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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

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

                                   FORM 10-K

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

(MARK ONE)
           [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                 FOR THE FISCAL YEAR ENDED SEPTEMBER 27, 1997
 
                                      OR
 
         [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from _____ to _____
 
                       COMMISSION FILE NUMBER 333-20155

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

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


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

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

                                     NONE

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

                                     NONE

                               (Title of class)

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

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


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

                      DOCUMENTS INCORPORATED BY REFERENCE

                                     NONE

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                        GORGES/QUIK-TO-FIX FOODS, INC.

                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----
 
PART I
 
     Item 1.  Business...................................................     1
                                                                             
     Item 2.  Properties.................................................     9
                                                                             
     Item 3.  Legal Proceedings..........................................     9
                                                                             
     Item 4.  Submission of Matters to a Vote of Security Holders........    10
                                                                             
PART II                                                                      
                                                                             
     Item 5.  Market for Registrant's Common Stock and Related               
              Stockholder Matters........................................    11
                                                                             
     Item 6.  Selected Financial Data....................................    12
                                                                             
     Item 7.  Management's Discussion and Analysis of Financial              
              Condition and Results of Operations........................    12
                                                                             
     Item 8.  Financial Statements and Supplementary Data................    22
                                                                             
     Item 9.  Changes in and Disagreements with Accountants on               
              Accounting and Financial Disclosure........................    22
                                                                             
PART III                                                                     
                                                                             
     Item 10. Directors and Executive Officers of the Registrant.........    23
                                                                             
     Item 11. Executive Compensation.....................................    24
                                                                             
     Item 12. Security Ownership of Certain Beneficial Owners and            
              Management.................................................    25
                                                                             
     Item 13. Certain Relationships and Related Transactions.............    25
                                                                             
PART IV                                                                      
                                                                             
     Item 14. Exhibits, Financial Statement Schedules and Reports on         
              Form 8-K...................................................    28
                                                                             
SIGNATURES...............................................................    29
 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS...............................    F-1
 
 
 
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                        GORGES/QUIK-TO-FIX-FOODS, INC.
 
                        1997 ANNUAL REPORT ON FORM 10-K

                                    PART I

ITEM 1.  BUSINESS

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

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

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

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

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

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

INDUSTRY OVERVIEW

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

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


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

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

                                       2
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  A number of national associations conduct research on consumer preferences for
beef, run programs to promote the consumption of beef and conduct research on
improvement of the beef product. These associations, which provide valuable
category promotion, include The National Cattlemen's Association, The Beef
Industry Council and the National Livestock and Meat Board.


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


PRODUCT CATEGORIES

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

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

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

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

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

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

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

                                       3
<PAGE>
 
GROWTH STRATEGY

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

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

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

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

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

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

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

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

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

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


SALES AND MARKETING

 Sales and Marketing Team

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


 Foodservice Broker Network

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

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


CUSTOMERS AND END USERS

 Overview

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

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

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

 Foodservice Distributors

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

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

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


DISTRIBUTION

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

                                       6
<PAGE>
 
SUPPLIERS

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

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

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

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


RESEARCH AND DEVELOPMENT

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


ENVIRONMENTAL MATTERS

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

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

                                       7
<PAGE>
 
incurring such surcharges. The amount of the surcharge is calculated based on
the amount of effluent discharge and the total amount of water used by the
Garland, Texas plant. Management does not believe that the incurrence of the
aforementioned surcharges will have a material adverse effect on the Company's
business, results of operations and debt service capabilities. There can be no
assurance, however, that such surcharges will not be increased or that the
Company will not be required to modify its operations, which may result in
significant expenses or material capital expenditures.

GOVERNMENTAL REGULATION

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

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

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

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

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

PATENTS AND TRADEMARKS

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

                                       8
<PAGE>
 
  The above referenced trademarks, service marks and trade names used by the
Company are the property of the Company. In addition, the Company uses other
trademarks under co-pack arrangements for various customers. Various trademarks,
service marks and trade names used under such co-pack arrangements or to which
reference is made in this report are the property of owners other than the
Company. Such owners have all applicable rights with respect to their respective
trademarks, service marks and trade names.


COMPETITION

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


EMPLOYEES

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


ITEM 2.  PROPERTIES.

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

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

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


ITEM 3.  LEGAL PROCEEDINGS.

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

                                       9
<PAGE>
 
  The Company is likely to be subject to claims arising from time to time in the
ordinary course of its business. In certain of such actions, plaintiffs may
request punitive or other damages that may not be covered by insurance and,
accordingly, no assurance can be given with respect to the ultimate outcome of
any such possible future claims or litigation or their effect on the Company.

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

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

                                       10
<PAGE>
 
                                    PART II

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

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

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

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

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

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

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

                                       11
<PAGE>
 
ITEM 6.  SELECTED FINANCIAL DATA.

