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THE MORNINGSTAR GROUP ANNOUNCES NEW GROWTH STRATEGY

 DALLAS, Jan. 6 /PRNewswire/ -- The Morningstar Group Inc. (NASDAQ: MSTR) today announced that it has implemented a new growth strategy under which it will sharpen its focus on the faster-growing value-added segments of its core specialty food products business, while reorganizing its operations to be much more lean and efficient.
 Actions to be taken pursuant to the strategy include the divestiture of a non-core business, the realignment of the company's remaining operations, with an associated charge to fourth-quarter 1993 operating income, and suspension of the dividend on the company's common stock in 1994.
 James A. Bach, Morningstar's president and chief executive officer, said: "This new strategy will be characterized by far greater emphasis on, and investment in, aggressive internal growth and marketing of Morningstar's specialty dairy foods, as well as the pursuit of significant expansion opportunity via strategic acquisitions. Additionally, the company will focus strongly on operating efficiencies and cost and expense reduction and control."
 Specifically, actions under the new growth strategy include:
 -- The signing of a letter of intent to sell Velda Farms, a
 Florida-based fluid milk operation that recorded 1993 sales of $130
 million and operating income of approximately $6.5 million. This
 transaction is expected to close by the end of the first quarter of
 1994 at an approximate price of $48 million.
 -- Reorganization and realignment of the company's remaining
 operations to improve production and distribution efficiencies and
 customer service levels. The expected cost reduction from this
 restructuring is estimated to be at least $5 million annually. With
 respect to this reorganization, the company will record a one-time $9
 million charge to operating income for the quarter ended Dec. 31,
 1993.
 -- Given the new focus on growth and expansion, Morningstar will
 suspend the current nominal dividend on its common stock
 immediately following the payment, on Jan. 20, 1994, of a quarterly
 dividend of $0.0375 per share to holders of record as of
 Dec. 31, 1993.
 C. Dean Metropoulos, whose appointment as chairman of Morningstar was announced on December 15, and who until recently was president and chief executive officer of Stella Foods, Inc., which he built from a company with 1982 sales of less than $20 million to the nation's largest specialty cheese manufacturer and marketer with annual sales of more than $800 million, said: "I look forward to working with Morningstar's management team to enhance the company's value by helping to generate a dynamic new commitment and focus on growth and efficiency."
 Bach said: "With Dean's guidance and new direction, we plan on quickly changing Morningstar into a focused growth company. The company and its management are energized and excited to accept this new challenge and the associated opportunities."
 Morningstar is a nationally prominent manufacturer, distributor and marketer of refrigerated food products. Its established branded products include; International Delight(R), a gourmet-flavored coffee creamer; Second Nature(R), a refrigerated no-cholesterol egg substitute; Naturally Yours(TM), a no fat, real dairy sour cream, and, in the western two-thirds of the United States, Lactaid(R), a lactose-reduced milk produced under license from McNeil Consumer Products Company, a subsidiary of Johnson & Johnson. Morningstar also specializes in providing private label refrigerated products to grocery warehouses and dairy companies.
 -0- 1/6/94
 /CONTACT: Tracy L. Noll, CFO, The Morningstar Group, Inc., 214-360-4777, or Roy Winnick, Kekst and Company, 212-593-2655/
 (MSTR)


CO: Morningstar Group Inc. ST: Texas IN: FOD SU: DIV RCN TNM

LG -- NY012 -- 9631 01/06/94 08:23 EST
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Publication:PR Newswire
Date:Jan 6, 1994
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