(Former name, former address and former fiscal year, if changed since last report)

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 (the “Exchange Act”) 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. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The registrant’s Common Stock is not publicly traded. The Registrant had 100 shares of $0.01 par value common stock outstanding as of November 12, 2013.

	September 28, 2013			December 29, 2012
	(Unaudited)
ASSETS
Current Assets
Cash and equivalents	$	39,334		$	43,274
Accounts receivable, less allowances		163,656			164,025
Inventories		182,134			153,171
Prepaid expenses and other		14,769			18,445
Total Current Assets		399,893			378,915

Property, Plant and Equipment
Land		10,589			9,589
Buildings and improvements		133,020			128,422
Machinery and equipment		323,285			285,848
Total Property, Plant and Equipment		466,894			423,859
Less accumulated depreciation		203,625			159,195
Property, Plant and Equipment, net		263,269			264,664

Goodwill		829,769			830,017
Intangible assets, net		531,308			554,408
Deferred financing costs		33,620			39,436
Other assets		8,096			7,908
Total Assets	$	2,065,955		$	2,075,348
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Current maturities of long-term debt	$	6,765		$	19,833
Accounts payable		96,855			99,184
Accrued liabilities
Compensation		19,418			18,347
Customer programs		32,874			33,547
Interest		17,925			22,920
Other		28,915			32,277
Total Current Liabilities		202,752			226,108
Long-term debt, less current maturities		1,187,893			1,189,570
Deferred income taxes		240,801			253,195
Other long-term liabilities		4,417			6,978
Commitments and contingencies		—			—
Shareholder’s Equity
Common stock, $0.01 par value, 5,000 shares authorized and 100 shares issued and outstanding as of September 28, 2013 and December 29, 2012		0			0
Additional paid-in capital		402,714			394,201
Retained earnings		28,058			7,037
Accumulated other comprehensive loss		(680	)		(1,741	)
Total Shareholder’s Equity		430,092			399,497
Total Liabilities and Shareholder’s Equity	$	2,065,955		$	2,075,348

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

	Three Months Ended						Nine Months Ended
	September 28,			September 29,			September 28,		September 29,
	2013			2012			2013		2012
Net sales	$	486,926		$	470,947		$	1,435,547	$	1,352,434
Cost of sales		410,840			395,589			1,194,449		1,124,110
Gross profit		76,086			75,358			241,098		228,324
Selling, general and administrative expenses		38,436			40,438			122,312		135,154
Operating profit		37,650			34,920			118,786		93,170
Interest expense, net		21,646			22,426			64,891		68,151
Unrealized (gain) loss on currency transactions		(290	)		(780	)		617		(696	)
Earnings before income taxes and equity in losses of unconsolidated subsidiary		16,294			13,274			53,278		25,715
Income tax expense		5,723			4,332			18,028		8,761
Equity in losses of unconsolidated subsidiary		0			202			788		568
Net earnings		10,571			8,740			34,462		16,386
Other comprehensive income (loss)
Change in fair value of derivatives, net of tax		(1,325	)		(1,395	)		1,036		693
Foreign currency translation adjustment		111			137			25		248
Other comprehensive income (loss) (see Note A)		(1,214	)		(1,258	)		1,061		941
Comprehensive income	$	9,357		$	7,482		$	35,523	$	17,327

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

	Shares Issued		Amount		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholder’s Equity
Balance at December 29, 2012		100	$	0	$	394,201	$	7,037		$	(1,741	)	$	399,497
Stock option compensation						1,623								1,623
Capital contributed by parent						59								59
Non-cash capital invested by parent						6,831								6,831
Dividend to parent								(13,441	)					(13,441	)
Net earnings								34,462						34,462
Other comprehensive income, net of tax											1,061			1,061
Balance at September 28, 2013		100	$	0	$	402,714	$	28,058		$	(680	)	$	430,092

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

	2013			2012
Cash flows from operating activities:
Net earnings	$	34,462		$	16,386
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		45,730			51,082
Amortization of intangibles		23,100			23,100
Amortization of deferred financing costs		5,946			5,755
Amortization of original issue discount on long-term debt		1,529			1,524
Deferred income taxes		(9,885	)		(16,007	)
Non-cash stock option compensation		1,623			1,586
Changes in operating assets and liabilities, net of business acquisition:
Accounts receivable		15,353			(15,623	)
Inventories		(17,800	)		(4,633	)
Prepaid expenses, income taxes and other		(214	)		(2,055	)
Accounts payable		(6,512	)		(1,556	)
Accrued liabilities		(580	)		8,484
Net cash provided by operating activities		92,752			68,043
Cash flows from investing activities:
Capital expenditures		(26,964	)		(24,225	)
Business acquisition (see Note A)		(38,910	)		0
Other assets		(610	)		0
Net cash used in investing activities		(66,484	)		(24,225	)
Cash flows from financing activities:
Payments on long-term debt		(16,750	)		(7,868	)
Capital contributed by parent		59			0
Dividend to parent		(13,441	)		(769	)
Deferred financing costs		(130	)		(118	)
Net cash used in financing activities		(30,262	)		(8,755	)
Effect of exchange rate changes on cash		54			(3	)
Net increase (decrease) in cash and equivalents		(3,940	)		35,060
Cash and equivalents at beginning of period		43,274			68,118
Cash and equivalents at end of period	$	39,334		$	103,178
Supplemental disclosures of cash flow information:
Non-cash capital investment by parent (see Note D)	$	6,831		$	214
Non-cash property, plant and equipment under capital lease		0			5,145

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

The accompanying condensed consolidated financial statements have been prepared in accordance with Regulation S-X of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America 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 year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

We utilize a 52/53 week fiscal year ending on the Saturday nearest to December 31 each year. The three and nine-month periods ended September 28, 2013 and September 29, 2012 were 13 and 39-week periods.

In the opinion of management, the unaudited financial statements contain all adjustments necessary to present fairly the results of operations for the periods indicated and are of normal, recurring nature. Our results of operations and cash flows for the nine-month periods ended September 28, 2013 and September 29, 2012 are not necessarily indicative of the results expected for the full year, primarily due to the impacts of seasonality on our fourth quarter resulting from increased holiday demand.

On June 27, 2013, we purchased the net assets of Primera Foods Corporation (“Primera”), an egg products processing company, with operations in the Midwest. The purchase price of $38.9 million was financed through cash from operations. The acquired net assets, recorded at fair value, include $27.2 million of current assets, primarily accounts receivable and inventory, $4.7 million of current liabilities, primarily accounts payable, and $16.4 million for property, plant and equipment. We expect to achieve significant synergies and cost reductions through the integration of Primera customers and operations into our egg products division. The accounting for the purchase has not been finalized. During the three-month period ended September 28, 2013, we made $3.2 million of working capital true-up payments to Primera per the asset purchase agreement. We continue to assess the fair market value of property, plant and equipment purchased and expect final resolution during the fourth quarter of 2013.

In July 2012, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance which amends the existing guidance related to impairment testing of indefinite-lived intangible assets. The amendments allow the option of performing a qualitative impairment assessment before calculating the fair value of the intangible assets, which could, depending on the results of the assessment, eliminate the need for further impairment testing. The guidance is effective for interim and annual periods beginning after September 15, 2012 with early adoption permitted. The adoption of this guidance did not have an impact on our financial position, results of operations or cash flows.

In February 2013, the FASB updated the guidance requiring companies to report, in one place, information about reclassifications of accumulated other comprehensive income (“AOCI”) and changes in AOCI balances. For significant items reclassified out of AOCI to net income in their entirety in the same reporting period, reporting is required about the effect of the reclassifications on the respective line items in the statement where net income is presented. For items that are not reclassified to net income in their entirety in the same reporting period, a cross reference to other disclosures currently required in conformity with accounting principles generally accepted in the United States is required. The above information must be presented in one place, either parenthetically on the face of the financial statements by income statement line item, or in a note. The adoption of this updated guidance was effective for us beginning with fiscal year 2013. The adoption of this guidance did not have an impact on our financial position, results of operations or cash flows.

There was no other accounting pronouncement adopted during the nine-month period ended September 28, 2013 that had a material impact on our financial position, operating results or disclosures.