  The following table presents (i) selected historical financial information of
the Company and the Predecessor, as of the dates and for the periods indicated,
and (ii) summary proforma financial information of the Company, as of the date
and for the period indicated, adjusted for the completion of the Acquisition.
The historical financial information for the three hundred and six day period
ended September 27, 1997 has been derived from the Company's financial
statements, which have been audited by Ernst & Young LLP.  The historical
information for each of the three years in the period ended September 28, 1996
and the fifty-eight days ended November 25, 1996 has been derived from the
Predecessor's financial statements, which have been audited by Ernst & Young
LLP.  The historical financial information for the one year period ended October
2, 1993 has been derived from unaudited financial statements of the Predecessor
and, in the opinion of management, includes all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of results of
operations for these periods.  The summary proforma information does not purport
to represent what the Company's results of operations would have been if such
events had occurred at the dates indicated, nor does such information purport to
project the results of the Company for any future period.  The summary financial
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements and the Notes thereto included elsewhere in this annual report.
<TABLE>
<CAPTION>
 
                                        Predecessor                                                 Company
-----------------------------------------------------------------------------------------------------------------------------
                                                                                  September 29,| November 26,   September 29, 
                                                                                    1996 to    |   1996 to        1996 to 
                            October 2,  October 1,  September 30,  September 28,  November 25, | September 27,  September 27, 
                              1993        1994         1995           1996           1996      |    1997            1997
                                                  (In thousands)                   (58 days)   | (306 days)      (Proforma)
<S>                         <C>         <C>       <C>              <C>            <C>          | <C>            <C>
Statement of                                                                                   | 
 operations data:                                                                              | 
Revenues                     $294,468    $331,969     $304,474      $232,761       $31,966     |  $172,738         $204,704
Costs and expenses,                                                                            |              
 excluding Amortization       277,398     312,480      283,337       215,973        30,070     |   158,794          189,649
Amortization                    1,239       1,528        1,624         1,624           250     |     2,706            3,057
                             ----------------------------------------------------------------------------------------------
Operating income (loss)        15,831      17,961       19,513        15,164         1,646     |    11,238           12,098
Interest expense                    0           0            0             0             0     |    13,709           16,398
Other expenses (income)             0           4          678           796             0     |        11               11
Income Tax                      6,649       7,508        7,931         6,205           731     |         0                0
                             ----------------------------------------------------------------------------------------------
Net income (loss)            $  9,182    $ 10,449     $ 10,904      $  8,163       $   915     |  $ (2,482)        $ (4,311)
                             ==============================================================================================
Balance sheet                                                                                  |
 data (at period end):                                                                         |
Total assets                                                                                   |  $211,261         $211,261
Total debt                                                                                     |   149,500          149,500
Total equity (deficit)                                                                         |    43,103           43,103
                                                                                               |
Other data:                                                                                    |
EBITDA                         24,909      28,579       29,877        24,080         2,238     |    21,291           24,768
                                                                                               |
Cash provided by                                                                               |
 operating activities               -      16,724       21,107        15,895           962     |     3,117              N/A
Cash provided by (used                                                                         |
 for) investing activities          -     (39,773)       2,510          (609)         (141)    |  (187,944)             N/A
Cash provided by (used                                                                         |  
 for) financing activities          -      23,075      (23,637)      (15,286)         (821)    |   184,827              N/A
Capital expenditures            3,300       6,580        2,792           735           141     |     3,691            3,832
</TABLE>


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

GENERAL

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

                                       12
<PAGE>
 
  The following discussion should be read in conjunction with the Audited
Financial Statements and the Notes thereto, and the Unaudited Pro Forma
Financial Statements and the Notes thereto of the Company, included elsewhere in
this Document.

RESULTS OF OPERATIONS

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

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

  The following tables set forth, for the fiscal periods indicated, (i) sales
and categories of expenses in dollars and as a percentage of sales and (ii)
production volumes.
<TABLE>
<CAPTION>
 
