<PAGE> 1
PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424B(3)
TO PROSPECTUS DATED MAY 4, 1999 FILE NO. 333-51541
NEBCO EVANS HOLDING COMPANY
12 3/8% NEW SENIOR DISCOUNT NOTES DUE 2007
11 1/4% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK DUE 2008
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Prospectus Supplement supplements the information contained in, and
should be read in conjunction with, the Prospectus dated May 4, 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 principal as well as market-making transactions at negotiated prices related
to prevailing market prices at the time of sale. The New Notes and New Preferred
Stock are not listed on any securities exchange or admitted thereof 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 New Notes and New Preferred Stock;
however, it is not obligated 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 New
Notes and New Preferred Stock and has paid certain expenses incident to the
registration of the New Notes and the New Preferred Stock.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MAY 13, 1999.
<PAGE> 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 MARCH 27, 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:
---------------------
NEBCO EVANS HOLDING COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 06-1444203
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
545 STEAMBOAT ROAD
GREENWICH, CT 06830
(Address of principal executive offices)
(203) 422-3000
(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 May 11, 1999, there were 8,241,000 shares of Class B Common Stock of the
registrant outstanding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3
NEBCO EVANS HOLDING COMPANY
FORM 10-Q INDEX
<TABLE>
<S> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of March 27,
1999 and December 26, 1998............................ 2
Condensed Consolidated Statements of Operations for the
three months ended March 27, 1999 and March 28,
1998.................................................. 3
Condensed Consolidated Statements of Cash Flows for the
three months ended March 27, 1999 and March 28,
1998.................................................. 4
Notes to Condensed Consolidated Financial Statements... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 8
Item 3. Quantitative and Qualitative Disclosures About
Market Risk............................................ 17
Part II. Other Information
Item 1. Legal Proceedings................................. 18
Item 2. Changes in Securities............................. 18
Item 3. Defaults upon Senior Securities................... 18
Item 4. Submission of Matters to a Vote of Security
Holders................................................ 18
Item 5. Other Information................................. 18
Item 6. Exhibits and Reports on Form 8-K.................. 18
Signatures.................................................. 21
Exhibits....................................................
</TABLE>
1
<PAGE> 4
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEBCO EVANS HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
MARCH 27, DECEMBER 26,
1999 1998
----------- ------------
(UNAUDITED) (NOTE)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 8,592 $ 37,646
Accounts receivable....................................... 39,049 55,402
Undivided interest in accounts receivable trust........... 202,305 208,451
Allowance for doubtful accounts........................... (23,547) (23,852)
Inventories............................................... 286,048 292,255
Other current assets...................................... 29,016 14,196
---------- ----------
Total current assets.............................. 541,463 584,098
Property and equipment, net................................. 246,937 235,426
Intangible assets, net...................................... 1,104,913 1,087,079
Other noncurrent assets..................................... 30,501 29,209
---------- ----------
$1,923,814 $1,935,812
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt......................... $ 12,297 $ 8,768
Accounts payable.......................................... 703,461 700,105
Accrued and other current liabilities..................... 179,161 183,764
---------- ----------
Total current liabilities......................... 894,919 892,637
Long-term debt.............................................. 1,020,831 979,416
Other noncurrent liabilities................................ 84,365 85,006
11 1/4% Senior redeemable exchangeable preferred stock...... 269,987 262,107
Stockholders' deficit:
8% Senior convertible preferred stock, $.01 per value per
share; 300 shares authorized, 235 shares outstanding,
$2,350 liquidation value............................... 2,350 2,350
Class B voting common stock, $.01 per value per share;
14,000,000 shares authorized, 8,241,000 outstanding.... 82 82
Accumulated deficit....................................... (348,720) (285,786)
---------- ----------
Total stockholders' deficit....................... (346,288) (283,354)
---------- ----------
$1,923,814 $1,935,812
========== ==========
</TABLE>
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.
2
<PAGE> 5
NEBCO EVANS HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
MARCH 27, MARCH 28,
1999 1998
---------- ----------
<S> <C> <C>
Net sales................................................... $2,014,469 $1,123,938
Cost of goods sold.......................................... 1,838,857 1,013,010
---------- ----------
Gross profit................................................ 175,612 110,928
Distribution, selling and administrative expenses........... 155,623 89,520
Depreciation of property and equipment...................... 9,871 5,774
Amortization of intangible assets........................... 12,090 6,814
Restructuring and other unusual costs....................... 22,528 1,988
---------- ----------
Operating income (loss)..................................... (24,500) 6,832
Other income (expense):
Interest expense, net..................................... (23,067) (19,299)
Loss on sale of accounts receivable....................... (7,049) (3,588)
Interest income-affiliates................................ 315 152
---------- ----------
(29,801) (22,735)
---------- ----------
Loss before income taxes.................................... (54,301) (15,903)
Provision for income taxes.................................. 565 296
---------- ----------
Net loss.................................................... $ (54,866) $ (16,199)
========== ==========
</TABLE>
See accompanying notes.
