U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)
For the fiscal year ended May 28, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 0-1744
Ambassador Food Services Corporation
(Name of small business issuer in its charter)
Delaware 44-0656199
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3269 Roanoke Road, Kansas City, Missouri 64111
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 816 561-6474
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (Par Value $1)
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for
such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days.
YES X NO
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year are $19,205,078.
At November 2, 1998 there were 737,656 shares of the Registrant's common stock
outstanding. Based on the average of the highest bid and lowest asked prices
reported on the national over-the-counter market (NASDAQ Symbol AMBF), the
aggregate market value of the shares held by non-affiliates of the Registrant
was $ 829,863.
Exhibit Index is on page 36.
Transitional Small Business Disclosure Format: YES NO X
PART I
Item 1. Description of Business
(a) Business Development
The Registrant (hereinafter "Company" or "Ambassador") is a Delaware
corporation incorporated in 1963. It is engaged, through divisions and a
subsidiary, in the food service and janitorial industries in Iowa, Kansas,
New York, Texas, New Jersey, Missouri, and Oklahoma.
The principal business activity of the Company is the servicing of its
customer accounts, primarily factories, offices, hospitals, schools, and social
service agencies, through the use of vending machines, cafeterias, and
prepared meals delivered from Company commissaries.
On August 1, 1989, the name of the Company was changed from Automatique,
Incorporated to Ambassador Food Services Corporation.
(b) Business of Issuer
(1) Description of Business Done by the Registrant in its Food Segment
(i and ii)The vending and cafeteria segment of the Company's business
consists of contracting to distribute beverages and food products
to customer locations consisting of factories, offices,
hospitals, and schools. The Company conducts surveys of
potential customer locations, determines profitability of the
location, and submits a proposal offering to provide the vending
and/or cafeteria service for the customer location. Business
with local government social service agencies and not-for-profit
agencies is obtained through competitive bidding and is
serviced by producing meals in a central commissary and
delivering them to various designated points for consumption.
(iii) No new products have been developed by this segment. The
Company, in general, markets the product developed by its
suppliers.
(iv) The vending food service business, made up of a few large
companies and many small independently owned local and
regional enterprises, is highly competitive. The practice in the
industry is to operate under written agreements with the
locations served. In the market areas where the Company is
located, it has national, regional, and local competition, some of
which have substantially greater total sales and assets.
Competition for locations in the food service industry
normally comes in the form of pricing and in quality of
service and product.
(v) Raw materials, consisting of packaged products and commodities, are
purchased from manufacturers and purveyors and are warehoused
or processed by the Company in the local market. There is an
adequate supply of raw materials from normal sources; which
include Midwest Food Distributors, Inc., Pepsi Cola General
Bottlers and Loeb and Mayer.
(vi) During the year ended May 28, 1998, this segment had no single
customer whose sales were equal to 10 percent or more of the
Company's consolidated revenues.
Because the Company's customers are primarily the employees and
students of the various schools, colleges, factories, offices, and
hospitals at which it has its vending and cafeteria services, the
Company normally experiences a seasonal decline in sales during the
summer months and around holidays, during which times many of these
customers vacation and many locations close completely.
(vii) The distinctive logo associated with the Company has been
registered under the laws of the United States relating to
trade names and trademarks. The Company regards such logo as
valuable and will maintain the registration in effect for
continuing use in connection with the Company's business. In
addition, the segment is a party to the following labor
agreements:
<TABLE>
<S> <C> <C>
Bargaining Unit Market Expiration Date
Teamsters Local #838 Kansas City 1/1/00
Teamsters Local #90 Des Moines 4/30/02
United Service Employees
Union #377 New York 12/31/99
</TABLE>
(viii) The Company does not have a material portion of its business
subject to renegotiation or termination at the election of
the Government.
(ix) The Company does not believe that existing or probable government
regulations have a material effect on its operation.
(b) (2) Description of Business Done by the Registrant in its
Janitorial Segment
(i and ii) The janitorial and maintenance service division of the
Company's business consists primarily of contracting
various types of routine cleaning services for
customers on a weekly, monthly, or as-needed basis.
Customers currently include grocery stores and public
housing complexes in New York and New Jersey.
(iii) No new products have been introduced by this segment.
(iv) The janitorial segment is limited to the New Jersey and New York
metropolitan areas. Competition for janitorial contracts comes in
the form of pricing and quality of service. Competition in
general is from regional and local companies.
(v) The sources and availability of raw materials for this segment are
adequate. Sources of raw materials include Graco Manufacturing
and Malone Chemical.
(vi) During fiscal 1998, this segment had no single customer whose
sales were equal to 10 percent or more of the Company's
consolidated revenues.
This segment is not subject to material fluctuations in sales volume
due to seasonality.
Sales in this segment are on open accounts receivable. Inventory
levels are not significant.
(vii) This segment is operating without registered trademarks or
patents. The segment is a party to a labor agreement with
the United Service Employees Union #377 in New York that expires
December 31, 1999.
(viii) The Company does not have a material portion of its business
subject to renegotiation or termination at the election of the
Government.
(ix) The Company does not believe that existing or probable government
regulations have a material effect on its operations.
(b) (x) Through (xii) with Respect to the Registrant's Business in
General
(x) The Company has not incurred any expense for research and
development activities during any of its last two (2)
fiscal years.
(xi) Compliance with federal, state, and local laws and
regulations involving the protection of the environment
will not have a material effect.
(xii) As of May 28, 1998, the Company and its subsidiary employed
approximately 250 persons.
Item 2. Description of Properties
The Company leased all real estate for office, warehouse, garage, repair
shops, and commissaries in each of its market areas throughout fiscal 1998,
except for the property located at 3269 Roanoke Road, which was
purchased in July 1990. The property was encumbered by a mortgage in the
amount of $275,476 at May 28, 1998. Annual rentals were approximately
$281,485 less $22,200 of sublease income. The suitability of the leased
properties is adequate; such properties are described below:
<TABLE>
<S> <C> <C> <C>
Size Expiration
Location Type of Property (Sq. Ft.) Date
3269 Roanoke Rd., Kansas City, MO Office/Whse 13,600 Owned
208 E. Aurora, Des Moines, IA Office/Whse 9,200 5/98
5-30 54th Ave., Long Island City, NY Office/Whse 8,000 Mo/Mo
41-43 24th St., Long Island City, NY Office/Whse 2,500 3/01
9100 Santa Fe Dr., Overland Park, KS Restaurant-
Discontinued 1,800 2/04
162 Closter Dock Rd., Closter, NJ Office/Whse 1,200 Mo/Mo
900 West 8th St., Kansas City, MO Warehouse 300 Mo/Mo
36 Clark St., Des Moines, IA Office/Whse 10,600 3/01
</TABLE>
The major portion of the physical properties used by the Company is made up
of automatic vending equipment and food service and production equipment.
