<PAGE>

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                                  UNITED STATES
                       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 June 29, 2002

                                       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 numbers 333-50305 and 333-50305-01
                        Eagle Family Foods Holdings, Inc.
             (Exact name of registrant as specified in its charter)

              Delaware                                         13-3983598
    (State or other jurisdiction                              (IRS Employer
    of incorporation or organization)                     Identification Number)

                            Eagle Family Foods, Inc.
             (Exact name of registrant as specified in its charter)

              Delaware                                         13-3982757
    (State or other jurisdiction                              (IRS Employer
    of incorporation or organization)                     Identification Number)

         735 Taylor Road, Suite 200                              43230
              Gahanna, OH                                      (Zip Code)
  (Address of principal executive offices)

       Registrants' telephone number, including area code: (614) 501-4200

           Securities registered pursuant to Section 12(b) of the Act:

    Title of each class                Name of each exchange on which registered
          N/A                                           N/A
   Securities registered pursuant to Section 12(g) of the Act: None
                                 Title of Class
                                       N/A

     Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have 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 (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrants' 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]

     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates. N/A.

     As of September 27, 2002, there were 1,002,582 shares of common stock, par
value $.01 per share, of Eagle Family Foods Holdings, Inc. ("Common Stock") and
10,000 shares of common stock, par value $.01 per share, of Eagle Family Foods,
Inc. outstanding, respectively.
================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                             <C>
PART I
     Item 1.  Business ......................................................................................    2
     Item 2.  Properties ....................................................................................    6
     Item 3.  Legal Proceedings .............................................................................    6
     Item 4.  Submission of Matters to a Vote of the Security Holders .......................................    7

PART II
     Item 5.  Market for Registrants' Common Equity and Related Stockholder Matters .........................    7
     Item 6.  Selected Financial Data .......................................................................    8
     Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations .........    9
     Item 7A. Quantitative and Qualitative Disclosures About Market Risk ....................................   17
     Item 8.  Financial Statements and Supplementary Data ...................................................   18
     Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ..........   18

PART III
     Item 10. Directors and Executive Officers of the Registrants ...........................................   19
     Item 11. Executive Compensation ........................................................................   21
     Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
              Matters .......................................................................................   23
     Item 13. Certain Relationships and Related Transactions ................................................   25
     Item 14. Controls and Procedures .......................................................................   26

PART IV
     Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ..............................   27
</TABLE>

<PAGE>

PART I

Item 1:   Business

Business History

     On January 23, 1998 (the "Acquisition Closing"), Eagle Family Foods, Inc.
("Eagle") acquired certain assets of Borden Foods Corporation ("BFC"), BFC
Investments, L.P. ("BFC Investments") and certain of their affiliates for an
aggregate purchase price of $376.8 million (the "Acquisition"). The assets
acquired include, among other things: (i) four manufacturing facilities located
in Wellsboro, Pennsylvania; Starkville, Mississippi; Waterloo, New York; and
Chester, South Carolina; (ii) all machinery and equipment located at these
facilities; (iii) the trademarks Eagle; ReaLemon; ReaLime; Cremora; Kava; None
Such and certain other trademarks in North America and in certain foreign
territories; and (iv) a non-compete and non-solicitation agreement from BFC and
certain of its affiliates. Eagle is a wholly owned subsidiary of Eagle Family
Foods Holdings, Inc. ("Holdings"). Eagle and Holdings are collectively referred
to as the "Company", unless the context indicates otherwise. Eagle and Holdings
were incorporated in Delaware in 1997.

     Financing for the Acquisition and related fees and expenses consisted of
(i) $82.5 million of equity contribution from Holdings (which was financed by
Holdings' issuance of preferred and common stock in that amount to GE Investment
Private Placement Partners II, a Limited Partnership ("GEI") and Warburg, Pincus
Ventures, L.P. ("Warburg" and together with GEI, the "Equity Sponsors"), and
certain members of the Company's management, (the "Management Investors"), who
contributed approximately $1.7 million of such amount (the "Equity
Contribution"); (ii) the issuance of $115.0 million of 8.75% senior subordinated
notes due 2008 (the "Senior Subordinated Notes"); and (iii) senior secured
credit facilities (the "Senior Credit Facilities") in an aggregate principal
amount of $245.0 million, consisting of a $175.0 million term loan facility (the
"Term Loan Facility") and a $70.0 million revolving credit facility (the
"Revolving Credit Facility").

     Since the Acquisition Closing, the Company nationally launched Cremora
Royale powdered non-dairy creamer, the Star and Magnolia Hispanic brands of
sweetened condensed milk and ReaLemonade lemonade liquid concentrate.

     In September 1999, the Equity Sponsors contributed an aggregate of $10.0
million to Holdings in exchange for shares of a new series of Holdings preferred
stock and Holdings common stock. This contribution was made to finance the
marketing investment made by the Company in launching Cremora Royale and
ReaLemonade during its fiscal year ended July 3, 1999.

     In September 2001, Eagle and Holdings completed the sale to Mott's Inc. and
Cadbury Beverages Delaware, Inc. of Eagle's business of developing,
manufacturing, marketing, distributing and selling shelf-stable juice sold under
the ReaLemon and ReaLime brand names (the "ReaLemon product lines") and related
assets for $128.4 million (the "ReaLemon Sale").

     In July 2001, the Company began implementing a plan ("the Plan") to
reorganize the management and operations of the Company as a result of the then
pending ReaLemon Sale, which reduced the sales and operating base of the
Company. The Plan included (1) the resignation of John O'C. Nugent as Chief
Executive Officer and President of the Company; (2) the appointment of Craig A.
Steinke as Chief Executive Officer and President in addition to serving as the
Chief Financial Officer of the Company; (3) the resignations of other executive
officers of the Company; and (4) the closure of the corporate office in
Tarrytown, New York and the research and development office in Columbus, Ohio.

     As part of the Plan, the number of corporate and administrative employees
of the Company was reduced by 64% during the two quarters ended December 29,
2001, with the majority of the reductions occurring in the quarter ended
September 29, 2001. In addition, the Company's overall administrative cost
structure was reduced by renegotiation of annual service contracts with third
party vendors, elimination of office leases and related costs and reductions in
travel, entertainment and other administrative expenses.

                                       2

<PAGE>

Recent Developments

     The Company plans to close its powdered non-dairy creamer plant located in
Chester, South Carolina in late November 2002. Future production will be sourced
from a third party manufacturer under a long-term co-pack agreement. The
third-party manufacturer has significantly larger powdered non-dairy creamer
plants and has agreed to produce the Company's powdered non-dairy creamer
requirements at a lower cost than the Company's current cost of production.
Closure costs including benefits and severance for the 79 employees are being
assessed and will be recorded in the Company's fiscal year ending June 28, 2003
("fiscal year 2003"), when the measurement date has occurred.

Products and Markets

     The Company manufactures and markets a portfolio of leading dry-grocery
food products with widely recognized and established brands, including Eagle
Brand sweetened condensed milk and Cremora powdered non-dairy creamer. The
Company's primary distribution channel is the retail grocery channel, but also
has presence within mass merchandisers, club stores, foodservice, the U.S.
military, industrial and private label businesses. The Company's U.S. food
business is complemented by a strong presence in Canada and Puerto Rico.

     The Company sells its products in the U.S. to the retail grocery trade
through 11 independent food brokers and a national brokerage company with 64
brokerage houses. The Company also sells its products to non-grocery channels
and to international markets. These sales are generated through brokers,
distributors, or directly, depending on the size and needs of the customers.

     The Company's marketing programs consist of various combinations of media
advertising, consumer promotions, trade promotion and co-promotion of certain
products such as ingredients in recipes. Certain products are also promoted with
direct consumer rebate programs. The Company's customers may also be offered
pre-season stocking and in-store promotional allowances. Since many of the
Company's brands are purchased primarily as ingredients for recipes, the Company
frequently promotes recipes incorporating its brands. The Company utilizes
Internet sites to promote recipes containing the Company's products. The Company
also promotes its seasonal brands, None Such mincemeat pie filling and Borden
eggnog, with recipe promotions during the holiday season.

     The Company manufactured and marketed ReaLemon lemon juice from concentrate
and ReaLime lime juice from concentrate until the sale of the ReaLemon business
to Mott's Inc. in September 2001. The net sales percentages provided below
exclude the results from the ReaLemon product lines for the periods provided.

     Sweetened condensed milk. The Company manufactures and markets Eagle Brand
and additional sweetened condensed milk products. In addition to classic Eagle
Brand sweetened condensed milk, the Company's other branded sweetened condensed
milk products include Eagle Brand low fat and fat free products, Meadow Gold,
and Star and Magnolia Hispanic brands. The Company's Eagle brand products carry
the Borden and Elsie trademarks. The Company also manufactures sweetened
condensed milk under several labels for a customer who distributes and markets
these products to certain ethnic markets. In its fifty-two week periods ended
June 29, 2002 ("fiscal year 2002"), June 30, 2001 ("fiscal year 2001"), and July
1, 2000 ("fiscal year 2000"), respectively, the Company's sweetened condensed
milk products accounted for 71%, 69% and 69% of the Company's net sales.

     Retail channels, including grocery and mass merchandisers, are the primary
outlet for the Company's sweetened condensed milk products and accounted for
approximately 81%, 82% and 84% of the Company's sweetened condensed milk net
sales for fiscal year 2002, fiscal year 2001 and fiscal year 2000, respectively.
The balance of the Company's sweetened condensed milk net sales is made through
other channels, including foodservice customers, industrial customers and export
markets.

     Powdered non-dairy creamers. The Company manufactures and markets powdered
non-dairy creamer under the Cremora and Cremora Royale brand names and also
manufactures powdered non-dairy creamer for private label and industrial
customers. In fiscal year 2002, fiscal year 2001 and fiscal year 2000, the
Company's powdered non-dairy creamer products accounted for 21%, 22% and 22% of
the Company's net sales, respectively.

                                       3

<PAGE>

     Branded Cremora and Cremora Royale are sold primarily through retail
channels and accounted for 80%, 73% and 71% of the Company's fiscal year 2002,
fiscal year 2001, and fiscal year 2000 powdered non-dairy creamer net sales,
respectively. Private label net sales accounted for 16%, 9% and 16% of the
Company's powdered non-dairy creamer net sales for fiscal year 2002, fiscal year
2001 and fiscal year 2000, respectively, with the balance primarily attributable
to export net sales and to bulk net sales to industrial customers (who use
non-dairy creamer in producing other food products).

     Niche Brand Products. The Company's niche brand products include eggnog,
mincemeat pie filling and instant coffee.

     Borden eggnog is manufactured by a third party through a seasonal purchase
order agreement. Borden eggnog is the only shelf-stable eggnog available in the
market and competes with refrigerated eggnog. Borden eggnog is distributed
through the retail grocery channel. Eggnog is generally consumed during the
November and December holiday season as a beverage or mixed with liquor as a
cocktail.

     The Company manufactures and markets two flavors of None Such mincemeat pie
filling: Regular and Brandy & Rum. None Such mincemeat is used in pies, cookies
and pastries, and is consumed primarily during the November and December holiday
season. None Such is distributed through the retail grocery channel.

     Kava is marketed by the Company and manufactured by a third party
independent manufacturer pursuant to a co-packing agreement. Kava is a unique
instant coffee, differentiated as the only coffee that is "90%
acid-neutralized." Management believes that Kava's customer loyalty is
significantly higher than that of most other instant coffee brands, and is well
positioned to remain high given the brand's unique position as an
acid-neutralized product.

Industry Overview

     The U.S. food industry is characterized by relatively stable annual growth
based on modest price and population increases. Over the last ten years,
management believes the industry has experienced consolidation as competitors
have shed non-core business lines and made strategic acquisitions to strengthen
category positions, generate economies of scale in distribution, production and
raw material sourcing and create leverage relative to the retail grocery trade
through better service and broader market presence.

     Grocery retailers have also utilized mergers and acquisitions to
consolidate within their industry. Growth in the mass merchandiser channel has
outpaced growth in the retail grocery channel, and mass merchandisers have
consequently increased their share of food sales relative to the retail grocery
and drug store channels. Furthermore, the convenience store channel has
maintained a constant presence within the total grocery industry. To expand
their potential markets, management believes that food companies are broadening
their distribution channels to include greater focus on mass merchandisers and
other alternative distribution channels. In the opinion of management, another
growth opportunity in the U.S. for branded food companies is the foodservice
channel, which supplies restaurants, hospitals, schools and other institutions.

Seasonality

     The Company's net sales, operating income and cash flows are affected by a
seasonal bias toward the second quarter of the Company's fiscal year due to
increased sales during the holiday season. Three of the Company's five major
brands (Eagle Brand sweetened condensed milk, Borden eggnog and None Such
mincemeat pie filling) are consumed primarily during the November and December
holiday season. In recent years, approximately 49% of the Company's net sales,
excluding the ReaLemon and ReaLime brands' net sales, have occurred in the
second quarter of the fiscal year. As a result of this seasonality, the
Company's working capital needs have historically increased throughout the year,
normally peaking in the September/October period, which requires the Company to
draw additional amounts on its Revolving Credit Facility in that period.

                                       4

<PAGE>

Raw Materials and Suppliers

     The primary raw materials used in the Company's operations include milk,
sugar, vegetable oil, corn syrup, and packaging materials. The Company purchases
many of its raw materials from numerous independent suppliers. Milk is purchased
through one cooperative at each of its manufacturing plants. Kava instant coffee
and Borden eggnog are obtained in final product form from third party
manufacturers, traditionally referred to as co-packers.

Competition

     The food industry is highly competitive. Numerous brands and products
compete for shelf-space and sales, with competition based primarily on price and
quality. The Company competes with a significant number of competitors of
varying sizes, including divisions or subsidiaries of larger companies. The most
significant branded competition encountered by the Company is Nestle's
Coffee-mate, which competes with Cremora and Cremora Royale. However, most of
the competition encountered by the Company is from private label brands. A
number of these branded and private label competitors have broader product lines
as well as substantially greater financial and other resources available to them
compared to the Company.

Trademarks, Copyrights and Patents

     The Company owns a number of trademarks, licenses and patents. The
Company's principal trademarks include Eagle Brand, Cremora, and None Such which
the Company has registered in the United States and various foreign countries.
The Company holds a perpetual, exclusive and royalty-free license to use the
Borden and Elsie trademarks on certain products and their extensions. The Borden
and Elsie trademarks are currently used on (i) the entire line of Eagle Brand
products, including condensed or evaporated milk, (ii) shelf-stable eggnog, and
(iii) Cremora non-dairy creamer. The Borden trademark is also currently used on
Magnolia sweetened condensed milk. The Company also holds a perpetual, exclusive
and royalty-free license to use the Borden trademark on None Such mincemeat,
Magnolia condensed or evaporated milk, and Kava acid-neutralized coffee. In
addition, as assignee from BFC, the Company holds an exclusive and royalty-free
license from Southern Foods Group, L.P. to use the Meadow Gold trademark on
sweetened condensed milk in the United States for a five year term, which is
renewable automatically for subsequent five year terms and terminable at the
option of the Company upon one year's notice and, under certain limited
circumstances, by the licensor. Such brand names are considered to be of
fundamental importance to the business of the Company due to their brand
identification and ability to maintain brand loyalty. A third party owns the
Cremora trademark in Africa and the Middle East. The Company also owns various
patents and copyrights associated with the business.

Employees

     As of June 29, 2002, the Company employed approximately 247 people,
including 160 hourly and 87 salaried employees. The Wellsboro, Pennsylvania and
Starkville, Mississippi plants are the only unionized Company plants. As of June
29, 2002, union employees represented approximately 38% of the Company's total
work force. At Starkville, the Teamsters Local 984 has a contract expiring on
January 31, 2005 and at Wellsboro, the United Food and Commercial Workers
Union-Local 174 has a contract expiring on February 5, 2005. Management believes
that relations with the Company's employees and unions are generally good.

     The Company employed approximately 79 people as of June 29, 2002 at the
Chester, South Carolina powdered non-dairy creamer manufacturing plant. During
the second quarter of fiscal year 2003, the Company intends to enter into a
long-term contractual agreement with a third-party powdered non-dairy creamer
manufacturer to produce the Company's powdered non-dairy creamer product line
and to close the Chester, South Carolina plant in late November 2002. All of the
employees employed at the plant will be terminated.

Certain Legal and Regulatory Matters

     Public Health. The Company is subject to the Federal Food, Drug and
Cosmetic Act and regulations promulgated thereunder by the Food and Drug
Administration. This comprehensive regulatory program governs, among other
things, the manufacturing, composition and ingredients, labeling, packaging and
safety of food. In addition, the Nutrition Labeling and Education Act of 1990,
as amended, prescribes the format and content of

                                       5

<PAGE>

certain information required to appear on the labels of food products. The
Company is also subject to regulation by certain other governmental agencies.

     The operations and the products of the Company are also subject to state
and local regulation through such measures as licensing of plants, enforcement
by state health agencies of various state standards and inspection of
facilities. Enforcement actions for violations of federal, state and local
regulations may include seizure and condemnation of volatile products, cease and
desist orders, injunctions and/or monetary penalties. Management believes that
the Company's facilities and practices are in compliance with applicable
government regulations in all material respects.

     The Company is subject to certain health and safety regulations, including
regulations issued pursuant to the Occupational Safety and Health Act. These
regulations require the Company to comply with certain manufacturing, health and
safety standards to protect its employees from accidents.

     Environmental. The Company believes that it is substantially in compliance
with all applicable laws and regulations for the protection of the environment
and the health and safety of its employees. The Company's operations and
properties are subject to a wide variety of increasingly complex and stringent
federal, state and local environmental regulations governing the storage,
handling, generation, treatment, emission, and disposal of certain substances
and wastes, the remediation of contaminated soil and groundwater, and the health
and safety of employees. As such, the nature of the Company's operations exposes
it to the risk of claims with respect to environmental matters. Based upon its
experience to date, the Company believes that the future cost of compliance with
existing environmental laws and regulations and liability for known
environmental claims will not have a material adverse effect on the Company's
business or financial position. In connection with the Acquisition, the Company
assumed all past and future environmental liabilities related to the acquired
business. The Company will be indemnified, however, by BFC and BFC Investments
with respect to certain environmental liabilities occurring prior to the
Acquisition Closing. This indemnification will expire January 2003 and is
limited in amount. There can be no assurance that material environmental
liabilities will not be incurred after the indemnification period or in excess
of the indemnified amount or that the Company will be able to pursue
successfully any indemnification claims against BFC. In addition, future events,
such as changes in existing laws and regulations or their interpretation, and
more vigorous enforcement policies of regulatory agencies, may give rise to
additional expenditures or liabilities that could be material.

Item 2:   Properties

     Except for Kava instant coffee and sweetened condensed milk in Canada,
which are produced under co-pack agreements, and Borden eggnog, which the
Company obtains under a seasonal purchase order, the Company produces all of its
products in three Company-owned manufacturing facilities, as described in the
following table. Management believes that the Company's manufacturing plants
have sufficient capacity to accommodate the Company's needs for the foreseeable
future.

    Location       Square Feet               Products Manufactured
    --------       -----------               ---------------------

Wellsboro, PA ....    119,000    Sweetened condensed milk, mincemeat pie filling
Starkville, MS ...     49,000    Sweetened condensed milk
Chester, SC ......     77,300    Powdered non-dairy creamer

     In addition to the owned manufacturing facilities described above, as of
June 29, 2002, the Company leased 20,000 square feet of office space in
Columbus, Ohio and uses public warehouse space in numerous locations in variable
amounts as needed. In addition, the Company leased 13,605 square feet in
Tarrytown, New York. Under the reorganization plan, the office was closed. The
Tarrytown, New York lease will expire December 2002.

Item 3:   Legal Proceedings

     The Company is subject to litigation in the ordinary course of its
business. The Company is not a party to any lawsuit or proceeding which, in the
opinion of management, is likely to have a material adverse effect on the
Company's financial condition or results of operations.

                                       6

<PAGE>

Item 4:   Submission of Matters to a Vote of the Security Holders

     Not applicable.

PART II

Item 5:   Market for Registrants' Common Equity and Related Stockholder Matters

     There is no established public trading market for the common stock of
Holdings or Eagle. As of September 27, 2002, Holdings was the only holder of
Eagle common stock. As of September 27, 2002, there were approximately 22
holders of Holdings' common stock.

