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 March 5, 1994
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 1-12454
MORRISON RESTAURANTS INC.
(Exact name of registrant as specified in charter)
DELAWARE 63-0475239
(State of incorporation or (I.R.S. Employer identifi-
organization) cation no.)
4721 Morrison Drive
P.O. Box 160266
Mobile, AL 36625
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (205)344-3000
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 .
35,412,840
(Number of shares of $0.01 par value common stock outstanding
as of April 15, 1994)
This document contains 18 sequentially numbered pages including
exhibits. Exhibit Index appears on page 16.
Page 1 of 18
INDEX
PAGE
NUMBER
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
MARCH 5, 1994 AND JUNE 5, 1993................. 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THIRTEEN AND THIRTY-NINE WEEKS
ENDED MARCH 5, 1994 AND MARCH 6, 1993.......... 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS FOR THE THIRTY-NINE WEEKS ENDED
MARCH 5, 1994 AND MARCH 6, 1993................ 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS..................................... 6-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS................................. 8-12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS............................. 13
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............................. 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.............. 14
SIGNATURES................................................. 15
Page 2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
MORRISON RESTAURANTS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
MAR. 5, 1994 JUNE 5, 1993
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and short-term investments.................. $18,919 $31,372
Receivables - Accounts and Notes (net)........... 37,188 34,040
Inventories...................................... 17,010 15,503
Prepaid expenses and other current assets........ 23,634 23,606
Total current assets........................... 96,751 104,521
PROPERTY, PLANT AND EQUIPMENT - at cost............ 491,878 434,572
Less accumulated depreciation and amortization... 233,849 214,242
258,029 220,330
OTHER INVESTMENTS.................................. 8,450 12,836
COST IN EXCESS OF NET ASSETS ACQUIRED.............. 22,772 23,081
OTHER ASSETS....................................... 44,912 37,574
TOTAL ASSETS................................. $430,914 $398,342
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts and notes payable....................... $40,930 $33,872
Other current liabilities........................ 73,263 68,743
Total Current Liabilities.................... 114,193 102,615
LONG-TERM DEBT..................................... 9,008 13,085
OTHER DEFERRED LIABILITIES......................... 75,795 63,018
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value
(authorized: 50,000 shares;
issued: 03/05/94 - 43,644 shares
issued: 06/05/93 - 29,097 shares)............. 436 291
Capital in excess of par value................... 78,093 75,181
Retained earnings................................ 238,776 215,226
317,305 290,698
Less common stock held in treasury - at cost
(7,562 shares @ 03/05/94; 4,723 shares @ 06/05/93) 85,387 71,074
231,918 219,624
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY..... $430,914 $398,342
The accompanying notes are an integral part of the consolidated financial statements.
Page 3
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<TABLE>
ITEM 1 - FINANCIAL STATEMENTS
MORRISON RESTAURANTS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
MAR.5, 1994 MAR.6, 1993 MAR.5, 1994 MAR.6, 1993
<S> <C> <C> <C> <C>
SALES................................. $309,951 $283,591 $902,469 $813,577
COST AND EXPENSES:
Cost of Merchandise................. 95,690 90,226 281,437 258,951
Payroll and related costs........... 110,701 104,357 325,881 299,199
Other operating costs............... 53,239 47,184 157,204 139,154
Selling, general and administrative. 20,125 15,935 55,956 45,456
Depreciation........................ 10,141 8,908 29,208 26,131
Interest expense net of
interest income................... 181 2 283 230
290,077 266,612 849,969 769,121
INCOME BEFORE INCOME TAXES AND CUMU-
LATIVE EFFECT OF ACCOUNTING CHANGES. 19,874 16,979 52,500 44,456
PROVISION FOR FEDERAL AND STATE
INCOME TAXES........................ 7,574 6,430 20,053 16,572
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES.................. 12,300 10,549 32,447 27,884
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES, NET:
Postretirement benefits............. 0 0 0 (2,579)
Income Taxes........................ 0 0 0 2,395
NET INCOME............................ $12,300 $10,549 $32,447 $27,700
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE
Primary:
Before Cumulative Effect of
Accounting Changes................ $0.33 $0.28 $0.87 $0.74
Cumulative Effect of Accounting
Changes, net:
Postretirement Benefits............. 0.00 0.00 0.00 (0.07)
Income Taxes........................ 0.00 0.00 0.00 0.06
Total............................... $0.33 $0.28 $0.87 $0.73
Fully Diluted:
Before Cumulative Effect of
Accounting Changes................ $0.33 $0.28 $0.87 $0.74
Cumulative Effect of Accounting
Changes, net:
Postretirement Benefits............. 0.00 0.00 0.00 (0.07)
Income Taxes........................ 0.00 0.00 0.00 0.06
Total............................... $0.33 $0.28 $0.87 $0.73
CASH DIVIDENDS PER SHARE PAID......... $0.0833 $0.08 $0.2466 $0.24
WEIGHTED AVERAGE SHARES USED IN
EARNINGS PER SHARE COMPUTATION:
Primary............................. 37,556 38,308 37,481 38,054
Fully Diluted....................... 37,585 38,308 37,510 38,130
The accompanying notes are an integral part of the consolidated financial statements.