3
<PAGE> 6
NEBCO EVANS HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 27, MARCH 28,
1999 1998
--------- ---------
<S> <C> <C>
Operating Activities:
Net loss.................................................. $(54,866) $(16,199)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization.......................... 21,961 12,588
Interest accreted on subordinated loans................ 2,020 1,792
Changes in assets and liabilities...................... (29,258) (62,780)
-------- --------
Net cash used for operating activities.................... (60,143) (64,599)
-------- --------
Investing Activities:
Capital expenditures...................................... (15,627) (4,550)
Net cash transfers to affiliates.......................... (236) (8,543)
-------- --------
Net cash used for investing activities.................... (15,863) (13,093)
-------- --------
Financing Activities:
Net increase in borrowings under revolving line of
credit................................................. 40,100 --
Proceeds from sale of accounts receivable................. 10,000 --
Proceeds from issuance of preferred stock................. -- 250,000
Financing fees incurred................................... -- (10,000)
Repurchase of preferred stock............................. -- (153,572)
Preferred stock dividends................................. (188) --
Repayments of capital lease and other obligations......... (2,960) (390)
-------- --------
Net cash provided by financing activities................. 46,952 86,038
-------- --------
Net increase (decrease) in cash........................... (29,054) 8,346
Cash at beginning of period............................... 37,646 231,450
-------- --------
Cash at end of period..................................... $ 8,592 $239,796
======== ========
Supplemental disclosures:
Cash paid during the period for:
Interest............................................. $ 28,537 $ 25,875
Income taxes, net of refunds......................... $ 176 $ 67
Noncash investing and financing activities:
Capital expenditures through capital leases (included
in long-term debt).................................. $ 8,700 $ 904
</TABLE>
See accompanying notes.
4
<PAGE> 7
NEBCO EVANS HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 27, 1999 (UNAUDITED)
1. INTERIM FINANCIAL DATA
The accompanying unaudited Condensed Consolidated Financial Statements of
Nebco Evans Holding Company (NEHC) 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 three-month period ended March 27, 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
NEHC's Annual Report on Form 10-K for the fiscal year ended December 26, 1998.
Certain amounts previously presented in the financial statements of the
prior year have been reclassified to conform to the current year presentation.
2. ACQUISITION
On May 21, 1998, AmeriServe Food Distribution, Inc. (the Company), a direct
subsidiary of NEHC, acquired ProSource, Inc. (ProSource) for $313.5 million in
cash, including 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. Thirteen weeks of operating results of a substantial majority of the
former ProSource operations are included in the Company's operating results for
the three months ended March 27, 1999. The Company is in the process of
conforming certain business (including the former ProSource operations) to an
accounting calendar with 12 weeks in each of the first three quarters of the
year and 16 weeks in the fourth quarter. Certain former ProSource operations
have been converted to the new calendar as of March 27, 1999. The conversion
will be completed in 2000.
The following unaudited pro forma results of operations for the three
months ended March 28, 1998 assume the acquisition of ProSource occurred at the
beginning of that period (in thousands):
<TABLE>
<S> <C>
Net sales............................... $2,113,702
Net loss................................ (17,835)
</TABLE>
This information does not purport to be indicative of the results that
actually would have been obtained if the combined operations had been conducted
during the period presented.
3. RESTRUCTURING AND OTHER UNUSUAL COSTS
In 1998, the Company completed a restructuring plan identifying a number of
actions to consolidate and integrate the operations of ProSource and PFS, a
Division of PepsiCo, Inc., acquired effective June 1997. 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 standardizing support processes.
The restructuring plan includes currently ongoing activities to consolidate
the quick service operations, which represent a substantial majority of the
actions and are expected to be completed by mid-2000.
5
<PAGE> 8
NEBCO EVANS HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Additional actions to integrate the casual dining operations will be largely
completed during 2000. The actions under the plan include construction of new
strategically located, state-of-the-art warehouse facilities, closures of a
number of existing warehouse facilities 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 Dallas, Texas headquarters.