     No cash dividends on common stock have been declared by either registrant
since their respective incorporations. Holdings and Eagle are restricted from
declaring dividends on their common stock by the Senior Credit Facilities. See
Note 7 of the Notes to the Financial Statements of Holdings and Eagle included
elsewhere in this Annual Report on Form 10-K.

                                       7

<PAGE>

Item 6:   Selected Financial Data

     The selected financial data set forth below (dollars in thousands) as of
June 29, 2002 and June 30, 2001, and the fifty-two week periods ended June 29,
2002, June 30, 2001 and July 1, 2000 are derived from audited financial
statements included elsewhere herein. The selected financial data set forth
below as of June 27, 1998, July 3, 1999 and July 1, 2000 and the one hundred
fifty-five day period ended June 27, 1998 ("fiscal year 1998") and the
fifty-three week period ended July 3, 1999 ("fiscal year 1999") are derived from
the financial statements not included elsewhere herein. The results of
operations were affected by certain reclassifications made to comply with the
Emerging Issues Task Force ("EITF") No. 00-14 and No. 00-25, as described in
"Item 7: Management's Discussion and Analysis of Financial Condition and Results
of Operations." These reclassifications had no impact on operating income, net
loss or cash flows.

<TABLE>
<CAPTION>
                                   One Hundred        Fifty-Three        Fifty-Two          Fifty-Two          Fifty-Two
                                  Fifty-Five Day         Week              Week               Week               Week
                                  Period Ended        Period Ended     Period Ended        Period Ended       Period Ended
                                    June 27,            July 3,        July 1, 2000           June 30,           June 29,
                                   1998 /(a)/         1999 /(a)/          /(a)/             2001 /(a)/         2002 /(a)/
                                  --------------     ------------     --------------     --------------     -------------
<S>                               <C>                  <C>               <C>                <C>                <C>
Statement of Operations
Data:/(b)/
Net sales .....................  $   62,046         $  205,668     $      186,165     $       185,570    $      143,849
Cost of goods sold ............      38,376 /(c)/      111,026            111,140             102,650           101,273
                                  --------------     ------------     --------------     --------------     -------------
Gross profit ..................      23,670             94,642             75,025              82,920            42,576
Distribution expenses .........       4,484             12,947             13,098              12,851             9,004
Marketing expense .............       8,977             42,382             27,071              20,284            12,335
General & administrative
expense .......................       3,691             12,406             13,580              13,363             8,824
Amortization of intangibles ...      11,855             21,249             11,156              11,157             8,052
Gain on sale of product
lines, net of reorganization
  charges .....................          --                 --                 --                  --           (18,722) /(d)/
Other operating income ........          --                 --             (1,212)                 --                --
In-process research and
   development write-off ......      23,900                 --                 --                  --                --
                                  --------------     ------------     --------------     --------------     -------------
Operating income (loss) .......     (29,237)            5,658              11,332              25,265            23,083
Net loss ......................  $  (26,456)        $ (14,485)     $      (11,610)    $        (5,434)   $      (31,709) /(f)/
Other Financial Data:
Depreciation and
 amortization. /(e)/ ..........  $   13,755         $   26,497     $       20,553     $        19,756    $       28,427
Capital expenditures ..........       2,578             13,744              7,564               3,568               414

<CAPTION>
                                     As of             As of              As of             As of              As of
                                    June 27,           July 3,           July 1,           June 30,           June 29.
                                    1998 /(a)/       1999 /(a)/         2000 /(a)/        2001 /(a)/         2002 /(a)/
                                  ------------      ------------      --------------     ------------       ------------
<S>                               <C>              <C>               <C>                <C>                <C>
Balance Sheet Data:
Inventories ..................   $   32,001         $   41,757     $       33,780     $        36,929    $       35,491
Net property and equipment ...       24,791             33,798             33,775              31,014             8,670
Total assets .................      399,240            417,286            396,670             387,546           224,424
Total debt, including current
    maturities ...............      318,250            338,500            327,500             333,500           203,788
Stockholder's equity .........       55,994             41,795             39,972              34,563             2,709
</TABLE>

/(a)/ The statements of operations and the balance sheets set forth above
      reflects the financial position and results of operations of Eagle. With
      the exception of stockholder's equity, Series A Non-Voting Preferred Stock
      ("Series A Preferred Stock") and the Series B Non-Voting Preferred Stock
      (the "Series B Preferred Stock," together with Series A Preferred Stock,
      "Redeemable Preferred Stock"), this information is substantially
      consistent with that of Holdings. The following represents stockholders'
      deficit and Redeemable Preferred Stock of Holdings:

<TABLE>
<CAPTION>
                                   As of June 27,  As of July 3,  As of July 1,  As of June 30,    As of June 29,
                                        1998           1999            2000          2001              2002
                                  --------------- -------------- -------------- ---------------  ----------------
<S>                                <C>             <C>            <C>             <C>              <C>
   Stockholders' deficit ........   $(29,159)       $(52,235)      $(74,314)       $(91,362)        $(135,802)
   Redeemable preferred stock ...     84,327          93,302        113,555         125,163           137,129
</TABLE>

(b)   The adoption of EITF No. 00-14 and No. 00-25, effective first quarter of
      2002, resulted in the following reclassifications to fiscal year 1998,
      fiscal year 1999, fiscal year 2000 and fiscal year 2001: net sales were
      reduced by $6.1 million, $34.1 million, $38.6 million and $35.1 million,
      respectively; distribution expense was reduced by $0.1 million, $0.5
      million, $1.0 million and $1.0 million, respectively; and marketing
      expense was reduced by $6.1 million, $33.6 million, $37.6 million and
      $34.1 million, respectively. These reclassifications had no impact on
      operating income, net loss and cash flows.

(c)   Includes a charge of $5.2 million of additional cost of sales related to
      the expensing of inventories stated at lower of cost or market.

(d)   Represents the $18.7 million gain on the ReaLemon Sale, net of
      reorganization charges of $4.8 million

(e)   Includes the amortization of debt issuance cost of $371, $920, $1,823,
      $2,322 and $2,878 for the one hundred fifty-five day period ended June 27,
      1998, the fifty-three week period ended July 3, 1999, and the fifty-two
      week periods ended July 1, 2000, June 30, 2001 and June 29, 2002,
      respectively.

(f)   In fiscal year 2002, the Company recorded a valuation allowance for its
      deferred tax assets and net operating loss carryforwards of $33.2 million.

                                       8

<PAGE>

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

General

     Set forth below is a discussion of the consolidated financial condition and
consolidated results of operations for the fifty-two week periods ended June 29,
2002, June 30, 2001 and July 1, 2000 of the Company. With the exception of
Stockholder's Equity, Redeemable Preferred Stock and an intercompany payable of
$1.4 million, the financial condition and results of operations of Eagle are
substantially consistent with that of Holdings. The following discussion should
be read in conjunction with the financial statements of the Company and the
notes thereto included elsewhere in this Annual Report on Form 10-K. The
following table sets forth the results of operations as a percentage of net
sales for the fifty-two week periods ended June 29, 2002, June 30, 2001 and July
1, 2000.

     The results of operations were affected by certain reclassifications made
to comply with the new accounting standards, EITF Issue No. 00-14, "Accounting
for Certain Sales Incentives" and EITF Issue No. 00-25, "Accounting for
Consideration from a Vendor to a Retailer in Connection with the Purchase or
Promotion of the Vendor's Products". Under these Issues, the EITF concluded that
certain consumer and trade sales promotion expenses, such as coupon redemption
costs, cooperative advertising programs, new product introduction fees, feature
price discounts and in-store display incentives should be classified as a
reduction of sales rather than as marketing expense. The adoption of these
Issues, effective first quarter of 2002, resulted in the following
reclassifications to fiscal year 2001 and fiscal year 2000: net sales were
reduced by $35.1 million and $38.6 million, respectively; distribution expense
was reduced by $1.0 million and $1.0 million, respectively; and marketing
expense was reduced by $34.1 million and $37.6 million, respectively. These
reclassifications had no impact on operating income, net loss and cash flows.

<TABLE>
<CAPTION>
                                                                           Results of Operations
                                                            Fifty-Two Week     Fifty-Two Week     Fifty-Two Week
                                                             Period Ended       Period Ended       Period Ended
                                                             June 29, 2002      June 30, 2001      July 1, 2000
                                                             -------------      -------------      ------------
<S>                                                                  <C>                <C>                <C>
  Net sales ...........................................              100.0 %            100.0 %            100.0 %
  Cost of goods sold ..................................               62.7               55.3               59.7
  Cost of goods sold, accelerated depreciation ........                7.7                 --                 --
                                                            ---------------    ---------------    ---------------
  Total cost of goods sold ............................               70.4               55.3               59.7
  Gross margin ........................................               29.6               44.7               40.3
  Distribution expense ................................                6.3                6.9                7.0
  Marketing expense ...................................                8.6               10.9               14.5
  General & administrative expense ....................                6.1                7.2                7.3
  Amortization of intangibles .........................                5.6                6.0                6.0
  Gain on sale of product lines .......................              (13.0)                --                 --
  Other operating income ..............................                 --                 --               (0.7)
                                                            ---------------    ---------------    ---------------
  Operating income ....................................               16.0 %             13.7 %              6.2 %
                                                            ===============    ===============    ===============
</TABLE>

     In July 2001, the Company implemented the Plan, which reorganized the
management and operations of the Company. This was executed as a result of the
ReaLemon Sale that had reduced the sales and operating base of the Company.

     On September 19, 2001, the Company sold to Motts Inc. and Cadbury Beverages
Delaware, Inc. the Company's business of developing, manufacturing, marketing,
distributing and selling shelf-stable juice sold under the ReaLemon and ReaLime
brand names and related assets including inventory and the manufacturing
facility in Waterloo, New York. In fiscal year 1999, the Company had entered the
lemonade liquid concentrate market with the launch of ReaLemonade. While an
intensive marketing program drove ReaLemonade to strong performance in its
launch year relative to other shelf-stable juice concentrates, sales in the
second summer season did not meet expectations. The Company determined that it
could not achieve the necessary return on the ReaLemonade product line and,
therefore, discontinued sales in the retail channel after the calendar year 2000
summer selling season.

                                       9

<PAGE>

     The following table sets forth the unaudited consolidated results of
operations of the Company excluding (i) the results of operations of the
ReaLemon product lines for fiscal year 2002, fiscal year 2001, and fiscal year
2000 and (ii) the results of operations of the ReaLemonade product line for
fiscal year 2001 and fiscal year 2000. The information is intended to provide
comparable results for the continuing product lines for the periods presented in
a manner used by the Company to assist in making internal operating decisions.
This data is not intended to represent and should not be considered more
meaningful than, or an alternative to, operating income, cash flows from
operating activities or other measures of performance in accordance with
generally accepted accounting principles.

<TABLE>
<CAPTION>
                           Results of Operations Excluding the ReaLemon Product Lines and
                                            the ReaLemonade Product Line
     -----------------------------------------------------------------------------------------------------------
                                                    Fifty-Two Week        Fifty-Two Week        Fifty-Two Week
                                                     Period Ended          Period Ended          Period Ended
                                                     June 29, 2002        June 30, 2001          July 1, 2000
                                                     -------------        -------------          ------------
<S>                                                          <C>                   <C>                   <C>
     Net sales ..................................            100.0 %               100.0 %               100.0 %
     Cost of goods sold .........................             64.2                  60.2                  58.6
     Cost of goods sold, accelerated
       depreciation .............................              8.4                    --                    --
                                                    ----------------     -----------------     -----------------
     Gross profit ...............................             27.4                  39.8                  41.4
     Distribution expense .......................              6.0                   6.3                   5.7
     Marketing expense ..........................              8.7                  11.0                  14.1
     General & administrative expense ...........              6.7                  10.4                  10.2
     Amortization of intangibles ................              5.4                   5.6                   5.5
     Other operating income .....................               --                    --                  (0.5)
                                                    ---------------      ----------------      ----------------
     Operating income ...........................              0.6 %                 6.5 %                 6.4 %
                                                    ===============      ================      ================
</TABLE>

Results of Operations

     Fifty-Two Week Periods Ended June 29, 2002 and June 30, 2001.

     Net Sales. The Company's net sales for fiscal year 2002 were $143.8 million
as compared to $185.6 million for fiscal year 2001, a decrease of $41.8 million,
or 22.5%. The table below sets forth the Company's net sales data for each of
the Company's product lines for fiscal year 2002 and fiscal year 2001 (dollars
in millions):

<TABLE>
<CAPTION>
                                                                       Net Sales   Percentage       Net Sales   Percentage
                                                                      Fiscal Year      of          Fiscal Year      of
        Product Lines               Company's Principal Brands           2002       Net Sales          2001     Net Sales
----------------------------   ------------------------------------   ------------ ------------    ------------ ------------
<S>                            <C>                                  <C>            <C>            <C>           <C>
Sweetened condensed milk       Eagle Brand, Meadow Gold,
                               Magnolia, Star and other             $        93.5         65.0%  $        89.7        48.3 %
Lemon and lime juices          ReaLemon and ReaLime                          11.6          8.1            55.5        29.9
Lemonade liquid concentrate    ReaLemonade                                     --           --             0.2         0.1
Non-dairy creamer              Cremora, Cremora Royale and other             27.5         19.1            28.9        15.6
Niche brand products           Borden, None Such, Kava                       11.2          7.8            11.3         6.1
                                                                      ------------ ------------    ------------ -----------
     Total                                                          $       143.8        100.0%  $       185.6       100.0  %
                                                                      ============ ============    ============ ===========
</TABLE>

     The decrease in net sales was primarily attributable to the sale of the
ReaLemon product lines in September 2001, resulting in a decrease of $43.9
million in lemon and lime juice net sales. The decrease in the net sales of the
non-dairy creamer product line was the result of increased marketing initiatives
by the Company's competitors. The increase in sweetened condensed milk product
net sales of $3.8 million was primarily due to higher sales volumes for
sweetened condensed milk private label and Hispanic brands.

     Cost of Goods Sold. Cost of goods sold was $101.3 million for fiscal year
2002 as compared to $102.7 million for fiscal year 2001, a decrease of $1.4
million, or 1.4%. Excluding the cost of goods sold for the ReaLemon product
lines for the reported periods, cost of goods sold was $96.1 million for fiscal
year 2002 as compared to $78.1 million for fiscal year 2001, an increase of $18
million, or 23%. In fiscal year 2002, the Company recorded $11.1 million of
accelerated depreciation related to long-lived assets that will be taken out of
service before the end of their normal service period due

                                       10

<PAGE>

to the Plan. Expressed as a percentage of net sales, cost of goods sold
excluding accelerated depreciation for fiscal year 2002 and cost of goods sold
for the ReaLemon product lines for fiscal year 2002 and fiscal year 2001
increased to 64.3% from 60.2% for 2001. The increase in the percentage was due
to higher raw material costs, principally milk and sugar used in the production
of sweetened condensed milk, and an increase in the sales of lower margin
industrial and private label non-dairy creamer products. In early fiscal year
2002, milk prices rose to levels significantly above historical averages and
negatively affected costs of goods sold.

     Distribution Expense. Distribution expense was $9.0 million for fiscal year
2002 as compared to $12.9 million for fiscal year 2001, a decrease of $3.9
million, or 30.2%. Excluding the distribution expense for the ReaLemon product
lines for the reported periods, distribution expense was $7.9 million for fiscal
year 2002 and $8.2 million for fiscal year 2001, a decrease of $0.3, or 3.7%.
Expressed as a percentage of net sales, excluding the distribution expense for
the ReaLemon product lines for the reported periods, distribution expense was
6.0% and 6.3 % for fiscal year 2002 and fiscal year 2001, respectively. The
decrease of 0.3% was primarily due to a reduction in administrative support
staff in fiscal year 2002 pursuant to the Plan.

     Marketing Expense. Marketing expense was $12.3 million for fiscal year 2002
as compared to $20.3 million for fiscal year 2001, a decrease of $8.0 million,
or 39.4%. Excluding the marketing expense of the ReaLemon product lines for the
reported periods, marketing expense was $11.5 million for fiscal year 2002
compared to $14.2 million for fiscal year 2001, a decrease of $2.7 million, or
19.0%. The decrease was primarily due to the reduction in marketing
administrative costs related to the Plan. Expressed as a percentage of net
sales, excluding the marketing expense for the ReaLemon product lines for the
reported periods, marketing expense for fiscal year 2002 decreased to 8.7% from
10.9% for fiscal year 2001.

     General & Administrative ("G&A") Expense. G&A expense was $8.8 million for
fiscal year 2002 as compared to $13.4 million for fiscal year 2001, a decrease
of $4.6 million, or 34.3%. Expressed as a percentage of net sales, G&A expense
was 6.1% and 7.2% for fiscal year 2002 and fiscal year 2001, respectively. The
decrease in G&A expense was primarily due to the execution of the Plan as noted
above.

     Amortization of Intangibles. Amortization of intangibles was $8.0 million
for fiscal year 2002 and $11.2 for fiscal year 2001. The decrease is due to the
write-off of the net book value of certain tradenames and other intangible
assets sold pursuant to the ReaLemon Sale.

     Gain on Sales of Product Lines. In fiscal year 2002, the Company recognized
an $18.7 million gain on the ReaLemon Sale, net of reorganization charges of
$4.8 million.

     Operating Income. Operating income was $23.1 million for fiscal year 2002
as compared to $25.3 million for fiscal year 2001, a decrease of $2.2 million,
or 8.7%. Together with other factors discussed above, the decrease in operating
income was primarily due to the charge of accelerated depreciation, lost
ReaLemon operating income opportunity after the ReaLemon Sale, offset by the
gain on the ReaLemon Sale.

     Interest Expense. Net interest expense was $20.7 million for fiscal year
2002 as compared to net interest expense of $33.2 million for fiscal year 2001,
a decrease of $12.5 million. The decrease was primarily due to lower average
interest rates and lower average debt balances during 2002. The average debt
balance was lower as proceeds from the ReaLemon Sale were used to repay
indebtedness under the Term Loan Facility for fiscal year 2002 compared to
fiscal year 2001.

     Income Taxes. The Company recorded an income tax expense of $34.1 million
for fiscal year 2002 as compared to a $2.9 million income tax benefit for fiscal
year 2001. The Company established a tax valuation allowance for $33.2 million
for the Company's net deferred tax assets and net operating loss caryforwards.
The valuation allowance was calculated in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting for
Income Taxes" ("SFAS No. 109") which requires the recording of a valuation
allowance when it is probable that any or all of the deferred tax assets will
not be realized. In absence of favorable factors, application of SFAS No. 109
requires a 100% valuation allowance for any net deferred tax assets when a
company has cumulative financial accounting losses, excluding unusual items,
over several years. The Company has experienced pretax losses over the past
three years, excluding the gain in fiscal year 2002 on the ReaLemon Sale.
Management continues to see lower industry market values in the current economic
environment

                                       11

<PAGE>

which could affect the tax planning strategies available to the Company. As a
result of these factors, the Company recorded a full valuation allowance under
the provisions of SFAS No. 109. The Company intends to maintain a full valuation
allowance for its net deferred tax assets and net operating loss carryforwards
until sufficient positive evidence exists to support reversal of the reserve.
Until such time, except for minor state and local tax provisions, the Company
will have no reported tax provision, net of valuation allowance adjustments.

     In determining the amount of the deferred tax asset valuation allowance,
the Company estimated the current tax deductibility of certain costs and
charges, and evaluated the fair market value of the company in comparison to the
tax value. These estimates are subject to change. Any differences between these
current estimates and actual values determined at a future date will result in a
change to the valuation allowance and will be recorded at that date.

     Excluding the valuation allowance, the increase was primarily due to the
gain on the ReaLemon Sale.

     Fifty-Two Week Periods Ended June 30, 2001 and July 1, 2000.