                                                         FISCAL YEAR ENDED
                                            ------------------------------------------
                                 SEPTEMBER 30,           SEPTEMBER 28,               SEPTEMBER 27,
                                    1995                    1996                        1997
                                                 HISTORICAL                            PROFORMA
                           -----------------------------------------------             --------
                                          (DOLLARS AND POUNDS IN THOUSANDS)
<S>                        <C>            <C>          <C>          <C>          <C>            <C>
SALES                      $304,474       100.0%       $232,761     100.0%       $204,704       100.0%
COST OF GOODS SOLD          250,787        82.4         189,559      81.4         166,696        81.4
                           --------------------------------------------------------------------------
GROSS PROFIT                 53,687        17.6          43,202      18.6          38,008        18.6
OPERATING EXPENSES           34,174        11.2          28,038      12.1          25,910        12.7
                           --------------------------------------------------------------------------                    
OPERATING INCOME             19,513         6.4          15,164       6.5          12,098         5.9
OTHER EXPENSES                  678         0.2             796       0.3          16,409         8.0
                           --------------------------------------------------------------------------
EARNINGS BEFORE              18,835         6.2          14,368       6.2          (4,311)       -2.1
 TAXES ON INCOME                                                                               
PROVISION FOR                 7,931         2.6           6,205       2.7               0           0
 INCOME TAXES                                                                                  
                           --------------------------------------------------------------------------
NET INCOME                 $ 10,904         3.6%       $  8,163       3.5%       $ (4,311)       -2.1%
                           ==========================================================================
VOLUME (IN POUNDS)          215,289                     173,821                   154,628
</TABLE>



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

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

                                       13
<PAGE>
 
attributable to the declines in the raw materials costs and changes in product
mix, with the Company's sales of lower margin ground beef and portion steaks
decreasing. The increase in gross profit as a percentage of sales was partially
offset by several factors, including inefficiencies and costs related to the
Reconfiguration (as hereinafter defined) and losses incurred in disposing of
portion steak inventory in connection with the discontinuation of that product.

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

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

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

 Sales

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

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

                                       14
<PAGE>
 
  Value Added Products.  Sales of value added products decreased approximately
1.5% in fiscal 1997 after decreasing approximately 3% in fiscal 1996. The
decrease in fiscal 1997 and 1996 was due to a slight decrease in both sales
volumes and selling prices. Sales volumes decreased due to the loss of some
business with national account customers and the elimination of certain less
profitable products, partially offset by sales of newly introduced products.
Additionally, fiscal 1997 sales were adversely affected by the announcement that
Tyson would no longer own the Business and 1996 sales were adversely affected by
order fulfillment and quality problems resulting from the Reconfiguration.
Selling prices for value added products were slightly lower in both fiscal 1997
and fiscal 1996 primarily due to lower prices for two key raw materials, 90%
lean beef trimmings and rib lifter meat. Additionally, with the acquisition of
Gorges, Inc. the Company entered the commodity reprocessing market whereby the
Company receives meat from the federal government which is then processed and
sold on a fee for service basis to school districts. The Company does not
purchase the meat used in commodity reprocessing and only charges the school
system customers for the conversion costs, plus related margin, incurred during
the reprocessing.

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

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

 Gross Profit

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

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

 Operating Expenses

  The following table shows the components of the Company's operating expenses
for fiscal 1995, fiscal 1996, and fiscal 1997.
<TABLE>
<CAPTION>
                                                           FISCAL YEAR ENDED                       
                                     ---------------------------------------------------------------
                                     SEPTEMBER 30, 1995     SEPTEMBER 28,1996     SEPTEMBER 27, 1997
                                                    HISTORICAL                        PROFORMA
                                     ---------------------------------------------------------------
                                                             (DOLLARS IN THOUSANDS)
<S>                                  <C>                    <C>                   <C>
Selling, general and                         
 administrative..................            31,514               26,414                22,853
Amortization.....................             1,624                1,624                 3,057
Plant relocation.................             1,036                   --                    --
                                            -------              -------               -------
                                            $34,174              $28,038               $25,910
                                            =======              =======               =======
</TABLE>

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

                                       15
<PAGE>
 
both periods. As a result, selling, general and administrative expenses as a
percentage of sales and on a per pound basis decreased in 1997. The decrease in
these costs as a percentage of sales and on a per pound basis in both years is
due, in part, to decreases in sales of ground beef which has lower selling
expenses. Additionally, in fiscal 1996 the Company experienced increases in
freight and freezer expenses due to increased usage of more expensive third
party outside freezer storage space as a result of the Reconfiguration of the
Garland plant; higher inventory levels as a result of reduced sales volumes and
opportunistic purchases of raw materials; and the added costs of servicing a
national account customer. Additionally, brokerage costs were higher due to
increases in the brokerage rates on certain products. Total market development
expenses, which include direct payments and discounts to customers made to
promote products, were down approximately 13% in fiscal 1996. Market development
expenses are relatively discretionary in nature and do not directly correlate
with sales volumes or dollars. The decrease in market development expenses in
fiscal 1996 is due to conscious decisions by management to reduce these items,
partially offset by increased discounts offered to customers in connection with
the sales of certain products manufactured during the period of the product line
Reconfiguration.

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

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


 Other Expenses

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


 Provision for Income Taxes

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


LIQUIDITY AND CAPITAL RESOURCES

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

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

                                       16
<PAGE>
 
Agreement. In connection with the effort to establish an administrative
structure the Company has hired additional personnel into its newly leased
Dallas corporate office.

