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]
For the period from March 7, 1996 (date of inception) to December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-14202
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
MORRISON FRESH COOKING, INC. SALARY DEFERRAL PLAN
B. Name of issuer of the securities held pursuant to the Plan
and address of its principal executive office:
MORRISON FRESH COOKING, INC.
4893 Riverdale Road
Suite 260
Atlanta, Georgia 30337
EXHIBIT INDEX
Exhibit
Number Description
13 Annual Report to Security-Holders
23 Consent of Independent Auditors
SIGNATURES
Morrison Fresh Cooking, Inc. Salary Deferral Plan. Pursuant to
the requirements of the Securities Exchange Act of 1934, the
Compensation Committee of the Morrison Fresh Cooking, Inc. Salary
Deferral Plan have duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
Morrison Fresh Cooking, Inc.
Salary Deferral Plan
(Name of Plan)
Date June 27, 1997 /s/ CRAIG D. NELSON
CRAIG D. NELSON
Senior Vice President, Finance
(Senior Vice President and
Principal Accounting Officer)
and Trustee
Audited Financial Statements and
Supplemental Schedules
Morrison Fresh Cooking, Inc.
Salary Deferral Plan
Period from March 7, 1996 (date of
inception) to December 31, 1996
with Report of Independent Auditors
Morrison Fresh Cooking, Inc. Salary Deferral Plan
Audited Financial Statements
and Supplemental Schedules
Period from March 7, 1996 (date of inception) to December
31, 1996
Contents
Report of Independent Auditors 1
Audited Financial Statements
Statement 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-Schedule of Assets Held for Investment Purposes 14
Item 27d-Schedule of Reportable Transactions 15
Supplemental Schedules
Report of Independent Auditors
Compensation Committee
Morrison Fresh Cooking, Inc. Salary Deferral Plan
We have audited the accompanying statement of net assets
available for benefits of the Morrison Fresh Cooking, Inc.
Salary Deferral Plan as of December 31, 1996, and the related
statement of changes in net assets available for benefits for
the period from March 7, 1996 (date of inception) to December
31, 1996. 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, 1996, and
the changes in its net assets available for benefits for the
period from March 7, 1996 (date of inception) to December 31,
1996, in conformity with generally accepted accounting
principles.
Our audit was made 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, 1996 and Reportable
Transactions for the period from March 7, 1996 (date of
inception) to December 31, 1996, 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. The supplemental schedules
have been subjected to the auditing procedures applied in our
audit 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
Ernst & Young LLP
Atlanta, Georgia
June 24, 1997
Morrison Fresh Cooking, Inc. Salary Deferral Plan
Statement of Net Assets Available for Benefits
December 31, 1996
Assets
Investments, at fair value:
Morrison Fresh Cooking, Inc. common $ 562,219
stock
Morrison Health Care, Inc. common stock 642,131
Ruby Tuesday, Inc. common stock 1,194,267
Delaware Group Value Fund 1,018,858
Templeton Growth Fund 969,663
Stable Value Fund 2,476,808
Phoenix Fund 2,178,696
Guaranteed investment contracts with
insurance companies, at contract value 6,173,236
Total investments 15,215,878
Contributions receivable:
Participants 83,326
Employer 23,330
106,656
Dividends and interest receivable 28,995
Total receivables 135,651
Cash 641,869
Total assets 15,993,398
Liabilities
Other liabilities (24,228)
Payable to related plans (2,396,093)
Net assets available for benefits $ 13,573,077
See accompanying notes.
Morrison Fresh Cooking, Inc. Salary Deferral Plan
Statement of Changes in Net Assets Available for Benefits
Period from March 7, 1996 (date of inception) to
December 31, 1996
Additions:
Transfers from related plans $13,506,452
Investment income:
Interest and dividend income 842,015
Contributions:
Participants 898,607
Employer 245,000
1,143,607
Total additions 15,492,074
Deductions:
Administrative expenses (208,121)
Withdrawals by participants (2,363,756)
Other (85,416)
Total deductions (2,657,293)
Net realized and unrealized
appreciation in fair value of 738,296
investments
Net additions 13,573,077
Net assets available for benefits at
beginning of period
Net assets available for benefits at $ 13,573,077
end of period
See accompanying notes.
