Gorges Quik to Fix Foods Inc – ‘10-K’ for 9/27/97

As of:  Monday, 1/12/98   ·   For:  9/27/97   ·   Accession #:  930661-98-50   ·   File #:  333-20155

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Form 10-K - 09/27/97                                  45    249K 
 2: EX-10.1     Amendment to Senior Credit Facility                    8     32K 
 3: EX-27       Financial Data Schedule                                2      8K 
 4: EX-99       Ghc Stock Option Agreement for A Scott Letier         15     45K 

10-K   —   Form 10-K – 09/27/97
Document Table of Contents

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================================================================================
SECURITIES AND EXCHANGE COMMISSION  
WASHINGTON, D.C.  20549 

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

FORM 10-K 

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

(MARK ONE)                                                                      
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  
SECURITIES EXCHANGE ACT OF 1934 
FOR THE FISCAL YEAR ENDED SEPTEMBER 27, 1997  

OR  

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  
SECURITIES EXCHANGE ACT OF 1934 
For the transition period from _____ to _____ 

COMMISSION FILE NUMBER 333-20155  

GORGES/QUIK-TO-FIX FOODS, INC.  
(Exact name of registrant as specified in its charter)  

      DELAWARE                                58-2263508
     (State or other                          (I.R.S. Employer
 jurisdiction of incorporation)                Identification No.)

9441 LBJ FREEWAY  
SUITE 214 
DALLAS, TEXAS 75243 
(Address of principal executive offices)  
(972) 690-7675  
(Registrant's telephone number) 

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: 

NONE  

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: 

NONE  

(Title of class)  

   Indicate by check mark whether the registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of   
1934 during the preceding 12 months (or for such shorter period that the        
registrant was required to file such reports), and (2) has been subject to such 
filing requirements for the past 90 days.  Yes  X  No                           
                        ---    ---

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information          
statements incorporated by reference in Part III of this Form 10-K or any       
amendment to this Form 10-K.  [X]                                               

The number of shares of the registrant's Common Stock outstanding at  
December 1, 1997 was 1,000.  There is no public trading market for shares of the
registrant's Common Stock.                                                      

DOCUMENTS INCORPORATED BY REFERENCE 

NONE  

================================================================================

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GORGES/QUIK-TO-FIX FOODS, INC.  

TABLE OF CONTENTS 

                                                                            Page
                                                                            ----

PART I                                                                          

    Item 1.  Business...................................................     1

    Item 2.  Properties.................................................     9

    Item 3.  Legal Proceedings..........................................     9

    Item 4.  Submission of Matters to a Vote of Security Holders........    10

PART II                                                                         

Item 5.  Market for Registrant's Common Stock and Related             
             Stockholder Matters........................................    11

    Item 6.  Selected Financial Data....................................    12

Item 7.  Management's Discussion and Analysis of Financial            
             Condition and Results of Operations........................    12

    Item 8.  Financial Statements and Supplementary Data................    22

Item 9.  Changes in and Disagreements with Accountants on             
             Accounting and Financial Disclosure........................    22

PART III                                                                        

    Item 10. Directors and Executive Officers of the Registrant.........    23

    Item 11. Executive Compensation.....................................    24

Item 12. Security Ownership of Certain Beneficial Owners and          
             Management.................................................    25

    Item 13. Certain Relationships and Related Transactions.............    25

PART IV                                                                         

Item 14. Exhibits, Financial Statement Schedules and Reports on       
             Form 8-K...................................................    28

SIGNATURES...............................................................    29 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS...............................    F-1

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GORGES/QUIK-TO-FIX-FOODS, INC.  

1997 ANNUAL REPORT ON FORM 10-K 

PART I  

ITEM 1.  BUSINESS                                                               

GENERAL                                                                         

Gorges/Quik-to-Fix Foods, Inc., (the "Company"), or its representatives, may
make forward looking statements, oral or written, including statements in this  
report's Management's Discussion and Analysis of Financial Condition and Results
of Operations, press releases and filings with the Securities and Exchange      
Commission (the "Commission"), regarding estimated future operating results,    
planned capital expenditures (including the amount and nature thereof) and the  
Company's financing plans, if any, related thereto, increases in customers and  
the Company's financial position and other plans and objectives for future      
operations.  Certain of the matters discussed may involve known and unknown     
risks, uncertainties and other factors which may cause the actual results,      
performance or achievements of the Company to be materially different from      
future results, performance or achievements expressed or implied by such        
forward-looking statements. Important factors that could cause the actual       
results, performance or achievements of the Company to differ materially from   
the Company's expectations are set forth among the factors set forth in the     
"Factors Affecting Future Performance" section in Item 7 of this report or in   
the description of the Company's business in Item 1 of this report, as well as  
factors contained in the Company's other securities filings.                    

  All subsequent oral and written forward looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their        
entirety by these factors.  The Company assumes no obligation to update any of  
these statements.  The Company's fiscal year ends on the Saturday closest to    
September 30.  References in this report to "fiscal 1998," "fiscal 1997,"       
"fiscal 1996," and "fiscal 1995" refer to the twelve month periods ended October
3, 1998, September 27, 1997, September 28, 1996, and September 30, 1995,        
respectively.                                                                   

The Company is a leading producer of value added processed beef products for
the foodservice industry and is one of the few companies in this segment of the 
industry that markets and distributes nationally. The Company's products are    
marketed under the nationally recognized Quik-to-Fix and Gorges brand names, as 
well as the private labels of leading national foodservice distributors. The    
Company believes that its products are well positioned to take advantage of what
it believes is a trend within the foodservice industry toward greater           
outsourcing of the food preparation process. Outsourcing provides many benefits 
to foodservice operators including consistent product quality, reduced          
preparation costs and increased food safety.                                    

 The Company purchases fresh and frozen beef and, to a lesser extent, pork and
poultry, which it processes into a broad range of fully cooked and ready to     
cook products. The Company's two product categories are value added products and
ground beef. Value added product offerings include (i) breaded beef items, such 
as country fried steak and beef fingers, (ii) charbroiled beef, such as fully   
cooked hamburger patties, fajita strips, meatballs, meatloaf and taco meat and  
(iii) other specialty products, such as fully cooked and ready to cook pork     
sausage, breaded pork and turkey, cubed steaks and Philly steak slices. Ground  
beef product offerings consist primarily of ready to cook individually quick    
frozen ("IQF") hamburger patties. The Company operates four manufacturing       
facilities, three of which are dedicated to value added products and one of     
which produces primarily ground beef products. The Company's products are sold  
primarily to the foodservice industry, which encompasses all aspects of away-   
from-home food preparation, including commercial establishments such as fast    
food restaurants and family dining restaurants and non-commercial establishments
such as healthcare providers, schools and corporations. The Company sells its   
products principally through broadline and specialty foodservice distributors.  

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The Company was formed in 1996 in connection with the acquisition of the    
processed beef operations (the "Business") of Tyson Foods, Inc. ("Tyson" and the
"Acquisition" respectively). Prior to the Acquisition, the Business operated as 
part of Tyson, the world's largest vertically integrated poultry processor.     
Tyson acquired a portion of the Business in 1989 through its acquisition of     
Holly Farms. In doing so, Tyson acquired two separate beef processing companies,
Harker's, Inc. ("Harker's") and Quik-to-Fix Foods, Inc. ("Quik-to-Fix, Inc."),  
each of which had been acquired by Holly Farms in 1986. In 1990, Tyson sold the 
Harker's brand name and route sales division to Harker's Distribution, Inc., a  
company formed by former members of Harker's management. In January 1994, Tyson 
expanded its beef processing operations further by acquiring Gorges Foodservice,
Inc., ("Gorges, Inc."), a leading producer of charbroiled beef products. In     
April 1996, Tyson announced its intention to sell the Business in order to      
concentrate on its core poultry business. The Acquisition was consummated on    
November 25, 1996.                                                              

   The Company is incorporated under the laws of the state of Delaware.  The
Company's principal executive offices are located at 9441 LBJ Freeway, Suite    
214, Dallas, Texas, 75243, and its telephone number is 972/690-7675.  The       
Company is a wholly owned subsidiary of Gorges Holding Corporation ("GHC"),     
which, in turn, is substantially owned by CGW Southeast Partners III, L.P.      
("CGW").  GHC has no business other than holding the stock of the Company, which
is the sole source of GHC's financial resources.  GHC is controlled by CGW,     
which beneficially owns shares representing 54.8% of the voting interest in GHC,
(46.3% on a fully diluted basis) and has the right to designate all of the      
directors of GHC. Accordingly, CGW, through its control of GHC, controls the    
Company and has the power to elect all of its directors, appoint new management,
and approve any action requiring the approval of the holders of the Company's   
common stock.                                                                   

INDUSTRY OVERVIEW                                                               

  The Foodservice Industry. Purchases of food prepared away from home have grown
consistently for over forty years and currently represent approximately 45% of  
total food purchases. Demand has risen due to various demographic changes,      
including increases in personal disposable income, the increasing number of     
single-parent households and the rising number of dual income families. The     
Company believes it has strengthened its relationships with broadline and       
specialty foodservice distributors over the last decade, a period of industry   
consolidation. Furthermore, management believes that the Company is well        
positioned to continue to identify and capitalize on certain segments of the    
foodservice industry that are growing at a faster rate than the foodservice     
industry overall.                                                               

The Company believes restaurants and other foodservice providers are seeking
to outsource more of the "back-of-the-house" food preparation process in order  
to reduce preparation costs and to ensure product safety, quality and           
consistency. Management believes the growth in the foodservice industry,        
combined with the trend of outsourcing food preparation, will enhance the growth
of value added food processors.                                                 

 The Beef Industry.  Beef is the most consumed protein in the United States on
the basis of boneless, per capita consumption. Although per capita beef         
consumption in the United States declined through the late 1980s as consumers   
became more concerned about the level of fat in their diet, the beef industry   
has taken steps to maintain beef as the nation's number one protein. Beef is now
leaner than ever, with the average cut of beef 27% leaner than in 1985, due to  
closer trimming of fat, new leaner cuts of beef and the use of leaner cattle.   

 According to the Beef Industry Council, within the foodservice industry, beef
consumption increased from 6.22 billion beef servings in commercial restaurants 
in 1991 to 6.68 billion servings in 1994, a 7.4% increase. Furthermore,         
according to NPD/CREST, ground beef represents 79% of all beef served away from 
home. Fueled by high value "combo" meals in the fast food segment, ground beef  
sales in the restaurant industry grew by 3% in 1995.                            

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  A number of national associations conduct research on consumer preferences for
beef, run programs to promote the consumption of beef and conduct research on   
improvement of the beef product. These associations, which provide valuable     
category promotion, include The National Cattlemen's Association, The Beef      
Industry Council and the National Livestock and Meat Board.                     

 Value Added Beef Processors.  Value added beef processors such as the Company
purchase fresh and frozen beef and process it into a broad range of fully cooked
and ready to cook products sold primarily to the foodservice industry, including
fast food and family dining restaurants, wholesale clubs, healthcare providers, 
schools and corporations. The Company believes that foodservice operators'      
priorities are quality, product consistency, food safety, ease of preparation   
and price and that its products satisfy these priorities.                       

PRODUCT CATEGORIES                                                              

  The Company manufactures and markets an extensive variety of IQF, fully cooked
and ready to cook beef, pork and poultry products. The Company's products are   
marketed under the nationally recognized Quik-to-Fix and Gorges brand names as  
well as the private labels of leading national foodservice distributors.        

 Value Added Products.  The Company's breaded beef products are sold primarily
under the Quik-to-Fix brand. The flagship product of the Quik-to-Fix brand is   
country fried steak. The primary customers for breaded beef products are        
commercial foodservice operators, including Shoney's, Cracker Barrel, Chili's,  
Steak and Ale and Marriott Corporation.                                         

Charbroiled beef products are the flagship items of the Gorges brand. Under 
the Gorges brand, the Company offers an extensive variety of fully cooked       
charbroiled beef products, including charbroiled steak burgers, meatballs,      
meatloaf, taco meat and chili. Customers for charbroiled beef products include a
wide variety of commercial users such as Ryan's, Golden Corral and Marriott     
Corporation, along with non-commercial users such as hospitals, schools and     
corporations. Growth in charbroiled beef products has been driven by customers' 
desire to minimize preparation time and concerns about the food safety issues   
surrounding the handling of raw beef products. The USDA Commodity Reprocessing  
Program for schools has also played an important role in the growth of these    
products, as it allows the Company to couple the processing of federally donated
commodity products with the sale of other value added products, thereby         
increasing penetration in the important school foodservice program segment.     

  Other value added products include a wide variety of fully cooked and ready to
cook items such as charbroiled beef strips, pork sausage, beef luncheon steaks, 
cubed steaks, pre-cooked rib patties, meatloaf, stew beef and breaded turkey    
products. In March 1996, Quik-to-Fix Beef Steak Slices were introduced for use  
in Philly steak sandwiches, stir-fry and other sliced steak dishes. Customers   
for these specialty items include Tyson, Stouffer's, Steak and Ale, McLane, and 
Subway.                                                                         

Value added products accounted for $147.3 million (71.9%), $149.6 million   
(66.7%), and $154.1 million (56.8%) of sales (excluding frozen portion steak    
sales) in fiscal 1997, fiscal 1996, and fiscal 1995, respectively.              

Ground Beef.  The Company serves the ground beef market principally through 
the sale of IQF patties. The ground beef market is very competitive and is      
served by a large number of national and regional suppliers. The Company's      
quality standards allow the Company to position its ground beef products as     
safer, healthier and more consistent. Ground beef customers include Sonic,      
Harker's, and Sysco.                                                            

Ground beef accounted for $57.4 million (28.1%), $74.7 million (33.3%), and 
$117.1 million (43.2%) of sales (excluding frozen portion steak sales) in 12    
month fiscal 1997, fiscal 1996, and fiscal 1995, respectively.                  

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GROWTH STRATEGY                                                                 

 The Company's business was acquired from Tyson on November 25, 1996. Prior to
the Acquisition, Tyson's management modified its strategy of providing a full   
range of center of the plate meat proteins in addition to chicken. Accordingly  
Tyson returned its focus to its core poultry business, as evidenced by its      
adoption of the "We're Chicken" campaign in early 1996.                         

  The Company's principal business objective is to build its higher margin value
added business. Value added products address many of the concerns within the    
foodservice industry, including cost reduction, food safety and product quality 
and consistency. The Company also intends to utilize its ground beef            
manufacturing capabilities to target higher volume multi-unit accounts,         
especially where opportunities exist to cross-sell its higher margin value added
products. Management believes that by operating as an integrated, stand alone   
enterprise, the Company will be better able to capitalize on its strengths and  
industry trends, including the following.                                       

.  Favorable Trends in the Foodservice Industry. Purchases of food prepared 
   away from home have grown consistently for over forty years and currently
   represent approximately 45% of total food purchases. Demand has risen due
    to various demographic changes, including increases in personal disposable
  income, the increasing number of single-parent households and the rising
number of dual income families.                                       

.  The Company believes that there is also an increasing trend within the   
foodservice industry toward outsourcing more of the food preparation  
   process to reduce preparation costs and to ensure product safety, quality
     and consistency. The Company addresses these outsourcing needs by producing
   products that are precooked or ready to cook (e.g. breaded, portioned and
seasoned) and require little "back-of-the-house" preparation.         

  .  Strong Brand Names. The Gorges and Quik-to-Fix brands have been established
for over 50 and 30 years, respectively. The Company believes its      
     charbroiled beef and country fried steak customers associate the Gorges and
Quik-to-Fix brand names with products that are high quality, safe and 
reasonably priced. The Company intends to capitalize on this brand    
recognition to increase the market penetration of its breaded beef and
charbroiled beef products and to promote additional products under the
Gorges and Quik-to-Fix brand names.                                   

