Morrison Health Care, Inc. and Subsidiaries
Selected Financial Data

The   following  table  summarizes  certain  selected   financial
information with respect to Morrison Health Care, Inc. (MHCI) and
is  derived from the Financial Statements of MHCI.  The Financial
Statements  of MHCI are presented as if MHCI had been a  separate
entity  for  fiscal  years  1996,  1995,  1994  and  1993.    The
statements of income data for the years ended June 1, 1996,  June
3,  1995,  June  4, 1994 and June 5, 1993, and the balance  sheet
data  as  of  June  1, 1996, June 3, 1995 and June  4,  1994  are
derived  from  the  Audited Financial Statements  of  MHCI.   The
balance  sheet  data  as of  June 5, 1993  is  derived  from  the
Unaudited  Financial Statements of MHCI and, in  the  opinion  of
Management,  includes  all  adjustments  consisting   of   normal
recurring  accruals, which MHCI considered necessary for  a  fair
representation  of  the financial position  and  the  results  of
operations for that period.  The financial information  presented
below  may not be indicative of MHCI's future performance  as  an
independent company.  The information set forth below  should  be
read  in  conjunction  with  "MHCI  Management's  Discussion  and
Analysis  of  Financial Condition and Results of Operations"  and
the  Financial  Statements  of MHCI and  notes  thereto  and  the
Unaudited  Pro  Forma Financial Information of MHCI  included  in
Note  2  of  the  Notes  to  Consolidated  Financial  Statements.
Weighted average shares for 1996 were determined as if the shares
issued in connection with the Distribution were outstanding  from
the  beginning of the year. Earnings per share and dividend  data
have  not been presented for fiscal years 1995, 1994 and 1993  as
MHCI was not a publicly held company prior to March, 1996.

Fiscal  years 1994 and 1993 information includes the  results  of
B&I  operations  which were sold in fiscal  year  1995.    Income
Before  Cumulative Effect of Accounting Changes for  fiscal  year
1995 includes an after tax gain of $25.8 million from the sale of
the  B&I  operations.   See Note 3 of the Notes  to  Consolidated
Financial Statements for more information on the sale of B&I.


<TABLE>
                                (In thousands, except per share data)
                             -------------------------------------------------
                                                 Fiscal Year
                             _________________________________________________
                                  1997      1996     1995      1994      1993
                             ---------  --------  -------  --------  ---------
<CAPTION>
<S>                           <C>       <C>       <C>       <C>       <C>
Consolidated statements
  of income data:
    Managed volume
   (estimated and
    unaudited)................$464,800  $435,600  $408,300         *         *
                              ========  ========  ========  ========  ========
    Revenues..................$221,011  $219,995  $225,392  $461,780  $430,145
                              ========  ========  ========  ========  ========

Income before provision for
  income taxes and cumulative
  effect of accounting
  changes.....................$ 17,576  $ 16,011  $ 65,295  $ 21,588  $ 18,122
Provision for federal
  and state income taxes......   7,290     6,731    28,469     8,351     6,980
                              --------  --------  --------  --------   -------
Income before cumulative
  effect of accounting
  changes.....................  10,286     9,280    36,826**  13,237    11,142
Cumulative effect of
  accounting changes:
    Postretirement benefits...       0         0         0         0      (640)
    Income taxes..............       0         0         0         0       426
                              --------  --------  --------  --------  --------
Net income....................$ 10,286  $  9,280  $ 36,826**$ 13,237  $ 10,928
                              ========  ========  ========  ========  ========

Earnings per common and
  common equivalent share.....$   0.87  $   0.79
                              ========  ========

Weighted average common
and common equivalent
shares........................  11,841    11,724
                              ========  ========

All fiscal years are composed of 52 weeks.

*  Fiscal years 1993 and 1994 not presented because they included B&I
   information.

** Includes an after tax gain of  $25.8 million from the sale of the B&I
   operations.

Other Financial Data:
  Total assets................$ 57,607  $ 61,101  $ 69,028  $105,964  $107,581
  Long-term debt..............$ 15,022  $ 20,034  $ 19,245  $  3,128  $  4,686
  Stockholders' equity........$  5,628  $  4,716  $  9,015  $ 51,164  $ 56,807
  Cash dividends per
    share of common stock.....$   0.82  $  0.205***    ***       ***       ***
  Working capital.............$  3,891  $  8,677  $ 13,318  $  9,239  $ 19,672
  Current ratio...............   1.1:1     1.3:1     1.5:1     1.2:1     1.6:1
</TABLE>


*** Dividends were not paid prior to the fourth quarter of fiscal year 1996.


MORRISON HEALTH CARE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This  discussion should be read in conjunction with the  business
information and the Financial Statements and related notes  found
on pages 20 to 35.


RESULTS OF OPERATIONS

Effects of Distribution on Results of Operations

Effective  March 9, 1996, Morrison Health Care, Inc.  (MHCI)  was
spun  off (the Distribution) from Morrison Restaurants Inc. (MRI)
becoming an independent corporation trading under the symbol  MHI
on  the  New York Stock Exchange.   Management believes that  the
Distribution,  see Note 2 of the Notes to Consolidated  Financial
Statements,  has  had  a  material  impact  on  the  results   of
operations  due  to the added separate company  costs  that  were
incurred  by  MHCI.  The estimated effect of the Distribution  on
the  results  of operations of MHCI for the fiscal  years  ending
June 1, 1996 and June 3, 1995 are presented in the Unaudited  Pro
Forma  Financial Information on pages 25 - 27.   Such  pro  forma
financial  information is presented as if  the  Distribution  had
been effective as of the dates indicated.

1997 Compared To Unaudited Pro Forma 1996

Overview

In  MHCI's first full year as an independent company, fiscal year
1997  showed strong financial results with increases  in  managed
volume, revenue, operating profit and net income.  This is due to
continued  focus  on  cost reduction in accounts  and  growth  in
existing accounts

MHCI   is   the  only  national,  publicly  held  company   which
specializes  exclusively  in  health  care  food  and   nutrition
services.   MHCI's client base includes some of the  largest  and
most prestigious hospitals in the country.

Managed Volume/Revenue

While actual services performed are the same, revenue recognition
varies  by type of contract based on the expenses paid  by  MHCI.
In  a management fee account, revenue, in addition to the fee, is
recognized  only when the Company pays expenses or employees  are
on  the  Company's payroll.  In a profit and loss  account  where
MHCI  assumes  the  risk of profit or loss  for  the  foodservice
operation,  the amount of revenue reported is the actual  revenue
generated  from  meals served to patients, client  employees  and
visitors.   Because  of  the difference  between  the  amount  of
revenue that is reported for the fee account, where MHCI pays all
or  part of the cost and the account where no cost is paid, it is
Management's opinion that managed volume is a better  measure  of
performance.   Managed  volume is defined  as  MHCI  revenue,  as
reported,  plus  estimated  client  paid  cost.   Managed  volume
increased $29.2 million or 6.7% in fiscal year 1997 when compared
to  fiscal year 1996.  This increase is due to growth in existing
accounts  and  opening accounts with larger managed  volume  than
those that were closed.

Revenue  increased $1.0 million or 0.5% in 1997  as  compared  to
1996.   The  increase  in revenue was due  to  the  increases  in
existing  account  revenue during 1997.  Most of  the  growth  in
existing  account  revenue  is attributable  to   adding  vending
operations and employee payrolls at those accounts.

Gross Profit

Gross  profit,  revenue less operating expenses,  increased  $0.4
million  or  1%  for  1997.  The  increase  in  gross  profit  is
attributed  to growth of existing account business and continuing
emphasis on food and labor cost reductions.

Selling, General and Administrative

Selling,  general and administrative expenses decreased  slightly
as a percentage of revenue due to improved control of expenses.

Interest Expense, net

Interest  expense decreased 47% due to much lower debt levels  in
fiscal year 1997.

Federal and State Income Taxes

The  combined  federal and state effective tax rate decreased  to
41.5% in 1997, from 42.1% in 1996.


Unaudited Pro Forma 1996 Compared To Unaudited Pro Forma 1995

Overview

Fiscal  year  1996 was a transitional year for MHCI  due  to  the
Company's  spin-off from MRI.  This new independence allowed  the
Company's Management to concentrate on its own resources and core
competencies,  health  care  food  and  nutrition  services.   In
addition,  the Company focused specifically on its own customers,
employees  and  shareholders.   Fiscal  1996  was  important   as
Management  took the opportunity to restructure its sales  force.
As  a  result,  the Company's earnings were negatively  impacted;
however,  positive  results were noticeable in  the  increase  of
sales activity.

In  the  third quarter of fiscal year 1996, MHCI incurred charges
of  $2.1  million consisting primarily of estimated  professional
and other fees incurred in connection with the Distribution ($1.4
million),  relocation  costs for personnel moving  in  connection
with  the  Distribution  ($0.5 million) and  miscellaneous  other
asset write-offs ($0.2 million).

Managed Volume/Revenue

Managed volume increased 7% in fiscal year 1996 when compared  to
fiscal  year  1995.  This increase was due to growth in  existing
accounts  and  opening accounts with larger managed  volume  than
those that were closed.

Revenue  decreased $5.4 million or 2.4% in 1996  as  compared  to
1995.   The  decrease in revenue was due to the net  decrease  of
accounts  during 1996.  In addition to loss of accounts,  several
accounts  converted from MHCI paying for food, payroll and  other
costs to directly paying for these costs themselves.

