<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No fee required effective October 7, 1996]
For the fiscal year ended December 31, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No fee required]
For the transition report period from ________________ to ________________.
Commission File number 1-14194
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
MORRISON HEALTH CARE, INC. SALARY DEFERRAL PLAN
B. Name of issuer of the securities held pursuant to the
Plan and address of its principal executive office:
Morrison Health Care, Inc.
1955 Lake Park Drive
Suite 400
Smyrna, GA 30080
Exhibit index appears on page 2.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
_______ __________________________________________
13 Annual report to Security-Holders
23 Consent of Independent Auditors
<PAGE>
SIGNATURES
Morrison Health Care, Inc. Salary Deferral Plan.
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Compensation Committee of the Morrison Health
Care, Inc. Salary Deferral Plan has duly caused this annual
report to be signed on its behalf by the undersigned
hereunto duly authorized.
Morrison Health Care, Inc.
Salary Deferral Plan
(Name of Plan)
Date: June 29, 1998 /s/ Claire L. Arnold
--------------- -----------------------
Claire L. Arnold
Director; Chairman,
Compensation Committee
<PAGE>
Exhibit 13
Audited Financial Statements
and Supplemental Schedules
Morrison Health Care, Inc.
Salary Deferral Plan
Year ended December 31, 1997
and as of December 31, 1996
with Report of Independent Auditors
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Audited Financial Statements and Supplemental Schedules
Year ended December 31, 1997 and as of December 31, 1996
Contents
Report of Independent Auditors....................... 1
Audited Financial Statements
Statements of Net Assets Available for Benefits...... 2
Statement of Changes in Net Assets
Available for Benefits.............................. 3
Notes to Financial Statements........................ 4
Supplemental Schedules
Item 27a Assets Held for Investment Purposes........ 16
Item 27d Reportable Transactions.................... 17
<PAGE>
Report of Independent Auditors
Compensation Committee
Morrison Health Care, Inc.
Morrison Health Care, Inc. Salary Deferral Plan
We have audited the accompanying statements of net assets
available for benefits of the Morrison Health Care, Inc.
Salary Deferral Plan (the "Plan") as of December 31, 1997
and 1996, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1997.
These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the Plan at December 31, 1997 and
1996, and the changes in its net assets available for
benefits for the year ended December 31, 1997 in conformity
with generally accepted accounting principles.
Our audits were performed for the purpose of forming an
opinion on the basic financial statements taken as a whole.
The accompanying supplemental schedules of assets held for
investment purposes as of December 31, 1997 and reportable
transactions for the year then ended, are presented for
purposes of complying with the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974, and are not
a required part of the basic financial statements. These
supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected
to the auditing procedures applied in our audits of the
basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Ernst & Young LLP
Atlanta, Georgia
June 26, 1998
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
December 31,
1997 1996
----------------------------
<S> <C> <C>
Assets
Investments, at fair value (Note 3 and Note 6):
Morrison Health Care, Inc. common stock............ $ 3,375,152 $ 1,686,248
Unallocated ESOP shares of Morrison Health Care,
Inc. common stock................................ 4,755,749 -
Stable Value Fund.................................. 962,034 -
Merrill Lynch Federal Securities Fund.............. 3,639,393 -
Merrill Lynch Growth Fund.......................... 1,188,469 -
AIM Constellation Fund............................. 1,197,400 -
Merrill Lynch Equity Index Fund.................... 1,332,430 -
Templeton Foreign Fund............................. 1,198,806 -
Morrison Restaurants Inc. common stock............. - 134,844
Ruby Tuesday, Inc. common stock.................... - 1,364,578
AmSouth Prime Obligation Fund...................... - 234,440
Delaware Group Value Fund.......................... - 1,527,817
Templeton Growth Fund.............................. - 1,459,370
New York Life Insurance Company Guaranteed
Investment Contracts............................. 994,934 -
Protective Life Insurance Company Guaranteed
Investment Contract.............................. 328,134 -
Transamerica Occidental Life Insurance Company
Guaranteed Investment Contract................... 466,815 -
Guaranteed investment contracts with insurance
companies, at contract value..................... - 3,272,517
Phoenix Fund....................................... - 1,433,056
----------------------------
Total investments.................................. 19,439,316 11,128,870
Receivable from related plan (Note 1).............. - 1,113,000
Contributions receivable:
Participants.................................... 130,114 100,568
Employer (unallocated in 1997).................. 39,040 20,660
----------------------------
169,154 121,228
Dividends and interest receivable.................. - 1,708
Cash............................................... 77,482 12,080
----------------------------
Total Assets....................................... 19,685,952 12,360,886
Liabilities
ESOP note payable (Note 7)......................... 3,433,246 -
----------------------------
Net assets available for benefits.................. $16,252,706 $12,360,886
============================
</TABLE>
See accompanying notes.