Most of the equipment used is owned by Company. In several instances, the
cafeteria and vending equipment is owned by the account to which food
services are rendered by the Company. The Company operates
approximately 90 vehicles in the conduct of its business, approximately
25% of which are leased and the balance owned. The annual rentals on
all such leased real estate properties, equipment, and vehicles are
approximately $700,000.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year of the Company.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) Price Range of Common Stock
The principal market in which the common stock of the Company is traded is
the national over-the-counter market (NASDAQ symbol AMBF).
The bid quotation for the Company's common stock for each quarter during
fiscal years ended May 28, 1998 and May 29, 1997 are shown below:
<TABLE>
1998 1997
Bid Quotation Bid Quotation
<S> <C> <C> <C> <C>
High Low High Low
First Quarter 1 3/8 1 1 1/16 1 1/16
Second Quarter 1 1/16 1 1/16 1 1/8 1 1/16
Third Quarter 1 3/16 1 1/8 1 1/2 1 1/16
Fourth Quarter 1 3/16 1 1/8 1 7/16 1 3/8
</TABLE>
The quotations above reflect inter-dealer prices without retail mark-up,
mark-down, or commission and may not represent actual transactions.
(b) Number of Equity Security Holders
As of November 2, 1998, there were 591 record holders of the Company's
common stock.
(c) Dividends
The Company has never paid cash dividends on its common stock. Payment of
dividends will be within the discretion of the Company's Board of
Directors and will depend, among other factors, on earnings, debt
agreements, capital requirements, and the operating and financial
condition of the Company.
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Continuing Operations
1998 Results
Sales declined from fiscal 1997 levels by $3,565,468 to $19,205,078 in
the year ended May 28, 1998. This decline reflected the impact of the
sale of the Company's St. Louis operations in April 1997 which resulted
in a decline of $2,968,360. Additional declines in revenues resulted
from the closing of the Company's operations in Tyler, Texas and from
the loss of vending and cafeteria contracts to competitors in Kansas
City. Despite these lower sales, Ambassador reduced its loss from
operations from $1,164,217 to $75,800. This improvement partially
resulted from the elimination of losses experienced during fiscal 1997
in the Company's St. Louis operations.
The Company improved its gross margins in fiscal 1998 through improved
purchasing and through the addition of sales in its New York operation
in the form of short-term contracts which carried strong pricing
relative to food cost. Management continues to pursue increased pricing
and to lower the cost of its products; however, the end of the short-term
agreements in New York during late 1998 and early 1999 makes it unlikely
the Company's gross margins will improve further in 1999.
Operating costs declined compared to 1997 levels as a percentage of sales
because of unusually high cost in this area associated with the closing
of the Company's St. Louis operations during fiscal 1997. The Company
also lowered its operating expenses by reducing operating payrolls,
vehicle costs, and the cost of supplies in its food service operations.
Management has further reduced payrolls and anticipates even lower
operating costs in fiscal 1999.
Administrative, depreciation, and interest costs were all lower in
1998 because of strict control of capital expenditures and reductions
in all administrative cost areas. Management anticipates further
improvements in these cost areas during fiscal 1999 through further
staff reduction and continued controls on capital expenditures.
The carrying value of intangible assets is periodically reviewed by
the Company based on the estimated future operating income of each
acquired entity on an undiscounted cash flow basis. Based upon its
most recent analysis, the Company believes that no material
impairment of intangible assets exists at May 28, 1998.
1997 Results
Despite growth in sales of more than $ 2,000,000 from fiscal 1996 levels,
Ambassador experienced a before tax loss from continuing operations of
$1,164,217 compared to a before tax profit of $ 50,244 in 1996. Growth in
sales waas provided through the acquisition of a competitor in the Des
Moines, Iowa market during the latter part of fiscal 1996 and the opening
of a new operation in Tyler, Texas during the second quarter of 1997.
The loss reflects poor results in the Company's Midwest operations and the
costs associated with the sales of Ambassador's operations in St. Louis.
During 1997, operating losses of $432,000 were recorded in the St. Louis
operation with an additional loss of $199,000 recorded on the sales of the
operation. The new operation in Tyler, Texas failed to meet sales
objectives and produced a loss of $31,000 during the year. The operation
in Tyler has been closed during fiscal 1998.
Cost of food products sold continue to increase as a percentage of sales.
This problem impacted all markets as cost of products rose dramatically
during the year and price increases implemented were not adequate to offset
the effect of these rising costs. Management continues to pursue pricing
as well as purchasing opportunities to improve gross margins.
Operating costs increased dramatically due to the cost associated with the
closing of the St. Louis operation as well as high operating lease costs
that relate to the acquisition in Iowa. Administrative cost increased as a
percentage of sales due to higher payroll costs. Additionally, the Company
experienced unusually high costs relating to placement fees within the
Company's corporate accounting office and late payment fees for various
obligations. Management has taken steps to reduce operating and
administrative cost through staff reductions and stringent controls on
expenditures in all areas.
Year 2000
Management has reviewed its systems relative to the Year 2000 issue and has
determined that no material expenditures will be required for modifications
or replacement of software due to this problem. Management does anticipate
replacing its primary financial reporting and control systems as part of
its short-term business plan and will ensure that all new systems are Year
2000 compliant.
Liquidity and Capital Resources
The Company's working capital deficit declined by $146,631 from a deficit
of $1,984,468 at May 29, 1997 to a deficit of $1,837,837 at May 28, 1998.
