UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q



[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 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:  0-15638


                               MICHAEL FOODS, INC.
             (Exact name of registrant as specified in its charter)


         Minnesota                                      41-0498850
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


Suite 324, Park National Bank Building
5353 Wayzata Boulevard
Minneapolis, MN                                           55416
(Address of principal executive offices)                (Zip code)


                                 (612) 546-1500
              (Registrant's telephone number, including area code)

         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.  [X] Yes  [ ] No

         The number of shares outstanding of the registrant's Common Stock, $.01
par value, as of November 3, 1997 was 21,781,098 shares.


<PAGE>


                         PART I - FINANCIAL INFORMATION

                      MICHAEL FOODS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                September 30,  December 31,
ASSETS                                                              1997          1996
------                                                          ------------   ------------
<S>                                                             <C>            <C>         
CURRENT ASSETS
  Cash and equivalents                                          $  3,742,000   $  2,585,000
  Accounts receivable, less allowances                            91,314,000     51,394,000
  Inventories                                                     64,639,000     58,976,000
  Prepaid expenses and other                                       2,981,000      2,976,000
                                                                ------------   ------------
     Total current assets                                        162,676,000    115,931,000

PROPERTY, PLANT AND EQUIPMENT-AT COST
  Land                                                             4,188,000      4,110,000
  Buildings and improvements                                     103,796,000     97,470,000
  Machinery and equipment                                        262,362,000    225,215,000
                                                                ------------   ------------
                                                                 370,346,000    326,795,000
  Less accumulated depreciation                                  153,340,000    144,556,000
                                                                ------------   ------------
                                                                 217,006,000    182,239,000
OTHER ASSETS
  Goodwill, net                                                  114,933,000     53,602,000
  Other                                                            6,662,000     12,887,000
                                                                ------------   ------------
                                                                 121,595,000     66,489,000
                                                                ------------   ------------
                                                                $501,277,000   $364,659,000
                                                                ============   ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
  Current maturities of long-term debt                          $  8,649,000   $  8,410,000
  Accounts payable                                                45,041,000     28,412,000
  Accrued compensation                                             8,739,000      4,604,000
  Accrued insurance                                                7,047,000      6,471,000
  Other accrued expenses                                          31,949,000     11,357,000
                                                                ------------   ------------
     Total current liabilities                                   101,425,000     59,254,000

LONG-TERM DEBT, less current maturities                          144,163,000    104,491,000
DEFERRED INCOME TAXES                                             35,857,000     26,872,000
CONTINGENCIES                                                           --             --

SHAREHOLDERS' EQUITY
  Common stock, $.01 par value, 40,000,000 shares authorized,
    shares issued: 21,720,519 at September 30, 1997 and
    19,459,731 at December 31, 1996                                  217,000        195,000
  Additional paid-in capital                                     138,991,000    113,268,000
  Retained earnings                                               80,624,000     60,579,000
                                                                ------------   ------------
                                                                 219,832,000    174,042,000
                                                                ------------   ------------
                                                                $501,277,000   $364,659,000
                                                                ============   ============

</TABLE>

See accompanying notes to condensed consolidated financial statements.


<PAGE>


                      MICHAEL FOODS, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                  Three Months Ended September 30, (Unaudited)


                                                   1997           1996
                                               ------------   ------------
Net sales                                      $245,868,000   $159,928,000

Cost of sales                                   207,514,000    144,828,000
                                               ------------   ------------

       Gross profit                              38,354,000     15,100,000

Selling, general and administrative expenses     17,184,000     11,155,000
                                               ------------   ------------

       Operating profit                          21,170,000      3,945,000

Other expense
    Interest expense, net                         2,673,000      1,730,000
                                               ------------   ------------

       Earnings before income taxes              18,497,000      2,215,000

Income tax expense                                7,669,000        890,000
                                               ------------   ------------

       NET EARNINGS                            $ 10,828,000   $  1,325,000
                                               ============   ============

       NET EARNINGS PER SHARE                  $        .50   $        .07
                                               ============   ============

       DIVIDENDS PER SHARE                     $        .05   $        .05
                                               ============   ============

Weighted average shares outstanding              21,583,000     19,396,000
                                               ============   ============


See accompanying notes to condensed consolidated financial statements.


