Morrison Management Specialists, Inc. announced the completion of a record fiscal year ended May 31, 2000. Diluted earnings per share for the year were $1.07, three cents higher than analyst expectations and inclusive of the 10 percent stock dividend awarded in May.

Fourth Quarter Highlights (compared to fiscal year 1999's fourth
quarter)
  • 19% increase in managed volume to $216.2 million. Managed volume is the amount of total operating costs managed and a very important indicator of the Company's financial health.

  • 44% gain in revenues to $130.9 million

  • 30% increase in net income to $4.8 million

  • 24% growth in diluted earnings per share to $0.36
Fiscal Year Highlights (compared to fiscal year 1999)
  • 20% increase in managed volume to $778.6 million

  • 36% gain in revenues to $441.1 million

  • 5% increase in net income to $14.3 million

  • 5% growth in diluted earnings per share to $1.07
Morrison attributes its growth to record new business and high client retention, which averaged 94% for the fiscal year. The primary driver of the Company's record new business is the accelerating outsourcing trend in the healthcare and senior living industries. Healthcare systems, hospitals and senior living communities are choosing to outsource their food, nutrition and dining services at a faster rate than ever in order to achieve economies of scale and focus on their core operations. Morrison is winning a significant volume of new business generated by this accelerating outsourcing trend, and, most importantly, is retaining almost all of its business.

Chairman and CEO Glenn Davenport credits Morrison's team members for the Company's success. "Our people provide the expertise and specialization that wins and retains our business. Their dedication and tremendous efforts have led Morrison through the most exciting year in our history."

Davenport singles out the Company's contract with Tenet Healthcare as one of its most significant accomplishments. "Earlier this year, we won the largest healthcare foodservice contract ever awarded, which placed us clearly as the number two player in the industry." Morrison was also recently ranked in the top twenty among the best performing companies in Georgia by the Atlanta Journal and Constitution.

"Our greatest accomplishment this year was the roll-out of our five core values and The Morrison Way," Davenport continued. "We are preserving our culture while focusing on growth."

The Company is seeing the results from its record new business flow through to its bottom line. In the fourth quarter, earnings growth exceeded managed volume growth, even though selling, general and administrative expenses as a percent of managed volume were higher compared to the fourth quarter last year. Operating margin, as a percent of managed volume, of 9.3% for the fourth quarter was significantly higher than 8.6% in last year's fourth quarter. Earnings before interest and taxes in the fourth quarter increased 29% to $8.7 million compared to $6.7 million in the fourth quarter last year. The Company's effective interest rate was approximately 6.7% in the fourth quarter. The low rate is due to the $75 million credit facility signed in the first quarter of fiscal year 1999. Morrison has approximately $23 million available under its lines of credit.

For fiscal year 2000, record levels of new business opened, including Tenet, contributed to Morrison's managed volume and revenue growth. Associated with this new business were additional opening costs and required expenses for human resources, training, relocations and promotions. These additional costs and expenses impacted the Company's second and third quarter earnings. As a result, earnings growth for the fiscal year lagged behind the Company's topline growth. But Davenport notes, "As reflected in our fourth quarter results, we are realizing the benefits resulting from our record levels of new business during the past fiscal year. We expect the long-term rewards will be significant."

The Company's operating margin, as a percent of managed volume, of 8.6% for the fiscal year was slightly higher than 8.4% for fiscal year 1999. Earnings before interest and taxes in fiscal year 2000 increased 7% to $26.3 million versus $24.6 million in fiscal year 1999.

Morrison's balance sheet remains strong. Compared to year-end 1999, assets increased to support the Company's rapid growth. Collections remain strong, with accounts receivable days decreasing considerably from year-end 1999. Morrison has grown significantly with only a slight increase in working capital, resulting in substantial operating cash flow of $22 million for the year. The Company's leverage is low with debt less than 2 times EBITDA and with interest coverage of over 8.

"We are extremely proud of our growth and accomplishments during the past fiscal year," said Davenport. "As we look to our future, we are confident that we will continue to achieve tremendous growth and maximize value for our clients, team members and shareowners."

Outlook

The Company's sales pipeline remains strong. It is expected that future growth will be driven primarily by increasing new business and high client retention.

