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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




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Form 10-K/A

Amendment No. 1


|                                 |  |                                                                                                 
|-------------------------------- |  | ------------------------------------------------------------------------------------------------
|(Mark One)                       |  |                                                                                                 
|þ                                |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|                                
|                                 |  | For the fiscal year ended December 30,
    2003                                                 
|                                
|o                                |  | 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 001-31904

Centerplate, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                                                                            |  |                                                                       
|--------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------
|Delaware                                                                                                                    |  | 13-3870167                                                            
|(State of incorporation)                                                                                                    |  | (I.R.S. Employer Identification No.)                                  
|                                                                                                                           
|201 East Broad Street
    Spartanburg, South Carolina 29306(Address of principal executive
    offices, including zip code) |  | (864) 598-8600(Registrants telephone
    number, including area code)

http://www.centerplate.com

(Registrants URL)


Volume Services America Holdings,
Inc.

(Former name, former address and former fiscal
year, if changed since last report)


Securities of Centerplate, Inc.
registered pursuant to Section 12(b) of the Act

|                                                                                               |  |                                                   
|---------------------------------------------------------------------------------------------- |  | --------------------------------------------------
|Title of Each Class                                                                            |  | Name of Each Exchange on Which Registered         
|                                                                                               |  |                                                   
|Income Deposit Securities (representing shares
    of
    common stock and subordinated notes) |  | American Stock Exchange
    Toronto Stock Exchange

Securities of Centerplate, Inc.
registered pursuant to Section 12(g) of the
Act:     None

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 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 þ          No o

Indicate by check
mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrants
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this
Form 10-K/A or any amendment to this
Form 10-K/A.     þ

Indicate by check
mark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Securities Exchange Act of
1934).     Yes o          No þ

The aggregate
market value of the Income Deposit Securities (IDSs) held by
non-affiliates of Centerplate, Inc. as of December 30,
2003 was approximately $248,400,000. For purposes of this
disclosure, IDSs held by persons who hold more than 5% of
the outstanding IDSs and IDSs held by officers and directors of
the registrant have been excluded because such persons may be
deemed to be affiliates. This determination is not necessarily
conclusive. Centerplate, Inc. did not have publicly traded
securities as of the last business day of its most recently
completed second fiscal quarter.

The number of
shares of common stock of Centerplate, Inc. outstanding as
of March 26, 2004 was 22,524,992.

DOCUMENTS INCORPORATED BY REFERENCE

None are
incorporated in this Amendment No. 1 to the Annual Report
on Form 10-K/A.



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CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)

EXPLANATORY NOTE

This Amendment No. 1 to our Annual Report on
Form 10-K/A for the year ended December 30, 2003, is
being filed to reflect changes to Item 8 as described
below. In addition, minor changes were also made to Items 7
and 9A to reflect the resolution of the accounting treatment of
our public securities. Unless otherwise noted and except for
Note 2 to the consolidated financial statements, as to
which the date is October 28, 2004, all information
contained herein is as of March 26, 2004, when we filed our
Annual Report on Form 10K, and does not reflect any events
or changes in information that may have occurred subsequent to
such date.

Following the completion of the initial public
offering by Centerplate, Inc. (formerly Volume Services America
Holdings, Inc., Centerplate or the
Company) in December 2003, there have been
continuing reviews of the accounting treatment of certain
features of securities similar to the Companys income
deposit securities (IDSs). As a result of these
reviews and discussions with the SEC, the Company has identified
several revisions to its accounting for IDSs. The Company has
incorporated relevant changes to its accounting treatment of its
IDSs that are reflected in this Amendment No. 1 to Annual
Report on Form 10-K/A as described below. In addition, as
described below, the Company has revised Note 16 of the
consolidated financial statements to report the results of
operations of Centerplate (the parent holding company and issuer
of the IDSs) separately from the results of operations of the
subsidiaries that guarantee the subordinated notes included in
its IDSs (the combined guarantor subsidiaries).

This Amendment No. 1 to Annual Report on
Form 10-K/A amends Item 8. Financial Statements
and Supplemental Data of the previously filed Annual
Report on Form 10-K for the fiscal year ended
December 30, 2003 (Form 10-K) as follows:

1. Consolidated Balance Sheets 
In connection with the initial public offering
(IPO), those investors who held stock prior to the
IPO (the Initial Equity Investors) entered into an
amended and restated stockholders agreement, which provides
that, upon any post-offering sale of common stock by the Initial
Equity Investors, at the option of the Initial Equity Investors,
we will exchange a portion of their common stock for
subordinated notes at an exchange rate of $9.30 principal amount
of subordinated notes for each share of common stock (so that,
after such exchange, the Initial Equity Investors will have
shares of common stock and subordinated notes in the appropriate
proportions to represent integral numbers of IDSs) (the
conversion option). We have concluded that the portion of
the Initial Equity Investors common stock exchangeable for
subordinated debt should be classified on our consolidated
balance sheet according to the guidance provided by Accounting
Series Release No. 268 (FRR Section 211),
Redeemable Preferred Stocks. Accordingly, we have
reclassified $14.0 million between Common stock with
conversion option exchangeable for subordinated debt, net of
discount and Accumulated Deficit on the
balance sheet as of December 30, 2003. This amount will be
accreted to the face amount due of $14.4 million using the
effective interest method over the Initial Equity Investors
minimum required 180-day holding period.

2. Consolidated Balance Sheets 
It has been determined that the conversion option is an embedded
derivative in accordance with SFAS No. 133. This resulted
in a reclassification of $2.7 million from
Accumulated Deficit to Liability for
derivatives as of December 30, 2003.

3. Consolidated Balance Sheets 
It has been determined that the Company has two classes of
common stock as a result of the conversion option. Accordingly,
Common Stock has been segregated into the two
classes, Shares Outstanding with Conversion Option
and Shares Outstanding without Conversion Option.

4. Consolidated Statement of
Stockholders Equity  The Statement of
Stockholders Equity has been revised to reflect the two
classes of common stock, the conversion option and the liability
for the derivative.

5. Non-Guarantor Subsidiaries Financial
Statements (see Note 16 in the Notes to the Financial
Statements)  Changes as discussed in
numbers 1-3 to the Consolidated Balance Sheet have been
made as appropriate to the Companys Consolidating Balance
Sheet.

6. Non-Guarantor Subsidiaries Financial
Statements (see Note 16 in the Notes to the Financial
Statements)  Centerplates results had
been consolidated with the combined guarantor subsidiaries of
its subordinated notes in the previously reported financial
statements. The Company has revised the consolidating financial
statements where necessary to report Centerplate independently.

7. Notes to Consolidated Financial
Statements  Notes discussing the accounting treatment
of the Companys IDSs and derivative financial instruments
have been updated to reflect the changes as discussed above.

The Company has made no other significant changes
to its financial statements other than those discussed above.

i



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CENTERPLATE, INC. (FORMERLY VOLUME
SERVICES AMERICA HOLDINGS, INC.)

FISCAL YEAR 2003

FORM 10-K/A


ANNUAL REPORT



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TABLE OF CONTENTS

|                                             |          |  |                                                                                           |  |  |     | 
|-------------------------------------------- | -------- |  | ----------------------------------------------------------------------------------------- |  |  | --- | 
|PART II                                      |          |  |                                                                                           | 
|                                             | Item 7.  |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations |  |  | 2   | 
|                                             | Item 8.  |  | Financial Statements and
    Supplementary Data                                           |  |  | F-1 | 
|                                             | Item 9A. |  | Internal Control over
    Financial Reporting                                             |  |  | 16  | 
|PART IV                                      |          |  | 16                                                                                        | 
|                                             | Item 15. |  | Exhibits, Financial
    Statement Schedules, and Reports on Form 8-K                      |  |  | 16  | 
|CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
|CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
|CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
|CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations



| |        
| | -------
| | General

Managements discussion and analysis is a
review of our results of operations and our liquidity and
capital resources. The following discussion should be read in
conjunction with Selected Financial Data (which was
previously filed on March 29, 2004 in our Form 10K)
and the financial statements, including the related notes,
appearing elsewhere in this report. The following data has been
prepared in accordance with GAAP.



| |         
| | --------
| | Overview

We believe that the ability to retain existing
accounts and to win new accounts are the key drivers to
maintaining and growing our net sales. Net sales historically
have also increased when there has been an increase in the
number of events or attendance at our facilities in connection
with major league sports post-season and play-off games. Another
key factor is our skill at controlling product costs, cash and
labor during the events where we provide our services.

When renewing an existing contract or securing a
new contract, we usually have to make a capital expenditure in
our clients facility and offer to pay the client a
percentage of the net sales or profits in the form of a
commission. Over the past three years, we have reinvested the
cash flow generated by operating activities in order to renew or
obtain contracts. We believe that these investments have
provided a diversified account base of exclusive, long-term
contracts. However, as a result of the changes to our capital
structure (including refinancing the 1998 credit facility,
entering into the 2003 credit facility, repurchasing the 1999
notes and completing our IPO) and the dividend and interest
payments to our IDS holders, we may be limited in our ability to
grow our business, and our related levels of growth capital
expenditures, at rates as great as the relatively rapid growth
that we experienced over the last several years. In particular,
we may not be able to pursue future growth opportunities if
borrowings under our 2003 credit facility or additional
issuances of our IDSs or other securities are not available to
us on favorable terms or at all.

Critical Accounting Policies

The preparation of financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at
the financial statement date and reported amounts of revenues
and expenses, including amounts that are susceptible to change.
Our critical accounting policies include accounting methods and
estimates underlying such financial statement preparation, as
well as judgments around uncertainties affecting the application
of those policies. In applying critical accounting policies,
materially different amounts or results could be reported under
different conditions or using different assumptions. We believe
that our critical accounting policies, involving significant
estimates, uncertainties and susceptibility to change, include
the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Recoverability of Property and Equipment,
    Contract Rights, Cost in Excess of Net Assets Acquired
    (Goodwill) and Other Intangible
    Assets.As of December 30, 2003,
    net property and equipment of $52.8 million and net
    contract rights of $101.5 million were recorded. In
    accordance with SFAS No. 144, we evaluate long-lived
    assets with definite lives for possible impairment when an event
    occurs which would indicate that its carrying amount may not be
    recoverable. The impairment analysis is made at the contract
    level and evaluates the net property and equipment as well as
    the contract rights related to that contract. The undiscounted
    future cash flows from a contract are compared to the carrying
    value of the related long-lived assets. If the undiscounted
    future cash flows are lower than the carrying value, an
    impairment charge is recorded. The amount of the impairment
    charge is equal to the difference between the balance of the
    long-lived assets and the future discounted cash flows related
    to the assets (using a rate based on our incremental borrowing
    rate). As we base our estimates of undiscounted future cash
    flows on past operating performance, including anticipated labor
    and other cost increases, and prevailing market conditions, we
    cannot make assurances that our estimates are achievable.
    Different conditions or assumptions, if significantly negative
    or unfavorable, could have a material adverse effect on the
    outcome of our evaluation and our financial condition or future
    results of

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | operations. Events that would trigger an
    evaluation at the contract level include the loss of a tenant
    team, intent to cease operations at a facility due to contract
    termination or other means, the bankruptcy of a client,
    discontinuation of a sports league or a significant increase in
    competition that could reduce the future profitability of the
    contract, among others. As of December 30, 2003, net
    goodwill of $46.5 million and other intangible assets
    (trademarks) of $17.3 million were recorded. In accordance
    with SFAS No. 142, on an annual basis, we test our
    indefinite-lived intangible assets (goodwill and trademarks) for
    impairment. Additionally, goodwill is tested between annual
    tests if an event occurs or circumstances change that would more
    likely than not reduce the fair value of a reporting unit below
    its carrying amount. We have determined that the reporting unit
    for testing the goodwill for impairment is Centerplate. In
    performing the annual goodwill assessment, we compare the fair
    value of Centerplate to its net asset carrying amount, including
    goodwill and trademarks. If the fair value of Centerplate
    exceeds the carrying amount, then it is determined that goodwill
    is not impaired. Should the carrying amount exceed the fair
    value, then we would need to perform the second step in the
    impairment test to determine the amount of the goodwill
    write-off. Fair value for these tests is determined based upon a
    discounted cash flow model, using a rate based on our
    incremental borrowing rate. As we base our estimates of cash
    flows on past operating performance, including anticipated labor
    and other cost increases and prevailing market conditions, we
    cannot make assurances that our estimates are achievable.
    Different conditions or assumptions, if significantly negative
    or unfavorable, could have a material adverse effect on the
    outcome of our evaluation and on our financial condition or
    future results of operations. In performing the annual trademark
    assessment, management compares the fair value of the intangible
    asset to its carrying value. Fair value is determined based on a
    discounted cash flow model, using a rate based on our
    incremental borrowing rate. If the carrying amount of the
    intangible asset exceeds its fair value, an impairment loss will
    be recognized for the excess amount. If the fair value is
    greater than the carrying amount, no further assessment is
    performed. We have performed our annual assessments of goodwill
    and trademarks on April 1, 2003 and determined that no
    impairment exists.
|
| |  | Insurance.We have a
    high deductible insurance program for general liability, auto
    liability and workers compensation risk. We are required
    to estimate and accrue for the amount of losses that we expect
    to incur. These amounts are recorded in cost of sales and
    selling, general and administrative expenses on the statement of
    operations and accrued liabilities and long-term liabilities on
    the balance sheet. Our estimates consider a number of factors,
    including historical experience and an actuarial assessment of
    the liabilities for reported claims and claims incurred but not
    reported. While we use outside parties to assist us in making
    these estimates, it is difficult to provide assurance that the
    actual amounts may not be materially different than what we have
    recorded. In addition we are self-insured for employee medical
    benefits and related liabilities. Our liabilities are based on
    historical trends and claims filed and are estimated for claims
    incurred but not reported. While the liabilities represent
    managements best estimate, actual results could differ
    significantly from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Accounting Treatment for IDSs, Common Stock
    Owned by Initial Equity Investors and Derivative Financial
    Instruments.Our IDSs include common
    stock and subordinated notes, the latter of which has three
    embedded derivative features. The embedded derivative features
    include a call option, a change of control put option, and a
    term-extending option on the notes. The call option allows us to
    repay the principal amount of the subordinated notes after the
    fifth anniversary of the issuance, provided that we also pay all
    of the interest that would have been paid during the initial
    10-year term of the notes, discounted to the date of repayment
    at a risk-free rate. Under the change of control put option, the
    holders have the right to cause us to repay the subordinated
    notes at 101% of face value upon a change of control, as defined
    in the subordinated note agreement. The term-extending option
    allows us to unilaterally extend the term of the subordinated
    notes for two five-year periods at the end of the initial
    10-year period provided that we are in compliance with the
    requirements of the indenture. We have accounted for these
    embedded derivatives in accordance with Statement of Financial
    Accounting Standards (SFAS) No. 133,
    Accounting for Derivative Instruments and Hedging
    Activities, as amended and interpreted. Based on SFAS
    No. 133, as amended and interpreted, the call option and
    the change of control put option are required to be separately
    valued. As of December 30,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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| |  |                                                                                                                                                                                                                                                                                                  
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 2003, these embedded derivatives were fair valued
    and determined to be insignificant. The term extending option
    was determined to not be separable from the underlying
    subordinated notes. Accordingly, it will not be separately
    accounted for in the current or future periods.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In connection with the IPO, those investors who
    held stock prior to the IPO (the Initial Equity
    Investors) entered into an amended and restated
    stockholders agreement, which provides that, upon any
    post-offering sale of common stock by the Initial Equity
    Investors, at the option of the Initial Equity Investors, we
    will exchange a portion of their common stock for subordinated
    notes at an exchange rate of $9.30 principal amount of
    subordinated notes for each share of common stock (so that,
    after such exchange, the Initial Equity Investors will have
    shares of common stock and subordinated notes in the appropriate
    proportions to represent integral numbers of IDSs). We have
    concluded that the portion of the Initial Equity Investors
    common stock exchangeable for subordinated debt should be
    classified on its consolidated balance sheet according to the
    guidance provided by Accounting Series Release No. 268 (FRR
    Section 211), Redeemable Preferred Stocks.Accordingly, we have recorded $14.0 million as
    Common stock with conversion option exchangeable for
    subordinated debt, net of discount on the balance sheet.
    This amount will be accreted to the face amount due of
    $14.4 million using the effective interest method over the
    life of the Initial Equity Investors minimum required 180-day
    holding period. In addition, we have determined that the option
    conveyed to the Initial Equity Investors to exchange common
    stock for subordinated debt in order to form IDSs is an embedded
    derivative in accordance with SFAS No. 133. The Company has
    recorded a liability for the fair value of this embedded
    derivative of approximately $2.7 million as of
    December 30, 2003. This option is fair-valued each
    reporting period with the change in the fair value recorded in
    interest expense in the accompanying consolidated statement of
    operations.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Deferred Income
    Taxes.We recognize deferred tax
    assets and liabilities based on the expected future tax
    consequences of temporary differences between the carrying
    amounts and the tax basis of assets and liabilities. Our primary
    deferred tax assets relate to net operating losses and credit
    carryovers. The realization of these deferred tax assets depends
    upon our ability to generate future income. If our results of
    operations are adversely affected, not all of our deferred tax
    assets, if any, may be realized.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |   | We accounted for the issuance of IDS units in
    December 2003 by allocating the proceeds for each IDS unit to
    the underlying stock and subordinated notes based upon the
    relative fair values of each at that time. Accordingly, the
    portion of the aggregate IDSs outstanding that represents
    subordinated notes has been accounted for as long-term debt
    bearing a stated interest rate of 13.5% maturing on
    December 10, 2013. There can be no assurances that the
    Internal Revenue Service or the courts will not seek to
    challenge the treatment of these notes as debt or the amount of
    interest expense deducted, although to date we have not been
    notified that the notes should be treated as equity rather than
    debt for U.S. federal and state income tax purposes. Such
    reclassification would result in an additional tax liability and
    cause the Company to utilize at a faster rate more of its
    deferred tax assets than it otherwise would.

