Selected Financial Data
             Morrison Management Specialists, Inc. and Subsidiaries

The following table  summarizes  certain  selected  financial  information  with
respect to Morrison Management  Specialists,  Inc. (the "Company" or "MMSI") and
is derived from the Financial Statements of MMSI. The Selected Financial Data of
MMSI is  presented  as if MMSI had been a separate  entity for fiscal years 1996
and 1995. The  information  set forth below should be read in  conjunction  with
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and the Financial  Statements of MMSI and notes  thereto.  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 year 1995 as MMSI
was not a separate publicly held company prior to March 1996.


<TABLE>

-----------------------------------------------------------------------------------------------------------------------------------
                                                                                 For The Fiscal Year *
-----------------------------------------------------------------------------------------------------------------------------------
(In thousands except per share data)                           1999          1998           1997          1996           1995
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S>                                                        <C>           <C>            <C>           <C>            <C>
Consolidated statements of income data:
 Managed volume (estimated and unaudited)................. $ 647,900     $ 504,400      $ 464,800     $ 435,600      $ 408,300
                                                          =========================================================================
 Revenues................................................. $ 324,968     $ 250,371      $ 221,011     $ 219,995      $ 225,392
                                                          =========================================================================
 Income before provision for income taxes................. $  22,197     $  19,065      $  17,576     $  16,011      $  65,295
 Provision for federal and state income taxes.............     8,657         7,513          7,290         6,731         28,469
                                                          -------------------------------------------------------------------------
 Net income............................................... $  13,540     $  11,552      $  10,286     $   9,280      $  36,826**
                                                          =========================================================================
 Earnings per share - Basic............................... $    1.14     $    0.97      $    0.87     $    0.79
                                                          =====================================================

 Earnings per share - Diluted............................. $    1.12     $    0.95      $    0.87     $    0.79
                                                          =====================================================
 Weighted average common shares - Basic...................    11,883        11,938         11,785        11,673
 Net dilutive effect of stock options and
   nonvested stock awards.................................       222           254             56            51
                                                          -----------------------------------------------------
 Weighted average common shares - Diluted.................    12,105        12,192         11,841        11,724
                                                          =====================================================

  *Fiscal years 1999 and 1998 are twelve-month years. Fiscal years 1997, 1996 and 1995 are composed of 52 weeks.
 **Includes  an after-tax  gain of $25.8  million from the sale of 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.

</TABLE>
<TABLE>
<S>                                                        <C>           <C>            <C>           <C>            <C>

Other Financial Data:
 Total assets............................................. $ 102,927     $  84,374      $  60,203     $  61,101      $  69,028
 Long-term debt........................................... $  49,305     $  31,690      $  15,022     $  20,034      $  19,245
 Stockholders' equity..................................... $  14,563     $  10,220      $   6,969     $   5,645      $   9,015
 Cash dividends per share of common stock................. $    0.16     $    0.82      $    0.82     $   0.205***           -
 Working capital.......................................... $  15,670     $   7,344      $   3,891     $   8,677      $  13,318
 Current ratio............................................     1.6:1         1.2:1          1.1:1         1.3:1          1.5:1
</TABLE>

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

<PAGE>


           Management's Discussion and Analysis of Financial Condition
                           and Results of Operations

             Morrison Management Specialists, Inc. and Subsidiaries

This discussion should be read in conjunction with the Financial  Statements and
related notes found on pages 22 to 34.

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
public corporation  trading under the symbol MHI on the New York Stock Exchange.
MHCI subsequently changed its name to Morrison Management Specialists, Inc. (the
"Company" or "MMSI")  effective  June 30,  1999.  Management  believes  that the
Distribution  has had a material  impact on the results of operations due to the
added separate company costs that were incurred by MMSI.

1999 Compared To 1998

Overview
MMSI is the only national,  publicly held company which specializes  exclusively
in providing  food,  nutrition and dining services to the health care and senior
living  industries.  MMSI's  client base  includes  some of the largest and most
prominent hospitals,  health systems and senior living communities in the United
States.

In fiscal  year 1999,  MMSI's  third full year as an  independent  company,  the
Company again demonstrated  strong financial results,  with increases in managed
volume, revenue, operating profit and net income. These accomplishments were due
to strong new account sales,  high account  retention,  continued  focus on cost
reductions  in all  accounts,  and growth in existing  accounts.  Hospitals  are
experiencing  increasing  cost  pressures  and many are  outsourcing  their food
services to achieve  cost  reductions  along with  patient  satisfaction  goals.
Another  prime factor which added to the increases in managed  volume,  revenue,
operating profit and net income was the acquisition of Culinary Service Network,
Inc. in October 1998.  Culinary Service Network was MMSI's third  acquisition in
the senior living market. The experience and practices of these industry experts
create a solid  foundation  for further  developing  and  growing  the  nation's
foremost  senior  living  services  business.  (See  Note  2  of  the  Notes  to
Consolidated Financial Statements for more information.)

Managed Volume/Revenue
The Company generally performs its services pursuant to either management fee or
profit and loss contracts. While actual services performed are the same, revenue
recognition  varies by type of  contract.  In a  management  fee  account,  MMSI
manages the services and  facilities,  but the client is responsible  for all or
nearly all the costs.  Revenues  and fees are  recognized  for the amount of the
contractually  agreed-upon  management  fee and any earned  incentives  plus the
amount of any expenses or employee payroll costs paid by the Company and charged
back to the  client.  In a profit and loss  account,  MMSI  assumes  the risk of
profit or loss for the food service operation.  For such accounts, 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  (net  management  fees  plus
reimbursed  expenses)  and the profit and loss account  (gross  revenues of meal
sales),  Management uses the concept of managed volume to evaluate the Company's
true growth.  Managed  volume is defined by MMSI as the total costs of operating
the food services,  regardless of which type of contract exists with the client.
Management  believes managed volume is its best indicator of performance because
it measures total  activity from all client  accounts and provides an indication
of what gross revenues would be if the Company  performed all services  pursuant
to profit and loss  contracts.  Management  uses managed volume as an additional
indicator of performance  and not as a replacement of measures such as revenues,
as defined and required by generally accepted accounting principles.

Managed volume increased  $143.5 million,  or 28.5%, to $647.9 million in fiscal
year 1999 when compared to fiscal year 1998. Revenue increased $74.6 million, or
29.8%,  to $325.0  million in fiscal  year 1999 as compared to fiscal year 1998.
The primary  sources of these  increases  were opening more and larger  accounts
than  accounts  which were  closed,  key  acquisitions,  and growth at  existing
accounts, including adding vending operations and increasing employee payrolls.

Gross Profit
Gross  profit,  defined as revenue  less  operating  expenses,  increased  $11.2
million or 26.0% for fiscal year 1999.  Management's  continued emphasis on food
and labor cost reductions, acquisitions, and growth of existing account business
all contributed to the favorable results.

Selling, General and Administrative
Selling,  general and administrative expenses were 4.6% of managed volume, which
is a slight increase over the 4.5% of managed volume in fiscal year 1998.

Interest Expense, Net
Interest  expense  increased  110% compared to the prior year due to higher debt
levels  associated  with  the  Company's   acquisitions  and  increased  capital
expenditures for both the Advanced Culinary  Centers(TM) and improvements to the
Company's management information systems.

Federal and State Income Taxes
The combined  federal and state  effective  tax rate  decreased to 39% in fiscal
year 1999 from 39.4% in fiscal year 1998.

1998 COMPARED TO 1997

Overview
In MMSI's  second full year as an  independent  company,  fiscal year 1998,  the
Company  showed strong  financial  results,  with  increases in managed  volume,
revenue,  operating  profit  and net  income.  The  accomplishments  were due to
continued focus on cost reductions in all accounts, growth in existing accounts,
strong new account sales,  and the  acquisitions of Drake  Management  Services,
Inc. (January 1998) and Spectra Services, Inc. (March 1998) in the senior living
market. (See Note 2 of the Notes to Consolidated  Financial  Statements for more
information.)