To  address  lower  sales of new accounts,  the  sales  team  was
expanded  and  new sales positions were created.  The  new  sales
organization   allows   expanded  focus  on   prospecting   while
continuing to grow existing relationships with current accounts.

Gross Profit

Gross profit increased $1.4 million or 3.7% in 1996. The increase
in  gross profit is attributed to continuing emphasis on food and
labor cost reductions.

Selling, General and Administrative

Selling,  general  and  administrative expenses  increased  as  a
percentage  of  revenue due to the addition of a  regional  team,
the  expansion of the sales force and the relocation of corporate
headquarters.

Interest Expense, net

Interest  expense increased due to increased debt. The  increased
debt  resulted  from the allocation of MRI's debt  in  connection
with the Distribution.

Federal and State Income Taxes

The  combined  federal and state effective tax rate decreased  to
42.1% in 1996, from 43.6% in 1995.  The higher effective rate  in
fiscal  year 1995 was due to not being able to allocate a portion
of the goodwill tax basis to the sale of the B&I accounts.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow, Capital Expenditures and Financing

Due  to the nature of its contract foodservice business, MHCI  is
able  to  maintain a relatively steady cash flow. Cash flow  from
operations  has historically financed MHCI's capital investments.
MHCI  plans for controlled expansion over the next several  years
and  anticipates that cash flow from operations plus  utilization
of the existing lines of credit will be sufficient to provide for
this  expansion.  See  "Special  Note  Regarding  Forward-Looking
Information."

To  partially  finance its activities, MHCI has  obtained  a  $50
million,   five-year  credit  facility  from  various   financial
institutions.   Of the total facility, $30 million  is  revolving
lines of credit.  The Company had no borrowings outstanding under
the  terms  of  these  lines of credit  at  May  31,  1997.   The
remaining $20 million of the credit facility is a five-year  term
note  which  will  be repaid in quarterly installments  of  $1.25
million  beginning  June 30, 1997. The credit  facility  contains
restrictions  on  incurring additional indebtedness  and  certain
funded debt, net worth and fixed charge coverage requirements. On
May  31, 1997, MHCI had $20 million outstanding in total debt,  a
decrease of $6.8 million from the prior year.

In  the  event  that  the Company requires funds  for  day-to-day
operating activities, it has obtained additional lines of  credit
which will allow borrowing up to $5 million.  The Company had  no
borrowings outstanding under this agreement at May 31, 1997.

The  Company  entered  into an interest rate  swap  agreement  to
manage  the interest costs of the term note.  This swap agreement
effectively  fixes the interest rate at 6.7% per  annum  for  the
period of the term note.
     
Trade  accounts receivable make up the majority of  MHCI's  total
current  assets.  Historically, the average days  outstanding  in
trade  accounts receivable is less than one month  and  bad  debt
expense has been minimal.

MHCI  requires  capital principally for new  accounts,  equipment
replacement and remodeling of existing accounts. Cash provided by
operating  activities approximated $19.6 million for fiscal  year
1997.   Capital expenditures were approximately $4.8 million,  an
increase  of  $2.6  million or 118% compared to  the  prior  year
period.   Capital  expenditures are  anticipated  to  total  $5.9
million  in fiscal year 1998.  MHCI plans to finance this  amount
primarily through internally generated funds.  See "Special  Note
Regarding Forward-Looking Information."

Working Capital

Working  capital and the current ratio as of May  31,  1997  were
$3.9  million and 1.1:1, respectively.  Working capital  and  the
current ratio decreased $4.8 million and 0.2, respectively,  when
compared  to  the prior year.  This decrease is due primarily  to
the use of cash to repay short-term borrowings.

Dividends

MHCI  paid  approximately  $9.7  million  in  cash  dividends  to
stockholders during fiscal year 1997.  The Company plans  to  pay
annual   dividends  of  approximately $9.8 million  in  the  next
fiscal   year.    See  "Special  Note  Regarding  Forward-Looking
Information."

Deferred Tax Assets

The recognition of deferred tax assets depends on the anticipated
existence  of  taxable  income  in  future  periods  in   amounts
sufficient to realize the assets.  A valuation allowance must  be
provided for the deferred tax asset if such future income is  not
likely  to be generated.  Management believes that future taxable
income should be sufficient to realize all of MHCI's deferred tax
assets  based  on  historical  earnings  of  MHCI;  therefore,  a
valuation allowance has not been established.


KNOWN EVENTS, UNCERTAINTIES AND TRENDS

New Accounting Standards

In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share", which is required to  be
adopted for financial statements issued after December 15,  1997.
At  that time, the Company will be required to change the  method
currently  used to compute earnings per share and to restate  all
prior  periods.   Under  the  new  requirements  for  calculating
primary  earnings per share, the dilutive effect of stock options
will  be excluded.  The change is not expected to have a material
impact  on  the Company's primary or fully diluted  earnings  per
share.

Impact of Inflation

In  the  past,  MHCI  has been able to recover inflationary  cost
increases   through  contract  inflation  adjustments,  increased
productivity and menu changes.  There have been and there may  be
in  the  future,  delays  in contract inflation  adjustments  and
competitive pressures which limit MHCI's ability to recover  such
cost  increases in their entirety. Historically, the  effects  of
inflation on MHCI's net income have not been materially adverse.

Management's Outlook

Management   believes  that  the  fiscal  year  1997   expansion,
restructuring and training of  the sales teams will increase  the
number  and economic value of accounts sold in  fiscal year  1998
and  beyond.   Management believes that growth  will  also  occur
through  expanding  services at existing  accounts  and  possible
acquisition of companies that complement our core competencies.

The  Company has created a new division to develop advanced  food
preparation  and delivery systems. These systems are designed  to
increase    customer   satisfaction   by   enhancing   production
consistencies  and  generate significant cost  reductions,  while
providing quality services for health care facilities nationwide.

Several  MHCI  accounts  are among the  largest  acute  care  and
teaching hospitals in the United States.  The Company strives  to
maintain  its long-term partnerships with these facilities  while
continuing   to  increase quality and lower  costs.   During  the
upcoming   year,  MHCI  believes that additional  investments  in
people  and  programs  designed to enhance its  aggressive  sales
drive  will add new clients while building stronger relationships
with  current  accounts. By continuing to focus  on  its  primary
health care market of acute and life care facilities, the Company
believes  that  it is strategically positioned  to  continue  its
steady  growth.   See  "Special  Note  Regarding  Forward-Looking
Information."


Special Note Regarding Forward-Looking Information

The   foregoing   section   contains   various   "forward-looking
statements" which represent the Company's expectations or beliefs
concerning  future  events, including the  following:  statements
regarding account growth, future capital expenditures and  future
borrowings.   The  Company cautions that a  number  of  important
factors  could,  individually or in the aggregate,  cause  actual
results  to differ materially from those included in the forward-
looking  statements including, without limitation, the following:
health  care  spending trends; the growth of  systems  and  group
purchasing  organizations; changes in  health  care  regulations;
increased  competition  in the health  care  food  and  nutrition
market;  customers'  acceptance  of  the  Company's  cost  saving
programs;  and laws and regulations affecting labor and  employee
benefit costs.


                      Morrison Health Care, Inc. and Subsidiaries
                                
                          Consolidated Statements of Income

                         (In thousands, except per share data)
                      -------------------------------------------
                               For the Fiscal Year Ended
                      -------------------------------------------
                      May 31, 1997    June 1, 1996   June 3, 1995
                      -------------------------------------------

Revenues..............    $221,011        $219,995       $225,392

Operating costs and
  expenses:

Operating expenses....     181,233         180,607       187,426
Selling, general and
  administrative......      21,395          20,670        18,946
Restructuring costs...           0           1,398             0
Asset impairment......           0             193             0
Net gain on sale/
  closure of B&I
  accounts............           0               0       (46,782)
Interest expense, net
  of interest income,
  totaling $687 in 
  1997, $428 in 1996 
  and $221 in 1995....         807           1,116           507
                          --------        --------      --------
                           203,435         203,984       160,097
                          --------        --------      --------
Income before provision
  for income taxes....      17,576          16,011        65,295
Provision for federal
and state income taxes.      7,290           6,731        28,469
                          --------        --------      --------
Net income............     $10,286          $9,280       $36,826
                          ========        ========      ========

Earnings per common
  and common equivalent
  share...............     $ 0.87           $ 0.79
                         ========         ========
Weighted average common
  and common equivalent
  shares..............     11,841           11,724
                         ========         ========


The accompanying notes are an integral part of the financial
statements.
<TABLE>

           Morrison Health Care, Inc. and Subsidiaries
                   Consolidated Balance Sheets
<CAPTION>
         
                                                    (In thousands)
                                         -----------------------------------
                                               May 31, 1997    June 1, 1996
                                         -----------------------------------   
<S>                                                <C>            <C>
Assets
Current assets:
Cash and short-term investments..........          $ 3,751         $ 6,088
Receivables:
Trade, less allowance for doubtful
  accounts of $744 at May 31, 1997
  and $1,122 at June 1, 1996.............           16,387          17,650
Other....................................            4,884           4,985
Inventories..............................            2,686           2,662
Prepaid expenses.........................            1,006           1,616
Deferred income tax benefits.............            1,929           2,397
                                         -----------------  ----------------