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1997
<TABLE>
<CAPTION>
Allocated Unallocated Total
------------------------------------------
Additions to net assets attributable to:
<S> <C> <C> <C>
Interest and dividend income.............. $ 644,718 $ - $ 644,718
Contributions:
Participants.............................. 1,627,696 - 1,627,696
Employer.................................. 36,933 301,907 338,840
------------------------------------------
1,664,629 301,907 1,966,536
------------------------------------------
Total additions........................... 2,309,347 301,907 2,611,254
Deductions from net assets attributable to:
Distributions to participants............. 1,560,776 - 1,560,776
Administrative expenses................... 187,067 - 187,067
ESOP interest expense..................... - 96,589 96,589
------------------------------------------
Total deductions.......................... 1,747,843 96,589 1,844,432
Net realized and unrealized appreciation
in fair value of investments............ 1,745,819 1,353,264 3,099,083
Allocation of 16,715 shares of Morrison
Health Care, Inc. common stock,
at market............................... 236,079 (236,079) -
Net transfers from related plans.......... 25,915 - 25,915
------------------------------------------
Net increase in net assets available
for benefits............................ 2,569,317 1,322,503 3,891,820
Net assets available for benefits:
Beginning of year....................... 12,360,886 - 12,360,886
------------------------------------------
End of year............................. $14,930,203 $1,322,503 $16,252,706
==========================================
</TABLE>
See accompanying notes.
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements
December 31, 1997
1. Description of the Plan
The Morrison Health Care, Inc. Salary Deferral Plan (the
"Plan") is a defined contribution plan and is sponsored by
Morrison Health Care, Inc. (the "Company"). The Plan covers
all employees who have attained the age of 21 and is subject
to the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). The following
description of the Plan provides only general information.
Participants should refer to the Summary Plan Description
for a more complete description of the Plan's provisions.
General
The Plan was established March 7, 1996 as a result of the
Company's spin-off from Morrison Restaurants Inc. (now named
Ruby Tuesday, Inc.) to provide additional incentive and
retirement security for eligible employees of the Company.
In connection with the establishment of the Plan, assets
totalling approximately $10,545,000 were transferred from
the Morrison Restaurants Inc. Salary Deferral Plan. In
addition, in connection with establishing the trust of the
Plan, certain of the Plan's assets were transferred to the
trust of the Morrison Fresh Cooking, Inc. Salary Deferral
Plan ("MFC Plan"). These assets plus investment income
thereon totaled approximately $1,113,000 at December 31,
1996. Subsequent to December 31, 1996 the MFC Plan
transferred such assets to the Plan.
Effective February 28, 1997, a component of the Plan
operates a leveraged employee stock ownership plan ("ESOP")
and is designed to comply with section 4975(e)(7) and the
related regulations thereunder of the Internal Revenue Code
of 1986, as amended ("the Code").
Effective October 1, 1997, the Plan changed custodian and
recordkeeper from AmSouth Bank of Alabama to Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as recordkeeper, and
Merrill Lynch Trust Company, as trustee.