Seasonality and Quarterly Results

Our net sales and operating results have varied,
and are expected to continue to vary, from quarter to quarter (a
quarter is comprised of thirteen or fourteen weeks), as a result
of factors which include:



| |   |                                                                      
| | - | ---------------------------------------------------------------------
| |  | seasonality of sporting and other events;                            
|
| |  | unpredictability in the number, timing and type
    of new contracts;
|
| |  | timing of contract expirations and special
    events; and           
|
| |  | level of attendance at the facilities which we
    serve.            

Business at the principal types of facilities we
serve is seasonal in nature. MLB and minor league baseball
related sales are concentrated in the second and third quarters,
the majority of NFL related activity occurs in

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the fourth quarter and convention centers and
arenas generally host fewer events during the summer months.
Results of operations for any particular quarter may not be
indicative of results of operations for future periods.


Set forth below are comparative net sales by
quarter for fiscal 2003, 2002 and 2001, as well as operating
income (loss) and net income (loss), on an actual and per share
basis (in thousands, except per share data):

|            |  |       |         |           |  |                   |        |           |  |                  |       |   |  |   |         |   |  |   |       |  
|----------- |  | ----- | ------- | --------- |  | ----------------- | ------ | --------- |  | ---------------- | ----- | - |  | - | ------- | - |  | - | ----- | -
|            |  |      
|            |  | 2003 
|            |  |      
|            |  |       |         | Basic and |  |                   |        | Basic and
|            |  |       |         | Operating |  | Diluted Operating |        | Net       |  | Diluted Earnings
|            |  |       |         | Income    |  | Income (Loss)     |        | Income    |  | (Loss) Per      
|            |  | Sales |         | (Loss)    |  | Per Share(1)      |        | (Loss)    |  | Share(1)        
|            |  |       |         |           |  |                   |        |           |  |                 
|1st Quarter |  | $     | 96,900  |           |  | $                 | (4,715 | )         |  | $                | (0.35 | ) |  | $ | (6,545  | ) |  | $ | (0.48 | )
|2nd Quarter |  | $     | 172,733 |           |  | $                 | 10,460 |           |  | $                | 0.77  |   |  | $ | 2,876   |   |  | $ | 0.21  |  
|3rd Quarter |  | $     | 214,636 |           |  | $                 | 16,583 |           |  | $                | 1.22  |   |  | $ | 10,674  |   |  | $ | 0.78  |  
|4th Quarter |  | $     | 131,788 |           |  | $                 | (375   | )         |  | $                | (0.02 | ) |  | $ | (11,423 | ) |  | $ | (0.70 | )

|            |  |       |         |           |  |                   |        |           |  |                  |       |   |  |   |        |   |  |   |       |  
|----------- |  | ----- | ------- | --------- |  | ----------------- | ------ | --------- |  | ---------------- | ----- | - |  | - | ------ | - |  | - | ----- | -
|            |  |      
|            |  | 2002 
|            |  |      
|            |  |       |         | Basic and |  |                   |        | Basic and
|            |  |       |         | Operating |  | Diluted Operating |        | Net       |  | Diluted Earnings
|            |  |       |         | Income    |  | Income (Loss)     |        | Income    |  | (Loss) Per      
|            |  | Sales |         | (Loss)    |  | Per Share(1)      |        | (Loss)    |  | Share(1)        
|            |  |       |         |           |  |                   |        |           |  |                 
|1st Quarter |  | $     | 87,840  |           |  | $                 | (4,185 | )         |  | $                | (0.31 | ) |  | $ | (6,870 | ) |  | $ | (0.50 | )
|2nd Quarter |  | $     | 166,421 |           |  | $                 | 9,813  |           |  | $                | 0.72  |   |  | $ | 3,841  |   |  | $ | 0.28  |  
|3rd Quarter |  | $     | 195,100 |           |  | $                 | 15,892 |           |  | $                | 1.17  |   |  | $ | 9,783  |   |  | $ | 0.72  |  
|4th Quarter |  | $     | 127,801 |           |  | $                 | 1,975  |           |  | $                | 0.15  |   |  | $ | (2,258 | ) |  | $ | (0.17 | )

|            |  |       |         |           |  |                   |        |           |  |                  |       |   |  |   |         |   |  |   |       |  
|----------- |  | ----- | ------- | --------- |  | ----------------- | ------ | --------- |  | ---------------- | ----- | - |  | - | ------- | - |  | - | ----- | -
|            |  |      
|            |  | 2001 
|            |  |      
|            |  |       |         | Basic and |  |                   |        | Basic and
|            |  |       |         | Operating |  | Diluted Operating |        | Net       |  | Diluted Earnings
|            |  |       |         | Income    |  | Income (Loss)     |        | Income    |  | (Loss) Per      
|            |  | Sales |         | (Loss)    |  | Per Share(1)      |        | (Loss)    |  | Share(1)        
|            |  |       |         |           |  |                   |        |           |  |                 
|1st Quarter |  | $     | 83,194  |           |  | $                 | (4,107 | )         |  | $                | (0.30 | ) |  | $ | (10,631 | ) |  | $ | (0.78 | )
|2nd Quarter |  | $     | 157,646 |           |  | $                 | 8,117  |           |  | $                | 0.60  |   |  | $ | 2,155   |   |  | $ | 0.16  |  
|3rd Quarter |  | $     | 177,559 |           |  | $                 | 13,862 |           |  | $                | 1.02  |   |  | $ | 8,399   |   |  | $ | 0.62  |  
|4th Quarter |  | $     | 124,714 |           |  | $                 | 1,283  |           |  | $                | 0.09  |   |  | $ | (3,523  | ) |  | $ | (0.26 | )



---



|    |                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The basic and diluted operating income (loss) and
    basic and diluted earnings (loss) per share reflect a 40,920
    (rounded to the nearest share) for one split of the common stock
    that was effected on December 2, 2003.

Results of Operations



| |                                        
| | ---------------------------------------
| | Fiscal 2003 Compared to Fiscal
    2002

Net sales.Net sales
of $616.1 million for fiscal 2003 increased by
$38.9 million or 6.7% from $577.2 million in fiscal
2002. The increase was primarily due to 17 new accounts
(including contracts executed in fiscal 2002 where revenue was
not fully annualized until fiscal 2003), which generated net
sales of $37.1 million partially offset by 11 expired
and/or terminated accounts, which decreased net sales by
$7.8 million. Additionally, MLB related sales increased
$14.3 million from the prior year period primarily
attributable to an overall increase in attendance and per capita
spending and also included an increase of approximately
$4.4 million related to post-season games. The remaining
decline in net sales was primarily due to decreased volume in
various facilities where we provide our services.

Cost of sales.Cost
of sales of $504.0 million for fiscal 2003 increased by
$33.1 million from $470.9 million in fiscal 2002 due
primarily to the higher sales volume. Cost of sales as a
percentage of net sales increased by approximately 0.2% from the
prior year period. The increase was primarily the result of
higher commission costs related to higher commission rates paid
to our largest client in connection with the renewal

5



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##### Table of Contents



of that clients contract and a change in
the sales mix to client facilities with higher commission rates.
These increases were partially offset by lower product costs as
a percentage of net sales resulting from efficiencies achieved
in some of the facilities we serve.


Selling, general and administrative
expenses.Selling, general and
administrative expenses of $59.6 million in fiscal 2003
increased by $4.3 million from $55.3 million in fiscal
2002. The increase was primarily associated with higher
corporate overhead expenses of $4.3 million related to the
addition of management positions during fiscal 2002 and to an
increase in professional and legal fees. These additions to
management were designed to increase and upgrade the
senior-level management available to our clients. In addition,
higher insurance costs of approximately $1.1 million were
incurred; however; these costs were offset by savings in other
cost categories.

Depreciation and
amortization.Depreciation and
amortization was $27.1 million for fiscal 2003, compared to
$26.2 million in fiscal 2002. The increase was principally
attributable to higher amortization expense primarily related to
investments for the renewal and/or acquisition of certain
contracts.

Transaction related
expenses.Transaction related expenses
of $2.6 million in fiscal 2003 include certain expenses
related to executive compensation associated with our IPO of
IDSs. The fiscal 2002 costs related primarily to the expenses
incurred in connection with the structuring and evaluation of
financing and recapitalization strategies.

Contract related
losses.Contract related losses of
$0.8 million recorded in fiscal 2003 reflected an
impairment charge of approximately $0.2 million for the
write-down of property and equipment for a contract which has
been assigned to a third-party, and $0.6 million for the
write-down of contract rights and other assets for certain
terminated contracts. In fiscal 2002, contract related losses of
$0.7 million reflected an impairment charge for the
write-down of contract rights.

Operating income.Operating income decreased approximately $1.5 million from
fiscal 2002 due to the factors described above.

Interest expense.Interest expense of $32.8 million in fiscal 2003 included a
$5.3 million non-cash charge for the early extinguishment
of debt resulting from the refinancing of our 1998 credit
facility and $7.2 million in expenses related to the
repurchase of our 1999 notes. These interest expenses, which
were precipitated by our IPO, contributed substantially to the
net loss we reported for fiscal 2003. With the proceeds from the
IPO and funds received under our 2003 credit facility, we repaid
all outstanding borrowings under our 1998 credit facility and
redeemed 87.75% of our $100 million in aggregate principal
amount of the 1999 notes at a redemption price of approximately
108.1% of the aggregate principal amount of the 1999 notes plus
accrued and unpaid interest. Excluding these charges, interest
of $20.3 million decreased by $0.4 million from fiscal
2002 principally due to the refinancing of our 1998 credit
facility.

Other income, net.During the first quarter of fiscal 2002, Service America
received approximately $1.4 million in connection with
funds previously set aside to satisfy creditors pursuant to a
plan of reorganization approved in 1993. Under the plan of
reorganization, Service America was required to deposit funds
with a disbursing agent for the benefit of its creditors. Any
funds which remained unclaimed by its creditors after a period
of two years from the date of distribution were forfeited and
all interest in those funds reverted back to Service America.
Service America does not believe that it has any obligation to
escheat such funds. This event was not repeated in 2003.

Income taxes.We
have evaluated the available evidence about future taxable
income and other possible sources of realization of deferred tax
assets and based on our best current estimates believe that
taxable income will be realized in fiscal 2004 and beyond.
Accordingly, in fiscal 2003, we have eliminated the valuation
allowance of approximately $0.9 million and recorded a tax
benefit of $6.3 million in comparison to the recognition of
a $0.2 million benefit in the prior year period. The
effective tax rate for fiscal 2003 was significantly impacted by
recognizing the tax benefits associated with approximately
$2.1 million of prior and current year tax credits and the
release of the valuation allowance of approximately
$0.9 million. The benefit associated with the credits arose
as we determined that we could obtain the credits without
increasing the amount of taxes that were payable.

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##### Table of Contents



Other comprehensive
income The foreign
currency translation gain of $0.7 million in fiscal 2003
reflects the favorable Canadian dollar exchange rate versus the
U.S. dollar at our Canadian operations.



| |                                        
| | ---------------------------------------
| | Fiscal 2002 Compared to Fiscal
    2001

Net Sales.Net sales
of $577.2 million during fiscal 2002 increased
$34.1 million or approximately 6% from $543.1 million
in fiscal 2001. Our sports facility accounts accounted for
approximately $20.2 million of the increase, of which
$10.5 million was related to NFL venues. Five additional
NFL games were played in our clients facilities in fiscal
2002, including four games that had been postponed from fiscal
2001 due to the events of September 11, 2001, and Super
Bowl XXXVI. Additionally, a slight increase of
$0.8 million was generated in MLB venues due primarily to
an increase in sales as a result of post-season activity,
including the World Series. Sales in convention centers and
other entertainment facilities increased $2.3 million and
$6.2 million, respectively. In addition, newly acquired
service contracts generated net sales of $4.6 million.

Cost of Sales.Cost
of sales of $470.9 million for fiscal 2002 increased by
$24.3 million from $446.6 million for fiscal 2001. The
increase was due primarily to the increase in sales volume. Cost
of sales as a percentage of net sales decreased by approximately
0.4% from fiscal 2001 to 81.6%. This decrease was due mainly to
efficiencies associated with the greater sales volume.

Selling, General and Administrative
Expenses.Selling, general and
administrative expenses of $55.3 million increased
approximately 0.7% as a percentage of net sales as compared to
fiscal 2001. The increase was primarily the result of higher
insurance costs due to dramatic price increases in the insurance
market post September 11, 2001, higher corporate overhead
expenses related to the addition of management positions and an
increase in professional fees. With respect to the insurance
increase, we obtained estimates for the casualty insurance
program (workers compensation, general liability, and
automobile liability policies) from multiple insurance companies
at the end of 2001. Due to increased rates across the insurance
market in the wake of September 11, 2001, and after
reviewing the results of the estimates obtained along with an
independent actuarial analysis, it was our assessment that a
high deductible program was more cost effective than a
guaranteed cost (zero deductible) program.

Depreciation and
Amortization.Depreciation and
amortization was $26.2 million in fiscal 2002 compared to
$24.5 million in fiscal 2001. The increase was principally
attributable to higher amortization expense related to
investments for the renewal and/or acquisition of certain
contracts, partially offset by a decline in amortization as a
result of the discontinuation of goodwill and trademark
amortization ($2.5 million) in accordance with
SFAS No. 142.

Transaction Related
Expenses.Acquisition related costs of
$0.6 million were incurred in fiscal 2002 relating
primarily to expenses incurred in connection with the
structuring and evaluation of financing and recapitalization
strategies, including proposals for securities offerings that
preceded the proposed offering of IDSs and the related
refinancing of the 1998 credit facility and 1999 notes. No such
expenses were incurred in 2001.

Contract Related
Losses.Contract related losses of
$0.7 million in fiscal 2002 reflected an impairment charge
related to a write-down of contract rights for one contract. In
fiscal 2001, contract related losses of $4.8 million
reflected an impairment charge of $2.3 million for
equipment, leasehold improvements and location contracts with
respect to certain contracts. Most of the $2.3 million
impairment charge related to two of our clients which filed for
Chapter 11 bankruptcy in 2001. Additionally,
$2.5 million in other assets  chiefly long-term
receivables related to one of those clients  was
written off.

Operating Income.Operating income increased approximately $4.3 million in
fiscal 2002 as compared to fiscal 2001 due to the factors
described above.

Interest Expense.Interest expense decreased by $2.7 million from fiscal 2001
due primarily to lower interest rates on our variable rate debt.

Other Income, net.During fiscal 2002, Service America received approximately
$1.4 million in connection with funds set aside to satisfy
creditors pursuant to a plan of reorganization approved in 1993.

7



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##### Table of Contents



Under the plan of reorganization, Service America
was required to deposit funds with a disbursing agent for the
benefit of its creditors. Any funds which remained unclaimed by
its creditors after a period of two years from the date of
distribution were forfeited and all interest in those funds
reverted back to Service America. Service America does not
believe that it has any obligation to escheat such funds.


Income Taxes.Management has evaluated the available evidence about future
taxable income and other possible sources of realization of
deferred tax assets, and, based on its best current estimates,
believes taxable income or benefit will be realized in fiscal
2002 and beyond. Accordingly, in fiscal 2002 we have reduced the
valuation allowance by $1.3 million and recorded a tax
benefit of approximately $0.2 million in comparison to the
recognition of a benefit of $0.4 million in fiscal 2001.



| |        
| | -------
| | Outlook

The weak economy and related factors in the last
several years have had an adverse impact on the levels of
attendance at some sports events and in many convention center
facilities we serve and on the levels of spending in the
convention center facilities. Looking forward, we hope that
economic conditions will improve, but we have no evidence that
2004 will be significantly different from 2003.

The events of September 11, 2001 caused a
significant increase in our insurance costs related to the
recreational facilities in which we provide services. Recently
there has been some improvement in insurance rates, although
insurance costs remain high for desirable coverage.

Liquidity and Capital Resources

For fiscal 2003, net cash provided by operating
activities was $27.2 million compared to $38.6 million
in fiscal 2002. The $11.4 million decline in cash provided
was principally attributable to IPO related expenses, including
$7.2 million for the repurchase of the 1999 notes, as
discussed above, and $2.6 million in expenses related to
executive compensation associated with the issuance of the IDSs.
In addition, in fiscal 2002, approximately $1.4 million in
funds was recovered by Service America, as discussed above.

Net cash used in investing activities was
$23.3 million for fiscal 2003 compared to
$45.0 million in fiscal 2002 reflecting a higher level of
investment associated with renewals of existing contracts in the
prior year period, including the renewal of our largest client.

Net cash provided by financing activities was
$8.7 million in fiscal 2003 as compared to
$1.7 million in fiscal 2002, the increase primarily
reflecting the IPO. The proceeds of the term loans from our 2003
credit facility were combined with proceeds from the IPO and the
combined funds of $341.7 were used to repay the outstanding
balance under our 1998 credit facility of $116.8 million,
repay $87.8 million of 1999 notes, establish cash reserves
of $22.0 million for the benefit of the new lenders,
repurchase the remaining 1999 notes, repurchase common stock
from the investors in the amount of $71.4 million and pay
fees and expenses in connection with the IPO, the 2003 credit
facility and the notes thereunder.

For fiscal 2002, net cash provided by operating
activities was $38.6 million as compared to
$24.7 million in fiscal 2001. The $13.9 million
increase was principally attributable to a $8.1 million
increase in net income, mainly as the result of the
$4.3 million improvement in operating income,
$2.7 million decline in interest expense and the recovery
of $1.4 million in funds by Service America, as discussed
above. Additionally, our working capital decreased as compared
to the prior year period chiefly due to higher accrued
commissions, insurance and legal fees.