Total current assets.....................           30,643          35,398
                                         -----------------  ----------------


Property and equipment - at cost:
Buildings and improvements...............            2,326           3,883
Equipment................................           14,017          11,346
                                         -----------------  ----------------
                                                    16,343          15,229
Less accumulated depreciation............            8,471           9,571
                                         -----------------  ----------------
                                                     7,872           5,658

Deferred income tax benefits.............            1,610           1,656
Cost in excess of net assets
  acquired, net..........................            4,582           4,736
Notes receivable.........................            3,817           4,940
Deferred charges.........................            2,830           2,833
Other assets.............................            6,253           5,880
                                         -----------------  ----------------
Total assets.............................          $57,607         $61,101
                                         =================  ================


Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable..........................         $10,381         $ 8,684
Short-term borrowings.....................               0           6,760
Accrued liabilities:
Taxes, other than income
  taxes..................................            1,546           1,609
Payroll and related costs................            4,133           3,117
Insurance................................            3,436           3,819
Other....................................            2,245           1,786
Income taxes payable.....................                0             935
Current portion of long-term debt........            5,011              11
                                         -----------------  ---------------- 
Total current liabilities................           26,752          26,721
                                         -----------------  ----------------

Long-term debt...........................           15,022          20,034
Other liabilities........................           10,205           9,630

Stockholders' equity:
Common stock, $0.01 par value
  (authorized 100,000 shares;
  issued: 1997 - 12,165 shares,
  1996 - 11,791 shares)..................              122             118
Capital in excess of par value...........            9,717           5,441
Unearned ESOP shares.....................           (3,517)              0
Retained earnings........................              647              86
                                         -----------------  ----------------
                                                     6,969           5,645

Less cost of treasury stock..............            1,341             929
                                         -----------------  ----------------
Total stockholders' equity...............            5,628           4,716
                                         -----------------  ----------------
Total liabilities and
  stockholders' equity...................          $57,607         $61,101
                                         =================  ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>

                Morrison Health Care, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows

                                              (In thousands)
                                    ------------------------------------------
                                              For the Fiscal Year Ended
                                    ------------------------------------------
                                    May 31, 1997   June 1, 1996   June 3, 1995
                                    ------------------------------------------
<CAPTION>
<S>                                     <C>            <C>            <C>
Operating activities:
Net income..........................    $ 10,286       $  9,280       $ 36,826
Adjustments to reconcile net income
  to net cash provided (used) by
  operating activities:
    Depreciation and amortization...       1,992          2,330          2,238
    Amortization of intangibles.....         153            152            153
    Gain on sale of B&I contracts
      and assets....................           0              0        (46,782)
    Other, net......................       1,066          1,172         (3,088)
    Deferred income taxes...........         514          4,927           (972)
    Loss on disposition of assets...          29            170          4,372
Changes in operating assets and
  liabilities:
Decrease in receivables.............       2,486          1,345          1,510
(Increase)/Decrease in inventories..         (24)           218            564
Decrease/(Increase) in prepaid and
  other assets......................         631         (2,005)         1,149
Increase/(Decrease) in accounts
  payable, accrued and other
  liabilities.......................       3,450        (12,112)       (25,488)
(Decrease)/Increase in income
  taxes payable.....................        (935)         6,928         (5,703)
                                    ------------------------------------------
Net cash provided (used) by
  operating activities..............      19,648         12,405        (35,221)
                                    ------------------------------------------
Investing activities:
Purchases of property and equipment.      (4,843)        (2,170)        (3,482)
Proceeds from disposal of assets....         459            387            674
Proceeds from sale of B&I
  contracts and assets..............           0              0        100,000
Other, net..........................      (1,456)           764         (2,121)
                                    ------------------------------------------
Net cash (used) provided by
  investing activities..............      (5,840)        (1,019)        95,071
                                    ------------------------------------------
Financing activities:
Proceeds from long-term debt........           0            800         19,200
Principal payments on long-
  term debt.........................         (11)           (11)        (4,619)
Net change in short-term
  borrowings........................      (6,760)         6,760              0
Proceeds from exercise of stock
  options and issuance of stock.....         679          1,544              0
Dividends paid......................      (9,725)        (2,403)             0
(Increase)/Decrease in Treasury
  Stock held by Deferred
  Compensation Plan.................        (412)            29              0
ESOP shares released................          84              0              0
Net transfers to Morrison
  Restaurants Inc...................           0        (12,749)       (78,975)
                                    ------------------------------------------
Net cash used by financing
  activities........................     (16,145)        (6,030)       (64,394)
                                    ------------------------------------------
(Decrease)/increase in cash and
  short-term investments............      (2,337)         5,356         (4,544)
Cash and short-term investments
at the beginning of the period......       6,088            732          5,276
                                    ------------------------------------------
Cash and short-term investments
  at the end of the period..........    $  3,751       $  6,088       $    732
                                    ==========================================

Supplemental disclosure of cash
  flow information-cash paid for:
    Interest........................    $  1,190       $  1,533       $    776
    Income taxes....................    $  8,000       $ 18,586       $ 32,764
</TABLE>

The accompanying notes are an integral part of the financial statements.

<TABLE>
                   Morrison Health Care, Inc. and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
                                        
                            (In thousands, except per share data)
                                   For the Fiscal Year Ended
                             ------------------------------------------------
                                 May 31, 1997      June 1, 1996   June 3,1995
                             ----------------   ----------------  -----------
                             Shares   Amounts   Shares   Amounts    Amounts
                             ----------------   ----------------  -----------
<CAPTION>
<S>                         <C>      <C>        <C>     <C>       <C>
COMMON STOCK
Beginning balance............11,791  $   118         0  $     0      $     0
Shares issued pursuant to
  spin-off from Morrison
  Restaurants Inc............     0        0    11,678      117            0
Shares issued to ESOP........   255        3         0        0            0
Shares issued under Stock
  Incentive Plans............   119        1       113        1            0
                             ----------------   ----------------  -----------
Ending balance...............12,165      122    11,791      118            0
                             ----------------   ----------------  -----------

CAPITAL IN EXCESS OF PAR VALUE
Beginning balance............          5,441                  0            0
Shares issued to ESOP........          3,592                  0            0
Shares issued under Stock
  Incentive Plans............            678              1,543            0
Shares released from ESOP....              6                  0            0
Distribution of Morrison
  Restaurants Inc.'s
  investment in the Company
  to Morrison Restaurants
  Inc. shareholders..........              0              3,898            0
                             ----------------    ---------------   ----------
Ending balance...............          9,717              5,441            0
                             ----------------    ---------------   ----------

MORRISON RESTAURANTS INC. EQUITY INVESTMENT
Beginning balance............              0              9,015       51,164
Net income for the three
  quarters ending March 2,
  1996 and the year ended
  June 3, 1995...............              0              6,791       36,826
Cash transfers to Morrison
  Restaurants Inc............              0            (12,749)     (78,975)
Distribution of Morrison
  Restaurants Inc.'s
  investment in the Company
  to Morrison Restaurants
  Inc. shareholders..........              0             (3,057)           0
                             ----------------    ---------------   ----------
Ending balance...............              0                  0        9,015
                             ----------------    ---------------   ----------

UNEARNED ESOP SHARES
Shares issued to ESOP........  (255)  (3,595)                 0            0
Shares released from ESOP....     6       78                  0            0
                             ----------------    ---------------   ----------
Ending balance...............  (249)  (3,517)                 0            0
                             ----------------    ---------------   ----------

RETAINED EARNINGS
Beginning balance............             86                  0            0
Net income for the year
  ending May 31, 1997 and
  the quarter ending
  June 1, 1996...............         10,286              2,489            0
Cash dividends of $0.820
  for the year ending
  May 31, 1997 and $0.205
  per share for the quarter
  ending June 1, 1996........         (9,725)            (2,403)           0
                             ----------------    ---------------   ----------
Ending balance...............            647                 86            0
                             ----------------    ---------------   ----------


TREASURY STOCK (held by
  Deferred Compensation Plan)
Beginning balance............           (929)                 0            0
Distribution of Morrison
  Restaurants Inc.'s invest-
  ment in the Company to
  Morrison Restaurants Inc.
  shareholders...............              0               (958)           0
(Purchase)/Sale of Treasury
  Stock......................           (412)                29            0
                             ----------------    ---------------   ----------
Ending balance...............         (1,341)              (929)           0
                             ----------------    ---------------   ----------


TOTAL STOCKHOLDERS' EQUITY...         $5,628            $ 4,716      $ 9,015
                             ================    ===============   ==========
</TABLE>



The accompanying notes are an integral part of the financial statements.



1. Summary of Significant Accounting Policies

Basis of Presentation

On  March  9,  1996, Morrison Health Care, Inc. and  Subsidiaries
(the Company or MHCI) was spun off from Morrison Restaurants Inc.
(MRI).   Prior  to the spin-off, MHCI was a wholly  owned  health
care  contract  food and nutrition business  of  MRI.   Prior  to
August  8,  1994,  the  Company's operations included  education,
business  and  industry  (B&I) contracts  and  assets.   The  B&I
contracts  and assets were sold on that date to Gardner  Merchant
Food  Services,  Inc.   See  Note  3  of  Notes  to  Consolidated
Financial  Statements  for  more information.   The  accompanying
financial  statements have been prepared as if MRI's health  care
contract food and nutrition and B&I businesses had operated as  a
stand-alone  entity  for all fiscal years prior  to  1997.   Such
statements include the assets, liabilities, revenues and expenses
that are directly related to the Company's operations.  They also
include  an allocation of certain assets, liabilities and general
corporate expenses of MRI, such as executive payroll, legal, data
processing  and  interest,  which are  related  to  the  Company.
Amounts were allocated on a specific identification method  where
appropriate  and  on  a  pro  rata basis  otherwise.   Management
believes the allocation methods used are reasonable.

