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MORNINGSTAR GROUP SAYS THIRD QUARTER NET MAY BE DOWN MORE THAN 50 PERCENT FROM PRIOR-YEAR LEVEL

 DALLAS, Oct. 22 /PRNewswire/ -- Reflecting aggressive pricing in several key markets by its principal competitors in the specialty dairy foods business and the resulting intense pressure on its operating margins, as well as one-time expenses related to the acquisition of Favorite Foods in California, the Morningstar Group Inc. (NASDAQ: MSTR) said today that its third quarter earnings could be down more than 50 percent from the prior-year level of 10 cents per share and that fourth quarter results are unlikely to reach year earlier levels.
 The company expects to report its third quarter 1993 results on Nov. 5, 1993.
 In the third quarter of 1992, the company reported net income of $1.5 million on sales of $87.0 million. In the 1992 fourth quarter, Morningstar earned $5.1 million or $.34 per share on sales of $93.0 million.
 James A. Bach, president and chief executive officer of Morningstar, said, "Competition in several of our product lines accelerated rapidly after the second quarter, eroding margins significantly. In addition, during the third quarter we incurred nearly $500,000 before taxes or approximately 2 cents per share of one-time expenses related to our Favorite Foods acquisition in California.
 "While these transitional expenses should not recur, the competitive business climate will make it difficult to significantly improve our margins in the near term. In spite of this short-term situation, we continue to aggressively pursue opportunities to grow our business," Mr. Bach said.
 -0- 10/22/93
 /CONTACT: Tracy L. Noll, CFO of the Morningstar Group, 214-360-4777, or Roy Winnick of Kekst and Company, 212-593-2655/
 (MSTR)


CO: Morningstar Group Inc. ST: Texas IN: FOD SU: ERP

CK -- NY086 -- 5953 10/22/93 17:46 EDT
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Publication:PR Newswire
Date:Oct 22, 1993
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