<PAGE>


                      MICHAEL FOODS, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                   Nine Months Ended September 30, (Unaudited)

                                                   1997           1996
                                               ------------   ------------
Net sales                                      $679,147,000   $455,478,000

Cost of sales                                   577,603,000    403,267,000
                                               ------------   ------------

       Gross profit                             101,544,000     52,211,000

Selling, general and administrative expenses     54,029,000     33,597,000
                                               ------------   ------------

       Operating profit                          47,515,000     18,614,000

Other expense
    Interest expense, net                         7,954,000      5,474,000
                                               ------------   ------------

       Earnings before income taxes              39,561,000     13,140,000

Income tax expense                               16,419,000      5,260,000
                                               ------------   ------------

       NET EARNINGS                            $ 23,142,000   $  7,880,000
                                               ============   ============

       NET EARNINGS PER SHARE                  $       1.10   $        .41
                                               ============   ============

       DIVIDENDS PER SHARE                     $        .15   $        .15
                                               ============   ============

Weighted average shares outstanding              20,977,000     19,379,000
                                               ============   ============

See accompanying notes to condensed consolidated financial statements.


<PAGE>


                      MICHAEL FOODS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Nine Months Ended September 30, (Unaudited)

<TABLE>
<CAPTION>
                                                                      1997             1996
                                                                  -------------    -------------
<S>                                                               <C>              <C>          
Net cash provided by operating activities                         $  65,937,000    $  30,965,000

Cash flows from investing activities:
  Capital expenditures                                              (24,841,000)     (20,594,000)
  Business acquisitions, net of cash acquired, and other assets     (43,139,000)         968,000
                                                                  -------------    -------------

Net cash used in investing activities                               (67,980,000)     (19,626,000)

Cash flows from financing activities:
  Payments on notes payable and long-term debt                     (227,973,000)     (99,916,000)
  Proceeds from notes payable and long-term debt                    223,656,000       92,814,000
  Purchase of shares                                                       --           (500,000)
  Proceeds from issuance of common stock                             10,613,000          213,000
  Cash dividends                                                     (3,096,000)      (2,905,000)
                                                                  -------------    -------------

Net cash provided by (used in) financing activities                   3,200,000      (10,294,000)
                                                                  -------------    -------------

Net increase in cash and equivalents                                  1,157,000        1,045,000

Cash and equivalents at beginning of year                             2,585,000        1,921,000
                                                                  -------------    -------------

Cash and equivalents at end of period                             $   3,742,000    $   2,966,000
                                                                  =============    =============


NON-CASH INVESTING AND FINANCING TRANSACTIONS
Acquisition:
  Cash paid, net of cash acquired                                 $  42,720,000
  Stock issued                                                       38,859,000
  Fair value of assets acquired                                     (86,334,000)
  Liabilities assumed                                                68,223,000
                                                                  -------------

  Purchase price in excess of net assets acquired                 $  63,468,000
                                                                  =============

In connection with the merger with North Star Universal, Inc., Michael Foods,
Inc. (the "Company") assumed $21,250,000 of net indebtedness and effectively
repurchased 1,782,961 shares of its common stock (see note D).

</TABLE>

See accompanying notes to condensed consolidated financial statements.


<PAGE>


                      MICHAEL FOODS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with Regulation S-X pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that the
disclosures are adequate to make the information presented not misleading.

The Company utilizes a fiscal year consisting of either 52 or 53 weeks, ending
on the Saturday nearest to December 31 each year. The quarters ended September
30, 1997 and September 30, 1996 each include thirteen weeks of operations. For
clarity of presentation, the Company has described all periods presented as if
the three month and nine month periods ended on September 30.

In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of September
30, 1997 and the results of operations for the three and nine month periods
ended September 30, 1997 and 1996 and cash flows for the nine months ended
September 30, 1997 and 1996. The results of operations for the nine months ended
September 30, 1997 are not necessarily indicative of the results for the full
year.

NOTE B - NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share, which is effective
for periods ending after December 15, 1997. Early adoption of the new standard
is not permitted. The new standard eliminates primary and fully diluted earnings
per share disclosure and requires presentation of basic and diluted earnings per
share, together with disclosure of how the per share amounts were computed.
Basic earnings per share excludes dilution and is computed by dividing income
available to common shareholders by the weighted-average common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised and converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. The pro forma
effect of adopting the new standard would not have a material impact on the
reported net earnings per share for the three and nine month periods ended
September 30, 1997 and 1996 for both basic and diluted earnings per share.

