TLC BEATRICE INTERNATIONAL HOLDINGS INC, 424B3, 1996-07-18

TLC BEATRICE INTERNATIONAL HOLDINGS INC
424B3, 1996-07-18
GROCERIES & RELATED PRODUCTS

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Filed Pursuant to Rules 424(b)(3) and 429
Registration Nos. 33-88602 and 33-80445

4,346,055 SHARES
TLC BEATRICE INTERNATIONAL HOLDINGS, INC.
COMMON STOCK
($.01 PAR VALUE PER SHARE)

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

The 4,346,055 shares of Common Stock offered hereby (the 'Offering') are to
be sold from time to time by the Selling Stockholders and are presently
outstanding. See 'Selling Stockholders.' TLC Beatrice International Holdings,
Inc. ('TLC Beatrice') will not receive any of the proceeds from the sale of the
shares offered hereby.

Such shares may be sold from time to time by the Selling Stockholders in
ordinary brokerage transactions, in transactions in the over-the-counter market,
in negotiated transactions, through the writing of options on such shares,
through a combination of such methods, or otherwise. Such shares may be sold
directly by the Selling Stockholders or to or through broker-dealers or agents,
and such broker-dealers or agents may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of such shares for whom they may act as agent or to whom they may
sell as principal, or both (which compensation may exceed customary
commissions). Such transactions may be effected at fixed offering prices which
may be changed, at varying market prices prevailing at the time of sale, at
varying prices related to such prevailing market prices, or at negotiated
prices. Such prices will be determined by the Selling Stockholders or by
agreement between the Selling Stockholders and any broker-dealers, agents or
purchasers participating in the Offering. The Selling Stockholders and any
broker-dealers or agents who participate in the distribution of such shares may
be deemed to be 'underwriters,' as such term is defined in the Securities Act of
1933, as amended, and any discounts, concessions or commissions received by such
broker-dealers or agents and any profit on any resale of such shares by them as
principal, may be deemed to be underwriting discounts and commissions under such
Act. See 'Plan of Distribution.'

There is currently no public market for TLC Beatrice's Common Stock. TLC
Beatrice has no current intention to list the Common Stock for trading on any
securities exchange or on any automated dealer quotation system. See 'Risk
Factors -- Absence of Public Market.'

SEE 'RISK FACTORS' ON PAGES 7 THROUGH 9 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.

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

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.

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

TLC Beatrice has agreed to bear all expenses of the Selling Stockholders in
connection with the registration, offering and sale of the shares offered
hereby, other than (i) the legal fees and expenses of counsel for the Selling
Stockholders, except the reasonable fees and expenses of one counsel for all
Selling Stockholders and certain other stockholders of TLC Beatrice as a group,
selected in accordance with the Stockholders' Agreement (as defined herein),
(ii) discounts, concessions and commissions, if any, of broker-dealers or
agents, and (iii) transfer taxes, if any, on the shares sold by the Selling
Stockholders. See 'Selling Stockholders,' 'Certain Transactions' and 'Plan of
Distribution.' TLC Beatrice has agreed to indemnify the Selling Stockholders
against certain liabilities, including liabilities under the Securities Act of
1933, as amended. See 'Plan of Distribution.'

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

The date of this Prospectus is July 12, 1996.

ADDITIONAL INFORMATION

TLC Beatrice has filed with the Securities and Exchange Commission (the
'Commission') Registration Statements on Form S-1 (the 'Registration
Statements') under the Securities Act of 1933, as amended (the 'Act'), with
respect to the Common Stock being offered by this Prospectus. This Prospectus
does not contain all the information set forth in the Registration Statements,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to TLC
Beatrice and its subsidiaries and the Common Stock offered hereby, reference is
made to the Registration Statements, including the exhibits and schedules
thereto. Statements contained in this Prospectus as to the contents of any
contract or other document 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 Statements, each statement being qualified in all
respects by such reference.

Since the effective date of TLC Beatrice's Registration Statement No.
33-88602, TLC Beatrice has been subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in
accordance therewith has filed and will continue to file reports and other
information with the Commission for as long as it is subject to such
requirements. A copy of the Registration Statements and the exhibits thereto
filed by TLC Beatrice with the Commission, as well as other reports and other
information filed by TLC Beatrice with the Commission, may be examined without
charge 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 Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can also be obtained at prescribed
rates by mail from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, the Commission maintains a
Web site at http://www.sec.gov that contains periodic reports and other
information regarding registrants, like the Company, that file electronically
with the Commission.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless the context otherwise requires, references
in this Prospectus to 'TLC Beatrice' shall refer to TLC Beatrice International
Holdings, Inc., and references to the 'Company' shall refer to TLC Beatrice and
its subsidiaries, certain of which subsidiaries are not wholly-owned, directly
or indirectly, by TLC Beatrice. See 'Business.' References in this Prospectus to
'subsidiaries' shall refer to both TLC Beatrice's wholly-owned and
majority-owned subsidiaries, unless the context otherwise requires. TLC
Beatrice's operations are conducted entirely through its subsidiaries.
Prospective investors are urged to read this Prospectus in its entirety.

THE COMPANY

The Company is an international food and grocery products company with
operations principally in western Europe. The Company's operations are comprised
of two segments: Food Distribution and Grocery Products. Food Distribution
operations are concentrated in the wholesale and retail distribution of dry
groceries, beverages, household products and frozen food in France. Through its
Grocery Products segment, the Company manufactures and markets ice cream and
desserts, potato chips, snacks and beverages in selected major western European
markets. Operations are decentralized, enabling local management to develop and
implement business plans tailored to local market conditions.

FOOD DISTRIBUTION

The Company is a major wholesale and retail distributor of dry groceries,
beverages, household products and frozen food in France, operating through its
Franprix and Leader Price networks.

Through its Franprix network, the Company is a wholesale and retail
distributor of dry groceries, beverages, household products and frozen food in
traditional supermarkets and superettes in the Paris metropolitan area under the
Franprix name. Based on published industry data for 1995, the Company's Franprix
network has the largest number of supermarkets, with approximately 25% of the
total number of supermarkets, and the most supermarket selling space in the
Paris metropolitan area. The Paris metropolitan area is the largest consumer
market in France. As of March 31, 1996, 31 supermarkets and superettes were
owned by the Company and another 370 were owned and operated by franchisees, all
operating under the Franprix name. Under the Company's arrangements with its
franchisees, the Franprix stores purchase their dry groceries, beverages,
household products and frozen food exclusively from the Company. Franprix stores
are neighborhood supermarkets and superettes with an average size of
approximately 7,500 square feet and 3,800 square feet, respectively. Franprix
stores carry an assortment of 4,000 to 6,000 grocery and other products sold by
the Company and offer quality national brand name products and private label
goods at competitive prices.

The Company introduced its Leader Price stores in 1991 in Paris to
capitalize on the trend toward discount retailing, and now operates these stores
throughout France. As of March 31, 1996, the Company had introduced 215 Leader
Price stores, 174 of which it owns interests in and 41 of which are franchised.
The Company increased the total number of Leader Price stores from 165 to 215
during the twelve months ended March 31, 1996. Leader Price stores typically
range from 7,000 to 10,000 square feet in size, and sell up to 2,000 grocery
products, almost all of which carry the Leader Price brand name. Leader Price
products are offered at comparatively low prices in Leader Price stores which
have lower cost structures than traditional supermarkets. Leader Price stores
purchase all of their products except produce from the Company.

The objectives of the Company's Food Distribution segment are (1) to
preserve its leading position in the Paris metropolitan area under the Franprix
name and (2) to capitalize on the trend toward discount retailing by increasing
its operations throughout France and by entering neighboring European markets
under the Leader Price name.

GROCERY PRODUCTS

Through its Grocery Products segment, the Company is a major manufacturer
and marketer of ice cream and dessert products, potato chips, snacks and
beverages in selected markets in western Europe.

The Company's ice cream operations are located in Spain, including the
Canary Islands, and Portugal. The Company's ice cream products are generally
manufactured locally and marketed under local brand names, such as Menorquina in
Spain and Portugal and Kalise in the Canary Islands. Such products include ice
cream novelties, cakes and specialty frozen desserts sold mainly in cafes,
restaurants, hotels and kiosks as well as for home consumption through
supermarkets. The Company's most important product categories are moderately
priced ice cream novelties which are purchased on impulse for immediate
consumption and ice cream desserts.

The Company's potato chip and snack food operations are located in the
Republic of Ireland, where the Company has a dominant position in the potato
chip market and is the leading manufacturer of processed snacks under its Tayto,
King and other brand names. The Company's leadership in these markets is
attributable to its strong brand names and to a comprehensive distribution
network that sells the Company's products to supermarkets, small shops, pubs and
restaurants throughout the Republic of Ireland.

Through its bottling/canning operations located in the Netherlands, Belgium
and France, the Grocery Products segment produces soft drinks on a contract
basis for supermarket private labels and major international brands, and
manufactures and markets a variety of beverages and soft drinks under the
Company's own brand names.

The strategy of the Company's Grocery Products segment is to develop new
products designed to appeal to a variety of consumers, to differentiate the
Company's branded products from those of its competitors and to focus its
resources on products with strong market share or potential for growth. See
'Business.'

HISTORY

TLC Beatrice was organized in August 1987 to acquire the international
operations of the Beatrice Companies, Inc., which acquisition was consummated on
November 30, 1987 (the 'Acquisition'). Since the Acquisition, the Company's
overall strategy has been to improve the performance and increase the value of
its businesses and divest certain underperforming and non-strategic operating
units. The Company has focused on businesses in which it has a significant
market share and/or which it believes offer attractive growth prospects, and on
reducing indebtedness through the application of free cash flow and proceeds
from the sale of divested businesses. The Company has divested assets and
investments for total consideration of approximately $1 billion, substantially
all of which has been used by the Company to repay Acquisition-related and other
indebtedness and to reacquire stock issued in connection with the Acquisition.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Selling
Stockholders............................... 4,346,055 shares
Common Stock Outstanding..................... 9,138,465 shares
Use of Proceeds.............................. The shares offered hereby are being sold by the selling
stockholders listed under 'Selling Stockholders' (the 'Selling
Stockholders') pursuant to the demand registration provisions
under the Stockholders' Agreement (as defined herein), and the
Company will not receive any part of the proceeds from such
sales.
Holding Company Structure.................... TLC Beatrice is a holding company whose operations are conducted
entirely through its subsidiaries. TLC Beatrice's ability to pay
dividends and make other distributions on its Common Stock will
depend on distributions from its subsidiaries, which
distributions will depend on the earnings and cash flow of such
subsidiaries. Distributions to TLC Beatrice by its subsidiaries
will be subject to the prior claims of creditors of such
subsidiaries. See 'Risk Factors -- Holding Company Structure;
Restrictions on Distributions.'
Restrictions on Distributions................ Distributions to TLC Beatrice by its subsidiaries and dividends on
Common Stock will also be subject to legal restrictions and
restrictions now or hereafter contained in credit and other
agreements to which TLC Beatrice or any of its subsidiaries is a
party. See 'Risk Factors -- Holding Company Structure;
Restrictions on Distributions.'
Control; Anti-Takeover Effect................ Following the Offering, certain principal stockholders of TLC
Beatrice will continue to own beneficially a sufficient number
of shares of Common Stock to elect the entire Board of Directors
of TLC Beatrice. See 'Risk Factors -- Control; Anti-Takeover
Effect' and 'Security Ownership of Principal Stockholders and
Management.'
TLC Beatrice is authorized to issue up to 2.5 million shares of
Preferred Stock having terms fixed by the Board of Directors
without any stockholder vote. Issuance of these shares could be
used as an anti-takeover device. See 'Risk Factors -- Control;
Anti-Takeover Effect' and 'Description of Capital
Stock -- Preferred Stock.'
Shares Eligible for Future Sale.............. If all 4,346,055 shares offered in the Offering are sold, such
shares will be freely tradeable without restriction, unless they
are held by an 'affiliate' of TLC Beatrice. An additional
4,792,410 shares will be eligible for future sale in the public
market pursuant to Rule 144 under the Act. Of such 4,792,410
shares, 4,478,260 shares may be held by affiliates of TLC
Beatrice and may be subject to the limitations of Rule 144
applicable to affiliates.
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL DATA
Set forth below are summary consolidated financial data of the Company for
each of the five years in the period ended December 31, 1995 and for the three
months ended March 31, 1996 and 1995. The consolidated summary financial data
should be read in conjunction with 'Selected Consolidated Financial Data,' the
Company's Consolidated Financial Statements, including the Notes thereto, and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations,' included elsewhere in this Prospectus. The historical consolidated
financial data have been derived from audited consolidated financial statements.
The consolidated financial data for the three months ended March 31, 1996 and
March 31, 1995 have been derived from consolidated financial statements which
are unaudited, but, in the opinion of management, include all adjustments,
consisting of normal recurring accruals, necessary for a fair presentation of
the Company's financial position and results of operations for such periods. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year. The Company reports its results in
U.S. dollars. However, since the Company's operations are conducted principally
in France, Spain and Ireland, fluctuations in the value of currencies in which
the Company transacts business in relation to the U.S. dollar may significantly
affect the Company's reported results of operations and stockholders' equity.
See 'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
----------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Net sales........................... $ 530,390 $ 451,507
Special charges(1).................. -- --
Operating income(1)................. 14,015 11,536
Income before extraordinary item.... 1,240 1,041
Net income (loss)(1)(2)(3).......... 1,240 1,041

YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ---------- ---------- ---------- ----------
(AS RESTATED)

<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Net sales........................... $2,072,613 $1,821,670 $1,656,336 $1,664,602 $1,542,212
Special charges(1).................. -- -- 8,650 39,943 --
Operating income(1)................. 79,312 71,579 60,141 46,902 97,216
Income before extraordinary item.... 18,456 11,313 1,047 (16,570) 51,445
Net income (loss)(1)(2)(3).......... 15,364 11,313 1,047 (16,570) 51,445
</TABLE>

<TABLE>
<CAPTION>
AS OF
MARCH 31,
1996
-----------
(UNAUDITED)
(DOLLARS IN
THOUSANDS)
<S> <C>
Consolidated Balance Sheet Data:
Working capital............................................................................................. $ 34,201
Total assets................................................................................................ 791,935
Short-term debt and current portion of long-term debt....................................................... 67,404
Long-term debt.............................................................................................. 223,419
Total common stockholders' equity........................................................................... 95,836
</TABLE>

- ------------
(1) Operating income and net income for 1993 reflect the impact of special
charges of $8.7 million, of which $3.0 million related to a write-off for
excess office lease space and $5.7 million related to employee severance
expenses. See Note 3 of Notes to Consolidated Financial Statements.
Operating income and net loss for 1992 reflect the impact of special charges
of $39.9 million for restructuring and special compensation expenses. See
'Selected Consolidated Financial Data.'
(2) During the year ended December 31, 1995, the Company recorded an
extraordinary loss of $3.1 million relating to the write-off of certain
deferred debt issuance costs and other costs incurred relating to long-term
debt repaid prior to maturity. The pre-tax amount of $4.6 million was
recorded net of an income tax benefit of $1.5 million.
(3) During the year ended December 31, 1995, the Company sold three
subsidiaries: Artigel GmbH & Co. Kg, a 70% owned ice cream manufacturer in
Germany, and two wholly owned ice cream distributors, Artic S.A. in Belgium
and Artic France S.A.R.L. in France. Additionally, the Company ceased
operations of its subsidiary, Dairyworld S.A., a Swiss trader of bulk dairy
products. The Company recorded pre-tax gains on such sales and dispositions
of approximately $10.5 million, which have been included in other income.
The Company also recorded charges relating to non-cash exchange losses
recorded in compliance with Statement of Financial Accounting Standards
('SFAS') No. 52, 'Foreign Currency Translation,' in the amount of
approximately $4.8 million. During 1995, the Company determined that
advances from foreign subsidiaries were no longer of a long-term investment
nature. Additionally, certain advances were either forgiven in connection
with the sale of certain subsidiaries, converted into dividends or settled
through other non-cash transactions. Accordingly, the translation
adjustments related to these advances, previously included in cumulative
translation adjustment, have been included in other income for the year
ended December 31, 1995. Also during 1995, the Company sold other
investments for approximately $467,000, recorded equity in earnings from
minority-owned Leader Price stores of approximately $331,000, and received
additional proceeds of $703,000 from the 1994 sale of Choky S.A., described
below, which have been included in other income. During the year ended
December 31, 1994 the Company sold four wholly-owned subsidiaries: Premier
Is A/S, an ice cream manufacturer in Denmark; Choky S.A., a distributor of
powdered drink products in France; Sodialim S.A., an institutional food
distributor in France; and Gelati Sanson S.p.A., an ice cream manufacturer
in Italy. The Company recorded pre-tax and after-tax gains on such sales of
approximately $12.1 million and $3.9 million, respectively. Also during
1994, the Company sold other investments for a pre-tax gain of approximately
$1.6 million which has also been included in other income. During the year
ended December 31, 1991, the Company sold its 20% equity investment in its
Canadian affiliate and its wholly-owned subsidiary, Maxime Delrue, S.A., a
French distributor of juice and other food products. The Company recorded
pre-tax gains on such sales of approximately $4.6 million and $18.8 million
in 1992 and 1991, respectively, which have been included in other income.

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the Common Stock offered hereby.

HOLDING COMPANY STRUCTURE; RESTRICTIONS ON DISTRIBUTIONS

TLC Beatrice's ability to pay dividends and make other distributions on its
Common Stock will depend on distributions from its subsidiaries, which
distributions will depend on the earnings and cash flow of such subsidiaries.

TLC Beatrice is a holding company whose operations are conducted
exclusively through its subsidiaries. Its assets consist primarily of its
investments in its subsidiaries, and a substantial portion of the consolidated
liabilities of the Company have been incurred by such subsidiaries.

The ability of TLC Beatrice's subsidiaries to make distributions to TLC
Beatrice will be subject to, among other things, the prior claims of such
subsidiaries' creditors, including trade creditors. TLC Beatrice's right to
participate in the distribution of the assets of any subsidiary upon such
subsidiary's liquidation or reorganization will also be subject to the prior
claims of such subsidiary's creditors, including trade creditors, except to the
extent that TLC Beatrice may itself be a creditor with recognized claims against
such subsidiary (in which case, the claims of TLC Beatrice would still be
subject to the prior claims of any secured creditor of such subsidiary and of
any other holder of indebtedness of such subsidiary that is senior to that held
by TLC Beatrice).

The ability of TLC Beatrice to pay, and any determination by the Board of
Directors with respect to, dividends or other distributions on Common Stock will
be subject to Delaware law, which provides that dividends on a corporation's
capital stock may be paid either out of its surplus, as defined and computed in
accordance with Delaware law, or in case there is no such surplus, out of its
net profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year. In addition, TLC Beatrice's ability to pay dividends or
make other distributions will be subject to restrictions now or hereafter
contained in the credit and other agreements to which TLC Beatrice or any of its
subsidiaries is a party, including the Indenture governing TLC Beatrice's 11.5%
Senior Secured Notes due October 1, 2005 (the 'Notes'). See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources' and Note 12 of Notes to
Consolidated Financial Statements.

Many of TLC Beatrice's operating subsidiaries have local minority
stockholders whose equity interests in these subsidiaries range from 2.6% to
49%. Any dividends paid by such operating subsidiaries would be shared pro rata
with such local stockholders. See 'Business -- Relationships with Minority
Stockholders.'

EFFECT OF CURRENCY EXCHANGE RATES ON REPORTED RESULTS OF OPERATIONS

The Company's net sales, costs, assets and liabilities are for the most
part denominated in local currencies. Therefore, results of operations, as
stated in local currencies, and the Company's business practices and plans with
respect to a particular country, are not significantly affected by exchange rate
fluctuations. However, such results of operations as reported in U.S. dollars
may be significantly affected by fluctuations in the value of the local
currencies in which the Company transacts business in relation to the U.S.
dollar. Results of the Company's operations are translated into U.S. dollars on
the basis of average exchange rates throughout the period. Assets and
liabilities are translated into U.S. dollars on the basis of rates of exchange
as of the balance sheet dates. See 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and Note 18 of Notes to
Consolidated Financial Statements.

CONTROL; ANTI-TAKEOVER EFFECT

Following the Offering, certain members of the family of Reginald F. Lewis,
TLC Beatrice's former Chairman and Chief Executive Officer, and entities under
their control, which are listed in the tables under 'Security Ownership of
Principal Stockholders and Management,' will continue to own beneficially a
sufficient number of shares of Common Stock to determine the outcome of most
corporate actions requiring stockholder approval, including the election of the
entire Board of Directors, without the votes of the purchasers of any of the
shares of Common Stock offered hereby. There are no provisions for cumulative
voting by stockholders in TLC Beatrice's Restated Certificate of

Incorporation or By-laws, and accordingly the holders of a majority of the
outstanding shares can elect all of the directors of TLC Beatrice. The principal
stockholders of TLC Beatrice include the Estate of Reginald F. Lewis (the 'Lewis
Estate'), TLC Beatrice's former Chairman and Chief Executive Officer, and
members of the Lewis family. See 'Security Ownership of Principal Stockholders
and Management,' 'Selling Stockholders' and 'Description of Capital Stock.'

In addition, under its Restated Certificate of Incorporation as currently
in effect, TLC Beatrice is authorized to issue up to 2.5 million shares of
Preferred Stock in one or more series, having such rights, preferences and
voting powers as may be fixed by the Board of Directors, without any stockholder
vote. Issuance of these shares could be used as an anti-takeover device. The
Board of Directors has no current intention or plan to issue any shares of
Preferred Stock. See 'Description of Capital Stock -- Preferred Stock.'

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market following
the Offering could adversely affect the market price of the Common Stock and, if
TLC Beatrice should determine to sell equity securities in the future, may make
it more difficult for TLC Beatrice to do so at a time and price which it deems
appropriate.

Assuming that all 4,346,055 shares offered in the Offering are sold, such
shares will be freely tradeable without restriction, unless they are held by an
'affiliate' of TLC Beatrice (as such term is used in Rule 144 under the Act). An
additional 4,792,410 shares will be eligible for future sale in the public
market either pursuant to a registration statement under the Act or an
applicable exemption from the registration requirements of the Act, including
Rule 144 and Rule 144A.

ABSENCE OF PUBLIC MARKET

There is currently no established public market for the Common Stock.
Accordingly, there can be no assurance that the Offering will be completed.
Sales from time to time of the Common Stock offered hereby may be effected at
fixed offering prices which may be changed, at varying market prices prevailing
at the time of sale, at varying prices related to such prevailing market prices,
or at negotiated prices. Such prices will be determined by the Selling
Stockholders or by agreement between the Selling Stockholders and any
broker-dealers, agents or purchasers participating in the Offering.

No assurance can be given as to whether an active trading market will
develop for the Common Stock or as to the liquidity of any trading market that
may develop. TLC Beatrice has no current intention to list the Common Stock for
trading on any securities exchange or on any automated dealer quotation system.
No assurance can be given that a purchaser of any of the shares of Common Stock
offered hereby will be able to sell such shares in the future or that any such
sale will be at a price equal to or greater than the price paid for such shares.
The absence of an active trading market for the Common Stock could adversely
affect the price at which shares of Common Stock can be sold.

LITIGATION WITH CARLTON INVESTMENTS

TLC Beatrice is currently engaged in lawsuits with Carlton Investments, a
California limited partnership and a stockholder of record of TLC Beatrice
('Carlton'). See 'Security Ownership of Principal Stockholders and Management.'
In the first lawsuit filed in New York state court, Carlton has alleged, among
other things, that TLC Beatrice breached the Stockholders' Agreement when it
paid a $22.1 million compensation package to Reginald F. Lewis, TLC Beatrice's
former Chairman and Chief Executive Officer, weeks before his death, and that
Mr. Lewis tortiously interfered with Carlton's rights under the Stockholders'
Agreement by procuring the alleged breach for his personal enrichment at TLC
Beatrice's expense. This tortious interference claim was dismissed by the court
and is now pending appeal. Carlton claims damages of approximately $11.5
million, plus interest, punitive damages, attorneys' fees and litigation
expenses. TLC Beatrice believes that this lawsuit is without merit and is
defending against the action vigorously and has asserted counterclaims against
Carlton. Carlton has also filed another lawsuit in Delaware state court. This
lawsuit is brought by Carlton as a shareholders' derivative suit against TLC
Beatrice and various former and current officers and directors and entities
allegedly affiliated with Reginald F. Lewis and alleges waste and conversion of
TLC Beatrice's assets, breach of the directors' fiduciary duties, fraud and
usurpation of corporate opportunity arising from the payment of compensation to
Reginald F. Lewis, also challenged in the New York lawsuit, and by other

challenged transactions, such as TLC Beatrice's allegedly inappropriate
acquisition and use of an allegedly extravagant and costly corporate aircraft
and the alleged conversion of millions of dollars of TLC Beatrice assets for the
benefit of Reginald F. Lewis and entities allegedly affiliated with Reginald F.
Lewis. Carlton also alleges in the Delaware suit that most of the transactions
it challenges were in breach of the Stockholders' Agreement. Carlton seeks to
recover for TLC Beatrice the payments that Carlton alleges were improper and
also seeks recovery of its costs and reasonable attorneys' fees. TLC Beatrice
believes that this second lawsuit is also without merit and intends to defend
against it vigorously. However, no assurances can be given regarding the outcome
of either lawsuit. TLC Beatrice's outside litigation counsel has advised TLC
Beatrice that at this time the extent of TLC Beatrice's liability, if any, is
not determinable. The ultimate outcome that may result from these matters may
have a material adverse effect on TLC Beatrice's consolidated financial
condition and results of operations. See 'Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources' and 'Business -- Legal Proceedings.'

SUBSTANTIAL LEVEL OF INDEBTEDNESS

The Company has debt that is substantial in relation to its stockholders'
equity and a significant portion of the Company's cash flow from operations is
required for debt service. As of March 31, 1996, the Company had total
short-term debt of $67.4 million and it had total long-term debt of $223.4
million and stockholders' equity of $95.8 million, resulting in a total
capitalization of $386.6 million. See 'Capitalization'; 'Selected Consolidated
Financial Data'; and 'Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources.'

The Company believes that its current level of indebtedness is such that no
significant restrictions on future earnings or liquidity exist and that the
Company's existing level of indebtedness will not have an adverse impact on its
operational flexibility. The Company anticipates that it will be required to use
a significant portion of its cash flow from operations to meet its debt service
obligations. If the Company is unable to generate sufficient cash flow to meet
its debt service requirements, it will have to adopt one or more alternatives,
such as reducing or delaying planned expansion and capital expenditures, selling
assets, obtaining additional equity capital or restructuring debt. There can be
no assurances that any of these strategies, if necessary, could be effected on
satisfactory terms. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources.'

THE COMPANY

The Company is an international food and grocery products company with
operations principally in western Europe. The Company's operations are comprised
of two segments: Food Distribution and Grocery Products. Food Distribution
operations are concentrated in the wholesale and retail distribution of dry
groceries, beverages, household products and frozen food in France. Through its
Grocery Products segment, the Company manufactures and markets ice cream and
desserts, snacks and beverages in selected western European markets. Operations
are decentralized, enabling local management to develop and implement business
plans tailored to local market conditions.

FOOD DISTRIBUTION

The Company is a major wholesale and retail distributor of dry groceries,
beverages, household products and frozen food in France, operating through its
Franprix and Leader Price networks.

of 4,000 to 6,000 grocery and other products sold by the Company and offer
quality national brand name products and private label goods at competitive
prices.

The Company introduced its Leader Price stores in 1991 in Paris to
capitalize on the trend toward discount retailing, and now operates these stores
throughout France. As of March 31, 1996, the Company had introduced 215 Leader
Price stores, 174 of which it owns interests in and 41 of which are franchised.
The Company increased the total number of Leader Price stores from 165 to 215
during the twelve months ended March 31, 1996. Leader Price stores typically
range from 7,000 to 10,000 square feet in size, and sell up to 2,000 grocery
products almost all of which carry the Leader Price brand name. Leader Price
products are offered at comparatively low prices in Leader Price stores which
have lower cost structures than traditional supermarkets. Leader Price stores
purchase all of their products except produce from the Company.

GROCERY PRODUCTS

Through its Grocery Products segment, the Company is a major manufacturer
and marketer of ice cream and dessert products, potato chips, snacks and
beverages in selected markets in western Europe.

HISTORY

TLC Beatrice was organized in August 1987 to acquire the international
operations of the Beatrice Companies, Inc., which Acquisition was consummated on
November 30, 1987 for a cash purchase price of $985 million plus approximately
$54 million of expenses, including investment banking fees, bank fees and
related costs, for a total acquisition cost of approximately $1.039 billion. TLC
Beatrice financed the acquisition through the issuance of securities by its
wholly-owned subsidiary TLC Beatrice International Finance, Inc., including (i)
$400 million of term debt, (ii) $135 million of increasing rate notes at par,
(iii) approximately $234 million of subordinated notes at 63.872% of such
principal amount for gross proceeds of approximately $150 million and (iv) 86
million of Eurofranc notes at par (or approximately $15 million based on
currency exchange rates then in effect). In addition, TLC Beatrice sold (i) an
aggregate of 505,000 shares of preferred stock for $100 per share and (ii)
9,000,000 shares of its Common Stock for $1.00 per share. Simultaneously with
the Acquisition,

TLC Beatrice sold certain of the Company's operations in Canada, Australia and
Spain for gross proceeds of $431 million. See 'Certain Transactions.' Since the
Acquisition, the Company's overall strategy has been to improve the performance
and increase the value of its businesses and divest certain underperforming and
non-strategic operating units. The Company has divested assets and investments
for a total consideration of approximately $1 billion, substantially all of
which has been used by the Company to repay Acquisition-related and other
indebtedness, which aggregated approximately $834 million at the time of the
Acquisition, and to reacquire stock issued in connection with the Acquisition.
The Company's current level of indebtedness amounts to approximately $290.8
million at March 31, 1996, of which $223.4 million represents long-term debt and
$67.4 million represents short-term debt and current portion of long-term debt.
See 'Certain Transactions.'

The principal executive offices of TLC Beatrice are located at 9 West 57th
Street, New York, New York 10019. Its telephone number at that location is (212)
756-8900. TLC Beatrice is a Delaware corporation, incorporated on August 17,
1987.

BEATRICE, KALISE, MENORQUINA, TAYTO, KING, FRANPRIX, BAUD, LEADER PRICE,
SUNCO, TAYTO RIPPLES, TEXICANOS, AND CHOKOGRANDE ARE REGISTERED OR PROPRIETARY
TRADEMARKS OR SERVICE MARKS OF THE COMPANY.

USE OF PROCEEDS

The shares of TLC Beatrice's Common Stock offered hereby are being sold by
the Selling Stockholders. TLC Beatrice will not receive any part of the proceeds
from such sales.

DIVIDENDS

On January 19, 1996, the Board of Directors declared a dividend on the
Common Stock of $.11 per share, paid on February 15, 1996 to holders of record
on February 5, 1996. In addition, the Company paid dividends on its Common Stock
of $.15, $.20 and $.25 per share to holders of record on July 30, 1992, October
30, 1992 and December 30, 1992, respectively. On January 19, 1996, the Board of
Directors also established a policy providing for the payment of dividends not
less than annually, subject to the availability of surplus and net profits and
further subject to declaration by the Board of Directors. The Board of Directors
will make any such determination in light of conditions then existing, including
the Company's earnings, financial condition and capital requirements,
restrictions in credit and other agreements, business conditions and other
factors. See Notes 12 and 14 of the Notes to Consolidated Financial Statements.

TLC Beatrice is a holding company whose operations are conducted entirely
through its subsidiaries. TLC Beatrice's ability to pay dividends and make other
distributions on its Common Stock will depend on distributions from its
subsidiaries, which distributions will depend on the earnings and cash flow of
such subsidiaries. Distributions to TLC Beatrice by its subsidiaries will be
subject to the prior claims of creditors of such subsidiaries. See 'Risk
Factors -- Holding Company Structure; Restrictions on Distributions.'

Distributions to TLC Beatrice by its subsidiaries and dividends on Common
Stock will also be subject to applicable legal restrictions and restrictions now
or hereafter contained in credit and other agreements to which TLC Beatrice or
any of its subsidiaries is a party, including the Indenture governing the Notes.
See Note 12 of Notes to Consolidated Financial Statements.

CAPITALIZATION

The following table sets forth the consolidated short-term debt and
capitalization of the Company as of March 31, 1996. The table should be read in
conjunction with the Company's Consolidated Financial Statements, including the
Notes thereto, and the other information included elsewhere in this Prospectus.
See 'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'

<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------
ACTUAL
(UNAUDITED)
----------------------
(DOLLARS IN THOUSANDS)

<S> <C>
Short-term debt and current portion of long-term debt....................................... $ 67,404
------------
------------
Capitalization:
Long-term debt:
11.5% Senior Secured Notes due October 1, 2005.................................... $175,000
Other............................................................................. 48,419
------------
Total long-term debt......................................................... 223,419
------------
Total debt................................................................... 290,823
------------
Common stockholders' equity:
Common stock, $.01 par value; authorized 11,000,000 shares; issued 9,750,000
shares........................................................................... 97
Additional paid-in capital........................................................ 9,653
Treasury stock (611,535 shares)................................................... (23,200)
Retained earnings................................................................. 138,787
Cumulative foreign currency translation adjustment................................ (29,501)
------------
Total common stockholders' equity............................................ 95,836
------------
Total capitalization.................................................... $386,659
------------
------------
</TABLE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data of the Company are
qualified by reference to and should be read in conjunction with the Company's
Consolidated Financial Statements, including the Notes thereto, and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' included elsewhere in this Prospectus. The consolidated financial
data for fiscal years 1991 through 1995 have been derived from audited
consolidated financial statements. The consolidated financial data for the three
months ended March 31, 1996 and 1995 have been derived from consolidated
financial statements which are unaudited, but, in the opinion of management,
include all adjustments, consisting of normal recurring accruals, necessary for
a fair presentation of the Company's financial position and results of
operations for such periods. The results of operations for interim periods are
not necessarily indicative of the results to be expected for the full year. The
Company reports its results in U.S. dollars. However, since the Company's
operations are conducted principally in France, Spain and Ireland, fluctuations
in the value of currencies in which the Company transacts business in relation
to the U.S. dollar may significantly affect the Company's reported results of
operations and stockholders' equity. See 'Management's Discussion and Analysis
of Financial Condition and Results of Operations.'