Certain costs associated with these actions, principally exit costs for
warehouse and other facility lease terminations and employee severance, were
previously accrued for as part of the ProSource and PFS purchase price
allocations or the restructuring charges recorded in 1998 and 1997. Other
incremental integration costs associated with the restructuring plan that do not
qualify as exit costs are expensed as incurred and included in "Restructuring
and other unusual costs" in the Condensed Consolidated Statements of Operations.
These integration costs relate primarily to start-up of new warehouse facilities
and other actions to facilitate the warehouse network consolidation, delivery
fleet modifications and activities to realign and centralize administrative and
other support functions.
Approximately $119 million in cash exit costs related to the restructuring
plan have been reserved for through the previously recorded purchase price
allocations and restructuring charges. Through March 27, 1999, approximately $22
million in payments have been charged to the reserves. There have been no
material adjustments to the reserves.
In conjunction with the restructuring plan, the Company is in the process
of implementing a major new computer software and hardware platform, which
facilitates the standardization of warehouse operations and support processes
and reduces the Company'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
included in "Restructuring and other unusual costs" in the Condensed
Consolidated Statements of Operations.
4. LONG-TERM DEBT
In 1998, the Company secured a revolving credit facility, expiring in May
2003, of up to $220 million. An amendment to the credit facility completed on
March 24, 1999 provides that availability under the facility is impacted only by
the amount of letters of credit in excess of $30 million. Availability under the
facility is linked to levels of the Company's inventories of food and paper
products and supplies. At March 27, 1999, the availability under the facility
was $154.7 million, before borrowings and letters of credit at that date of
$44.1 million and $5.3 million, respectively.
5. ACCOUNTS RECEIVABLE PROGRAM
Under the Company's ongoing Accounts Receivable Program (the Program) that
expires in December 2001, a substantial majority of the trade accounts
receivable generated by the Company 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 of 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. Because of the linkage
to accounts receivable levels, the availability at March 27, 1999 was $455
million, all of which the Company had received in proceeds
6
<PAGE> 9
NEBCO EVANS HOLDING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
as of that date. The proceeds reflected $657.3 million of accounts receivable
sold less Funding's undivided interest in the assets of the Trust of $202.3
million.
6. GUARANTOR SUBSIDIARIES
The Company's principal operating subsidiaries fully, unconditionally,
jointly and severally guarantee the Company's $500 million 10 1/8% Senior
Subordinated Notes and $350 million 8 7/8% Senior Notes.
The guarantor subsidiaries are direct, wholly owned U.S. subsidiaries of
the Company. The Company and the guarantor subsidiaries conduct the substantial
majority of the operations of the Company and its subsidiaries on a consolidated
basis. 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 the Company 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 (the
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
the Company, 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 March 27, 1999 and for the three months then
ended for the guarantor subsidiaries of the Company (in thousands):
<TABLE>
<S> <C>
Current assets........................................... $ 30,889
Current liabilities...................................... 10,559
Noncurrent assets........................................ 70,653
Noncurrent liabilities................................... 23,931
Net sales................................................ $113,894
Operating income......................................... 1,521
Net income............................................... 1,446
</TABLE>
7
<PAGE> 10
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. Nebco
Evans Holding Company (NEHC) 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
NEHC is the parent of AmeriServe Food Distribution, Inc. (the Company),
which accounts for substantially all of NEHC's assets and operations. The
Company is a foodservice distributor specializing in distribution to chain
restaurants. The Company distributes a wide variety of food items as well as
paper goods, cleaning and other supplies and equipment. The Company 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."
The Company services approximately 36,000 restaurants, the vast majority of
which are in the United States. The Company's major customers are 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, the Company services all or a substantial majority
of the U.S. restaurants in the systems. The Company also operates foodservice
distribution businesses in Canada and Mexico, which are not material to the
consolidated financial statements of the Company.
NEHC is an indirect subsidiary of Holberg Industries, Inc., a privately
held diversified service company. In addition to NEHC, Holberg has subsidiaries
operating within the parking services industry in North America.
ACQUISITION
On May 21, 1998, the Company acquired ProSource for $313.5 million in cash,
which reflected $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 and $989.8 million for the first
quarter of 1998, 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 the Company from
NEHC and cash and cash equivalents on hand. The acquisition has been accounted
for under the purchase method. Thirteen weeks of results for a substantial
majority of the former ProSource operations are included in the Company's
reported operating results for the three months ended March 27, 1999. Certain
former ProSource operations have been converted to an accounting calendar with
12 weeks in the quarter -- see discussion below under "Accounting Calendar". The
comparisons of reported operating results for the first quarter 1999 to the
first quarter 1998 presented below under "Results of Operations" are
significantly impacted by the acquisition of ProSource.