.  Focused Sales and Marketing Team. The Company's sales and marketing team 
    consists of 14 experienced professionals, most of whom worked with Gorges,
  Inc., Harker's or Quik-to-Fix, Inc. prior to their acquisition by Tyson.
     Until May 1996, these sales professionals marketed substantially all of the
   Tyson product line. With volume based incentives, sales were dominated by
   high volume chicken products. The Company's sales force, now selling only
the Company's product line, continues to be compensated based on sales
    volume and growth based incentive programs, all of which are tied to sales
of the Company's predominantly beef based product lines.              

.  Extensive Foodservice Broker Network. Management believes that the       
   Company's extensive independent foodservice broker network, consisting of
64 brokers covering 49 states, is one of its most valuable assets. The
    brokers act as extensions of the Company's in-house sales force, providing
  sales and marketing support and an intensive sales effort focused on the
major foodservice distributors in each of their respective regions.   

.  Strong and Diverse Customer Base. The Company has a strong and diverse   
customer base, anchored by 48 of the 50 largest broadline foodservice 
    distributors. The Company's products are purchased by 28 of the 50 largest
multi-unit restaurant chains in the United States, including Shoney's,
Chili's, Ponderosa and Cracker Barrel, as well as by institutional    
 customers such as Marriott Corporation and school districts through the
USDA Commodity Reprocessing Program. The Company's products are also  
purchased by wholesale club stores.                                   

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.  Modern Facilities with Excess Capacity. The Company operates four modern 
   facilities using state-of-the-art equipment with capacity that will allow
     significant volume increases without major additional capital expenditures.
Until recently, several plants had duplicative capabilities, creating 
  production inefficiencies. During late fiscal 1995 and the first half of
     fiscal 1996, Tyson reconfigured the facilities, significantly enhancing the
  operating efficiency of the facilities, increasing capacity and reducing
the Company's overall labor expenditures.                             

.  Experienced and Focused Management Team. Prior to the Acquisition, the   
   Company's four plants operated primarily as independent facilities rather
   than as an integrated unit. Furthermore, strategic decisions were made by
    corporate level managers whose principal focus was on Tyson's core poultry
   business. The Company is now operated by a team of managers almost all of
whom have spent the majority of their careers in the beef processing  
industry. Most members of the management team were employed by Gorges,
  Inc., Quik-to-Fix, Inc. or Harker's prior to their acquisition by Tyson.
   The management team has developed valuable industry relationships and has
    extensive experience in key aspects of the Company's operations, including
    procurement, production, sales and marketing, research and development and
distribution.                                                         

SALES AND MARKETING                                                             

Sales and Marketing Team                                                      

The Company's sales and marketing team consists of 14 experienced           
professionals, most of whom worked with Gorges, Inc., Harker's or Quik-to-Fix,  
Inc. prior to their respective acquisitions by Tyson. Until May 1996, these     
sales professionals marketed substantially all of the Tyson product line. With  
volume based incentives, sales were dominated by high volume chicken products.  
The Company's sales force, now selling only the Company's product lines,        
continues to be compensated based on sales volume and growth based incentive    
programs, all of which are tied to sales of the Company's predominantly beef    
based product lines.                                                            

Foodservice Broker Network                                                    

Management believes that the Company's extensive independent foodservice    
broker network consisting of 64 brokers covering 49 states, is one of its most  
valuable assets. The brokers act as extensions of the Company's in-house sales  
force, providing sales and marketing support and an intensive sales effort      
focused on the major foodservice distributors in each of their respective       
regions. Most brokers sell a wide variety of products produced by other         
manufacturers. However, the brokers generally do not carry products that compete
directly with those produced by the Company. The brokers are compensated on a   
commission basis and do not take title to the Company's products.               

The brokers perform the following functions: (i) sell the Company's products
to foodservice distributors; (ii) provide administrative support for the Company
and its foodservice distributors; and (iii) sell the Company's products to      
foodservice operators through product presentations, participation in broadline 
foodservice distributor food shows, training seminars for key foodservice       
operators, training seminars for distributor sales representatives and          
introduction and execution of new product rollout and promotional activities.   

CUSTOMERS AND END USERS                                                         

Overview                                                                      

 Commercial and non-commercial foodservice operators are the primary end users
of the Company's products. Commercial foodservice operators include fast food   
and family dining restaurants, multi-unit national chain accounts, regional     
chain accounts and wholesale clubs. Non-commercial foodservice operators include
hospitals, corporations and schools (including through the USDA Commodity       

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Reprocessing Program). The Company's sales force, in conjunction with the       
Company's independent foodservice brokers, markets the Company's products to    
broadline and specialty distributors, multi-unit chains and wholesale clubs. The
majority of sales to foodservice distributors are effected through the Company's
independent broker network. Foodservice distributors are the principal suppliers
of the Company's products to the end users.                                     

During fiscal 1997, Sysco, Sam's Club and Harker's accounted for 16.6%, 5.9%
and 12.8% of gross sales, respectively. See "Management's Discussion and        
Analysis of Financial Condition and Results of Operations - Factors Affecting   
Future Performance."                                                            

Foodservice Distributors                                                      

  Broadline foodservice distributors distribute a full line of dry, refrigerated
and frozen food products to commercial and non-commercial foodservice operators.
A majority of the Company's sales are made to broadline and specialty           
foodservice distributors which resell the Company's products to end users under 
the Gorges and Quik-to-Fix brand names or under the distributor's private label 
using items produced and packaged for the distributor. The Company has          
established strong relationships with 48 of the top 50 broadline foodservice    
distributors in the United States, including Sysco, JP Foodservice (formerly JP 
Foodservice, US Foodservice and Rykoff-Sexton), Alliant Foodservice, Inc. and   
PYA/Monarch, Inc.                                                               

End Users.  The four primary end users of the Company's products are: (i)   
independent commercial foodservice operators, including fast food, family dining
and fine dining restaurants, snack bars and caterers, most of which purchase    
their products through broadline foodservice distributors; (ii) national        
accounts, concentrated in the rapidly growing fast food and family dining       
category, which generally have centralized buying organizations served by either
broadline or specialty foodservice distributors; (iii) wholesale clubs such as  
Sam's Club and Price/Cost Co.; and (iv) non-commercial foodservice operators,   
including corporate cafeterias and health care and educational institutions,    
most of which purchase their products primarily through broadline foodservice   
distributors.                                                                   

USDA Commodity Reprocessing. The Company participates in the USDA Commodity 
Reprocessing Program. Under this federal program, the Company takes USDA-donated
commodity beef and further processes it for schools. The Company charges a fee  
for processing the beef into value-added further processed products such as     
charbroiled beef patties and fully cooked breaded beef patties. The program has 
complex administrative requirements with which the Company has significant      
experience. These complex administrative requirements make it difficult for     
competitors to enter the business on a casual basis. The majority of demand for 
products under the program arises each spring and fall; however, the frozen     
nature of the product allows production to be scheduled throughout the year to  
keep plant utilization high. Despite this segments continued growth as a percent
of the Company's sales, the Company has historically derived less than 10% of   
its revenues from the USDA Commodity Reprocessing Program.                      

DISTRIBUTION                                                                    

  The Company is one of the few value added beef processors that distributes its
products nationally. Prior to the Acquisition, all of the Company's products    
were shipped frozen to customers, to public warehouses for distribution or to a 
Tyson warehouse for distribution with other Tyson products. Historically, two   
thirds of the Company's shipping requirements have been met by independent      
shippers and trucking lines with the remainder being shipped in Tyson-owned     
trucks with charges to the Company at market rates. Between 1994 and the        
Acquisition Closing, Tyson required the Business to stock inventory at four     
separate warehouses to accommodate Tyson's poultry shipping needs, thereby      
resulting in higher inventory levels. Beginning June 1, 1997, the Company       
established a distribution network using its own warehouses and two primary     
public warehouses.  Substantially all of the Company's products are shipped by  
common and contract carriers.   Management believes that this network will allow
the Company to maintain its national distribution capability.                   

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SUPPLIERS                                                                       

The three major components of the Company's products are (i) meat proteins; 
(ii) batter, breading, spices and other ingredients; and (iii) packaging        
material.                                                                       

  The Company has long standing relationships with numerous major beef suppliers
and operates a centralized procurement group which is responsible for sourcing  
beef for all of its facilities. Approximately 70% of the Company's beef needs   
are obtained from three major suppliers: IBP; Montfort (ConAgra); and Excel     
(Cargill). The Company's pork and poultry needs also are sourced primarily from 
these major suppliers, as well as Tyson Foods and John Morrell. Although the    
supply of meat proteins is concentrated, it is a commodity market and supplies  
at USDA standards are readily available from a variety of sources. The Company  
typically purchases raw materials from its suppliers using short-term purchase  
orders. The Company does not speculate in the markets for its raw materials and 
generally does not enter into long-term contractual arrangements with its       
suppliers. As a matter of policy, the Company performs its own quality assurance
testing of its raw materials; however, the Company does require pre-testing by  
its suppliers of raw materials to be used in its IQF raw ground beef products.  

  Batters, breading, spices and other ingredients, once specified, are purchased
at the plant level, typically from regional suppliers.                          

Virtually all packaging material requirements for the Company's products,   
which consist of corrugated boxes, plastic bags and labels, are acquired on a   
local basis for each of the plants.                                             

RESEARCH AND DEVELOPMENT                                                        

Over the past three years, the Company has introduced a variety of new      
products or product extensions, including the Pub Burger, Beef TastyRib,        
charbroiled meatballs, cooked taco meat, breakfast country fried steaks, beef   
steak slices, Quik-to-Fix homestyle country fried steaks, breaded turkey and    
cooked babyback ribs. Research and development activities for the Business had  
historically been carried out at centralized Tyson facilities in Arkansas, and  
these facilities were available for use by the Company for up to twelve months  
after the Acquisition Closing. The Company's Garland, Texas facility has space  
which was specifically designed and used for conducting food related research   
and development prior to its acquisition by Tyson. The majority of research and 
development is now being performed at this space. The Company currently employs 
five research and development professionals dedicated to product development,   
headed by a team leader with a BS in Biochemistry and Food Science and Masters  
degrees in Biochemistry and Business Administration. The Company's research and 
development team works closely with the sales force to respond to changing      
customer needs.                                                                 

ENVIRONMENTAL MATTERS                                                           

The operations of the Company and the ownership of real property by the     
Company are subject to extensive and changing federal, state and local          
environmental laws and regulations. The Company believes it is currently in     
material compliance with all known material and applicable environmental        
regulations and currently does not expect to make material capital expenditures 
with respect to environmental control facilities during fiscal 1998. The Company
did not assume any liabilities for environmental matters relating to the        
operation of the Business prior to the Acquisition Closing. In the future, the  
Company may be involved from time to time in administrative and judicial        
proceedings and inquiries relating to environmental matters and may be required 
to make capital expenditures to comply with environmental laws.                 

Prior to the Acquisition, Tyson incurred monthly surcharges of approximately
$40,000 to the city of Garland, Texas as a result of effluent wastewater        
discharges from the Garland, Texas facility. Tyson elected to pay the monthly   
surcharges rather than modify the facility to allow its operation without       
incurring such surcharges. Since the Acquisition, the Company has continued to  
incur the monthly surcharges and the Company currently does not intend to modify
the facility to allow its operation without                                     

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incurring such surcharges. The amount of the surcharge is calculated based on   
the amount of effluent discharge and the total amount of water used by the      
Garland, Texas plant. Management does not believe that the incurrence of the    
aforementioned surcharges will have a material adverse effect on the Company's  
business, results of operations and debt service capabilities. There can be no  
assurance, however, that such surcharges will not be increased or that the      
Company will not be required to modify its operations, which may result in      
significant expenses or material capital expenditures.                          

GOVERNMENTAL REGULATION                                                         

  The Company is subject to federal, state and local health laws and regulations
that establish standards for the manufacture, storage, labeling and transport of
foodstuffs. The USDA is the regulatory body which is primarily responsible for  
oversight of the Company's operations. Beef, pork and poultry inspection is     
mandatory, under the jurisdiction of the Food Safety and Inspection Service (a  
division of the USDA), for meat that is transported across state lines or is    
otherwise placed in interstate commerce. Tyson has made, and the Company may be 
required to make, capital expenditures in response to changing compliance       
standards and production, storage, and transportation technology.               

  Recently, several of the Company's competitors allegedly have been responsible
for the distribution and sale of beef products contaminated with the e-coli     
virus. Although the Company has taken measures to ensure that its products are  
not contaminated with such virus, there can be no assurance that such           
contamination will not occur or that, in the absence of such contamination, the 
Company's results of operations, financial condition and debt service           
capabilities will not be adversely affected by negative publicity about the     
Company's industry.  In addition, such publicity or other factors may result in 
increased government regulation of the Company's business and there can be no   
assurance that such regulation will not adversely affect the Company's results  
of operations, financial condition, and debt service capabilities.              

The Company operates a USDA-approved Total Quality Control program at each  
facility. The Company's programs assure that the Company's products are         
manufactured under conditions that meet or exceed all applicable government     
standards. Such programs are monitored by federal inspectors and include: (i)   
inspection of meat at various stages of processing; (ii) temperature monitoring 
for both fresh and cooked meat; (iii) review of packaging and labels used for   
fresh and processed meat; and (iv) controlling and monitoring the use of        
additives.                                                                      

As a participant in the USDA Commodity Reprocessing Program for schools, the
Company must adhere to certain rules, regulations and guidelines. Such rules,   
regulations and guidelines include financial surety bonding in the state of     
operation, product inspection and grading and certain reporting requirements.   
Should the Company fail to remain in compliance with such rules, regulations and
guidelines, it could be excluded from the USDA Commodity Reprocessing Program   
which could have a material adverse effect on the Company's business, results of
operations and debt service capabilities.                                       

The operations and the products of the Company are also subject to state and
local regulation through such measures as licensing of plants, enforcement of   
health standards and inspection of the facilities. Enforcement actions for      
violations of federal, state and local regulations may include seizure and      
condemnation of violative products, cease and desist orders, injunctions and/or 
monetary penalties. Management believes that the Company's facilities and       
practices are sufficient to maintain compliance with applicable government      
regulations, although there can be no assurances in this regard.                

PATENTS AND TRADEMARKS                                                          

 The Company utilizes a number of U.S. trademarks, the most important of which
are Gorges/(R)/ and Quik-to-Fix/(R)/. Certain of the Company's products are     
marketed under additional trademarks, such as Crispntender/(R)/,                
Tenderbroil/(R)/ and TastyRib/(R)/. Although the Company's management considers 
all such intellectual property to be valuable assets, management believes that  
the loss or expiration of any patents or trademarks, other than the Gorges or   
Quik-to-Fix trademarks, would not have a material adverse effect on the         
Company's business, results of operations and debt service capabilities.        

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The above referenced trademarks, service marks and trade names used by the  
Company are the property of the Company. In addition, the Company uses other    
trademarks under co-pack arrangements for various customers. Various trademarks,
service marks and trade names used under such co-pack arrangements or to which  
reference is made in this report are the property of owners other than the      
Company. Such owners have all applicable rights with respect to their respective
trademarks, service marks and trade names.                                      

COMPETITION                                                                     

The value added beef processing industry is highly competitive, with a large
number of competitors offering similar products. The Company's most significant 
competitors in its primary markets are Advance Meats, King's Command, Penthouse 
Meats, Hudson Specialty Foods, Travis Meats and Zartic. In addition, certain of 
the Company's suppliers, such as Cargill, IBP and ConAgra, produce ground beef  
products that compete directly with certain of the Company's products. The      
Company seeks to successfully compete with these suppliers by providing a       
diversity of product offerings and custom order packaging to meet its customers'
needs. However, there can be no assurance that such suppliers will not expand   
their presence in the value added beef processing industry in the future. These 
suppliers and Hudson Specialty Foods are larger and have greater resources than 
the Company. The Company also faces significant price competition from its      
competitors and may encounter competition from new market entrants.             

