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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------------
FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 27, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 19367
AMERISERVE FOOD DISTRIBUTION, INC.*
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 75-2296149
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
14841 DALLAS PARKWAY
DALLAS, TX 75240 (972) 338-7000
(Address of Principal Executive Offices) (Registrant's Telephone Number,
Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
All shares of the registrant's common stock are held by one affiliate. As of
August 4, 1998, there were 600 shares of common stock of the registrant
outstanding.
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*TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION OF I.R.S. EMPLOYER
INCORPORATION IDENTIFICATION
NAME, ADDRESS AND TELEPHONE NUMBER(1) OR ORGANIZATION NUMBER
- ------------------------------------- --------------- ---------------
<S> <C> <C>
Chicago Consolidated Corporation ...................... Illinois 36-3691925
Northland Transportation Services, Inc ................ Nebraska 39-1807312
Delta Transportation, Ltd ............................. Wisconsin 39-1411171
AmeriServe Transportation, Inc ........................ Nebraska 91-1824117
</TABLE>
- ----------
(1) The address of these registrants is 14841 Dallas Parkway, Dallas, TX 75240.
The telephone number is (972) 338- 7000.
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AMERISERVE FOOD DISTRIBUTION, INC.
FORM 10-Q INDEX
<TABLE>
<S> <C>
Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of June 27, 1998 and December 27, 1997............................. 3
Condensed Consolidated Statements of Operations for the three and six months ended
June 27, 1998 and June 28, 1997 ........................................................................... 4
Condensed Consolidated Statements of Cash Flows for the six months ended June 27, 1998 and
June 28, 1997 ............................................................................................. 5
Notes to Condensed Consolidated Financial Statements ....................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 10
Part II. Other Information
Item 1. Legal Proceedings ..................................................................................... 16
Item 2. Changes in Securities ................................................................................. 16
Item 3. Defaults upon Senior Securities ....................................................................... 16
Item 4. Submission of Matters to a Vote of Security Holders ................................................... 16
Item 5. Other Information ..................................................................................... 16
Item 6. Exhibits and Reports on Form 8-K ...................................................................... 17
Signatures ...................................................................................................... 19
Exhibits ........................................................................................................ 20
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERISERVE FOOD DISTRIBUTION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
(Unaudited)
JUNE 27, DECEMBER 27,
1998 1997
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents ...................................... $ 12,405 $ 231,131
Accounts receivable ............................................ 33,301 43,625
Undivided interest in accounts receivable trust ................ 288,156 154,371
Allowance for doubtful accounts ................................ (26,854) (15,566)
Inventories .................................................... 264,990 150,148
Other current assets ........................................... 32,695 23,768
------------ ------------
Total current assets ................................... 604,693 587,477
Property and equipment, net ...................................... 167,914 130,856
Intangible assets, net ........................................... 1,043,906 737,870
Other noncurrent assets .......................................... 15,453 6,118
------------ ------------
$ 1,831,966 $ 1,462,321
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt .............................. $ 6,538 $ 5,019
Accounts payable ............................................... 544,649 345,379
Accrued and other current liabilities .......................... 152,775 101,219
------------ ------------
Total current liabilities .............................. 703,962 451,617
Long-term debt ................................................... 924,764 874,219
Other noncurrent liabilities ..................................... 120,007 38,430
Stockholder's equity:
Common stock, $.01 par value per share; 10,000 shares
authorized, 600 shares outstanding ........................... -- 6
Preferred stock, $.01 par value per share; 10,000 shares
authorized, none outstanding ................................. -- --
Additional paid-in capital ..................................... 224,609 174,603
Accumulated deficit ............................................ (141,376) (76,554)
------------ ------------
Total stockholder's equity ............................. 83,233 98,055
------------ ------------
$ 1,831,966 $ 1,462,321
============ ============
</TABLE>
See accompanying notes.
Note: The balance sheet at December 27, 1997 has been derived from the
audited financial statement at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
3
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AMERISERVE FOOD DISTRIBUTION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------- ------------------------------
JUNE 27, 1998 JUNE 28, 1997 JUNE 27, 1998 JUNE 28, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales ........................................ $ 1,646,011 $ 432,282 $ 2,769,949 $ 741,009
Cost of goods sold ............................... 1,489,736 391,458 2,502,746 668,544
------------ ------------ ------------ ------------
Gross profit ..................................... 156,275 40,824 267,203 72,465
Distribution, selling and administrative
expenses ....................................... 122,191 33,064 212,044 60,722
Depreciation of property and equipment............ 6,866 2,351 12,547 4,092
Amortization of intangible assets ................ 7,245 1,322 14,059 2,319
Impairment, restructuring and other
unusual charges ................................ 45,316 -- 47,304 --
------------ ------------ ------------ ------------
Operating income (loss) .......................... (25,343) 4,087 (18,751) 5,332
------------ ------------ ------------ ------------
Other income (expense):
Interest expense, net ............................ (19,523) (4,078) (36,850) (7,243)
Loss on sale of accounts receivable............... (5,427) -- (9,015) --
Interest income-affiliates ....................... 166 152 318 237
------------ ------------ ------------ ------------
(24,784) (3,926) (45,547) (7,006)
------------ ------------ ------------ ------------
Income (loss) before income taxes ................ (50,127) 161 (64,298) (1,674)
Provision (benefit) for income taxes.............. 300 20 524 (629)
------------ ------------ ------------ ------------
Net income (loss) ................................ $ (50,427) $ 141 $ (64,822) $ (1,045)
============ ============ ============ ============
</TABLE>
See accompanying notes.