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 could differ from those estimates.

Principles of Consolidation

The  accompanying consolidated financial statements  include  the
accounts  of  Morrison  Health Care, Inc. and  its  wholly  owned
subsidiaries.    All   significant  intercompany   accounts   and
transactions have been eliminated.

Fiscal Year

The  Company's fiscal year ends on the first Saturday  after  May
30.   The fiscal years ended May 31, 1997, June 1, 1996 and  June
3,  1995  were  comprised of 52 weeks.  Starting in  fiscal  year
1998, the Company will change from a 52-53 week fiscal year to  a
12-month fiscal year ending on May 31 each year.

Cash and Short-Term Investments

The Company's cash management program provides for the investment
of  excess  cash balances in short-term money market instruments.
Short-term  investments  are stated at cost,  which  approximates
market.   The  Company  considers marketable  securities  with  a
maturity  of three months or less when purchased to be short-term
investments.


Inventories

Inventories consist of materials, food supplies, china and silver
and  are  stated  at the lower of cost (first-in,  first-out)  or
market.

Reclassifications

Certain  amounts  have been reclassified in  the  1996  and  1995
financial statements to conform with the 1997 financial statement
presentation.

Property and Equipment and Depreciation

Depreciation  for financial reporting purposes is computed  using
the  straight-line method over the estimated useful lives of  the
assets.   Annual rates of depreciation range from 3%  to  5%  for
buildings and from 8% to 34% for kitchen and other equipment.

Intangible Assets

Excess  of  costs over the fair value of net assets  acquired  of
purchased  businesses generally is amortized on  a  straight-line
basis  over  40  years.  At May 31, 1997 and June  1,  1996,  the
accumulated  amortization  for costs  in  excess  of  net  assets
acquired was $1.6 million and $1.4 million, respectively.

The carrying value of goodwill and other intangibles is evaluated
periodically in relation to the operating performance and  future
undiscounted  cash  flows  of each operating  business  acquired.
Adjustments are made if the sum of expected future net cash flows
is  less  than  net  book value.  The Company believes  that  the
remaining amounts of these assets have continuing value.

Revenue Recognition

Revenue  is recognized upon performance of services.  The Company
operates under two major types of contracts, management  fee  and
profit  and loss.  While actual services performed are the  same,
revenue  recognition  varies by type of  contract  based  on  the
expenses  and  payroll paid by the Company.  In a management  fee
account, revenue, in addition to the fee, is recognized only when
the  Company  pays  expenses or employees are  on  the  Company's
payroll.   In  a profit and loss account, where MHCI assumes  the
risk  of profit or loss for the foodservice operation, the amount
of  revenue  reported is the actual revenue generated from  meals
served to patients, client employees and visitors.

Income Taxes

For periods prior to the spin-off, the accompanying statements of
income  reflect an income tax expense representing the  Company's
allocated share of MRI's tax expense and the Company's actual tax
expenses  for  the  fourth  quarter of  fiscal  year  1996.   The
allocated income tax expense approximates the tax expense of  the
Company on a stand-alone basis.

Deferred  income  taxes  are  determined  utilizing  a  liability
approach.   This  method gives consideration to  the  future  tax
consequences   associated  with  differences  between   financial
accounting and tax bases of assets and liabilities.

Stock-Based Compensation

During  fiscal  year  1997,  the  Company  adopted  Statement  of
Financial  Accounting Standards No. 123, "Accounting  for  Stock-
Based  Compensation",  (FAS No. 123)   which  was  effective  for
fiscal  years  beginning  after December  15,  1995.   Under  the
provisions  of  FAS No. 123, companies can elect to  account  for
stock-based compensation plans using a fair-value based method or
continue measuring compensation expense for those plans using the
intrinsic value method prescribed in Accounting Principles  Board
Opinion No. 25, "Accounting for Stock Issued to Employees",  (APB
No. 25) and related Interpretations.  The Company has elected  to
continue  to account for such plans under the provisions  of  APB
No.  25  and to provide certain pro forma disclosures  (see  Note
10).   Accordingly,  compensation  cost  for  stock  options   is
measured as the excess, if any, of the quoted market price of the
Company's  stock  at  the date of the grant over  the  amount  an
employee must pay to acquire the stock.

Earnings Per Share

Earnings  per share (EPS) are computed by dividing net income  by
the  weighted  average  number of common  and  common  equivalent
shares  outstanding.   Weighted  average  shares  for  1996  were
determined  as  if  the  shares issued  in  connection  with  the
Distribution  were outstanding from the beginning  of  the  year.
Earnings per share are not presented for 1995 because the Company
was not publicly held prior to the Distribution date.

In  February  1997,  the   Financial Accounting  Standards  Board
issued  Statement  of  Financial Accounting  Standards  No.  128,
"Earnings Per Share", (FAS No. 128).   The provisions of FAS  No.
128  are applicable to reporting periods after December 15, 1997,
and   supersede  Accounting  Principles  Board  Opinion  No.   15
"Earnings Per Share."  Under FAS No. 128, basic EPS are  computed
by  dividing  income  available to  common  stockholders  by  the
weighted  average number of common shares outstanding during  the
period.   Early application is not permitted.


Pre-Opening Expenses

Pre-opening  costs, such as, salaries, personnel  training  costs
and  other expenses of opening a new account are often reimbursed
by  the  client.  In circumstances when they are not  reimbursed,
these costs are charged to expense as incurred.

Financial Instruments

The  Company's financial instruments consist of cash  and  short-
term investments, accounts and notes receivable, an interest rate
swap  and  long-term  debt.  The fair value  of  these  financial
instruments  approximated the carrying amounts  reported  in  the
balance sheets.

Although  substantially  all  of  the  Company's  trade  accounts
receivable are from health care institutions, Management believes
that  concentrations  of  credit risk  are  limited  due  to  the
geographic diversity of the Company's customer base.  The Company
performs  periodic credit evaluations of its customers' financial
condition    and   generally   does   not   require   collateral.
Historically, the Company has not experienced  significant losses
related to trade accounts receivable from individual customers or
from groups of customers in any geographic area.

2. Distribution

On  March  7, 1996, the shareholders of MRI approved the Distribution
by  MRI  of  all the outstanding shares of common stock  of  Morrison
Health  Care, Inc., a wholly owned subsidiary of MRI.  The  Board  of
Directors  of  MRI believed that the Distribution  was  in  the  best
interests of MRI and its stockholders because the separation of MRI's
three  lines of business, among other things, (i) allowed  management
of  each of the three companies to concentrate on its business and to
reward  management  and  employees based on the  performance  of  its
business;  (ii)  allowed each company to access the  capital  markets
directly to raise capital; (iii) established a value for each company
that  is  independent of the other businesses and provided  investors
and  security  analysts a clearer basis on which  to  understand  and
analyze  the  three  businesses; and (iv) allowed MHCI  to  establish
equity-based benefit plans which hold MHCI common stock.

The  following Unaudited Pro Forma Consolidated Statements of  Income
have  been  prepared to illustrate certain estimated effects  of  the
Distribution.  These statements include adjustments for the effect of
costs   and  expenses  which  might  have  been  incurred   had   the
Distribution  occurred June 5, 1994.  Adjustments are  based  on  the
assumptions set forth below the statement.

<TABLE>
(In thousands, except per share data)
For the Fiscal Year Ended                 June 1, 1996                         June 3, 1995
                                           Unaudited                                 Unaudited
                                           Pro Forma     Unaudited                   Pro Forma     Unaudited
                              Historical   Adjustments   Pro Forma      Historical   Adjustments   Pro Forma
                              ----------   -----------   ---------      ----------   -----------   ---------
<CAPTION>
<S>                           <C>          <C>           <C>            <C>          <C>           <C>      
Revenues......................  $219,995      $     0     $219,995        $225,392   $        0     $225,392
Operating costs and expenses: 
Operating expenses............   180,607            0      180,607         187,426            0      187,426
Selling, general and
  administrative..............    20,670        1,420(a)    22,090          18,946        1,567(a)    20,513
Restructuring cost............     1,398            0        1,398               0            0            0
Asset impairment..............       193            0          193               0            0            0
Net gain on sale/closure of
  B&I accounts................         0            0            0         (46,782)           0      (46,782)
Interest expense, net.........     1,116          400(b)     1,516             507            0          507
                              ----------   -----------   ---------      ----------   -----------   ---------
                                 203,984        1,820      205,804         160,097        1,567      161,664
                              ----------   -----------   ---------      ----------   -----------   ---------
Income before provision
  for income taxes............    16,011       (1,820)      14,191          65,295       (1,567)      63,728
Provision for federal and
  state income taxes..........     6,731         (760)(c)    5,971          28,469         (683)(c)   27,786
                              ----------   -----------   ---------      ----------   -----------   ---------
Net income....................    $9,280      $(1,060)      $8,220         $36,826      $  (884)    $ 35,942
                              ==========   ===========   =========      ==========   ===========   =========

Earnings per common and
  common equivalent share.....                              $ 0.70                                  $   3.00
Weighted average common and
  common equivalent shares....                              11,811(d)                                 11,974(d)

</TABLE>

The  pro forma adjustments to the accompanying historical statements  of
income  for  the fiscal years ended June 1, 1996 and June  3,  1995  are
described below:


     (a)    To   record  the  increase  in  selling,  and  general   and
            administrative expenses which  presumably would have been
            incurred by MHCI had MHCI  been a separate and stand-alone entity.
   