     Net Sales. The Company's net sales for fiscal year 2001 were $185.6 million
as compared to $186.2 million for fiscal year 2000, a decrease of $0.6 million,
or 0.3%. The table below sets forth the Company's net sales data for each of the
Company's product lines for fiscal year 2001 and fiscal year 2000 (dollars in
millions):

<TABLE>
<CAPTION>
                                                                      Net Sales                    Net Sales
                                                                       Fiscal     Percentage        Fiscal    Percentage
                                                                        Year          of             Year         of
        Product Lines               Company's Principal Brands          2001      Net Sales          2000      Net Sales
---------------------------    ---------------------------------     ----------- -------------    ----------- --------------
<S>                            <C>                                 <C>           <C>             <C>          <C>
Sweetened condensed milk       Eagle Brand, Meadow Gold,
                               Magnolia, Star and other            $       89.7          48.3%  $       89.9         48.3%
Lemon and lime juices          ReaLemon and ReaLime                        55.5          29.9           55.4         29.8
Lemonade liquid concentrate    ReaLemonade                                  0.2           0.1          (2.0)        (1.1)
Non-dairy creamer              Cremora, Cremora Royale and other           28.9          15.6           31.0         16.6
Niche brand products           Borden, None Such, Kava                     11.3           6.1           11.9          6.4
                                                                     ----------- -------------    ----------- ------------
     Total                                                         $      185.6         100.0%  $      186.2        100.0%
                                                                     =========== =============    =========== ============
</TABLE>

     The decrease in net sales was due to a $2.1 million decrease in non-dairy
creamer sales primarily from a sales volume decline to certain private label
customers. This decrease is offset by a reduction of ReaLemonade product returns
in fiscal year 2000.

     Cost of Goods Sold. Cost of goods sold was $102.7 million for fiscal year
2001 as compared to $111.1 million for fiscal year 2000, a decrease of $8.4
million, or 7.6%. Expressed as a percentage of net sales, cost of goods sold for
fiscal year 2001 decreased to 55.3% from 59.7% for fiscal year 2000. Cost of
goods sold, as a percentage of net sales, was higher in fiscal year 2000
primarily due to a charge in fiscal year 2000 to reserve for obsolescence of
ReaLemonade inventories related to inventory expiration. Excluding the results
of retail ReaLemonade for fiscal year 2001 and fiscal year 2000, cost of goods
sold was $102.5 million for fiscal year 2001 as compared to $100.2 million for
fiscal year 2000, an increase of $2.3 million, or 2.2%. Expressed as a
percentage of net sales, excluding the results of retail ReaLemonade for both
periods, cost of goods sold for fiscal year 2001 increased to 55.2% from 53.2%
for fiscal year 2000 due to higher raw material costs, principally lemon
concentrate used in production of lemon juice products.

     Distribution Expense. Distribution expense was $12.9 million for fiscal
year 2001 as compared to $13.1 million for fiscal year 2000, a decrease of $0.2
million, or 1.5%. Expressed as a percentage of net sales, distribution expense
was 7.0% for fiscal year 2001 and for fiscal year 2000. The decrease of $0.2
million was partially due to reduced warehousing costs as levels of inventory
were lower between years, primarily from reduced retail ReaLemonade inventory.

     Marketing Expense. Marketing expense was $20.3 million for fiscal year 2001
as compared to $27.1 million for fiscal year 2000, a decrease of $6.8 million,
or 25.1%. Expressed as a percentage of net sales, marketing expense

                                       12

<PAGE>

for fiscal year 2001 decreased to 10.9% from 14.6% for fiscal year 2000. The
decrease was primarily driven by $9.8 million decrease in advertising, trade,
and consumer support from the discontinued retail ReaLemonade product line.

     General & Administrative Expense. G&A expense was $13.4 million for fiscal
year 2001 as compared to $13.6 million for fiscal year 2000, a decrease of $0.2
million, or 1.5%. Expressed as a percentage of net sales, G&A expense was 7.2%
and 7.3% for fiscal year 2001 and fiscal year 2000, respectively.

     Other Operating Income. Other operating income for fiscal year 2000 was
$1.2 million, of which $0.5 million related to a product diversion lawsuit
settlement against a wholesale customer and $0.6 million for settlement from a
supplier for defective packaging materials. There was no other operating income
for fiscal year 2001.

     Amortization of Intangibles. Amortization of intangibles was $11.2 million
for both fiscal year 2001 and fiscal year 2000.

     Operating Income. Operating income was $25.3 million for fiscal year 2001
as compared to $11.3 million for fiscal year 2000, an increase of $14.0 million,
or 123.9%. Expressed as a percentage of net sales, operating income increased to
13.6% for fiscal year 2001 from 6.1% for fiscal year 2000. Together with other
factors discussed above, the increase in operating income was primarily due to a
reduction of investment in ReaLemonade.

     Interest Expense. Net interest expense was $33.2 million for fiscal year
2001 as compared to net interest expense of $31.7 million for fiscal year 2000,
an increase of $1.5 million. The increase was primarily due to higher average
interest rates for fiscal year 2001 compared to fiscal year 2000.

     Income Taxes. The Company recorded an income tax benefit of $2.9 million
for fiscal year 2001 as compared to a $8.7 million income tax benefit for fiscal
year 2000. The decrease of $5.8 million is due to the lower net loss in fiscal
year 2001.

Liquidity and Capital Resources

     Borrowings under the Term Loan Facility were $53.2 million and $171.5
million at June 29, 2002 and June 30, 2001, respectively. The Term Loan Facility
matures $0.9 million, $8.6 million, $25.0 million and $18.7 million in the
fiscal years 2003 through 2006, respectively. The Company has a $60.0 million
Revolving Credit Facility, of which $35.6 million and $47.0 million was
outstanding at June 29, 2002 and June 30, 2001, respectively. Included in the
Revolving Credit Facility is a $10.0 million swingline loan that is utilized for
short-term borrowings for periods less than thirty days. The Revolving Credit
Facility matures in fiscal year 2005.

     Interest payments on the Senior Subordinated Notes and interest and
principal payments under the Term Loan Facility and the Revolving Credit
Facility represent significant cash requirements for the Company. Borrowings
under the Term Loan Facility and the Revolving Credit Facility bear interest at
floating rates and require interest payments on varying dates.

     The Company's remaining liquidity needs are for capital expenditures and
increases in working capital. The Company spent $0.4 million on capital projects
in fiscal year 2002 to fund expenditures at existing facilities. The Company
expects to spend approximately $1.0 million on capital projects in fiscal year
2003 to fund expenditures at existing facilities. The Company's primary sources
of liquidity are cash flows from operations and available borrowings under the
Revolving Credit Facility.

     Net cash provided from operating activities for fiscal year 2002 was $3.0
million, and net cash used in operating activities for fiscal year 2001 was $1.8
million. The increase in net cash from operating activities is primarily due to
$12.6 million of reduced interest payments resulting from lower interest rates
and lower average debt balances. This is primarily offset by $9.9 million in
payments associated with the ReaLemon Sale and the Plan.

     Cash used in financing activities in fiscal year 2002 was $131.3 million,
and cash provided from financing activities for fiscal year 2001 was $5.3
million, a change of $136.6 million. The change in net cash used in financing
was due to a $118.0 million repayment of indebtedness under the Term Loan
Facility in first quarter 2002

                                       13

<PAGE>

from the use of the proceeds from the ReaLemon Sale and reduced borrowing
requirements under the Revolving Credit Facility to finance operations in fiscal
2002.

     The Company intends to amend certain covenants of the Senior Credit
Facilities, in similar manner to the amendment granted August 10, 2001 for the
period beginning on September 29, 2001 and ending on and including December 28,
2002. The purpose of this amendment is to provide additional flexibility in the
financial covenants as the Company manages the transition of producing powdered
non-dairy creamer products through a co-packer and closes its present Chester,
South Carolina manufacturing plant. The Company will seek this one or two year
amendment, subject to the banks' approval, in late November 2002. If the Company
is unable to amend the Senior Credit Facilities, management believes it can meet
existing bank covenants pursuant to the Senior Credit Facilities credit
agreement, as amended, for each of the four quarters of fiscal year 2003.

Senior Credit Facilities Amendment

     The Company amended its Senior Credit Facilities pursuant to an amendment
dated August 10, 2001 (the "Amendment") which became effective as of the
completion of the ReaLemon Sale. Pursuant to the Amendment, the Company received
consent from the lenders for the ReaLemon Sale, and the lenders waived
compliance with leverage ratio and consolidated cash interest expense coverage
ratio financial covenants for periods commencing on and including September 29,
2001 and ending on and including December 28, 2002. The Amendment includes
restrictions on the carrying balance of the Revolving Credit Facility for a
period of thirty consecutive days commencing on a date not earlier than December
1 of any year and ending not later than March 31 of the following year. The
Amendment also sets forth minimum requirements for consolidated earnings before
interest, income tax, depreciation and amortization.

     The interest rate on the Term Loan Facility, as amended, is LIBOR plus
4.00%. The interest rate on the Revolving Credit Facility, as amended, is LIBOR
plus 4.00% with the swingline loan portion bearing interest at Prime plus 3.00%.

     Management believes that cash generated from operations and borrowings
under the Term Loan Facility and the Revolving Credit Facility will be
sufficient to satisfy working capital requirements and required capital
expenditures. Further expansion of the business through acquisitions may require
the Company to incur additional indebtedness or to sell additional equity
securities. There can be no assurance that the Company will be able to secure
additional financing on favorable terms if at all.

     The Company was advised by GEI and Warburg, Holdings' principal
stockholders that as of September 27, 2002, each owned $14.0 million in
aggregate principal amount of Notes.

Commitments and Contingencies

     The Company may enter into long-term contracts for the purchase of certain
raw materials. Minimum purchase commitments, at current prices, were
approximately $3.9 million and $13.1 million at June 29, 2002 and June 30, 2001.
The Company intends to utilize in production the raw materials under the
outstanding purchase commitments. The Company leases buildings and equipment
under various noncancellable lease agreements for periods of one to five years.
The lease agreements generally provide that the Company pay taxes, insurance and
maintenance expenses related to the leased assets. At June 29, 2002, the future
minimum lease payments were $0.5 million, $0.3 million and $0.1 million for
fiscal year 2003, fiscal year 2004 and fiscal year 2005, respectively. The
Company has entered into employment agreements with certain key executives. Such
agreements provide for annual salaries, bonuses and severances and include
non-compete and non-solicitation provisions.

Redeemable Preferred Stock

     Redeemable Preferred Stock (as defined in Notes to the Financial Statement
number 11) is subject to mandatory redemption at a price per share equal to the
Stated Value for each series of Preferred Stock plus all dividends accrued and
unpaid there upon (1) the closing of a public offering pursuant to an effective
registration statement under the Securities Act of 1933, (2) the sale of all or
substantially all of the assets of Holdings or the merger or consolidation of
Holdings with or into any other corporation or other entity in which the holders
of

                                       14

<PAGE>

Holdings' outstanding shares before the merger or consolidation do not retain a
majority of the voting power of the surviving corporation or other entity or (3)
the acquisition by any person of shares of Common Stock representing a majority
of the issued and outstanding shares of Common Stock then outstanding.

Recent Developments

     The Company plans to close its powdered non-dairy creamer plant located in
Chester, South Carolina in late November 2002. Future production will be sourced
from a third party manufacturer under a long-term co-pack agreement. The
third-party manufacturer has significantly larger powdered non-dairy creamer
plants and has agreed to produce the Company's powdered non-dairy creamer
requirements at a lower cost than the Company's current cost of production.
Closure costs including benefits and severance for the 79 employees are being
assessed and will be recorded in fiscal year 2003, when the measurement date has
occurred.

Seasonality

     The Company's net sales, operating income and cash flows are affected by a
seasonal bias toward the second quarter of the Company's fiscal year due to
increased sales during the holiday season. Three of the Company's five major
brands (Eagle Brand sweetened condensed milk, Borden eggnog and None Such
mincemeat pie filling) are consumed primarily during the November and December
holiday season. In recent years, approximately 49% of the Company's net sales,
excluding the ReaLemon and ReaLime brands' net sales, have occurred in the
second quarter of the fiscal year. As a result of this seasonality, the
Company's working capital needs have historically increased throughout the year,
normally peaking in the September/October period, which requires the Company to
draw additional amounts on its Revolving Credit Facility during this period.

Critical Accounting Policies and Estimates

     The process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of significant judgment and estimates on the part of the Company's management
about the effect of matters that are inherently uncertain. Actual results could
differ significantly from the estimates under different assumptions or
conditions. The Company's significant accounting policies are described in the
Notes to the Financial Statements within this Annual Report on Form 10-K. The
following discussion addresses the Company's most critical accounting policies.

     Marketing Costs. The Company offers market development funds, slotting, and
other trade spending programs to its customers to support the customers'
promotional activities related to the Company's product lines. The Company
regularly reviews and revises estimates of costs to the Company, when deemed
necessary, for the marketing programs based on actual costs incurred or revised
spending level by the customers. Actual costs may differ significantly, as the
performance from the marketing program may differ from previous expectations.

     Inventories. Inventories are stated at the lower of cost or market, with
cost of goods sold principally determined using the first-in, first-out method.
The Company reviews the value of the inventory, and based on the physical
condition (e.g., age and quality) of the inventories and forecasted sales plans,
may require adjustments, either favorable or unfavorable. These inventory
adjustments are estimates and may differ if future economic conditions, customer
inventory levels or competitive conditions differ from the Company's
expectations.

     Property, Plant and Equipment and Intangibles. Property, plant and
equipment is stated at cost and is depreciated on a straight-line method over
the estimated useful lives of the assets. Changes in circumstances, such as
technological advances or changes to the Company's capital strategy, can result
in the actual lives differing from the Company's estimates. The Company
periodically reviews the useful lives of its property, plant and equipment, and
where warranted, changes are made that may result in acceleration of
depreciation.

     Intangibles are stated at fair value as recorded at acquisition and are
amortized on a straight-line basis over their estimated useful lives. The
Company reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying value of any such asset may not be
recoverable. The estimate of cash flow is based upon certain assumptions about
expected future operating performance. The Company's estimates of undiscounted
cash flow may differ from actual cash flow due to technological changes,
economic conditions or

                                       15

<PAGE>

changes in its operating performance. If the sum of the undiscounted cash flows
(excluding interest) is less than the carrying value, the Company recognizes an
impairment loss, measured as the amount of the carrying value that exceeds the
fair value of the asset.

    Income taxes. Income taxes are recognized using the liability method. Under
this method, deferred tax assets and liabilities are recognized based on the
difference between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates in effect in the years in which
those temporary differences are expected to reverse. The Company assesses the
recoverability of the deferred tax assets in accordance with the provisions of
SFAS No. 109. In accordance with SFAS No. 109, the Company recorded a valuation
allowance for the net deferred tax assets and net operating loss carryforwards
of $33.2 million as of June 29, 2002. The Company intends to maintain a full
valuation allowance for the net deferred tax assets and net operating loss
carryforwards until sufficient positive evidence exists to support reversal of
the remaining reserve. Until such time, except for minor state and local tax
provisions, the Company will have no reported tax provision, net of valuation
allowance adjustments. In the event the Company were to determine, based on the
existence of sufficient positive evidence, that it would be able to realize
deferred tax assets in the future in excess of the net recorded amount, an
adjustment to the valuation allowance would increase income in the period such
determination was made.

Recently Issued Accounting Statements

    In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, "Business Combinations" ("SFAS 141"). The statement requires all
business combinations to be accounted for under the purchase method and
establishes criteria for the separate recognition of intangible assets acquired
in a business combination. The provisions of this pronouncement will be applied
to any business combinations completed after June 30, 2001.

    In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). SFAS 142 addresses financial accounting and reporting for
intangible assets acquired individually or with a group of other assets at
acquisition and for periods subsequent to acquisition. The statement provides
that goodwill and indefinite life intangible assets be tested for impairment
annually, not amortized over a specified life. The Company's results do not
include any charges for any potential adjustments in the carrying amount of
goodwill and other intangible assets that may be recorded in connection with the
initial adoption of this pronouncement. Based on the initial impairment
evaluation using a royalty savings methodology and discounted cash flows, the
Company expects to record a charge of $43.7 million (unaudited) against
tradenames and $14.4 million (unaudited) against goodwill during the first
quarter of fiscal year 2003 as a cumulative effect of an accounting change. The
Company's annual amortization charge will be reduced by an estimated $11.2
million (unaudited) in fiscal year 2003.

    In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"). SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. The adoption of this pronouncement did
not have a material impact on the Company's results of operations or financial
condition.

    In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets") ("SFAS 144"). SFAS 144 supercedes
SFAS 121 and applies to all long-lived assets (including discontinued operations
and consequently amends Accounting Principles Board Opinion No. 30, "Reporting
Results of Operations Reporting the Effects of Disposal of a Segment of a
Business" ("APB 30"). SFAS 144 develops an accounting model (based on the model
in SFAS 121) for the disposal of long-lived assets. This model requires that
long-lived assets that are to be disposed of be measured at the lower of book
value or fair value, less cost to sell. Additionally, SFAS 144 expands the scope
of discontinued operations to include all components of an entity with
operations that (1) can be distinguished from the rest of the entity and (2)
will be eliminated from the ongoing operations of the entity in a disposal
transaction. SFAS 144 is effective for the Company's first quarter of fiscal
year 2003. The adoption of this pronouncement is not expected to have a material
impact on the Company's results of operations or financial condition.

    In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections"
("SFAS 145") with an adoption date of fiscal

                                       16

<PAGE>

years beginning after May 15, 2002. This pronouncement rescinds the
aforementioned Statements and amends SFAS No. 13 and other various authoritative
pronouncements to clarify, correct technically or describe applicability under
changed conditions. The adoption of this pronouncement is not expected to have a
material impact on the Company's results of operations or financial condition.

    In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Costs covered by SFAS No. 146 include lease termination costs and certain
employee severance costs that are associated with a restructuring, discontinued
operation, plant closing or other exit or disposal activity that is initiated
after December 31, 2002. The Company will adopt this pronouncement for
activities after December 31, 2002. The adoption of this pronouncement is not
expected to have a material impact on the Company's results of operations or
financial condition.

Cautionary Statement Regarding Forward-Looking Statements

    Certain statements within this section may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 that involve known and unknown risks and uncertainties. The Company's
actual results, performance or achievements in the future could differ
significantly from the results, performance or achievements discussed or implied
in such forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, the effect on financial
performance of increased competition in the dry-grocery food industry, potential
future competition, competitive pricing for products, general economic and
business conditions, industry trends, raw material costs, dependence on the
Company's labor force, the success of new product innovations and changes in, or
the failure or inability to comply with, government rules and regulations,
including, without limitation, Food and Drug Administration and environmental
rules and regulations.

    Statements concerning interest rate swap and other financial instrument fair
values and their estimated contribution to the Company's future results of
operations are based upon market information as of a specific date. This market
information is often a function of significant judgment and estimation. Further,
market interest rates and commodity prices are subject to significant
volatility.

Item 7A: Quantitative and Qualitative Disclosures About Market Risk

Interest Rates

    The following table presents a description of the financial instruments that
were held by the Company at June 29, 2002 and which were sensitive to changes in
interest rates. In the ordinary course of business, the Company enters into
derivative financial instrument transactions in order to manage or reduce market
risk. The Company does not enter into derivative financial instrument
transactions for speculative purposes. For the liabilities, the table represents
principal fiscal year cash flows that exist by maturity date and the related
average interest rate. The variable rates are estimated based upon the six-month
forward LIBOR rate.

    All amounts are reflected in U.S. dollars (in thousands).

<TABLE>
<CAPTION>
                                                                                                                        Fair
                                  2003         2004         2005        2006        Thereafter        Total            Value
                               ----------   ---------    ---------    ---------    ------------    ------------     ----------
<S>                            <C>          <C>          <C>          <C>          <C>             <C>              <C>
Liabilities
   Fixed Rate ...............                                                      $    115,000    $    115,000     $   87,400
   Average Interest Rate ....                                                             8.750%          8.750%
   Variable Rate ............  $      936   $   8,578    $  60,556    $  18,718    $               $     88,788     $   88,788
   Average Interest Rate ....       5.860%      5.860%       5.867%       5.860%                          5.865%
</TABLE>

    As the table incorporates only those exposures that existed as of June 29,
2002, it does not consider exposure to changes in the LIBOR rate that arise
after that date. As a result, our ultimate interest expense with respect to
interest rate fluctuations will depend on the interest rates that are applicable
during the period. A 1% change in interest rate will cause a variance of
approximately $0.9 million in forecasted interest expense.