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

EFFECTS OF INFLATION

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

EFFECTS OF YEAR 2000 PROBLEMS

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


RECENT ACCOUNTING PRONOUNCEMENTS

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


FACTORS AFFECTING FUTURE PERFORMANCE

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

                                       17
<PAGE>
 
  The level of the Company's indebtedness could have important consequences to
holders of the Notes, including: (i) a substantial portion of the Company's cash
flow from operations must be dedicated to debt service and will not be available
for other purposes; (ii) the Company's ability to obtain additional debt
financing in the future for working capital, capital expenditures, research and
development, acquisitions or other corporate purposes may be limited; (iii) the
borrowings of the Company under the Credit Facilities accrue interest at
variable rates, which could cause the Company to be vulnerable to increased
interest expense in the event of higher interest rates; and (iv) the Company's
level of indebtedness could limit its flexibility in reacting to changes in its
industry or economic conditions generally.

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

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

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

                                       18
<PAGE>
 
  Restrictions Imposed by Terms of the Company's Indebtedness.  The Indenture
restricts, among other things, the ability of the Company to incur additional
indebtedness, pay dividends or make certain other restricted payments, incur
liens to secure pari passu or subordinated indebtedness, engage in any sale and
leaseback transactions, sell stock of subsidiaries, apply net proceeds from
certain asset sales, merge or consolidate with any other person, sell, assign,
transfer, lease, convey or otherwise dispose of substantially all of the assets
of the Company, enter into certain transactions with affiliates, or incur
indebtedness that is subordinate in right of payment to any Senior Indebtedness
and senior in right of payment to the Notes. In addition, the Credit Facilities
contain other and more restrictive covenants and prohibit the Company from
prepaying other indebtedness (including the Notes). As a result of these
covenants, the ability of the Company to respond to changing business and
economic conditions and to secure additional financing, if needed, may be
significantly restricted, and the Company may be prevented from engaging in
transactions that might otherwise be considered beneficial to the Company.

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

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

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

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

                                       19
<PAGE>
 
  Governmental Regulation.  The Company's production facilities and products are
subject to numerous federal, state and local laws and regulations concerning,
among other things, health and safety matters, food manufacture, product
labeling, advertising and the environment. Compliance with existing federal,
state and local laws and regulations is not expected to have a material adverse
effect on the Company's business, results of operations or debt service
capabilities. However, the Company cannot predict the effect, if any, of laws
and regulations that may be enacted in the future, or of changes in the
enforcement of existing laws and regulations that are subject to extensive
regulatory discretion. There can be no assurance that the Company will not incur
expenses or liabilities for compliance with such laws and regulations in the
future, including those resulting from changes in health laws and regulations,
that may have a material adverse effect on the Company's business, results of
operations and debt service capabilities.

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

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

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

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

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

                                       20
<PAGE>
 
  Importance of Key Customers.  Historically, one of the Company's largest
customers has been Sam's Club ("Sam's"), a subsidiary of Wal-Mart Stores, Inc.
The Company supplied Sam's with ground beef patties pursuant to two contracts
(the "Sam's Contracts") which became effective in November 1995. Pursuant to
the Sam's Contracts, the Company agreed to sell and Sam's agreed to purchase an
aggregate of 28.0 million pounds of ground beef. As of September 27, 1997, the
Company had delivered substantially all of the ground beef under the Sam's
Contracts.  During fiscal 1995, fiscal 1996, and fiscal 1997 the Sam's Contracts
accounted for 14.4%, 13.2%, and 5.9% of the Company's sales.

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

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

  Sam's, Harker's and affiliates of Sysco collectively accounted for
approximately 42.1%, 43.6%, and 35.3% of sales during fiscal 1995, fiscal 1996,
and fiscal 1997, respectively. The loss of the Harker's Agreement or reduced
sales to affiliates of Sysco without offsetting sales to other customers could
have a material adverse effect on the Company's business, results of operations
and debt service capabilities.
 
  Reliance on Sales of Ground Beef.  Although the Company's strategy is to
maximize sales of higher margin value added products, the Company has
historically relied on sales of lower margin ground beef products to generate a
significant portion of its revenues. The Company anticipates that such reliance
will continue in the future. In recent years, however, the Company's sales of
ground beef have been declining, and it is expected that one customer whose
purchases were significant in fiscal 1997 will not purchase a significant amount
in fiscal 1998. Any substantial decline in ground beef sales below the fiscal
1997 level could have a material adverse effect on the Company's business,
results of operations and debt service capabilities.

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

                                       21
<PAGE>
 
disruption of operations and higher labor costs, either of which could have a
material adverse effect on the Company's business, results of operations and
debt service capabilities.