Long-term liabilities declined by $582,943 during fiscal 1998. Management
was able to further strengthen the working capital position of the Company
by refinancing certain of the current obligations on a long-term basis
subsequent to May 28, 1998; and cash flow from operations will, in the
opinion of managment, be more than sufficient to meet the Company's cash
requirements. Idle equipment continues to be available to provide for
growth in the Company's vending operations, and financing is in place for
any capital expenditure needs during fiscal 1999.
Item 7. Consolidated Financial Statements
Index to Consolidated Financial Statements
Page
Report of Independent Certified Public Accountants 10
Consolidated Balance Sheets as of May 28, 1998 and May 29, 1997 11-12
Consolidated Statements of Operations for the Years Ended
May 28, 1998 and May 29, 1997 13
Consolidated Statement of Changes in Stockholders' Equity for the
Years Ended May 28, 1998 and May 29, 1997 14
Consolidated Statements of Cash Flows for the Years Ended May 28, 1998
and May 29, 1997 15-16
Notes to Consolidated Financial Statements 17
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Ambassador Food Services Corporation and Subsidiary
We have audited the accompanying consolidated balance sheets of Ambassador Food
Services Corporation and Subsidiary as of May 28, 1998 and May 29, 1997 and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Ambassador Food
Services Corporation and Subsidiary as of May 28, 1998 and May 29, 1997 and
the consolidated results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.
Kansas City, Missouri
September 11, 1998,(except for Note P
as to which the date is September 23,1998)
Ambassador Food Services Corporation and Subsidiary
CONSOLIDATED BALANCE SHEETS
May 28, 1998 and May 29, 1997
<TABLE>
<S> <C> <C>
ASSETS 1998 1997
CURRENT ASSETS
Cash (including change funds of $196,412 in 1998
and $241,719 in 1997) (note A10) $ 271,709 $ 370,340
Trade accounts receivable, net of allowance for
doubtful accounts of $87,820 in 1998 and
$118,234 in 1997 (notes A11 and D) 1,193,619 1,697,773
Income taxes receivable 3,277 8,881
Inventories (note A4) 483,999 548,477
Prepaid expenses 134,961 186,817
Current portion of note receivable (notes N,O and P) 295,570 372,351
Total current assets 2,383,135 3,184,639
PROPERTY AND EQUIPMENT - at cost (notes A5 and E)
Vending equipment 4,682,523 4,804,840
Cafeteria, commissary, and restaurant equipment 1,144,887 1,205,077
Building and leasehold improvements 634,457 641,814
Other 971,883 991,570
7,433,750 7,643,301
Less accumulated depreciation and amortization 5,622,766 5,445,471
Total property and equipment 1,810,984 2,197,830
OTHER ASSETS
Location contracts, net of accumulated amortization of
$141,138 in 1998 amd $124,286 om 1997 (notes A6 and E) 253,345 267,530
Note receivable, less current portion (notes N and O 909,100 1,227,048
Unrecognized prior service costs (notes A7 and H) 146,266 183,009
Excess of purchase price over net assets acquired,net of
accumulated amortization of $21,645 in 1998 and
$20,375 in 1997 (note A6) 22,035 23,054
Deferred expenses 49,956 52,432
Miscellaneous 111,288 180,320
Total other assets 1,491,990 1,933,393
$ 5,686,109 $ 7,315,862
The accompanying notes are an integral part of these statements.
</TABLE>
Ambassador Food Services Corporation and Subsidiary
CONSOLIDATED BALANCE SHEETS - CONTINUED
May 28, 1998 and May 29, 1997
<TABLE>
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
CURRENT LIABILITIES
Checks outstanding in excess of bank balances $ 224,290 $ 662,086
Trade accounts payable 1,731,606 1,532,775
Accrued expenses (note C) 678,243 1,249,170
Current maturities of long-term debt (note E) 864,904 582,863
Line of credit (note D) 721,929 1,142,213
Total current liabilities 4,220,972 5,169,107
LONG-TERM LIABILITIES
Projected benefit obligation (note H) 318,545 337,468
Other long-term liabilities 16,366 42,035
Subordinated note payable to stockholder
(note F) 250,000 250,000
Long-term debt, less current maturities
(note E) 396,803 921,617
Accrued costs of discontinued restaurant
operations (note K) 70,666 84,203
Total long-term liabilities 1,052,380 1,635,323
COMMITMENTS AND CONTINGENCIES
(notes G, I, K, L, and N) - -
STOCKHOLDERS' EQUITY (notes F and I)
Common stock, par value $1.00 per share;
authorized, 2,000,000 shares; issued,
1,009,230 shares 1,009,230 1,009,230
Additional paid-in capital 718,291 718,291
Retained earnings (accumulated deficit) (993,328 (912,528)
734,193 809,993
Less treasury stock - 267,074 shares in 1998
and 251,774 shares in 1997 (321,436) (298,561)
Total stockholders' equity 412,757 511,432
$5,686,109 $7,315,862
The accompanying note are an integgral part of these statements.