                                       17

<PAGE>

Milk Hedging

    The Company uses milk as a major ingredient in its sweetened condensed milk
product line and is subject to the risk of rising milk prices that increase
manufacturing costs and erode profit margins. By purchasing futures contracts,
however, the Company establishes a known price for future milk purchases in
order to protect against fluctuating milk prices. As of June 29, 2002, the
Company had purchased 133 milk futures contracts, which will settle during
various months through March 2003, at a cost of $4.2 million and a current
market value of $3.7 million, or an aggregate market loss of $0.5 million. The
aggregate market value will increase or decrease based on the future milk
prices.

Cautionary Statement Regarding Forward-Looking Statements

    Certain statements within this section may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 that involve known and unknown risks and uncertainties. The Company's
actual results, performance or achievements in the future could differ
significantly from the results, performance or achievements discussed or implied
in such forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, the effect on financial
performance of increased competition in the dry-grocery food industry, potential
future competition, competitive pricing for products, general economic and
business conditions, industry trends, raw material costs, dependence on the
Company's labor force, the success of new product innovations and changes in, or
the failure or inability to comply with, government rules and regulations,
including, without limitation, Food and Drug Administration and environmental
rules and regulations.

    Statements concerning interest rate swap and other financial instrument fair
values and their estimated contribution to the Company's future results of
operations are based upon market information as of a specific date. This market
information is often a function of significant judgment and estimation. Further,
market interest rates and commodity prices are subject to significant
volatility.

Item 8: Financial Statements and Supplementary Data

    See Item 15: "Exhibits, Financial Statement Schedules and Reports on Form
8-K."

Item 9: Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

    Not applicable.

                                       18

<PAGE>

PART III

Item 10: Directors and Executive Officers of the Registrants

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

<TABLE>
<CAPTION>
              Name                Age                         Position
              ----                ---                         --------
   <S>                           <C>    <C>
   Craig A. Steinke .........      45    Chief Executive Officer, President, Chief Financial
                                         Officer, Treasurer and Director*
   Michael  P. Conti ........      33    Vice President, Finance*
   Kelly  J. Crouse. ........      39    Vice President, Marketing
   Ronald E. Hord, Jr .......      40    Vice President, Supply Chain
   Lori S. Snowden ..........      42    Secretary* and Financial Controller
   Harold G. M. Strunk ......      45    Vice President, Sales
   David  A. Barr ...........      39    Director
   Andreas T. Hildebrand ....      34    Director
   Kewsong Lee ..............      37    Director
   Donald W. Torey ..........      45    Director
</TABLE>

--------------
*   Messrs. Steinke, Conti and Ms. Snowden hold these same positions at Holdings
and are the executive officers of Holdings.

    Craig A. Steinke has served as a Director, Chief Executive Officer and
President of Holdings and Eagle since July 2001. Since January 1998, Mr. Steinke
has held the positions of Chief Financial Officer, and Treasurer of Holdings and
Eagle. From March 1999 until July 2001, Mr. Steinke also served as Senior Vice
President of Operations of Holdings and Eagle. Prior to joining Eagle, Mr.
Steinke was President of Magma Metals, a billion dollar subsidiary of Magma
Copper. He was responsible for operations, marketing and sales. Magma Metals was
acquired by Broken Hill Proprietary Co. Ltd., and Mr. Steinke was promoted to
Senior Vice President and Group General Manager of BHP Copper, a $3.0 billion
subsidiary of Broken Hill Proprietary Co., Ltd. His responsibilities included
worldwide sales, international and national marketing teams and a complex U.S.
based manufacturing operation with over 1,000 employees.

    Michael P. Conti has served as Vice President, Finance of Holdings and Eagle
since August 2001. Mr. Conti joined Eagle in August 1998 and has held Director
of Financial Planning and Analysis and Financial Manager positions. From April
1996 through August 1998, Mr. Conti served as Controller of Hamilton Watch, a
division of The Swatch Watch Group.

    Kelly J. Crouse has served as Vice President, Marketing of Eagle since
August 2001. From 1998 through August 2001, Mr. Crouse served as Director of
Customer Marketing and as Area Vice President of Sales at Eagle. Between 1994
and 1998, Mr. Crouse served as a National Trade Marketing Manager and Midwest
Regional Sales Manager with BFC's, Pasta/Sauce Division.

    Ronald E. Hord, Jr. has served as Vice President, Supply Chain of Eagle
since August 2001 as an executive officer. From March 2000 to August 2001, Mr.
Hord served in that position in a non-executive officer capacity. Mr. Hord
joined Eagle as the Director of Logistics in January 1998. From March 1994
through January 1998, Mr. Hord held a position in logistics with BFC and Borden,
Inc., working on numerous food brands including the six brands that Eagle
acquired.

    Lori S. Snowden has served as Secretary of Holdings and Eagle since August
2001. Since April 1999, Ms. Snowden has served as Financial Controller for
Eagle. Ms. Snowden joined Eagle as Assistant Controller in January 1998. From
1990 to the time she joined Eagle, Ms. Snowden held various managerial
accounting positions with BFC and Borden, Inc.

    Harold G. M. Strunk has served as Vice President, Sales of Eagle since
August 2001 and from 1998 through August 2001 Mr. Strunk held positions of
Director of Sales Support and Vice President of International Sales of

                                       19

<PAGE>

Eagle. Between 1996 and 1998, Mr. Strunk held various managerial positions in
sales and marketing with BFC and Borden, Inc.

    Andreas T. Hildebrand has served as a Director of Holdings and Eagle since
their respective dates of formation. Mr. Hildebrand has served as Managing
Director of the Private Equity Group of General Electric Asset Management
("GEAM") since July 2000 and Vice President of GEAM since May 1997. Mr.
Hildebrand presently serves as a director of several privately held companies.

    Kewsong Lee has served as a Director of Holdings and Eagle since their
respective dates of formation. Mr. Lee has served as a Member and Managing
Director of E.M. Warburg, Pincus & Co., LLC ("EMW LLC") and General Partner of
Warburg, Pincus & Co. ("WP") since January 1, 1997. His present service as a
director includes membership on the boards of Knoll, Inc., Arch Capital Group
Ltd. and several privately held companies.

    David A. Barr has served as a Director of Holdings and Eagle since August
13, 2001. Mr. Barr has served as a Member and Managing Director of EMW LLC and
General Partner of WP since January 1, 2001. Prior to joining EMW LLC, Mr. Barr
was a Managing Director at Butler Capital Corp., a private investment firm
focused on middle market management buyouts.

    Donald W. Torey has served as a Director of Holdings and Eagle since their
respective dates of formation. Mr. Torey has served as Executive Vice President
of GEAM and GE Investment Management Incorporated ("GEIM" and, together with
GEAM, "GE Investments") with responsibility for GE Investments' Private Equity
and Real Estate groups since January 1997. Mr. Torey currently serves as a
Trustee for the General Electric Pension Trust ("GEPT") and as a director of a
privately held company.

                                       20

<PAGE>

Item 11:   Executive Compensation

Summary Compensation Table

     The following summary compensation table provides information concerning
compensation for the Company's chief executive officers, the four other most
highly compensated executive officers of Eagle and other executive officers who
are named executive officers within the meaning of Item 402(a)(3) of Regulation
S-K under the Securities Act of 1933 (collectively, the "Named Executive
Officers") for the fiscal years ended June 29, 2002, June 30, 2001 and July 1,
2000.

<TABLE>
<CAPTION>
                                                                                                            Long Term
                                                                  Annual Compensation                    Compensation(3)
                                                -------------------------------------------------------- -----------------
                                                                                               Other         Restricted
                                                 Fiscal                                    Compensation     Stock Awards
        Name and Principal Position               Year       Salary($)      Bonus($)(1)       ($)(2)           ($)(4)
----------------------------------------------  ---------  ---------------  ------------- ---------------- ---------------
<S>                                              <C>       <C>              <C>            <C>                  <C>
Craig A. Steinke (5) .........................    2002   $    305,078     $      182,500 $     382,300(6)            --
  Chief Executive Officer, President              2001        278,333            167,125         6,464               --
    and Chief Financial Officer                   2000        232,667             59,483         3,736    $         350

Harold G.M. Strunk (7)                            2002        173,967             91,470        12,998(8)            --
  Senior Vice President, Marketing and Sales

Ronald E. Hord, Jr. (7) ......................    2002        163,042             72,450        10,020(8)            --
   Vice President, Supply Chain

Kelly J. Crouse (7) ..........................    2002        162,842             66,980        38,337(8)(9)         --
   Vice President, Marketing

Michael P. Conti (7) .........................    2002        138,533             58,570        58,207(9)(10)        --
   Vice President, Finance

John O'C.  Nugent (11) .......................    2002         14,300            119,380     1,004,500(12)           --
   Former Chief Executive Officer and             2001        331,825            178,036         5,381               --
   Former President                               2000        315,125             70,800         4,819               --

Mark J. Greatrex (11) ........................    2002        187,850             72,930       362,508(12)           --
   Former Senior Vice President, Marketing        2001        259.250            140,250         8,766               --
   and Sales                                      2000         47,813               --           1,434              275

Jonathan F. Rich (11) ........................    2002         42,100             46,310       351,647(12)           --
   Former Vice President and Former               2001        164,608             89,046         6,685               --
   General Counsel                                2000        157,583             42,488         2,654              175
</TABLE>

---------------
(1)  The bonus represents the amount earned and paid to the Named Executive
     Officer for the Company's fiscal year for which each executive could earn
     up to 100% of his base salary if certain performance targets were met.

(2)  Other compensation includes matching and profit sharing contributions
     ("company 401k match") made by the Company on behalf of each Named
     Executive Officer pursuant to the Eagle Family Foods, Inc. 401k Savings and
     Retirement Plan, and where noted car allowance, severance based on
     contractual arrangements, moving expenses and special bonuses for
     consummating the Realemon Sale.

(3)  The Company has not awarded any stock options or stock appreciation rights
     to the Named Executive Officers.

(4)  The restricted stock award for fiscal year 2000 represent the approximate
     value of award of restricted Common Stock issued to the Named Executive
     Officer (the "Restricted Shares"). The Restricted Shares will vest in equal
     installments over five years (the "Vesting Period"), beginning on the first
     anniversary of the date of issuance if such grantee is employed by the
     Company on such date. Upon the consummation of an initial public offering
     of Common Stock of Holdings registered under the Securities Act of 1933
     meeting certain thresholds prior to the end of the Vesting Period, 20% of
     the Restricted Shares will vest. Any remaining unvested Restricted Shares
     would then vest in equal installments over the time remaining in the
     Vesting Period. The Board of Directors of Holdings may also establish
     certain performance criteria that could result

                                       21

<PAGE>

     in accelerated vesting of the Restricted Shares. As of June 29, 2002, the
     approximate value of each such award was $350, $275 and $175 for Messrs.
     Steinke, Greatrex and Rich, respectively.

(5)  Mr. Steinke became Chief Executive Officer and President in addition to
     serving as Chief Financial Officer and Treasurer in July 2001.

(6)  Includes $370,800 special bonus for consummating the ReaLemon Sale, $6,000
     for out-of-town car allowance and $5,500 for company 401k match.

(7)  Prior to the 2002 fiscal year, these Named Executive Officers were
     employees of Eagle, but did not hold executive officer positions so their
     compensation is not provided for prior fiscal years.

(8)  Includes car allowance of $7,200, $6,000 and $7,200 for Messrs. Strunk,
     Hord, and Crouse, respectively.

(9)  Includes $25,420 and $31,778 related to moving expense for Messrs. Crouse
     and Conti, respectively.

(10) Includes $20,000 special bonus for consummating the ReaLemon Sale.

(11) Messrs. Nugent, Greatrex and Rich resigned from their respective positions
     during fiscal year 2002.

(12) Includes $361,900, $77,350 and $142,492 for severance and accrued vacation
     payments based on contractual agreements for Messrs. Nugent, Greatrex and
     Rich, respectively, and $642,600, $283,500 and $207,900 special bonuses for
     consummating the ReaLemon Sale for Messrs. Nugent, Greatrex and Rich,
     respectively.

Compensation Committee Interlocks and Insider Participation

     Matters of compensation are reviewed and acted upon by the full Board of
Directors, consisting of David A. Barr, Andreas T. Hildebrand, Kewsong Lee,
Craig A. Steinke and Donald W. Torey. Mr. Steinke is an executive officer and
employee of Holdings and Eagle. See "Item 13. Certain Relationships and Related
Transactions."

Director Compensation

     The Directors of Holdings and Eagle have not received, and are not expected
in the future to receive, compensation for their service as directors. Directors
are entitled to reasonable out-of-pocket expenses in connection with their
travel to and attendance at meetings of the Boards of Directors or committees
thereof, except that directors who are employees of Holdings, Eagle, or a
stockholder of Holdings shall not be entitled to such reimbursement.

Employment Agreements

     On January 23, 1998, the Company entered into an employment agreement with
Craig A. Steinke, pursuant to which Mr. Steinke served as Vice President, Chief
Financial Officer and Treasurer of the Company. In July 2001, Mr. Steinke was
appointed Chief Executive Officer and President of the Company. The Company has
not entered into a new agreement with Mr. Steinke since his promotion. Pursuant
to his employment agreement, his annual base salary was $300,000 as of July 1,
2001 and is subject to increases as determined by the Board of Directors. In
addition, pursuant to the agreement, Mr. Steinke is entitled to receive a bonus
of up to 100% of his base salary if certain performance targets are met. Bonuses
for future periods are to be based on targets to be established by the Board of
Directors. The agreement has a term of one year, with automatic annual renewals.
In the event the employment agreement is terminated by the Company without
"cause" (as defined in such employment agreement), Mr. Steinke is entitled to
receive severance payments equal to the base salary then in effect for 12
months. The agreement provides for customary non-competition and
non-solicitation provisions.

     The Company entered into employment arrangements with Messrs. Conti,
Crouse, Hord and Strunk relative to base pay and bonuses. In the event the
employment arrangement is terminated by the Company without cause, the Executive
Officers are entitled to receive severance payments equal to the base salary
then in effect for 12 months.

     Effective July 15, 2001, Eagle's and Holdings' Board of Directors accepted
the resignation of John O'C. Nugent as a Director, Chief Executive Officer and
President ("Nugent"). The separation agreement, dated as of June 25, 2001,
between the Company, GEI, Warburg and Nugent ("Separation Agreement") provided
termination benefits in accordance with Nugent's employment agreement with the
Company, dated January 23, 1998, as well as a cash payment of $25,000. The
Separation Agreement provided for certain payments to Nugent upon the
consummation of the sale of the Company or portions thereof. Pursuant to the
Separation Agreement, Nugent also agreed to transfer 2,475 shares of Series A
Non-Voting Preferred Stock to the Company and waived his right to payment
therefore in accordance with the terms of his employment agreement. The value of
said shares and the

                                       22

<PAGE>

accumulated dividends satisfied as payment in full of the $250,000 principal and
accrued interest on Nugent's Secured Recourse Promissory Note with the Company.
Nugent also agreed to transfer 2,475 shares of Series A Non-Voting Preferred
Stock for a cash purchase price of $250,000. See "Item 13: Certain Relationships
and Related Transactions."

     Upon the separations of certain other officers during fiscal year 2002 and
pursuant to each employment agreement, the Company purchased into treasury 2,574
shares of Series A Preferred Stock for a value of $368,000.

Item 12:   Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

     All of the issued and outstanding shares of common stock of Eagle as of
September 27, 2002 are beneficially owned by Holdings. There are three classes
of capital stock of Holdings authorized and outstanding: the Common Stock, which
has full voting rights, the Series A Preferred Stock and the Series B Preferred
Stock, which each have limited voting rights. The following table sets forth, as
of September 27, 2002, certain information regarding the beneficial ownership of
Common Stock, Series A Preferred Stock and Series B Preferred Stock, as
determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), with respect to (i) each person known by
the Company to be the beneficial owner of more than five percent of any class of
Holdings' voting securities, (ii) each of the directors and executive officers
of Holdings and Eagle and (iii) all directors and executive officers of Holdings
and Eagle, as a group:

<TABLE>
<CAPTION>
                                                                               Series A             Series B
                                                           Common Stock     Preferred Stock      Preferred Stock
                                                           ------------     ---------------      ---------------
                 Name and Address of                  Number of            Number of            Number of
                Beneficial Owner (1)                   Shares   Percentage  Shares   Percentage  Shares   Percentage
                --------------------                   ------   ----------  -------  ----------  ------   ----------
<S>                                                   <C>          <C>     <C>          <C>        <C>       <C>
GE Investment Private Placement Partners II,
   a Limited Partnership
   3003 Summer Street
   Stamford, CT 06905(2) .........................    458,200      45.7    402,399      49.5       49.5      50.0

Warburg, Pincus Ventures, L.P.
   466 Lexington Avenue
   New York, NY 10017(3) .........................    458,200      45.7    402,399      49.5       49.5      50.0

Craig A. Steinke(4) ..............................     40,835       4.1        990         *         --        --
David A. Barr(3) .................................    458,200      45.7    402,399      49.5         --        --
Andreas T. Hildebrand(2)(5) ......................         --        --         --        --         --        --
Kewsong Lee(3) ...................................    458,200      45.7    402,399      49.5         --        --
Donald W. Torey(2)(5) ............................         --        --         --        --         --        --
All directors and executive officers as a
   Group (8 persons)(6) ..........................    503,685      50.2    403,389      50.1       49.5      50.0
</TABLE>

---------------
* Less than 1%

(1)  Pursuant to the rules of the Securities and Exchange Commission, shares are
     deemed to be "beneficially owned" by a person if such person directly or
     indirectly has or shares (i) the power to vote or dispose of such shares,
     whether or not such person has any pecuniary interest in such shares, or
     (ii) the right to acquire the power to vote or dispose of such shares
     within 60 days, including any right to acquire through the exercise of any
     option, warrant or right. Unless otherwise indicated, each person's address
     is c/o Eagle Family Foods, Inc. 735 Taylor Road, Gahanna, Ohio 43230.
     Messrs. Lee and Barr have the same address as Warburg. Messrs. Torey and
     Hildebrand have the same address as GEI.

(2)  Does not include any shares indirectly held by Trustees of GEPT by virtue
     of GEPT's limited partnership interest in Warburg. GEPT is also a limited
     partner in GEI. GEIM is the general partner of GEI and a wholly owned
     subsidiary of GE. As a result, each of GEIM and GE may be deemed to be the
     beneficial owner of the shares owned by GEI.

(3)  The sole general partner of Warburg is WP, a New York general partnership.
     EMW LLC, a New York limited liability company, manages Warburg. The members
     of EMW LLC are substantially the same as the partners of WP. Lionel I.
     Pincus is the managing partner of WP and the managing member of EMW LLC.
     WP, as the sole general partner of Warburg, has a 15% interest in the
     profits of Warburg. Messrs. Lee and Barr, directors of Holdings, are
     Managing Directors and members of EMW LLC and general partners of WP. As
     such, Messrs. Lee and Barr may be deemed to have an indirect pecuniary
     interest (within the meaning of Rule 16a-1 under the Exchange Act) in an
     indeterminate portion of the shares beneficially owned by Warburg and WP.

(4)  Includes 39,835 Restricted Shares, subject to certain vesting and for
     future requirements, issued to Mr. Steinke.

(5)  Excludes 458,200 shares of Common Stock, 402,399 shares of Series A
     Preferred Stock and 49.5 shares of Series B Preferred Stock beneficially
     owned by GEI and GEIM. As an executive officer and director of GEIM, Mr.
     Torey has shared voting and investment power with respect to the shares
     held by GEI, and therefore, may be deemed to be the beneficial owner of
     such shares. Messrs. Torey and Hildebrand disclaim beneficial ownership of
     all such shares owned by GEI and GEIM.

(6)  Includes 458,200 shares of Common Stock, 402,399 shares of Series A
     Preferred Stock and 49.5 shares of Series B Preferred Stock beneficially
     owned by Warburg. Excludes 458,200 shares of Common Stock, 402,399 shares
     of Series A Preferred Stock and 49.5 shares of Series B Preferred Stock
     beneficially owned by GEI. Includes 4,650 shares of restricted stock,
     subject to certain vesting and forfeiture requirements, issued to executive
     officers not identified in the table.

                                       23

<PAGE>

Equity Compensation Plan Information

     The following table sets forth information about the Common Stock issuable
under the 1998 Stock Incentive Plan (the "Plan") as of June 29, 2002. Only
Restricted Shares had been issued under the Plan as of June 29, 2002.