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- ---------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- ------------- ---------- ---------- ---------- ----------
(UNAUDITED) (AS RESTATED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Net sales..................... $530,390 $451,507 $ 2,072,613 $1,821,670 $1,656,336 $1,664,602 $1,542,212
Cost of sales................. 442,204 374,449 1,693,288 1,435,143 1,275,644 1,237,393 1,150,448
Selling, general and
administrative
expenses(1)................. 74,171 65,522 300,013 314,948 311,901 340,364 294,548
Special charges(2)............ -- -- -- -- 8,650 39,943 --
--------- --------- ------------- ---------- ---------- ---------- ----------
Operating income.............. 14,015 11,536 79,312 71,579 60,141 46,902 97,216
Interest income............... 1,992 1,994 9,372 8,601 9,298 12,501 14,521
Interest expense(3)........... (8,733 ) (5,827 ) (32,974) (32,715) (37,023) (37,170) (40,976)
Other income(4)............... 157 -- 7,182 13,729 646 4,627 20,590
--------- --------- ------------- ---------- ---------- ---------- ----------
Income from operations before
income taxes and minority
interests in earnings....... 7,431 7,703 62,892 61,194 33,062 26,860 91,351
Income taxes(5)............... (2,071 ) (4,063 ) (20,470) (35,999) (19,445) (29,638) (24,090)
Minority interests in
earnings.................... (4,120 ) (2,599 ) (23,966) (13,882) (12,570) (13,792) (15,816)
--------- --------- ------------- ---------- ---------- ---------- ----------
Income (loss) before
extraordinary item.......... 1,240 1,041 18,456 11,313 1,047 (16,570) 51,445
Extraordinary item, net of
taxes(6).................... -- -- (3,092) -- -- -- --
--------- --------- ------------- ---------- ---------- ---------- ----------
Net income (loss)............. $ 1,240 $ 1,041 $ 15,364 $ 11,313 $ 1,047 $ (16,570) $ 51,445
--------- --------- ------------- ---------- ---------- ---------- ----------
--------- --------- ------------- ---------- ---------- ---------- ----------
Net income (loss) per common
share:
Income before extraordinary
item........................ $ .14 $ .11 $ 2.01 $ 1.23 $ .11 $ (1.91) $ 4.03
Extraordinary item............ -- -- (.33) -- -- -- --
--------- --------- ------------- ---------- ---------- ---------- ----------
Net income (loss) per
common share............ $ .14 $ .11 $ 1.68 $ 1.23 $ .11 $ (1.91) $ 4.03
--------- --------- ------------- ---------- ---------- ---------- ----------
--------- --------- ------------- ---------- ---------- ---------- ----------
OTHER DATA:
Franprix stores opened at end
of period................... 401 434 412 425 424 422 456
--------- --------- ------------- ---------- ---------- ---------- ----------
--------- --------- ------------- ---------- ---------- ---------- ----------
Leader Price stores opened at
end of period............... 215 165 206 156 108 59 16
--------- --------- ------------- ---------- ---------- ---------- ----------
--------- --------- ------------- ---------- ---------- ---------- ----------
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ---------------------------------------------------------
1996 1995 1994 1993 1992 1991
----------- -------- -------- --------- -------- --------
(UNAUDITED) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficiency)....................... $ 34,201 $ 42,283 $ 8,807 $(163,361) $ 10,853 $130,668
Total assets....................................... 791,935 815,575 735,503 756,980 795,871 858,822
Short-term debt and current portion of
long-term debt................................... 67,404 64,647 87,898 292,485 124,407 123,913
Long-term debt..................................... 223,419 223,308 145,209 29,714 179,177 186,101
Total redeemable preferred stock(7)................ -- -- -- -- -- 1,676
Total common stockholders' equity.................. 95,836 97,047 93,222 65,358 86,306 153,777
</TABLE>

(footnotes on next page)

(footnotes from previous page)

(1) Includes amortization of intangible assets. See Consolidated Financial
Statements.

(2) During 1993, the Company recorded special charges in the amount of $8.7
million for the corporate headquarters located in New York. These charges
included a write-off for excess office lease space of $3.0 million and
employee severance expense of $5.7 million. During 1992, the Company
recorded special charges in the amount of $39.9 million for restructuring
charges and special compensation expense. The restructuring charges included
write-offs for plant closures of ice cream companies in Belgium and Spain
and severance expense for redundant personnel throughout the Company. The
write-offs for plant closures and severance expense amounted to $12.4
million and $4.4 million, respectively. Other miscellaneous reorganization
charges amounted to $1.0 million. In 1992, the Company paid to Mr. Reginald
F. Lewis, the Company's then Chairman and Chief Executive Officer, a
compensation package consisting of $16.6 million in cash and a $5.5 million
demand note bearing interest at a rate per annum equal to the prime rate
plus 1%. The demand note was paid in October 1993. The package included $3.0
million per year for the three-year period December 1, 1987 through November
30, 1990 and annual salary, bonus and certain other benefits, commencing
December 1, 1990 through December 31, 1992. The total amount of compensation
expense recorded as special charges amounted to $22.1 million. The
compensation package for Mr. Lewis was approved by the Board of Directors of
the Company by resolution adopted in December 1990. At that time, an issue
was raised as to whether any stockholder might claim that the payment of the
compensation package was prohibited under the terms of the Stockholders'
Agreement. While TLC Beatrice did not believe that such payment was
prohibited by the Stockholders' Agreement, the Board of Directors, with the
acquiescence of Mr. Lewis, did not obtain advice from outside counsel
resolving the issue until late 1992, when, in anticipation of proposed
legislative changes in the tax treatment of executive compensation, TLC
Beatrice determined to resolve the issue. In December 1992, the Board of
Directors sought and obtained advice from outside counsel to the effect that
the compensation package was not prohibited under the terms of the
Stockholders' Agreement, and the package was paid at that time. These
payments were made in late 1992 in anticipation of proposed legislative
changes in the tax treatment of executive compensation. In addition, in
March 1993, TLC Beatrice obtained a written opinion from outside counsel
which concluded that payment of the compensation package to Mr. Lewis did
not violate restrictions in the Stockholders' Agreement on certain
transactions with holders of 5% or more of the equity securities of TLC
Beatrice or an affiliate.

(3) TLC Beatrice and Mr. Lewis entered into a Fee Agreement dated November 30,
1987, pursuant to which TLC Beatrice agreed to pay Mr. Lewis a fee, payable
in Series C Preferred Stock, at any time at TLC Beatrice's option after
January 15, 1988 and before January 15, 1993, for services rendered in
originating, negotiating and consummating the Acquisition and the related
financing arrangements. The amount of the fee was approximately $7.6 million
payable at TLC Beatrice's option in 76,335 shares of TLC Beatrice's Series C
Preferred Stock. TLC Beatrice recorded a liability in the amount of
approximately $7.6 million in 1988. In January 1992, TLC Beatrice paid Mr.
Lewis approximately $14.8 million in cash, which included the fee of
approximately $7.6 million in lieu of the 76,335 shares of TLC Beatrice's
Series C Preferred Stock, plus $7.2 million, an amount that was
approximately equivalent to the dividends which would have accrued on 76,335
shares of TLC Beatrice's Series C Preferred Stock, had such shares been
outstanding. To provide for the payment of this amount in 1992, TLC Beatrice
recorded an expense of approximately $7.2 million in 1991, in addition to
the liability recorded in 1988. See 'Certain Transactions.'

(4) During the year ended December 31, 1995, the Company sold three
subsidiaries: Artigel GmbH & Co. Kg, a 70% owned ice cream manufacturer in
Germany, and two wholly owned ice cream distributors, Artic S.A. in Belgium
and Artic France S.A.R.L. in France. Additionally, the Company ceased
operations of its subsidiary, Dairyworld S.A., a Swiss trader of bulk dairy
products. The Company recorded pre-tax gains on such sales and dispositions
of approximately $10.5 million, which have been included in other income.
The Company also recorded charges relating to non-cash exchange losses
recorded in compliance with SFAS No. 52 in the amount of approximately

(footnotes continued on next page)

(footnotes continued from previous page)
$4.8 million. During 1995, the Company determined that advances from foreign
subsidiaries were no longer of a long-term investment nature. Additionally,
certain advances were either forgiven in connection with the sale of certain
subsidiaries, converted into dividends or settled through other non-cash
transactions. Accordingly, the translation adjustments related to these
advances, previously included in cumulative translation adjustment, have
been included in other income for the year ended December 31, 1995. Also
during 1995, the Company sold other investments for approximately $467,000,
recorded equity in earnings from minority-owned Leader Price stores of
approximately $331,000, and received additional proceeds of $703,000 from
the 1994 sale of Choky, S.A., described below, which have been included in
other income. During the year ended December 31, 1994 the Company sold four
wholly-owned subsidiaries: Premier Is A/S, an ice cream manufacturer in
Denmark, Choky S.A. a distributor of powdered drink products in France,
Sodialim S.A., an institutional food distributor in France, and Gelati
Sanson S.p.A., an ice cream manufacturer in Italy. The Company recorded
pre-tax gains on such sales of approximately $12.1 million in 1994, which
have been included in other income. The Company recorded after-tax gains on
such sales of approximately $3.9 million. Also during 1994, the Company sold
other investments for a gain of approximately $1.6 million, which has also
been included in other income. During the year ended December 31, 1991, the
Company sold its 20% equity investment in its Canadian affiliate and its
wholly-owned subsidiary, Maxime Delrue, S.A., a French distributor of juice
and other food products. The Company recorded gains on such sales of
approximately $4.6 million and $18.8 million in 1992 and 1991, respectively,
which have been included in other income.

(5) During 1995, the Company favorably concluded a tax audit for its Canary
Islands' subsidiary with respect to a tax incentive investment reserve set
up in 1991 and qualified investments made from 1992 through 1995 related to
this reserve which resulted in a reduction in income tax expense of $10.9
million.

(6) During the year ended December 31, 1995 the Company recorded an
extraordinary loss of $3.1 million relating to the write-off of certain
deferred debt issuance costs and other costs incurred relating to long-term
debt repaid prior to maturity. The pre-tax amount of $4.6 million was
recorded net of an income tax benefit of $1.5 million.

(7) During 1991, TLC Beatrice redeemed and repurchased all of its Series A and
Series B Increasing Rate Cumulative Exchangeable Redeemable Preferred Stock
at 100% of redemption value, totalling approximately $88.6 million. During
1992, TLC Beatrice redeemed and repurchased all of its Series C Increasing
Rate Cumulative Exchangeable Redeemable Preferred Stock at 100% of
redemption value, totalling approximately $3.1 million.

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

The following discussion and analysis is qualified by reference to and
should be read in conjunction with the Company's Consolidated Financial
Statements, including the Notes thereto, included elsewhere in this Prospectus.
The Company's net sales and results of operations during the periods presented
have not been significantly affected by inflation.

The Company's net sales, costs, assets and liabilities are for the most
part denominated in local currencies. Therefore, results of operations, as
stated in local currencies, and the Company's business practices and plans with
respect to a particular country, are not significantly affected by exchange rate
fluctuations. However, such results of operations as reported in U.S. dollars
may be significantly affected by fluctuations in the value of the local
currencies in which the Company transacts business in relation to the U.S.
dollar. Results of operations of the Company's subsidiaries are translated into
U.S. dollars on the basis of average exchange rates throughout the period.
Assets and liabilities are translated into U.S. dollars on the basis of rates of
exchange as of the balance sheet dates. The Company has in the past and will
continue to closely monitor its currency exposure.

Operations of the Company's Food Distribution segment are concentrated in
France, and net sales, costs, assets and liabilities of these operations are
therefore denominated almost exclusively in French francs. Operations of the
Company's Grocery Products segment, however, are located in several European
countries, including Spain, Ireland, Belgium, the Netherlands and France. The
approximate percentage of the Company's operating income, before special
charges, attributable to operations in French francs was 59% in 1995, 67% in
1994 and 66% in 1993. A significant portion of the Company's remaining operating
income was attributable to operations denominated in Spanish pesetas, and, to a
lesser extent, Irish punts, and, prior to 1995, Italian lira. See Note 18 of
Notes to Consolidated Financial Statements. Unless otherwise indicated, all
percentage changes in segment operating results set forth below have been
calculated based on local currency amounts.

Beginning with the year ended December 31, 1995, and as reflected below
under ' -- 1995 Compared with 1994,' the Company has redefined the components of
its Food Distribution segment to consist of the Company's (i) Franprix network,
which consists of Etablissements Baud S.A. ('Baud'), which is the Company's
Franprix wholesale operation, and the Minimarche Group ('Minimarche'), which
owns and operates the Franprix and certain of the Leader Price retail stores
owned by the Company, and (ii) Leader Price network, which consists of
Distribution Leader Price S.A. ('Distribution Leader Price'), the Company's
Leader Price wholesale operation, and the Retail Leader Price Group ('Retail
Leader Price'), which operates a majority of the Leader Price retail stores
owned by the Company. This redefinition differs from the Company's earlier
definition of its lines of business for the years ended 1993 and 1994, which
classified the Company's wholesale operations under both the Franprix network
and the Leader Price network as one line of business and its retail operations
under both the Franprix network and the Leader Price network as another line of
business.

During the year ended December 31, 1995, the Company sold three
subsidiaries: Artigel GmbH & Co. Kg ('Artigel'), a 70% owned ice cream
manufacturer in Germany, and two wholly-owned ice cream distributors, Artic S.A.
('Artic') in Belgium and Artic France S.A.R.L. ('Artic France') in France.
Artigel, Artic and Artic France had combined net sales in 1995 and 1994 of $66.3
million and $75.6 million, respectively. Artigel, Artic and Artic France are at
times referred to collectively herein as the 'Northern Ice Cream Subsidiaries.'

During 1994 the Company sold four wholly-owned subsidiaries. In May 1994,
the Company sold Choky S.A. ('Choky'), a distributor of powdered drink products
in France. In July 1994, the Company disposed of two subsidiaries, Premier Is
A/S, ('Premier'), an ice cream manufacturer in Denmark, and Sodialim S.A.
('Sodialim'), an institutional food distributor in France. Gelati Sanson S.p.A.
('Sanson'), an ice cream manufacturer in Italy was sold in September 1994.
Choky, Premier, Sodialim and Sanson are referred to collectively as the 'Sold
Subsidiaries.' See ' -- 1995 Compared with 1994,' ' -- 1994 Compared with 1993'
and Note 4 of Notes to Consolidated Financial Statements.

RESULTS OF OPERATIONS

The following table provides information concerning the Company's net sales
and operating income, by segment, for fiscal years 1993 through 1995 and for the
three months ended March 31, 1996 and 1995. The approximate percentage changes
in net sales and operating income attributable to operations on a local currency
basis and to changes in exchange rates for such periods are shown in the tables
on pages 18, 20 and 22 below.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- --------------------------------------
1996 1995 1995 1994 1993
-------- -------- ---------- ---------- ----------
(UNAUDITED) (DOLLARS IN THOUSANDS)

<S> <C> <C> <C> <C> <C>
Net Sales:
Food Distribution................... $458,645 $376,953 $1,640,994 $1,356,532 $1,197,517
Grocery Products.................... 71,745 74,554 431,619 465,138 458,819
-------- -------- ---------- ---------- ----------
Total Net Sales................ $530,390 $451,507 $2,072,613 $1,821,670 $1,656,336
-------- -------- ---------- ---------- ----------
-------- -------- ---------- ---------- ----------
Operating Income:
Food Distribution................... $ 13,953 $ 12,668 $ 49,995 $ 51,653 $ 47,567
Grocery Products.................... 3,634 1,967 42,374 43,354 43,739
-------- -------- ---------- ---------- ----------
Segment Operating Income............ 17,587 14,635 92,369 95,007 91,306
Corporate Expenses(1)............... (2,841) (2,393) (10,317) (20,200) (19,370)
Amortization of Intangibles......... (731) (706) (2,740) (3,228) (3,145)
Special Charges..................... -- -- -- -- (8,650)
-------- -------- ---------- ---------- ----------
Total Operating Income......... $ 14,015 $ 11,536 $ 79,312 $ 71,579 $ 60,141
-------- -------- ---------- ---------- ----------
-------- -------- ---------- ---------- ----------
</TABLE>

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

(1) Excludes special charges in the year ended December 31, 1993 of
approximately $8.7 million for employee severance expense and a write-off
for excess office lease space.

THREE MONTHS ENDED MARCH 31, 1996 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1995

Net sales were approximately $530 million for the three-month period ended
March 31, 1996, an increase of 17% compared to the corresponding period in 1995,
or a 14% increase on a local currency basis. Excluding the net sales of the
Northern Ice Cream Subsidiaries for the three-month period ended March 31, 1995,
net sales would have increased 21%, or 17% on a local currency basis, in the
first three months of 1996 versus the same period in 1995.

The Food Distribution segment had net sales for the three-month period
ended March 31, 1996 of $459 million, an increase of 22%, or a 18% increase on a
local currency basis, over the comparable period in 1995. Wholesale sales
relating to the Franprix network declined by 4% primarily reflecting lower
volume due to a reduction in the number of franchisees in the network from 434
at March 31, 1995 to 401 at March 31, 1996. Also affecting wholesale sales was a
4% decline in sales to comparative Franprix stores from the first quarter 1996
versus the first quarter 1995. Net sales relating to the Leader Price network
increased by 54% in the first quarter of 1996 versus the first quarter of 1995,
relecting the additional volume created by the opening of 50 stores between
March 31, 1995 and March 31, 1996.

The Grocery Products segment had net sales in the first three months of
1996 of $72 million, a decrease of 4%, or 6% on a local currency basis, over the
comparable period in 1995. Excluding the net sales of the Northern Ice Cream
Subsidiaries for the three-month period ended March 31, 1995, net sales would
have increased 15%, or 12% on a local currency basis, in the first quarter of
1996 versus the first quarter of 1995. The increase was due to higher sales
experienced in all grocery product operations. Beverage operation sales
increased 19% due to strong sales to customers in France. Snack operation sales
increased 7% due to the introduction of price increases in the second quarter of
1995. The Company's Spanish ice cream operations, consisting of Interglas S.A.
('Interglas') and Helados La Menorquina S.A. ('La Menorquina'), also experienced
sales growth in the

first quarter of 1996 versus the comparable period in 1995. Net sales of
Interglas increased by 5% due to increased yogurt sales and price increases in
ice cream products. Net sales of La Menorquina increased by 10% primarily due to
stronger sales to hotels and restaurants.

Total combined segment operating income (operating income before corporate
expenses and amortization of intangibles) for the three-month period ended March
31, 1996 increased by 20%, or 17% on a local currency basis, over the comparable
period in the prior year. Excluding the segment operating income of the Northern
Ice Cream Subsidiaries in the first quarter of 1995, segment operating income
would have increased by 12%, or 10% on a local currency basis, in the first
three months of 1996 versus the comparable period in 1995.

Operating income of the Food Distribution segment increased by 10%, or 7%
on a local currency basis, in the first three months of 1996 compared to the
first three months of 1995. The 48% increase in Leader Price operating income,
primarily reflecting the increase in the number of Leader Price stores from 165
in March 1995 to 215 in March 1996, was partially offset by a 27% decline in
Franprix's operating income for the first quarter of 1996 versus the first
quarter of 1995. The shortfall in Franprix's operating income was due on the
wholesale level to a decline in sales of 7% and to a decline in gross margin due
to continuing competitive pressures in the Paris food distribution business. On
the retail level, the drop in operating income was due to increased business
taxes, higher repairs and maintenance expenditures, poor performance of a newly
opened Franprix store and one-time expenses associated with the closing of a
underperforming store owned by the Company.

Operating income of the Grocery Products segment increased by approximately
$1.6 million to $3.6 million in the first quarter of 1996 compared to $2.0
million for the comparable period in 1995. Excluding the Northern Ice Cream
Subsidiaries from 1995 results, operating income would have increased 22%, or
19% on a local currency basis, for the first quarter of 1996 versus the
comparable period in 1995. Improved performance at Interglas, Tayto Ltd.
('Tayto') and the Company's beverage operations were slightly offset by lower
operating income performance at La Menorquina. The increase in operating income
of 13% at Interglas was attributed to increased sales and higher ice cream
prices. Beverage operations posted an 11% increase in operating income due
primarily to a 15% increase experienced at Frisdranken Industrie Winters B.V.
('Winters') reflecting a 15% increase in net sales and greater production
efficiencies. Tayto, a manufacturer of potato chips and snacks in Ireland,
recorded a 6% increase in operating income due to a 7% increase in net sales. La
Menorquina experienced a small decline in operating income due to increased
selling expenses.

The following table details the approximate percentage changes in net sales
and operating income attributable to operations on a local currency basis and to
changes in exchange rates for the three-month period ended March 31, 1996 as
compared to the three-month period ended March 31, 1995.

<TABLE>
<CAPTION>
NET SALES OPERATING INCOME
--------------------------------- ---------------------------------
PERCENT CHANGE PERCENT CHANGE
ATTRIBUTABLE TO ATTRIBUTABLE TO
---------------------- TOTAL ---------------------- TOTAL
EXCHANGE PERCENT EXCHANGE PERCENT
OPERATIONS RATES CHANGES OPERATIONS RATES CHANGES
---------- -------- ------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Segment
Food distribution.................. 18% 4% 22% 7% 3% 10%
Grocery products................... (6) 2 (4) 77 8 85
Grocery products, excluding
Northern Ice Cream
Subsidiaries..................... 12 3 15 19 3 22
Total......................... 14 3 17 17 3 20
Total, excluding Northern Ice
Cream Subsidiaries.......... 17 4 21 10 2 12
</TABLE>

Net income for the first quarter of 1996 increased by approximately
$200,000 to $1.2 million, compared to $1.0 million in the first quarter of 1995.
The increase was primarily due to higher operating income of $2.5 million and
lower tax expense of $2.0 million offset by higher interest expense of $2.9
million and higher reported minority interest in earnings of $1.5 million. The
decrease in tax expense was primarily attributable to deferred tax adjustments
recorded in the first quarter of 1996.

The increase in interest expense was primarily due to higher interest rates and
increased indebtedness of the Company at March 31, 1996 versus March 31, 1995.
Total indebtedness, short-term debt, current portion of long-term debt and
long-term debt, was $290.8 million at March 31, 1996 versus $279.4 million at
March 31, 1995.

1995 COMPARED WITH 1994

Net sales were approximately $2.1 billion for the year ended December 31,
1995, an increase of 14% compared to 1994, or a 3% increase on a local currency
basis. Excluding the net sales of the Sold Subsidiaries for the year ended
December 31, 1994, net sales would have increased by 22%, or 10% on a local
currency basis, in 1995 versus 1994. Fourth quarter net sales of approximately
$527 million for the quarter ended December 31, 1995, represented an increase of
28%, or 20% on a local currency basis, from the comparable period in 1994. The
significant increase was primarily due to the expansion of the Leader Price
network as described below.

The Food Distribution segment had net sales for the year ended December 31,
1995 of $1.6 billion, an increase of 21%, or 9% on a local currency basis, over
the comparable period in 1994. Partially offsetting the sales increase was a
decline in net sales due to the 1994 disposition of two of the Sold
Subsidiaries, Choky and Sodialim. Excluding these two companies' net sales from
1994, net sales would have increased by 26%, or 13% on a local currency basis.
Wholesale and retail sales relating to the Franprix network declined by 3% in
1995 compared with 1994. Price cutting strategies from hypermarket competitors
and discount retailers along with sluggish consumer spending were responsible
for such decline. Consumers living in the Paris area have been commuting to
hypermarkets and other discount stores outside Paris to make major purchases of
groceries and other household items. Franprix stores, generally located in the
Paris metropolitan area, have been adversely affected by such trend. Sales
relating to the Leader Price network increased by 45% in 1995 versus 1994,
primarily reflecting the additional volume created by the opening of 50 stores
between December 31, 1994 and December 31, 1995. Leader Price sales were
especially strong in the fourth quarter of 1995 as reflected by an 87% increase
in net sales over the fourth quarter of 1994. The larger base of opened stores
in the fourth quarter of 1995 versus the fourth quarter of 1994 was primarily
responsible for the significant increase. The Company does not believe that
Franprix results were materially impacted by the growth of the Leader Price
network.

The Grocery Products segment had net sales in 1995 of $432 million, a
decrease of 7%, or a 15% decrease on a local currency basis, over the comparable
period in 1994. The decrease was primarily due to a decline in net sales due to
the 1994 disposition of two of the Sold Subsidiaries, Premier and Sanson.
Excluding these two companies' net sales from 1994, net sales for the Grocery
Products segment would have increased by 8%, or declined 2% on a local currency
basis in 1995, compared with 1994. Increased net sales in southern ice cream
operations, consisting of Interglas and La Menorquina, were substantially offset
by lower sales in the beverage and ice cream operations in northern Europe and
the Company's snack operations in Ireland. La Menorquina, the Company's ice
cream operation in mainland Spain, posted a 14% increase in net sales primarily
due to significantly higher export and supermarket sales in 1995 versus 1994.
Interglas reported a 6% increase in net sales due to successful new product
introductions, strong yogurt sales and lower discounts offered to distributors.
The Company's ice cream operations in Belgium and Germany, Artic and Artigel,
respectively, recorded a combined decrease in net sales of 22% from the prior
year. Artigel's decrease was attributable to lower sales to major distributors
which were diversifying their purchasing portfolios in order to reduce reliance
on any single source. Artic's decline was due to lower export sales and reduced
sales to distributors, due in part to overstock of inventories at the
distributor level carried over from the fourth quarter of 1994. An 8% decrease
in net sales at Winters in the Netherlands was primarily responsible for the
decrease in the total beverage operation sales of 3% during 1995 versus 1994.
Winters' decline was primarily due to unusually high 1994 sales of iced tea
products to a single customer related to product promotions not repeated by this
customer in 1995. Tayto, the leading potato chip and snack company in Ireland,
reported a 2% reduction of net sales due to increased promotional activity by
competitors.

Total combined segment operating income (operating income before corporate
expenses and amortization of intangibles) for the year ended December 31, 1995
decreased by 3% to $92 million, or an 11% decrease on a local currency basis,
over the comparable period in the prior year. Excluding the segment operating
income of the Sold Subsidiaries for the year ended December 31, 1994, segment
operating income would have increased by 13%, or 3% on a local currency basis,
in 1995 versus 1994.

Operating income of the Food Distribution segment declined 3%, or 13% on a
local currency basis, in 1995 compared to 1994. Excluding Choky and Sodialim,
segment operating income increased 4%, or decreased 7% on a local currency
basis. The 32% increase in the number of Leader Price stores from 156 in
December 1994 to 206 in December 1995 was responsible for a 31% increase in
Leader Price operating income. Continued margin pressure and overall volume
decline in the Franprix network was responsible for a 22% decline in operating
income for the combined results of both Baud and Minimarche.

Operating income of the Grocery Products segment decreased by approximately
$1 million to $42 million in 1995 compared to 1994. Excluding Premier, Sanson
and the sale of idle property in Puerto Rico from 1994 results, operating income
would have increased by 16% on a local currency basis in 1995 versus 1994. Also
included in 1994 operating income of the Grocery Products segment was
approximately $2 million in accelerated depreciation expenses. La Menorquina and
Interglas reported increases in operating income of 28% and 3%, respectively,
primarily related to sales increases of 14% and 6%, respectively, greater
production efficiencies and better expense controls experienced during 1995
versus the prior year. La Menorquina also benefitted from the recognition of
previously deferred exchange gains related to export sales. Offsetting these
improvements in such companies' operating profit was a decline in gross margins.
Such decline was due at Interglas to increases in raw material prices and higher
packaging costs and due at La Menorquina to below average weather in mainland
Spain which resulted in lower sales of high margin ice cream novelties. The
northern ice cream operations, Artigel and Artic, reported a 1995 loss of $3
million versus a 1994 loss of $5 million. Included in the 1994 net loss was $3.6
million in special bad debt and restructuring charges. See ' -- 1994 Compared
with 1993.' Excluding these special reserves, northern ice cream operating
income would have declined by $1.6 million, primarily reflecting a 22% decline
in net sales in 1995 versus 1994. Winters experienced a 23% decline in operating
income in 1995 versus 1994, primarily due to decreased net sales of 8%, lower
margins resulting from increased competition and higher labor and freight costs
associated with increased export sales outside Europe.

The following table details the approximate percentage changes in net sales
and operating income attributable to operations on a local currency basis and to
changes in exchange rates for the year ended December 31, 1995 as compared to
the year ended December 31, 1994.

<S> <C> <C> <C> <C> <C> <C>
Segment
Food distribution.................. 9% 12% 21% (13%) 10% (3%)
Food distribution, excluding Sold
Subsidiaries..................... 13 13 26 (7) 11 4
Grocery products................... (15) 8 (7) (8) 6 (2)
Grocery products, excluding Sold
Subsidiaries..................... (2) 10 8 16 10 26
Total......................... 3 11 14 (11) 8 (3)
Total, excluding Sold
Subsidiaries................ 10 12 22 3 10 13
</TABLE>

Net income for 1995 increased by $4.1 million to $15.4 million compared to
$11.3 million in 1994. The increase was primarily due to lower tax expense of
$15.5 million, improved operating income of $7.7 million and lower net interest
expense of $.5 million, offset by a decrease of other income of $6.5

million, higher reported minority interest in earnings of $10.1 million and the
recognition of an extraordinary loss of $3.1 million.

During the year ended December 31, 1995, the Company sold the Northern Ice
Cream Subsidiaries. Additionally, the Company ceased operations of its
subsidiary, Dairyworld S.A., a Swiss trader of bulk dairy products. The Company
recorded pre-tax gains on such sales and dispositions of approximately $10.5
million, which have been included in other income. The Company also recorded
charges relating to non-cash exchange losses recorded in compliance with SFAS
No. 52 in the amount of approximately $4.8 million. During 1995, the Company
determined that advances from foreign subsidiaries were no longer of a long-term
investment nature. Additionally, certain advances were either forgiven in
connection with the sale of certain subsidiaries, converted into dividends or
settled through other non-cash transactions. Accordingly, the translation
adjustments related to these advances, previously included in cumulative
translation adjustment, have been included in other income for the year ended
December 31, 1995. Also during 1995, the Company sold other investments for
approximately $467,000, recorded equity in earnings from minority-owned Leader
Price stores of approximately $331,000, and received additional proceeds of
$703,000 from the 1994 sale of Choky, S.A. which have been included in other
income.

During the year ended December 31, 1994, the Company sold the Sold
Subsidiaries. The Company recorded pre-tax gains on such sales of approximately
$12.1 million in 1994 which have been included in other income. Also during
1994, the Company sold other investments for a pre-tax gain of approximately
$1.6 million which has also been included in other income.

The decrease in tax expense was attributable to taxes related to asset
dispositions recorded in 1994 of $8.2 million and a reversal of tax contingency
reserves in 1995 of $10.9 million.

During the year ended December 31, 1995 the Company recorded an
extraordinary loss of $3.1 million relating to the write-off of certain deferred
debt issuance costs and other costs incurred relating to long-term debt repaid
prior to maturity. The pre-tax amount of $4.6 million was recorded net of an
income tax benefit of $1.5 million.

1994 COMPARED WITH 1993

Net sales were approximately $1.8 billion for the year ended December 31,
1994, an increase of 10% compared to the corresponding period in 1993, or a 9%
increase on a local currency basis. Excluding the net sales of the Sold
Subsidiaries for the years ended December 31, 1994 and December 31, 1993, net
sales would have increased by 17%, or 15% on a local currency basis, for 1994
versus 1993.

The Food Distribution segment had net sales for the year ended December 31,
1994 of $1.4 billion, an increase of 13%, or an 11% increase on a local currency
basis, over the comparable period in 1993. Wholesale operations, consisting of
Baud and Distribution Leader Price, posted a sales increase of 11% due to growth
of the Leader Price network of stores. Sales in retail operations, consisting of
Minimarche and Retail Leader Price, increased 28% in 1994 versus 1993.
Substantially all of this increase was due to increased volume resulting from
the opening of 48 Leader Price stores. Offsetting these sales increases was a
decline in net sales due to the disposition of two of the Sold Subsidiaries. The
Company sold Choky and Sodialim in May and July of 1994, respectively. Excluding
these two companies from both 1994 and 1993, net sales would have increased by
17% for 1994 versus 1993.

The Grocery Products segment had net sales for the year ended December 31,
1994 of $465 million, an increase of 1%, or a 2% increase on a local currency
basis, over the comparable period in 1993. Increases in beverage, snacks, and
ice cream/dessert operations in Spain and Germany were largely offset by
decreases in ice cream operations in Belgium and France. Sales were also
affected by the sale of two of the Sold Subsidiaries, Premier and Sanson, during
the third quarter of 1994. Winters and Sunco N.V. ('Sunco'), the Company's
beverage operation in Belgium, posted an aggregate 20% sales increase due to
favorable summer weather conditions and strong sales of iced tea in Belgium. La
Menorquina posted a 22% increase in net sales due to the recovery in tourism and
increased market coverage consisting of new distributors and additional points
of sale. Artigel, an ice cream producer in

Germany, experienced a sales increase of 10% due to favorable weather during the
peak ice cream season and new customers obtained in 1994. Tayto, the leading
snacks company in Ireland, recorded an 8% increase in net sales due to strong
sales of new products and improvement in the Irish economy. Artic, an ice cream
distributor in Belgium and France, reported a 25% decline in net outside sales,
primarily due to lower sales volume to certain customers. Excluding the sales of
Premier and Sanson in 1993 and 1994, net sales for the Grocery Products segment
would have increased 9% in the year ended December 31, 1994 versus the
corresponding period in 1993.

Total combined segment operating income (operating income before corporate
expenses and amortization of intangibles) for the year ended December 31, 1994
increased by 4% to $95.0 million, also 4% on a local currency basis, over the
comparable period in the prior year. Excluding the segment operating income of
the Sold Subsidiaries for the years ended December 31, 1994 and December 31,
1993, segment operating income would have increased by 5%, on both an actual and
local currency basis, in 1994 versus 1993.

Operating income of the Food Distribution segment increased by 9%, or 7% on
a local currency basis, for the year ended December 31, 1994 compared to the
year ended December 31, 1993. The increase, excluding Choky and Sodialim, was
10%, primarily relating to the increase in Leader Price stores and improved
gross margins experienced at the Leader Price wholesale level.

Operating income of the Grocery Products segment decreased by 1% to $43.4
million, or a 1% increase on a local currency basis, during 1994 versus 1993.
Excluding Premier and Sanson, operating income would have decreased 1% in 1994
versus 1993. La Menorquina increased operating income by 64% for the year ended
December 31, 1994, primarily due to a 22% increase in net sales and lower
selling and administration expenses. Operating income from beverage operations
improved by 13% over the prior year primarily due to increased sales volume and
improved overhead absorption. A 7% increase in Tayto's operating income was
primarily due to increased sales volume in 1994 over 1993. Artigel posted a 59%
decline in operating income during 1994 versus 1993 due to a reserve for
possible uncollectible receivables from certain distributors. Excluding this bad
debt reserve, Artigel would have posted a 59% increase in operating income for
1994 versus 1993 due to higher sales volume and improved operating margins as
compared with the prior year. Artic reported a $4.8 million decrease in 1994's
operating income versus 1993. Artic's decline was primarily due to recognition
of $2.6 million in restructuring charges consisting of severance expense,
writeoffs of obsolete inventory and additional plant shut down expenses. Also
affecting Artic's operating income in 1994 versus 1993 were lower gross margins
due to price increases from suppliers and poor results in key ice cream selling
months of May and June due to unfavorable weather conditions. The Company also
sold idle property in Puerto Rico during the third quarter of 1994, resulting in
a gain of approximately $1.5 million which has been included in operating income
for 1994.

The following table details the approximate percentage changes in net sales
and operating income attributable to operations on a local currency basis and to
changes in exchange rates for the year ended December 31, 1994 as compared to
the year ended December 31, 1993.

<TABLE>
<CAPTION>
NET SALES OPERATING INCOME
--------------------------------------- ---------------------------------------
PERCENT CHANGE PERCENT CHANGE
ATTRIBUTABLE TO ATTRIBUTABLE TO
---------------------- TOTAL ---------------------- TOTAL
EXCHANGE PERCENT EXCHANGE PERCENT
OPERATIONS RATES CHANGES OPERATIONS RATES CHANGES
---------- -------- ------------- ---------- -------- -------------

<S> <C> <C> <C> <C> <C> <C>
Segment
Food distribution......... 11% 2% 13% 7% 2% 9%
Grocery products.......... 2 (1) 1 1 (2) (1)
Total................ 9 1 10 4 -- 4
</TABLE>

Net income for the year ended December 31, 1994 increased by $10.3 million
to $11.3 million compared to 1993. Excluding the effect of special charges of
$8.7 million in 1993, net income increased by $1.6 million as compared to 1993.
The increase was attributable to increases in operating income before special
charges of $2.8 million, other income due to asset sales of $13.1 million, and

lower net interest expense of $3.6 million, which was partially offset by
increased tax expense of $16.6 million and increased minority interest in
earnings of $1.3 million.

Net interest expense declined primarily due to a decrease in outstanding
debt resulting from the application of the proceeds from the sales of the Sold
Subsidiaries and the effect of the partial elimination of the Sold Subsidiaries'
1994 net interest expense.

Income tax expense, as a percentage of income from continuing operations,
increased principally due to taxes related to gains from dispositions.

SEASONALITY

The Company's Food Distribution segment shows relatively even sales and
operating income throughout the year. The Grocery Products segment shows greater
seasonality, with the majority of sales and operating income earned during the
second and third quarters of the year. Results of the Grocery Products segment
are affected by summer weather conditions which impact sales of ice cream,
dessert and soft drink products. While the working capital needs of the Food
Distribution segment remain stable throughout the year, the working capital
levels of the Grocery Products segment increase during the second and third
quarters because of higher inventories and receivables.