EMPLOYEES                                                                       

The Company employs approximately 1,000 people. Currently, approximately 200
employees of a total of 253 union-eligible employees at the Garland, Texas      
facility are represented by the United Food & Commercial Workers International  
Union, AFL-CIO, CLC, Local 540 (the "Union"). The Garland, Texas facility is    
being operated pursuant to the terms and conditions specified by the Company at 
the time of the Acquisition Closing. The Company was not obligated to enter into
the collective bargaining agreement agreed upon by Tyson and the Union or to    
continue to operate the Garland, Texas facility pursuant to the terms of such   
agreement. Management is currently negotiating a replacement collective         
bargaining agreement with the Union, although there can be no assurance that it 
will be successful in doing so.                                                 

ITEM 2.  PROPERTIES.                                                            

The Company's properties consist of the following manufacturing facilities: 

                                                                [Download Table]

--------------------------------------------------------------------------------
       LOCATION                 PRODUCT CATEGORY       SQUARE FOOTAGE           
       --------                 ----------------       --------------           
--------------------------------------------------------------------------------
                                                                                
   Garland, Texas             Value added products          122,166             
--------------------------------------------------------------------------------
   Harlingen, Texas           Value added products          111,412             
--------------------------------------------------------------------------------
   Orange City, Iowa               Ground beef              135,600             
                            and value added products                            
--------------------------------------------------------------------------------
   Sioux Center, Iowa         Value added products           72,211             
--------------------------------------------------------------------------------

All of the manufacturing facilities are owned by the Company. The Company's 
principal executive offices are located at 9441 LBJ Freeway, Suite 214, Dallas, 
Texas 75243.                                                                    

ITEM 3.  LEGAL PROCEEDINGS.                                                     

The Company did not assume any litigation relating to the Business that was 
pending as of the Acquisition Closing. Tyson agreed to indemnify the Company    
with respect to any litigation that may arise in the future to the extent such  
litigation relates to the conduct of the Business prior to the Acquisition      
Closing. The Company is not a party to nor are any of its properties subject to 
any lawsuit or proceeding which, in the opinion of management of the Company, is
likely, individually or in the aggregate, to have a material adverse effect on  
the Company.                                                                    

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  The Company is likely to be subject to claims arising from time to time in the
ordinary course of its business. In certain of such actions, plaintiffs may     
request punitive or other damages that may not be covered by insurance and,     
accordingly, no assurance can be given with respect to the ultimate outcome of  
any such possible future claims or litigation or their effect on the Company.   

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                   

     The Company did not submit any matters to a vote of security holders during
the year covered by this report.                                                

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PART II 

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.  

The Company's common stock is not publicly traded.  The Company is a wholly 
owned subsidiary of GHC, which, in turn, is substantially owned by CGW.  GHC has
no business other than holding the stock of the Company, which is the sole      
source of GHC's financial resources. GHC is controlled by CGW, which            
beneficially owns shares representing 54.8% of the voting interest in GHC,      
(46.3% on a fully diluted basis) and has the right to designate all of the      
directors of GHC. Accordingly, CGW, through its control of GHC, controls the    
Company and has the power to elect all of its directors, appoint new management 
and approve any action requiring the approval of the holders of the Company's   
common stock.                                                                   

  At the Acquisition Closing, CGW, NationsBanc Investment Corp. ("NBIC"), Mellon
Bank, N.A., as trustee of First Plaza Group Trust, a General Motors pension plan
("FPGT") and Messrs. Culwell, Mitchell, Powers, Collins and Aviles (each a      
"Senior Manager" and, collectively, the "Senior Managers"), ("Stockholders")    
entered into a Securities Purchase and Stockholders Agreement (the "Securities  
Purchase and Stockholders Agreement") with regard to GHC. Subsequent to the     
Acquisition Closing, Mr. Letier became a party to the Securities Purchase and   
Stockholders' Agreement (Mr. Letier shall hereinafter be included in the        
definitions of Stockholder Senior Manager).  All future purchasers of GHC common
stock will be required to enter into the Securities Purchase and Stockholders   
Agreement. The Securities Purchase and Stockholders Agreement contains          
provisions concerning the governance of GHC and the Company, restrictions on the
transferability of the securities of GHC and the Company and registration rights
for the securities of GHC held by the Stockholders.                             

The governance provisions of the Securities Purchase and Stockholders       
Agreement provide that the Board of Directors of GHC will consist of up to five 
members all of whom shall be designated by CGW, and that the Board of Directors 
of the Company shall be comprised of the directors of GHC. The Securities       
Purchase and Stockholders Agreement requires holders of voting securities of GHC
to vote their shares in favor of such designees of CGW for election as directors
of GHC. The Securities Purchase and Stockholders Agreement also grants to each  
of NBIC and FPGT the right, except in certain circumstances, to have a          
representative in attendance at all meetings of the Board of Directors of GHC or
the Company.                                                                    

The Securities Purchase and Stockholders Agreement grants to the stockholder
parties thereto pre-emptive rights, exercisable pro rata in accordance with     
their respective ownership of common stock of GHC, to purchase shares of common 
stock or other equity securities of GHC (other than shares of common stock      
issued upon exercise of options, rights, awards or grants pursuant to the Plan  
and common stock issued in exchange for common stock of another class), and     
further provides for certain co-sale rights and obligations in the event CGW    
elects to sell all or a portion of its shares of GHC's common stock.            
Additionally, GHC has a right of first refusal in connection with any proposed  
sale by NBIC, FPGT or any Senior Manager of its or his investment in GHC.       

The Securities Purchase and Stockholders Agreement provides that if a Senior
Manager's employment is terminated for any reason other than for cause, GHC will
have the right to repurchase any shares owned by such Senior Manager at the     
greater of cost or fair value. If a Senior Manager's employment is terminated   
for cause, GHC will have the right to repurchase any shares owned by such Senior
Manager at the lesser of fair value or cost. Such right is exercisable within   
180 days following such termination of employment of the Senior Manager. Fair   
value of the repurchased shares shall be determined by agreement between GHC and
the Senior Manager whose shares are being repurchased or, failing such          
agreement, by an independent investment banking firm.                           

If GHC is unable to exercise either its right of first refusal or right to  
repurchase shares of common stock from a Senior Manager whose employment is     
terminated, it may assign such right to the other Stockholders who are parties  
to the Securities Purchase and Stockholders Agreement (other than the           
Stockholder whose shares are subject to such rights), who may exercise such     
rights in accordance with their respective ownership of common stock.           

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ITEM 6.  SELECTED FINANCIAL DATA.                                               

 The following table presents (i) selected historical financial information of
the Company and the Predecessor, as of the dates and for the periods indicated, 
and (ii) summary proforma financial information of the Company, as of the date  
and for the period indicated, adjusted for the completion of the Acquisition.   
The historical financial information for the three hundred and six day period   
ended September 27, 1997 has been derived from the Company's financial          
statements, which have been audited by Ernst & Young LLP.  The historical       
information for each of the three years in the period ended September 28, 1996  
and the fifty-eight days ended November 25, 1996 has been derived from the      
Predecessor's financial statements, which have been audited by Ernst & Young    
LLP.  The historical financial information for the one year period ended October
2, 1993 has been derived from unaudited financial statements of the Predecessor 
and, in the opinion of management, includes all adjustments (consisting of      
normal recurring accruals) necessary for a fair presentation of results of      
operations for these periods.  The summary proforma information does not purport
to represent what the Company's results of operations would have been if such   
events had occurred at the dates indicated, nor does such information purport to
project the results of the Company for any future period.  The summary financial
information should be read in conjunction with "Management's Discussion and     
Analysis of Financial Condition and Results of Operations" and the Financial    
Statements and the Notes thereto included elsewhere in this annual report.      

                                                        [Enlarge/Download Table]


                                        Predecessor                                                 Company                  
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  September 29,| November 26,   September 29,
                                                                                    1996 to    |   1996 to        1996 to    
                            October 2,  October 1,  September 30,  September 28,  November 25, | September 27,  September 27,
                              1993        1994         1995           1996           1996      |    1997            1997     
                                                  (In thousands)                   (58 days)   | (306 days)      (Proforma)  
                                                                                               |                             
Statement of                                                                                   |                             
 operations data:                                                                              |                             
Revenues                     $294,468    $331,969     $304,474      $232,761       $31,966     |  $172,738         $204,704  
Costs and expenses,                                                                            |                             
 excluding Amortization       277,398     312,480      283,337       215,973        30,070     |   158,794          189,649  
Amortization                    1,239       1,528        1,624         1,624           250     |     2,706            3,057  
                             ----------------------------------------------------------------------------------------------  
Operating income (loss)        15,831      17,961       19,513        15,164         1,646     |    11,238           12,098  
Interest expense                    0           0            0             0             0     |    13,709           16,398  
Other expenses (income)             0           4          678           796             0     |        11               11  
Income Tax                      6,649       7,508        7,931         6,205           731     |         0                0  
                             ----------------------------------------------------------------------------------------------  
Net income (loss)            $  9,182    $ 10,449     $ 10,904      $  8,163       $   915     |  $ (2,482)        $ (4,311) 
                             ==============================================================================================  
Balance sheet                                                                                  |                             
 data (at period end):                                                                         |                             
Total assets                                                                                   |  $211,261         $211,261  
Total debt                                                                                     |   149,500          149,500  
Total equity (deficit)                                                                         |    43,103           43,103  
                                                                                               |                             
Other data:                                                                                    |                             
EBITDA                         24,909      28,579       29,877        24,080         2,238     |    21,291           24,768  
                                                                                               |                             
Cash provided by                                                                               |                             
 operating activities               -      16,724       21,107        15,895           962     |     3,117              N/A  
Cash provided by (used                                                                         |                             
 for) investing activities          -     (39,773)       2,510          (609)         (141)    |  (187,944)             N/A  
Cash provided by (used                                                                         |                             
 for) financing activities          -      23,075      (23,637)      (15,286)         (821)    |   184,827              N/A  
Capital expenditures            3,300       6,580        2,792           735           141     |     3,691            3,832  

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.                                                

GENERAL                                                                         

  In the Acquisition, the Company acquired the Business from Tyson. Prior to the
Acquisition, (i) Gorges/Quik-to-Fix Foods, Inc. had no significant assets or    
liabilities and had not conducted any business, other than in connection with   
the Acquisition and the related financings (the "Transactions"), and (ii) the   
Business was not operated by Tyson as a distinct legal entity.                  

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The following discussion should be read in conjunction with the Audited     
Financial Statements and the Notes thereto, and the Unaudited Pro Forma         
Financial Statements and the Notes thereto of the Company, included elsewhere in
this Document.                                                                  

RESULTS OF OPERATIONS                                                           

The Company's fiscal year ends on the Saturday closest to September 30.     
References in this report to "fiscal 1997," "fiscal 1996," and "fiscal 1995"    
refer to the twelve month periods ended September 27, 1997, September 28, 1996  
and September 30, 1995, respectively.  Discussion of the results of operations  
for the Company as they relate to fiscal 1997 are made in reference to the pro  
forma Statement of Income, which represents an adjusted combination of the two  
stub periods, one of the Predecessor prior to the consummation of the           
Acquisition, and one of the Company following the consummation of the           
Acquisition, which together completes coverage of the time of the 52 week period
ended September 27, 1997.                                                       

COMPARISON OF THE YEARS ENDED SEPTEMBER 27, 1997, SEPTEMBER 28, 1996 AND        
SEPTEMBER 30, 1995                                                              

The following tables set forth, for the fiscal periods indicated, (i) sales 
and categories of expenses in dollars and as a percentage of sales and (ii)     
production volumes.                                                             

                                                        [Enlarge/Download Table]


                                                  FISCAL YEAR ENDED                            
                                     ------------------------------------------                
                          SEPTEMBER 30,           SEPTEMBER 28,               SEPTEMBER 27,    
                             1995                    1996                        1997          
                                          HISTORICAL                            PROFORMA       
                    -----------------------------------------------             --------       
                                   (DOLLARS AND POUNDS IN THOUSANDS)                           
                                                                                               
SALES               $304,474       100.0%       $232,761     100.0%       $204,704       100.0%
COST OF GOODS SOLD   250,787        82.4         189,559      81.4         166,696        81.4 
                    -------------------------------------------------------------------------- 
GROSS PROFIT          53,687        17.6          43,202      18.6          38,008        18.6 
OPERATING EXPENSES    34,174        11.2          28,038      12.1          25,910        12.7 
                    -------------------------------------------------------------------------- 
OPERATING INCOME      19,513         6.4          15,164       6.5          12,098         5.9 
OTHER EXPENSES           678         0.2             796       0.3          16,409         8.0 
                    -------------------------------------------------------------------------- 
EARNINGS BEFORE       18,835         6.2          14,368       6.2          (4,311)       -2.1 
 TAXES ON INCOME                                                                               
PROVISION FOR          7,931         2.6           6,205       2.7               0           0 
 INCOME TAXES                                                                                  
                    -------------------------------------------------------------------------- 
NET INCOME          $ 10,904         3.6%       $  8,163       3.5%       $ (4,311)       -2.1%
                    ========================================================================== 
VOLUME (IN POUNDS)   215,289                     173,821                   154,628             

The Company has experienced an overall decrease in net sales during the past
three years primarily due to reduced sales volumes, and to a lesser extent,     
decreases in average selling prices. The decreases in average selling prices are
primarily due to lower prices for two key raw materials, 90% lean beef trimmings
and rib lifter meat, which the Company has passed on, in part, to customers. The
lower sales volumes are principally attributable to reduced sales of ground     
beef, primarily related to the completion of a temporary contract with a        
national fast food chain, and lower volumes for frozen portion steaks, a        
business which the Company discontinued in fiscal 1996. Sales volumes for the   
Company's value added products have generally increased during the two year     
period due to overall market growth for these products and the introduction of  
new products. These increases in sales volumes for value added products were    
partially offset by the loss of some business with several national accounts.   

 Gross profit declined in fiscal 1997 relative to fiscal 1996, and declined in
fiscal 1996 relative to fiscal 1995. The decline in gross profit is attributable
primarily to the lower sales volumes described above. However, as a percentage  
of sales, gross profits improved from 17.6% in fiscal 1995 to 18.6% in fiscal   
1996 and remained at 18.6% in fiscal 1997. The improvement in gross profit as a 
percentage of sales is                                                          

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attributable to the declines in the raw materials costs and changes in product  
mix, with the Company's sales of lower margin ground beef and portion steaks    
decreasing. The increase in gross profit as a percentage of sales was partially 
offset by several factors, including inefficiencies and costs related to the    
Reconfiguration (as hereinafter defined) and losses incurred in disposing of    
portion steak inventory in connection with the discontinuation of that product. 

In late fiscal 1995 and the first half of fiscal 1996, the Company relocated
the production lines for several products in order to take advantage of lower   
labor costs and to segregate production between cooked and uncooked products to 
assure high standards for food safety preparation (the "Reconfiguration"). The  
Company had significant problems related to the Reconfiguration, including      
product quality and order fulfillment issues. The Company estimates that non-   
recurring costs totaling approximately $4.3 million were incurred in connection 
with the Reconfiguration, which adversely affected gross profit and operating   
income in fiscal 1996.                                                          

The Company decided to exit the frozen portion steak business in March 1996 
due to increased consumer preference for fresh cut steaks resulting in a        
decrease in sales of $24.7 million in fiscal 1996 and no sales in fiscal 1997.  
This change in the marketplace had resulted in a steady deterioration in the    
Company's sales volumes for frozen portion steaks. Subsequent to the decision to
exit this business, the Company was forced to sell inventory at significant     
discounts, with this product generating negative gross profit of approximately  
$1.1 million and an operating loss of approximately $1.5 million in fiscal 1996.
The portion steak business had operating income of approximately $1.0 million in
fiscal 1995 and approximately $3.7 million in fiscal 1994.                      