  General Risks of Food Industry.  The industry in which the Company competes is
subject to various risks, including: adverse changes in general economic
conditions; adverse changes in local markets; evolving consumer preferences;
nutritional and health-related concerns; federal, state and local food
processing controls; consumer product liability claims; risks of product
tampering; limited shelf life of food products; and the availability and expense
of liability insurance.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

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

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

None.

                                       22
<PAGE>
 
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

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

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

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

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

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

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

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

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

                                       23
<PAGE>
 
  RICHARD L. CRAVEY has been a director of the Company since October 1996. Mr.
Cravey is a member of CGW Southeast III L.L.C., the general partner of CGW, (the
"General Partner"), and is jointly responsible for all major decisions of the
General Partner.  Mr. Cravey is also a member of CGW Southwest Management III,
L.L.C. (the "Management Company"), an affiliate of CGW. In addition, Mr. Cravey
is a member of Le Select III, L.L.C. (the "Limited Partner"), a limited
partner of CGW. Mr. Cravey has been a member of the General Partner, the
Management Company or affiliated entities for more than five years. He is a
director of AMRESCO, Inc. and Cameron Ashley Building Products, Inc.

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

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


ITEM 11.  EXECUTIVE COMPENSATION.

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

                           SUMMARY COMPENSATION TABLE

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

(1)  Consists of 401K contribution match.


EMPLOYMENT AGREEMENTS

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

                                       24
<PAGE>
 
months base salary. If a Senior Manager is terminated for cause, death or
disability, such Senior Manager will receive only earned salary and bonus due as
of the date of termination. The Employment Agreements will also contain non-
competition, non-solicitation and confidentiality provisions.

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

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

SECURITIES PURCHASE AND STOCKHOLDERS AGREEMENT

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

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

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

                                       25
<PAGE>
 
Stockholders Agreement also grants to each of NBIC and FPGT the right, except in
certain circumstances, to have a representative in attendance at all meetings of
the Board of Directors of GHC or the Company.

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

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

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


TRANSACTIONS WITH CGW AND ITS AFFILIATES

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

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

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


TRANSACTIONS WITH NBIC AND ITS AFFILIATES

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

                                       26
<PAGE>
 
INDEMNIFICATION OF OFFICERS AND DIRECTORS

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

                                       27
<PAGE>
 
                                    PART IV

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

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

 
         1.   CONSOLIDATED FINANCIAL STATEMENTS AT ITEM 8.

         2.   CONSOLIDATED FINANCIAL STATEMENT SCHEDULES:

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

         3.   Exhibits:
 
              The following exhibits either (i) are filed herewith; or (ii) have
              previously been filed with the Securities and Exchange Commission
              and are incorporated herein by reference to such prior filings.
 
              3.1  Restated Certificate of Incorporation of Gorges/Quik-to-Fix
                   Foods, Inc. (incorporated herein by reference to the
                   Company's Registration Statement on Form S-1, originally
                   filed January 21, 1997 (Reg. No. 333-20155)( the
                   "Registration Statement on Form S-1")).

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

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

              27.  Financial Data Schedule.

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

         (b) REPORTS ON FORM 8-K

                   None

         (c) EXHIBITS

                   See Item 14(a)3.

         (d) FINANCIAL STATEMENT SCHEDULES

                   See Item 14(a)2.

                                       28
<PAGE>
 
                                   SIGNATURES

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

                              GORGES/QUIK-TO-FIX FOODS, INC.


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

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

        SIGNATURE                                 TITLE
        ---------                                 -----
 
/s/ J. David Culwell                  Chief Executive Officer and Director
----------------------------
    J. David Culwell
 
/s/ Richard E. Mitchell               President and Director
----------------------------
    Richard E. Mitchell
 
/s/ Richard L. Cravey                 Director
---------------------------- 
    Richard L. Cravey
 
/s/ William A. Davies                 Director
----------------------------
    William A. Davies
 
/s/ James A. O'Donnell                Director
----------------------------
    James A. O'Donnell
 
/s/ A. Scott Letier                   Chief Financial Officer
----------------------------
    A. Scott Letier
 

                                       29
<PAGE>
 
                        GORGES/QUIK-TO-FIX FOODS, INC.

                  Index to Consolidated Financial Statements

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

                                      F-1
<PAGE>
 
                         Report of Independent Auditors



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


We have audited the accompanying balance sheet of Gorges/Quik-to-Fix Foods, Inc.
as of September 27, 1997, and the related statements of operations,
stockholder's equity, and cash flows for the three hundred six day period ended
September 27, 1997 and the balance sheet of the Gorges/Quik-to-Fix Foods
operations of Tyson Foods, Inc. as of September 28, 1996, and the related 
statements of operations and cash flows for the fifty-eight day period ended
November 25, 1996 and the years ended September 28, 1996 and September 30, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Gorges/Quik-to-Fix Foods, Inc.
at September 27, 1997 and the Gorges/Quik-to-Fix Foods operations of Tyson
Foods, Inc. at September 28, 1996, and the results of operations and cash flows
for the three hundred six day period ended September 27, 1997 of Gorges/Quik-to-
Fix Foods, Inc. and fifty-eight days ended November 25, 1996 and the years ended
September 28, 1996 and September 30, 1995 of Gorges/Quik-to-Fix Foods,
operations of Tyson Foods, Inc., in conformity with generally accepted
accounting principles.


