-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HYNSzIB7v2Ni61D3xbMF/pnqoGxG3hY0JBhEQD2r61yoZK2yl591VLMmy4TYviTx i9u+0NRbRxoZdvWmWbzhIg== 0000008734-98-000001.txt : 19980507 0000008734-98-000001.hdr.sgml : 19980507 ACCESSION NUMBER: 0000008734-98-000001 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970529 FILED AS OF DATE: 19980506 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMBASSADOR FOOD SERVICES CORP CENTRAL INDEX KEY: 0000008734 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 440656199 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-01744 FILM NUMBER: 98611026 BUSINESS ADDRESS: STREET 1: 3269 ROANOKE ROAD CITY: KANSAS CITY STATE: MO ZIP: 64111 BUSINESS PHONE: 8165616474 MAIL ADDRESS: STREET 1: 3269 ROANOKE ROAD CITY: KANSAS CITY STATE: MO ZIP: 64111 FORMER COMPANY: FORMER CONFORMED NAME: AUTOMATIQUE INC DATE OF NAME CHANGE: 19890810 10KSB 1 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 29, 1997 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 $22,770,546. At April 1, 1998 there were 745,456 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 $1,001,893. Exhibit Index is on page 37. 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 29, 1997, 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: Bargaining Unit Market Expiration Date Teamsters Local #838 Kansas City 1/1/00 Teamsters Local #90 Des Moines 4/30/98 United Service Employees Union #377 New York 12/31/99
(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 1997, 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 29, 1997, the Company and its subsidiary employed approximately 300 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 1997, 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 $277,552 at May 29, 1997. Annual rentals were approximately $358,652 less $20,400 of sublease income. The suitability of the leased properties is adequate; such properties are described below: 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 10745 Midwest Indust Dr., St.Louis, MO Office/Whse 15,800 9/98 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
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 100 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 $750,000. 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 29, 1997 and May 30, 1996 are shown below: 1996 1995 Bid Quotation Bid Quotation High Low High Low First Quarter 1 1/16 1 1/16 3/4 3/4 Second Quarter 1 1/8 1 1/16 3/4 3/4 Third Quarter 1 1/2 1 1/16 1 3/4 Fourth Quarter 1 7/16 1 3/8 1 3/8 15/16
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 May 29, 1997, there were 601 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 1997 Results Despite growth in sales of more than $ 2,000,000 from fiscal 1996 levels, Ambassador experienced a before tqax 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 ooperations 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 persue 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. 1996 Results Income from continuing operations declined from the 1995 level despite increased sales of $836,773 during the year ended May 30, 1996. These earnings were $50,224 in fiscal 1996, down from $180,052 in 1995. A change in the reserve relating to the Company's discontinued restaurant operations brought the net result to a loss of $42,076. This disappointing result reflects continued deterioration in margins in the Company's vending and cafeteria operations. While management implemented price increases throughout the year, food costs continued to rise at a substantial rate resulting in a decline in margins during the year. Price increases and improved controls and purchasing are being implemented to address this problem. It is imperative that margins improve for the Company to return to profitability. All other cost areas combined remained near 1995 levels in relation to sales. Operating costs were lower as a percentage of sales due to lower operating payroll; however, increased administrative payroll and interest costs offset these decreases. 