4
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AMERISERVE FOOD DISTRIBUTION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------
JUNE 27, 1998 JUNE 28, 1997
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ....................................................... $ (64,822) $ (1,045)
Adjustments to reconcile net loss to net cash used for
operating activities:
Depreciation and amortization ................................ 26,606 6,411
Impairment of property, equipment and other assets ........... 16,462 --
Changes in assets and liabilities ............................ (77,998) (13,909)
------------ ------------
Net cash used for operating activities ......................... (99,752) (8,543)
------------ ------------
INVESTING ACTIVITIES:
Business acquired, net of cash acquired ........................ (313,501) --
Capital expenditures ........................................... (19,050) (7,275)
Net cash transfers to affiliates ............................... (5,288) (5,971)
------------ ------------
Net cash used for investing activities ......................... (337,839) (13,246)
------------ ------------
FINANCING ACTIVITIES:
Net increase in borrowings under credit facilities ............. 46,400 19,700
Proceeds from sale of accounts receivable ...................... 125,000 --
Proceeds from capital contribution ............................. 50,000 --
Proceeds from long-term debt ................................... -- 5,000
Repayments of long-term debt ................................... (2,535) (1,660)
------------ ------------
Net cash provided by financing activities ...................... 218,865 23,040
------------ ------------
Net increase (decrease) in cash ................................ (218,726) 1,251
Cash at beginning of period .................................... 231,131 2,162
------------ ------------
Cash at end of period .......................................... $ 12,405 $ 3,413
============ ============
Supplemental disclosures:
Cash paid during the period for:
Interest ..................................................... $ 45,251 $ 7,317
Income taxes, net of refunds ................................. 378 2,443
Businesses acquired:
Fair value of assets acquired ................................ $ 744,405 $ 1,069,117
Cash paid/note payable issued ................................ (313,501) (830,000)
------------ ------------
Liabilities assumed .......................................... $ 430,904 $ 239,117
============ ============
Noncash investing and financing activities:
Capital expenditures through capital leases
(included in long-term debt) .............................. $ 8,199 $ 12,670
</TABLE>
See accompanying notes.
5
<PAGE> 6
AMERISERVE FOOD DISTRIBUTION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 27, 1998 (UNAUDITED)
1. INTERIM FINANCIAL DATA
The accompanying unaudited condensed consolidated financial statements of
AmeriServe Food Distribution, Inc. (the Company), a wholly owned subsidiary 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 six months ended June 27, 1998 are not necessarily
indicative of the results that might be expected for the entire fiscal year
ended December 26, 1998. This report should be read in conjunction with the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 27,
1997.
2. ACQUISITIONS
On May 21, 1998, the Company acquired ProSource, Inc. (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, 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, Lone Star Steak House, Long John Silver's, Olive Garden, Red Lobster,
Sonic, TCBY and TGI Friday's. Funding for the transactions related to the
acquisition was provided by expansion of the Company's Accounts Receivable
Program to include ProSource accounts receivable ($125 million-see Note 4), a
capital contribution to the Company from NEHC of $50 million and cash and cash
equivalents on hand. The acquisition has been accounted for under the purchase
method.
Following is the preliminary ProSource purchase price allocation (the final
purchase price allocation will be based on the final determination of the fair
values of assets acquired and liabilities assumed):
<TABLE>
<CAPTION>
(in millions)
<S> <C>
Accounts receivable .................... $ 224.3
Inventories ............................ 148.6
Property and equipment ................. 35.3
Goodwill and other intangibles ......... 318.5
Other assets ........................... 17.6
Accounts payable ....................... (303.9)
Restructuring reserves ................. (59.2)
Other liabilities ...................... (67.7)
----------
$ 313.5
==========
</TABLE>
The restructuring reserves of $59.2 million were included in the preliminary
purchase price allocation above in connection with the Company's business plan
to integrate the operations of ProSource. The reserves represent accruals for
costs to be incurred by the Company related to the termination of redundant
employees ($27.7 million), lease termination costs in connection with the
closing of duplicative facilities ($28.8 million) and certain other costs to
exit ProSource activities ($2.7 million). See Note 3 for additional discussion.
6
<PAGE> 7
Effective June 11, 1997, the Company acquired the PFS Division of PepsiCo,
Inc. (PFS) for $842 million in cash including direct costs. PFS distributed food
products, supplies and equipment to franchised and company-owned restaurants in
the Pizza Hut, Taco Bell and KFC systems, which were spun-off by PepsiCo, Inc.
in October 1997 and are now operating as Tricon Global Restaurants, Inc. The
acquisition has been accounted for under the purchase method.
