1
FILED PURSUANT TO RULE 424(b)(3)
FILE NOS. 333-33225-01, 333-33225-02, 333-33225-04, 333-33225-05, 333-33225-06,
333-33225-07, 333-33225-08, 333-33225-09, 333-33225-10
PROSPECTUS SUPPLEMENT NO. 2
TO PROSPECTUS DATED MAY 4, 1999 [AMERISERVE LOGO]
AMERISERVE FOOD DISTRIBUTION, INC.
8 7/8% NEW SENIOR NOTES DUE 2006
10 1/8% NEW SENIOR SUBORDINATED NOTES DUE 2007
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This second Prospectus Supplement supplements the information contained in,
and should be read in conjunction with, the Prospectus dated May 4, 1999 and the
Prospectus Supplement filed on May 17, 1999.
This Prospectus Supplement and the Prospectus are to be used by Donaldson,
Lufkin & Jenrette Securities Corporation, in connection with the offers and
sales in market-making transactions at negotiated prices related to prevailing
market prices at the time of sale. The Notes are not listed on any securities
exchange or admitted to trading in the National Association of Securities
Dealers Automated Quotation System and the Company does not intend to make any
such listing or seek such admission to trading. DLJ currently makes a market in
the Notes; however, they are not obligated to continue to do so and any market-
making may be discontinued at any time. The Company receives no portion of the
proceeds of sales of the Notes and has paid certain expenses incident to the
registration of the Notes.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
-------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS AUGUST 10, 1999.
2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 26, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934,
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 19367
---------------------
AMERISERVE FOOD DISTRIBUTION, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2296149
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15305 DALLAS PARKWAY
ADDISON, TX 75001
(Address of principal executive offices)
(972) 364-2000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
---------------------
Former name, address and fiscal year, if changed since last report:
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 periods 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 [ ]
All shares of the registrant's common stock are held by one affiliate. As
of August 10, 1999, there were 600 shares of common stock of the registrant
outstanding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
AMERISERVE FOOD DISTRIBUTION, INC.
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of June 26,
1999 and December 26, 1998............................ 3
Condensed Consolidated Statements of Operations for the
second quarter and year-to-date periods ended June 26,
1999 and June 27, 1998................................ 4
Condensed Consolidated Statements of Cash Flows for the
year-to-date periods ended
June 26, 1999 and June 27, 1998...................... 5
Notes to Condensed Consolidated Financial Statements... 6
Item 2. Management's Discussion and Analysis of Financial
Condition
and Results of Operations.............................. 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk............................................ 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................. 21
Item 2. Changes in Securities............................. 21
Item 3. Defaults upon Senior Securities................... 21
Item 4. Submission of Matters to a Vote of Security
Holders................................................ 21
Item 5. Other Information................................. 21
Item 6. Exhibits and Reports on Form 8-K.................. 21
Signatures.................................................. 25
Index to Exhibits
2
4
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERISERVE FOOD DISTRIBUTION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
ASSETS
JUNE 26, DECEMBER 26,
1999 1998
----------- ------------
(UNAUDITED) (NOTE)
Current assets:
Cash and cash equivalents................................. $ 1,313 $ 4,667
Accounts receivable....................................... 51,315 55,402
Undivided interest in accounts receivable trust........... 219,294 208,451
Allowance for doubtful accounts........................... (21,587) (23,852)
Inventories............................................... 343,127 292,255
Other current assets...................................... 37,532 13,835
---------- ----------
Total current assets.............................. 630,994 550,758
Property and equipment, net................................. 254,737 224,516
Intangible assets, net...................................... 1,143,244 1,087,079
Other noncurrent assets..................................... 16,502 24,970
---------- ----------
$2,045,477 $1,887,323
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current Liabilities:
Current portion of long-term debt......................... $ 14,985 $ 8,649
Accounts payable.......................................... 828,214 699,788
Accrued and other current liabilities..................... 200,611 183,671
---------- ----------
Total current liabilities......................... 1,043,810 892,108
Long-term debt.............................................. 969,379 902,600
Other noncurrent liabilities................................ 120,160 91,533
Stockholder's equity (deficit):
Common stock, $.01 par value per share; 10,000 shares
authorized, 600 shares outstanding..................... -- --
Paid-in capital........................................... 249,609 224,609
Accumulated deficit....................................... (337,481) (223,527)
---------- ----------
Total stockholder's equity (deficit).............. (87,872) 1,082
---------- ----------
$2,045,477 $1,887,323
========== ==========
See accompanying notes.
Note: The balance sheet at December 26, 1998 has been derived from the
audited financial statement at that date but does not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements.
3
5
AMERISERVE FOOD DISTRIBUTION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, UNAUDITED)
SECOND QUARTER ENDED YEAR-TO-DATE ENDED
----------------------- -----------------------
JUNE 26, JUNE 27, JUNE 26, JUNE 27,
1999 1998 1999 1998
---------- ---------- ---------- ----------
Net sales.................................... $2,145,762 $1,646,011 $4,160,231 $2,769,949
Cost of goods sold........................... 1,953,515 1,489,736 3,792,372 2,502,746
---------- ---------- ---------- ----------
Gross profit................................. 192,247 156,275 367,859 267,203
Distribution, selling and administrative
expenses................................... 154,358 122,191 310,315 212,044
Depreciation of property and equipment....... 12,333 6,866 22,110 12,547
Amortization of intangible assets............ 13,259 7,245 25,349 14,059
Restructuring and other unusual costs........ 44,432 45,316 66,960 47,304
---------- ---------- ---------- ----------
Operating loss............................... (32,135) (25,343) (56,875) (18,751)
---------- ---------- ---------- ----------
Other income (expense):
Interest expense, net...................... (22,572) (19,523) (43,642) (36,850)
Loss on sale of accounts receivable........ (5,983) (5,427) (13,032) (9,015)
Interest income-affiliates................. 233 166 467 318
---------- ---------- ---------- ----------
(28,322) (24,784) (56,207) (45,547)
---------- ---------- ---------- ----------
Loss before income taxes..................... (60,457) (50,127) (113,082) (64,298)
Provision for income taxes................... 399 300 872 524
---------- ---------- ---------- ----------
Net loss..................................... $ (60,856) $ (50,427) $ (113,954) $ (64,822)
========== ========== ========== ==========
See accompanying notes.
4
6
AMERISERVE FOOD DISTRIBUTION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
YEAR-TO-DATE ENDED
----------------------
JUNE 26, JUNE 27,
1999 1998
--------- ---------
Operating Activities:
Net loss.................................................. $(113,954) $ (64,822)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization.......................... 47,459 26,606
Impairment of property, equipment and other assets..... -- 16,462
Changes in assets and liabilities...................... (26,757) (77,998)
--------- ---------
Net cash used for operating activities.................... (93,252) (99,752)
--------- ---------
Investing Activities:
Business acquired, net of cash acquired................... -- (313,501)
Capital expenditures...................................... (32,558) (19,050)
Net cash transfers from (to) affiliates................... 14,255 (5,288)
--------- ---------
Net cash used for investing activities.................... (18,303) (337,839)
--------- ---------
Financing Activities:
Net increase in borrowings under revolving line of
credit................................................. 60,100 46,400
Proceeds from sale of accounts receivable................. 30,000 125,000
Proceeds from capital contribution........................ 25,000 50,000
Repayments of long-term debt.............................. (6,899) (2,535)
--------- ---------
Net cash provided by financing activities................. 108,201 218,865
--------- ---------
Net decrease in cash........................................ (3,354) (218,726)
Cash at beginning of period................................. 4,667 231,131
--------- ---------
Cash at end of period....................................... $ 1,313 $ 12,405
========= =========
Supplemental disclosures:
Cash paid during the period for:
Interest............................................... $ 47,763 $ 45,251
Income taxes, net of refunds........................... $ 555 $ 378
Business acquired:
Fair value of assets acquired............................. $ -- $ 744,405
Cash paid................................................. -- (313,501)
--------- ---------
Liabilities assumed....................................... $ -- $ 430,904
========= =========
Noncash investing and financing activities:
Capital expenditures through capital leases (included
in long-term debt).................................... $ 19,873 $ 8,199
See accompanying notes.
5
7
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 26, 1999 (UNAUDITED)
1. INTERIM FINANCIAL DATA
The accompanying unaudited Condensed Consolidated Financial Statements of
AmeriServe Food Distribution, Inc. (AmeriServe) have been prepared in accordance
with generally accepted accounting principles for interim financial information
and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and notes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of
adjustments of a normal and recurring nature) considered necessary for a fair
presentation of the financial position and results of operations have been
included. Operating results for the year-to-date period ended June 26, 1999 are
not necessarily indicative of the results that might be expected for the entire
fiscal year ended December 25, 1999. This report should be read in conjunction
with the consolidated financial statements and footnotes thereto included in
AmeriServe's Annual Report on Form 10-K for the fiscal year ended December 26,
1998.
AmeriServe is a direct subsidiary of Nebco Evans Holding Company (NEHC) and
comprises substantially all of NEHC's operations. NEHC is an indirect subsidiary
of Holberg Industries, Inc., a privately held diversified service company that
also has subsidiaries operating within the parking services industry in North
America. NEHC has outstanding debt and preferred stock securities registered
with the Securities and Exchange Commission.
2. ACQUISITION
On May 21, 1998, AmeriServe acquired ProSource, Inc. (ProSource) for $313.5
million in cash, which included repayment of ProSource's existing indebtedness.
ProSource, which reported net sales of $3.9 billion for its fiscal year ended
December 27, 1997, was in the foodservice distribution business, specializing in
quick service and casual dining chain restaurants. ProSource serviced
approximately 12,700 restaurants, principally in the United States, in such
chains as Burger King, Chick-fil-A, Chili's, Long John Silver's, Olive Garden,
Red Lobster, Sonic, TCBY and TGI Friday's. The acquisition has been accounted
for under the purchase method; accordingly, reported operating results for 1998
include the ProSource operations only for periods subsequent to its acquisition
date.