LIQUIDITY AND CAPITAL RESOURCES

The Company incurred significant indebtedness in connection with the
Acquisition. All of the Company's original Acquisition-related indebtedness has
been repaid. Management believes that the Company's current level of
indebtedness, amounting to approximately $290.8 million at March 31, 1996, of
which $223.4 million represents long-term debt and $67.4 million represents
short-term debt and current portion of long-term debt, is such that no
significant restrictions on future earnings or liquidity exist and that the
Company's existing level of indebtedness will not have any adverse impact on its
operating flexibility. The Company, however, continues to monitor its level of
indebtedness.

Working capital financing is generally available to each operating
subsidiary of the Company through short-term lines of credit and overdraft
facilities from local banks. At March 31, 1996, TLC Beatrice's subsidiaries had
lines of credit denominated in local currencies totalling $162.2 million, of
which $108.5 million remained unused. The Company believes that cash flow from
operations combined with local credit facilities are sufficient, in the
aggregate, to meet anticipated working capital and capital spending
requirements, as well as the Company's debt service requirements for the
foreseeable future, including interest payments.

During the year ended December 31, 1995, the Company sold the Northern Ice
Cream Subsidiaries. Additionally, the Company ceased operations of its
subsidiary, Dairyworld S.A., a Swiss trader of bulk dairy products. The Company
recorded pre-tax gains on such sales and dispositions of approximately $10.5
million, which have been included in other income. The Company also recorded
charges relating to non-cash exchange losses recorded in compliance with SFAS
No. 52 in the amount of approximately $4.8 million. During 1995, the Company
determined that advances from foreign subsidiaries were no longer of a long-term
investment nature. Additionally, certain advances were either forgiven in
connection with the sale of certain subsidiaries, converted into dividends or
settled through other non-cash transactions. Accordingly, the translation
adjustments related to these advances, previously included in cumulative
translation adjustment, have been included in other income for the year ended
December 31, 1995. During the year ended December 31, 1994 the Company sold the
Sold Subsidiaries. The Company recorded pre-tax gains on such sales of
approximately $12.1 million in 1994 which have been included in other income.
The Company recorded after-tax gains on such sales of approximately $3.9
million. Also during 1994, the Company sold other investments for a pre-tax gain
of approximately $1.6 million which has also been included in other income.

At March 31, 1996, the Company had working capital of $34.2 million,
compared to working capital of $42.3 million at December 31, 1995.

At December 31, 1995, the Company had working capital of $42.3 million,
compared to working capital of $8.8 million at December 31, 1994. The increase
was primarily due to repayment of $40.6 million in short-term debt as part of
the refinancing described below.

On October 2, 1995, TLC Beatrice sold $175 million aggregate principal
amount of 11.5% Senior Secured Notes due October 1, 2005 (the 'Notes'). Interest
on the Notes is payable on April 1 and October 1 of each year, commencing April
1, 1996. The Notes rank pari passu in right of payment with all unsubordinated
borrowings of TLC Beatrice and are secured by a security interest in a portion
of the capital stock of certain of TLC Beatrice's subsidiaries and certain
intercompany indebtedness. The Indenture relating to the Notes (the 'Indenture')
permits TLC Beatrice's subsidiaries to incur additional indebtedness under
certain circumstances, including up to $25 million for general corporate
purposes under a Facility Agreement (the 'Credit Agreement'), described below,
among Banque Paribas, Smurfit Paribas Bank Limited and TLC Beatrice
International (Irish) Holdings Limited ('Irish Holdings') which is guaranteed by
TLC Beatrice.

The Notes are redeemable, at the option of TLC Beatrice, in whole or in
part, at any time on or after October 1, 2000, at the redemption prices set
forth in the Indenture plus accrued interest to the redemption date. In
addition, upon one or more Public Equity Offerings (as defined in the Indenture)
consummated prior to October 1, 1998, TLC Beatrice may at its option redeem up
to $52.5 million aggregate principal amount of Notes from the proceeds thereof
at 110% of the principal amount thereof plus accrued interest to the date of
redemption.

TLC Beatrice is required to offer to repurchase all outstanding Notes at
101% of principal amount plus accrued interest promptly after the occurrence of
a Change of Control (as defined in the Indenture) with respect to TLC Beatrice.
A Change of Control will generally be deemed to occur if (i) the Permitted
Holders (as defined in the Indenture) shall beneficially own in the aggregate
less than 20% of the aggregate voting power of all classes of Voting Stock (as
defined in the Indenture) of TLC Beatrice; or (ii) any person or entity (other
than a Permitted Holder) shall beneficially own either more than 50% of the
aggregate voting power of all classes of Voting Stock of TLC Beatrice or shares
of Voting Stock of TLC Beatrice representing aggregate voting power greater than
that represented by the aggregate shares of Voting Stock then beneficially owned
by the Permitted Holders; or (iii) any such person or entity shall elect a
majority of the Board of Directors of TLC Beatrice. There can be no assurance
that TLC Beatrice will have sufficient funds to repay the Notes should a Change
of Control occur.

Proceeds from the issuance of the Notes were used to repay: (i) a 485
million French franc (approximately $98.6 million at the September 30, 1995
foreign exchange rate) term loan (the 'Term Loan') due September 2001 of TLC
Beatrice International Holdings France S.A. ('TLC France'), bearing interest at
the Paris Interbank Offering Rate ('PIBOR') plus 1.75%; (ii) a 100 million
French franc (approximately $20.3 million at the September 30, 1995 foreign
exchange rate) subordinated term loan (the 'Subordinated Loan') due March 2002
of TLC France, bearing interest at PIBOR plus 3.5%, and a redemption fee of
approximately $2 million which was due when the Subordinated Loan was repaid;
(iii) 46 million French francs (approximately $9.3 million at the September 30,
1995 foreign exchange rate) and $16.3 million outstanding under a 137 million
French franc revolving loan of Irish Holdings due October 31, 1995, bearing
interest at LIBOR plus 1.30% and (iv) $15 million outstanding under a term loan
due January 1996 of TLC Beatrice, bearing interest at 7.69%, which loan was
guaranteed by certain subsidiaries of TLC Beatrice. The remaining proceeds were
used for general corporate purposes. The Company recorded charges of $4.6
million pre-tax or $3.1 million after-tax in the quarter ended December 31, 1995
relating to the repayment of these facilities which is reflected as an
extraordinary item.

On October 6, 1995, Irish Holdings entered into the Credit Agreement
pursuant to which Irish Holdings can initially borrow up to the lower of (a) 16
million Irish Punts (approximately $25.9 million at the then-prevailing foreign
exchange rate) and (b) an amount calculated as follows: 28 million Irish Punts
plus any share capital contributed in cash to Tayto, Irish Holdings' principal
operating subsidiary, less the cumulative amount of cash dividends paid and
management fees and intercompany loans made by Tayto to Irish Holdings from the
date of the Credit Agreement. The amount available for borrowing under the
Credit Agreement is reduced to (i) 9.6 million Irish Punts (approximately $15.4
million at the December 31, 1995 foreign exchange rate) from February 1, 1999
through January 31, 2000 and (ii) 3.2 million Irish Punts (approximately $5.1
million at the December 31, 1995 foreign exchange rate) from February 1, 2000
through January 31, 2001, at which time all amounts outstanding must be repaid.
Interest on borrowings in Irish Punts is payable at the rate of the Dublin
Interbank Offering Rate ('DIBOR') plus 1.65%. The Credit Agreement also provides
for an alternative currency option pursuant to which Irish Holdings can borrow
in certain other currencies at an interest rate equal to LIBOR plus 1.65%. The
Credit Agreement contains restrictions on certain activities of Irish Holdings
and Tayto, including, among other things, the incurrence of indebtedness or
encumbrances, entering into agreements other than in the ordinary course of
business, the making of certain capital expenditures and the acquisition or sale
of assets outside the ordinary course of business. In addition, Irish Holdings
and Tayto are required to maintain certain financial ratios. The Credit
Agreement is guaranteed by TLC Beatrice and secured by a pledge of the common
stock of Tayto owned by Irish Holdings. As of March 31, 1996, approximately $5.5
million (at the then-prevailing foreign exchange rate), was borrowed under the
Credit Agreement.

In the three months ended March 31, 1996, cash used in operating activities
was $24.4 million. For the years ended December 31, 1995, 1994 and 1993, cash
provided by operating activities was $75.8 million, $48.3 million and $18.8
million, respectively.

In the three months ended March 31, 1996, cash provided by financing
activities was $3.7 million, primarily reflecting approximately $4.0 million in
net proceeds from the issuance of short-term debt.

In the year ended December 31, 1995, cash provided by financing activities
was $49.3 million, primarily reflecting net proceeds from the issuance of the
Notes, offset by the repayments of $136.4 million and $6.4 million of long-term
and short-term indebtedness, respectively.

In 1994, cash used in financing activities was $79.4 million, primarily
reflecting the net repayments of short-term indebtedness of $41.2 million and
long-term indebtedness of $34.7 million.

In 1993, cash provided by financing activities was $24.3 million. Net
proceeds from issuance of long-term and short-term debt of $36.5 million was
reduced by pro rata loans made to minority interests of $11.6 million. Loans by
certain of TLC Beatrice's subsidiaries to minority interests represent a
tax-efficient method of distributing earnings to stockholders. Such loans are
also made to the Company as majority stockholder on a pro rata basis. In 1995,
the Company netted these loans to a minority interest partner (previously
recorded in noncurrent assets) against the respective minority interests. The
Company expects the loans to be repaid through the application of dividend
payments anticipated in January 1997. See 'Risk Factors -- Holding Company
Structure; Restrictions on Distributions.'

In the three months ended March 31, 1996, cash used in investing activities
was $17.2 million, primarily reflecting capital expenditures. The Company
estimates its 1996 net capital expenditures will be approximately $57 million,
primarily related to (i) the construction of a beverage manufacturing facility
in France, (ii) the construction of a warehouse in Ireland in order to
consolidate Tayto's warehouse operations and (iii) anticipated Leader Price
store openings. During the first quarter of 1996, new French regulations were
enacted which place certain restrictions on the opening of new food stores over
3,000 square feet in size. The Company can give no assurances as to how the
regulations will be enforced. As many of the Company's planned new store
openings for 1996 are already in progress, the Company does not anticipate that
1996 planned store openings will be significantly affected. However, future
store openings could be adversely affected by the new regulations.

For the year ended December 31, 1995, cash used in investing activities was
$83.8 million, primarily reflecting disbursements for net capital expenditures
of $60.9 million, bond investments relating to the Canary Island tax incentive
program (described below) of $10.4 million and equity ownership stakes in Leader
Price stores of $8.7 million. For the year ended December 31, 1994, cash
provided by investing activities was $48.6 million, primarily as a result of the
proceeds received from the sale of the Sold Subsidiaries of $87.4 million
principally offset by net capital expenditures. Cash used in investing
activities was $59.6 million in 1993, primarily reflecting capital expenditures.

The 1995 net capital expenditures of approximately $60.9 million were
applied primarily toward the maintenance and further expansion of the Company's
ice cream sales in Spain and distribution network in France and the costs of new
store openings, which primarily consisted of Leader Price stores. Net capital
expenditures during the year ended December 31, 1994 totalled approximately
$40.5 million, as compared to $52.6 million for the comparable 1993 period. The
reduction in 1994 net capital expenditures reflects the disposition of the
corporate aircraft and the sale of idle property in Puerto Rico.

Certain countries in which the Company operates have in the past imposed
temporary exchange controls which restricted payments from the Company's
subsidiaries. No such exchange controls are currently in effect or, to the
knowledge of the Company, proposed. When such exchange controls were in effect,
the impact on the Company's operations was not material.

The Company, including in certain circumstances TLC Beatrice, is a party to
separate stockholder agreements with minority stockholders. Certain of these
minority stockholders have the option to require the Company to purchase their
interests in certain of the Company's subsidiaries in whole or in part at any
time, and certain of these minority stockholders have the option to require the
Company to purchase their interests in certain of the Company's subsidiaries in
whole or in part on or after January 1, 1997 or upon cessation of such
stockholder's employment with the Company for any reason. Solely for purposes of
illustration, if all of such options were exercised in full, using the formula
that would be in effect on January 1, 1997, the Company's aggregate purchase
obligation in respect of the interests in such subsidiaries is estimated to be
approximately $35 million as of December 31, 1995. Such amount would be likely
to increase or decrease depending on when such options were exercised. In
addition, certain other minority stockholders have the right to require the
Company to repurchase their shares in Distribution Leader Price and Retail
Leader Price, and the Company has the right to acquire such shares, on or after
July 1, 1997. If the put option is exercised after July 1, 1997, as long as the
Notes remain outstanding, the purchase price for such shares is payable 25% on
the closing of the purchase of such shares, 45% on the first anniversary of such
closing and 30% on the second anniversary of such closing, together with
interest thereon at PIBOR. After repayment of the Notes, the purchase price for
such shares is payable 50% on the closing of the purchase of such shares and 50%
on the first anniversary of such closing, without interest. Solely for purposes
of illustration, if such other minority stockholders were to have exercised
their options to require the Company to purchase all their shares in such
subsidiaries on December 31, 1995, using the formula that would be in effect on
July 1, 1997, the total purchase price for such shares would have been
approximately $91 million. Distribution Leader Price and Retail Leader Price
have shown substantial earnings growth during the past three years. If such
companies' earnings were to continue to increase prior to the exercise of such
option, as to which no assurance can be given, the purchase price would increase
materially. Due to the manner in which such purchase price would be calculated,
the Company is not currently able to quantify what the purchase obligation would
be. However, the Company believes that such purchase obligation would be
material. See 'Business -- Relationships with Minority Stockholders' and Note 6
of Notes to Consolidated Financial Statements.

If any or all of such minority stockholders require the Company to purchase
their interest in certain subsidiaries of the Company pursuant to the put rights
described above, the Company believes cash flows from operations, together with
the Company's potential financing sources, will be sufficient to meet any
purchase obligation that may result.

As a consequence of the termination of certain long-standing income tax
incentives in the Canary Islands as of December 31, 1991, transition rules were
promulgated by the Spanish and Canary Island provincial governments. To preserve
the tax advantages granted under these prior incentives, the

transition rules required investments by TLC Beatrice's Canary Islands
subsidiary, Interglas, in certain approved Canary Islands' investments. The
unfulfilled investment requirement aggregated approximately $10.7 million at
December 31, 1995 and must be made in 1996. A variety of investments are
eligible, including productive machinery and equipment and/or local government
interest-bearing bonds. To the extent the investment requirement is met by
investment in productive machinery and equipment, Interglas is not entitled to
claim the 25% investment tax credit normally allowable on such machinery or
equipment. To the extent the requirement is satisfied by an investment in local
government bonds, they must be held for a minimum of five years. For 1995,
Interglas satisfied its investment requirement under the transition rules of
approximately $10.4 million entirely from internal cash flow. If the Company
cannot meet its investment requirements, then it would be required to pay taxes
in an amount equal to 35% of its outstanding investment obligation. The Company
has provided for deferred income taxes of approximately $3.7 million on its
outstanding investment obligation under the transition rules.

In addition, the Canary Islands instituted new tax incentives beginning in
1994. Interglas has taken advantage of these incentives and is required to make
qualifying investments of $17.8 million by 1997 and an additional $17.5 million
by 1998. The Company has provided for deferred income taxes on these
requirements equal to the 35% tax rate on $35.3 million, or approximately $12.4
million, in the event that the required investment obligations are not
fulfilled. The Company can give no assurances that changes in existing Canary
Islands tax rules and requirements will not occur or that the Company will be
able to make qualifying investments in the future. By reason of these
uncertainties, the Company has recorded the potential full deferred tax
liability. If the Company can fulfill these investment requirements, the
deferred tax liability may be reversed depending upon relevant facts and
circumstances existing at the time.

TLC Beatrice is a defendant in lawsuits with Carlton Investments alleging,
among other things, a breach of the Stockholders' Agreement, waste of corporate
assets and breaches of fiduciary duties. TLC Beatrice intends to vigorously
defend against these actions and believes these allegations to be without merit.
TLC Beatrice's outside litigation counsel has advised TLC Beatrice that at this
time the extent of TLC Beatrice's liability, if any, is not determinable. The
ultimate outcome that may result from these matters may have a material effect
on TLC Beatrice's consolidated financial condition and/or results of operations.
See 'Risk Factors -- Litigation with Carlton Investments' and 'Business -- Legal
Proceedings.'

TAX MATTERS

TLC Beatrice is presently a personal holding company within the meaning of
Section 542 of the Internal Revenue Code of 1986, as amended. It could therefore
be subject to a special United States federal income tax (in addition to the
regular corporate tax) under certain circumstances. If applicable, the
additional tax is imposed at a rate of 28% through 1992, and 39.6% thereafter,
based on such corporation's taxable income (computed after certain adjustments,
including a reduction for capital gains, the regular federal income tax and a
limited use of the net operating loss deduction) reduced by certain dividends
paid ('undistributed personal holding company income'). For the one-month period
ended December 31, 1987 and the eight years ended December 31, 1995, the Company
had no undistributed personal holding company income and therefore the tax did
not apply.

Currently, many of the countries in which the Company's subsidiaries are
located impose a withholding tax of approximately 5% to 15% on dividends paid by
such subsidiaries to the Company. Such taxes may generally be credited against
federal income taxes payable by the Company in the United States. However,
because the Company does not have significant taxable income in the United
States, it may be unable to use any or all of such credits.

BUSINESS

The Company is an international food and grocery products company with
operations in western Europe. The Company's operations are comprised of two
segments: Food Distribution and Grocery Products. Food Distribution operations
are concentrated in the wholesale and retail distribution of dry groceries,
beverages, household products and frozen food in France. Through its Grocery
Products segment, the Company manufactures and markets ice cream and dessert
products, potato chips, snacks and beverages principally in selected western
European markets. The Company's business is conducted principally through 11
entities (the 'Principal Companies') and their respective subsidiaries, which
have sales in over 20 countries and manufacturing facilities in six countries.

The table below sets forth the percentage of TLC Beatrice's direct and
indirect ownership, and country of organization, of each of the Principal
Companies:

<TABLE>
<CAPTION>
PERCENTAGE COUNTRY
PRINCIPAL COMPANY OWNERSHIP OF ORGANIZATION
- ---------------------------------------------------------------- ---------- -----------------------

<S> <C> <C>
FOOD DISTRIBUTION
Franprix
Etablissements Baud S.A. (wholesale operations) 97.0% France
Minimarche Group (retail operations) 74.0 France
Leader Price
Distribution Leader Price S.A. (wholesale operations) 51.0 France
Retail Leader Price Group (retail operations) 51.0 France
GROCERY PRODUCTS
Ice Cream
Helados La Menorquina S.A. 77.4 Spain
Interglas S.A. 60.0 Spain (Canary Islands)
Potato Chips and Snacks
Tayto, Ltd. 97.4 Ireland
Beverage
Frisdranken Industrie Winters B.V. 100.0 Netherlands
Sunco N.V. 80.0 Belgium
Bireley's California Orange (Thailand) Co. Ltd. 87.9 Thailand
Saint Alban Boissons S.A. 95.0 France
</TABLE>

The Company's operations are decentralized, enabling local management to
develop and implement business plans tailored to local market conditions.
Generally, the management of each subsidiary has primary responsibility for such
subsidiary's day-to-day operations. Management of each individual operating
company is responsible for attaining financial and other goals established
jointly with, and then monitored by, corporate and segment management. In the
case of Baud, Bireley's California Orange (Thailand) Co. Ltd. ('Bireley's'),
Saint Alban Boissons S.A., Distribution Leader Price, Interglas, La Menorquina,
Minimarche, Retail Leader Price, Sunco and Tayto, management includes local
minority stockholders. See 'Business -- Relationships with Minority
Stockholders.'

For a discussion of certain business segment and geographic data, see Note
18 of Notes to Consolidated Financial Statements.

FOOD DISTRIBUTION

The Company is a major wholesale and retail distributor of dry groceries,
beverages, household products and frozen food, operating through its Franprix
and Leader Price networks. The Company's Franprix network consisted at March 31,
1996 of 401 supermarkets and superettes in the Paris metropolitan area. The
Leader Price network consisted at March 31, 1996 of 215 stores. The objectives
of the Company's Food Distribution segment are (1) to preserve its leading
position in the Paris metropolitan area under the Franprix name and (2) to
capitalize on the trend toward discount retailing by increasing its operations
throughout France and by entering neighboring European markets under the Leader
Price name.

FRANPRIX

Franprix stores are generally neighborhood supermarkets and superettes
carrying an assortment of 4,000 to 6,000 grocery products. Of the 401
supermarkets and superettes in the Franprix network, 31 are owned and operated
by Minimarche and 370 are owned and operated by franchisees. The Franprix stores
are supplied with dry groceries, beverages, household products and frozen food
by Baud, the Company's wholesale distribution subsidiary. Baud distributes such
products on a wholesale basis almost exclusively to Franprix stores, and
distributes a small amount of such products to smaller, unaffiliated stores.
Based on published industry data for 1995, the Franprix network has the largest
number of supermarkets in the Paris metropolitan area, approximately 25% of the
total number, and the most supermarket selling space in the supermarket category
(supermarkets are categorized as those stores with 4,000 to 25,000 square feet
of selling space). At present, approximately one-half of the Franprix stores are
superettes, with a size of 3,800 square feet. Franprix has no stores in the
hypermarket category, which are stores in excess of 25,000 square feet of
selling space.

The Paris metropolitan area constitutes the largest consumer market in
France, with approximately ten million people. The Franprix outlets are
generally in densely populated areas where there is limited direct competition
from larger supermarkets and hypermarkets. The Company believes that Baud's
strong competitive position in the highly visible Paris market has enabled it to
negotiate attractive discounts, rebates and promotional allowances from food and
grocery manufacturers.

Under the Company's franchise agreements with its Franprix franchisees, the
franchisees are obligated to purchase their dry groceries, beverages, household
products and frozen food exclusively from the Company and are required to use
the Franprix name. The franchisees are free to purchase other goods from other
sources. The Company does not receive any franchise or other fees from its
Franprix franchisees. The consideration the Company receives is reflected in the
prices charged for the products purchased. The Company has a right of first
refusal on franchised Franprix stores if a franchisee desires to sell his store
to a third party.

The Company provides marketing support to the Franprix stores, including
advice on store layout and appearance, product mix and promotional materials.
The Company also promotes a program called 'Super Discount', under which the
Company offers 100 to 150 items at discount prices to increase traffic and
purchases in the Franprix stores. Forward buying of these items, along with
promotional allowances from suppliers, enable both the Company and Franprix
stores to maintain their margins on Super Discount goods despite the lower
prices offered to consumers.

In addition to selling brand name products, the Company markets goods under
several private label brand names (including Leader Price), which accounted for
approximately 28% of Baud's total net sales in 1995. Private label products,
which are generally priced below comparable brand name products to appeal to
price sensitive customers, provide the Company with additional leverage in
negotiations with brand suppliers.

Franprix franchisees are generally independent entrepreneurs. Many have a
long affiliation with the Baud organization. Of the 401 stores in the Franprix
network, 31 are owned by the Company and 11 are owned by children of the late
Jacques Baud, a former Vice President of Baud. These 42 stores represent
approximately 18% of total Baud sales and approximately 10% of the number of
stores in the network. The 31 stores owned by the Company represent
approximately 14% of total Baud sales and approximately 8% of the number of
stores in the network. Company-owned Franprix stores operate under the same
arrangements with Baud as franchised Franprix stores. Of the Franprix stores not
owned by the Company or the children of Jacques Baud, 92 are owned by an
affiliated group consisting of members of a single family, and 50 are owned by
franchisees who have five to seven stores each. Each of the remaining
franchisees has one or two stores.

Baud distributes dry grocery products from its 600,000 sq. ft. warehouse at
Chennevieres located nine miles from the center of Paris. Baud also leases a
200,000 square foot facility from which it delivers bulk products. Its
efficiently run distribution system is designed and managed to make deliveries
on a cost effective basis in the congested Paris metropolitan area via its fleet
of 200 leased trucks. Baud receives orders from a computer controlled system,
which facilitates delivery scheduling and inventory management.

LEADER PRICE

In 1991, in response to increasing consumer demand for lower priced
products, the Company developed a range of items under the Leader Price brand
name which were initially introduced in certain Franprix stores. Since then, the
Company has expanded the concept to include Leader Price stores which carry a
limited range of approximately 2,000 items, almost all of which carry the Leader
Price brand name. Of the 215 Leader Price stores, 174 are wholly or partially
owned by the Company's Retail Leader Price subsidiary. Leader Price's wholesale
activities are conducted by the Company's Distribution Leader Price subsidiary.
Leader Price stores are obligated to purchase all products except produce from
the Company.

The Company's objective with Leader Price is to offer consumers good
quality products with prices at least 20%, and as much as 50%, below national
brands. It is common practice for French food distributors to offer products in
three price ranges: higher priced national brands; store brands or secondary
brands at 15 to 25% lower prices; and discount products at 20 to 50% lower
prices. Leader Price products offer consistent quality at discount prices.

Leader Price stores are clean, well-ordered and brightly lit. The sizes,
which typically range from 7,000 to 10,000 square feet of selling space, are
comparable to traditional supermarkets in France. Racks for the products are
simple in design, facilitate frequent restocking and display products in an
attractive way. The product range of approximately 2,000 items is one-third that
of an average Franprix supermarket, which improves product turnover and
simplifies product handling. Labor costs are minimized by the limited product
range and by eliminating labor-intensive departments such as bakery,
delicatessen and meat cutting. The everyday low price policy results in reduced
time and expense required to change product prices.

Leader Price stores are all required to offer the same range of products
and have similar store layouts. Store operations are closely monitored with
respect to labor costs and other expenses. The lower costs and investment
required in a Leader Price store compared to a traditional supermarket permit
store profitability to compare favorably with that of a traditional supermarket
despite lower selling prices. Leader Price stores are required to offer the same
products at the same prices and require uniform layout, signage, operating
practices and staffing.

As of March, 1996, the Leader Price network had 215 stores, of which 174
were wholly or partially owned by the Company and 41 were franchised. The
Company intends to control more than 50% of the Leader Price network through
direct ownership and minority equity stakes with select franchisees which carry
rights providing elements of control. The Company believes this approach ensures
greater control over store operations and standards as the network expands. As
with Franprix, the Company does not receive any franchise or other fees from
franchisees. The consideration the Company receives is reflected in the prices
charged for the products purchased. The Company has a right of first refusal on
franchised Leader Price stores if a franchisee desires to sell his stores to a
third party.

The Leader Price stores are serviced from Distribution Leader Price's
warehouse at Gretz, near Paris. The warehouse was constructed to the Company's
specifications and became fully operational in the latter part of 1993. The
facility has 550,000 sq. ft. of warehousing space, as well as administrative
facilities to process orders. Order entry, delivery and inventory management
systems are computer based, and electronic ordering systems are in place. The
Company uses outside transportation to supply the Leader Price stores. The
Company believes this arrangement permits it to respond to growth in the Leader
Price network not only in the Paris area but also in other areas of France where
Company-owned trucks would not be cost effective. For example, since many
agricultural products are shipped from the south of France to processors in the
Paris area, relatively low back-haul costs permit Leader Price products to be
shipped efficiently to stores located in the southern part of the country.
Deliveries are managed so that, in general, full truckloads are delivered to
stores, reducing delivery times and loading costs.

GROCERY PRODUCTS

The Company is a major ice cream manufacturer and marketer in Spain,
including the Canary Islands and, to a lesser extent, the Balearic Islands, and
is the leading manufacturer of potato chips

and snacks in the Republic of Ireland. The Company also manufactures and markets
a variety of beverages and soft drinks. The Company's strategy for its Grocery
Products segment is to develop new products designed to appeal to a variety of
consumers, to differentiate the Company's branded products from those of its
competitors and to focus its resources on products with strong market share or
potential for growth.

ICE CREAM AND DESSERTS

The Company manufactures ice cream products in Spain, including the Canary
Islands and the Balearic Islands, and markets such products throughout western
Europe. Increasing market integration in Europe has led the Company to emphasize
a greater degree of uniformity of ingredients, composition and packaging of its
ice cream products so that they may be sold without modification in all European
Union countries. In Spain and the Canary Islands, the Company's most important
product categories are ice cream novelties which are purchased on impulse for
immediate consumption and ice cream desserts.

La Menorquina, operating in Spain, including the Balearic Islands, and
Portugal, has established itself as a supplier to the restaurant sector by
developing sophisticated ice cream desserts. Examples of these desserts include
frozen natural orange, apple, coconut and other fruit shells filled with natural
fruit-flavored ice cream, multi-layer ice cream cakes and frozen desserts in
stylized ceramic dishes. While supermarkets are not currently major outlets for
ice cream in these markets due to consumption habits and the small size of home
freezers in such markets, the Company has developed products that are suitable
for this 'take home' sector of the market as it develops. La Menorquina also
sells its products to the Company's other ice cream subsidiaries for
distribution in their markets and exports to unaffiliated customers in other
countries. Approximately 40% of La Menorquina sales during the year ended
December 31, 1995 were derived from products developed during the last three
years.

In the Canary Islands, Interglas is the leading ice cream supplier under
its Kalise brand name, and has a significant share of the yogurt and desserts
market. In 1995, approximately 64% of the Company's ice cream sales were high
margin ice cream novelties, cakes and specialty frozen desserts. The Company has
increased its sales by developing innovative products that are designed to
appeal to the over six million tourists who visit the Canary Islands each year.
Interglas received certification under the ISO-9002 standard on March 29, 1996,
which is given to companies that can demonstrate rigorous quality controls.

POTATO CHIPS AND SNACKS

The Company, through Tayto, has a dominant position in the Irish potato
chip market and is the leading manufacturer of processed snacks in Ireland.
During 1995, the Company believes that its market shares in these markets, based
on net sales, were approximately 62% and 41%, respectively. Under its primary
brand name, Tayto, and secondary brand name, King, the Company distributes to
approximately 6,000 outlets, representing nearly all of the points of sale in
Ireland where snack products are sold. The Company strives to manufacture the
highest quality products, receiving the Irish Quality Mark, which now appears on
Tayto's packaging, in each year from 1990 through 1995.

The Company continually develops new and innovative products to appeal to a
variety of customers. For example, the Company has developed a number of premium
products designed to appeal to adults, such as a wavy chip under the Tayto
Ripples brand name. Tayto recently launched a new range of corn chips under the
Texicanos brand name aimed at teenagers and young adults using a marketing
campaign highlighting figures from the history of Texas.

BOTTLING OPERATIONS

The Company's principal bottling operations consist of Winters and Sunco,
each of which produces soft drinks on a contract basis for supermarket private
labels and major international brands. The Company also manufactures and markets
a variety of beverages and soft drinks under the Company's own brand names.
Winters, located in the Netherlands, produces soft drinks, principally in cans,
for sale throughout western Europe. Sunco, located in Belgium, produces soft
drinks in plastic and glass bottles for sale principally in Belgium, France and
Germany. Bireley's, well-known in

Thailand, is a marketer of non-carbonated orange drinks and other beverages in
that country. In 1996, the Company acquired the assets of S.A. des Eaux
Minerales de St. Alban les Eaux, a French mineral water bottler.

PROPERTIES

The Company's principal executive offices are located at 9 West 57th Street
in New York City, where the Company currently leases approximately 7,000 square
feet of space. The lease for this space expires June 30, 2003. The Company has
leased this space since March 1995 when it amended its prior lease for 23,000
square feet in the same building. Net base rental expense for the Company's
current executive office space is approximately $362,000 per annum over the life
of the lease. In addition, as a fee for the amendment to the Company's prior
lease, the Company paid $500,000 in each of 1994 and 1995, and will make annual
payments of $800,000 in each of 1996 through 1999. The Company also maintains
divisional offices for its Food Distribution operations in Paris, France and its
Grocery Products operations in Ninove, Belgium. Rental expense for leased
property in the Food Distribution division office was approximately $189,000,
$222,000 and $266,000 in 1993, 1994 and 1995, respectively. Rental expense for
the Grocery Products division office was approximately $19,000 in each of 1993,
1994 and 1995.

The Company also owns and leases manufacturing plants, warehouse
distribution centers, retail stores and other facilities in the various
countries in which it operates. The Company believes the facilities are suitable
and adequate for the conduct of its business. The following table sets forth
information with respect to the approximate number of facilities owned or leased
as of March 31, 1996:

<TABLE>
<CAPTION>
MANUFACTURING DISTRIBUTION OTHER TOTAL
--------------- --------------- --------------- ---------------
OWNED LEASED OWNED LEASED OWNED LEASED OWNED LEASED
----- ------ ----- ------ ----- ------ ----- ------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Food Distribution......... 0 0 7 142 0 2 7 144
Grocery Products.......... 11 1 14 32 2 1 27 34
- - -
----- ----- ------ ----- ------
Total................ 11 1 21 174 2 3 34 178
----- - ----- ------ - - ----- ------
----- - ----- ------ - - ----- ------

</TABLE>

The aggregate rental expense for leased property for the Food Distribution
operations was $11.1 million, $12.4 million and $17.6 million in 1993, 1994 and
1995, respectively. The increase from 1993 through 1995 is primarily
attributable to the expansion of the Leader Price network. The aggregate rental
expense for leased property for the Grocery Products operations was $7.4
million, $4.1 million and $2.3 million in 1993, 1994, and 1995, respectively.
The decline in Grocery Products rental expense from 1993 through 1995 reflects
subsidiary dispositions throughout the time period.

CUSTOMERS AND COMPETITION

The Company believes that its aggregate sales are not concentrated in, or
materially dependent on, any single customer or small group of customers.
However, certain individual markets in which the Company competes are subject to
a high degree of customer concentration by one or a few supermarket chains or
buying cooperatives. For example, a group consisting of members of a single
family which owns 92 Franprix stores accounted for approximately 31% of 1995
sales by Baud in France.

The Food Distribution and Grocery Products segments in general are very
competitive, and the Company faces substantial competition throughout its
activities and product lines from many companies, some of which have greater
financial resources than the Company and some of which offer other, better-known
branded products. Competition in the Food Distribution segment is largely a
function of service and price. Competition in the Grocery Products segment is
generally based on quality, product innovation, price, availability and brand
name recognition.

The Company's main competitors in its Food Distribution segment are
Carrefour S.A., Promodes and Docks d' France. In its Grocery Products segment,
the Company's main competitors are United Biscuits U.K. Ltd. in the potato chip
and processed snack markets and Nestle S.A., Unilever PLC and Danone S.A. in the
ice cream, yogurt and frozen dessert markets. The Company believes it competes
effectively on the basis of the factors affecting its industry segments.

RAW MATERIALS

Various agricultural commodities constitute the principal raw materials
used by the Company in the manufacture of its grocery products. Primary items
include milk powder, butter, potatoes, vegetable oil and sugar. None of the raw
materials for the Company's significant products are currently in short supply
and most are available from many different independent suppliers. Prices of
agricultural commodities tend to fluctuate in response to various seasonal,
climatic and economic factors, which generally affect the Company's competitors
as well.

TRADEMARKS, TRADE NAMES AND LICENSES

The Company has locally registered trademarks for many of its products.
Trademarks are important to the Company because local brand name recognition is
critical to its success.

In 1987, Beatrice Companies, Inc. assigned the trade name and trademark
Beatrice to the Company for use on its products anywhere in the world, except
the United States. However, Beatrice Companies, Inc. and its affiliates are
permitted to use the trade name and trademark Beatrice in connection with
products which they manufacture or distribute anywhere in the world. Although
the name Beatrice is contained in the Company's trade name and is part of its
corporate identity, it is not currently anticipated that the name Beatrice will
be used by the Company to a significant degree as an identifying trademark in
connection with local product marketing and sales.