Managed Volume/Revenue
In fiscal year 1998, managed volume increased $39.6 million,  or 8.5%, to $504.4
million when compared to fiscal year 1997.  Revenue increased $29.4 million,  or
13.3%,  to $250.4  million in fiscal  year 1998 as compared to fiscal year 1997.
The  primary  sources  of these  increases  were  growth at  existing  accounts,
including adding vending operations and increasing  employee  payrolls,  opening

<PAGE>

more  accounts and larger  accounts  than  accounts  which were closed,  and key
acquisitions.

Gross Profit
Gross profit  increased $3.3 million,  or 8.4%, to $43.1 million for fiscal year
1998. Growth of existing account business,  continued emphasis on food and labor
cost reductions, and acquisitions all contributed to the favorable results.

Selling, General and Administrative
Selling,  general and  administrative  expenses  decreased  as a  percentage  of
managed volume and revenue, although they increased overall when compared to the
prior year.  The  expenses  were 4.5% of managed  volume in fiscal year 1998 and
were 4.6% of managed  volume in fiscal year 1997.  Compared to fiscal year 1997,
the expenses increased $1.5 million, or 7.1%, versus a revenue increase of 13.3%
for the same period.

Interest Expense, Net
Interest  expense  increased 39.0% compared to the prior year due to higher debt
levels  associated  with  the  Company's   acquisitions  and  increased  capital
expenditures for both the Advanced Culinary  Centers(TM) and improvements to the
management information systems.

Federal and State Income Taxes
The combined  federal and state  effective tax rate decreased to 39.4% in fiscal
1998 from 41.5% in fiscal 1997. The higher  effective  income tax rate in fiscal
1997 as  compared  to fiscal  1998 is  primarily  due to  higher  non-deductible
expenses in fiscal 1997.

YEAR 2000

The "Year 2000 Issue" is a term used to  describe  the  problems  created by the
inability  of certain  computer  software  programs  to properly  recognize  and
process  date-sensitive  information  relative to dates after December 31, 1999.
These  problems  arise  mostly from the fact that many  software  programs  have
historically  been  programmed to accept only two digit entries in the date code
fields and use such two digit entries in the software's  calculation  and report
generation formats.

State of Readiness
The Company is  currently  addressing  the impact of the Year 2000 Issue.  After
completing  inventories of its technology  systems,  MMSI elected to replace its
most critical system, a  shared-mainframe  corporate system,  with client-server
systems architected using Year 2000 standards. The transition to this new system
began in June 1997 and was completed in January 1999. The Company  continues its
testing and  preparations  of other  systems,  which it  anticipates  completing
before  December 31, 1999. In addition,  the Company has verified that all other
significant vendor licensed software applications are either currently year 2000
compliant or will be by December 31, 1999.

Costs
The Company's technology initiatives include both preparations for the Year 2000
Issue and significant system upgrades and enhancements. While it is not possible
to give an  estimate of the costs  specifically  related to the Year 2000 Issue,
the total cost of the  Company's  technology  initiatives  is  approximately  $5
million, substantially all of which has been incurred.

External Relationships
All major  suppliers  have provided  letters  assuring the Company of their Year
2000  readiness.  To date,  the Company is not aware of any  external  supplier,
vendor or other  party with a Year 2000 Issue that would  materially  impact the
Company's results of operations,  liquidity or capital resources.  However,  the
Company has no means of ensuring  that  external  parties will be ready for Year
2000 Issues.

Risks
Management  of the  Company  believes  it has an  effective  program in place to
resolve problems related to the Year 2000 Issue in a timely manner. There can be
no assurance that the Company will be completely  successful in its preparations
to address the Year 2000 Issue.  If the Company is not completely  successful in
its  preparations,  the  Company  could  suffer  loss of sales or other  adverse
consequences,  including, but not limited to, diversion of resources,  damage to
the Company's  reputation  and increased  litigation,  any of which could have a
material  adverse  effect on the  Company's  business  operations  or  financial
statements.

The Company's year 2000  compliance is also dependent on external  parties which
exposes it to risks  including,  but not  limited  to, loss of local or regional
utilities,  loss of  telecommunications  services and delays or cancellations by
suppliers.  Because of the Company's  dependence upon certain  external  parties
being  year  2000  compliant  on  a  timely  basis   (including   infrastructure
providers),  there can be no  assurance  that the  Company's  preparations  will
prevent a material  adverse  effect on its  business,  results of  operations or
financial condition.

Contingency Plans
The Company  maintains  manual  procedures in the normal course of business that
may be utilized if the Company,  or an external  party upon which the Company is
dependent,  is unable to achieve year 2000  readiness.  Although the Company has
not formalized a comprehensive contingency plan specific to the Year 2000 Issue,
the Company's year 2000 preparations are ongoing and its ultimate scope, as well
as the  consideration  of  formalized  contingency  plans,  will  continue to be
evaluated as new information becomes available.

See "Special Note Regarding Forward-Looking Information."

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow, Capital Expenditures and Financing
Due to the nature of its contract food service business,  the Company is able to
maintain  a  relatively   steady  cash  flow.  Cash  flow  from  operations  has
historically financed MMSI's capital investments.  MMSI plans for 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."

In July 1998, the Company  replaced its $50 million  credit  facility with a $75
million revolving credit line from four financial  institutions.  The new credit
line has a variable  interest rate based on LIBOR and variable  interest payment
requirements.  The  principal  is due no later  than July 2, 2003.  The  initial

<PAGE>

amount  borrowed was $35.4  million,  all of which was used to repay the balance
due on the $50 million and $5 million credit facilities.

In June 1998, the Company  entered into two interest rate swap  agreements  with
notional  amounts  of $10  million  each to reduce  the impact of changes in the
interest rates on its floating rate debt and to exchange floating rate for fixed
rate payments on certain debt.  These swap  agreements  effectively  convert $20
million of  variable  rate  borrowings  to fixed  rates of  approximately  5.6%.
Interest  expense is  adjusted  for the  differential  to be paid or received as
interest rates change.  The effect of such  adjustments on interest  expense has
not been  significant.  The Company's  swap  agreements  expose it to market and
credit risks which are inherent in all interest  rate swaps.  Counterparties  to
these  agreements are major financial  institutions.  Consequently,  the Company
believes  that the credit risk of its swap  agreements  is minimal.  The Company
does not believe that any reasonably  likely change in near-term  interest rates
would have a material adverse effect on the future earnings or cash flows of the
Company.

As a result  of the new  credit  facility,  the  related  swap  agreements,  the
Company's  strong  financial  position,  and the general  decline in LIBOR,  the
Company's  effective  interest rate was decreased  from  approximately  6.65% in
fiscal year 1998 to 5.75% in fiscal year 1999.

On May 31, 1999,  MMSI had $49.4 million  outstanding in total debt, an increase
of $12.7 million from the prior year.

Trade accounts  receivable  make up the majority of MMSI'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.

MMSI requires  capital  principally for  acquisitions,  new accounts,  equipment
replacement and remodeling of existing accounts and the construction of Advanced
Culinary  Centers(TM).  Cash provided by operating activities  approximated $8.1
million for fiscal  year 1999.  Capital  expenditures  were  approximately  $8.4
million,  a decrease of $0.5 million compared to the prior year period.  Capital
expenditures  are anticipated to total $10 million to $15 million in fiscal year
2000. Cash used for  acquisitions  and related costs was $6.9 million for fiscal
year 1999, a decrease of $0.6 million  compared to the prior year. MMSI plans to
finance this amount primarily through  internally  generated funds. See "Special
Note Regarding Forward-Looking Information."

Stock Repurchase Program
In March 1998,  MMSI's Board of Directors  authorized a program to repurchase up
to 1,000,000  shares of the  Company's  Common  Stock.  During fiscal year 1999,
777,210  shares of the Company's  stock were  purchased at an aggregate  cost of
$14.5  million.  Subsequent to year end, in June 1999,  the  Company's  Board of
Directors authorized the repurchase of an additional 1,000,000 shares.

