DUE DILIGENCE AND LBO OF OVERHILL FARMS PRESENTATION PREAPRED FOR GLENCOE CAPITAL

December 12, 2010

DEB SAHOO MBA, ROSS SCHOOL OF BUSINESS UNIVERSITY OF MICHIGAN, ANN ARBOR

AGENDA
I. II. III. IV. V. Investment Summary Industry and Company Overview Financial Performance and Valuation Transaction Overview Exit Strategies

I. INVESTMENT SUMMARY

COMPANY OVERVIEW
Company overview
value-added manufacturer of high quality, prepared frozen food products for branded retail, private label, foodservice and airline customers Products are sold in retail club stores such as Sam's Club, and in leading grocery chains nationwide Headquarters, entre manufacturing and warehousing, product development, sales and quality control facilities are located at a single location in Vernon, California.
Source: Company Website

Products and services

Branded Frozen Meals White label frozen food Other Food Products Soups Sauces Frozen Vegetables Ready to eat frozen meals Custom meals

Summary financials

Customer Types
Grocery Chains Restaurants Airlines Diet Brands Discount Retailers

Source: Company 10-k and Factset

Source: Company 10-k

INVESTMENT HIGHLIGHTS
OFI is an attractive take-out target with steady cash flows, minimal debt and is not benefiting from being a public company
Overhill Farms, Inc
(Amex: OFI)

$194.5M in revenue in 2010, $209.8M estimated revenue in 2009 $17.6M in EBITDA in 2010, $21M EBITDA in 2009 Steady and healthy gross profit margin

Role of investment

Acquire company not currently benefiting from public ownership Use of operating leverage will enhance returns to equity holders Base Case: 21% IRR Allow management to monetize a portion of its equity investment Management retains 12% pro forma ownership to participate in upside Target an exit within five years by either sale of company, public offering or other capital realization

Investment structure

Financing requirements

Conservative leverage to ensure financing and deal consummation Proposing a senior bank loan of 2.2x 2010 EBITDA, credit revolver of 1.7x 2010 EBITDA, and Senior Sub Debt of 0.8x 2010 EBITDA Sponsor equity financing, management equity rollover, and balance sheet cash to cover remainder of purchase price

INVESTMENT RATIONALE
OFI provides cycle-resistant free cash flows with no current operating leverage and its management team is likely looking to monetize part of its equity position
Stable cash flows

Healthy cash flows from operations over the last three years Predictable cash flows enable self funding of capital expenditures and increases in working capital Company has maintained margins and grown free cash flows through downturn in economic cycle and material volatility of material key inputs (see slide 29) Management team is highly qualified, experienced, and has helped the Company grow. Proposed structure would retain significant equity position, allowing them to realize improved operational performance of company without punitive equity market reaction $13.2M of LT debt as of 9/26/2010 Strong cash flows enabled pay-down of proposed $20.28M of bank debt over 3 years Recent capital expenditures put company in a position for growth without requiring near future large capital investment Company invested in and operating efficient production facilities Offering expanding range of products to customer base Recently signed large white label product deal with large national retailer Continuing to grow organically and exploring growth via acquisitions

Strong management

Strong debt position

Diversifying customer base and products

TARGETED RETURN OVERVIEW

Conservative base case provides 21% IRR Further upside from increased capacity utilization
Base case (50% Capacity)

Projected IRR of 21%

80% Capacity Utilization

Projected IRR of 29%

INVESTMENT RISKS Risks

Market risk Commodity price volatility (food and packaging) Consolidation among customers Airline bankruptcy and cost cutting

Mitigating Factors
Commodity price volatility will affect competitors as well Explore hedging in options market Provide range of products including items for price-sensitive customers Diversified customers

Operating risk

Currently operating in a highly Operations are subject to stringent standards, including regulations mandated regulated environment by the federal Food, Drug and Cosmetic Act, the FDA, OHSA, the EPA and the USDA Product liability

Financing risk

Ability to finance debt, particularly $7.7 million in long-term adjustable interest rate debt

Total debt less than 1x EBITDA

Exit risk

Potential acquisition reluctance as competitors can easily expand product portfolio organically without acquisitions

Industry trending toward consolidation

II. INDUSTRY AND COMPANY OVERVIEW

CUSTOMERS AND SEGEMENTS

Breakdown of Key Customers by Contribution to Revenue over the last 3 Financial Years

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DYNAMIC END MARKETS

Overhill Farms end products is used by a diverse customer base across a number of Industries Food Processing Industry forecasted to grow at 4% CAGR
2010- 2015 Factors for Growth Economic recovery in the US will increase consumer spending power Anticipated economic recovery next year will fuel further growth Growth will be buoyed by increased demand in eating out US Economic recover will increase demand for airline activity Anticipated consolidation of airlines will keep growth minimal