In 1992, Geimex, a French limited liability company partially owned by Jean
Baud ('Geimex'), assigned to the Company ownership of the Leader Price trademark
and the exclusive right to use the trademark in the French territory pursuant to
an Assignment of Trademark (the 'Leader Price License') which superseded a prior
licensing agreement. Pursuant to the Leader Price License, the Company agreed
not to expand the Leader Price trademark to foreign countries and granted to
Geimex an exclusive license to use the trademark in the overseas French
territories in return for which Geimex agreed to grant any foreign third parties
only the right to distribute, and not the right to manufacture, products under
the Leader Price trademark. In addition, pursuant to the Leader Price License,
Geimex granted to the Company a right of first refusal prior to assigning to a
foreign third party any rights under the Leader Price trademark, and the
shareholders of Geimex granted to the Company a right of first refusal prior to
selling all or any portion of their shares of Geimex. The Company anticipates
entering into arrangements for using the Leader Price name outside the French
territory. However, no assurance can be given that the Company will succeed in
entering into such arrangements.

The Company is not aware of any factors which would adversely affect its
ability to utilize any of its major trademarks. Patents are not considered
material to the conduct of the Company's business.

EMPLOYEES

As of March 31, 1996, the Company had approximately 4,800 employees,
although the number of employees may vary by as many as 1,000 from time to time
based on the Company's seasonal needs. TLC Beatrice's subsidiaries are managed
by local nationals. Substantially all of the Company's full-time employees,
other than management personnel, are hourly employees represented by unions.
Management of the Company believes no single union relationship or agreement is
material to the Company's aggregate results. Labor relations, including
compensation and severance, are governed by local law. The Company believes its
relations with its employees are generally good. During the past five years, no
subsidiary has experienced any work stoppage or labor-related problem material
to such subsidiary or the Company as a whole.

LEGAL PROCEEDINGS

TLC BEATRICE IS A DEFENDANT IN CERTAIN LEGAL PROCEEDINGS BROUGHT BY CARLTON
INVESTMENTS, A CALIFORNIA LIMITED PARTNERSHIP ('CARLTON'), AS DESCRIBED BELOW.
NOTWITHSTANDING THE INFORMATION SET FORTH IN THIS PROSPECTUS, TLC BEATRICE
RESERVES ANY AND ALL CLAIMS OR DEFENSES THAT IT HAS OR MAY HAVE AGAINST CARLTON.

On May 20, 1994, Carlton, formed and controlled by former officers and
employees of Drexel Burnham Lambert, Inc. ('Drexel'), filed a two-count
Complaint against TLC Beatrice and against Mrs. Loida Nicolas Lewis, the
Chairman and Chief Executive Officer of TLC Beatrice, and Ms. Leslie N. Lewis, a
Director of TLC Beatrice and a daughter of Loida Nicolas Lewis, as Executrices
of The Estate of Reginald F. Lewis (the 'Lewis Estate') titled, Carlton
Investments v. TLC Beatrice International Holdings, Inc., et al., Index No.
114798/94, Supreme Court of the State of New York, County of New York. Reginald
F. Lewis was TLC Beatrice's founder and served as its Chairman and Chief
Executive Officer from its organization until his death in January 1993.

In Count I of the Complaint, Carlton alleges that TLC Beatrice breached the
Stockholders' Agreement when TLC Beatrice paid Reginald F. Lewis a $22.1 million
compensation package for services rendered to TLC Beatrice from 1988 through
1992. Carlton claims that payment of the compensation package violated a
provision of the Stockholders' Agreement restricting certain transactions
between TLC Beatrice and its affiliates. As a result of the alleged breach,
Carlton asserts that it has been damaged in an amount estimated to be not less
than $11,460,000, plus interest; it also claims that it is entitled, pursuant to
a provision in the Stockholders' Agreement, to recover its attorneys' fees and
litigation expenses.

In Count II of the Complaint, Carlton alleged that Reginald F. Lewis
tortiously interfered with the Stockholders' Agreement by causing TLC Beatrice
to pay the compensation package. As a result of the alleged interference,
Carlton asserts that it has been damaged in an amount estimated to be not less
than $11,460,000, plus interest; it also seeks punitive damages for the alleged
interference. On September 21, 1994, the Supreme Court of New York County
granted the motion of TLC Beatrice and the Lewis Estate to dismiss this claim.
In so ruling, the Court found that Carlton had not stated a claim against the
Lewis Estate for tortious interference. On November 29, 1994, Carlton filed a
Notice of Appeal from the September 21, 1994 order, which presently is pending
before the Appellate Division, First Department of the Supreme Court of New
York.

On December 2, 1994, TLC Beatrice responded to Count I of the Complaint by
filing an Answer, Affirmative Defenses and Counterclaim. In the Answer, TLC
Beatrice denied all material allegations of the Complaint and set forth 17
affirmative defenses thereto. TLC Beatrice defends against the Complaint by
alleging, among other things, that Mr. Lewis earned the compensation package for
his successful and dynamic leadership of the Company from 1988 through 1992. TLC
Beatrice claims that the 1992 payment to Mr. Lewis was not prohibited by the
terms of the Stockholders' Agreement for a variety of reasons. Among other
things, TLC Beatrice alleges that the Stockholders' Agreement does not preclude
compensation to TLC Beatrice's officers, and that it was not anticipated at the
time the Stockholders' Agreement was executed that Mr. Lewis would be required
to devote nearly all of his time and efforts to the day-to-day management of the
Company, including having to relocate his family to Europe. In addition, TLC
Beatrice alleges that the compensation package was first discussed and
considered by the Board of Directors in 1989 and approved in 1990; therefore,
Carlton, by its years of inaction, waived any claims or objections it had to the
compensation package. TLC Beatrice further alleges that Carlton lacks standing
to assert its claim under the Stockholders' Agreement.

TLC Beatrice also defends against the Complaint by asserting that, because
Carlton wrongfully acquired the stock it claims to control through a pattern of
fraud and breaches of fiduciary duties committed by a group of Drexel officers
including Peter Ackerman (the 'Ackerman Group') in connection with the
Acquisition and thereafter, Carlton is barred by its misconduct from asserting
its claims. More specifically, TLC Beatrice claims that the Ackerman Group
falsely represented to Mr. Lewis and TLC Beatrice in 1987 that Drexel required
not only a $30 million fee for obtaining $300 million of subordinated financing
in the $985 million transaction engineered by Mr. Lewis, but also equity in TLC
Beatrice to assist in placing the debt. Rather, TLC Beatrice asserts, the
Ackerman Group kept this equity and funneled it to Carlton, an entity which was
not a Drexel affiliate acquiring stock ownership in TLC Beatrice to assist in
the sale of debt (as represented by the Ackerman Group), but instead was the
vehicle by which the Ackerman Group defrauded TLC Beatrice and personally
enriched its members.

TLC Beatrice further alleges that Carlton's challenge to the compensation
package is part of a scheme to acquire TLC Beatrice's assets at less than fair
market value, or to force a purchase of

Carlton's stock at an inflated price, by harassing and attempting to coerce TLC
Beatrice into meeting its demands. TLC Beatrice alleges that Carlton, despite
knowing of the Board of Directors' approval of the compensation package to Mr.
Lewis in 1990, did nothing to challenge the package until after Mr. Lewis' death
when Carlton opposed the compensation package and also opposed the leadership of
Mrs. Lewis, who became Chairman of TLC Beatrice in February 1994. More
specifically, TLC Beatrice alleges that Carlton attempted to consummate its
scheme by filing in bad faith a demand in October 1993, pursuant to the terms of
the Stockholders' Agreement, that TLC Beatrice register its stock with the
Commission, which Carlton then sought to withdraw after TLC Beatrice incurred
substantial expense in filing a Form S-1 Registration Statement with the
Commission.

In addition, TLC Beatrice claims that, in exchange for allowing Carlton to
withdraw its registration demand without prejudice, it reached an agreement with
Carlton (the 'Registration Withdrawal Agreement'), pursuant to which Carlton
agreed, among other things, to consent to the merger of TLC Beatrice and TLC
Holdings and to allow Mrs. Lewis to manage TLC Beatrice until October 1994
without Carlton's interference. According to TLC Beatrice, Carlton, as part of
its scheme, then breached the Registration Withdrawal Agreement by, among other
things, filing the Complaint and suing TLC Beatrice in New York and in Delaware
in May 1994, as hereinafter described. TLC Beatrice further claims that Carlton
caused Paul Biddelman, a Director of TLC Beatrice, to breach his fiduciary
duties to TLC Beatrice and that Carlton, Biddelman and Ackerman attempted to
induce one of TLC Beatrice's officers to breach his fiduciary duties to TLC
Beatrice in order to interfere with one of TLC Beatrice's key lending
relationships and with the potential sale of TLC Beatrice's ice cream
businesses.

Based on the foregoing allegations, TLC Beatrice contends that Carlton is
barred by its misconduct from pursuing the Complaint and that the Stockholders'
Agreement is unenforceable by Carlton. TLC Beatrice and the Lewis Estate also
have filed a four-count Counterclaim against Carlton, Paul Biddelman and Peter
Ackerman based on these allegations. More specifically, in Count I of the
Counterclaim, TLC Beatrice and the Lewis Estate (as an intended third-party
beneficiary of the Registration Withdrawal Agreement) seek damages from Carlton
for its breach of that agreement in an amount to be determined at trial. In
Count II, TLC Beatrice and the Lewis Estate seek damages based on promissory
estoppel for Carlton's failure and refusal to fulfill its promises, as part of
the Registration Withdrawal Agreement, to consent to the merger of TLC Beatrice
with TLC Holdings and to allow Mrs. Lewis to manage TLC Beatrice until October
1994 without Carlton's interference. In Count III, TLC Beatrice and the Lewis
Estate allege fraud in connection with these false promises made to induce their
consent to the Registration Withdrawal Agreement, for which they seek damages
from Carlton and rescission of the Amendment to the Stockholders' Agreement
dated February 4, 1994 permitting Carlton to withdraw its registration request
without prejudice. Finally, in Count IV of the Counterclaim, TLC Beatrice and
the Lewis Estate seek damages from Carlton, Mr. Biddelman and Mr. Ackerman based
on Mr. Biddelman's breach of his fiduciary duties to TLC Beatrice. TLC Beatrice
claims that Mr. Biddelman's breach was committed on behalf of or in conspiracy
with Carlton and Mr. Ackerman, which conspiracy also included attempts to induce
an officer's breach of his fiduciary duties to TLC Beatrice. TLC Beatrice also
seeks exemplary damages in connection with Counts III and IV of its
Counterclaim.

On January 10, 1995, Carlton and Messrs. Biddelman and Ackerman moved to
dismiss TLC Beatrice's Counterclaims and certain of its affirmative defenses.
Among other things, Carlton and Messrs. Biddelman and Ackerman claim that the
Counterclaims fail to allege damages with the specificity required under New
York law, fail to allege fraud or breach of fiduciary duty with the requisite
particularity, and fail to adequately allege any breach of contract. Carlton
also moved to dismiss the affirmative defenses that claim that Carlton is barred
from asserting its rights under the Stockholders' Agreement by its alleged
misconduct. Among other arguments, Carlton asserts that these affirmative
defenses are barred in that they seek to relitigate claims which were allegedly
conclusively settled, and from which Carlton was allegedly released, in
connection with the court-approved settlement in 1992 of over 180 lawsuits
including approximately 60 class and derivative actions filed against Michael
Milken and hundreds of other individuals and entities, including Mr. Ackerman,
Mr. Biddelman and Carlton relating to their allegedly unlawful activities
relating to aspects of business of Drexel Burnham Lambert Group, Inc., its
subsidiaries and affiliates. This motion to dismiss is pending.

The above described litigation is in the early stages. TLC Beatrice has
served written document requests and interrogatories upon Carlton and has
requested the depositions of various Carlton partners. TLC Beatrice intends to
defend against the Complaint and pursue its defenses and Counterclaim
vigorously, and believes that the Complaint is without merit, although no
assurances can be given regarding the outcome of such litigation. For further
information with respect to the litigation, reference is hereby made to the
Complaint and the Answer which have been filed as Exhibits to the Registration
Statements of which this Prospectus is a part.

On May 20, 1994, Carlton filed a Complaint titled, Carlton Investments v.
TLC Beatrice International Holdings, Inc., C.A. No. 13537, in the Court of
Chancery of the State of Delaware, New Castle County, against TLC Beatrice
pursuant to Section 220 of the Delaware General Corporation Law demanding to
inspect certain books and records of the Company, the alleged purpose of which
was to give Carlton access to information to permit it to value its stock and to
investigate alleged mismanagement of TLC Beatrice and waste of corporate assets.
TLC Beatrice filed an Answer denying all material allegations of the Complaint
and setting forth five affirmative defenses thereto. Among other things, TLC
Beatrice defended against the Complaint by claiming that Carlton's demand was
vague and its stated purposes were improper; that Carlton already had access to
sufficient information to value its stock; and that the demand was designed to
harass and coerce TLC Beatrice into exchanging TLC Beatrice assets for Carlton's
stock or acquire its interest in TLC Beatrice at an inflated price. To eliminate
the drain on TLC Beatrice's time and resources this suit presented, this lawsuit
was dismissed pursuant to a negotiated settlement between the parties in October
1994, by which certain documents were produced to Carlton.

On January 4, 1995, Carlton filed a stockholder derivative complaint on
behalf of TLC Beatrice's stockholders in the Court of Chancery of the State of
Delaware, New Castle County, entitled Carlton Investments v. TLC Beatrice
International Holdings, Inc., et al., C.A. No. 13950. In this stockholder
derivative action, which has been amended twice, Carlton seeks to recover for
the benefit of TLC Beatrice millions of dollars of corporate funds allegedly
paid to the late Reginald F. Lewis and entities controlled by or affiliated with
him between 1987 and 1993. Named as defendants are the executrices of Mr. Lewis'
estate, several entities allegedly controlled by the late Mr. Lewis (TLC Group
L.P., TLC Holdings Corp., TLC General Corp., TLC Transport, Inc. and McCall
Pattern Holdings, Inc.), together with a number of current and former directors
and a former officer of TLC Beatrice. The derivative complaint also names TLC
Beatrice as a nominal defendant.

The derivative complaint alleges that Reginald F. Lewis, personally and
through entities he controlled, wasted and converted millions of dollars of TLC
Beatrice's assets between 1987 and 1993 and that the defendant directors, all
controlled by Mr. Lewis, either acquiesced in or approved these diversions of
TLC Beatrice assets in breach of their fiduciary duties to TLC Beatrice's
stockholders. Carlton also alleges fraud and usurpation of corporate
opportunity.

Specifically, the derivative complaint alleges that Mr. Lewis caused TLC
Beatrice to reimburse him for more than $2.1 million of personal living expenses
and failed to disclose the lack of receipts for these expenses. The derivative
complaint further alleges that Mr. Lewis secured the approval of the TLC
Beatrice Board of Directors to cause TLC Beatrice to reimburse Mr. Lewis at
least $2.5 million paid by him to defend himself and a number of the director
defendants against litigation unrelated to TLC Beatrice.

The derivative complaint also challenges, among other things, TLC
Beatrice's reimbursement from 1987 through 1992 to TLC Group L.P., an entity
then owned and controlled by Mr. Lewis, of more than $10.4 million in expenses
that allegedly were largely unrelated to any monitoring of TLC Beatrice, and the
alleged failure to disclose these payments and their purpose. The complaint
alleges that these reimbursements included: (i) more than $4 million in salaries
and bonuses to employees of TLC Group L.P.; (ii) more than $2.1 million in taxes
and other governmental levies paid on behalf of various entities allegedly
controlled by Mr. Lewis; (iii) approximately $97,000 in direct payments to or
for the benefit of Mr. Lewis' daughters' trusts; (iv) more than $100,000 for
rents and upkeep of several properties rented to Mr. Lewis or entities
controlled by him; and (v) more than $150,000 in payments directly to or for the
benefit of McCall Pattern Holdings, Inc., an entity controlled by Mr. Lewis but
otherwise unaffiliated with TLC Beatrice.

The derivative complaint also asserts that beginning in 1988, Mr. Lewis (i)
caused TLC Beatrice to lease (and later purchase) an extravagantly large and
costly jet airplane for his and his family's nearly exclusive use, both business
and personal, (ii) caused TLC Beatrice to subsidize the rent for space that
several Lewis-owned entities shared with TLC Beatrice at prime locations in New
York, (iii) failed to disclose to the Board that he was receiving funds from
Lewis & Clarkson after he withdrew from the firm, (iv) failed to disclose the
retention by him of voting rights associated with Common Stock issued to
management and (v) used the assets and corporate opportunities of the Company's
French subsidiaries for his own personal purposes.

The derivative complaint also challenges the allegedly extravagant
employment and severance packages paid by TLC Beatrice to Albert Fenster and Mr.
Lewis' half-brother, Jean S. Fugett, Jr.

The derivative complaint further asserts that beginning in 1990, Mr. Lewis
wrongfully induced TLC Beatrice to cash out his investment in his TLC Beatrice
Series B and C Preferred Stock, for which he received more than $33 million, by
failing to disclose to the TLC Beatrice Board that he owned 100% of the Series B
Preferred Stock and approximately 80% of the Series C Preferred Stock.

Finally, the derivative complaint challenges the $22.1 million compensation
package paid to Mr. Lewis shortly before his death, which payment is also
subject to challenge in the action pending in New York State Supreme Court,
Index No. 114798/94, described above. Carlton alleges that Mr. Lewis and his
family failed to disclose to the Board of Directors of TLC Beatrice that Mr.
Lewis was allegedly terminally ill before the payment of the compensation
package. For further information with respect to the derivative lawsuit,
reference is hereby made to the derivative complaint, as amended, which has been
filed as an Exhibit to the Registration Statements of which the Prospectus is a
part.

TLC Beatrice and the other defendants have filed answers and affirmative
defenses to the derivative complaint. Discovery is proceeding and is scheduled
to end August 15, 1996. Trial will be scheduled for 1997.

On July 20, 1995, Carlton filed a motion for contempt against TLC Beatrice,
its counsel and the Lewis Estate in the case entitled Presidential Life
Insurance Co. v. Michael Milken, et al., pending in the U.S. District Court for
the Southern District of New York before the Honorable Milton Pollack as Case
No. 92 Civ 1151 (MP) ('Presidential Life'), asserting that certain of TLC
Beatrice's affirmative defenses in the above-described litigation pending in the
Supreme Court of New York County, New York (the 'New York Suit') constituted
'claims' allegedly dismissed and released under the July 17, 1992 order and
final judgment in Presidential Life (the 'Order and Final Judgment').
Presidential Life was a class action which, as described by counsel for the
class members, was instituted for the purpose of marshalling and laying to rest,
as part of a broader settlement of other litigation, all previously unasserted
claims against Michael Milken and hundreds of other individuals and partnerships
concerning their activities related to Drexel and its affiliates. On July 27,
1995, TLC Beatrice filed a motion seeking leave to intervene in Presidential
Life for the purpose of resolving the extent, if any, to which the Order and
Final Judgment is binding on TLC Beatrice or precludes any of its affirmative
defenses in the New York Suit, and also filed a separate motion seeking to
vacate the Order and Final Judgment to the extent it purports to preclude TLC
Beatrice's assertion of such affirmative defenses or claims seeking the
cancellation of Carlton's common stock. In these motions, TLC Beatrice asserts,
among other things, that even if the Order and Final Judgment is binding on TLC
Beatrice, it precludes only claims by class members, and does not preclude
affirmative defenses to subsequently filed claims by any of the defendants. In
addition, TLC Beatrice asserts that the proceedings in Presidential Life,
including the Order and Final Judgment, are not binding upon it (i) because it
never received adequate notice of the action; (ii) because Presidential Life was
a collusive suit brought in order to accommodate the defendants' demand, as an
express condition to the settlement of other litigation against them, that they
receive immunity from future civil liability in connection with their Drexel-
related activity; (iii) because the court lacked subject matter jurisdiction
over such a suit and over any claims by TLC Beatrice against Carlton; and (iv)
because the named plaintiff and class counsel did not adequately represent the
interests of class members, purportedly including TLC Beatrice. On July 28,
1995, TLC Beatrice also filed its response to Carlton's motion for contempt,
which maintains that all of the issues raised by that motion should instead be
resolved in connection with TLC Beatrice's motion to intervene and motion for
relief from the Order and Final Judgment, and that a finding of contempt is in
any event unwarranted because, as set forth in TLC Beatrice's own motions, the
Order and Final Judgment

does not preclude TLC Beatrice from asserting any affirmative defenses in the
New York Suit, and the proceedings in Presidential Life are not binding upon TLC
Beatrice. By order dated September 12, 1995, Judge Pollack denied Carlton's
motion for contempt. By orders dated September 25, 1995, Judge Pollack denied
TLC Beatrice's motion to intervene and motion for relief from the Order and
Final Judgment. On October 24, 1995, TLC Beatrice filed a Notice of Appeal from
such orders which is presently pending before the U.S. Court of Appeals for the
Second Circuit. Carlton filed a motion to dismiss the appeal which was denied by
the Second Circuit after briefing of the appeal was complete.

TLC Beatrice intends to defend vigorously against these actions and
believes these allegations to be without merit. TLC Beatrice's outside
litigation counsel has advised TLC Beatrice that at this time the extent of TLC
Beatrice's liability, if any, is not determinable. The ultimate outcome that may
result from these matters may have a material effect on TLC Beatrice's
consolidated financial condition and/or results of operations. In addition,
under certain circumstances, TLC Beatrice is obligated to reimburse the
directors for their share of any judgment or settlement. See 'Risk
Factors -- Litigation with Carlton Investments' and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations.'

On May 24, 1996, TLC Beatrice's Board of Directors unanimously voted to
expand the size of the Board by two seats, elected Clifford L. Alexander, Jr.
and William H. Webster to the Board and appointed Messrs. Alexander and Webster
as directors with no personal or business relationship or dealings with the
defendants, TLC Beatrice, or the Lewis family, to serve as the members of a
Special Litigation Committee. The Committee was charged with the responsibility
of investigating and evaluating the allegations and issues raised in the
derivative complaint and to prepare a report and consider and determine whether
or not continued prosecution of the derivative complaint is in the best
interests of TLC Beatrice and its shareholders and what action TLC Beatrice
should take with respect to the derivative complaint in accordance with Delaware
law. The Special Litigation Committee is in the process of engaging experts and
advisors that it deems necessary and determining what actions, if any, it will
take in connection with the derivative complaint.

TLC Beatrice and its subsidiaries are also involved in certain other legal
actions and claims arising in the ordinary course of business. Management
believes that the outcome of such other litigation will not have a material
adverse effect on the financial position or results of operations of the
Company.

GOVERNMENTAL REGULATION

Virtually all of the Company's operations are subject to the laws and
regulations of foreign countries, which differ from country to country, as well
as the laws and regulations of the United States. The production, distribution
and sale of many of the Company's products are subject to governmental
regulation regarding the production, sale, safety, sanitation, labeling and
ingredients of such products in the various countries in which the Company
operates. In addition, in various markets the manufacture of many of the
Company's products is subject to governmental regulation relating to the
discharge of materials into the environment.

Compliance with existing legislation and regulations relating to
environmental matters has not had, and is not expected to have, a material
adverse effect on the Company's capital expenditures or results of operations.

RELATIONSHIPS WITH MINORITY STOCKHOLDERS

Certain of TLC Beatrice's operating subsidiaries have local minority
stockholders whose equity interests in these subsidiaries range from 2.6% to
49%. The subsidiaries that have the largest equity interests owned by local
stockholders include Distribution Leader Price (49%), Retail Leader Price (49%),
Interglas (40%), Minimarche (26%) and La Menorquina (22%). See 'Business.' In
most cases, the local stockholders are responsible for the management of these
subsidiaries.

The Company believes that equity participation by local management is
beneficial in that it gives them a direct interest in the business which they
manage and thus provides an incentive to enhance performance of that business.
While the Company believes that it generally has satisfactory relationships with
the management of its subsidiaries, the ability of the Company to achieve its

earnings and other objectives could be adversely affected if relations with
certain local stockholders were not satisfactory.

The minority stockholders of Distribution Leader Price and Retail Leader
Price, directly or indirectly, are various members of the Baud family and a
corporate entity controlled by the Baud family (collectively, the 'Baud Minority
Stockholders'). Pursuant to certain agreements entered into in 1992, the Company
is obligated under certain circumstances to purchase the Baud Minority
Stockholders' ownership interests in Distribution Leader Price and Retail Leader
Price. The agreements provide that prior to June 30, 1997, if certain members of
the Baud family cease to hold their management positions with the applicable
company and the Company fails to propose and vote in favor of one of certain
members of the Baud family as a replacement, the Baud Minority Stockholders have
the right to require TLC France, and TLC France has the right, to purchase all
of the Baud Minority Stockholders' shares of Distribution Leader Price and
Retail Leader Price. In addition, at any time on or after July 1, 1997 and prior
to June 30, 2027, the Baud Minority Stockholders have the right to require TLC
France, and TLC France has the right, to purchase all of the Baud Minority
Stockholders' ownership interests in Distribution Leader Price and Retail Leader
Price without restriction. The option price under such agreements is based on a
formula calculated at the time of exercise which sets a purchase price at a
multiple of the average annual net income per share of Distribution Leader Price
and Retail Leader Price, as applicable, for the two fiscal years prior to
exercise, with a guaranteed minimum return on the Baud Minority Stockholders'
aggregate investment if an option is exercised prior to July 1, 1997. The
Company does not intend to permit the circumstances to arise that would enable
the Baud Minority Stockholders to exercise their right to require the Company to
purchase their shares of Distribution Leader Price and Retail Leader Price prior
to July 1, 1997. If the put option is exercised after July 1, 1997, and as long
as the Notes are outstanding, the purchase price for such shares is payable 25%
on the closing of the purchase of such shares, 45% on the first anniversary of
such closing and 30% on the second anniversary of such closing, together with
interest thereon at PIBOR. After repayment of the Notes, the purchase price for
such shares is payable 50% on the closing of the purchase of such shares and 50%
on the first anniversary of such closing, without interest. Solely for purposes
of illustration, if the Baud Minority Stockholders were to have exercised their
options to require TLC France to purchase all their shares of Distribution
Leader Price and Retail Leader Price on December 31, 1995, using the formula
that would be in effect on July 1, 1997, the total purchase price for such
shares would have been approximately $91 million. Distribution Leader Price and
Retail Leader Price have shown substantial earnings growth during the past three
years. If such companies' earnings were to continue to increase prior to the
exercise of such option, as to which no assurance can be given, the purchase
price would increase materially. Due to the manner in which such purchase price
would be calculated, the Company is not currently able to quantify what the
purchase obligation would be. However, the Company believes that such purchase
obligation would be material.

In addition to the foregoing, the Company, including in certain
circumstances TLC Beatrice, is a party to separate stockholder agreements with
certain other local minority stockholders of Baud, Sedipro, S.A. and Minimarche
(collectively, the 'Other Baud Stockholders') and certain other minority
stockholders. Certain of these agreements and the by-laws of certain
subsidiaries restrict the sale of the minority stockholders' interest or require
the Company or the minority stockholders, as the case may be, to offer to sell
their shares to the other stockholders prior to selling such shares to a third
party and/or require the Company to purchase these interests under certain
circumstances. Certain of these local minority stockholders have the option to
require the Company to purchase their interests in whole or in part at any time
and certain of these local minority stockholders have the option to require the
Company to purchase their interests in whole or in part on or after January 1,
1997 or upon cessation of such stockholder's employment with the Company for any
reason. Solely for purposes of illustration, if all of such options were
exercised in full, using the formula that would be in effect on January 1, 1997,
the Company's aggregate purchase obligation is estimated to be approximately $35
million as of December 31, 1995. See 'Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources' and Note 6 of Notes to Consolidated Financial Statements.

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

Directors are elected by the stockholders of TLC Beatrice at its annual
meeting or, in the case of a vacancy, appointed by the stockholders or by the
directors then in office to serve until the next annual meeting or until their
successors are elected and qualified. The officers of TLC Beatrice are elected
by and serve at the pleasure of the Board of Directors. Set forth below is
certain information concerning the directors and executive officers of TLC
Beatrice.

<TABLE>
<CAPTION>
NAME POSITION AGE
- --------------------------------------- ---------------------------------------------- ---
<S> <C> <C>
Loida Nicolas Lewis.................... Chairman and Chief Executive Officer; Director 53
Reynaldo P. Glover..................... Executive Vice President, General Counsel and
Assistant Secretary; Director 53
Peter Offermann........................ Executive Vice President and Chief Financial
Officer 51
Dennis P. Jones........................ Executive Vice President, Operations 44
Daniel Jux............................. President, Food Distribution Division 51
Vincent P. O'Sullivan.................. President, Grocery Products Division 49
Charles Clarkson....................... Secretary; Counsel 49
Terri L. Pike.......................... Controller 34
Rene S. Meily.......................... Vice President, Director of Communications 42
Imelda M. Nicolas...................... Vice President, Training and Development 50
Clifford L. Alexander, Jr. ............ Director 62
Lee A. Archer, Jr...................... Director 72
Paul A. Biddelman...................... Director 50
Dort A. Cameron III.................... Director 51
Robert C. deJongh...................... Director 49
Anthony S. Fugett...................... Director 43
Leslie N. Lewis........................ Director 23
James E. Obi........................... Director 53
Ricardo J. Olivarez.................... Director 54
Samuel P. Peabody...................... Director 70
William H. Webster..................... Director 72
</TABLE>

Loida Nicolas Lewis has been a director of TLC Beatrice since December 22,
1993. She became Chairman of TLC Beatrice effective February 1, 1994 and Chief
Executive Officer in July 1994. From 1979 through 1990, Mrs. Lewis served as a
General Attorney for the United States Immigration and Naturalization Service.
From February 1993 she has been Chairman of The Reginald F. Lewis Foundation,
Inc., a private foundation. Mrs. Lewis was an associate attorney with Antonio C.
Martinez from 1977 to 1979 and legal clerk at Manhattan Legal Services from 1970
to 1973. Mrs. Lewis is the mother of Leslie N. Lewis, sister of Imelda M.
Nicolas and sister-in-law of Anthony S. Fugett.

Reynaldo P. Glover has been a director of TLC Beatrice since July 1995 and
Executive Vice President, General Counsel and Assistant Secretary of TLC
Beatrice since July 1994. Since September 1994, Mr. Glover has served as of
counsel to the law firm Rudnick & Wolfe. From 1991 through July 1994 he was a
general partner of the law firm Miller, Shakman, Hamilton, Kurtzson & Schlifke.
From 1987 through 1991 he was a general partner of the law firm Jenner & Block.

Peter Offermann has been Executive Vice President and Chief Financial
Officer of TLC Beatrice since December 1994. Since May 1994, Mr. Offermann has
been the President of Offermann Financial, Inc., a financial consulting firm.
From 1968 through May 1994, he served in a number of positions with Bankers
Trust Company and its affiliates, including as Managing Director of BT
Investment Partners, Inc. from October 1992 through May 1994, Managing Director
of BT Securities Corporation from October 1991 through October 1992, and
Managing Director of

Bankers Trust Company from 1986 through September 1991. Mr. Offermann is a
Director of Jan-Bell Marketing, Inc.

Dennis P. Jones has been Executive Vice President, Operations of TLC
Beatrice since January 1993. He served as Senior Vice President, Business
Planning and Development of TLC Beatrice from March 1990 to January 1993, and
Vice President, Business Planning and Development of TLC Beatrice from 1987 to
March 1990.

Daniel Jux has been the President of the Food Distribution Division of TLC
Beatrice since June 1990. He was Financial Director of the Food Distribution
Division of TLC France from February 1988 to June 1990. Previously he was Field
Manager from 1985 to 1988 and Financial Director from 1982 to 1985 of Boucheries
Bernard, a French meat company.

Vincent P. O'Sullivan has been President of the Grocery Products Division
since January 1994. Mr. O'Sullivan has also been the Chairman and Managing
Director of Tayto, the Company's snack company in Ireland, for more than five
years.

Charles Clarkson has been the Secretary and Counsel of TLC Beatrice since
July 1994. From April 1993 to July 1994, he was Assistant Secretary and Counsel
of TLC Beatrice. From March 1993 through January 1994, he also served as a
consultant to TLC Beatrice. From May 1990 through March 1993, Mr. Clarkson was
on a leave of absence from TLC Beatrice. He was Assistant Secretary of TLC
Beatrice from April 1990 to October 1990 and Secretary of TLC Beatrice from
August 1987 to April 1990. Mr. Clarkson was a partner of the law firm Lewis &
Clarkson or its successor from 1979 until May 1990.

Terri L. Pike has been Controller of TLC Beatrice since July 1993 and
previously served as Assistant Controller of TLC Beatrice from July 1992 to July
1993. Ms. Pike was Controller of the Office of Environmental Policy/Legal
Services Group for W.R. Grace & Co. from July 1991 to July 1992. From January
1989 to June 1991, she was Manager of Financial Procedures & Controls of Grace
Specialty Businesses, a division of W.R. Grace & Co.

Rene S. Meily has been Vice President, Director of Communications of TLC
Beatrice since April 1995. From March 1994 through March 1995 he served as a
consultant to TLC Beatrice. Mr. Meily was Vice President, Director of
Communications of TLC Beatrice from November 1989 through January 1994 and
Director of Communications from June 1988 through November 1989. From 1987 to
1988 he served as Client Service Manager for Burson-Marsteller Inc.

Imelda M. Nicolas has been Vice President, Training and Development of TLC
Beatrice since January 1996. From March 1994 through January 1996 she served as
Assistant to the Chairman of TLC Beatrice. Since 1993 she had been Chairperson
of the National Commission of Women for the Philippines. From 1986 through 1992
she was a presidential assistant in the Office of the President of the
Philippines under President Corazon C. Aquino. She is the sister of Loida
Nicolas Lewis and the aunt of Leslie N. Lewis.

Clifford L. Alexander, Jr. has been a director of TLC Beatrice since May
24, 1996. Since January 1981, Mr. Alexander has been the President of Alexander
& Associates, Incorporated, a private consulting firm. From February 1977
through January 1981, Mr. Alexander served as Secretary of the Army. Mr.
Alexander is a director of MCI Communications Corporation, The Dun & Bradstreet
Corporation, The Dreyfus Third Century Fund, Dreyfus General Family of Funds and
Dreyfus Premier of Funds, Mutual of America Life Insurance Company, and American
Home Products.

Lee A. Archer, Jr. has been a director of TLC Beatrice since February 1988.
From 1976 to 1987, he was a Vice President of General Foods Corporation. Since
1987, he has been Chairman and Chief Executive Officer of Organizational
Publishing Company.

Paul A. Biddelman has been a director of TLC Beatrice since October 1993.
Mr. Biddelman was nominated as a director by Carlton Investments pursuant to the
Stockholders' Agreement. Certain arrangements under the Stockholders' Agreement
with respect to the election of directors are described under 'Certain
Transactions.' Mr. Biddelman has been a principal of Hanseatic Corporation, a
private investment management company, since 1992. From 1991 and until he joined
Hanseatic Corporation, he was associated with Clements Taee Biddelman
Incorporated, a financial advisory firm.

From 1982 to 1991 he was a Managing Director in Corporate Finance at Drexel
Burnham Lambert Incorporated. Mr. Biddelman is a director of Insituform
Technologies, Inc., Premier Parks, Inc., Celadon Group, Inc., Electronic
Retailing Systems International, Inc. and Petroleum Heat and Power Company, Inc.

Dort A. Cameron III has been a director of TLC Beatrice since July 1995.
Since 1984, Mr. Cameron has been the general partner of BMA Limited Partnership,
which is the general partner of Investment Limited Partnership, an investment
partnership focusing on high-yield securities, structured transactions and
certain direct equity investments. Since 1988, Mr. Cameron has been the
co-general partner of EBD L.P., which is the general partner of The Airlie
Group, L.P., an investment partnership focusing on hedged arbitrage
transactions. Since 1993, Mr. Cameron has been the Chairman of the Board of
Entex Information Services, Inc., a computer reseller and service corporation.
Since 1994, Mr. Cameron has been the Chairman of the Board of Milestone Capital
Management. Mr. Cameron is a director of Foodbrands America, Inc. and Perkins
Restaurants, Inc.

Robert C. deJongh has been a director of TLC Beatrice since February 1988.
For more than five years, Mr. deJongh has headed the U.S. Virgin Islands
architectural firm of deJongh & Associates.

Anthony S. Fugett has been a director of TLC Beatrice since January 1993.
Since May 1989, he has been President and Chief Executive Officer of ASF
Systems, Inc., a computer systems integration company. From 1977 through May
1989, he was an executive with the International Business Machines Corporation.
He is a brother-in-law of Loida Nicolas Lewis and uncle of Leslie N. Lewis.