In March 2013, the FASB updated the guidance for a parent’s accounting of the cumulative translation adjustment (“CTA”) account related to foreign subsidiaries or investment in foreign entities. The update specifies that a company’s CTA should be released into earnings when an entity ceases to have a controlling financial interest in a subsidiary or investment, for example, if a sale or transfer results in the complete or substantially complete liquidation of the foreign entity. The adoption of this guidance is not expected to have a material impact on our financial position, results of operations or cash flows.

In July 2013, the FASB updated the income taxes guidance for presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance requires an unrecognized tax benefit, or a portion of, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent the deferred tax asset is not available at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position; the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with the deferred tax asset. The guidance is effective for reporting periods beginning after December 15, 2013 with early adoption permitted. The adoption of this guidance is not expected to have a material impact on our financial position, results of operations or cash flows.

There were no other new accounting pronouncements issued during the nine-month period ended September 28, 2013 that are expected to have material impacts on our financial position, operating results or disclosures.

We are exposed to market risks from changes in commodity prices, which may adversely affect our operating results and financial position. When appropriate, we seek to minimize our risks from commodity price fluctuations through the use of derivative financial instruments, such as commodity purchase contracts, which are classified as derivatives, along with other instruments relating primarily to corn, soybean meal, cheese and energy-related needs. We estimate fair values based on exchange-quoted prices, adjusted as appropriate for differences in local markets. These differences are generally valued using inputs from broker or dealer quotations, or market transactions in either the listed or over-the-counter commodity markets. In such cases, these derivative contracts are classified within Level 2 of the fair value hierarchy. Changes in the fair values of these contracts are recognized in the consolidated financial statements as a component of cost of sales or other comprehensive income (loss). The hedging-related financial instruments measured at fair value on a recurring basis are included in current assets under “prepaid expenses and other.”

In addition, we seek to minimize our risks from interest rate fluctuations through the use of interest rate swap contracts. These instruments are valued using standard calculations and models with inputs other than quoted market prices provided by our banking partners. The fair value of instruments may be impacted by the Company’s nonperformance risk, which is estimated based upon the unsecured borrowing rates available to the Company. The borrowing rates available to the Company are considered a significant unobservable input used in the fair value measurement of such instruments. As such, the interest rate swap contracts are included in the Level 3 fair value measurements as of September 28, 2013 and December 29, 2012. A 1% change in the unobservable input would have an approximately $0.1 million effect on interest expense. Management has elected not to account for these instruments as designated hedges so changes in the fair values of these instruments are recognized in the consolidated financial statements as a component of interest expense. The interest rate swap contract liability is measured at fair value on a recurring basis and the current portion of the liability is included in “other accrued liabilities” and the long-term portion is included in “other long-term liabilities.”

The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used Level 3, significant unobservable inputs (in thousands):

The following tables set forth our hedging-related financial assets and liabilities measured on a recurring basis as of the periods ended September 28, 2013 and December 29, 2012 (in thousands):

	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	Fair Value Measurements As of September 28, 2013
Assets at fair value:
Commodity contracts—Grain	$	0	$	0	$	0	$	0
Commodity contracts—Energy		35		0		35		0
Foreign currency contracts		0		0		0		0
Total assets at fair value	$	35	$	0	$	35	$	0
Liabilities at fair value:
Commodity contracts—Grain	$	473	$	0	$	473	$	0
Commodity contracts—Energy		0		0		0		0
Foreign currency contracts		71		0		71		0
Interest rate swap contracts		6,456		0		0		6,456
Total liabilities at fair value	$	7,000	$	0	$	544	$	6,456

	Fair Value Measurements As of December 29, 2012
Assets at fair value:
Commodity contracts—Grain	$	0	$	0	$	0	$	0
Commodity contracts—Energy		0		0		0		0
Total assets at fair value	$	0	$	0	$	0	$	0
Liabilities at fair value:
Commodity contracts—Grain	$	1,607	$	0	$	1,607	$	0
Commodity contracts—Energy		116		0		116		0
Interest rate swap contracts		8,872		0		0		8,872
Total liabilities at fair value	$	10,595	$	0	$	1,723	$	8,872

The carrying amount of our debt (including current maturities) was $1.2 billion as of September 28, 2013 and $1.21 billion as of December 29, 2012. Based on current market rates provided primarily by various bank sources, the fair value of this debt at September 28, 2013 was estimated at $1.24 billion (level 2) and at December 29, 2012 was estimated at $1.26 billion (level 2). Our cash equivalents, accounts receivable, accounts payable and other liabilities’ carrying value approximate fair value.

Certain of our operating segments enter into derivative instruments, such as corn and soybean meal futures, which we believe provide an economic hedge on future transactions and are designated as cash flow hedges. As the commodities being hedged are grain ingredients fed to our flocks, the changes in the market value of such contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in price movements of these items.

We actively monitor exposure to commodity price risks and use derivative commodity instruments to manage the impact of certain of these risks. We use derivatives, primarily futures contracts, only for the purpose of managing risks associated with underlying commodity exposures. Our futures contracts for grains are cash flow hedges of firm purchase commitments and anticipated production requirements, as they reduce our exposure to changes in the cash price of the respective items and generally extend for less than one year. We expect that within the next twelve months we will reclassify, as earnings or losses, substantially all of the amount recorded in accumulated other comprehensive income (loss).

In addition, we use derivative instruments to mitigate some of the risk associated with our foreign currency sales transactions, energy-related needs and interest costs. We do not treat those futures contracts as hedging instruments and, therefore, record the gains or losses related to them as a component of earnings in the period of change. We do not trade or use instruments with the objective of earning financial gains on the commodity price, nor do we use instruments where there is no underlying exposure. All derivatives are recognized at their fair value. For derivative instruments designated and qualifying as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income or (loss) (“AOCI” or “AOCL”) in the equity section of our balance sheet and an associated amount is recorded in “prepaid expenses and other” current assets. The amounts carried in cash, when appropriate, represent the fair value of our positions in excess of the margin requirements. We offset certain derivative asset and liability amounts where a legal right of offset exists. The amounts deferred are subsequently recognized in cost of sales when the associated products are sold. The cost or benefit of contracts closed prior to the execution of the underlying purchase is deferred until the anticipated purchase occurs. As a result of the volatility of the markets, deferred gains and losses in AOCI or AOCL may fluctuate until the related contract is closed. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current earnings. We do not exclude any items from our assessment of ineffectiveness.

We had the following outstanding commodity-forward contracts for hedging of forecasted purchases of grain, as of the periods ended (in thousands):

Information on location and amounts of derivative fair values in the condensed consolidated balance sheets is presented below (in thousands):

			Fair Value (1)
			September 28, 2013					December 29, 2012
	Balance Sheet Location		Asset		Liability			Asset		Liability
Derivatives designated as hedging instruments:
Commodity contracts – Grain		Prepaid expenses and other	$	645	$	(1,118	)	$	205	$	(1,812	)
Derivatives not designated as hedging instruments:
Commodity contracts – Energy		Prepaid expenses and other	$	35	$	(0	)	$	36	$	(152	)
Foreign currency contracts		Prepaid expenses and other	$	0	$	(71	)	$	0	$	0
Interest rate swap contracts		Other accrued liabilities and other long-term liabilities	$	0	$	(6,456	)	$	0	$	(8,872	)

The following table represents the effect of derivative instruments in cash flow hedging relationships on our Condensed Consolidated Statements of Earnings and Comprehensive Income, net of tax for the three and nine-month periods ended September 28, 2013 and September 29, 2012 (in thousands):

	(Effective Portion)								(Ineffective Portion)
	Gain (Loss) Recognized in AOCI on Derivative			Location of Gain (Loss) Reclassified from AOCI into Earnings		Gain (Loss) Reclassified from AOCI into Earnings			Location of Gain (Loss) Recognized in Earnings on Derivative		Gain (Loss) Recognized in Earnings on Derivative (1)
	For the three months ended September 28, 2013
Commodity contracts – Grain	$	(47	)		Cost of sales	$	1,278			Cost of sales	$	(28	)

	For the three months ended September 29, 2012
Commodity contracts – Grain	$	1,533			Cost of sales	$	2,928			Cost of sales	$	452

	For the nine months ended September 28, 2013
Commodity contracts – Grain	$	(114	)		Cost of sales	$	(1,150	)		Cost of sales	$	(47	)

	For the nine months ended September 29, 2012
Commodity contracts – Grain	$	1,861			Cost of sales	$	1,168			Cost of sales	$	(109	)

The following table represents the effect of derivative instruments not designated as hedging instruments on our Condensed Consolidated Statements of Earnings and Comprehensive Income for the three and nine-month periods ended September 28, 2013 and September 29, 2012 (in thousands):

Other comprehensive income (loss) is comprised of unrealized gains (losses) on cash flow hedges and foreign currency translation adjustments.