In June 1997, the FASB issued Statement No. 130 "Reporting Comprehensive Income"
and Statement No. 131 "Disclosures about Segments of an Enterprise and Related
Information" which are effective for fiscal years beginning after December 15,
1997. Statement No. 130 will require the Company to display an amount
representing total comprehensive income, as defined by the statement, as part of
the Company's basic financial statements. Comprehensive income will include
items such as unrealized gains or losses on certain investment securities and
foreign currency items. Statement No. 131 will require the Company to disclose
financial and other information about its business segments, as defined by the
statement, their products and services, geographical areas, major customers,
revenue, profits, assets and other information. The adoption of these two
statements is not expected to have a material effect on the consolidated
financial statements of the Company.


<PAGE>


                      MICHAEL FOODS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE C - INVENTORIES

Inventories other than flocks, raw potatoes, and potato products are stated at
the lower of cost determined on a first-in, first-out basis) or market. Flock
inventory represents the cost of purchasing and raising flocks to laying
maturity, at which time their cost is amortized to operations over their
expected useful life of generally one to two years, assuming no salvage value.
Raw potatoes and potato products are stated at the lower of average cost for the
year in which produced or at market. Inventories consist of the following:

                                             September 30,         December 31,
                                                 1997                   1996
                                              -----------           -----------
Raw materials and supplies                    $14,476,000           $11,065,000
Work in process and finished goods             29,666,000            21,235,000
Flocks                                         20,497,000            26,676,000
                                              -----------           -----------
                                              $64,639,000           $58,976,000
                                              ===========           ===========

NOTE D - ACQUISITION OF PAPETTI'S AND MERGER WITH NORTH STAR UNIVERSAL

On February 26, 1997, the Company completed the acquisition of Papetti's Hygrade
Egg Products, Inc. and affiliated entities (collectively "Papetti's"). The
acquisition has been accounted for as a purchase. Total consideration of
$83,174,000, together with the assumption of $22,825,000 of notes payable and
long-term debt, was delivered through the issuance of 3,195,455 shares of newly
issued common stock valued at $38,859,000, and $44,315,000 in cash and closing
costs. The total consideration delivered exceeded the fair value of the net
assets acquired by $63,468,000, which has been recorded as goodwill and will be
amortized on a straight line basis over 40 years. The Papetti's results of
operations have been included in the Company's operating results since the date
of acquisition.

On February 28, 1997, Michael Foods, Inc., a Delaware corporation, merged into
North Star Universal, Inc. ("NSU") with NSU immediately distributing NSU's
subsidiary, ENStar Inc., in a tax-free distribution to the former shareholders
of NSU. At the time of the merger, NSU changed its name to Michael Foods, Inc.
and the management and operations of the continuing entity are those of the
Company. The merger has been accounted for as a reverse acquisition utilizing
the purchase method of accounting. The effect of the merger is that the Company
assumed $21,250,000 of net subordinated indebtedness and effectively retired
1,782,961 shares of the Company's common stock of approximately equal value.

The following unaudited pro forma statement of earnings information has been
prepared assuming the Papetti's acquisition, the merger with NSU and the
refinancing of the Company's debt described in Note E had occurred on January 1,
1997 and 1996:

For the nine months ended September 30,          1997             1996
----------------------------------------     ------------     ------------
Net sales                                    $727,742,000     $716,874,000
Net earnings                                 $ 23,695,000     $  7,725,000
Net earnings per share                       $       1.11     $        .37
                                             ============     ============

Weighted average shares outstanding            21,260,000       20,791,000
                                             ============     ============

This unaudited pro forma information is not necessarily indicative of the
combined results of operations that would have occurred had the acquisition,
merger and refinancing occurred on the respective dates, nor are they indicative
of the results which may occur in the future.