The Company's operating income increased in fiscal 1995 due primarily to the
positive impact of the lower raw material prices. In fiscal 1996, operating     
income decreased approximately 22% from fiscal 1995 due primarily to lower gross
profit partially offset by a reduction in indirect selling expenses and general 
and administrative expenses allocated by Tyson.  In fiscal 1997, operating      
income decreased approximately 20% primarily due to decreased gross profit, but 
as a percent of sales, operating income decreased half a percent over 1996      
caused by increased operating expenses.                                         

Sales                                                                         

  The following table outlines sales by product category for fiscal 1995, fiscal
1996 and fiscal 1997.                                                           

                                                        [Enlarge/Download Table]

                                                  FISCAL YEAR ENDED                      
                                           -------------------------------               
                         SEPTEMBER 30, 1995    SEPTEMBER 28, 1996      SEPTEMBER 27, 1997
                         ------------------   -------------------      ------------------
                                          HISTORICAL                       PROFORMA      
                         ----------------------------------------          --------      
                           (DOLLARS AND POUNDS IN THOUSANDS, EXCEPT PER POUND AMOUNTS)   
                                                                                         
DOLLARS                                                                                  
Value added products....      $154,124              $149,564                $147,260     
Ground beef.............       117,118                74,670                  57,444     
Frozen portion steaks...        33,232                 8,527                       -     
                              --------              --------                --------     
                              $304,474              $232,761                $204,704     
                              ========              ========                ========     
VOLUMES (IN POUNDS)                                                                      
Value added products....        95,113                93,631                  92,065     
Ground beef.............       111,429                77,604                  62,563     
Frozen portion steaks...         8,747                 2,586                       -     
                              --------              --------                --------     
                               215,289               173,821                 154,628     
                              ========              ========                ========     
SALES PER POUND                                                                          
Value added products....      $   1.62              $   1.60                $   1.60     
Ground beef.............          1.05                  0.96                     .92     
Frozen portion steaks...          3.80                  3.30                       -     
                              --------              --------                --------     
Overall average.........      $   1.41              $   1.34                $   1.32     
                              ========              ========                ========     

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Value Added Products.  Sales of value added products decreased approximately
1.5% in fiscal 1997 after decreasing approximately 3% in fiscal 1996. The       
decrease in fiscal 1997 and 1996 was due to a slight decrease in both sales     
volumes and selling prices. Sales volumes decreased due to the loss of some     
business with national account customers and the elimination of certain less    
profitable products, partially offset by sales of newly introduced products.    
Additionally, fiscal 1997 sales were adversely affected by the announcement that
Tyson would no longer own the Business and 1996 sales were adversely affected by
order fulfillment and quality problems resulting from the Reconfiguration.      
Selling prices for value added products were slightly lower in both fiscal 1997 
and fiscal 1996 primarily due to lower prices for two key raw materials, 90%    
lean beef trimmings and rib lifter meat. Additionally, with the acquisition of  
Gorges, Inc. the Company entered the commodity reprocessing market whereby the  
Company receives meat from the federal government which is then processed and   
sold on a fee for service basis to school districts. The Company does not       
purchase the meat used in commodity reprocessing and only charges the school    
system customers for the conversion costs, plus related margin, incurred during 
the reprocessing.                                                               

Ground Beef.  Ground beef sales decreased 23% in fiscal 1997 versus fiscal  
1996 and 36% in fiscal 1996 versus fiscal 1995 due to decreases in sales volumes
and average selling prices. A major reason for the decrease in sales volumes in 
fiscal 1996 was caused by a decrease in ground beef sales to a national club    
store.  Sales to the national club store declined in 1997 due to the customer's 
decision to increase its purchases from one of the Company's competitors.       
Average selling prices per pound decreased in fiscal 1997 and fiscal 1996       
primarily due to the decreases in raw material costs. The Company's ground beef 
contracts with its national account customers are generally based on the market 
price of the raw materials used in manufacturing the product and, therefore,    
changes in the costs of raw materials are generally passed along to customers.  

Frozen Portion Steaks. Frozen portion steaks were discontinued in the first 
quarter of fiscal 1996 due to poor sales and profits.                           

Gross Profit                                                                  

As a percentage of sales, gross profit remained relatively constant for all 
three years at approximately 18.6% in 1997 and 1996 and 17.6% in 1995. The      
decrease in gross profit dollars in fiscal 1997 was due primarily to the        
decrease in sales volumes and non-recurring costs incurred in connection with   
the implementation of new operating and information systems, and the            
establishment of new corporate offices and research and development facilities. 

Gross profit decreased in fiscal 1997 and 1996 due primarily to lower sales 
volumes. Lower selling prices were effectively offset by the lower costs of raw 
materials in fiscal 1995. Gross profit as a percentage of sales increased to    
18.6% in 1996 and remained at 18.6% in 1997. These improvements were generally  
attributable to a reduction in the average cost of ground beef sold of          
approximately $0.10 per pound. This decrease was due primarily to lower costs   
for 90% lean beef trimmings.                                                    

Operating Expenses                                                            

The following table shows the components of the Company's operating expenses
for fiscal 1995, fiscal 1996, and fiscal 1997.                                  

                                                        [Enlarge/Download Table]

                                                        FISCAL YEAR ENDED                        
                                  ---------------------------------------------------------------
                                  SEPTEMBER 30, 1995     SEPTEMBER 28,1996     SEPTEMBER 27, 1997
                                                 HISTORICAL                        PROFORMA      
                                  ---------------------------------------------------------------
                                                          (DOLLARS IN THOUSANDS)                 
                                                                                                 
Selling, general and                                                                             
 administrative..................         31,514               26,414                22,853      
Amortization.....................          1,624                1,624                 3,057      
Plant relocation.................          1,036                   --                    --      
                                         -------              -------               -------      
                                         $34,174              $28,038               $25,910      
                                         =======              =======               =======      

  Total selling, general and administrative expenses decreased approximately 14%
in fiscal 1997 from 1996 and decreased approximately 16% in fiscal 1996, even   
though sales volumes and dollars decreased in                                   

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both periods. As a result, selling, general and administrative expenses as a    
percentage of sales and on a per pound basis decreased in 1997. The decrease in 
these costs as a percentage of sales and on a per pound basis in both years is  
due, in part, to decreases in sales of ground beef which has lower selling      
expenses. Additionally, in fiscal 1996 the Company experienced increases in     
freight and freezer expenses due to increased usage of more expensive third     
party outside freezer storage space as a result of the Reconfiguration of the   
Garland plant; higher inventory levels as a result of reduced sales volumes and 
opportunistic purchases of raw materials; and the added costs of servicing a    
national account customer. Additionally, brokerage costs were higher due to     
increases in the brokerage rates on certain products. Total market development  
expenses, which include direct payments and discounts to customers made to      
promote products, were down approximately 13% in fiscal 1996. Market development
expenses are relatively discretionary in nature and do not directly correlate   
with sales volumes or dollars. The decrease in market development expenses in   
fiscal 1996 is due to conscious decisions by management to reduce these items,  
partially offset by increased discounts offered to customers in connection with 
the sales of certain products manufactured during the period of the product line
Reconfiguration.                                                                

  Amortization expense represents the amortization of the excess of the purchase
price over the fair value of the assets related to the acquisitions. The        
increase in fiscal 1997 is due to the inclusion of a full year of amortization  
expense related to the Acquisition, which occurred November 25,1996.            

Plant relocation expenses relate to the closure of the LeMars, Iowa facility
and relocation of the production line to other Company facilities.              

Other Expenses                                                                

  Other expenses are non-recurring items consisting of losses on the disposal of
fixed assets.                                                                   

Provision for Income Taxes                                                    

  The Company's results of operations have historically been included in Tyson's
consolidated federal income tax return. However, the provision prior to the     
Acquisition for income taxes for fiscal years 1995 and 1996 have been computed  
as though the Company had operated on a stand-alone basis. The Company's        
effective income tax rate was approximately 42%, 43% and 0% for fiscal 1995,    
fiscal 1996 and fiscal 1997, respectively.  The decrease in the tax rate for    
fiscal 1997 is due primarily to the net operating loss created by the Company   
for the period ended September 27, 1997 and the uncertainty regarding the       
realization of the net deferred tax asset.                                      

LIQUIDITY AND CAPITAL RESOURCES                                                 

 As a result of the Transactions, the Company has significant annual principal
and interest obligations. Borrowings under the Credit Facilities, which totaled 
$49.5 million at September 27, 1997 ($37.5 million under the Term Loan Facility 
and $12.0 million under the Revolving Credit Facility), accrued interest at an  
average rate of 8.32% in the three hundred six day period ended September 27,   
1997. Borrowings under the Notes totaled $100.0 million at September 27, 1997,  
and accrued interest at 11.5%.                                                  

In addition to its debt service obligations, the Company will need liquidity
for working capital and capital expenditures. For the fiscal year ended         
September 28, 1996 the Company spent $0.7 million on capital projects. For the  
three hundred six day period ended September 27, 1997, the Company spent $3.7   
million on capital projects, primarily for the establishment of a corporate     
administrative function, principally for computer software and hardware, as     
well as office furniture, fixtures and equipment. The remaining capital         
expenditures are primarily for the capital maintenance of the Company's         
facilities as well as the establishment of a research and development facility. 
The Company created an administrative structure to provide services some of     
which were provided by Tyson under the Transition Services                      

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Agreement. In connection with the effort to establish an administrative         
structure the Company has hired additional personnel into its newly leased      
Dallas corporate office.                                                        

 The Company's primary sources of liquidity are cash flows from operations and
borrowings under the Revolving Credit Facility. The Company had additional      
credit availability of $18.0 million under the Revolving Credit Facility at     
September 27, 1997.  In the three hundred six day period ended September 27,    
1997, net cash provided by financing activities of $184.8 million was used by   
investing activities of $187.9 million in connection with the Acquisition and   
normal capital expenditures. Also, the Company had cash provided by operating   
activities of $3.1 million, primarily in connection with the increases of       
working capital assets. In the fifty-eight day period ending November 25, 1996, 
net cash provided by operating activities of $1.0 million was used by investing 
activities of $0.1 million and financing activities of $0.8 million.  At        
September 27, 1997, the Company had no cash and cash equivalents.  The Company  
anticipates that its working capital requirements, capital expenditures and     
scheduled repayments for fiscal 1998 will be satisfied through a combination of 
cash flows generated from operations together with funds available under the    
Revolving Credit Facility.                                                      

EFFECTS OF INFLATION                                                            

 Inflation has not had a significant effect on the operations of the Business.
However, in the event of increases in inflation or commodity prices from recent 
levels, the Company could experience sudden and significant increases in beef   
costs. Over periods of 90 days or less, the Company may be unable to completely 
pass these price increases on to its customers. Management currently believes   
that over longer periods of time, it generally will be able to pass on price    
increases to its customers.                                                     

EFFECTS OF YEAR 2000 PROBLEMS                                                   

While the Company is not aware of any material expenses or losses of revenue
that it will incur as a result of so-called "Year 2000 problems" it is          
impossible to anticipate all of the ways in which such problems could arise and 
affect the Company's financial condition and results of operations.  In addition
to hardware and software problems that could arise within the Company's own     
computer systems, computer systems with which the Company's systems interface or
other machinery, the Company could be affected by the Year 2000 problems of its 
suppliers, partners or customers, or of other parties upon whom the Company     
depends, as well.  At this time the Company is unable to quantify the possible  
effect of Year 2000 problems on its financial condition or results of           
operations.                                                                     

RECENT ACCOUNTING PRONOUNCEMENTS                                                

In addition, the financial Accounting Standards Board issued Statement of   
Financial Accounting Standards No. 130 Reporting Comprehensive Income and       
Statement of Financial Accounting Standards No. 131 Disclosures About Segments  
of an Enterprise and Related Information which are effective for financial      
statement periods beginning after December 15, 1997. As these statements require
only additional disclosures, they will have no effect on the Company's financial
position, results of operations or cash flows.                                  

FACTORS AFFECTING FUTURE PERFORMANCE                                            

  Significant Leverage and Debt Service.  Upon consummation of the Transactions,
the Company became highly leveraged. At September 27, 1997, the Company had     
total outstanding debt of $149.5 million. In addition, subject to the           
restrictions in the Indenture, the Company may incur additional indebtedness    
(including additional Senior Indebtedness) from time to time to finance         
acquisitions or capital expenditures or for other purposes. At September 27,    
1997, the Company had outstanding borrowings of approximately $12.0 million and 
unused capacity of $18.0 million under the Revolving Credit Facility to finance 
working capital needs.                                                          

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The level of the Company's indebtedness could have important consequences to
holders of the Notes, including: (i) a substantial portion of the Company's cash
flow from operations must be dedicated to debt service and will not be available
for other purposes; (ii) the Company's ability to obtain additional debt        
financing in the future for working capital, capital expenditures, research and 
development, acquisitions or other corporate purposes may be limited; (iii) the 
borrowings of the Company under the Credit Facilities accrue interest at        
variable rates, which could cause the Company to be vulnerable to increased     
interest expense in the event of higher interest rates; and (iv) the Company's  
level of indebtedness could limit its flexibility in reacting to changes in its 
industry or economic conditions generally.                                      

The Company's ability to pay interest on the Notes and to satisfy its other 
debt obligations will depend upon its future operating performance, which will  
be affected by prevailing economic conditions and financial, business and other 
factors, certain of which are beyond its control, as well as the availability of
borrowings under the Revolving Credit Facility or successor facilities. The     
Company anticipates that its operating cash flow and borrowings under the       
Revolving Credit Facility or successor facilities will be sufficient to meet its
operating expenses and to service its debt requirements as they become due.     
However, if the Company is unable to service its indebtedness, it will be forced
to take actions such as reducing or delaying capital expenditures, selling      
assets, restructuring or refinancing its indebtedness or seeking additional     
equity capital. There can be no assurance that any of these remedies can be     
effected on satisfactory terms, if at all. In addition, the Company's ability to
repay the principal amount of the Notes at maturity may depend on its ability to
refinance the Notes. There can be no assurance that the Company will be able to 
refinance the Notes at maturity, if necessary, on satisfactory terms, if at all.

Subordination of Notes.  The Notes are general unsecured obligations of the 
Company subordinated in right of payment to all existing and future Senior      
Indebtedness of the Company, including borrowings under the Credit Facilities.  
In the event of bankruptcy, liquidation or reorganization of the Company, the   
assets of the Company will be available to pay obligations on the Notes only    
after all Senior Indebtedness has been paid in full, and there may not be       
sufficient assets remaining to pay amounts due on any or all of the Notes then  
outstanding. In addition, under certain circumstances the Company will not be   
able to make payment of its obligations under the Notes in the event of a       
default under certain Senior Indebtedness. At September 27, 1997, the aggregate 
principle amount of Senior Indebtedness was $49.5 million, including outstanding
borrowings of approximately $12.0 million under the Revolving Credit Facility.  

Decreases in Net Sales.  The Company has experienced an overall decrease in 
net sales during fiscal 1995, fiscal 1996 and fiscal 1997. The decreases are    
primarily due to reduced sales volumes, and to a lesser extent, decreases in    
average selling prices. The decreases in average selling prices are primarily   
due to lower prices for two key raw materials, 90% lean beef trimmings and rib  
lifter meat, which the Company has passed on, in part, to customers. Overall,   
the lower sales volumes in the current periods are related to the uncertainties 
which surrounded the Company when Tyson announced its intent to sell the        
Business in early 1996. As a result of the uncertainties and the activity       
surrounding the acquisition the Company did not have the benefit of aggressively
selling during the bid programs for the 1996-1997 fiscal school year, and also  
as a direct result of uncertainties related to the Transactions prior to their  
consummation, some national customers did not place larger contracts with the   
Company which it had garnered in prior years, primarily a large account which in
the past has purchased a significant amount of ground beef from the Company.    
Also responsible for sales declines are the reduced sales of ground beef,       
primarily related to the completion of a temporary contract with a national fast
food chain, and lower volumes for frozen portion steaks, a line of the business 
which the Company discontinued in fiscal 1996. Sales volumes for the Company's  
value added products have generally increased during the past two years due to  
overall market growth for these products and the introduction of new products.  
These increases in sales volumes for value added products were partially offset 
by the loss of some business with several national accounts. Management believes
that the decrease in net sales during the past three years does not represent a 
continuing material trend. Management intends to pursue the strategies set forth
under "Business--Growth Strategy." However, there can be no assurance that      
these strategies will be successful. Continued decreases in net sales could have
a material adverse effect on the Company's business, results of operations and  
debt service capabilities. See "Business--Growth Strategy."                     