The components of accumulated other comprehensive income (loss), net of taxes, were as follows (in thousands):

The following table summarizes the changes in accumulated balances of the components of other comprehensive income and the related tax effects for the three and nine-month periods ended September 28, 2013 and September 29, 2012 (in thousands):

The following table summarizes the reclassification adjustments, net of tax, out of accumulated other comprehensive income (loss), by component, that were included in net earnings for the three and nine-month periods ended September 28, 2013 (in thousands):

Our Egg Products Division includes a subsidiary in Canada (MFI Food Canada Ltd.). Its financial statements are included in our consolidated financial statements. The financial statements for the Canadian entity are measured in the local currency and then translated into U.S. dollars. The balance sheet accounts, with the exception of retained earnings accounts, are translated using the current exchange rate at the balance sheet date and the operating results are translated using the average rates prevailing throughout the reporting period. The retained earnings equity accounts are translated at historical average rates. Accumulated translation gains or losses are recorded in AOCI or AOCL and are included as a component of other comprehensive income. Transactional gains and losses are reported in the statement of earnings. Michael Foods, Inc. holds a Canadian dollar-denominated note receivable from the Canadian subsidiary. As a result, we record the exchange-rate impact on that note as a component of earnings (loss) in the period of change.

As of September 28, 2013, we have invested $2 million, our 50% share of the capital funding of a joint venture, in MFOSI, LLC, a Delaware LLC (“MFOSI”). MFOSI owns 100% of its subsidiary, Lang Fang MK Food Company Ltd., a Chinese egg products company. In July 2012, we and our joint venture partner each issued a $2 million irrevocable standby letter of credit with Bank of America, N.A. as beneficiary. The letters of credit were established as a guarantee for a $4 million credit facility entered into by Lang Fang MK Food Company Ltd. and the China branch of Bank of America. At September 28, 2013, Lang Fang MK Food Company Ltd. had $2 million outstanding under its credit facility and we have recorded our portion of the guarantee, approximately $1 million, as part of long-term debt. We account for the joint venture under the equity method of accounting. The joint venture facility has ceased operations.

Inventories, other than flocks, 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. The costs included in our flock inventory include the costs of the chicks, the feed fed to the birds, and the labor and overhead costs incurred to operate the pullet facilities until the birds are transferred into the laying facilities, at which time their cost is amortized to operations, as cost of goods sold, over their expected useful lives of one to two years.

Antitrust claims: In late 2008 and early 2009, some 22 class-action lawsuits were filed in various federal courts against Michael Foods, Inc. and approximately 20 other defendants (producers of shell eggs, manufacturers of processed egg products, and egg industry organizations), alleging violations of federal and state antitrust laws in connection with the production and sale of shell eggs and processed-egg products, and seeking unspecified damages. Plaintiffs seek to represent nationwide classes of direct and indirect purchasers, and allege that defendants conspired to reduce the supply of eggs by participating in animal husbandry, egg-export and other programs of various egg-industry associations. In December 2008, the Judicial Panel on Multidistrict Litigation ordered the transfer of all cases to the Eastern District of Pennsylvania for coordinated and/or consolidated pretrial proceedings. Between late 2010 and early 2012, a number of companies, each of which would be part of the purported class in the antitrust action, brought separate actions against defendants. These “tag-along” cases, brought primarily by various grocery chains and food companies, assert essentially the same allegations as the Second Consolidated Amended Complaint in the main action. All but one of the tag-along cases were either filed in or transferred to the Eastern District of Pennsylvania where they are being treated as related to the main action; discovery is underway in these matters. The one tag-along case where pretrial proceedings are not under the jurisdiction of the Eastern District of Pennsylvania was brought by a retail grocery chain in Kansas state court under Kansas state law. Claims against Michael Foods in that particular matter were resolved through a confidential settlement agreement on April 11, 2013.

We received a Civil Investigative Demand (“CID”) issued by the Florida Attorney General on November 17, 2008, regarding an investigation of possible anticompetitive activities “relating to the production and sale of eggs or egg products.” The CID requested information and documents related to the pricing and supply of shell eggs and egg products, as well as our participation in various programs of United Egg Producers. We have fully cooperated with the Florida Attorney General’s Office to date. Further compliance was suspended pending discovery in the civil antitrust litigation referenced above.

Patent infringement litigation: On October 27, 2010, National Pasteurized Eggs, Inc. and National Pasteurized Eggs, LLC (collectively “NPE”) commenced litigation against Michael Foods, Inc. and several of its subsidiaries in U.S. District Court for the Western District of Wisconsin. NPE alleged that our pasteurized shell eggs infringe on patents and trademarks that NPE owns or licenses. On April 15, 2011, Michael Foods, Inc. commenced litigation against National Pasteurized Eggs, Inc. in U.S. District Court for the District of Minnesota, alleging that National Pasteurized Eggs, Inc.’s production and sale of pasteurized shell eggs infringed three patents exclusively licensed to Michael Foods, Inc. The cases were consolidated before the U.S. District Court for the Western District of Wisconsin. A jury trial took place in June, 2012; the jury returned a verdict of patent infringement against Michael Foods and awarded $5.8 million in damages. The verdict did not affect Michael Foods’ ability to continue producing pasteurized shell eggs, but in response to the jury verdict, we returned to process parameters that were in place prior to April, 2010. On April 29, 2013, we filed an appeal of this matter with the U.S. Court of Appeals for the Federal Circuit. The matter was fully resolved on July 1, 2013 through court-ordered mediation, and the appeal was subsequently dismissed. In late July, 2013 we paid the $4.5 million settlement amount.

Lawsuit against the City of Elizabeth and Liberty Water Co.: On January 28, 2010, our subsidiary Papetti’s Hygrade Egg Products, Inc. commenced suit in New Jersey Superior Court against the City of Elizabeth, N.J. and Liberty Water Company. The suit alleges that City sewer charges, which are billed by Liberty Water, are arbitrary and inequitable. Papetti’s seeks a declaration that its sewer bills have been inaccurate at least since 2002, and seeks invalidation of certain sewer-related charges and surcharges. In responding to the suit, the City of Elizabeth counterclaimed on May 7, 2010 that Papetti’s “has not been charged the full and proper amount of sewage charges due to billing mistakes of Defendant Liberty Water Company,” but did not allege any undercharged amount. On June 1, 2011, Liberty Water gave notice of its belief that since 2004, it underbilled Papetti’s by some $6.5 million. In November of 2011, Liberty Water issued invoices totaling $6.2 million to Papetti’s in connection with the alleged underbilling. We have not recorded a liability for the alleged underbilling as we believe there is no merit in this claim. The Court has assigned this matter to a special master to assist with pre-trial proceedings, including exploration of possible resolution.

We do not believe it is possible to estimate any further possible loss in connection with these litigated matters. Accordingly, we cannot predict what impact, if any, these matters and any results from such matters could have on our future results of operations.

Other: In addition, we are from time to time party to litigation, administrative proceedings and union grievances that arise in the ordinary course of business, and occasionally pay non-material amounts to resolve claims and alleged violations of regulatory requirements. There are no pending “ordinary course” matters that, separately or in the aggregate, would, in the opinion of management, have a material adverse effect on our operations, financial condition or cash flow.

We recorded non-cash capital investments from our parent, of $6,831,000 and $214,000 in the nine-month periods ended September 28, 2013 and September 29, 2012, related to the tax benefit the Company receives on our parent’s interest expense and tax amortization deductions due to filing a consolidated Federal tax return.

We are responsible for servicing Michael Foods Holding, Inc. senior PIK notes. On July 15, 2013, we paid a $13,441,000 dividend to Michael Foods Holding, Inc. to make its semi-annual interest payment on the notes.