<TABLE>
<CAPTION>
                                                                                                     Number of securities
                                                                                                      remaining available
                                                Number of securities        Weighted average         for further issuance
                                                  to be issued upon         exercise price of           under equity
                                                     exercise of               outstanding           compensation plans
                                                outstanding options,        options, warrants       (excluding securities
                                                 warrants and rights           and rights            reflected in column (a)).
              Plan category                              (a)                       (b)                       (c)
              -------------                              ---                       ---                       ---
<S>                                             <C>                          <C>                      <C>
Equity compensation plans approved by                    --                        --                         --
security holders ............................
Equity compensation plans not approved by                --                        --
security holders /(1)/ ......................                                                            120,968 /(2)/
                                                ----------------------     --------------------    ------------------------
Total                                                    --                        --                    120,968
                                                ======================     ====================    ========================
</TABLE>

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

(1)   On January 14, 1998, Holdings' Board of Directors adopted the Plan.
      The Plan provides for the granting of incentive stock options,
      non-qualified stock options and restricted stock to officers, key
      employees, directors and consultants of the Company at the discretion
      of a committee of the Holdings' Board of Directors. Originally, there
      were 153,650 shares of Common Stock reserved for issuance under the
      Plan. As amended on January 5, 2000 by the Holdings' Board of
      Directors, 206,150 shares of Common Stock may be awarded under the
      Plan, subject to certain adjustments reflecting changes in Holdings'
      capitalization.

(2)   All 120,968 shares of Common Stock remain available for issuance pursuant
      to the 1998 Stock Incentive Plan. No options have been issued under the
      1998 Stock Incentive Plan.

The Holdings Stockholders Agreement

     The relations among the Equity Sponsors and the Management Investor
(collectively, the "Investors"), and Holdings are governed by a Stockholders
Agreement, dated as of the Acquisition Closing and as amended (the "Holdings
Stockholders Agreement"). The following summary of certain provisions of the
Holdings Stockholders Agreement does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Holdings Stockholders
Agreement.

     Board of Directors. Holdings is managed by a Board of Directors not to
exceed nine members, three members of which may be designated by GEI and three
members of which may be designated by Warburg. For so long as GEI beneficially
owns at least 20% of the Common Stock outstanding on a fully diluted basis, GEI
has the right to designate three directors to the Board of Directors. For so
long as GEI beneficially owns at least 15% of the Common Stock outstanding on a
fully diluted basis, GEI has the right to designate two directors to the Board
of Directors. For so long as GEI beneficially owns at least 10% of the Common
Stock outstanding on a fully diluted basis, GEI has the right to designate one
director to the Board of Directors. For so long as Warburg beneficially owns at
least 20% of the Common Stock outstanding on a fully diluted basis, Warburg has
the right to designate three directors to the Board of Directors. For so long as
Warburg beneficially owns at least 15% of the Common Stock outstanding on a
fully diluted basis, Warburg has the right to designate two directors to the
Board of Directors. For so long as Warburg beneficially owns at least 10% of the
Common Stock outstanding on a fully diluted basis, Warburg has the right to
designate one director to the Board of Directors. In addition, as long as the
Equity Sponsors in the aggregate beneficially own more than 50% of the Common
Stock outstanding on a fully diluted basis, the Equity Sponsors have the right
to designate a majority of the directors to the Board of Directors. The Board of
Directors will have at least one director who is not an officer or employee of
Holdings, the Company, or the Equity Sponsors, appointed by unanimous approval
of the Board of Directors. The Holdings Stockholders Agreement provides that the
Board of Directors of the Company is identical to that of Holdings.

     The consent of a majority of the Board of Directors which includes at least
one of the directors designated by GEI and one of the directors designated by
Warburg is required for the approval of (i) the Company's or Holdings' annual
operating budget; (ii) capital expenditures or investments not approved in the
annual budget in amounts greater than $500,000; (iii) any merger or
consolidation involving the Company or Holdings; (iv) any acquisition by the
Company or Holdings of any assets or stock, other than acquisitions of assets in
the ordinary course of business; (v) any divestiture of assets in excess of
$500,000 by the Company or Holdings, other than sales of inventory in the

                                       24

<PAGE>

ordinary course of business; (vi) any liquidation, dissolution or winding up,
or any consent to a bankruptcy or insolvency or related proceeding involving,
the Company or Holdings; (vii) the issuance or sale of any debt or equity
securities for cash; (viii) any expansion into new lines of business; (ix) any
joint venture or strategic alliance; (x) the repurchase or redemption of any
outstanding shares of capital stock or the declaration or payment of any
dividends on any shares of capital stock of the Company or Holdings; (xi) the
amendment or modification of the certificate of incorporation or bylaws of the
Company or Holdings; (xii) the amendment, modification or termination of any
employment agreement with any executive officer of the Company or Holdings;
(xiii) the grant of any stock options or other equity-based compensation; (xiv)
the hiring or firing of any executive officer; (xv) any related party
transactions; (xvi) any loans or guarantees by the Company or Holdings outside
of the ordinary course of business; (xvii) any agreement having a duration in
excess of one year or cumulative obligations in excess of $1 million; (xviii)
the amendment, modification or termination of any agreement with any union;
(xix) the approval or adoption, amendment, modification or termination of
certain employee benefit plans; and (xx) any agreement to do any of the
foregoing.

     Restrictions on Transfer of Stock. Securities held by the Management
Investors, including any shares of Common Stock or Redeemable Preferred Stock
and any options to acquire shares of Common Stock, may only be sold or otherwise
transferred with the consent of the Board of Directors of Holdings.

     Tag-Along Rights. The Holdings Stockholders Agreement provides that in the
event any Investor chooses to sell or otherwise transfer more than 20% of its
shares of Common Stock or Redeemable Preferred Stock to a proposed transferee,
the selling Investor must offer to each of the other Investors the right to
participate in such sale on a pro rata basis based on ownership of the shares
being sold.

     Subscription Rights. With certain exceptions, the Holdings Stockholders
Agreement provides each Investor with subscription rights in connection with any
issuance of equity securities by Holdings for cash whereby each Investor shall
have the right to purchase a pro rata portion of such equity securities.

     Certain Covenants. The Holdings Stockholders Agreement requires Holdings to
(i) provide certain financial and other information to the Investors concerning
Holdings and its subsidiaries (ii) comply with applicable law and (iii) maintain
insurance.

     Termination. The tag-along rights and subscription rights described above
will terminate upon the completion of an initial public offering of Common
Stock.

The Registration Rights Agreement

     Holdings and the Investors entered into a Registration Rights Agreement,
dated as of the Acquisition Closing and as amended (the "Registration Rights
Agreement"). Pursuant to the Registration Rights Agreement, each of the Equity
Sponsors has two demand registration rights for each of its Redeemable Preferred
Stock and Common Stock. In addition, the Equity Sponsors have unlimited Form S-3
registration rights and unlimited piggyback rights. The Management Investors
also have piggyback registration rights. All expenses related to these
registrations (other than underwriting discounts and commissions) will be borne
by Holdings. Holdings is required to use its best efforts to affect such
registrations, subject to certain conditions and limitations. Holdings has
agreed to indemnify the Investors for certain liabilities arising out of such
registrations, including liabilities under the Securities Act.

Item 13:   Certain Relationships and Related Transactions

     In connection with the portion of the Equity Contribution to Holdings made
by Mr. Nugent, the Company lent an aggregate of $250,000 to Mr. Nugent in
exchange for full recourse note bearing interest at a floating rate, set
semi-annually, at The Chase Manhattan Bank's then applicable prime rate, in
effect for six-month periods, plus 0.5%. The note would have matured on the
fifth anniversary of the Acquisition Closing and was secured by a pledge in
favor of the Company of all of the shares of Common Stock and Series A Preferred
Stock owned by such Management Investor. Pursuant to the Separation Agreement,
Mr. Nugent agreed to transfer 2,475 shares of Series A Preferred Stock to the
Company and to waive his right to payment therefore in accordance with the terms
of his employment agreement, as payment in full and complete satisfaction of
principal and interest accrued on this note and 2,475 shares of Series A
Preferred Stock for a cash purchase price of $250,000.

                                       25

<PAGE>

     Upon the separations of Mr. Rich, Mr. Richard A. Lumpp and Mr. James A
Bryne during fiscal year 2002 and pursuant to each employment agreements of the
executive officers, the Company purchased into treasury 2,574 shares of Series A
Preferred Stock for a value of $368,000.

     On September 27, 1999, pursuant to a subscription agreement, each of
Warburg and GEI purchased (i) 50,000 shares of Common Stock and Warrants to
purchase 11,006.5 shares of Common Stock for a cash purchase price of $50,000
and (ii) 49.5 shares of Series B Preferred Stock for a cash purchase price of
$4,950,000. The Warrants may be exercised (a) for a purchase price of $1 per
share of Common Stock (subject to certain adjustments) and (b) only upon the
failure of the Company to achieve certain financial targets for fiscal year
2000. The financial targets for fiscal year 2000 were not met. Therefore, the
Warrants are exercisable. The Warrants expire on September 27, 2004.

     Matters of compensation are reviewed and acted upon by the full Board of
Directors, consisting of David A. Barr, Andreas T. Hildebrand, Kewsong Lee,
Craig A. Steinke and Donald W. Torey. Mr. Steinke is an executive officer and
employee of Holdings and Eagle.

     All future transactions between the Company and its officers, directors,
principal stockholders or their respective affiliates, will be on terms no less
favorable to the Company than can be obtained from unaffiliated third parties.

Item 14:   Controls and Procedures

     Not applicable.

                                       26

<PAGE>

PART IV

Item 15: Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1) Financial Statements of the Company

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
     <S>                                                                                                       <C>
     Eagle Family Foods, Inc. and Eagle Family Foods Holdings, Inc.

     Report of Independent Accountants .......................................................................   32

     Eagle Family Foods, Inc. Statements of Operations and Comprehensive Loss for the Fifty-Two
        Week Periods ended June 29, 2002, June 30, 2001 and July 1, 2000 .....................................   33

     Eagle Family Foods, Inc. Balance Sheets as of June 29, 2002 and June 30, 2001 ...........................   34

     Eagle Family Foods, Inc. Statements of Cash Flows for the Fifty-Two Week Periods ended June 29,
        2002, June 30, 2001 and July 1, 2000 .................................................................   35

     Eagle Family Foods, Inc. Statements of Changes in Stockholder's Equity for the Fifty-Two Week
        Periods ended June 29, 2002, June 30, 2001 and July 1, 2000 ..........................................   36

     Eagle Family Foods Holdings, Inc. Consolidated Statements of Operations and Comprehensive
        Loss for the Fifty-Two Week Periods ended June 29, 2002, June 30, 2001 and July 1, 2000 ..............   37

     Eagle Family Foods Holdings, Inc. Consolidated Balance Sheets as of June 29, 2002 and June 30, 2001 .....   38

     Eagle Family Foods Holdings, Inc. Consolidated Statements of Cash Flows for the Fifty-Two Week
        Periods ended June 29, 2002, June 30, 2001 and July 1, 2000 ..........................................   39

     Eagle Family Foods Holdings, Inc. Consolidated Statements of Changes in Stockholders' Equity
        (Deficit) for the Fifty-Two Week Periods ended June 29, 2002, June 30, 2001 and July 1, 2000 .........   40

     Notes to the Financial Statements .......................................................................   41
</TABLE>

(a)(2) Financial Statement Schedules

     All schedules are omitted because the required information is either
     presented in the financial statements or notes thereto, or is not
     applicable, required or material.

(a)(3) Exhibits

 2.1      Asset Purchase Agreement, dated as of November 24, 1997, as amended as
          of December 9, 1997 and January 15, 1998, by and among Borden Foods
          Corporation, BFC Investments, L.P., and the Company (Incorporated by
          reference to Exhibit 2.1 to the Registration Statement on Form S-4 of
          Eagle and Holdings filed on June 17, 1998 (the "S-4"))

 3.1      Restated Certificate of Incorporation of Holdings (Incorporated by
          reference to Exhibit 3.1 of the S-4)

 3.2      Amended Bylaws of Holdings (Incorporated by reference to Exhibit 3.1
          of the Report on Form 10-Q, filed by Holdings and Eagle on May 14,
          1999)

 3.3      Restated Certificate of Incorporation, dated November 19, 1997
          (Incorporated by reference to Exhibit 3.3 of the S-4)

                                       27

<PAGE>

   3.4    Amended Bylaws of Eagle (Incorporated by reference to Exhibit 3.2 of
          the Report on Form 10-Q, filed by Holdings and Eagle on May 14, 1999)

   3.5    Certificate of Designation, Number, Voting Powers, Preferences and
          Rights of Series B Non-Voting Preferred Stock of Eagle Family Foods
          Holdings, Inc. dated September 24, 1999 (Incorporated by reference to
          Exhibit 3.1 of the Report on Form 10-Q, filed by Holdings and Eagle on
          October 27, 1999)

   4.1    Credit Agreement, dated January 23, 1998, by and among Holdings,
          Eagle, The Chase Manhattan Bank, Merrill Lynch Capital Corporation,
          Chase Securities, Inc., and Merrill Lynch, Pierce, Fenner & Smith
          Incorporated, as amended by Amendment No. 1, dated August 12, 1998, as
          amended by Amendment No. 2, dated November 30, 1998, as amended by
          Amendment No. 3, dated June 30, 1999, as amended by Amendment No. 4
          dated June 29, 2000, as amended by Amendment No. 5 dated January 26,
          2001, and as amended by Amendment No. 6 dated August 10, 2001.

   4.2    Purchase Agreement, dated January 16, 1998, by and among Holdings,
          Eagle, Chase Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith
          Incorporated (Incorporated by reference to Exhibit 4.1 of the S-4)

   4.3    Indenture, dated January 23, 1998, among Holdings, Eagle and IBJ
          Schroder Bank & Trust Company (including Specimen Certificates of 8
          3/4% Series Senior Subordinated Notes due 2008 and 8 3/4% Series B
          Senior Subordinated Notes due 2008) (Incorporated by reference to
          Exhibit 4.2 of the S-4)

   4.4    Registration Rights Agreement, dated January 23, 1998, by and among
          Holdings, Eagle, Chase Securities Inc. and Merrill Lynch, Pierce,
          Fenner & Smith Incorporated (Incorporated by reference to Exhibit 4.3
          of the S-4)

   4.5    Stockholders Agreement, dated as of January 23, 1998, by and among
          Holdings and certain stockholders of Holdings named therein
          (Incorporated by reference to Exhibit 4.5 of the S-4)

   4.6    Exchange and Registration Rights Agreement, dated as of January 23,
          1998, by and among Holdings and certain stockholders of Holdings named
          therein (Incorporated by reference to Exhibit 4.6 of the S-4)

   4.7    Subscription Rights Agreement, dated as of January 23, 1998, by and
          among Holdings, GEI and Warburg (Incorporated by reference to Exhibit
          4.7 of the S-4)

   4.8    First Amendment to Registration Rights Agreement, dated September 27,
          1999, by and among Holdings and certain investors named therein
          (Incorporated by reference to Exhibit 4.1 of the 10-Q, filed on
          October 27, 1999)

   4.9    First Amendment to Stockholders Agreement, dated September 27, 1999,
          by and among Holdings and certain stockholders of Holdings named
          therein (Incorporated by reference to Exhibit 4.2 of the Report on
          Form 10-Q, filed by Holdings and Eagle on October 27, 1999)

   4.10   Subscription Agreement, dated September 27, 1999, by and among
          Holdings, GE Investment Private Placement Partners, II, a Limited
          Partnership and Warburg, Pincus Ventures, L. P. (Incorporated by
          reference to Exhibit 4.3 of the Report on Form 10-Q, filed by Holdings
          and Eagle on October 27, 1999)

   10.1   Master Customer Services Agreement, dated as of January 23, 1998, by
          and between the Company and Borden Foods Corporation (Incorporated by
          reference to Exhibit 10.1 of the S-4)

   10.2   License Agreement dated January 23, 1998 by and among BDH Two, Inc.,
          Borden, Inc. and the Company (Incorporated by reference to Exhibit
          10.2 of the S-4)

                                       28

<PAGE>

   10.3   Assignment of Trademark License Agreement dated January 23, 1998, by
          and between BFC and the Company of BFC's License Agreement, dated as
          of September 4, 1997, by and between BFC and Southern Foods Group,
          L.P. (Incorporated by reference to Exhibit 10.3 of the S-4)

   10.4   License Agreement, dated January 23, 1998, by and between BFC and the
          Company (Incorporated by reference to Exhibit 10.4 of the S-4)

   10.5   The 1998 Stock Incentive Plan of Holdings (Incorporated by reference
          to Exhibit 10.5 of the S-4)

   10.6   Employment Agreement, dated January 23, 1998, by and between Craig A.
          Steinke and the Company (Incorporated by reference to Exhibit 10.8 of
          the S-4)

   10.7   Pledge Agreement, dated January 23, 1998, by and between John O'C.
          Nugent and the Company (Incorporated by reference to Exhibit 10.12 of
          the S-4)

   10.8   Secured Recourse Promissory Note, dated January 23, 1998, from John
          O'C. Nugent to the Company (Incorporated by reference to Exhibit 10.14
          of the S-4)

   10.9   Amendment No. 1 to the Eagle Family Foods Holdings, Inc. 1998 Stock
          Incentive Plan, effective January 5, 2000 (Incorporated by reference
          to Exhibit 10.1 of the Report on Form 10-Q, filed by Holdings and
          Eagle on May 10, 2000)

   12.1   Eagle Family Foods Holdings, Inc. Ratio of Earnings to Fixed Charges

   12.2   Eagle Family Foods, Inc. Ratio of Earnings to Fixed Charges

                                       29

<PAGE>

 (b) Reports on Form 8-K

     A report on Form 8-K, dated September 19, 2002, was filed by the
registrants disclosing their intent to close the Chester, South Carolina
powdered non-dairy creamer manufacturing plant in late November 2002.

CERTIFICATIONS

I, Craig A. Steinke, Chief Executive Officer and Chief Financial Officer of
Eagle Family Foods, Inc., certify that:

     1.   I have reviewed this annual report on Form 10-K of Eagle Family Foods,
          Inc.;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report; and

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report.


Date: September 27, 2002
                                               /s/ Craig A. Steinke
                                               ---------------------------------
                                               Craig A. Steinke
                                               Chief Executive Officer and Chief
                                               Financial Officer



I, Craig A. Steinke, Chief Executive Officer and Chief Financial Officer of
Eagle Family Foods Holdings, Inc., certify that:

     1.   I have reviewed this annual report on Form 10-K of Eagle Family Foods
          Holdings, Inc.;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report; and

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report.


Date: September 27, 2002
                                               /s/ Craig A. Steinke
                                               ---------------------------------
                                               Craig A. Steinke
                                               Chief Executive Officer and Chief
                                               Financial Officer

                                       30

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrants have duly caused this report to be signed
on their behalf by the undersigned, thereunto duly authorized.


                                       Eagle Family Foods Holdings, Inc.


                                         By:        /s/ Craig A. Steinke
                                             -----------------------------------
                                                        Craig A. Steinke
                                             President, Chief Executive Officer
                                                and Chief Financial Officer


                                       Eagle Family Foods, Inc.


                                         By:        /s/ Craig A. Steinke
                                             -----------------------------------
                                                        Craig A. Steinke
                                             President, Chief Executive Officer
                                                and Chief Financial Officer

September 27, 2002


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrants and in their capacities indicated.

<TABLE>
<CAPTION>
                 Name                                      Title                            Date
                 ----                                      -----                            ----
<S>                                        <C>                                       <C>
         /s/ Craig A. Steinke              Director, President, Chief Executive      September 27, 2002
---------------------------------------    Officer and Chief Financial Officer
             Craig A. Steinke              (principal executive officer and
                                           principal financial and accounting
                                           officer)

       /s/ Andreas T. Hildebrand           Director                                  September 27, 2002
---------------------------------------
           Andreas T. Hildebrand

            /s/ Kewsong Lee                Director                                  September 27, 2002
---------------------------------------
                Kewsong Lee

           /s/ David A. Barr               Director                                  September 27, 2002
---------------------------------------
               David A. Barr

          /s/ Donald W. Torey              Director                                  September 27, 2002
---------------------------------------
              Donald W. Torey
</TABLE>

                                       31

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Eagle Family Foods, Inc. and
Eagle Family Foods Holdings, Inc.


