##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the period ended
    May 23, 2004Commission file number
    0-3833


Morgans Foods, Inc.

---



Ohio
    
    34-0562210(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)24200 Chagrin Boulevard, Suite 126, Beachwood, Ohio
    
    44122(Address of principal executive offices)
    
    (Zip Code)


Registrants telephone number, including area code:
    (216) 360-7500




---



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes x   No o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

Yes o   No x

As of June 25, 2004, the issuer had 2,718,441 shares of common stock
outstanding.

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TABLE OF CONTENTS



|                                                   |                                                                                                |  |  |  |  |  |  | 
|-------------------------------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION                      
|                                                   | Item 1. Financial Statements.                                                                 
|CONSOLIDATED STATEMENTS OF OPERATIONS             
|CONSOLIDATED BALANCE SHEETS                       
|CONSOLIDATED STATEMENT OF SHAREHOLDERS DEFICIENCY
|CONSOLIDATED STATEMENTS OF CASH FLOWS             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        
|                                                   | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                                                   | Item 3. Quantitative and Qualitative Disclosures About Market Risk.                           
|                                                   | Item 4. Controls and Procedures.                                                              
|PART II OTHER INFORMATION                         
|                                                   | Item 5. Submission of Matters to a Vote of Security Holders                                   
|INDEX TO EXHIBITS                                 
|SIGNATURES                                        
|Exhibit 31.1                                      
|Exhibit 31.2                                      
|Exhibit 32.1                                      
|Exhibit 32.2                                      



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PART I FINANCIAL INFORMATION




Item 1. Financial Statements.

Morgans Foods, Inc.




CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

Quarter EndedMay 23, 2004
    
    May 25, 2003Revenues
    
    $
    18,343,000
    
    
    $
    19,828,000Cost of sales:Food, paper and beverage
    
    
    5,572,000
    
    
    
    6,069,000Labor and benefits
    
    
    5,480,000
    
    
    
    5,358,000Restaurant operating expenses
    
    
    4,782,000
    
    
    
    5,000,000Depreciation and amortization
    
    
    783,000
    
    
    
    803,000General and administrative expenses
    
    
    1,273,000
    
    
    
    1,305,000Loss on restaurant assets
    
    
    270,000
    
    
    
    10,000Operating income
    
    
    183,000
    
    
    
    1,283,000Interest Expense:Bank debt and notes payable
    
    
    (1,036,000
    )
    
    
    (1,109,000
    )Capital leases
    
    
    (11,000
    )
    
    
    (11,000
    )Other income and expense, net
    
    
    17,000
    
    
    
    21,000Net income (loss) before income taxes
    
    
    (847,000
    )
    
    
    184,000Provision for income taxes
    
    
    
    
    
    
    4,000Net income (loss)
    
    $
    (847,000
    )
    
    $
    180,000Basic and diluted net income (loss)
per common share
    
    $
    (.31
    )
    
    $
    .07Basic weighted average number of
shares outstanding
    
    
    2,718,441
    
    
    
    2,718,441Diluted weighted average number of
shares outstanding
    
    
    2,718,441
    
    
    
    2,725,293


See notes to consolidated financial statements.

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Morgans Foods, Inc.




CONSOLIDATED BALANCE SHEETS

(unaudited)

May 23, 2004
    
    February 29, 2004ASSETSCurrent assets:Cash and equivalents
    
    $
    3,451,000
    
    
    $
    4,353,000Short term investment  restricted
    
    
    300,000
    
    
    
    300,000Receivables
    
    
    201,000
    
    
    
    242,000Inventories
    
    
    624,000
    
    
    
    573,000Prepaid expenses
    
    
    567,000
    
    
    
    324,0005,143,000
    
    
    
    5,792,000Property and equipment:Land
    
    
    10,906,000
    
    
    
    10,971,000Buildings and improvements
    
    
    19,227,000
    
    
    