Leslie N. Lewis has been a director of TLC Beatrice since December 1991.
Beginning in 1991, Ms. Lewis attended Harvard University, from which she
graduated in 1995. She has held summer analyst positions at McKinsey & Co.
during the summer of 1994, TLC Beatrice during the summer of 1993 and at Lion
Advisors, L.P. during the summer of 1992. She is the daughter of Loida Nicolas
Lewis and the niece of Imelda M. Nicolas and Anthony S. Fugett.

James E. Obi has been a director of TLC Beatrice since February 1988. For
more than five years Mr. Obi has been a Chartered Life Underwriter and Agency
Manager for The Equitable Life Assurance Society of the United States.

Ricardo J. Olivarez has been a director of TLC Beatrice since February
1988. Since April 1988, he has been the Controller of Southern California
Association of Governments.

Samuel P. Peabody has been a director of TLC Beatrice since February 1988.
For more than five years, Mr. Peabody has been an educational consultant.

William H. Webster has been a director of TLC Beatrice since May 24, 1996.
Since September 1991, Mr. Webster has been a partner with the law firm of
Milbank, Tweed, Hadley & McCloy. From May 1987 through September 1991, Mr.
Webster served as Director of Central Intelligence. From February 1978 through
May 1987, Mr. Webster served as Director of the Federal Bureau of Investigation.
Mr. Webster is a director of Anheuser-Busch Companies, Inc., Maritz Inc. and
Pinkerton, Inc.

COMPENSATION OF DIRECTORS

Directors who are employees of TLC Beatrice do not receive any special
compensation for their services as directors. During 1995 each outside director
of TLC Beatrice was paid an annual fee of $20,000 and a fee of $1,200 plus
travel-related expenses for each meeting of the Board of Directors or committee
of the Board of Directors attended.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth the compensation paid by TLC Beatrice to (i)
its Chairman of the Board and Chief Executive Officer and (ii) each of the four
most highly compensated individuals serving as executive officers of the Company
at the end of 1995 (collectively, the 'Named Executives'), for services rendered
in all capacities to TLC Beatrice during the periods indicated.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ----------------
----------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS/SARS (#) COMPENSATION($)
- ---------------------------------- ---- -------- -------- ------------------ ---------------- ----------------

<S> <C> <C> <C> <C> <C> <C>
Loida Nicolas Lewis 1995 -- 750,000 -- -- --
Chairman of the Board 1994 -- -- -- -- --
and Chief Executive 1993 -- -- -- -- --
Officer(1)
Dennis P. Jones 1995 250,000 155,000 -- -- 4,620(2)
Executive Vice President, 1994 195,000 101,250 -- -- 4,620(2)
Operations 1993 180,000 170,000 -- -- 4,497(2)
Peter Offermann 1995 240,000 150,000 -- -- 1,072(2)
Executive Vice President and 1994 10,239 40,000 -- -- --
Chief Financial Officer(3) 1993 -- -- -- -- --
Reynaldo P. Glover 1995 275,000 115,000 -- -- 4,620(2)
Executive Vice President, 1994 232,500 140,000 -- 100,000(4) 4,620(2)
General Counsel and Assistant 1993 -- -- -- -- --
Secretary; Director(5)
Carl Brody 1995 245,830 125,000 -- -- 4,620(2)
Senior Vice President, Director 1994 221,250 125,000 -- -- 4,620(2)
of Taxes 1993 180,000 110,000 -- -- 4,497(2)
</TABLE>

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

(1) Loida Nicolas Lewis became Chairman of TLC Beatrice effective February 1,
1994 and Chief Executive Officer on July 27, 1994. She did not receive any
salary or bonus for her services to TLC Beatrice in 1994 and only received a
bonus for 1995. Mrs. Lewis did, however, receive compensation from TLC
Group, L.P. in the amount of $700,000 in 1993 and $1 million in each of 1995
and 1994. TLC Beatrice paid TLC Group an annual fee of $1 million pursuant
to the Stockholders' Agreement in each of 1993, 1994 and 1995. See 'Certain
Transactions.'

(2) Reflects TLC Beatrice-matching contributions to the Beatrice International
Savings Plan, as allowable under Section 401(k) of the Internal Revenue Code
of 1986, as amended.

(3) Mr. Offermann is the President of Offermann Financial, Inc., which provided
financial advisory services to TLC Beatrice prior to Mr. Offermann joining
the Company in December 1994. TLC Beatrice paid fees to Offermann Financial,
Inc. of $150,000 in 1994. See 'Certain Transactions.'

(4) Pursuant to his employment agreement, Mr. Glover received 100,000 stock
appreciation rights ('SARs') in 1994, 25,000 of which vested in each of 1994
and 1995. The remaining SARs have been cancelled. See ' -- Employment and
Other Agreements.'

(5) Mr. Glover is of counsel to the law firm Rudnick & Wolfe, which has been and
continues to be retained by TLC Beatrice to perform legal services on behalf
of TLC Beatrice. TLC Beatrice paid fees to Rudnick & Wolfe of approximately
$248,000 in 1994 and approximately $1,283,000 in 1995. In addition, prior to
July 1994, Mr. Glover was a general partner of Miller, Shakman, Hamilton,
Kurtzon and Schlifke, a law firm which was retained by TLC Beatrice to
perform substantial services in 1994. The fees paid to Miller, Shakman,
Hamilton, Kurtzon and Schlifke and Mr. Glover for legal services in 1994
were approximately $147,000. See 'Certain Transactions.'

The following table contains information regarding grants of stock options
and SARs made to the Named Executives in 1995.

OPTION/SAR GRANTS IN 1995

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
PERCENT
OF
NUMBER TOTAL
OF OPTIONS/
SHARES SARS POTENTIAL REALIZABLE VALUE AT
UNDERLYING GRANTED ASSUMED ANNUAL RATES OF STOCK
OPTIONS/ TO PRICE APPRECIATION FOR OPTION
SARS EMPLOYEES EXERCISE OR TERM
GRANTED IN 1995 BASE PRICE EXPIRATION -------------------------------
NAME (#) (%) ($/SHARE) DATE 5% ($) 10% ($)
- --------------------------------------- ---------- --------- ------------- ---------- -------------- --------------

<S> <C> <C> <C> <C> <C> <C>
Loida Nicolas Lewis.................... -- -- -- -- -- --
Dennis P. Jones........................ -- -- -- -- -- --
Peter Offermann........................ -- -- -- -- -- --
Reynaldo P. Glover..................... -- -- -- -- -- --
Carl Brody............................. -- -- -- -- -- --
</TABLE>

The following table sets forth information regarding SARs held by the Named
Executives as of the end of 1995.

AGGREGATED OPTION/SAR EXERCISES IN 1995 AND
YEAR-END 1995 OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL YEAR-END AT FISCAL YEAR-END
SHARES (#) ($)
ACQUIRED VALUE ------------------ --------------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------ ----------- -------- ------------------ --------------------

<S> <C> <C> <C> <C>
Loida Nicolas Lewis................. -- -- -- --
Dennis P. Jones..................... -- -- -- --
Peter Offermann..................... -- -- -- --
Reynaldo P. Glover.................. -- -- 0/50,000 0/0(1)
Carl Brody.......................... -- -- --
</TABLE>

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

(1) There is no trading market for the Common Stock. However, based on the book
value of the Common Stock, which was $10.62 per share as of December 31,
1995, and certain other factors, TLC Beatrice believes that the SARs held by
Mr. Glover were not in-the-money on December 31, 1995.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's compensation policies are determined and executive officer
compensation decisions are made by the Compensation Committee of the Board of
Directors (the 'Compensation Committee'). During 1995, the members of the
Compensation Committee were Anthony S. Fugett, Robert C. deJongh, James E. Obi
and Paul A. Biddelman. Lee A. Archer, Jr. acted as an alternate member of the
Compensation Committee.

During 1995, none of the members of the Compensation Committee was an
officer or employee of TLC Beatrice or any of its subsidiaries or a former
officer of TLC Beatrice or any of its subsidiaries.

EMPLOYMENT AND OTHER AGREEMENTS

The Company is a party to employment agreements with Reynaldo P. Glover,
Daniel Jux and Vincent P. O'Sullivan and was a party to an employment agreement
with Carl Brody which terminated on December 31, 1995. Mr. Glover's employment
agreement commenced August 1, 1994 and can be terminated by Mr. Glover upon at
least six months' prior written notice or by TLC Beatrice, with or without
cause, effectively immediately upon written notice. Under such agreement, Mr.
Glover receives

a base salary of $275,000 per annum and an annual performance bonus determined
in accordance with TLC Beatrice's management incentive plan. TLC Beatrice paid
Mr. Glover an additional one-time signing payment of $100,000 in 1994. Pursuant
to his employment agreement, Mr. Glover also received (subject to vesting)
100,000 SARs in 1994 with an exercise price of $30.00 per share under the TLC
Beatrice Stock Incentive Plan (the '1992 Plan'). Twenty-five thousand of these
SARs vested in each of 1994 and 1995 and the remaining SARs were cancelled in
1996 upon the adoption of the TLC Beatrice 1996 Long Term Incentive Stock Option
Plan. See ' -- 1996 Long Term Incentive Stock Option Plan.' The outstanding SARs
will become exercisable for a period of 90 days either upon a Change of Control
(as defined in the 1992 Plan) or, at TLC Beatrice's option, when Mr. Glover
leaves TLC Beatrice. Mr. Glover is also eligible to participate in TLC
Beatrice's benefit plans offered generally to executive employees and is
eligible for certain other fringe benefits. Upon termination by TLC Beatrice,
other than for cause, Mr. Glover is entitled to receive two years' base pay if
terminated in the first year, eighteen months' base pay if terminated in the
second year and one years' base pay if terminated in the third year or later,
such amounts in all cases to be paid on a monthly basis.

Mr. O'Sullivan has separate employment agreements with TLC Beatrice and
Tayto. Mr. O'Sullivan's employment agreement with TLC Beatrice commenced January
1, 1994 and can be terminated by Mr. O'Sullivan upon at least six months' prior
written notice or by TLC Beatrice, with or without cause, immediately upon
written notice. Under such agreement, Mr. O'Sullivan receives a base salary of
$100,000 per annum and an annual performance bonus determined in accordance with
TLC Beatrice's management incentive plan. Under such agreement, Mr. O'Sullivan
waived coverage under all fringe benefit programs maintained or offered by TLC
Beatrice to its employees except the Beatrice International Pension Plan and
those benefits provided for specifically in his employment agreement. Upon
termination, other than for cause, Mr. O'Sullivan is entitled to receive regular
salary and bonus for a period equal to the number of full months that elapse
following December 31, 1993 and prior to termination during which Mr. O'Sullivan
served as President of the Grocery Products Division, up to a maximum of 30
months.

Mr. O'Sullivan's employment agreement with Tayto commenced January 1, 1994,
and has a three-year term which can be extended until Mr. O'Sullivan reaches age
65. Such agreement can be terminated by Mr. O'Sullivan upon at least six months'
prior written notice or by Tayto, with or without cause, upon thirty days' prior
written notice. Under such agreement, Mr. O'Sullivan receives a base salary of
85,000 Irish pounds per annum and an annual performance bonus in accordance with
TLC Beatrice's management incentive plan. Under such agreement, Mr. O'Sullivan
is eligible to participate in the Tayto Ltd. Non-Contributory Pension Plan, and
is entitled to certain fringe benefits. Upon termination other than for cause or
following six months' prior written notice of termination by Mr. O'Sullivan
following a change in control (as defined in such agreement), Mr. O'Sullivan is
entitled to receive his current base salary and target bonus for the unexpired
term of such agreement.

Mr. Jux has an employment agreement with TLC France, which commenced
September 1, 1988 and is terminable at any time, with or without cause, by
either TLC France or Mr. Jux upon six months' prior notice. Mr. Jux receives
base salary of 1,350,000 French Francs per annum plus an annual performance
bonus of up to 60% of base salary, the exact amount depending on the achievement
of certain financial objectives established each year by TLC France. In
addition, Mr. Jux is entitled to participate in the retirement and insurance
plans of TLC France and is eligible for certain other customary fringe benefits.
Upon termination, other than for serious professional misconduct, Mr. Jux is
entitled to a lump-sum payment equal to six months' base salary.

On November 30, 1995, TLC Beatrice entered into a termination agreement
with Carl Brody as part of Mr. Brody's retirement from TLC Beatrice, which was
effective on December 31, 1995. Pursuant to the terms of this agreement, Mr.
Brody will be paid $250,000 during calendar year 1996, payable semi-monthly. Mr.
Brody has also been retained as a consultant to TLC Beatrice for the years 1996,
1997 and 1998, for which Mr. Brody will be paid a fee of $25,000 per year,
payable semi-monthly. In addition, pursuant to his termination agreement, Mr.
Brody is to be paid or has been paid the following amounts: $125,000 on January
15, 1996 as a bonus for 1995; a lump-sum payment of $139,836 on January 15, 1996
under the Beatrice International Supplemental Pension Plan; and a $465,000
severance payment on March 15, 1996. Mr. Brody will continue to participate in
benefit plans of TLC

Beatrice until the earlier of 18 months from December 31, 1995 or the date Mr.
Brody commences other employment pursuant to which Mr. Brody is entitled to
benefits similar to those being provided by TLC Beatrice.

In 1994, TLC Beatrice entered into various termination agreements with
certain of its former executive officers (including Mr. Jean S. Fugett, Jr., Mr.
Albert Fenster, Mr. David A. Guarino and Mr. W. Kevin Wright), in connection
with the termination of such executive officers' employment, providing for total
payments of $5,845,000 and continuation of certain benefits for a period not to
exceed eighteen months. In the case of Mr. Fugett and Mr. Fenster, the
termination agreements were in settlement of the Company's obligations under
their respective employment agreements. Total severance payments paid to Mr.
Fugett, Mr. Fenster, Mr. Guarino and Mr. Wright were approximately $2.1 million,
$1.8 million, $960,000, and $960,000, respectively. Mr. Wright was retained as a
consultant to TLC Beatrice for a one year term ending July 14, 1995, for which
he was paid $200,000.

EMPLOYEE BENEFIT PLANS

Beatrice International Pension Plan. Generally, employees of TLC Beatrice
and participating subsidiaries and affiliates of TLC Beatrice ('Participating
Employers') who are in executive, managerial, technical, professional,
administrative, clerical or sales positions or who are members of covered
collective bargaining units, and who have performed 1,000 hours of service, are
covered by the Beatrice International Pension Plan ('BIPP'), which is designed
to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the 'Code'). BIPP provides a monthly retirement benefit at age 65 equal to 1.5%
of final average monthly earnings multiplied by years of benefit service, less
1.5% of monthly Social Security benefits multiplied by years of benefit service
(not to exceed, however, 50% of monthly Social Security benefits), reduced by
amounts payable under other defined benefit plans. 'Final average monthly
earnings,' as defined in BIPP, means average monthly cash compensation
(excluding payments under long-term incentive plans and expense reimbursements)
over five consecutive years for which earnings were highest during a
participant's last fifteen calendar years of employment, or if greater, the 60
consecutive months during the last 120 months of service during which earnings
were highest. BIPP also provides early retirement benefits and a surviving
spouse benefit if a participant dies after satisfying certain requirements.

The normal form of payment under BIPP is a life annuity if the participant
is unmarried, or a 50% joint and survivor annuity, if married. There are,
however, optional forms of payment available, including other joint and survivor
annuities, and a life annuity with a guaranteed payment period of up to fifteen
years. The Code imposes a limitation on the benefits that may be paid under BIPP
as of January 1, 1989. The amount of annual compensation which could be taken
into account for benefit plan purposes in 1995 and 1994 was $150,000. The 1993
limit was $235,840. The Company has a non-qualified supplemental pension plan to
provide benefits that participants would have been entitled to receive under
BIPP were it not for these and other limitations.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ----------------------------------------------- -------- -------- -------- -------- --------

Based on estimated Social Security benefit levels, the table reflects
annual benefit payments under BIPP and the non-qualified supplemental pension
plan in the form of a straight life annuity to

participants at specified annual salary levels and with specified lengths of
service under BIPP. BIPP provides that (i) the definition of the term 'final
average monthly earnings' for purposes of that plan includes earnings through
the month of termination, (ii) the reduction factors for early retirement and
deferred pensions are 6% for each year between ages 55 and 60 and (iii) no
reduction factors apply above age 60 or above age 55 if the sum of the
participant's age and years of service is at least 90. At December 31, 1995, Mr.
Jones had 17 years of credited service and Messrs. Glover and Offermann each had
one year of credited service for purposes of BIPP. Mr. Brody is receiving
monthly payments of approximately $1,100 under the BIPP. No other Named
Executive has any credited years of service for purposes of BIPP.

Beatrice International Supplemental Pension Plan. The Beatrice
International Supplemental Pension Plan ('SPP') provides supplemental retirement
income for participants and their beneficiaries. A participant is any employee
of TLC Beatrice or any of its affiliates or subsidiaries who is a participant
under BIPP. Participants are entitled to receive the actuarial equivalent of (i)
the amount by which their benefits under BIPP are reduced as a result of the
operation of Sections 415 (limit on benefits) and 401(a)(17) (annual limit on
compensation) of the Code and (ii) the amount by which their benefits under BIPP
and SPP are reduced due to the deferral of their compensation after 1985.
Additionally, officers of TLC Beatrice holding the office of Vice President or
higher, whose employment with TLC Beatrice and its affiliates terminates after
any 'change in control' (as defined in SPP) and before their benefit under BIPP
becomes nonforfeitable, shall be entitled to an amount equal to the benefit
under BIPP that they would have been entitled to had they performed the minimum
number of years of service necessary to qualify for a benefit thereunder.
Benefits shall be calculated on the basis of a monthly benefit for the life of
the employee and are paid in a lump sum or, in the sole discretion of the
committee which administers BIPP and SPP, in any form of benefit provided for
under BIPP.

Beatrice International Savings Plan. The Beatrice Companies, Inc.'s Board
of Directors approved the establishment of the Beatrice Employee Savings Trust
(the 'Prior Plan'), which became effective July 1, 1984. Effective as of
December 1, 1987, TLC Beatrice established the Beatrice International Savings
Plan ('BISP') for the benefit of its employees and retirees, and those of
Participating Employers, who were employees and retired employees of Beatrice
International Food Company and who participated or were eligible to participate
in the Prior Plan. Other salaried and hourly employees of the Company and
Participating Employers (and part-time employees who have completed a year of
service with the Company or a Participating Employer) are also eligible to
participate in BISP if they so elect. BISP is designed to qualify under Sections
401(a) and 401(k) of the Code as a profit-sharing plan. BISP allows participants
to defer up to 17% of their eligible compensation on a pre-tax basis, except
that pre-tax contributions were limited to $9,240 for 1995 and 1994, and $8,994
for 1993 to conform with the Tax Reform Act of 1986. Subject to certain
limitations, the BISP also permits participants to make after tax contributions.
TLC Beatrice and Participating Employers make matching contributions of 50% of
the amount of salary deferral and after-tax contributions (up to 6% of
compensation) elected by a BISP participant.

Amounts contributed for a participant are held in trust until distributed
either in a lump sum, or installments, pursuant to the provisions of the plan.
All employee contributions are 100% vested. Fifty percent of the employer's
contributions vest after three years of employment. One hundred percent of the
employer's contributions vest after five years of employment. Employee
contributions and employer matching contributions are invested at the employee's
discretion in investment alternatives offered by the plan.

During 1995, TLC Beatrice made contributions to BISP on behalf of Messrs.
Jones, Offermann, Glover and Brody in the amounts of $4,620, $1,072, $4,620 and
$4,620, respectively.

Management Incentive Plan. Until January 1996, TLC Beatrice's eligible
senior management employees, as approved by the Chairman and Chief Executive
Officer, participated in TLC Beatrice's Management Incentive Plan ('MIP').
Certain other members of management participated at the discretion of officers
named in MIP. Participants in MIP earned annual bonuses based upon (i) the
yearly financial performance of the business unit of the Company for which they
performed services, as compared with the financial targets set for it by members
of TLC Beatrice's management; and (ii) individual performance, as compared with
individual performance goals developed jointly by

participants and their supervisors. The maximum bonus that could be earned under
MIP varied from 85% of a participant's base salary (for the most highly
compensated participants) to 25% of a participant's base salary (for the least
highly compensated participants). Base salary meant gross earnings before BISP
deferrals for the applicable year, excluding MIP bonuses, long-term incentive
awards, overbase allowances, imputed income from fringe benefit plans and
non-recurring payments such as moving expenses. The criteria used in developing
financial targets included the operating earnings, cash flow and return on total
capital for the business unit of the participant. Individual performance goals
included both quantifiable and non-quantifiable criteria and incorporated
specific objectives, plans of action and timetables for accomplishment. The
Chairman and Chief Executive Officer could, prior to the end of the applicable
year, change financial targets or individual performance goals.

The MIP was terminated in January 1996 upon adoption of the TLC Beatrice
Annual Incentive Plan.

ANNUAL INCENTIVE PLAN

On January 19, 1996, the Board of Directors of TLC Beatrice established the
TLC Beatrice 1996 Annual Incentive Plan (the 'Annual Incentive Plan') for the
purpose of promoting the long-term financial performance of the Company by
providing incentive compensation opportunities to officers, managers and other
key employees of TLC Beatrice and its subsidiaries. Each participant's award
under the Annual Incentive Plan for any fiscal year is based on the Company's
financial performance as well as, where appropriate, the participant's own
individual performance. The Annual Incentive Plan is administered by the
Compensation Committee.

Participants in the Annual Incentive Plan are chosen by the Compensation
Committee, upon the recommendation of the Chief Executive Officer of TLC
Beatrice. At the beginning of each fiscal year, an individual target award (an
'Individual Target Award') is established for each participant based on a
percentage of such participant's base salary. The Annual Incentive Plan
contemplates that the applicable percentage will vary by Company position and
range from 10% to 75% of base salary, as determined by the Compensation
Committee. Actual awards under the Annual Incentive Plan are based on the
following factors: (i) the Company's actual earnings from operations ('Actual
Earnings') as compared to targeted earnings ('Target Earnings') established at
the beginning of each fiscal year; (ii) the Company's achievement of any other
special, strategic or other performance factors; and (iii) the individual
performance of each participant.

The maximum amount of funds made available by the Company for the purpose
of making awards under the Annual Incentive Plan in any fiscal year (the
'Maximum Available Awards Fund') is the aggregate amount of all Individual
Target Awards established at the commencement of the fiscal year (the 'Incentive
Award Pool') multiplied by a percentage based on the Company's Actual Earnings
as compared to Target Earnings for such fiscal year. Depending on Actual
Earnings, the Maximum Available Awards Fund in any fiscal year may equal from 0%
to 150% of the Incentive Award Pool. The Chief Executive Officer and the
Compensation Committee also have discretion to increase or decrease the Maximum
Available Awards Fund in any year based on other performance measures that are
deemed appropriate. The amount of the award paid to each participant is equal to
such participant's proportionate share (based on his or her Individual Target
Award) of the Maximum Available Awards Fund, subject to adjustment by the
Compensation Committee.

1996 LONG TERM INCENTIVE STOCK OPTION PLAN

the 1996 Stock Option Plan in any calendar year, as determined by the Board of
Directors. The exercise price for an option granted pursuant to the 1996 Stock
Option Plan which is intended to meet the requirements of Section 422(b) of the
Code (an 'ISO'), which may be granted only to a Key Employee, cannot be less
than 100% (or 110% in certain cases) of the fair market value (as calculated in
accordance with the 1996 Stock Option Plan) of a share of Common Stock on the
date the ISO is granted. The exercise price for each non-ISO option granted
pursuant to the 1996 Stock Option Plan (a 'NQSO'), which may be granted to
either a Key Employee or a Consultant, shall be determined by the Board of
Directors on the date that the NQSO is granted. Each option granted under the
1996 Stock Option Plan shall be evidenced by a stock option agreement between
the Key Employee or Consultant, as the case may be, and TLC Beatrice, which
agreement may contain additional terms not inconsistent with the 1996 Stock
Option Plan.

Each option granted under the 1996 Stock Option Plan shall become
exercisable, in full or in part, as the Board of Directors determines, provided
that no option may become exercisable prior to the later of the listing of the
Common Stock on any national securities exchange or interdealer quotation system
or thirty months from the grant of such option. The Board of Directors may
postpone the exercise of an option in order to (i) effect or maintain
registration or qualification of the 1996 Stock Option Plan, or Common Stock
issuable thereunder, under any applicable securities law, (ii) take any action
required to comply with restrictions incident to the listing on any securities
exchange of, or the maintenance of a public market for, the Common Stock or
(iii) determine that the actions described in (i) or (ii) need not be taken. No
postponement of the exercise of an option granted under the 1996 Stock Option
Plan will extend the termination or expiration date of such option. In the event
of a Change of Control (as defined in the 1996 Stock Option Plan) of TLC
Beatrice, any unvested options shall become fully vested and immediately
exercisable.

Each option granted under the 1996 Stock Option Plan shall terminate as
determined by the Board of Directors, but not later than the earliest of (i) ten
years (or five years in the case of certain ISOs) from the date of grant, (ii)
ninety days after the grantee's employment or relationship with TLC Beatrice
terminates other than 'for cause' (as defined in the 1996 Stock Option Plan),
(iii) two years after the grantee's employment or relationship with TLC Beatrice
terminates other than 'for cause' if such termination occurs within two years
following a Change of Control of TLC Beatrice and (iv) immediately upon the
termination of the grantee's employment or relationship with TLC Beatrice 'for
cause.' The 1996 Stock Option Plan will terminate on December 31, 2000, unless
terminated earlier by the Board of Directors.

Provisions of the 1996 Stock Option Plan relating to extension of its
termination date, the amount of Common Stock for which options may be granted,
the eligibility standards for participants and the period during which options
may be exercised may only be amended with shareholder approval. Amendment or
termination of the 1996 Stock Option Plan shall not affect the validity or terms
of any option previously granted thereunder in a manner adverse to the grantee
without the consent of such grantee.

On January 19, 1996, the Board of Directors of TLC Beatrice granted options
with respect to 563,000 shares of Common Stock to seventeen Key Employees under
the 1996 Stock Option Plan, subject to shareholder approval of the 1996 Stock
Option Plan. These options will become exercisable in accordance with the 1996
Stock Option Plan at an exercise price equal to the greater of $25.00 per share
or the fair market value (as calculated in accordance with the 1996 Stock Option
Plan) of a share of Common Stock on the date the 1996 Stock Option Plan receives
shareholder approval.

1992 STOCK INCENTIVE PLAN

In December 1992, TLC Beatrice established a Stock Incentive Plan (the
'1992 Plan') to reward officers, key employees and directors for service to the
Company and to provide incentives for future service and enhancement of
shareholder value. The Compensation Committee administers the 1992 Plan. The
1992 Plan provided for awards of up to 500,000 stock appreciation rights
('SARs') to directors and key employees and up to 100,000 shares of phantom
stock to officers and members of TLC Beatrice's management, each as determined
by the Compensation Committee. With the adoption

of the 1996 Stock Option Plan, no further awards of SARs or phantom stock will
be made under the 1992 Plan. See ' -- 1996 Long Term Incentive Stock Option
Plan.'

Upon a Change in Control (as defined in the 1992 Plan) or, at TLC
Beatrice's option, when a plan participant leaves the Company, TLC Beatrice will
pay to the participant in cash the fair market value of the aggregate number of
SARs and phantom stock awarded to such participant less the Exercise Price (as
defined in the 1992 Plan) of each SAR or share of phantom stock. Under the 1992
Plan, in the event that the Common Stock is not traded in the public market, the
determination of fair market value, both for purposes of SARs and phantom stock
rights, is determined solely at the discretion of the Compensation Committee.
The 1992 Plan does not provide any parameters limiting the Compensation
Committee in this regard, and there are a variety of permissible methods for
determining fair market value. Awarded SARs and shares of phantom stock are
subject to forfeiture under certain circumstances.

On December 1, 1992, 5,000 SARs were awarded to each member of the Board of
Directors and to several key employees, for a total of 55,000 SARs. In 1993,
25,000 shares of phantom stock were awarded to certain members of TLC Beatrice's
management. In 1994, 200,000 SARs were awarded to certain members of TLC
Beatrice's management. Also during 1994, the rights to 20,000 shares of phantom
stock and 10,000 SARs were waived pursuant to certain severance agreements of
key management personnel. In January 1995, 75,000 of the 200,000 SARs awarded in
1994 were forfeited in connection with the termination of certain employment
agreements. In January 1996, 50,000 SARs awarded under the 1992 Plan were
cancelled with the adoption of the 1996 Stock Option Plan.

FINANCIAL COUNSELING PLAN

Each executive officer of TLC Beatrice is entitled to annual financial
counseling services having a value of $3,000 to $10,000 depending on his or her
position, and certain senior officers are entitled to an additional $5,000 for
an estate review in the fifth year of participation and the year of retirement.
The financial counseling services include tax and estate planning, tax return
preparation assistance and personal financial management advice.

BEATRICE INTERNATIONAL FOOD COMPANY SEVERANCE POLICY

TLC Beatrice maintains the Beatrice International Food Company Severance
Policy (the 'Policy') for eligible employees who are not exempt under the
Federal Fair Labor Standards Act and are employed on a full-time basis at TLC
Beatrice's corporate headquarters (the 'Covered Employees'). TLC Beatrice may,
in its sole discretion, extend the policy to non-exempt persons employed by one
or more of its divisions or subsidiaries. Severance benefits are available to
employees who are unemployed following termination without cause or resignation
with good reason. TLC Beatrice may, in its sole discretion, award severance pay
to an employee terminated for poor job performance or may classify any
termination as a 'special situation separation' and establish a separate
severance policy. Covered Employees who become unemployed because of death,
disability or misconduct are not eligible for benefits under the Policy. A
Covered Employee who is bonus eligible and is in salary grade 14 or above is
entitled to an amount equal to (i) one year's base salary at the highest annual
rate in effect during the three-year period prior to termination of employment
and (ii) his target bonus under the bonus plan in effect at the date of
termination. A Covered Employee who is not bonus eligible or is in salary grade
15 or below is entitled to an amount equal to nine months' base salary at the
highest annual rate in effect during the three-year period prior to termination
of employment. Benefits are paid on a schedule determined by TLC Beatrice. If an
employee is entitled to receive severance pay benefits, he is entitled to
continue receiving basic health and welfare plan benefits until the earliest of
(i) the date the Covered Employee is covered by another employer's plan, (ii)
the date that is six months after a Covered Employee receives a severance
payment in a lump sum or (iii) the date the Covered Employee ceases to receive
severance pay installments. In 1995, 1994 and 1993, excluding termination
agreements with certain of TLC Beatrice's former executive officers (see
' -- Employment and Other Agreements'), accruals in the amount of $600,000,
$700,000 and $1.2 million, respectively, were set up for severance payments to
be made in 1994 through 1996 under the Policy.

CERTAIN TRANSACTIONS

In August 1987, TLC Group, a New York limited partnership principally owned
and controlled by Mr. Reginald F. Lewis, acquired the rights to purchase the
international food operations of Beatrice Companies, Inc. for a cash purchase
price of $985 million, and, in connection with the Acquisition (which was
completed on December 1, 1987), TLC Group assigned such rights to TLC Beatrice.
To finance the Acquisition, TLC Beatrice, directly and through a finance
subsidiary, issued a package of debt and equity securities, including (i)
105,000 shares of Series B Increasing Rate Cumulative Exchangeable Redeemable
Preferred Stock ('Series B Preferred Stock'), all of which were purchased by Mr.
Lewis or TLC Holdings Corp., a Delaware corporation owned and controlled by Mr.
Lewis ('TLC Holdings'), for a total aggregate consideration of $10.5 million,
(ii) 9 million shares of Common Stock of which 5.3 million shares were purchased
by TLC Beatrice International Partners, L.P., a Delaware limited partnership
('TLC Partners'), for $5.3 million and (iii) 200,000 shares of Common Stock
which were purchased by trusts for Mr. Lewis' children for $200,000. TLC
Partners has been dissolved, and until January 19, 1996 TLC Holdings directly
owned 4,300,000 shares formerly held by TLC Partners, plus an additional 34,000
shares. During 1991, in connection with the redemption of all of the Company's
Series A Increasing Rate Cumulative Exchangeable Redeemable Preferred Stock, TLC
Beatrice redeemed and repurchased all of its Series B Preferred Stock at 100% of
redemption value. The Series B Preferred Stock, purchased by Mr. Lewis and TLC
Holdings for approximately $11 million in 1987, had a redemption value of
approximately $18 million. During 1992, TLC Beatrice redeemed and repurchased
all of its Series C Increasing Rate Cumulative Exchangeable Redeemable Preferred
Stock ('Series C Preferred Stock') at 100% of redemption value of approximately
$3 million.

Carlton was the sole limited partner of TLC Partners and with the
dissolution of TLC Partners owned directly 1,000,000 shares formerly held by TLC
Partners. Carlton has since transferred 406,201 shares and currently claims to
own 593,799 shares. In addition, Carlton, through a nominee, claims to own or
control an additional 1,425,092 shares Common Stock that were acquired for
$1,425,092 in 1987. See 'Security Ownership of Principal Stockholders and
Management.'

On January 19, 1996, TLC Holdings was merged with TLCB Acquisition Corp.
('TLCB'), a newly formed wholly owned subsidiary of TLC Beatrice, with TLC
Holdings being the surviving corporation. Subsequent to the merger of TLC
Holdings with TLCB, TLC Holdings was merged into TLC Beatrice with TLC Beatrice
being the surviving corporation. As a result of these transactions, the shares
of Common Stock formerly held by TLC Holdings have been cancelled and an equal
number of shares were issued directly to the Lewis Estate.

TLC Beatrice and Mr. Lewis entered into a Fee Agreement dated November 30,
1987, pursuant to which TLC Beatrice agreed to pay Mr. Lewis a fee, payable in
Series C Preferred Stock, at any time at TLC Beatrice's option after January 15,
1988 and before January 15, 1993, for services rendered in originating,
negotiating and consummating the Acquisition and the related financing
arrangements. The amount of the fee was approximately $7.6 million payable at
the Company's option in 76,335 shares of TLC Beatrice's Series C Preferred
Stock. TLC Beatrice recorded a liability in the amount of approximately $7.6
million in 1988. In January 1992, TLC Beatrice paid Mr. Lewis approximately
$14.8 million in cash, which included the fee of approximately $7.6 million in
lieu of the 76,335 shares of TLC Beatrice's Series C Preferred Stock, plus $7.2
million, an amount that was approximately equivalent to the dividends which
would have accrued on 76,335 shares of TLC Beatrice's Series C Preferred Stock,
had such shares been outstanding. To provide for the payment of this amount in
1992, TLC Beatrice recorded an expense of approximately $7.2 million in 1991, in
addition to the liability recorded in 1988.

TLC Beatrice and many of the original purchasers of TLC Beatrice's Common
Stock entered into the Stockholders' Agreement dated November 30, 1987, as
amended (the 'Stockholders' Agreement'). Under the Stockholders' Agreement,
prior to its termination, Institutional Investors (as defined in the
Stockholders' Agreement) holding at least 25% of the aggregate Registrable
Securities (as defined in the Stockholders' Agreement) then held by
Institutional Investors could make a written request to TLC Beatrice for
registration with the Commission in accordance with the provisions of the Act,
of all or part of their Registrable Securities (a 'Demand Registration'). Upon
such request, TLC Beatrice was required to include in the requested registration
(i) all Registrable Securities held by Institutional Investors, to the extent
requested by them, and (ii) all shares held by TLC Holdings or its successor

and by trusts for the benefit of Leslie N. Lewis and Christina S.N. Lewis (the
'Trusts'), to the extent requested by any of them; provided that Registrable
Securities held by TLC Holdings or its successor and the Trusts were not
required to be included in such registration if their inclusion would reduce the
number of Registrable Securities of Institutional Investors to be included in
such registration or adversely affect the sale price of the Institutional
Investors' Registrable Securities. TLC Beatrice was obligated to file a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective. Subject
to certain limitations set forth in the Stockholders' Agreement, the
Institutional Investors were entitled to two Demand Registrations, the expenses
of which were required to be borne by TLC Beatrice. If, by the date occurring
120 days after the request for a Demand Registration was delivered to TLC
Beatrice, a Demand Registration had not been declared effective, then, under
certain terms and conditions set forth in the Stockholders' Agreement, each
Institutional Investor could elect to sell, severally, to TLC Beatrice all, but
not less than all, of the Registrable Securities owned by such Institutional
Investor at a purchase price per share equal to the fair market value of such
Registrable Securities. Fair market value was to be determined by three
investment banking firms, selected in accordance with the Stockholders'
Agreement, on a fully-diluted basis (in accordance with generally accepted
accounting principles), assuming a liquid public market capable of absorbing
such Registrable Securities without discount from prevailing market prices, and
with no discount for the lack of control of TLC Beatrice. Institutional
Investors hold 4,396,740 shares of Common Stock. The Stockholders' Agreement,
prior to its termination, also provided for certain 'piggyback' registration
rights with respect to certain offerings of Common Stock.