The final ProSource purchase price allocation is based on the estimated
fair values of identifiable intangible and tangible assets acquired and
liabilities assumed at the acquisition date, as follows (in millions):
Accounts receivable....................................... $ 224.0
Inventories............................................... 153.6
Property and equipment.................................... 29.0
Goodwill.................................................. 314.3
Identifiable intangible assets............................ 82.0
Other assets.............................................. 15.3
Accounts payable.......................................... (310.0)
Accrued and other liabilities............................. (98.2)
Restructuring reserves.................................... (96.5)
-------
$ 313.5
=======
The restructuring reserves of $96.5 million were included in the purchase
price allocation above in connection with a business restructuring plan to
consolidate and integrate the operations of ProSource and PFS, a Division of
PepsiCo, Inc. (PFS), acquired effective June 1997, with AmeriServe's existing
operations. The reserves consist of accruals for severance and other
employee-related costs ($45.9 million), costs
6
8
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
associated with the closures of duplicative warehouse and other facilities
($47.0 million), and other exit cost accruals ($3.6 million). Through June 26,
1999, payments charged against the ProSource restructuring reserves totaled
$15.4 million, including $9.5 million in 1999. See Note 3 for additional
discussion.
The following unaudited pro forma results of operations for the
year-to-date period ended June 27, 1998 assume the acquisition of ProSource
occurred at the beginning of that period (in thousands):
Net sales................................................. $4,432.5
Net loss.................................................. (70.9)
This information does not purport to be indicative of the results that
would have been obtained if ProSource had actually been acquired at the
beginning of fiscal 1998.
3. RESTRUCTURING AND OTHER UNUSUAL COSTS
In 1997, AmeriServe developed a restructuring plan identifying a number of
actions to consolidate and integrate the operations of PFS. The plan was revised
in 1998 for the consolidation and integration of the acquired ProSource
operations (see Note 2). The restructuring plan is designed to reduce operating
costs by eliminating cost redundancies arising from the acquisitions, leveraging
warehouse economies of scale, increasing delivery fleet utilization and
centralizing and streamlining support processes.
The restructuring plan includes currently ongoing activities to consolidate
operations serving quick service restaurants, which represent a substantial
majority of the actions and are expected to be largely completed by mid-2000.
Additional plan actions to integrate operations serving casual dining
restaurants into the quick service distribution network will be largely
completed by the end of 2000. The actions under the plan include construction of
new, strategically located, state-of-the-art distribution centers, closures of a
number of distribution centers and expansions/reconfigurations of others,
dispositions of property and equipment, conversions of computer systems,
reductions in workforce, relocation of employees and centralization of support
functions largely at the headquarters in Addison, Texas, a suburb of Dallas.
In the second quarter of 1999, AmeriServe completed the development of the
restructuring plan, deciding to close additional distribution centers in 2000
previously under consideration. To primarily recognize exit cost liabilities for
lease termination and employee severance related to these centers, AmeriServe
recorded $4.0 million in additional restructuring charges and $15.7 million in
increased restructuring reserves as part of the final ProSource purchase price
allocation. AmeriServe believes that all material exit costs and asset
writedowns arising from the planned restructuring actions have now been
accounted for.
A total of $148.8 million in cash exit liabilities related to the
restructuring plan have been reserved for through the final PFS and ProSource
purchase price allocations (for planned closures of acquired facilities) and
restructuring charges recorded in 1997, 1998 and the second quarter of 1999 (for
planned closures of existing facilities). Through June 26, 1999, approximately
$27.1 million in payments, including $10.8 million in 1999, have been charged to
the reserves. Material adjustments to the reserves have consisted only of those
described in the previous paragraph and revisions to preliminary estimates in
finalizing the ProSource purchase price allocation.
Other incremental integration costs associated with the restructuring plan
that do not qualify as exit costs are expensed as incurred and classified as
"Restructuring and other unusual costs". These integration costs relate
primarily to start-up of new or expanded distribution centers and other actions
to facilitate the distribution network consolidation, and include both
specifically identifiable and estimated distribution network inefficiencies, as
well as activities to realign and centralize administrative and other support
functions.
In conjunction with the restructuring plan, AmeriServe is in the process of
implementing a major new computer software and hardware platform, which enhances
productivity in distribution operations, streamlines
7
9
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and facilitates centralization of support processes and reduces AmeriServe's
exposure to the Year 2000 computer code problem. The noncapitalized costs to
develop and implement the new system, as well as costs to remediate computer
code of existing systems for the Year 2000 issue, are expensed as incurred and
classified as "Restructuring and other unusual costs".
Included in "Restructuring and other unusual costs" in the Condensed
Consolidated Statements of Operations are the following (in millions):
SECOND QUARTER ENDED YEAR-TO-DATE ENDED
--------------------- -------------------
JUNE 26, JUNE 27, JUNE 26, JUNE 27,
1999 1998 1999 1998
-------- -------- -------- --------
Restructuring and impairment charges............. $ 4.0 $33.9 $ 4.0 $33.9
Distribution network start-up costs and
integration inefficiencies..................... 18.4 4.7 28.4 5.7
Administrative integration-related costs......... 8.0 .5 10.8 1.1
New computer system implementation costs......... 11.1 .5 18.3 .9
Y2K remediation costs............................ 2.3 1.1 4.9 1.1
Other unusual costs, including one-time
acquisition related expenses................... .6 4.6 .6 4.6
----- ----- ----- -----
$44.4 $45.3 $67.0 $47.3
===== ===== ===== =====
4. LONG-TERM DEBT
In 1998, AmeriServe secured a revolving credit facility, expiring in May
2003, of up to $220 million. Availability under the facility is linked to levels
of AmeriServe's inventories of food and paper products and supplies. At June 26,
1999, the availability under the facility based on inventory levels was $199.6
million before $64.1 million in borrowings and $11.6 million in letters of
credit. Total letters of credit outstanding at that date were $32.0 million, but
under an amendment to the facility in March 1999, $20.4 million (of up to $30
million depending on total availability) did not impact borrowing capacity.
5. ACCOUNTS RECEIVABLE PROGRAM
Under AmeriServe's ongoing Accounts Receivable Program (the Program) that
expires in December 2001, a substantial majority of the trade accounts
receivable generated by AmeriServe are sold on a daily basis to AmeriServe
Funding Corporation (Funding), a wholly owned, special purpose,
bankruptcy-remote, consolidated subsidiary. The purchases by Funding are
financed through the sale of the receivables by Funding to AmeriServe Master
Trust (the Trust) in exchange for cash and an undivided interest in the Trust.
The initial purchases of accounts receivable by the Trust were funded through
the issuances of a series of interest-bearing investor certificates by the
Trust. Subsequent purchases are funded daily by collections on previously
acquired accounts receivable. As liquidity available under the Program changes
with seasonal or other fluctuations in accounts receivable levels, the amount of
investor certificates outstanding is adjusted. The "Loss on sale of accounts
receivable" in the Condensed Consolidated Statements of Operations largely
represents the return to investors in the certificates.
The Program provides up to $485 million in capacity, with the actual
availability linked to eligible accounts receivable levels. The availability at
June 26, 1999 was $475 million, all of which AmeriServe had received in proceeds
as of that date. The proceeds reflected $694.3 million of accounts receivable
sold less Funding's undivided interest in the assets of the Trust of $219.3
million.
In anticipation of peak summer sales, the Program was temporarily expanded
for the period from June 1 to September 28, 1999 to provide AmeriServe with up
to $585 million in total capacity. The amount of
8
10
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
additional proceeds received will depend on the level of receivables outstanding
during that time. All other provisions within the Accounts Receivable Program
remain the same.
6. GUARANTOR SUBSIDIARIES
AmeriServe's principal operating subsidiaries fully, unconditionally,
jointly and severally guarantee AmeriServe's $350 million 8 7/8% Senior Notes
and $500 million 10 1/8% Senior Subordinated Notes.
The AmeriServe parent company and the guarantor subsidiaries, which are
direct, wholly owned U.S. subsidiaries, conduct the substantial majority of
consolidated operations. Separate financial statements of the guarantor
subsidiaries are not presented because, in the opinion of management, such
financial statements are not material to investors.
The only material subsidiary of AmeriServe that is not a guarantor
subsidiary is Funding, which is a wholly owned, special purpose,
bankruptcy-remote subsidiary. Funding has no operating revenues or expenses, and
its only asset is an undivided interest in an accounts receivable trust (see
Note 5). Funding's interest in the Trust is junior to the claims of the holders
of certificates issued by the Trust. Accordingly, as creditors of AmeriServe,
the claims of the holders of the Senior Subordinated Notes and Senior Notes
against the accounts receivable held in the Trust are similarly junior to the
claims of holders of the certificates issued by the Trust.
Following is summarized combined financial information (in accordance with
Rule 1-02(bb) of Regulation S-X) at June 26, 1999 and for the year-to-date
period then ended for the guarantor subsidiaries (in thousands):
Current assets........................................... $ 35,140
Current liabilities...................................... 15,505
Noncurrent assets........................................ 72,322
Noncurrent liabilities................................... 40,123
Net sales................................................ $275,338
Operating income......................................... 4,763
Net income............................................... 4,530
7. CAPITAL CONTRIBUTION
On March 24, 1999, NEHC provided a $25 million cash capital contribution to
AmeriServe. These funds represented proceeds remaining from NEHC's issuance of
11 1/4% Senior Redeemable Exchangeable Preferred Stock in March 1998.