    19,246,000Property under capital leases
    
    
    776,000
    
    
    
    776,000Leasehold improvements
    
    
    7,270,000
    
    
    
    7,353,000Equipment, furniture and fixtures
    
    
    18,999,000
    
    
    
    18,864,000Construction in progress
    
    
    59,000
    
    
    
    58,00057,237,000
    
    
    
    57,268,000Less accumulated depreciation and amortization
    
    
    24,117,000
    
    
    
    23,377,00033,120,000
    
    
    
    33,891,000Other assets
    
    
    1,157,000
    
    
    
    1,186,000Franchise agreements
    
    
    1,842,000
    
    
    
    1,876,000Deferred taxes
    
    
    600,000
    
    
    
    600,000Goodwill
    
    
    9,327,000
    
    
    
    9,327,000$
    51,189,000
    
    
    $
    52,672,000LIABILITIES AND SHAREHOLDERS DEFICIENCYCurrent liabilities:Current maturities of long-term debt
    
    $
    2,793,000
    
    
    $
    2,743,000Current maturities of capital lease obligations
    
    
    42,000
    
    
    
    58,000Accounts payable
    
    
    3,817,000
    
    
    
    3,642,000Accrued liabilities
    
    
    3,351,000
    
    
    
    3,348,00010,003,000
    
    
    
    9,791,000Long-term debt
    
    
    42,614,000
    
    
    
    43,370,000Long-term capital lease obligations
    
    
    378,000
    
    
    
    379,000Other long-term liabilities
    
    
    1,757,000
    
    
    
    1,848,000SHAREHOLDERS DEFICIENCYPreferred shares, 1,000,000 shares authorized,
no shares outstandingCommon StockAuthorized
shares  25,000,000Issued shares  2,969,405
    
    
    30,000
    
    
    
    30,000Treasury shares  250,964
    
    
    (284,000
    )
    
    
    (284,000
    )Capital in excess of stated value
    
    
    28,829,000
    
    
    
    28,829,000Accumulated deficit
    
    
    (32,138,000
    )
    
    
    (31,291,000
    )Total shareholders deficiency
    
    
    (3,563,000
    )
    
    
    (2,716,000
    )$
    51,189,000
    
    
    $
    52,672,000


See notes to consolidated financial statements.

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Morgans Foods, Inc.




CONSOLIDATED STATEMENT OF SHAREHOLDERS DEFICIENCY

(unaudited)

Capital in
    
    
    
    
    
    TotalCommon Shares
    
    Treasury Shares
    
    excess of
    
    Accumulated
    
    ShareholdersShares
    
    Amount
    
    Shares
    
    Amount
    
    stated value
    
    Deficit
    
    DeficiencyBalance March 2, 2003
    
    
    2,969,405
    
    
    $
    30,000
    
    
    
    (250,964
    )
    
    $
    (284,000
    )
    
    $
    28,829,000
    
    
    $
    (29,997,000
    )
    
    $
    (1,422,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,294,000
    )
    
    
    (1,294,000
    )Balance February 29, 2004
    
    
    2,969,405
    
    
    $
    30,000
    
    
    
    (250,964
    )
    
    
    (284,000
    )
    
    
    28,829,000
    
    
    
    (31,291,000
    )
    
    
    (2,716,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (847,000
    )
    
    
    (847,000
    )Balance May 23, 2004
    
    
    2,969,405
    
    
    $
    30,000
    
    
    
    (250,964
    )
    
    $
    (284,000
    )
    
    $
    28,829,000
    
    
    $
    (32,138,000
    )
    
    $
    (3,563,000
    )


See notes to consolidated
financial statements.

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Morgans Foods, Inc.




CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Quarter EndedMay 23, 2004
    
    May 25, 2003Cash flows from operating activities:Net income (loss)
    
    $
    (847,000
    )
    
    $
    180,000Adjustments to reconcile to net cash
provided by operating activities:Depreciation and amortization
    
    
    783,000
    
    
    
    803,000Amortization of deferred financing costs
    
    
    29,000
    
    
    
    32,000Amortization of supply agreement advances
    
    
    (186,000
    )
    
    
    (179,000
    )Funding from supply agreements
    
    
    63,000
    
    
    
    68,000Loss on restaurant assets
    
    
    270,000
    
    
    
    10,000Change in assets and liabilities:Decrease (increase) in receivables
    
    
    41,000
    
    
    
    (157,000
    )Increase in inventories
    
    
    (51,000
    )
    
    
    (25,000
    )Increase in prepaid expenses
    
    
    (243,000
    )
    
    
    (78,000
    )Decrease in other assets
    
    
    
    
    
    
    Increase in accounts payable
    
    
    175,000
    
    
    
    503,000Increase in accrued liabilities
    
    
    33,000
    
    
    
    65,000Net cash provided by operating activities
    
    
    67,000
    
    
    
    1,222,000Cash flows from investing activities:Capital expenditures
    
    
    (246,000
    )
    
    
    (368,000
    )Purchase of certificate of deposit
    
    
    
    
    
    
    (300,000
    )Net cash used in investing activities
    
    
    (246,000
    )
    
    
    (668,000
    )Cash flows from financing activities:Proceeds from issuance of long-term debt,
net of financing costs
    
    
    22,000
    
    
    
    Principal payments on long-term debt
    
    
    (728,000
    )
    
    
    (637,000
    )Principal payments on capital lease obligations
    
    
    (17,000
    )
    
    
    (27,000
    )Net cash used by financing activities
    
    
    (723,000
    )
    
    
    (664,000
    )Net change in cash and equivalents
    
    
    (902,000
    )
    
    
    (110,000
    )Cash and equivalents, beginning balance
    
    
    4,353,000
    
    
    
    4,901,000Cash and equivalents, ending balance
    
    $
    3,451,000
    
    
    $
    4,791,000


See notes to consolidated financial statements.

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Morgans Foods, Inc.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




Note 1. Summary of Significant Accounting Policies.

The interim consolidated financial statements of Morgans Foods, Inc. have
been prepared without audit. In the opinion of Company Management, all
adjustments have been included. Unless otherwise disclosed, all adjustments
consist only of normal recurring adjustments necessary for a fair statement of
results of operations for the interim periods. These unaudited financial
statements have been prepared using the same accounting principles that were
used in preparation of the Companys annual report on Form 10-K for the year
ended February 29, 2004.

Cash and Investments.At May 23, 2004 the Company held a $300,000
certificate of deposit as a restricted short-term investment to secure a letter
of credit that expired June 18, 2004.

Note 2. Income Per Common Share.

Basic net income (loss) per common share is computed by dividing net
income (loss) by the weighted average number of common shares outstanding
during the period. Diluted net income (loss) per common share is based on the
combined weighted average number of shares outstanding, which includes the
assumed exercise or conversion of options. In computing diluted net income
(loss) per common share, the Company has utilized the treasury stock method.
For the quarters ended May 23, 2004 and May 25, 2003, 286,500 and 275,000
shares, respectively, were excluded from the computation of diluted earnings
per share due to their antidilutive effect.

Note 3. Stock  Based Compensation.

The Companys outstanding stock options are accounted for using the
intrinsic value method, under which compensation cost is measured as the
excess, if any, of the quoted market price of the stock at the grant date over
the amount an employee must pay to acquire the stock. Had compensation cost
for the options granted been determined based on their fair values at the grant
dates in accordance with the fair value method of Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation,
the proforma impact on the Companys net income (loss) and earnings (loss) per
share would be immaterial for the quarters ended May 23, 2004 and May 25, 2003.

Note 4. Long-Term Debt.