<PAGE>


                      MICHAEL FOODS, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                   (Unaudited)

NOTE E - LONG-TERM DEBT

In February, 1997, the Company issued senior notes in the principal amount of
$125,000,000 to finance the cash portion of the acquisition of Papetti's, to
retire certain Company debt, and to refinance all or a portion of the debt
assumed in the Papetti's acquisition and the NSU merger. The senior notes bear
interest at 7.58% and are due in five equal annual payments beginning in 2005.
In addition, the Company also obtained a new $80,000,000 unsecured revolving
line of credit with its principal banks. The revolving line of credit will
mature in February, 2002 and bears interest at the banks' reference rate, or at
Eurodollar rates as defined, at the Company's option. Proceeds from the
revolving line of credit were used to retire the outstanding balance of the
preexisting line of credit and to assist with completing the acquisition of
Papetti's and the merger with NSU. At September 30, 1997, the Company had
$77,000,000 available under this revolving line of credit.

NOTE F - CONTINGENCIES

Use of Estimates
In preparation of the Company's consolidated financial statements, management is
required to make estimates and assumptions that affect reported amounts of
assets and liabilities and related revenues and expenses. Actual results could
differ from the estimates used by management.

Patent Litigation
The Company has an exclusive license agreement for the production and sale of
extended shelf-life liquid egg products. Under the terms of this license
agreement the Company has the right to defend and prosecute infringement of the
patents which are the basis of the exclusive license agreement. The Company can
offset up to 50% of the required royalty payments under the agreement with costs
associated with the legal defense of the licensed patents. To the extent defense
costs exceed the required royalty payments, the agreement permits the Company to
defer the excess costs and apply them to future royalty payments. At September
30, 1997 and December 31, 1996, the Company had prepaid royalty payments of
approximately $1,512,000 and $7,923,000 included in other assets related to the
defense of its licensed patent rights against several infringing parties. In
connection with the February 26, 1997 acquisition of Papetti's, which was a
defendant in one of these patent infringement cases, a settlement of $6,000,000
was received by the Company. Under the terms of its license agreement, the
Company was required to apply this settlement as a reduction of its prepaid
royalty payments.

During 1996, the Company was informed by the U.S. Patent and Trademark Office
that a patent examiner rejected the claims under the four process patents which
are the subject of the license agreement. The Company and the holder of the
patents are appealing the decision of the examiner and the Company believes the
validity of the patents will ultimately be upheld. During the appeal process,
the patents remain valid and in full force and effect. There can be no assurance
that the Company will be able to fully recover its prepaid royalty payments. If
the patents are ultimately denied, the Company would continue to produce and
market the products currently subject to the license agreement without incurring
royalty cost.

Other Litigation
The Company is also engaged in routine litigation incidental to its business,
which management believes will not have a material effect upon its consolidated
financial position, liquidity or results of operations.


<PAGE>


                      MICHAEL FOODS, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                   (Unaudited)


NOTE G - RECLASSIFICATIONS

Certain 1996 amounts have been reclassified to conform with the 1997
presentation.


<PAGE>


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


THREE MONTHS ENDED SEPTEMBER 30, 1997 VS THREE MONTHS ENDED
SEPTEMBER 30, 1996

RESULTS OF OPERATIONS

The Company completed the acquisition of Papetti's on February 26, 1997.
Papetti's results of operations since the date of acquisition are included in
the Company's Egg Products Division operating results.

The following table sets forth the percentage of net sales accounted for by each
of the Company's operating divisions for the periods indicated:

                                         Three Months Ended
                                            September 30,
                                    ---------------------------
                                     1997                  1996
                                    -----                 -----
Egg Products                           65%                   42%
Refrigerated Distribution              21                    32
Dairy Products                         12                    18
Potato Products                         5                    13
Intercompany Sales                     (3)                   (5)
                                    -----                 -----
          TOTAL                       100%                  100%
                                    =====                 =====

The following table sets forth the percentage of divisional operating earnings
(before corporate, interest and income tax expenses) accounted for by each of
the Company's operating divisions for the periods indicated:

                                         Three Months Ended
                                            September 30,
                                    ---------------------------
                                     1997                  1996
                                    -----                 -----
Egg Products                           75%                   61%
Refrigerated Distribution              10                    35
Dairy Products                         13                    42
Potato Products                         2                   (38)
                                    -----                 -----
          TOTAL                       100%                  100%
                                    =====                 =====