All share data has been adjusted to give effect to the 3-for-2 split paid on
October 29, 1993.
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ITEM 1 - FINANCIAL STATEMENTS
MORRISON RESTAURANTS INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
FOR THE 39 WEEKS ENDED
MAR. 5, 1994 MAR. 6, 1993
<S> <C> <C>
CASH FROM OPERATIONS.......................... $78,365 $76,313
INVESTING ACTIVITIES:
Purchases of property, plant and equipment.... (69,028) (47,497)
Other......................................... (1,527) (3,177)
NET CASH USED BY INVESTING ACTIVITIES......... (70,555) (50,674)
FINANCING ACTIVITIES:
Early Retirement of Debt...................... 0 (23,500)
Stock repurchases............................. (14,087) (5)
Dividends paid................................ (8,896) (8,902)
Other......................................... 2,720 2,391
NET CASH USED BY FINANCING ACTIVITIES......... (20,263) (30,016)
(DECREASE)/INCREASE IN CASH AND
SHORT-TERM INVESTMENTS..................... (12,453) (4,377)
Beginning cash and short-term investments..... 31,372 50,100
Ending cash and short-term investments........ $18,919 $45,723
The accompanying notes are an integral part of the consolidated financial statements.
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ITEM 1
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 statements should be read
in conjunction with the notes to the consolidated financial
statements included in Morrison Restaurants Inc.'s annual report
for the fiscal year ended June 5, 1993. The accompanying
unaudited, condensed consolidated financial statements reflect
all adjustments (which comprise only normal recurring accruals)
necessary, in the opinion of management, to a fair presentation
of the financial position and 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.
NOTE B - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Previously reported fiscal year 1993 results have been restated
to reflect adoption of FAS No. 106 - "Employers' Accounting for
Postretirement Benefits Other than Pensions." See Note 3 of the
notes to the consolidated financial statements included in
Morrison Restaurants Inc.'s annual report to stockholders for the
fiscal year ended June 5, 1993.
NOTE C - INCOME TAXES
Previously reported fiscal year 1993 results have been restated
to reflect adoption of FAS No. 109 - "Accounting for Income
Taxes." See Note 4 of the notes to the consolidated financial
statements included in Morrison Restaurants Inc.'s annual report
to stockholders for the fiscal year ended June 5, 1993.
Page 6
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ITEM 1
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE D - MORRISON RESTAURANTS INC.
SUPPLEMENTAL INFORMATION
(DOLLARS IN THOUSANDS)
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
% %
MAR.5, 1994 MAR.6, 1993 Change MAR.5, 1994 MAR.6, 1993 Change
<S> <C> <C> <C> <C> <C> <C>
SALES:
Casual Dining Group............ $122,646 $100,209 22 $340,643 $277,359 23
Contract Dining Group.......... 114,495 109,171 5 343,677 318,538 8
Family Dining Group............ 72,718 74,212 (2) 218,207 217,662 0
Corporate and Other............ 92 (1) (58) 18
$309,951 $283,591 9 $902,469 $813,577 11
OPERATING PROFIT:
Casual Dining Group............ $12,990 $10,837 20 $29,922 $24,991 20
Contract Dining Group.......... 5,327 4,633 15 18,013 15,489 16
Family Dining Group............ 4,858 4,066 19 13,547 10,598 28
23,175 19,536 19 61,482 51,078 20
Corporate Expenses............. (3,120) (2,555) 22 (8,699) (6,392) 36
Net Interest Income (Expense).. (181) (2) (283) (230)
Income Before Income Taxes and
Cumulative Effect of
Accounting Changes............. 19,874 16,979 17 52,500 44,456 18
Income Taxes.................... 7,574 6,430 18 20,053 16,572 21
Income before Cumulative
Effect of Accounting Changes... 12,300 10,549 17 32,447 27,884 16
Accounting Changes, net:
Postretirement Benefits......... 0 0 0 (2,579)
Income Taxes.................... 0 0 0 2,395
Net Income...................... $12,300 $10,549 17 $32,447 $27,700 17
Earnings per Common and
Common Equivalent Share........