We are a diversified producer and distributor of food products in three segments — egg products, refrigerated potato products and cheese and other dairy case products. We produce and distribute egg products to the foodservice, retail and food ingredient markets. We process and distribute refrigerated potato products to the foodservice and retail grocery markets in North America. We market a broad line of refrigerated grocery products to U.S. retail grocery outlets, including branded and private-label cheese, bagels, butter, muffins and ethnic foods.

Certain financial information on operating segments is as follows (in thousands):

	Egg Products		Refrigerated Potato Products		Cheese & Other Dairy-Case Products		Corporate			Total
Three months ended September 28, 2013
External net sales	$	366,351	$	41,336	$	79,239	$	0		$	486,926
Operating profit (loss)		30,066		4,357		5,771		(2,544	)		37,650
Depreciation and amortization		17,986		2,901		1,728		1			22,616

Three months ended September 29, 2012
External net sales	$	339,242	$	38,033	$	93,672	$	0		$	470,947
Operating profit (loss)		28,215		4,475		5,320		(3,090	)		34,920
Depreciation and amortization		20,274		2,817		1,810		1			24,902

Nine months ended September 28, 2013
External net sales	$	1,055,179	$	123,190	$	257,178	$	0		$	1,435,547
Operating profit (loss)		95,871		13,470		17,600		(8,155	)		118,786
Depreciation and amortization		54,791		8,758		5,278		3			68,830

Nine months ended September 29, 2012
External net sales	$	960,148	$	109,862	$	282,424	$	0		$	1,352,434
Operating profit (loss)		81,782		10,113		20,279		(19,004	)		93,170
Depreciation and amortization		60,296		8,451		5,431		4			74,182

We and our 100% owned domestic subsidiaries jointly and severally, and fully and unconditionally, guarantee the credit agreement. We and our 100% owned domestic subsidiaries jointly and severally guarantee the 9.75% senior notes. The guarantee by our subsidiaries of the 9.75% senior notes is not full and unconditional as there are certain customary guarantee release provisions in the 9.75% senior notes indenture. The guarantee release provisions include release when there is a sale of a guarantor’s capital stock, if the guarantor is designated as an unrestricted subsidiary (currently all guarantors of the 9.75% senior notes are restricted subsidiaries), there is a liquidation or dissolution of a guarantor subsidiary or a sale of all of the assets of a guarantor.

The following condensed consolidating financial information presents our consolidated balance sheets as of September 28, 2013 and as of December 29, 2012, and the condensed consolidating statements of operations and comprehensive income (loss) for the three and nine-month periods ended September 28, 2013 and September 29, 2012 and cash flows for the nine-month periods ended September 28, 2013 and September 29, 2012. The financial statements reflect Michael Foods Group, Inc. (Corporate), the wholly owned guarantor subsidiaries (on a combined basis), the non-guarantor subsidiary (MFI Food Canada Ltd.), and elimination entries necessary to combine such entities on a consolidated basis.

	Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations			Consolidated
Assets
Current Assets
Cash and equivalents	$	0		$	38,881		$	453		$	0		$	39,334
Accounts receivable, less allowances		0			158,597			5,059			0			163,656
Intercompany receivable (payable)		(18,314	)		22,925			(4,611	)		0			0
Inventories		0			175,257			6,877			0			182,134
Prepaid expenses and other		4,801			9,667			301			0			14,769
Total current assets		(13,513	)		405,327			8,079			0			399,893
Property, Plant and Equipment—net		0			253,957			9,312			0			263,269
Goodwill		0			822,960			6,809			0			829,769
Intangibles and other assets		789,345			556,274			0			(772,595	)		573,024
Investment in subsidiaries		864,159			(3,757	)		0			(860,402	)		0
Total assets	$	1,639,991		$	2,034,761		$	24,200		$	(1,632,997	)	$	2,065,955
Liabilities and Shareholder’s Equity
Current Liabilities
Current maturities of long-term debt	$	0		$	5,820		$	945		$	0		$	6,765
Accounts payable		0			93,921			2,934			0			96,855
Accrued liabilities		22,029			74,101			3,002			0			99,132
Total current liabilities		22,029			173,842			6,881			0			202,752
Long-term debt, less current maturities		1,176,972			762,591			20,925			(772,595	)		1,187,893
Deferred income taxes		6,481			234,181			139			0			240,801
Other long-term liabilities		4,417			0			0			0			4,417
Shareholder’s equity		430,092			864,147			(3,745	)		(860,402	)		430,092
Total liabilities and shareholder’s equity	$	1,639,991		$	2,034,761		$	24,200		$	(1,632,997	)	$	2,065,955

	Corporate		Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations			Consolidated
Assets
Current Assets
Cash and equivalents	$	0	$	43,274		$	0		$	0		$	43,274
Accounts receivable, less allowances		0		163,040			1,519			(534	)		164,025
Inventories		0		145,011			8,160			0			153,171
Prepaid expenses and other		4,036		14,342			67			0			18,445
Total current assets		4,036		365,667			9,746			(534	)		378,915
Property, Plant and Equipment—net		0		253,605			11,059			0			264,664
Goodwill		0		822,959			7,058			0			830,017
Intangibles and other assets		805,161		580,103			0			(783,512	)		601,752
Investment in subsidiaries		816,656		(1,334	)		0			(815,322	)		0
Total assets	$	1,625,853	$	2,021,000		$	27,863		$	(1,599,368	)	$	2,075,348
Liabilities and Shareholder’s Equity
Current Liabilities
Current maturities of long-term debt	$	10,000	$	8,867		$	966		$	0		$	19,833
Accounts payable		0		96,342			3,376			(534	)		99,184
Accrued liabilities		26,789		78,113			2,189			0			107,091
Total current liabilities		36,789		183,322			6,531			(534	)		226,108
Long-term debt, less current maturities		1,175,443		774,774			22,865			(783,512	)		1,189,570
Deferred income taxes		7,146		245,928			121			0			253,195
Other long-term liabilities		6,978		0			0			0			6,978
Shareholder’s equity		399,497		816,976			(1,654	)		(815,322	)		399,497
Total liabilities and shareholder’s equity	$	1,625,853	$	2,021,000		$	27,863		$	(1,599,368	)	$	2,075,348

	Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations			Consolidated
Net sales	$	0		$	476,076		$	12,051		$	(1,201	)	$	486,926
Cost of sales		0			400,784			11,257			(1,201	)		410,840
Gross profit		0			75,292			794			0			76,086
Selling, general and administrative expenses		0			37,777			659			0			38,436
Operating profit		0			37,515			135			0			37,650
Interest expense, net		13,416			7,845			385			0			21,646
Unrealized gain on currency transactions		0			(290	)		0			0			(290	)
Earnings (loss) before equity in earnings (loss) of subsidiaries, income taxes and equity in losses of unconsolidated subsidiary		(13,416	)		29,960			(250	)		0			16,294
Equity in earnings (loss) of subsidiaries		19,062			(258	)		0			(18,804	)		0
Income tax expense (benefit)		(4,925	)		10,640			8			0			5,723
Net earnings (loss)	$	10,571		$	19,062		$	(258	)	$	(18,804	)	$	10,571
Comprehensive income (loss)	$	10,571		$	18,015		$	(425	)	$	(18,804	)	$	9,357

	Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations			Consolidated
Net sales	$	0		$	459,147		$	13,359		$	(1,559	)	$	470,947
Cost of sales		0			383,046			14,102			(1,559	)		395,589
Gross profit (loss)		0			76,101			(743	)		0			75,358
Selling, general and administrative expenses		0			39,857			581			0			40,438
Operating profit (loss)		0			36,244			(1,324	)		0			34,920
Interest expense, net		13,556			8,492			378			0			22,426
Unrealized gain on currency transactions		0			(780	)		0			0			(780	)
Earnings (loss) before equity in earnings (loss) of subsidiaries, income taxes and equity in losses of unconsolidated subsidiary		(13,556	)		28,532			(1,702	)		0			13,274
Equity in earnings (loss) of subsidiaries		17,314			(1,704	)		0			(15,610	)		0
Income tax expense (benefit)		(4,982	)		9,312			2			0			4,332
Equity in losses of unconsolidated subsidiary		0			202			0			0			202
Net earnings (loss)	$	8,740		$	17,314		$	(1,704	)	$	(15,610	)	$	8,740
Comprehensive income (loss)	$	8,740		$	16,332		$	(1,980	)	$	(15,610	)	$	7,482

	Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations			Consolidated
Net sales	$	0		$	1,404,203		$	34,954		$	(3,610	)	$	1,435,547
Cost of sales		0			1,163,945			34,114			(3,610	)		1,194,449
Gross profit		0			240,258			840			0			241,098
Selling, general and administrative expenses		0			120,480			1,832			0			122,312
Operating profit (loss)		0			119,778			(992	)		0			118,786
Interest expense, net		40,115			23,594			1,182			0			64,891
Unrealized loss on currency transactions		0			617			0			0			617
Earnings (loss) before equity in earnings (loss) of subsidiaries, income taxes and equity in losses of unconsolidated subsidiary		(40,115	)		95,567			(2,174	)		0			53,278
Equity in earnings (loss) of subsidiaries		59,882			(2,195	)		0			(57,687	)		0
Income tax expense (benefit)		(14,695	)		32,702			21			0			18,028
Equity in losses of unconsolidated subsidiary		0			788			0			0			788
Net earnings (loss)	$	34,462		$	59,882		$	(2,195	)	$	(57,687	)	$	34,462
Comprehensive income (loss)	$	34,462		$	60,610		$	(1,862	)	$	(57,687	)	$	35,523

	Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations			Consolidated
Net sales	$	0		$	1,319,971		$	36,581		$	(4,118	)	$	1,352,434
Cost of sales		0			1,091,095			37,133			(4,118	)		1,124,110
Gross profit (loss)		0			228,876			(552	)		0			228,324
Selling, general and administrative expenses		0			133,013			2,141			0			135,154
Operating profit (loss)		0			95,863			(2,693	)		0			93,170
Interest expense, net		41,423			25,622			1,106			0			68,151
Unrealized gain on currency transactions		0			(696	)		0			0			(696	)
Earnings (loss) before equity in earnings (loss) of subsidiaries, income taxes and equity in losses of unconsolidated subsidiary		(41,423	)		70,937			(3,799	)		0			25,715
Equity in earnings (loss) of subsidiaries		42,585			(3,824	)		0			(38,761	)		0
Income tax expense (benefit)		(15,224	)		23,960			25			0			8,761
Equity in losses of unconsolidated subsidiary		0			568			0			0			568
Net earnings (loss)	$	16,386		$	42,585		$	(3,824	)	$	(38,761	)	$	16,386
Comprehensive income (loss)	$	16,386		$	43,784		$	(4,082	)	$	(38,761	)	$	17,327

	Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Consolidated
Net cash provided by (used in) operating activities	$	(18,242	)	$	109,308		$	1,686		$	92,752

Cash flows from investing activities:
Capital expenditures		0			(26,149	)		(815	)		(26,964	)
Business acquisition		0			(38,910	)		0			(38,910	)
Other assets		0			(610	)		0			(610	)
Net cash used in investing activities		0			(65,669	)		(815	)		(66,484	)

Cash flows from financing activities:
Payments on long-term debt		(10,000	)		(5,911	)		(839	)		(16,750	)
Deferred financing costs		(130	)		0			0			(130	)
Capital contributed by parent		59			0			0			59
Dividend to parent		(13,441	)		0			0			(13,441	)
Dividend from subsidiaries		41,754			(42,121	)		367			0
Net cash provided by (used in) financing activities		18,242			(48,032	)		(472	)		(30,262	)
Effect of exchange rate changes on cash		0			0			54			54
Net increase (decrease) in cash and equivalents		0			(4,393	)		453			(3,940	)
Cash and equivalents at beginning of period		0			43,274			0			43,274
Cash and equivalents at end of period	$	0		$	38,881		$	453		$	39,334

	Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Consolidated
Net cash provided by (used in) operating activities	$	(31,902	)	$	98,950		$	995		$	68,043

Cash flows from investing activities:
Capital expenditures		0			(22,857	)		(1,368	)		(24,225	)
Net cash used in investing activities		0			(22,857	)		(1,368	)		(24,225	)

Cash flows from financing activities:
Payments on long-term debt		(1,077	)		(5,598	)		(1,193	)		(7,868	)
Deferred financing costs		(118	)		0			0			(118	)
Dividend to parent		(769	)		0			0			(769	)
Dividend from subsidiaries		33,866			(35,581	)		1,715			0
Net cash provided by (used in) financing activities		31,902			(41,179	)		522			(8,755	)
Effect of exchange rate changes on cash		0			0			(3	)		(3	)
Net increase in cash and equivalents		0			34,914			146			35,060
Cash and equivalents at beginning of period		0			68,118			0			68,118
Cash and equivalents at end of period	$	0		$	103,032		$	146		$	103,178

ITEM 2— MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are a producer and distributor of egg products to the foodservice, retail and food ingredient markets. We are also a producer and distributor of refrigerated potato products to the foodservice and retail grocery markets. Additionally, we distribute refrigerated food items, primarily cheese and other products sold in the dairy case, to the retail grocery market, predominantly in the central United States. We focus our growth efforts on the specialty sectors within our food categories and strive to be a market leader in product innovation and efficient production. We have a strategic focus on value-added processing of food products, which is designed to capitalize on key food industry trends, such as (i) the desire for improved safety and convenience, (ii) the focus by foodservice operators on reducing labor and waste, and (iii) the long-term trend toward food consumption away from home, which continues to be slowed somewhat by the economic environment. We believe our operational scale, product breadth and geographic scope make us an attractive and important strategic partner for our customers, which include foodservice distributors, major restaurant chains, food ingredient companies and the retail grocery market.

Our principal exposure to market risks that may adversely affect our results of operations and financial position include changes in future commodity prices and interest rates. We seek to minimize or manage these market risks through normal operating and financing activities and through the use of commodity futures contracts, when appropriate. We do not trade or use instruments with the objective of earning financial gains on commodity prices, nor do we use instruments where there are not underlying exposures.

The profit margins we earn on many of our products are sensitive to changes in commodity prices. Generally, approximately 70% of the Egg Products Division’s annual net sales come from higher value-added egg products, such as extended shelf-life liquid and precooked products, with the remainder coming from products mainly used in the food ingredients market or shell eggs. Gross profit margins for certain higher value-added egg products are generally less sensitive to commodity price fluctuations, which impact the input costs of our egg supply, than are other egg products or shell eggs; however, because of agreements with customers we are sometimes unable to adjust product pricing for value-added products as quickly as we are for other egg products and shell eggs when our costs change. Margins for our food ingredient egg products and shell eggs are more commodity price-sensitive than are higher value-added product sales. 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 market costs were approximately 18% higher in the first nine months of 2013 than in the comparable 2012 period (as measured by Urner Barry Publications). Prices (as measured by the Chicago Board of Trade) for corn and soybean meal used in our feed, decreased approximately 9% and increased approximately 1%, respectively, in the first nine months of 2013 as compared to the comparable 2012 period.

The Cheese & Other Dairy-Case Products Division derives a majority of its net sales from refrigerated products produced by others. A majority of those sales are represented by cheese and butter, for which the costs fluctuate with national dairy markets. Time lags between cost changes for these lines and wholesale/retail pricing changes can result in significant margin changes. The average commodity block cheese prices in the first nine months of 2013 were up 7% year-over-year.

The Refrigerated Potato Products Division typically purchases approximately 90% of its annual raw potato requirements from contract producers. 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. Moderate variations in the purchase price of raw materials or the selling price per pound of finished products can have a significant effect on the Refrigerated Potato Products Division’s operating results.

Beginning January 1, 2013, we changed our retail selling costs allocation methodology between segments. The allocation impacts the operating profit reported by each segment. This change increased the operating profit for the Cheese and Other Dairy-Case Products segment, and decreased the operating profit for the Egg Products and Refrigerated Potato Products segments. The operating profit comparative discussion below reflects, and the amounts for the September 29, 2012 three and nine-month periods have been restated to reflect the allocation change. Readers are directed to “Note E—Business Segments” for data on the unaudited financial results of our business segments for the three and nine-month periods ended September 28, 2013 and September 29, 2012.