Net cash used in investing activities was
$45.0 million in fiscal 2002 compared to $29.3 million
in fiscal 2001, primarily reflecting a higher level of
investment in contract rights and property and equipment
associated with renewals of existing contracts in fiscal 2002.

Net cash provided by financing activities was
$1.7 million in fiscal 2002 as compared to
$5.0 million in fiscal 2001. As of December 31, 2002,
$15.0 million in revolving loans were outstanding under our
1998 credit facility as compared to $12.8 million at the
end of fiscal 2001; however, the increase in net borrowings was
only

8



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##### Table of Contents



$2.2 million in fiscal 2002 versus
$6.8 million in fiscal 2001. In addition, net cash provided
by bank overdrafts increased by approximately $1.4 million
in fiscal 2002 as compared to fiscal 2001.


We are also often required to obtain performance
bonds, bid bonds or letters of credit to secure our contractual
obligations. As of December 30, 2003, we had requirements
outstanding for performance bonds and letters of credit of
$13.4 million and $20.3 million, respectively. Under
the 2003 credit facility, we have an aggregate of
$35.0 million available for letters of credit, subject to
an overall borrowing limit of $50.0 million under that
facility. As of December 30, 2003 we had approximately
$25.7 million available to be borrowed under the revolving
credit facility. At that date there were $4.0 million in
outstanding borrowings and $20.3 million of outstanding
undrawn letters of credit reducing availability. At
December 31, 2002, $43.7 million was available to be
borrowed under our 1998 credit facility. At that date, there
were $15.0 million in outstanding borrowings and
$16.3 million of outstanding, undrawn letters of credit
reducing availability.

Our capital expenditures can be categorized into
two types: maintenance and growth. Maintenance capital
expenditures are associated with securing renewals of our
existing contracts and maintaining those contracts following
renewal. Growth capital expenditures are those made in
connection with securing new contracts and maintaining those
contracts during their initial term. In both cases, particularly
for sports facilities, capital expenditures are often required
in the form of contract acquisition fees or up-front or
committed future capital investment to help finance facility
construction or renovation. This expenditure typically takes the
form of investment in leasehold improvements and food service
equipment and grants to owners or operators of facilities. We
provide our historical maintenance and growth capital
expenditures for each of the five fiscal years ended
December 30, 2003 in Item 6 Selected Financial
Data. The amount of maintenance capital expenditures in
fiscal 2002, a total of $31.2 million, increased
significantly due to the renewal of several large long-term
contracts. We have historically financed our capital
expenditures with a combination of cash from operating
activities and borrowings under the revolving line of credit of
the credit facility.

We believe that the identification and separation
of maintenance and growth capital expenditures are important
factors in evaluating our business results. While we strive to
maintain our present levels of net sales and EBITDA by securing
renewals of our existing contracts, we cannot make assurances
that we will maintain our present levels of net sales and EBITDA
since we cannot predict the future financial requirements of our
clients. Contracts may be renewed at significantly different
commission rates, and thus levels of net sales and EBITDA,
depending on the clients financial requirements at the
time of renewal.

The amount of capital commitment required by us
can vary significantly. The ability to make those expenditures
is often an essential element of a successful bid on a new
contract or renewal of an existing contract. The following table
shows our net sales for fiscal 2003, which equaled
$616.1 million, as allocated according to the expiration
year of our contracts:

|                       |  |       |  |        |  |       |  |                |       | 
|---------------------- |  | ----- |  | ------ |  | ----- |  | -------------- | ----- | 
|                      
|Contracts Expiring in:
|                      
|2004                   |  | 2005  |  | 2006   |  | 2007  |  | 2008 and After
|                       |  |       |  |        |  |       |  |               
|                      
|(In millions)         
|$104.3                 |  | $56.8 |  | $110.1 |  | $81.0 |  | $              | 260.2 | 

Commission and management fee rates vary
significantly among contracts based primarily upon the amount of
capital that we invest, the type of facility involved, the term
of the contract and the services provided by us. In general,
within each client category, the level of capital investment and
commission are related, such that the greater the capital
investment that we make, the lower the commission we pay to the
client. Our profit sharing contracts generally provide that we
are reimbursed each year for the amortization of our capital
investments prior to determining profits under the contract.

At the end of the contract term, all capital
investments that we have made typically remain the property of
the client, but our contracts generally provide that the client
must reimburse us for any undepreciated or unamortized capital
investments or fees made pursuant to the terms of the contract
if the contract is terminated early, other than due to our
default.

9



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##### Table of Contents



We believe that cash flow from operating
activities, together with borrowings available under the 2003
credit facility, will be sufficient to fund our currently
anticipated capital investment requirements, interest and
principal payment obligations, working capital requirements and
anticipated dividend payments. In fiscal 2003, we made capital
investments of $23.9 million. We are currently committed to
fund aggregate capital investments of approximately
$12.4 million, $1.7 million, $2.7 million and $0.3
million in 2004, 2005, 2006 and 2007, respectively. We expect
that future maintenance capital expenditures will be financed
through net cash provided by operating activities. We expect
that future growth capital expenditures will be financed through
borrowings under the revolving portion of our 2003 credit
facility, issuances of additional IDSs or other securities of
ours, net cash provided by operating activities or a combination
of these alternatives.



| |                      
| | ---------------------
| | 2003 Credit Agreement

On December 10, 2003, Volume Services
America, Inc. (VSA), a subsidiary of Centerplate,
entered into the 2003 credit facility under a credit agreement
providing for $65,000,000 in fixed rate term loans and a
$50,000,000 revolving portion. The term loans bear interest at a
fixed rate of 7.24% and mature on June 10, 2008. The
revolving portion of the 2003 credit facility allows VSA to
borrow up to $50,000,000 and includes a sub-limit of $35,000,000
for letters of credit (which reduce availability under the
revolving portion of the 2003 credit facility) and a sub-limit
of $5,000,000 for swingline loans. Revolving loans must be
repaid on the maturity date of the revolving portion of the 2003
credit facility and are subject to an annual clean-up period of
thirty days. Swingline loans must be either repaid within five
days or converted to revolving loans. The revolving portion of
the 2003 credit facility is subject to an annual clean-up period
of thirty days and matures on December 10, 2006. Borrowings
under the revolving portion of the 2003 credit facility bear
interest at floating rates based upon the interest rate option
elected by VSA and its leverage ratio.

The credit agreement calls for mandatory
prepayment of the loans under certain circumstances and optional
prepayment without penalty. There are further provisions that
limit VSAs ability to make interest payments on the 2003
notes, make dividend payments and invest in capital
expenditures. The credit agreement contains provisions that
require VSA to comply with certain financial covenants,
including a maximum net total leverage ratio, a maximum net
senior leverage ratio and an interest coverage ratio. At
December 30, 2003, VSA was in compliance with all covenants.



| |                                      
| | -------------------------------------
| | Subordinated Notes Issued in
    2003

During December 2003, in connection with our IPO,
we issued $105,245,000 in aggregate principal amount of
13.50% Subordinated Notes (2003 notes). The
2003 notes mature on December 10, 2013 and are subject to
extension by two successive five year terms at
Centerplates option provided that certain financial
conditions are met. Interest on the 2003 notes is payable on or
about the 20th day of each month. The 2003 notes are unsecured,
are subordinated to all of Centerplates existing and
future senior indebtedness, and rank equally with all of
Centerplates existing and future indebtedness.
Furthermore, the debt is guaranteed by all of the wholly-owned
subsidiaries of Centerplate.

10



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##### Table of Contents



Contractual Commitments

We have future obligations for debt repayments,
future minimum rental and similar commitments under
non-cancelable operating leases as well as contingent
obligations related to outstanding letters of credit. These
obligations as of December 30, 2003 are summarized below:

|                               |  |               |       |                        |  |       |      |       |  |           |      |  |  |   |       |  |  |   |       | 
|------------------------------ |  | ------------- | ----- | ---------------------- |  | ----- | ---- | ----- |  | --------- | ---- |  |  | - | ----- |  |  | - | ----- | 
|                               |  |               |       |                       
|                               |  |               |       | Payments Due by Period
|                               |  |               |       |                       
|                               |  |               |       | Less Than              |  | 1-3   |      | 4-5   |  | More Than
|                               |  | Total         |       | 1 Year                 |  | Years |      | Years |  | 5 Years  
|                               |  |               |       |                        |  |       |      |       |  |          
|                               |  |              
|                               |  | (In millions)
|Long-term borrowings           |  | $             | 186.5 |                        |  | $     | 16.3 |       |  | $         |     |  |  | $ | 65.0  |  |  | $ | 105.2 | 
|Interest for fixed rate debt   |  |               | 162.8 |                        |  |       | 19.1 |       |  |           | 57.2 |  |  |   | 30.5  |  |  |   | 56.0  | 
|Insurance                      |  |               | 8.8   |                        |  |       | 4.5  |       |  |           | 3.6  |  |  |   | 0.5   |  |  |   | 0.2   | 
|Operating leases               |  |               | 1.3   |                        |  |       | 0.5  |       |  |           | 0.8  |  |  |   |      |  |  |   |      | 
|Commissions and royalties      |  |               | 38.4  |                        |  |       | 8.3  |       |  |           | 17.1 |  |  |   | 6.1   |  |  |   | 6.9   | 
|Capital Commitments(1)         |  |               | 17.1  |                        |  |       | 12.4 |       |  |           | 4.7  |  |  |   |      |  |  |   |      | 
|Other long-term liabilities(2) |  |               | 0.7   |                        |  |       | 0.5  |       |  |           | 0.1  |  |  |   | 0.1   |  |  |   |      | 
|                               |  |               |       |                        |  |       |      |       |  |           |      |  |  |   |       |  |  |   |       | 
|Total contractual obligations  |  | $             | 415.6 |                        |  | $     | 61.6 |       |  | $         | 83.5 |  |  | $ | 102.2 |  |  | $ | 168.3 | 
|                               |  |               |       |                        |  |       |      |       |  |           |      |  |  |   |       |  |  |   |       | 



---



|    |                                                                                              
|--- | ---------------------------------------------------------------------------------------------
|(1) | Represents capital commitments in connection with
    several long-term concession contracts.
|   
|(2) | Represents various long-term obligations
    reflected on the balance sheet.                 

|                             |  |               |      |                        |  |       |      |       |  |           |   |  |  |   |   |  |  |   |   | 
|---------------------------- |  | ------------- | ---- | ---------------------- |  | ----- | ---- | ----- |  | --------- | - |  |  | - | - |  |  | - | - | 
|                             |  |               |      |                       
|                             |  |               |      | Payments Due by Period
|                             |  |               |      |                       
|                             |  |               |      | Less Than              |  | 1-3   |      | 4-5   |  | More Than
|Other Commercial Commitments |  | Total         |      | 1 Year                 |  | Years |      | Years |  | 5 Years  
|                             |  |               |      |                        |  |       |      |       |  |          
|                             |  |              
|                             |  | (In millions)
|Letters of credit            |  | $             | 20.3 |                        |  | $     | 20.3 |       |  | $         |  |  |  | $ |  |  |  | $ |  | 

We believe that our net cash provided by
operating activities and borrowing capacity under the 2003
credit facility will be sufficient to enable us to fund our
liquidity needs for the foreseeable future. Should we be unable
to borrow under the 2003 credit facility, we would seek other
sources of debt or equity funding. However, we cannot make
assurances that we will be successful in obtaining alternate
sources of funding in sufficient amounts or on acceptable terms.

New Accounting Standards

In June 2001, the Financial Accounting Standards
Board (FASB) issued SFAS No. 143,
Accounting for Asset Retirement Obligations.
The provisions of SFAS No. 143 require that asset
retirement obligations that are identifiable upon acquisition
and construction, and during the operating life of a long-lived
asset, be recorded as a liability using the present value of the
estimated cash flows. A corresponding amount would be
capitalized as part of the assets carrying amount and
amortized to expense over the assets useful life. We have
adopted the provisions of SFAS No. 143 effective
January 1, 2003. The adoption of this statement has not had
and is not expected to have a material impact on our financial
position, results of operations or cash flows.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. This statement addresses financial accounting
and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issue
No. 94-3, Liability Recognition for Certain Employees
Termination Benefits and Other Costs to Exit an Activity
(Including Certain Costs Incurred in a Restructuring)and is
effective for exit or disposal activities after
December 31, 2002. The implementation of this statement did
not have a material effect on our financial position or results
of operations.

On November 25, 2002, the FASB issued
Interpretation No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, which elaborates on
the disclosures to be made by a guarantor about its obligations
under certain guarantees issued. It also clarifies that a
guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The Interpretation expands
on the accounting guidance of

11



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##### Table of Contents



SFAS No. 5, Accounting for
Contingencies, SFAS No. 57, Related Party
Disclosures, and SFAS No. 107, Disclosures
about Fair Value of Financial Instruments. The
Interpretation also incorporates, without change, the provisions
of FASB Interpretation No. 34, Disclosure of Indirect
Guarantees of Indebtedness of Others, which it supersedes.
The Interpretation does identify several situations where the
recognition of a liability at inception for a guarantors
obligation is not required. The initial recognition and
measurement provisions of Interpretation No. 45 apply on a
prospective basis to guarantees issued or modified after
December 31, 2002, regardless of the guarantors
fiscal year-end. The disclosures are effective for financial
statements of interim or annual periods ending after
December 15, 2002. The disclosure requirements, initial
recognition and initial measurement provisions are currently
effective and did not have a material effect on our financial
position or results of operations.


On December 31, 2002, the FASB issued
SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. SFAS
No. 148 amends SFAS No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods of
transition to SFAS No. 123s fair value method of
accounting for stock-based employee compensation. SFAS
No. 148 also amends the disclosure provisions of SFAS
No. 123 and Accounting Principles Board (APB)
Opinion No. 28, Interim Financial Reporting, to
require disclosure in the summary of significant accounting
policies of the effects of an entitys accounting policy
with respect to stock-based employee compensation on reported
net income and earnings per share in annual and interim
financial statements. While SFAS No. 148 does not amend
SFAS No. 123 to require companies to account for employee
stock options using the fair value method, the disclosure
provisions of SFAS No. 148 are applicable to all companies
with stock-based compensation, regardless of whether they
account for that compensation using the fair value method of
SFAS No. 123 or the intrinsic value method of APB Opinion
No. 25, Accounting for Stock Issued to Employees.
SFAS No. 148s amendment of the transition and annual
disclosure requirements of SFAS No. 123 are effective for
fiscal years ending after December 15, 2002. The
implementation of this standard did not have a material effect
on our financial position or results of operations.

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin No. 51,
Consolidated Financial Statements (FIN 46).
This Interpretation applies immediately to variable interest
entities created after January 31, 2003. In October 2003,
certain provisions of FIN 46 were amended. FIN 46, as
amended, applies to the first fiscal year or interim period
ending after December 15, 2003, to those variable interest
entities in which an enterprise holds a variable interest that
it acquired before February 1, 2003. This Interpretation
may be applied prospectively with a cumulative-effect adjustment
as of the date on which it is first applied or by restating
previously issued financial statements for one or more years
with a cumulative-effect adjustment as of the beginning of the
first year restated. Certain provisions of FIN 46 were
deferred until the period ending after March 15, 2004. The
implementation of FIN 46 for provisions effective during
2003 did not have a material impact on our financial position or
results of operations.

In April 2003, the FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This
statement amends and clarifies financial accounting and
reporting for derivative instruments including certain
derivatives embedded in other contracts. This statement is
effective for contracts entered into or modified after
June 30, 2003. The implementation of this statement did not
have a material effect on our financial position or results of
operations.

In May 2003, the FASB issued
SFAS No. 150,Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and
Equity. SFAS No. 150 establishes standards for
classification and measurement of certain financial instruments
with characteristics of both liabilities and equity. This
statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at
the beginning of the first interim period after June 15,
2003. In October 2003, the FASB deferred the implementation of
certain provisions of this standard indefinitely. The
implementation of this standard did not have a material effect
on our financial position or results of operations.

12



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Cautionary Statement Regarding Forward-Looking
Statements

Some of the statements under
Managements Discussion and Analysis of Financial
Condition and Results of Operations, Business
and elsewhere in this Annual Report on Form 10-K/A may
include forward-looking statements which reflect our current
views with respect to future events and financial performance.
Statements which include the words expect,
intend, plan, believe,
project, anticipate and similar
statements of a future or forward-looking nature identify
forward-looking statements for purposes of the federal
securities laws or otherwise.