In our opinion, the accompanying balance sheets and the related statements of
operations and comprehensive loss, of cash flows and changes in stockholder's
equity of Eagle Family Foods, Inc. and the accompanying consolidated balance
sheets and the related consolidated statements of operations and comprehensive
loss, of cash flows and changes in stockholders' equity (deficit) of Eagle
Family Foods Holdings, Inc. present fairly, in all material respects, the
financial position of Eagle Family Foods, Inc. and Eagle Family Foods Holdings,
Inc. at June 29, 2002 and June 30, 2001, and the results of their operations and
their cash flows for each of the three years in the period ended June 29, 2002,
in conformity with accounting principles generally accepted in the United States
of America. 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 of these statements in
accordance with auditing standards generally accepted in the United States of
America, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP


Columbus, Ohio


August 26, 2002

                                       32

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                 Statements of Operations and Comprehensive Loss
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                         Fifty-Two Week Period Ended
                                                                              June 29, 2002      June 30, 2001      July 1, 2000
                                                                             ---------------   -----------------   ---------------
<S>                                                                          <C>               <C>                 <C>
Net sales, before marketing allowance .....................................  $       171,431   $         220,633   $       224,733
Marketing allowance .......................................................           27,582              35,063            38,568
                                                                             ---------------   -----------------   ---------------
Net sales .................................................................          143,849             185,570           186,165
Cost of goods sold ........................................................           90,147             102,650           111,140
Cost of goods sold, accelerated depreciation ..............................           11,126                  --                --
                                                                             ---------------   -----------------   ---------------
   Cost of goods sold .....................................................          101,273             102,650           111,140
   Gross margin ...........................................................           42,576              82,920            75,025
Distribution expense ......................................................            9,004              12,851            13,098
Marketing expense .........................................................           12,335              20,284            27,071
General and administrative expense ........................................            8,824              13,363            13,580
Amortization of intangibles ...............................................            8,052              11,157            11,156
Gain on sale of product lines, net of reorganization charges ..............          (18,722)                 --                --
Other operating income ....................................................               --                  --            (1,212)
                                                                             ---------------   -----------------   ---------------
   Operating income .......................................................           23,083              25,265            11,332
Interest expense, net .....................................................           20,691              33,200            31,669
                                                                             ---------------   -----------------   ---------------
   Income (loss) before income taxes and cumulative effect
   of accounting change ...................................................            2,392              (7,935)          (20,337)
Income tax benefit (expense) ..............................................          (34,101)              2,862             8,727
                                                                             ---------------   -----------------   ---------------
   Net loss before cumulative effect of accounting change .................          (31,709)             (5,073)          (11,610)
   Cumulative effect of accounting change (net of tax $212) ...............               --                (361)               --
                                                                             ---------------   -----------------   ---------------
   Net loss ...............................................................  $       (31,709)  $          (5,434)  $       (11,610)
                                                                             ===============   =================   ===============
Other comprehensive loss:
   Cash flow hedges -
      Cumulative effect of accounting change
       (net of tax of $741) ...............................................               --               1,262                --
      Change in fair value of financial derivatives
        (net of tax benefit of $568) ......................................               --                (967)               --
      Change in fair value of commodity contracts (net of tax
      benefit of $24) .....................................................              (41)                 --                --
      Reclassification to interest expense
        (net of tax benefit of $124 and $127) .............................             (211)               (215)               --

   Foreign currency translation adjustment ................................              107                 (55)             (213)
                                                                             ---------------   -----------------   ---------------
   Comprehensive loss .....................................................  $       (31,854)  $          (5,409)  $       (11,823)
                                                                             ===============   =================   ===============
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       33

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                                 Balance Sheets
                    (Dollars in Thousands Except Share Data)

<TABLE>
<CAPTION>
                                                                                 June 29, 2002       June 30, 2001
                                                                                ----------------   ----------------
<S>                                                                             <C>                <C>
                                  Assets
Current assets
   Cash and cash equivalents ................................................   $            892   $          1,064
   Accounts receivable, net .................................................              9,379             14,334
   Inventories ..............................................................             35,491             36,929
   Other current assets .....................................................                605              1,487
                                                                                ----------------   ----------------
     Total current assets ...................................................             46,367             53,814

Property and equipment, net .................................................              8,670             31,014
Note receivable from related party. .........................................                 --                339
Intangibles, net ............................................................            162,837            260,597
Deferred income taxes .......................................................                 --             33,889
Other non-current assets ....................................................              5,168              7,470
Intercompany receivable .....................................................              1,382                423
                                                                                ----------------   ----------------
Total assets ................................................................   $        224,424   $        387,546
                                                                                ================   ================

                   Liabilities and Stockholder's Equity
Current liabilities
   Current portion of long-term debt ........................................   $            936   $            750
   Accounts payable .........................................................              5,825              7,021
   Other accrued liabilities ................................................              7,031              3,954
   Accrued interest .........................................................              5,071              8,508
                                                                                ----------------   ----------------
     Total current liabilities ..............................................             18,863             20,233

Long-term debt ..............................................................            202,852            332,750

Commitments and contingencies (Note 14)

Stockholder's equity
   Common stock, $.01 par value, 250,000 shares authorized, 10,000 shares
     issued and outstanding .................................................                  1                  1
   Additional paid-in capital ...............................................             92,500             92,500
   Accumulated deficit ......................................................            (89,682)           (57,973)
   Accumulated other comprehensive income (loss) ............................               (110)                35
                                                                                ----------------   ----------------
     Total stockholder's equity .............................................              2,709             34,563
                                                                                ----------------   ----------------
Total liabilities and stockholder's equity ..................................   $        224,424   $        387,546
                                                                                ================   ================
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       34

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                            Statements of Cash Flows
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                                  Fifty-Two Week Period Ended
                                                                                            June 29,      June 30,        July 1,
                                                                                              2002          2001           2000
                                                                                          ------------- ------------- --------------
<S>                                                                                      <C>           <C>           <C>
Cash flows from (used in) operating activities:
   Net loss ..........................................................................   $    (31,709) $     (5,434) $     (11,610)
   Adjustments to reconcile net loss to net cash from (used in) operating activities
     Depreciation and amortization ...................................................         25,549        17,434         18,730
     Amortization of deferred financing costs ........................................          2,878         2,322          1,823
     Deferred taxes ..................................................................         33,889        (3,094)        (8,789)
     Gain on divestiture .............................................................        (18,722)           --             --
     Cumulative effect of accounting change ..........................................             --           361             --
     Loss (gain) on retirement/sale of fixed assets ..................................             (5)           32            (46)
   Net change in assets and liabilities:
     Accounts receivable, net ........................................................          4,955          (462)         6,719
     Inventories .....................................................................         (1,542)       (2,541)         7,977
     Accounts payable ................................................................         (1,196)       (4,942)        (4,055)
     Other assets ....................................................................           (250)         (825)         3,439
     Other liabilities ...............................................................        (11,768)       (4,677)        (3,976)
                                                                                          ------------  ------------  --------------
   Cash from (used in) operating activities ..........................................          2,079        (1,826)        10,212

Cash from (used in) investing activities:
   Capital expenditures ..............................................................           (414)       (3,568)        (7,564)
   Proceeds from the sale of assets ..................................................             41            --             85
   Repayment of notes and interest receivable ........................................             --            --            473
   Proceeds from sale of product lines ...............................................        128,425            --             --
                                                                                          ------------  ------------  --------------
   Cash from (used in) investing activities ..........................................        128,052        (3,568)        (7,006)

Cash (used in) from financing activities:
   Borrowings under revolving credit facility ........................................         64,100        78,900         65,500
   Payments under revolving credit facility ..........................................        (75,500)      (71,900)       (75,500)
   Proceeds from sale of interest rate swap agreements ...............................             --           873             --
   Payments under term loan facility .................................................       (118,312)       (1,000)        (1,000)
   Other financing costs .............................................................           (591)       (1,612)        (1,981)
   Capital contribution ..............................................................             --            --         10,000
                                                                                          ------------  ------------  --------------
   Cash (used in) from financing activities ..........................................       (130,303)        5,261         (2,981)

(Decrease) increase in cash and cash equivalents .....................................           (172)         (133)           225
Cash and cash equivalents at beginning of period .....................................          1,064         1,197            972
                                                                                          ------------  ------------  --------------
Cash and cash equivalents at end of period ...........................................   $        892  $      1,064  $       1,197
                                                                                          ============  ============  ==============
Supplemental disclosure:
   Interest paid .....................................................................   $     21,528  $     31,863  $      29,261
                                                                                          ============  ============  ==============
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       35

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                  Statements of Changes in Stockholder's Equity
               For the Fifty-Two Week Periods Ended June 29, 2002,
                         June 30, 2001 and July 1, 2000
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                                Accumulated
                                                               Additional                          Other
                                                 Common           Paid        Accumulated      Comprehensive
                                                  Stock        in Capital       Deficit        Income (Loss)        Total
                                               ------------   -------------   -------------    ---------------  --------------
<S>                                           <C>            <C>             <C>              <C>              <C>
Balance, July 3, 1999 ....................... $         1    $     82,500    $    (40,929)    $          223   $      41,795
Net loss ....................................          --              --         (11,610)                --         (11,610)
Capital contribution ........................          --          10,000              --                 --          10,000
Other comprehensive loss:
  Foreign currency translation adjustment ...          --              --              --               (213)           (213)
                                               ------------   -------------   -------------    ---------------  --------------
Balance, July 1, 2000 .......................           1          92,500         (52,539)                10          39,972
Net loss ....................................          --              --          (5,434)                --          (5,434)
Other comprehensive loss:
  Cumulative effect of accounting change ....          --              --              --              1,262           1,262
  Change in fair value of financial
    derivatives .............................          --              --              --               (967)           (967)
  Reclassification to interest expense ......          --              --              --               (215)           (215)
  Foreign currency translation adjustment ...          --              --              --                (55)            (55)
                                               ------------   -------------   -------------    ---------------  --------------
Balance, June 30,2001 .......................           1          92,500         (57,973)                35          34,563
Net loss ....................................          --              --         (31,709)                --         (31,709)
Other comprehensive loss:
  Change in fair value of commodities .......          --              --              --                (41)            (41)
  Recognition of interest income ............          --              --              --               (211)           (211)
  Foreign currency translation adjustment ...          --              --              --                107             107
                                               ------------   -------------   -------------    ---------------  --------------
Balance, June 29,2002 ....................... $         1    $     92,500    $    (89,682)    $         (110)  $       2,709
                                               ============   =============   =============    ===============  ==============
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       36

<PAGE>

                        EAGLE FAMILY FOODS HOLDINGS, INC.
          Consolidated Statements of Operations and Comprehensive Loss
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                              Fifty-Two Week Period Ended
                                                                      June 29, 2002   June 30, 2001   July 1, 2000
                                                                      -------------- --------------- --------------
<S>                                                                    <C>             <C>            <C>
Net sales, before marketing allowance ..............................   $   171,431     $   220,633    $   224,733
Marketing allowance ................................................        27,582          35,063         38,568
                                                                       -----------     -----------    -----------
Net sales ..........................................................       143,849         185,570        186,165
Cost of goods sold .................................................        90,147         102,650        111,140
Cost of goods sold, accelerated depreciation .......................        11,126              --             --
                                                                       -----------     -----------    -----------
   Cost of goods sold ..............................................       101,273         102,650        111,140
   Gross margin ....................................................        42,576          82,920         75,025
Distribution expense ...............................................         9,004          12,851         13,098
Marketing expense ..................................................        12,335          20,284         27,071
General and administrative expense .................................         8,794          13,372         13,601
Amortization of intangibles ........................................         8,052          11,157         11,156
Gain on sale of product lines, net of reorganization charges .......       (18,722)             --             --
Other operating income .............................................            --              --         (1,212)
                                                                       -----------     -----------    -----------
   Operating income ................................................        23,113          25,256         11,311
Interest expense, net ..............................................        20,691          33,200         31,669
                                                                       -----------     -----------    -----------
   Income (loss) before income taxes and cumulative effect of
   accounting change ...............................................         2,422          (7,944)       (20,358)
Income tax benefit (expense) .......................................       (34,101)          2,862          8,727
                                                                       -----------     -----------    -----------
Net loss before cumulative effect of accounting change .............       (31,679)         (5,082)       (11,631)
Cumulative effect of accounting change (net of tax of $212 ) .......            --            (361)            --
                                                                       -----------     -----------    -----------
   Net loss ........................................................   $   (31,679)    $    (5,443)   $   (11,631)
                                                                       ===========     ===========    ===========
Other comprehensive loss:
   Cash flow hedges -
      Cumulative effect of accounting change
        (net of tax of $741) .......................................            --           1,262             --
      Change in fair value of financial derivatives
        (net of tax benefit of $568) ...............................            --            (967)            --
      Change in fair value of commodity contracts (net of tax
        benefit of $24) ............................................           (41)             --             --
      Reclassification to interest expense
        (net of tax benefit of $124 and $127) ......................          (211)           (215)            --
   Foreign currency translation adjustment .........................           107             (55)          (213)
                                                                       -----------     -----------    -----------
   Comprehensive loss ..............................................   $   (31,824)    $    (5,418)   $   (11,844)
                                                                       ===========     ===========    ===========
</TABLE>


    The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       37

<PAGE>

                        EAGLE FAMILY FOODS HOLDINGS, INC.
                           Consolidated Balance Sheets
                    (Dollars in Thousands Except Share Data)

<TABLE>
<CAPTION>
                                                                                 June 29, 2002     June 30, 2001
                                                                                ---------------   ---------------
<S>                                                                                <C>               <C>
                                       Assets
Current assets
   Cash and cash equivalents .................................................     $     892         $   1,064
   Accounts receivable, net ..................................................         9,379            14,334
   Inventories ...............................................................        35,491            36,929
   Other current assets ......................................................           605             1,487
                                                                                   ---------         ---------
     Total current assets ....................................................        46,367            53,814

Property and equipment, net ..................................................         8,670            31,014
Intangibles, net .............................................................       162,837           260,597
Deferred income taxes ........................................................            --            33,889
Other non-current assets .....................................................         5,168             7,470
                                                                                   ---------         ---------
Total assets .................................................................     $ 223,042         $ 386,784
                                                                                   =========         =========

                        Liabilities and Stockholders' Deficit
Current liabilities
   Current portion of long-term debt .........................................     $     936         $     750
   Accounts payable ..........................................................         5,825             7,021
   Other accrued liabilities .................................................         7,031             3,954
   Accrued interest ..........................................................         5,071             8,508
                                                                                   ---------         ---------
     Total current liabilities ...............................................        18,863            20,233

Long-term debt ...............................................................       202,852           332,750

Commitments and contingencies (Note 14)

Redeemable preferred stock, 1,000,000 shares authorized:
   Series A preferred stock, $100 stated value, 816,750 shares issued and
     outstanding at redemption value .........................................       125,555           114,162
   Treasury stock, 10,962 and 3,438 shares respectively at cost ..............        (1,382)             (423)
   Subscription receivable ...................................................            --              (333)
                                                                                   ---------         ---------
                                                                                     124,173           113,406
   Series B preferred stock, $100,000 stated value, 99 shares issued and
     outstanding at redemption value .........................................        12,956            11,757
                                                                                   ---------         ---------
     Total redeemable preferred stock ........................................       137,129           125,163

Stockholders' deficit
   Common stock $0.01 par value, 1,200,000 shares authorized, 1,002,582
   and 1,116,704 issued and outstanding, respectively ........................            10                11
   Additional paid-in capital ................................................           958             1,001
   Accumulated deficit .......................................................      (136,660)          (92,388)
   Accumulated other comprehensive income (loss) .............................          (110)               35
   Other .....................................................................            --               (21)
                                                                                   ---------         ---------
     Total stockholders' deficit .............................................      (135,802)          (91,362)
                                                                                   ---------         ---------
Total liabilities and stockholders' deficit ..................................     $ 223,042         $ 386,784
                                                                                   =========         =========
</TABLE>


    The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       38

<PAGE>

                        EAGLE FAMILY FOODS HOLDINGS, INC.
                      Consolidated Statements of Cash Flows
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                                Fifty-Two Week Period Ended
                                                                                        June 29, 2002   June 30, 2001  July 1, 2000
                                                                                        -------------   -------------  ------------
<S>                                                                                     <C>             <C>            <C>
Cash flows from (used in) operating activities:
   Net loss ..........................................................................  $     (31,679)  $      (5,443) $    (11,631)
   Adjustments to reconcile net loss to net cash from (used in) operating activities
     Depreciation and amortization ...................................................         25,519          17,443        18,752
     Amortization of deferred financing costs ........................................          2,878           2,322         1,823
     Deferred taxes ..................................................................         33,889          (3,094)       (8,789)
     Cumulative effect of accounting  change .........................................             --             361            --
     Gain on divestiture .............................................................        (18,722)             --            --
     Loss (gain) on retirement/sale of fixed assets ..................................             (5)             32           (46)
   Net change in assets and liabilities:
     Accounts receivable, net ........................................................          4,955            (462)        6,719
     Inventories .....................................................................         (1,542)         (2,541)        7,977
     Accounts payable ................................................................         (1,196)         (4,942)       (4,055)
     Other assets ....................................................................            716            (825)        3,861
     Other liabilities ...............................................................        (11,768)         (4,677)       (3,976)
                                                                                        -------------   -------------  ------------
   Cash from (used in) operating activities ..........................................          3,045          (1,826)       10,635

Cash from (used in) investing activities:
   Capital expenditures ..............................................................           (414)         (3,568)       (7,564)
   Proceeds from the sale of assets ..................................................             41              --            85
   Repayment of notes and interest receivable ........................................             --              --           473
   Proceeds from sale of product lines ...............................................        128,425              --            --
                                                                                        -------------   -------------  ------------
   Cash from (used in) investing activities ..........................................        128,052          (3,568)       (7,006)

Cash (used in) from financing activities:
   Borrowings under revolving credit facility ........................................         64,100          78,900        65,500
   Payments under revolving credit facility ..........................................        (75,500)        (71,900)      (75,500)
   Proceeds from sale of interest rate swap agreements ...............................             --             873            --
   Payments under term loan facility .................................................       (118,312)         (1,000)       (1,000)
   Other financing costs .............................................................           (591)         (1,612)       (1,981)
   Purchase of Series A Preferred Stock ..............................................           (966)             --          (423)
   Issuance of Series B Preferred Stock and Common Stock .............................             --              --        10,000
                                                                                        -------------   -------------  ------------
   Cash (used in) from financing activities ..........................................       (131,269)          5,261        (3,404)

(Decrease) increase in cash and cash equivalents .....................................           (172)           (133)          225
Cash and cash equivalents at beginning of period .....................................          1,064           1,197           972
                                                                                        -------------   -------------  ------------
Cash and cash equivalents at end of period ...........................................  $         892   $       1,064  $      1,197
                                                                                        =============   =============  ============

Supplemental disclosure:
   Interest paid .....................................................................  $      21,528   $      31,863  $     29,261
                                                                                        =============   =============  ============
   Non-cash activities, including dividends accrued on redeemable preferred stock ....  $      12,593   $      11,636  $     10,360
                                                                                        =============   =============  ============
</TABLE>

    The accompanying notes are an integral part of the consolidated financial
                                   statements.