The Companys debt arrangements require the maintenance of a consolidated
fixed charge coverage ratio of 1.2 to 1 regarding all of its mortgage loans and
individual restaurant coverage ratios between 1.2 and 1.5 to 1 on certain of
its loans. As of February 29, 2004, the Company was not in compliance with the
consolidated ratio of 1.2 to 1 or the unit level ratios relating to $31,933,000
of its debt. The Company has obtained waivers of these violations from the
applicable lenders as of February 29, 2004 and May 23, 2004. As these waivers
continue through the following twelve months, the Company has classified its
debt as long term as of February 29, 2004 and May 23, 2004. All payments on
the Companys debt have been, and continue to be current and management

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believes that the Company will continue to be able to service the debt. The
fixed charge coverage ratios are computed based upon financial results for the
preceding twelve months. Based upon financial results for the quarter ended
May 23, 2004 management anticipates that the Company may not achieve certain
ratios for the fiscal year ending February 27, 2005. If the Company does not
comply with debt covenants in the future, and if future waivers are not
obtained, the lenders will have certain remedies available to them which could
include calling of the debt or acceleration of payments. Noncompliance with
the requirements of the Companys mortgage debt, if not waived, could also
trigger cross-default provisions of other debt agreements.

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Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations.

Description of Business. Morgans Foods, Inc. (the Company) operates,
through wholly-owned subsidiaries KFC restaurants under franchises from KFC
Corporation and Taco Bell restaurants under franchises from Taco Bell
Corporation. As of June 25, 2004, the Company operates 76 KFC restaurants, 7
Taco Bell restaurants, 14 KFC/Taco Bell 2n1s under franchises from KFC
Corporation and franchises or licenses from Taco Bell Corporation, 3 Taco
Bell/Pizza Hut Express 2n1s operated under franchisees from Taco Bell
Corporation and licenses from Pizza Hut Corporation, 1 KFC/Pizza Hut Express
2n1 operated under a franchise from KFC Corporation and a license from Pizza
Hut Corporation and 1 KFC/A&W 2n1 operated under a franchise from KFC
Corporation and a license from A&W Restaurants, Inc. The Companys fiscal year
is a 52 - 53 week year ending on the Sunday nearest the last day of February.

Summary of Expenses and Operating Income as a Percentage of Revenues

Quarter EndedMay 23, 2004
    
    May 25, 2003Cost of sales:Food, paper and beverage
    
    
    30.4
    %
    
    
    30.6
    %Labor and benefits
    
    
    29.9
    %
    
    
    27.0
    %Restaurant operating expenses
    
    
    26.1
    %
    
    
    25.2
    %Depreciation and amortization
    
    
    4.3
    %
    
    
    4.0
    %General and administrative expenses
    
    
    6.9
    %
    
    
    6.6
    %Operating income
    
    
    1.0
    %
    
    
    6.5
    %


Revenues. Revenues for the quarter ended May 23, 2004 were $18,343,000
compared to $19,828,000 for the quarter ended May 25, 2003. This decrease of
$1,485,000 was primarily due to a 6.7% decrease in comparable restaurant
revenues and $136,000 in revenues lost due to the closing of one restaurant.
The decrease in comparable restaurant revenues was primarily the result of
ineffective product promotions by the KFC franchisor during the quarter.

Costs
of Sales - Food, Paper and Beverages. Food, paper and beverage
costs for the first quarter decreased as a percentage of revenue from 30.6% in
fiscal 2004 to 30.4% in fiscal 2005. This decrease was primarily the result of
the development and implementation of tools that assist in the management of
food costs.

Cost
of Sales - Labor and Benefits. Labor and benefits increased as a
percentage of revenue for the quarter ended May 23, 2004 to 29.9% compared to
27.0% for the year earlier quarter. The increase was primarily due to
inefficiencies resulting from lower average restaurant volumes and increased
health care costs of $84,000 and increased labor of $67,000 as a result of
hiring for open restaurant management positions.