Morrison Fresh Cooking, Inc. Salary Deferral Plan
Notes to Financial Statements
December 31, 1996
1. Significant Accounting Policies
Basis of Presentation
The financial statements of the Morrison Fresh Cooking, Inc.
Salary Deferral Plan (the "Plan") are presented on the
accrual basis of accounting.
Valuation of Investments
Investments are stated at fair value based on quoted
redemption values on the last business day of the plan year.
Morrison Fresh Cooking, Inc., Ruby Tuesday, Inc., and
Morrison Health Care, Inc. 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 value
for investments in commingled 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. Purchases and sales of investments are recorded on a
trade-date basis. Guaranteed investment contracts are stated
at the contract 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.
Administrative Costs
The Plan's sponsor, Morrison Fresh Cooking, Inc. (the
"Company"), pays any administrative costs of the Plan not
paid from Plan assets.
Use of Estimates
The preparation of the 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 could differ from those
estimates.
2. Description of the Plan
The following description of the Plan is provided for
general information purposes only.
More complete information regarding terms such as vesting,
benefit provisions, and plan termination may be found in the
Summary Plan Description, which has been distributed to all
participants, and also the Plan Document which is available
to all participants upon request.
The Plan was established March 7, 1996 as a result of the
Company's spin-off from Morrison Restaurants Inc. to provide
additional incentive and retirement security for eligible
employees of the Company. In connection with the
establishment of the Plan, assets totaling $18,966,738 were
initially transferred from the Morrison Restaurants Inc.
Salary Deferral Plan. Subsequent to the initial transfer,
adjustments netting to $5,460,286 were made to correct the
initial allocation. At December 31, 1996, the Plan had a
payable to the Morrison Health Care, Inc. Salary Deferral
Plan and the Ruby Tuesday, Inc. Salary Deferral Plan
totaling $2,396,093, which represents assets plus investment
income, in connection with the allocation adjustments.
Subsequent to December 31, 1996, the Plan paid those
amounts.
The Plan is a defined contribution plan covering
substantially all employees of the Company. To participate
in the Plan, the employee must have completed one year of
service (as defined in the Plan Document), attained the age
of 21, and authorized, on a form prescribed by the Company,
the deduction from his pay of the basic contribution as
defined by the Plan. Participation is voluntary, and
participants may contribute on a pre-tax basis amounts
ranging from 2% to 10% of their compensation (not to exceed
$9,500 for 1996) and specify the various investment
alternatives, in 25% increments, to which the contributions
will be directed. Participants contributing a pre-tax
contribution of at least 2% may elect to make after-tax
contributions not in excess of 10% of annual earnings.
The Company matches 20% of contributions by participants
with three to nine years of service, 30% for participants
with ten to nineteen years, and 40% for 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.
2. Description of Plan (continued)
The Plan's assets are held by AmSouth Bank of Alabama,
trustee for the Plan. Prudential Securities, Inc. is the
investment advisor for the Plan. AmSouth Bank of Alabama
and Morley Capital Management, Inc. are the investment
managers for Plan assets. The Plan is administered by the
Compensation Committee (the "Committee") appointed by the
Board of Directors of the Plan sponsor.
Individual accounts are maintained by the trustee for each
participant. Investment income earned by the Plan is
allocated to participants' accounts based upon relative
balances of the individual accounts as of the valuation date
for which the allocation is being made.
Participants or their beneficiaries are immediately vested
in the value of their respective contributions and employer
matching contributions. Upon his or her retirement, death,
or disability, a participant's total account balance is
payable in a single lump sum payment in cash.
At December 31, 1996, account balances allocated to persons
who have terminated employment with the Company totaled
approximately $3,461,000.
Although it has not expressed an 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 in accordance with the respective values
of their accounts after payment of all properly chargeable
expenses.
3. Investments
The Plan's investments are held by a trust fund maintained
by AmSouth Bank of Alabama, 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. A description of the four investment
options is as follows:
Money Market Fund
The investment policy of the money market fund is to invest
in income-producing assets with relatively short terms and
relatively low risk. This fund invests primarily in short-
term U.S. government securities.
Equity Fund
The investment policy of the equity fund is to invest in
relatively high quality equity assets producing either
income or capital appreciation, or both. The fund invests in
the Templeton Growth Fund and the Delaware Group Value Fund.