                                       39

<PAGE>

                        EAGLE FAMILY FOODS HOLDINGS, INC.
      Consolidated Statements of Changes in Stockholders' Equity (Deficit)
               For the Fifty-Two Week Periods Ended June 29, 2002,
                         June 30, 2001 and July 1, 2000
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                          Accumulated
                                                            Additional                       Other
                                              Common           Paid      Accumulated     Comprehensive
                                               Stock        In Capital     Deficit           Income          Other        Total
                                             ----------    ------------ --------------   --------------   -----------  ------------
<S>                                          <C>           <C>          <C>              <C>              <C>          <C>
Balance, July 3, 1999 ...................... $       10    $        966 $      (53,318)  $          223   $      (116) $    (52,235)
Net loss ...................................         --              --        (11,631)              --            --       (11,631)
Preferred stock dividend ...................         --              --        (10,360)              --            --       (10,360)
Subscription receivable:
  Interest Income ..........................         --              --             --               --            (5)           (5)
Infusion of capital ........................          1              99             --               --            --           100
Cancellation of restricted common stock
  grants ...................................         --             (64)            --               --            64            --
Payment on subscription receivable .........         --              --             --               --             9             9
Amortization of unearned compensation ......         --              --             --               --            21            21
Other comprehensive loss:
  Foreign currency translation adjustment ..         --              --             --             (213)           --          (213)
                                             ----------    ------------ --------------   --------------   -----------  ------------
Balance, July 1, 2000 ......................         11           1,001        (75,309)              10           (27)      (74,314)
Net loss ...................................         --              --         (5,443)              --            --        (5,443)
Preferred stock dividend ...................         --              --        (11,636)              --            --       (11,636)
Subscription receivable:
  Interest Income ..........................         --              --             --               --            (3)           (3)
Amortization of unearned compensation ......         --              --             --               --             9             9
Other comprehensive loss:
  Cumulative effect of accounting change ...         --              --             --            1,262                       1,262
  Change in fair value of financial
    derivatives ............................         --              --             --             (967)           --          (967)
  Reclassification to interest expense .....         --              --             --             (215)           --          (215)
  Foreign currency translation adjustment ..         --              --             --              (55)           --           (55)
                                             ----------    ------------ --------------   --------------   -----------  ------------
Balance, June 30, 2001 .....................         11           1,001        (92,388)              35           (21)      (91,362)
Net loss ...................................         --              --        (31,679)              --            --       (31,679)
Preferred stock dividend ...................         --              --        (12,593)              --            --       (12,593)
Subscription receivable:
  Interest income ..........................         --              --             --               --            (1)           (1)
  Repayment of subscription receivable .....         --              --             --               --             7             7
  Termination of restricted common
    stock ..................................         (1)            (43)            --               --             1           (43)
Amortization of unearned compensation ......         --              --             --               --            14            14
Other comprehensive loss:
  Change in fair value of commodities ......         --              --             --              (41)           --           (41)
  Recognition of interest income ...........         --              --             --             (211)           --          (211)
  Foreign currency translation adjustment ..         --              --             --              107            --           107
                                             ----------    ------------ --------------   --------------   -----------  ------------
Balance, June 29, 2002 ..................... $       10    $        958 $     (136,660)  $         (110)  $        --  $   (135,802)
                                             ==========    ============ ==============   ==============   ===========  ============
</TABLE>

 The accompanying notes are an integral part of the consolidated financial
                                   statements.

                                       40

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                        Notes to the Financial Statements

1. Basis of Presentation:

     The accompanying financial statements as of June 29, 2002 and June 30, 2001
and for the fifty-two week periods ended June 29, 2002, June 30, 2001 and July
1, 2000 present the financial position, results of operations and cash flows of
Eagle Family Foods, Inc. ("Eagle") and the consolidated financial position,
results of operations and cash flows of Eagle Family Foods Holdings, Inc.
("Holdings") and its wholly owned subsidiary, Eagle. Eagle and Holdings are
collectively referred to as the "Company", unless the context indicates
otherwise. All significant intercompany balances and transactions have been
eliminated in consolidation. Certain prior year amounts have been reclassified
to conform to the current year's presentation. Eagle's and Holdings' fiscal year
end is the Saturday closest to June 30. Fiscal years are designated in the
financial statements and notes by the calendar year in which the fiscal year
ends.

     Eagle was incorporated on November 14, 1997 and Holdings was incorporated
on December 22, 1997. On December 30, 1997, Eagle issued 10,000 shares of common
stock, par value $.01 per share, for $1,000 to Holdings. Holdings and Eagle did
not realize any income or incur any expenses until commencement of operations on
January 23, 1998. On January 23, 1998, Holdings received $82.5 million from GE
Investment Private Placement Partners II ("GEI"), Warburg, Pincus Ventures, L.P.
("Warburg") and certain members of management in exchange for 825,000 shares of
common stock and 816,750 shares of Series A preferred stock. On January 23,
1998, Eagle acquired certain assets of Borden Foods Corporation ("BFC") and
certain of their affiliates for $376.8 million. Financing for the acquisition
and related fees consisted of (i) $82.5 million equity contribution from
Holdings, (ii) $115.0 million of 8.75% senior subordinated notes and (iii)
senior secured credit facilities in the aggregate principal amount of $245.0
million, consisting of a $175.0 million term loan facility and a $70.0 million
revolving credit facility, under which $16.5 million was drawn at the time of
the acquisition closing.

     The acquisition was reflected in the financial statements using the
purchase method of accounting. The purchase price was allocated to the assets of
Eagle based on their fair values. The fair values of assets were determined
based on independent appraisals and management estimates.

     Eagle operates in a single segment that manufactures and markets a
portfolio of leading dry-grocery food products with widely recognized and
established brands in the United States. The Company also has limited sales and
manufacturing in Canada. The Company's portfolio of products includes Eagle
Brand sweetened condensed milk, None Such mincemeat pie filling, Cremora
powdered non-dairy creamer, Kava acid-neutralized coffee and Borden eggnog, and
through September 19, 2001 included ReaLemon and ReaLime lemon and lime juice
from concentrate.

2. Summary of Significant Accounting Policies:

   Revenue Recognition

     Revenues are recognized when title, ownership and risk of loss transfers to
the customer. Liabilities are established for estimated returns, allowances,
consumer and certain trade promotions and discounts when revenues are
recognized. In the fourth quarter of fiscal year 2001, the Company changed its
method of accounting for revenue, as clarified in the Securities and Exchange
Commission Staff Accounting Bulletin ("SAB") No. 101. The Company recorded a
cumulative effect from this accounting change of $361,000, net of tax of
$212,000.

   Research and Development

     Research and development costs are charged to general and administrative
expense when incurred. Research and development costs amounted to $629,000,
$1,510,000 and $1,718,000 for the periods ended June 29, 2002, June 30, 2001 and
July 1, 2000.

                                       41

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

   Advertising and Promotion

     The Company advertises its products through national and regional media,
and through cooperative advertising programs with retailers. Certain products
are also promoted with direct consumer rebate programs. The Company's customers
may also be offered pre-season stocking and in-store promotional allowances.

     Production costs of future media advertising and consumer promotion events
are deferred until the advertising or promotion first occurs. All other
advertising and promotion costs are expensed ratably to interim periods in
relation to revenues. Amounts paid to or credited to customers for promotional
activities are classified as a reduction of net sales. Advertising and
promotional expenses were $30,830,000, $39,877,000 and $49,002,000 for the
periods ended June 29, 2002, June 30, 2001 and July 1, 2000, respectively.

   Cash and Cash Equivalents

     The Company considers liquid investments purchased with an initial term to
maturity of three months or less when purchased to be cash equivalents.

   Inventories

     Inventories are stated at the lower of cost or market, with cost of goods
sold being determined using the first-in, first-out method.

   Slotting Allowance

     The costs of obtaining shelf space (slotting) are expensed over a period
not to exceed twelve months. Slotting expense was $392,000, $567,000 and
$3,463,000 for the periods ended June 29, 2002, June 30, 2001 and July 1, 2000,
respectively.

   Property and Equipment

     Property and equipment is stated at cost. Depreciation of property and
equipment is calculated for financial reporting purposes on a straight-line
method using estimated service lives ranging principally from 8-20 years for
buildings and improvements and 3-10 years for other property and equipment. When
assets are sold, retired or otherwise disposed of, the related cost and
accumulated depreciation are removed from the accounts and any related gain or
loss is recorded in the statement of operations. Normal maintenance and repairs
are expensed as incurred, while major renewals and betterments that extend
service lives are capitalized.

   Capitalized Software Development Costs

     Certain external costs and internal payroll and payroll related costs
incurred during the application development and implementation stages of a
software project are capitalized and amortized on a straight-line basis over the
useful life of the software. Costs incurred during the preliminary project and
post-implementation stages are expensed as incurred. Capitalized software costs
were $9,063,000 at June 29, 2002 and June 30, 2001, and had a net book value of
$2,996,000 and $4,834,000 at June 29, 2002 and June 30, 2001, respectively.

   Intangibles

     Intangibles are stated at cost and are amortized on a straight-line basis
over their estimated useful lives. Goodwill represents the excess of purchase
price over fair value of identifiable assets and liabilities acquired.

                                       42

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

   Impairment

     Long-lived assets including goodwill and tradenames are reviewed for
impairment whenever events or changes indicate that full recoverability is
questionable. Factors used in the valuation include, but are not limited to,
management's plans for future operations, recent operating results and projected
undiscounted cash flows.

   Other Non-current Assets

     Other non-current assets at June 29, 2002 and June 30, 2001 consisted
primarily of net deferred financing costs amounting to approximately $5,160,000
and $7,447,000, respectively. Such costs are amortized over the term of the
related debt using the interest method.

   Start up Costs

     Costs for start up activities are expensed as incurred.

   Income Taxes

     The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires the use of the liability method.
Under this method, deferred tax assets and liabilities are recognized based on
the difference between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates in effect in the years in which
those temporary differences are expected to reverse. Under SFAS No. 109, the
effect on deferred taxes of a change in tax rates is recognized in income in the
period that includes the enactment date. The Company assesses the recoverability
of the deferred tax assets in accordance with the provisions of SFAS No. 109. In
accordance with SFAS No. 109, the Company recorded a valuation allowance for the
net deferred tax assets and net operating loss carryforwards of $33.2 million as
of June 29, 2002.

    Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosure of contingent
assets, liabilities, revenue and expenses as well as assets and liabilities.
Actual results may differ from those estimates.

   Foreign Currency Translation

     All assets and liabilities of Canadian operations are translated into U.S.
dollars using the rate at the end of the fiscal period. Income and expense items
are translated at average exchange rates prevailing during the fiscal period.
Foreign currency assets, liabilities, income and expenses were not significant
to the Company's financial position, results of operations and cash flows.

   Fair Value of Financial Instruments

     The carrying value of cash equivalents, accounts receivable and accounts
payable as stated on the balance sheets approximate their fair market values
because of their short maturities. The fair value of the Company's debt is
estimated based on the current rates offered to the Company for debt of the same
remaining maturities. The fair value of the Company's derivatives is estimated
based on dealer quotes for those instruments.

                                       43

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

   Derivative Instruments and Hedging

     In July 2000, the Company adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires that all
derivative instruments be recognized as assets and liabilities in the financial
statements at fair value. Derivatives that are not hedges must be adjusted to
fair value through income. If the derivative is a hedge, depending on the nature
of the hedge (fair value or cash flow), changes in the fair value of the
derivative will either be offset against the change in fair value of the hedged
assets or liabilities through earnings, or recognized in other comprehensive
income until the hedged item is recognized in earnings. The amount of the hedged
item is expected to be recorded to earnings within twelve months. The change in
a derivative's fair value related to the ineffective portion of a hedge, if any,
will be immediately recognized in earnings. The Company's current financial
derivatives are treated as cash flow hedges.

     The adoption of the pronouncement resulted in an adjustment to accumulated
other comprehensive income of $1,262,000, net of tax, for the fair value of the
interest rate swap agreement. On November 9, 2000, the Company sold its interest
rate swap positions for fair market gains of $873,000. Pursuant to SFAS 133, the
gains on the interest rate swap agreements will remain in other comprehensive
income and be reclassified as interest expense over the original terms of the
interest rate swap agreements. The interest income in other comprehensive loss
as of December 30, 2000 will be amortized through the period ending December 31,
2002.

     As of June 29, 2002, the Company had purchased 133 milk futures contracts,
which will settle during various months through March 2003, at a cost of $3.7
million and a current market value of $4.2 million, or an aggregate market loss
of $0.5 million. The aggregate market value will increase or decrease based on
the future milk prices activities.

   Environmental

     The Company, like others in similar businesses, is subject to extensive
Federal, state and local environmental laws and regulations. Although the
Company's environmental policies and practices are designed to ensure compliance
with these laws and regulations, future developments and increasingly stringent
regulations could require the Company to incur additional unforeseen
environmental expenditures. Environmental remediation costs are accrued when
environmental assessments and/or remedial efforts are probable and the cost or a
reasonable range can be estimated. Environmental expenditures, which improve the
condition of the property, are capitalized and amortized over their estimated
useful life.

   Recently Issued Accounting Statements

     In June 2001, the FASB issued SFAS No. 141. The statement requires all
business combinations to be accounted for under the purchase method and
establishes criteria for the separate recognition of intangible assets acquired
in a business combination. The provisions of this pronouncement will apply to
any business combinations completed after June 30, 2001.

     In June 2001, the FASB issued SFAS No. 142. SFAS 142 addresses financial
accounting and reporting for intangible assets acquired individually or with a
group of other assets at acquisition and for periods subsequent to acquisition.
The statement provides that goodwill and indefinite life intangible assets be
tested for impairment annually, not amortized over a specified life. The
Company's results do not include any charges for any potential adjustments in
the carrying amount of goodwill and other intangible assets that may be recorded
in connection with the initial adoption of this pronouncement. Based on the
initial impairment evaluation using a royalty savings methodology and discounted
cash flows, the Company expects to record a charge of $43,700,000 (unaudited)
against tradenames and $14,400,000 (unaudited) against goodwill during the first
quarter of fiscal year 2003 as a cumulative effect of an accounting change. The
Company's annual amortization charge will be reduced by an estimated $11.2
million (unaudited) in fiscal year 2003.

                                       44

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

     In June 2001, the FASB issued SFAS No. 143. SFAS 143 addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. The
adoption of this pronouncement did not have a material impact on the Company's
results of operations or financial condition.

     In October 2001, the FASB issued SFAS No. 144. SFAS 144 supercedes SFAS 121
and applies to all long-lived assets (including discontinued operations) and
consequently amends APB 30. SFAS 144 develops an accounting model (based on the
model in SFAS 121) for disposal of long-lived assets. This model requires that
long-lived assets that are to be disposed of be measured at the lower of book
value or fair value, less cost to sell. Additionally, SFAS 144 expands the scope
of discontinued operations to include all components of an entity with
operations that (1) can be distinguished from the rest of the entity and (2)
will be eliminated from the ongoing operations of the entity in a disposal
transaction. SFAS 144 is effective for the Company's first quarter of fiscal
year 2003. The adoption of this pronouncement is not expected to have a material
impact on the Company's results of operations or financial condition.

     In April 2002, the FASB issued SFAS No. 145 with an adoption date of fiscal
years beginning after May 15, 2002. This pronouncement rescinds the
aforementioned Statements and amends SFAS No. 13 and other various authoritative
pronouncements to clarify, correct technically or describe applicability under
changed conditions. The adoption of this pronouncement is not expected to have a
material impact on the Company's results of operations or financial condition.

     In July 2002, the FASB issued SFAS No. 146. SFAS 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Costs covered by SFAS No. 146 include lease termination costs and certain
employee severance costs that are associated with a restructuring, discontinued
operation, plant closing or other exit or disposal activity that is initiated
after December 31, 2002. The Company will adopt this pronouncement for
activities after December 31, 2002. The adoption of this pronouncement is not
expected to have a material impact on the Company's results of operations or
financial condition.

3. Divestiture and restructuring activities:

     On September 19, 2001, the Company sold to Mott's Inc. and Cadbury
Beverages Delaware, Inc. the Company's business of developing, manufacturing,
marketing, distributing and selling shelf-stable juice sold under the ReaLemon
and ReaLime brand names and related assets, including inventory and the
manufacturing facility in Waterloo, New York (the "ReaLemon Sale") for
$128,425,000. The Company recognized a gain of $18,722,000 on the ReaLemon Sale,
net of reorganization and transition charges of $4,769,000.

     In connection with the ReaLemon Sale, the Company committed to a plan
("Plan") to reorganize the management and operations of the Company. The Plan
included the reduction of approximately 60 employees, including executives and
administrative staff at the offices in Tarrytown, New York; Columbus, Ohio; and
Gahanna, Ohio, and the closure of corporate and research and development
offices. The Company completed the tactical actions of the Plan. Costs expensed
to date during the period ended June 29, 2002 related to the Plan and classified
as part of the "Gain on sale of product lines, net of reorganization charges" on
the Consolidated Statement of Operations and Comprehensive Loss included
$3,942,000 severance and related termination costs and $827,000 for contractual
lease liabilities and related office closure costs. The remaining cash
requirements of the Plan as of June 29, 2002 are expected to total approximately
$1,856,000 and are expected to be paid by November 30, 2002.

                                       45

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

      The selected consolidated results of operations excluding the results of
operations for the ReaLemon and ReaLime product lines on a pro forma basis for
the thirteen-week periods and the fifty-two week periods ended June 29, 2002 and
June 30, 2001 were (in thousands and unaudited):

<TABLE>
<CAPTION>
                                                Thirteen Week Period Ended       Fifty-Two Week Period Ended
                                                --------------------------       ---------------------------
                                                  June 29,       June 30,          June 29,        June 30,
                                                    2002           2001              2002            2001
                                                ------------    ----------       ------------     ----------
<S>                                              <C>            <C>                <C>             <C>
       Net sales ............................    $  22,402      $  22,723          $  132,319      $ 129,859
       Gross margin .........................    $   1,829      $   6,826          $   36,276      $  51,725
       Operating Income .....................    $  (6,127)     $  (2,525)         $      776      $   8,491
</TABLE>

      The results of operations of Eagle are substantially consistent with that
of the consolidated results of operations of Holdings.

4. Inventories:

      Inventories are stated at lower of cost or market and at June 29, 2002 and
June 30, 2001 consisted of the following (in thousands):

                                                  June 29, 2002  June 30, 2001
                                                  -------------  -------------
               Finished goods ..................  $      33,915  $      34,033
               Raw material ....................          1,576          2,896
                                                  -------------  -------------
                   Total inventories ...........  $      35,491  $      36,929
                                                  =============  =============

5. Property and Equipment:

      Property and equipment is recorded at cost and consisted of the following
(in thousands):

                                                    June 29, 2002  June 30, 2001
                                                    -------------  -------------
              Land ...............................     $      390    $      470
              Buildings and improvements .........          6,996         9,174
              Machinery and equipment ............         21,965        27,663
              Computers ..........................         10,996        11,862
              Construction in progress ...........            110           351
                                                       ----------    ----------
                  Total property and equipment ...         40,457        49,520
              Accumulated depreciation ...........        (31,787)      (18,506)
                                                       ----------    ----------
                  Net property and equipment .....     $    8,670    $   31,014
                                                       ==========    ==========

      The Company periodically reviews the useful lives of its assets, and when
warranted, changes are made that result in an acceleration of depreciation. The
Company recorded a charge for accelerated depreciation related to long-lived
assets that will be taken out of service before the end of their normal service
period due to the Plan. The useful lives of assets related to the strategic
initiatives were shortened, resulting in incremental depreciation expense
totaling $11,126,000 (unaudited) for fiscal year 2002.

                                       46

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

6. Intangible Assets:

      Intangible assets are amortized on a straight-line basis over their
estimated useful lives and consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                        Estimated Useful
                                                         June 29, 2002   June 30, 2001       Lives
                                                         -------------   -------------  ----------------
<S>                                                      <C>             <C>            <C>
              Tradenames ..............................  $      91,000   $     141,000      40 years
              Goodwill ................................         90,116         136,664      40 years
              Covenant not to compete .................         13,847          21,000       5 years
                                                         -------------   -------------
                 Total intangible assets ..............        194,963         298,664
              Accumulated amortization ................        (32,126)        (38,067)
                                                         -------------   -------------
                 Net intangible assets ................  $     162,837   $     260,597
                                                         =============   =============
</TABLE>

7. Debt:

      Debt consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                                           June 29, 2002  June 30, 2001
                                                                           -------------  --------------
<S>                                                                        <C>            <C>
        Term loan facility due December 31, 2005 ......................    $      53,188  $      171,500
        Senior subordinated notes due January 15, 2008 ................          115,000         115,000
        Revolving credit facility due December 31, 2004 ...............           35,000          46,000
        Revolving credit facility swingline loan due December 31,
          2004 ........................................................              600           1,000
                                                                           -------------  --------------
            Total debt ................................................          203,788         333,500
        Less: current portion of long-term debt .......................             (936)           (750)
                                                                           -------------  --------------
           Long-term debt .............................................    $     202,852  $      332,750
                                                                           =============  ==============
</TABLE>

   Senior Credit Facilities

      The Company is the borrower under a credit agreement, dated as of January
23, 1998, as amended (the "Senior Credit Facilities"), which consists of (i) a
$60 million seven-year revolving credit facility, including a $10.0 million
swingline loan (the "Revolving Credit Facility") and (ii) a $175 million
eight-year term loan (the "Term Loan Facility"). The Senior Credit Facilities
are guaranteed by Holdings and all future domestic subsidiaries of the Company.