Working Capital
As of May 31, 1999,  working  capital was $15.7  million while the current ratio
was  1.6:1.  Working  capital  increased  $8.3  million  and the  current  ratio
increased 0.4 when compared to the prior year.

Dividends
MMSI paid  approximately  $1.9 million in cash dividends to stockholders  during
fiscal year 1999.  The Company  plans to pay annual  dividends of  approximately
$1.9  million  in  the  next  fiscal   year.   See   "Special   Note   Regarding
Forward-Looking Information."

KNOWN EVENTS, UNCERTAINTIES AND TRENDS

Impact of Inflation
In the past, MMSI 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 MMSI's ability to recover such
cost  increases  in their  entirety.  Historically,  the effects of inflation on
MMSI's net income have not been materially adverse.  See "Special Note Regarding
Forward-Looking Information."

Management's Outlook
Management  believes  that growth will continue to occur through sales to health
care systems and senior living  communities,  and through expanding  services at
the Company's existing accounts and the Advanced Culinary Centers(TM).  Morrison
Healthcare  Food Services,  the Company's  health care  division,  believes that
pressures on hospitals  and health care systems to outsource  food  services are
increasing due to the Balanced Budget Act and managed care.  Management believes
these pressures will aid the continued  growth of MMSI. The Company also expects
growth  to  come  from  its  newly  created  Morrison  Senior  Dining  division.
Management  believes growth in this division will result  primarily from focused
expertise and the ability to provide  unique dining  solutions for senior living
communities.

MMSI  serves  some of the  largest  and most  prominent  hospitals,  health care
systems, and senior living communities in the United States. The Company strives
to maintain its long-term  partnerships with these facilities and communities by
continuing to increase  quality and lower costs.  During the upcoming year, MMSI
believes that additional  investments in its team members and programs  designed
to enhance  its  aggressive  sales  drive will add new  clients  while  building
stronger  relationships  with  current  accounts.  By  focusing on its market of
hospitals and health care systems and expanding  into the senior living  market,
the Company believes that it is strategically  positioned for strong 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, impact of the Year
2000, future capital expenditures and borrowings,  the payment of dividends, the
impact of inflation and the effects of Management's  strategies for growth.  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;  impact  of the year  2000;  and  laws  and  regulations
affecting labor and employee benefit costs.


<PAGE>
<TABLE>


                        Consolidated Statements of Income
             Morrison Management Specialists, Inc. and Subsidiaries


                                                          For the Fiscal Year Ended
-----------------------------------------------------------------------------------------------------
(In thousands, except per share data)            May 31, 1999     May 31, 1998     May 31, 1997
-----------------------------------------------------------------------------------------------------
<CAPTION>
<S>                                                  <C>              <C>              <C>

Revenues........................................     $324,968         $250,371         $221,011
Operating expenses..............................      270,637          207,265          181,233
                                                -----------------------------------------------------
Gross Profit....................................       54,331           43,106           39,778
Selling, general and administrative expenses....       29,776           22,919           21,395
                                                -----------------------------------------------------
                                                       24,555           20,187           18,383
Interest expense, net of interest income of
  $396 in 1999, $406 in 1998, and $687 in 1997..        2,358            1,122              807
                                                -----------------------------------------------------
Income before provision for income taxes........       22,197           19,065           17,576
Provision for federal and state income taxes....        8,657            7,513            7,290
                                                -----------------------------------------------------
Net income......................................     $ 13,540         $ 11,552         $ 10,286
                                                =====================================================

Earnings per share - Basic......................     $   1.14         $   0.97         $   0.87
Earnings per share - Diluted....................     $   1.12         $   0.95         $   0.87

Weighted average common shares - Basic..........       11,883           11,938           11,785
Net dilutive effect of stock options and
  nonvested stock awards........................          222              254               56
                                                -----------------------------------------------------
Weighted average common shares - Diluted........       12,105           12,192           11,841
                                                =====================================================

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



<PAGE>

<TABLE>

                           Consolidated Balance Sheets
             Morrison Management Specialists, Inc. and Subsidiaries

 (In thousands)                              May 31, 1999      May 31, 1998
--------------------------------------------------------------------------------
<CAPTION>
<S>                                            <C>               <C>
Assets
Current assets:
 Cash and short-term investments.............  $ 2,780           $ 5,720
 Receivables:
  Trade, less allowance for doubtful
    accounts of $712 at May 31, 1999 and
    $887 at May 31, 1998.....................   27,804            21,381
  Other......................................    6,231             6,372
 Inventories.................................    2,940             2,936
 Prepaid expenses............................    2,312             1,262
 Deferred income tax benefits................    1,747             1,949
                                             -----------------------------------
Total current assets.........................   43,814            39,620

Property and equipment - at cost:
 Buildings and improvements..................    5,931             3,425
 Equipment...................................   24,923            16,037
 Construction in progress....................      121             4,729
                                             -----------------------------------
                                                30,975            24,191
 Less accumulated depreciation...............   12,376            10,232
                                             -----------------------------------
                                                18,599            13,959

Deferred income tax benefits.................    2,947             2,503
Cost in excess of net assets acquired, net...   18,331            12,097
Notes receivable, less current portion.......    3,626             3,729
Other assets.................................   15,610            12,466
                                             -----------------------------------
Total assets................................. $102,927           $84,374
                                             ===================================

Liabilities and Stockholders' Equity:
Current liabilities:
 Accounts payable............................  $15,091           $14,545
 Accrued liabilities:
  Taxes, other than income taxes.............    2,187             1,818
  Payroll and related costs..................    7,322             6,395
  Insurance..................................    1,909             2,289
  Other......................................    1,499             2,207
 Current portion of long-term debt...........      136             5,022
                                             -----------------------------------
Total current liabilities....................   28,144            32,276

Long-term debt...............................   49,305            31,690
Other liabilities............................   10,915            10,188

Stockholders' equity:
 Common stock, $0.01 par value (authorized
  100,000 shares; issued: 1999 - 11,977
  shares, 1998 - 12,379 shares)..............      120               124
 Capital in excess of par value..............    3,324            12,859
 Unearned ESOP shares........................   (2,806)           (3,195)
 Deferred Compensation Plan liability
  payable in Company stock...................    1,518             1,848
Retained earnings............................   13,925             2,322
                                             -----------------------------------
                                                16,081            13,958
 Less cost of treasury/Company stock
  held by Deferred Compensation Plan.........    1,518             3,738
                                             -----------------------------------
Total stockholders' equity...................   14,563            10,220
                                             -----------------------------------
Total liabilities and stockholders' equity... $102,927           $84,374
                                             ===================================
</TABLE>

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


<PAGE>
<TABLE>


                      Consolidated Statements of Cash Flows
             Morrison Management Specialists, Inc. and Subsidiaries


                                                         For the Fiscal Year Ended
-----------------------------------------------------------------------------------------------
(In thousands)                                   May 31, 1999    May 31, 1998    May 31, 1997
-----------------------------------------------------------------------------------------------
<CAPTION>
<S>                                                  <C>             <C>             <C>