</TABLE>
Ambassador Food Services Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended May 28, 1998 and May 29, 1997
<TABLE>
<S> <C> <C>
1998 1997
Net sales
Food $17,511,476 $20,839,872
Janitorial 1,693,602 1,930,674
19,205,078 22,770,546
Cost and expenses
Cost of food products sold 7,924,592 9,497,576
Operating (note M) 7,523,717 9,818,547
Selling and administrative 2,852,652 3,521,127
Depreciation and amortization 602,166 684,352
Interest 377,751 413,161
Total cost and expenses 19,280,878 23,934,763
Loss before income taxes (75,800) (1,164,217)
Deferred income tax benefit (note J) - 267,069
Net Loss $ (75,800) $ (897,148)
Loss per common share:
Net loss per common share $ (.10) $ (1.18)
Weighted average common shares
outstanding (note A9) 742,156 760,906
</TABLE>
Ambassador Food Services Corporation and Subsidiary
CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
Years ended May 28, 1998 and May 29, 1997
<TABLE>
Retained
Additional Earnings Total
Paid-In (Accumulated Stockholders'
Common Stock Capital Deficit) Equity
Issued Treasury Stock
Shares Amount Shares Cost
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
June 1,
1996 1,009,230 $1,009,230 241,274 $283,905 $718,291 $(20,380) $1,423,236
Net
loss - - - - - (897,148) (897,148)
Purchase of
treasury
stock - - 10,500 14,656 - - (14,656)
Balance at
May 29,
1997 1,009,230 1,009,230 251,774 298,561 718,291 (917,528) 511,432
Net loss - - - - - (75,800) (75,800)
Purchase of
treasury
stock - - 15,300 22,875 - - (22,875)
Balance at
May 29,
1997 1,009,230 $1,009,230 267,074 $321,436 $718,291 $(993,328) $ 412,757
</TABLE>
Ambassador Food Services Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended May 28, 1998 and May 29, 1997
<TABLE>
<S> <C> <C>
1998 1997
Cash Flows From Operating Activities
Net earnings (loss) $ (75,800) $(897,148)
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in)
operations
Depreciation and amortization 602,166 684,352
Gain on sale of property and equipment (10,596) 198,898
Provision for bad debts (30,414) 96,060
Deferred income taxes - (267,069)
Changes in operating assets and
liabilities:
Trade accounts receivable 534,568 (25,622)
Income taxes receivable 5,604 8,161
Miscellaneous - other assets 45,149 39,264
Inventories 64,478 45,343
Prepaid expenses 51,856 62,099
Trade accounts payable and
accrued expenses (404,556) 416,432
Net cash provided by
(used in) operating
activities 782,455 360,770
Cash Flows From Investing Activities
Purchase of property and equipment (195,028) (844,257)
Proceeds from sale of property and
equipment 68,610 -
Collections on notes receivable 394,729 96,744
Net cash used in investing
activities 268,311 (747,513)
Cash Flows From Financing Activities
Proceeds from issuance of long-term debt 309,091 524,046
Principal payments on long-term obligations (551,864) (415,766)
Purchase of treasury stock (22,875) (14,656)
Net increase in checks outstanding in excess
of bank balances (437,796) 94,317
Other financing activities (25,669) (26,487)
Net borrowings under line of credit (420,284) 192,861
Net cash provided by financing
activities (1,149,397) 354,315
Net Increase (Decrease) in Cash (98,631) (32,428)
Cash, Beginning of Year 370,340 402,768
Cash, End of Year $ 271,709 $ 370,340
Supplementary Schedule of Cash Flow Information:
Cash paid during year for:
Income taxes $ 1,300 $ -
Interest $ 368,282 $ 422,629
Noncash investing and financing activities:
Sale of St. Louis location financed
with note receivable $ - $ 1,200,000
</TABLE>
Ambassador Food Services Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended May 28, 1998 and May 29, 1997
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying consolidated fanancial statements
follows.
1. Principles of Consolidation
The consolidated financial statements include the accounts of Ambassador Food
Services Corporation and its wholly-owned subsidiary, Ambassador Fast
Services,Inc. All material intercompany balances and transactions have been
eliminated.
2. Nature of Business
The Company and its subsidiary are engaged in two segments: food service
(vending, cafeteria and catering) and janitorial service. The Company's
customers are principally located in the Midwest and Northeast United States.
3. Reporting Periods
The Company has a fiscal year (52 or 53 weeks) ending on the Thursday nearest
May 31. Both fiscal years 1998 and 1997 contained 52 weeks.
4. Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
5. Property and Equipment
Property and equipment are stated at cost. Depreciation is
provided in amounts sufficient to relate the cost of depreciable assets to
operations over their estimated useful lives on the straight-line method.
The estimated lives used in determining depreciation are:
Vending equipment 4-8 years
Cafeteria and commissary equipment 3-10 years
Building and leasehold improvements 3-22 years
Other 3-10 years
6. Location Contracts and Excess of Purchase Price Over Net Assets
Acquired
Location contracts and excess of purchase price over net assets acquired arise
from the purchase of various companies and are carried at cost. Location
contracts represent the amount paid for customer vending relationships in
existence at the time of acquisition which were generally cancelable by either
party with limited notice. Amounts resulting from acquisitions prior to
November 1, 1970 ($1,064,787) were not amortized and relate mainly to St.
Louis operations. During 1997, these costs for St. Louis were disposed of in
conjunction with the sales of the operation (see Note N). Acquisitions of
$438,163 expended subsequent to November 1, 1970 are being amortized on a
straight-line basis over 5 to 40 years.
The carrying value of assets is periodically reviewed by the Company based
on the estimated future operating income of each acquired entity on an
undiscounted cash flow basis. Based upon its most recent analysis, the
Company believes that no material impairment of intangible assets exists at
May 28, 1998.
7. Unrecognized Prior Service Costs
Unrecognized prior service costs, related to the defined benefit pension plan
discussed in Note H, are being amortized straight-line over the average
remaining service period of the participants included in the plan.
8. Costs and Expenses
Preopening costs associated with new vending and cafeteria accounts are expensed
as incurred.
9. Earnings (Loss) Per Common Share
Loss per share has been computed using the weighted average common
shares outstanding during the period. In addition to these shares, certain
stock options and convertible debt exist that were outstanding during the
reporting periods. These common stock equivalents were not considered in the
net loss per share calculation for fiscal year 1998 and 1997 as their effect
is antidilutive.
10. Statements of Cash Flows
For purposes of reporting cash flows, cash includes cash on hand, in banks, and
in change funds.
11. Concentration of Credit Risk
Of the Company's accounts receivable approximately $930,000 in 1998 and
$1,300,000 in 1997 are with customers located in the northeastern
United States. The Company grants credit to customers; which includes
businesses, schools, and governmental agencies. Usually collateral is not
required.
12. Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
13. Financial Instruments
The carrying value of the Company's financial instruments, including cash,
accounts and notes receivable, accounts payable, line of credit, and
long-term debt, approximate fair value.
B. REALIZATION OF ASSETS
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern.
Recoverability of the recorded asset amounts shown in the accompanying
consolidated balance sheets is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet
its financing requirements on a continuing basis and to succeed in its
future operations. These financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or amounts and classification of liabilities that might be
necessary should the Company be unable to continue in existence.
Management has taken the following steps to revise its operating and
financial requirements, which it believes are sufficient to provide the
Company with the ability to continue in existence:
Certain unprofitable operations have been closed
Several administrative and regional positions have been eliminated
Steps to improve margins and reduce costs have been taken.