Retail Restaurants Airlines

4.0% CAGR 3.0% CAGR 2.0% CAGR

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INDUSTRY OVERVIEW
Frozen foods wholesale industry products include baked foods, seafood, poultry, meats , soups, fruits and vegetables. Demand is projected grow in line with the overall economic growth Threat of globalization in the industry is low Competition driven by relative costs/prices Highly regulated industry due to nature of the products

Industry overview

Barriers to entry

High investment requirements in warehouses and distribution system Effective quality control is a must Existing multi-year supply contracts with retailers Nature of the product and transportation costs make the industry domestic in nature Industry concentration is low, hence reasonable pricing power Top four firms account for 24% of market share Industry consolidation is expected Geographically concentrated in west and Southeast regions

Concentration

Market size

Industry revenue in 2009 expected to be $87.8 billion Frozen poultry, ready to eat dinners, vegetables and meats make 58.4% of revenue Mature industry dealing with essential items stable moderate growth rate (projected 1.5% YOY) Well positioned to benefit from improvement in the economy

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CUSTOMERS AND SEGMENTS

OFI serves a variety of private label retail and institutional customers

Retail Chains

Chain Restaurants

Institutional Accounts

Educational Facilities 13

Airlines

Health Care Providers

LONG TERM CONTRACTS WITH MAJOR RETAILERS

OFI has multi-year supply contracts with major national retailers
Supply contracts and agreements are major drivers in this industry Recent exclusive supply contracts: Contract to produce a line of 16 private label meals with a national retailer (name undisclosed for competitive reasons) likely to produce revenues of 7 million USD, possibility of further expansion later. Exclusive license contract with Boston Market Corp. to manufacture, distribute and market Boston Market brand of retail frozen foods.

Existing supply contracts :

Long term contracts assure stable revenues with strong potential of revenue growth

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MANAGEMENT PROFILE
James Rudis
Chairman of the Board, President, Chief Executive Officer and Director 61 years old Was elected to board of directors in April 1995 and has served as President and Chief Executive Officer since June 1997 Prior to his employment with OFI, Mr. Rudis was president of Quorum Corporation, a private consulting firm involved in acquisitions and market development

Tracy E. Quin
Interim Chief Financial Officer 56 years old Former controller at the H. J. Heinz Company Became Interim CFO in September 2007 Previous experience includes various senior-level finance and operating positions for the H. J. Heinz Company

Robert A. Olivarez
Vice President-Finance and Secretary 31 years old Served as Secretary since May 2010 and served as Vice President-Finance since February 2010 Prior to becoming Vice President-Finance, he was Manager-Finance from June 2007. Experience includes assurance practice at PricewaterhouseCoopers, LLP in the Los Angeles, California office since 2001

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STOCK OWNERSHIP

Company Name: Industry: Sector: Market Cap: Total Shares out:

OVERHILL FARMS INC COM (OFI) Food: Specialty/Candy Consumer Non-Durables Micro 15,823,000

Holder Name Hotchkis & Wiley Capital Management LLC Lord Abbett & Co. LLC ESTES HAROLD L Royce & Associates LLC Northern Trust Co. of Connecticut Metropolitan West Capital Management LLC Dimensional Fund Advisors, Inc. LSV Asset Management TT International OppenheimerFunds, Inc.

Position 2,624,352 2,507,575 1,111,565 714,888 348,952 348,952 269,611 263,094 268,337 234,522

Mkt Val 14,722,615 14,067,496 6,235,880 4,010,522 1,957,621 1,831,998 1,512,518 1,475,957 1,408,769 1,315,668

% O/S 16.59 15.85 7.03 4.52 2.21 2.21 1.70 1.66 1.70 1.48

Holdings Style Cap Group Style Type Yield Large Cap Mutual Fund Manager Value Large Cap Mutual Fund Manager Individual Value Multi Cap Investment Adviser Growth Large Cap Bank Management Division GARP Large Cap Value Multi Cap Investment Adviser Yield Large Cap Investment Adviser GARP Large Cap Growth Large Cap Investment Adviser

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MANAGEMENT COMPENSATION

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MANAGEMENT AND COMPANY ASSESSMENT

OFI has a strong management team, good financials and a strategic industry position
Management has unique insights into challenges, opportunities and operation of the industry

Have expertise in dealing with large financial transactions, keeping return in sight
Management Strengths
Executive management has significant experience with a solid understanding of the frozen food market Board of Directors is strong and deep includes a former executive of H. J. Heinz Company, former consultant from PwC , former executive of General Motors, several expert lawyers Focused on exploring strategic opportunities and operational efficiency CEO has a strategic vision for growth, business strategy and strategic planning skills and marketing acumen