Operating activities:
Net income.......................................    $ 13,540        $ 11,552        $ 10,286
Adjustments to reconcile net income to net cash
  provided by operating activities:
Depreciation and amortization....................       3,254           2,538           1,992
Amortization of intangibles......................         860             377             153
Deferred income taxes............................        (182)           (811)            514
(Gain)/loss on disposition of assets.............        (112)            (19)             29
Changes in operating assets and liabilities:
  Receivables....................................      (5,949)         (6,359)          2,486
  Inventories....................................          (4)           (246)            (24)
  Prepaid and other assets.......................      (4,141)         (3,420)            241
  Accounts payable, accrued and other
    liabilities..................................         855           3,430           4,699
                                                  ---------------------------------------------
Net cash provided by operating activities........       8,121           7,042          20,376
                                                  ---------------------------------------------
Investing activities:
Purchases of property and equipment..............      (8,389)         (8,850)         (4,843)
Proceeds from disposal of assets.................         799             268             459
Acquisition of businesses, net of cash acquired..      (6,859)         (7,464)              0
                                                  ---------------------------------------------
Net cash used  by investing activities...........     (14,449)        (16,046)         (4,384)
                                                  ---------------------------------------------
Financing activities:
Net proceeds from long-term debt.................      18,323          21,690               0
Principal payments on long-term debt.............      (7,309)         (5,011)            (11)
Net change in short-term borrowings..............       1,570               0          (6,760)
Proceeds from exercise of stock options and
 issuance of stock, net of income tax benefits...       6,766           3,054             679
Dividends paid...................................      (1,937)         (9,877)         (9,725)
Payments to acquire Treasury Stock...............     (14,539)         (1,891)              0
ESOP shares released.............................         514             412              84
                                                  ---------------------------------------------
Net cash provided/(used) by financing activities.       3,388           8,377         (15,733)
                                                  ---------------------------------------------
(Decrease)/Increase in cash and
  short-term investments.........................      (2,940)           (627)            259
Cash and short-term investments at the
    beginning of the year........................       5,720           6,347           6,088
                                                  ---------------------------------------------
Cash and short-term investments at the
    end of the year..............................    $  2,780         $ 5,720        $  6,347
                                                  =============================================

Supplemental disclosure of cash flow
   information-cash paid for:
 Interest........................................    $  2,924         $ 1,696        $  1,190
 Income taxes....................................    $  9,386         $ 7,933        $  8,000

</TABLE>

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



<PAGE>
<TABLE>
                 Consolidated Statements of Stockholders' Equity
             Morrison Management Specialists, Inc. and Subsidiaries

                                                                           For the Fiscal Year Ended
                                                      ---------------------------------------------------------------------
(In thousands, except per share data)                     May 31, 1999           May 31, 1998           May 31, 1997
                                                      ---------------------------------------------------------------------
                                                       Shares       Amount    Shares      Amount      Shares     Amount
                                                      ---------------------------------------------------------------------
<CAPTION>
<S>                                                    <C>        <C>         <C>        <C>          <C>        <C>
Common Stock
Beginning balance..................................... 12,379     $    124    12,165     $   122      11,791     $  118
Shares issued to ESOP.................................      0            0         0           0         255          3
Shares issued under Stock Incentive Plans.............    470            5       214           2         119          1
Cancellation of Treasury Stock........................   (872)          (9)        0           0           0          0
                                                      ---------------------------------------------------------------------
         Ending balance............................... 11,977          120    12,379         124      12,165        122
                                                      ---------------------------------------------------------------------
Capital in Excess of Par Value
Beginning balance.....................................              12,859                 9,717                  5,441
Shares issued to ESOP.................................                   0                     0                  3,592
Shares issued under Stock Incentive Plans,
 net of income tax benefits...........................               6,761                 3,052                    678
Shares released from ESOP.............................                 125                    90                      6
Cancellation of Treasury Stock........................             (16,421)                    0                      0
                                                      ---------------------------------------------------------------------
         Ending balance...............................               3,324                12,859                  9,717
                                                      ---------------------------------------------------------------------
Unearned ESOP Shares
Beginning balance.....................................   (226)      (3,195)     (249)     (3,517)          0          0
Shares issued to ESOP.................................      0            0         0           0        (255)    (3,595)
Shares released from ESOP.............................     28          389        23         322           6         78
                                                      ----------------------------------------------------------------------
         Ending balance...............................   (198)      (2,806)     (226)     (3,195)       (249)    (3,517)
                                                      ----------------------------------------------------------------------
Deferred Compensation Plan liability
 payable in Company stock
Beginning balance.....................................               1,848                 1,341                    929
Net change ...........................................                (330)                  507                    412
                                                      -----------------------------------------------------------------------
         Ending balance...............................               1,518                 1,848                  1,341
                                                      -----------------------------------------------------------------------
Retained Earnings
Beginning balance.....................................               2,322                   647                     86
Net income............................................              13,540                11,552                 10,286
Cash dividends of $0.16 per share
 in fiscal 1999 and $0.82 per share
 in fiscal 1998 and 1997..............................              (1,937)               (9,877)                (9,725)
                                                      -----------------------------------------------------------------------
         Ending balance...............................              13,925                 2,322                    647
                                                      -----------------------------------------------------------------------
Treasury/Company Stock Held By Deferred
 Compensation Plan
Beginning balance.....................................   (199)      (3,738)      (95)     (1,341)        (62)      (929)
Cancellation/(Purchase) of Treasury Stock.............     95        1,891       (95)     (1,891)          0          0
Sale/(Purchase) of Company Stock - held by
  Deferred Compensation Plan..........................     19          329        (9)       (506)        (33)      (412)
                                                      ------------------------------------------------------------------------
         Ending balance...............................    (85)      (1,518)     (199)     (3,738)        (95)    (1,341)
                                                      ------------------------------------------------------------------------
Total Stockholders' Equity............................            $ 14,563               $10,220                 $6,969
                                                      ========================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.


<PAGE>


                   Notes to Consolidated Financial Statements
             Morrison Management Specialists, Inc. and Subsidiaries

1. Summary of Significant Accounting Policies

Basis of Presentation
On March 9, 1996, Morrison Health Care, Inc. and Subsidiaries  ("MHCI") was spun
off (the "Distribution") from Morrison Restaurants Inc. ("MRI").  Effective June
30, 1999 MHCI changed its name to Morrison  Management  Specialists,  Inc.  (the
"Company" or "MMSI"). Prior to the Distribution,  MMSI was a wholly owned health
care  contract food and nutrition  business of MRI. The  accompanying  financial
statements reflect MMSI as a stand-alone entity.

Use of Estimates
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires Management to make estimates and assumptions that
affect the  reported  amounts of the assets and  liabilities  at the date of the
financial  statements,  and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk
The Company  primarily  competes in the health care food and nutrition  services
and senior living  industries,  and  encounters  significant  competition in the
markets  in which it  operates.  The  length of  contract  varies  by  customer.
Concentration of credit risk with respect to accounts receivable are limited due
to the large number of customers that make up the Company's  customer base, thus
spreading  trade  credit risk.  The Company  maintains  reserves  for  potential
uncollectible  amounts which, in the aggregate,  have not exceeded  Management's
expectations.

Principles of Consolidation
The accompanying  consolidated financial statements include the accounts of MMSI
and its wholly owned  subsidiaries.  All significant  intercompany  accounts and
transactions have been eliminated.

Fiscal Year
Effective with the fiscal year 1998,  the Company's  fiscal year ends on May 31.
The fiscal year ended May 31, 1997  comprised of 52 weeks.  Starting with fiscal
year 1998,  the  Company  changed  from a 52-53 week  fiscal  year to a 12-month
fiscal year ending 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.

Property and Equipment and Depreciation
Property  and  equipment  are  stated  at cost  and are  being  depreciated  for
financial  reporting purposes using the straight-line  method over the estimated
useful lives of the assets. Annual rates of depreciation generally range from 3%
to 5% for buildings and from 10% to 34% for kitchen and other  equipment.  Costs
incurred in connection with the  construction at major facilities or of Advanced
Culinary  Centers(TM)  are  capitalized as  construction  in progress until such
facilities or centers become operational.  Interest is capitalized in connection
with these capitalized  construction costs. The capitalized interest is recorded
as part of the  asset to which it  relates  and is  amortized  over the  asset's
estimated  useful  life.  In fiscal  1999 and 1998,  $219,000  and  $127,000  of
interest was  capitalized,  respectively.  No interest was capitalized in fiscal
1997.