BUSINESS RESTRUCTURING
The Company 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.
8
<PAGE> 11
These acquisitions have resulted in redundancies in the Company's warehouse
facilities, truck delivery routes and administrative and other support
functions. The Company 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
warehouse facilities, closures of a number of existing warehouse facilities 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 Dallas, Texas
headquarters.
Completion of the plan is expected to significantly increase operating
efficiencies through warehouse economies of scale, increased delivery fleet
utilization and centralized, standardized support processes. Implementation of a
major new computer software and hardware platform (discussed below under
"Computer Systems and Year 2000 Issue") will facilitate the streamlining of
warehouse operations and support processes.
The Company will complete the plan in two phases. The first phase, which
represents a substantial majority of the restructuring actions, is the
consolidation of the quick service business. The integration of the casual
dining business, as discussed below, is the second phase. Cost savings from the
quick service consolidation actions are expected to build over time, reaching a
run rate of approximately $100 million annually upon the anticipated completion
of this phase in mid-2000. The Company may take additional restructuring actions
as the warehouse network continues to be assessed for optimum efficiency.
The Company has recently completed the restructuring plan to include the
integration of the former ProSource casual dining operations, and the estimated
ProSource exit costs associated with both phases of the plan are reflected in
the preliminary purchase price allocation. The casual dining integration actions
will occur largely in 2000. Final estimates of cost savings from this
integration and all spending to effect it are not yet complete.
The Company is on schedule in its restructuring plan. As of May 7, 1999,
the Company has closed 19 quick service warehouse facilities and transferred the
business to new or existing facilities. Another 17 closures are planned for the
balance of 1999. Four warehouse facilities have been expanded and/or
significantly reconfigured, and four of the remaining five planned for
completion in 1999 are in process and on schedule. Operations have commenced at
three newly constructed warehouse facilities in Orlando, FL, Denver, CO and
Memphis, TN. The new Charlotte, NC facility has been completed and the business
will begin to transfer there from existing facilities in late May. Three
additional new warehouse facilities planned for completion in 1999 are under
construction and on schedule. As a result of these actions, warehouse facilities
that are substantially complete with respect to consolidation of the quick
service business represent approximately 27% of quick service net sales; with
Charlotte, about 32% will be consolidated.
The Company will incur significant cash costs to effect the restructuring.
Approximately $119 million in cash costs have been accounted for through
restructuring charges in 1998 and 1997 and reserves recorded as part of the
purchase price allocations for ProSource and PFS. (See Note 3 to the Condensed
Consolidated Financial Statements.) Approximately $22 million of this amount has
been spent through March 27, 1999, and about $39 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 approximately $56 million through March
27, 1999, and about $36 million is expected to be spent over the balance of
1999. These integration costs relate primarily to start-up of new warehouse
facilities and other actions to facilitate the warehouse network consolidation,
delivery fleet modifications and activities to realign and centralize
administrative and other support functions.
CUSTOMER ACTIVITIES
The Company has been very active in solidifying relationships with existing
customers, including TRICON Global Restaurants, Inc. (Tricon), the Company's
largest customer, and franchisees in the Tricon and Burger King systems, through
long-term distribution agreements. Currently, over 75% of the Company's total
business is covered by long-term agreements, with about 70% of the business
under contracts with three or more years of remaining term.
9
<PAGE> 12
As part of the Tricon and other new or revised distribution agreements, the
Company 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 the Company's cost structure and
insulates the Company from product cost and mix variability. Currently,
approximately 70% of the Company's business is under fee per case pricing.
In the course of revising or entering into new contracts, the Company, 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 enhances order fulfillment accuracy.
Also, the Company 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 the Company's warehouses, which reduces the freight component of product
costs. The Company 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, the Company 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 of the Company. Net
sales to the Wendy's concept were approximately $600 million annually, and the
discontinuance is expected to negatively impact the Company's operating profits
by approximately $15 million annually.
COMPUTER SYSTEMS AND YEAR 2000 ISSUE
The Company's business activity requires the processing of several thousand
transactions on a daily basis in the purchasing, transportation and warehousing
of food and supply items and sale of these items to restaurant customers. The
Company'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 the Company to customers' restaurants and
finally to consumers. This flow of goods depends on the use of computerized
systems throughout the supply chain.
The Company has taken a number of steps to assess and remediate its
exposure to the Year 2000 (Y2K) computer program code problem. The Company's
findings to date include:
- As measured by lines of program code, approximately 20% of the Company's
software was not Y2K compliant. Approximately 30% of this code has been
remediated, tested and placed back into production, and the balance will
be completed by mid-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 the
Company will continue to utilize. The providers of the software packages
have certified that their products are Y2K compliant. The Company will,
by mid-1999, perform procedures to verify such compliance.