Increasing the growth and profit of current operations through
internal sales efforts has become the Company's focus.
The existing lender refinanced the equipment loan, and the Company
obtained a short-term loan to provide additional liquidity.
Total debt has been reduced and debt service requirements
substantially decreased in June 1998.
C. CURRENT LIABILITIES
Accrued expenses include the following:
<TABLE>
<S> <C> <C>
1998 1997
Legal fees $ 42,183 $ 122,095
Vacation pay 65,952 69,546
Commissions 19,756 61,543
Taxes 281,205 332,476
Salaries 187,382 217,132
Current portion of projected benefit
obligation (Note H) 18,900 18,900
Accrued costs of discontinued restaurant
operations (Note K) 13,562 13,652
Accrued litigation and sales tax costs
(Note L) 19,674 123,416
Deferred revenue - 98,405
Medical Insurance 23,318 54,589
Lease Termination - 62,000
Other 6,311 75,506
$ 678,243 1,249,170
</TABLE>
D. LINE OF CREDIT AGREEMENT
The Company has a line of credit agreement with a financing company which
is due on demand. The agreement carries interest at the publicly announced
prime rate (8.5% at May 28, 1998) plus 3.5%. The amount drawn cannot
exceed 80% of eligible accounts receivable (1,066,680 at May 28, 1998)
and is collateralized by the Company's accounts receivable. Borrowings
are limited to a maximum of $1,500,000 plus the outstanding principal
related to a portion of the line of credit due August 2000 ($297,202 at
May 28, 1998). Interest is payable monthly and amounts outstanding are
due upon demand. At May 28,1998 and May 29,1997, amounts outstanding
were $721,929 and $1,142,213, respectively. The debt agreement contains
provisions regarding other borrowings, acquisitions, redemption of the
Company's stock distribution of property and assets, and delivery of
audited financial statements within 120 days. The financing company has
waived the delivery of audited financial statements within 120 days and
the redemption of the Company's stock.
E. LONG-TERM DEBT
<TABLE>
<S> <C> <C>
1998 1997
Note payable - bank, payable in monthly installments
of $2,848, including interest at prime rate
(8.5% at May 28, 1998) plus 2%, due July 1998,
collateralized by building. Subsequent to
May 28, 1998, the bank granted an extension on
the note payable, which changed the monthly
payment to $3,081, the due date to January 1999
and the interest rate to 11%. $ 275,476 $ 277,552
Notes payable - equipment, payable in monthly
installments of $57,449, including interest at
rates ranging from 9% to 19.3%, due through
July 2002, collateralized by equipment 828,673 1,014,837
Note payable to Bassman Vending, Inc. payable in
monthly installments of $5,150, including interest
at 8.5%, due through March 2001, collateralized by
certain location contracts and equipment 155,105 201,430
Note payable - other 2,453 10,661
1,261,707 1,504,480
Less current maturities 864,904 582,863
$ 396,803 $ 921,617
</TABLE>
Aggregate annual principal payments applicable to long-term debt due
subsequent to May 28, 1998 are as follows:
<TABLE>
<S> <C>
Fiscal Year
Ending Amount
1999 $ 864,904
2000 215,082
2001 145,938
2002 35,783
$1,261,707
</TABLE>
F. SUBORDINATED NOTE PAYABLE TO STOCKHOLDER
The Company borrowed $250,000 from a stockholder and officer. The note calls
for interest at 10%, payable quarterly with quarterly principal payments of
$12,500 beginning June 30, 2001, with a final payment June 30, 2006.
The note is subordinate to all other indebtedness of the Company.
From April 30, 1998 to May 1, 2006, the note is convertible to shares of the
Company's stock at a price of $1.25 per share. In the event any payments
are made on the note, the Company will issue warrants to the stockholder
which will entitle the stockholder to purchase an equivalent number of shares
during the same period. The conversion terms may be adjusted upon certain
events to prevent dilution of the stockholder conversion rights.
G. LEASES
Future minimum lease payments under all noncancellable operating leases as
of May 28, 1998 are as follows
<TABLE>
<S> <C> <C> <C>
Fiscal year
ending Real estate Equipment Total
1999 174,190 418,026 592,216
2000 164,883 345,755 510,638
2001 139,029 270,693 409,722
$ 478,102 $1,034,474 $1,512,576
</TABLE>
Rental expense charged to operations was $708.962 and $845,198 in 1997.
H. EMPLOYEE BENEFIT PLANS
The Company has a nonqualified defined benefit pension plan covering two key
employees and three former officers of the Company. Under the terms of the
plan, each individual will receive a fixed monthly payment for ten years
after retirement. The benefit does not vest until the employee reaches age
65. If the individual dies, either during employment or after retirement, the
beneficiary is entitled to receive benefits as specified in the agreement.
The plan is unfunded.
The following table sets forth the status and amounts recognized in the
Company's consolidated financial statements for 1998 and 1997:
<TABLE>
<S> <C> <C>
1998 1997
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $214,572 in 1998 and
$248,080 in 1997 $ 337,445 $ 356,368
Projected benefit obligation for service
rendered to date $ 337,445 $ 356,368
Plan assets at fair value - -
Projected benefit obligation in excess of
plan assets 337,445 356,368
Additional minimum liability recorded 146,266 183,009
Prior service cost not yet recognized in net
periodic pension cost (146,266) (183,009)
Net accrued pension cost $ 337,445 $ 356,368
Net accrued pension cost is included in the accompanying consolidated financial
statements as follows:
1998 1997
Current portion included in accrued
expenses $ 18,900 $ 18,900
Long-term portion of obligation 318,545 337,468
$ 337,445 $ 356,368
</TABLE>
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 8.0% in 1998 and 1997.
Net pension cost for 1998 and 1997 includes the following components:
<TABLE>
<S> <C> <C>
1998 1997
Service cost - benefits earned
during the period $ 5,931 $ 5,491
Interest cost on projected benefit
obligation 29,630 31,571
Amortization of prior service cost 37,745 37,746
Net periodic pension cost $73,306 $74,808
The Company contributed approximately $54,000 and $74,000 in fiscal years
1998 and 1997, respectively, to several multi-employer pension plans for
employees covered by collective bargaining agreements. These plans are not
administered by the Company, and contributions are determined in accordance
with provisions of negotiated labor contracts.