All forward-looking statements address matters
that involve risks and uncertainties. Accordingly, there are or
will be important factors that could cause actual results to
differ materially from those indicated in these statements or
that could adversely affect the holders of our IDSs, 2003 notes
and common stock. We believe that these factors include the
following:



| |   |                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We have substantial indebtedness, which could
    restrict our ability to pay interest and principal on our 2003
    notes and to pay dividends with respect to shares of our common
    stock represented by the IDSs and impact our financing options
    and liquidity position.                                                
|
| |  | We may amend the terms of our 2003 credit
    facility, or we may enter into new agreements that govern our
    senior indebtedness, and the amended or new terms may
    significantly affect our ability to pay interest and dividends
    to IDS holders.                                                                       
|
| |  | We are subject to restrictive debt covenants and
    other requirements related to our outstanding debt that limit
    our business flexibility by imposing operating and financial
    restrictions on our operations.                                                                                                            
|
| |  | We are a holding company and rely on dividends,
    interest and other payments, advances and transfers of funds
    from our subsidiaries to meet our debt service and other
    obligations.                                                                                                                                     
|
| |  | Our interest expense may increase significantly
    and could cause our net income and distributable cash to decline
    significantly.                                                                                                                                                                                            
|
| |  | We may not generate sufficient funds from
    operations to pay our indebtedness at maturity or upon the
    exercise by holders of their rights upon a change of control.                                                                                                                                                         
|
| |  | The indenture governing our 2003 notes and our
    2003 credit facility permit us to pay a significant portion of
    our free cash flow to stockholders in the form of dividends. Any
    amounts paid by us in the form of dividends will not be
    available in the future to satisfy our obligations under the
    2003 notes.
|
| |  | The realizable value of our assets upon
    liquidation may be insufficient to satisfy claims.                                                                                                                                                                                                                                     
|
| |  | Deferral of interest payments would have adverse
    tax consequences for holders of our 2003 notes and may adversely
    affect the trading price of the 2003 notes.                                                                                                                                                              
|
| |  | Because of the subordinated nature of the 2003
    notes, their holders may not be entitled to be paid in full, if
    at all, in a bankruptcy, liquidation or reorganization or
    similar proceeding.                                                                                                                           
|
| |  | The guarantees of the 2003 notes by our
    subsidiaries may not be enforceable.                                                                                                                                                                                                                                                   
|
| |  | Seasonality and variability of our businesses may
    cause volatility in the market value of our IDSs and may hinder
    our ability to make timely distributions on the IDSs.                                                                                                                                                    
|
| |  | The U.S. federal income tax consequences of
    the purchase, ownership and disposition of IDSs are unclear.                                                                                                                                                                                                                       
|
| |  | The Internal Revenue Service (IRS) may not view
    the interest rate on the 2003 notes as an arms length rate.                                                                                                                                                                                                                   
|
| |  | The IRS might seek to recharacterize our
    subordinated notes as equity, which would cause our interest
    payments not to be deductible for tax purposes. This could
    create a significant tax liability for which we have not
    reserved.                                                                                

13



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Before our IPO there was no public market for our
    IDSs, shares of our common stock or 2003 notes. The price of the
    IDSs may fluctuate substantially, which could negatively affect
    IDS holders.                                                                              
|
| |  | Future sales or the possibility of future sales
    of a substantial amount of IDSs, shares of our common stock or
    our 2003 notes may depress the price of our outstanding IDSs and
    the shares of our common stock and our 2003 notes.                                           
|
| |  | Our restated certificate of incorporation and
    amended and restated by-laws and several other factors could
    limit another partys ability to acquire us and deprive our
    investors of the opportunity to obtain a takeover premium for
    their securities.                   
|
| |  | If attendance or the number of events held at our
    clients facilities decreases, our net sales and cash flow
    may significantly decline.                                                                                                                                          
|
| |  | The pricing and termination provisions of our
    contracts may constrain our ability to recover costs and to make
    a profit on our contracts.                                                                                                                                        
|
| |  | We have a history of losses and may experience
    losses in the future.                                                                                                                                                                                                                 
|
| |  | We may not be able to recover our capital
    investments in clients facilities, which may significantly
    reduce our profits or cause losses.                                                                                                                                        
|
| |  | If the sports team tenant of a facility we serve
    relocates or the ownership of a facility we serve changes, we
    may lose the contract for that facility.                                                                                                                          
|
| |  | If we were to lose any of our largest clients,
    our results of operations could be significantly harmed.                                                                                                                                                                              
|
| |  | A contraction of MLB that eliminates any of the
    teams playing in any of the facilities we serve would likely
    have a material adverse effect on our results of operations.                                                                                                        
|
| |  | We may not have sufficient funds available to
    make capital investments in clients facilities necessary
    to maintain these relationships and increased capital
    investments or commissions to renew such relationships may lower
    our operating results for such facilities.
|
| |  | Our historical rapid growth rates may not be
    indicative of future results, given our new capital structure
    and dividend policy and our reliance on other financing sources.                                                                                                      
|
| |  | If labor or other operating costs increase, we
    may not be able to make a corresponding increase in the prices
    of our products and services and our profitability may decline
    significantly.                                                                                  
|
| |  | We may incur significant liabilities or
    reputational harm if claims of illness or injury associated with
    our service of food and beverage to the public are brought
    against us.                                                                                              
|
| |  | The loss of any of our liquor licenses or permits
    could adversely affect our ability to carry out our business.                                                                                                                                                                      
|
| |  | If one of our employees sells alcoholic beverages
    to an intoxicated or minor patron, we may be liable to third
    parties for the acts of the patron.                                                                                                                               
|
| |  | If we fail to comply with applicable governmental
    regulations, we may become subject to lawsuits and other
    liabilities or restrictions on our operations which could
    significantly reduce our net sales and cash flow and undermine
    the growth of our business.          
|
| |  | We are subject to litigation, which, if
    determined adversely, could be material.                                                                                                                                                                                                     
|
| |  | We may be subject to significant environmental
    liabilities.                                                                                                                                                                                                                          
|
| |  | We depend on a relatively small executive
    management team and the loss of any of them could adversely
    affect our business.                                                                                                                                                       
|
| |  | We could incur significant liability for
    withdrawing from multi-employer pension plans.                                                                                                                                                                                              

14



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | If we fail to remain competitive within our
    industry, we will not be able to maintain our clients or obtain
    new clients, which would materially adversely affect our
    financial condition, results of operations and liquidity.                          
|
| |  | An outbreak or escalation of any insurrection or
    armed conflict involving the United States or any other national
    or international calamity could significantly harm our business.                                                                          
|
| |  | A terrorist attack on any facility which we
    serve, particularly large sports facilities, could significantly
    harm or business, and our contracts do not provide for the
    recovery by us of our cost in the event of a terrorist attack on
    a facility.
|
| |  | We may not be able to obtain insurance, or obtain
    insurance on commercially acceptable terms, which could result
    in a material adverse effect on our financial condition, results
    of operations or liquidity.                                           
|
| |  | Weaker economic conditions within the United
    States could adversely affect our business.                                                                                                                                                                        
|
| |  | Our net sales could decline if there were a labor
    stoppage affecting any of the sports teams at whose facilities
    we provide our services.                                                                                                                   

Any forward-looking statement speaks only as of
the date on which such statement is made, and we undertake no
obligation to publicly update or review any forward-looking
statement, whether as a result of new information, future
developments or otherwise.

15



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##### Table of Contents








|        |                                                
|------- | -----------------------------------------------
|Item 8. | Financial Statements and Supplementary
    Data

CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                                                                                 |                                                                           |      |     |     | 
|---------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ---- | --- | --- | 
|                                                                                                                 |                                                                           | Page
|                                                                                                                 |                                                                           |     
|REPORT OF INDEPENDENT
    REGISTERED PUBLIC ACCOUNTING FIRM                                                      |                                                                           |      | F-2 |    
|CONSOLIDATED FINANCIAL
    STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2002
    AND DECEMBER 30, 2003: |                                                                           |      |     |    
|                                                                                                                 | Consolidated Balance
    Sheets                                           |      |     | F-3 | 
|                                                                                                                 | Consolidated Statements of
    Operations and Comprehensive Income (Loss) |      |     | F-5 | 
|                                                                                                                 | Consolidated Statements of
    Stockholders Equity (Deficiency)          |      |     | F-6 | 
|                                                                                                                 | Consolidated Statements of
    Cash Flows                                 |      |     | F-7 | 
|                                                                                                                 | Notes to Consolidated
    Financial Statements                            |      |     | F-9 | 

F-1



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##### Table of Contents









REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM




To the Board of Directors and Stockholders of




Centerplate, Inc. (formerly Volume Services
America Holdings, Inc.):








We have audited the accompanying consolidated
balance sheets of Centerplate, Inc. (formerly Volume Services
America Holdings, Inc.) and subsidiaries (the
Company) as of December 31, 2002 and
December 30, 2003, and the related consolidated statements
of operations and comprehensive income (loss),
stockholders equity (deficiency), and cash flows for each
of the three years in the period ended December 30, 2003.
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
standards of the Public Accounting Oversight Board (United
States). Those standards require that we plan and perform the
audit 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, such consolidated financial
statements present fairly, in all material respects, the
financial position of the Company and subsidiaries at
December 31, 2002 and December 30, 2003, and the
results of their operations and their cash flows for each of the
three years in the period ended December 30, 2003 in
conformity with accounting principles generally accepted in the
United States of America.







As discussed in Note 3 to the consolidated
financial statements, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assetsas of
January 2, 2002.







As discussed in Note 2 to the consolidated
financial statements, the Company has restated its 2003
financial statements.




/s/ Deloitte & Touche LLP




March 26, 2004 (except for Note 2, as
to which the date is October 28, 2004)




Charlotte, North Carolina


F-2



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##### Table of Contents









CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)






CONSOLIDATED BALANCE SHEETS


December 31, 2002 and December 30,
2003





|                        |                                                                                                                                             |                             |         |                |         |   |         |         |         | 
|----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ------- | -------------- | ------- | - | ------- | ------- | ------- | 
|                        |                                                                                                                                             |                             |         | December 30,  
|                        |                                                                                                                                             |                             |         | 2003          
|                        |                                                                                                                                             | December 31,                |         | (As Restated 
|                        |                                                                                                                                             | 2002                        |         | See Note 2)   
|                        |                                                                                                                                             |                             |         |               
|                        |                                                                                                                                             |                            
|                        |                                                                                                                                             | (In thousands,             
|                        |                                                                                                                                             | except share data)         
|ASSETS                 
|CURRENT ASSETS:         |                                                                                                                                             |                             |         |                |         |   |         |        
|                        | Cash and cash equivalents                                                                                                                   |                             | $       | 10,374         |         |   | $       | 22,929  |        
|                        | Restricted cash                                                                                                                             |                             |         |               |         |   |         | 13,628  |        
|                        | Accounts receivable, less allowance for doubtful
    accounts of $810 and $348 at December 31, 2002 and
    December 30, 2003, respectively |                             |         | 16,488         |         |   |         | 17,737  |        
|                        | Merchandise inventories                                                                                                                     |                             |         | 13,682         |         |   |         | 14,865  |        
|                        | Prepaid expenses and other                                                                                                                  |                             |         | 2,354          |         |   |         | 3,322   |        
|                        | Deferred tax asset                                                                                                                          |                             |         | 2,764          |         |   |         | 4,121   |        
|                        |                                                                                                                                             |                             |         |                |         |   |         |        
|                        |                                                                                                                                             | Total current assets        |         |                | 45,662  |   |         |         | 76,602  | 
|                        |                                                                                                                                             |                             |         |                |         |   |         |        
|PROPERTY AND EQUIPMENT: |                                                                                                                                             |                             |         |                |         |   |         |        
|                        | Leasehold improvements                                                                                                                      |                             |         | 49,452         |         |   |         | 45,828  |        
|                        | Merchandising equipment                                                                                                                     |                             |         | 51,185         |         |   |         | 54,635  |        
|                        | Vehicles and other equipment                                                                                                                |                             |         | 8,625          |         |   |         | 9,791   |        
|                        | Construction in process                                                                                                                     |                             |         | 295            |         |   |         | 168     |        
|                        |                                                                                                                                             |                             |         |                |         |   |         |        
|                        |                                                                                                                                             | Total                       |         |                | 109,557 |   |         |         | 110,422 | 
|                        | Less accumulated depreciation and amortization                                                                                              |                             |         | (53,498        | )       |   |         | (57,671 | )      
|                        |                                                                                                                                             |                             |         |                |         |   |         |        
|                        |                                                                                                                                             | Property and equipment, net |         |                | 56,059  |   |         |         | 52,751  | 
|                        |                                                                                                                                             |                             |         |                |         |   |         |        
|OTHER ASSETS:           |                                                                                                                                             |                             |         |                |         |   |         |        
|                        | Contract rights, net                                                                                                                        |                             |         | 101,702        |         |   |         | 101,512 |        
|                        | Restricted cash                                                                                                                             |                             |         |               |         |   |         | 8,420   |        
|                        | Cost in excess of net assets acquired                                                                                                       |                             |         | 46,457         |         |   |         | 46,457  |        
|                        | Deferred financing costs, net                                                                                                               |                             |         | 7,086          |         |   |         | 13,017  |        
|                        | Trademarks                                                                                                                                  |                             |         | 17,049         |         |   |         | 17,274  |        
|                        | Deferred tax asset                                                                                                                          |                             |         |               |         |   |         | 2,790   |        
|                        | Other                                                                                                                                       |                             |         | 6,177          |         |   |         | 3,450   |        
|                        |                                                                                                                                             |                             |         |                |         |   |         |        
|                        |                                                                                                                                             | Total other assets          |         |                | 178,471 |   |         |         | 192,920 | 
|                        |                                                                                                                                             |                             |         |                |         |   |         |        
|                       
|TOTAL ASSETS            |                                                                                                                                             | $                           | 280,192 |                |         | $ | 322,273 |        
|                        |                                                                                                                                             |                             |         |                |         |   |         |        




F-3



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)




CONSOLIDATED BALANCE
SHEETS  (Continued)

December 31, 2002 and December 30,
2003





|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |          |         | 
|------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | -------------- | ------- | - | ------- | -------- | ------- | 
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         | December 30,  
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         | 2003          
|                                                                                                              |                                                                                                                             | December 31,                                                                                                                                                                                 |         | (As Restated 
|                                                                                                              |                                                                                                                             | 2002                                                                                                                                                                                         |         | See Note 2)   
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         |               
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                             
|                                                                                                              |                                                                                                                             | (In thousands,                                                                                                                                                                              
|                                                                                                              |                                                                                                                             | except share data)                                                                                                                                                                          
|                                                                                                             
|LIABILITIES AND STOCKHOLDERS EQUITY
    (DEFICIENCY)                                                        
|CURRENT LIABILITIES:                                                                                          |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|                                                                                                              | Short-term note payable                                                                                                     |                                                                                                                                                                                              | $       |               |         |   | $       | 4,000    |        
|                                                                                                              | Current maturities of long-term debt                                                                                        |                                                                                                                                                                                              |         | 1,150          |         |   |         | 12,250   |        
|                                                                                                              | Accounts payable                                                                                                            |                                                                                                                                                                                              |         | 14,798         |         |   |         | 18,054   |        
|                                                                                                              | Accrued salaries and vacations                                                                                              |                                                                                                                                                                                              |         | 8,683          |         |   |         | 11,297   |        
|                                                                                                              | Liability for insurance                                                                                                     |                                                                                                                                                                                              |         | 4,441          |         |   |         | 4,537    |        
|                                                                                                              | Accrued taxes, including income taxes                                                                                       |                                                                                                                                                                                              |         | 3,890          |         |   |         | 3,947    |        
|                                                                                                              | Accrued commissions and royalties                                                                                           |                                                                                                                                                                                              |         | 13,627         |         |   |         | 14,053   |        
|                                                                                                              | Liability for derivatives                                                                                                   |                                                                                                                                                                                              |         |               |         |   |         | 2,654    |        
|                                                                                                              | Accrued interest                                                                                                            |                                                                                                                                                                                              |         | 3,832          |         |   |         | 1,566    |        
|                                                                                                              | Accrued dividends                                                                                                           |                                                                                                                                                                                              |         |               |         |   |         | 1,982    |        
|                                                                                                              | Other                                                                                                                       |                                                                                                                                                                                              |         | 6,057          |         |   |         | 5,082    |        
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|                                                                                                              |                                                                                                                             | Total current liabilities                                                                                                                                                                    |         |                | 56,478  |   |         |          | 79,422  | 
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|LONG-TERM LIABILITIES:                                                                                        |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|                                                                                                              | Long-term debt                                                                                                              |                                                                                                                                                                                              |         | 224,250        |         |   |         | 170,245  |        
|                                                                                                              | Deferred income taxes                                                                                                       |                                                                                                                                                                                              |         | 2,031          |         |   |         |         |        
|                                                                                                              | Liability for insurance                                                                                                     |                                                                                                                                                                                              |         | 2,001          |         |   |         | 4,245    |        
|                                                                                                              | Other liabilities                                                                                                           |                                                                                                                                                                                              |         | 700            |         |   |         | 699      |        
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|                                                                                                              |                                                                                                                             | Total long-term liabilities                                                                                                                                                                  |         |                | 228,982 |   |         |          | 175,189 | 
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|COMMITMENTS AND CONTINGENCIES                                                                                 |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|COMMON STOCK WITH CONVERSION OPTION, PAR VALUE
    $0.01, EXCHANGEABLE FOR SUBORDINATED DEBT, NET OF DISCOUNT |                                                                                                                             |                                                                                                                                                                                              |        |                |         |   | 14,035  |         
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|STOCKHOLDERS EQUITY (DEFICIENCY):                                                                            |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|                                                                                                              | Common stock, $0.01 par value 
    authorized: 100,000,000 shares;                                                         |                                                                                                                                                                                              |         |                |         |   |         |          |        
|                                                                                                              |                                                                                                                             | issued: 18,463,995 shares without conversion
    option; outstanding: 18,463,995 shares without conversion
    option                                                                        |         |                |        |   |         |          | 185     | 
|                                                                                                              |                                                                                                                             | issued: 21,531,152 shares; outstanding:
    13,612,829 and 4,060,997 shares at December 31, 2002
    and December 30, 2003, respectively, with conversion option
    as of December 30, 2003 |         |                | 215     |   |         |          | 215     | 
|                                                                                                              | Additional paid-in capital                                                                                                  |                                                                                                                                                                                              |         | 67,202         |         |   |         | 218,598  |        
|                                                                                                              | Accumulated deficit                                                                                                         |                                                                                                                                                                                              |         | (21,566        | )       |   |         | (44,655  | )      
|                                                                                                              | Accumulated other comprehensive income (loss)                                                                               |                                                                                                                                                                                              |         | (444           | )       |   |         | 224      |        
|                                                                                                              | Treasury stock  at cost (7,918,323 and
    17,470,153 shares at December 31, 2002 and
    December 30, 2003, respectively) |                                                                                                                                                                                              |         | (49,500        | )       |   |         | (120,940 | )      
|                                                                                                              | Loans to related parties                                                                                                    |                                                                                                                                                                                              |         | (1,175         | )       |   |         |         |        
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|                                                                                                              |                                                                                                                             | Total stockholders equity (deficiency)                                                                                                                                                      |         |                | (5,268  | ) |         |          | 53,627  | 
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    (DEFICIENCY)                                                   |                                                                                                                             | $                                                                                                                                                                                            | 280,192 |                |         | $ | 322,273 |         
|                                                                                                              |                                                                                                                             |                                                                                                                                                                                              |         |                |         |   |         |         




See notes to consolidated financial statements.