- The Company has completed an assessment of its computer hardware and
determined that approximately 30% of these devices are not Y2K compliant.
Remediation of this hardware will be completed by mid-1999.
- The Company has completed its assessment of other mechanical equipment
and devices with electronic components possibly susceptible to the Y2K
issue. Risk identified has been minimal, and the majority of upgrades
and/or replacements will be completed by mid-1999.
- The Company has requested information regarding Y2K readiness from 1,700
trading partners, including product suppliers, service providers and
customers. Responses from these trading partners have been evaluated, and
critical risk situations are being assessed for remediation and/or
contingency actions in cooperation with the trading partners.
10
<PAGE> 13
- The Company 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 the Company 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 to the Company is high and could result in a significant
adverse effect on the Company's operations. The Company believes that software
and equipment within its control are or will be timely compliant. The risk lies
principally with the Company's large base of suppliers and customers. Within
these groups there is a wide range of exposure and resources focusing on
potential Y2K issues. The Company 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 ascertain timely compliance.
The Company has initiated a contingency planning process to deal with
possible disruptions. Contingency plans will be developed by mid-1999 using
existing business continuity plans in a collaborative effort with trading
partners.
As referred to above, the Company is in the process of replacing certain
critical applications and processes within its management information system
with a new software and hardware platform. The software package platform
includes integrated warehouse operations and financial management applications.
The new system will complement the Company's consolidation effort by providing
the flexibility to support those processes that are customer-unique, while
allowing greater standardization and centralization of common processes. The
implementation of the system is on schedule. As of May 7, 1999, the new system
is operating in 15 of the final 21 warehouse facilities planned upon completion
of the quick service network consolidation, and the remaining facilities will be
converted by the third quarter of 1999. With respect to the former ProSource
operations, the Company 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, which will be Y2K compliant by
mid-1999.
The cash costs (excluding leased computer hardware) to implement the new
system and perform the assessment and remediation of the Y2K issue will
approximate $105 million. Approximately $67 million of this amount has been
spent through March 27, 1999, and the remainder of about $38 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 roll-out the
developed software, largely data conversion and training in nature, and to
perform the assessment and remediation of the Y2K issue are expensed as
incurred. The Company believes the Y2K costs are unusual and one-time in nature
and are therefore reported as a component of "Restructuring and other unusual
costs" in the Condensed Consolidated Statements of Operations.
ACCOUNTING CALENDAR
As previously disclosed, the Company is in the process of conforming the
reporting of certain operations in order to adopt a 13-period accounting
calendar for all the business. This calendar 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 March 27, 1999, approximately 60% 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 completed in
2000. Because of the phased nature of the conversion, 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.
11
<PAGE> 14
RESULTS OF OPERATIONS
The following table presents certain reported financial information of NEHC
(see Condensed Consolidated Statements of Operations), expressed as a percentage
of net sales:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 27, MARCH 28,
1999 1998
--------- ---------
<S> <C> <C>
Net sales................................................... 100.0% 100.0%
Cost of goods sold.......................................... 91.3 90.1
----- -----
Gross profit................................................ 8.7 9.9
Distribution, selling and administrative expenses........... 7.7 8.0
----- -----
Operating income before depreciation of property and
equipment, amortization of intangible assets and
restructuring and other unusual costs..................... 1.0% 1.9%
===== =====
</TABLE>
First Quarter 1999 Compared to First Quarter 1998:
Net sales increased $890.5 million, or 79%, to $2.0 billion in the first
quarter of 1999, primarily reflecting the acquisition of ProSource, partially
offset by the discontinuance of the Wendy's business.
Gross profit increased $64.7 million, or 58%, to $175.6 million in the
first quarter of 1999 reflecting the acquisition of ProSource. The gross profit
margin decreased from 9.9% in 1998 to 8.7% in 1999 due largely to the impact of
the ProSource acquisition. ProSource's casual dining business has higher product
case costs as compared to the Company's quick service business, resulting in a
lower gross profit margin. The Company's profitability is largely determined by
the relationship of the negotiated mark-up, or distribution fee that is added to
product cost to determined sales prices, to the Company's operating costs.
Therefore, a decline in the gross profit margin does not necessarily indicate a
decline in profitability in dollars. Also, gross margin comparisons to prior
periods will 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 increased $66.1 million,
or 74%, to $155.6 million in the first quarter of 1999 due primarily to the
acquisition of ProSource. Distribution, selling and administrative expenses as a
percent of net sales decreased from 8.0% in 1998 to 7.7% in 1999. 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
the Company's quick service business (see gross profit discussion above).