The Egg Products Division had higher dollar sales and higher dollar earnings in
the period ended September 30, 1997, as compared to the results of the same
period in 1996, due to strong unit sales, favorable spot market egg prices,
lower feed costs and contributions from Papetti's. Sales were particularly
strong for certain value-added egg products, notably Easy Eggs(R), Table
Ready(R) (extended shelf-life liquid whole eggs) and MicroFresh (frozen omelets,
patties and curds). Egg prices decreased approximately 8% compared to third
quarter 1996 levels, as reported by Urner Barry Publications - a widely quoted
industry pricing service, although pricing for egg products is not necessarily
directly effected by changes in shell egg pricing. With the acquisition of
Papetti's, a substantially greater portion of the Company's egg needs are now
purchased in the open market relative to prices reported by Urner Barry. The
relationship of open market egg prices to egg products prices was generally
favorable during the third quarter of 1997. Feed costs, which represent roughly
two-thirds of the cost of producing an egg, were lower in the 1997 period than
in the 1996 period, due principally to lower corn prices, which benefited
margins.

The Refrigerated Distribution Division had higher dollar sales and higher dollar
earnings in the period ended September 30, 1997, as compared to the results of
the same period in 1996. Unit sales


<PAGE>


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


THREE MONTHS ENDED SEPTEMBER 30, 1997 VS THREE MONTHS ENDED
SEPTEMBER 30, 1996

RESULTS OF OPERATIONS, CONT.

were higher for core refrigerated grocery items, reflecting, in part, new
customers, new product introductions and increased promotional activities. This
significant volume improvement allowed for divisional earnings growth.

The Dairy Products Division had higher dollar sales and higher dollar earnings
in the period ended September 30, 1997, as compared to the results of the same
period in 1996. Unit sales increased and were helped by improved sales volumes
with certain large fast-food customers and by a growing coffee creamer business.
Raw material costs declined during the quarter due to decreases in the pricing
of certain ingredients tied to the national butter fat market.

The Potato Products Division had lower dollar sales, largely due to the
discontinuation of frozen french fry sales, and operated profitably in the
period ended September 30, 1997, as compared to a loss in the same period in
1996. The Company announced earlier in 1997 that it would exit the frozen french
fry business in mid-1997 and it essentially completed that process in the second
quarter. The remaining business of the division, production and distribution of
value-added refrigerated potato products, generated greater earnings in the
third quarter of 1997 than in the third quarter of 1996, although earnings were
relatively modest in both periods. While unit sales declined for such products,
production costs were notably lower in the 1997 period than the 1996 period. In
the 1997 period benefits were seen from investments made in capital expenditures
and training over the prior 9-12 months. Profitability in the 1996 period was
hampered by significant losses in the former frozen french fry business.

The increase in gross profit margin of the Company for the period ended
September 30, 1997, as compared to the results of the same period in 1996,
reflected the factors discussed above, particularly the strength of Egg Products
Division earnings. It is management's strategy to increase value-added product
sales as a percent of total sales over time, while decreasing
commodity-sensitive products' contribution to consolidated sales. These efforts
historically have been beneficial to gross profit margins in most periods.

Selling, general and administrative expenses in the period ended September 30,
1997 were a comparable percent of sales, as compared to the results of the same
period in 1996. Increased expenditures for sales training, staffing additions
related, in part, to the Papetti's acquisition, and foodservice marketing
activities were largely offset by a non-recurring gain. This gain of
approximately $1.3 million pretax, or $0.04 per share after taxes, resulted from
the disposition of french fry production assets.


<PAGE>


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


NINE MONTHS ENDED SEPTEMBER 30, 1997 VS NINE MONTHS ENDED
SEPTEMBER 30, 1996

RESULTS OF OPERATIONS

The following table sets forth the percentage of net sales accounted for by each
of the Company's operating divisions for the periods indicated:

                                          Nine Months Ended
                                            September 30,
                                    ---------------------------
                                     1997                  1996
                                    -----                 -----
Egg Products                           62%                   43%
Refrigerated Distribution              23                    33
Dairy Products                         11                    16
Potato Products                         7                    14
Intercompany Sales                     (3)                   (6)
                                    -----                 -----
          TOTAL                       100%                  100%
                                    =====                 =====