     (b)    To record the increase in interest expense which would have been
            incurred by MHCI had MHCI been a separate and stand-alone entity.
   
     (c)    To record the estimated income tax benefit associated with  pro
            forma adjustments (a) and (b) at an assumed combined state and 
            federal effective income tax rate of 41.8% and 43.6% for the years 
            ended June  1, 1996 and June  3, 1995, respectively.  The assumed 
            effective income tax rate is comprised  of  a  35% statutory 
            federal income  tax  rate  plus applicable state income  taxes  
            and permanent differences, less  applicable  tax credits.

     (d)    The number of equivalent shares for periods prior to the spin-
            off is based on the number of MRI's common and common equivalent 
            shares adjusted for the 1 for 3 distribution ratio.


Unaudited Pro Forma quarterly financial results for the years ended June 1, 1996
and June 3, 1995 are summarized below.  All quarters are composed of 13 weeks.

<TABLE>
                                       (In thousands, except per share data)
                                  --------------------------------------------------------
                                      For the Fiscal Year Ended June 1, 1996
                                  --------------------------------------------------------
<CAPTION>
<S>                               <C>          <C>         <C>         <C>        <C>
                                  First        Second      Third       Fourth
                                  Quarter      Quarter     Quarter     Quarter    Total
                                  --------     -------     --------    --------   --------
Revenues..........................$ 56,289    $ 56,592     $ 54,224    $ 52,890   $219,995
                                  ========    ========     ========    ========   ========
Gross profit*.....................$ 10,273    $ 10,800     $  8,417    $  9,898   $ 39,388
                                  ========    ========     ========    ========   ========
Income before restructuring
  cost, asset impairment
  and income taxes................$  4,926    $  4,378     $  2,187    $  4,291   $ 15,782
Restructuring cost................       0           0       (1,398)          0     (1,398)
Asset impairment..................       0           0         (193)          0       (193)
                                  --------    --------     --------    --------   --------
Income before income taxes........   4,926       4,378          596       4,291     14,191

Provision for federal and
  state income taxes..............   2,032       1,887          250       1,802      5,971
                                  --------    --------     --------    --------   --------
Net income........................$  2,894    $  2,491     $    346    $  2,489   $  8,220
                                  ========    ========     ========    ========   ========
Earnings per common and
  common equivalent share:
    Before restructuring
    cost and asset impairment.....$   0.24    $   0.22     $   0.11    $   0.21   $   0.78
    Restructuring cost and
      asset impairment............    0.00        0.00        (0.08)       0.00      (0.08)
                                  --------    --------     --------    --------   --------
   Total..........................$   0.24    $   0.22     $   0.03    $   0.21   $   0.70
                                  ========    ========     ========    ========   ========


For the fiscal year ended June 3, 1995:
Revenues..........................$ 53,971    $ 56,578     $ 56,578    $ 58,265   $225,392
                                  ========    ========     ========    ========   ========

Gross profit*.....................$  8,594    $  9,585     $  8,857    $ 10,930   $ 37,966
                                  ========    ========     ========    ========   ========

Income before income taxes........$ 50,575**  $  4,965     $  2,956    $  5,232   $ 63,728
Provision for federal and
  state income taxes..............  22,495       1,999        1,185       2,107     27,786
                                  --------    --------     --------    --------   --------
Net income........................$ 28,080    $  2,966     $  1,771    $  3,125   $ 35,942
                                  ========    ========     ========    ========   ========

Earnings per common and
  common equivalent share***......$   2.30    $   0.26     $   0.17    $   0.27   $   3.00
                                  ========    ========     ========    ========   ========
</TABLE>

*     The Company defines gross profit as revenues less operating expenses.
**    Includes a pretax gain of $46,782 realized upon the sale of B&I.
***   The sale of  B&I contributed earnings per share of $2.12 in the first 
      quarter.


3.  Sale of the Education, Business  and Industry Contracts and Assets

On  August  8,  1994, the Company sold certain education,  business  and
industry (B&I) contracts and assets to Gardner Merchant Services,  Inc.,
for  a  cash  payment of $100 million.  The remaining B&I accounts  were
closed.   The  sale  of the B&I accounts and the discontinuance  of  the
remaining accounts resulted in a pretax gain of $46.8 million, or  $25.8
million after applicable taxes.

<TABLE>
4.  Notes Payable

Notes payable consists of the following:

                                                          (In thousands)
                                                   ---------------------------
                                                         Fiscal Year Ended
                                                   ---------------------------
                                                   May 31, 1997   June 1, 1996
                                                   ------------   ------------
<CAPTION>
<S>                                                <C>            <C> 
6.7% Term note due in equal quarterly
  installments of $1,250 from 1998-2001...........      $20,000        $20,000
Other notes and mortgages.........................           33             45
                                                   ------------   ------------
                                                         20,033         20,045
Less current maturities...........................        5,011             11
                                                   ------------   ------------
                                                        $15,022        $20,034
                                                   ============   ============
</TABLE>

Aggregate  maturities of long-term borrowings over the next  five  years
are  as  follows: 1998 - $5,011; 1999 - $5,011; 2000 -  $5,011;  2001  -
$5,000 and 2002 - $0.

In  March 1996, the Company entered into a five-year $50 million  credit
facility with various banks.  The credit facility includes a $30 million
revolving  line  of  credit which allows the  Company  to  borrow  under
various  interest rate options. Commitment fees of 0.25% per  annum  are
payable on the unused portion of the credit facility.  At May 31,  1997,
the  Company did not have any borrowings under the revolver. The balance
of  the  $50 million credit facility, $20 million, is a term note  which
will  be  repaid  in quarterly installments of $1.25 million  commencing
June  30, 1997.  In order to control the interest cost on the term note,
the  Company  entered into an interest rate swap agreement.   This  swap
agreement effectively fixes the interest rate at 6.7% per annum for  the
period of the term note.

In  addition,  the  Company  had  uncommitted  demand  lines  of  credit
amounting to $5 million.  At May 31, 1997, the Company did not have  any
borrowings outstanding under these lines.

The   credit   facility  contains  certain  restrictions  on   incurring
additional  indebtedness and certain funded debt, net  worth  and  fixed
charge coverage requirements.



5. Rents

Under the terms of certain of its contracts, the Company is required  to
make  rent  payments  to its health care institution  customers.   These
contracts  may provide for additional contingent rents based upon  sales
volume   and  contain  options  to  renew.   Generally,  the  underlying
contracts can be canceled upon 60-90 days notice.

Rental expense pursuant to contracts is summarized as follows:
                                    
                                                     (In thousands)
                                         -----------------------------------
                                               For the Fiscal Year Ended
                                         -----------------------------------
                                          May 31,     June 1,     June 3,
                                            1997        1996        1995
                                         --------    --------    --------
Minimum rent............................. $1,206      $1,168      $1,585
Contingent rent..........................    459         291       2,497
                                         --------    --------    --------
                                          $1,665      $1,459      $4,082
                                         ========    ========    ========

6.  Income Taxes


The components of income tax expense are as follows:

                                                 (In thousands)
                                        ------------------------------
                                           For the Fiscal Year Ended
                                        ------------------------------
                                          May 31,    June 1,    June 3,
                                            1997       1996       1995
                                        --------    -------    -------


Current:
Federal.................................  $5,960     $1,479    $24,486
State...................................     816        325      4,955
                                        --------    -------    -------
                                           6,776      1,804     29,441
Deferred:
Federal.................................     440      4,127       (812)
State...................................      74        800       (160)
                                        --------    -------    -------
                                             514      4,927       (972)
                                        --------    -------    -------
                                          $7,290     $6,731    $28,469
                                        ========    =======    =======


Deferred tax assets and liabilities are comprised of the following:

                                                 (In thousands)
                                      ----------------------------------
                                               Fiscal Year Ended
                                      ----------------------------------
                                      May  31, 1997         June 1, 1996
                                      ----------------------------------

Deferred tax assets:
Employee benefits....................     $3,547               $3,106
Insurance reserves...................      1,841                2,196
Bad debt reserve.....................        293                  447
Other................................        438                  554
                                     --------------       --------------
Total deferred tax assets............      6,119                6,303
                                     --------------       --------------


Deferred tax liabilities:
Depreciation........................         254                 239
Retirement plans....................         452                 448
Prepaid deductions..................         133                 209
Other...............................       1,741               1,354
                                     --------------       --------------
Total deferred tax liabilities.......      2,580               2,250
                                     --------------       --------------
Net deferred tax asset...............     $3,539              $4,053
                                     ==============       ==============

FAS  109  specifies  that deferred tax assets are to  be  reduced  by  a
valuation  allowance if it is more likely than not that some portion  of
the  deferred tax assets will not be realized.  Management believes that
future taxable income will be sufficient to realize all of the Company's
deferred  tax  assets based on historical earnings of the  Company  and,
therefore, a valuation allowance has not been established.