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 Working Capital at the close of fiscal 1997 was a deficit of almost $2,000,000. This reflects the impact of the loss incurred during fiscal 1997 coupled with the $1,000,000 deficit at the end of fiscal 1996. The Company has implemented stringent controls on capital expenditures and has idle equipment in its vending operations to support substantial growth in sales,if needed. Management has been successful in attaining financing during fiscal 1998 necessary to meet its current obligations. Additionally, payments being received on the sale of its St. Louis operations continue to provide capital. While financing continues to be available for the Company's capital equipment needs, Ambassador's ability to maintain its lending relationships are dependent upon a return to profitability. Item 7. Consolidated Financial Statements Index to Consolidated Financial Statements Page Report of Independent Certified Public Accountants 10 Consolidated Balance Sheets as of May 29, 1997 and May 30, 1996 11-12 Consolidated Statements of Operations for the Years Ended May 29, 1997 and May 30, 1996 13 Consolidated Statement of Changes in Stockholders' Equity for the Years Ended May 29, 1997 and May 30, 1996 14 Consolidated Statements of Cash Flows for the Years Ended May 29, 1997 and May 30, 1996 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 29, 1997 and May 30, 1996 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 29, 1997 and May 30, 1996 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 November 24, 1997 Ambassador Food Services Corporation and Subsidiary CONSOLIDATED BALANCE SHEETS May 29, 1997 and May 30, 1996 ASSETS 1997 1996 CURRENT ASSETS Cash (including change funds of $241,719 in 1997 and $291,505 in 1996) (note A10) $ 370,340 $ 402,768 Trade accounts receivable, net of allowance for doubtful accounts of $118,234 in 1997 and $22,174 in 1996 (notes A11 and D) 1,697,773 1,768,211 Income taxes receivable 8,881 17,042 Inventories (note A4) 548,477 593,820 Prepaid expenses 186,817 248,916 Current portion of note receivable (notes N,O and P) 372,351 114,182 Deferred income taxes (note J) - 30,033 Total current assets 3,184,639 3,174,972 PROPERTY AND EQUIPMENT - at cost (notes A5 and E) Vending equipment 4,804,840 5,044,062 Cafeteria, commissary, and restaurant equipment 1,205,077 1,171,549 Building and leasehold improvements 641,814 649,877 Other 991,570 1,056,859 7,643,301 7,922,347 Less accumulated depreciation and amortization 5,445,471 5,792,683 Total property and equipment 2,197,830 2,129,664 OTHER ASSETS Location contracts (note A6) 267,530 1,242,656 Note receivable, less current portion (notes N,O and P)1,227,048 481,961 Unrecognized prior service costs (notes A7 and H) 183,009 222,932 Excess of purchase price over net assets acquired,net of accumulated amortization of $20,375 in 1997 and $19,355 in 1996 (note A6) 23,054 93,771 Deferred expenses 52,432 58,012 Miscellaneous 180,320 273,398 Total other assets 2,372,730 1,616,174 The accompanying notes are an integral part of these statements.
Ambassador Food Services Corporation and Subsidiary CONSOLIDATED BALANCE SHEETS - CONTINUED May 29, 1997 and May 30, 1996 LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996 CURRENT LIABILITIES Checks outstanding in excess of bank balances $ 662,086 $ 567,769 Trade accounts payable 1,532,775 1,564,088 Accrued expenses (note C) 1,249,170 679,549 Current maturities of long-term debt (note E) 582,863 485,261 Line of credit (note D) 1,142,213 949,352 Total current liabilities 3,413,343 3,254,400 LONG-TERM LIABILITIES Deferred income taxes (note J) - 297,102 Projected benefit obligation (note H) 337,468 337,342 Other long-term liabilities 42,035 68,522 Subordinated note payable to stockholder (note F) 250,000 250,000 Long-term debt, less current maturities (note E) 921,617 910,939 Accrued costs of discontinued restaurant operations (note K) 84,203 97,612 Accrued litigation and sales tax costs (note L) - 46,594 Total long-term liabilities 1,635,323 2,008,111 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) (917,528) (20,380) 809,993 1,707,141 Less treasury stock - 251,774 shares in 1997 and 241,274 shares in 1996 (298,561) (283,905) Total stockholders' equity 511,432 1,423,236 The accompanying note are an integgral part of these statements.