The following unaudited pro forma results of operations for the six months
ended June 27, 1998 assume the acquisition of ProSource occurred at the
beginning of that period, and for the six months ended June 28, 1997 assume the
acquisitions of both PFS and ProSource occurred at the beginning of that period.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------------------------
JUNE 27, 1998 JUNE 28, 1997
------------- -------------
(IN MILLIONS)
<S> <C> <C>
Net sales....................... $ 4,432.5 $ 4,295.1
Net loss ....................... $ (70.9) $ (110.8)
</TABLE>
3. IMPAIRMENT, RESTRUCTURING AND OTHER UNUSUAL CHARGES
Included in "Impairment, restructuring and other unusual charges" in the
Condensed Consolidated Statements of Operations for the three and six months
ended June 27, 1998 are the following:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 27, 1998 JUNE 27, 1998
------------- -------------
(IN MILLIONS)
<S> <C> <C>
Impairment of property, equipment and
other assets ........................................ $ 16.5 $ 16.5
Restructuring expense, principally exit costs
for future lease terminations and employee
severance ........................................... 17.4 17.4
Financing-related fees and other one-time
indirect costs incurred in connection with
the ProSource acquisition ........................... 4.6 4.6
Costs incurred to integrate acquired
operations .......................................... 6.8 8.8
---------- ----------
$ 45.3 $ 47.3
========== ==========
</TABLE>
The noncash impairment charge and the restructuring accrual noted above
reflect actions to be taken with respect to the Company's existing facilities
as a result of the ProSource acquisition. During the second quarter of 1998,
management performed an extensive review of the existing and recently acquired
ProSource operations with the objective of developing a business plan for the
restructuring and consolidation of the organizations. The business plan, which
was approved by the Company's Board of Directors in the second quarter,
identified a number of actions designed to improve the efficiency and
effectiveness of the combined organization's warehouse and transportation
network and operations support infrastructure. These actions, which are expected
to be substantially completed by mid-2000, include construction of new
strategically located warehouse facilities, closures of a number of existing
warehouse facilities and expansions of others, dispositions of property and
equipment, conversions of computer systems, centralization of support functions,
reductions in workforce and relocation of employees.
Included above are charges totaling $6.4 million (represents an updated
estimate of the previously reported $7.5 million), which include costs related
to future equipment lease terminations and employee severance, associated with
the discontinuance of service to
7
<PAGE> 8
the Wendy's concept. As previously reported, the Company was informed by
Wendy's International, Inc. (Wendy's), the franchiser of the Wendy's concept,
that a competitor has been selected as its distributor in certain geographic
markets and that Wendy's would begin to transfer the business of its
company-owned units away from the Company beginning in August 1998. In
addition, Wendy's has notified the Company that the Company will be removed as
an authorized distributor to its franchisee operators during the third quarter
of this year, resulting in the loss of the entire Wendy's business. The
Company expects that the transfer of the company-owned and franchised business
will be largely completed by the end of 1998. In total, the Company's net
sales to the Wendy's concept, including ProSource net sales on a pro forma
basis, were approximately $600 million in 1997, or 7% of total pro forma net
sales of $8.9 billion. The Company expects that the loss of the Wendy's
business will negatively impact the Company's future operating profits by
$10-15 million on an annualized basis.
The Company has been incurring certain costs arising from integration and
consolidation actions associated with the PFS and previous acquisitions. These
costs, which under current accounting rules are not considered exit costs and
are expensed as incurred, have primarily consisted of start-up costs of new
warehouse facilities and computer systems conversion, employee relocation and
other costs to realign the operations support infrastructure.
4. ACCOUNTS RECEIVABLE PROGRAM
Under a five-year Accounts Receivable Program (the Program) effective July
1997, the Company received $225 million upon the initial sale of accounts
receivable to a wholly owned, special purpose, bankruptcy-remote subsidiary,
AmeriServe Funding Corporation (Funding), and concurrent sale of the accounts
receivable by Funding to AmeriServe Master Trust (the Trust). In connection
with the acquisition of ProSource, the Company received additional proceeds of
$125 million under the Program upon the sale of ProSource accounts receivable.
The Trust has financed the purchases through the issuance of a total of $350
million in interest bearing certificates. As of June 27, 1998, accounts
receivable sold to the Trust totaled $638.2 million and the undivided interest
in the Trust (receivables sold less the $350 million proceeds to the Company)
totaled $288.2 million. On July 30, 1998, the Company received additional
proceeds under the Program of approximately $80 million upon completion of an
amendment of the Program and implementation by the Company of additional
reporting requirements.
5. CREDIT FACILITY
On May 21, 1998, the Company entered into an amended credit agreement with a
group of financial institutions that provides for a credit facility, expiring
in 2003, of up to $200 million. The amended credit facility replaces the
previous $150 million revolving credit facility. Interest rates on borrowings
against the facility are indexed to certain key variable rates. Borrowings
against the facility are supported by the Company's inventories of food and
paper products and supplies. Restrictive covenants under the agreement include
minimum interest coverage and maximum leverage. As of June 27, 1998, borrowings
under the facility were $46.4 million, and $27.2 million in outstanding letters
of credit were supported by the facility. On August 3, 1998, committed funds
under the amended credit facility was increased to $220 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 and indirect wholly owned subsidiaries
of the Company. The Company and the guarantor subsidiaries conduct
substantially all of the operations of the Company and its subsidiaries on a
consolidated basis. Separate financial statements of the guarantor subsidiaries
are not separately presented because, in the opinion of management, such
financial statements are not material to investors.
The only significant 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 4). 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.