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Contributions
Under the Plan, participants may contribute on a tax
deferred basis amounts ranging from between 2% and 10% of
their compensation (not to exceed $9,500 for 1997 and 1996).
Participants contributing a tax-deferred contribution of at
least 2% may elect to make after-tax contributions up to 10%
of their annual earnings.
The Company matches 20% of contributions from participants
with three to nine years of service, 30% of contributions
from participants with ten to nineteen years of service and
40% of contributions from participants with twenty or more
years of service. Matching contributions are made to the
fund and are invested entirely in Company stock. All
contributions are remitted to the Plan monthly.
The Plan is administered by the Compensation Committee (the
"Committee") appointed by the Board of Directors of the Plan
sponsor. The duties of the Committee include interpretation
of the Plan agreement, determination of benefits due
participants, and authorization of disbursements from the
net assets available for plan benefits.
Participant Accounts
Each participant's account is credited, as appropriate, with
the participant's contribution, the Company's matching
contributions and allocations of investment earnings and
losses. Investment results are allocated to participant's
accounts based upon relative balances of the individual
accounts on the valuation date as defined by the Plan.
Vesting
Participants or their beneficiaries are immediately vested
in the value of their contributions, employer matching
contributions, plus actual earnings thereon.
Distributions to Participants
Upon his or her retirement, termination, death or
disability, as defined by the Plan, a participant or his
/her beneficiary may elect to receive a lump sum
distribution.
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Plan Termination
Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue
contributions at any time and to terminate the Plan subject
to the provisions of ERISA. In the event of Plan
termination (or permanent discontinuance of contributions to
the Plan), the Plan's assets are distributable to the
participants or their beneficiaries based on the respective
values of their accounts.
Administrative Costs
The Company pays any administrative costs of the Plan not
paid from Plan assets.
2. Significant Accounting Policies
Basis of Presentation
The accompanying financial statements of the Plan are
presented on the accrual basis of accounting.
Reclassifications
Certain amounts in the prior year have been reclassified to
conform with the current year presentation.
Valuation of Investments
Investments in mutual funds are stated at fair value based
on quoted redemption values on the last business day of the
plan year. Morrison Health Care, Inc, Morrison Restaurants
Inc. (formerly Morrison Fresh Cooking, Inc.), and Ruby
Tuesday, Inc. (collectively "the Morrison Companies") common
stock are traded on the New York Stock Exchange and are
valued at the closing sales price on the last business day
of the plan year. Fair values for investments in collective
trust funds are valued by the trustee based upon the quoted
market values of the underlying investments on the last
business day of the plan year. Guaranteed investment
contracts are stated at the contract value, which
approximates fair value, as determined by the insurance
companies. Contract value represents contributions made
under the contracts, plus interest at the contract rates,
less funds used to pay benefits and the insurance companies'
administrative expenses.
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes.
Actual results may differ from those estimates.
Concentration of Credit Risk
Financial investments that potentially subject the Plan to
significant concentrations of credit risk consist primarily
of guaranteed investment contracts. The guaranteed
investment contracts are held by various insurance companies
in their general assets, whereby funds are deposited and
earn a rate of return based on a contract rate.
Accordingly, the redemptions of the guaranteed investment
contracts are subject to the financial stability of the
applicable insurance companies.
3. Investments
The Plan's investments are held by a trust fund administered
by Merrill Lynch, the Plan's trustee and recordkeeper,
except for the guaranteed investment contracts with
insurance companies (see Note 6) and the investments in
mutual funds, which are held by the funds themselves.
Participants have the option of allocating their individual
accounts between four separate investment funds maintained
by the trustee of the Plan. Prior to October 1, 1997,
participants had four investment options with AmSouth Bank
of Alabama. Effective October 1, 1997 the investment
options available to participants changed to similar options
with Merrill Lynch. A general description of the four
investment options available to participants is as follows:
Fixed Income Fund
This fund invests in guaranteed investment contracts, the
Morrison Stable Value Fund, and the Merrill Lynch Federal
Securities Fund. The primary objective of this fund is to
provide current income. This fund invests in substantially
all areas of the fixed income instrument marketplace,
including corporate and government bonds within and outside
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
3. Investments (continued)
Fixed Income Fund (continued)
the United States. This fund holds guaranteed investment
contracts previously purchased by the Plan, however, no new
monies will be invested in these contracts.