6.  Income Taxes (continued)

A  reconciliation from the statutory federal income tax expense  to  the
reported income tax expense is shown below:
                                                 (In thousands)
                                        ------------------------------
                                           For the Fiscal Year Ended
                                        ------------------------------
                                          May 31,    June 1,    June 3,
                                            1997       1996       1995
                                        --------    -------    --------

Statutory federal income taxes.......... $6,152      $5,604     $22,853
State income taxes net of
  federal income tax benefit............    804         732       2,868
Tax credits.............................      0           0        (346)
B&I divestiture items...................      0           0       2,575
Other, net..............................    334         395         519
                                        --------    -------    --------
                                         $7,290      $6,731     $28,469
                                        ========    =======    ========

The  effective income tax rate was 41.5%, 42.0% and 43.6% in 1997,  1996
and  1995,  respectively.  The high effective income tax rate in  fiscal
year  1995 was due to the nondeductibility of acquired goodwill disposed
of in connection with the divestiture of the B&I accounts.

In  connection  with the Distribution, the Company entered  into  a  tax
allocation  agreement with Morrison Fresh Cooking, Inc. (MFC)  and  Ruby
Tuesday, Inc. (RTI).  This agreement provided that the Company will  pay
its  share of RTI's consolidated tax liability for the periods in  which
the  Company  was  included  in MRI's consolidated  federal  income  tax
return.   It  also  provides for sharing, where appropriate,  of  state,
local  and  foreign taxes attributable to periods prior to the  date  of
Distribution.

7.  Employee Benefit Plans

Salary Deferral Plan

Under the Morrison Health Care, Inc. Salary Deferral Plan, each eligible
employee  may  elect to make pretax contributions to  a  trust  fund  in
amounts  ranging  from  2% to 10% of their annual  earnings.   Employees
contributing  a  pretax contribution of at least 2% may  elect  to  make
after  tax  contributions not in excess of 10% of annual earnings.   The
Company's  contribution to the Plan is based on  the  employee's  pretax
contribution  and  years  of  service.  After  three  years  of  service
(including  service  with  MRI prior to the Distribution),  the  Company
contributes  20% of the employee's pretax contribution,  30%  after  ten
years of service, and 40% after 20 years of service.  Normally, the full
amount  of  each participant's interest in the trust fund will  be  paid
upon   retirement  or  total  disability.   However,  the  Plan   allows
participants  to  make  early  withdrawals  of  pretax  and  after   tax
contributions, subject to certain restrictions.  Under the provisions of
the  plan,  highly  compensated employees, as defined  by  the  Internal
Revenue  Code, are limited to contributions of 3% and receive a  maximum
of  a  20%  match.   The  Company's  contributions  to  the  trust  fund
approximated  $257,000, $244,000 and $349,000 for 1997, 1996  and  1995,
respectively.

During  fiscal year 1997, the Company began sponsorship of  an  employee
stock  ownership  feature  (ESOP) covering participants  in  the  Salary
Deferral  Plan.  The Company loaned the Plan $3.6 million ($3.5  million
outstanding at May 31, 1997) to purchase approximately 255,000 shares of
common stock, at an interest rate of 5.47%.  The loan is payable in  120
monthly  installments  of  principal and interest.   The  Company  makes
monthly contributions sufficient to cover principal and interest on  the
loan made to the Plan.  Shares are released and allocated to participant
accounts monthly as loan repayments are made.

The Company adopted the provisions of AICPA Statement of Position No. 93-
6 which requires that compensation expense be measured based on the fair
value  of  the shares over the period the shares are earned.   Dividends
paid  on  unallocated shares held by the Plan are used to make principal
and  interest  payments  and are not charged to retained  earnings,  and
shares  not  yet committed to be released are not considered outstanding
in  the  calculation of earnings per share. The fair value  of  unearned
shares at May 31, 1997 was approximately $4,046,000.

Deferred Compensation Plan

The   Company   maintains  the  Morrison  Health  Care,  Inc.   Deferred
Compensation  Plan  for certain selected employees.  The  provisions  of
this Plan are similar to those of the Salary Deferral Plan.  Differences
include   employees  who  are  eligible  to  participate  and  different
limitation   amounts  on  deferral  elections  that  may  be   made   by
participants.  The  Company's contributions under the Plan  approximated
$125,000,  $137,000 and $196,000, for 1997, 1996 and 1995, respectively.
Assets  of the Plan are held by a rabbi trust.  Under current accounting
rules,  assets  of a rabbi trust must be accounted for as  if  they  are
assets of the Company; therefore, all earnings and expenses are recorded
in  the  Company's  financial statements.  The net  of  the  MHCI  rabbi
trust's earnings and losses is recorded as additional liability  to  the
participants  and is considered to be interest expense to  the  Company.
The Company recorded interest income of $17,000 and interest expense  of
$12,000  for  this Plan in 1997 and 1996, respectively.  Assets  of  the
Plan  approximated $4,667,000 at May 31, 1997 and $4,327,000 at June  1,
1996  and includes $1,341,000 and $929,000, respectively, of MHCI common
stock which is accounted for as treasury stock at cost.

Retirement Plan

The  Retirement  Plan  was frozen by RTI (formerly Morrison  Restaurants
Inc.)  on  December 31, 1987 and will remain part of RTI.  No additional
benefits  accrued and no new participants entered the  Plan  after  that
date.   The  Company will continue to share in future  expenses  of  the
Plan.   Participants will receive benefits based upon salary and  length
of  service.   The  Plan's  assets include common  stock,  fixed  income
securities,   short-term   investments  and   cash.    There   were   no
contributions made to the Plan in 1997, 1996 or 1995.

Executive Supplemental Pension Plan

Under  the  Morrison  Health Care, Inc. Executive  Supplemental  Pension
Plan,  employees with average compensation of at least $120,000 and  who
have  completed  five years (including service with  MRI  prior  to  the
Distribution)  in  a  qualifying  position  become  eligible   to   earn
supplemental retirement payments based upon salary and length of service
(including service as part of MRI prior to the Distribution), reduced by
Social  Security  benefits and amounts otherwise  receivable  under  the
Retirement Plan.

Management Retirement Plan

Under  the  Morrison  Health  Care,  Inc.  Management  Retirement  Plan,
individuals  who  have 15 years of credited service  (including  service
with   MRI   prior  to  the  Distribution)  and  whose  average   annual
compensation for the immediately preceding three calendar years  equaled
or exceeded $40,000, become participants.  Participants receive benefits
based  upon  salary and length of service (including  service  with  MRI
prior  to  the  Distribution), reduced by social security  benefits  and
benefits  payable  under the Retirement Plan and Executive  Supplemental
Pension Plan.

To  provide  a  funding  source for the payment of  benefits  under  the
Executive Supplemental Pension Plan and the Management Retirement  Plan,
the   Company  owns  whole-life  insurance  contracts  on  some  of  the
participants.   The  cash value of these policies,  net  of  loans,  was
$1,256,000  at May 31, 1997 and $873,000 at June 1, 1996.  The  policies
have been placed in a rabbi trust which will hold the policies and death
benefits as they are received.

The  following  table  presents the components of pension  expense,  the
funded   status  and  amounts  recognized  in  the  Company's  financial
statements  for the Retirement Plan, the Executive Supplemental  Pension
Plan and the Management Retirement Plan.

7.  Employee Benefit Plans (continued)
<TABLE>
(In thousands)
                                        
                                                                        Accumulated Benefits Exceed Assets -
                               Assets Exceed Accumulated Benefits -      Executive Supplemental Pension Plan
                                      Retirement Plan                       and Management Retirement Plan
                               ----------------------------------       ------------------------------------
For the Fiscal Year Ended   
                               May 31,     June 1,     June 3,           May 31,      June 1,      June 3,
                                1997        1996        1995              1997         1996         1995
                               ----------------------------------       ------------------------------------
Components of pension
  (income)/expense:
<CAPTION>
<S>                            <C>        <C>          <C>                <C>          <C>         <C>
    Service cost...............$    0     $    0       $    0             $    81       $   63     $    82
    Interest cost..............   341        354          544                 230          251         315
Actual return on plan assets...  (700)      (833)        (174)                  0            0           0
Amortization and deferral......   341        526         (413)                122          122         141
Curtailment loss...............     0          0            0                   0            0         288
Settlement loss (gain).........     0          0          115                   0            0        (162)
Other..........................     0          0            0                   0            0         102
                               ----------------------------------      -------------------------------------
                               $  (18)    $   47       $   72             $   433       $  436     $   766
                               ==================================      =====================================
Plan assets at fair value......$4,859     $4,766       $6,679             $     0       $    0     $     0
                               ==================================      ===================================== 

Actuarial present value of
  projected benefit
  obligations:
    Accumulated benefit
    obligations:
      Vested................... 4,210      4,691        6,532               1,950        1,606       3,919
      Nonvested................     0          0            0                   0            0           9
Provision for future salary
  increases....................     0          0            0               1,296        1,116       1,009
                               ----------------------------------      -------------------------------------
Total projected benefit
  obligations.................. 4,210      4,691        6,532               3,246        2,722       4,937
                               ----------------------------------      -------------------------------------
Excess (deficit) of plan
  assets over projected
  benefit obligations..........   649         75          147              (3,246)      (2,722)     (4,937)
Unrecognized net loss (gain)      150        642        1,300                 258          216        (302)
Unrecognized prior service
  cost.........................     0          0            0                 289          351         760
Unrecognized net transition
  obligations..................   348        412          714                 576          541       1,133
Additional minimum liability...     0          0            0                (452)        (376)       (660)
                               ----------------------------------      -------------------------------------
Prepaid (accrued) pension
   cost........................$1,147     $1,129       $2,161             $(2,575)     $(1,990)    $(4,006)
                               ==================================      =====================================
</TABLE>

The weighted average discount rate for all three plans was 8.25%, 7.75% and 8.5%
for 1997, 1996  and  1995, respectively.  The rate of increase in compensation
levels  for the Executive Supplemental Pension Plan and Management Retirement 
Plan was 4% for 1997,  1996 and 1995.  The expected long-term rate of return
on plan assets for the Retirement Plan was 10% for all three years.