8
<PAGE> 9
Following is summarized combined financial information (in accordance with
Rule 1-02(bb) of Regulation S-X) at June 27, 1998 and for the six months then
ended for the guarantor subsidiaries of the Company (in thousands):
<TABLE>
<S> <C>
Current assets .............................. $ 192,922
Current liabilities ......................... 332,833
Noncurrent assets ........................... 424,461
Noncurrent liabilities ...................... 85,782
Net sales ................................... $ 507,201
Operating income ............................ 5,013
Net income .................................. 3,997
</TABLE>
7. STOCK OPTION PLAN
On May 19, 1998, NEHC adopted the 1998 Management Stock Option Plan (the
Plan). The Plan authorizes the issuance of up to one million shares of new Class
A common stock of NEHC through exercise of non-qualified stock options
granted primarily to key management employees of the Company. The shares offered
have been registered under The Securities Act of 1933, as amended, through a
Registration Statement on Form S-8 dated May 18, 1998.
Under the Plan, the Compensation Committee of the Board of Directors may
from time to time grant options, to be exercised within 10 years of the grant
date, at a price generally not less than the fair market value of the shares, as
determined by an independent appraisal firm.
On May 20, 1998, 436,270 options at $32.75 per share were granted under the
Plan. The options granted vest and become exercisable in two equal installments
upon each of the third and fourth anniversaries of the grant date; however, in
the event of an Initial Public Offering (as defined in the Plan), half of the
then outstanding and unvested options would become vested.
NEHC has elected to follow Accounting Principles Board Opinion No. 25 (APB
25) and related Interpretations in accounting for stock options. Under APB 25,
because the exercise price of NEHC's stock options granted equals the fair
market value of the underlying shares on the date of grant, no compensation
expense has been recognized.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
This quarterly report contains certain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A
of the Securities Act of 1933. 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. The Company 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.
AmeriServe Food Distribution, Inc. (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 to approximately 36,000 restaurants. The Company's customers are
principally franchisers/owners and/or franchisees in the Arby's, Burger King,
Chick-fil-A, Dairy Queen, KFC, Long John Silver's, Pizza Hut, Sonic, Taco Bell
and TCBY quick service restaurant systems and the Chili's, Lone Star Steak
House, Olive Garden, Red Lobster and TGI Friday's casual dining restaurant
systems.
The Company is a wholly owned subsidiary of Nebco Evans Holding Company
(NEHC), which is an indirect subsidiary of Holberg Industries, Inc.
On May 21, 1998, the Company acquired ProSource, Inc. (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, 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, Lone
Star Steak House, Long John Silver's, Olive Garden, Red Lobster, Sonic, TCBY and
TGI Friday's. Funding for the transactions related to the acquisition was
provided by expansion of the Company's accounts receivable program to include
ProSource accounts receivable (proceeds of $125 million - see Note 4), a capital
contribution to the Company from NEHC of $50 million and cash and cash
equivalents on hand. Because of similarities in activities, the Company intends
to consolidate certain operations of ProSource with those of the Company (see
Notes 2 and 3). The acquisition has been accounted for under the purchase
method; accordingly, five weeks of results for the former ProSource operations
are included in the Company's operating results for the three and six months
ended June 27, 1998.
Effective June 11, 1997, the Company acquired the PFS Division of PepsiCo,
Inc. (PFS) for $842 million in cash including direct costs. PFS distributed
food products, supplies and equipment to franchised and company-owned
restaurants in the Pizza Hut, Taco Bell and KFC systems, which were spun-off by
PepsiCo, Inc. in October 1997 and are now operating as Tricon Global
Restaurants, Inc. (Tricon). The acquisition has been accounted for under the
purchase method. Twelve and twenty-four weeks of results for the former PFS
operations are included in the Company's operating results for the three and
six months ended June 27, 1998, respectively. Because of the relative sizes of
the Company and PFS, which reported net sales of $741.0 million and $1.5
billion, respectively, for the first half of 1997, the comparisons of operating
results presented below are significantly impacted by the PFS acquisition.
10
<PAGE> 11
In April 1997, the Company began providing foodservice distribution to
approximately 2,600 Arby's restaurants under a three-year contract. While the
majority of Arby's restaurants are serviced directly by the Company, some are
serviced by other cooperating independent distributors.
RECENT DEVELOPMENTS
As previously reported, the Company was informed by Wendy's International,
Inc. (Wendy's), the franchiser of the Wendy's concept, that a competitor has
been selected as its distributor in certain geographic markets and that Wendy's
would begin to transfer the business of its company-owned units away from the
Company beginning in August 1998. In addition, Wendy's has notified the
Company that the Company will be removed as an authorized distributor to its
franchisee operators during the third quarter of this year, resulting in the
loss of the entire Wendy's business. The Company expects that the transfer of
the company-owned and franchised business will be largely completed by the end
of 1998. In total, the Company's net sales to the Wendy's concept, including
ProSource net sales on a pro forma basis, were approximately $600 million in
1997, or 7% of total pro forma net sales of $8.9 billion. As a result of the
loss of the Wendy's business, the Company has recorded a $6.4 million charge in
the current quarter (represents an updated estimate of the previously reported
$7.5 million-see Note 3). The Company expects that the loss of the Wendy's
business will negatively impact the Company's future operating profits by
$10-15 million on an annualized basis.