On November 29, 1994, TLC Beatrice received a letter from Carlton, which
claimed to hold more than 25% of the Registrable Securities owned by the
Institutional Investors as a group, requesting a Demand Registration under the
Act of all of the shares it claimed to own or control. Following notice by the
Company of such request to all Institutional Investors, certain other
Institutional Investors gave notice of their requests to participate in the
registration. On March 20, 1995, Registration Statement No. 33-88602 was
declared effective under the Demand Registration provisions of the Stockholders'
Agreement, Post-Effective Amendment No. 1 thereto was declared effective on May
9, 1995, Post-Effective Amendments Nos. 2 and 3 thereto were declared effective
on August 21, 1995, Post-Effective Amendment No. 4 thereto was declared
effective on November 14, 1995 and Post-Effective Amendment No. 5 thereto was
declared effective on December 19, 1995. By letter dated October 23, 1995, TLC
Beatrice received a second request notice (the 'Second Request') from Carlton
requesting a second Demand Registration under the Act of all the shares it
claimed to own or control. TLC Beatrice and Carlton have agreed that the Second
Request would be satisfied by the extension of the effectiveness of Registration
Statement No. 33-88602. In addition, on December 19, 1995 Registration Statement
No. 33-80445 covering additional shares of Common Stock under the Second Request
was declared effective.

The Stockholders' Agreement by its terms terminated on July 1, 1995 except
for certain registration rights, including the Demand Registration rights, and
the possible rights of Institutional Investors to sell Registrable Securities to
TLC Beatrice in the event a Demand Registration had not been declared effective
by a date occurring 120 days after the request for a Demand Registration was
delivered to TLC Beatrice, which terminated on January 31, 1996, and except for
certain indemnification provisions which continue indefinitely. Reference is
hereby made to the full text of the Stockholders' Agreement, which has been
filed as an exhibit to the Registration Statements of which this Prospectus is a
part.

The Stockholders' Agreement, prior to its termination, permitted Carlton,
as well as a majority of Institutional Investors, to each appoint one person to
serve on TLC Beatrice's Board of Directors. Carlton had designated Paul A.
Biddelman as a director of TLC Beatrice, and he was elected as a director in
October 1993. While TLC Beatrice contends that the Stockholders' Agreement
terminated on July 1, 1995, Carlton has made a claim that the Stockholders'
Agreement did not terminate until September 8, 1995 because of settlement
discussions between the parties. TLC Beatrice has disputed Carlton's claim.
However, TLC Beatrice, in order to avoid further litigation with Carlton, did
not oppose Mr. Biddelman's re-election to the Board, and Mr. Biddelman was
re-elected at TLC Beatrice's annual meeting of stockholders held on July 28,
1995.

Pursuant to the Stockholders' Agreement, TLC Holdings received a fee (the
'Monitoring Fee') of $1 million per year. TLC Holdings assigned its right to
receive the Monitoring Fee to TLC Group. After such assignment, the Monitoring
Fee was paid directly to TLC Group. Loida Nicolas Lewis received payments from
TLC Group of $700,000 in 1993 and $1 million in each of 1995 and 1994. As of
January 1, 1996, Mrs. Lewis was compensated as an employee of TLC Beatrice and
the Monitoring Fee is no longer being paid.

Anthony S. Fugett, a Director of TLC Beatrice, is the president, chief
executive officer and sole stockholder of ASF Systems, Inc., a computer systems
integration company. From December 1992 through January 1994, ASF Systems, Inc.
provided consulting services to TLC Beatrice at a cost of $150,000 per annum
plus reimbursement of certain expenses.

Reynaldo P. Glover, Executive Vice President, General Counsel, Assistant
Secretary and a director of TLC Beatrice, is of counsel to the law firm of
Rudnick & Wolfe, a law firm which has been and continues to be retained by TLC
Beatrice to perform legal services on behalf of TLC Beatrice on specific
matters. The fees paid to Rudnick & Wolfe for legal services during 1994 were
approximately $248,000. The fees paid to Rudnick & Wolfe for legal services
during 1995 were approximately $1,283,000. The fees paid to Rudnick & Wolfe for
legal services during 1996 as of March 31, 1996 were approximately $431,000.
Prior to July 1994, Mr. Glover was a general partner of Miller, Shakman,
Hamilton, Kurtzon and Schlifke, a law firm which was retained by TLC Beatrice to
perform substantial legal services in connection with asset dispositions and
various other matters. The fees paid by TLC Beatrice to Miller, Shakman,
Hamilton, Kurtzon and Schlifke and Mr. Glover for legal services rendered from
March 15, 1994 to July 1, 1994 were approximately $147,000. Mr. Glover became an
employee of the Company in July 1994.

Peter Offermann, Executive Vice President and Chief Financial Officer of
TLC Beatrice, is the President of Offermann Financial, Inc., which provided
financial advisory services to TLC Beatrice in 1994. The fees paid to Offermann
Financial, Inc. for such services were approximately $150,000, plus
reimbursement of certain expenses.

Charles Clarkson, Secretary and Counsel of TLC Beatrice, was an independent
consultant to the Company from March 1993 through January 1994. Mr. Clarkson
received fees of approximately $200,000 in 1993 and $12,500 in 1994 prior to
becoming an employee of TLC Beatrice.

W. Kevin Wright, a former officer of TLC Beatrice, was a member of a law
firm which was retained by TLC Beatrice to perform substantial legal services in
connection with asset dispositions and various other corporate matters. The fees
paid by TLC Beatrice to Mr. Wright's firm, Lewis & Clarkson, for legal services
rendered during the year ended December 31, 1992 were approximately $700,000.
Mr. Wright's law firm ceased operations in 1992 and Mr. Wright became an
employee of TLC Beatrice. Mr. Wright's employment with TLC Beatrice ceased
during 1994, although he was retained as a consultant for a one-year term ending
July 14, 1995, for which he was paid $200,000.

SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of July 10, 1996, certain information
with respect to the beneficial ownership of shares of Common Stock of TLC
Beatrice of all persons known by TLC Beatrice to own beneficially 5% or more of
the outstanding shares of Common Stock. Except as noted below, each of the
persons listed has sole investment and voting power with respect to the shares
indicated. All information was determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, based on information furnished
by the persons listed or otherwise known to TLC Beatrice.

<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENTAGE OF
OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
- ---------------------------------------------------------------------- ----------------- -------------

<S> <C> <C>
Estate of Reginald F. Lewis .......................................... 4,378,260(2) 47.91%
c/o TLC Beatrice International Holdings, Inc.
9 West 57th Street
New York, NY 10019
Loida Nicolas Lewis .................................................. 4,478,260(2)(3) 49.00%
c/o TLC Beatrice International Holdings, Inc.
9 West 57th Street
New York, NY 10019
Leslie N. Lewis ...................................................... 4,378,260(2)(4) 47.91%
c/o TLC Beatrice International Holdings, Inc.
9 West 57th Street
New York, NY 10019
Carlton Investments .................................................. 2,018,891(5) 22.09%
c/o CS Manager Corporation
844 Moraga Drive
Los Angeles, CA 90049
MAC & Company ........................................................ 1,432,092(6) 15.67%
P.O. Box 360796M
Pittsburgh, PA 15251
Atwell & Company ..................................................... --(7) --
c/o U.S. Trust Company of New York
770 Broadway
New York, NY 10013
Cede & Co. ........................................................... --(8) --
Box 20
Bowling Green Station
New York, New York 10004
Baupost Entities ..................................................... 496,035(9) 5.43%
44 Brattle Street
Cambridge, Massachusetts 02238
</TABLE>

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

(1) At July 10, 1996, there were 9,138,465 shares of Common Stock outstanding.

(2) Loida Nicolas Lewis, the wife of the late Reginald F. Lewis, and Leslie N.
Lewis are the co-executrices of the Lewis Estate. Joint voting and
dispositive power with respect to the shares held by the Lewis Estate are
held by Loida Nicolas Lewis and Leslie N. Lewis. Accordingly, Loida Nicolas
Lewis and Leslie N. Lewis may be deemed to have shared power to vote and
shared investment power with respect to the 4,378,260 shares owned by the
Lewis Estate. Loida Nicolas Lewis, her two children, Leslie N. Lewis and
Christina S.N. Lewis, and The Reginald F. Lewis Foundation, Inc. are among
the beneficiaries of the Lewis Estate.

In addition, Loida Nicolas Lewis owns directly 100,000 shares of Common
Stock of TLC Beatrice.

(footnotes continued on next page)

(footnotes continued from previous page)

Not included in the figures in the table are (i) an additional 100,000
shares of Common Stock of TLC Beatrice owned directly by a trust for the
benefit of Leslie N. Lewis, of which Carolyn E. Fugett, her grandmother, is
trustee, with sole power to vote and sole investment power with respect to
such shares and (ii) an additional 100,000 shares of Common Stock of TLC
Beatrice owned directly by a trust for the benefit of Christina S.N. Lewis,
of which Carolyn E. Fugett, her grandmother, is trustee, with sole power to
vote and sole investment power with respect to such shares.

(3) Includes (i) 100,000 shares owned directly by Loida Nicolas Lewis and (ii)
4,378,260 shares owned by the Lewis Estate, as to all of which shares Loida
Nicolas Lewis may be deemed to be a beneficial owner. See Note (2).

(4) Includes shares of Common Stock owned by the Lewis Estate, as to all of
which shares Leslie N. Lewis may be deemed to be a beneficial owner. See
Note (2).

(5) Includes (i) 593,799 shares owned directly by Carlton and (ii) 1,425,092
shares held of record by MAC & Company, of which Carlton claims to be the
beneficial owner. TLC Beatrice has been advised that the general partner of
Carlton is CS Manager Corporation, and that the board of directors of CS
Manager Corporation is responsible for voting the shares of TLC Beatrice's
Common Stock owned directly by Carlton and the shares held of record by MAC
& Company. Paul A. Biddelman, a member of the Board of Directors of TLC
Beatrice, is a member of the board of directors of CS Manager Corporation.
To TLC Beatrice's knowledge, the remaining members of the board of directors
of CS Manager Corporation are Lowell Milken, Peter Ackerman and Robert
Davidow. To TLC Beatrice's knowledge, no other director, officer or
affiliate of TLC Beatrice is an affiliate of Carlton or MAC & Company.

(6) Includes 1,425,092 shares, of which Carlton claims to be the beneficial
owner, that are held of record by MAC & Company. See Note (5).

(7) Atwell & Company is the record holder of 554,210 shares, or 6.065%, of the
outstanding Common Stock. Atwell & Company is believed by TLC Beatrice to be
a nominee for various beneficial holders of the Common Stock of TLC
Beatrice, none of which individually owns and/or controls more than 5% of
TLC Beatrice's Common Stock.

(8) Cede & Co. is the record holder of 795,403 shares, or 8.704%, of the
outstanding Common Stock, including 496,035 shares which are believed to be
beneficially owned by the Baupost Entities. See Note (9). The remaining
shares of Common Stock owned of record by Cede & Co. are believed to be held
by Cede & Co. as a nominee for various beneficial owners of Common Stock,
none of which are believed to own and/or control more than 5% of TLC
Beatrice's Common Stock.

(9) The Baupost Entities include Baupost Partners, a general partnership
('Baupost Partners'), The Baupost Group, Inc. ('Baupost Group') and certain
affiliated persons and entities. TLC Beatrice has been advised that Baupost
Partners is the managing general partner of two limited partnerships (the
'Baupost Partnerships') which together own 327,935 shares of Common Stock of
TLC Beatrice. Baupost Group is a managing general partner of Baupost
Partners and also an investment adviser to an investment company registered
under the Investment Company Act of 1940 (the 'Baupost Fund') which owns
168,000 shares of Common Stock of TLC Beatrice. Seth A. Klarman is a
managing general partner of Baupost Partners and the president and majority
shareholder of Baupost Group. By virtue of their voting and/or dispositive
power with respect to the shares of Common Stock held by the Baupost
Partnerships and the Baupost Fund, Baupost Group and Seth A. Klarman may
each be deemed to be the beneficial owner of the 496,035 shares of Common
Stock held by the Baupost Entities.

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth, as of July 10, 1996, certain information
with respect to the beneficial ownership of shares of Common Stock of TLC
Beatrice by the Named Executives, each director individually who beneficially
owns shares of Common Stock, and all directors and executive officers of TLC
Beatrice as a group.

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
- ------------------------------------------------------------------- ----------------- -------------

<S> <C> <C>
Loida Nicolas Lewis................................................ 4,478,260(2)(3) 49.00%
Dennis P. Jones.................................................... -- --
Peter Offermann.................................................... -- --
Reynaldo P. Glover................................................. -- --
Carl Brody......................................................... 7,410 *
Leslie N. Lewis.................................................... 4,378,260(2)(4) 47.91%
All Directors and Executive Officers as a Group.................... 4,485,670(5) 49.09%
</TABLE>

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

* Less than 1%

(1) At July 10, 1996, there were 9,138,465 shares of Common Stock outstanding.

(2) See Note (2) to the table under 'Security Ownership of Principal
Stockholders and Management -- Principal Stockholders.'

(3) Includes 4,378,260 shares owned by the Lewis Estate, as to all of which
shares Loida Nicolas Lewis may be deemed the beneficial owner, and 100,000
shares owned directly by Loida Nicolas Lewis. See Note (2) to the table
under 'Security Ownership of Principal Stockholders and
Management -- Principal Stockholders.'

(4) Includes shares of Common Stock owned by the Lewis Estate, as to all of
which shares Leslie N. Lewis may be deemed the beneficial owner. See Note
(2) to the table under 'Security Ownership of Principal Stockholders and
Management -- Principal Stockholders.'

(5) The total for all directors and executive officers as a group represents the
4,478,260 shares as to which Loida Nicolas Lewis may be deemed the
beneficial owner and includes the 4,378,260 shares of which Leslie N. Lewis
may be deemed the beneficial owner, and 7,410 shares owned by Carl Brody,
the former Senior Vice President, Director of Taxes of the Company. See Note
(2) to the table under 'Security Ownership of Principal Stockholders and
Management -- Principal Stockholders' and Notes (2) and (4) above. Other
than Leslie N. Lewis and Loida Nicolas Lewis, no director owns any shares of
the Common Stock of TLC Beatrice.

SELLING STOCKHOLDERS

The following table sets forth the name of each Selling Stockholder, the
number of shares of Common Stock owned by such Selling Stockholder prior to the
Offering, the number of shares to be offered by such Selling Stockholder in the
Offering and the number of shares to be owned by such Selling Stockholder after
completion of the Offering, assuming that all shares offered in the Offering are
sold.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER
SHARES SHARES OF SHARES
NAME OF SELLING OWNED BEFORE OFFERED FOR OWNED AFTER
STOCKHOLDER(1) OFFERING SALE OFFERING
- ---------------------------------------------------------------- ------------ ------------ -----------
<S> <C> <C> <C>
MAC & Company................................................... 1,432,092 1,432,092 0
Carlton Investments............................................. 593,799 593,799 0
Atwell & Co..................................................... 554,210 554,210 0
Inex Holdings................................................... 406,201 406,201 0
Oak Tree Partners, L.P.......................................... 279,468 279,468 0
Gerald B. Unterman.............................................. 148,888 148,888 0
Value Partners, Ltd............................................. 143,640 143,640 0
Risk Arbitrage Partners......................................... 104,630 104,630 0
Goldman, Sachs & Co............................................. 100,000 100,000 0
Gruss Partners.................................................. 65,100 65,100 0
How & Co........................................................ 45,000 45,000 0
Hudd & Co....................................................... 40,000 40,000 0
Perry Partners.................................................. 35,500 35,500 0
Grace Brothers, Ltd............................................. 35,000 35,000 0
Everest Capital International, Ltd.............................. 34,899 34,899 0
Erminie S. Sipple-Asher......................................... 32,500 32,500 0
Everest Capital Fund, L.P....................................... 28,301 28,301 0
Hare & Co....................................................... 26,000 26,000 0
ML Lee Acquisition Fund, L.P.................................... 25,500 25,500 0
Jefco........................................................... 23,955 23,955 0
Paribas Corporation............................................. 20,000 20,000 0
Drexel Burnham Lambert.......................................... 18,000 18,000 0
Streamview & Co................................................. 17,500 17,500 0
Elaine Unterman................................................. 12,500 12,500 0
Meal & Co....................................................... 11,350 11,350 0
Caxton Corporation.............................................. 10,000 10,000 0
Lazard Brothers & Co. (Guernsey) Limited........................ 10,000 10,000 0
Credit National (Foreign)....................................... 10,000 10,000 0
Loeb Arbitrage Fund............................................. 9,315 9,315 0
John Chulick.................................................... 8,500 8,500 0
Bear, Stearns & Co., Inc........................................ 8,000 8,000 0
Carl Brody...................................................... 7,410 7,410 0
Marianne Murphy Holmes.......................................... 5,062 5,062 0
Allen H. Klein.................................................. 5,000 5,000 0
Turtle & Co..................................................... 5,000 5,000 0
Leonid Frenkel.................................................. 4,000 4,000 0
TKI Capital, L.P................................................ 4,000 4,000 0
Loeb Partners Corp.............................................. 3,240 3,240 0
Gruss Security Investors........................................ 2,900 2,900 0
Patricia H. McMahon............................................. 2,700 2,700 0
Lois P. Wertheimer Inter-vivos Trust............................ 2,700 2,700 0
Bear, Stearns Securities Corp................................... 2,000 2,000 0
Saul & Co....................................................... 2,000 2,000 0
</TABLE>

(table continued on next page)

(table continued from previous page)

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

(1) The names set forth in this column are the names of the holders of record of
the indicated shares. In certain cases, such record holders are nominees for
the beneficial owners.

The shares offered in the Offering are being registered pursuant to
provisions of the Stockholders' Agreement providing for demand registration
rights under certain conditions. Such provisions, as well as provisions for
piggyback registration rights under certain conditions, are described under
'Certain Transactions.'

Under the Stockholders' Agreement, TLC Beatrice will pay all the expenses
of the Selling Stockholders in connection with the Offering, other than (i) the
legal fees and expenses of counsel for the Selling Stockholders, except the
reasonable fees and expenses of one counsel for all Selling Stockholders as a
group, selected in accordance with the Stockholders' Agreement, (ii) the
discounts, concessions and commissions, if any, of broker-dealers or agents
participating in the distribution of the shares offered hereby and (iii)
transfer taxes, if any, on the shares sold by the Selling Stockholders.

In addition, TLC Beatrice has agreed to indemnify the Selling Stockholders
against certain liabilities, including liabilities under the Act.

SHARES ELIGIBLE FOR FUTURE SALE

As of July 10, 1996, TLC Beatrice had outstanding 9,138,465 shares of
Common Stock.

The 4,346,055 shares of Common Stock offered hereby may be sold by the
Selling Stockholders from time to time in any of the transactions described
under 'Plan of Distribution'. TLC Beatrice is obligated to keep the Registration
Statements of which this Prospectus is a part effective for a period of six
months after their respective effective dates or such shorter period which will
terminate when all shares covered hereby have been sold or withdrawn, but not
prior to the expiration of the 90 day period referred to in Section 4(3) of the
Act and Rule 174 thereunder, if applicable. All shares sold by the Selling
Stockholders in the Offering will be freely tradeable without restriction under
the Act, except for any shares held by an 'affiliate' of TLC Beatrice (as that
term is defined under the rules and regulations of the Act), which may generally
be sold in a public distribution only in compliance with Rule 144 under the Act
or pursuant to a subsequent registration under the Act.

The remaining 4,792,410 shares not offered in the Offering were issued by
TLC Beatrice in private transactions not involving a public offering, and are
therefore 'restricted securities' for purposes of Rule 144, and may not be
re-sold in a public distribution except (i) in compliance with the registration
requirements of the Act or (ii) pursuant to Rule 144 or another exemption under
the Act.

In general, under Rule 144, as currently in effect, a stockholder (or
stockholders whose shares are aggregated) who has beneficially owned shares
which are 'restricted securities' for at least two years, including persons who
may be deemed to be affiliates of TLC Beatrice, would be entitled to sell,
within any three-month period, a number of shares that does not exceed one
percent (currently 91,385 shares) of the then outstanding shares. Sales under
Rule 144 are also subject to certain requirements as to the manner of sale,
notice, and the availability of current public information about TLC Beatrice.

In addition, affiliates of TLC Beatrice must comply with the restrictions
and requirements of Rule 144, other than the two-year holding period
requirement, in order to sell shares of Common Stock which are not 'restricted
securities' (such as shares acquired by affiliates in the Offering) without
compliance with the registration requirements of the Act.

A person who is not deemed to be an 'affiliate' of an issuer at any time
during the 90 days preceding a sale would be entitled to sell shares which are
'restricted securities' under Rule 144 without regard to the volume and manner
of sale limitations described above, provided that three years have elapsed
since such shares have been acquired from the issuer or an affiliate of the
issuer.

Of the 4,792,410 shares not offered in the Offering, a total of 4,478,260
shares are beneficially owned by persons listed in the tables under 'Security
Ownership of Principal Stockholders and Management', as set forth in such
tables. Such persons may be subject to the limitations under Rule 144 that are
applicable to affiliates, as set forth above.

Of the 4,792,410 shares not offered in the Offering, a total of 314,150
shares are beneficially owned by persons other than those listed in the tables
under 'Security Ownership of Principal Stockholders and Management' and the
footnotes thereto. To TLC Beatrice's knowledge, such persons are not affiliates
of TLC Beatrice, and accordingly may sell their shares pursuant to the
provisions of Rule 144 that are applicable to persons who are not affiliates, as
set forth above.

DESCRIPTION OF CAPITAL STOCK

The following description of the capital stock of TLC Beatrice and certain
provisions of TLC Beatrice's Restated Certificate of Incorporation (the
'Certificate') and By-laws is a summary, does not purport to be complete, and is
qualified in its entirety by reference to the provisions of the Certificate and
By-laws, copies of which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part and to the applicable provisions of
Delaware law.

TLC Beatrice amended and restated its certificate of incorporation on
January 19, 1996. Pursuant to the Certificate, TLC Beatrice's authorized capital
stock consists of 15,000,000 shares of Common Stock, $.01 par value per share
(the 'Common Stock'), and 2,500,000 shares of Preferred Stock, $.01 par value
per share (the 'Preferred Stock').

As of July 10, 1996, a total of 9,138,465 shares of Common Stock were
issued and outstanding, 4,945,795 shares were held in TLC Beatrice's treasury,
and as of July 10, 1996 there were approximately 60 holders of record of Common
Stock. Upon completion of the Offering, the same number of shares of Common
Stock will be issued and outstanding.

As of July 10, 1996, no shares of Preferred Stock were issued and
outstanding.

COMMON STOCK

GENERAL

All of the outstanding shares of Common Stock, including the shares of
Common Stock offered hereby, are duly authorized, validly issued, fully paid and
non-assessable. Holders of Common Stock have no preemptive or other rights to
subscribe for additional shares, and holders of Common Stock do not have any
redemption or conversion rights. No sinking fund provisions are applicable to
the Common Stock. See 'Certain Transactions.'

VOTING RIGHTS

Holders of Common Stock are entitled to one vote for each share held.
Cumulative voting for the election of directors is not provided for in the
Certificate or By-Laws. As a result, subject to the rights of any Preferred
Stock that may be designated and issued in the future, the holders of a majority
of the outstanding shares of Common Stock voting for directors can elect all of
the directors.

Following the Offering, certain Principal Stockholders will continue to own
beneficially a sufficient number of shares of Common Stock to elect the entire
Board of Directors. See 'Risk Factors -- Control; Anti-Takeover Effect' and
'Security Ownership by Principal Stockholders and Management.'

DIVIDENDS AND DISTRIBUTIONS

Subject to the prior rights of any Preferred Stock which may be designated
and issued in the future, holders of Common Stock are entitled to receive, pro
rata, such dividends as may be declared by the Board of Directors from time to
time out of funds legally available therefor. TLC Beatrice can give no assurance
as to whether the Board of Directors will declare cash dividends in the future
or as to the amount of any such dividend. See 'Risk Factors -- Holding Company
Structure; Restrictions on Dividends' and 'Dividends.'

Subject to the prior rights of any Preferred Stock which may be designated
and issued in the future, upon any liquidation, dissolution or winding up of TLC
Beatrice, the holders of Common Stock are entitled to receive, pro rata, the net
assets of TLC Beatrice available for distribution to stockholders.

TLC Beatrice is a holding company whose operations are conducted entirely
through its subsidiaries. TLC Beatrice's ability to pay dividends and make other
distributions on its Common Stock will depend on distributions from its
subsidiaries, which distributions will depend on the earnings and cash flow of
such subsidiaries. Distributions to TLC Beatrice by its subsidiaries will be
subject to the prior claims of creditors of the subsidiaries. See 'Risk
Factors -- Holding Company Structure; Restrictions on Distributions.'

Distributions to TLC Beatrice by its subsidiaries and dividends on Common
Stock will also be subject to applicable legal restrictions and restrictions now
or hereafter contained in credit and other agreements to which TLC Beatrice or
any of its subsidiaries is a party. See 'Risk Factors -- Holding Company
Structure; Restrictions on Distributions' and 'Dividends.'

BY-LAW AMENDMENTS

Under TLC Beatrice's current By-laws, any amendment to or repeal of the
By-laws requires the affirmative vote of at least a majority of the directors
present at a meeting at which at least one-third of the total number of
directors is present or the affirmative vote of at least a majority of the votes
cast at a meeting of the stockholders at which the holders of a majority of the
shares of Common Stock are present in person or represented by proxy.

PREFERRED STOCK

The Certificate, as currently in effect, authorizes the Board of Directors,
subject to any limitations prescribed by law, to issue from time to time up to
an aggregate of 2,500,000 shares of Preferred Stock, in one or more classes or
series, each such class or series to have such preferences, voting powers,
qualifications and special or relative rights and privileges as shall be
determined by the Board of Directors in a resolution or resolutions providing
for the issue of such class or series of Preferred Stock. Therefore, any class
or series of Preferred Stock may, if so determined by the Board of Directors,
have equal voting rights with the Common Stock or superior or limited voting
rights, be convertible into Common Stock or another security of TLC Beatrice,
and have such other preferences, relative rights and limitations as TLC
Beatrice's Board of Directors shall determine.

The issuance of any class or series of Preferred Stock may have adverse
effects on the holders of Common Stock, including restrictions on dividends on
the Common Stock if dividends on the Preferred Stock have not been paid;
dilution of the voting power of the Common Stock to the extent that the
Preferred Stock has voting rights; and deferral of participation in TLC
Beatrice's assets upon liquidation until satisfaction of any liquidation
preference of any class or series of Preferred Stock. The shares of any class or
series of Preferred Stock need not be identical.

In addition, the issuance of Preferred Stock could have the effect of
delaying or preventing a third party from acquiring a substantial amount of the
voting stock of the Company and of delaying or preventing a change of control of
TLC Beatrice. TLC Beatrice has no present plan to issue any shares of Preferred
Stock.

CERTAIN CHARTER PROVISIONS

TLC Beatrice's Restated Certificate of Incorporation provides that no
director of TLC Beatrice shall be liable to TLC Beatrice or its stockholders for
monetary damages for any breach of fiduciary duty, except to the extent
otherwise required by the General Corporation Law of the State of Delaware. This
provision does not prevent stockholders from obtaining injunctive or other
equitable relief against directors nor does it shield directors from liability
under Federal or state securities laws. Injunctive and other equitable relief is
generally available only upon a showing of threatened immediate and irreparable
harm and the inadequacy of monetary damages. Even if a stockholder were to
satisfy this standard, there are a variety of other factors, including the
timeliness of the request and the feasibility of granting the relief requested,
that could lead a court to deny such relief. Accordingly, it may be
impracticable or impossible for a stockholder to obtain injunctive or other
equitable relief against the directors or any proposed board of directors
action.

TRANSFER AGENT

The transfer agent for the Common Stock is The Bank of New York.

PLAN OF DISTRIBUTION

The shares of Common Stock offered hereby are to be sold from time to time
by the Selling Stockholders in various transactions, which may include ordinary
brokerage transactions, transactions in the over-the-counter market, negotiated
transactions, transactions involving the writing of options on such shares,
transactions involving a combination of such methods, or other transactions.
Such shares may be sold directly by the Selling Stockholders or to or through
broker-dealers or agents and such broker-dealers or agents may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of such shares for whom they may act
as agent or to whom they may sell as principal, or both (which compensation may
exceed customary commissions).

Such transactions may be effected at fixed offering prices which may be
changed, at varying market prices prevailing at the time of sale, at varying
prices related to such prevailing market prices, or at negotiated prices. Such
prices will be determined by the Selling Stockholders or by agreement between
the Selling Stockholders and any broker-dealers, agents or purchasers
participating in the offering.

The Selling Stockholders and any broker-dealers or agents who participate
in the distribution of such shares may be deemed to be 'underwriters', as such
term is defined in the Securities Act of 1933, as amended, and any discounts,
concessions or commissions received by such broker-dealers or agents and any
profit on any resale of such shares by them as principal, may be deemed to be
underwriting discounts and commissions under such Act.

No assurance can be given as to whether an active trading market will
develop for the Common Stock or as to the liquidity of any trading market that
may develop. TLC Beatrice has no current intention to list the Common Stock for
trading on any securities exchange or on any automated dealer quotation system.
No assurance can be given that a purchaser of any of the shares of Common Stock
offered hereby will be able to sell such shares in the future or that any such
sale will be at a price equal to or greater than the price paid for such shares.
The absence of an active trading market for the Common Stock would adversely
affect the price at which shares of Common Stock could be sold.

TLC Beatrice has agreed to bear all expenses of the Selling Stockholders in
connection with the registration, offering and sale of the shares offered
hereby, subject to certain exceptions. See 'Selling Stockholders' and 'Certain
Transactions.'

Pursuant to the Stockholders' Agreement, TLC Beatrice has agreed to
indemnify the Selling Stockholders against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.

LEGAL OPINIONS

Certain legal matters with respect to the shares of Common Stock offered
hereby will be passed upon for TLC Beatrice by Winston & Strawn, New York, New
York. W. Kevin Wright, a former officer of TLC Beatrice, is of counsel to
Winston & Strawn.

EXPERTS

The consolidated financial statements as of December 31, 1995 and 1994 and
for each of the three years in the period ended December 31, 1995 included in
this Prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein and elsewhere in the
Registration Statements, and have been so included in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.

TLC BEATRICE INTERNATIONAL HOLDINGS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Independent Auditors' Report............................................................................... F-2

Consolidated Balance Sheets -- March 31, 1996 (unaudited) and December 31, 1995 and 1994................... F-3

Consolidated Statements of Income for the three months ended March 31, 1996 and 1995 (unaudited) and the
years ended December 31, 1995, 1994 and 1993............................................................. F-4

Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995 (unaudited) and
the years ended December 31, 1995, 1994 and 1993......................................................... F-5

Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, 1996 and
1995 (unaudited) and the years ended December 31, 1995, 1994 and 1993.................................... F-6

Notes to Consolidated Financial Statements................................................................. F-7
</TABLE>

F-1

INDEPENDENT AUDITORS' REPORT

TLC BEATRICE INTERNATIONAL HOLDINGS, INC.:

We have audited the accompanying consolidated balance sheets of TLC
Beatrice International Holdings, Inc. and subsidiaries (the 'Company') as of
December 31, 1995 and 1994 and the related consolidated statements of income,
cash flows, and changes in stockholders' equity for each of the three years in
the period ended December 31, 1995. 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 consolidated financial position of TLC Beatrice
International Holdings, Inc. and subsidiaries at December 31, 1995 and 1994 and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1995 in conformity with generally accepted
accounting principles.

As discussed in Note 20 to the consolidated financial statements, the
Company is a defendant in various lawsuits, alleging breach of the Stockholders'
Agreement and breach of fiduciary duty by the directors and claiming damages and
attorney fees.

As discussed in Note 5, the accompanying consolidated financial statements
have been restated to reclassify the costs associated with an early
extinguishment of debt as an extraordinary item.

DELOITTE & TOUCHE LLP

New York, New York
March 20, 1996
(May 2, 1996 as to Note 5)

F-2

TLC BEATRICE INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------
1995 1994
MARCH 31, -------- --------
1996
---------
(UNAUDITED)

<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................... $ 82,555 $120,279 $ 74,786
Receivables, net.................................................. 182,186 165,989 153,348
Inventories, net.................................................. 126,216 129,848 131,527
Other current assets.............................................. 15,025 13,356 14,749
--------- -------- --------
Total current assets......................................... 405,982 429,472 374,410
Property, plant and equipment, net..................................... 244,012 237,174 204,140
Goodwill, net of accumulated amortization of $21,917, $21,519 and
$16,915 at March 31, 1996, December 31, 1995 and 1994,
respectively......................................................... 93,396 95,887 85,586
Other noncurrent assets................................................ 48,545 53,042 71,367
--------- -------- --------
Total assets................................................. $ 791,935 $815,575 $735,503
--------- -------- --------
--------- -------- --------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt............. $ 67,404 $ 64,647 $ 87,898
Accounts payable.................................................. 235,340 256,466 206,239
Taxes currently payable........................................... 12,124 8,996 15,360
Accrued expenses.................................................. 56,913 57,080 56,106
--------- -------- --------
Total current liabilities.................................... 371,781 387,189 365,603
Long-term debt......................................................... 223,419 223,308 145,209
Deferred income taxes.................................................. 16,546 18,180 15,354
Minority interests..................................................... 60,366 58,065 80,524
Other noncurrent liabilities........................................... 23,987 31,786 35,591
--------- -------- --------
Total liabilities............................................ 696,099 718,528 642,281
--------- -------- --------
Commitments and contingencies.......................................... -- -- --
Stockholders' equity:
Preferred stock, $.01 par value; authorized 2,500,000 shares; none
outstanding..................................................... -- -- --
Common stock, $.01 par value; authorized 11,000,000 shares; issued
9,750,000 shares................................................ 97 97 97
Additional paid-in capital........................................ 9,653 9,653 9,653
Treasury stock (611,535, 611,535 and 569,035 shares at March 31,
1996, December 31, 1995 and December 31, 1994, respectively).... (23,200) (23,200) (21,542)
Retained earnings................................................. 138,787 138,552 123,188
Cumulative foreign currency translation adjustment................ (29,501) (28,055) (17,000)
Unfunded accumulated pension benefits in excess of unrecognized
prior service cost.............................................. -- -- (1,174)
--------- -------- --------
Total stockholders' equity................................... 95,836 97,047 93,222
--------- -------- --------
Total liabilities and stockholders' equity................... $ 791,935 $815,575 $735,503
--------- -------- --------
--------- -------- --------
</TABLE>

See Notes to Consolidated Financial Statements.