Primary:
Before Cumulative Effect of
Accounting Changes............ $0.33 $0.28 18 $0.87 $0.74 18
Cumulative Effect of
Accounting Changes, net:
Postretirement Benefits....... 0.00 0.00 0.00 (0.07)
Income Taxes.................. 0.00 0.00 0.00 0.06
Total.......................... $0.33 $0.28 18 $0.87 $0.73 19
Fully Diluted:
Before Cumulative Effect of
Accounting Changes............ $0.33 $0.28 18 $0.87 $0.74 18
Cumulative Effect of
Accounting Changes, net:
Postretirement Benefits....... 0.00 0.00 0.00 (0.07)
Income Taxes.................. 0.00 0.00 0.00 0.06
Total.......................... $0.33 $0.28 18 $0.87 $0.73 19
Common and Common Equivalent
Shares:
Primary....................... 37,556 38,308 37,481 38,054
Fully Diluted................. 37,585 38,308 37,510 38,130
OPERATING PROFIT MARGINS:
Casual Dining Group............ 10.6% 10.8% 8.8% 9.0%
Contract Dining Group.......... 4.7% 4.2% 5.2% 4.9%
Family Dining Group............ 6.7% 5.5% 6.2% 4.9%
All share data has been adjusted to give effect to the 3-for-2 split paid on
October 29, 1993.
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Page 7
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
1. FINANCIAL CONDITION
1.1 ASSETS
Total Assets at March 5, 1994 were $430.9 million, a $9.4
million increase from $421.5 million as of the end of the prior
quarter, and a $32.6 million increase from $398.3 million as of
the prior year end. Cash and short-term investments increased
$.7 million during the quarter and decreased $12.5 million for
the year to date. These changes are due to the Company's
repurchase of stock during the first and third quarters of the
current year and capital expenditures in each quarter of the 39
week period ended March 5, 1994. Accounts and Notes Receivables
decreased $3.7 million during the quarter and increased $3.1
million for the year. These fluctuations are the result of the
seasonality of the institutional revenue for the Contract Dining
Group and a decrease of $1.3 million of landlord construction
allowances since June 5, 1993 for the Casual Dining Group.
Property, Plant and Equipment increased $13.1 million during the
quarter and $37.7 million from the prior fiscal year ended June
5, 1993. The increase is due to the net result of capital
expenditures of $23.7 million for the quarter and $69.0 million
for the year-to-date, less depreciation expense of $10.1 million
and $29.2 million and $.5 million and $2.1 million in retirements
for the quarter and year-to-date. Capital expenditures consisted
primarily of $18.2 and $51.3 million in the Casual Dining Group,
$2.1 and $8.1 million in the Contract Dining Group, and $3.1 and
$8.8 million in the Family Dining Group for the quarter and year-
to-date ended March 5, 1994. The Company anticipates that
during the remaining quarter of this fiscal year capital
expansion will be financed by funds generated by operations, and
if necessary, from borrowings on the lines of credit. Other
Investments decreased $.5 million and $4.4 million for the
quarter and year-to-date, respectively. The $4.4 million
decrease primarily results from the sale of the Admiral Benbow
Inn as discussed in section 3.3 - "Disposal of Investment".
Other Assets increased $.8 million for the quarter and $7.3
million for the year-to-date ended March 5, 1994. The year-to-
date increase of $7.3 million is primarily the result of a $3.1
million note receivable for the sale of the Admiral Benbow Inn, a
$1.5 million increase in construction allowances for the Contract
Dining Group, and a $3.0 increase in deferred income taxes in
accordance with FAS 109.