Operating income before depreciation of property and equipment,
amortization of intangible assets and restructuring and other unusual costs
decreased $1.4 million, or 6.6%, to $20.0 million in the first quarter of 1999,
and as a percent of net sales declined from 1.9% in 1998 to 1.0% in 1999. This
change was driven by the factors impacting gross profit as discussed above.
Depreciation of property and equipment increased $4.1 million to $9.9
million in the first quarter of 1999 due largely to the acquisition of
ProSource.
Amortization of intangible assets increased $5.3 million to $12.1 million
in the first quarter of 1999, primarily reflecting the amortization of the
intangible assets arising from the allocation of the ProSource purchase price.
Restructuring and other unusual costs of $22.5 million in the first quarter
of 1999 consisted primarily of incremental costs associated with the warehouse
network consolidation, the new computer system implementation and Y2K
remediation.
Interest expense net of interest income increased $3.8 million to $23.1
million in the first quarter of 1999, reflecting increased borrowings on the
revolving credit facility to largely fund restructuring activities and
12
<PAGE> 15
computer systems initiatives, as well as reduced interest income as cash
equivalents on hand in the first quarter of 1998 were later used to partially
fund the acquisition of ProSource.
Loss on sale of accounts receivable relates to an ongoing Accounts
Receivable Program established by the Company to provide additional financing
capacity. 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 $7.0 million largely represents the return to investors in
certificates issued by the master trust. The increase over 1998 reflects the
addition of ProSource accounts receivable as well as an amendment to the program
that resulted in additional capacity. (See Note 5 to the Condensed Consolidated
Financial Statements.)
Provision for income taxes in 1999 primarily represents estimated current
state and foreign income taxes payable. The Company's net deferred tax assets
are offset entirely by a valuation allowance, largely reflecting the Company's
net operating loss carryforward position for federal income tax purposes.
Net loss increased $38.7 million to $54.9 million in the first quarter of
1999, driven by higher business restructuring expenses, financing costs and
amortization of intangibles.
Comparison of Results of Operations on a Pro Forma Basis:
This supplementary information is provided to enhance the analysis of
results of operations. The pro forma results for the three months ended March
28, 1998 represent the combined historical results of the Company and ProSource
for the period as if the acquisition had occurred at the beginning of fiscal
1998. These pro forma combined results do not purport to represent what the
actual results would have been if the acquisition of ProSource had occurred at
the beginning of fiscal 1998.
<TABLE>
<CAPTION>
OPERATING RESULTS
THREE MONTHS ENDED
-----------------------------------
PRO FORMA
MARCH 27, 1999 MARCH 28, 1998
---------------- ----------------
$ % $ %
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Net sales................................................. $2,014.5 100.0% $2,113.7 100.0%
Cost of goods sold........................................ 1,838.9 91.3 1,924.6 91.1
-------- ----- -------- -----
Gross profit.............................................. 175.6 8.7 189.1 8.9
Distribution, selling and administrative expenses......... 155.6 7.7 164.4 7.8
-------- ----- -------- -----
Operating income before depreciation, amortization and
restructuring and other unusual costs................... $ 20.0 1.0% $ 24.7 1.2%
======== ===== ======== =====
</TABLE>
Management fees to Holberg Industries, Inc. included in distribution,
selling and administrative expenses were $.9 million in both periods.
The Company estimates that approximately $5.0 million and $3.1 million for
the first quarter of 1999 and 1998, respectively, in operating cost reductions
could be achieved within those Company (pre-acquisitions) and ProSource
distribution operations not yet consolidated, even before the savings arising
from the consolidation of the Company, PFS and ProSource operations. No
estimates were developed for ProSource for the periods prior to its acquisition,
and no amounts were estimated for the PFS network as it was assumed to be
reasonably efficient. The results presented have not been adjusted for such cost
savings.
Net sales decreased $99.2 million in 1999, or 4.7% from 1998 pro forma net
sales. Net sales increased about $96 million, or 5.0%, after adjusting 1998 pro
forma net sales for the impact of the discontinued Wendy's business of $151.4
million and the change in accounting calendar of about $44 million (see
discussion under "Accounting Calendar" above). This increase was driven by
growth in case volume in both the quick service and casual dining businesses. At
March 27, 1999, stores served by the Company totaled about 36,200 compared to
about 38,700 in 1998, including over 700 stores in Canada and Mexico in both
years. The decrease was driven by the discontinuance of the Wendy's business.