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Restrictions Imposed by Terms of the Company's Indebtedness.  The Indenture 
restricts, among other things, the ability of the Company to incur additional   
indebtedness, pay dividends or make certain other restricted payments, incur    
liens to secure pari passu or subordinated indebtedness, engage in any sale and 
leaseback transactions, sell stock of subsidiaries, apply net proceeds from     
certain asset sales, merge or consolidate with any other person, sell, assign,  
transfer, lease, convey or otherwise dispose of substantially all of the assets 
of the Company, enter into certain transactions with affiliates, or incur       
indebtedness that is subordinate in right of payment to any Senior Indebtedness 
and senior in right of payment to the Notes. In addition, the Credit Facilities 
contain other and more restrictive covenants and prohibit the Company from      
prepaying other indebtedness (including the Notes). As a result of these        
covenants, the ability of the Company to respond to changing business and       
economic conditions and to secure additional financing, if needed, may be       
significantly restricted, and the Company may be prevented from engaging in     
transactions that might otherwise be considered beneficial to the Company.      

  The Credit Facilities also require the Company to maintain specified financial
ratios and satisfy certain financial condition tests. The Company's ability to  
meet those financial ratios and tests can be affected by events beyond its      
control, and there can be no assurance that the Company will meet those tests. A
breach of any of these covenants could result in a default under the Credit     
Facilities. Upon the occurrence of an event of default under the Credit         
Facilities, the lenders could elect to declare all amounts outstanding under the
Credit Facilities, together with any accrued interest, to be immediately due and
payable. If the Company were unable to repay those amounts, the lenders could   
proceed against the collateral granted to them to secure that indebtedness. If  
the Credit Facilities were to be accelerated, there can be no assurance that the
assets of the Company would be sufficient to repay in full that indebtedness and
the other indebtedness of the Company, including the Notes. Substantially all   
the assets of the Company are pledged as security under the Credit Facilities.  
Such assets may also be pledged in the future to secure other Indebtedness.     

 Raw Materials.  The Company uses large quantities of meat proteins, including
beef, pork and poultry. Approximately 70% of the Company's beef needs are       
sourced from three major suppliers: IBP; Monfort (ConAgra); and Excel (Cargill).
The Company's pork and poultry needs also are sourced from these major          
suppliers. Historically, market prices for meat proteins have fluctuated in     
response to a number of factors, including changes in United States government  
farm support programs, changes in international agricultural and trading        
policies, weather and other conditions during the growing and harvesting        
seasons. While the Business historically has been able to pass through changes  
in the price of meat proteins to end users, there can be no assurance that the  
Company will be able to pass the effects of future changes to end users.        
Furthermore, large, abrupt changes in the price of meat proteins could adversely
affect the Company's operating margins, although such adverse effects           
historically have been only temporary. There is no assurance that significant   
changes in meat protein prices would not have a material adverse effect on the  
Company's business, results of operations and debt service capabilities.        

Dependence on Key Personnel.  The Company's operations are dependent, to a  
significant extent, on the continued efforts of J. David Culwell, Richard E.    
Mitchell, and Randall H. Collins with whom it has entered into employment       
agreements containing non-compete provisions. If any of these people become     
unable to continue in his present role, or if the Company is unable to attract  
and retain other skilled employees, the Company's business could be adversely   
affected.                                                                       

Competition.  The value-added beef processing industry is highly competitive
with a large number of competitors offering similar products. Certain of the    
Company's suppliers, such as Cargill, IBP and ConAgra, produce products that    
compete directly with certain of the Company's products. The Company seeks to   
successfully compete with these suppliers by providing a diversity of product   
offerings and custom order packaging to meet its customers needs. However, there
can be no assurance that such suppliers will not further expand their presence  
in the value added beef processing industry in the future or that any such      
expansion will not have a material adverse effect on the Company's business,    
results of operations and debt service capabilities. These suppliers and one of 
the Company's significant competitors are larger and have greater resources than
the Company. The Company also faces significant price competition from its      
competitors and may encounter competition from new market entrants.             

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  Governmental Regulation.  The Company's production facilities and products are
subject to numerous federal, state and local laws and regulations concerning,   
among other things, health and safety matters, food manufacture, product        
labeling, advertising and the environment. Compliance with existing federal,    
state and local laws and regulations is not expected to have a material adverse 
effect on the Company's business, results of operations or debt service         
capabilities. However, the Company cannot predict the effect, if any, of laws   
and regulations that may be enacted in the future, or of changes in the         
enforcement of existing laws and regulations that are subject to extensive      
regulatory discretion. There can be no assurance that the Company will not incur
expenses or liabilities for compliance with such laws and regulations in the    
future, including those resulting from changes in health laws and regulations,  
that may have a material adverse effect on the Company's business, results of   
operations and debt service capabilities.                                       

As a participant in the USDA Commodity Reprocessing Program for schools, the
Company must adhere to certain rules, regulations and guidelines. Such rules,   
regulations and guidelines include financial surety bonding in the state of     
operation, product inspection and grading and certain reporting requirements.   
Should the Company fail to remain in compliance with such rules, regulations and
guidelines, it could be excluded from the USDA Commodity Reprocessing Program,  
which could have a material adverse effect on the Company's business, results of
operations and debt service capabilities.                                       

  Recently, several of the Company's competitors allegedly have been responsible
for the distribution and sale of beef products contaminated with the e-coli     
virus.  Although the Company has taken measures to ensure that its products are 
not contaminated with such virus, there can be no assurance that such           
contamination will not occur or that, in the absence of such contamination, the 
Company's results of operations, financial condition, and debt service          
capabilities will not be adversely affected by negative publicity about the     
Company's industry.  In addition, such publicity or other factors may result in 
increased government regulation of the Company's business and there can be no   
assurance that such regulation will not adversely affect the Company's results  
of operations, financial condition, and debt service capabilities.              

Compliance with Environmental Regulations.  The Company's operations and the
ownership and operation of real property by the Company are subject to extensive
and changing federal, state and local environmental laws and regulations. As a  
result, the Company may be involved from time to time in administrative and     
judicial proceedings and inquiries relating to environmental matters. The       
Company cannot predict what environmental legislation or regulations will be    
enacted in the future, how existing or future laws or regulations will be       
administered or interpreted or what environmental conditions may be found to    
exist. Compliance with more stringent laws or regulations, stricter             
interpretation of existing laws or discovery of unknown conditions may require  
additional expenditures by the Company, some of which may be material. The      
Company believes it is currently in material compliance with all known material 
and applicable environmental regulations.                                       

 The Company incurs monthly surcharges of approximately $40,000 to the city of
Garland, Texas as a result of effluent wastewater discharges from the Garland,  
Texas facility. The Company has elected to incur the monthly surcharges and     
currently does not intend to modify the facility to allow its operation without 
incurring such surcharges. Management does not believe that the incurrence of   
the aforementioned surcharges will have a material adverse effect on the        
Company's business, results of operation and debt service capabilities. There   
can be no assurance, however, that such surcharges will not be increased or that
the Company will not be required to modify its operations, which may result in  
significant expenses or material capital expenditures.                          

Seasonality.  Certain of the end uses for some of the Company's products are
seasonal. Demand in many markets is generally higher in the period from July to 
September due to higher demand for beef products during the summer months and   
increased purchasing by schools in anticipation of the commencement of the      
school year. As a result, Company sales and profits are generally higher in the 
Company's fourth quarter than in any other quarter during its fiscal year. In   
addition, demand in many markets is generally lowest in the period from January 
to March, resulting in lower sales and profits in the Company's second quarter. 

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Importance of Key Customers.  Historically, one of the Company's largest    
customers has been Sam's Club ("Sam's"), a subsidiary of Wal-Mart Stores, Inc.  
The Company supplied Sam's with ground beef patties pursuant to two contracts   
(the "Sam's Contracts") which became effective in November 1995. Pursuant to    
the Sam's Contracts, the Company agreed to sell and Sam's agreed to purchase an 
aggregate of 28.0 million pounds of ground beef. As of September 27, 1997, the  
Company had delivered substantially all of the ground beef under the Sam's      
Contracts.  During fiscal 1995, fiscal 1996, and fiscal 1997 the Sam's Contracts
accounted for 14.4%, 13.2%, and 5.9% of the Company's sales.                    

The Company's second largest customer is Harker's. The Company supplies     
Harker's with ground beef pursuant to a supply agreement that will remain in    
effect until 1999 (the "Harker's Agreement"). The Harker's Agreement requires   
Harker's to purchase minimum amounts of the Company's products. The Harker's    
Agreement provides that amounts charged by the Company thereunder may be        
adjusted in response to fluctuations in the Company's costs. During fiscal 1995,
fiscal 1996, and fiscal 1997 the Harker's Agreement accounted for 12.5%, 12.6%  
and 12.8% of sales, respectively. At the Acquisition Closing, Tyson assigned to 
the Company its rights and obligations related to the supply of ground beef and 
value added products pursuant to the Harker's Agreement. Tyson will continue to 
supply poultry products to Harker's pursuant to the Harker's Agreement.         

In addition to Sam's and Harker's, the Company sells a significant amount of
its products to affiliates of Sysco Corp. ("Sysco"). Each local Sysco           
affiliate is responsible for its own purchasing decisions. Management believes  
that the loss of an individual Sysco affiliate as a customer would not have a   
material adverse effect on the Company's business, results of operations or debt
service capabilities. However, there can be no assurance that Sysco will not    
elect to employ a system whereby purchasing decisions are centralized. Should   
Sysco elect to employ a centralized system, there can be no assurance that Sysco
will continue to purchase the Company's products at historical volumes, if at   
all. The loss of all or a significant portion of the Company's sales to Sysco,  
regardless of the cause of such loss, would have a material adverse effect on   
the Company's business, results of operations and debt service capabilities.    
During fiscal 1995, fiscal 1996, and fiscal 1997 total sales to Sysco affiliates
accounted for 15.2%, 17.8%, and 16.6% of sales, respectively.                   

Sam's, Harker's and affiliates of Sysco collectively accounted for          
approximately 42.1%, 43.6%, and 35.3% of sales during fiscal 1995, fiscal 1996, 
and fiscal 1997, respectively. The loss of the Harker's Agreement or reduced    
sales to affiliates of Sysco without offsetting sales to other customers could  
have a material adverse effect on the Company's business, results of operations 
and debt service capabilities.                                                  

Reliance on Sales of Ground Beef.  Although the Company's strategy is to    
maximize sales of higher margin value added products, the Company has           
historically relied on sales of lower margin ground beef products to generate a 
significant portion of its revenues. The Company anticipates that such reliance 
will continue in the future. In recent years, however, the Company's sales of   
ground beef have been declining, and it is expected that one customer whose     
purchases were significant in fiscal 1997 will not purchase a significant amount
in fiscal 1998. Any substantial decline in ground beef sales below the fiscal   
1997 level could have a material adverse effect on the Company's business,      
results of operations and debt service capabilities.                            

Risks Related to Unionized Employees.  The Company's business is labor      
intensive. The Company's ability to operate profitably is dependent on its      
ability to recruit and retain employees while controlling labor costs.          
Currently, certain of the Company's employees at the Garland, Texas facility are
represented by the United Food & Commercial Workers International Union, AFL-   
CIO, CLC, Local 540 (the "Union"). The Garland, Texas facility is being         
operated pursuant to the terms and conditions specified by the Company at the   
time of the Acquisition Closing. The Company was not obligated to enter into the
collective bargaining agreement agreed upon by Tyson and the Union or to        
continue to operate the Garland, Texas facility pursuant to the terms of such   
agreement. Management is currently negotiating a replacement collective         
bargaining agreement with the Union, although there can be no assurance that it 
will be successful in doing so.  Except for employees at the Garland, Texas     
facility, none of the Company's employees are represented by a union. If        
unionized employees were to engage in a strike or other work stoppage or if     
additional employees were to become unionized, the Company could experience a   
significant                                                                     

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disruption of operations and higher labor costs, either of which could have a   
material adverse effect on the Company's business, results of operations and    
debt service capabilities.                                                      

  General Risks of Food Industry.  The industry in which the Company competes is
subject to various risks, including: adverse changes in general economic        
conditions; adverse changes in local markets; evolving consumer preferences;    
nutritional and health-related concerns; federal, state and local food          
processing controls; consumer product liability claims; risks of product        
tampering; limited shelf life of food products; and the availability and expense
of liability insurance.                                                         

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                            

      The consolidated financial statements and financial statement schedule
in Part IV, Item 14(a) 1 and 2 of this report are incorporated by reference into
this Item 8.                                                                    

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE.                                           

None.                                                                           

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PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.                   

Set forth below are the names and positions of the directors, officers and  
significant employees of the Company.                                           

NAME                AGE             POSITION                    
----                ---             --------                    
J. David Culwell.......    46    Chief Executive Officer and Director       
Richard E. Mitchell....    56    President and Director                     
Randall H. Collins.....    49    Vice President--Sales and Marketing        
A. Scott Letier........    36    Chief Financial Officer                    
Robert M. Powers.......    56    Vice President--Operations                 
Hernando Aviles........    41    Vice President--Human Resources            
Richard L. Cravey......    52    Director                                   
William A. Davies......    51    Director                                   
James A. O'Donnell.....    44    Director                                   

 J. DAVID CULWELL became Chief Executive Officer and a Director of the Company
at the time of the Acquisition Closing. Mr. Culwell has been an independent food
industry consultant since January 1991.                                         

 RICHARD E. MITCHELL joined Tyson in January 1994 as a Non-Commercial Division
Manager and in April 1996, was promoted to Vice President/General Manager for   
the Business, where he was responsible for the Sales and Marketing, Operations, 
Research and Development and Quality Assurance, and Human Resources departments.
Mr. Mitchell formerly was Vice President of Sales of Gorges, Inc. and served on 
the Board of Directors of Gorges, Inc. from July 1991 until Tyson's acquisition 
of Gorges, Inc. in 1994. He became President and a Director of the Company at   
the time of the Acquisition Closing.                                            

RANDALL H. COLLINS was employed by Tyson as Vice President of Sales and     
Marketing for the Business since April 1996, where he was responsible for a 16  
member sales and marketing staff. Prior to holding this position, Mr. Collins   
held a number of positions at Tyson, including Division Manager for Tyson       
Foodservice, Division Sales Manager for Tyson Beef and Pork, and Division       
Manager for Beef Sales. Prior to joining Tyson in 1989 as a result of Tyson's   
acquisition of Holly Farms, he held a number of general management and sales    
positions at Harker's/Holly Farms and Kraft/General Foods.  Mr. Collins became  
Vice President--Sales and Marketing at the time of the Acquisition Closing.     

A. SCOTT LETIER has been Vice President and Chief Financial Officer since   
joining the Company on December 10, 1996. Prior to joining the Company Mr.      
Letier served as the Senior Vice President and Chief Financial Officer of CS    
Wireless Systems, Inc. from July 1996 until December 1996. Mr. Letier also      
served as the Vice President of Finance and Chief Financial Officer of AmeriServ
Food Company from July 1993 until June 1996. Mr. Letier served as the Vice      
President and Corporate Controller of AmeriServ Food Company from February 1992 
until July 1993. Mr. Letier is a certified public accountant.                   

  ROBERT M. POWERS was employed by Tyson as Vice President of Operations for the
Business since April 1996. Prior to that time, Mr. Powers was Director of       
Commodity Procurement for Tyson, a position to which he was promoted in 1991.   
Mr. Powers became Vice President--Operations at the time of the Acquisition     
Closing.                                                                        

  HERNANDO AVILES was employed by Tyson as Vice President--Human Resources, Beef
and Pork Division since February 1994, where he was responsible for overseeing  
six personnel location directors, with responsibility over all human resources  
practices and policies. Mr. Aviles joined Tyson in 1989 as the Complex Personnel
Manager for the New Holland, Pennsylvania complex of Tyson. Prior to 1989, Mr.  
Aviles held various positions at Holly Farms.  Mr. Aviles became Vice President 
--Human Resources at the time of the Acquisition Closing.                       