1.2. LIABILITIES
Total Liabilities at March 5, 1994 were $199.0 million, a $3.1
million increase from $195.9 million as of the end of the prior
quarter and a $20.3 million increase from $178.7 million as of
the end of the prior fiscal year. The increase in liabilities is
Page 8
1. FINANCIAL CONDITION (CONTINUED)
1.2. LIABILITIES (CONTINUED)
due to the growth in the Company's operations and resulting
operational liabilities. Accounts and notes payable at March 5,
1994 were $40.9 million, a $7.1 million increase from the end of
the prior fiscal year. $4.0 million of this increase is due to
the reclassification of the first annual installment, due
December, 1994, of Senior Promissory Notes payable to Life
Insurance Company of Georgia from long-term debt. The remaining
difference is the result of seasonal sales of the Contract Dining
Division and growth in the Company's operations resulting in
increased operational liabilities. Long-Term Debt decreased $4.1
million to $9.0 million at March 5, 1994 from the end of the
prior fiscal year as a result of the reclassification of the
first annual installment of the Life Insurance Company of Georgia
notes payable, as discussed above. Other Deferred Liabilities
increased $12.8 million to $75.8 at March 5, 1994. This increase
is primarily the result of a $7.1 million increase in deferred
income taxes, a $1.9 million increase in escalating minimum rents
and a $3.4 million increase in liabilities for retirement and
deferred compensation plans.
1.3 WORKING CAPITAL
The Company had negative working capital of $17.4 million and the
current ratio was .85 at March 5, 1994, compared to positive $1.9
million working capital and 1.02 current ratio at the end of the
prior year. Growth in the number of operations and the stock
repurchase program have reduced the Company's working capital.
1.4 SHORT-TERM BORROWING
At March 5, 1994, the Company had lines of credit with various
banks amounting to $ 65.0 million. These lines are subject to
periodic review by each bank and may be canceled by the Company
at any time. There were no short-term borrowings during the
year-to-date ended March 5, 1994. The Company, however,
anticipates that there will be short-term borrowings during the
fourth quarter.
1.5 LONG-TERM BORROWING
Long-term borrowing decreased $4.0 million during the quarter and
year-to-date ended March 5, 1994 as a result of the
reclassification of the first annual installment, due December
1994, of Senior Promissory Notes payable to Life Insurance
Company of Georgia.
At their regularly scheduled quarterly meeting, held on March 30,
1994, the Board of Directors approved the business and financial
plans proposed by management which include a substantial increase
in the company's long-term debt to fund increased levels of
growth and development. The Company's new financial strategy sets
a target ratio of debt (including operating leases) to capital of
60%.
Page 9
1.6 CASH DIVIDENDS
Cash Dividends paid during the third quarter of fiscal year 1994
amounted to $3.0 million, which is consistent with the cash
dividends paid during the prior quarter. Dividends per share
were $0.0833 for the third quarter.
2. RESULTS OF OPERATIONS
2.1 SALES
Total sales for the quarter increased 9.3% over the same quarter
of the prior year. Total sales for the 39 weeks ended March 5,
1994 increased 10.9% compared to the same period in the prior
year. The sales increase for the quarter over the same quarter
in the prior year was the net result of a 22.4% sales increase in
the Casual Dining Group, a 4.9% increase in the Contract Dining
Group and a 2.0% decrease in the Family Dining Group. The sales
increase for the 39 weeks ended March 5, 1994 over the 39 weeks
ended March 6, 1993 was the net result of sales increases of
22.8%, 7.9%, and 0.3% for the Casual Dining Group, Contract
Dining Group and Family Dining Group, respectively.
The sales increase in the Casual Dining Group is primarily the
result of additional units. There is a net addition of 45 Casual
Dining units when compared to the same quarter of the prior year.
On March 5, 1994, the Casual Dining Group was composed of 216
Ruby Tuesday, 38 L&N Seafood Grill, 21 Silver Spoon, one
Mozzarella and two Sweetpea restaurants.
The sales increase in the Contract Dining Group is attributable
to an increase in new accounts. On March 5, 1994 the Contract
Dining Group was composed of food service contracts in hospitals,
education, and business and industry accounts.
The change in sales in the Family Dining Group is the net result
of a decrease in customers offset by a minimal increase in same-
store check average. The Family Dining Group was composed of 164
units as of March 5, 1994.