9
11
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This quarterly report contains certain forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.
Actual results could differ materially from those projected in such
forward-looking statements and readers are cautioned not to place undue reliance
on the forward-looking statements, which speak only as of the date hereof.
AmeriServe Food Distribution, Inc. (AmeriServe) undertakes no obligation to
update these forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence or nonoccurrence of anticipated
events.
NATURE OF OPERATIONS
AmeriServe is a foodservice distributor specializing in chain restaurants
and distributing a wide variety of food items as well as paper goods, cleaning
and other supplies and equipment. AmeriServe operates within a single type of
business activity, with no operating segments as defined by Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information."
AmeriServe services approximately 36,000 restaurants, the vast majority of
which are in the United States. AmeriServe's largest customers are system owners
and/or franchisees operating restaurants in the Arby's, Burger King,
Chick-fil-A, Chili's, Dairy Queen, KFC, Lone Star Steakhouse, Long John
Silver's, Olive Garden, Pizza Hut, Red Lobster, Sonic, Taco Bell, TCBY and TGI
Friday's systems. For most of these concepts, AmeriServe services all or a
substantial majority of the U.S. restaurants in the systems. AmeriServe also
operates foodservice distribution businesses in Canada and Mexico, which are not
material to the consolidated financial statements.
AmeriServe is a direct subsidiary of Nebco Evans Holding Company (NEHC) and
comprises substantially all of NEHC's operations. NEHC is an indirect subsidiary
of Holberg Industries, Inc., a privately held diversified service company that
also has subsidiaries operating within the parking services industry in North
America. NEHC has outstanding debt and preferred stock securities registered
with the Securities and Exchange Commission.
ACQUISITION
On May 21, 1998, AmeriServe acquired ProSource for $313.5 million in cash,
which included $15.00 per share for all of the outstanding common stock,
repayment of existing indebtedness of ProSource of $159.5 million and direct
costs of the acquisition. ProSource, which reported net sales of $3.9 billion
for its fiscal year ended December 27, 1997 was in the foodservice distribution
business, specializing in quick service and casual dining chain restaurants.
ProSource serviced approximately 12,700 restaurants, principally in the United
States, in such chains as Burger King, Chick-fil-A, Chili's, Long John Silver's,
Olive Garden, Red Lobster, Sonic, TCBY and TGI Friday's. Funding of the
acquisition and related transactions included $125 million in proceeds from the
sale of ProSource accounts receivable (see Note 5 to the Condensed Consolidated
Financial Statements), a $50 million capital contribution to AmeriServe from
NEHC and cash and cash equivalents on hand. The acquisition has been accounted
for under the purchase method; accordingly, reported operating results for the
second quarter and year-to-date periods ended June 27, 1998 included five weeks
of results for the former ProSource operations. Reported operating results for
the second quarter and year-to-date periods ended June 26, 1999 include 13 and
26 weeks, respectively, of results for a majority of the former ProSource
operations. Certain former ProSource operations have been converted to an
accounting calendar with 12 and 24 weeks in the quarter and year-to-date
periods -- see discussion below under "Accounting Calendar". The comparisons of
reported operating results for the quarter and year-to-date 1999 to the same
periods of 1998 presented below under "Results of Operations" are significantly
impacted by the acquisition of ProSource.
BUSINESS RESTRUCTURING
AmeriServe has experienced rapid growth as a result of the acquisitions of
ProSource and, effective June 1997, the PFS Division of PepsiCo, Inc.(PFS), both
large foodservice distribution companies with national scope specializing in the
chain restaurant segment of the U.S. foodservice industry.
10
12
These acquisitions have resulted in redundancies in AmeriServe's warehouse
facilities, truck delivery routes and administrative and other support
functions. AmeriServe has developed a business restructuring plan to consolidate
and integrate the acquired businesses. Actions identified in the plan include
construction of new, strategically located, state-of-the-art distribution
centers, closures of a number of distribution centers and
expansions/reconfigurations of others, dispositions of property and equipment,
conversions of computer systems, reductions in workforce, relocation of
employees and centralization of support functions largely at the headquarters in
Addison, Texas, a suburb of Dallas.
Completion of the plan is expected to significantly increase operating
efficiencies through warehouse economies of scale, increased delivery fleet
utilization and centralized, streamlined support processes. Implementation of a
major new computer software and hardware platform (discussed below under
"Computer Systems and Year 2000 Issue") will facilitate actions to enhance
productivity and centralize support processes.
The restructuring plan consists of two phases. The first phase, which
represents a substantial majority of the plan, is the consolidation of the
business serving quick service restaurant customers. The second phase is the
integration of the business serving casual dining restaurant customers into the
quick service restaurant distribution network. The estimated ProSource exit cost
reserves, primarily for lease liabilities and severance, associated with both
phases of the plan are reflected in the final purchase price allocation.
Cost savings resulting from the plan (including both phases) are estimated
at approximately $115 million annually. The cost savings will build over time,
reaching this savings run rate upon the substantial completion of the plan by
mid 2001.
The first phase of the plan is proceeding on schedule. As of August 10,
1999, AmeriServe has closed 29 quick service distribution centers and
transferred the business to new or existing centers. Another eight closures are
planned for the balance of 1999. Seven distribution centers have been expanded
and/or significantly reconfigured, and the remaining facility planned for
completion in 1999 is in process and on schedule. Operations have commenced at
six newly constructed distribution centers in Orlando, FL, Denver, CO, Memphis,
TN, Charlotte, NC, Atlanta, GA and Houston, TX. Another new distribution center
in Kansas City, KS planned for completion in October 1999 is under construction
and on schedule. As a result of these actions, 12 distribution centers are
substantially complete with respect to consolidation of the quick service
business, representing approximately 50% of quick service net sales. By the end
of the third quarter of 1999, approximately 85% of quick service net sales are
expected to be consolidated.
AmeriServe will incur significant cash costs to effect the restructuring.
Approximately $148.8 million in cash exit costs have been reserved for through
restructuring charges in 1997, 1998 and the second quarter 1999, as well as
reserves recorded as part of the purchase price allocations for ProSource and
PFS. In the second quarter, AmeriServe completed the development of the
restructuring plan, deciding to close additional distribution centers in 2000
previously under consideration. As a result, AmeriServe recorded additional
restructuring charges of $4.0 million and increased restructuring reserves of
$15.7 million as part of the final ProSource purchase price allocation. Cash
outlays associated with these actions, primarily for employee severance and
lease liabilities, will occur in 2000 and later years. Of the total in reserves
established, $27.1 million has been spent through June 26, 1999, including $10.8
million in 1999, and approximately $25 million is expected to be spent over the
balance of 1999, primarily representing employee severance and lease payments
related to closed facilities.
In addition, cash integration costs, which are expensed as incurred,
totaled $81.5 million through June 26, 1999, including $40.2 million in 1999,
and about $30 million is expected to be spent over the balance of 1999. These
integration costs relate primarily to start-up of new or expanded distribution
centers and other actions to facilitate the distribution network consolidation,
and include both specifically identifiable and estimated distribution network
inefficiencies, as well as activities to realign and centralize administrative
and other support functions.
All restructuring charges and integration costs are included in
"Restructuring and other unusual costs" in the Condensed Consolidated Statements
of Operations.
11
13
CUSTOMER ACTIVITIES
AmeriServe has been very active in solidifying relationships with existing
customers, including TRICON Global Restaurants, Inc. (Tricon), AmeriServe's
largest customer, and franchisees in the Tricon and Burger King systems, through
long-term distribution agreements. Approximately 80% of AmeriServe's total
business is covered by long-term agreements, with close to 75% of the business
under contracts with three or more years of remaining term.
As part of the Tricon and other new or revised distribution agreements,
AmeriServe has moved a substantial portion of its business from pricing based on
a percentage mark-up (over cost) to a fee per case mark-up. This change results
in pricing that more closely correlates with AmeriServe's cost structure and
insulates its gross profit from product cost and mix variability. Approximately
70% of AmeriServe's business is under fee per case pricing.
In the course of revising or entering into new contracts, AmeriServe, in
cooperation with customers, has identified supply chain efficiency and cost
reduction opportunities benefiting both parties. These include reduced
deliveries per week, after-hours delivery, electronic ordering and scheduled
order-to-delivery windows, which also enhance order fulfillment accuracy.
AmeriServe provides value-added services to customers such as consolidating
purchases of low volume items to reduce the cost of these products, and
management of freight costs in transporting products from vendors to
AmeriServe's distribution centers, which reduces the freight component of
product costs. AmeriServe has recently introduced a private label program under
which nonproprietary supplies and food items are offered to customers. The
ongoing expansion of these services and programs is expected to improve gross
profit margins from current levels.
During the second half of 1998, AmeriServe discontinued service to Wendy's
company-owned and franchised restaurants as a result of a decision by Wendy's
International, Inc. to transfer its business to a competitor. Net sales to the
Wendy's concept were approximately $600 million annually.
COMPUTER SYSTEMS AND YEAR 2000 ISSUE
AmeriServe's business activity requires the processing of thousands of
transactions on a daily basis in the purchasing, transportation and warehousing
of food and supply items and sale of these items to restaurant customers.
AmeriServe's operational and financial stability is reliant upon the orderly
flow of goods through the entire supply chain; i.e., from providers of food
commodities to food processors to AmeriServe to customers' restaurants and
finally to consumers. This flow of goods depends on the use of computerized
systems throughout the supply chain.
AmeriServe has taken a number of steps to assess and remediate its exposure
to the Year 2000 (Y2K) computer program code problem. Findings to date include:
- As measured by lines of program code, approximately 20% of AmeriServe's
software required remediation for the Y2K code problem. Remediation and
testing of these legacy applications is complete, and the applications
representing approximately 65% of this code have been placed back into
production. The one remaining application will be placed back into
production in the third quarter of 1999.