The Company has been informed that a customer, Long John Silver's, has filed
for bankruptcy protection under Chapter 11 of the federal bankruptcy laws. The
Company has no current financial exposure as a result of the filing. Long John
Silver's has announced a turnaround plan to improve operations and financial
results. Including ProSource net sales on a pro forma basis, the Company's
1997 net sales to the Long John Silver's concept totaled approximately $270
million, or 3% of total pro forma net sales of $8.9 billion.
RESULTS OF OPERATIONS
This discussion should be read in conjunction with the Condensed Consolidated
Financial Statements and notes thereto in Item 1.
The following table presents certain financial information of the Company,
expressed as a percentage of net sales:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-----------------------------------------------------------------------
JUNE 27, 1998 JUNE 28, 1997 JUNE 27, 1998 JUNE 28, 1997
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales ................................ 100.0% 100.0% 100.0% 100.0%
Cost of goods sold ....................... 90.5 90.6 90.4 90.2
Gross profit ............................. 9.5 9.4 9.6 9.8
Distribution, selling and
administrative expenses ................. 7.4 7.6 7.7 8.2
Operating income before
depreciation, amortization and
unusual charges ........................ 2.1 1.8 2.0 1.6
</TABLE>
Second Quarter and Year-to-Date 1998 Compared to the Same Periods of 1997:
Net sales in 1998 increased $1.2 billion, or 281%, to $1.6 billion in the
quarter and $2.0 billion, or 274%, to $2.8 billion year-to-date. The
acquisition of PFS accounted for $791 million and $1.5 billion of the
increases, respectively. The acquisition of ProSource accounted for $424
million of the increase in each of the periods. The remaining sales growth
year-to-date was largely due to the addition of service to Arby's.
Gross profit in 1998 increased $115.5 million, or 283%, to $156.3 million in
the quarter and $194.7 million, or 269%, to $267.2 million year-to-date, due
primarily to the acquisitions of PFS and ProSource. The gross profit margin of
9.5% was comparable to 1997 for the quarter but will decline in the future
until the full effect of the ProSource acquisition is reflected in 1998
results, because of the relatively higher product case costs in ProSource's
casual dining business as compared to other business. The margin decline of .2
of a point year-to-date to 9.6% is due to 1997's margin not reflecting the full
impact of a sales mix shift towards business with higher product case costs
that began in the second quarter of 1997.
11
<PAGE> 12
Distribution, selling and administrative expenses in 1998 increased $89.1
million, or 270%, to $122.2 million in the quarter and $151.3 million, or 249%,
to $212.0 million year-to-date, due primarily to the acquisitions of PFS and
ProSource. Distribution, selling and administrative expenses as a percent of
net sales decreased .2 of a point for the quarter to 7.4% and .5 of a point to
7.7% year-to-date. This change reflects the impact of PFS' and ProSource's
lower operating expense margin and, for the year-to-date, leveraging of the
incremental Arby's business. Because of the relatively higher case sales price
in ProSource's casual dining business as compared to other business, this
margin will decline in the future until the full effect of the ProSource
acquisition is reflected in 1998 results.
Operating income in 1998 before depreciation of property and equipment,
amortization of intangible assets and impairment, restructuring and other
unusual charges increased $26.3 million to $34.1 million in the quarter and
$43.4 million to $55.2 million year-to-date, due primarily to the acquisitions
of PFS and ProSource. As a percent of net sales, this income measure rose .3 of
a point to 2.1% for the quarter and .4 of a point to 2.0% year-to-date. This
change was driven by the lower distribution, selling and administrative expense
as a percent of net sales as discussed above.
Depreciation of property and equipment in 1998 increased $4.5 million to $6.9
million in the quarter and $8.5 million to $12.5 million year-to-date,
primarily reflecting the acquisitions of PFS and ProSource.
Amortization of intangible assets in 1998 increased $5.9 million to $7.2
million in the quarter and $11.7 million to $14.1 million year-to-date,
reflecting the amortization of the intangible assets arising from the PFS and
ProSource purchase price allocations.
Impairment, restructuring and other unusual charges totaled $45.3 million for
the quarter and $47.3 million year-to-date. The charge includes writedowns of
property and equipment, exit cost accruals for future lease terminations and
employee severance, fees for bridge financing and expansion of the accounts
receivable program and other one-time costs, all primarily related to the
ProSource acquisition. Also included in this line item are costs to integrate
prior acquisitions, which primarily consisted of start-up costs of new
distribution centers, employee relocation expenses and computer system
conversion costs, and costs related to the discontinuance of service to the
Wendy's concept (as discussed above under Recent Developments). See Note 3 for
further information.
Interest expense, net of interest income, in 1998 increased $15.4 million to
$19.5 million in the quarter and $29.6 million to $36.9 million year-to-date,
reflecting interest on additional debt primarily to finance the acquisition of
PFS.
Loss on sale of accounts receivable of $5.4 million in the quarter and $9.0
million year-to-date relates to the Company's ongoing accounts receivable
program effective July 1997. Under the program, accounts receivable are sold
to a consolidated, wholly owned, special purpose, bankruptcy-remote subsidiary,
which in turn sells the receivables to a master trust. The loss on sale of
accounts receivable primarily represents the return to investors in
certificates issued by the master trust to fund the purchases of the accounts
receivable. In connection with the acquisition of ProSource, the Company
expanded the program to include the accounts receivable of ProSource, resulting
in additional proceeds to the Company of $125 million (see Note 4).
