-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B+h0MyQ3/foyiaHinCcUWXrslQ2sQrBDVnyBjWZFof87U4lQKkGY5vOZGe9AZzuR YkVLaPZzOwzUaEH3KearEg== 0001007507-98-000004.txt : 19980114 0001007507-98-000004.hdr.sgml : 19980114 ACCESSION NUMBER: 0001007507-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971130 FILED AS OF DATE: 19980113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORRISON HEALTH CARE INC CENTRAL INDEX KEY: 0001007507 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 631155966 STATE OF INCORPORATION: GA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14194 FILM NUMBER: 98506134 BUSINESS ADDRESS: STREET 1: 1955 LAKE PARK DR SE STREET 2: STE 400 CITY: SMYRNA STATE: GA ZIP: 30080-8855 BUSINESS PHONE: 7704373300 MAIL ADDRESS: STREET 1: 1955 LAKE PARK DR SE STREET 2: STE 400 CITY: SMYRNA STATE: GA ZIP: 30080-8855 10-Q 1 6 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 1997 OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________. Commission file number 1-14194 MORRISON HEALTH CARE, INC. ------------------------- (Exact name of Registrant as specified in charter) GEORGIA 63-1155966 (State or other jurisdiction of (I.R.S. Employer identification No.) incorporation or organization) 1955 Lake Park Drive, Suite 400, Smyrna, GA 30080-8855 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (770) 437-3300 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 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___ 12,306,776 (Number of shares of $0.01 par value common stock outstanding as of December 31, 1997) INDEX ----- PART I Financial Information Page Number ------ Item 1. Financial Statements Condensed Consolidated Balance Sheets as of November 30, 1997 and May 31, 1997......... 3 Condensed Consolidated Statements of Income for the Quarter and Six Months Ended November 30, 1997 and 1996.................... 4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended November 30, 1997 and 1996.................... 5 Notes to Condensed Consolidated Financial Statements.................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 7-8 Item 3. Quantitative and Qualitative Disclosures about Market Risk............................. N/A PART II Other Information Item 1. Legal Proceedings............................. 9 Item 2. Changes in Securities......................... None Item 3. Defaults upon Senior Securities............... None Item 4. Submission of Matters to a Vote of Security Holders.............................. 9 Item 5. Other Information............................. 9 Item 6. Exhibits and Reports on Form 8-K.............. 9 Signatures................................................... 10 Index to Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................................ 11 PART I - FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS Morrison Health Care, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except per share data) As of As of November 30, May 31, 1997 1997 ----------------------------------- (Unaudited) (Audited)
Assets Current assets: Cash and short-term investments............... $ 5,842 $ 6,347 Receivables - accounts and notes (net)........ 25,738 21,271 Inventories................................... 2,716 2,686 Prepaid expenses.............................. 899 1,006 Deferred income tax benefits.................. 1,686 1,929 ----------------------------------- Total current assets........................ 36,881 33,239 ----------------------------------- Property and equipment - at cost................ 18,031 16,343 Less accumulated depreciation................. 9,113 8,471 ----------------------------------- 8,918 7,872 Cost in excess of net assets acquired, net...... 5,190 4,582 Other assets.................................... 17,213 14,510 ----------------------------------- Total assets................................ $68,202 $60,203 =================================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable.............................. $10,244 $10,381 Book bank overdrafts.......................... 3,201 2,596 Short-term borrowings......................... 2,395 0 Other accrued liabilities..................... 10,921 11,360 Current portion of long-term debt............. 5,011 5,011 ----------------------------------- Total current liabilities................... 31,772 29,348 ----------------------------------- Notes payable................................... 16,511 15,022 Other deferred liabilities...................... 11,339 10,205 Stockholders' equity: Common stock, $0.01 par value (authorized 100,000 shares; issued: 12,307 and 12,165 shares, 1998 and 1997, respectively)................ 123 122 Capital in excess of par value................ 11,518 9,717 Unearned ESOP shares.......................... (3,359) (3,517) Retained earnings............................. 1,608 647 ----------------------------------- 9,890 6,969 Less cost of treasury stock................... 1,310 1,341 ----------------------------------- Total stockholders' equity.................. 8,580 5,628 ----------------------------------- Total liabilities and stockholders' equity.. $68,202 $60,203 ===================================