      The Senior Credit Facilities contain financial covenants, which require
the Company to meet certain financial tests including debt coverage, interest
expense coverage and capital expenditure requirements. The Senior Credit
Facilities also contain covenants including limitations on additional
indebtedness, liens, asset sales, capital expenditures, sale and leaseback
transactions, dividends, loans and investments, modification of material
agreements, transactions with affiliates, acquisitions, mergers and
consolidations and prepayment of subordinated indebtedness. The Senior Credit
Facilities agreement provides that neither Holdings or Eagle will, nor will they
permit any subsidiary of Eagle to, declare or make, or agree to pay or make,
directly or indirectly, any dividend and certain other distributions and
payments, except primarily (i) Holdings may declare and pay dividends with
respect to its capital stock payable solely in additional shares of its capital
stock (other than redeemable preferred stock) and (ii) subsidiaries of Eagle may
declare and pay dividends ratable with respect to their capital stock. The
Senior Credit Facilities agreement also requires the Company to pledge assets
acquired after the acquisition closing, including stock of after-acquired or
formed subsidiaries, to deliver guarantees by wholly owned domestic subsidiaries
and to maintain insurance. The Senior Credit Facilities contain customary events
of default, including certain changes of control of the Company.

                                       47

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

      The Company amended its Senior Credit Facilities pursuant to an amendment
dated August 10, 2001 (the "Amendment") which became effective as of the
completion of the ReaLemon Sale. Pursuant to the Admendment, the Company
received consent from the lenders for the ReaLemon Sale, and the lenders waived
compliance with certain coverage ratio financial covenants for periods
commencing on and including September 29, 2001 and ending on and including
December 28, 2002. The Amendment includes restrictions on the carrying balance
of the Revolving Credit Facility for a period of thirty consecutive days
commencing on and including December 1 of any year and ending on and including
March 31 of the following year. The Amendment also sets forth minimum
requirements for consolidated earnings before interest, income tax, depreciation
and amortization.

      The interest rate on the Term Loan Facility, as amended, is LIBOR plus
4.00%. The interest rate on the Revolving Credit Facility, as amended, is LIBOR
plus 4.00% with the swingline loan portion bearing interest at Prime plus 3.00%.

      The obligations of Eagle under the Senior Credit Facilities are
collateralized by (i) 100% of the capital stock of the Company and each of its
subsidiaries and (ii) a first priority collateral interest in substantially all
assets and properties of the Company and its future domestic subsidiaries. The
fair market value of the senior credit facilities at June 29, 2002 approximates
the carrying value.

      As of June 29, 2002, the Company had a $500,000 letter of credit
outstanding under the Revolving Credit Facility as required as an insurance
guarantee on a milk surety bond.

   Senior Subordinated Notes

      The Company's senior subordinated notes (the "Notes") are due January 15,
2008 bearing interest of 8.75% per annum, payable on January 15 and July 15,
commencing July 15, 1998. The fair market value of the Notes was approximately
$87.4 million and $66.1 million at June 29, 2002 and June 30, 2001,
respectively.

      The Notes are unconditionally guaranteed by Holdings (the "Parent
Guarantee") and by each future Domestic Subsidiary of the Company (each, a
"Domestic Subsidiary Guarantee" and, collectively, the "Domestic Subsidiary
Guarantees"). The Company currently has no domestic subsidiaries and therefore
none which guarantee the Notes. The Parent Guarantee and the Domestic Subsidiary
Guarantees are joint and several as well as full and unconditional. The Notes
are unsecured and subordinated in right of payment to all existing and future
senior indebtedness of the Company. The Notes include certain covenants
including limitations on indebtedness, dividends and other payment restrictions
affecting subsidiaries, subordinated liens, sale and leaseback transactions,
sale or issuance of capital stock of subsidiaries, merger, consolidation or sale
of assets, transactions with affiliates and layering debt. The indenture
provides that the Company will not, and will not permit any of its subsidiaries,
directly or indirectly, to declare or pay any dividend or make any distribution
on or in respect of its capital stock except dividends or distributions payable
solely in its capital stock (other than redeemable stock) and except dividends
or distributions payable solely to the Company or any wholly-owned subsidiary of
the Company. Furthermore, Holdings' ability to obtain funds from its
subsidiaries is restricted by the Notes because (i) Holdings may not hold assets
other than Company capital stock and other minimal assets related to the
business of holding such stock and (ii) Holdings may not incur any additional
liabilities other than in the ordinary course of business.

      On April 16, 1998, Eagle and Holdings filed a Registration Statement on
Form S-4 to offer to exchange (the "Exchange Offer") up to $115 million of its
8.75% Series B Senior Subordinated Notes due 2008 (the "Exchange Notes") for up
to $115 million of its outstanding Notes.

      Upon consummation of the Exchange Offer, the terms of the Exchange Notes
were substantially identical in all respects to the term of the Notes. The
Exchange Notes are unconditionally guaranteed on a senior subordinated and
unsecured basis by Holdings and all future Domestic Subsidiaries.

                                       48

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

      Annual principal payments for the next five fiscal years and thereafter
consist of the following (in thousands):

                    2003 ................................    $     936
                    2004 ................................        8,578
                    2005 ................................       60,556
                    2006 ................................       18,718
                    2007 ................................           --
                    Thereafter ..........................      115,000
                                                             ---------
                                                             $ 203,788
                                                             =========

8. Income Taxes:

      The Company accounts for income taxes in accordance with SFAS No. 109,
which requires the use of the liability method. Under this method, deferred tax
assets and liabilities are recognized based on the difference between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates in effect in the years in which those temporary
differences are expected to reverse. Under SFAS No. 109, the effect on deferred
taxes of a change in tax rates is recognized in income in the period that
includes the enactment date. The Company assesses the recoverability of the
deferred tax assets in accordance with the provisions of SFAS No. 109, which
requires the recording of a valuation allowance when it is probable that any or
all of the deferred tax assets will not be realized. In accordance with SFAS No.
109, the Company recorded a valuation allowance for the net deferred tax assets
and net operating loss carryforwards of $33.2 million as of June 29, 2002.

      In absence of favorable factors, application of SFAS No. 109 requires a
100% valuation allowance for any net deferred tax assets when a company has
cumulative financial accounting losses, excluding unusual items, over several
years. The Company has experienced pretax losses over the past three years,
excluding the gain in fiscal year 2002 on the ReaLemon Sale. Management
continues to see lower industry market values in the current economic
environment which could affect the tax planning strategies available to the
Company. As a result of these factors, the Company recorded a full valuation
allowance under the provisions of SFAS No. 109. The Company intends to maintain
a full valuation allowance for its net deferred tax assets and net operating
loss carryforwards until sufficient positive evidence exists to support reversal
of the reserve. Until such time, except for minor state and local tax
provisions, the Company will have no reported tax provision, net of valuation
allowance adjustments.

      In determining the amount of the deferred tax asset valuation allowance,
the Company estimated the current tax deductibility of certain costs and
charges, and evaluated the fair market value of the Company in comparison to the
tax value. These estimates are subject to change. Any differences between these
current estimates and actual values determined at a future date will result in a
change to the valuation allowance and will be recorded at that date.

      A comparative analysis of the Company's (expense) benefit for income taxes
from earnings before income taxes and cumulative effect of accounting change
consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                            June 29, 2002   June 30, 2001  July 1, 2000
                                            -------------   -------------  ------------
<S>                                         <C>             <C>            <C>
             Federal .....................  $        (824)  $       2,721  $      6,229
             State .......................           (110)            141         2,498
             Valuation allowance .........        (33,167)             --            --
                                             ------------   -------------  ------------
                                            $     (34,101)  $       2,862  $      8,727
                                             ============   =============  ============
</TABLE>

      At June 29, 2002, the Company had $89.4 million of accumulated net
operating losses for financial statement purposes and $79.7 million of
accumulated net operating loss carryforwards for tax reporting purposes. The tax
net operating losses expire, if unused, beginning in 2018. During the period
ended July 1, 2000, the Company revised

                                       49

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

its previous estimates for state net operating loss carryforwards and recorded
an accumulated tax benefit for state net operating loss carryforwards of $1.7
million. The Company's net operating loss carryforwards for foreign purposes are
not material.

      Reconciliation of the differences between income taxes computed at Federal
statutory rates and the consolidated (expense) benefit for income taxes on
earnings before income taxes and cumulative effect of accounting change are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                              June 29,  June 30,  July 1,
                                                                2002      2001     2000
                                                              --------  --------  -------
<S>                                                           <C>       <C>       <C>
               Income tax (expense) benefit computed at
                 the Federal statutory tax rate ............  $   (848) $  2,781  $ 7,125
               State tax (expense) benefit, net of Federal
                  tax benefits .............................       (86)       92    1,602
               Other .......................................        --       (11)      --
               Valuation allowance .........................   (33,167)       --       --
                                                              --------  --------  -------
                                                              $(34,101) $  2,862  $ 8,727
                                                              ========  ========  =======
</TABLE>

      Deferred tax assets and liabilities consisted of the following (in
thousands):

<TABLE>
<CAPTION>
                                                              June 29,  June 30,  July 1,
                                                                2002      2001     2000
                                                              --------  --------  -------
<S>                                                           <C>       <C>       <C>
               Net operating loss carryforward .............  $ 29,470  $ 34,095  $25,855
               Intangible assets ...........................      (989)     (196)   3,108
               Property, plant and equipment ...............     2,052    (2,478)  (1,677)
               All other assets ............................     2,772     2,851    3,813
               All other liabilities .......................      (138)     (383)    (304)
               Valuation allowance .........................   (33,167)       --       --
                                                              --------  --------  -------
                  Net deferred tax asset ...................  $     --  $ 33,889  $30,795
                                                              ========  ========  =======
</TABLE>

9.  Supplemental Information:

     Other accrued liabilities consisted of the following (in thousands):


                                                              June 29,  June 30,
                                                                2002      2001
                                                              --------  --------
           Other accrued liabilities:
                Customer allowances ........................  $  2,463  $  1,271
                Divestiture reserve ........................     1,854        --
                Coupon accrual .............................       656       740
                Broker commissions .........................       592       865
                Compensation and related accruals ..........       916       592
                Other ......................................       550       486
                                                              --------  --------
                   Total other accrued liabilities .........  $  7,031  $  3,954
                                                              ========  ========

10. Other Within Holdings' Stockholders' Deficit:

      At June 30, 2001, other within Holdings' Stockholders' Deficit consisted
of unearned compensation of $15,000 and subscription receivables of $6,000.

11. Redeemable Preferred Stock:

      On September 24, 1999, 99 shares of Series B Non-Voting Preferred Stock
(the "Series B Preferred Stock") were issued by Holdings at a stated value of
$100,000 per share (the "Series B Stated Value"), and on January 23, 1998,
816,750 shares of Series A Non-Voting Preferred Stock (the "Series A Preferred
Stock" and together with the

                                       50

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

Series B Preferred Stock, the "Preferred Stock") were issued by Holdings at a
stated value of $100 per share (the "Series A Stated Value", and together with
the Series B Stated Value, the "Stated Value").

      Together, the Preferred Stock ranks as to dividends and on liquidation on
parity. The Preferred Stock provides for preferential cumulative dividends at
the rate of 10% per share per annum of the Stated Value for each series of
Preferred Stock. Dividends are payable as declared by the Holdings Board of
Directors and shall be paid before any dividends shall be set apart for or paid
upon the Common Stock of Holdings, par value $0.01 per share (the "Common
Stock"). In the event of liquidation, dissolution or winding up, the holders of
shares of Preferred Stock are entitled to be paid out of the assets of Holdings
available for distribution to its stockholders before any payment is made to the
holders of stock junior to the Preferred Stock. Holders of Preferred Stock are
not entitled to vote on any matters presented to the stockholders of Holdings.
However, the affirmative vote or written consent of the holders of at least
two-thirds of the then outstanding shares of Preferred Stock is required to
amend, alter or repeal the preferences, special rights or other powers of the
Preferred Stock. The Preferred Stock is subject to mandatory redemption at a
price per share equal to the Stated Value for each series of Preferred Stock
plus all dividends accrued and unpaid there upon (1) the closing of a public
offering pursuant to an effective registration statement under the Securities
Act of 1933, (2) the sale of all or substantially all of the assets of Holdings
or the merger or consolidation of Holdings with or into any other corporation or
other entity in which the holders of Holdings' outstanding shares before the
merger or consolidation do not retain a majority of the voting power of the
surviving corporation or other entity or (3) the acquisition by any person of
shares of Common Stock representing a majority of the issued and outstanding
shares of Common Stock then outstanding.

      Cumulative accrued dividends totaled $46,936,000 and $34,343,000 at June
29, 2002 and June 30, 2001, respectively. They are classified with Redeemable
Preferred Stock in the consolidated balance sheet of Holdings.

12. Stockholders and Registration Rights Agreements:

      The Stockholders Agreement, dated as of January 23, 1998, by and among
Holdings and the stockholders named therein (the "Stockholders Agreement") and
the Registration Rights Agreement, dated as of January 23, 1998, by and among
Holdings and the investors named therein (the "Registration Rights Agreement")
were each amended as of September 27, 1999, to reflect a Subscription Agreement
with GEI and Warburg (as described in Note 12) for the offer and sale of a total
of 99 shares of Series B Preferred Stock and a total of 100,000 shares of Common
Stock with accompanying warrants to purchase a total of 22,013 shares of Common
Stock (the "Warrants") . As a result of such amendments, all covenants and
agreements set forth in the initial Stockholders Agreement and Registration
Rights Agreement will apply to the newly issued Series B Preferred Stock, Common
Stock and Common Stock issuable upon exercise of the Warrants.

13. Stock Subscription Agreement:

     On September 27, 1999, GEI and Warburg subscribed to purchase a total of 99
shares of Series B Preferred Stock at $100,000 per share and a total of 100,000
shares of Common Stock at $1 per share with accompanying Warrants to purchase up
to 22,013 additional shares of Common Stock. The Warrants may be exercised for a
purchase price of $1 per share of Common Stock (subject to certain adjustments)
and only upon failure of the Company to achieve certain financial targets for
the fiscal year 2000. The Warrants would have automatically terminated if the
Company had achieved certain financial targets for fiscal year 2000.

     The Company did not meet the financial targets for fiscal year 2000.
Therefore, pursuant to the terms of the Warrants, the Warrants are currently
exercisable and expire on September 27, 2004. Holdings received $10.0 million in
exchange for these securities. Upon completion of the issuance of the Warrants,
Holdings made a $10.0 million capital contribution to Eagle.

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<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

      Upon the separations of certain executive officers during fiscal year 2002
and pursuant to their employment agreement, the Company purchased into treasury
7,524 shares of Series A Preferred Stock for a value of $966,000. During fiscal
year 2000, upon the separation of an executive officer and pursuant to a
separation agreement, the Company purchased into treasury 3,438 shares of Series
A Preferred Stock for a value of $423,000.

      Secured recourse promissory notes between the Company and two executives
were satisfied (i) in partial satisfaction of $200,000 principal and interest in
fiscal year 1999 by Mr. Lynch, (ii) in satisfaction of the remaining principal
and interest in fiscal year 2000 by Mr. Lynch, and (iii) in satisfaction of
principal and interest in fiscal year 2002 by Mr. Nugent by transferring 2,475
shares of Series A Preferred Stock (included in the 7,524 treasury shares
referenced above) to the Company.

14. Commitments and Contingencies:

      Commitments. The Company may enter into long-term contracts for the
purchase of certain raw materials. Minimum purchase commitments, at current
prices, were approximately and $3.9 million and $13.1 million at June 29, 2002
and June 30, 2001, respectively.

      The Company leases buildings and equipment under various noncancellable
operating lease agreements for periods of one to five years. The lease
agreements generally provide that the Company pays taxes, insurance and
maintenance expenses related to the leased assets. Rent expense for the periods
ended June 29, 2002, June 30, 2001 and July 1, 2000 totaled $1,257,000,
$1,065,000 and $888,000, respectively.

      At June 29, 2002, future minimum lease payments were as follows (in
thousands):

                2003 .....................................   $     550
                2004 .....................................         344
                2005 .....................................          45
                2006 and beyond ..........................          14
                                                             ---------
                Total minimum lease payments .............   $     953
                                                             =========

      Employment Agreements. The Company has entered into employment agreements
with certain key executives. Such agreements provide for annual salaries,
bonuses and severances and include non-compete and non-solicitation provisions.

15. Stock Options and Restricted Stock:

      On January 14, 1998, Holdings' Board of Directors adopted the 1998 Stock
Incentive Plan (the "Plan"). The Plan provides for the granting of incentive
stock options, non-qualified stock options, and restricted stock to officers,
key employees, directors and consultants of the Company at the discretion of a
committee of the Board of Directors. As amended on January 5, 2000, a total of
206,150 shares of common stock may be awarded under the Plan, subject to certain
adjustments reflecting changes in Holdings' capitalization.

      Grants of options and the periods during which such options can be
exercised, and grants of restricted stock and the periods during which such
grants become unrestricted and vest are at the discretion of a committee. As of
June 29, 2002, the committee has not granted any stock options.

      The committee has granted and issued shares of restricted stock to
Holdings' officers and other key employees. Holders of the restricted stock are
not entitled to (i) receive dividends until such shares vest or (ii) vote their
respective shares during the restricted period. The restricted stock vests in
installments of 20% per year on each of the first five anniversaries of the
issue date, provided that the recipient is employed by Holdings as of each such

                                       52

<PAGE>

                            EAGLE FAMILY FOODS, INC.
                        EAGLE FAMILY FOODS HOLDINGS, INC.
                  Notes to the Financial Statements - continued

date. Additionally, the sale, transfer, pledge, exchange or disposal of
restricted shares during the restricted period is not permitted except as
otherwise allowed by the Holdings' Stockholders Agreement.

      A summary of restricted stock transactions for the fiscal years 2001 and
2002 is as follows:

                                                                   Fair Market
                                                       Shares of      Value
                                                      Restricted   at Issuance
                                                         Stock         Date
                                                      ----------   -----------
             Outstanding at July 1, 2000 ..........      138,559   $    86,584
                Granted ...........................       53,145           531
                                                      ----------   -----------
             Outstanding at June 30, 2001 .........      191,704        87,115
                Cancelled .........................     (106,522)      (44,156)
                                                      ----------   -----------
             Outstanding at June 29, 2002 .........       85,182   $    42,959
                                                      ==========   ===========

     Unearned compensation is charged for the fair value of the restricted
shares granted and issued in accordance with the Plan. The unearned compensation
is shown as a reduction of stockholders' deficit in the accompanying
Consolidated Balance Sheets of Holdings. Unearned compensation is amortized
ratably over the restricted period.

16. Retirement Plan:

      The Company sponsors a defined contribution 401(k) retirement plan.
Participation in this plan is available to all employees who have completed
certain minimum service requirements. Company contributions to this plan are
based on a percentage of employees' annual compensation. The costs of this plan
were $373,000, $675,000 and $476,000 for the periods ended June 29, 2002, June
30, 2001 and July 1, 2000, respectively.

17. Intercompany Receivable:

      Eagle lent Holdings, in the aggregate, $1,382,000 as a non-interest
bearing loan to purchase into treasury certain shares of Series A Preferred
Stock from certain former executives pursuant to their employment agreements.

18. Other Information:

      The Company was advised by GEI and Warburg, Holdings' principal
stockholders, that as of September 27, 2002, each owned $14,000,000 in aggregate
principal amount of Notes.

19. Recent Developments:

      On September 13, 2002, the Company announced its intent to close down the
powdered non-dairy creamer manufacturing plant in Chester, South Carolina in
late November 2002. Future production will be sourced from a third party
manufacturer under a long-term co-pack agreement The third-party manufacturer
has significantly larger powdered non-dairy creamer plants and has agreed to
produce the Company's powdered non-dairy creamer requirements at a lower cost
than the Company's current cost of production. Closure costs including benefits
and severance for the 79 employees are being assessed and will be recorded in
fiscal year 2003, when the measurement date has occurred.

                                       53