2.2 COSTS AND EXPENSES
Total Costs and Expenses for the 13 and 39 weeks ended March 5,
1994 were $290.1 and $850.0 million, respectively, a $23.5
million increase from the $266.6 million in the same quarter of
the prior year and a $80.9 million increase from $769.1 million
in the same 39 weeks of the prior year. Selling, general and
administrative costs increased 26.3% and 23.1% to $20.1 million
and $56.0 million for the thirteen and 39 weeks ended March 5,
1994 over the same periods of the prior year. The increases in
selling, general and administrative expenses is due to increased
meeting, training and opening costs associated with the Company's
aggressive expansion. Selling, general and administrative
Page 10
2. RESULTS OF OPERATIONS (Continued)
2.2 COSTS AND EXPENSES (Continued)
expenses also increased due to the Company's plan to advertise
more in the television and radio media than in the prior year.
Costs and expenses when expressed as a percent of sales for the
13 and 39 week periods ended March 5, 1994 decreased to 93.6% and
94.2% from 94.0% and 94.5% in the same period of the prior year,
respectively. These decreases are largely attributable to the
success of food-cost-control programs.
2.3 PRE-TAX PROFIT
The consolidated pre-tax profit before the cumulative effect of
accounting changes for the 13 and 39 weeks ended March 5, 1994
increased $2.9 million and $8.0 million, or 17.1% and 18.1%,
respectively. The consolidated pre-tax profit margin before the
cumulative effect of accounting changes for the 13 and 39 weeks
ended March 5, 1994 was 6.4% and 5.8% compared to 6.0% and 5.5%
in the prior year.
2.4 INCOME TAX EXPENSE
The effective income tax rate for the 13 and 39 weeks ended March
5, 1994 was 38.1% and 38.2% compared to 37.9 % and 37.3% for the
same 13 and 39 weeks of the prior year. The increase in the
effective income tax rate is due to an increase in the federal
income tax rate of 1%, and an increase in state income taxes
offset by an increase in tax credits.
2.5 EARNINGS PER SHARE
As a result of Accounting Principles Board Opinion No. 15., the
Company has reported both primary and fully diluted earnings per
share on the income statement. APB No. 15 requires dual
disclosure whenever there is a three percent difference between
shares outstanding and shares outstanding plus common stock
equivalents. This difference occurred in the first quarter of
fiscal year 1994.
3. KNOWN EVENTS, UNCERTAINTIES AND TRENDS
3.1 SEASONALITY OF OPERATIONS
The operating results as well as certain current assets and
liabilities of the Hospitality Group are affected by the
traditional closings of educational institutions during the
summer months and their subsequent reopenings at the beginning of
September.
Page 11
3. KNOWN EVENTS, UNCERTAINTIES AND TRENDS (CONTINUED)
3.2 STOCK REPURCHASE PROGRAM
On March 31, 1993, the Board of Directors authorized a program to
repurchase up to 1,000,000 additional shares of Morrison common
stock. Shares acquired through the purchase will be held as
Treasury Stock and will be used to provide stock for general
corporate purposes. The program may be discontinued at any time.
This program is in addition to the program announced August 25,
1989, under which Morrison is authorized to acquire additional
shares of common stock for general corporate purposes and the
program announced October 1, 1992 to repurchase shares for the
purpose of providing sufficient shares of common stock for
issuance pursuant to employee benefit plans, including the
purchase of shares to offset any dilutive effect of such plans.
Funding for the repurchase programs will come from working
capital and debt. During the 39 weeks ended March 5, 1994, the
Company repurchased 682,109 shares of the Company's stock at an
average purchase price of $20.65 per share. Also, as of April 5,
1994, subsequent to the quarter ended March 5, 1994, Morrison
Restaurants Inc. had repurchased an additional 721,984 shares of
stock at an average purchase price of $23.21 per share.
Subsequent to the end of the quarter ended March 5, 1994, the
Board of Directors approved an increase of 2.5 million shares in
the number of shares that may be repurchased under its stock
repurchase programs. As of March 5, 1994, giving effect to such
increase, the total number of shares available for repurchase
under all of the Company's stock repurchase programs was 4.6
million shares.
3.3 DISPOSAL OF INVESTMENT
The Company sold its investment in the Admiral Benbow Inn in
Tampa, Florida, on August 4, 1993 for $3,607,000. Proceeds were
composed of $500,000 cash and a note receivable of $3,107,000.
The note carries interest of 8% for the first two years and 9%
for the remaining eight years. The financial impact on the
Company's 39 weeks ended March 5, 1994 was immaterial.