The Templeton Growth Fund invests in securities issued by
companies and governments both within and outside the United
States. The Delaware Group Value Fund invests in small to
medium-sized companies that are believed to be undervalued.
Fixed Income Fund
The investment policy of the fixed income fund is to achieve
income through investment in income-producing assets with
relatively high security of principal. This fund holds
investments in the Phoenix Duff & Phelps Multi-Sector Fixed
Income Fund (the "Phoenix Fund"), the Union Bond & Trust
Company Stable Value Fund (the "Stable Value Fund"), and
certain guaranteed investment contracts with insurance
companies. These contracts were previously held in the
Morrison Restaurant Inc. Salary Deferral Plan prior to the
spin-off. No new monies will be invested in these
contracts.
Stock Fund
When the Company was spun-off from Morrison Restaurants Inc.
(now named Ruby Tuesday, Inc.), participants were issued
shares of Morrison Fresh Cooking, Inc., Ruby Tuesday, Inc.,
and Morrison Health Care, Inc. common stock in exchange for
their Morrison Restaurants Inc. common stock. Participants
initially had the option of reallocating their respective
holdings among the three stocks. Subsequent to the initial
reallocation, no future contributions were allowed to be
invested in Ruby Tuesday, Inc. or Morrison Health Care, Inc.
common stock.
The Plan's investments (including investments bought, sold
and held during the period) appreciated (depreciated) in
value by $738,296 during the period from March 7, 1996 (date
of inception) to December 31, 1996, as shown below.
Morrison Fresh Cooking, Inc. common $ (350,744)
stock
Ruby Tuesday, Inc. common stock (83,146)
Morrison Health Care, Inc. common stock 116,109
Delaware Group Value Fund 230,650
Templeton Growth Fund 174,684
Money Market (1,053)
Stable Value Fund 124,188
Guaranteed Investment Contracts 495,863
Phoenix Fund 31,745
Totals $ 738,296
The fair values of individual investments (guaranteed
investment contracts at contract value) that represent 5% or
more of the Plan's net assets at December 31, 1996 are as
follows:
Templeton Growth Fund $ 969,663
Delaware Group Value Fund 1,018,858
Ruby Tuesday, Inc. common stock 1,194,267
Stable Value Fund 2,476,808
Phoenix Fund 2,178,696
Ohio National Life Insurance Company,
guaranteed investment contract 688,892
Principal Mutual Life Insurance
Company, guaranteed investment 833,207
contract
New York Life Insurance Company,
guaranteed investment contract 1,408,721
Hartford Life Insurance Company,
guaranteed investment contract 705,142
State Mutual Life Insurance Company,
guaranteed investment contract 696,132
Protective Life Insurance Company,
guaranteed investment contract 694,508
4. Income Tax Status
Morrison Fresh Cooking, Inc. requested a determination
letter regarding the qualified status of the Plan under
Section 401(a) of the Internal Revenue Code (IRC), but has
not yet received a favorable determination. This plan
mirrors the former Plan of Morrison Restaurant Inc. which
was qualified under Section 401(a) of the IRC and,
therefore, was not subject to tax under present income tax
law. The Plan is required to operate in conformity with the
IRC 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
At December 31, 1996 the Plan held 120,662 shares of
Morrison Fresh Cooking, Inc. common stock with a market
value of $562,219. During the period, the Plan received
$21,400 in dividend income from its investment in the
Company's stock. The Plan also has investments in Morrison
Health Care, Inc. common stock and Ruby Tuesday, Inc. common
stock, holding 43,904 shares and 64,841 shares of common
stock with a market value at December 31, 1996 of $642,131
and $1,194,267, respectively. During the period, the Plan
received $32,920 in dividend income from its investment in
the Morrison Health Care, Inc. common stock; no dividends
were received from Ruby Tuesday, Inc.
6. Guaranteed Investment Contracts
The Plan has guaranteed investment contracts with several
insurance companies. Deposits made under these contracts
earn interest at guaranteed rates between 6.10% and 8.12%.
The contracts have various terms relating to withdrawals.
