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MORNINGSTAR GROUP REPORTS IMPROVED RESULTS FROM REMAINING OPERATIONS; INITIATES CASH DIVIDEND ON COMMON STOCK

 MORNINGSTAR GROUP REPORTS IMPROVED RESULTS FROM REMAINING
 OPERATIONS; INITIATES CASH DIVIDEND ON COMMON STOCK
 DALLAS, Aug. 4 /PRNewswire/ -- The Morningstar Group Inc. (NASDAQ: MSTR) today announced improved sales and earnings from remaining operations for its second quarter ended June 30, 1992.
 For the quarter, Morningstar reported net sales of $88.6 million from remaining operations (those not divested or scheduled to be divested), an increase of 10.3 percent from $80.4 million from remaining operations for the second quarter of 1991. Operating income from remaining operations before one-time charges was $5.8 million for the second quarter of 1992, up 1.8 percent from $5.7 million from remaining operations in the prior year period. Total net sales (including both remaining and divested operations) were $121.3 million vs. $133.9 million for the second quarter 1991. Total operating income decreased to $4.4 million in 1992 from $7.4 million for the comparable 1991 period. The company recorded a net loss of $17.6 million for the second quarter of 1992 compared to net income of $1.9 million in the same period last year. The reduced total operating income and the net loss for the quarter are the result of $22.4 million in previously reported one-time charges, primarily non-cash charges related to the company's initial public offering, debt tender offer and senior debt refinancing, all of which were completed during the quarter.
 James A. Bach, Morningstar's president and chief executive officer, said: "We continue to be pleased with the growth in our remaining operations, particularly in light of the increased competitive pressure our branded products came under during the quarter. Having substantially completed our previously announced strategic divestiture program at the end of the quarter, we can now devote our full attention to our specialty refrigerated foods business, for which we believe the outlook is very bright."
 The company also announced that its board of directors approved the payment of a cash dividend of $.0375 per common share for the third quarter of 1992. Shareholders of record as of Sept. 30, 1992 will be eligible for the first quarterly dividend.
 In addition to Second Nature(R) and International Delight(R), Morningstar's products include several private-label dairy-based cultured and ultra-pasteurized products. Morningstar also operates Velda Farms, a leading manufacturer and distributor of dairy products in the state of Florida. A controlling interest in Morningstar is held by an investor group led by Hicks, Muse & Co. Incorporated, a private investment firm with offices in Dallas and New York.
 THE MORNINGSTAR GROUP INC.
 (Dollars in thousands)
 Quarter Ended June 30 1991 1992
 Sales
 Remaining operations $ 80,353 $ 88,587
 Total sales 133,929 121,267
 Gross profit
 Remaining operations 19,993 22,001
 Total gross profit 33,414 29,709
 Operating income
 Remaining operations 5,657 4,745
 Total operating income 7,385 4,480
 Interest expense 4,657 2,535
 Non-operating expenses 107 14,303
 Net income before
 extraordinary items $ 1,863 $ (11,953)
 Extraordinary items 0 (5,582)
 Net income (loss) $ 1,863 $ (17,535)
 Average shares (000's) 9,153 12,128
 Earnings per share $ 0.14 $ (1.46)
 Memo:
 One-time items affecting:
 Operating costs $ 0 $ (2,311)
 Extraordinary items 0 (5,582)
 Non-operating costs 0 (14,518)
 Total one-time items $ 0 $ (22,411)
 Proforma earnings per
 share for remaining
 operations: $ 0.12 $ 0.18
 Six months Ended June 30 1991 1992
 Sales
 Remaining operations $ 157,565 $ 173,444
 Total sales 249,263 230,641
 Gross profit
 Remaining operations 39,765 43,666
 Total gross profit 62,566 57,707
 Operating income
 Remaining operations 10,504 9,993
 Total operating income 11,200 9,163
 Interest expense 8,742 6,124
 Non-operating expenses 466 14,791
 Net income before
 extraordinary items $ 1,234 $ (11,752)
 Extraordinary items 58,115 (5,582)
 Net income (loss) $ 59,349 $ (17,334)
 Average shares (000's) 9,024 9,999
 Earnings per share $ 6.49 $ (1.83)
 Memo:
 One-time items affecting:
 Operating costs $ 0 $ (2,311)
 Extraordinary items 58,115 (5,582)
 Non-operating costs 0 (14,518)
 Total one-time items $ 58,115 $ (22,411)
 Proforma earnings per
 share for remaining
 operations: $ 0.20 $ 0.32
 -0- 8/4/92
 /CONTACT: Tracy Noll, vice president and CFO, of Morningstar Group Inc., 214-360-4777, or Roy Winnick of Kekst and Company, 212-593-2655 for Morningstar Group Inc./
 (MSTR) CO: Morningstar Group Inc. ST: Dallas IN: SU: ERN


LD -- NY076 -- 6884 08/04/92 19:50 EDT
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