13
<PAGE> 16
Gross profit in 1999 decreased $13.5 million from 1998, or 7.1%, and the
gross margin declined .2 of a point to 8.7%. This performance reflected the
discontinuance of the Wendy's business and the relatively faster growth of the
casual dining business, which has a lower gross profit margin than the quick
service business (see gross profit discussion above). Also, gross margin
comparisons to prior periods will 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 $8.8 million or 5.4% from 1998, and as
a percent of net sales declined .1 of a point to 7.7%. This performance
primarily 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
The Company's sources of liquidity include cash provided by operating
activities, a credit facility of up to $220 million, of which $154.7 million was
available before $44.1 million in borrowings and $5.3 million in letters of
credit at March 27, 1999, proceeds from the accounts receivable program of up to
$485 million, of which $455 million was available and was fully used at March
27, 1999, proceeds from sales of warehouse facilities and lease financing of new
warehouse facilities, delivery fleet, material handling equipment and computer
hardware requirements.
On March 24, 1999, an amendment to the credit facility was completed that
allows the Company up to $30 million in letters of credit before usage of the
facility is impacted, resulting in additional liquidity in this amount. Also, on
March 24, 1999, NEHC provided $25 million in a cash capital contribution to the
Company, funded by cash equivalents on hand.
The Company believes that its liquidity sources will be adequate to fund
the approximately $113 million in cash needs for the balance of 1999 relating to
the restructuring 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 $7 million was spent in the quarter.
First Quarter 1999 Compared to First Quarter 1998:
Net cash used for operating activities decreased $4.5 million to $60.1
million in 1999. This performance primarily reflected less unfavorable changes
in assets and liabilities ($33.5 million), driven by timing of accounts payable
payments, partially offset by the increased net loss after adjustment for
depreciation and amortization ($29.3 million).
Net cash used for investing activities increased $2.8 million to $15.9
million in 1999. This change reflected higher capital expenditures ($11.1
million), driven by capitalized computer software development costs and spending
associated with warehouse facility development, partially offset by a decrease
in net cash advances to affiliates ($8.3 million).
Net cash provided by financing activities decreased $39.1 million to $47.0
million in 1999. The 1999 activity reflected the Company's borrowings on the
credit facility and additional funding under the Accounts Receivable Program.
The 1998 activity reflected proceeds from issuance of preferred stock, net of
repurchase of existing preferred stock.
SEASONALITY AND GENERAL PRICE LEVELS
Historically, the Company's operating results have reflected seasonal
variations. The Company 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. The
Company is in the process of adopting a 13-period fiscal calendar (see
discussion under "Accounting Calendar" above). Under this calendar, the first
14
<PAGE> 17
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 the Company's operations.
Food price deflation could adversely affect the Company's profitability as
approximately 30% of the Company's sales are at prices based on product cost
plus a percentage markup.
CAUTIONARY STATEMENTS
Restructuring Risk
As discussed above under "Business Restructuring," the Company 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. The Company is investing significant cash
expenditures to effect the restructuring plan, with the expectation of
substantial cost savings upon its completion.
While the Company has made important progress, there can be no assurance
that the restructuring actions will be completed on time, that business
operations will not be disrupted during the restructuring period, that spending
will be within projected levels and that the expected cost savings will be
achieved. While management believes it has the resources to meet the objectives,
the ultimate level and timing of efficiencies to be realized are subject to the
Company's 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," the
Company is implementing a new computer software and hardware platform that will
allow standardization and centralization of warehouse operations and support
processes. The Company is also remediating Y2K code problems in applications
that will not be replaced by the new system. These activities are occurring
concurrently with the Company's restructuring actions.
While the Company has made important 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
The Company'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 the Company's acquisition
activity, may further intensify competitive pressures. While the Company 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 the Company's consistent achievement of service level
requirements set forth in customer contracts. Management believes that
completion of the restructuring plan will enhance the Company's position as one
of the most efficient distributors in its industry and, therefore, highly
competitive in pricing and customer service.
With respect to risk of customer concentration, approximately 21% of the
Company's net sales are to Tricon and 10% are to Darden Restaurants, Inc., which
owns all the Red Lobster and Olive Garden restaurants. The Company provides
service to Tricon's U.S. company-owned restaurants under a long-term exclusive
distribution agreement that expires July 2007, including a two and one-half year
extension option. 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 on
substantially similar terms, there can be no assurance that the transition from
company-owned to franchised status will not affect the Company's
15
<PAGE> 18
results. The Company provides service to Red Lobster and Olive Garden
restaurants under exclusive distribution agreements effective June 1997 and
expiring in May 2002.