8.  Postretirement Benefits Other Than Pensions

The Company provides health care benefits and life insurance benefits to
eligible  retirees.   Benefits are funded as  medical  claims  and  life
insurance   premiums  are  incurred.   Retirees  become   eligible   for
retirement  benefits if they have met certain service  and  minimum  age
requirements  at  date  of  retirement.  The  Company  accrues  expenses
related to postretirement health care and life insurance benefits during
the years an employee provides services.

<TABLE>
The  actuarial  present  value  of  accumulated  postretirement  benefit
obligations  and the amounts recognized in the Company's  balance  sheet
are as follows:

                                                           (In thousands)
                                               ----------------------------------
                                                       Fiscal Year Ended
                                               ----------------------------------
                                               May  31, 1997       June 1, 1996
                                               ----------------------------------
<CAPTION>
<S>                                                 <C>                  <C>  
Retirees.......................................     $1,609               $1,591
Fully eligible active plan participants........        202                  196
Other active plan participants.................        123                  117
                                               ----------------------------------
Accumulated postretirement benefit obligation..      1,934                1,904
Unrecognized net loss..........................       (328)                (409)
                                               ----------------------------------
Accrued postretirement benefit cost............     $1,606               $1,495
                                               ==================================
</TABLE>
The postretirement benefit cost is as follows:
                                                (In thousands)
                                        -------------------------------
                                           For the Fiscal Year Ended
                                        -------------------------------
                                          May 31,    June 1,    June 3,
                                            1997       1996       1995
                                        --------    -------    --------

Service cost............................     $7         $8          $7
Interest cost...........................    140        155         104
Amortization of unrecognized net loss...     23         28          32
                                        --------    -------    --------
Postretirement benefit cost.............   $170       $191        $143
                                        ========    =======    ========

The   assumed  health  care  cost  trend  rate  used  in  measuring  the
accumulated postretirement benefit obligation was 0% because the Company
has  frozen current and future contribution levels. Increases in  health
care  cost  due  to factors such as inflation, changes  in  health  care
utilization or delivery patterns, technological advances and changes  in
the   health  status  of  plan  participants  will  be  borne   by   the
participants.   Measurement  of the accumulated  postretirement  benefit
obligation was based on an assumed 8.25%, 7.75% and 8.50% discount  rate
for fiscal years 1997, 1996 and 1995, respectively.


9.  Preferred Stock

Under  its  Certificate of Incorporation, the Company is  authorized  to
issue  preferred  stock with a par value of $0.01 in an  amount  not  to
exceed 250,000 shares which may be divided into and issued in designated
series,   with   dividend  rates,  rights  of  conversion,   redemption,
liquidation  prices and other terms or conditions as determined  by  the
Board of Directors.  No preferred shares have been issued as of May  31,
1997.   The  Board of Directors has designated 50,000 of such shares  as
Series  A Junior Participating Preferred Stock and has issued rights  to
acquire such shares, upon certain events, with an exercise price  to  be
determined,  but  substantially above the expected trading  price.   The
rights will expire ten years after the date such rights are issued,  and
may  be redeemed prior to ten days after the acquisition of 20% or  more
of the Company's common stock.



10.  Stock Incentive Plans

Under  the  Company's stock incentive plans, incentive and non-qualified
stock  options may be granted to Management, key employees  and  outside
directors  to  purchase shares of Company stock.   The  Morrison  Health
Care, Inc. 1996 Stock Incentive Plan and the Morrison Health Care,  Inc.
1996 Non-Executive Stock Incentive Plan (the Plans) are administered  by
a  Committee,  appointed by the Board, which has complete discretion  to
determine participants and the terms and provisions of stock incentives,
subject to the Plans.   The Plans permit the Committee to make awards of
a  variety of stock incentives, including (but not limited to)  dividend
equivalent rights, incentive stock options, non-qualified stock options,
performance unit awards, phantom shares, stock appreciation  rights  and
stock  awards.  These discretionary awards may be made on an  individual
basis or pursuant to a program approved by the Committee for the benefit
of a group of eligible persons. All options awarded under the Plans have
been at the prevailing market value at the time of issue or grant.   All
options  granted have five or ten year terms and become  exercisable  at
the end of two or three years of continued employment.

At  May 31, 1997, the Company had reserved a total of 804,376 shares  of
common stock under the Company's 1996 Stock Incentive Plan.  At the June
1997 meeting of the Board of Directors, an additional 900,000 shares  of
common  stock  was  reserved  for  this  Plan,  subject  to  stockholder
approval.

In March 1997, the Board of Directors approved a resolution to offer the
Company's  non-executive employees the opportunity  to  reprice  certain
options  which  were  originally granted under the Company's  1996  Non-
Executive  Stock Incentive Plan.  The repricing occurred  on  March  25,
1997,  and resulted in the cancellation of approximately 290,000 options
and  the  granting of approximately 174,000 new options with an exercise
price  equal  to  $13.125,  the closing price  on  March  24,1997.   The
canceled options were replaced with fewer new options in accordance with
a  formula  to result in economic equivalence between the  old  and  new
options.  The new options were granted with two year vesting periods and
ten year terms.

At  May 31,1997, the Company had reserved a total of 2,582,127 shares of
common stock for this Plan.

The Morrison Health Care, Inc. Stock Incentive and Deferred Compensation
Plan  for  Directors provides nonmanagement directors with opportunities
to  defer  the  receipt  of their retainer fees  or  to  allocate  their
retainer  fees to purchase shares of the Company.  In general, the  Plan
sets   a  target  ownership  level  for  nonmanagement  directors.    To
facilitate attaining the target ownership level, the Plan provides  that
the  directors must use 60% of their retainer to purchase shares of  the
Company.   Each  director  purchasing stock receives  additional  shares
equal to 15% of the shares purchased and three times the total shares in
options,  which  after six months vest and become exercisable  for  five
years from the grant date.  All options awarded under the Plan have been
at the prevailing market value at the time of grant.  During 1997, 3,782
shares  were issued under the Plan.  Pursuant to this Plan,  a  one-time
restricted  stock award totaling 5,000 shares was made  in  fiscal  year
1997  to a nonmanagement director.  A Committee, appointed by the Board,
administers  the Plan on behalf of the Company.  At May  31,  1997,  the
Company had reserved 85,251 shares of common stock for this Plan.

Under  the  terms  of  the Distribution, holders of  MRI  stock  options
received adjusted, substitute options in MHCI, MFC and RTI which, in the
aggregate,  preserved the economic value as well as the material  terms,
such  as  option  period,  vesting provisions  and  payment  terms,  the
optionee had in the original MRI options prior to the Distribution.  For
FAS  No.  123 disclosure purposes, these options, if granted  in  fiscal
year 1996, were valued as of the original grant date.

The Company applies APB No. 25 and related interpretations in accounting
for  its  stock incentive plans.  Under APB No. 25, because the exercise
price of the Company's employee stock options equals the market price of
the stock on the date of grant, no compensation expense is recognized.

Pro  forma  information regarding net income and earnings per share  has
been  determined as if the Company had accounted for its employee  stock
options under the fair value method of FAS No. 123.  The fair value  for
these  options  was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted average assumptions for
1997  and 1996, respectively: risk-free interest rates of 6.6% and 6.0%;
volatility  factors of .19 and .22;  dividend yields of 4.3%  and  4.7%;
and weighted average expected lives of 7.6 and 4.8 years.

For  purposes of pro forma disclosures, the estimated fair value of  the
options  is amortized to expense over the options' vesting period.   The
Company's  pro forma information follows (in thousands, except  earnings
per share amounts):

                                       For the Fiscal Year Ended
                                     ------------------------------
                                     May 31,                 June 1,
                                      1997                    1996
                                     ------                 -------
Pro forma net income                 $9,618                  $9,157
Pro forma earnings per share         $ 0.82                  $ 0.78


The effects of applying FAS No. 123 in this pro forma disclosure are not
indicative of future amounts. FAS No. 123 does not apply to awards made
prior to fiscal year 1996, and additional awards are anticipated.