The following table sets forth the percentage of divisional operating earnings
(before corporate, interest and income tax expenses) accounted for by each of
the Company's operating divisions for the periods indicated:

                                          Nine Months Ended
                                            September 30,
                                    ---------------------------
                                     1997                  1996
                                    -----                 -----
Egg Products                           79%                   60%
Refrigerated Distribution              11                    24
Dairy Products                         11                    23
Potato Products                        (1)                   (7)
                                    -----                 -----
          TOTAL                       100%                  100%
                                    =====                 =====

The Egg Products Division had higher dollar sales and higher dollar earnings in
the period ended September 30, 1997, as compared to the results of the same
period in 1996, due to strong unit sales, favorable spot market egg prices and
contributions from the recently acquired Papetti's operations. Sales were
particularly strong for certain value-added egg products, notably Easy Eggs(R),
Table Ready(R) and MicroFresh. Egg prices decreased approximately 7% compared to
levels in the comparable 1996 period, as reported by Urner Barry, although
pricing for egg products is not necessarily directly effected by changes in
shell egg pricing. With the acquisition of Papetti's, a substantially greater
portion of the Company's egg needs are now purchased in the open market relative
to prices reported by Urner Barry. The relationship of open market egg prices to
egg products prices was generally favorable during the 1997 period. Feed costs,
which typically represent roughly two-thirds of the cost of producing an egg,
were lower in the 1997 period than in the 1996 period, due principally to lower
corn prices, which benefited margins.

The Refrigerated Distribution Division had higher dollar sales and higher dollar
earnings in the period ended September 30, 1997, as compared to the results of
the same period in 1996. Unit sales were higher for core refrigerated grocery
items, reflecting, in part, new customers, new product introductions and
increased promotional activity. This significant volume improvement allowed for
divisional earnings growth.


<PAGE>


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


NINE MONTHS ENDED SEPTEMBER 30, 1997 VS NINE MONTHS ENDED
SEPTEMBER 30, 1996

RESULTS OF OPERATIONS, CONT.

The Dairy Products Division had higher dollar sales and higher dollar earnings
in the period ended September 30, 1997, as compared to the results of the same
period in 1996. Unit sales increased and were helped by promotional activities
with certain customers, increased sales volumes with certain large fast-food
customers and by a growing coffee creamer business.

The Potato Products Division had lower dollar sales, largely due to a planned
exiting of the frozen french fry business, in the period ended September 30,
1997, as compared to the results of the same period in 1996 and operated at a
loss in both periods. The loss in the 1997 period was smaller than the loss in
the 1996 period. Frozen french fry operations generated losses totaling
approximately $0.05 per share (after tax) in the 1997 period, compared to a loss
of approximately $0.13 per share (after tax) recorded in the 1996 period.
Value-added refrigerated potato product sales generated earnings in the first
nine months of 1997, but at levels below those experienced in the comparable
1996 period. Unit sales declined for such products, resulting in a reduced
utilization of refrigerated products production lines, which pressured margins.

The increase in gross profit margin of the Company for the period ended
September 30, 1997, as compared to the results of the same period in 1996,
reflected the factors discussed above, particularly the strength of Egg Products
Division earnings. It is management's strategy to increase value-added product
sales as a percent of total sales over time, while decreasing sales of
commodity-sensitive products.

Selling, general and administrative expenses increased as a percent of sales in
the period ended September 30, 1997, as compared to the results of the same
period in 1996, due primarily to increased sales training, staffing additions
related, in part, to the Papetti's acquisition, and increased foodservice
marketing activities. Additionally, non-recurring severance expenses, and other
costs, of approximately $2.4 million (pretax) were recorded in the second
quarter of 1997 related to the exiting of the frozen french fry business,
including a reorganization of the Company's sales group. Also, a non-recurring
gain of approximately $1.3 million (pretax) was recorded in the third quarter of
1997, as a result of the disposition of french fry production assets.