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RICHARD L. CRAVEY has been a director of the Company since October 1996. Mr.
Cravey is a member of CGW Southeast III L.L.C., the general partner of CGW, (the
"General Partner"), and is jointly responsible for all major decisions of the   
General Partner.  Mr. Cravey is also a member of CGW Southwest Management III,  
L.L.C. (the "Management Company"), an affiliate of CGW. In addition, Mr. Cravey 
is a member of Le Select III, L.L.C. (the "Limited Partner"), a limited         
partner of CGW. Mr. Cravey has been a member of the General Partner, the        
Management Company or affiliated entities for more than five years. He is a     
director of AMRESCO, Inc. and Cameron Ashley Building Products, Inc.            

WILLIAM A. DAVIES has been a director of the Company since October 1996. Mr.
Davies is a member of each of the General Partner and the Limited Partner, and  
is responsible for sourcing, structuring and negotiating transactions,          
participating in strategic planning with portfolio company management to        
maximize value and managing exit strategies. In addition, Mr. Davies is involved
in managing the administrative functions of the General Partner. Mr. Davies has 
been a member of the General Partner or an employee of affiliates of the General
Partner for more than five years.                                               

 JAMES A. O'DONNELL has been a director of the Company since October 1996. Mr.
O'Donnell has been a member of the General Partner since 1995, and is           
responsible for sourcing, structuring and negotiating transactions,             
participating in strategic planning with portfolio company management to        
maximize value and managing exit strategies. Mr. O'Donnell is also a member of  
the Limited Partner. Mr. O'Donnell has been a general partner of Sherry Lane    
Partners, a private equity investment firm based in Dallas, Texas, since 1992.  
Also, Mr. O'Donnell has been a general partner of O'Donnell & Masur, a private  
equity investment firm based in Dallas, Texas, since 1989. He is a director of  
Bestway Rental, Inc.                                                            

ITEM 11.  EXECUTIVE COMPENSATION.                                               

The following table sets forth certain summary information concerning the   
compensation paid or awarded to the Company's Chief Executive Officer and the   
other executive officers receiving compensation in excess of $100,000 for the   
period November 25, 1996 (Inception) through September 26, 1997 (the "Named     
Executive Officers"). This information is presented on a proforma annual basis. 

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

----------------------------------------------------------------------------------------------------------------
Name and Principle        Salary           Bonus        Other Annual          Securities           All Other    
Position                                                Compensation (1)      Underlying         Compensation   
                                                                               Options/                         
                                                                                SARs(#)                         
----------------------------------------------------------------------------------------------------------------
                                                                                                                
J. David Culwell            175,000           0              5,115                 0                   0        
Richard E. Mitchell         159,000           0              4,648                 0                   0        
Randall H. Collins          142,500           0              2,850                 0                   0        
A. Scott Letier             130,000           0              2,600                 0                   0        
Robert M. Powers            115,000           0              3,361                 0                   0        
----------------------------------------------------------------------------------------------------------------

(1)  Consists of 401K contribution match.                                       

EMPLOYMENT AGREEMENTS                                                           

The Company entered into employment agreements (the "Employment Agreements")
with Messrs. Culwell, Mitchell, Collins, Powers, Letier, and Aviles for terms   
expiring on the fifth anniversary of the Acquisition Closing, subject to        
automatic one-year renewals unless either party gives 60 days notice not to     
renew. The Company has the right to terminate the Employment Agreements at any  
time prior to expiration. However, if a Senior Manager is terminated other than 
for cause, death or disability, such Senior Manager will receive, in addition to
earned salary and bonus, a severance payment equal to 12                        

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months base salary. If a Senior Manager is terminated for cause, death or       
disability, such Senior Manager will receive only earned salary and bonus due as
of the date of termination. The Employment Agreements will also contain non-    
competition, non-solicitation and confidentiality provisions.                   

  Mr. Culwell's Employment Agreement provides for a base salary of $175,000, and
Mr. Culwell is eligible to receive a bonus of up to 50% of his base salary at   
the discretion of the Company's Board of Directors. Mr. Mitchell's Employment   
Agreement provides for a base salary of $159,000, and Mr. Mitchell eligible to  
receive a bonus of up to 50% of his base salary at the discretion of the        
Company's Board of Directors. Mr. Collins' Employment Agreement provides for a  
base salary of $142,500, and Mr. Collins is eligible to receive a bonus of up to
50% of his base salary at the discretion of the Company's Board of Directors.   
Mr. Powers' Employment Agreement provides for a base salary of $115,000, and Mr.
Powers will be eligible to receive a bonus of up to 40% of his base salary at   
the discretion of the Company's Board of Directors. Mr. Letier's Employment     
Agreement provides for a base salary of $130,000, and Mr. Letier is eligible to 
receive a bonus of up to 40% of his base salary at the discretion of the        
Company's Board of Directors.                                                   

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         

 GHC owns 100% of the issued and outstanding capital stock of the Company. GHC
is owned 54.8% by CGW, 19.7% by NBIC, 24.1% by FPGT and 1.4%, in the aggregate, 
by the Senior Managers, none of whom individually owns more than 1%. On a fully-
diluted basis, GHC is owned 46.3% by CGW, 16.7%by NBIC, 20.4% by FPGT and 16.6% 
in the aggregate, by the Senior Managers and other employees of the Company who 
hold options to purchase GHC common stock, none of whom individually owns more  
than 1% on a fully diluted basis. Affiliated entities of each of: (i) Richard L.
Cravey, William A. Davies and James A. O'Donnell; (ii) NBIC; and (iii) FPGT are 
limited partners of CGW.                                                        

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                       

SECURITIES PURCHASE AND STOCKHOLDERS AGREEMENT                                  

The Company's common stock is not publicly traded.  The Company is a wholly 
owned subsidiary of GHC, which, in turn, is substantially owned by CGW.  GHC has
no business other than holding the stock of the Company, which is the sole      
source of GHC's financial resources.  GHC is controlled by CGW, which           
beneficially owns shares representing 54.8% of the voting interest in GHC,      
(46.3% on a fully diluted basis) and has the right to designate all of the      
directors of GHC. Accordingly, CGW, through its control of GHC, controls the    
Company and has the power to elect all of its directors, appoint new management 
and approve any action requiring the approval of the holders of the Company's   
common stock.                                                                   

  At the Acquisition Closing, CGW, NationsBanc Investment Corp. ("NBIC"), Mellon
Bank, N.A., as trustee of First Plaza Group Trust, a General Motors pension plan
("FPGT") and Messrs. Culwell, Mitchell, Powers, Collins and Aviles (each a      
"Senior Manager" and, collectively, the "Senior Managers"), ("Stockholders")    
entered into a Securities Purchase and Stockholders Agreement (the "Securities  
Purchase and Stockholders Agreement") with regard to GHC. Subsequent to the     
Acquisition Closing, Mr. Letier became a party to the Securities Purchase and   
Stockholders' Agreement (Mr. Letier shall hereinafter be included in the        
definitions of Stockholder senior Manager).  All future purchasers of GHC common
stock will be required to enter into the Securities Purchase and Stockholders   
Agreement. The Securities Purchase and Stockholders Agreement contains          
provisions concerning the governance of GHC and the Company, restrictions on the
transferability of the securities of GHC and the Company and registration rights
for the securities of GHC held by the Stockholders.                             

The governance provisions of the Securities Purchase and Stockholders       
Agreement provide that the Board of Directors of GHC will consist of up to five 
members all of whom shall be designated by CGW, and that the Board of Directors 
of the Company shall be comprised of the directors of GHC. The Securities       
Purchase and Stockholders Agreement requires holders of voting securities of GHC
to vote their shares in favor of such designees of CGW for election as directors
of GHC. The Securities Purchase and                                             

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Stockholders Agreement also grants to each of NBIC and FPGT the right, except in
certain circumstances, to have a representative in attendance at all meetings of
the Board of Directors of GHC or the Company.                                   

The Securities Purchase and Stockholders Agreement grants to the stockholder
parties thereto pre-emptive rights, exercisable pro rata in accordance with     
their respective ownership of common stock of GHC, to purchase shares of common 
stock or other equity securities of GHC (other than shares of common stock      
issued upon exercise of options, rights, awards or grants pursuant to the Plan  
and common stock issued in exchange for common stock of another class), and     
further provides for certain co-sale rights and obligations in the event CGW    
elects to sell all or a portion of its shares of GHC's common stock.            
Additionally, GHC has a right of first refusal in connection with any proposed  
sale by NBIC, FPGT or any Senior Manager of its or his investment in GHC.       

The Securities Purchase and Stockholders Agreement provides that if a Senior
Manager's employment is terminated for any reason other than for cause, GHC will
have the right to repurchase any shares owned by such Senior Manager at the     
greater of cost or fair value. If a Senior Manager's employment is terminated   
for cause, GHC will have the right to repurchase any shares owned by such Senior
Manager at the lesser of fair value or cost. Such right is exercisable within   
180 days following such termination of employment of the Senior Manager. Fair   
value of the repurchased shares shall be determined by agreement between GHC and
the Senior Manager whose shares are being repurchased or, failing such          
agreement, by an independent investment banking firm.                           

If GHC is unable to exercise either its right of first refusal or right to  
repurchase shares of common stock from a Senior Manager whose employment is     
terminated, it may assign such right to the other Stockholders who are parties  
to the Securities Purchase and Stockholders Agreement (other than the           
Stockholder whose shares are subject to such rights), who may exercise such     
rights in accordance with their respective ownership of common stock.           

TRANSACTIONS WITH CGW AND ITS AFFILIATES                                        

At the Acquisition Closing, the General Partner entered into the Consulting 
Agreement with the Company whereby the Company will pay the General Partner a   
monthly retainer fee of $30,000 for financial and management consulting         
services. The Company paid $300,000 to CGW for the three hundred and six day    
period ended September 27, 1997 for such services.  The General Partner may also
receive additional compensation (not to exceed an aggregate of $500,000         
annually) if approved by the Board of Directors of the Company at the end of the
Company's fiscal year, based upon the overall performance of the Company. The   
Consulting Agreement expires five years from the Acquisition Closing. At the    
Acquisition Closing, the General Partner delegated its rights and obligations   
under the Consulting Agreement to the Management Company, an affiliate of CGW.  

At the Acquisition Closing, the Company paid to the Management Company, an  
affiliate of CGW, a fee of $2.65 million for its services in assisting the      
Company in structuring and negotiating the Transactions.                        

The Company believes that the terms and conditions of the Consulting        
Agreement, the fees paid to the General Partner thereunder and the fees paid to 
the Management Company are consistent with arms-length transactions with        
unaffiliated parties. In addition, the terms and conditions of the Credit       
Agreement and the Indenture restrict the Company's ability to enter into certain
transactions with Affiliates.                                                   

TRANSACTIONS WITH NBIC AND ITS AFFILIATES                                       

NationsBank of Texas, N.A., an affiliate of NBIC and NationsBanc Capital    
Markets, Inc., was paid usual and customary fees of approximately $1.5 million  
for underwriting, structuring, syndicating and administering the Credit         
Facilities. NationsBanc Capital Markets, Inc. received a portion of the fees    
related to underwriting, structuring and syndicating the Credit Facilities. The 
NationsBanc Capital Markets, Inc. received $3.0 million in discounts and        
commissions in connection with the initial offering of the Notes.               

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INDEMNIFICATION OF OFFICERS AND DIRECTORS                                       

The Certificates of Incorporation of the Company and GHC contain provisions 
eliminating the liability of directors for monetary damages for breaches of     
their duty of care to the Company or GHC, as applicable, except in certain      
prescribed circumstances. The Certificates of Incorporation and Bylaws of the   
Company and GHC also provide that directors and officers of the Company and GHC 
will be indemnified by the Company and GHC, respectively, to the fullest extent 
authorized by Delaware law, as it now exists or may in the future be amended,   
against all expenses and liabilities reasonably incurred in connection with     
service for or on behalf of the Company or GHC, as appropriate. The Certificate 
of Incorporation and Bylaws of the Company and GHC provide that the right of    
directors and officers to indemnification is not exclusive of any other right   
now possessed or hereinafter acquired under any statute, agreement or otherwise.

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PART IV 

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.       

       (a) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS ANNUAL REPORT
ON FORM 10-K.                                                                   

1.   CONSOLIDATED FINANCIAL STATEMENTS AT ITEM 8.             

2.   CONSOLIDATED FINANCIAL STATEMENT SCHEDULES:              

           All other Financial Statement Schedules have been omitted
          because (i) the required information is not present in amounts
      sufficient to require submission of the schedule, (ii) the
          information required is included in the Consolidated Financial
              Statements or the Notes thereto, or (iii) the information required
in the Schedules is not applicable to the Company.  

3.   Exhibits:                                                

              The following exhibits either (i) are filed herewith; or (ii) have
             previously been filed with the Securities and Exchange Commission
           and are incorporated herein by reference to such prior filings.

            3.1  Restated Certificate of Incorporation of Gorges/Quik-to-Fix
          Foods, Inc. (incorporated herein by reference to the
              Company's Registration Statement on Form S-1, originally
      filed January 21, 1997 (Reg. No. 333-20155)( the
"Registration Statement on Form S-1")).   

              3.2  Bylaws of Gorges/Quik-to-Fix Foods, Inc. (incorporated herein
                  by reference to the Company's Registration Statement on Form
S-1).                                     

            4.   Indenture, dated November 25, 1996, between Gorges/Quik-to-
               Fix Foods, Inc. and IBJ Schroder Bank & Trust Company, as
                   Trustee, relating to the Company's 11 1/2 Senior Subordinated
                   Notes due 2006, Series B (incorporated herein by reference to
        the Company's Registration Statement on Form S-1).

            10.1  Amendment to Senior Credit Facility dated November 25, 1996.

27.  Financial Data Schedule.                       

99.  GHC Stock Option Agreement for A. Scott Letier.

(b) REPORTS ON FORM 8-K                                       

None                                      

(c) EXHIBITS                                                  

See Item 14(a)3.                          

(d) FINANCIAL STATEMENT SCHEDULES                             

See Item 14(a)2.                          

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on January 8, 1998.    

          GORGES/QUIK-TO-FIX FOODS, INC.

      BY: /s/   J. David Culwell
                   ---------------------------------
                J. David Culwell
               Chief Executive Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated on January 8, 1998. 

SIGNATURE                                 TITLE                 
---------                                 -----                 

/s/ J. David Culwell                  Chief Executive Officer and Director      
----------------------------                                                    
J. David Culwell                                                        

/s/ Richard E. Mitchell               President and Director                    
----------------------------                                                    
Richard E. Mitchell                                                     

/s/ Richard L. Cravey                 Director                                  
----------------------------                                                    
Richard L. Cravey                                                       

/s/ William A. Davies                 Director                                  
----------------------------                                                    
William A. Davies                                                       

/s/ James A. O'Donnell                Director                                  
----------------------------                                                    
James A. O'Donnell                                                      

/s/ A. Scott Letier                   Chief Financial Officer                   
----------------------------                                                    
A. Scott Letier                                                         

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GORGES/QUIK-TO-FIX FOODS, INC.  