F-3

TLC BEATRICE INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------------- -----------------------------------------
1996 1995 1995 1994 1993
----------- ----------- ------------- ---------- ----------
(UNAUDITED) (AS RESTATED)
<S> <C> <C> <C> <C> <C>
Net sales......................................... $ 530,390 $ 451,507 $ 2,072,613 $1,821,670 $1,656,336
----------- ----------- ------------- ---------- ----------
Operating expenses:
Cost of sales................................. 442,204 374,449 1,693,288 1,435,143 1,275,644
Selling, general and administrative expenses.. 73,440 64,816 297,273 311,720 308,756
Amortization of intangible assets............ 731 706 2,740 3,228 3,145
Special charges.............................. -- -- -- -- 8,650
----------- ----------- ------------- ---------- ----------
Total operating expenses................ 516,375 439,971 1,993,301 1,750,091 1,596,195
----------- ----------- ------------- ---------- ----------
Operating income.................................. 14,015 11,536 79,312 71,579 60,141
----------- ----------- ------------- ---------- ----------
Other income (expense):
Interest income.............................. 1,992 1,994 9,372 8,601 9,298
Interest expense............................. (8,733) (5,827) (32,974) (32,715) (37,023)
Other income................................. 157 -- 7,182 13,729 646
----------- ----------- ------------- ---------- ----------
Total other income (expense)............ (6,584) (3,833) (16,420) (10,385) (27,079)
----------- ----------- ------------- ---------- ----------
Income from operations before income taxes and
minority interests in earnings.................. 7,431 7,703 62,892 61,194 33,062
Income taxes...................................... (2,071) (4,063) (20,470) (35,999) (19,445)
Minority interests in earnings.................... (4,120) (2,599) (23,966) (13,882) (12,570)
----------- ----------- ------------- ---------- ----------
Income before extraordinary item.................. 1,240 1,041 18,456 11,313 1,047
Extraordinary item, net of tax.................... -- -- (3,092) -- --
----------- ----------- ------------- ---------- ----------
Net income........................................ $ 1,240 $ 1,041 $ 15,364 $ 11,313 $ 1,047
----------- ----------- ------------- ---------- ----------
----------- ----------- ------------- ---------- ----------
Net income (loss) per common share:
Income before extraordinary item............ $.14 $.11 $2.01 $1.23 $.11
Extraordinary item.......................... -- -- (.33) -- --
----------- ----------- ------------- ---------- ----------
Net income per common share................. $.14 $.11 $1.68 $1.23 $.11
----------- ----------- ------------- ---------- ----------
----------- ----------- ------------- ---------- ----------
Weighted average number of common shares
outstanding...... ........................... 9,138 9,181 9,167 9,181 9,194
----------- ----------- ------------- ---------- ----------
----------- ----------- ------------- ---------- ----------
</TABLE>

See Notes to Consolidated Financial Statements.

F-4

TLC BEATRICE INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1996 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income......................... $ 1,240 $ 1,041
Items not affecting cash:
Depreciation and amortization of
intangible assets................ 8,930 7,853
Minority interests in earnings,
net................................... 4,120 2,099
Gain on sale of assets............. -- --
Deferred income taxes and other
items, net....................... (5,914) (146)
Extraordinary item, net of tax..... -- --
Changes in working capital:
Receivables, net................... (20,227) 16,041
Inventories, net................... 656 (14,250)
Accounts payable and accrued
expenses......................... (14,353) (15,998)
Taxes payable...................... 3,322 (6,895)
Other current assets............... (2,192) (4,399)
----------- -----------
Net cash (used in) provided by
operating activities........ (24,418) (14,654)
----------- -----------
Cash flows from investing activities:
Proceeds from divestitures......... -- --
Expenditures for property, plant
and equipment.................... (17,918) (13,183)
Proceeds from disposal of assets... 1,147 1,040
Purchases of bond investments...... -- --
Redemption of bond investments..... -- --
Other investments.................. (468) (2,976)
----------- -----------
Net cash (used in) provided by
investing activities........ (17,239) (15,119)
----------- -----------
Cash flows from financing activities:
Net proceeds from issuance of 11.5%
Senior Secured Notes............. -- --
Proceeds from issuance of long-term
bank debt........................ 3,931 2,189
Repayment of long-term bank
borrowings....................... (3,190) (6,215)
Net proceeds from (repayments of)
short-term debt.................. 3,983 28,666
Repurchase of common stock......... -- --
Common stock dividends............. (1,005) --
Minority interest loans............ -- --
----------- -----------
Net cash provided by (used in)
financing activities........ 3,719 24,640
----------- -----------
Foreign exchange effects on cash and
cash equivalents...................... 214 3,771
----------- -----------
Net (decrease) increase in cash and cash
equivalents........................... (37,724) (1,362)
Cash and cash equivalents at beginning
of the period......................... 120,279 74,786
----------- -----------
Cash and cash equivalents at end of the
period................................ $ 82,555 $ 73,424
----------- -----------
----------- -----------
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest........................... $ 3,126 $ 5,302
----------- -----------
----------- -----------
Income taxes....................... $ 3,625 $ 10,060
----------- -----------
----------- -----------
Supplemental schedule of non-cash
investing and financing activities:
Conversion of loans to minority
shareholders to dividends..........

YEAR ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
------------ -------- --------
(AS RESTATED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.........................$ 15,364 $ 11,313 $ 1,047
Items not affecting cash:
Depreciation and amortization of
intangible assets................ 36,261 36,791 38,444
Minority interests in earnings,
net................................... 21,235 11,226 11,229
Gain on sale of assets............. (10,322 ) (13,729) --
Deferred income taxes and other
items, net....................... (5,063 ) 758 (15,518)
Extraordinary item, net of tax..... 3,092 -- --
Changes in working capital:
Receivables, net................... (15,295 ) (9,396) (8,615)
Inventories, net................... (1,781 ) (15,908) (16,392)
Accounts payable and accrued
expenses......................... 42,986 31,221 (2,228)
Taxes payable...................... (9,572 ) (3,317) 8,360
Other current assets............... (1,096 ) (665) 2,436
------------ -------- --------
Net cash (used in) provided by
operating activities........ 75,809 48,294 18,763
------------ -------- --------
Cash flows from investing activities:
Proceeds from divestitures......... (3,439 ) 87,436 --
Expenditures for property, plant
and equipment.................... (65,080 ) (58,444) (59,322)
Proceeds from disposal of assets... 4,157 17,972 6,757
Purchases of bond investments...... (10,435 ) (5,988) (7,004)
Redemption of bond investments..... -- 11,178 8,026
Other investments.................. (9,022 ) (3,545) (8,067)
------------ -------- --------
Net cash (used in) provided by
investing activities........ (83,819 ) 48,609 (59,610)
------------ -------- --------
Cash flows from financing activities:
Net proceeds from issuance of 11.5%
Senior Secured Notes............. 169,474 -- --
Proceeds from issuance of long-term
bank debt........................ 23,116 141,627 18,057
Repayment of long-term bank
borrowings....................... (136,422 ) (176,350) (5,578)
Net proceeds from (repayments of)
short-term debt.................. (6,354 ) (41,206) 24,018
Repurchase of common stock......... (488 ) -- (547)
Common stock dividends............. -- -- --
Minority interest loans............ -- (3,519) (11,639)
------------ -------- --------
Net cash provided by (used in)
financing activities........ 49,326 (79,448) 24,311
------------ -------- --------
Foreign exchange effects on cash and
cash equivalents...................... 4,177 6,114 (7,066)
------------ -------- --------
Net (decrease) increase in cash and cash
equivalents........................... 45,493 23,569 (23,602)
Cash and cash equivalents at beginning
of the period......................... 74,786 51,217 74,819
------------ -------- --------
Cash and cash equivalents at end of the
period................................$ 120,279 $ 74,786 $ 51,217
------------ -------- --------
------------ -------- --------
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest...........................$ 27,741 $ 32,452 $ 34,938
------------ -------- --------
------------ -------- --------
Income taxes.......................$ 33,833 $ 27,815 $ 25,695
------------ -------- --------
------------ -------- --------
Supplemental schedule of non-cash
investing and financing activities:
Conversion of loans to minority
shareholders to dividends..........$ 47,517
------------
------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-5

TLC BEATRICE INTERNATIONAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
--------------- -----------------
NUMBER ADDITIONAL NUMBER
OF PAID-IN OF
SHARES AMOUNT CAPITAL SHARES AMOUNT
------ ------ ---------- ------ --------

<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993................ 9,750 $ 97 $9,653 555 $(20,995)

Purchase of Treasury Stock.......... 14 (547)
Net income..........................
Unfunded accumulated pension
benefits in excess of unrecognized
prior service cost................
Translation adjustment..............
------ ------ ---------- ------ --------
Balance, December 31, 1993.......... 9,750 97 9,653 569 (21,542)

Year Ended December 31, 1994
Net income..........................
Cumulative translation loss realized
on sale of foreign subsidiaries...
Unfunded accumulated pension
benefits in excess of unrecognized
prior service cost................
Translation adjustment..............
------ ------ ---------- ------ --------
Balance, December 31, 1994.......... 9,750 97 9,653 569 (21,542)

Year Ended December 31, 1995
Net income..........................
Purchase of Treasury Stock.......... 43 (1,658)
Unfunded accumulated pension
benefits in excess of unrecognized
prior service cost................
Translation adjustment..............
------ ------ ---------- ------ --------
Balance, December 31, 1995.......... 9,750 97 9,653 612 (23,200)
Three Months Ended March 31, 1996
(unaudited)
Net income..........................
Common Stock Dividends..............
Translation adjustment..............
------ ------ ---------- ------ --------
Balance, March 31, 1996............. 9,750 $ 97 $9,653 612 $(23,200)
------ ------ ---------- ------ --------
------ ------ ---------- ------ --------

<CAPTION>
UNFUNDED
ACCUMULATED
PENSION
BENEFITS IN
CUMULATIVE EXCESS OF
FOREIGN UNRECOGNIZED
CURRENCY PRIOR TOTAL
RETAINED TRANSLATION SERVICE STOCKHOLDERS'
EARNINGS ADJUSTMENT COST EQUITY
------------ ---------- ------------ -------------
<S> <C> <C> <C> <C>
Balance, January 1, 1993................$ 110,828 $(13,277) $ -- $ 86,306
Purchase of Treasury Stock.......... (547)
Net income.......................... 1,047 1,047
Unfunded accumulated pension
benefits in excess of unrecognized
prior service cost................ (1,312) (1,312)
Translation adjustment.............. (20,136) (20,136)
------------ ---------- ------------ -------------
Balance, December 31, 1993.......... 111,875 (33,413) (1,312) 65,358
Year Ended December 31, 1994
Net income.......................... 11,313 11,313
Cumulative translation loss realized
on sale of foreign subsidiaries... 11,871 11,871
Unfunded accumulated pension
benefits in excess of unrecognized
prior service cost................ 138 138
Translation adjustment.............. 4,542 4,542
------------ ---------- ------------ -------------
Balance, December 31, 1994.......... 123,188 (17,000) (1,174) 93,222
Year Ended December 31, 1995
Net income.......................... 15,364 15,364
Purchase of Treasury Stock.......... (1,658)
Unfunded accumulated pension
benefits in excess of unrecognized
prior service cost................ 1,174 1,174
Translation adjustment.............. (11,055) (11,055)
------------ ---------- ------------ -------------
Balance, December 31, 1995.......... 138,552 (28,055) -- 97,047
Three Months Ended March 31, 1996
(unaudited)
Net income.......................... 1,240 1,240
Common Stock Dividends.............. (1,005 ) (1,005)
Translation adjustment.............. (1,446) (1,446)
------------ ---------- ------------ -------------
Balance, March 31, 1996.............$ 138,787 $(29,501) $ -- $ 95,836
------------ ---------- ------------ -------------
------------ ---------- ------------ -------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-6

TLC BEATRICE INTERNATIONAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) AND THE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

1. BUSINESS DESCRIPTION

As of March 31, 1996, TLC Beatrice International Holdings, Inc. ('TLC
Beatrice' and together with its subsidiaries, the 'Company') and its
subsidiaries is comprised of 11 operating entities and their subsidiaries
located principally in western Europe, having disposed of nine operating
entities since December 31, 1993 (see Note 4). The Company's operating entities
are engaged in the wholesale and retail distribution of food, groceries,
household products and beverages, and the manufacture and marketing of ice cream
and desserts, snacks, and beverages. Sales of these products are made to
customers principally in western Europe.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of TLC Beatrice
and its majority-owned subsidiaries. All significant intercompany transactions,
balances and profits have been eliminated. For accounting efficiencies, certain
of TLC Beatrice's French subsidiaries report results on a one to three month lag
basis. All of TLC Beatrice's other subsidiaries' year-ends are December 31. For
each of the periods presented there have been no intervening events between the
periods which would materially affect the consolidated financial position or
results of operations of the Company.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The accompanying interim financial statements as of March 31, 1996 and for
the three-month periods ended March 31, 1996 and 1995 have not been audited;
however, in the opinion of management, all adjustments, which consist of normal
recurring accruals, necessary for a fair presentation of the financial position
and results of operations for such interim periods, are included. The results of
operations for an interim period are not necessarily indicative of results for
an entire year. The Company's Food Distribution segment shows relatively even
sales and operating income throughout the year. The Grocery Products segment
shows greater seasonality, with the majority of sales and operating income
earned during the second and third quarters of the year.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

FOREIGN CURRENCY TRANSLATION

Assets and liabilities of foreign entities have been translated using the
exchange rates in effect at the balance sheet dates. Results of operations of
foreign entities are translated using the average exchange rates prevailing
throughout the period. Local currencies are considered the functional currencies
of the Company's foreign operating entities. Translation effects are accumulated
as part of the cumulative foreign currency translation adjustment in equity.
Gains and losses from foreign currency transactions are included in net income
for the period.

FOREIGN CURRENCY SWAPS THAT QUALIFY AS HEDGES

Changes in the value of foreign currency swap contracts related to existing
assets and liabilities are recognized in income currently, offsetting foreign
exchange gains and losses from the hedged

F-7

TLC BEATRICE INTERNATIONAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) AND THE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

asset/liability. Changes in the value of foreign currency swap contracts that
qualify as hedges of firm commitments are deferred and are recognized in income
as adjustments to carrying amounts when the hedged transaction occurs.

INVENTORIES

Inventories are valued at the lower of cost or market. The cost of
substantially all inventories is determined by the first-in, first-out method.

REVENUE RECOGNITION

Sales and related cost of sales are recognized primarily upon shipment of
products. Volume discounts offered by the Company are accrued on a
month-to-month basis based on customer sales to date. Retail sales are
recognized at the time when goods are sold to the customer.

INVESTMENT IN MARKETABLE DEBT SECURITIES

In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ('SFAS') No. 115, 'Accounting for Certain
Investments in Debt and Equity Securities.' The adoption of this Statement,
which became effective in 1994, required the Company to either classify its debt
and fixed maturity securities as held to maturity, trading securities or
available for sale securities. In accordance with the Company's investment
intentions, the Company has classified its investment in marketable debt
securities as held to maturity, and has recorded such marketable debt securities
at their amortized cost. The Company's held to maturity marketable debt
securities at December 31, 1995 are included in other noncurrent assets in the
accompanying consolidated balance sheets. The accompanying consolidated
statements of cash flows reflect the Company's redemption of approximately
$11,178,000 of bond investments that had reached their maturity in 1994. The
adoption of SFAS No. 115 did not have a material effect on the Company's
consolidated financial position or results of its operations.

PROPERTY, PLANT AND EQUIPMENT

Depreciation is generally provided on the straight-line method for
financial reporting purposes over the estimated useful lives of the underlying
assets. Machinery and equipment are depreciated over a period ranging from 3 to
12 years and buildings are amortized from 20 to 50 years. Leasehold improvements
are amortized using the straight-line method over the term of the lease or the
estimated useful life of the improvements, whichever is shorter.

GOODWILL

Goodwill is amortized using the straight-line method over various periods
not exceeding 40 years. The Company assesses the recoverability of its goodwill
quarterly during the preparation of the Company's operating plans and
consolidated financial statements, which includes estimates of future operating
unit earnings. In connection with this review, the Company also considers past
trends and other current factors that may impact the value of the Company's
investment in the individual operating units.

INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No. 109,
'Accounting for Income Taxes.' SFAS No. 109 requires an asset and liability
approach for financial reporting for income taxes. It also requires the Company
to adjust its deferred tax balances in the period of enactment for

F-8

the effect of enacted changes in tax rates and to provide a valuation allowance
against such deferred tax assets that are not, more likely than not, to be
realized.

Certain of TLC Beatrice's foreign subsidiaries file consolidated income tax
returns in the jurisdiction of their operations. TLC Beatrice's U.S.
subsidiaries file a consolidated U.S. income tax return.

NET INCOME PER COMMON SHARE

Net income per common share is computed by dividing the net income by the
weighted average number of common shares outstanding during the year.

CASH EQUIVALENTS

Highly liquid investments with original maturities of three months or less
are considered cash equivalents.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with the
current year presentation.

EFFECT OF ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

Long-Lived Assets -- In March 1995, the Financial Accounting Standards
Board issued SFAS No. 121, 'Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of.' This Statement is effective for
fiscal years beginning after December 15, 1995. The Company does not expect the
effect on its consolidated financial condition from the adoption of this
statement to be material.

Stock Options and Warrants -- In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123, 'Accounting for Stock-Based Compensation,'
which will be effective for the Company beginning January 1, 1996. SFAS No. 123
requires expanded disclosures of stock-based compensation arrangements with
employees and encourages (but does not require) compensation cost to be measured
based on the fair value of the equity instrument awarded. Companies are
permitted, however, to continue to apply APB Opinion No. 25, which recognizes
compensation cost based on the intrinsic value of the equity instrument awarded.
The Company will continue to apply APB Opinion No. 25 to its stock based
compensation awards to employees and will disclose the required pro forma effect
on net income and earnings per share.

3. SPECIAL CHARGES

During 1993, the Company recorded special charges in the amount of $8.7
million for the corporate headquarters located in New York. These charges
included a write-off for excess office lease space of $3 million and severance
expense of $5.7 million.

4. OTHER INCOME

During the year ended December 31, 1995, the Company sold three
subsidiaries: Artigel GmbH & Co. Kg, a 70% owned ice cream manufacturer in
Germany, and two wholly owned ice cream distributors: Artic S.A. in Belgium and
Artic France S.A.R.L. in France. Additionally, the Company ceased operations of
its subsidiary, Dairyworld S.A., a Swiss trader of bulk dairy products. The
Company recorded pre-tax gains on such sales and dispositions of approximately
$10.5 million, which have been included in other income.

F-9

The Company also recorded charges relating to non-cash exchange losses
recorded in compliance with SFAS No. 52, 'Foreign Currency Translation,' in the
amount of approximately $4.8 million. During 1995, the Company determined that
advances from foreign subsidiaries were no longer of a long-term investment
nature. Additionally, certain advances were either forgiven in connection with
the sale of certain subsidiaries, converted into dividends or settled through
other non-cash transactions. Accordingly, the translation adjustments related to
these advances, previously included in cumulative translation adjustment, have
been included in other income for the year ended December 31, 1995. Also during
1995, the Company sold other investments for approximately $467,000, recorded
equity in earnings from minority-owned Leader Price stores of approximately
$331,000, and received additional proceeds of $703,000 from the 1994 sale of
Choky, S.A. which have been included in other income.

During the year ended December 31, 1994 the Company sold four wholly-owned
subsidiaries: Premier Is A/S, an ice cream manufacturer in Denmark, Choky S.A.,
a distributor of powdered drink products in France, Sodialim S.A. an
institutional food distributor in France and Gelati Sanson S.p.A., an ice cream
manufacturer in Italy. The Company recorded pre-tax gains on such sales of
approximately $12.1 million in 1994 which have been included in other income.
The Company recorded after-tax gains on such sales of approximately $3.9
million. Also during 1994, the Company sold other investments for a pre-tax gain
of approximately $1.2 million which has also been included in other income.

During the years ended December 31, 1994 and 1993, the Company sold Spanish
Government bonds and recorded gains on the sale of approximately $416,000 and
$646,000, respectively. These gains are reflected in other income in the
accompanying consolidated statements of income.

5. EXTRAORDINARY ITEM

During the year ended December 31, 1995 the Company wrote off $3.1 million
of certain deferred debt issuance costs and other costs incurred relating to
long-term debt repaid prior to maturity. The pre-tax amount of $4.6 million was
previously recorded as a component of other income. Subsequent to the issuance
of the Company's 1995 consolidated financial statements, it was determined that
this transaction should have been accounted for as an extraordinary item and, as
a result, the Company's 1995 consolidated financial statements have been
restated. The effect of this restatement is to increase income before
extraordinary item by $3.1 million and income before extraordinary item per
share by $.33.

6. RELATED PARTY TRANSACTIONS

TLC Beatrice was founded by Mr. Reginald F. Lewis, its former Chairman and
Chief Executive Officer. Mr. Lewis died on January 19, 1993. TLC Group, L.P.
('TLC Group'), a New York limited partnership owned and controlled by the estate
of Mr. Lewis, provided certain administrative services to TLC Beatrice. During
1995, 1994 and 1993, TLC Beatrice paid TLC Group, as assignee of TLC Holdings
Corp., a Delaware corporation ('TLC Holdings'), a monitoring fee in the amount
of $1 million per year. Until January 19, 1996, TLC Holdings owned directly
4,334,000 shares of Common Stock. Leslie N. Lewis was Chairman of TLC Holdings.
TLC Holdings was 100% owned by the Estate of Reginald F. Lewis, deceased (the
'Lewis Estate').

On January 19, 1996, TLC Holdings was merged with TLCB Acquisition Corp.
('TLCB'), a newly formed wholly-owned subsidiary of TLC Beatrice, with TLC
Holdings being the surviving corporation. Subsequent to the merger of TLC
Holdings with TLCB, TLC Holdings was merged into TLC Beatrice with TLC Beatrice
being the surviving corporation. As a result of these transactions, the shares
of

F-10

Common Stock formerly held by TLC Holdings have been cancelled and an equal
number of shares were issued directly to the Lewis Estate.

Certain of TLC Beatrice's operating subsidiaries have local minority
stockholders whose equity interests in these subsidiaries range from 2.6% to
49%. The subsidiaries that have the largest equity interests owned by local
stockholders include Distribution Leader Price S.A. ('Distribution Leader
Price') (49%), the Retail Leader Price Group ('Retail Leader Price') (49%),
Interglas S.A. ('Interglas') (40%), the Minimarche Group ('Minimarche') (26%)
and Helados La Menorquina S.A. ('La Menorquina') (22%). In most cases, the local
stockholders are responsible for the management of these subsidiaries.

The minority stockholders of Distribution Leader Price and Retail Leader
Price, directly or indirectly, are various members of the Baud family and a
corporate entity controlled by the Baud family (collectively, the 'Baud Minority
Stockholders'). Pursuant to certain agreements entered into in 1992, the Company
is obligated under certain circumstances to purchase the Baud Minority
Stockholders' ownership interests in Distribution Leader Price and Retail Leader
Price. The agreements provide that prior to June 30, 1997, if certain members of
the Baud family cease to hold their management positions with the applicable
company and the Company fails to propose and vote in favor of one of certain
members of the Baud family as a replacement, the Baud Minority Stockholders have
the right to require TLC France, and TLC France has the right, to purchase all
of the Baud Minority Stockholders' shares of Distribution Leader Price and
Retail Leader Price. In addition, at any time on or after July 1, 1997 and prior
to June 30, 2027, the Baud Minority Stockholders have the right to require TLC
France, and TLC France has the right, to purchase all of the Baud Minority
Stockholders' ownership interests in Distribution Leader Price and Retail Leader
Price without restriction. The option price under such agreements is based on a
formula calculated at the time of exercise which sets a purchase price at a
multiple of the average annual net income per share of Distribution Leader Price
and Retail Leader Price, as applicable, for the two fiscal years prior to
exercise, with a guaranteed minimum return on the Baud Minority Stockholders'
aggregate investment if an option is exercised prior to July 1, 1997. The
Company does not intend to permit the circumstances to arise that would enable
the Baud Minority Stockholders to exercise their right to require the Company to
purchase their shares of Distribution Leader Price and Retail Leader Price prior
to July 1, 1997. If the put option is exercised after July 1, 1997, and as long
as the TLC Beatrice's 11.5% Senior Secured Notes due October 1, 2005 (the
'Notes') are outstanding, the purchase price for such shares is payable 25% on
the closing of the purchase of such shares, 45% on the first anniversary of such
closing and 30% on the second anniversary of such closing, together with
interest thereon at PIBOR (as defined in Note 12). After repayment of the Notes,
the purchase price for such shares is payable 50% on the closing of the purchase
of such shares and 50% on the first anniversary of such closing, without
interest. Solely for purposes of illustration, if the Baud Minority Stockholders
were to have exercised their options to require TLC France to purchase all their
shares of Distribution Leader Price and Retail Leader Price on December 31,
1995, using the formula that would be in effect on July 1, 1997, the total
purchase price for such shares would have been approximately $91 million.
Distribution Leader Price and Retail Leader Price have shown substantial
earnings growth during the past three years. If such companies' earnings were to
continue to increase during the two fiscal years prior to the exercise of such
option, to which no assurance can be given, the purchase price would increase
materially. Due to the manner in which such purchase price would be calculated,
the Company is not currently able to quantify what the purchase obligation would
be. However, the Company believes that such purchase obligation would be
material.

F-11

certain other minority stockholders. Certain of these agreements and the by-laws
of certain subsidiaries restrict the sale of the minority stockholders' interest
or require the Company or the minority stockholders, as the case may be, to
offer to sell their shares to the other stockholders prior to selling such
shares to a third party and/or require the Company to purchase these interests
under certain circumstances. Certain of these local minority stockholders have
the option to require the Company to purchase their interests in whole or in
part at any time and certain of these local minority stockholders have the
option to require the Company to purchase their interests in whole or in part on
or after January 1, 1997 or upon cessation of such stockholder's employment with
the Company for any reason. Solely for purposes of illustration, if all of such
options were exercised in full, using the formula that would be in effect on
January 1, 1997, the Company's aggregate purchase obligation is estimated to be
approximately $35 million as of December 31, 1995.

The Company assesses the fair value of the underlying minority interests to
determine that such value continues to equal or exceed the amount that the
Company would have to pay to the minority stockholders should they exercise the
puts. As a part of its strategic planning process the Company is in regular
communication with a number of investment banks and financial institutions which
provide it with information from which it can determine the approximate market
value of its businesses. Based in part on such information, it is the Company's
current assessment that the underlying fair value of the minority interests
exceeds any obligation that would result from the exercise of the puts.

The Company has made loans to a minority interest partner totaling
$47,517,000 and $37,672,000 at December 31, 1995 and 1994, respectively. The
maturity dates of the loans range from August 15, 1996 to January 15, 1997, with
an option for a rollover of the loans at the then current market interest rates
in Spain. At December 31, 1995, the interest rate on such loans was 9.5 percent.
Loans by certain of TLC Beatrice's subsidiaries to minority interests represent
a tax-efficient method of distributing earnings to stockholders. Such loans are
also made to the Company as majority stockholder on a pro rata basis. In 1995,
the Company netted these loans to a minority interest partner (previously
recorded in noncurrent assets) against the respective minority interests. The
Company expects the loans to be repaid through the application of dividend
payments anticipated in January 1997.

7. RECEIVABLES

Receivables included in current assets are stated net of allowances for
doubtful accounts amounting to approximately $7 million at December 31, 1995 and
1994. The Company recorded $1 million, $3 million and $4 million for bad debts
for the years ended December 31, 1995, 1994 and 1993, respectively.

F-12

8. INVENTORIES

Inventories consisted of the following components:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
MARCH 31, -------- --------
1996
-----------
(UNAUDITED)
<S> <C> <C> <C>
(IN THOUSANDS)

Raw materials and supplies...................................... $ 13,173 $ 10,860 $ 12,726
Work in process................................................. 120 76 156
Finished goods.................................................. 113,889 120,189 119,999
----------- -------- --------
127,182 131,125 132,881
Less inventory reserves......................................... (966) (1,277) (1,354)
----------- -------- --------
Total...................................................... $ 126,216 $129,848 $131,527
----------- -------- --------
----------- -------- --------
</TABLE>

9. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following components:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
--------- ---------
(IN THOUSANDS)

<S> <C> <C>
Land and buildings.......................................................... $ 106,720 $ 93,753
Machinery and equipment..................................................... 295,251 249,595
--------- ---------
401,971 343,348
Less accumulated depreciation............................................... (164,797) (139,208)
--------- ---------
Property, plant and equipment -- net................................... $ 237,174 $ 204,140
--------- ---------
--------- ---------
</TABLE>

Depreciation expense amounted to approximately $33 million, $34 million and
$35 million for the years ended December 31, 1995, 1994 and 1993, respectively.

Accumulated depreciation at March 31, 1996, amounted to approximately $173
million.

10. LEASES

Property leased under capital leases and included in property, plant and
equipment is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1995 1994
----- -----
(IN THOUSANDS)

<S> <C> <C>
Buildings............................................................................. $-- $ 557
Machinery and equipment............................................................... 370 357
----- -----
370 914
Less accumulated depreciation......................................................... (227) (585)
----- -----
Property held under capital leases -- net........................................ $ 143 $ 329
----- -----
----- -----
</TABLE>

The Company leases office facilities, manufacturing facilities,
distribution facilities and retail facilities under various noncancelable
operating lease agreements expiring through 2037. Future

F-13

minimum lease payments under noncancelable operating leases at December 31, 1995
were as follows (in thousands):

<TABLE>
<S> <C>
1996................................................................................... $ 15,288
1997................................................................................... 12,503
1998................................................................................... 9,136
1999................................................................................... 3,260
2000................................................................................... 2,561
Later years............................................................................ 46,332
--------------
Total minimum lease payments........................................................... $ 89,080
--------------
--------------
</TABLE>

Total rent expense for all operating leases amounted to approximately $20
million, $18 million and $21 million for the years ended December 31, 1995, 1994
and 1993, respectively.

11. SHORT-TERM DEBT AND CURRENT PORTION OF LONG-TERM DEBT

Short-term debt and current portion of long-term debt at December 31, 1995
and 1994 consisted of the following components:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt............................................... $13,872 $18,259
Short-term debt................................................................. 50,775 69,639
------- -------
Total...................................................................... $64,647 $87,898
------- -------
------- -------
</TABLE>

The weighted average interest rate of short-term debt outstanding at
December 31, 1995 and December 31, 1994 was 8.66% and 7.38%, respectively.

At March 31, 1996, the Company had approximately $109 million of unused
lines of credit available for short-term financing.

On October 6, 1995, TLC Beatrice International Irish Holdings Ltd. ('Irish
Holdings') entered into a Facility Agreement with Banque Paribas and Smurfit
Paribas Bank Limited (the 'Credit Agreement'), pursuant to which Irish Holdings
can initially borrow up to the lower of (a) 16 million Irish Punts
(approximately $25.9 million at the then-prevailing foreign exchange rate) or
(b) an amount calculated as follows: 28 million Irish Punts plus any share
capital contributed in cash to Tayto, Irish Holdings' principal operating
subsidiary, less the cumulative amount of cash dividends paid and management
fees and intercompany loans made by Tayto to Irish Holdings from the date of the
Credit Agreement. The amount available for borrowing under the Credit Agreement
is reduced to (i) 9.6 million Irish Punts (approximately $15.4 million at the
December 31, 1995 foreign exchange rate) from February 1, 1999 through January
31, 2000 and (ii) 3.2 million Irish Punts (approximately $5.1 million at the
December 31, 1995 foreign exchange rate) from February 1, 2000 through January
31, 2001, at which time all amounts outstanding must be repaid. Interest on
borrowings in Irish Punts is payable at the rate of the Dublin Interbank
Offering Rate ('DIBOR') plus 1.65%. The Credit Agreement also provides for an
alternative currency option pursuant to which Irish Holdings can borrow in
certain other currencies at an interest rate equal to LIBOR plus 1.65%. The
Credit Agreement contains restrictions on certain activities of Irish Holdings
and Tayto, including, among other things, the incurrence of indebtedness or
encumbrances, entering into agreements other than in the ordinary course of
business, the making of certain capital expenditures and the acquisition or sale
of assets outside the ordinary course of business. In addition, Irish Holdings
and Tayto are required to maintain certain financial ratios. The Credit
Agreement is guaranteed by TLC Beatrice and secured by a pledge of the common
stock of Tayto owned by Irish Holdings. As of March 31, 1996, approximately $5.5
million (at the then-prevailing foreign exchange rate) was borrowed under the
Credit Agreement.

F-14

The Company is a party to certain loan and credit agreements with various
banks to finance its working capital and other requirements.

12. LONG-TERM DEBT

Long-term debt at December 31, 1995 and 1994 consisted of the following:

<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS)

<S> <C> <C>
11.5% Senior Secured Notes due October 1, 2005.......................................... $175,000 $ --
PIBOR Plus .6% Note due 1999(1)......................................................... 9,787 11,238
PIBOR Plus .6% Notes due 2001(1)........................................................ 3,806 --
7.10% Note due 1999..................................................................... 2,210 2,671
PIBOR Plus .8% Note due 1996(1)......................................................... 2,203 --
7.0% Note due 2001...................................................................... 1,202 --
8.5% Note due 1996...................................................................... 731 1,023
Term Loan Agreement due 2001............................................................ -- 99,269
Subordinated Loan Agreement due 2002.................................................... -- 18,730
7.25% Note due 2000..................................................................... -- 3,728
Miscellaneous, individually less than $1,000,000 in 1995 and 1994 due various dates
through the year 2002 (7.10%*)........................................................ 42,241 26,452
Capitalized lease obligations (10.37%**)................................................ -- 357
-------- --------
237,180 163,468
Less current portion.................................................................... (13,872) (18,259)
-------- --------
Total long-term debt............................................................... $223,308 $145,209
-------- --------
-------- --------
</TABLE>

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

(1) PIBOR at December 31, 1995 equaled 5%.

(*) Weighted average interest rates at December 31, 1995.

(**) Weighted average interest rate at December 31, 1994.

On October 2, 1995, TLC Beatrice sold $175 million aggregate principal
amount of the Notes. Interest on the Notes is payable on April 1 and October 1
of each year, commencing April 1, 1996. The Notes rank pari passu in right of
payment with all unsubordinated borrowings of TLC Beatrice and are secured by a
security interest in a portion of the capital stock of certain of TLC Beatrice's
subsidiaries and certain intercompany indebtedness. The Indenture relating to
the Notes (the 'Indenture') permits TLC Beatrice's subsidiaries to incur
additional indebtedness under certain circumstances, including up to $25 million
for general corporate purposes under the Credit Agreement.

F-15

Voting Stock of TLC Beatrice representing aggregate voting power greater than
that represented by the aggregate shares of Voting Stock then beneficially owned
by the Permitted Holders; or (iii) any such person or entity shall elect a
majority of the Board of Directors of TLC Beatrice. There can be no assurance
that TLC Beatrice will have sufficient funds to repay the Notes should a Change
of Control occur.

The Indenture restricts, among other things, the ability of TLC Beatrice
and its Restricted Subsidiaries (as defined in the Indenture) to incur
indebtedness, incur liens, enter into sale and leaseback transactions, make
restricted payments, enter into asset dispositions and engage in transactions
with affiliates. The Indenture also limits the ability of TLC Beatrice and its
Restricted Subsidiaries to enter into agreements that restrict the payment of
dividends and other payments by any Restricted Subsidiary to the Company. In
addition, the Indenture restricts the ability of TLC Beatrice to merge or
consolidate with or transfer all or substantially all of its assets to another
entity. Proceeds from the issuance of the Notes were used to repay: (i) a 485
million French franc (approximately $98.6 million as of September 30, 1995) term
loan (the 'Term Loan') due September 2001 of TLC Beatrice International Holdings
France S.A. ('TLC France'), bearing interest at the Paris Interbank Offering
Rate ('PIBOR') plus 1.75%; (ii) a 100 million French franc (approximately $20.3
million as of September 30, 1995) subordinated term loan (the 'Subordinated
Loan') due March 2002 of TLC France, bearing interest at PIBOR plus 3.5%, and a
redemption fee of approximately $2 million which was due when the Subordinated
Loan was repaid; (iii) 46 million French francs (approximately $9.3 million as
of September 30, 1995) and $16.3 million outstanding under a 137 million French
franc revolving loan of Irish Holdings due October 31, 1995, bearing interest at
LIBOR plus 1.30% and (iv) $15 million outstanding under a term loan due January
1996 of TLC Beatrice, bearing interest at 7.69%, which loan was guaranteed by
certain subsidiaries of TLC Beatrice. The remaining proceeds were used for
general corporate purposes. The Company recorded charges of $4.6 million in the
quarter ended December 31, 1995 relating to the repayment of these facilities
which is reflected as an extraordinary item.