- The remaining 80% of software includes applications that are currently
being replaced by a new software package platform (see discussion below)
and several previously existing software application packages that will
continue to be utilized. The providers of the software packages have
certified that their products are Y2K compliant. AmeriServe has initiated
testing procedures to verify compliance, and testing of human resource
and purchasing applications are complete. Finance applications have been
upgraded to the compliant version and testing is well underway. Upgrades
and testing of PC-based applications are also in process. All testing
activities will be completed in the third quarter.
- AmeriServe has completed an assessment of its computer hardware and
determined that approximately 30% of these devices were not Y2K
compliant. Upgrades and replacements of critical assets,
12
14
including mid-range systems and operating system software, are complete.
Remediation of other assets, including desktops and laptops, will be
completed in the third quarter.
- AmeriServe has completed its assessment of other mechanical equipment and
devices with electronic components possibly susceptible to the Y2K issue.
Risk identified has been minimal. Upgrades and replacements of
mission-critical systems are complete and the remainder will be completed
in the third quarter.
- AmeriServe has requested information regarding Y2K readiness from 2,300
product vendors and service providers and 7,400 customers. A systematic,
objective evaluation process is being used to assess provider responses.
Follow-up activities, including contingency planning, is underway with
critical providers.
- AmeriServe is using the services of outside experts to assist internal
resources in the identification and remediation of Y2K issues in the
various areas of exposure discussed above.
Given the environment AmeriServe operates in, with rapid movement of high
volumes of products in cooperation with a large number of trading partners, the
risk of the Y2K issue is high and could result in a significant adverse effect
on AmeriServe's operations. AmeriServe believes that software and equipment
within its control are or will be timely compliant. The risk lies principally
with AmeriServe's large base of suppliers and customers. Within these groups
there is a wide range of exposure and resources focusing on potential Y2K
issues. AmeriServe is limited in its ability to determine with a high degree of
reliability the state of readiness of trading partners and to influence these
partners to achieve timely compliance.
AmeriServe has completed drafting a contingency plan focusing on critical
business activities in the event of a disruption to the business. The plan will
be finalized in the third quarter upon review and approval by management.
As referred to above, AmeriServe is in the process of replacing critical
applications and processes within its management information system with a new
software and hardware platform. The software package platform includes
integrated distribution operations and financial management applications. The
new system complements the restructuring plan as it enhances productivity in
distribution operations, streamlines and facilitates centralization of support
processes and has the flexibility to meet customer-unique requirements. The
implementation of the system is on schedule. As of August 10, 1999,
approximately 90% of the quick service business is operating under the new
system, with the remainder to be completed by the end of the third quarter. With
respect to the former ProSource operations, AmeriServe intends to support the
quick service business with the new system, but in the short-term will continue
to utilize applications currently supporting the casual dining business. These
applications have been remediated and tested and are being placed back into
production as discussed above.
The cash costs (excluding leased computer hardware) to implement the new
system in the quick service business and perform the assessment and remediation
of the Y2K issue will approximate $105 million. Of this amount, $87.3 million
has been spent through June 26, 1999, including $37.0 million in 1999, and the
remainder of approximately $17 million is expected to be spent over the balance
of 1999. The costs to purchase and develop the software for the new system are
being capitalized. The costs to re-engineer processes, roll-out the developed
software (largely data conversion and training) and perform the assessment and
remediation of the Y2K issue are expensed as incurred and included in
"Restructuring and other unusual costs" in the Condensed Consolidated Statements
of Operations.
ACCOUNTING CALENDAR
As previously disclosed, AmeriServe is in the process of conforming the
reporting of certain operations in order to adopt a 13-period accounting
calendar for all the business. Under this calendar, the fiscal year consists of
13 four-week periods, with each of the first three quarters consisting of 12
weeks and the fourth quarter consisting of 16 weeks. As of June 26, 1999,
approximately 70% of the business was on the new calendar, with the balance on a
calendar with each quarter consisting of 13 weeks. The conversion is expected to
be
13
15
completed in 2000. Because of the phased nature of the conversion, which began
in the fourth quarter of 1998, year-over-year comparisons of quarterly results
have not been materially impacted, but disclosures of the impact will be made as
necessary to help identify underlying trends.
RESULTS OF OPERATIONS
The following table presents certain reported financial information of
AmeriServe (see Condensed Consolidated Statements of Operations), expressed as a
percentage of net sales:
SECOND QUARTER ENDED YEAR-TO-DATE ENDED
--------------------- -------------------
JUNE 26, JUNE 27, JUNE 26, JUNE 27,
1999 1998 1999 1998
-------- -------- -------- --------
Net sales....................................... 100.0% 100.0% 100.0% 100.0%
Cost of goods sold.............................. 91.0 90.5 91.2 90.4
----- ----- ----- -----
Gross profit.................................... 9.0 9.5 8.8 9.6
Distribution, selling and administrative
expenses...................................... 7.2 7.4 7.5 7.7
----- ----- ----- -----
Operating income before depreciation,
amortization and restructuring and other
unusual costs................................. 1.8% 2.1% 1.4% 2.0%
===== ===== ===== =====
Second Quarter and Year-to-Date 1999 Compared to the Same Periods of 1998:
Net sales in 1999 increased $499.8 million, or 30.4%, to $2.1 billion in
the quarter and $1.4 billion, or 50.2%, to $4.2 billion year-to-date, primarily
reflecting the acquisition of ProSource, partially offset by the discontinuance
of the Wendy's business.
Gross profit in 1999 increased $36.0 million, or 23.0%, to $192.2 million
in the quarter and $100.7 million, or 37.7%, to $367.9 million year-to-date due
primarily to the acquisition of ProSource. The margin decline of .5 of a point
to 9.0% in the quarter and .8 of a point to 8.8% year-to-date reflected the
impact of the ProSource acquisition. ProSource's casual dining business has
higher product case costs as compared to AmeriServe's quick service business,
resulting in a lower gross profit margin. AmeriServe's profitability is largely
determined by the relationship of the negotiated mark-up, or distribution fee
that is added to product cost to determine sales prices, to AmeriServe's
operating costs. Therefore, a decline in the gross profit margin does not
necessarily indicate a decline in profitability in dollars. Gross margins are
expected to improve as value-added services provided for in certain recent
customer contracts, such as private label sales and inbound freight management,
are fully implemented.
Distribution, selling and administrative expenses in 1999 increased $32.2
million, or 26.3%, to $154.4 million in the quarter and $98.3 million, or 46.3%,
to $310.3 million year-to-date due primarily to the acquisition of ProSource.
Distribution, selling and administrative expenses as a percent of net sales
decreased .2 of a point to 7.2% in the quarter and .2 of a point to 7.5%
year-to-date. This change primarily reflected the downward effect on the
operating cost margin of the higher case sales prices in ProSource's casual
dining business as compared to AmeriServe's quick service business (see gross
profit discussion above).
Operating income in 1999 before depreciation of property and equipment,
amortization of intangible assets and restructuring and other unusual costs
increased $3.8 million, or 11.2%, to $37.9 million in the quarter and $2.4
million, or 4.3%, to $57.5 million year-to-date, reflecting the ProSource
acquisition, partially offset by the Wendy's discontinuance. As a percent of net
sales, this income measure declined .3 of a point to 1.8% in the quarter and .6
of a point to 1.4% year-to-date. This change was driven by the factors impacting
gross profit as discussed above.
Depreciation of property and equipment in 1999 increased $5.5 million to
$12.3 million in the quarter and $9.6 million to $22.1 million year-to-date due
largely to the acquisition of ProSource.
Amortization of intangible assets in 1999 increased $6.0 million to $13.3
million in the quarter and $11.3 million to $25.3 million year-to-date primarily
reflecting the amortization of the intangible assets arising from the allocation
of the ProSource purchase price.
14
16
Restructuring and other unusual costs in 1999 of $44.4 million in the
quarter and $67.0 million year-to-date consisted primarily of incremental costs
associated with the distribution network consolidation and integration, the new
computer system implementation and Y2K remediation. Costs in 1999 include $4.0
million in charges taken in the second quarter primarily for severance and lease
liabilities arising from distribution center closure decisions to finalize the
restructuring plan. Restructuring and other unusual costs in 1998 of $45.3
million in the quarter and $47.3 million year-to-date included $33.9 million in
exit cost accruals and impairment charges in the second quarter primarily for
distribution centers to be closed in connection with the revised restructuring
plan to consolidate and integrate the newly acquired ProSource operations.
Interest expense net of interest income in 1999 increased $3.0 million to
$22.6 million in the quarter and $6.8 million to $43.6 million year-to-date
reflecting increased borrowings on the revolving credit facility to largely fund
restructuring activities and computer systems initiatives, as well as reduced
interest income as cash equivalents on hand in 1998 were used to partially fund
the acquisition of ProSource.
Loss on sale of accounts receivable relates to an ongoing Accounts
Receivable Program that provides financing capacity. (See Note 5 to the
Condensed Consolidated Financial Statements.) Under the program, trade accounts
receivable are sold to a wholly owned, special purpose, bankruptcy-remote,
consolidated subsidiary, which in turn transfers the receivables to a master
trust. The loss on sale of accounts receivable of $6.0 million in the quarter
and $13.0 million year-to-date largely represents the return to investors in
certificates issued by the master trust. The increase over 1998 of $.6 million
in the quarter and $4.0 million year-to-date reflects the addition of ProSource
accounts receivable as well as amendments to the program in the second half of
1998 that resulted in additional capacity.
Provision for income taxes in 1999 primarily represents estimated current
state and foreign income taxes payable. AmeriServe's net deferred tax assets are
offset entirely by a valuation allowance, largely reflecting a net operating
loss carryforward position for federal income tax purposes.