Index to Consolidated Financial Statements  

Report of Independent Auditors                                              F-2 
Balance Sheets                                                              F-3 
Statements of Operations                                                    F-4 
Statements of Cash Flows                                                    F-5 
Statement of Changes in Stockholder's Equity                                F-6 
Notes to Financial Statements                                               F-7 

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Report of Independent Auditors

The Board of Directors and Stockholder                                          
Gorges/Quick-to-Fix Foods, Inc.                                                 

We have audited the accompanying balance sheet of Gorges/Quik-to-Fix Foods, Inc.
as of September 27, 1997, and the related statements of operations,             
stockholder's equity, and cash flows for the three hundred six day period ended 
September 27, 1997 and the balance sheet of the Gorges/Quik-to-Fix Foods        
operations of Tyson Foods, Inc. as of September 28, 1996, and the related       
statements of operations and cash flows for the fifty-eight day period ended    
November 25, 1996 and the years ended September 28, 1996 and September 30, 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, the financial statements referred to above present fairly, in   
all material respects, the financial position of Gorges/Quik-to-Fix Foods, Inc. 
at September 27, 1997 and the Gorges/Quik-to-Fix Foods operations of Tyson      
Foods, Inc. at September 28, 1996, and the results of operations and cash flows 
for the three hundred six day period ended September 27, 1997 of Gorges/Quik-to-
Fix Foods, Inc. and fifty-eight days ended November 25, 1996 and the years ended
September 28, 1996 and September 30, 1995 of Gorges/Quik-to-Fix Foods,          
operations of Tyson Foods, Inc., in conformity with generally accepted          
accounting principles.                                                          

               /s/   Ernst & Young LLP
               -----------------------

Dallas, Texas                                                                   
December 19, 1997                                                               

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GORGES/QUIK-TO-FIX FOODS, INC.
BALANCE SHEETS
(In thousands, except share data) 

                                                        [Enlarge/Download Table]

                                                            PREDECESSOR             COMPANY          
                                                            ----------------        ---------------- 
                                                            SEPTEMBER 28,           SEPTEMBER 27,    
                                                            1996                    1997             
                                                            ----------------        ---------------- 
                                                                                                     
     ASSETS                                                                                          
Current assets:                                                                                      
   Cash                                                             $      9                $      - 
   Accounts receivable, net of allowance for doubtful                      -                  21,960 
          Accounts of $795 in 1997                                                                   
   Inventory                                                          31,325                  28,645 
   Prepaid expenses and other                                              -                      78 
                                                            ----------------        ---------------- 
     Total current assets                                             31,334                  50,683 

Property, plant and equipment:                                                                       
   Land                                                                1,088                   1,499 
   Buildings and leasehold improvements                               35,768                  44,531 
   Machinery and equipment                                            52,853                  44,517 
   Land improvements and other                                         1,186                   3,144 
                                                            ----------------        ---------------- 
                                                                      90,895                  93,691 
   Accumulated depreciation                                          (44,439)                 (7,358)
                                                            ----------------        ---------------- 
     Net property, plant and equipment                                46,456                  86,333 

Other assets:                                                                                        
   Intangible assets                                                  59,508                  65,389 
   Organizational and deferred debt issuance costs                         -                   8,767 
   Other                                                                   -                      89 
                                                            ----------------        ---------------- 
     Total assets                                                   $137,298                $211,261 
                                                            ================        ================ 

     LIABILITIES AND STOCKHOLDER'S EQUITY                                                            
Current liabilities:                                                                                 
   Accounts payable and accrued expenses                            $      -                $ 18,658 
   Current portion of long-term debt                                       -                   8,450 
                                                            ----------------        ---------------- 
      Total current liabilities                                                               27,108 

Long-term debt, less current portion                                       -                 141,050 
Deferred income taxes                                                  6,375                       - 
Investment and advances by Tyson                                     130,923                       - 

Stockholder's equity:                                                                                
   Common stock, $.01 par value; 2,000 shares                                                        
         authorized, 1,000 shares issued and                                                         
         outstanding                                                       -                       - 
   Additional paid-in capital                                              -                  45,585 
   Accumulated deficit                                                     -                  (2,482)
                                                            ----------------        ---------------- 
     Total stockholder's equity                                            -                  43,103 
                                                            ----------------        ---------------- 
     Total liabilities and stockholder's equity                     $137,298                $211,261 
                                                       =====================   ===================== 

See accompanying notes to financial statements                                  

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GORGES/QUIK-TO-FIX FOODS, INC.  
STATEMENTS OF OPERATIONS  
(In thousands)  

                                                        [Enlarge/Download Table]


                                                  PREDECESSOR                       COMPANY                       
                         -----------------------------------------------------------------------------------------
                          YEAR                YEAR               FIFTY-EIGHT       THREE HUNDRED       PRO-FORMA  
                          ENDED               ENDED              DAYS              SIX DAYS            YEAR       
                                                                                   ENDED               ENDED      

                          SEPTEMBER           SEPTEMBER          NOVEMBER          SEPTEMBER           SEPTEMBER  
                          30, 1995            28, 1996           25, 1996          27, 1997            27, 1997   
                                                                                                       (UNAUDITED)
                          ----------------------------------------------------------------------------------------
                                                                                                                  
Sales                       304,474            $232,761            $31,966          $172,738            $204,704  
Costs of goods sold         250,787             189,559             25,917           140,149             166,696  
                           ---------           ---------           --------         ---------           --------- 
   Gross profit              53,687              43,202              6,049            32,589              38,008  

Operating expenses:                                                                                               
   Selling, general and                                                                                           
      administrative         31,514              26,414              4,153            18,645              22,853  
   Plant relocation           1,036                   -                  -                 -                   -  
   Amortization               1,624               1,624                250             2,706               3,057  
                           ---------           ---------           --------         ---------           --------- 
     Total operating         34,174              28,038              4,403            21,351              25,910  
      Expenses                                                                                                    
                           ---------           ---------           --------         ---------           --------- 

Operating income             19,513              15,164              1,646            11,238              12,098  

Interest expense                  -                   -                  -            13,709              16,398  
Other expense                   678                 796                  -                11                  11  
                           ---------           ---------           --------         ---------           --------- 

Income (loss) before         18,835              14,368              1,646            (2,482)             (4,311) 
    income taxes                                                                                                  
Income tax expense            7,931               6,205                731                 -                   -  
                           ---------           ---------           --------         ---------           --------- 

     Net income (loss)     $ 10,904            $  8,163            $   915          $ (2,482)           $ (4,311) 
                           =========           =========           ========         =========           ========= 

See accompanying notes to financial statements                                  

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GORGES/QUIK-TO-FIX FOODS, INC.  
STATEMENTS OF CASH FLOWS  
(In thousands)  

                                                        [Enlarge/Download Table]

                                                                    PREDECESSOR                           COMPANY      
                                                  ---------------------------------------------------------------------
                                                   YEAR             YEAR              FIFTY-EIGHT         THREE        
                                                   ENDED            ENDED             DAYS                HUNDRED      
                                                                                      ENDED               SIX DAYS     
                                                                                                          ENDED        
                                                   SEPTEMBER        SEPTEMBER         NOVEMBER            SEPTEMBER    
                                                   30, 1995         28, 1996          25, 1996            27, 1997     
                                                  ---------------------------------------------------------------------
                                                                                                                       
Cash flows from operating activities:                                                                                  
   Net income (loss)                               $  10,904         $  8,163             $ 915            $   (2,482) 
   Adjustments to reconcile net income (loss) to                                                                       
    net cash provided by operating                                                                                     
    activities:                                                                                                        
      Depreciation                                     8,740            7,292               342                 7,358  
      Amortization                                     1,624            1,624               250                 3,301  
      Deferred income taxes                           (3,720)          (1,285)               26                    -   
      Loss on disposition of equipment                   678              792                 -                    -   
      Provision for losses on doubtful accounts            -                -                 -                   795  
Changes in assets and liabilities:                                                                                     
         Increase in accounts receivable                                    -                 -               (22,755) 
         (Increase) decrease in inventory              2,881             (691)             (571)                 (645) 
         Increase in prepaid expenses and other                             -                 -                  (167) 
         Increase in accounts payable and                                                                              
           Accrued expenses                                                 -                 -                17,712  
                                                  ---------------------------------------------------------------------
     Net cash provided by operating activities        21,107           15,895               962                 3,117  

Cash flows from investing activities:                                                                                  
   Purchases of plant and equipment                   (2,792)            (735)             (141)               (3,691) 
   Acquisition, net of cash received                                        -                 -              (184,349) 
   Proceeds from sale of equipment                     5,302              126                 -                    45  
   Other                                                                    -                 -                    51  
                                                  ---------------------------------------------------------------------
     Net cash provided by (used in) investing          2,510             (609)             (141)             (187,944) 
          activities                                                                                                   

Cash flows from financing activities:                                                                                  
   Proceeds from note offering                                              -                 -               100,000  
   Capital contributions                                                    -                 -                45,585  
   Proceeds from revolving line of credit                                   -                 -                19,000  
   Payments on revolving line of credit                                     -                 -                (7,000) 
   Proceeds from term loan                                                  -                 -                40,000  
   Payments on term loan                                                    -                 -                (2,500) 
   Debt issuance and organizational costs                                   -                 -               (10,258) 
   Decrease in Investment and advances by                                                                              
     Tyson                                           (23,637)         (15,286)             (821)                    -  
                                                  ---------------------------------------------------------------------
     Net cash (used in) provided by financing        (23,637)         (15,286)             (821)              184,827  
         activities                                                                                                    
                                                  ---------------------------------------------------------------------
Net decrease in cash                                     (20)               -                 -                     -  
Cash at beginning of period                               29                9                 9                     -  
                                                  ---------------------------------------------------------------------
Cash at end of period                              $       9         $      9             $   9             $       -  
                                                  =====================================================================

See accompanying notes to financial statements                                  

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GORGES/QUIK-TO-FIX FOODS, INC.  
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY  
(In thousands, except share data) 

                                                        [Enlarge/Download Table]

                                                Common         Additional          Accumulated                 
                                Common           Stock           Paid in             Deficit                   
                                 Stock                           Capital                              Total    
                                Shares                                                                         
                             ----------------------------------------------------------------------------------
                                                                                                               
November 25, 1996                    -         $   -             $     -             $     -         $     -   
Initial Sale                                                                                                   
 (issuance of common stock)      1,000                            45,585                   -          45,585   
Net Loss                             -             -                   -             $(2,482)         (2,482)  
                             ----------------------------------------------------------------------------------

September 27, 1997               1,000         $   -             $45,585             $(2,482)        $43,103   
                             ==================================================================================

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GORGES/QUIK-TO-FIX FOODS, INC.                                                  
NOTES TO FINANCIAL STATEMENTS                                                   
September 27, 1997                                                              

1.  ORGANIZATION AND BASIS OF PRESENTATION                                      

        On November 25, 1996 the Company acquired certain assets and liabilities
of the beef processing division of Tyson Foods, Inc., (the Predecessor), in     
exchange for a cash payment of approximately $184 million (the "Acquisition").  
The cash used to consummate the Acquisition was obtained through the issuance of
$45 million in common stock, and the proceeds from the borrowings described in  
the notes. The Company assumed no liabilities or obligations of Tyson or the    
Predecessor with the exception of those defined in the purchase agreement:      
future obligations of normal course of business executory contracts, agreements 
to purchase inventory or supply products, accrued vacation pay, and certain     
property tax obligations. Tyson has agreed to indemnify the Company from any and
all liabilities and obligations relating to the Predecessor, other than the     
aforementioned liabilities assumed by the Company. The Company and Tyson have   
also entered into a non-competition agreement which expires two years from the  
date of closing, in which the parties have agreed, subject to certain exceptions
and limitations, to not compete with each other in the production or sale of    
beef and pork items, in the case of Tyson, and poultry items, in the case of the
Company. As a result of the acquisition, financial information for periods      
through November 25, 1996 are presented on a different cost basis and,          
therefore, such information may not be comparable.                              

Gorges/Quik-to-Fix Foods, Inc., (the "Company"), a wholly owned 
subsidiary of Gorges Holding Company ("GHC"), is a leading producer, marketer   
and distributor of value added processed fresh and frozen beef, and to a lesser 
extent pork and poultry. The Company purchases fresh and frozen beef, pork and  
poultry, which it processes into a broad range of fully cooked and ready to cook
products generally falling into one of two categories, value added products and 
ground beef. Value added products include but are not limited to: (i) breaded   
beef items such as country fried steak and beef fingers; (ii) charbroiled beef  
items such as fully cooked hamburger patties, fajita strips, meatballs, and     
meatloaf; and (iii) other specialty products such as fully cooked and ready to  
cook pork sausage, breaded pork and turkey, cubed steaks, and Philly steak      
slices. Ground beef product offerings primarily consist of individually quick   
frozen hamburger patties. The Company's products are primarily sold to the      
foodservice industry, which encompasses all aspects of away-from-home food      
preparation, including restaurants, schools, healthcare providers, corporations,
and other commercial feeding operations. The Company sells its products         
primarily through broadline and specialty foodservice distributors throughout   
the U.S.                                                                        

The accompanying audited and unaudited financial statements include financial   
information of the Company, and its Predecessor, which represents the Company   
prior to its acquisition from Tyson Foods, Inc. ("Tyson").  The Predecessor     
represents the beef processing assets and operations of Tyson, which was        
operated and accounted for as a consolidated operating division of Tyson. Prior 
to the Acquisition, Tyson's accounting system produced separate income          
statements for the Predecessor while certain balance sheet accounts, including  
the majority of cash, receivables, prepaids, payables and accruals were         
maintained only on a consolidated basis at the corporate level, and are in      
effect reflected in Investment and Advances by Tyson.  The Predecessor          
participated in Tyson's overall corporate cash management program whereby       
operating funds were provided by Tyson with the corresponding charge or credit  
reflected in the Investment and Advances by Tyson account.  As a result, the    
Predecessor maintained only                                                     

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GORGES/QUIK-TO-FIX FOODS, INC.                                                  
NOTES TO FINANCIAL STATEMENTS-(Continued)                                       

1.  ORGANIZATION AND BASIS OF PRESENTATION - CONTINUED                          

nominal cash accounts. A portion of Tyson's accounting and administrative costs 
related to these functions were allocated to the Predecessor as discussed in    
Note 2. Additionally the allocable portion of the expenses associated with      
certain other assets and other liabilities recorded at Tyson's corporate level  
for which the Predecessor received benefit was reported in the Predecessor's    
operations.                                                                     

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

Fiscal Year                                                                   

     The Company utilizes a 52 or 53 week accounting period, ending on the
Saturday closest to September 30.                                               

Accounts Receivable                                                             

        The Company periodically evaluates the creditworthiness of its customers
as accounts receivable balances are not collateralized. The Company has not     
experienced significant credit losses.                                          

Inventories                                                                   

        Inventories, valued at the lower of cost (first-in, first-out) or market
(replacement or net realizable value), consist of the following (in thousands): 

                                                                [Download Table]

                               Predecessor                Company          
                             -------------------        -------------------
                                 September 28,              September 27,  
                                     1996                       1997       
                             -------------------        -------------------
                                                                           
Finished products                        $27,569                    $17,655
Work in process                              688                          -
Supplies                                   3,068                     10,990
                             -------------------        -------------------
  TOTAL                                  $31,325                    $28,645
                             ===================        ===================

Property, Plant and Equipment                                                 

 Property, plant and equipment is stated at cost.  Depreciation is
calculated primarily by the straight-line method over the estimated useful lives
of the assets, which range from 3 to 20 years.                                  

Capital expenditures for equipment and capital improvements are 
generally capitalized while maintenance is expensed.                            

Intangible assets and Organizational and Deferred Debt Issuance Costs         

       Intangible assets, consisting of goodwill and trademarks, are stated at
cost and are amortized on a straight- line basis over 30 years (40 years by the 
Predecessor).  Recoverability of the carrying value of intangible assets is     
evaluated on a recurring basis with consideration toward recovery through future
operating results on an undiscounted basis.                                     

     Organizational costs are amortized on a straight line basis over five
years, and deferred debt issuance costs are amortized over the life of the debt 
instrument to which it relates.                                                 

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GORGES/QUIK-TO-FIX FOODS, INC.                                                  
NOTES TO FINANCIAL STATEMENTS-(Continued)                                       

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED                      

At September 28, 1996 and September 27, 1997, the accumulated   
amortization was $10.6 million and $3.3 million, respectively.                  

Income Taxes                                                                  

   The Company follows the liability method of accounting for deferred
income taxes. The liability method provides that deferred tax liabilities are   
recorded at currently enacted tax rates based on the difference between the tax 
basis of assets and liabilities and their carrying amounts for financial        
reporting purposes, referred to as temporary differences.                       