Three Months Ended September 28, 2013 as Compared to Three Months Ended September 29, 2012

Net Sales. Net sales for 2013 increased approximately $16 million, or 3.4%, to $486.9 million from $470.9 million in 2012. The increased net sales reflected volume growth of 5.2% with gains in our egg and refrigerated potato product segments offset by a reduction in volumes in our cheese and dairy-case segment.

Egg Products Division Net Sales. External net sales for 2013 increased approximately $27.1 million, or 8%. The net sales increase is primarily due to a 6.6% increase in volume, which was seen in all the distribution channels.Foodservice and Food Ingredient volumes were favorably impacted as a result of the Primera acquisition made effective June 27, 2013. Primera accounted for approximately 97% of the 6.6% volume increase. Pass-through of input costs which were higher due to increased commodity costs between periods also contributed to the net sales increase.

Refrigerated Potato Products Division Net Sales. External net sales for 2013 increased approximately $3.3 million, or 8.7%. The net sales increase is primarily due to a 12.6% increase in volume, driven by strong foodservice growth. Volumes in our retail business decreased 4.8% as a result of promotional timing between periods.

Cheese & Other Dairy-Case Products Division Net Sales. External net sales for 2013 decreased approximately $14.4 million, or 15.4%. The net sales decrease reflected volume decreases of 17% due to significant competitive pricing activity in branded cheese and reduced distribution in our private-label cheese and butter businesses. The lower sales decline compared to the volume was due to product mix within the remaining business.

Cost of Sales. Cost of sales for 2013 increased approximately $15.2 million, or 3.9%, to $410.8 million from $395.6 million in 2012. The increased cost of sales reflected volume growth of 5.2% as noted above. The smaller increase in cost of sales is due to volume mix between product divisions during the quarter, with the larger decline in the cheese and dairy product segment offsetting the slightly higher costs in the egg and potato product segments.

Egg Products Division Cost of Sales. Cost of sales for 2013 increased approximately $25.5 million, or 8.9%. The cost of sales increase is primarily due to a 6.6% increase in volume. The higher increase compared to volume was due primarily to an increase in market related egg purchases (particularly egg whites) as market egg costs (as measured by Urner Barry Publications) were up 4.5% compared to last year.

Refrigerated Potato Products Division Cost of Sales. Cost of sales for 2013 increased approximately $4.1 million, or 15.2%. The cost of sales increase is primarily due to a 12.6% increase in volume. The higher increase compared to volumes was due primarily to an increase in raw potato costs between periods.

Cheese & Other Dairy-Case Products Division Cost of Sales. Cost of sales for 2013 decreased approximately $14.4 million, or 17.4%. The cost of sales decrease reflected volume decreases of 17% as noted above. The slightly larger decline compared to volume was due to lower commodity prices between periods with cheese costs down 3% between periods.

Gross Profit. Gross profit for 2013 increased $0.7 million, or 1%, to $76.1 million from $75.4 million in 2012. Our gross profit margin decreased to 15.6% in 2013 as compared to 16% in 2012. The decrease in the gross margin percentage was due to a very competitive pricing environment preventing us from passing through all of our input cost increases, especially in the retail distribution channel.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for 2013 were down to $38.4 million from $40.4 million in 2012, primarily as a result of reduced marketing and compensation related costs compared to the prior year.

Operating Profit. Operating profit for 2013 increased approximately $2.8 million, or 7.8%, to $37.7 million from $34.9 million in 2012. The increase in operating profit for 2013 is due to the factors described above.

Egg Products Division Operating Profit. Operating profit for 2013 increased approximately $1.9 million, or 6.6%, to $30.1 million from $28.2 million in 2012. The increase was mainly a result of volume growth as margins were constrained by the competitive pricing environment, particularly in the retail channel.

Refrigerated Potato Products Division Operating Profit. Operating profit for 2013 decreased approximately $0.1 million, or 2.6%, to $4.4 million from $4.5 million in 2012 due to higher raw potato costs and sales channel mix.

Cheese & Other Dairy-Case Products Division Operating Profit. Operating profit for 2013 increased approximately $0.5 million, or 8.5%, to $5.8 million from $5.3 million in 2012. The increase was mainly due to a reduction in marketing spend between years as we choose to rationalize our spending given the heavy promotion environment occurring in cheese.

Interest Expense. Interest expense decreased to $21.6 million in 2013 from approximately $22.4 million in 2012 mainly due to a reduction in unrealized losses related to interest rate swaps to $0.3 million compared to $0.5 million in 2012 and to lower debt levels in 2013.

Unrealized (gain) loss on currency transactions. We recorded the change in exchange rates impacting an intercompany Canadian currency-denominated note receivable due from our Canadian subsidiary, MFI Food Canada Ltd.

Income Taxes. Our effective tax rate on earnings before income taxes was approximately 35.1% for 2013 compared to approximately 32.6% in 2012. The effective tax rate was affected by the level of income for the period, the amount of permanent differences (primarily the qualified production activities deduction) between book and taxable income, actual tax expense payable at the state level and by the results in our Canadian subsidiary, which impacted the valuation allowance against its deferred tax assets and effective rate.

Nine Months Ended September 28, 2013 as Compared to Nine Months Ended September 29, 2012

Net Sales. Net sales for 2013 increased approximately $83.1 million, or 6.1%, to $1,435.5 million from $1,352.4 million in 2012. The increased net sales reflected volume growth of 3.3% with gains in our egg and refrigerated potato product business segments and price pass-through of higher commodity costs.

Egg Products Division Net Sales. External net sales for 2013 increased approximately $95 million, or 9.9%. The net sales increase is due to a 3.3% increase in volume, which was seen across all distribution channels. Foodservice and Food Ingredient volumes were favorably impacted as a result of the Primera acquisition made effective June 27, 2013. Primera accounted for approximately 67% of the 3.3% volume increase. Pass-through of input costs which were higher due to increased commodity costs between periods also contributed to the net sales increase.

Refrigerated Potato Products Division Net Sales. External net sales for 2013 increased approximately $13.3 million, or 12.1%. The net sales increase is primarily due to a 14% increase in volume, driven primarily by strong foodservice growth.

Cheese & Other Dairy-Case Products Division Net Sales. External net sales for 2013 decreased approximately $25.2 million, or 8.9%. The net sales decrease reflected volume decreases of 12.2% due to significant competitive pricing activity in branded cheese and reduced distribution in our private-label cheese and butter businesses. The lower sales decline compared to volume was due to the pricing impact of higher commodity prices between periods.

Cost of Sales. Cost of sales for 2013 increased approximately $70.3 million, or 6.3%, to $1,194.4 million from $1,124.1 million in 2012. The increased cost of sales reflected volume growth of 3.3% and higher commodity input costs across the business.

Egg Products Division Cost of Sales. Cost of sales for 2013 increased approximately $81.2 million, or 10.1%. The cost of sales increase is due to a 3.3% increase in volume and increased commodity costs between periods due primarily to an increase in market related egg purchases (particularly egg whites) as market egg costs (as measured by Urner Barry Publications) were up 15% compared to last year.

Refrigerated Potato Products Division Cost of Sales. Cost of sales for 2013 increased approximately $11 million, or 14%. The cost of sales increase is primarily due to a 14% increase in volume.

Cheese & Other Dairy-Case Products Division Cost of Sales. Cost of sales for 2013 decreased approximately $21.9 million, or 9%. The cost of sales decrease reflected volume decreases of 12.2%, offset somewhat by higher commodity cheese costs between periods, which were up 7%.

Gross Profit. Gross profit for 2013 increased $12.8 million, or 5.6%, to $241.1 million from $228.3 million in 2012. Our gross profit margin was 16.8% in 2013 and 16.9% in 2012. The slight decline in gross profit margin was due to the competitive pricing environment preventing us from fully pricing the higher commodity input costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for 2013 were down $12.9 million, to $122.3 million from $135.2 million in 2012, primarily as a result of reduced legal costs in 2013 compared to the 2012 period which included a $5.8 million reserve with respect to damages awarded by a jury in the National Pasteurized Eggs, Inc. litigation and other legal costs (see Note C to the condensed consolidated financial statements). The $5.8 million jury award and various awarded costs was reduced through a mediation process in July 2013 to $4.5 million. The $1.3 million reduction is reflected in the 2013 period as an expense reduction. The 2013 period also reflects reduced marketing and compensation related costs.