Provision for income taxes in 1998 represents estimated current state income
taxes payable. The Company's net deferred tax assets are offset entirely by a
valuation allowance, reflecting the Company's significant net operating loss
carryforward position.
Excluding impairment, restructuring and other unusual charges, the net loss in
1998 was $5.1 million in the quarter and $17.5 million year-to-date, as higher
financing costs and amortization of intangibles more than offset the operating
income of PFS and ProSource.
Comparison of Results of Operations on a pro forma basis:
This supplementary information is provided to enhance the analysis of results
of operations. The following pro forma results represent the combined
historical results of the Company, PFS and ProSource for the periods presented,
without pro forma adjustments for the impact of the acquisitions of PFS and
ProSource. These pro forma combined results do not purport to represent what
the actual results would have been if the acquisitions of PFS and ProSource had
occurred at the beginning of fiscal 1997.
12
<PAGE> 13
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------------------- -----------------------------------------
JUNE 27, JUNE 28, JUNE 27, JUNE 28,
1998 % 1997 % 1998 % 1997 %
-------- -------- -------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales ............................ $2,316.3 100.0 $2,216.2 100.0 $4,430.0 100.0 $4,289.0 100.0
Cost of goods sold ................... 2,106.8 91.0 2,015.7 91.0 4,031.4 91.0 3,897.5 90.9
-------- -------- -------- -------- -------- -------- -------- --------
Gross profit ......................... 209.5 9.0 200.5 9.0 398.6 9.0 391.5 9.1
Distribution, selling and
administrative expenses ......... 170.2 7.3 162.4 7.3 335.0 7.6 324.5 7.5
-------- -------- -------- -------- -------- -------- -------- --------
Operating income before
depreciation, amortization
and unusual charges ................ $ 39.3 1.7 $ 38.1 1.7 $ 63.6 1.4 $ 67.0 1.6
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
The net sales growth in 1998 of $100.1 million (4.5%) in the quarter and
$141.0 million (3.3%) year-to-date was driven by the former ProSource
operations, reflecting growth across all its major customers and the addition
of the Lone Star Steak House business.
Gross profit growth in 1998 of $9.0 million (4.5%) in the quarter and $7.1
million (1.8%) year-to-date was led by the net sales growth.
Operating expenses in 1998 rose $7.8 million (4.8%) in the quarter and $10.5
million (3.2%) year-to-date, reflecting certain unusually low expenses in 1997
in the former PFS operations in connection with the anticipated sale of the
business, as well as higher variable delivery expenses (largely wages).
Operating expenses in 1998 included $.9 million and $1.8 million for the
quarter and year-to-date, respectively, in management fees to Holberg
Industries, Inc.
The Company estimates that the pro forma results for 1998 reflect
approximately $2.9 million and $6.0 million for the quarter and year-to-date,
respectively, in distribution, selling and administrative cost inefficiencies in
certain existing warehouse facilities (excluding ProSource) that have been or
are targeted for closure or restructuring in accordance with the consolidation
actions. Reliable estimates of such inefficiencies reflected in ProSource's
results included above have not yet been developed.
LIQUIDITY AND CAPITAL RESOURCES
Capital resources are expected to be sufficient to support ongoing business
needs as well as activities to integrate acquisitions. These resources include
cash provided by operating activities, capital and operating lease financing of
new warehouse facilities and equipment, and a credit facility of up to $220
million (See Note 5). On July 30, 1998, the Company received additional
proceeds under the Accounts Receivable Program of approximately $80 million
upon completion of an amendment of the program and implementation by the
Company of additional reporting requirements.
Year-to-Date 1998 Compared to Year-to-Date 1997:
Net cash used for operating activities in 1998 increased $91.2 million to
$99.8 million. This increase reflects unfavorable working capital changes, due
primarily to timing of accounts payable payments, and higher interest payments,
partially offset by the cash earnings generated by the PFS operations and, to a
lesser extent, the ProSource operations.
Net cash used for investing activities in 1998 increased $324.6 million to
$337.8 million, reflecting the $313.5 million cash outlay for the ProSource
acquisition. Capital expenditures in 1998 increased $11.8 million to $19.1
million, driven by the impact of the acquisition of PFS.
Net cash provided by financing activities in 1998 reflected transactions to
partially fund the ProSource acquisition. Borrowings under the credit facility
reflect short-term funding of working capital requirements. Net cash provided
by financing activities in 1997 reflected borrowings to support spending for
additional warehouse capacity as well as inventory build-up for the Arby's
business.
SEASONALITY AND INFLATION
Historically, the Company's sales and operating results have reflected
seasonal variations. The Company experiences lower net sales and income from
operations in the first and fourth 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.
13
<PAGE> 14
Inflation has not had a significant impact on the Company's operations. Food
price deflation could adversely affect the Company's profitability as a
significant portion of the Company's sales are at prices based on product cost
plus a percentage markup. The Company has not experienced significant adverse
effects of food price deflation in recent years.
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Consolidation and Integration of Acquisitions
The Company's acquisitions of PFS and ProSource present opportunities to
significantly improve operating efficiencies of the combined businesses by
eliminating redundant facilities, achieving warehouse economies of scale with
new and larger facilities, improving truck fleet utilization through increased
deliveries per route and leveraging the operations support infrastructure.