The Multiemployer Pension Plan Amendments Act of 1980(the Act)
significantly increased the pension responsibilities of participating employers.
Under the provisions of the Act, if the plans terminate or the Company
withdraws, the Company could be subject to a substantial "withdrawl liability."
Management has no intention of undertaking any action which would subject the
Company to this obligation.
The Company has a defined contribution plan that covers all permanent
nonunion employees. Under the terms of the plan, employees can contribute
up to a maximum of 15% of their gross annual salary. Company contributions
to the Plan are at the discretion of the Board of Directors. The Company made
no contributions to this plan during fiscal year 1998 or 1997.
I. STOCK OPTIONS
During fiscal year 1998, The Board of Directors approved the granting of
nonstatutory options for 125,000 shares certain key employees. The exercise
price of the options are $1.37 per share, which approximated the fair market
value of the shares on the date of grant of the option June 1, 1998. The
options can be exercised at various dates starting September 1998 through
June 1, 1999.
J. INCOME TAXES
Deferred income taxes includes the following amounts of deferred tax assets
and liabilities:
</TABLE>
<TABLE>
<S> <C> <C>
1998 1997
Deferred tax liability $ 256,890 $ 232,883
Deferred tax asset (746,111) (721,444)
Less: Valuation allowance 489,221 488,561
Net deferred tax liability $ - $ -
</TABLE>
The approximate tax effect of each temporary difference giving rise to the
deferred tax liability and asset was as follows at May 28, 1998 and May 29,
1997:
<TABLE>
<S> <C> <C>
1998 1997
Amortization of location contracts $ 2,305 $ 1,201
Accelerated depreciation 254,585 231,682
$ 256,890 $ 232,883
Accrued costs $ (33,691) $ (62,308)
Amortization of pension costs (76,002) (66,758)
Vacation accrual (26,381) (27,123)
Allowance for bad debts (35,128) (46,111)
Other (18,803) (7,689)
Net operating loss carryforward (289,498) (244,847)
AMT credit carryforward (106,504) (106,504)
Investment tax credit carryforward (160,104) (160,104)
$ (746,111) $ (721,444)
</TABLE>
The valuation allowance was established to reduce the deferred tax asset to the
amount that will more likely than not be realized. The reduction is necessary
due to prior operating losses and uncertainty as to the Company's ability to
utilize tax credit and net operating loss carryforwards before they expire.
The valuation allowance was increased $660 and $56,534 in fiscal years 1998
and 1997, respectively.
The income tax benefit reflected in the consolidated statements of operations
differs from the amounts computed at federal statutory income tax rates. The
principal differences are as follows:
<TABLE>
<S> <C> <C>
1998 1997
Federal income tax benefit
computed at statutory rate $ (26,000) $ (396,000)
State income tax benefit (4,000) (58,000)
Tax effect of nondeductible expenses 10,000 14,000
Increase in valuation allowance 660 57,000
Underaccrual of prior deferred tax liability - 120,000
Other, net (19,340) (4,000)
$ - $ (267,000)
</TABLE>
The Company had available for income tax purposes the following investment
credit carryforwards at May 28, 1998:
<TABLE>
<S> <C>
Year of Expiration Amount
1999 59,630
2000 25,168
2001 49,551
2002 25,755
$160,104
</TABLE>
In addition, the Company had the following net operating loss carryforwards
available at May 28, 1998:
<TABLE>
<S> <C>
Year of Expiration Amount
2008 $252,779
2009 138,822
2010 63,240
2011 156,463
2012 16,508
2013 107,773
$735,585
</TABLE>
K. ACCRUED COSTS OF DISCONTINUED RESTAURANT OPERATIONS
During fiscal year 1988, management ceased restaurant operations.
The estimated obligation under the property lease, netof anticipated sublease
rentals, is accrued.
The accrual is included in the accompanying consolidated financial
statements as follows:
<TABLE>
<S> <C> <C>
1998 1997
Current portion included in accrued
expenses $ 13,562 $ 13,562
Accrual included in long-term
liabilities 70,666 84,203
$ 84,228 $ 97,765
</TABLE>
L. ACCRUED LITIGATION AND SALES TAX COSTS
At June 1, 1996, the Company had an accrual of $75,594 relating to a New York
state sales tax audit performed in 1988. The amount is a total of the sales
tax assessed plus interest and penalties, less total payments. During 1997,
the Company received a letter granting amnesty for tax-year liabilities up
to and including those for 1988.
During fiscal year 1997, the Company was assessed $133,233 in taxes and
penalties by the Missouri Department of Revenue for delinquent sales taxes
for the period from September 1996 through February 1997. The Company entered
into an agreement to pay this amount plus interest at 12% in monthly
installments of $11,150 through April 1998.
The accrual is in the accompanying consolidated financial statements
as follows:
<TABLE>
<S> <C> <C>
1998 1997
Current portion included in accrued expenses $ 19,674 $ 123,416
$ 19,674 $ 123,416
</TABLE>
The New York State Department of Taxation and Finance is conducted a sales
use tax examination for the period from June 1993 through November 1995.
The examination is completed and is still in mediation.
The ultimate outcome of this examination cannot currently be determined.
Therefore, no provision for any liability that may result has been made in
the accompanying consolidated financial statements.
M. OPERATING EXPENSES
Operating expenses in the accompanying consolidated statements of operations are
composed of the following:
<TABLE>
<S> <C> <C>
1998 1997
Payroll and related costs $5,725,843 $6,676,089
Equipment rental costs 476,677 535,893
Other 1,321,197 2,606,565
$7,523,717 $9,818,547
</TABLE>
N. SALE OF ST. LOUIS OPERATIONS
During fiscal year 1997, the Company entered into an agreement to lease and sale
equipment and location contracts for its St. Louis operations. The agreement
called for rental payments to be paid in monthly installments equal to 10% of
the gross revenues from all sales during the lease to customers identified in
the agreement. The term of the lease was from April 18, 1997 to January 1,
1998. Equipment of the Company will be used for all customers indentified by
the agreement. Equipment located at customers no longer receiving service from
the purchaser will be returned to the Company. All returned equipment will
result in a credit to the purchase price of 50% of the yearly revenue of the
customer as set forth in the agreement.