Equity Fund
This fund invests in the AIM Constellation Fund, the Merrill
Lynch Growth Fund, the Merrill Lynch Equity Fund and the
Templeton Foreign Fund. The primary objective of this fund
is capital appreciation. The AIM Constellation Fund primarily
invests in domestic common stocks. The Merrill Lynch Growth
Fund invests in diversified growth company common stocks.
The Merrill Lynch Equity Fund invests in companies in the
Standard and Poor's 500 Index and the Templeton Foreign Fund
invests in US Treasury notes and common stocks of companies
based in Europe, Australia, and Hong Kong.
Money Market Fund
This fund invests primarily in short-term U.S. government
securities. The primary objective of this fund is to
provide current income with relative stability of principal.
Stock Fund
The Morrison Health Care, Inc. Stock Fund invests in the
common stock of Morrison Health Care, Inc.
Fund Options Available Prior to October 1, 1997
The following investment options were available prior to
October 1, 1997:
Fixed Income Fund - This fund invested primarily in
guaranteed investment contracts and the Phoenix Duff
and Phelps Multi Sector Fixed Income Fund (the "Phoenix
Fund"). The primary objective of this fund was to
provide current income.
Equity Fund - This fund invested partly in the
Templeton Growth Fund and partly in the Delaware Group
Value Fund. The primary objective of this fund was
capital appreciation. The Templeton Growth fund
invested in securities issued by companies and
governments both within and outside the United States.
The
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
3. Investments (continued)
Delaware Value fund invested in small to medium-sized
companies that were believed to be undervalued.
Money Market Fund - This fund invested primarily in
short-term U.S. government securities. The primary
objective of this fund was to provide current income
with relative stability of principal.
Stock Funds - These funds were invested in the
Morrison Restaurants Inc. Stock Fund and the Ruby
Tuesday Stock Fund.
When Morrison Health Care, Inc. was spun-off from Morrison
Restaurants Inc. (now named Ruby Tuesday, Inc.), the
resulting distribution created two additional funds under
the Plan: the Ruby Tuesday Stock Fund and the Morrison Fresh
Cooking Stock Fund (now named Morrison Restaurants Inc.),
(collectively, the "Morrison Funds"). The Morrison Funds
held shares which were acquired by Morrison Restaurant Inc.
shareholders (excluding shares in the Company's common
stock) as a result of the spin-off. No future contributions
were allowed to be made to the Morrison Funds.
The Morrison Restaurants Inc. Stock Fund was invested in the
common stock of Morrison Restaurants Inc. (formerly Morrison
Fresh Cooking, Inc.). The Ruby Tuesday, Inc. Stock Fund was
invested in the common stock of Ruby Tuesday, Inc.
Participants may change their investment options at any
time.
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
3. Investments (continued)
The Plan's investments (including investments bought, sold
and held during the period) appreciated (depreciated) in
value by $3,099,083 during the year ended December 31, 1997,
as shown below.