Net loss in 1999 increased $10.4 million to $60.9 million in the quarter
and $49.1 million to $114.0 million year-to-date driven by higher amortization
of intangibles and financing costs, as well as increased restructuring expenses
for the year-to-date.
Comparison of Results of Operations on a Combined Basis:
This supplementary information is provided to enhance comparisons of
results of operations by taking into account the acquisition of ProSource. The
combined results for the three and six months ended June 27, 1998 presented
below include the historical results of ProSource for the periods prior to its
May 1998 acquisition date. The following combined results do not purport to
represent what the 1998 reported results would have been had the acquisition of
ProSource actually occurred at the beginning of fiscal 1998 (in thousands):
SECOND QUARTER ENDED YEAR-TO-DATE ENDED
----------------------------------- -----------------------------------
COMBINED COMBINED
JUNE 26, JUNE 27, JUNE 26, JUNE 27,
1999 % 1998 % 1999 % 1998 %
-------- ----- -------- ----- -------- ----- -------- -----
Net sales.......................... $2,145.8 100.0 $2,316.3 100.0 $4,160.2 100.0 $4,430.0 100.0
Cost of goods sold................. 1,953.6 91.0 2,106.8 91.0 3,792.4 91.2 4,031.4 91.0
-------- ----- -------- ----- -------- ----- -------- -----
Gross profit....................... 192.2 9.0 209.5 9.0 367.8 8.8 398.6 9.0
Distribution, selling and
administrative expenses.......... 154.3 7.2 170.2 7.3 310.3 7.5 335.0 7.6
-------- ----- -------- ----- -------- ----- -------- -----
Operating income before
depreciation, amortization and
restructuring and other unusual
costs............................ $ 37.9 1.8 $ 39.3 1.7 $ 57.5 1.4 $ 63.6 1.4
======== ===== ======== ===== ======== ===== ======== =====
Management fees to Holberg Industries, Inc. included in distribution,
selling and administrative expenses in both 1999 and 1998 were $.9 million in
the quarter and $1.8 million year-to-date.
15
17
Included in 1999 distribution, selling and administrative expenses
presented above are estimated cost inefficiencies of $2.9 million in the quarter
and $7.9 million year-to-date that relate to distribution centers in the
AmeriServe (pre-acquisitions) and ProSource networks not yet consolidated as
part of the restructuring plan. AmeriServe believes these operating costs could
have been eliminated independent of the restructuring plan. Such amounts
included in 1998 expenses presented above were approximately $2.9 million in the
quarter and $6.0 million year-to-date. No estimates were developed for ProSource
for periods prior to its May 1998 acquisition, and no estimates were developed
for PFS as it was assumed to be reasonably efficient.
Results for the quarter were dampened by the ineffectiveness of Tricon's
promotional tie-in with Star Wars to drive sales, compounded by operating
incremental costs incurred to stock related promotional items and prepare for
anticipated case volume growth. The Tricon business, including both
company-owned and franchised stores in the Pizza Hut, Taco Bell and KFC systems,
represents approximately 39% of AmeriServe's net sales.
Net sales in 1999 decreased $170.5 million, or 7.4%, in the quarter and
$269.8 million, or 6.1%, year-to-date. Net sales increased 3.3% in the quarter
and 3.8% year-to-date after adjusting 1998 combined net sales for the estimated
impact of the discontinued Wendy's business of $162 million in the quarter and
$313 million year-to-date and the change in accounting calendar from 13 weeks in
the quarter to 12 weeks of $77 million in the quarter and $110 million
year-to-date (see discussion under "Accounting Calendar" above). At June 26,
1999, the approximate number of stores served by AmeriServe was 36,700 compared
to 38,200 at the same time last year, including over 700 stores in Canada and
Mexico in both years. The decrease was driven by the discontinuance of the
Wendy's business, which represented approximately 2000 stores.
The adjusted net sales growth of 3.3% in the quarter and 3.8% year-to-date
reflected strong case volume growth in the casual dining business. In the quick
service business, lower case volumes per store more than offset growth in stores
served by AmeriServe.
Gross profit in 1999 decreased $17.3 million, or 8.3%, in the quarter and
$30.8 million, or 7.7%, year-to-date, reflecting the discontinuance of the
Wendy's business and the accounting calendar change. The gross margin was even
for the quarter and declined .2 of a point to 8.8% year-to-date. The relatively
faster growth of casual dining case volumes had a downward effect on reported
gross margins (see gross profit discussion above). Gross margins are expected to
improve as value-added services provided for in certain recent customer
contracts, such as private label sales and inbound freight management, are fully
implemented.
Operating expenses in 1999 declined $15.9 million, or 9.3%, in the quarter
and $24.7 million, or 7.4%, year-to-date. As a percent of net sales, operating
expenses declined .1 of a point to 7.2% in the quarter and .1 of a point to 7.5%
year-to-date. This performance reflected the impact of the net sales decrease,
the relatively faster growth of the casual dining business and lower
administrative expenses at the former ProSource headquarters.
LIQUIDITY AND CAPITAL RESOURCES
AmeriServe's sources of liquidity include the following:
- Cash provided by ongoing operating activities.
- A credit facility of up to $220 million, of which $199.6 was available
before $64.1 in borrowings and $11.6 in letters of credit at June 26,
1999. (See Note 4 to the Condensed Consolidated Statements of
Operations.)
- Proceeds from the Accounts Receivable Program of up to $485 million,
temporarily increased (through September 28, 1999) to $585 million in
anticipation of peak summer sales, of which $475 million was available
and fully used at June 26, 1999. (See Note 5 to the Condensed
Consolidated Statements of Operations.)
- Future proceeds from sales of warehouse facilities and excess
transportation equipment estimated to be $25-35 million for the balance
of 1999.
16
18
- Lease financing of warehouse facility construction and purchases of
delivery fleet, material handling equipment and computer hardware.
AmeriServe believes that its liquidity sources will be adequate to fund the
approximately $72 million in cash needs for the balance of 1999 relating to the
consolidation and integration actions and computer systems initiatives
(discussed above under "Business Restructuring" and "Computer Systems and Year
2000 Issue", respectively). Cash capital expenditures for 1999, in addition to
amounts included in the computer systems initiatives, are estimated to be about
$25 million, of which $18 million has been spent year-to-date. The following
table indicates the nature and timing of cash expenditures associated with the
restructuring and computer systems initiatives (in millions):
1998 SECOND YEAR TOTAL BALANCE
AND QUARTER TO DATE SPENDING OF 1999
1997 1999 1999 TO DATE (ESTIMATED)
------ ------- ------- -------- -----------
Cash expenditures for:
Lease liabilities, severance and other
exit costs(a)........................ $ 16.3 $ 5.2 $10.8 $ 27.1 $25
Integration costs(b)................... 41.3 26.0 40.2 81.5 30
New computer system implementation and
Y2K remediation(c)................... 50.3 20.0 37.0 87.3 17
------ ----- ----- ------ ---
$107.9 $51.2 $88.0 $195.9 $72
====== ===== ===== ====== ===
- ---------------
(a) Spending is charged against exit cost reserves, totaling $148.8 million,
that were established at the time the specific planned facility closure
actions were finalized and approved. This amount reflects restructuring
charges recorded in 1997 ($13.4 million), 1998 ($12.7 million) and the
second quarter of 1999 ($4.0 million) for planned closures of then existing
facilities, as well as reserves recorded in the PFS and ProSource purchase
price allocations ($118.7 million) for planned closures of acquired
facilities.
(b) Spending is expensed as incurred.
(c) The portion of the spending representing costs to purchase and develop
software is capitalized. All other spending is expensed as incurred.
Amounts included above that were capitalized were $6 million in the second
quarter and $14 million year-to-date.
Year-to-Date 1999 Compared to Year-to-Date 1998:
Net cash used for operating activities decreased $6.5 million to $93.3
million in 1999. This performance primarily reflected a reduction in assets and
liabilities of $51.2 million driven by timing of accounts payable payments,
partially offset by the increased net loss of $44.7 million after adjustment for
noncash depreciation, amortization and impairment charges.
The Tricon promotional tie-in resulted in higher inventory and accounts
payable associated with toys and other promotional items. Under agreement with
Tricon, which funded the purchases of the promotional items from vendors,
AmeriServe will reimburse Tricon as the items are sold to stores.
Net cash used for investing activities decreased $319.5 million to $18.3
million in 1999 primarily due to the ProSource acquisition in 1998. Higher
capital expenditures of $13.5 million, driven by capitalized computer software
development costs and spending associated with warehouse facility development,
were more than offset by an increase in net cash transfers from affiliates of
$19.5 million.
Net cash provided by financing activities decreased $110.7 million to
$108.2 million in 1999. This change was largely due to a decrease in proceeds
from sale of accounts receivable of $95 million and capital contributions from
NEHC of $25 million, reflecting the 1998 funding of the ProSource acquisition,
partially offset by increased borrowings on the revolving credit facility of
$13.7 million.
17
19
SEASONALITY AND GENERAL PRICE LEVELS
Historically, AmeriServe's operating results have reflected seasonal
variations. AmeriServe experiences lower net sales and operating profits in the
first and fourth calendar quarters, with the effects being more pronounced in
the first quarter. Additionally, the effect of these seasonal variations is more
pronounced in regions where winter weather is generally more inclement.
AmeriServe is in the process of adopting a 13-period fiscal year calendar (see
discussion under "Accounting Calendar" above). Under this calendar, the first
three quarters consist of 12 weeks and the fourth quarter consists of 16 weeks.
As a result, reported net sales and operating profits for the fourth quarter
will not necessarily decline from the second and third quarters.