At the end of the lease, the remaining equipment will be purchased for a sales
price of $1,200,000,net of the credits above(See Note O).
As a result of this sale, the Company recognized a loss of $198,898 during
fiscal year 1997.
O. NOTES RECEIVABLE
Notes receivable include the following:
<TABLE>
<S> <C> <C>
1998 1997
Note receivable from BVI, payable in
monthly installments of $12,300, including
interest at 8.5% through April 2001,
collateralized by the equipment and real
estate being leased by the Company $ 382,072 $ 493,247
Note receivable from sales of St. Louis
operations, with $120,000 payment due in
January 1998, with 60 monthly installments
commencing February 1998, plus interest
at 10%, collateralized by the equipment
sold as discussed in Note N 822,598 1,106,152
1,204,670 1,599,399
Less current portion 295,570 372,351
$ 909,100 $1,227,048
</TABLE>
P. SUBSEQUENT EVENT
The Board of Directors approved a resolution for the Company to enter into a
ten-year consulting agreement with a stockholder and former officer. The
consulting fee would be payable over the ten-year period at a rate of $100,000
per year. No formal agreement has been signed.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no disagreements of the type described in paragraph (a)
or any reportable event as described in paragraph (b) of Item 304
of Regulation SB during the two most recent fiscal years.
PART III
Item 9. Directors and Executive Officers of the Registrant; Compliance with
16 (a) of the Exchange Act.
(a), (b) The Executive Officers and Directors of the Company are:
<TABLE>
<S> <C> <C> <C>
Name Age Principal Occupation Director
Since
Robert A. Laudicina(1) 58 President, Treasurer(2) 1986
Arthur D. Stevens (1) 74 Chairman of the Board of Directors(3) 1963
George T. Terris(1) 76 Investor (4) 1966
Richard A. Mitchell 35 Secretary, Vice President
of Operations (5) N/A
Ann W. Stevens 57 Real Estate Broker 1996
Douglas M. Schosser,CPA 28 Director,Key Asset Management Co. 1997
</TABLE>
(1) Member of Executive Committee of Board of Directors
(2) Mr. Laudicina was elected President in March 1998 and
Treasurer in May 1998. He served as Executive Vice President
beginning in February 1989 and Vice President prior to that
time beginning in January 1982.
(3) Mr. Stevens has been Chairman of the Board of Directors of
Ambassador since February 15, 1963. He was also the first
President and Treasurer of Ambassador beginning on April 19.
1963, relinquishing those positions in April 1978 and October
1969, respectively. He again assumed the position of President
on January 1, 1987 upon the retirement of Mr. George Terris
from that position, serving in that capacity through March 1998.
He was Chief Executive Officer from April 11, 1963 through May
1998 and Treasurer from January 26, 1972 through May 1998.
(4) Mr. Terris, until his retirement January 1, 1987, was President and
Chief Operations Officer of Ambassador.
(5) Mr. Mitchell served as Manager of Operating Systems from August
1991 through November 1994 and served as Assistant Secretary
since November 1991 through 1996. In November 1994, he was
appointed to the position of Vice President of Operations and
appointed Secretary in November 1996.
(c) Arthur D. Stevens,Chairman, and Ann W. Stevens,Director,are
husband and wife. No other family relationship exists between
any of the executive officers and directors listed above.
Each Officer holds his office at the pleasure of the Board of Directors
until the next annual meeting of the Directors and until his successor
is duly elected and qualified.
(d) The Executive Officers and Directors listed above were not involved
or a part of any legal proceedings as described in Item 401(d).
Item 10. Executive Compensation
(a), (b) The following table sets forth information as to the remuneration
accrued by Ambassador Food Services Corporation and its
subsidiary during the fiscal year ended May 28, 1998, for each
Director and Officer whose aggregate remuneration for the year
exceeded $100,000.
<TABLE>
<S> <C> <C>
Names of Individuals,
Number of Persons in Group Fiscal Base
and Capacities in which Served Year Salary
Arthur D. Stevens, 1998 $147,877
Chairman of the Board, President, Chief Executive 1997 144,144
Officer and Treasurer of Ambassador and Officer 1996 188,428
and Director of its Subsidiary
Robert A. Laudicina, 1998 $165,095
Executive Vice President and 1997 157,000
General Manager of New York Operations 1996 169,597
</TABLE>
Executive Retirement Program
An executive retirement program was adopted during the 1990 fiscal year to
provide a target annual retirement benefit at age 65 or upon retirement, if
later, in an amount equal to approximately 40-45% of annual salary, payable
for 10 years, for certain salaried employees, including the following officer:
Robert A. Laudicina. This target retirement benefit will be provided through
the combination of (1) discretionary annual cash retirement bonus payments in
the amount of $2,000, which must be invested in an individual retirement
account or a universal life insurance policy, and (2) a nonqualified (for tax
purposes) supplemental retirement agreement from the Company. The nonqualified
retirement agreements will pay the estimated portion of the target retirement
benefit which cannot be funded by the executive through the annual cash
retirement bonus payments. The nonqualified retirement arrangements will
also provide a pre-retirement death benefit in the event of the executive's
death prior to age 65.
These annual retirement benefits of the above named Officer, are estimated
to be as follows:
<TABLE>
<S> <C> <C> <C> <C>
Name of Executive Age Estimated Benefit Supplemental Target
From Cash Retirement Retirement
Retirement Benefit Benefit
Robert A. Laudicina 58 $9,123 $46,227 $55,350
</TABLE>
*based upon contributions of $2,000 per year until age 65 and interest at
8% annum.
The Company maintains insurance policies on the lives of the executives in
amounts estimated to be sufficient to reimburse it for most of the supplemental
retirement and/or death benefit payments.
(d) Stock Options
Robert Laudicina, President and Treasurer hold options to purchase 3,125 shares
of Ambassador common stock at $1.37 excersiable anytime before June 1, 2003,
effective June 1, 1998.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
The following table sets forth, as of May 28, 1998, the information with
respect to common stock ownership of each person known by the Company to own
beneficially more than 5% of the shares of the Company's common stock, and of
all Officers and Directors as a group.