Morrison Health Care, Inc. common stock......... $ 637,929
Unallocated ESOP shares of Morrison Health
Care, Inc. common stock....................... 1,397,001
Merrill Lynch Federal Securities Fund........... 7,577
Merrill Lynch Growth Fund....................... (201,542)
AIM Constellation Fund.......................... (195,260)
Merrill Lynch Equity Index Fund................. 24,592
Templeton Foreign Fund.......................... (232,882)
Phoenix Fund.................................... 369,852
Morrison Restaurants Inc. common stock.......... (3,184)
Ruby Tuesday, Inc. common stock................. 379,444
Delaware Group Value Fund....................... 562,727
Templeton Growth Fund........................... 366,341
Guaranteed investment contracts with
insurance companies........................... (13,512)
------------
Net realized and unrealized appreciation
in fair value of investments.................. $3,099,083
============
4. Income Tax Status
Internal Revenue Service (IRS) ruled on December 19, 1997,
that the Plan qualifies under Section 401(a) of the Code,
and therefore, the related trust is not subject to tax under
present income tax law. The Plan has been amended since
receiving the determination letter. The Plan is required to
operate in conformity with the Code to maintain its
qualification. The Plan administrator is not aware of any
course of action or series of events that have occurred that
might adversely affect the Plan's pending qualified status.
5. Transactions with Parties-in-Interest
The Plan held 406,545 shares of Morrison Health Care, Inc.
common stock valued at $8,130,901 at December 31, 1997.
During 1997, the Plan received $206,170 in dividends on
Morrison Health Care, Inc. common stock. The Plan also had
investments in Morrison Restaurants Inc. common stock and
Ruby Tuesday, Inc. common stock. During
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
5. Transactions with Parties-in-Interest (continued)
1997, the Plan received $6,597 in dividend income from its
investment in Morrison Restaurants Inc. common stock; no
dividends were received from Ruby Tuesday, Inc. in 1997.
Certain Plan investments are units of participation in
collective trust funds maintained by the trustee.
6. Guaranteed Investments Contracts
At December 31, 1997 and 1996 the Plan had guaranteed
investment contracts with several insurance companies.
Deposits made under these contracts earn interest at
guaranteed rates between 7.7% and 7.1%. The contracts have
various terms relating to the allowance of withdrawals.
Each contains provisions for investment loss (surrender)
charges which the Plan would have to pay in the event of
early withdrawal prior to the maturity date. The contract
values of the individual investments which comprised the
total of the guaranteed investment contracts at
December 31, 1996 were as follows:
Ohio National Life.............................. $ 365,191
Principal Mutual Life........................... 441,695
Life Insurance Co of Virginia................... 257,070
New York Life Insurance......................... 746,782
Hartford Life Insurance Co of Virginia.......... 373,805
State Mutual Life............................... 369,029
Protective Life Insurance....................... 368,168
Transamerica.................................... 350,777
----------
Total........................................... $3,272,517
==========
The average yield on the contracts for the plan period ended
December 31, 1997 and 1996 was 6.7% and 7.3%, respectively.
The fair values of the contracts are determined using the
sum of the present values of each of the contract's
projected cash flows discounted at the year end interest
rates based on the current yields of similar investments
with comparable duration. Fair values approximate the
contract values.
7. ESOP Fund and Note Payable
On February 28, 1997, and in connection with a private
letter ruling from the IRS concerning the tax-free
reorganization of Morrison Restaurants Inc., the Plan, in
conjunction with the Company, created an employee stock
ownership feature for the Plan,
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
7. ESOP Fund and Note Payable (continued)
which is herein referred to as the "ESOP". In connection
with the ESOP's formation, the Company issued 254,502
shares of its common stock with a fair market value of
$14.125 per share to the Plan in exchange for a 10-year note
with a principal amount of $3,594,841 executed by the Plan's
trustee. These shares, together with those already held by
the Plan, increased the Plan's level of ownership to 3%.
The note bears interest at 5.47% and provides for the
scheduled principal payments totaling $467,520 in each of
the next ten years. The Plan uses employer matching
contributions and dividends received to make loan payments.
As the Plan repays the loan, shares are released from the
unallocated ESOP account and are allocated to the
participant's stock fund account based on a ratio of
principal paid to the total remaining loan balance prior to
the payment. The loan is collateralized by the unallocated
shares of the Company's stock. Accordingly, the financial
statements of the Plan for 1997 present separately the
assets and liabilities and changes therein pertaining to
shares of Company stock allocated to participant accounts
and the shares of Company stock that are unallocated.