Operating Profit. Operating profit for 2013 increased approximately $25.6 million, or 27.5%, to $118.8 million from $93.2 million in 2012. The increase in operating profit for 2013 is due to the factors described above.

Egg Products Division Operating Profit. Operating profit for 2013 increased approximately $14.1 million, or 17.2%, to $95.9 million from $81.8 million in 2012. The increase was mainly a result of volume growth and the improved alignment of pricing with input costs.

Refrigerated Potato Products Division Operating Profit. Operating profit for 2013 increased approximately $3.4 million, or 33.2%, to $13.5 million from $10.1 million in 2012. The increase was mainly a result of volume growth, efficient plant operations and lower casualty insurance related costs.

Cheese & Other Dairy-Case Products Division Operating Profit. Operating profit for 2013 decreased approximately $2.7 million, or 13.2%, to $17.6 million from $20.3 million in 2012. The decrease was mainly a result of volume decreases and increased cheese and butter costs that could not be passed on to customers due to significant competitive pricing activity, especially in branded cheese.

Interest Expense. Interest expense decreased to $64.9 million in 2013 from approximately $68.2 million in 2012, mainly due to a reduction in unrealized losses related to interest rate swaps to $0.6 million compared to $2.2 million in 2012 and lower debt levels in 2013.

Income Taxes. Our effective tax rate on earnings before income taxes was approximately 33.8% for 2013 compared to approximately 34.1% in 2012. The effective tax rate was affected by the level of income for the period, the amount of permanent differences (primarily the qualified production activities deduction) between book and taxable income, actual tax expense payable at the state level and by the results in our Canadian subsidiary, which impacted the valuation allowance against its deferred tax assets and effective rate. The effective rate for 2013 was also favorably impacted by the enactment of the American Taxpayer Relief Act of 2012 (the “Act”), which was enacted in the first quarter of 2013. The Act retroactively reinstated, back to the beginning of 2012, the research and development and work opportunity tax credits. The impact of the Act was recorded in the first quarter of 2013.

Historically, we have financed our liquidity requirements through internally generated funds, bank borrowings and the issuance of other indebtedness. We believe such sources remain viable financing alternatives to meet our anticipated needs. Our investments in acquisitions and capital expenditures have been a significant use of capital. We plan to continue to invest in advanced production facilities to maintain our competitive position.

The cash flow of approximately $92.8 million provided by operating activities in the nine-month period ended September 28, 2013 reflects cash earnings generation and a decrease in the use of working capital, mainly improved receivable collection, offset by inventory growth and the higher payout of incentive compensation. The cash flow of approximately $68 million provided by operating activities in the nine-month period ended September 29, 2012 primarily reflects lower cash earnings generation and higher use of working capital.

The cash flow of approximately $65.9 million used in investing activities in the nine-month period ended September 28, 2013 was for the acquisition of the assets of Primera Foods Corporation and capital expenditures. Additionally, in August 2013, we were required to increase, by $610,000, the level of guarantee of deductible and/or loss limit reimbursement on workers compensation, automobile and general liability claims via an escrow collateral money market account, classified as restricted cash in “long-term other assets.” For the nine-month period ended September 29, 2012, the cash used in investing activities was all capital expenditures.

The cash flow of approximately $30.3 million used in financing activities for the nine-month period ended September 28, 2013 reflects a $13.4 million cash dividend to Michael Foods Holding, Inc. to make the required interest payment on its senior PIK notes, a $10 million term B loan prepayment and other scheduled debt payments. The cash flow of approximately $8.8 million used in financing activities for the nine-month period ended September 29, 2012 reflects mainly scheduled debt payments.

We are a party to a credit agreement, with Bank of America, N.A. as administrative agent, with availability up to $915 million and consisting of the following:

On June 29, 2010 the Company issued $430 million of 9.75% senior notes maturing on July 15, 2018, with Wells Fargo Bank, National Association as Trustee.

On December 18, 2012, Michael Foods Holding, Inc. issued $275 million senior PIK notes which accrue cash interest at a rate of 8.5%, with the option to PIK interest at a rate of 9.25%. Although we do not guarantee the notes, as a wholly owned subsidiary of the issuer, we are responsible for servicing the notes. During the period ended September 28, 2013, we paid a $13.4 million cash dividend to Michael Foods Holding, Inc. for its use in paying the semi-annual interest payment.

The credit agreement requires us to meet a minimum interest coverage ratio and a maximum leverage ratio. In addition, the credit agreement and the indenture relating to the 9.75% senior notes, contain certain restrictive covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, prepayments of other indebtedness, liens and encumbrances and other matters customarily restricted in these agreements. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could have a material adverse effect on the results of operations, financial position and cash flow. In general, the debt covenants limit discretion in the operation of our businesses. We were in compliance with all of the covenants under the credit agreement and 9.75% senior notes as of September 28, 2013.

We use Adjusted EBITDA (earnings before interest expense, taxes, depreciation, amortization and other adjustments) as a measurement of our financial results because we believe it is indicative of the relative strength of our operating performance; it is used to determine incentive compensation levels and it is a key measurement contained in the financial covenants of our indebtedness.

The following is a calculation of the minimum interest coverage and maximum leverage ratios under the credit agreement:

	Twelve Months Ended
	September 28, 2013			September 29, 2012
(Unaudited, In thousands)
Calculation of Interest Coverage Ratio:
Adjusted EBITDA (2)	$	259,869		$	246,406
Consolidated Interest Charges (3)		79,342			78,839
Interest Coverage Ratio		3.28x			3.13x
Minimum Permitted Interest Coverage Ratio		1.90x			1.90x
Calculation of Leverage Ratio:
Funded Indebtedness (4)	$	1,207,072		$	1,266,196
Less: Cash and equivalents (Maximum $75,000) (1)		(39,334	)		(75,000	)
	$	1,167,738		$	1,191,196
Adjusted EBITDA (2)		259,869			246,406
Leverage Ratio		4.49x			4.83x
Maximum Permitted Leverage Ratio		6.50x			7.00x

	Twelve Months Ended
	September 28, 2013			September 29, 2012
	(Unaudited, in thousands)
Net earnings	$	48,170		$	35,706
Unrealized (gain) loss on currency transactions (a)		873			(1,062	)
Consolidated net earnings		49,043			34,644
Interest expense		87,185			89,858
Income tax expense		21,791			10,098
Depreciation and amortization		92,294			97,803
Non-cash and stock option compensation		2,158			2,115
Unusual charges (b)		(1,342	)		5,842
Costs associated with debt issuance		224			0
Costs associated with permitted acquisition		246			0
Costs associated with unconsummated acquisitions		1,832			0
Realized (gain) loss upon the disposition of property not in the ordinary course of business		(645	)		324
Equity sponsor management fee		2,546			2,412
Expenses related to industrial revenue bonds guaranteed by certain of our subsidiaries		472			563
Non-cash other expenses (c)		0			3,275
Projected acquisition synergies (d)		4,500			0
Unusual gain		(943	)		0
Unrealized (gain) loss on swap contracts		508			(528	)
Adjusted EBITDA, as defined in the credit agreement	$	259,869		$	246,406

	September 28, 2013			September 29, 2012
	(Unaudited, in thousands)
Credit facility – revolving line of credit	$	0		$	0
Credit facility – term B loan		755,723			805,723
Senior unsecured notes		430,000			430,000
Secured notes		2,325			3,675
Capital leases		7,084			11,882
Guarantees		7,512			10,242
Other indebtedness		533			1,119
Insurance bonds		1,545			1,205
Standby letters of credit		2,350			2,350
	$	1,207,072		$	1,266,196
Reconciling items to Long-term debt, including current maturities:
Insurance bonds	$	(1,545	)	$	(1,205	)
Guarantees		(815	)		(1,775	)
Standby letters of credit		(2,350	)		(2,350	)
Guarantee for Lang Fang MK Food Company credit facility		1,047			0
Original issue discount on term B loan		(8,751	)		(10,911	)
		(12,414	)		(16,241	)
Long-term debt, including current maturities	$	1,194,658		$	1,249,955

In December 2008, we entered into a $15.6 million variable-rate lease agreement to fund a portion of the equipment purchases at our new potato products facility. The lease agreement matures on December 30, 2013. As of September 28, 2013, the outstanding balance under the lease was $2.6 million and had an effective interest rate of 3.9%. On November 25, 2009, we entered into a variable-rate note for up to $7.5 million for additional financing for equipment for the new potato products facility. The $7.5 million note is due November 25, 2014. As of September 28, 2013, the outstanding balance was $2.3 million and had an effective interest rate of 3.6%.