Selling Expenses                                                              

   Selling expenses include product line expenses such as shipping and
storage, external handling, external freezer charges, product and package       
design, brokerage expense, and other direct selling expenses such as certain    
salaries, travel and research and development.  Selling expenses for the        
Predecessor also include an allocable share of other common Tyson selling       
expenses as discussed below.                                                    

Allocation of Corporate Expenses                                              

       Prior to the Acquisition from Tyson certain indirect administrative and
selling expenses incurred by Tyson were not actually incurred for programs      
specific to the Predecessor have been allocated to the Predecessor based on net 
sales.  Allocated administrative expenses include costs incurred for all        
corporate support functions.  Allocated selling expenses consisted of costs     
incurred by Tyson's corporate sales and marketing department.  Because these    
charges were incurred by Tyson, actual charges, if the Predecessor had been a   
separate entity at the time, might have differed.  Certain expenses incurred at 
Tyson corporate directly related to the Predecessor such as production          
scheduling, research and development and the corporate aviation department were 
allocated based on usage.                                                       

Selling, administrative and corporate expenses allocated to the 
Predecessor and charged to operations for the year ended September 30, 1995 and 
September 28, 1996, and the fifty-eight days ended November 25, 1996 were $17.1 
million, $13.9 million and $1.4 million, respectively.                          

Advertising, Promotion and Research and Development Expenses                  

        Advertising, promotion and research and development expenses are charged
to operations in the period incurred. Advertising and promotion expenses were   
$6.6 million for the proforma period ending September 27, 1997 compared to $5.7 
million and $7.3 million for fiscal 1996 and 1995, respectively. Research and   
Development expenses were $ 0.4 million for the year ended September 27, 1997.  
Prior years were nominal, with expenses allocated by Tyson.                     

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GORGES/QUIK-TO-FIX FOODS, INC.                                                  
NOTES TO FINANCIAL STATEMENTS-(Continued)                                       

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED                      

Use of Estimates                                                              

        The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and        
assumptions that affect the amounts reported in the financial statements and    
accompanying notes.  Actual results could differ from those estimates.          

Collective Bargaining Agreements                                                

  Currently the Company has approximately 200 employees of its total
workforce of approximately 1,000 employees covered under a collective bargaining
agreement.  The collective bargaining agreement has expired and the Company is  
negotiating a new agreement.                                                    

3.  LONG TERM DEBT                                                              

Senior Debt                                                                   

        The Company has entered into a credit agreement (the "Credit Agreement")
with NationsBank of Texas, NA (the "Bank") as agent for a syndicate of banks and
financial institutions which provides the Company with a $30 million Revolving  
Credit Facility (the "Revolver"), and a $40 million Term Credit Facility (the   
"Term Loan"). The Revolver includes a subfacility of $7 million for commercial  
and standby letters of credit.  The Revolver has a term of five years, and all  
amounts outstanding will become due and payable on November 30, 2001.  As of    
September 27, 1997, the Company's available credit under the Revolver was $18.0 
million.  The Term Loan also has a five year term and is subject to quarterly   
principal payments in an aggregate amount of $8.45 million in fiscal 1998, $8.5 
million in fiscal 1999, $9.0 million in fiscal 2000, $7.25 million in fiscal    
2001, and $4.3 million in fiscal 2002.                                          

  Outstanding borrowings under the Credit Agreement bear interest at
floating rates per annum equal to, at the Company's option: (i) the Base Rate   
plus 1.50%, or (ii) the Eurodollar rate, LIBOR, plus 2.50%, provided, however,  
the interest rate margins are subject to reductions in the event the Company    
meets certain performance targets as set forth in the Credit Agreement. At      
September 27, 1997 the interest rate for the Company based on this formula was  
8.32%. The Company may be required to make mandatory prepayments against both   
facilities, comprised of principal payments totaling: (i) 100% of cash received 
in asset sales wherein the proceeds are not used to purchase replacement assets,
and (ii) 50% of the Company's Excess Cash Flow as defined in the Credit         
Agreement. These payments are to be applied first to the Term Loan and, upon the
term Loan's retirement, to the Revolver as a permanent reduction. At September  
27, 1997, the Company's outstanding borrowings under these facilities were $49.5
million, $12 million on the Revolver, $37.5 million on the Term Loan, and no    
outstanding letters of credit.                                                  

Under the Credit Agreement, the Company is subject to customary 
financial and other covenants including certain financial limit and ratio       
covenants as well as limitations on further indebtedness, guaranties, liens,    
dividends and other restricted payments (including transactions with            
affiliates), prepayments and redemption of debt, mergers, acquisitions, asset   
sales,                                                                          

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GORGES/QUIK-TO-FIX FOODS, INC.                                                  
NOTES TO FINANCIAL STATEMENTS-(Continued)                                       

consolidations, and other investments.  Additionally, the Credit Agreement      
provides that indebtedness outstanding is secured by a first-priority security  
interest in, and lien upon, substantially all of the Company's present and      
future tangible and intangible assets and capital stock.                        

Subordinated Debt                                                             

    On November 25, 1996, the Company consummated a private placement of
$100 million aggregate principal amount of 11.5% Senior Subordinated Notes Due  
2006 (the "Notes"). The Notes will mature on December 1, 2006, unless previously
redeemed. Interest on the notes is payable semiannually in arrears, commencing  
June 1, 1997, and will be payable on June 1 and December 1 of each year at a    
rate of 11.5% per annum. The issuance of the Notes resulted in net proceeds to  
the Company of approximately $95 million after underwriting discounts and other 
debt issuance costs aggregating approximately $5 million. On April 30, 1997, the
Company consummated an exchange offer where by the private placement Notes were 
replaced with similar Notes that are publicly traded. The Company's outstanding 
indebtedness under these Notes was $100 million at September 27, 1997.          

     The Notes were issued pursuant to an indenture which contains certain
restrictive covenants and limitations.  Among other things, the Indenture limits
the incurrence of additional indebtedness, limits the making of restricted      
payments (as defined) including the declaration and/or payment of dividends,    
places limitations on dividends and other payments by the Company, and places   
limitations on liens, certain asset dispositions and merger/sale of assets      
activity.  The Company was in compliance with these covenants at September 27,  
1997.                                                                           

        The Notes are unsecured subordinated general obligations of the Company.
The Notes become redeemable at the Company's option on December 1, 2001, at     
which time the Notes are redeemable in whole or part, subject to a redemption   
premium which begins at 105.75 % of the face value in 2001 and reduces at a     
scheduled rate annually until 2004 at which time the redemption is 100% of face 
value.  Notwithstanding the foregoing, at any time prior to December 1, 1999,   
the Company, at its option, may redeem the Notes, in part, with the net proceeds
of a public equity offering or of a capital contribution made to the common     
equity of the Company.  Any such redemption is also subject to a redemption     
premium, which begins at 110.75% in 1997 and 110.00% in 1998 and 1999.  No      
mandatory redemption or sinking fund payments are required with respect to the  
Notes; however, at each Note holder's option, the Company may be required to    
repurchase the Notes at a redemption premium of 101% in the event the Company   
incurs a change of control as defined by the indenture. The Company paid        
interest of $13.7 million for the three hundred six day period ended September  
27, 1997.                                                                       

4.  COMMITMENTS                                                                 

      Tyson (for the Predecessor), and the Company leased certain properties
and equipment for which the total rentals thereon approximated $134,000 for the 
three hundred six day period ended September 27, 1997, approximately $11,000 for
the fifty-eight day period ended November 25, 1996, approximately $44,000 for   
the year ended September 28, 1996, and approximately $17,000 for the year ended 
September 30, 1995.                                                             

        Future minimum lease payments for all noncancelable operating leases for
the Company at September 27, 1997 consist of $327,000, $311,000, $311,000,      
285,000, and $104,000 annually for fiscal 1998 through 2002.                    

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GORGES/QUIK-TO-FIX FOODS, INC.                                                  
NOTES TO FINANCIAL STATEMENTS-(Continued)                                       

5.  BENEFIT PLANS                                                               

     The Company has defined contribution retirement and incentive benefit
programs for all employees after meeting requirements concerning time employed. 
Incentive benefit programs are of a profit sharing nature, and are discretionary
as to amount and timing.  No incentive contributions were made by Predecessor or
the Company. Contributions to the defined contribution plans totaled $452,612   
for the three hundred six day period ending September 27, 1997.                 

6.  INCOME TAXES                                                                

   The Predecessor was included in the consolidated federal income tax
return of Tyson and computed its federal tax provision as if it filed a separate
return. The state tax provision was computed using an effective state tax rate  
as if the Predecessor filed separate state tax returns. The Company has not     
recorded an income tax benefit related to the net deferred tax asset for the    
period ended September 27, 1997 because in the opinion of management it is      
uncertain when the Company will be able to realize such deferred tax asset.     

Detail of the provision for income taxes consists of:                           

                                                        [Enlarge/Download Table]

               Year ended             Year ended           Fifty-eight                 Three    
               September              September            days ended               hundred six 
                30, 1995               28, 1996             November                 days ended 
                                                            25, 1996                 September  
                                                                                      27, 1997  
          --------------------------------------------------------------------------------------

                                                                                                
Federal           $ 6,746                $ 5,270                 $ 621                 $     -  
State               1,185                    935                   110                       -  
          -----------------      -----------------      -----------------      -----------------
                    7,931                  6,205                   731                       -  
          =================      =================      =================      =================
Current            11,651                  7,490                   990                       -  
Deferred           (3,720)                (1,285)                 (259)                      -  
          -----------------      -----------------      -----------------      -----------------
                  $ 7,931                $ 6,205                 $ 731                 $     -  
          =================      =================      =================      =================

        The reasons for the difference between the effective income tax rate and
the statutory U.S. federal income tax rate are as follows:                      

                                                        [Enlarge/Download Table]

                                    Year ended             Year ended           Fifty-eight                 Three    
                                    September              September            days ended               hundred six 
                                     30, 1995               28, 1996             November                 days ended 
                                                                                 25, 1996                 September  
                                                                                                           27, 1997  
                               --------------------------------------------------------------------------------------
                                                                                                                     
U. S. federal income tax rate            35.0%                 35.0%                 35.0%                 35.0%     
State income taxes                        4.1                   4.2                   4.2                   4.2      
Amortization of excess of                 3.0                   4.0                   5.2                     -      
 investments over net assets                                                                                         
 acquired                                                                                                            
Valuation allowance                         -                     -                     -                 (39.2)     
                               -----------------      -----------------      -----------------      -----------------
                                         42.1%                 43.2%                 44.4%                  -  %     
                               =================      =================      =================      =================

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GORGES/QUIK-TO-FIX FOODS, INC.                                                  
NOTES TO FINANCIAL STATEMENTS-(Continued)                                       

Deferred incomes taxes reflect the net tax effects of temporary 
differences between the carrying amounts of assets and liabilities for the      
financial reporting purposes and the amounts used for incomes tax purposes. The 
significant component of the Predecessor's deferred tax liabilities consisted   
primarily of the basis difference in property, plant and equipment. The         
significant components of the Company's deferred tax assets and liabilities as  
of September 27, 1997 are as follows (in thousands):                            

                                                                [Download Table]


                                                                        

Deferred tax liabilities:                                               
    Tax-over-book amortization                                  $  (758)
                                                                ========
Deferred tax assets:                                                    
    Accounts receivable reserves                                    310 
    Inventory reserves                                              229 
    Inventory capitalization                                        201 
    Book-over-tax depreciation                                      192 
    Net operating loss carryforward                                 766 
                                                                --------
  Total deferred tax assets                                       1,698 
                                                                ========

  Total net deferred tax assets                                 $   940 
  Valuation allowance                                              (940)
                                                                --------
Total net                                                       $     - 
                                                                ========

The Company has $13.4 million of net operating loss carryforwards that expire in
fiscal 2012.                                                                    

7.  SIGNIFICANT CUSTOMERS                                                       

   Certain of the Predecessor's and the Company's products are sold to
major foodservice distributors for distribution to foodservice outlets. As a    
result, the Company's top three customers accounted for approximately 35.3% of  
sales for proforma fifty-two week period ended September 27, 1997, and 43.6% for
the fifty-two week period ended September 28, 1996. Sales to one of these       
customers is significantly lower in fiscal 1997 than in fiscal 1996 due to the  
customer's decision to increase its purchases with one of the Company's         
competitors.                                                                    

8.  TRANSACTIONS WITH AFFILIATES                                                

        The Company has entered into a consulting agreement with an affiliate of
majority shareholder CGW, under which CGW will receive a monthly fee of $30,000 
for financial and management consulting services.  In addition to the monthly   
fee to CGW, the Board of Directors may approve an additional fee not to exceed  
$500,000 annually, based upon overall Company operations.  At the closing of the
acquisition, CGW received a fee of $2.65 million, included as part of the       
Company's organizational costs, for its services in assisting the Company with  
the structuring and negotiating of this transaction.                            

      NationsBank of Texas, NA, an affiliate of NationsBanc Investment Corp.
("NBIC") a minority shareholder and a limited partner of CGW, is a lender to the
Company and in that capacity has received fees for underwriting, structuring,   
syndicating and administering the Facilities under the Credit Agreement.        
NationsBanc Capital Markets, Inc., another affiliate of NBIC, was the initial   
purchaser of the Company's Senior Subordinated Notes, and in that capacity      
received fees and commissions in connection with that transaction.              

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GORGES/QUIK-TO-FIX FOODS, INC.                                                  
NOTES TO FINANCIAL STATEMENTS-(Continued)                                       

9.  PRO FORMA INFORMATION                                                       

     The pro forma income statement included herein for the fifty-two week
period ended September 27, 1997 combines the final fifty-eight day period       
September 28, 1996 through November 25, 1996 when the company was owned by the  
Predecessor, with the Three hundred six day period November 26, 1996 through    
September 27, 1997, providing a full fifty-two week period to compare with      
previous periods. On a proforma basis, the Company would have sales of $204,704 
and $232,761 and a net loss of $4,311 and $2,132 for the years ended            
September 27, 1997 and September 28, 1996, respectively.                        

10.  STOCK OPTIONS                                                              

      In 1997, GHC adopted a stock option plan (the Stock Option Plan) which
provides for the granting of up to 112,250 incentive stock options to employees 
to purchase shares of GHC's common stock.  All options granted under the Stock  
Option Plan have a five year vesting period and a term of up to ten years.  GHC 
has no assets or liabilities, other than their direct investment in the Company.
Stock option activity is as follows:                                            

                                                                [Download Table]

                                         Number of Shares     Option Price per 
                                                                         Share 
                                        ---------------------------------------
                                                                               
Options granted                                    84,968              $100.00 
Options exercised                                       -                    - 
Options cancelled                                       -                    - 
                                        ---------------------------------------
Options outstanding September 27, 1997             84,968              $100.00 

   Proforma information regarding net income and earnings per share is
required by SFAS 123, and has been determined as if the Company had accounted   
for its stock options under fair value method of that statement.  The fair value
for these options was estimated at the date of grant using a minimum value      
pricing model with the following weighted-average assumptions for 1997, risk-   
free interest rate of 6.0%, dividend yield of 0%, a weighted-average expected   
life of the option of 8 years and near zero volatility.                         

       Option valuation models are used in estimating the fair value of traded
options that have no vesting restrictions and are fully transferable.  In       
addition, option valuation models require the input of highly subjective        
assumptions.  Because the Company's stock options have characteristics          
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in  
management's opinion, the existing models do not necessarily provide a reliable 
single measure of the fair value of its stock options.                          

     For purposes of proforma disclosures, the estimated fair value of the
options is amortized to expense on a straight-line basis over the options'      
vesting period.  The Company's proforma net loss for the three hundred and six  
days ended is $3,015,000.                                                       

F-14

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		12/1/06		42
		12/1/01		42
		11/30/01		41
		12/1/99		42
		10/3/98		3					10-K405
Filed on:		1/12/98
		1/8/98		31
		12/19/97		33
		12/15/97		19
		12/1/97		1
For Period End:		9/27/97		1		45			NT 10-K
		9/26/97		26
		6/1/97		8		42
		4/30/97		42
		1/21/97		30
		12/10/96		25
		11/26/96		45
		11/25/96		4		45
		9/29/96		14
		9/28/96		3		45
		9/30/95		3		42
		10/2/93		14
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