Property and  equipment are  periodically  reviewed for  impairment  based on an
assessment  of future  operations.  The  Company  records  impairment  losses on
long-lived  assets used in operations  when indicators of impairment are present
and the  undiscounted  cash flows  estimated to be generated by those assets are
less than the asset's carrying amount.

Intangible Assets
Excess  of costs  over the fair  value of net  assets  acquired  with  purchased
businesses  generally is amortized on a straight-line basis over periods ranging
from  10 to 40  years.  At May  31,  1999  and May  31,  1998,  the  accumulated
amortization  for costs in excess of net assets  acquired  was $2.8  million and
$1.9 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  generally
performs  its  services  pursuant  to either  management  fee or profit and loss
contracts.  While actual services  performed are the same,  revenue  recognition
varies by type of  contract.  In a  management  fee  account,  MMSI  manages the
services and facilities, but the client is responsible for all or nearly all the
costs.  Revenue  and fees are  recognized  for the  amount of the  contractually
agreed-upon  management  fee and any  earned  incentives  plus the amount of any
expenses or employee  payroll  costs paid by the Company and charged back to the
client.  In a profit and loss  account,  MMSI assumes the risk of profit or loss
for the food  service  operation.  For such  accounts,  the  amount  of  revenue
reported is the actual revenue  generated from meals served to patients,  client
employees and visitors.

<PAGE>

Income Taxes
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
Stock  options are  recorded in  accordance  with  Accounting  Principles  Board
Opinion  ("APB") No. 25, with pro forma  disclosures  of net income and earnings
per share as if Statement of Financial Accounting Standards ("SFAS") No. 123 had
been applied.

New Accounting Standards
In 1997, the Financial Accounting Standards Board issued Statements of Financial
Accounting  Standards  No. 130,  "Reporting  Comprehensive  Income" and No. 131,
"Disclosures about Segments of an Enterprise and Related  Information." In 1998,
the  Financial   Accounting  Standards  Board  issued  Statements  of  Financial
Accounting Standards No. 132,  "Employer's  Disclosures about Pensions and other
Postretirement  Benefits."  These  statements,  which were  effective for fiscal
years beginning after December 15, 1997, expand or modify disclosures and had no
impact on the Company's consolidated  financial position,  results of operations
or cash flow. In June 1998,  the  Financial  Accounting  Standards  Board issued
Statement  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities," which establishes accounting and reporting standards for derivative
instruments.  The statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000 and will be adopted by the Company in fiscal 2002.
Based upon the  Company's  current  limited use of  derivative  instruments  and
hedging  activities,  Management  does not  believe  the  statement  will have a
material impact on the Company's  consolidated  financial  position,  results of
operations or cash flows.

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 at May 31, 1999, May 31, 1998, and May 31,
1997  consisted  of  cash  and  short-term   investments,   accounts  and  notes
receivable,  and long-term debt. The fair value of these  financial  instruments
approximated  the  carrying  amounts  reported  in the balance  sheets.  Cash is
deposited in financial  institutions  which carry FDIC  insurance.  From time to
time,  the cash  balances  in these  institutions  exceed  the  insured  amount.
Management does not believe this is a significant risk to the Company.

The  Company  uses  interest  rate  swap  agreements  to  manage  interest  rate
exposures.  The Company  specifically  designates  these agreements as hedges of
debt  instruments  and  recognizes  interest  differentials  as  adjustments  to
interest expense in the period the differentials occur.

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.

Reclassification
Certain prior year amounts and balances have been reclassified to conform to the
current year presentation.

2. Acquisitions

In October 1998,  the Company  acquired all of the  outstanding  common stock of
Philadelphia-based  Culinary  Service  Network,  Inc. In March 1998, the Company
acquired substantially all of the assets of Chicago-based Spectra Services, Inc.
In January 1998,  the Company  acquired all of the  outstanding  common stock of
Phoenix-based  Drake  Management  Services,  Inc. Each of the  companies,  which
provide  dining  services in the senior living  market,  were acquired for cash,
with a total  acquisition  price of $12.1  million.  Contingent  payments may be
earned by sellers in future years. The acquisitions were accounted for using the
purchase  method and the  resulting  goodwill is being  amortized  over 20 years
using the  straight-line  method.  The operating results of these companies have
been included from their respective acquisition dates. Pro forma results are not
presented for these  acquisitions as they are not significant during the periods
presented.

<PAGE>

3. Long-Term Debt

Long-term debt consists of the following:

(In thousands)                                     Fiscal Year Ended
                                            -----------------------------------
                                               May 31, 1999      May 31, 1998
                                            -----------------------------------

Variable rate revolving
  credit facility due in full 7/2/03........        $46,555           $17,500
Variable rate demand lines
   of credit................................              0             4,190
Term note...................................              0            15,000
Other notes and mortgages...................          2,886                22
                                            -----------------------------------
                                                     49,441            36,712
Less current maturities.....................            136             5,022
                                            -----------------------------------
                                                    $49,305           $31,690
                                            ===================================

In July 1998, the Company  entered into a $75 million credit  facility with four
financial  institutions.  This credit facility replaced the previous $50 million
credit  facility.  The new credit line has a variable  interest  rate based upon
LIBOR and variable interest payment requirements.  The principal is due no later
than July 2, 2003.  Commitment fees of 0.25% per annum are payable on the unused
portion of the credit  facility.  At May 31, 1999, the Company had $46.6 million
in borrowings  under the  agreement,  with a weighted  average  variable rate of
approximately 5.8%.

In June 1998,  the Company  entered into two interest  rate swap  agreements  to
reduce the impact of changes in the interest rates on its floating rate debt and
to exchange  floating rate for fixed rate payments at certain debt. Under theses
agreements, with a notional amount of $20 million at May 31, 1999, MMSI will pay
the  counterparties  interest  at a  weighted  average  fixed  interest  rate of
approximately  5.6% at May  31,  1999,  and the  counterparties  will  pay  MMSI
interest  at a variable  rate  equal to LIBOR.  The  differential  to be paid or
received is accrued as interest  rates change and is recognized as an adjustment
to the  interest  expense  related to the debt.  The related  amount  payable or
receivable  from  counterparties  is included in trade and other  receivables or
payables.  The fair value of such swap agreements was not significant at May 31,
1999.

In addition,  the Company had uncommitted demand lines of credit amounting to $5
million.  At May 31, 1999, the Company did not have any  borrowings  outstanding
under these agreements.

The credit  facility  contains  certain  restrictions  on  incurring  additional
indebtedness  and certain funded debt, and fixed charge  coverage  requirements.
The Company was in compliance with all such covenants at May 31, 1999.


<PAGE>


4. Income Taxes

The components of income tax expense are as follows:

(In thousands)                                 For the Fiscal Year Ended
                                        ---------------------------------------
                                        May 31, 1999  May 31, 1998  May 31,1997
                                        ---------------------------------------
Current:
Federal.................................      $7,301        $6,875       $5,960
State...................................       1,538         1,449          816
                                        ---------------------------------------
                                               8,839         8,324        6,776
Deferred:
Federal.................................        (150)         (670)         440
State...................................        ( 32)         (141)          74
                                        ---------------------------------------
                                                (182)         (811)         514
                                        ---------------------------------------
                                              $8,657        $7,513       $7,290
                                        =======================================
Deferred tax assets and liabilities are comprised of the following:

 (In thousands)                                Fiscal Year Ended
                                        ---------------------------
                                        May 31, 1999  May 31, 1998
                                        ---------------------------

Deferred tax assets:
Employee benefits.......................      $4,484        $4,346
Insurance reserves......................       1,093         1,366
Bad debt reserve........................         292           349
Other...................................         907           487
                                        ---------------------------
Total deferred tax assets...............       6,776         6,548

Deferred tax liabilities:
Depreciation............................         517           282
Retirement plans........................         451           479
Prepaid deductions......................         157           131
Other...................................         957         1,204
                                        ---------------------------
Total deferred tax liabilities.........        2,082         2,096
                                        ---------------------------
Net deferred tax assets...............        $4,694        $4,452
                                        ===========================

SFAS No. 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.