Morrison maintains its fiscal year 2001 target for managed volume growth of between 15% and 20%. Because of its better-than-expected performance for fiscal year 2000, the Company has revised its revenue and earnings percentage growth targets for fiscal year 2001. The Company's growth target for revenue will be between 20% and 25%. The Company's earnings per share growth target for fiscal year 2001 will be between 40% and 50%. Beyond fiscal year 2001, the Company anticipates earnings per share growth targets will be between 15% and 20%. These growth targets are exclusive of acquisitions and are based on new business anticipated coupled with the Company's goal of a 95% client retention rate.

Morrison Management Specialists, Inc. is the nation's second largest company in healthcare foodservice. The Atlanta-based company specializes in providing food, nutrition and dining services to the hospital and senior living markets. Morrison serves some of the largest and most prominent integrated healthcare systems, hospitals and senior living communities in the United States.

This news release may contain "forward-looking statements" which represent the Company's expectations or beliefs concerning future events. The Company cautions that a number of important factors could, individually or in the aggregate, cause actual results to differ materially from such forward-looking statements including, without limitation, the following: healthcare spending trends; the growth of systems and group purchasing organizations; changes in healthcare regulations; increased competition in the healthcare food and nutrition market; customer acceptance of the Company's cost savings programs; and laws and regulations affecting labor and employee benefit costs.

tables follow-
MORRISON MANAGEMENT SPECIALISTS, INC.

(In thousands except per share
amounts, unaudited)

FINANCIAL RESULTS Quarter Ended Year Ended
May 31, May 31, May 31, May 31,
2000 1999 2000 1999
------------------------ ------------------------

Managed Volume $ 216,199 $ 181,712 $ 778,571 $ 647,900
=========== =========== ============ ===========

Revenue $ 130,882 $ 90,804 $ 441,074 $ 324,968


Operating Expenses 110,684 75,096 374,310 270,637
----------- ----------- ------------ -----------
Operating Profit 20,198 15,708 66,764 54,331


Selling, General
and Administrative 11,522 8,987 40,457 29,776
----------- ----------- ------------ -----------

Earnings Before
Interest and Income
Taxes 8,676 6,721 26,307 24,555

Interest Expense,
Net 679 650 2,734 2,358
----------- ----------- ------------ -----------
Income Before
Income Taxes 7,997 6,071 23,573 22,197

Provision for
Federal and State
Income Taxes 3,158 2,337 9,311 8,657
----------- ----------- ------------ -----------
Net Income $ 4,839 $ 3,734 $ 14,262 $ 13,540
=========== =========== ============ ===========

Basic Net Income
Per Common Share $ 0.37 $ 0.29 $ 1.10 $ 1.04
=========== =========== ============ ===========
Weighted Average
Shares Outstanding 12,737 12,897 12,918 13,071
=========== =========== ============ ===========

Diluted Net Income
Per Common Share $ 0.36 $ 0.29 $ 1.07 $ 1.02
=========== =========== ============ ===========
Diluted Weighted
Average Shares
Outstanding 13,309 13,114 13,345 13,315
=========== =========== ============ ===========


(In thousands; Unaudited)

CONDENSED BALANCE SHEETS May 31, 2000 May 31, 1999
Assets
Cash and Short-Term Investments $ 3,645 $ 2,780
Accounts and Notes Receivable 40,417 34,035
Inventories 4,909 2,940
Other Current Assets 4,606 4,059
------------ ------------
Total Current Assets 53,577 43,814
Property and Equipment, Net 25,391 18,599
Costs in Excess of Net Assets
Acquired 18,670 18,331
Other Assets 22,822 22,183
------------ ------------
Total Assets $ 120,460 $ 102,927
============ ===========

Liabilities
Accounts Payable $ 19,290 $ 15,091
Current Maturities of Long-Term
Debt 28 136
Other Current Liabilities 17,389 12,917
------------ ------------
Total Current Liabilities 36,707 28,144
Long-Term Debt 54,865 49,305
Other Deferred Liabilities 13,803 10,915
------------ -----------
Total Liabilities 105,375 88,364
Stockholders' Equity 15,085 14,563
------------ -----------
Total Liabilities and
Stockholders' Equity $ 120,460 $ 102,927
============ ===========