The accompanying notes are an integral part of the financial statements. Morrison Health Care, Inc. and Subsidiaries Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited) For the Quarter Ended For the Six Months Ended ----------------------------- ---------------------------- November 30, November 30, November 30, November 30, 1997 1996 1997 1996 ----------------------------- ----------------------------
Revenues............................ $60,646 $54,355 $118,400 $107,013 Operating costs and expenses: Operating expenses................ 49,958 44,064 97,685 87,088 Selling, general and administrative.................. 5,424 5,347 10,550 10,260 Interest expense, net of interest income, totaling $1,103 and $1,280, respectively, in 1998 and $120 and $414, respectively, in 1997........................... 229 296 456 398 ----------------------------- ---------------------------- 55,611 49,707 108,691 97,746 ----------------------------- ---------------------------- Income before provision for income taxes...................... 5,035 4,648 9,709 9,267 Provision for federal and state income taxes...................... 1,989 1,922 3,835 3,845 ----------------------------- ---------------------------- Net income.......................... $ 3,046 $ 2,726 $ 5,874 $ 5,422 ============================= ============================ Earnings per common and common equivalent share.................. $ 0.25 $ 0.23 $ 0.49 $ 0.46 ============================= ============================ Weighted average common and common equivalent shares................. 12,161 11,831 12,095 11,834 ============================= ============================
The accompanying notes are an integral part of the financial statements. Morrison Health Care, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited) For the Six Months Ended ------------------------------ November 30, November 30, 1997 1996 ------------------------------
Operating activities: Net income........................................ $ 5,874 $ 5,422 Adjustments to reconcile net income to net cash (used) provided by operating activities: Depreciation and amortization................. 1,216 944 Amortization of intangibles................... 113 78 Other, net.................................... 483 557 Deferred income taxes......................... (295) (777) (Gain)/Loss on disposition of assets.......... (39) 14 Changes in operating assets and liabilities: (Increase)/Decrease in receivables.......... (4,777) 2,881 Increase in inventories..................... (31) (51) Increase in prepaid and other assets........ (209) (85) Increase in accounts payable, accrued and other liabilities..................... 866 1,823 Increase in income taxes payable............ 688 49 ------------------------------- Net cash provided by operating activities......... 3,889 10,855 ------------------------------- Investing activities: Purchases of property and equipment............... (2,447) (1,808) Proceeds from disposal of assets.................. 225 51 Other, net........................................ (3,133) (677) ------------------------------- Net cash used by investing activities............. (5,355) (2,434) ------------------------------- Financing activities: Principal payments on long-term debt.............. (2,511) (11) Net change in short-term borrowings............... 6,395 (3,761) Proceeds from exercise of stock options........... 1,770 306 Dividends paid.................................... (4,914) (4,855) Decrease/(Increase) in Treasury Stock held by Deferred Comp Plan............................ 31 (197) ESOP shares....................................... 190 0 ------------------------------- Net cash provided (used) by financing activities.. 961 (8,518) ------------------------------- Decrease in cash and short-term investments....... (505) (97) Cash and short-term investments at the beginning of the period......................... 6,347 6,088 ------------------------------- Cash and short-term investments at the end of the period............................... $ 5,842 $ 5,991 ===============================
The accompanying notes are an integral part of the financial statements. Morrison Health Care, Inc. and Subsidiaries NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect all adjustments for normal recurring accruals. These adjustments are necessary, in the opinion of Management, for a fair presentation of the financial position, the results of operations and the cash flows for the interim periods presented. The results of operations for the interim periods reported herein are not necessarily indicative of results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended May 31, 1997. Certain prior reported amounts have been reclassified to be consistent with current reporting practices. NOTE B - SUBSEQUENT EVENTS Declaration of Quarterly Dividend On January 7, 1998, the Company's Board of Directors declared a quarterly cash dividend of $0.205 per share of outstanding common stock payable on January 31, 1998 to shareholders of record at the close of business on January 20, 1998. NOTE C - NEW ACCOUNTING STANDARD In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings Per Share", which is required to be adopted for financial statements issued after December 15, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating basic earnings per share, the dilutive effect of stock options will be excluded. The change is not expected to have a material impact on the Company's earnings per share. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Morrison Health Care, Inc. ("MHCI" or the "Company"), a Georgia corporation, was spun off from Morrison Restaurants Inc. ("MRI") in March 1996. The discussion below relates to the results of operations of the Company for the quarter and six months ended November 30, 1997 compared with the results for the comparable periods of the prior year. Results of Operations The Company reported net income from continuing operations of $3.0 million for the quarter and $5.9 million for the six months ended November 30, 1997, compared with net income of $2.7 and $5.4 million reported for the corresponding periods of the prior fiscal year. Earnings before interest and taxes increased $0.3 million to $5.3 million for the quarter and increased $0.5 million to $10.2 million for the six months ended November 30, 1997. Revenue Revenue from operations increased $6.3 million or 11.6% to $60.6 million for the quarter and increased $11.4 million or 10.6% to $118.4 million for the six months ended November 30, 1997. The increase was primarily attributable to the conversion of client paid payroll to MHCI paid payroll in continuing accounts. Managed volume (which is the amount of estimated total operating costs managed) from operations increased $7.1 million or 6.2% to $121.0 million for the quarter and increased $11.0 or 4.8% for the six months ended November 30,1997 from the prior year period due to the expansion of the vending and branded concepts programs in continuing accounts. Operating Costs Operating costs increased $5.9 million or 13.4% to $50.0 million for the quarter and increased $10.6 million or 12.2% for the six months ended November 30, 1997. These costs have increased as a percentage of revenue from the comparable periods in the prior year primarily as a result of the conversion of client paid payroll to MHCI paid payroll in continuing accounts. Selling, general and administrative expenses for the quarter increased $0.08 million or 1.4% for the quarter and increased $0.3 million or 2.8% for the six months ended November 30, 1997 as compared to the same periods of the prior year. Interest Expense (net of Interest Income) Net interest expense decreased from $0.3 million to $0.2 million for the quarter and increased to $0.5 million for the six months ended November 30, 1997 from $0.4 million for the same period of the prior year. Income Taxes The effective income tax rate on continuing operations for the three months and six months ended November 30, 1997 was 39.5%, as compared to 41.4% and 41.5%, respectively, for the same periods of the prior year. The Company has lowered its estimated effective income tax rate for the current year based upon anticipated tax credits and a review of the first full year of tax filings. Earnings per Share Earnings per share are based on the weighted-average number of shares outstanding during each quarter and are adjusted for equivalent shares. Equivalent shares are the assumed conversion of shares issuable upon exercise of options, after the assumed repurchase of common shares with the related proceeds. Liquidity and Capital Resources Total assets at November 30, 1997 were $68.2 million, a $8.0 million increase from $60.2 million as of the prior fiscal year end. This increase is attributable to the following: 1) an increase of $4.5 million in accounts receivable due to the Thanksgiving holiday being before the end of the quarter; 2) an increase of $0.8 million in client investments; and 3) a $0.9 million increase in the Company's Deferred Compensation Plan assets. Total liabilities at November 30, 1997 were $59.6 million, a $5.0 million increase from $54.6 million as of the end of the prior fiscal year. This increase was primarily due to a $3.8 million increase in debt and a $1.1 million increase in deferred other liabilities related to the Company's Deferred Compensation Plan. The Company expects that funds generated from operations and existing lines of credit will be sufficient to meet its normal operating requirements over the near term. Special Note Regarding Forward-Looking Information The foregoing sections contain "forward-looking" statements which represent the Company's expectations or beliefs concerning future events, including statements regarding liquidity and capital resources. The Company cautions that a number of important factors could, individually or in the aggregate, cause actual results to differ materially from such forward-looking statements including, without limitation, the following: health care spending trends; the growth of systems and group purchasing organizations; changes in health care regulations; increased competition in the health care food and nutrition market; customer acceptance of the Company's cost savings programs; and changes in laws and regulations affecting labor and employee benefit costs. ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable. PART II - OTHER INFORMATION ITEM 1 LEGAL PROCEEDINGS The Company is presently, and from time to time, subject to pending claims and suits arising in the ordinary course of its business. In the opinion of Management, the ultimate resolution of these pending legal proceedings will not have a material adverse effect on the Company's operations or consolidated financial position. ITEM 2 CHANGES IN SECURITIES None ITEM 3 DEFAULTS UPON SENIOR SECURITIES None ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On September 23, 1997, the Company held its Annual Meeting of Shareholders in Atlanta, Georgia. During the meeting, the following matters were voted upon. Proposal 1 - Election of Directors The following nominees were elected as Class II directors to the Board of Directors for a three year term. Number of Number of Votes Nominees Votes For Withheld - ------------------------------------------------------ Claire L. Arnold.............10,713,739 88,694 Glenn A. Davenport...........10,751,747 50,686 Other members of the Board of Directors are E. Eugene Bishop, Fred L. Brown, John B. McKinnon, Arthur R. Outlaw, Jr and Dr. Benjamin F. Payton. Proposal 2 - Amendment to 1996 Stock Incentive Plan The shareholders approved amending the 1996 Stock Incentive Plan to increase the number of shares authorized for issuance thereunder the Plan by 900,000. The results of the shareholders' votes were 8,367,404 shares voted For, 1,076,424 shares voted Against, 52,293 shares Abstained, and 1,982,558 shares subject to broker non-votes. ITEM 5 OTHER INFORMATION At its quarterly meeting held on January 7, 1998, the Board of Directors declared a cash dividend of $0.205 per share, payable on January 31, 1998 to shareholders of record at the close of business on January 20, 1998. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 11 Computation of Earnings per Share Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K: None SIGNATURES 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. MORRISON HEALTH CARE, INC. (Registrant) 01/12/98 By: /S/ K. WYATT ENGWALL DATE K. WYATT ENGWALL Senior Vice President, Finance (Senior Vice President and Principal Accounting Officer) MORRISON HEALTH CARE, INC. LIST OF EXHIBITS Exhibit Number Description - ------- ---------------------------------------------------- 11 Computation of Earnings per Share 27 Financial Data Schedule EX-11 2 MORRISON HEALTH CARE, INC. EXHIBIT 11 - STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (Amounts in thousands, except per share data) Three Months Ended -------------------------------- November 30, November 30, 1997 1996 --------------------------------
Primary - ------- Weighted Average shares outstanding......... 11,965 11,784 Net effect of dilutive stock options-based on the treasury stock method using average market price................................ 196 47 -------------------------------- Total....................................... 12,161 11,831 ================================ Net income.................................. $3,046 $2,726 ================================ Per share amount............................ $ 0.25 $ 0.23 ================================ Fully Diluted - ------------- Weighted Average shares outstanding......... 11,965 11,784 Net effect of dilutive stock options-based on the treasury stock method using the higher of period-end or average market price................................ 258 80 -------------------------------- Total....................................... 12,223 11,864 ================================ Net income.................................. $3,046 $2,726 ================================ Per share amount............................ $ 0.25 $ 0.23 ================================
Six Months Ended -------------------------------- November 30, November 30, 1997 1996 --------------------------------
Primary - ------- Weighted Average shares outstanding......... 11,904 11,783 Net effect of dilutive stock options-based on the treasury stock method using average market price................................ 191 51 -------------------------------- Total....................................... 12,095 11,834 ================================ Net income.................................. $5,874 $5,422 ================================ Per share amount............................ $ 0.49 $ 0.46 ================================ Fully Diluted - ------------- Weighted Average shares outstanding......... 11,904 11,783 Net effect of dilutive stock options-based on the treasury stock method using the higher of period-end or average market price................................ 253 68 -------------------------------- Total....................................... 12,157 11,851 ================================ Net income.................................. $5,874 $5,422 ================================ Per share amount............................ $ 0.48 $ 0.46 ================================
EX-27 3
5 This schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statements of income in the Company's Quarterly Report to Shareholders for the quarter ended November 30, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS MAY-31-1998 NOV-30-1997 5,842 0 21,627 744 2,716 36,881 18,031 9,113 68,202 31,772 16,511 0 0 123 8,457 8,580 118,400 118,400 97,685 97,685 0 0 1,736 9,709 3,835 5,874 0 0 0 5,874 0.49 0.48
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