Restaurant Operating Expenses. Restaurant operating expenses increased as
a percentage of revenue to 26.1% in the first quarter of fiscal 2005 compared
to 25.2% in the first quarter of fiscal 2004. This increase was primarily due
to increased repairs and maintenance costs and inefficiencies resulting from
lower average restaurant volumes as well as the small equipment purchases
required as part of recent promotions.

Depreciation and Amortization. Depreciation and amortization was
relatively unchanged at $783,000 and $803,000 for the first quarters of 2005
and 2004, respectively.

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General and Administrative Expenses. General and administrative expenses
were substantially unchanged at $1,273,000 and $1,305,000 for the first
quarters of fiscal 2005 and 2004, respectively.

Loss on Restaurant Assets. The loss on restaurant assets was $270,000 and
$10,000, respectively, in the first quarters of fiscal 2005 and 2004. The 2005
amount includes impairment losses of $266,000 on three restaurants to reduce
their carrying values to their estimated fair values. Due to the weak
financial performance of these restaurants, management determined that future
operating cash flows would not fully recover the carrying value of the property
and equipment of these restaurants.

Operating Income. Operating income in the first quarter of fiscal 2005
decreased to $183,000 or 1.0% of revenues compared to $1,283,000 or 6.5% of
revenues for the first quarter of fiscal 2004. Operating income decreased
primarily due to inefficiencies resulting from lower average restaurant volumes
increased health care costs and the $266,000 impairment loss discussed above.

Interest Expense. Interest expense on bank debt decreased to $1,036,000
in the first quarter of fiscal 2005 from $1,109,000 in fiscal 2004 due to lower
debt balances during the fiscal 2005 quarter. Interest expense on capitalized
leases was substantially unchanged from the prior year first quarter.

Other Income. Other income was substantially unchanged at $17,000 in the
first quarter of fiscal 2005 and $21,000 in the first quarter of fiscal 2004.

Provision for Income Taxes. The provision for income taxes for the first
quarter of fiscal 2005 decreased to zero from $4,000 in the first quarters of
fiscal 2004 due to the Companys decreased profitability in the first quarter
of fiscal 2005.

Liquidity and Capital Resources. Cash flow activity for the first
quarters of fiscal 2005 and fiscal 2004 is presented in the Consolidated
Statements of Cash Flows. Cash provided by operating activities was $67,000
for the quarter ended May 23, 2004 and $1,222,000 for the quarter May 25, 2003.
The decrease in cash provided by operating activities resulted from the cash
outflows associated with the funding of operating assets and liabilities and
the Companys decreased profitability during the first quarter of fiscal 2005.
The Company paid scheduled long-term bank and capitalized lease debt of
$745,000 in the first quarter of fiscal 2005.

The quick service restaurant operations of the Company have historically
provided sufficient cash flow to service the Companys debt, refurbish and
upgrade restaurant properties and cover administrative overhead. Management
believes that operating cash flow will provide sufficient capital to continue
to operate and maintain the KFC, Taco Bell and 2n1 restaurants, service the
Companys debt and support required corporate expenses.

The Companys debt arrangements require the maintenance of a consolidated
fixed charge coverage ratio of 1.2 to 1 regarding all of its mortgage loans and
individual restaurant coverage ratios between 1.2 and 1.5 to 1 on certain of
its loans. As of February 29, 2004, the Company was not in compliance with the
consolidated ratio of 1.2 to 1 or the unit level ratios relating to $31,933,000
of its debt. The Company has obtained waivers of these violations from the
applicable lenders as of February 29, 2004 and May 23, 2004. As these waivers
continue through the following twelve months, the Company has classified its
debt as long term as of February 29, 2004 and May 23, 2004. All payments on
the Companys debt have been, and continue to be current and management

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believes that the Company will continue to be able to service the debt. The
fixed charge coverage ratios are computed based upon financial results for the
preceding twelve months. Based upon financial results for the quarter ended
May 23, 2004 management anticipates that the Company may not achieve certain
ratios as of the end of the fiscal year. If the Company does not comply with
debt covenants in the future, and if future waivers are not obtained, the
lenders will have certain remedies available to them which could include
calling of the debt or acceleration of payments. Noncompliance with the
requirements of the Companys mortgage debt, if not waived, could also trigger
cross-default provisions of other debt agreements.

