-----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, PnBzeuu35le63H81BHRgPCJuTeOhQ7boyKYkeaTb0gvLaP4k/8bOYEhwMd6SL7gQ 8K/YVycdSt5he9ZZE55LQQ== 0001007507-97-000004.txt : 19970116 0001007507-97-000004.hdr.sgml : 19970116 ACCESSION NUMBER: 0001007507-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970115 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: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14194 FILM NUMBER: 97505979 BUSINESS ADDRESS: STREET 1: 4893 RIVERDALE RD STREET 2: STE 260 CITY: ATLANTA STATE: GA ZIP: 30337 BUSINESS PHONE: 7709910351 10-Q 1 12 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, 1996 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 11,872,138 (Number of shares of $0.01 par value common stock outstanding as of December 31, 1996) INDEX PART I Financial Information Page Number Item 1. Financial Statements Condensed Consolidated Balance Sheets as of November 30, 1996 and June 1, 1996 3 Condensed Consolidated Statements of Income for the Thirteen Weeks and Twenty-Six Weeks Ended November 30, 1996 and December 2, 1995 4 Condensed Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended November 30, 1996 and December 2, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 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 10 Signatures 11 Index to Exhibits, Financial Statement Schedules, and Reports on Form 8-K 12 PART I - FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS Morrison Health Care, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except per share data) Historical As of As of November 30, 1996 June 1, 1996 (Unaudited)
Assets Current assets: Cash and short-term investments $ 5,991 $ 6,088 Receivables - accounts and notes (net) 20,793 22,635 Inventories 2,713 2,662 Prepaid expenses 1,304 1,616 Deferred income tax benefits 2,264 2,397 Total current assets 33,065 35,398 Property and equipment - at cost 14,549 15,229 Less accumulated depreciation 8,082 9,571 6,467 5,658 Cost in excess of net assets acquired, net 4,658 4,736 Other assets 15,554 15,309 Total assets $59,744 $61,101 Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $ 9,369 $ 8,684 Short-term borrowings 3,000 6,760 Other accrued liabilities 11,469 11,266 Current portion of long-term debt 2,511 11 Total current liabilities 26,349 26,721 Notes payable 17,522 20,034 Other deferred liabilities 10,481 9,630 Stockholders' equity: Common stock, $0.01 par value (authorized 100,000 shares; issued: 11,863 and 11,791 shares, 1997 and 1996, respectively) 119 118 Capital in excess of par value 5,746 5,441 Retained earnings 653 86 6,518 5,645 Less cost of treasury stock 1,126 929 Total stockholders' equity 5,392 4,716 Total liabilities and stockholders' equity $59,744 $61,101
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 Thirteen Weeks Ended December 2, 1995 Pro Forma For the Thirteen Weeks Ended Adjustments November 30, 1996 Historical Note (C) Pro Forma Revenues $54,355 $56,592 $ 0 $56,592 Operating costs and expenses: Operating expenses 44,064 45,845 (53)(a) 45,792 Selling, general and administrative 5,347 5,529 502(a) 6,031 Interest expense, net of interest income, totaling $120 in 1997 and $37 in 1996 296 391 391 49,707 51,765 449 52,214 Income before provision for income taxes 4,648 4,827 (449) 4,378 Provision for federal and state income taxes 1,922 2,082 (195)(b) 1,887 Net income $ 2,726 $ 2,745 $ (254) $ 2,491 Earnings per common and common equivalent share $ 0.23 $ 0.22 Weighted average common and common equivalent shares 11,831 11,761
For the Twenty-Six Weeks Ended December 2, 1995 Pro Forma For the Twenty-Six Weeks Ended Adjustments November 30, 1996 Historical Note (C) Pro Forma Revenues $107,013 $112,881 $ 0 $112,881 Operating costs and expenses: Operating expenses 87,088 91,808 91,808 Selling, general and administrative 10,260 9,816 1,200(a) 11,016 Interest expense, net of interest income, totaling $414 in 1997 and $71 in 1996 398 753 753 97,746 102,377 1,200 103,577 Income before provision for income taxes 9,267 10,504 (1,200) 9,304 Provision for federal and state income taxes 3,845 4,424 (505)(b) 3,919 Net income $ 5,422 $ 6,080 $ (695) $ 5,385 Earnings per common and common equivalent share $ 0.46 $ 0.46 Weighted average common and common equivalent shares 11,834 11,805
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)