F-4



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)

Years Ended January 1, 2002,
December 31, 2002 and December 30, 2003


|                                                                                |  |                                       |            |              |  |              |            |   |  |   |            |  
|------------------------------------------------------------------------------- |  | ------------------------------------- | ---------- | ------------ |  | ------------ | ---------- | - |  | - | ---------- | -
|                                                                                |  | January 1,                            |            | December 31, |  | December 30,
|                                                                                |  | 2002                                  |            | 2002         |  | 2003        
|                                                                                |  |                                       |            |              |  |             
|                                                                                |  |                                      
|                                                                                |  | (In thousands, except per share data)
|Net sales                                                                       |  | $                                     | 543,113    |              |  | $            | 577,162    |   |  | $ | 616,057    |  
|Cost of sales                                                                   |  |                                       | 446,596    |              |  |              | 470,929    |   |  |   | 503,986    |  
|Selling, general and administrative                                             |  |                                       | 48,108     |              |  |              | 55,257     |   |  |   | 59,591     |  
|Depreciation and amortization                                                   |  |                                       | 24,492     |              |  |              | 26,185     |   |  |   | 27,119     |  
|Transaction related expenses                                                    |  |                                       |           |              |  |              | 597        |   |  |   | 2,577      |  
|Contract related losses                                                         |  |                                       | 4,762      |              |  |              | 699        |   |  |   | 831        |  
|                                                                                |  |                                       |            |              |  |              |            |   |  |   |            |  
|Operating income                                                                |  |                                       | 19,155     |              |  |              | 23,495     |   |  |   | 21,953     |  
|Interest expense                                                                |  |                                       | 23,429     |              |  |              | 20,742     |   |  |   | 32,763     |  
|Other income, net                                                               |  |                                       | (242       | )            |  |              | (1,556     | ) |  |   | (55        | )
|                                                                                |  |                                       |            |              |  |              |            |   |  |   |            |  
|Income (loss) before income taxes                                               |  |                                       | (4,032     | )            |  |              | 4,309      |   |  |   | (10,755    | )
|Income tax benefit                                                              |  |                                       | (432       | )            |  |              | (187       | ) |  |   | (6,337     | )
|                                                                                |  |                                       |            |              |  |              |            |   |  |   |            |  
|Net income (loss)                                                               |  |                                       | (3,600     | )            |  |              | 4,496      |   |  |   | (4,418     | )
|Other comprehensive income (loss) 
    foreign currency translation adjustment |  |                                       | (209       | )            |  |              | 27         |   |  |   | 668        |  
|                                                                                |  |                                       |            |              |  |              |            |   |  |   |            |  
|Comprehensive income (loss)                                                     |  | $                                     | (3,809     | )            |  | $            | 4,523      |   |  | $ | (3,750     | )
|                                                                                |  |                                       |            |              |  |              |            |   |  |   |            |  
|Basic Net Income (Loss) per share                                               |  | $                                     | (0.26      | )            |  | $            | 0.33       |   |  | $ | (0.31      | )
|                                                                                |  |                                       |            |              |  |              |            |   |  |   |            |  
|Diluted Net Income (Loss) per share                                             |  | $                                     | (0.26      | )            |  | $            | 0.33       |   |  | $ | (0.31      | )
|                                                                                |  |                                       |            |              |  |              |            |   |  |   |            |  
|Weighted average shares outstanding                                             |  |                                       | 13,612,829 |              |  |              | 13,612,829 |   |  |   | 14,263,164 |  
|                                                                                |  |                                       |            |              |  |              |            |   |  |   |            |  
|Dividends declared per share                                                    |  | $                                     |           |              |  | $            |           |   |  | $ | 0.09       |  
|                                                                                |  |                                       |            |              |  |              |            |   |  |   |            |  

See notes to consolidated financial statements.

F-5



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)






CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY (DEFICIENCY)


Years Ended January 1, 2002,
December 31, 2002 and December 30, 2003





|                                                         |                                                                                                                      |                                   |            |            |  |            |     |            |  |            |            |             |  |               |     |          |  |          |         |         |  |   |         |         |   |   |      |      |   |   |          |         |   |   |        |       |   |   |         |         |  
|-------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | --------------------------------- | ---------- | ---------- |  | ---------- | --- | ---------- |  | ---------- | ---------- | ----------- |  | ------------- | --- | -------- |  | -------- | ------- | ------- |  | - | ------- | ------- | - | - | ---- | ---- | - | - | -------- | ------- | - | - | ------ | ----- | - | - | ------- | ------- | -
|                                                         |                                                                                                                      | Common                            |            | Common     |  | Common     |     | Common     |  |            |            |             |  |               |     |          |  |          |         |        
|                                                         |                                                                                                                      | Shares                            |            | Stock      |  | Shares     |     | Stock      |  |            |            |             |  | Accumulated   |     |          |  |          |         |        
|                                                         |                                                                                                                      | Without                           |            | Without    |  | With       |     | With       |  | Additional |            |             |  | Other         |     |          |  | Loans to |         |        
|                                                         |                                                                                                                      | Conversion                        |            | Conversion |  | Conversion |     | Conversion |  | Paid-in    |            | Accumulated |  | Comprehensive |     | Treasury |  | Related  |         |        
|                                                         |                                                                                                                      | Option                            |            | Option     |  | Option     |     | Option     |  | Capital    |            | Deficit     |  | Income (Loss) |     | Stock    |  | Parties  |         | Total  
|                                                         |                                                                                                                      |                                   |            |            |  |            |     |            |  |            |            |             |  |               |     |          |  |          |         |        
|                                                         |                                                                                                                      |                                  
|                                                         |                                                                                                                      | (In thousands, except share data)
|BALANCE, JANUARY 2, 2001                                 |                                                                                                                      |                                   |           |            |  | $          |    |            |  |            | 21,531,152 |             |  | $             | 215 |          |  | $        | 66,539  |         |  | $ | (22,462 | )       |   | $ | (262 | )    |   | $ | (49,500  | )       |   | $ | (1,039 | )     |   | $ | (6,509  | )      
|                                                         | Noncash compensation                                                                                                 |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         | 98      |  |   |         |        |   |   |      |     |   |   |          |        |   |   |        |      |   |   |         | 98      |  
|                                                         | Loans to related parties                                                                                             |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         |        |   |   |      |     |   |   |          |        |   |   |        | (40   | ) |   |         | (40     | )
|                                                         | Foreign currency translation                                                                                         |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         |        |   |   |      | (209 | ) |   |          |        |   |   |        |      |   |   |         | (209    | )
|                                                         | Net loss                                                                                                             |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         | (3,600  | ) |   |      |     |   |   |          |        |   |   |        |      |   |   |         | (3,600  | )
|                                                         |                                                                                                                      |                                   |            |            |  |            |     |            |  |            |            |             |  |               |     |          |  |          |         |         |  |   |         |         |   |   |      |      |   |   |          |         |   |   |        |       |   |   |         |        
|BALANCE, JANUARY 1, 2002                                 |                                                                                                                      |                                   |           |            |  |            |    |            |  |            | 21,531,152 |             |  |               | 215 |          |  |          | 66,637  |         |  |   | (26,062 | )       |   |   | (471 | )    |   |   | (49,500  | )       |   |   | (1,079 | )     |   |   | (10,260 | )      
|                                                         | Noncash compensation                                                                                                 |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         | 565     |  |   |         |        |   |   |      |     |   |   |          |        |   |   |        |      |   |   |         | 565     |  
|                                                         | Loans to related parties                                                                                             |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         |        |   |   |      |     |   |   |          |        |   |   |        | (96   | ) |   |         | (96     | )
|                                                         | Foreign currency translation                                                                                         |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         |        |   |   |      | 27   |   |   |          |        |   |   |        |      |   |   |         | 27      |  
|                                                         | Net income                                                                                                           |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         | 4,496   |   |   |      |     |   |   |          |        |   |   |        |      |   |   |         | 4,496   |  
|                                                         |                                                                                                                      |                                   |            |            |  |            |     |            |  |            |            |             |  |               |     |          |  |          |         |         |  |   |         |         |   |   |      |      |   |   |          |         |   |   |        |       |   |   |         |        
|BALANCE, DECEMBER 31, 2002                               |                                                                                                                      |                                   |           |            |  |            |    |            |  |            | 21,531,152 |             |  |               | 215 |          |  |          | 67,202  |         |  |   | (21,566 | )       |   |   | (444 | )    |   |   | (49,500  | )       |   |   | (1,175 | )     |   |   | (5,268  | )      
|                                                         | Proceeds from IDS issuance, net                                                                                      |                                   |            | 18,463,993 |  |            |     | 185        |  |            |            |            |  |               |     |         |  |          |         | 151,332 |  |   |         |        |   |   |      |     |   |   |          |        |   |   |        | 1,241 |   |   |         | 152,758 |  
|                                                         | Derivative liability (As Restated  See
    Note 2)                                                                  |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         | (2,654  | ) |   |      |     |   |   |          |        |   |   |        |      |   |   |         | (2,654  | )
|                                                         | Common stock, par value $0.01 exchangeable for
    subordinated debt, net of discount (As Restated  See
    Note 2) |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         | (14,035 | ) |   |      |     |   |   |          |        |   |   |        |      |   |   |         | (14,035 | )
|                                                         | Repurchase of stock                                                                                                  |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         |        |   |   |      |     |   |   |          | (71,440 | ) |   |        |      |   |   |         | (71,440 | )
|                                                         | Noncash compensation                                                                                                 |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         | 64      |  |   |         |        |   |   |      |     |   |   |          |        |   |   |        |      |   |   |         | 64      |  
|                                                         | Loans to related parties                                                                                             |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         |        |   |   |      |     |   |   |          |        |   |   |        | (66   | ) |   |         | (66     | )
|                                                         | Foreign currency translation                                                                                         |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         |        |   |   |      | 668  |   |   |          |        |   |   |        |      |   |   |         | 668     |  
|                                                         | Dividends declared                                                                                                   |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         | (1,982  | ) |   |      |     |   |   |          |        |   |   |        |      |   |   |         | (1,982  | )
|                                                         | Net loss                                                                                                             |                                   |            |           |  |            |     |           |  |            |            |            |  |               |     |         |  |          |         |        |  |   |         | (4,418  | ) |   |      |     |   |   |          |        |   |   |        |      |   |   |         | (4,418  | )
|                                                         |                                                                                                                      |                                   |            |            |  |            |     |            |  |            |            |             |  |               |     |          |  |          |         |         |  |   |         |         |   |   |      |      |   |   |          |         |   |   |        |       |   |   |         |        
|BALANCE, DECEMBER 30, 2003 (As
    Restated  See Note 2 |                                                                                                                      |                                   | 18,463,993 |            |  | $          | 185 |            |  |            | 21,531,152 |             |  | $             | 215 |          |  | $        | 218,598 |         |  | $ | (44,655 | )       |   | $ | 224  |      |   | $ | (120,940 | )       |   | $ |       |       |   | $ | 53,627  |        
|                                                         |                                                                                                                      |                                   |            |            |  |            |     |            |  |            |            |             |  |               |     |          |  |          |         |         |  |   |         |         |   |   |      |      |   |   |          |         |   |   |        |       |   |   |         |        




See notes to consolidated financial statements.

F-6



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)






CONSOLIDATED STATEMENTS OF CASH
FLOWS


Years Ended January 1, 2002,
December 31, 2002 and December 30, 2003


|                                      |                                                                                              |                                          |                                     |                                           |        |              |         |         |        |  |         |         |        |   |         |  
|------------------------------------- | -------------------------------------------------------------------------------------------- | ---------------------------------------- | ----------------------------------- | ----------------------------------------- | ------ | ------------ | ------- | ------- | ------ |  | ------- | ------- | ------ | - | ------- | -
|                                      |                                                                                              |                                         
|                                      |                                                                                              | Years Ended                             
|                                      |                                                                                              |                                         
|                                      |                                                                                              | January 1,                               |                                     | December 31,                              |        | December 30,
|                                      |                                                                                              | 2002                                     |                                     | 2002                                      |        | 2003        
|                                      |                                                                                              |                                          |                                     |                                           |        |             
|                                      |                                                                                              |                                         
|                                      |                                                                                              | (In thousands)                          
|CASH FLOWS FROM OPERATING ACTIVITIES: |                                                                                              |                                          |                                     |                                           |        |              |         |         |        |  |         |        
|                                      | Net income (loss)                                                                            |                                          | $                                   | (3,600                                    | )      |              | $       | 4,496   |        |  | $       | (4,418  | )     
|                                      | Adjustments to reconcile net income (loss) to net
    cash provided by operating activities: |                                          |                                     |                                           |        |              |         |         |        |  |         |         |       
|                                      |                                                                                              | Depreciation and amortization            |                                     |                                           | 24,492 |              |         |         | 26,185 |  |         |         | 27,119 |  
|                                      |                                                                                              | Amortization of deferred financing costs |                                     |                                           | 1,431  |              |         |         | 1,431  |  |         |         | 6,906  |  
|                                      |                                                                                              | Contract related losses                  |                                     |                                           | 4,762  |              |         |         | 699    |  |         |         | 831    |  
|                                      |                                                                                              | Noncash compensation                     |                                     |                                           | 98     |              |         |         | 565    |  |         |         | 64     |  
|                                      |                                                                                              | Deferred tax change                      |                                     |                                           | (911   | )            |         |         |       |  |         |         | (6,178 | )
|                                      |                                                                                              | (Gain) loss on disposition of assets     |                                     |                                           | (37    | )            |         |         | 70     |  |         |         | (69    | )
|                                      |                                                                                              | Other                                    |                                     |                                           | (209   | )            |         |         | 27     |  |         |         | 668    |  
|                                      |                                                                                              | Changes in assets and liabilities:       |                                     |                                           |        |              |         |         |        |  |         |         |        |  
|                                      |                                                                                              |                                          | Decrease (increase) in assets:      |                                           |        |              |         |         |        |  |         |         |        |   |        
|                                      |                                                                                              |                                          |                                     | Accounts receivable                       |        |              | 767     |         |        |  | 1,898   |         |        |   | (1,080  | )
|                                      |                                                                                              |                                          |                                     | Merchandise inventories                   |        |              | (1,697  | )       |        |  | (461    | )       |        |   | (1,183  | )
|                                      |                                                                                              |                                          |                                     | Prepaid expenses                          |        |              | 55      |         |        |  | 115     |         |        |   | (970    | )
|                                      |                                                                                              |                                          |                                     | Other assets                              |        |              | (1,612  | )       |        |  | (1,920  | )       |        |   | 1,525   |  
|                                      |                                                                                              |                                          | Increase (decrease) in liabilities: |                                           |        |              |         |         |        |  |         |         |        |   |        
|                                      |                                                                                              |                                          |                                     | Accounts payable                          |        |              | 593     |         |        |  | (1,147  | )       |        |   | 1,974   |  
|                                      |                                                                                              |                                          |                                     | Accrued salaries and vacations            |        |              | (161    | )       |        |  | 137     |         |        |   | 2,614   |  
|                                      |                                                                                              |                                          |                                     | Liability for insurance                   |        |              | (358    | )       |        |  | 2,670   |         |        |   | 2,340   |  
|                                      |                                                                                              |                                          |                                     | Accrued commissions and royalties         |        |              | (431    | )       |        |  | 1,726   |         |        |   | 426     |  
|                                      |                                                                                              |                                          |                                     | Other liabilities                         |        |              | 1,557   |         |        |  | 2,082   |         |        |   | (3,410  | )
|                                      |                                                                                              |                                          |                                     |                                           |        |              |         |         |        |  |         |        
|                                      |                                                                                              |                                          |                                     | Net cash provided by operating activities |        |              | 24,739  |         |        |  | 38,573  |         |        |   | 27,159  |  
|                                      |                                                                                              |                                          |                                     |                                           |        |              |         |         |        |  |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES: |                                                                                              |                                          |                                     |                                           |        |              |         |         |        |  |         |        
|                                      | Purchase of property and equipment                                                           |                                          |                                     | (8,052                                    | )      |              |         | (9,901  | )      |  |         | (7,904  | )     
|                                      | Proceeds from sale of property and equipment                                                 |                                          |                                     | 139                                       |        |              |         | 2,515   |        |  |         | 585     |       
|                                      | Purchase of contract rights                                                                  |                                          |                                     | (21,367                                   | )      |              |         | (37,660 | )      |  |         | (16,029 | )     
|                                      |                                                                                              |                                          |                                     |                                           |        |              |         |         |        |  |         |        
|                                      |                                                                                              |                                          |                                     | Net cash used in investing activities     |        |              | (29,280 | )       |        |  | (45,046 | )       |        |   | (23,348 | )
|                                      |                                                                                              |                                          |                                     |                                           |        |              |         |         |        |  |         |        

F-7



---



##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)




CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)