The Company had previously identified several actions to consolidate and
integrate the PFS business and has identified additional such actions related
to the ProSource business. These actions include construction of new warehouse
facilities, closures of a number of existing warehouse facilities and
expansions of others, dispositions of property and equipment, conversions of
computer systems, centralization of support functions, reductions in workforce
and relocation of employees. The Company currently intends to maintain a
largely standalone distribution network and operations support infrastructure
for the casual dining business of ProSource.
Under current accounting rules, certain costs associated with these actions,
principally asset writedowns and exit cost accruals for lease terminations and
employee severance, have been accounted for as part of the PFS and ProSource
purchase price allocations or the restructuring charges recorded in the third
quarter of 1997 and the current quarter. Other incremental costs associated
with the actions that do not qualify as exit costs are expensed as incurred and
reported as costs incurred to integrate acquired operations in the consolidated
statements of operations.
The Company is in the early stages of the consolidation and integration plan.
Because of the ProSource acquisition, the estimated completion date of the
actions identified in the plan has been extended to mid-2000. Future results
will be negatively impacted by the integration costs to be expensed as
incurred. Such integration costs include start-up costs of new facilities and
other temporary inefficiencies arising from the warehouse and transportation
network reconfiguration, as well as incremental expenses associated with the
consolidation of the operations support infrastructure. Total cash integration
costs to be expended over the remaining consolidation period are difficult to
estimate but are expected to be in the range of $25-50 million.
While management believes it has the resources to meet its objectives, the
ultimate level and timing of cost efficiencies to be achieved upon the
completion of the consolidation actions are subject to the Company's ability to
manage through the complexities of the consolidation and respond to
unanticipated events. Ultimate cost savings expected to be achieved after
completion of the consolidation and integration actions are estimated to be
approximately $100 million annually.
Computer Systems and Potential Year 2000 Issue
An important component of the consolidation effort is the replacement of most
existing management information systems with a new integrated software platform
and hardware configuration. The new computer system will complement the
consolidation effort by providing the flexibility to support the varied
processes of the combined business as well as allowing greater centralization
of support functions. The Company expects to incur significant internal staff
costs as well as significant consulting and other expenditures to implement the
new system. Another critical benefit of the new system is that it replaces
applications that are not Year 2000 compliant. The implementation of the new
system is underway and expected to be completed in mid-1999. Because of the
Year 2000 issue, a delay in the implementation of the new system could have a
significant adverse impact on the Company's operations. Further, the Company is
working with vendors and customers who are at various stages in analyzing this
issue. There can be no assurance that the systems of other companies that the
Company's systems rely on or interface with will be timely converted. While the
cost to implement the new system is significant (approximately $55-60 million),
the anticipated expenses to resolve Year 2000 issues with other peripheral
systems used by the Company are not expected to be significant.
With respect to ProSource, the Company intends to integrate the quick service
operations prior to 2000 so as to allow the Company's new computer system to
support that business. The systems supporting the casual dining business are
being replaced and/or upgraded to be Year 2000 compliant on all significant
applications by early 1999.
14
<PAGE> 15
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
Company's segment of the foodservice distribution industry, as evidenced by the
Company's acquisition activity, may further intensify competitive pressures and
negatively impact relationships between the Company and its existing customers.
While the Company will take appropriate actions to retain desired business,
some loss of customers during this transition period is expected. Management
believes that completion of the consolidation and integration 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.
The Company provides foodservice distribution to Tricon-owned restaurants
under a five-year exclusive distribution agreement effective July 1997. The
Company is subject to the inherent risk of customer concentration, as
approximately 25% of net sales, including ProSource net sales on a pro forma
basis, are to Tricon. 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 results. In
addition, the Company's future results may be impacted by the planned closure
of poorly performing restaurants announced by Tricon in December 1997.
Risk of Leverage
The Company is and will continue to be highly leveraged as a result of the
indebtedness incurred primarily in connection with the acquisition of PFS. 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 the Company's actual results to
differ materially from expected and historical results, see the "Risk Factors"
set forth in the Company's Post-Effective Amendment No. 1 on Form S-1 to the
Form S-4 Registration Statement, filed with the Securities and Exchange
Commission on April 10, 1998.
15
<PAGE> 16
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.
16
<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ----------------------------------------------------
<S> <C>
3.1 - Amended and Restated Certificate of Incorporation of AmeriServe
Food Distribution, Inc. (formerly AmeriServ Food Company,
successor to AmeriServe Food Distribution, Inc.), (incorporated by
reference to Exhibit 3.1 to the Registrant's Annual Report on Form
10-K filed March 28, 1998.)
3.3 - Articles of Incorporation of AmeriServe Transportation, Inc.
(incorporated by reference to Exhibit 3.5 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8,
1997).
3.4 - By-Laws of AmeriServe Transportation, Inc. (incorporated by
reference to Exhibit 3.6 to the Registrant's Registration
Statement of Form S-4 No. 333-33225 filed August 8, 1997).
3.5 - Articles of Incorporation of Chicago Consolidated Corporation
(incorporated by reference to Exhibit 3.7 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8,
1997).
3.6 - By-Laws of Chicago Consolidated Corporation (incorporated by
reference to Exhibit 3.8 to the Registrant's Registration
Statement on Form S-4 No. 333-33225 filed August 8, 1997).