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,    May 31,    May 31,
                                           1999       1998       1997
                                        -------------------------------

Statutory federal income taxes.......... $7,769      $6,673      $6,152
State income taxes net of
  federal income tax benefit............    839         853         804
Other, net..............................     49         (13)        334
                                        -------------------------------
                                         $8,657      $7,513      $7,290
                                        ===============================

The effective income tax rate was 39.0%,  39.4%, and 41.5% in fiscal years 1999,
1998, and 1997,  respectively.  The higher  effective  income tax rate in fiscal
year 1997 was due to higher nondeductible expenses.


<PAGE>



5. Employee Benefit Plans

Salary Deferral Plan
Under the Company's  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.  Generally,  after  three years  of
service, 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  $515,000,  $414,000 and  $257,000 for fiscal years 1999,  1998 and
1997, respectively.

During fiscal year 1997,  the Company  began  sponsorship  of an employee  stock
ownership (ESOP) feature covering  participants in the Salary Deferral Plan. The
Company loaned the Plan $3.6 million (with outstanding  balances of $2.8 million
and $3.2  million  at May 31, 1999 and May 31, 1998,  respectively)  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, 1999 and May 31, 1998 was approximately
$3,885,000 and $3,874,000, respectively.

Deferred Compensation Plan
The Company  maintains  the  Deferred  Compensation  Plan for  certain  selected
employees.  The  provisions  of this  Plan are  similar  to those of the  Salary
Deferral Plan.  Differences  include which employees are eligible to participate
and  the  limitations  on  the  amount  of  deferrals  that  may be  elected  by
participants.  The Company's contributions under the Plan approximated $112,000,
$104,000  and  $125,000,  for fiscal  years 1999,  1998 and 1997,  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 of the rabbi trust are recorded in
the  Company's  financial  statements.   Assets  and  liabilities  of  the  Plan
approximated  $6,428,000 and $6,043,000 at May 31, 1999 and 1998,  respectively,
and include $1,518,000 and $1,848,000, respectively, of MMSI common stock, which
is accounted for as treasury stock at cost.

Retirement Plan
The Retirement Plan was frozen by Ruby Tuesday,  Inc. ("RTI") (formerly Morrison
Restaurants  Inc.) on December 31, 1987.  The Company is a joint  sponsor of the
Retirement Plan. 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
fiscal years 1999, 1998 or 1997.

<PAGE>

Executive Supplemental Pension Plan
Under the Company's Executive Supplemental Pension Plan, employees with a salary
of at least $100,000 for five consecutive years in a qualifying  position become
eligible to earn supplemental  retirement  payments based upon salary and length
of  service,  reduced  by  Social  Security  benefits  and  amounts  otherwise
receivable under the Retirement Plan.

Management Retirement Plan
Under the Company's Management  Retirement Plan,  individuals that have 15 years
of  credited  service  (as defined by the  Company)  and earn an average  annual
compensation  of at least  $40,000  for the  immediately  preceding  three years
become participants.  Participants receive benefits based upon salary and length
of service,  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
various life insurance contracts on some of the participants.  The cash value of
these policies,  net of loans,  was $2,204,000 at May 31, 1999 and $1,897,000 at
May 31, 1998. The policies have been placed in a rabbi trust which will hold the
policies and death benefit proceeds as they are received.

The following table reconciles the change in the pension benefit  obligation and
the fair market  value of plan assets and  presents  the  components  of pension
expense,  the  funded  status  and  the  amounts  recognized  in  the  Company's
consolidated  financial  statements  for  the  Retirement  Plan,  the  Executive
Supplemental Pension Plan and the Management Retirement Plan.


<PAGE>

<TABLE>

5. Employee Benefit Plans (continued)
 (In thousands)                                                               Benefit Obligation Exceeds Assets -
                                    Assets Exceed Benefit Obligation -        Executive Supplemental Pension Plan
                                           Retirement Plan                      and Management Retirement Plan
                                    ----------------------------------       ------------------------------------
For the Fiscal Year Ended           May 31,     May 31,     May 31,            May 31,       May 31,      May 31,
                                      1999        1998        1997               1999          1998         1997
                                    ----------------------------------       ------------------------------------
<CAPTION>
<S>                                 <C>        <C>          <C>               <C>           <C>           <C>
Components of net periodic
  pension (income)/expense:
Service cost....................... $    0     $    0       $    0            $   140       $   108       $   81
Interest cost......................    274        347          341                322           270          230
Expected return on plan assets.....   (342)    (1,046)        (700)                 0             0            0
Amortization and deferral..........     (8)       629          341                184           149          122
                                    ----------------------------------       -------------------------------------
Net periodic pension
  (income)/expense................. $  (76)    $  (70)      $  (18)           $   646       $   527       $  433
                                    ==================================       =====================================
Change in benefit obligation:
Benefit obligation at
  beginning of year................ $3,895     $4,210                         $ 4,318       $ 3,246
    Service cost...................      0          0                             140           108
    Interest cost..................    274        347                             322           270
    Actuarial (gains) losses.......    588        (23)                            524           730
    Benefit payments...............   (594)      (639)                            (43)          (36)
                                    -------------------                     ------------------------
Benefit obligation at end of year.. $4,163     $3,895                         $ 5,261       $ 4,318
                                    ===================                     ========================
Change in fair value of plan
  assets:
Fair value at beginning of year.... $4,425     $4,859                         $     0       $     0
  Transfer of retiree liability....      0       (840)                              0             0
  Benefit payments.................   (593)      (640)                              0             0
  Actual return on plan assets.....    266        486                               0             0
  Gains on investments.............     76        560                               0             0
                                    -------------------                     ------------------------
Fair value at end of year.......... $4,174     $4,425                         $     0       $     0
                                    ===================                     ========================
Funded (unfunded) status........... $   11     $  530                         $(5,261)      $(4,318)
Unrecognized prior service cost....      0          0                             207           276
Unrecognized net losses............  1,071        407                           1,383           913
Unrecognized net transition
  obligation.......................    211        280                             456           516
Additional minimum liability.......      0          0                            (291)         (658)
                                    -------------------                     ------------------------
Prepaid (accrued) benefit cost..... $1,293     $1,217                         $(3,506)      $(3,271)
                                    ===================                     ========================
</TABLE>

The weighted  average discount rate for all three plans was 7.5%, 7.5% and 8.25%
for fiscal  years  1999,  1998 and 1997,  respectively.  The rate of increase in
compensation  levels  for  the  Executive  Supplemental  Pension  Plan  and  the
Management  Retirement Plan was 4% for all three years  presented.  The expected
long-term rate of return on plan assets for the Retirement  Plan was 10% for all
three years.  The  projected  benefit  obligation  and the  accumulated  benefit
obligation  for the  Executive  Supplemental  Pension  Plan  and the  Management
Retirement  Plan,  both of which  exceed  the fair  value of plan  assets,  were
$5,261,000 and $3,463,000,  respectively,  as of May 31, 1999 and $4,318,000 and
$2,889,000,  respectively,  as of May 31, 1998.  For the  Retirement  Plan,  the
projected benefit obligation equaled the accumulated  benefit obligation and was
less than the fair value of plan assets as of May 31, 1999 and May 31, 1998.
<PAGE>


6. 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.