Historical For the Twenty-Six Weeks Ended November 30, 1996 December 2, 1995 Operating activities: Net income $ 5,422 $ 6,080 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 944 1,252 Amortization of intangibles 78 77 Other, net 557 424 Deferred income taxes (777) 3,492 (Gain)/loss on disposition of assets 14 (14) Changes in operating assets and liabilities: Decrease in receivables 2,881 1,164 (Increase)/decrease in inventories (51) 34 (Increase)/decrease in prepaid and other assets (85) 237 Increase/(decrease) in accounts payable, accrued and other liabilities 1,823 (6,049) Increase in income taxes payable 49 2,122 Net cash provided by operating activities 10,855 8,819 Investing activities: Purchases of property and equipment (1,808) (1,436) Proceeds from disposal of assets 51 155 Other, net (677) (30) Net cash used by investing activities (2,434) (1,311) Financing activities: Proceeds from long-term debt 0 12,820 Principal payments on long-term debt (11) (11) Net change in short-term borrowings (3,761) 0 Proceeds from exercise of stock options 306 0 Dividends paid (4,855) 0 (Increase) in Treasury Stock held by Deferred Comp Plan (197) 0 Net transfers to Morrison Restaurants Inc. 0 (20,299) Net cash used by financing activities (8,518) (7,490) (Decrease)/increase in cash and short-term investments (97) 18 Cash and short-term investments at the beginning of the period 6,088 732 Cash and short-term investments at the end of the period $ 5,991 $ 750
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 June 1, 1996. Certain prior reported amounts have been reclassified to be consistent with current reporting practices. NOTE B - SUBSEQUENT EVENTS Declaration of Quarterly Dividend On January 9, 1997 the Company declared a quarterly cash dividend of $0.205 per share of outstanding common stock payable on January 31, 1997 to shareholders of record at the close of business on January 17, 1997. NOTE C - PRO FORMA ADJUSTMENTS The prior year historical condensed consolidated financial statements for the thirteen and twenty-six weeks ended December 2, 1995 reflect a period during which the Company did not operate as a separate, independent company, and certain assumptions were made in preparing such statements. Therefore, such historical statements may not necessarily reflect the consolidated results of operations or financial position that would have existed had the Company been a separate, independent company. The pro forma information presents the Company's results as if the spin-off from Morrison Restaurants Inc. ("MRI") occurred on June 4, 1995 and reflects adjustments for the estimated additional costs of being a separate, independent company. Note 1--The pro forma adjustments to the accompanying historical statement of income for the thirteen and twenty-six weeks ending December 2, 1995 are described below: (a) To record the decrease in operating expenses and the increase in selling, general and administrative expenses which presumably would have been incurred by the Company as a separate, stand-alone entity. (b) To record the estimated income tax benefit associated with pro forma adjustment (a) at an assumed combined state and federal effective income tax rate of 42.1% for the twenty-six week period ending December 2, 1995. The assumed effective income tax rate is comprised of a 35% statutory federal income tax rate plus applicable state income taxes and permanent differences, less applicable tax credits. Note 2--The historical operating costs and expenses include certain allocated expenses from MRI. 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 thirteen and twenty-six week periods ending November 30, 1996. The pro forma financial information for fiscal 1996 presents the Company's results as if the spin-off from MRI had occurred on June 4, 1995, and reflects adjustments for the estimated additional costs of being an independent company. The equivalent shares for periods prior to the spin-off are based on the number of shares of MRI common stock and common stock equivalents adjusted for the one for three distribution ratio. Results of Operations The Company reported net income from continuing operations of $2.7 and $5.4 million for the thirteen and twenty-six week periods ending November 30, 1996, compared with pro forma net income of $2.5 and $5.4 million reported for the corresponding periods of the prior fiscal year. The increase in net income for the quarter from the prior year primarily relates to lower operating costs. Revenue Revenue from operations decreased $2.2 million or 4.0% from $56.6 million for the quarter ended November 30, 1996 and decreased $5.9 million or 5.2% from $112.9 million for the twenty-six weeks ended November 30, 1996. The decrease was the result of revenue lost from closed units and contract shifts from a profit or loss account type to a management fee account type. Managed volume (which is the amount of estimated total operating costs managed) from operations increased $7.3 million or 6.9% from $106.6 million for the quarter and increased $11.5 or 5.3% for the twenty-six week period ended November 30,1996 from the prior year due to growth in continuing accounts. Operating