Overhill Farms, Inc. Strengths

Focused on large customers such as American Airline, Safeway, Panda Restaurant, Pinnacle Foods across multiple industries Competitive as a result of the companys ability to produce mid-sized to large custom product runs within a short time frame on a cost-effective basis Has entered into intellectual property right agreement with Eating Right and Boston Market to produce and sell frozen entres Irrespective of a small backlog of orders, it has not affected the total revenues of the company

Weaknesses
Most of top management are operational focused. This could be a problem while taking new strategic initiatives More executives except key decision makers at the top have expertise in financial services, but not in food sector which may be disadvantageous while evaluating strategic moves

Weaknesses
Revenue concentration. A significant portion of total revenues during the last three fiscal years was derived from top three customers Competition comes from numerous regional and national firms that are divisions of larger, highly integrated companies

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III. FINANCIAL PERFORMANCE AND VALUATION

SUPERIOR FINANCIAL PERFORMANCE

Strong margins, substantial cash flow and low debt levels

Significant free cash flow with minimal capital expenditures required Demonstrated ability to maintain margins during rising food price environment

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CURRENT FINANCIAL PROFILE

Solid balance sheet with minimal debt
Current ratio of 3.1 Market capitalization of $87M Total Assets of $65.8M

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STOCK PERFORMANCE
OFI stock has generally been steady, with few dramatic reactions from investors
Closing price of $5.61 at December 10, 2010 Stock price has fluctuated between $3 and $6.40 since 2008 Prices outside this range over the last five years appear to be due to systematic conditions
May 2006, OFI successfully completes $47.5M restructuring Sept, 2010, OFI signs $30M credit facility with BofA Nov 2010, OFI launches private label frozen food line, as well as an alliance with Boston Market Dec 2010 OFI announces revenues of $194M and Net Income of $7.6M

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PUBLIC COMPARABLES
Valuation Comparison
All values in millions of U.S. Dollar, except per share items.

Total Debt / Company Name Overhill Farms, Inc. (OFI-USA) Peer Universe (5 comps) Compass Group Plc (CPG-GB) Armanino Foods of Distinction, Inc. (AMNF) Autogrill SpA (AGL-IT) Campbell Soup Co. (CPB) Cuisine Solutions, Inc. (CUSI)
Data is LTM. Market value calculated using all classes of shares for the company. Source: FactSet Fundamentals, FactSet Estimates, FactSet Daily Prices, Hoover's

Fiscal Enterprise Price / EPS FY1 Enterprise Value / Period Value LTM FY1 NTM Date Sales EBIT EBITDA EBITDA 09/2010 96.0 11.94 - 09/2010 0.49x 6.9x 5.4x 0.74x

Enterprise Value 0.14x

09/2010 03/2005 09/2010 10/2010 03/2009

18,326.2 16.04 23.6 8.22 6,248.9 57.64 14,292.6 14.49 21.7 (120.25)

14.78 21.86 13.74 -

14.48 18.11 13.48 -

09/2011 12/2010 12/2010 07/2011 06/2011

1.58x 1.79x 0.78x 1.87x 0.27x

11.8x 69.4x 36.8x 10.5x 88.3x

9.5x 29.6x 9.8x 8.8x 9.0x

1.10x 0.00x 4.06x 1.90x 2.40x

0.12x 0.00x 0.42x 0.22x 0.27x

LTM as of 10- Dec- 2010

MAX 75th % Mean Median 25th %

1.87x 1.79x 1.26x 1.58x 0.78x

88.27x 69.42x 43.36x 36.82x 11.81x

29.59x 9.76x 13.33x 9.45x 9.00x

4.06x 2.40x 1.89x 1.90x 1.10x

0.42x 0.27x 0.20x 0.22x 0.12x

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PRECEDENT M&A COMPARABLES

Precendent Transaction Analysis Announcement Date 12/02/10 11/24/10 06/11/10 12/03/09 06/05/07 11/29/06 09/18/06 09/06/06 Acquirer Company Name PepsiCo, Inc. Danone SA Talleys Group Ltd. Goldstream Capital Ltd. Remgro Ltd. Nestle Purina PetCare Co. Smithfield Foods, Inc. Hormel Foods Corp. Target Company Name Wimm-Bill-Dann Foods OJSC Yocream International, Inc. Affco Holdings Ltd. Auric Pacific Group Ltd. Rainbow Chicken Ltd. Green's Foods Ltd. Premium Standard Farms, Inc. Provena Foods, Inc. Target Company Description Dairy Producer Mfrs yoghurt, ice cream Meat producer and processor Food & Bev marketing, distributing Producer and disributor of chicken Producer and disributor of speciality foods and candy Producer and distributor of pork Producer and distributor of prepared meats MAX 75th % Mean Median 25th % Min EV Enterprise Value Enterprise Enterprise Value / / EBITDA Value / EBIT Revenue $5,779.00 7.03x 8.83x 0.85x $99.75 18.77x 29.53x 2.44x $562.57 22.68x 22.68x 1.04x -$20.85 1.76x 2.17x 0.21x $551.11 24.26x 24.26x 0.76x $105.38 12.21x 75.38x 0.76x $824.98 $15.15 1.19x 3.18x 0.8x 5.92x -0.07x 0.46x