GENERAL

Certain of the Company's products are sensitive to changes in commodity prices.
The Company's Egg Products Division derived approximately 7% of net sales for
the first nine months of 1997 from shell eggs, which are sensitive to commodity
price swings. The value-added Easy Eggs(R) and Table Ready(R) extended
shelf-life liquid egg product lines accounted for approximately 40% of the Egg
Products Division's net sales for the first nine months of 1997. The remainder
of Egg Products Division sales are derived from the sale of other egg products,
which vary from being commodity-sensitive to being value-added. Gross profit
from shell eggs is primarily dependent upon the relationship between shell egg
prices and the cost of feed, both of which can fluctuate significantly. Shell
egg pricing in the first nine months of 1997 was approximately 7% below levels
in the comparable 1996 period as measured by a widely quoted pricing service.
Gross profit margins for extended shelf-life liquid whole eggs and specialty
prepared egg products are less sensitive to commodity price fluctuations than
are other egg products or shell eggs.


<PAGE>


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


GENERAL, CONT.

The Company's refrigerated distribution operations derive approximately 70% of
that division's net sales from refrigerated products produced by others, thereby
reducing the effect of commodity price swings. The balance of refrigerated
distribution sales are from shell eggs, some of which are produced by the Egg
Products Division and are sold on a distribution, or non-commodity, basis by the
Refrigerated Distribution Division.

The Potato Products Division typically purchases 70%-90% of its raw potatoes
from producers under annual contracts. The remainder is purchased at market
prices to satisfy short-term production requirements or to take advantage of
market prices when they are lower than contracted prices. Small variations in
the purchase price of raw materials or the selling price per pound of end
products can have a significant effect on Potato Products Division operating
results. The impact of raw material costs within the Potato Products Division
has been reduced in recent years due to significant increases in higher
value-added refrigerated potato products sales. Presently, all of the Potato
Products Division's sales are of value-added refrigerated potato products.

The Dairy Products Division sells its products primarily on a cost-plus basis
and, therefore, the division's earnings are not typically affected greatly by
raw ingredient price fluctuations.

Inflation is not expected to have a significant impact on the Company's
business. The Company generally has been able to offset the impact of inflation
through a combination of productivity gains and price increases.

CAPITAL RESOURCES AND LIQUIDITY

Acquisitions and capital expenditures have been, and will likely continue to be,
a significant capital requirement. The Company plans to continue to invest in
state-of-the-art production facilities to enhance its competitive position,
although the annual rate of spending has declined in recent years. Historically,
the Company has financed its growth principally from internally generated funds,
bank borrowings, issuance of senior debt and the sale of Common Stock. The
Company believes that these financing alternatives will continue to meet its
anticipated needs.

The Company invested approximately $24,841,000 in capital expenditures during
the nine months ended September, 1997. The Company plans to spend approximately
$45,000,000 in total capital expenditures in 1997.

The Company has an unsecured line of credit for $80,000,000 with its principal
banks. As of September 30, 1997, there was $3,000,000 borrowed under this line
of credit.

SEASONALITY

Consolidated quarterly operating results are affected by the seasonality of the
Company's net sales and operating profits. Specifically, shell egg prices
typically rise seasonally in the first and fourth quarters of the year due to
increased demand during holiday periods. Generally, refrigerated distribution
operations experience higher net sales and operating profits in the fourth
quarter. Operating profits from potato products are less seasonal, but tend to
be higher in the second half of the year coinciding with the potato harvest. Net
sales and operating profits from dairy operations typically are significantly
higher in the second and third quarters due to increased consumption of ice milk
and ice cream products during the summer months.


<PAGE>


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

Reference is made to the Company's Form 10-Q filed for the quarterly period
ended June 30, 1997 for discussion regarding two litigation matters settled
earlier in 1997.

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibit

                  27.1     Financial Data Schedule

                  10.51    Resolution adopted by the Board of Directors on
                           September 2, 1997, amending the Severance Plan for
                           Eligible Employees of Michael Foods, Inc. and
                           Subsidiaries and extending its termination date for
                           one additional year.

         (b)      There were no reports on Form 8-K filed during the quarter
                  ended September 30, 1997.


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.

                                     MICHAEL FOODS, INC.
                                     (Registrant)


Date:  November 12, 1997             By: /s/ Gregg A. Ostrander
                                         Gregg A. Ostrander
                                         (President and Chief Executive Officer)


Date:  November 12, 1997             By: /s/ John D. Reedy
                                         John D. Reedy
                                         (Vice President - Finance, Treasurer,
                                         Chief Financial Officer and Principal
                                         Accounting Officer)