Market Risk
The Company's Senior Notes and Senior Subordinated Notes and NEHC's Senior
Discount Notes carry fixed interest rates and, therefore, do not present a risk
of earnings or cash flow loss due to changes in market interest rates.
NEHC and the Company are exposed to market interest rates in connection
with its accounts receivable program and credit facility. As discussed above
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
the Company's accounts receivable have been transferred. At March 27, 1999, the
master trust had certificates outstanding in the amount of $455 million.
Borrowings against the Company's credit facility, which totaled $44.1 million at
March 27, 1999, also carry variable interest rates. (See Notes 4 and 5 to the
Condensed Consolidated Financial Statements.)
At March 27, 1999, NEHC and the Company are 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.
Risk of Leverage
NEHC and the Company are and will continue to be highly leveraged as a
result of the indebtedness incurred in connection with the acquisitions. NEHC's
and the Company'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 NEHC's actual results to differ
materially from expected and historical results, see the "Risk Factors" set
forth in NEHC's amended Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on April 30, 1999.
16
<PAGE> 19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's Senior Notes and Senior Subordinated Notes and NEHC's Senior
Discount Notes carry fixed interest rates and, therefore, do not expose the
Company and NEHC to the risk of earnings or cash flow loss due to changes in
market interest rates.
The Company is exposed to market interest rates in connection with its
accounts receivable program and credit facility. As discussed in Management's
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 the
Company's accounts receivable have been transferred. At March 27, 1999, the
master trust had certificates outstanding in the amount of $455 million. At this
level, a one-point change in interest rates would impact the annual loss on sale
of accounts receivable by $4.6 million. Borrowings against the Company's credit
facility, which totaled $44.1 million at March 27, 1999, also carry variable
interest rates. (See Notes 4 and 5 to the Condensed Consolidated Financial
Statements.)
At March 27, 1999, NEHC and the Company are 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.
17
<PAGE> 20
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:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
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 -- Restated Certificate of Incorporation of NEHC
(incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K filed on March
27, 1998).
3.2 -- By-Laws of NEHC (incorporated by reference to Exhibit 3.2
to the Registrant's Registration Statement on Form S-4,
No. 333-33223 filed August 8, 1997).
4.1 -- Indenture, dated as of October 15, 1997, by and among the
Company, 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).
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
4.3 -- Indenture, dated as of July 11, 1997, by and among the
Company, 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).
4.5 -- 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).
4.6 -- 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 the Registrant, 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 the Registrant, 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 the Company 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
the Company 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 the Company 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
the Company 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).
</TABLE>
19
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
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 Registrants 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 the
Registrant's Registration Statement on Form S-8 No.
333-53095 filed on May 20, 1998).
21 -- Subsidiaries of the Registrant. (incorporated by
reference to Exhibit 21 to the Registrant's Annual Report
on Form 10-K filed March 25, 1999).
27.1 -- Financial Data Schedule.*
</TABLE>
- ---------------
* Filed herewith.
(b) Reports on Form 8-K
None
20
<PAGE> 23
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:
Nebco Evans Holding Company
(Registrant)
By: /s/ DIANA M. MOOG
----------------------------------
Diana M. Moog,
Executive Vice President
And Chief Financial Officer
Date: May 11, 1999
By: /s/ STAN SZLAUDERBACH
----------------------------------
Stan Szlauderbach,
Vice President and
Chief Accounting Officer
Date: May 11, 1999
21
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
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 -- Restated Certificate of Incorporation of NEHC
(incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K filed on March
27, 1998).
3.2 -- By-Laws of NEHC (incorporated by reference to Exhibit 3.2
to the Registrant's Registration Statement on Form S-4,
No. 333-33223 filed August 8, 1997).
4.1 -- Indenture, dated as of October 15, 1997, by and among the
Company, 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 the
Company, 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).
4.5 -- 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).
4.6 -- 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).
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
10.1 -- Registration Rights Agreement, dated as of July 11, 1997,
by and among the Registrant, 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 the Registrant, 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 the Company 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
the Company 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 the Company 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
the Company 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 Registrants 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).
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
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 the
Registrant's Registration Statement on Form S-8 No.
333-53095 filed on May 20, 1998).
21 -- Subsidiaries of the Registrant. (incorporated by
reference to Exhibit 21 to the Registrant's Annual Report
on Form 10-K filed March 25, 1999).
27.1 -- Financial Data Schedule.*
</TABLE>
- ---------------
* Filed herewith.