Inflation has not had a significant impact on AmeriServe operations. Food
price deflation could adversely affect profitability as approximately 30% of
AmeriServe's sales are at prices based on product cost plus a percentage markup.
CAUTIONARY STATEMENTS
Restructuring Risk
As discussed above under "Business Restructuring," AmeriServe is in the
process of implementing a comprehensive restructuring involving consolidation
and transfer of business among warehouse facilities, re-routing of truck
deliveries, consolidation and streamlining of support functions and relocation
and training of employees. AmeriServe is investing significant cash expenditures
to effect the restructuring plan, with the expectation of substantial cost
savings upon its completion.
While AmeriServe has made significant progress, there can be no assurance
that the restructuring actions will be completed on time, that business
operations will not be disrupted during the remaining restructuring period, that
spending will be within projected levels and that the expected cost savings will
be achieved. While AmeriServe believes it has the resources to meet the
objectives, the ultimate level and timing of efficiencies to be realized are
subject to its ability to manage through the complexities of the restructuring
plan and respond to unanticipated events.
Computer Systems Risk
As discussed above under "Computer Systems and Year 2000 Issue," AmeriServe
is implementing a new computer software and hardware platform that will enhance
productivity in distribution operations, streamline support processes and
significantly reduce AmeriServe's exposure to the Y2K code problem. AmeriServe
is also remediating Y2K code problems in applications that will not be replaced
by the new system. These activities are occurring concurrently with the
restructuring actions.
While AmeriServe has made substantial progress, there can be no assurance
that the system implementation and Y2K remediation efforts will be completed on
time, that business operations will not be disrupted and that spending will be
within projected levels.
Industry and Customer Risk
AmeriServe's future results are subject to economic and competitive risks
and uncertainties in the chain restaurant and foodservice distribution
industries and in the economy, generally. The trend of consolidation in the
foodservice distribution industry, as evidenced by AmeriServe's acquisition
activity, may further intensify competitive pressures. While AmeriServe will
take appropriate actions to retain desired business, some loss of customers
during this transition period has occurred and is a continuing risk. In
addition, the activities associated with the restructuring plan and computer
systems initiatives increase the risk of business disruption; therefore, there
can be no assurance of AmeriServe's consistent achievement of service level
requirements set forth in customer contracts. Management believes that
completion of the restructuring plan will enhance AmeriServe's position as one
of the most efficient distributors in its industry and, therefore, highly
competitive in pricing and customer service.
18
20
With respect to risk of customer concentration, approximately 21% of
AmeriServe's net sales are to Tricon and 10% are to Darden Restaurants, Inc.,
which owns all the Red Lobster and Olive Garden restaurants. AmeriServe provides
service to Tricon's U.S. company-owned restaurants under a long-term exclusive
distribution agreement that, including a two and one-half year extension option,
expires July 2007. Tricon is actively engaged in the sale to franchisees of
company-owned restaurants covered by the distribution agreement. While the
distribution agreement provides that prior to sales of Pizza Hut and Taco Bell
restaurants, such franchisees will enter into distribution agreements with
AmeriServe on substantially similar terms, there can be no assurance that the
transition from company-owned to franchised status will not affect AmeriServe's
results. AmeriServe provides service to Red Lobster and Olive Garden restaurants
under exclusive distribution agreements effective June 1997 and expiring in May
2002.
Risk of Leverage
AmeriServe is and will continue to be highly leveraged as a result of
indebtedness incurred in connection with the acquisitions and restructuring
plan. AmeriServe's ability to meet interest payments, refinance the debt or
ultimately repay the debt is subject to the risks and uncertainties discussed
above.
For additional factors that could cause AmeriServe's actual results to
differ materially from expected and historical results, see the "Risk Factors"
set forth in AmeriServe's amended Registration Statement on Form S-4 filed with
the Securities and Exchange Commission on April 30, 1999.
19
21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
AmeriServe's Senior Notes and Senior Subordinated Notes carry fixed
interest rates and, therefore, do not expose AmeriServe to the risk of earnings
or cash flow loss due to changes in market interest rates.
AmeriServe is exposed to market interest rates in connection with its
accounts receivable program and credit facility. As discussed in Management
Discussion and Analysis of Financial Condition and Results of Operations under
"Results of Operations," the loss on sale of accounts receivable as reported in
the Condensed Consolidated Statements of Operations largely represents the
return to investors in variable interest rate certificates issued by a master
trust to which the rights of ownership of a substantial majority of AmeriServe's
accounts receivable have been transferred. At June 26, 1999, the master trust
had certificates outstanding of $475 million. Borrowings against AmeriServe's
credit facility, which totaled $64.1 million at June 26, 1999, also carry
variable interest rates. (See Notes 4 and 5 to the Condensed Consolidated
Financial Statements).
At June 26, 1999, AmeriServe is not engaged in other contracts which would
cause exposure to the risk of material earnings or cash flow loss due to changes
in market commodity prices, foreign currency exchange rates or interest rates.
20
22
PART II.
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT
NUMBER EXHIBIT
------- -------
2.1 -- Asset Purchase Agreement between PepsiCo, Inc. and Nebco
Evans Holding Company (incorporated by reference to
Exhibit 2.2 to the Registrant's Registration Statement
Form S-4 No. 333-33225 filed August 8, 1997).
2.2 -- Agreement and Plan of Merger, dated as of January 29,
1998, by and among AmeriServe Food Distribution, Inc.,
Steamboat Acquisition Corp. and ProSource, Inc.
(incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K, dated January
29, 1998).
2.3 -- Voting Agreement, dated as of January 29, 1998, by and
among AmeriServe Food Distribution, Inc., Steamboat
Acquisition Corp. and Onex DHC LLC and certain of its
affiliates (incorporated by reference to Exhibit 2.2 to
the Registrant's Current Report on Form 8-K, dated
January 29, 1998).
3.1 -- Amended and Restated Certificate of Incorporation of
AmeriServe Food Distribution, Inc. (formerly AmeriServ
Food Company, successor to AmeriServe Food Distribution,
Inc.) (incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K filed March 27,
1998).
3.2 -- Amended and Restated Bylaws of AmeriServe Food
Distribution, Inc. (formerly AmeriServ Food Company,
successor to AmeriServe Food Distribution, Inc.)
(incorporated by reference to Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K filed March 27,
1998).
3.3 -- Articles of Incorporation of AmeriServe Transportation,
Inc. (incorporated by reference to Exhibit 3.5 to the
Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
3.4 -- By-Laws of AmeriServe Transportation, Inc. (incorporated
by reference to Exhibit 3.6 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed
August 8, 1997).
21
23
EXHIBIT
NUMBER EXHIBIT
------- -------
3.5 -- Articles of Incorporation of Chicago Consolidated
Corporation (incorporated by reference to Exhibit 3.7 to
the Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
3.6 -- By-Laws of Chicago Consolidated Corporation (incorporated
by reference to Exhibit 3.8 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed
August 8, 1997).
3.7 -- Articles of Incorporation of Northland Transportation
Services, Inc. (incorporated by reference to Exhibit 3.9
to the Registrant's Registration Statement on Form S-4
No. 333-33225 filed August 8, 1997).
3.8 -- By-Laws of Northland Transportation Services, Inc.
(incorporated by reference to Exhibit 3.10 to the
Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
3.9 -- Articles of Incorporation of Delta Transportation, Ltd.
(incorporated by reference to Exhibit 3.13 to the
Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
3.10 -- By-Laws of Delta Transportation, Ltd. (incorporated by
reference to Exhibit 3.14 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed
August 8, 1997).
3.11 -- Articles of Incorporation of PSD Transportation Service,
Inc. (incorporated by reference to Exhibit 3.11 to the
Registrant's Registration Statement on Form S-4 No.
33-33225 filed August 8, 1997).
3.12 -- By-Laws of PSD Transportation Services, Inc.
(incorporated by reference to Exhibit 3.12 to the
Registrant's Registration Statement on Form S-4 No.
33-33225 filed August 8, 1997).
3.13 -- Certificate of Incorporation of PSC Services of Florida,
Inc. (incorporated by reference to Exhibit 3.13 to the
Registrant's Registration Statement on Form S-4 No.
33-33225 filed August 8, 1997).
3.14 -- By-Laws of PSC Services of Florida, Inc. (incorporated by
reference to Exhibit 3.14 to the Registrant's
Registration Statement on Form S-4 No. 33-33225 filed
August 8, 1997).
3.15 -- Certificate of Incorporation of BroMar Services, Inc.
(incorporated by reference to Exhibit 3.15 to the
Registrant's Registration Statement on Form S-4 No.
33-33225 filed August 8, 1997).
3.16 -- By-Laws of BroMar Services, Inc. (incorporated by
reference to Exhibit 3.16 to the Registrant's
Registration Statement on Form S-4 No. 33-33225 filed
August 8, 1997).
3.17 -- Certificate of Amendment to the Certificate of
Incorporation of BroMar Services, Inc. (incorporated by
reference to Exhibit 3.17 to the Registrant's
Registration Statement on Form S-4 No. 33-33225 filed
August 8, 1997).
3.18 -- Certificate of Incorporation of ProSource Mexico
Holdings, Inc. (incorporated by reference to Exhibit 3.18
to the Registrant's Registration Statement on Form S-4
No. 33-33225 filed August 8, 1997).
3.19 -- By-Laws of ProSource Mexico Holdings, Inc. (incorporated
by reference to Exhibit 3.19 to the Registrant's
Registration Statement on Form S-4 No. 33-33225 filed
August 8, 1997).
4.1 -- Indenture, dated as of October 15, 1997, by and among
AmeriServe Food Distribution, Inc., the Subsidiary
Guarantors and State Street Bank and Trust Company, with
respect to the Senior Notes (incorporated by reference to
Exhibit 4.1 to the Registrant's Registration Statement on
Form S-4 No. 333-38337 filed October 21, 1997).