Each contains provisions for investment loss (surrender)
charges which the Plan would have to pay in the event of
early withdrawal prior to contract maturity date. The
contract values of the individual investments which comprise
the total of the guaranteed investment contracts at December
31, 1996 are as follows:
New York Life Insurance Company $ 1,408,721
Principal Mutual Life Insurance Company 833,207
Ohio National Life Insurance Company 688,892
TransAmerica 661,701
Hartford Life Insurance Company 705,142
State Mutual Life Insurance Company 696,132
Protective Life Insurance Company 694,508
Life Insurance Company of Virginia 484,933
Totals $ 6,173,236
The average yield on the contracts for the period ended
December 31, 1996 was 7.29%. The fair values of the
contracts listed above, determined using the sum of present
values of each of the contract's projected cash flows,
discounted at December 31, 1996 interest rates based on the
current yields of similar investments with comparable
durations, approximate the contract values.
7. Subsequent Event
On February 27, 1997, and in connection with a private
letter ruling from the Internal Revenue Service concerning
the tax-free reorganization of Morrison Restaurants Inc.,
the Company issued 150,907 shares of its common stock with a
fair market value of $4.88 per share to the Plan in exchange
for a 10-year note of $735,672 executed by the Plan's
trustee. These shares, together with those already held by
the Plan, boosted the Plan's level of Company ownership to
3%. The Plan uses employer match contributions received to
make loan payments. Shares are allocated to the
participants' accounts as principal payments are applied.
8. Investment Programs
The allocation of Plan assets and liabilities to the separate
investment programs at December 31, 1996 was as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
Money Fixed
Market Equity Income Stock
Fund Fund Fund Fund Total
Assets
Investments, at
fair value:
Morrison Fresh
Cooking, Inc. $0 $0 $0 $ 562,219 $ 562,219
common stock
Templeton Growth 969,663 969,663
Fund
Delaware Group 1,018,858 1,018,858
Value Fund
Morrison Health
Care, Inc. common 642,131 642,131
stock
Ruby Tuesday, Inc.
common stock 1,194,267 1,194,267
Stable Value Fund 2,476,808 2,476,808
Phoenix Fund 2,178,696 2,178,696
Guaranteed
investment 6,173,236 6,173,236
contracts, at
contract value
Total investments $0 1,988,521 10,828,740 2,398,617 15,215,878
Contributions
receivable:
Participants 3,882 15,792 48,065 15,587 83,326
Employer 23,330 23,330
3,882 15,792 48,065 38,917 106,656
Dividends and 2,745 26,250 28,995
interest
receivable
Cash 605,659 16,977 18,118 1,115 641,869
612,286 2,021,290 10,921,173 2,438,649 15,993,398
Liabilities
Other liabilities (15,718) (8,510) (24,228)
Payable to related 16,795 (2,411,303) (1,585) (2,396,093)
plans
Net assets $612,286 $2,038,085 $8,494,152 $2,428,554 $13,573,077
available for
benefits
</TABLE>
8. Investment Programs (continued)
Changes in net assets available for benefits for the period from
March 7, 1996 (date of inception) to December 31, 1996 were
allocated to the separate investment programs as follows:
Money Equity Fixed Stock
Market Fund Income Fund Total
Fund Fund
<TABLE>
<S> <C> <C> <C> <C> <C>
Net assets
available for $ $ $ $ $
benefits at
beginning of
period
Additions:
Transfers from 578,378 1,213,687 8,862,312 2,852,075 13,506,452
related plans
Interest and 27,137 30,118 730,440 54,320 842,015
dividend income
Net realized and
unrealized
appreciation (1,053) 405,334 651,796 (317,781) 738,296
(depreciation) in
fair value of
investments
Contributions:
Participants 63,229 118,292 540,120 176,966 898,607
Employer 245,000 245,000
63,229 118,292 540,120 421,966 1,143,607
Total additions 667,691 1,767,431 10,784,668 3,010,580 16,230,370
Deductions:
Administrative (6,969) (27,064) (129,749) (44,339) (208,121)
expenses
