-----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, HFlwWzT5Ykpjkw4Qx5wCsACd6pGZhT5BXV+Zu0FkJlW2/qfTGNqo+CLz16vEqz2b yMfIFj5e5r3EmZbqVF5AzQ== 0001007507-97-000029.txt : 19971016 0001007507-97-000029.hdr.sgml : 19971016 ACCESSION NUMBER: 0001007507-97-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970831 FILED AS OF DATE: 19971015 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: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14194 FILM NUMBER: 97695603 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 1 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 August 31, 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 identifiation 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 12,289,950 (Number of shares of $0.01 par value common stock outstanding as of September 30, 1997) INDEX PART I Financial Information Page Number ------ Item 1. Financial Statements Condensed Consolidated Balance Sheets as of August 31, 1997 and May 31, 1997.......... 3 Condensed Consolidated Statements of Income for the Quarter Ended August 31, 1997 and 1996..................... 4 Condensed Consolidated Statements of Cash Flows for the Quarter Ended August 31, 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 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............................ None 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 August 31, May 31, 1997 1997 -------------------------- (Unaudited) (Audited)
Assets Current assets: Cash and short-term investments................. $ 1,668 $ 6,347 Receivables - accounts and notes (net).......... 24,224 21,271 Inventories..................................... 2,641 2,686 Prepaid expenses................................ 979 1,006 Deferred income tax benefits.................... 1,704 1,929 -------------------------- Total current assets.......................... 31,216 33,239 -------------------------- Property and equipment - at cost.................. 16,792 16,343 Less accumulated depreciation................... 8,674 8,471 -------------------------- 8,118 7,872 Cost in excess of net assets acquired, net........ 5,246 4,582 Other assets...................................... 15,713 14,510 -------------------------- Total assets.................................. $60,293 $60,203 ========================== Liabilities and Stockholders' Equity: Current liabilities: Accounts payable................................ $ 9,237 $10,381 Book bank overdrafts............................ 2,061 2,596 Short-term borrowings........................... 1,992 0 Other accrued liabilities....................... 11,443 11,360 Current portion of long-term debt............... 5,011 5,011 -------------------------- Total current liabilities..................... 29,744 29,348 -------------------------- Notes payable..................................... 13,761 15,022 Other deferred liabilities........................ 10,373 10,205 Stockholders' equity: Common stock, $0.01 par value (authorized 100,000 shares; issued: 12,199 and 12,165 shares, 1998 and 1997, respectively).................. 122 122 Capital in excess of par value.................. 10,127 9,717 Unearned ESOP shares............................ (3,438) (3,517) Retained earnings............................... 979 647 -------------------------- 7,790 6,969 Less cost of treasury stock..................... 1,375 1,341 -------------------------- Total stockholders' equity.................... 6,415 5,628 -------------------------- Total liabilities and stockholders' equity.... $60,293 $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 -------------------------- August 31, August 31, 1997 1996 --------------------------
Revenues............................................ $57,754 $52,658 Operating costs and expenses: Operating expenses................................ 47,727 43,024 Selling, general and administrative............... 5,126 4,913 Interest expense, net of interest income, totaling $177 in 1998 and $294 in 1997.......... 227 102 -------------------------- 53,080 48,039 -------------------------- Income before provision for income taxes............ 4,674 4,619 Provision for federal and state income taxes........ 1,846 1,923 -------------------------- Net income.......................................... $ 2,828 $ 2,696 ========================== Earnings per common and common equivalent share..... $ 0.24 $ 0.23 ========================== Weighted-average common and common equivalent shares.............................. 12,028 11,837 ==========================
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 Quarter Ended ------------------------- August 31, August 31, 1997 1996 -------------------------
Operating activities: Net income........................................... $ 2,828 $ 2,696 Adjustments to reconcile net income to net cash (used) provided by operating activities: Depreciation and amortization.................... 580 455 Amortization of intangibles...................... 56 39 Other, net....................................... 214 317 Deferred income taxes............................ 167 (351) (Gain)/Loss on disposition of assets............. (43) 18 Changes in operating assets and liabilities: (Increase)/Decrease in receivables............. (3,292) 3,532 Decrease in inventories........................ 43 26 (Increase)/Decrease in prepaid and other assets....................................... (29) 135 Increase in accounts payable, accrued and other liabilities........................ 2,615 19 Increase in income taxes payable............... 1,578 601 ------------------------- Net cash (used) provided by operating activities..... (513) 7,487 ------------------------- Investing activities: Purchases of property and equipment.................. (981) (944) Proceeds from disposal of assets..................... 197 34 Other, net........................................... (2,073) (330) ------------------------- Net cash used by investing activities................ (2,857) (1,240) ------------------------- Financing activities: Principal payments on long-term debt................. (1,261) (11) Net change in short-term borrowings.................. 1,992 (1,761) Proceeds from exercise of stock options.............. 396 134 Dividends paid....................................... (2,496) (2,423) Increase in Treasury Stock held by Deferred Comp Plan................................. (33) (66) ESOP shares.......................................... 93 0 ------------------------- Net cash used by financing activities................ (1,309) (4,127) ------------------------- (Decrease)/Increase in cash and short-term investments........................................ (4,679) 2,120 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.................................. $ 1,668 $ 8,208 =========================