Ambassador Food Services Corporation and Subsidiary CONSOLIDATED STATEMENTS OF OPERATIONS Years ended May 29, 1997 and May 30, 1996 1997 1996 Net sales Food $20,839,872 $18,807,080 Janitorial 1,930,674 1,655,385 22,770,546 20,462,465 Cost and expenses Cost of food products sold 9,497,576 8,300,394 Operating (note M) 9,818,547 8,265,161 Selling and administrative 3,521,127 2,930,109 Depreciation and amortization 684,352 671,911 Interest 413,161 244,666 Total cost and expenses 23,934,763 20,412,241 Earnings (loss) from continuing operations before income taxes (1,164,217) 50,224 Income tax benefit (note J) 267,069 - Net earnings from continuing operations (897,148) 50,224 Discontinued operations Change in estimate of loss on disposal of restaurants (note K) - (92,300) Net Loss $ (897,148) $ (42,076) Earnings (loss) per common share: Earnings from continuing operations $ (1.18) $ .07 Loss on disposal of restaurants - (.13) Net loss per common share $ (1.18) $ (.06) Weighted average common shares outstanding (note A9) 760,906 719,207
Ambassador Food Services Corporation and Subsidiary CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY Years ended May 29, 1997 and May 30, 1996 Retained Additional Earnings Total Paid-In (Accumulated Stockholders' Common Stock Capital Deficit) Equity Issued Treasury Stock Shares Amount Shares Cost Balance at June 1, 1995 1,009,230 $1,009,230 305,873 $348,504 $718,291 $ 21,696 $1,400,713 Net earnings - - - - - (42,076) (42,076) Sale of treasury stock - - (77,267) (77,267) - - 77,267 Purchase of treasury stock - - 12,668 12,668 - - (12,668) Balance at May 30, 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, 19976 1,009,230 $1,009,230 251,774 $298,561 $718,291 $(917,528) $ 511,432
Ambassador Food Services Corporation and Subsidiary CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended May 29, 1997 and May 30, 1996 1997 1996 Cash Flows From Operating Activities Net earnings (loss) $(897,148) $(42,076) Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operations Depreciation and amortization 684,352 671,911 Gain on sale of property and equipment 198,898 (1,342) Provision for bad debts 96,060 9,589 Deferred income taxes (267,069) - Changes in operating assets and liabilities: Trade accounts receivable (25,622) (74,648) Income taxes receivable 8,161 4,520 Miscellaneous - other assets 39,264 (180,374) Inventories 45,343 (110,537) Prepaid expenses 62,099 (148,320) Trade accounts payable and accrued expenses 416,432 311,005 Net cash provided by (used in) operating activities 360,770 438,728 5 Cash Flows From Investing Activities Purchase of property and equipment (844,257) (638,663) Proceeds from sale of property and equipment - 12,174 Issuance of note receivable - (600,000) 3,857 - Collections on notes receivable 96,744 3,857 Net cash used in investing activities (747,513) (1,222,632) Cash Flows From Financing Activities Proceeds from issuance of long-term debt 524,046 1,179,648 Principal payments on long-term obligations (415,766) (606,068) Purchase of treasury stock (14,656) (12,668) Sale of treasury stock - 77,267 Net increase in checks outstanding in excess of bank balances 94,317 58,927 Other financing activities (26,485) 41,675 Net borrowings under line of credit 192,861 125,420 Net cash provided by financing activities 354,315 864,201 Net Increase (Decrease) in Cash (32,428) 81,297 Cash, Beginning of Year 402,768 321,471 Cash, End of Year $ 470,340 $ 402,768 Supplementary Schedule of Cash Flow Information: Cash paid during year for: Income taxes $ - $ 6,553 Interest $ 422,629 $ 250,436 Noncash investing and financing activities: Purchase of Bassman Vending, Inc. assets with long-term debt $ - $ 251,000 Sale of St. Louis location financed with note receivable $ 1,200,000 $ -
Ambassador Food Services Corporation and Subsidiary NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended May 29, 1997 and May 30, 1996 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 1997 and 1996 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 8 years Cafeteria and commissary equipment 3-10 years Building and leasehold improvements 3-22 years Other 2-4 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 O). Acquisitions of $568,173 expended subsequent to November 1, 1970 are being amortized on a straight-line basis over 5 to 40 years. The Company's management continually evaluates the carrying value of their intangible assets based upon local market and economic conditions, and, in their opinion, there has been no diminution in the value of these assets. 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 1997 and 1996 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 Approximately $1,300,000 in 1997 and $1,500,000 of the Company's accounts receivable, are with customers located in the Northeast United States. The Company grants credit to customers; which includes businesses, schools, and governmental agencies. Collateral is generally 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. 