We have guaranteed, through our M.G. Waldbaum Company subsidiary, the repayment of certain industrial revenue bonds used for the expansion of the wastewater treatment facilities of two municipalities where we have food processing facilities. In September 2012, the City of Wakefield, Nebraska refinanced two bonds related to its wastewater treatment facility. The refinancing resulted in the combination of the remaining balances of the 2005 and 2007 series bonds into a 2012 series bond for $8.5 million at an annual interest rate of 4.57%. We are required to pay the principal and interest payments related to these bonds, which mature September 15, 2017. These bonds are included in current maturities of long-term debt and long-term debt. The remaining principal balance for all guaranteed bonds at September 28, 2013 was approximately $7.5 million.

Our ability to make payments on and to refinance our debt, to fund planned capital expenditures and otherwise satisfy our obligations will depend on our ability to generate sufficient cash in the future. This, to some extent, is subject to general economic, financial, competitive and other factors that are beyond our control. We believe that, based on current levels of operations, we will be able to meet our debt service and other obligations when due. Significant assumptions underlie this belief, including, among other things, that we will continue to be successful in implementing our business strategy and that there will be no material adverse developments in our business, liquidity or capital requirements. If our future cash flows from operations and other capital resources are insufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced to reduce or delay our business activities and capital expenditures, sell assets, obtain additional debt or equity capital, or restructure or refinance all or a portion of our debt, on or before maturity. We cannot assure our investors that we would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. In addition, the terms of our existing and future indebtedness may limit our ability to pursue any of these alternatives.

To manage exposure to counterparty credit risk, we enter into agreements with highly rated institutions that can be expected to fully perform under the terms of such agreements. Frequently, these institutions are members of the lender group providing our credit facility, which management believes further minimizes the risk of non-performance.

Our longer-term planning is focused on growing our sales, earnings and cash flows primarily by focusing on our existing business lines, expanding product offerings, increasing production capacity for value-added products and broadening customer bases. We believe our financial resources are sufficient to meet the working capital and capital spending necessary to execute our longer-term plans. In executing these plans, we expect to reduce debt over the coming years. However, possible significant acquisition activity could result in us seeking additional financing resources, which we expect would be available to us if sought. At September 28, 2013, we had $72.7 million of funds available on our revolving line of credit.

We invested approximately $27 million in capital expenditures in the nine-month period ended September 28, 2013. Our spending continues to be focused on expanding capacity for higher value-added egg products and maintaining existing production facilities, among other projects. Further capital spending in the remainder of 2013 is expected to be funded by operating cash flows. We expect these investments to improve manufacturing efficiencies, customer service and product quality.

Our consolidated quarterly operating results are affected by the seasonal fluctuations of net sales. For example, shell egg prices typically rise seasonally in the first and fourth quarters of the year due to increased demand during holiday periods. Consequently, net sales in the Egg Products Division may increase in the first and fourth quarters. Generally, the Cheese & Other Dairy-Case Products Division has higher net sales and operating profits in the fourth quarter, coinciding with incremental consumer demand during the holiday season. Operating profits from the Refrigerated Potato Products Division are less seasonal, but tend to be higher in the second half of the year, coinciding with the potato harvest and incremental consumer demand.

See Note A to the condensed consolidated financial statements for discussion on recently issued accounting pronouncements.

Certain items in this Form 10-Q are “forward-looking statements.” Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future sales or performance, capital expenditures, financing needs, ability to fund our operations, intentions relating to acquisitions, our competitive strengths and weaknesses, our business strategy and the trends we anticipate in the industries and economies in which we operate and other information that is not historical information and, in particular, appear under the heading, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” When used herein, the words “may,” “should,” “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes” and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them, but there can be no assurance that our expectations, beliefs and projections will be realized.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this Form 10-Q, including the factors described under “Risk Factors” in our Form 10-K filed with the SEC on March 22, 2013. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Form 10-Q include changes in national or global economic conditions. Additional risks and uncertainties include variances in the demand for our products due to consumer and industry developments, as well as variances in the costs to produce such products, including normal volatility in egg, feed, potato and cheese costs. You should not place undue reliance on our forward-looking statements. If any of these risks or uncertainties materialize, or if any of our underlying assumptions are incorrect, our actual results may differ significantly from the results that we express in or imply by any of our forward-looking statements. We do not undertake any obligation to publicly update or revise these forward-looking statements to reflect future events or circumstances except as required by law.

There was no material change in our market risk during the nine-month period ended September 28, 2013.

Our management evaluated, with the participation of our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of September 28 , 2013. Based on these evaluations, our principal executive and principal financial officers concluded that our disclosure controls and procedures were effective as of September 28, 2013.

There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 28, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Readers are directed to our Annual Report on Form 10-K filed March 22, 2013, for a discussion of Risk Factors. We do not believe there have been any material changes to our Risk Factors.

Pursuant to the requirements 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.

Delaware		20-0344222
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

301 Carlson Parkway, Suite 400 Minnetonka, Minnesota		55305
(Address of principal executive offices)		(Zip Code)


Large accelerated filer ¨		Accelerated filer ¨		Non-accelerated filer x		Smaller Reporting Company ¨

	September 28, 2013		December 29, 2012
Raw materials and supplies	$	28,252	$	28,989
Work in process and finished goods		122,272		88,353
Flocks		31,610		35,829
Total inventories	$	182,134	$	153,171

	Twelve Months Ended
	September 28, 2013		September 29, 2012
	(Unaudited, in thousands)
Gross interest expense	$	87,452	$	90,282
Plus:
Cash settlements on interest rate swaps		2,975		0
Minus:
Amortization of financing costs		10,316		9,798
Non-cash mark-to-market on interest rate swaps		769		1,645
Consolidated interest charges	$	79,342	$	78,839

Exhibit No.	Description

31.1	Certification of Chief Executive Officer

31.2	Certification of Chief Financial Officer

32.1	Certification of Chief Executive Officer

32.2	Certification of Chief Financial Officer

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	XBRL Taxonomy Extension Labels Linkbase Document

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

	Interest Rate Swap Contracts
Balance at December 29, 2012	$	8,872
Unrealized loss included in interest expense		559
Settlements		(2,975	)
Balance at September 28, 2013	$	6,456

	Locations of Gain (Loss) Recognized in Earnings on Derivative		Three Months Ended						Nine Months Ended
			2013			2012			2013			2012
			Gain (Loss) Recognized in Earnings on Derivative
Commodity contracts – Energy		Cost of sales	$	585		$	865		$	(84	)	$	472
Foreign currency contracts		General and administrative expense	$	(71	)	$	0		$	(71	)	$	0
Interest rate swap contracts		Interest expense	$	(283	)	$	(513	)	$	(559	)	$	(2,162	)

	September 28, 2013			December 29, 2012
Unrealized loss on cash flow hedges	$	(165	)	$	(1,201	)
Foreign currency translation		(515	)		(540	)
Accumulated other comprehensive income (loss)	$	(680	)	$	(1,741	)

		Three Months Ended September 28, 2013			Nine Months Ended September 28, 2013
		Three Months Ended September 28, 2013			Nine Months Ended September 28, 2013	Classification In Earnings

Cash flow hedges, net of tax	$	(1,278	)	$	1,150	Cost of sales


			MICHAEL FOODS GROUP, INC.
		By:	/s/ James E. Dwyer, Jr.
			James E. Dwyer, Jr.
			Chairman and Chief Executive Officer
			(Principal Executive Officer)

		By:	/s/ Mark W. Westphal
			Mark W. Westphal
			Chief Financial Officer and Senior Vice President
			(Principal Financial Officer and Principal Accounting Officer)
Date:	November 12, 2013