3.7 - Articles of Incorporation of Northland Transportation Services,
Inc. (incorporated by reference to Exhibit 3.9 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8,
1997).
3.8 - By-Laws of Northland Transportation Services, Inc. (incorporated
by reference to Exhibit 3.10 to the Registrant's Registration
statement on Form S-4 No. 333-33225 filed August 8, 1997).
3.9 - Articles of Incorporation of Delta Transportation, Ltd.
(incorporated by reference to Exhibit 3.13 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8,
1997).
3.10 - By-Laws of Delta Transportation, Ltd. (incorporated by reference
to Exhibit 3.14 to the Registrant's Registration Statement on Form
S-4 No. 333-33225 filed August 8, 1997).
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 - 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).
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C>
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).
4.6 - Second Supplemental 10 1/8% New Senior Subordinated 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 4.3 to the Registrant's
Current Report on Form 8-K dated May 21, 1998).
27.1 - Financial Data Schedule.*
</TABLE>
- ----------
* Filed herewith.
(b) Reports on Form 8-K.
During the second quarter of 1998, the Company and each of the Subsidiary
Guarantors filed the following:
1. Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 6, 1998 disclosing, under Item 5, notifications received
from a customer, Wendy's International, Inc., indicating the customer's
intent to transfer its business to a competitor and to influence its
franchisee operators to transfer their business to the competitor.
2. Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 22, 1998 disclosing, under Item 2, the consummation of the
acquisition of ProSource, Inc. on May 21, 1998 and, under Item 5, the
execution of agreements on May 21, 1998, pursuant to which ProSource, Inc.
and certain of its subsidiaries became guarantors of the Company's $500
million 10 1/8% Senior Subordinated Notes and $350 million 8 7/8% Senior
Notes.
18
<PAGE> 19
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
AmeriServe Food Distribution, Inc. (Registrant)
Date: August 4, 1998 /s/ John V. Holten,
Chairman and Chief Executive
Officer
Date: August 4, 1998 /s/ Diana M. Moog,
Executive Vice President and
Chief Financial Officer
19
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ----------------------------------------------------
<S> <C>
3.1 - Amended and Restated Certificate of Incorporation of AmeriServe
Food Distribution, Inc. (formerly AmeriServ Food Company,
successor to AmeriServe Food Distribution, Inc.), (incorporated by
reference to Exhibit 3.1 to the Registrant's Annual Report on Form
10-K filed March 28, 1998.)
3.3 - Articles of Incorporation of AmeriServe Transportation, Inc.
(incorporated by reference to Exhibit 3.5 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8,
1997).
3.4 - By-Laws of AmeriServe Transportation, Inc. (incorporated by
reference to Exhibit 3.6 to the Registrant's Registration
Statement of Form S-4 No. 333-33225 filed August 8, 1997).
3.5 - Articles of Incorporation of Chicago Consolidated Corporation
(incorporated by reference to Exhibit 3.7 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8,
1997).
3.6 - By-Laws of Chicago Consolidated Corporation (incorporated by
reference to Exhibit 3.8 to the Registrant's Registration
Statement on Form S-4 No. 333-33225 filed August 8, 1997).
3.7 - Articles of Incorporation of Northland Transportation Services,
Inc. (incorporated by reference to Exhibit 3.9 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8,
1997).
3.8 - By-Laws of Northland Transportation Services, Inc. (incorporated
by reference to Exhibit 3.10 to the Registrant's Registration
statement on Form S-4 No. 333-33225 filed August 8, 1997).
3.9 - Articles of Incorporation of Delta Transportation, Ltd.
(incorporated by reference to Exhibit 3.13 to the Registrant's
Registration Statement on Form S-4 No. 333-33225 filed August 8,
1997).
3.10 - By-Laws of Delta Transportation, Ltd. (incorporated by reference
to Exhibit 3.14 to the Registrant's Registration Statement on Form
S-4 No. 333-33225 filed August 8, 1997).
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 - 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).
4.4 - 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).
4.6 - Second Supplemental 10 1/8% New Senior Subordinated 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 4.3 to the Registrant's
Current Report on Form 8-K dated May 21, 1998).
27.1 - Financial Data Schedule.*
</TABLE>
- ----------
* Filed herewith.
20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF AMERISERVE FOOD DISTRIBUTION, INC. FOR THE
SECOND QUARTER ENDED JUNE 27, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000875612
<NAME> AMERISERVE FOOD DISTRIBUTION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> JUN-27-1998
<CASH> 12,405
<SECURITIES> 0
<RECEIVABLES> 33,301
<ALLOWANCES> (26,854)
<INVENTORY> 264,990
<CURRENT-ASSETS> 604,693
<PP&E> 227,756
<DEPRECIATION> 59,842
<TOTAL-ASSETS> 1,831,966
<CURRENT-LIABILITIES> 703,962
<BONDS> 850,000
0
0
<COMMON> 0
<OTHER-SE> 83,233
<TOTAL-LIABILITY-AND-EQUITY> 1,831,966
<SALES> 2,769,949
<TOTAL-REVENUES> 2,769,949
<CGS> 2,502,746
<TOTAL-COSTS> 2,502,746
<OTHER-EXPENSES> 285,954
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,547
<INCOME-PRETAX> (64,298)
<INCOME-TAX> 524
<INCOME-CONTINUING> (64,822)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (64,822)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