The Company continues to be out of compliance with certain of the
continued listing standards of the American Stock Exchange (the Exchange), as
has been previously reported in the Companys SEC filings and in shareholder
communications during the last several years. Specifically, the Company fell
under the guidelines in Section 1003(a)(i) with shareholders equity of less
than $2,000,000 and has sustained losses from continuing operations and/or net
losses in two of its three most recent fiscal years and Section 1003(a)(ii)
with shareholders equity of less than $4,000,000 and has sustained losses from
continuing operations and/or net losses in three out of its four most recent
fiscal years.

The Company has not been in compliance with the aforementioned continued
listing standards since June of 1997 and has provided periodic reports and
analyses to the Exchange indicating its plans for achieving compliance with the
standards. During this time, the Company has been near compliance several
times but has not achieved compliance with the continued listing standards.
Based on the Companys financial performance for its most current fiscal year
ended February 29, 2004 compliance with the continued listing standards has not
been achieved. The Board of Directors of the Company, after consultation with
management and counsel, has determined that it is in the best interests of the
Company to withdraw the Companys common shares from listing and registration
on the Exchange. As a result, on June 29, 2004 the Company submitted an
application to remove its common shares from listing on the Exchange. If the
Companys application is accepted, the Companys shares will not be listed on
any stock exchange and the liquidity of its common shares will likely be
adversely affected. While the shares of the Company would be able to be traded
in the over-the-counter market there can be no guarantee that a market for the
shares will occur. The Company intends to request certain brokers to make a
market in the shares, in which case their quotes would be listed in the Pink
Sheets or in the OTC Bulletin Board. The Company cannot predict the extent
to which this change may impact the liquidity of its common shares or the stock
price.

The Companys market risk exposure is primarily due to possible
fluctuations in interest rates as they relate to future borrowings. The
Company has evaluated the potential effect of a 1.0% increase in these rates on
future capital spending plans and believes that there would be no material
effect. The Company does not enter into derivative financial investments for
trading or speculation purposes. As a result, the Company believes that its
market risk exposure is not material to the Companys financial position,
liquidity or results of operations.

Seasonality. The operations of the Company are affected by seasonal
fluctuations. Historically, the Companys revenues and income have been
highest during the summer months with the fourth fiscal quarter representing
the slowest period. This seasonality is primarily attributable to weather
conditions in the Companys marketplace, which consists of portions of Ohio,
Pennsylvania, Missouri, Illinois, West Virginia and New York.

Safe Harbor Statements.This document contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
The statements include those identified by such words as may, will,
expect anticipate, believe, plan and other similar terminology. The
forward-looking statements reflect the Companys current expectations and are
based upon data available at the time of the statements. Actual results

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involve risks and uncertainties, including both those specific to the Company
and general economic and industry factors. Factors specific to the Company
include, but are not limited to, its debt covenant compliance and its ability
to obtain waivers of any debt covenant violations as well as the listing status
of its common shares with the American Stock Exchange.

Economic and industry risks and uncertainties include, but are not
limited, to, franchisor promotions, business and economic conditions,
legislation and governmental regulation, competition, success of operating
initiatives and advertising and promotional efforts, volatility of commodity
costs and increases in minimum wage and other operating costs, availability and
cost of land and construction, consumer preferences, spending patterns and
demographic trends.




Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Information required by this item is included under Liquidity and Capital
Resources.




Item 4. Controls and Procedures.