Although participants do not have any investment discretion
regarding the ESOP Fund portions of their account balances,
each participant is entitled to exercise voting rights
attributable to shares on Company stock allocated to his/her
account and is notified before such rights are to be
exercised. The trustee votes any unallocated shares and any
allocated shares for which it does not receive voting
directions.
8. Differences Between Financial Statements and Form 5500
The following is a reconciliation of the net assets
available for benefits per the financial statements to the
Form 5500:
December 31, 1996
-------------------
Net assets available for benefits
per the financial statements......... $12,360,886
Receivable from related plan........... (1,113,000)
Employee contributions receivable...... (100,568)
Employer contribution receivable....... (20,660)
Other, net............................. (17,517)
-------------------
Net assets available for benefits
per the Form 5500.................... $11,109,141
===================
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
9. Year 2000 Issue (Unaudited)
The Plan Sponsor has developed a plan to modify its internal
information technology to be ready for the year 2000 and has
begun converting critical data processing systems. The
project also determines whether third party service
providers have reasonable plans in place to become year 2000
compliant. The Plan Sponsor currently expects the project
to be substantially complete by early 1999. The Plan
Sponsor does not expect this project to have a significant
effect on plan operations.
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
10. Investment Programs
Changes in net assets for the year ended December 31, 1997 were allocated to the
separate investment programs as follows:
<TABLE>
<CAPTION>
AmSouth AmSouth
Fixed AmSouth Money AmSouth
Income Equity Market Stock
Fund Fund Fund Fund Total
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Interest and dividend income...... $ 100,512 $ 2,064 $ 14,337 $ 76,469 $ 193,382
Contributions:
Employee.......................... 85,342 241,768 500,840 212,525 1,040,475
Employer.......................... - - - 146,162 146,162
----------------------------------------------------------------
Total additions..................... 185,854 243,832 515,177 435,156 1,380,019
Deductions and Transfers:
Distributions to participants..... (758,215) (162,008) (346,389) (287,583) (1,554,195)
Administrative expenses........... (65,393) (45,306) (13,009) (63,359) (187,067)
Transfer (to)/from related plan... 24,212 - (844) 2,547 25,915
Fund transfers, net............... (369,878) 1,810,030 (264,898) (1,175,254) -
Transfer (to)/from successor
trustee...........................(5,231,191) (5,835,274) (107,098) (2,286,582) (13,460,145)
ESOP loan interest expense.......... - - - (96,589) (96,589)
Net realized and unrealized
appreciation in fair value of
investments....................... 356,341 929,068 - 245,767 1,531,176
-----------------------------------------------------------------
Total net deductions and transfers..(6,044,124) (3,303,490) (732,238) (3,661,053) (13,740,905)
-----------------------------------------------------------------
Net (decrease)......................(5,858,270) (3,059,658) (217,061) (3,225,897) (12,360,886)
Net assets available for
benefits at beginning of period... 5,858,270 3,059,658 217,061 3,225,897 12,360,886
-----------------------------------------------------------------
Net assets available for
benefits at end of period.........$ - $ - $ - $ - $ -
==================================================================
</TABLE>
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Notes to Financial Statements (continued)
10. Investment Programs (continued)
<TABLE>
<CAPTION>
Merrill Merrill
Lynch Merrill Lynch Merrill
Fixed Lynch Money Lynch
Income Equity Market Stock
Fund Fund Fund Fund Total
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Interest and dividend income...... $ 126,301 $ 293,083 $ - $ 31,952 $ 451,336
Contributions:
Employee.......................... 167,841 320,483 (192) 99,089 587,221
Employer.......................... - - 76,387 116,291 192,678
------------------------------------------------------------------
Total additions..................... 294,142 613,566 76,195 247,332 1,231,235
Deductions and Transfers:
Distributions to participants..... (10) - (6,571) - (6,581)
Fund transfers, net............... 895,572 (861,181) (99,240) 64,849 -
Transfer from predecessor
trustee........................... 5,231,191 5,835,274 107,098 2,286,582 13,460,145
Net realized and unrealized
appreciation (depreciation)
in fair value of investments...... 7,577 (605,092) - 2,165,422 1,567,907
------------------------------------------------------------------
Total net deductions and transfers.. 6,134,330 4,369,001 1,287 4,516,853 15,021,471
------------------------------------------------------------------
Net increase........................ 6,428,472 4,982,567 77,482 4,764,185 16,252,706
Net assets available for
benefits at beginning of period... - - - - -
-------------------------------------------------------------------
Net assets available for
benefits at end of period......... $6,428,472 $4,982,567 $77,482 $4,764,185 $16,252,706
===================================================================
</TABLE>
<PAGE>
SUPPLEMENTAL SCHEDULES
Morrison Health Care, Inc.