14. Reclassifications Certain items in the 1996 consolidated financial statements have been reclassified to conform to the 1997 presentation. 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 reqquirements, 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. Making current operations profitable and growing through intenal sales efforts have 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 sucstantially decrease in June 1998. C. CURRENT LIABILITIES Accrued expenses include the following: 1997 1996 Legal fees $122,095 $ 108,874 Vacation pay 69,546 97,376 Commissions 61,543 61,674 Taxes 332,476 47,622 Salaries 217,132 245,070 Current portion of projected benefit obligation (Note H) 18,900 60,638 Accrued costs of discontinued restaurant operations (Note K) 13,562 16,388 Accrued litigation and sales tax costs (Note L) 123,416 29,000 Deferred revenue 98,405 - Medical Insurance 54,589 - Lease Termination 62,000 - Other 75,506 12,907 $1,249,170 $679,549
D. LINE OF CREDIT AGREEMENT The Company has a line of credit agreement with a financing company that that carries interest at the publicly announced prime rate (8.5% at May 29 1997) plus 3.5%. The amount drawn cannot exceed 80% of eligible accounts receivable 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 1997 ($213,878 at May 29, 1997). Interest is payable monthly and amounts outstanding are due upon demand. At May 29,1997 and May 30,1996,amounts outstanding were $1,142,213 and $949,352,respectively. E. LONG-TERM DEBT 1996 1995 Note payable - bank, payable in monthly installments of $2,848, including interest at prime rate (8.5% at May 29, 1997) plus 2.0%, due July 1998, collateralized by building $277,552 $282,937 Notes payable - equipment, payable in monthly installments of $57,449, including interest at rates ranging from 9% to 19.25%, due through July 2002, collateralized by equipment 1,014,837 817,467 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 (See Note N). 201,430 244,232 Note payable - other 10,661 51,564 1,504,480 1,396,200 Less current maturities 582,863 485,261 $ 921,617 $ 910,939
Aggregate annual principal payments applicable to long-term debt due subsequent to May 29, 1997 are as follows: Fiscal Year Ending Amount 1998 $ 582,863 1999 542,938 2000 202,453 2001 138,924 2002 37,302 $1,504,480
F. SUBORDINATED NOTE PAYABLE TO STOCKHOLDER During fiscal year 1996, 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 29, 1997 are as follows Fiscal year ending Real estate Equipment Total 1998 $ 209,392 $ 436,352 $ 645,744 1999 195,921 370,494 566,415 2000 156,606 314,231 470,837 2001 135,580 39,678 175,258 $ 697,499 $1,160,755 $1,858,254
Rental expense charged to operations was as follows: 1997 1996 Minimum rentals $845,198 $499,703 Less sublease rentals - ( 6,630) $845,198 $493,073
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 1997 and 1996: 1997 1996 Actuarial present value of benefit obligations: Accumulated benefit obligation, including vested benefits of $248,080 in 1997 and $302,806 in 1996 $ 356,368 $ 397,980 Projected benefit obligation for service rendered to date $ 356,368 $ 397,980 Plan assets at fair value - - Projected benefit obligation in excess of plan assets 356,368 397,980 Additional minimum liability recorded 183,009 183,009 Prior service cost not yet recognized in net periodic pension cost (183,009) (222,932) Net accrued pension cost $ 356,368 $ 397,980 Net accrued pension cost is included in the accompanying consolidated financial statements as follows: 1996 1995 Current portion included in accrued expenses $ 18,900 $ 60,638 Long-term portion of obligation 337,468 337,342 $ 356,368 $ 397,980
The weighted-average discount rate used in determining the actuarial present value of the projected benefit obligation was 8.0% in 1997 and 1996. Net pension cost for 1997 and 1996 includes the following components: 1997 1996 Service cost - benefits earned during the period $ 5,491 $ 5,085 Interest cost on projected benefit obligation 31,571 35,363 Amortization of prior service cost 37,746 37,745 Net periodic pension cost $74,808 $78,193 The Company contributed approximately $74,000 and $83,000 in fiscal years 1997 and 1996, 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 1997 or 1996. I. STOCK OPTIONS In fiscal year 1993, the Board of Directors granted nonstatutory options for 40,000 shares to an officer and certain key employees. These options expired of unexercised subsequent to May 29, 1997. In fiscal year 1996, the Board of Directors approved the granting of nonstatutory options for 65,000 shares to certain key employees. The exercise price of the options was $1 per share, which approximated the fair market value of the shares on the date of grant of the option. The options were exercised during fiscal year 1996. Stock option transactions for the two years are summarized below:
Option Shares 1997 1995 Outstanding, beginning of year 40,000 40,000 Granted - 65,000 Exercised - (65,000) Outstanding, end of year 40,000 40,000
J. INCOME TAXES The net deferred tax liability in the accompanying consolidated balance sheets includes the following amounts of deferred tax assets and liabilities: 1997 1996 Deferred tax liability $ 232,883 $ 528,337 Deferred tax asset (721,444) (693,295) Less: Valuation allowance 488,561 432,027 Net deferred tax liability $ - $ 267,069
The net deferred tax liability is included in the accompanying consolidated financial statements as follows: 1997 1996 Deferred income taxes - noncurrent liability $ - $ 297,102 Deferred income taxes - short-term asset - (30,033) - $ 267,069
The approximate tax effect of each temporary difference giving rise to the deferred tax liability and asset was as follows at May 29, 1997 and May 30, 1996: 1997 1996 Amortization of location contracts $ 1,201 $ 297,069 Accelerated depreciation 231,682 231,268 $ 232,883 $ 528,337 Accrued costs $ (62,308) $ (60,681) Amortization of pension costs (66,758) (69,118) Vacation accrual (27,123) (37,977) Allowance for bad debts (46,111) (8,648) Other (7,689) - Net operating loss carryforward (244,847) (243,834) AMT credit carryforward (106,504) (108,716) Investment tax credit carryforward (160,104) (164,321) $ (721,444) $ (693,295)
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 $56,534 and $10,759 in fiscal years 1997 and 1996, 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: 1996 1995 Federal income tax benefit computed at statutory rate $ (396,000) $ (14,000) State income tax benefit (58,000) (2,000) Tax effect of nondeductible expenses 14,000 12,000 Increase in valuation allowance 57,000 11,000 Underaccrual of prior deferred tax liability 120,000 - Other, net (4,000) (7,000) $ (267,000) $ -
The Company had available for income tax purposes the following investment credit carryforwards at May 29, 1997: Year of Expiration Amount 1998 59,630 1999 25,168 2000 49,551 2001 25,755 $160,104
In addition, the Company had the following net operating loss carryforwards available at May 29, 1997: Year of Expiration Amount 2008 $252,779 2009 138,822 2010 63,240 2011 156,463 2012 16,508 $627,812
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: 1997 1996 Current portion included in accrued expenses $ 13,562 $ 16,388 Accrual included in long-term liabilities 84,203 97,612 $ 97,765 $114,000
L. ACCRUED LITIGATION AND SALES TAX COSTS During fiscal year 1994, the Company established an accrual relating to a lawsuit filed by the federal government on behalf of the United States Department of Agriculture. To avoid further litigation expenses, an agreement for settlement was reached. Terms of the agreement included payment by the Company to the government of $164,000, the last installment of which was paid in 1996. At May 30, 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 the year the Company received a letter granting amnesty for the tax year liability for 1988 and before. 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: 1997 1996 Current portion included in accrued expenses $ 123,416 $ 29,000 Reserve included in long-term liabilities - 46,594 $ 123,416 $ 75,594
The New York State Department of Taxation and Finance is conducting a sales and use tax examination for the period from June 1993 through November 1995. The examination is not completed, and no adjustments have been proposed. The ultimate outcome of this examination cannot presently be determineed. 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: 1996 1995 Payroll and related costs $6,676,089 $6,162,640 Equipment rental costs 535,893 255,431 Other 2,606,565 1,847,090 $9,818,547 $8,265,161
N. ACQUISITION During fiscal year 1996, the Company acquired certain location contracts, parts inventory and equipment from Bassman Vending, Inc. (BVI) for $251,000 allocated as follows: Location contracts (in and around Des Moines, Iowa) $161,000 Parts inventory 30,000 Equipment 60,000 $251,000
The purchase price was financed with a $251,000 note payable to BVI, which is described in Note E. In addition, the Company has entered into noncancellable operating leases with BVI whereby the Company will lease certain equipment and real estate for $6,000 and $24,500 per month, respectively, from March 1996 through March 2001. Additionally, the Company lent BVI $600,000 (See Note P). O. 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. 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 P). As a result of this sale, the Company recognized a loss of $198,898 during fiscal year 1997. P. NOTES RECEIVABLE Notes receivable include the following: 1997 1996 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 as discussed in Note N $ 493,247 $ 596,143 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 O 1,106,152 - 1,599,399 596,143 Less current portion 372,351 114,182 $1,227,048 $ 481,961