24.26x 19.75x 11.39x 9.62x 2.83x 1.19x

75.38x 25.58x 21.20x 15.755x 4.98x 0.8x

2.44x 0.90x 0.81x 0.76x 0.40x -0.07x

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FINANCIAL PROJECTIONS
Sales growth approximates average growth of metal plating and end market industries Base case assumptions are conservative, leaving substantial upside potential to estimated returns Margin Assumptions Gross Margin 86% based on 09 and 10 performance SG&A 4% of sales based on 07 10 average (assume no margin expansion due to improved capacity utilization) Capital Expenditures moderate spike in 2011 due to protein cooking plant expansion

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LEVERAGE BUYOUT ANALYSIS

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VALUATION SUMMARY
Overhill Farms is substantially undervalued as a public company

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IV. TRANSACTION OVERVIEW

TRANSACTION SUMMARY
$6.60 / share offer price represents 20% premium over 12/10/2010 closing price
Total purchase price of $104M Financing Assumptions Senior Debt at 2.2x EBITDA (10) Utilize existing revolver of $30M Senior Subordinated debt of 0.8X EBITDA (10) Management rolls-over 5% of equity Required equity contribution of $30.2M

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VALUE CREATION ALTERNATIVES

Continue to enter into long term supply contracts and manage quality control. Recent agreements with national level retailers and chains aid in getting more contracts in future Pro: Growth in EBITDA due to increased revenues, broader customer base Con: Expansion of product line may be required which would require investment in facilities. OFI can act as a Manufacturers Sales and Branch Office (MSBO) for Specialty Food Group (SFG) especially in western US SFG Inc. is a leading marketer and producer of premium meat products based in Virginia. Expand operations to new regions and strengthen market share in existing areas of operations because of expanded product line. Possible 5% increase in profits even by conservative estimates. MSBOs realize greater economies of scale also help in mitigating the wholesale bypass risk Leverage SFGs existing relationships for access to niche markets in eastern US Purchase costs are nearly 85% revenues (industry average ~82%) Pro: Improve efficiencies and mitigate operating risks. Realize higher economies of scale. Con: Without careful planning of the distribution systems the requisite scale economies may not be realized.

Base Case

Synergistic MSBO agreement with SFG Inc. (a Glencoe

portfolio company)

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V. EXIT STRATEGIES

EXIT STRATEGIES
Would allow for greatest valuation of company at exit Strategic buyers can utilize Overhill to reach new customer accounts or acquire leading-edge facilities

Sale to Strategic Buyer

Sale to Financial Buyer

Re-lever of Overhill would provide returns to present sponsor and allow continued growth of NGA Adequate number of PE firms with matching investment criteria

Public offering

Increased size of Overhill and expanded geographical presence may increase visibility in investor community Company may be more successful continuing as private company

Dividend recapitalization

Re-lever Overhill with additional debt to provide return to equity holders Financing for transaction may be difficult to secure

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POTENTIAL STRATEGIC BUYERS

Company Market Cap
$17.2B

Description
Leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, and lodging establishments #1 french fry maker in the world. Also produces a variety of other frozen foods. Owns Ore-Ida food service business (not retail) Produces and markets a range of fresh meat and packaged meat products both domestically and internationally Produces, distributes and markets chicken, beef, pork, and prepared foods

Rationale
Largest player in food service space; may look to defend Sysco branded products from erosion by private labels To expand product portfolio. Able to take advantage of existing robust supply chain / channel overlap

Private

$3.37B

May be overly dependent on retail sales of packaged meats. Has room to expand institutional sales business Expand institutional customer base and diversity of prepared food product portfolio

$6.7B

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POTENTIAL FINANCIAL BUYERS

Company Fund Size
$500M Revenue: $50 - $500M

Target Criteria

Relevant Portfolio Companies

Numerous food industry investment including recent acquisition of pork processor

$300M Revenue: $10 - $200M Fund focused on health sector and consumer food goods Recently sold stake in Atkins for 5x return

$1,500M

Revenue: $20 - $1000M EBITDA: $10 - $100M Equity: $15 - $350 Equity: $15 - $75M Revenue: $25 - $500M

Focus on food industry Multiple investments in food franchises, food producers, and restaurant chains Buys manufacturers and marketers of branded food products Also buys suppliers of ingredients and raw materials to food manufacturers

$650M

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