Management is responsible for the preparation, integrity and objectivity
of the consolidated financial statements and other information presented in
this report. The financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America and
reflect certain estimates and adjustments by management. In preparing
financial statements in conformity with accounting principles generally
accepted in the United States of America, we must make a variety of decisions
that affect the reported amounts and the related disclosures. Such decisions
include the selection of accounting principles that reflect the economic
substance of the underlying transactions and the assumptions on which to base
accounting estimates. In reaching such decisions, we apply judgment based on
our understanding and analysis of the relevant circumstances, including our
historical experience, actuarial studies and other assumptions. We re-evaluate
our estimates and assumptions on an ongoing basis. While actual results could,
in fact, differ from those estimated at the time of preparation of the
financial statements, we are committed to preparing financial statements
incorporating accounting principles, assumptions and estimates that promote the
representational faithfulness, verifiability, neutrality and transparency of
the accounting information included in the financial statements.

We maintain a system of internal accounting controls and procedures, which
management believes provide reasonable assurance that transactions are properly
recorded and that assets are protected from loss or unauthorized use.

We maintain a system of disclosure controls and procedures to ensure
timely collection and evaluation of information subject to disclosure, to
ensure the selection of appropriate accounting policies, and to ensure
compliance with our accounting policies and procedures. Our disclosure control
systems and procedures include the certification of financial information
provided from each of our key management personnel.

The integrity of our disclosure control systems are based on written
policies and procedures, the careful selection and training of qualified
financial personnel and direct management review. Our disclosure control
committee meets periodically to review our systems and procedures and to review
our financial statements and related disclosures.

Our independent auditors have direct and private access to the Audit
Committee.

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The effectiveness of the design and operation of our disclosure controls
and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act
of 1934) was evaluated as of the date of the financial statements. This
evaluation was carried out under the supervision of and with the participation
of management, including the Chief Executive Officer and the Chief Financial
Officer. Based upon that evaluation, the Chief Executive Officer and the Chief
Financial Officer concluded that the design and operation of these disclosure
controls and procedures are effective. There were no significant changes in
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the most recent evaluation.

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PART II OTHER INFORMATION




Item 5. Submission of Matters to a Vote of Security Holders

The Companys annual meeting of shareholders was held on June 25, 2004 and
voting was conducted on the following proposals:

Proposal 1  The election of seven Directors. The following seven Directors
were elected:

NAME
    
    FOR
    
    WITHHOLD
    
    ABSTAINLeonard Stein-Sapir
    
    
    2,489,029
    
    
    
    2,835
    
    
    
    27,988Lawrence S. Dolin
    
    
    2,491,554
    
    
    
    310
    
    
    
    27,988Bahman Guyuron, M.D.
    
    
    2,482,228
    
    
    
    10,569
    
    
    
    27,055Kenneth L. Hignett
    
    
    2,489,987
    
    
    
    1,877
    
    
    
    27,988Steven S. Kaufman
    
    
    2,491,620
    
    
    
    244
    
    
    
    27,988Bernard Lerner
    
    
    2,491,620
    
    
    
    244
    
    
    
    27,988James J. Liguori
    
    
    2,489,454
    
    
    
    2,410
    
    
    
    27,988


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MORGANS FOODS, INC.




INDEX TO
EXHIBITS


ExhibitNumber
    
    Exhibit Description31.1
    
    Certification of the Chairman and Chief Executive Officer
pursuant to Rule 13a-14(a) of Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of the Senior Vice President, Chief Financial
Officer & Secretary pursuant to Rule 13a-14(a) of Securities Exchange
Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 200232.1
    
    Certification of the Chairman of the Board and Chief Executive
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of the Senior Vice President, Chief Financial
Officer and Secretary pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Morgans Foods, Inc.(Registrant)Dated:
    
    July 7, 2004
    
    By:
    
    /s/ Kenneth L. HignettKenneth L. HignettSenior Vice President,Chief Financial Officer & Secretary


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