Salary Deferral Plan
Line 27a - Assets Held For Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
Identity of Issue, Borrower, Description of Current
Lessor or Similar Party Investments Cost Value
- ----------------------------- ---------------------- ------------ ------------
<S> <C> <C> <C>
Morrison Health Care, Inc.* 168,758 common shares $ 2,866,411 $ 3,375,152
Unallocated ESOP shares of
Morrison Health Care, Inc.* 237,787 common shares 3,358,741 4,755,749
Stable Value Fund 962,034 units 962,034 962,034
Merrill Lynch Federal
Securities Fund 373,271 units 3,631,816 3,639,393
Merrill Lynch Growth Fund 41,482 units 1,390,011 1,188,469
AIM Constellation Fund 45,390 units 1,392,660 1,197,400
Merrill Lynch Equity
Index Trust Fund 20,381 units 1,307,838 1,332,430
Templeton Foreign Fund 120,483 units 1,431,688 1,198,806
New York Life Insurance Guaranteed
Company investment contracts
with insurance company 994,934 994,934
Protective Life Insurance Guaranteed
Company investment contract
with insurance
company 328,134 328,134
Transamerica Occidental Life Guaranteed
Insurance Company investment contract
with insurance
company 466,815 466,815
------------ ------------
Total Investments.............................................. $18,131,082 $19,439,316
============ ============
</TABLE>
* Indicates a party-in-interest to the Plan.
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Item 27d - Reportable Transactions
Year ended December 31, 1997
<TABLE>
<CAPTION>
Current
Value on
Purchase Selling Cost of Transaction Net Gain
Description of Assets Price Price Asset Date (Loss)
- ---------------------------------------------------------------------------------------------------
Category (i) Individual transactions in excess of 5 percent of the current value
of total plan assets.
<S> <C> <C> <C> <C> <C>
AIM Equity Constellation Fund $1,243,487 $ - $1,243,487 $1,243,487 $ -
AmSouth Prime Obligation Fund 5,154,458 - 5,154,458 5,154,458 -
AmSouth Prime Obligation Fund - 2,580,919 2,580,919 2,580,919 -
AmSouth Prime Obligation Fund - 2,573,539 2,573,539 2,573,539 -
AmSouth Prime Obligation Fund 4,695,413 - 4,695,413 4,695,413 -
AmSouth Prime Obligation Fund - 2,351,236 2,351,236 2,351,236 -
AmSouth Prime Obligation Fund - 2,344,180 2,344,180 2,344,180 -
AmSouth Prime Obligation Fund 7,061,936 - 7,061,936 7,061,936 -
AmSouth Prime Obligation Fund 652,578 - 652,578 652,578 -
AmSouth Prime Obligation Fund 650,800 - 650,800 650,800 -
AmSouth Prime Obligation Fund 1,833,536 - 1,833,536 1,833,536 -
AmSouth Prime Obligation Fund 919,287 - 919,287 919,287 -
</TABLE>
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Item 27d - Reportable Transactions (continued)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Current
Value on
Purchase Selling Cost of Transaction Net Gain
Description of Assets Price Price Asset Date (Loss)
- ---------------------------------------------------------------------------------------------------
Category (i) Individual transactions in excess of 5 percent of the current value
of total plan assets.