Costs Operating costs decreased $1.7 million or 3.8% to $44.1 million for the quarter and decreased $4.7 million or 5.1% for the twenty-six weeks ended November 30, 1996. These costs have decreased from the comparable periods in the prior year as a result of a change in the mix of account types where the Company pays operating expenses to account types where the client pays such expenses. Selling, general and administrative expenses for the quarter decreased $0.7 million or 11.3% for the quarter and decreased $0.8 million or 6.9% for the twenty-six week period ending November 30, 1996 as compared to the same periods of the prior year. Interest Expense (net of Interest Income) Net interest expense decreased from $0.4 million to $0.3 million for the quarter and decreased to $0.4 million for the twenty-six weeks ended November 30, 1996 from $0.8 million for the same period of the prior year due to a decrease in the Company's debt. Income Taxes The effective income tax rates on continuing operations for the thirteen and twenty-six weeks ended November 30, 1996 were 41.4% and 41.5%, respectively, as compared to 43.1% and 42.1%, respectively, for the same periods of the prior year. The lower effective income tax rates for the current year are primarily attributable to the utilization of Work Opportunity Tax credits. 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. The number of equivalent shares used for the prior year for purposes of calculating pro forma earnings per share is based on the number of shares of MRI common stock and common stock equivalents for such period adjusted for the one for three distribution ratio. Liquidity and Capital Resources Total assets at November 30, 1996 were $59.7 million, a $2.8 million decrease from $62.5 million as of the prior fiscal year end. This decrease is attributable to a decrease in accounts receivable and the early collection of a note receivable. Total liabilities at November 30, 1996 were $54.4 million, a $3.5 million decrease from $57.8 million as of the end of the prior fiscal year. This decrease was primarily due to a $3.8 million decrease in debt. 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. 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 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On September 26, 1996 the Company held its first 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 I directors to the Board of Directors for a three year term. Number of Number of Votes Nominees Votes For % Withheld % E. Eugene Bishop 9,843,095 98.96 102,944 1.04 Arthur R. Outlaw, Jr .9,845,715 98.99 100,325 1.01 Fred L. Brown 9,844,497 98.98 101,543 1.02 Other members of the Board of Directors are Claire L. Arnold, Glenn A. Davenport, John B. McKinnon, and Dr. Benjamin F. Payton. Proposal 2 - Amendment to 1996 Stock Incentive Plan The shareholders approved amending the 1996 Stock Incentive Plan to (i) increase the number of shares authorized for issuance under the Plan from 500,000 to 850,000 and (ii) increase from 100,000 to 300,000 the number of shares that may be granted in the form of options or stock appreciation rights awards during a fiscal year to any employee who is covered by the deductibility restrictions of Section 162(m) of the Internal Revenue Code. The results of the shareholders' votes were 6,943,649 shares voted For, 2,854,998 shares voted Against, 97,454 shares Abstained, and 49,939 shares were subject to broker non-votes. ITEM 5 OTHER INFORMATION At its quarterly meeting held on January 9, 1997, the Board of Directors declared a cash dividend of $0.205 per share, payable on January 31, 1997 to shareholders of record at the close of business on January 17, 1997. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 11 Computation of Earnings per Share and Pro Forma Earnings per Share Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the fiscal quarter ended November 30, 1996. 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) 1/13/97 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 and Pro Forma 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)
Thirteen Weeks Ended Twenty-Six Weeks Ended November 30, 1996 November 30, 1996 Primary Average shares outstanding 11,784 11,783 Net effect of dilutive stock options - based on the treasury stock method using average market price 47 51 Total 11,831 11,834 Net Income Per share amount $0.23 $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 Novemeber 30, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS MAY-31-1997 NOV-30-1996 5,991 0 18,611 1,114 2,713 33,065 14,549 8,082 59,744 26,349 17,522 0 0 119 5,273 59,744 107,013 107,013 87,088 87,088 10,260 0 812 9,267 3,845 5,422 0 0 0 5,422 0.46 0.46
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