22
24
EXHIBIT
NUMBER EXHIBIT
------- -------
4.2 -- Supplemental 8 7/8% New Senior Notes Indenture, dated as
of December 23, 1997, by and among AmeriServe Food
Distribution, Inc., AmeriServ Food Company, and State
Street Bank and Trust Company, as Trustee (incorporated
by reference to Exhibit 4.2 to the Registrant's Current
Report on Form 8-K, dated December 28, 1997).
4.3 -- Indenture, dated as of July 11, 1997, by and among
AmeriServe Food Distribution, Inc., the Subsidiary
Guarantors and State Street Bank and Trust Company, with
respect to the new Senior Subordinated Notes
(incorporated by reference to Exhibit 4.1 of the
Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
4.4 -- Supplemental 10 1/8% New Senior Subordinated Notes
Indenture, dated as of December 23, 1997, by and among
AmeriServe Food Distribution, Inc., AmeriServ Food
Company, and State Street Bank and Trust Company, as
Trustee (incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K, dated December
28, 1997).
4.7 -- Second Supplemental 8 7/8% New Senior Notes Indenture,
dated as of May 21, 1998, by and among AmeriServe Food
Distribution, Inc. and State Street Bank and Trust
Company (incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated May 21,
1998).
4.8 -- Second Supplemental 10 1/8% New Senior Subordinated Notes
Indenture, dated as of December 23, 1997, by and among
AmeriServe Food Distribution, Inc., AmeriServ Food
Company, and State Street Bank and Trust Company
(incorporated by reference to Exhibit 4.3 to the
Registrant's Current Report on Form 8-K dated May 21,
1998).
10.1 -- Registration Rights Agreement, dated as of July 11, 1997,
by and among AmeriServe Food Distribution, Inc., the
Subsidiary Guarantors and Donaldson, Lufkin & Jenrette
Securities Corporation (incorporated by reference to
Exhibit 10.1 to the Registrant's Registration Statement
on Form S-4 No. 333-33225 filed August 8, 1997).
10.2 -- Registration Rights Agreement, dated as of October 15,
1997, by and among AmeriServe Food Distribution, Inc.,
the Subsidiary Guarantors and Donaldson, Lufkin &
Jenrette Securities Corporation (incorporated by
reference to Exhibit 10.1 to the Registrant's
Registration Statement on Form S-4 No. 333-38337 filed
October 21, 1997).
10.3 -- Employment Agreement, dated as of December 23, 1986
between AmeriServe Food Distribution, Inc. and Raymond E.
Marshall, as amended by Amendment to Employment
Agreement, dated as of January 1, 1995 (incorporated by
reference to Exhibit 10.4 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed
August 8, 1997).
10.4 -- Employment Agreement, dated as of July 1, 1998 between
AmeriServe Food Distribution, Inc. and Thomas C.
Highland. (incorporated by reference to Exhibit 10.4 to
the Registrant's Annual Report on Form 10-K filed March
25, 1999).
10.5 -- Employment Agreement, dated as of November 26, 1997
between AmeriServe Food Distribution, Inc. and Kenneth R.
Lane. (incorporated by reference to Exhibit 10.5 to the
Registrant's Annual Report on Form 10-K filed March 25,
1999).
10.6 -- Employment Agreement, dated as of August 15, 1997 between
AmeriServe Food Distribution, Inc. and Diana M. Moog.
(incorporated by reference to Exhibit 10.6 to the
Registrant's Annual Report on Form 10-K filed March 25,
1999).
23
25
EXHIBIT
NUMBER EXHIBIT
------- -------
10.7 -- Amended and Restated Sales and Distribution Agreement
dated as of November 1, 1998, by and among PFS, Pizza
Hut, Taco Bell, Kentucky Fried Chicken Corporation and
Kentucky Fried Chicken of California, Inc. (incorporated
by reference to Exhibit 10.7 to the Registrant's Annual
Report on Form 10-K filed March 25, 1999).
10.8 -- Third Amended and Restated Credit Agreement, dated as of
May 21, 1998 among AmeriServe Food Distribution, Inc.,
Bank of America National Trust and Savings Association,
as Administrative Agent, Donaldson, Lufkin and Jenrette
Securities Corporation, as Documentation Agent, Bank of
America National Trust and Savings Association, as Letter
of Credit Issuing Lender and the Other Financial
Institutions Party Thereto, Arranged by BancAmerica
Robertson Stephens (incorporated by reference to Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q
filed November 10, 1998).
10.9 -- First Amendment to Third Amended and Restated Credit
Agreement, dated as of July 24, 1998. (incorporated by
reference to Exhibit 10.9 to the Registrant's Annual
Report on Form 10-K filed March 25, 1999).
10.10 -- Amended and Restated Pooling and Servicing Agreement,
dated as of July 28, 1998 among AmeriServe Funding
Corporation, AmeriServe Food Distribution, Inc. and
Norwest Bank Minnesota, N.A. (incorporated by reference
to Exhibit 10.10 to the Registrant's Annual Report on
Form 10-K filed March 25, 1999).
10.11 -- Series 1998-1 Supplement to Pooling and Servicing
Agreement, dated as of July 28, 1998 among AmeriServe
Funding Corporation, AmeriServe Food Distribution, Inc.
and Norwest Bank Minnesota, N.A. (incorporated by
reference to Exhibit 10.11 to the Registrant's Annual
Report on Form 10-K filed March 25, 1999).
10.12 -- Series 1998-3 Supplement to Pooling and Servicing
Agreement, dated as of December 18, 1998 among AmeriServe
Funding Corporation, AmeriServe Food Distribution, Inc.
and Norwest Bank Minnesota, N.A. (incorporated by
reference to Exhibit 10.12 to the Registrant's Annual
Report on Form 10-K filed March 25, 1999).
10.13 -- Series 1998-4 Supplement to Pooling and Servicing
Agreement, dated as of December 18, 1998 among AmeriServe
Funding Corporation, AmeriServe Food Distribution, Inc.
and Norwest Bank Minnesota, N.A. (incorporated by
reference to Exhibit 10.13 to the Registrant's Annual
Report on Form 10-K filed March 25, 1999).
10.14 -- Nebco Evans Holding Company 1998 Management Stock Option
Plan (incorporated by reference to Exhibit 4.2 to Nebco
Evans Holding Company's Registration Statement on Form
S-8 No. 333-53095 filed on May 20, 1998).
10.15 -- Omnibus Amendment No. 1 to Series 1998-1 Supplement to
Pooling and Services Agreement, dated as of June 1, 1999
among AmeriServe Funding Corporation, AmeriServe Food
Distribution, Inc. and Norwest Bank Minnesota, N.A.*
10.16 -- Omnibus Amendment No. 1 to Series 1998-4 Supplement to
Pooling and Services Agreement, dated as of June 1, 1999
among AmeriServe Funding Corporation, AmeriServe Food
Distribution, Inc. and Norwest Bank Minnesota, N.A.*
27.1 -- Financial Data Schedule.*
- ---------------
* Filed herewith.
(b) Reports on Form 8-K
None
24
26
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:
AmeriServe Food Distribution, Inc.
(Registrant)
By: /s/ DIANA M. MOOG
----------------------------------
Diana M. Moog,
Executive Vice President
and Chief Financial Officer
Date: August 10, 1999
By: /s/ STAN SZLAUDERBACH
----------------------------------
Stan Szlauderbach,
Vice President and
Chief Accounting Officer
Date: August 10, 1999
25
27
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
------- -------
2.1 -- Asset Purchase Agreement between PepsiCo, Inc. and Nebco
Evans Holding Company (incorporated by reference to
Exhibit 2.2 to the Registrant's Registration Statement
Form S-4 No. 333-33225 filed August 8, 1997).
2.2 -- Agreement and Plan of Merger, dated as of January 29,
1998, by and among AmeriServe Food Distribution, Inc.,
Steamboat Acquisition Corp. and ProSource, Inc.
(incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K, dated January
29, 1998).
2.3 -- Voting Agreement, dated as of January 29, 1998, by and
among AmeriServe Food Distribution, Inc., Steamboat
Acquisition Corp. and Onex DHC LLC and certain of its
affiliates (incorporated by reference to Exhibit 2.2 to
the Registrant's Current Report on Form 8-K, dated
January 29, 1998).
3.1 -- Amended and Restated Certificate of Incorporation of
AmeriServe Food Distribution, Inc. (formerly AmeriServ
Food Company, successor to AmeriServe Food Distribution,
Inc.) (incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K filed March 27,
1998).
3.2 -- Amended and Restated Bylaws of AmeriServe Food
Distribution, Inc. (formerly AmeriServ Food Company,
successor to AmeriServe Food Distribution, Inc.)
(incorporated by reference to Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K filed March 27,
1998).
3.3 -- Articles of Incorporation of AmeriServe Transportation,
Inc. (incorporated by reference to Exhibit 3.5 to the
Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
3.4 -- By-Laws of AmeriServe Transportation, Inc. (incorporated
by reference to Exhibit 3.6 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed
August 8, 1997).
3.5 -- Articles of Incorporation of Chicago Consolidated
Corporation (incorporated by reference to Exhibit 3.7 to
the Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
3.6 -- By-Laws of Chicago Consolidated Corporation (incorporated
by reference to Exhibit 3.8 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed
August 8, 1997).
3.7 -- Articles of Incorporation of Northland Transportation
Services, Inc. (incorporated by reference to Exhibit 3.9
to the Registrant's Registration Statement on Form S-4
No. 333-33225 filed August 8, 1997).
3.8 -- By-Laws of Northland Transportation Services, Inc.
(incorporated by reference to Exhibit 3.10 to the
Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
3.9 -- Articles of Incorporation of Delta Transportation, Ltd.