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

Dallas, Texas
December 19, 1997

                                      F-2
<PAGE>
 
                         GORGES/QUIK-TO-FIX FOODS, INC.
                                 BALANCE SHEETS
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                            PREDECESSOR                      COMPANY
                                                            ----------------                 ----------------
                                                            SEPTEMBER 28,                    SEPTEMBER 27,
                                                            1996                             1997
                                                            ----------------                 ----------------
<S>                                                         <C>                              <C>
     ASSETS
Current assets:
   Cash                                                             $      9                         $      -
   Accounts receivable, net of allowance for doubtful                      -                           21,960
          Accounts of $795 in 1997
   Inventory                                                          31,325                           28,645
   Prepaid expenses and other                                              -                               78
                                                            ----------------                 ----------------
     Total current assets                                             31,334                           50,683
 
Property, plant and equipment:
   Land                                                                1,088                            1,499
   Buildings and leasehold improvements                               35,768                           44,531
   Machinery and equipment                                            52,853                           44,517
   Land improvements and other                                         1,186                            3,144
                                                            ----------------                 ----------------
                                                                      90,895                           93,691
   Accumulated depreciation                                          (44,439)                          (7,358)
                                                            ----------------                 ----------------
     Net property, plant and equipment                                46,456                           86,333
 
Other assets:
   Intangible assets                                                  59,508                           65,389
   Organizational and deferred debt issuance costs                         -                            8,767
   Other                                                                   -                               89
                                                            ----------------                 ----------------
     Total assets                                                   $137,298                         $211,261
                                                            ================                 ================
 
     LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
   Accounts payable and accrued expenses                            $      -                         $ 18,658
   Current portion of long-term debt                                       -                            8,450
                                                            ----------------                 ----------------
      Total current liabilities                                                                        27,108
 
Long-term debt, less current portion                                       -                          141,050
Deferred income taxes                                                  6,375                                -
Investment and advances by Tyson                                     130,923                                -
 
Stockholder's equity:
   Common stock, $.01 par value; 2,000 shares
         authorized, 1,000 shares issued and
         outstanding                                                       -                                -
   Additional paid-in capital                                              -                           45,585
   Accumulated deficit                                                     -                           (2,482)
                                                            ----------------                 ----------------
     Total stockholder's equity                                            -                           43,103
                                                            ----------------                 ----------------
     Total liabilities and stockholder's equity                     $137,298                         $211,261
                                                       =====================            =====================
</TABLE>



See accompanying notes to financial statements

                                      F-3
<PAGE>
 
                        GORGES/QUIK-TO-FIX FOODS, INC.
                           STATEMENTS OF OPERATIONS
                                (In thousands)

<TABLE>
<CAPTION>
 
                                                     PREDECESSOR                       COMPANY
                            -----------------------------------------------------------------------------------------
                             YEAR                YEAR               FIFTY-EIGHT       THREE HUNDRED       PRO-FORMA 
                             ENDED               ENDED              DAYS              SIX DAYS            YEAR
                                                                                      ENDED               ENDED

                             SEPTEMBER           SEPTEMBER          NOVEMBER          SEPTEMBER           SEPTEMBER 
                             30, 1995            28, 1996           25, 1996          27, 1997            27, 1997
                                                                                                          (UNAUDITED)
                             ----------------------------------------------------------------------------------------
<S>                          <C>                 <C>                <C>               <C>                 <C>
Sales                          304,474            $232,761            $31,966          $172,738            $204,704
Costs of goods sold            250,787             189,559             25,917           140,149             166,696
                              ---------           ---------           --------         ---------           ---------
   Gross profit                 53,687              43,202              6,049            32,589              38,008
                                                                                                           
Operating expenses:                                                                                        
   Selling, general and                                                                                    
      administrative            31,514              26,414              4,153            18,645              22,853
   Plant relocation              1,036                   -                  -                 -                   -
   Amortization                  1,624               1,624                250             2,706               3,057
                              ---------           ---------           --------         ---------           ---------
     Total operating            34,174              28,038              4,403            21,351              25,910
      Expenses                                                                                             
                              ---------           ---------           --------         ---------           ---------
                                                                                                           
Operating income                19,513              15,164              1,646            11,238              12,098
                                                                                                           
Interest expense                     -                   -                  -            13,709              16,398
Other expense                      678                 796                  -                11                  11
                              ---------           ---------           --------         ---------           ---------
                                                                                                           