The  following  table  reconciles  the  change  in  the  postretirement  benefit
obligation  and the fair market value of plan assets and presents the components
of net  periodic  postretirement  benefit  expense,  the  funded  status and the
amounts recognized in the Company's consolidated financial statements:

(In thousands)                        -----------------------------------------
For the Fiscal Year Ended             May 31, 1999   May 31, 1998  May 31, 1997
                                      -----------------------------------------
Components of net periodic
   postretirement expense:
Service cost..........................    $      8       $      7      $      7
Interest cost.........................         136            147           140
Amortization and deferral.............          17              4            23
                                        ---------------------------------------
Net periodic postretirement expense...    $    161       $    158      $    170
                                        =======================================

Change in benefit obligation:
Benefit Obligation at
  beginning of year...................    $  1,919       $  1,934
    Service cost......................           8              7
    Interest cost.....................         136            147
    Actuarial (gains) losses..........           -             41
    Benefit payments..................        (210)          (210)
                                        --------------------------
Benefit obligation at end of year.....    $  1,853       $  1,919
                                        ==========================
 Change in fair value of plan assets:
 Fair Value at beginning of year......    $      0       $      0
   Employer contributions.............         210            210
   Benefit payments...................        (210)          (210)
                                        --------------------------
Fair value at end of year.............    $      0       $      0
                                        ==========================
Funded (unfunded) status..............    $ (1,853)      $ (1,919)
Unrecognized prior service cost.......        (117)          (138)
Unrecognized net losses...............         466            504
                                        --------------------------
Accrued postretirement benefit cost...    $ (1,504)      $ (1,553)
                                        ==========================

The  weighted   average   discount  rate  used  for  measuring  the  accumulated
postretirement  benefit  obligation  was 7.5%,  7.5% and 8.25% for fiscal  years
1999, 1998 and 1997,  respectively.  SFAS No. 132 requires the disclosure of the
impact of a one  percent  increase  and a one  percent  decrease  in the assumed
health  care  cost  trend  rates  on  the  accumulated   postretirement  benefit
obligation  and the  service  and  interest  costs  components  of net  periodic
postretirement  benefit  costs.  This  benefit  is not  subject  to health  care
inflation  and  therefore,  there is no impact  from a one  percent  increase or
decrease in the trend rates.

7. 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, 1999. 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, at an exercise price of $75
per  one  one-thousandth  of a  share,  subject  to  adjustment.  Under  certain
circumstances,  the rights will  entitle the  holders  thereof to receive,  upon
payment of the exercise  price,  in lieu of preferred  shares,  shares of common
stock with a market  value equal to twice the  exercise  price.  The rights will
expire  on  March 1,  2006 and may be  redeemed  prior  to ten  days  after  the
acquisition by any person or group of 20% or more of the Company's  common stock
without the consent of the Company.

8. 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 Company's 1996 Stock  Incentive Plan and
1996  Non-Executive  Stock Incentive Plan (the Plans) are both administered by a

<PAGE>

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-year  or  ten-year  terms  and  become
exercisable at the end of two or three years of continued employment. At May 31,
1999 and 1998,  the  Company had  reserved a total of  1,602,441  and  1,704,376
shares,  respectively,  of common stock under the Company's 1996 Stock Incentive
Plan.

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, 1999 and 1998,  the Company had reserved a total of
1,837,204 and 1,464,820 shares, respectively, of common stock for this Plan.

The  Company's  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 at least 60% of their retainer to purchase shares of
the  Company  until  they  reach  the  target  ownership  level.  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. In addition,  under the
Plan,  an option to purchase  5,000 shares is granted to each  director upon his
initial  election to the Board of Directors and options to purchase 2,000 shares
each are granted to directors upon  re-election  to the Board of Directors.  All
options  awarded under the Plan have been at the prevailing  market price at the
time of grant. 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, 1999 and 1998,  the Company had reserved  77,619 and 81,917
shares, respectively, of common stock for this Plan.

Under the terms of the  Distribution,  holders  of MRI  stock  options  received
adjusted,  substitute options in MMSI, Morrison Fresh Cooking,  Inc. ("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 SFAS 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 SFAS 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 fiscal years 1999, 1998 and 1997,
respectively:  risk-free  interest  rates of 5.5%,  5.7%  and  6.6%;  volatility
factors  of .17,  .24 and .19;  dividend  yields  of 0.7%,  0.9% and  4.3%;  and
weighted average expected lives of 7.0, 7.5 and 7.6 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:

                                                  For the Fiscal Year Ended
                                            ------------------------------------

                                             May 31,        May 31,      May 31,
(In thousands, except per share data)          1999           1998         1997
--------------------------------------------------------------------------------
Pro forma net income - Basic and Diluted... $12,224        $10,771       $9,618
Pro forma earnings per share - Basic....... $  1.03        $  0.90       $ 0.82
Pro forma earnings per share - Diluted..... $  1.02        $  0.89       $ 0.82

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



<PAGE>



A summary of the Company's stock option activity and related information for the
years ended May, 31, 1999, May 31, 1998 and May 31, 1997 follows:
<TABLE>

                                      May 31, 1999             May 31, 1998           May 31, 1997
                                 ----------------------   --------------------- ----------------------
                                             Weighted                 Weighted               Weighted
                                             Average                  Average                Average
                                  Options    Exercise      Options    Exercise    Options    Exercise
                                    (000)    Price          (000)     Price        (000)     Price
                                 -----------------------  --------------------- ----------------------
<CAPTION>
<S>                                <C>       <C>            <C>       <C>         <C>        <C>

Outstanding - beginning of year..  2,246     $16.45         2,307     $15.82      2,368      $15.97
Granted..........................    571      17.52           357      17.76        493       13.21
Exercised........................   (634)     14.68          (274)     12.05       (200)       9.69
Forfeited........................   (261)     21.06          (144)     15.55       (354)      16.78
------------------------------------------------------------------------------------------------------
Outstanding - end of year........  1,922     $16.72         2,246     $16.45      2,307      $15.82
======================================================================================================
Exercisable at end of year.......  1,039     $16.52         1,110     $17.09      1,068      $15.95
======================================================================================================

Weighted average fair value of
options granted during the year..            $ 5.34                   $ 6.66                 $ 1.89
======================================================================================================
</TABLE>



<PAGE>



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

                              May 31, 1999
                          Options Outstanding              Options Exercisable
                   -----------------------------------   ----------------------
                                            Weighted
                                Weighted    Average                    Weighted
Range of           Number       Average     Remaining    Number        Average
Exercise           Outstanding  Exercise    Contractual  Exercisable   Exercise
Prices             (000)        Price       Life         (000)         Price
-------------------------------------------------------------------------------

$ 8.98 - $14.38...   513        $13.56      5.59           341         $13.30
$16.50 - $16.50...   523        $16.50      2.14           498         $16.50
$16.56 - $17.13...   504        $17.10      8.80            14         $17.05
$17.21 - $31.59...   382        $20.76      5.17           186         $22.40
-------------------------------------------------------------------------------
                   1,922        $16.72      5.41         1,039         $16.52
===============================================================================

                            May 31, 1998
                          Options Outstanding              Options Exercisable
                   -----------------------------------   ----------------------
                                            Weighted
                                Weighted    Average                    Weighted
Range of           Number       Average     Remaining    Number        Average
Exercise           Outstanding  Exercise    Contractual  Exercisable   Exercise
Prices             (000)        Price       Life         (000)         Price
-------------------------------------------------------------------------------

$ 8.98 - $14.38...   567        $12.77      5.70           187         $11.93
$14.50 - $16.38...   469        $14.78      1.83           432         $14.68
$16.50 - $16.50...   578        $16.50      3.11           110         $16.50
$16.56 - $31.59...   632        $20.94      4.48           381         $22.51
-------------------------------------------------------------------------------
                   2,246        $16.45      3.88         1,110         $17.09
===============================================================================




<PAGE>



9. Contingencies

At May 31, 1999,  the Company was  contingently  liable for  approximately  $7.4
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.  These
agreements  are  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 1999 or 1998.