Years Ended January 1, 2002,
December 31, 2002 and December 30, 2003





|                                               |                                                   |                                           |     |              |       |              |        |        |       |  |        |          |       | 
|---------------------------------------------- | ------------------------------------------------- | ----------------------------------------- | --- | ------------ | ----- | ------------ | ------ | ------ | ----- |  | ------ | -------- | ----- | 
|                                               |                                                   |                                          
|                                               |                                                   | Years Ended                              
|                                               |                                                   |                                          
|                                               |                                                   | January 1,                                |     | December 31, |       | December 30,
|                                               |                                                   | 2002                                      |     | 2002         |       | 2003        
|                                               |                                                   |                                           |     |              |       |             
|                                               |                                                   |                                          
|                                               |                                                   | (In thousands)                           
|CASH FLOWS FROM FINANCING ACTIVITIES:          |                                                   |                                           |     |              |       |              |        |        |       |  |        |         
|                                               | Net borrowings (repayments)  revolving
    loans |                                           | $   | 6,750        |       |              | $      | 2,250  |       |  | $      | (11,000  | )    
|                                               | Principal payments on long-term debt              |                                           |     | (1,150       | )     |              |        | (1,150 | )     |  |        | (110,400 | )    
|                                               | Proceeds from issuance of long-term debt          |                                           |     |             |       |              |        |       |       |  |        | 65,000   |      
|                                               | Proceeds from issuance of stock, net              |                                           |     |             |       |              |        |       |       |  |        | 151,517  |      
|                                               | Proceeds from issuance of subordinated notes      |                                           |     |             |       |              |        |       |       |  |        | 105,245  |      
|                                               | Payment of existing subordinated notes            |                                           |     |             |       |              |        |       |       |  |        | (87,750  | )    
|                                               | Repurchase of stock                               |                                           |     |             |       |              |        |       |       |  |        | (71,440  | )    
|                                               | Proceeds from loans to related parties            |                                           |     |             |       |              |        |       |       |  |        | 1,241    |      
|                                               | Payments of debt issuance costs                   |                                           |     |             |       |              |        |       |       |  |        | (12,837  | )    
|                                               | Restricted cash                                   |                                           |     |             |       |              |        |       |       |  |        | (22,048  | )    
|                                               | Principal payments on capital lease obligations   |                                           |     | (149         | )     |              |        | (267   | )     |  |        |         |      
|                                               | Increase (decrease) in bank overdrafts            |                                           |     | (454         | )     |              |        | 968    |       |  |        | 1,282    |      
|                                               | Loans to related parties                          |                                           |     | (40          | )     |              |        | (96    | )     |  |        | (66      | )    
|                                               |                                                   |                                           |     |              |       |              |        |        |       |  |        |         
|                                               |                                                   | Net cash provided by financing activities |     |              | 4,957 |              |        |        | 1,705 |  |        |          | 8,744 | 
|                                               |                                                   |                                           |     |              |       |              |        |        |       |  |        |         
|INCREASE (DECREASE) IN CASH                    |                                                   |                                           | 416 |              |       |              | (4,768 | )      |       |  | 12,555 |         
|CASH AND CASH EQUIVALENTS:                     |                                                   |                                           |     |              |       |              |        |        |       |  |        |         
|                                               | Beginning of year                                 |                                           |     | 14,726       |       |              |        | 15,142 |       |  |        | 10,374   |      
|                                               |                                                   |                                           |     |              |       |              |        |        |       |  |        |         
|                                               | End of year                                       |                                           | $   | 15,142       |       |              | $      | 10,374 |       |  | $      | 22,929   |      
|                                               |                                                   |                                           |     |              |       |              |        |        |       |  |        |         
|SUPPLEMENTAL CASH FLOW INFORMATION:            |                                                   |                                           |     |              |       |              |        |        |       |  |        |         
|                                               | Interest paid                                     |                                           | $   | 22,155       |       |              | $      | 18,493 |       |  | $      | 35,029   |      
|                                               |                                                   |                                           |     |              |       |              |        |        |       |  |        |         
|                                               | Income taxes paid                                 |                                           | $   | 696          |       |              | $      | 188    |       |  | $      | 125      |      
|                                               |                                                   |                                           |     |              |       |              |        |        |       |  |        |         
|SUPPLEMENTAL NON CASH FLOW FINANCING ACTIVITY: |                                                   |                                           |     |              |       |              |        |        |       |  |        |         
|                                               | Dividends declared and unpaid                     |                                           | $   |             |       |              | $      |       |       |  | $      | 1,982    |      
|                                               |                                                   |                                           |     |              |       |              |        |        |       |  |        |         




See notes to consolidated financial statements.

F-8



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)






NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


Years Ended January 1, 2002,
December 31, 2002 and December 30, 2003




|   |        
|-- | -------
|1. | General




Centerplate, Inc. (formerly Volume Services
America Holdings, Inc.) (Centerplate and
together with its subsidiaries, the Company) is a
holding company, the principal assets of which are the capital
stock of its subsidiary, Volume Services America, Inc.
(Volume Services America). Volume Services America
is also a holding company, the principal assets of which are the
capital stock of its subsidiaries, Volume Services, Inc.
(Volume Services) and Service America Corporation
(Service America).







On February 11, 2003, the Company announced
that it changed the trade name for its operating businesses from
Volume Services America to Centerplate and on October 13,
2004, the securityholders of the Company approved a resolution
to change the Companys legal name from Volume Services
America Holdings, Inc. to Centerplate, Inc.




On December 1, 2003, the Board of Directors
authorized and the Company effected on December 2, 2003 a
40,920 (rounded to the nearest share) for 1 split of the common
stock. Share and per share amounts for all years presented give
effect to this stock split.




On December 4, 2003, Centerplates
registration statement on Form S-1 in respect of a proposed
initial public offering (IPO) of Income Deposit
Securities (IDSs) was declared effective by the
Securities and Exchange Commission. Each IDS represents one
share of common stock and a 13.5% subordinated note with a
$5.70 principal amount and the proceeds were allocated to the
underlying stock or subordinated notes based upon the relative
fair values of each. Trading of the IDSs began on the American
Stock Exchange on December 5, 2003 and on the Toronto Stock
Exchange on December 8, 2003. On December 10, 2003,
the IPO transaction closed and the Company simultaneously
entered into a new senior credit facility (see 2003 Credit
Agreement, Note 5). From the IPO transaction, the
Company raised approximately $251,800,000 on December 10,
2003 and an additional $25,200,000 on December 16, 2003 in
connection with the underwriters over-allotment option. With the
proceeds from the IPO and the new senior credit facility, the
Company repaid its existing senior credit facility, repaid
$87,750,000 of its $100,000,000 11.25% senior subordinated
notes due 2009, repurchased common stock held by existing equity
investors, established certain restricted cash and other cash
accounts and paid related fees and expenses.




The Company is in the business of providing
specified concession services, including catering and novelty
merchandise items at stadiums, sports arenas, convention centers
and other entertainment facilities at various locations in the
United States and Canada. At December 30, 2003, the Company
had 129 contracts to provide these services which were generally
obtained through competitive bids. In most instances, the
Company has the right to provide these services in a particular
location for a period of several years, with the duration of
time often a function of the required investment in facilities
or other financial considerations. The contracts vary in length
generally from 1 to 20 years. Certain of the contracts
contain renewal clauses.






|   |                                    
|-- | -----------------------------------
|2. | Restatement of Financial Statements







Following the completion of the initial public
offering by Centerplate in December 2003, there have been
continuing reviews of the accounting treatment of certain
features of securities similar to the Companys IDSs. As a
result of these reviews and discussions with the SEC, the
Company has identified several revisions to its accounting for
IDSs. The Company has incorporated relevant changes to its
accounting for IDSs and restated its financial statements as of
and for the period ended December 30, 2003. In addition, as
described in Note 16, the Company has revised its
consolidating financial statements to report the results of
operations of Centerplate (the parent holding company and issuer
of the IDSs) separately from the results of operations of the
subsidiaries that guarantee the subordinated notes included in
its IDSs (the combined guarantor subsidiaries).




F-9



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Consolidated Balance
Sheets In connection with
the IPO, those investors who held stock prior to the IPO (the
Initial Equity Investors) entered into an amended
and restated stockholders agreement, which provides that, upon
any post-offering sale of common stock by the Initial Equity
Investors, at the option of the Initial Equity Investors, the
Company will exchange a portion of their common stock for
subordinated notes at an exchange, rate of $9.30 principal
amount of subordinated notes for each share of common stock (so
that, after such exchange, the Initial Equity Investors will
have shares of common stock and subordinated notes in the
appropriate proportions to represent integral numbers of IDSs)
(the conversion option). The Company has concluded
that the portion of the Initial Equity Investors common
stock exchangeable for subordinated debt should be classified on
the consolidated balance sheet according to the guidance
provided by Accounting Series Release No. 268 (FRR
Section 211), Redeemable Preferred Stocks.
Accordingly, The Company has reclassified $14.0 million
between Common stock with conversion option exchangeable
for subordinated debt, net of discount and
Accumulated Deficit on the balance sheet as of
December 30, 2003. This amount will be accreted to the face
amount due of $14.4 million using the effective interest
method over the Initial Equity Investors minimum required
180-day holding period.







In addition, it has been determined that the
conversion option is an embedded derivative in accordance with
SFAS No. 133. This resulted in a reclassification of
$2.7 million from Accumulated Deficit to
Liability for derivatives as of December 30,
2003.







The Company has two classes of common stock as a
result of the conversion option. Accordingly, Common
Stock has been segregated into the two classes,
Shares Outstanding with Conversion Option and
Shares Outstanding without Conversion Option.







Consolidated Statement of Stockholders
Equity The Statement of
Stockholders Equity has been revised to reflect the two
classes of common stock, the conversion option and the liability
for the derivative as discussed above.







Non-Guarantor Subsidiaries Financial
Statements (see
Note 16)  Changes as discussed above to the
Consolidated Balance Sheet have been made as appropriate to the
Companys Consolidating Balance Sheet. In addition,
Centerplates results had been consolidated with the
combined guarantor subsidiaries of its subordinated notes in the
previous statements. The Company has revised the consolidating
financial statements where necessary to report Centerplate
independently.







A summary of the significant effects on the
Consolidated Balance Sheet as of December 30, 2003 is as
follows:







|                                                                                       |  |                |         |          |  |   |         |  
|-------------------------------------------------------------------------------------- |  | -------------- | ------- | -------- |  | - | ------- | -
|                                                                                       |  | Originally     |         |         
|                                                                                       |  | Reported       |         | Restated
|                                                                                       |  |                |         |         
|                                                                                       |  |               
|                                                                                       |  | (In thousands)
|Consolidated Balance Sheet:                                                            |  |                |         |          |  |   |         |  
|Liability for derivatives                                                              |  | $              |        |          |  | $ | 2,654   |  
|Common Stock, Par Value $0.01, Exchangeable for
    Subordinated Debt, net of discount |  | $              |        |          |  | $ | 14,035  |  
|                                                                                       |  |                |         |          |  |   |         |  
|Accumulated Deficit                                                                    |  | $              | (27,966 | )        |  | $ | (44,655 | )
|                                                                                       |  |                |         |          |  |   |         |  
|Total Stockholders Equity                                                             |  | $              | 70,316  |          |  | $ | 53,627  |  
|                                                                                       |  |                |         |          |  |   |         |  









|   |                                               
|-- | ----------------------------------------------
|3. | Summary of Significant Accounting
    Policies







Principles of
Consolidation The
consolidated financial statements include the accounts of
Centerplate, and its wholly owned subsidiary, Volume Services
America, and its wholly owned subsidiaries, Volume Services and
Service America. All significant intercompany transactions have
been eliminated.




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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Fiscal
Year The Company has
adopted a 52-53 week period ending on the Tuesday closest
to December 31 as its fiscal year end. The 2001, 2002 and
2003 fiscal years consisted of 52 weeks.

Cash and Cash
Equivalents The Company
considers temporary cash investments purchased with an original
maturity of three months or less to be cash equivalents.




Restricted
Cash Restricted cash
consists of approximately $13,600,000 recorded in current assets
set aside to retire $12,250,000 in senior subordinated notes
during 2004 plus accrued interest (See Note 5). In
addition, approximately $8,400,000 is recorded in other assets
representing five months of interest on the Companys
subordinated notes, plus $2,500,000. In addition, beginning in
December 2004 the Company must restrict $60,000 per month
for the life of the 2003 Credit Agreement. Such funds are
restricted from the Companys use until term loans have
been repaid.




Revenue
Recognition The Company
typically enters into one of three types of contracts:
1) profit and loss contracts, 2) profit sharing
contracts, and 3) management fee contracts. Under profit
and loss and profit-sharing contracts, revenue from food and
beverage concessions and catering contract food services is
recognized as net sales when the services are provided.
Management fee contracts provide the Company with a fixed fee or
a fixed fee plus an incentive fee and the Company bears no
profit or loss risk. Fees received for management fee contracts
are included in net sales when earned.

Merchandise
Inventories Merchandise
inventories consist of food, beverage, team and other
merchandise. Inventory is valued at the lower of cost or market,
determined on the first-in, first-out basis. Merchandise
inventory is net of reserve of $227,000 and $151,000,
respectively, as of December 31, 2002 and December 30,
2003.

Depreciation
Property and equipment is stated at cost and is depreciated on
the straight-line method over the lesser of the estimated useful
life of the asset or the term of the contract at the site where
such property and equipment is located. Following are the
estimated useful lives of the property and equipment:



| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | Leasehold improvements 
    10 years  limited by the lease term or contract
    term, if applicable
|
| |  | Merchandising equipment  5 to
    10 years  limited by the contract term, if
    applicable        
|
| |  | Vehicles and other equipment  2 to
    10 years  limited by the contract term, if
    applicable   

Contract
Rights Contract rights,
net of accumulated amortization, consist primarily of certain
direct incremental costs incurred by the Company in obtaining or
renewing contracts with clients and the adjustment to fair value
of contract rights acquired in the acquisitions of Volume
Services in 1995 and Service America in 1998. These costs are
amortized over the contract life of each such contract,
including optional renewal periods where the option to renew
rests solely with the Company and they intend to exercise that
option. Accumulated amortization was approximately $34,396,000
at December 31, 2002 and $47,838,000 at December 30,
2003. Amortization expense for fiscal 2004 through 2008 is
estimated to be approximately $14,334,000, $13,870,000,
$12,221,000, $11,224,000, and $6,679,000, respectively.

Cost in Excess of Net Assets Acquired and
Trademarks During fiscal
2003, the Company incurred approximately $225,000 of costs
associated with the change of its trade name to Centerplate.
Such costs were included in Trademarks and are subject to the
provisions of Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other
Intangible Assets.

As of January 2, 2002, the Company adopted
SFAS No. 142. With the adoption of
SFAS No. 142, cost in excess of net assets acquired
(goodwill) and trademarks were no longer subject to
amortization, rather they are subject to at least an annual
assessment for impairment by applying a fair value based test.
The Company completed the impairment tests required by
SFAS No. 142 including the annual impairment test on
July 2, 2002 and April 1, 2003, which did not result
in an impairment charge. Accumulated amortization for goodwill
and trademarks were approximately $6,748,000 and $3,551,000,
respectively at December 31, 2002 and

F-11



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

December 30, 2003. Goodwill and trademark
amortization (pre-tax) was approximately $2,458,000 in fiscal
2001. Had SFAS No. 142 been in effect for the fiscal
year ended January 1, 2002, the adjusted net income (loss)
would have been as follows:

|                            |                            |                                       |        |              |   |              |       |      |  |   |        |       |  
|--------------------------- | -------------------------- | ------------------------------------- | ------ | ------------ | - | ------------ | ----- | ---- |  | - | ------ | ----- | -
|                            |                            |                                      
|                            |                            | Fiscal Year Ended                    
|                            |                            |                                      
|                            |                            | January 1,                            |        | December 31, |   | December 30,
|                            |                            | 2002                                  |        | 2002         |   | 2003        
|                            |                            |                                       |        |              |   |             
|                            |                            |                                      
|                            |                            | (In thousands, except per share data)
|Reported net income (loss)  |                            | $                                     | (3,600 | )            |   | $            | 4,496 |      |  | $ | (4,418 | )    
|                            | Goodwill amortization      |                                       |        | 1,771        |   |              |       |     |  |   |        |      |  
|                            | Trademark amortization     |                                       |        | 687          |   |              |       |     |  |   |        |      |  
|                            |                            |                                       |        |              |   |              |       |      |  |   |        |      
|Adjusted net income (loss)  |                            | $                                     | (1,142 | )            |   | $            | 4,496 |      |  | $ | (4,418 | )    
|                            |                            |                                       |        |              |   |              |       |      |  |   |        |      
|Basic net loss per share:   |                            |                                       |        |              |   |              |       |      |  |   |        |      
|                            | Reported net income (loss) |                                       | $      | (0.26        | ) |              | $     | 0.33 |  |   | $      | (0.31 | )
|                            | Goodwill amortization      |                                       |        | 0.13         |   |              |       |     |  |   |        |      |  
|                            | Trademark amortization     |                                       |        | 0.05         |   |              |       |     |  |   |        |      |  
|                            |                            |                                       |        |              |   |              |       |      |  |   |        |      
|Adjusted net income (loss)  |                            | $                                     | (0.08  | )            |   | $            | 0.33  |      |  | $ | (0.31  | )    
|                            |                            |                                       |        |              |   |              |       |      |  |   |        |      
|Diluted net loss per share: |                            |                                       |        |              |   |              |       |      |  |   |        |      
|                            | Reported net income (loss) |                                       | $      | (0.26        | ) |              | $     | 0.33 |  |   | $      | (0.31 | )
|                            | Goodwill amortization      |                                       |        | 0.13         |   |              |       |     |  |   |        |      |  
|                            | Trademark amortization     |                                       |        | 0.05         |   |              |       |     |  |   |        |      |  
|                            |                            |                                       |        |              |   |              |       |      |  |   |        |      
|Adjusted net income (loss)  |                            | $                                     | (0.08  | )            |   | $            | 0.33  |      |  | $ | (0.31  | )    
|                            |                            |                                       |        |              |   |              |       |      |  |   |        |      




Deferred Financing
Costs Deferred financing
costs are being amortized as interest expense over the life of
the respective debt using the effective interest method.
Accumulated amortization was $5,923,000 at December 31,
2002. As a result of the Companys new credit facility and
the repurchase of the Companys existing subordinated
notes, at December 30, 2003 all existing deferred financing
costs had been written-off except for approximately $301,000
(net of accumulated amortization of approximately $462,000)
associated with the untendered subordinated notes (see
Note 5). The Company incurred approximately $12,837,000 in
deferred financing cost associated with the IDSs issuance and
new credit facility in fiscal 2003. At December 30, 2003,
accumulated amortization of the deferred financing costs on the
IDSs was approximately $121,000.