3.4 TIA'S AGREEMENT
On November 23, 1993, Morrison entered into an agreement to
assist in the development of up to 10 Tia's Restaurants and has
options to acquire the company during the next five years.
During the quarter ended March 5, 1994 Morrison loaned Tia's
$450,000 at 9.75%.
Page 12
PART II - OTHER INFORMATION
ITEM 1
LEGAL PROCEEDINGS
The Registrant 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 Registrant's operations or consolidated
financial position.
ITEM 5
OTHER INFORMATION
At their regular quarterly meeting on March 30, 1994, the Board
of Directors announced the following items:
(a) A regular cash dividend of eight and one-third cents per
share was declared, payable at the close of business on April 29,
1994 to shareholders of record as of April 11, 1994.
(b) Approval of management's business and financial plans for
the coming four years. The financial plan includes a substantial
increase in the amount of money the Company will borrow in order
to fund increased levels of growth and development and sets a
target ratio of debt (including operating leases) to capital of
60%. The plan also sets a policy to increase dividends paid to
stockholders by five-percent annually if goals for growth in
earnings are achieved, and it states that Morrison's stock will
be reacquired if the Company has excess cash after its
investments in new units and food service contracts. In
connection with this plan, the Board of Directors authorized the
repurchase of up to 2.5 million additional shares of the
Company's stock.
(c) Reorganization of the current structure into two operating
groups with the divisions of each group aligned under division
Presidents. The two operating groups are as follows:
-- the Ruby Tuesday Group, formerly known as the Casual
Dining Group, composed of a Ruby Tuesday Division and a
Specialty Division.
-- the Morrison Group, composed of the Hospitality and Health
Care Divisions, which were formerly known as the Contract
Dining Group, and the Family Dining Division, formerly
known as the Family Dining Group.
(d) The appointment of Claire Lewis Arnold, Chief Executive
Officer of the Atlanta-based NCC L.P., to the Board of Directors
of the Company.
Page 13
PART II - OTHER INFORMATION (CONTINUED)
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed as part of this report:
Exhibit
No.
11 Computation of Primary and Fully Diluted
Earnings Per Share
(b) There were no reports on Form 8-K filed during the quarter
ended March 5, 1994.
Page 14
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 RESTAURANTS INC.
(Registrant)
04/18/94 /s/ J. RUSSELL MOTHERSHED
DATE J. RUSSELL MOTHERSHED
Senior Vice President, Finance
(Senior Vice President and
Principal Accounting Officer)
Page 15
EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
11 Computation of Primary and Fully
Diluted Earnings Per Share 17 - 18
Page 16
<PAGE>
<TABLE>
ITEM 6.(a)
EXHIBIT 11: COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
MAR.5, 1994 MAR.6, 1993 MAR.5, 1994 MAR.6, 1993
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Average common shares outstanding...... 36,051 37,160 36,092 37,049
Average additional common shares
issuable on exercise of dilutive
stock options (computed by use of
the "treasury stock method", at the
average market price)................ 1,505 1,148 1,389 1,005
TOTALS.............. 37,556 38,308 37,481 38,054
Net Income............................. $12,300 $10,549 $32,447 $27,700
Primary earnings per common and
common equivalent share.............. $0.33 $0.28 $0.87 $0.73
All share data has been adjusted to give effect to the 3-for-2 stock split paid on
October 29, 1993.
</TABLE>
Page 17
</PAGE>
<PAGE>
<TABLE>
ITEM 6.(a) (continued)
EXHIBIT 11: COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
MAR.5, 1994 MAR.6, 1993 MAR.5, 1994 MAR.6, 1993
<S> <C> <C> <C> <C>
FULLY DILUTED EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Average common shares outstanding...... 36,051 37,160 36,092 37,049
Average additional common shares
issuable on exercise of dilutive
stock options (computed by use of
the "treasury stock method", at the
higher of period-end or average
market price)........................ 1,534 1,148 1,418 1,081
TOTALS.............. 37,585 38,308 37,510 38,130
Net Income............................. $12,300 $10,549 $32,447 $27,700
Fully diluted earnings per common and
common equivalent share.............. $0.33 $0.28 $0.87 $0.73
All share data has been adjusted to give effect to the 3-for-2 stock split paid on
October 29, 1993
</TABLE>
Page 18
</PAGE>