(incorporated by reference to Exhibit 3.13 to the
Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
3.10 -- By-Laws of Delta Transportation, Ltd. (incorporated by
reference to Exhibit 3.14 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed
August 8, 1997).
28
EXHIBIT
NUMBER EXHIBIT
------- -------
3.11 -- Articles of Incorporation of PSD Transportation Service,
Inc. (incorporated by reference to Exhibit 3.11 to the
Registrant's Registration Statement on Form S-4 No.
33-33225 filed August 8, 1997).
3.12 -- By-Laws of PSD Transportation Services, Inc.
(incorporated by reference to Exhibit 3.12 to the
Registrant's Registration Statement on Form S-4 No.
33-33225 filed August 8, 1997).
3.13 -- Certificate of Incorporation of PSC Services of Florida,
Inc. (incorporated by reference to Exhibit 3.13 to the
Registrant's Registration Statement on Form S-4 No.
33-33225 filed August 8, 1997).
3.14 -- By-Laws of PSC Services of Florida, Inc. (incorporated by
reference to Exhibit 3.14 to the Registrant's
Registration Statement on Form S-4 No. 33-33225 filed
August 8, 1997).
3.15 -- Certificate of Incorporation of BroMar Services, Inc.
(incorporated by reference to Exhibit 3.15 to the
Registrant's Registration Statement on Form S-4 No.
33-33225 filed August 8, 1997).
3.16 -- By-Laws of BroMar Services, Inc. (incorporated by
reference to Exhibit 3.16 to the Registrant's
Registration Statement on Form S-4 No. 33-33225 filed
August 8, 1997).
3.17 -- Certificate of Amendment to the Certificate of
Incorporation of BroMar Services, Inc. (incorporated by
reference to Exhibit 3.17 to the Registrant's
Registration Statement on Form S-4 No. 33-33225 filed
August 8, 1997).
3.18 -- Certificate of Incorporation of ProSource Mexico
Holdings, Inc. (incorporated by reference to Exhibit 3.18
to the Registrant's Registration Statement on Form S-4
No. 33-33225 filed August 8, 1997).
3.19 -- By-Laws of ProSource Mexico Holdings, Inc. (incorporated
by reference to Exhibit 3.19 to the Registrant's
Registration Statement on Form S-4 No. 33-33225 filed
August 8, 1997).
4.1 -- Indenture, dated as of October 15, 1997, by and among
AmeriServe Food Distribution, Inc., the Subsidiary
Guarantors and State Street Bank and Trust Company, with
respect to the Senior Notes (incorporated by reference to
Exhibit 4.1 to the Registrant's Registration Statement on
Form S-4 No. 333-38337 filed October 21, 1997).
4.2 -- Supplemental 8 7/8% New Senior Notes Indenture, dated as
of December 23, 1997, by and among AmeriServe Food
Distribution, Inc., AmeriServ Food Company, and State
Street Bank and Trust Company, as Trustee (incorporated
by reference to Exhibit 4.2 to the Registrant's Current
Report on Form 8-K, dated December 28, 1997).
4.3 -- Indenture, dated as of July 11, 1997, by and among
AmeriServe Food Distribution, Inc., the Subsidiary
Guarantors and State Street Bank and Trust Company, with
respect to the new Senior Subordinated Notes
(incorporated by reference to Exhibit 4.1 of the
Registrant's Registration Statement on Form S-4 No.
333-33225 filed August 8, 1997).
4.4 -- Supplemental 10 1/8% New Senior Subordinated Notes
Indenture, dated as of December 23, 1997, by and among
AmeriServe Food Distribution, Inc., AmeriServ Food
Company, and State Street Bank and Trust Company, as
Trustee (incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K, dated December
28, 1997).
29
EXHIBIT
NUMBER EXHIBIT
------- -------
4.7 -- Second Supplemental 8 7/8% New Senior Notes Indenture,
dated as of May 21, 1998, by and among AmeriServe Food
Distribution, Inc. and State Street Bank and Trust
Company (incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated May 21,
1998).
4.8 -- Second Supplemental 10 1/8% New Senior Subordinated Notes
Indenture, dated as of December 23, 1997, by and among
AmeriServe Food Distribution, Inc., AmeriServ Food
Company, and State Street Bank and Trust Company
(incorporated by reference to Exhibit 4.3 to the
Registrant's Current Report on Form 8-K dated May 21,
1998).
10.1 -- Registration Rights Agreement, dated as of July 11, 1997,
by and among AmeriServe Food Distribution, Inc., the
Subsidiary Guarantors and Donaldson, Lufkin & Jenrette
Securities Corporation (incorporated by reference to
Exhibit 10.1 to the Registrant's Registration Statement
on Form S-4 No. 333-33225 filed August 8, 1997).
10.2 -- Registration Rights Agreement, dated as of October 15,
1997, by and among AmeriServe Food Distribution, Inc.,
the Subsidiary Guarantors and Donaldson, Lufkin &
Jenrette Securities Corporation (incorporated by
reference to Exhibit 10.1 to the Registrant's
Registration Statement on Form S-4 No. 333-38337 filed
October 21, 1997).
10.3 -- Employment Agreement, dated as of December 23, 1986
between AmeriServe Food Distribution, Inc. and Raymond E.
Marshall, as amended by Amendment to Employment
Agreement, dated as of January 1, 1995 (incorporated by
reference to Exhibit 10.4 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed
August 8, 1997).
10.4 -- Employment Agreement, dated as of July 1, 1998 between
AmeriServe Food Distribution, Inc. and Thomas C.
Highland. (incorporated by reference to Exhibit 10.4 to
the Registrant's Annual Report on Form 10-K filed March
25, 1999).
10.5 -- Employment Agreement, dated as of November 26, 1997
between AmeriServe Food Distribution, Inc. and Kenneth R.
Lane. (incorporated by reference to Exhibit 10.5 to the
Registrant's Annual Report on Form 10-K filed March 25,
1999).
10.6 -- Employment Agreement, dated as of August 15, 1997 between
AmeriServe Food Distribution, Inc. and Diana M. Moog.
(incorporated by reference to Exhibit 10.6 to the
Registrant's Annual Report on Form 10-K filed March 25,
1999).
10.7 -- Amended and Restated Sales and Distribution Agreement
dated as of November 1, 1998, by and among PFS, Pizza
Hut, Taco Bell, Kentucky Fried Chicken Corporation and
Kentucky Fried Chicken of California, Inc. (incorporated
by reference to Exhibit 10.7 to the Registrant's Annual
Report on Form 10-K filed March 25, 1999).
10.8 -- Third Amended and Restated Credit Agreement, dated as of
May 21, 1998 among AmeriServe Food Distribution, Inc.,
Bank of America National Trust and Savings Association,
as Administrative Agent, Donaldson, Lufkin and Jenrette
Securities Corporation, as Documentation Agent, Bank of
America National Trust and Savings Association, as Letter
of Credit Issuing Lender and the Other Financial
Institutions Party Thereto, Arranged by BancAmerica
Robertson Stephens (incorporated by reference to Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q
filed November 10, 1998).
30
EXHIBIT
NUMBER EXHIBIT
------- -------
10.9 -- First Amendment to Third Amended and Restated Credit
Agreement, dated as of July 24, 1998. (incorporated by
reference to Exhibit 10.9 to the Registrant's Annual
Report on Form 10-K filed March 25, 1999).
10.10 -- Amended and Restated Pooling and Servicing Agreement,
dated as of July 28, 1998 among AmeriServe Funding
Corporation, AmeriServe Food Distribution, Inc. and
Norwest Bank Minnesota, N.A. (incorporated by reference
to Exhibit 10.10 to the Registrant's Annual Report on
Form 10-K filed March 25, 1999).
10.11 -- Series 1998-1 Supplement to Pooling and Servicing
Agreement, dated as of July 28, 1998 among AmeriServe
Funding Corporation, AmeriServe Food Distribution, Inc.
and Norwest Bank Minnesota, N.A. (incorporated by
reference to Exhibit 10.11 to the Registrant's Annual
Report on Form 10-K filed March 25, 1999).
10.12 -- Series 1998-3 Supplement to Pooling and Servicing
Agreement, dated as of December 18, 1998 among AmeriServe
Funding Corporation, AmeriServe Food Distribution, Inc.
and Norwest Bank Minnesota, N.A. (incorporated by
reference to Exhibit 10.12 to the Registrant's Annual
Report on Form 10-K filed March 25, 1999).
10.13 -- Series 1998-4 Supplement to Pooling and Servicing
Agreement, dated as of December 18, 1998 among AmeriServe
Funding Corporation, AmeriServe Food Distribution, Inc.
and Norwest Bank Minnesota, N.A. (incorporated by
reference to Exhibit 10.13 to the Registrant's Annual
Report on Form 10-K filed March 25, 1999).
10.14 -- Nebco Evans Holding Company 1998 Management Stock Option
Plan (incorporated by reference to Exhibit 4.2 to Nebco
Evans Holding Company's Registration Statement on Form
S-8 No. 333-53095 filed on May 20, 1998).
10.15 -- Omnibus Amendment No. 1 to Series 1998-1 Supplement to
Pooling and Services Agreement, dated as of June 1, 1999
among AmeriServe Funding Corporation, AmeriServe Food
Distribution, Inc. and Norwest Bank Minnesota, N.A.*
10.16 -- Omnibus Amendment No. 1 to Series 1998-4 Supplement to
Pooling and Services Agreement, dated as of June 1, 1999
among AmeriServe Funding Corporation, AmeriServe Food
Distribution, Inc. and Norwest Bank Minnesota, N.A.*
27.1 -- Financial Data Schedule.*
- ---------------
* Filed herewith.