<S> <C> <C> <C> <C> <C>
AmSouth Prime Obligation Fund $ - $ 652,578 $ 652,578 $ 652,578 $ -
AmSouth Prime Obligation Fund - 919,287 919,287 919,287 -
AmSouth Prime Obligation Fund - 923,067 923,067 923,067 -
AmSouth Prime Obligation Fund - 919,287 919,287 919,287 -
AmSouth Prime Obligation Fund - 914,249 914,249 914,249 -
Delaware Group Value Fund - 2,577,229 2,005,385 2,577,229 571,844
ML Equity Index Trust Fund 1,243,487 - 1,243,487 1,243,487 -
ML Federal Securities Trust Fund 3,434,951 - 3,434,951 3,434,951 -
ML Growth Fund 1,243,633 - 1,243,633 1,243,633 -
Phoenix Fund 1,468,000 - 1,468,000 1,468,000 -
Phoenix Fund - 3,419,050 3,049,198 3,419,050 369,582
Ruby Tuesday, Inc. common stock - 1,295,110 1,084,095 1,295,110 211,015
Stable Value Fund 935,721 - 935,721 935,721 -
Templeton Foreign Fund 1,243,487 - 1,243,487 1,243,487 -
Templeton Growth Fund 4,695,416 - 4,695,416 4,695,416 -
Templeton Growth Fund - 2,347,708 1,887,115 2,347,708 460,593
</TABLE>
<PAGE>
Morrison Health Care, Inc.
Salary Deferral Plan
Item 27d - Reportable Transactions (continued)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Current
Value on
Purchase Selling Cost of Transaction Net Gain
Description of Assets Price Price Asset Date (Loss)
- ----------------------------------------------------------------------------------------------------
Category (iii) A series of securities transactions with respect to
the same issue which amount in the aggregate to more than 5 percent of
the current value of total plan assets.
<S> <C> <C> <C> <C> <C>
AIM Equity Constellation Fund $ 1,392,660 $ - $ 1,392,660 $ 1,392,660 $ -
AmSouth Prime Obligation Fund 22,391,232 - 22,391,232 22,391,232 -
AmSouth Prime Obligation Fund - 22,625,671 22,625,671 22,625,671 -
Delaware Group Value Fund 814,466 - 814,466 814,466 -
Delaware Group Value Fund - 2,905,009 2,304,229 2,905,009 600,780
ML Equity Index Trust Fund 1,307,838 - 1,307,838 1,307,838 -
ML Federal Securities Trust Fund 3,631,825 - 3,631,825 3,631,825 -
ML Growth Fund 1,390,011 - 1,390,011 1,390,011 -
Morrison Health Care, Inc.
common stock* 1,134,334 - 1,134,334 1,134,334 -
Phoenix Fund 2,571,994 - 2,571,994 2,571,994 -
Phoenix Fund - 4,565,050 4,174,255 4,174,255 390,795
Ruby Tuesday, Inc. common stock* - 1,723,253 1,532,007 1,723,253 191,246
Stable Value Fund 935,721 - 935,721 935,721 -
Templeton Foreign Fund 1,431,688 - 1,431,688 1,431,688 -
Templeton Growth Fund 829,654 - 829,654 829,654 -
Templeton Growth Fund - 2,655,366 2,155,960 2,655,366 499,406
</TABLE>
* Indicates a party-in-interest to the Plan.
There were no category (ii) or (iv) transactions during the year ended
December 31, 1997.
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the
Registration Statement (Form S-8 No. 333-2098) pertaining to
the Morrison Health Care, Inc. Salary Deferral Plan of our
report dated June 26, 1998, with respect to the financial
statements and schedules of the Morrison Health Care, Inc.
Salary Deferral Plan included in this Annual Report
(Form 11-K) for the year ended December 31, 1997.
/s/ Ernst & Young LLP
Atlanta, Georgia
June 26, 1998