Withdrawals by (30,349) (430,836) (1,468,569) (434,002) (2,363,756)
participants
Other 438 (85,854) (85,416)
Total deductions (36,880) (457,900) (1,598,318) (564,195) (2,657,293)
Fund transfers, net (18,525) 728,554 (692,198) (17,831)
Net additions 612,286 2,038,085 8,494,152 2,428,554 13,573,077
Net assets
available for $612,286 $2,038,085 $ 8,494,152 $2,428,554 $13,573,077
benefits at end of
period
</TABLE>
Morrison Fresh Cooking, Inc. Salary Deferral Plan
Schedule 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996
Identity of Issuer, Cost Current
Borrower, Lessor or Description of Investment Value
Similar Party Investments
<TABLE>
<S> <C> <C> <C>
Investments
Morrison Fresh 120,662 shares of $876,875 $562,219
Cooking, Inc. common stock*
Delaware Group Value 44,414 units of 964,369 1,018,858
Fund equity fund
Templeton Growth 49,625 units of 859,499 969,663
Fund equity fund
Morrison Health 43,904 shares of 545,673 642,131
Care, Inc. common stock*
Ruby Tuesday, Inc. 64,841 shares of 1,286,374 1,194,267
common stock*
Stable Value Fund 204,932 units of 2,352,620 2,476,808
investment fund
Phoenix Multi-Sector 161,505 units of bond 2,146,951 2,178,696
Fund fund
9,032,361 9,042,642
Guaranteed investment contracts with
insurance companies, at contract value:
Ohio National Life
Insurance Company Guaranteed investment 688,892 688,892
contract
Principal Mutual Guaranteed investment 833,207 833,207
Life contract
New York Life
Insurance Company Guaranteed investment 1,408,721 1,408,721
contract
Hartford Life
Insurance Company Guaranteed investment 705,142 705,142
contract
State Mutual Life
Insurance Company Guaranteed investment 696,132 696,132
contract
Protective Life
Insurance Company Guaranteed investment 694,508 694,508
contract
TransAmerica Guaranteed investment 661,701 661,701
contract
Life Insurance
Company of Virginia Guaranteed investment 484,933 484,933
contract
6,173,236 6,173,236
Total investments $15,205,597 $15,215,878
</TABLE>
*Indicates party-in-interest to the Plan
Morrison Fresh Cooking, Inc. Salary Deferral Plan
Item 27d - Schedule of Reportable Transactions
Period from March 7, 1996 (date of inception) to December
31, 1996
Fair
Value
Cost of on Net
Description Of Purchase Sales Asset Transac Gain
Assets s tion (Loss)
Date
Category (i) - Individual transactions in excess of 5%
of plan assets.
<TABLE>
<S> <C> <C> <C> <C> <C>
Stable Value Fund
Fund $2,366,016 $ $2,366,016 $2,366,016 $
Guaranteed 817,442 817,442 817,442
investment
contract
Phoenix Multi- 1,950,000 1,950,060 1,950,060
Sector Fund
Guaranteed 1,950,000 1,767,492 1,950,000 183,608
investment
contract
Guaranteed 713,632 713,652 713,652
investment
contract
Guaranteed 1,615,000 1,487,949 1,615,000 127,051
investment
contract
Guaranteed 1,590,545 1,590,545 1,590,545
investment
contract
Category (iii) Series of transactions in
excess of 5% of plan assets.
Phoenix Multi- 2,762,247 2,762,247 7,762,247
Sector Fund
Phoenix Multi- 617,611 615,796 617,611 2,315
Sector Fund
Stable Value
Fund 2,366,016 2,366,016 2,366,016
Stable Value Fund 4,536 4,434 4,536 102
Guaranteed 2,457,291 2,457,791 2,457,291
investment
contract
Guaranteed 5,991,386 5,495,832 5,991,386 495,554
investment
contract
</TABLE>
There were no category (ii) or (iv) transactions during the
period from March 7, 1997 (date of inception) to
December 31, 1996.
1
CONSENT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statement (Form S-8 No. 33-20585, Post-Effective
Amendment No. 1) pertaining to the Salary Deferral Plan of
Morrison Fresh Cooking, Inc. of our Report dated June 24, 1997,
with respect to the financial statements and schedules of the
Morrison Fresh Cooking, Inc. Salary Deferral Plan included in
this Annual Report (Form 11-K) for the period from March 7,
1996 (date of inception) to December 31, 1996.
/s/ Ernst & Young LLP
Ernst & Young LLP
Atlanta, Georgia
June 24, 1997