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 period 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 September 23, 1997, the Company's Board of Directors declared a quarterly cash dividend of $0.205 per share of outstanding common stock payable on October 31, 1997 to shareholders of record at the close of business on October 10, 1997. 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 ended August 31, 1997 compared with the results for the quarter ended August 31, 1996. Results of Operations The Company reported net income from continuing operations of $2.8 million for the quarter ended August 31, 1997, compared with income of $2.7 million reported for the corresponding period of the prior fiscal year. Revenue Revenue from operations increased $5.1 million or 9.7% to $57.8 million for the quarter ended August 31, 1997 from the comparable period in the prior year. The quarterly increase was primarily attributable to the conversion of client payroll to MHCI payroll in continuing accounts. Managed volume (which is the amount of estimated total operating costs managed) from operations increased $3.9 million or 3.4% to $117.4 million for the quarter ended August 31, 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 $4.7 million or 10.9% to $47.7 million for the quarter ended August 31, 1997. These costs have increased as a percent of revenue from the comparable period in the prior year primarily as a result of the conversion of client payroll to MHCI payroll in continuing accounts. Selling, general and administrative expenses for the quarter increased $0.2 million or 4.3% for the quarter ending August 31, 1997 as compared to the same period of the prior year. Interest Expense (net of Interest Income) Net interest expense increased to $0.2 million for the quarter from $0.1 million for the same period of the prior year due to the receipt of $0.2 million in interest income in the prior year. Income Taxes The effective income tax rate on continuing operations for the quarter ended August 31, 1997 was 39.5%, as compared to 41.6% for the same period of the prior year. The Company has lowered its estimated effective income tax rate for the current year based upon its anticipated taxable income including anticipated 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. Liquidity and Capital Resources Total assets at August 31, 1997 were $60.3 million, a $0.1 million increase from $60.2 million as of the prior fiscal year end. Total liabilities at August 31, 1997 were $53.9 million, a $0.7 million decrease from $54.6 million as of the end of the prior fiscal year. This decrease was primarily due to a $1.1 million decrease in accounts payable. 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. VHA Inc. Agreement On August 21, 1997, the Company signed an agreement with VHA Inc. to serve as a preferred provider of food and nutrition services for VHA members. VHA is a nationwide network of leading community-owned health care organizations that comprises approximately 22 percent of the nation's hospitals. Management believes that this agreement will give the Company increased visibility and greater growth potential in the health care market. 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 5 OTHER INFORMATION At its quarterly meeting held on September 23, 1997, the Board of Directors declared a cash dividend of $0.205 per share, payable on October 31, 1997 to shareholders of record at the close of business on October 10, 1997. 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) 10/14/97 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 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) Quarter Ended -------------------------- August 31, August 31, 1997 1996 --------------------------
Primary - ------- Average shares outstanding.......... 11,842 11,781 Net effect of dilutive stock options-based on the treasury stock method using average market price........................ 186 56 ---------------------------- Total............................... 12,028 11,837 ============================ Net income.......................... $ 2,828 $ 2,696 ============================ Per share amount.................... $ 0.24 $ 0.23 ============================ Fully Diluted - ------------- Average shares outstanding.......... 11,842 11,781 Net effect of dilutive stock options-based on the treasury stock method using the higher of period-end or average market price........................ 249 56 ---------------------------- Total............................... 12,091 11,837 ============================ Net income.......................... $ 2,828 $ 2,696 ============================ Per share amount.................... $ 0.23 $ 0.23 ============================
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 August 31, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS MAY-31-1998 AUG-31-1997 1,668 0 19,240 744 2,641 31,216 16,792 8,674 60,293 29,744 13,761 0 0 122 6,293 60,293 57,754 57,754 47,727 47,727 0 0 404 4,674 1,846 2,828 0 0 0 2,828 0.24 0.23
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