Income (loss) before            18,835              14,368              1,646            (2,482)             (4,311)
    income taxes                                                                                           
Income tax expense               7,931               6,205                731                 -                   -
                              ---------           ---------           --------         ---------           ---------
                                                                                                           
     Net income (loss)        $ 10,904            $  8,163            $   915          $ (2,482)           $ (4,311)
                              =========           =========           ========         =========           =========
</TABLE>



See accompanying notes to financial statements

                                      F-4
<PAGE>
 
                        GORGES/QUIK-TO-FIX FOODS, INC.
                           STATEMENTS OF CASH FLOWS
                                (In thousands)

<TABLE>
<CAPTION>
                                                                            PREDECESSOR                           COMPANY
                                                          ---------------------------------------------------------------------
                                                           YEAR             YEAR              FIFTY-EIGHT         THREE 
                                                           ENDED            ENDED             DAYS                HUNDRED
                                                                                              ENDED               SIX DAYS
                                                                                                                  ENDED   
                                                           SEPTEMBER        SEPTEMBER         NOVEMBER            SEPTEMBER 
                                                           30, 1995         28, 1996          25, 1996            27, 1997
                                                          ---------------------------------------------------------------------
<S>                                                       <C>               <C>               <C>                 <C> 
Cash flows from operating activities:
   Net income (loss)                                       $  10,904         $  8,163             $ 915            $   (2,482)
   Adjustments to reconcile net income (loss) to
    net cash provided by operating
    activities:
      Depreciation                                             8,740            7,292               342                 7,358
      Amortization                                             1,624            1,624               250                 3,301
      Deferred income taxes                                   (3,720)          (1,285)               26                    -
      Loss on disposition of equipment                           678              792                 -                    -
      Provision for losses on doubtful accounts                    -                -                 -                   795
Changes in assets and liabilities:
         Increase in accounts receivable                                            -                 -               (22,755)
         (Increase) decrease in inventory                      2,881             (691)             (571)                 (645)
         Increase in prepaid expenses and other                                     -                 -                  (167)
         Increase in accounts payable and
           Accrued expenses                                                         -                 -                17,712
                                                          ---------------------------------------------------------------------
     Net cash provided by operating activities                21,107           15,895               962                 3,117
 
Cash flows from investing activities:
   Purchases of plant and equipment                           (2,792)            (735)             (141)               (3,691)
   Acquisition, net of cash received                                                -                 -              (184,349)
   Proceeds from sale of equipment                             5,302              126                 -                    45
   Other                                                                            -                 -                    51
                                                          ---------------------------------------------------------------------
     Net cash provided by (used in) investing                  2,510             (609)             (141)             (187,944)
          activities
 
Cash flows from financing activities:
   Proceeds from note offering                                                      -                 -               100,000
   Capital contributions                                                            -                 -                45,585
   Proceeds from revolving line of credit                                           -                 -                19,000
   Payments on revolving line of credit                                             -                 -                (7,000)
   Proceeds from term loan                                                          -                 -                40,000
   Payments on term loan                                                            -                 -                (2,500)
   Debt issuance and organizational costs                                           -                 -               (10,258)
   Decrease in Investment and advances by
     Tyson                                                   (23,637)         (15,286)             (821)                    -
                                                          ---------------------------------------------------------------------
     Net cash (used in) provided by financing                (23,637)         (15,286)             (821)              184,827
         activities
                                                          ---------------------------------------------------------------------
Net decrease in cash                                             (20)               -                 -                     -
Cash at beginning of period                                       29                9                 9                     -
                                                          ---------------------------------------------------------------------
Cash at end of period                                      $       9         $      9             $   9             $       -
                                                          =====================================================================
</TABLE>

See accompanying notes to financial statements

                                      F-5
<PAGE>
 
                        GORGES/QUIK-TO-FIX FOODS, INC.
                 STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
                       (In thousands, except share data)



<TABLE>
<CAPTION>
                                                   Common         Additional          Accumulated
                                   Common           Stock           Paid in             Deficit
                                    Stock                           Capital                              Total
                                   Shares
                                ----------------------------------------------------------------------------------
<S>                             <C>                <C>            <C>                 <C>                <C>
November 25, 1996                       -         $   -             $     -             $     -         $     -
Initial Sale
 (issuance of common stock)         1,000                            45,585                   -          45,585
Net Loss                                -             -                   -             $(2,482)         (2,482)
                                ----------------------------------------------------------------------------------
 
September 27, 1997                  1,000         $   -             $45,585             $(2,482)        $43,103
                                ==================================================================================
</TABLE>