Q. YEAR-END ADJUSTMENTS The following adjustments were made in the fourth quarter of fiscal year 1997: (Income) expense Correct accounts payable $ 154,000 Increase in allowance for and write-off of questionable trade and miscellaneous receivables. 273,000 Correct Iowa sales tax payable 69,000 Record loss on sales of St.Louis operations 199,000 Reduce deferred tax liability (267,000) Amnesty on New York sales tax obligation (76,000) $ 352,000 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:
Name Age Principal Occupation Director Since Arthur D. Stevens (1) 73 Chairman of the Board of Directors, Executive Officer, and Treasurer of Ambassador (2) 1963 George T. Terris(1) 75 Investor (3) 1966 Robert A. Laudicina(1) 57 Executive Vice-President and General Manager of Ambassador's New York Operations (4) 1986 Richard A. Mitchell 32 Assistant Secretary, Vice President ofOperations (5) N/A Ann W. Stevens 55 1996 Douglas M. Schosser,CPA 27 Director,Key Asset Management Co. 1997
(1) Member of Executive Committee of Board of Directors (2) Mr. Stevens has been Chairman of the Board of Directors of Ambassador since February 15, 1963, Chief Executive Officer since April 11, 1963, and Treasurer since January 26, 1972. 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. (3) Mr. Terris, until his retirement January 1, 1987, was President and Chief Operations Officer of Ambassador. (4) Mr. Laudicina was elected Executive Vice President February 22, 1989. He served as Vice President prior to that time, beginning in January 1982. He was New York Sales and Marketing Director from December 1977 to January 1979 and has been divisional President of Ambassador's New York operations since January 1979. (5) Mr. Mitchell served as Manager of Operating Systems from August 1991 through November 1994 and has served as Assistant Secretary since November 1991. In November 1994, he was appointed to the position of Vice President of Operations. (c) Arthur D. Stevens,CEO and 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 29, 1997, for each Director and Officer whose aggregate remuneration for the year exceeded $100,000. Names of Individuals, Number of Persons in Group Fiscal Base and Capacities in which Served Year Salary Arthur D. Stevens, 1997 $144,144 Chairman of the Board, President, Chief Executive 1996 188,428 Officer and Treasurer of Ambassador and Officer 1995 161,100 and Director of its Subsidiary Robert A. Laudicina, 1997 $157,000 Executive Vice President and 1996 169,597 General Manager of New York Operations 1995 140,446
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: Name of Executive Age Estimated Benefit Supplemental Target From Cash Retirement Retirement Retirement Benefit Benefit Robert A. Laudicina 57 $9,123 $46,227 $55,350
*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 There were no stock options held by any Officer or Director whose remunerations exceeded $100,000 as of May 29, 1997. 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 29, 1997, 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. 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) 23.9% Thomas G. Berlin 800 Superior Avenue, Suite 2100 Cleveland, Ohio 44114 124,218 (3) 16.4% George T. Terris 936 West Shaker Circle Nequon, WI 53092 50,000 (2) 6.6% George F. Crawford 10110 Fontana Lane Overland Park, KS 66207 52,597 6.9%
(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 Shares of Stock Beneficially Owned May 29, 1997 Name Number Percent of Shares of Stock Arthur D. Stevens 1901 W. 69th Street Mission Hills, KS 66205 181,444 (1) 23.9% George T. Terris 936 West Shaker Circle Nequon, WI 53092 50,000 (2) 6.6% Robert A. Laudicina 303 Cedar Court Norwood, NJ 07648 26,500 3.5% 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) 264,144 34.9%
(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. (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 1997 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 Arthur D. Stevens, 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/ Robert A. Laudicina Date April 20, 1998 Robert A. Laudicina Interim President /s/ Richard Mitchell Date April 20, 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 April 20, 1998 Arthur D. Stevens Title Date /s/ Robert A. Laudicina Interim President/Director April 20, 1998 Robert A. Laudicina Title Date /s/ Ann W. Stevens Director April 20, 1998 Ann W. Stevens Title Date /s/ George T. Terris Director April 20, 1998 George T. Terris Title Date /s/Douglas M. Schosser Director April 20, 1998 Douglas M. Schosser Title Date EX-27 2
5 YEAR MAY-29-1997 MAY-29-1997 370,340 0 1,697,773 118,234 548,477 3,184,639 7,643,301 5,445,471 7,315,862 5,169,107 0 1,009,230 0 0 (199,237) 7,315,862 22,770,546 22,770,546 19,316,123 4,205,479 0 0 413,161 (1,164,217) (267,069) (897,148) 0 0 0 (897,148) (1.18) (1.18)
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