<PAGE>


11. Supplemental Quarterly Financial Data (Unaudited)

Quarterly  financial  results  for the years ended May 31, 1999 and May 31, 1998
are summarized below. All quarters are composed of three months.
<TABLE>

(In thousands, except per share    First      Second     Third     Fourth
data)                              Quarter    Quarter    Quarter   Quarter    Total
                                   ===================================================
For the fiscal year ended
  May 31, 1999
<CAPTION>
<S>                                <C>        <C>        <C>       <C>        <C>

Revenues...........................$72,246    $77,833    $84,085   $90,804    $324,968
                                   ===================================================
Gross profit*......................$11,597    $13,255    $13,771   $15,708    $ 54,331
                                   ===================================================
Income before income taxes.........$ 5,255    $ 5,620    $ 5,251   $ 6,071    $ 22,197
Provision for federal and state
  income taxes.....................  2,103      2,196      2,021     2,337       8,657
                                   ---------------------------------------------------
Net income.........................$ 3,152    $ 3,424    $ 3,230   $ 3,734    $ 13,540
                                   ===================================================
Earnings per share:
  Basic............................$  0.26    $  0.28    $  0.28   $  0.32    $   1.14
  Diluted..........................$  0.26    $  0.28    $  0.27   $  0.31    $   1.12

For thefiscal year ended
   May 31, 1998

Revenues...........................$57,754    $60,646    $63,337   $68,634    $250,371
                                   ===================================================
Gross profit*......................$10,027    $10,688    $10,541   $11,850    $ 43,106
                                   ===================================================
Income before income taxes.........$ 4,674    $ 5,035    $ 4,292   $ 5,064    $ 19,065
Provision for federal and state
  income taxes.....................  1,846      1,989      1,695     1,983       7,513
                                   ---------------------------------------------------
Net income.........................$ 2,828    $ 3,046    $ 2,597   $ 3,081    $ 11,552
                                   ===================================================
Earnings per share:
  Basic............................$  0.24    $  0.25    $  0.22   $  0.26    $   0.97
  Diluted..........................$  0.24    $  0.25    $  0.21   $  0.25    $   0.95
</TABLE>

*The Company defines gross profit as revenue less operating expenses.


<PAGE>

                         Report of Independent Auditors
             Morrison Management Specialists, Inc. and Subsidiaries


Stockholders and Board of Directors
Morrison Management Specialists, Inc. and Subsidiaries

We have  audited  the  accompanying  consolidated  balance  sheets  of  Morrison
Management  Specialists,  Inc. and Subsidiaries  (formerly Morrison Health Care,
Inc.)  as of May 31,  1999  and  May 31,  1998,  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, 1999.  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
Management Specialists,  Inc. and Subsidiaries at May 31, 1999 and May 31, 1998,
and the  consolidated  results of their operations and their cash flows for each
of the three fiscal years in the period ended May 31, 1999, in  conformity  with
generally accepted accounting principles.

/s/ERNST & YOUNG LLP

Atlanta, Georgia
June 23, 1999
<PAGE>


Common Stock Market Prices and Dividends

Morrison Management Specialists, 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 1999 and 1998.

                                   First       Second     Third      Fourth
                                   Quarter     Quarter    Quarter    Quarter
                                   -------------------------------------------

1999 market price per share:
  High.............................$19.875     $18.500    $20.125    $19.938
  Low..............................$16.875     $16.000    $18.125    $17.500

1998 market price per share:
  High.............................$17.250     $19.750    $20.188    $22.875
  Low..............................$15.375     $15.750    $17.063    $16.250


Cash dividends on the common stock of Morrison Management Specialists, Inc. were
paid during each quarter of fiscal years 1999 and 1998 as follows:
<TABLE>

                                   First       Second     Third      Fourth
                                   Quarter     Quarter    Quarter    Quarter    Total
                                   ---------------------------------------------------
<CAPTION>
<S>                                <C>         <C>        <C>        <C>        <C>

1999 cash dividends per share......$0.040      $0.040     $0.040     $0.040     $0.160
1998 cash dividends per share......$0.205      $0.205     $0.205     $0.205     $0.820
</TABLE>

On June 30, 1999, the Company's Board of Directors declared a quarterly dividend
of $0.04 per share,  payable July 30, 1999, to 3,493  stockholders  of record on
July 16, 1999.




<PAGE>

                             SHAREHOLDER INFORMATION
             Morrison Management Specialists, Inc. and Subsidiaries

Transfer Agent, Registrar,                 Executive and Operating Offices
Dividend Disbursing Agent                  1955 Lake Park Drive, SE
and Dividend Reinvestment                  Suite 400
Plan Administrator                         Smyrna, GA 30080
SunTrust Bank, Atlanta                     (770) 437-3300
Mail Code 258
PO Box 4625                                Form 10-K Information
Atlanta, GA 30302                          A copy of the Company's annual report
(800) 568-3476                             on Form 10-K, excluding exhibits,
                                           filed with the Securities and
Dividend Reinvestment Plan                 Exchange Commission, will be
For information contact the                furnished to any shareholder without
Investor Relations Department or           charge upon written request to the:
the Dividend Reinvestment Plan             Investor Relations Department
Administrator.                             1955 Lake Park Drive, SE, Suite 400
                                           Smyrna, GA 30080
Independent Auditors
Ernst & Young LLP
600 Peachtree Street                       Annual Meeting
Atlanta, GA 30308                          The Annual Meeting ofStockholders
                                           will be held Tuesday, September 28,
Legal Counsel                              1999, starting at 1:00 p.m. EST at
Powell, Goldstein, Frazer & Murphy LLP     the Georgia International Convention
191 Peachtree Street, NE                   Center, 1902 Sullivan Road, College
Atlanta, GA 30303                          Park, GA 30337

Common Stock                               Morrison's Spice of Life, Advanced
Common Stock of Morrison  Management       Culinary Centers, ACC and Resident's
Specialists, Inc. is traded on the New     Choice are trademarks or registered
York Stock Exchange. (NYSE symbol: MHI)    trademarks of Morrison Management
                                           Specialists, Inc.  All other
                                           trademarks identified in this Annual
                                           Report are the property of third
                                           parties.

<PAGE>

The Board of Directors                     Officers of the Company

Glenn A. Davenport                         Glenn A. Davenport
Chairman of the Board and                  Chairman of the Board and
Chief Executive Officer,                   Chief Executive Officer
Morrison Management Specialists
                                           Eugene D. Dolloff
Claire L. Arnold (1,2,3)                   President, Morrison
Chairman and Chief Executive               Senior Dining
Officer, Leapfrog Services
Inc.; Former Chief Executive               K. Wyatt Engwall
Officer, NCC L.P.                          Senior Vice President,
                                           Finance and Assistant
E. Eugene Bishop (1,2,3)                   Secretary
Former Chairman of the
Board and Chief Executive                  John E. Fountain
Officer, Morrison                          Vice President, General
Restaurants Inc                            Counsel and Secretary

Fred L. Brown (1,2,3)                      Gary L. Gaddy
Vice Chairman, BJC Health                  Senior Vice President,
Health System; Chairman,                   Sales and Marketing
American Hospital Association;
Chairman, Advisory Board of                Frances G. Michels
AmericasDoctor.com                         Senior Vice President,
                                           Support Services
Michael F. Corbett (1,2,3)
President, Michael F.                      Richard C. Roberson
Corbett & Associates, LTD;                 Division Vice President,
Chairman and Executive                     Morrison Healthcare Food Services
Director of The Outsourcing
Research Council; Chairman of The          Jerry D. Underhill
Corbett Group                              President, Morrison
                                           Healthcare Food Services
John B. McKinnon (1,2,3)
Former Dean, Babcock
Graduate School of
Management, Wake Forest
University; Former
President, Sara Lee
Corporation; Former President
And Chief Executive Officer,
Integon Corporation

Arthur R. Outlaw, Jr. (1,2,3)
Chairman of the Board and
Chief Executive Officer,
Marshall Biscuit Company

Dr. Benjamin F. Payton (1,2,3)
President, Tuskegee
University

Committees of the Board
1. Compensation and Stock
    Option*
2. Audit*
3. Nominating*

*Comprised entirely of
 non-employee Board Members