Impairment of Long-Lived Assets and Contract
Losses In accordance with
SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, the Company reviews
long-lived assets and contract assets for impairment whenever
events or changes in circumstances indicate that the book value
of the asset group may not be recoverable. Accordingly, the
Company estimates the future undiscounted cash flows expected to
result from the use of the asset group and their eventual
disposition. If the sum of the expected future undiscounted cash
flows is less than the carrying amount of the asset group, an
impairment loss is recognized. Measurement of an impairment loss
for long-lived assets, such as property, and certain
identifiable intangibles, is based on the estimated fair value
of the asset determined by future discounted net cash flows.




Accounting Treatment for IDSs, Common Stock
Owned by Initial Equity Investors and Derivative Financial
Instruments.The Companys IDSs
include common stock and subordinated notes, the latter of which
has three embedded derivative features. The embedded derivative
features include a call option, a change of control put option,
and a term-extending option on the notes. The call option allows
the Company to repay the principal amount of the subordinated
notes after the fifth anniversary of the issuance, provided that




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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




the Company also pays all of the interest that
would have been paid during the initial 10-year term of the
notes, discounted to the date of repayment at a risk-free rate.
Under the change of control put option, the holders have the
right to cause the Company to repay the subordinated notes at
101% of face value upon a change of control, as defined in the
subordinated note agreement. The term-extending option allows
the Company to unilaterally extend the term of the subordinated
notes for two five-year periods at the end of the initial
10-year period provided that it is in compliance with the
requirements of the indenture. The Company has accounted for
these embedded derivatives in accordance with Statement of
Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging
Activities, as amended and interpreted. Based on SFAS
No. 133, as amended and interpreted, the call option and
the change of control put option are required to be separately
valued. As of December 30, 2003, these embedded derivatives
were fair valued and determined to be insignificant. The term
extending option was determined to not be separable from the
underlying subordinated notes. Accordingly, it will not be
separately accounted for in the current or future periods.







In connection with the IPO, those investors who
held stock prior to the IPO (the Initial Equity
Investors) entered into an amended and restated
stockholders agreement, which provides that, upon any
post-offering sale of common stock by the Initial Equity
Investors, at the option of the Initial Equity Investors, the
Company will exchange a portion of its common stock for
subordinated notes at an exchange rate of $9.30 principal amount
of subordinate notes for each share of common stock (so that,
after such exchange, the Initial Equity Investors will have
shares of common stock and subordinated notes in the appropriate
proportions to represent integral numbers of IDSs). The Company
has concluded that the portion of the Initial Equity
Investors common stock exchangeable for subordinated debt
should be classified on its consolidated balance sheet according
to the guidance provided by Accounting Series Release
No. 268 (FRR Section 211), Redeemable Preferred
Stocks. Accordingly, the Company has recorded
$14.0 million as Common stock with conversion option
exchangeable for subordinated debt, net of discount on the
balance sheet. This amount will be accreted to the face amount
due of $14.4 million using the effective interest method
over the Initial Equity Investors minimum required 180-day
holding period. In addition, the Company has determined that the
option conveyed to the Initial Equity Investors to exchange
common stock for subordinated debt in order to form IDSs is an
embedded derivative in accordance with Paragraph 12 of SFAS
No. 133. The Company has recorded a liability for the fair
value of this embedded derivative of approximately
$2.7 million as of December 30, 2003. This option is
fair-valued each reporting period with the change in the fair
value recorded in interest expense in the accompanying
consolidated statement of operations.







Insurance
At the beginning of fiscal 2002, the Company adopted a high
deductible insurance program for general liability, auto
liability, and workerscompensation risk. From 1999 through
2001, the Company had been a premium-based insurance program for
general liability, automobile liability and workers
compensation risk. Management establishes a reserve for the
deductible and self-insurance considering a number of factors,
including historical experience and an actuarial assessment of
the liabilities for reported claims and claims incurred but not
reported. The self-insurance liabilities for estimated incurred
losses were discounted (using rates between 1.32 percent
and 3.83 percent at December 31, 2002 and
1.46 percent and 4.29 percent at December 30,
2003), to their present value based on expected loss payment
patterns determined by experience. The total discounted
self-insurance liabilities recorded by the Company at
December 31, 2002 and December 30, 2003 were
$4,654,000 and $7,734,000, respectively. The related
undiscounted amounts were $4,955,000 and $8,232,000,
respectively.







The employee health self-insurance liability is
based on claims filed and not paid and estimates for claims
incurred but not reported. The total liability recorded by the
Company at December 31, 2002 and December 30, 2003 was
$1,222,000 and $1,319,000, respectively.




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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Cash
Overdrafts The Company has
included in accounts payable on the accompanying consolidated
balance sheets cash overdrafts totaling approximately $7,582,000
and $8,864,000 at December 31, 2002 and December 30,
2003, respectively.

Dividends
The Companys board of directors approved a dividend of
$0.088 per share of common stock payable in January 2004.
The total liability recorded as of December 30, 2003 was
approximately $1,982,000.

Foreign
Currency The balance sheet
and results of operations of the Companys Canadian
subsidiary (a subsidiary of Service America) are measured using
the local currency as the functional currency. Assets and
liabilities have been translated into United States dollars at
the rates of exchange at the balance sheet date. Revenues and
expenses are translated into United States dollars at the
average rate during the period. The exchange gains and losses
arising on transactions are charged to income as incurred.
Translation gains and losses arising from the use of differing
exchange rates from year to year are included in accumulated
other comprehensive income (loss).




Transaction Related
Expenses Transaction
related expenses in fiscal year 2002 consist primarily of
expenses incurred in connection with the structuring and
evaluation of financing and recapitalization strategies.
Transaction related expenses in fiscal 2003 include certain
expenses related to executive compensation associated with the
IPO (see Note 5).




Interest
Interest expense for fiscal 2003 includes a non-cash charge of
approximately $5.3 million for the early extinguishment of
debt resulting from the refinancing of the Companys credit
agreement and $7.2 million in expenses related to the
repurchase of our existing high yield notes.

Income
Taxes The provision for
income taxes includes federal, state and foreign taxes currently
payable, and the change in deferred tax assets and liabilities.
Deferred tax assets and liabilities are recognized for the
expected future tax consequences of temporary differences
between the carrying amounts and the tax basis of assets and
liabilities. A valuation allowance is established for deferred
tax assets when it is more likely than not that the benefits of
such assets will not be realized.

Segment
Reporting The combined
operations of the Company, consisting of contracts to provide
concession services, including catering and novelty merchandise
items at stadiums, sports arenas, convention centers and other
entertainment facilities, comprise one reportable segment.

Reclassifications
Certain amounts in 2001 and 2002 have been reclassified, where
applicable, to conform to the financial statement presentation
used in 2003.

Noncash
Compensation The Company
has elected to follow the accounting provisions of Accounting
Principles Board Opinion (APB) No. 25,
Accounting for Stock Issued to Employees for Stock-Based
Compensation. The Company has accounted for existing
stock-based compensation relating to the non-recourse loans
using the fair value method and applied the disclosure
provisions of SFAS No. 148 Accounting for
Stock-Based Compensation  Transition and
Disclosure (see new Accounting Standards). As of
December 30, 2003, all non-recourse loans have been repaid.



| |                         
| | ------------------------
| | New Accounting Standards

In June 2001, the Financial Accounting Standards
Board (FASB) issued SFAS No. 143,
Accounting for Asset Retirement Obligations. The
provisions of SFAS No. 143 require that asset
retirement obligations that are identifiable upon acquisition
and construction, and during the operating life of a long-lived
asset, be recorded as a liability using the present value of the
estimated cash flows. A corresponding amount would be
capitalized as part of the assets carrying amount and
amortized to expense over the assets useful life. The
Company adopted the provisions of SFAS No. 143
effective January 1, 2003. The adoption of this statement

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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

has not had and is not expected to have a
material impact on the Companys financial position,
results of operations or cash flows.

In June 2002, the FASB issued
SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. This statement addresses
financial accounting and reporting for costs associated with
exit or disposal activities and nullifies Emerging Issues Task
Force Issue No. 94-3, Liability Recognition for Certain
Employees Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring)and is effective for exit or disposal activities after
December 31, 2002. The implementation of this statement did
not have a material effect on the Companys financial
position or results of operations.

On November 25, 2002, the FASB issued
Interpretation No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, which elaborates on
the disclosures to be made by a guarantor about its obligations
under certain guarantees issued. It also clarifies that a
guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The Interpretation expands
on the accounting guidance of SFAS No. 5,
Accounting for Contingencies, SFAS No 57,
Related Party Disclosures, and SFAS No. 107,
Disclosures about Fair Value of Financial Instruments.
The Interpretation also incorporates, without change, the
provisions of FASB Interpretation No. 34, Disclosure of
Indirect Guarantees of Indebtedness of Others, which it
supersedes. The Interpretation does identify several situations
where the recognition of a liability at inception for a
guarantors obligation is not required. The initial
recognition and measurement provisions of Interpretation
No. 45 apply on a prospective basis to guarantees issued or
modified after December 31, 2002, regardless of the
guarantors fiscal year-end. The disclosures are effective
for financial statements of interim or annual periods ending
after December 15, 2002. The disclosure requirements,
initial recognition and initial measurement provisions are
currently effective and did not have a material effect on the
Companys financial position or results of operations.

On December 31, 2002, the FASB issued
SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. SFAS
No. 148 amends SFAS No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods of
transition to SFAS No. 123s fair value method of
accounting for stock-based employee compensation. SFAS
No. 148 also amends the disclosure provisions of SFAS
No. 123 and Accounting Principles Board
(APB) Opinion No. 28, Interim Financial
Reporting, to require disclosure in the summary of
significant accounting policies of the effects of an
entitys accounting policy with respect to stock-based
employee compensation on reported net income and earnings per
share in annual and interim financial statements. While SFAS
No. 148 does not amend SFAS No. 123 to require
companies to account for employee stock options using the fair
value method, the disclosure provisions of SFAS No. 148 are
applicable to all companies with stock-based compensation,
regardless of whether they account for that compensation using
the fair value method of SFAS No. 123 or the intrinsic
value method of APB Opinion No. 25, Accounting for
Stock Issued to Employees. SFAS No. 148s
amendment of the transition and annual disclosure requirements
of SFAS No. 123 are effective for fiscal years ending after
December 15, 2002. The implementation of this standard did
not have a material effect on the Companys financial
position or results of operations.

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest Entities, an
Interpretation of Accounting Research Bulletin No. 51,
Consolidated Financial Statements(FIN 46).
This Interpretation applies immediately to variable interest
entities created after January 31, 2003. In October 2003,
certain provisions of FIN 46 were amended. FIN 46, as
amended, applies to the first fiscal year or interim period
ending after December 15, 2003, to those variable interest
entities in which an enterprise holds a variable interest that
it acquired before February 1, 2003. This Interpretation
may be applied prospectively with a cumulative-effect adjustment
as of the date on which it is first applied or by restating
previously issued financial statements for one or more years
with a cumulative-effect adjustment as of the beginning of the
first year restated. Certain provisions of FIN 46 were
deferred until the period ending after March 15, 2004. The

F-15



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

implementation of FIN 46 for provisions
effective during 2003 did not have a material impact on the
Companys financial position or results of operations.

In April 2003, the FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This
statement amends and clarifies financial accounting and
reporting for derivative instruments including certain
derivatives embedded in other contracts. This statement is
effective for contracts entered into or modified after
June 30, 2003. The implementation of this statement did not
have a material effect on the Companys financial position
or results of operations.

In May 2003, the FASB issued
SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and
Equity. SFAS No. 150 establishes standards for
classification and measurement of certain financial instruments
with characteristics of both liabilities and equity. This
statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at
the beginning of the first interim period after June 15,
2003. In October 2003, the FASB deferred the implementation of
certain provisions of this standard indefinitely. The
implementation of this standard did not have a material effect
on the Companys financial position or results of
operations.






|   |                                    
|-- | -----------------------------------
|4. | Significant Risks and Uncertainties




Use of
Estimates The preparation
of financial statements in conformity with accounting principles
generally accepted in the United States of America requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. The Companys most significant
financial statement estimates include the estimate of the
recoverability of contract rights and related assets, potential
litigation claims and settlements, the liability for
self-insured claims, the valuation allowance for deferred tax
assets and the allowance for doubtful accounts. Actual results
could differ from those estimates.

Certain Risk
Concentrations Financial
instruments that potentially subject the Company to a
concentration of credit risk principally consist of cash
equivalents, short-term investments and accounts receivable. The
Company places its cash equivalents and short-term investments
with high-credit qualified financial institutions and, by
practice, limits the amount of credit exposure to any one
financial institution.

Concentrations of credit risk with respect to
accounts receivable are limited due to many customers comprising
the Companys customer base and their dispersion across
different geographic areas. For the fiscal years ended
January 1, 2002, December 31, 2002 and
December 30, 2003, the Company had one contract that
accounted for approximately 10.0 percent, 8.6 percent,
and 10.2 percent of net sales, respectively.

The Company is in the process of renegotiating
one of its major contracts. While the Company believes the new
terms proposed for the agreement are favorable to the Company,
the new agreement would result in a return to the Company of a
substantial capital investment initially made to obtain the
contract. The Company would need to reinvest the amount of the
capital investment returned in other, new contracts. While the
Company believes it will be able to reinvest these amounts
successfully, if the Company were unable to do so reasonably
promptly, it could have a material adverse impact on our
financial results.

The Companys revenues and earnings are
dependent on various factors such as attendance levels and the
number of games played by the professional sports teams which
are tenants at facilities serviced by the Company, which can be
favorably impacted if the teams qualify for post-season play, or
adversely affected if there are stoppages such as strikes by
players of the teams.

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CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |     
|-- | ----
|5. | Debt




Long-term debt consists of the following:

|                                              |  |                |         |      |  |   |         |  
|--------------------------------------------- |  | -------------- | ------- | ---- |  | - | ------- | -
|                                              |  | 2002           |         | 2003
|                                              |  |                |         |     
|                                              |  |               
|                                              |  | (In thousands)
|Term B borrowings  1998 Credit
    Agreement |  | $              | 110,400 |      |  | $ |        |  
|Revolving loans  1998 Credit Agreement       |  |                | 15,000  |      |  |   |        |  
|VSA subordinated notes  Issued in 1999       |  |                | 100,000 |      |  |   | 12,250  |  
|Term Loans  2003 Credit Agreement            |  |                |        |      |  |   | 65,000  |  
|Revolving loans  2003 Credit Agreement       |  |                |        |      |  |   | 4,000   |  
|VSAH subordinated notes  Issued in 2003      |  |                |        |      |  |   | 105,245 |  
|                                              |  |                |         |      |  |   |         |  
|                                              |  |                | 225,400 |      |  |   | 186,495 |  
|Less  current portion of long-term debt      |  |                | (1,150  | )    |  |   | (16,250 | )
|                                              |  |                |         |      |  |   |         |  
|Total long-term debt                          |  | $              | 224,250 |      |  | $ | 170,245 |  
|                                              |  |                |         |      |  |   |         |  




1998 Credit
Agreement On
December 3, 1998, Volume Services America (the
Borrower) entered into a credit agreement, which
provided for $160,000,000 in term loans, consisting of
$40,000,000 of Tranche A term loans (Term
Loan A) and $120,000,000 of Tranche B term loans
(Term Loan B and together with Term
Loan A, the Term Loans) and a $75,000,000
revolving credit facility (the Revolving Credit
Facility). At December 31, 2002, $15,000,000 in
Revolving Loans were outstanding under the Revolving Credit
Facility, and approximately $16,277,000 of letters of credit
were outstanding but undrawn. Borrowings under the Term Loans
were used to repay in full all outstanding indebtedness of
Volume Services and Service America under their then existing
credit facilities and to pay fees and expenses incurred in
connection with the acquisition of Service America and the
credit agreement. Borrowings under the credit facility were
secured by substantially all the assets of Centerplate and the
majority of its subsidiaries, including Volume Services and
Service America. On March 4, 1999, the $40,000,000 of
Term A borrowings and $5,000,000 of Term B borrowings
were repaid with the proceeds from the Senior Subordinated
Notes Issued in 1999 discussed below. During fiscal 2003,
loans outstanding under the 1998 Credit Agreement were repaid
with the proceeds from the IPO and the new credit agreement.







Senior Subordinated Notes Issued in
1999 On March 4,
1999, Volume Services America completed a private placement of
11.25% Senior Subordinated Notes in the aggregate principal
amount of $100 million. On September 30, 1999, the
Company exchanged the Senior Subordinated Notes for notes which
were registered under the Securities Act of 1933. The notes were
to mature on March 1, 2009 and interest was payable on
March 1 and September 1 of each year, beginning on
September 1, 1999. Such notes were unsecured, were
subordinated to all the existing debt and any future debt of
Volume Services America, ranked equally with all of the other
Senior Subordinated debt of Volume Services America, and senior
to all of Volume Services Americas existing and
subordinated debt. Furthermore, the debt was guaranteed by
Centerplate and all of the subsidiaries of Volume Services
America, except for certain non-wholly owned
U.S. subsidiaries and one non-U.S. subsidiary. As of
December 30, 2003, $87,750,000 of the senior subordinated
notes were repaid with the proceeds of the IPO and the credit
agreement with the remaining $12,250,000 balance repaid on
March 1, 2004 at a price equal to 105.625% of the principal
amount plus accrued interest. As of December 30, 2003,
approximately $13.6 million in proceeds from the IPO were
set aside to pay such redemption price plus accrued interest.
Such amount was recorded in current assets as restricted cash.