<TABLE>
<S> <C> <C>
Amount Percent of
Beneficially Outstanding
Name and Address of Beneficial Owner(s) Owned Shares
Arthur D. Stevens
1901 W. 69th Street
Mission Hills, KS 66205 181,444 (1) 24.5%
Thomas G. Berlin
800 Superior Avenue, Suite 2100
Cleveland, Ohio 44114 124,218 (3) 16.8%
George T. Terris
936 West Shaker Circle
Nequon, WI 53092 64,000 (2) 8.7%
George F. Crawford
10110 Fontana Lane
Overland Park, KS 66207 52,597 7.1%
</TABLE>
(1) Does not include 60,000 shares beneficially owned by Mr. Stevens'
adult children, in which shares he disclaims any beneficial
interest. Additionally, does not include 200,000 shares which may
be issued in the event of conversion of certain debt under its
conversion provisions which are effective from April 30, 1998 to
May 1, 2006.
(2) Does not include 4,000 shares owned by Mr. Terris' immediate
family, in which shares he disclaims any beneficial interest.
(3) Includes 12,800 shares owned by Mr. Berlin's wife.
(b) Security Ownership of Management
<TABLE>
<S> <C> <C>
Shares of Stock
Beneficially Owned
May 28, 1998
Name Number Percent
of Shares of Stock
Arthur D. Stevens
1901 W. 69th Street
Mission Hills, KS 66205 181,444 (1) 24.5%
George T. Terris
936 West Shaker Circle
Nequon, WI 53092 64,000 (2) 8.7%
Robert A. Laudicina
303 Cedar Court
Norwood, NJ 07648 29,390 (3) 4.0%
Ann W. Stevens
1901 W. 69th Street
Mission Hills, KS 66205 1,000 0.1%
Douglas M. Schosser
1050 Allston Road
Cleveland Heights, OH 44121 2,000 0.3%
All Directors and Officers
as a Group (6 persons) 289,989 (4) 38.4%
</TABLE>
(1) Does not include 60,000 shares beneficially owned by Mr. Stevens'
adult children, in which shares he disclaims any beneficial
interest. Additionally, does not include 200,000 shares which may
be issued in the event of conversion of certain debt under its
conversion provisions which are effective from April 30, 1998
to May 1, 2006.
(2) Does not include 4,000 shares owned by Mr. Terris' immediate
family, in which shares he disclaims any beneficial interest.
(3) Includes 3,125 shares which Mr. Laudicina could purchase for $1.37
per share under a stock option excersiable anytime before June 1,
2003.
(4) Includes 6,250 shares which could be purchased by certain officers
and directors under stock options.
(c) Changes in Control
The Company knows of no contractual arrangements which may, at a subsequent
date, result in a change in control of the Company.
Item 12. Certain Relationships and Related Transactions
(a) Certain Business Relationships
There were no transactions with any member of management during
fiscal 1998 which exceeded $60,000.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibit No.:
3A Articles of Incorporation of the Registrant (1)
3B By-Laws of the Registrant (1)
6 1984 Incentive Stock Option Plan Dated January 31, 1984(2)
10 Material Contracts Agreement with Paul F. Leathers (1)
22 Subsidiary of the Registrant (3)
(1) This exhibit was filed with the Ambassador's 10-K for the fiscal
year ended May 28, 1981. A copy of the Certificate of Amendment
of Certificate of Incorporation changing the Company's name was
filed as a supplement to said exhibit for the fiscal year ended
June 1, 1989.
(2) This exhibit was filed with the Company's 10-K for the fiscal year
ended May 31, 1984.
(3) Exhibit attached as part of filing.
Exhibit No. 22
Subsidiary of the Registrant
Ambassador Food Services Corporation (a Delaware Corporation), the parent
Company, has the following subsidiary, which is included in the consolidated
financial statements.
Name of Subsidiary State of Incorporation % of Voting
Securities Owned
Ambassador Fast
Services, Inc.
d/b/a Squire Maintenance
Services New York 100%
Note: The Company will provide, on the written request of any stockholder, a
copy of any exhibit to this Form 10-KSB at a rate of $.15 per page.
The minimum fee is $5.00. Requests should be directed to Robert A.
Laudicina, President, Ambassador Food Services Corporation, P.O. Box
419586, Kansas City, Missouri 64141-6586.
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
AMBASSADOR FOOD SERVICES CORPORATION
(Registrant)
/s/ Arthur D. Stevens Date December 9, 1998
Arthur D. Stevens
Chairman of the Board
/s/ Richard Mitchell Date December 9, 1998
Richard Mitchell
Assistant Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ Arthur D. Stevens Chairman of the Board December 9, 1998
Arthur D. Stevens Title Date
/s/ Robert A. Laudicina President and Chief
Executive Officer/Director December 9, 1998
Robert A. Laudicina Title Date
/s/ Ann W. Stevens Director December 9, 1998
Ann W. Stevens Title Date
/s/ George T. Terris Director December 9, 1998
George T. Terris Title Date
/s/Douglas M. Schosser Director December 9, 1998
Douglas M. Schosser Title Date
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-28-1998
<PERIOD-END> MAY-28-1998
<CASH> 271,709
<SECURITIES> 0
<RECEIVABLES> 1,193,619
<ALLOWANCES> 0
<INVENTORY> 483,999
<CURRENT-ASSETS> 2,383,135
<PP&E> 7,433,750
<DEPRECIATION> 5,622,766
<TOTAL-ASSETS> 5,686,109
<CURRENT-LIABILITIES> 4,220,972
<BONDS> 0
<COMMON> 1,009,230
0
0
<OTHER-SE> (275,037)
<TOTAL-LIABILITY-AND-EQUITY> 5,686,109
<SALES> 19,205,078
<TOTAL-REVENUES> 19,205,078
<CGS> 15,448,309
<TOTAL-COSTS> 3,454,818
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 377,751
<INCOME-PRETAX> (75,800)
<INCOME-TAX> 0
<INCOME-CONTINUING> (75,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (75,800)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