The PIBOR plus .6% Note due 1999 is an indebtedness secured by a mortgage
on the Company's distribution warehouse in France.

The PIBOR plus .6% Notes due 2001 is indebtedness secured by mortgages on
the assets of certain of the Company's discount supermarkets in France.

The remaining notes are indebtedness secured by mortgages on the Company's
bottling factory in Belgium and certain retail and discount supermarkets.

The net book value of property and equipment encumbered under long-term
debt agreements was $102 million at December 31, 1995.

The scheduled annual maturities of long-term debt, as of December 31, 1995,
are approximately $15 million in 1997, $11 million in 1998, $10 million in 1999,
$5 million in 2000, and $181 million in later years.

13. ACCRUED EXPENSES

Included in other accrued expenses at December 31, 1995 and 1994 are
liabilities as follows:

<TABLE>
<CAPTION>
1995 1994
------- -------
(IN THOUSANDS)

<S> <C> <C>
Employee compensation................................................. $20,949 $26,323
Other................................................................. 36,131 29,783
------- -------
$57,080 $56,106
------- -------
------- -------
</TABLE>

F-16

14. COMMON STOCK

In 1995, TLC Beatrice repurchased 42,500 shares of Common Stock for
approximately $1.7 million.

In 1993, TLC Beatrice repurchased 14,035 shares of Common Stock for
approximately $547,000.

On February 15, 1996, the Company paid a dividend of $.11 per share to
stockholders of record as of February 5, 1996.

No Common Stock dividends were paid in 1995, 1994 and 1993.

Under the Stockholders' Agreement dated November 30, 1987, prior to its
termination, certain institutional investors holding at least 25% of the
aggregate Registrable Securities (as defined in the Stockholders' Agreement)
held by such institutional investors could make a written request to TLC
Beatrice for registration with the Securities and Exchange Commission of all or
part of their Registrable Securities (a 'Demand Registration'). Upon such
request, TLC Beatrice was obligated to file a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective.

If, by the date occurring 120 days after the request for a registration was
delivered to TLC Beatrice, a registration statement had not been declared
effective, then, under certain terms and conditions set forth in the
Stockholders' Agreement, each Institutional Investor (as defined in the
Stockholders' Agreement) could elect to sell, severally, to TLC Beatrice, all,
but not less than all, of the Registrable Securities owned by such Institutional
Investor at a purchase price per share equal to the fair market value of such
Registrable Securities in the manner set forth in the Stockholders' Agreement to
be determined by three investment banking firms, selected in accordance with the
Stockholders' Agreement.

On October 29, 1993, Carlton Investments ('Carlton'), a California limited
partnership, requested registration of 500,000 shares of Common Stock pursuant
to the provisions of the Stockholders' Agreement. Subsequently, at Carlton's
request, the Company, Carlton and other institutional investors holding
sufficient shares of Common Stock to amend the Stockholders' Agreement, entered
into Amendment No. 1 to the Stockholders' Agreement dated as of February 4,
1994, which, in part, (i) provided that the demand was withdrawn without
prejudice; (ii) provided that no demand for registration could be made until
after September 30, 1994; and (iii) provided that the Stockholders' Agreement by
its terms would terminate (except as to certain indemnification provisions which
continue indefinitely) not later than June 1, 1995 (but could terminate sooner
as to some or all of its provisions), provided that the demand registration
rights and rights of the Institutional Investors to sell their Registrable
Securities to TLC Beatrice if a registration statement was not declared
effective in 120 days after the demand request was delivered to TLC Beatrice
could terminate as late as January 31, 1996.

On November 29, 1994, TLC Beatrice received a letter from Carlton, which
claimed to hold more than 25% of the Registrable Securities owned by the
Institutional Investors as a group, requesting a Demand Registration under the
Securities Act of 1933, as amended, of all of the shares it claimed to own or
control. Following notice by the Company of such request to all Institutional
Investors, certain other Institutional Investors gave notice of their requests
to participate in the registration. On March 20, 1995, Registration Statement
No. 33-88602 was declared effective under the Demand Registration provisions of
the Stockholders' Agreement, Post-Effective Amendment No. 1 thereto was declared
effective on May 9, 1995, Post-Effective Amendments Nos. 2 and 3 thereto were
declared effective on August 21, 1995, Post-Effective Amendment No. 4 thereto
was declared effective on November 14, 1995 and Post-Effective Amendment No. 5
thereto was declared effective on December 19, 1995. By letter dated October 23,
1995, TLC Beatrice received a second request notice (the 'Second Request') from
Carlton requesting a second Demand Registration under the Act of all the shares
it claimed to own or control. TLC Beatrice and Carlton have agreed that the
Second Request would be satisfied by the extension of the effectiveness of
Registration Statement No. 33-88602. In addition, on December

F-17

19, 1995 Registration Statement No. 33-80445 covering additional shares of
Common Stock under the Second Request was declared effective.

The Stockholders' Agreement by its terms terminated on June 1, 1995 except
for certain registration rights, including the Demand Registration rights, and
the possible rights of Institutional Investors to sell Registrable Securities to
TLC Beatrice in the event a Demand Registration had not been declared effective
by a date occurring 120 days after the request for a Demand Registration was
delivered to TLC Beatrice, which terminated on January 31, 1996, and except for
certain indemnification provisions which continue indefinitely.

15. PENSION AND POSTRETIREMENT PLANS

TLC Beatrice maintains a noncontributory defined benefit plan covering
employees of TLC Beatrice and its participating subsidiaries and divisions who
are in executive, managerial, office, technical, professional, administrative,
clerical or sales positions and have completed one year of service.

Plan benefits are calculated according to a benefit formula based on total
years and months of credited service and average compensation in the highest 5
years of the last 15 years of employment, or the highest 60 consecutive months
of the last 120 months of employment. A majority of the plan assets are invested
in short-term fixed income instruments and various equity portfolios. The plan
does not have significant liabilities other than benefit obligations. TLC
Beatrice's funding policy is to contribute amounts equal to the minimum funding
requirements of the Employee Retirement Income Security Act of 1974.

Certain of TLC Beatrice's non-U.S. operating companies also sponsor defined
benefit plans for their employees.

Pension expense for the years ended December 31, 1995, 1994 and 1993
includes the following components:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1995 1994 1993
------- ------- ------
(IN THOUSANDS)

<S> <C> <C> <C>
Service cost........................................................... $ 569 $ 589 $ 610
Interest cost.......................................................... 1,076 1,030 1,009
Actual return on plan assets........................................... (1,115) 299 (1,326)
Net amortization and deferral.......................................... 357 (1,011) 703
------- ------- ------
Total pension expense........................................ $ 887 $ 907 $ 996
------- ------- ------
------- ------- ------
</TABLE>

F-18

The reconciliation of the funded status of TLC Beatrice's plans at December
31, 1995 and 1994 follows:

<TABLE>
<CAPTION>
1995 1994
----------- --------------------------
ASSETS ACCUMULATED ASSETS
EXCEED BENEFITS EXCEED
ACCUMULATED EXCEED ACCUMULATED
BENEFITS ASSETS BENEFITS
----------- ----------- -----------
(IN THOUSANDS)

<S> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation............................ $ 9,732 $ 6,268 $ 3,955
Nonvested benefit obligation......................... 131 15 --
----------- ----------- -----------
Accumulated benefit obligation....................... 9,863 6,283 3,955
Value of future pay increases........................ 4,662 97 2,763
----------- ----------- -----------
Projected benefit obligation......................... 14,525 6,380 6,718
Plan assets at fair value............................ 11,996 5,262 4,475
----------- ----------- -----------
Underfunded projected benefit obligation............. (2,529) (1,118) (2,243)
Unrecognized net loss................................ 2,114 1,272 1,365
Adjustment required to recognize minimum liability... -- (1,174) --
----------- ----------- -----------
Net pension liability recognized in the accompanying
consolidated balance sheets........................ $ (415) $(1,020) $ (878)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The assumptions used in determining the pension expense and pension
liability for each of the years shown above were as follows: Discount
rate -- 7.5-8% and 8-8.5%; Rate of salary progression -- 5-6% and 5-6%;
Long-term rate of return on assets -- 8-8.5% and 8-8.5%, in each case for the
years ended December 31, 1995 and 1994, respectively.

In January 1993, TLC Beatrice adopted SFAS No. 106, 'Employers' Accounting
for Postretirement Benefits other than Pensions', and SFAS No. 112, 'Employers'
Accounting for Postemployment Benefits.' The adoption of these standards had no
material effect on TLC Beatrice's consolidated financial statements.

TLC Beatrice sponsors an employee savings plan designed to qualify under
Sections 401(a) and 401(k) of the Internal Revenue Code as a profit-sharing
plan. TLC Beatrice makes matching contributions of 50% of the amount of salary
deferral and after-tax contributions (up to 6% of compensation) elected by a
participant. The amount of TLC Beatrice's contributions to this plan that were
charged to income were $37,000, $37,000 and $22,000 for the years ended 1995,
1994 and 1993, respectively.

16. STOCK OPTION AND BONUS PLANS

ANNUAL INCENTIVE PLAN AND 1996 LONG TERM INCENTIVE STOCK OPTION PLAN

F-19

On January 19, 1996, TLC Beatrice established (subject to shareholder
approval) the TLC Beatrice 1996 Long Term Incentive Stock Option Plan (the '1996
Stock Option Plan') to promote the long-term financial performance of TLC
Beatrice by attracting, retaining and motivating Key Employees (as defined in
the 1996 Stock Option Plan) and Consultants (as defined in the 1996 Stock Option
Plan). The Board of Directors administers the 1996 Stock Option Plan, which
provides for the grant of options with respect to a maximum of 750,000 shares of
Common Stock. Each Key Employee and Consultant may receive options to purchase a
maximum of 100,000 shares of Common Stock under the 1996 Stock Option Plan in
any calendar year, as determined by the Board of Directors. The exercise price
for an option granted pursuant to the 1996 Stock Option Plan which is intended
to meet the requirements of Section 422(b) of the Code (an 'ISO'), which may be
granted only to a Key Employee, cannot be less than 100% (or 110% in certain
cases) of the fair market value (as calculated in accordance with the 1996 Stock
Option Plan) of a share of Common Stock on the date the ISO is granted. The
exercise price for each non-ISO option granted pursuant to the 1996 Stock Option
Plan (a 'NQSO'), which may be granted to either a Key Employee or a Consultant,
shall be determined by the Board of Directors on the date that the NQSO is
granted. Each option granted under the 1996 Stock Option Plan shall be evidenced
by a stock option agreement between the Key Employee or Consultant, as the case
may be, and TLC Beatrice, which agreement may contain additional terms not
inconsistent with the 1996 Stock Option Plan.

F-20

defined in the 1996 Stock Option Plan) of TLC Beatrice, any unvested options
shall become fully vested and immediately exercisable.

1992 STOCK INCENTIVE PLAN

Upon a Change in Control (as defined in the 1992 Plan) or, at TLC
Beatrice's option, when a plan participant leaves the Company, TLC Beatrice will
pay to the participant in cash the fair market value of the aggregate number of
SARs and phantom stock awarded to such participant less the Exercise Price (as
defined in the 1992 Plan) of each SAR or share of phantom stock. Under the 1992
Plan, in the event that the common stock of TLC Beatrice is not traded in the
public market, the determination of fair market value, both for purposes of SARs
and phantom stock rights, is determined solely at the discretion of the
Compensation Committee. The 1992 Plan does not provide any parameters limiting
the Compensation Committee in this regard, and there are a variety of
permissible methods for determining fair market value.

Five thousand (5,000) SARs were awarded to each member of the Board of
Directors as of December 1, 1992 and to several key employees, for a total of
55,000 SARs. In 1993, 25,000 shares of phantom stock were awarded to certain
members of TLC Beatrice's management.

In 1994, 200,000 SARs were awarded to certain members of TLC Beatrice's
management. Vesting will occur in 25% intervals in each year beginning in 1994.
Also during 1994, the rights to 20,000 shares of phantom stock and 10,000 SARs
were waived pursuant to certain severance agreements of

F-21

key management personnel. As of December 31, 1995, approximately $1.1 million
has been provided for current and noncurrent obligations under the 1992 Plan.

In January 1995, 75,000 of the 200,000 SARs awarded in 1994 were forfeited
in connection with the termination of certain employment agreements.

In January 1996, 50,000 SARs were cancelled with the adoption of the 1996
Stock Option Plan.

17. INCOME TAXES

The income tax provisions are comprised of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1994 1993
------- -------
1995
-------------
(AS RESTATED)
(IN THOUSANDS)

<S> <C> <C> <C>
United States:
Current............................................................... $-- $ -- $ --
Deferred.............................................................. -- -- --
Foreign:
Current(a)............................................................ 28,147 26,959 18,531
Deferred(b)........................................................... (7,677) 9,040 914
------------- ------- -------
Total............................................................ $20,470 $35,999 $19,445
------------- ------- -------
------------- ------- -------
</TABLE>

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

(a) Excludes $201,000 of tax benefit related to the retirement of debt which
reduced the extraordinary loss in 1995.

(b) Excludes $1,297,000 of tax benefit related to the retirement of debt which
reduced the extraordinary loss in 1995.

Income (loss) from operations before income taxes and minority interests in
earnings were as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1994 1993
-------- --------
1995
-------------
(AS RESTATED)
(IN THOUSANDS)

<S> <C> <C> <C>
United States............................................................ $ (20,927) $(33,584) $(49,348)
Foreign.................................................................. 83,819 94,778 82,410
------------- -------- --------
Total.......................................................... $ 62,892 $ 61,194 $ 33,062
------------- -------- --------
------------- -------- --------
</TABLE>

F-22

The provision for income taxes varied from the U.S. Federal statutory
income tax rate due to the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1993
1995 1994 -------
------------- --------------
(AS RESTATED) (IN THOUSANDS)

<S> <C> <C> <C>
U.S. Statutory Rate................................................... 35% 35% 35%
------------- -------------- -------
------------- -------------- -------
Income taxes computed at U.S. statutory rates......................... $22,012 $ 21,418 $11,572
Goodwill amortization................................................. 1,139 1,130 1,059
U.S. losses without tax benefit....................................... 6,364 11,754 17,272
Foreign losses without tax benefit.................................... 1,712 1,737 509
Foreign withholding taxes without benefit............................. 853 -- --
Reversal of foreign tax contingency reserves.......................... (10,872) (1,600) (5,027)
Rate differentials and other.......................................... (738) 1,560 (5,940)
------------- -------------- -------
Total tax provision......................................... $20,470 $ 35,999 $19,445
------------- -------------- -------
------------- -------------- -------
</TABLE>

TLC Beatrice has not provided deferred taxes on that portion of the
undistributed earnings of its non-U.S. subsidiaries which are not considered to
be permanently invested, since TLC Beatrice has and is anticipated to have
sufficient U.S. operating losses to substantially reduce any U.S. Federal income
tax due upon distribution of such earnings.

TLC Beatrice has U.S. net operating loss carryforwards of approximately $36
million as of December 31, 1995 which expire between 2008 and 2010.

TLC Beatrice adopted SFAS No. 109, 'Accounting for Income Taxes,' effective
January 1, 1993. TLC Beatrice, prior to January 1, 1993, had been accounting for
income taxes using Accounting Principles Board Opinion No. 11. The adoption of
SFAS 109 had no material effect on TLC Beatrice's financial statements.

At the end of 1995, TLC Beatrice recorded a deferred tax liability in the
amount of $16 million with respect to the timing difference related to tax
incentive reserves that have been set up by its Canary Islands' subsidiary,
Interglas (see note 19). If Interglas makes the necessary investments required
for the reserves it has set up, TLC Beatrice will recognize a reduction in
income tax expense of $3.7 million in 1996, $6.2 million in 1997 and $6.1
million in 1998. During 1995, Interglas favorably concluded a tax audit with
respect to an investment reserve it set up in 1991 and qualified investments
made between 1992 and 1995 related to this reserve which resulted in a reduction
in income tax expense of $10.9 million.

At December 31, 1995, 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) the value of operating loss and tax credit

F-23

carryforwards. The tax effects of significant items comprising TLC Beatrice's
net deferred tax liability as of December 31, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Differences between book and tax basis of property....... $ (2,242) $ (2,491)
Differences in recognition of foreign reinvestment
reserves............................................... (16,013) (5,926)
Gain on sales of subsidiaries............................ -- (6,286)
Inventory valuation differences.......................... (1,645) (1,757)
Other.................................................... (2,535) (3,995)
------------ ------------
(22,435) (20,455)
------------ ------------
Deferred tax assets:
Reserves not currently deductible........................ 2,925 3,834
Operating loss carryforwards............................. 15,708 18,799
------------ ------------
18,633 22,633
Valuation allowance...................................... (14,378) (17,532)
------------ ------------
4,255 5,101
------------ ------------
Net deferred tax liability.......................... $(18,180) $(15,354)
------------ ------------
------------ ------------
</TABLE>

There was no significant change in the valuation allowance for the three
months ended March 31, 1996.

F-24

18. BUSINESS SEGMENT AND GEOGRAPHIC DATA

The Company's operations are composed of two segments, Grocery Products and
Food Distribution. Financial data for each of the segments are shown in the
tables below (in thousands of dollars):
<TABLE>
<CAPTION>
NET SALES
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ --------------------------------------

<CAPTION>
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Food Distribution.................... $ 458,645 $ 376,953 $1,640,994 $1,356,532 $1,197,517
Grocery Products..................... 71,745 74,554 431,619 465,138 458,819
---------- ---------- ---------- ---------- ----------
$ 530,390 $ 451,507 $2,072,613 $1,821,670 $1,656,336
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
OPERATING INCOME
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ --------------------------------------

<CAPTION>
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Food Distribution.................... $ 13,953 $ 12,668 $ 49,995 $ 51,653 $ 47,567
Amortization of intangible assets.... (584) (563) (2,141) (2,199) (1,882)
---------- ---------- ---------- ---------- ----------
Net Food Distribution................ 13,369 12,105 47,854 49,454 45,685
---------- ---------- ---------- ---------- ----------
Grocery Products..................... 3,634 1,967 42,374 43,354 43,739
Amortization of intangible assets.... (147) (143) (599) (889) (1,259)
---------- ---------- ---------- ---------- ----------
Net Grocery Products................. 3,487 1,824 41,775 42,465 42,480
---------- ---------- ---------- ---------- ----------
Total segments............. 16,856 13,929 89,629 91,919 88,165
---------- ---------- ---------- ---------- ----------
Corporate expenses................... (2,841) (2,393) (10,317) (20,200) (28,020)
Amortization of intangible assets.... -- -- -- (140) (4)
---------- ---------- ---------- ---------- ----------
Net Corporate expenses............... (2,841) (2,393) (10,317) (20,340) (28,024)
---------- ---------- ---------- ---------- ----------
$ 14,015 $ 11,536 $ 79,312 $ 71,579 $ 60,141
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>

F-25

<TABLE>
<CAPTION>
IDENTIFIABLE CAPITAL
ASSETS DEPRECIATION SPENDING
------------ ------------ --------
<S> <C> <C> <C>
March 31, 1996 (unaudited)
Food Distribution.................................................... $469,860 $ 5,362 $ 9,934
Grocery Products..................................................... 243,333 2,807 7,984
------------ ------------ --------
Total segments.................................................. 713,193 8,169 17,918
Corporate and other.................................................. 78,742 30 --
------------ ------------ --------
$791,935 $ 8,199 $17,918
------------ ------------ --------
------------ ------------ --------
March 31, 1995 (unaudited)
Food Distribution.................................................... $407,083 $ 4,078 $ 7,922
Grocery Products..................................................... 311,453 3,057 4,777
------------ ------------ --------
Total segments.................................................. 718,536 7,135 12,699
Corporate and other.................................................. 80,326 12 484
------------ ------------ --------
$798,862 $ 7,147 $13,183
------------ ------------ --------
------------ ------------ --------
1995
Food Distribution.................................................... $484,232 $ 21,013 $44,867
Grocery Products..................................................... 249,119 11,876 19,622
------------ ------------ --------
Total segments.................................................. 733,351 32,889 64,489
Corporate and other.................................................. 82,224 118 591
------------ ------------ --------
$815,575 $ 33,007 $65,080
------------ ------------ --------
------------ ------------ --------
1994
Food Distribution.................................................... $385,621 $ 16,195 $36,664
Grocery Products..................................................... 276,738 17,327 21,637
------------ ------------ --------
Total segments.................................................. 662,359 33,522 58,301
Corporate and other.................................................. 73,144 41 143
------------ ------------ --------
$735,503 $ 33,563 $58,444
------------ ------------ --------
------------ ------------ --------
1993
Food Distribution.................................................... $346,125 $ 16,153 $29,255
Grocery Products..................................................... 325,267 18,040 29,942
------------ ------------ --------
Total segments.................................................. 671,392 34,193 59,197
Corporate and other.................................................. 85,588 1,106 125
------------ ------------ --------
$756,980 $ 35,299 $59,322
------------ ------------ --------
------------ ------------ --------
</TABLE>

F-26

The following table provides certain geographic data on the Company's
operations (in thousands of dollars):

<TABLE>
<CAPTION>
OPERATING IDENTIFIABLE
NET SALES INCOME ASSETS
---------- --------- ------------
<S> <C> <C> <C>
March 31, 1996 (unaudited)
France.............................................................. $ 459,394 $ 13,368 $472,200
Southern Europe..................................................... 29,651 (917) 141,269
Other countries..................................................... 41,345 4,405 99,724
Corporate and other................................................. -- (2,841) 78,742
---------- --------- ------------
$ 530,390 $ 14,015 $791,935
---------- --------- ------------
---------- --------- ------------
March 31, 1995 (unaudited)
France.............................................................. $ 378,742 $ 11,759 $404,248
Southern Europe..................................................... 26,182 (1,455) 169,064
Other countries..................................................... 46,583 3,447 145,224
Corporate and other................................................. -- (2,215) 80,326
---------- --------- ------------
$ 451,507 $ 11,536 $798,862
---------- --------- ------------
---------- --------- ------------
1995
France.............................................................. $1,654,432 $ 47,132 $483,277
Southern Europe..................................................... 176,674 24,533 154,131
Other countries..................................................... 241,507 17,964 95,943
Corporate and other................................................. -- (10,317) 82,224
---------- --------- ------------
$2,072,613 $ 79,312 $815,575
---------- --------- ------------
---------- --------- ------------
1994
France.............................................................. $1,369,605 $ 48,282 $384,951
Southern Europe..................................................... 199,309 29,328 154,194
Other countries..................................................... 252,756 14,309 123,214
Corporate and other................................................. -- (20,340) 73,144
---------- --------- ------------
$1,821,670 $ 71,579 $735,503
---------- --------- ------------
---------- --------- ------------
1993
France.............................................................. $1,216,202 $ 45,171 $347,215
Southern Europe..................................................... 197,910 27,156 198,302
Other countries..................................................... 242,224 15,954 125,875
Corporate and other................................................. -- (28,140) 85,588
---------- --------- ------------
$1,656,336 $ 60,141 $756,980
---------- --------- ------------
---------- --------- ------------
</TABLE>

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

Southern Europe is comprised of Spain, Portugal and, prior to 1995, Italy.

Intersegment and intergeographic sales are not significant to the net sales
of any business segment or geographic location. Sales to any single customer are
not material. There are no export sales from the United States. Corporate and
other assets consist principally of cash and cash equivalents, and goodwill.

19. COMMITMENTS AND OTHER CONTINGENT LIABILITIES

F-27

transition rules required investments by TLC Beatrice Canary Islands'
subsidiary, Interglas, in certain approved Canary Islands' investments. The
unfulfilled investment requirement aggregated approximately $10.7 million at
December 31, 1995 and must be made in 1996. A variety of investments are
eligible, including productive machinery and equipment and/or local government
interest-bearing bonds. To the extent the investment requirement is met by
investment in productive machinery and equipment, Interglas is not entitled to
claim the 25% investment tax credit normally allowable on such machinery or
equipment. To the extent the requirement is satisfied by an investment in local
government bonds, they must be held for a minimum of five years. For 1995,
Interglas satisfied its investment requirement under the transition rules of
approximately $10.4 million entirely from internal cash flow. If the Company
cannot meet its investment requirements, then it would be required to pay taxes
in an amount equal to 35% of its outstanding investment obligation. The Company
has provided deferred income taxes of approximately $3.7 million on its
outstanding investment obligation under the transition rules.

The Canary Islands instituted new tax incentives beginning in 1994.
Interglas has taken advantage of these incentives and is required to make
qualifying investments of $17.8 million by 1997 and an additional $17.5 million
by 1998. The Company has provided for deferred income taxes on these
requirements equal to the 35% tax rate on $35.3 million, or approximately, $12.4
million, in the event that the required investment obligations are not
fulfilled. The Company can give no assurances that changes in existing Canary
Islands tax rules and requirements will not occur or that the Company will be
able to make qualifying investments in the future. By reason of these
uncertainties, the Company has recorded the potential full deferred tax
liability. If the Company can fulfill these investment requirements, the
deferred tax liability may be reversed depending upon relevant facts and
circumstances existing at the time.

20. OTHER INVESTMENTS

Included in other noncurrent assets at December 31, 1995 and 1994 are
investments as follows:

<TABLE>
<CAPTION>
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Noncurrent:
Investment in various Spanish interest-bearing bonds....................... $24,624 $12,908
------- -------
------- -------
</TABLE>

The interest rates of such investments range from 7.5% to 12.35% at
December 31, 1995 and at December 31, 1994. Maturities ranged from September
1998 to December 2002 at December 31, 1995 and September 1998 to December 2001
at December 31, 1994. These investments are treated as held to maturity in
accordance with SFAS No. 115, and are carried at amortized cost (see note 2).

21. LITIGATION

On May 20, 1994, Carlton Investments ('Carlton') filed a complaint against
TLC Beatrice and the executrices of the Lewis Estate in the Supreme Court of the
State of New York, County of New York, titled Carlton Investments v. TLC
Beatrice International Holdings Inc., et al. Carlton alleges that TLC Beatrice
breached the Stockholders' Agreement by paying a $22.1 million compensation
package to Mr. Reginald F. Lewis, former Chairman of the Board and Chief
Executive Officer of TLC Beatrice, and that Mr. Lewis tortiously interfered with
the Stockholders' Agreement by procuring that breach for his personal
enrichment. The tortious interference claim was subsequently dismissed by the
court and is now pending appeal. TLC Beatrice is vigorously defending this
action. Carlton is seeking $11.5 million plus interest in damages and attorneys'
fees and costs.

On January 4, 1995, Carlton filed a stockholder derivative suit in the
Court of Chancery of the State of Delaware, New Castle County, entitled Carlton
Investments v. TLC Beatrice International

F-28

Holdings, Inc., et al., C.A. No. 13950. This suit, as amended, alleges that from
1987 to 1993, Reginald Lewis and certain entities and individuals allegedly
controlled by Mr. Lewis wasted and converted TLC Beatrice's assets and that the
director defendants breached their fiduciary duties by authorizing or
acquiescing in this waste of assets. Among other things, the derivative
complaint, as amended, alleges (i) the alleged conversion of more than $2.1
million of TLC Beatrice's assets by Mr. Lewis as living expenses, (ii) Mr.
Lewis' alleged procurement of board approval of at least $2.5 million paid by
TLC Beatrice to reimburse Mr. Lewis for legal fees paid by Mr. Lewis to defend
himself and certain of the director defendants against litigation unrelated to
TLC Beatrice, (iii) the diversion of millions of dollars of TLC Beatrice assets
at the direction of Mr. Lewis to TLC Group, L.P., an entity owned and controlled
by Mr. Lewis, to or for the benefit of Mr. Lewis and entities owned or
affiliated with him without any benefit to TLC Beatrice, (iv) the wrongful
payment to Mr. Lewis of a $22.1 million compensation package weeks before his
death and that his family failed to disclose to the Board that Mr. Lewis was
allegedly terminally ill before the payment of the compensation package, and (v)
the payment of extravagant compensation and severance packages to certain of Mr.
Lewis' friends and family members. The derivative complaint also asserts that
beginning in 1988, Mr. Lewis (i) caused TLC Beatrice to lease (and later
purchase) an extravagantly large and costly jet airplane for his and his
family's nearly exclusive use, both business and personal, (ii) caused TLC
Beatrice to subsidize the rent for space that several Lewis-owned entities
shared with TLC Beatrice at prime locations in New York, (iii) failed to
disclose to the Board that he was receiving funds from Lewis & Clarkson after he
withdrew from the firm, (iv) failed to disclose the retention by him of voting
rights associated with common stock issued to management and (v) used the assets
and corporate opportunities of French subsidiaries for his own personal
purposes. Carlton also alleges as a basis for these claims that many of the
transactions challenged were in breach of the Stockholders' Agreement. Named as
defendants are the executrices of Mr. Lewis' estate, several entities allegedly
controlled by the late Mr. Lewis, together with a number of current and former
directors and a former officer of TLC Beatrice. TLC Beatrice and four direct or
indirect subsidiaries are also named as a nominal defendants. Carlton seeks
damages for TLC Beatrice in the amount of payments it alleges were improperly
paid by TLC Beatrice, an accounting and Carlton's cost of suit and reasonable
attorneys' fees. TLC Beatrice and the other defendants have filed answers and
affirmative defenses to the derivative complaint. Discovery is proceeding. TLC
Beatrice intends to vigorously defend against this suit and believes the
allegations to be without merit. TLC Beatrice's outside litigation counsel has
advised TLC Beatrice that at this time the extent of TLC Beatrice's liability,
if any, is not determinable. Under certain circumstances the Registrant is
obligated to reimburse the directors for their share of any judgment or
settlement.

The ultimate outcome that may result from these matters may have a material
adverse effect on the Company's consolidated financial condition or results of
operations. No provision for any liability that may result from these matters
has been made in the consolidated financial statements.

F-29

22. FAIR MARKET VALUE OF FINANCIAL INSTRUMENTS

<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------------- -----------------------
CARRYING FAIR MARKET CARRYING FAIR MARKET
VALUE VALUE VALUE VALUE
-------- ----------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents................................... $120,279 $ 120,279 $ 74,786 $ 74,786
Receivables, net............................................ 165,989 165,989 153,348 153,348
Other current assets........................................ 13,356 13,356 14,749 14,749
Other noncurrent assets..................................... 53,042 53,053 71,367 71,708
LIABILITIES:
Short-term debt and current portion of long-term debt....... 64,647 64,647 87,898 87,898
Accounts payable............................................ 256,466 256,466 206,239 206,239
Taxes payable............................................... 8,996 8,996 15,360 15,360
Long-term debt.............................................. 223,308 223,308 145,209 145,209
Deferred income taxes....................................... 18,180 18,180 15,354 15,354
Other noncurrent liabilities................................ 29,944 29,944 35,591 35,591
Foreign currency swaps...................................... 1,842 8,942 -- --
</TABLE>

Cash and cash equivalents, net receivables, accounts payable, taxes payable,
deferred income taxes and other noncurrent liabilities.

The carrying amounts of these items are a reasonable estimate of their fair
value.

Other current and noncurrent assets.

The fair market value of securities held for investment purposes included in
other current and noncurrent assets is based on quoted market prices.

Short-term and long-term debt.

Interest rates which are currently available to the Company for issuance of debt
with similar terms and remaining maturities are used to estimate fair value for
debt issues that are not quoted on an exchange.

Foreign currency swaps.

The fair value is the estimated amount that the Company would pay to
terminate the contracts at the reporting date. The fair value information has
been obtained from dealer quotations.

23. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company operates internationally, giving rise to significant exposure
to market risk from changes in foreign exchange rates. In October 1995, the
Company entered into currency swaps to reduce the risk that the cash inflows
from its foreign subsidiaries will be adversely affected by changes in exchange
rates and affect the Company's ability to meet interest payments on the Notes
(see Note 12). The Company does not hold or issue financial instruments for
trading purposes.

Under the currency swap agreements, the Company agrees with other parties
to exchange, at specified intervals, French francs for U.S. dollars, based on
specified interest rates applied to the notional amount of the contract. At
inception, the Company received approximately 660 million French francs in
exchange for approximately $133 million. The Company receives interest in
dollars at 11.50% based on the notional U.S. dollar amount and pays interest in
French francs at a weighted average rate of 12.51% based on the notional French
franc amount. Interest payments and receipts occur semi-

F-30

annually on April 1 and October 1, commencing April 1, 1996. The swap agreements
expire October 1, 2005 and require final settlement of the notional amounts at
that date.

The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to the swap agreements, but it does not expect
any counterparties to fail to meet their obligations given their high credit
ratings. The credit exposure from swap contracts is represented by the value of
contracts with a positive fair value at the reporting date.

24. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations
for the calendar years 1995 and 1994 and the quarter ended March 31, 1996:
<TABLE>
<CAPTION>
QUARTERS ENDED
-----------------------------------------------
DECEMBER 31, SEPTEMBER 30,
--------------------- ---------------------
1995 1994 1995 1994
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................... $526,512 $412,234 $532,950 $511,658
-------- -------- -------- --------
Gross profit............................ 90,265 74,144 104,757 111,769
-------- -------- -------- --------
Income (loss) before extraordinary
item.................................. 3,209 (4,069) 8,431 9,195
Extraordinary item, net of taxes........ (3,092) -- -- --
-------- -------- -------- --------
Net income.............................. $ 117 $ (4,069) $ 8,431 $ 9,195
-------- -------- -------- --------
-------- -------- -------- --------
Net income (loss) per common share...... $ .01 $ (.44) $ .92 $ 1.00
-------- -------- -------- --------
-------- -------- -------- --------

JUNE 30, MARCH 31,
-------------------- ----------------------------------
1995 1994 1996 1995 1994
-------- -------- -------- -------- --------

<S> <C> <C> <C> <C> <C>
Net sales...............................$561,644 $501,037 $530,390 $451,507 $396,741
-------- -------- -------- -------- --------
Gross profit............................ 107,245 117,811 88,186 77,058 82,803
-------- -------- -------- -------- --------
Income (loss) before extraordinary
item.................................. 5,775 9,619 1,240 1,041 (3,432)
Extraordinary item, net of taxes........ -- -- -- -- --
-------- -------- -------- -------- --------
Net income..............................$ 5,775 $ 9,619 $ 1,240 $ 1,041 $ (3,432)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net income (loss) per common share......$ .63 $ 1.05 $ .14 $ .11 $ (.37)
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

Net income (loss) per common share for each of the quarters is based on the
weighted average number of shares outstanding for each period, and the sum of
the quarters may not necessarily be equal to the full year's net income per
share.

F-31

__________________________________ __________________________________

NO 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. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY STATE OR IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----

<S> <C>
Additional Information................................................................................................. 2
Prospectus Summary..................................................................................................... 3
Risk Factors........................................................................................................... 7
The Company............................................................................................................ 9
Use of Proceeds........................................................................................................ 11
Dividends.............................................................................................................. 11
Capitalization......................................................................................................... 12
Selected Consolidated Financial Data................................................................................... 13
Management's Discussion and
Analysis of Financial Condition and
Results of Operations................................................................................................ 16
Business............................................................................................................... 28
Management............................................................................................................. 40
Certain Transactions................................................................................................... 51
Security Ownership of Principal Stockholders and Management............................................................ 54
Selling Stockholders................................................................................................... 57
Shares Eligible for Future Sale........................................................................................ 59
Description of Capital Stock........................................................................................... 60
Plan of Distribution................................................................................................... 62
Legal Opinions......................................................................................................... 62
Experts................................................................................................................ 62
Index to Consolidated
Financial Statements................................................................................................. F-1
</TABLE>

4,346,055 SHARES

TLC BEATRICE INTERNATIONAL
HOLDINGS, INC.

COMMON STOCK
($.01 PAR VALUE PER SHARE)

-----------------------
PROSPECTUS
-----------------------

__________________________________ __________________________________

<PAGE>