RESULTS OF OPERATIONS
1999 compared to 1998

Sales in fiscal year 1999 increased $3,970,000 (2.9%) when compared to sales of the prior year, primarily as a result of increased sales volume.

Cost of products sold decreased by $332,000 when compared to the prior year. The gross margin was approximately 42% in 1999, 40% in 1998 and 36.9% 1997. Costs for pork commodity products remained at historically low levels and flour costs continued to be favorable in 1999 and 1998.

Selling, general and administrative expenses increased $1,844,000 (5.0%) when compared to the prior year. This increase was generally consistent with the overall increase in sales. Selling expenses slightly outpaced sales growth due to an increased sales force and higher performance bonuses due to record profitability.

The Company's capital expansion projects increased compared to recent years. The Company expects to continue the growth and modernization of facilities and equipment used in the business. The effective tax rate remained consistent with the prior year at 38%.

1998 compared to 1997

Sales in fiscal year 1998 increased $6,956,000 (5.4%) when compared to sales of the prior year, primarily as a result of increased sales volume.

Cost of products sold increased by only $255,000 when compared to the prior year. The gross margin was approximately 40% in 1998, 36.9% in 1997 and 35.9% 1996. Costs for pork commodity products reached historically low levels and flour costs continued to be favorable in 1998 and 1997 compared to the prior years.

Selling, general and administrative expenses increased $3,303,000 (9.8%) when compared to the prior year. This increase was generally consistent with the overall increase in sales. Selling expenses outpaced sales growth due to an increased sales force and higher performance bonuses due to record profitability.

The effective tax rate remained consistent with the prior year at 38%.

1997 compared to 1996

Sales in fiscal year 1997 increased $9,543,000 (8.1%) when compared to sales of the prior year, primarily as a result of increased sales volume.

Cost of products sold increased by $4,747,000 (6.3%) when compared to the prior year. The gross margin was approximately 36.9% in 1997 and 35.9% 1996. Costs for pork commodity products remained at historically high levels while flour costs became more favorable in 1997 compared to the prior year. Improved sales of higher margin products and lower flour costs result in a slight improvement in the gross margin.

LIQUIDITY AND CAPITAL RESOURCES

Favorable operating results over the past several years have continued to provide significant liquidity to the Company. Net cash provided by operating activities was $9,635,000 in the 1999 fiscal year compared to $14,579,000 in 1998 and $10,189,000 in 1997. Accounts receivable balances increased $1,617,000 (13%) in 1999, $699,000 (6%) in 1998 and $1,367,000 (13%) in 1997 due to higher sales and slower collections. Inventories increased in 1999 $2,083,000 due to higher unit quantities and decreased $1,490,000 in fiscal 1998 due primarily to significantly lower commodity costs and lower quantities compared to the prior fiscal year. Non-current assets increased $1,431,000 (16%), $1,363,000 (18%), and $1,122,000 (17%) in 1999, 1998, and 1997, respectively, due primarily to the increased cash surrender value of life-insurance policies and increases in deferred income tax benefits due primarily to increases in non-funded employee benefits. Accounts payable and accrued expenses increased $1,759,000 (19%) in 1997, due to higher purchasing activity to support record fourth quarter sales volume, and increased product promotion and bonus accruals.

The Company's capital improvement expenditures increased in 1999 compared to recent years. Cash used for additions to property, plant and equipment increased $2,617,000 (114%) compared to fiscal year 1998. Significant projects were completed in 1999, primarily the Dallas Sandwich Freezer expansion at a total cost of $966,000 and the shipping dock expansion of the Chicago plant at a total cost of $1,541,000. Cash and cash equivalents increased $2,749,000 in 1999 (12.3%). The increase was lower than in recent years due to higher tax payments, increased capital expenditures and higher accounts receivable and inventory balances. Cash and cash equivalents increased $9,894,000 in 1998 and $6,035,000 (95%) in 1997 primarily as a result of lower capital expenditures, improved profitability and significant increases in non-funded employee benefits. The Company has remained free of interest-bearing debt for twelve consecutive years. Working capital increased $6,509,000 (17.5%) and $7,569,000 (25.5%) in 1999 and 1998. The increases in working capital reflect lower capital spending in 1998, improved profitability and significant increases in non-funded employee benefits. The Company maintains a line of credit with Bank of America that expires April 30, 2001. There were no borrowings under this line of credit during 1999.

The Company has and will continue to make certain investments in its software systems and applications to ensure year 2000 compliance. The financial impact to the Company has not been and is not anticipated to be material to its financial position or results of operations in any given year. Detail disclosure regarding the Company's year 2000 plan and discussion of risk factors is continued under Item 1., "Business" in Form 10-K for the fiscal year ended October 29, 1999.