A summary of the Company's stock option activity and related information
for the years ended May 31, 1997 and June 1, 1996 follows:

                                      May 31, 1997           June 1, 1996
                                ---------------------   --------------------
                                            Weighted                Weighted
                                            Average                 Average
                                 Options    Exercise    Option      Exercise
                                  (000)     Price        (000)      Price
                                --------    --------    ------      --------
 

Outstanding - Beginning of year.  2,368    $15.97           0       $  0.00
Converted MRI options...........      0      0.00       1,493         15.55
Granted.........................    493     13.21         950         16.50
Exercised.......................   (200)     9.69         (57)        11.38
Forfeited.......................   (354)    16.78         (18)        24.44
---------------------------------------------------------------------------
Outstanding - End of year.......  2,307    $15.82       2,368        $15.97
===========================================================================
Exercisable at end of year......  1,068    $15.95       1,056        $14.52
===========================================================================

Weighted average fair value
of options granted during
the year........................            $1.89                     $2.70
===========================================================================
Shares available for future
   grants.......................  1,164                 1,305
===========================================================================


The following table summarizes information about stock options
outstanding at the end of:

                             May 31, 1997
                          Options Outstanding              Options Exercisable
                   -----------------------------------   ----------------------
                                            Weighted
                                Weighted    Average                    Weighted
Range of                        Average     Remaining                  Average
Exercise           Number       Exercise    Contractual  Number        Exercise
Prices             Outstanding  Price       Life         Exercisable   Price
-------------------------------------------------------------------------------

$ 8.98 - $13.13        676        $12.16      5.96          317        $11.15
$13.50 - $15.75        596        $14.56      2.70          475        $14.62
$16.50 - $16.50        622        $16.50      3.84            0        $ 0.00
$17.03 - $31.59        413        $22.61      2.40          276        $23.72
-------------------------------------------------------------------------------
                     2,307        $15.82      3.91        1,068        $15.95
===============================================================================


11.  Contingencies

At  May  31, 1997, the Company was contingently liable for approximately
$6.4  million in letters of credit, issued primarily in connection  with
its Workers' Compensation and Casualty insurance programs.

The  Company  is  presently, and from time to time, subject  to  pending
claims and lawsuits arising in the ordinary course of its business.   In
the  opinion  of  Management, the ultimate resolution of  these  pending
legal  proceedings  will  not  have a material  adverse  effect  on  the
Company's operations or financial position.

Prior  to  the Distribution, the Company entered into an agreement  with
MFC  and  RTI  providing  for  assumptions  of  liabilities  and  cross-
indemnities  designed to allocate generally, among the three  companies,
effective  as  of  the Distribution date, financial  responsibility  for
liabilities  arising  out of or in connection with  business  activities
prior  to the Distribution.  No significant amounts were incurred  under
this agreement during fiscal year 1997 or 1996.

     
12.  Supplemental Quarterly Financial Data (Unaudited)

Quarterly financial results for the years ended May 31, 1997 and June 1,
1996 are summarized below.  All quarters are composed of 13 weeks.
Amounts presented are in thousands.
     
<TABLE>
     
                                   First      Second     Third    Fourth
                                   Quarter    Quarter    Quarter  Quarter     Total
                                   ===================================================
<CAPTION>
<S>                                <C>        <C>        <C>       <C>        <C>
For the year ended May 31, 1997
Revenues...........................$52,658    $54,355    $57,483   $56,515    $221,011
                                   ===================================================
Gross profit*......................$ 9,634    $10,291    $ 9,416   $10,437    $ 39,778
                                   ===================================================
Income before income taxes.........$ 4,619    $ 4,648    $ 3,695   $ 4,614    $ 17,576
Provision for federal and state
  income taxes.....................  1,923      1,922      1,533     1,912       7,290
                                   ---------------------------------------------------
Net income.........................$ 2,696    $ 2,726    $ 2,162   $ 2,702    $ 10,286
                                   ===================================================
Earnings per common and common
  equivalent share.................$  0.23    $  0.23    $  0.18   $  0.23    $   0.87

For the year ended June 1, 1996:
Revenues...........................$56,289    $56,592    $54,224   $52,890    $219,995
                                   ===================================================
Gross profit*......................$10,326    $10,747    $ 8,417   $ 9,898    $ 39,388
                                   ===================================================
Income before income taxes.........$ 5,677    $ 4,827    $ 1,216   $ 4,291    $ 16,011
Provision for federal and state
  income taxes.....................  2,342      2,082        505     1,802       6,731
                                   ---------------------------------------------------
Net income.........................$ 3,335    $ 2,745    $   711   $ 2,489    $  9,280
                                   ===================================================
</TABLE>
*The Company defines gross profit as revenue less operating expenses.

Common Stock Market Prices and Dividends

Morrison  Health Care, Inc. common stock is publicly traded on  the  New
York  Stock Exchange (NYSE) under the ticker symbol MHI.  The  following
table  sets  forth the reported high and low prices on the NYSE  or  the
high  and  low bid prices for each quarter during fiscal years 1997  and
1996.
<TABLE>
                                   First       Second     Third      Fourth
                                   Quarter     Quarter    Quarter    Quarter    Total
                                   ---------------------------------------------------
<CAPTION>
<S>                                <C>         <C>        <C>        <C>        <C>
1997 market price per share:
  High.............................$15.000     $14.375    $14.875    $16.500
  Low..............................$11.125     $10.750    $13.250    $13.000

1996 market price per share

  High.............................  N/A          N/A       N/A      $18.375
  Low..............................  N/A          N/A       N/A      $13.750


Cash dividends on the common stock of Morrison Health Care, Inc. were
paid during each quarter of fiscal years 1997 and 1996 as follows:

1997 cash dividends per share.......$0.205      $0.205     $0.205    $0.205     $0.820
1996 cash dividends per share......   N/A          N/A        N/A    $0.205     $0.205
</TABLE>

On  June 26, 1997, the Company's Board of Directors declared a quarterly
dividend   of  $0.205  per  share  payable  July  31,  1997,  to   5,737
shareholders of record on July 11, 1997.








                     Report of Independent Auditors
                                    

Stockholders and Board of Directors
Morrison Health Care, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Morrison
Health Care, Inc. and Subsidiaries as of May 31, 1997 and June 1,  1996,
and  the related consolidated statements of income, stockholders' equity
and  cash  flows for each of the three fiscal years in the period  ended
May  31, 1997. These financial statements are the responsibility of  the
Company'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 consolidated financial position of
Morrison Health Care, Inc. and Subsidiaries at May 31, 1997 and June  1,
1996,  and  the consolidated results of their operations and their  cash
flows  for  each of the three fiscal years in the period ended  May  31,
1997, in conformity with generally accepted accounting principles.


/s/ERNST & YOUNG LLP

Atlanta, Georgia
June 19, 1997




The Board of Directors     Transfer Agent, Registrar,    Annual Meeting
                           Dividend Disbursing Agent     The annual meeting of
John B. McKinnon           and Dividend Reinvestment     Stockholders will be
Chairman of the Board,     Plan Administrator            held Tuesday,
Former Dean, Babcock       AmSouth Bank, N.A.            September 23, 1997,
Graduate School of         Post Office Box 11426         starting at 1:00
Management,Wake Forest     Birmingham, AL  35202         p.m., EDT, at the
University and Former                                    Renaissance Atlanta
President, Sara Lee        Dividend Reinvestment Plan    Hotel-Concourse, One
Corporation                For information contact the   Hartsfield Centre
                           Shareholders Relations        Parkway, Atlanta,
Glenn A. Davenport         Department or the Dividend    GA  30354.
President and Chief        Reinvestment Plan
Executive Officer          Administrator.                Officers of the
                                                         Company
Claire L. Arnold (1, 2)    Independent Auditors          Glenn A.Davenport
Former Chief Executive     Ernst & Young LLP             President and Chief
Officer NCC L.P.           600 Peachtree Street          Executive Officer
                           Atlanta, GA  30308
E. Eugene Bishop (1, 2)                                  K. Wyatt Engwall
Former Chairman of the     Legal Counsel                 Senior Vice
Board and Chief Executive  Powell, Goldstein, Frazer &   President, Finance
Officer of Morrison        Murphy, LLP                   and Assistant
Restaurants Inc.           191 Peachtree Street, N.E.    Secretary
                           Atlanta, GA  30303
Fred L. Brown (1, 2)                                     John E. Fountain
President and Chief        Common Stock                  Vice President,
Executive Officer,         The Common Stock of           General Counsel
BJC Health Systems         Morrison Health Care, Inc.    and Secretary
                           is traded on the New York
                           Stock Exchange.               Carolyn L. Kolesar
Arthur R. Outlaw, Jr.      (NYSE symbol: MHI)            Senior Vice President
(1, 2)
Chairman of the Board      Executive and Operating       Frances G. Michels
and Chief Executive        Offices                       Senior Vice
Officer of Marshall        1955 Lake Park Dr. SE,        President, Support
Biscuit Company.           Suite 400                     Services
                           Smyrna, GA  30080
Dr. Benjamin F. Payton     770-437-3300                  Jerry D.Underhill
(1, 2)                                                   Senior Vice
President, Tuskegee        Form 10-K Information         President, Sales and
University                 A copy of the Company's       Marketing
                           annual report on Form 10-K,  
Committees of the Board    excluding exhibits, filed
                           with the Securities and
1. Compensation and        Exchange Commission, will
    Stock Option*          be furnished to any
2. Audit*                  shareholder without
                           charge upon written
* Comprised entirely of    request to the Shareholders
nonemployee Board          Relations Department,
Members                    1955 Lake Park Dr. SE,
                           Suite 400
                           Smyrna, GA  30080.