                                      F-6
<PAGE>
 
GORGES/QUIK-TO-FIX FOODS, INC.
NOTES TO FINANCIAL STATEMENTS
September 27, 1997

1.  ORGANIZATION AND BASIS OF PRESENTATION

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

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

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

                                      F-7
<PAGE>
 
GORGES/QUIK-TO-FIX FOODS, INC.
NOTES TO FINANCIAL STATEMENTS-(Continued)

1.  ORGANIZATION AND BASIS OF PRESENTATION - CONTINUED

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

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Fiscal Year

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

Accounts Receivable

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

 Inventories

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

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

 Property, Plant and Equipment

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

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

 Intangible assets and Organizational and Deferred Debt Issuance Costs

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

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

                                      F-8
<PAGE>
 
GORGES/QUIK-TO-FIX FOODS, INC.
NOTES TO FINANCIAL STATEMENTS-(Continued)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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

 Income Taxes

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

 Selling Expenses

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

 Allocation of Corporate Expenses

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

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


 Advertising, Promotion and Research and Development Expenses

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

                                      F-9
<PAGE>
 
GORGES/QUIK-TO-FIX FOODS, INC.
NOTES TO FINANCIAL STATEMENTS-(Continued)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 Use of Estimates

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

Collective Bargaining Agreements

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

3.  LONG TERM DEBT

 Senior Debt

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

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

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

                                      F-10
<PAGE>
 
GORGES/QUIK-TO-FIX FOODS, INC.
NOTES TO FINANCIAL STATEMENTS-(Continued)

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

 Subordinated Debt

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

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

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

4.  COMMITMENTS

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

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

                                      F-11
<PAGE>
 
GORGES/QUIK-TO-FIX FOODS, INC.
NOTES TO FINANCIAL STATEMENTS-(Continued)

5.  BENEFIT PLANS

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

6.  INCOME TAXES

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

Detail of the provision for income taxes consists of:
<TABLE>
<CAPTION>
                                     Year ended             Year ended           Fifty-eight                 Three 
                                     September              September            days ended               hundred six 
                                      30, 1995               28, 1996             November                 days ended 
                                                                                  25, 1996                 September 
                                                                                                            27, 1997 
                                --------------------------------------------------------------------------------------
 
<S>                             <C>                    <C>                    <C>                    <C>
Federal                                 $ 6,746                $ 5,270                 $ 621                 $     -
State                                     1,185                    935                   110                       -
                                -----------------      -----------------      -----------------      -----------------
                                          7,931                  6,205                   731                       -
                                =================      =================      =================      =================
Current                                  11,651                  7,490                   990                       -
Deferred                                 (3,720)                (1,285)                 (259)                      -
                                -----------------      -----------------      -----------------      -----------------
                                        $ 7,931                $ 6,205                 $ 731                 $     -
                                =================      =================      =================      =================
</TABLE>
        The reasons for the difference between the effective income tax rate and
the statutory U.S. federal income tax rate are as follows:

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

                                      F-12
<PAGE>
 
GORGES/QUIK-TO-FIX FOODS, INC.
NOTES TO FINANCIAL STATEMENTS-(Continued)

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

<TABLE>
<CAPTION>

<S>                                                             <C>

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

  Total net deferred tax assets                                 $   940
  Valuation allowance                                              (940)
                                                                --------
Total net                                                       $     -
                                                                ========
</TABLE>

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

7.  SIGNIFICANT CUSTOMERS

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

8.  TRANSACTIONS WITH AFFILIATES

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

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

                                      F-13
<PAGE>
 
GORGES/QUIK-TO-FIX FOODS, INC.
NOTES TO FINANCIAL STATEMENTS-(Continued)

9.  PRO FORMA INFORMATION

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

        In 1997, GHC adopted a stock option plan (the Stock Option Plan) which
provides for the granting of up to 112,250 incentive stock options to employees
to purchase shares of GHC's common stock.  All options granted under the Stock
Option Plan have a five year vesting period and a term of up to ten years.  GHC
has no assets or liabilities, other than their direct investment in the Company.
Stock option activity is as follows:
 
<TABLE>
<CAPTION>
                                         Number of Shares     Option Price per 
                                                                         Share
                                        ---------------------------------------
<S>                                      <C>                  <C>
Options granted                                    84,968              $100.00
Options exercised                                       -                    -
Options cancelled                                       -                    -
                                        ---------------------------------------
Options outstanding September 27, 1997             84,968              $100.00
</TABLE>


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

        Option valuation models are used in estimating the fair value of traded
options that have no vesting restrictions and are fully transferable.  In
addition, option valuation models require the input of highly subjective
assumptions.  Because the Company's stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its stock options.
 
        For purposes of proforma disclosures, the estimated fair value of the
options is amortized to expense on a straight-line basis over the options'
vesting period.  The Company's proforma net loss for the three hundred and six
days ended is $3,015,000.

                                      F-14