The proceeds of the notes were used to
(i) repay $40,000,000 of Term A Borrowings and
$5,000,000 of Term B Borrowings, (ii) fund the
repurchase by Centerplate of 7,918,323 shares of
Centerplates common stock for $49,500,000 and the
repayment by Centerplate of a $500,000 note in favor of GE
Capital and




F-17



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(iii) pay fees and expenses incurred in
connection with the notes and the consent from lenders to an
amendment to the Credit Agreement.

2003 Credit
Agreement On
December 10, 2003, Volume Services America (the
Borrower) entered into a senior secured credit
agreement which provided for $65,000,000 in fixed rate term
loans and a $50,000,000 revolving credit facility (the
Revolving Credit Facility). The term loans bear interest
at a fixed rate of 7.24% and mature on June 10, 2008. The
Revolving Credit Facility allows the Company to borrow up to
$50,000,000 and includes a sub-limit of $35,000,000 for letters
of credit which reduce availability under the Revolving Credit
Facility and a sub-limit of $5,000,000 for Swingline Loans.
Under the Swingline sub-limit, advances will be provided for up
to five business days and with respect to any loans not repaid
prior to the fifth business day, they will automatically convert
to a Revolver loan. Revolving Loans must be repaid at the
Revolving Credit Facility maturity date and are subject to an
annual clean-up period. During the annual clean-up period the
revolving credit exposure is reduced to zero during at least one
consecutive thirty day period beginning during fiscal 2004. The
credit agreement provides that any letter of credit amounts
outstanding as of the commencement of the annual clean-up period
are permitted to remain outstanding during the annual clean-up
period. The Revolving Credit Facility will mature on
December 10, 2006. At December 30, 2003, $4,000,000 in
Revolving Loans were outstanding under the Revolving Credit
Facility, and approximately $20,250,000 of letters of credit
were outstanding but undrawn. Borrowings under the Revolving
Credit Facility bear interest at floating rates based upon the
interest rate option elected by the Company subject to
adjustment based on the Companys leverage ratio. The
weighted average interest rate at December 30, 2003 was
5.29% for the Revolving Credit Facility.

The credit agreement calls for mandatory
prepayment of the loans under certain circumstances and optional
prepayment without penalty. There are further provisions that
limit the ability of the Company to make interest payment on the
Subordinated Notes Issued in 2003 and dividend payments if
it is not in compliance with certain financial covenants,
including a maximum total leverage ratio, a maximum senior
leverage ratio and an interest coverage ratio. At
December 30, 2003, the Company was in compliance with all
covenants. The credit agreement also contains provisions that
limit the Companys capital expenditures.




Subordinated Notes Issued in
2003 During December 2003,
as part of the IPO, Centerplate issued $105,245,000 in
13.50% Subordinated Notes. The notes mature on
December 10, 2013 and are subject to extension by two
successive five year terms at the Companys option provided
that certain financial conditions are met. Interest on the notes
is payable on the twentieth day of each month. Such notes are
unsecured, are subordinated to all the existing and any future
senior indebtedness of the Company, and rank equally with all
existing and future indebtedness of the Company. Furthermore,
the debt is guaranteed by all of the subsidiaries of
Centerplate, except for certain non-wholly owned
U.S. subsidiaries and one non-U.S. subsidiary.




Use of
Proceeds The proceeds of
the term loans and notes issued in 2003 were combined with
proceeds from the IPO and were used to (i) repay
$116,828,000 outstanding under the 1998 Credit Agreement,
(ii) repay $87,750,000 of Senior Subordinated Notes issued
in 1999, (iii) establish cash reserves of $22,048,000 for
the benefit of the new lenders and to repurchase the remaining
Senior Subordinated Notes issued in 1999, (iv) repurchase
common stock from the investors in the amount of $71,440,000 and
(v) pay fees and expenses incurred in connection with the
initial public offering, the 2003 Credit Agreement and the notes
issued in 2003.

F-18



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Aggregate annual maturities of long-term debt at
December 30, 2003 are as follows (in thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2004       |  | $ | 16,250  | 
|2005       |  |   |        | 
|2006       |  |   |        | 
|2007       |  |   |        | 
|2008       |  |   | 65,000  | 
|Thereafter |  |   | 105,245 | 
|           |  |   |         | 
|Total      |  | $ | 186,495 | 
|           |  |   |         | 






|   |             
|-- | ------------
|6. | Income Taxes




|                                                                                                                   |                                                            |                |        |        |   |   |        |        |  
|------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------- | -------------- | ------ | ------ | - | - | ------ | ------ | -
|                                                                                                                   |                                                            | 2002           |        | 2003  
|                                                                                                                   |                                                            |                |        |       
|                                                                                                                   |                                                            |               
|                                                                                                                   |                                                            | (In thousands)
|Deferred tax liabilities:                                                                                          |                                                            |                |        |        |   |   |        |       
|                                                                                                                   | Intangibles (goodwill, contract rights and
    trademarks) |                | $      | (5,853 | ) |   | $      | (5,298 | )
|                                                                                                                   | Differences between book and tax basis of property         |                |        | (858   | ) |   |        | (1,569 | )
|                                                                                                                   | Other                                                      |                |        | (1,115 | ) |   |        | (875   | )
|                                                                                                                   |                                                            |                |        |        |   |   |        |       
|                                                                                                                   |                                                            |                | (7,826 | )      |   |   | (7,742 | )     
|                                                                                                                   |                                                            |                |        |        |   |   |        |       
|Deferred tax assets:                                                                                               |                                                            |                |        |        |   |   |        |       
|                                                                                                                   | Bad debt reserves                                          |                |        | 158    |   |   |        | 108    |  
|                                                                                                                   | Inventory reserves                                         |                |        | 91     |   |   |        | 60     |  
|                                                                                                                   | Other reserves and accrued liabilities                     |                |        | 4,441  |   |   |        | 3,963  |  
|                                                                                                                   | General business and AMT credit carryforwards              |                |        | 3,020  |   |   |        | 5,167  |  
|                                                                                                                   | Accrued compensation and vacation                          |                |        | 1,205  |   |   |        | 2,314  |  
|                                                                                                                   | Net operating loss carryforward                            |                |        | 586    |   |   |        | 3,041  |  
|                                                                                                                   |                                                            |                |        |        |   |   |        |       
|                                                                                                                   |                                                            |                | 9,501  |        |   |   | 14,653 |       
|Valuation allowance                                                                                                |                                                            |                | (942   | )      |   |   |       |       
|                                                                                                                   |                                                            |                |        |        |   |   |        |       
|                                                                                                                   |                                                            |                | 8,559  |        |   |   | 14,653 |       
|Net deferred tax asset                                                                                             |                                                            | $              | 733    |        |   | $ | 6,911  |       
|                                                                                                                   |                                                            |                |        |        |   |   |        |       
|Net deferred tax asset is recognized as follows
    in the accompanying 2002 and 2003 consolidated balance sheets: |                                                            |                |        |        |   |   |        |       
|                                                                                                                   | Current deferred tax asset                                 |                | $      | 2,764  |   |   | $      | 4,121  |  
|                                                                                                                   | Noncurrent deferred tax asset (liability)                  |                |        | (2,031 | ) |   |        | 2,790  |  
|                                                                                                                   |                                                            |                |        |        |   |   |        |       
|Net deferred tax asset                                                                                             |                                                            | $              | 733    |        |   | $ | 6,911  |       
|                                                                                                                   |                                                            |                |        |        |   |   |        |       

At December 30, 2003, the Company has
approximately $19,723,000 of federal net operating loss
carryforwards, $13,000,000 of which are from the acquisition of
Service America and will reduce goodwill when utilized. These
carryforwards expire in various periods between 2004 and 2023.
The Companys future ability to utilize its net operating
loss carryforward is limited to some extent by Section 382
of the Internal Revenue Code of 1986, as amended. At
December 30, 2003, the Company has approximately $6,848,000
of federal tax credit carryforwards, $1,712,000 which are from
the acquisition of Service America and will reduce goodwill when
utilized. These carryforwards expire in various periods between
2004 and 2023. In addition, the

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CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Company has approximately $663,000 of Canadian
net operating loss carryforwards. These carryforwards expire in
various periods ending between 2003 and 2010.

At December 30, 2003, the Company did not
have a valuation allowance related to the deferred tax assets
associated with certain net operating loss and credit
carryforwards. Management believes that, based on a number of
factors, the available objective evidence creates sufficient
certainty regarding the realizability of these net operating
losses and credit carryovers. Management eliminated the
valuation allowance in fiscal 2003 since they believe that it is
more likely than not that all of the net deferred tax assets
will be realized. The amount of net deferred tax assets
considered realizable, however, could be reduced in the near
term based on changing conditions.

The components of the benefit for income taxes on
income (loss) are as follows:

|                               |  |                   |      |              |  |              |      |   |  |   |        |  
|------------------------------ |  | ----------------- | ---- | ------------ |  | ------------ | ---- | - |  | - | ------ | -
|                               |  |                  
|                               |  | Fiscal Year Ended
|                               |  |                  
|                               |  | January 1,        |      | December 31, |  | December 30,
|                               |  | 2002              |      | 2002         |  | 2003        
|                               |  |                   |      |              |  |             
|                               |  |                  
|                               |  | (In thousands)   
|Current provision (benefit)    |  | $                 | 478  |              |  | $            | (187 | ) |  | $ | (159   | )
|Deferred benefit               |  |                   | (910 | )            |  |              |     |   |  |   | (6,178 | )
|                               |  |                   |      |              |  |              |      |   |  |   |        |  
|Total benefit for income taxes |  | $                 | (432 | )            |  | $            | (187 | ) |  | $ | (6,337 | )
|                               |  |                   |      |              |  |              |      |   |  |   |        |  

A reconciliation of the provision for income
taxes on continuing operations to the federal statutory rate
follows:




|                               |                                                  |                   |     |              |   |              |    |     |   |  |     |     |  
|------------------------------ | ------------------------------------------------ | ----------------- | --- | ------------ | - | ------------ | -- | --- | - |  | --- | --- | -
|                               |                                                  |                  
|                               |                                                  | Fiscal Year Ended
|                               |                                                  |                  
|                               |                                                  | January 1,        |     | December 31, |   | December 30,
|                               |                                                  | 2002              |     | 2002         |   | 2003        
|                               |                                                  |                   |     |              |   |             
|Statutory rate                 |                                                  |                   | (34 | )%           |   |              | 34 | %   |   |  | (34 | )% 
|Differences:                   |                                                  |                   |     |              |   |              |    |     |   |  |     |    
|                               | State income taxes                               |                   |     | 11           |   |              |    | 2   |   |  |     | (4  | )
|                               | Nondeductible expenses (meals and entertainment) |                   |     | 2            |   |              |    | 2   |   |  |     | 1   |  
|                               | Adjustment to valuation allowance                |                   |     | 56           |   |              |    | (31 | ) |  |     | (9  | )
|                               | Goodwill                                         |                   |     | 13           |   |              |    |    |   |  |     |    |  
|                               | Federal tax credits                              |                   |     | (56          | ) |              |    | (5  | ) |  |     | (13 | )
|                               | Reserve for tax audit                            |                   |     |             |   |              |    | (9  | ) |  |     |    |  
|                               | Nondeductible compensation                       |                   |     | 1            |   |              |    | 4   |   |  |     |    |  
|                               | Other                                            |                   |     | (4           | ) |              |    | (1  | ) |  |     |    |  
|                               |                                                  |                   |     |              |   |              |    |     |   |  |     |    
|Total benefit for income taxes |                                                  |                   | (11 | )%           |   |              | (4 | )%  |   |  | (59 | )% 
|                               |                                                  |                   |     |              |   |              |    |     |   |  |     |    







The Company has accounted for its issuance of IDS
units in December 2003 as representing shares of common stock
and the 2003 Subordinated Notes (see Note 5), by allocating
the proceeds for each IDS unit to the underlying stock or
Subordinated Note based upon the relative fair values of each.
Accordingly, the portion of the aggregate IDSs outstanding that
represents Subordinated Notes has been accounted for by the
Company as long-term debt bearing a stated interest rate of
13.5% maturing on December 10, 2013. During the year ended
December 30, 2003, the Company has deducted interest
expense of approximately $829,000 on the Subordinated Notes from
taxable income for U.S. federal and state income tax
purposes. There can be no assurances that the Internal Revenue
Service or the courts will not seek to challenge the treatment
of these notes as debt or the amount of interest expense
deducted, although to date the Company has not been notified
that the notes should be treated as equity rather than debt for
U.S. federal and state income tax purposes. If the notes
were reclassified as equity the cumulative interest expense
associated with the notes of approxi-




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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

mately $829,000 would not be deductible from
taxable income. The additional tax due to the federal and state
authorities would be zero based on the Companys estimate
that it will generate a tax loss for the year ended
December 30, 2003. The Company has not recorded a liability
for the potential disallowance of this deduction.






|   |                    
|-- | -------------------
|7. | Equity Transactions




Loans to Related
Parties Loans to VSI
Management Direct L.P. and another partnership which holds a
direct and an indirect ownership interest, respectively, in the
Company were outstanding at December 31, 2002. The loans
were used to fund the repurchase of partnership interests from
former members of management of the Company. Accordingly, these
amounts were included as a reduction to stockholders
equity at December 31, 2002. In December 2003, these loans
were repaid.

Noncash
Compensation During fiscal
2000, certain management employees purchased units in the two
partnerships described above. These purchases were financed with
nonrecourse loans. The terms of the purchase agreements are such
that the issuance of these units is a variable plan, which
requires the Company to revalue the units at each measurement
date for changes in the fair value of the units. The related
compensation expense is recorded in selling, general, and
administrative expenses in the statement of operations and
comprehensive income (loss) for fiscal years 2001, 2002 and
2003. As of December 30, 2003, all non-recourse loans have
been repaid.






|   |                                    
|-- | -----------------------------------
|8. | Fair Value of Financial Instruments




The estimated fair value of financial instruments
and related underlying assumptions are as follows:




Long-Term
Debt The Company estimates
that the carrying value at December 31, 2002 approximates
the fair value of the 1998 Term Loans and 1998 Revolving Credit
Facility based upon the variable rate of interest and frequent
repricing. The Company estimates the fair value of the 1999
Senior Subordinated Notes to be approximately $95,000,000 (book
value $100,000,000) and $12,900,000 (book value $12,250,000) at
December 31, 2002 and December 30, 2003, respectively,
based on third-party quotations for the same or similar issues.
In December 2003, in connection with the IPO and the refinancing
of the 1998 Credit Agreement (see Note 5), the Company
issued new subordinated notes in the amount of $105,245,000
bearing a fixed interest rate of 13.5% and new term loans in the
amount of $65,000,000 bearing a fixed interest rate of 7.24%.
The Company believes that the market value approximates the
carrying cost at December 30, 2003 due to the nearness of
the date of issue to the Companys fiscal year end. The
table presents principal cash flows and related average rates as
of December 30, 2003:




|                   |                      |                       |     |      |       |      |   |      |  |      |   |            |  |       |   |            |  |  |   |      |      |   |   |       |       |   |     |       |  |   |     |       |  | 
|------------------ | -------------------- | --------------------- | --- | ---- | ----- | ---- | - | ---- |  | ---- | - | ---------- |  | ----- | - | ---------- |  |  | - | ---- | ---- | - | - | ----- | ----- | - | --- | ----- |  | - | --- | ----- |  | 
|                   |                      |                       |     |      |       |      |   |      |  |      |   |            |  |       |   | Fair Value
|                   |                      | 2004                  |     | 2005 |       | 2006 |   | 2007 |  | 2008 |   | Thereafter |  | Total |   | 12/30/03  
|                   |                      |                       |     |      |       |      |   |      |  |      |   |            |  |       |   |           
|                   |                      |                      
|                   |                      | (In millions)        
|Variable rate debt |                      | $                     | 4.0 |      |       |      |  |      |  |      |  |            |  |       |  |            |  |  |  |      |      |   |  |       |       | $ | 4.0 |       |  | $ | 4.0 |      
|                   |                      | Average interest rate |     |      | 5.29  | %    |   |      |  |      |   |            |  |       |   |            |  |  |   |      |      |   |   |       |       |   |     |       |  |   |     |       |  | 
|Fixed rate debt:   |                      |                       |     |      |       |      |   |      |  |      |   |            |  |       |   |            |  |  |   |      |      |   |   |       |       |   |     |       |  |   |     |      
|                   | Represented by IDSs  |                       |     |     |       |      |   |     |  |      |   |           |  |       |   |           |  |  |   |     |      |   | $ | 105.2 |       |   | $   | 105.2 |  |   | $   | 105.2 | 
|                   |                      | Average interest rate |     |      |       |      |   |      |  |      |   |            |  |       |   |            |  |  |   |      |      |   |   |       | 13.50 | % |     |       |  |   |     |       |  | 
|                   | Term loans           |                       |     |     |       |      |   |     |  |      |   |           |  |       |   |           |  |  | $ | 65.0 |      |   |   |      |       |   | $   | 65.0  |  |   | $   | 65.0  | 
|                   |                      | Average interest rate |     |      |       |      |   |      |  |      |   |            |  |       |   |            |  |  |   |      | 7.24 | % |   |       |       |   |     |       |  |   |     |       |  | 
|                   | Remaining 1999 notes |                       | $   | 12.3 |       |      |   |     |  |      |   |           |  |       |   |           |  |  |   |     |      |   |   |      |       |   | $   | 12.3  |  |   | $   | 12.9  | 
|                   |                      | Average interest rate |     |      | 11.25 | %    |   |      |  |      |   |            |  |       |   |            |  |  |   |      |      |   |   |       |       |   |     |       |  |   |     |       |  | 

F-21



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Derivative Financial
Instruments The Company
considers all relevant information, including data received from
specialists and derivative financial instrument models to
determine the fair value of derivative financial instruments.




Current Assets and Current
Liabilities The Company
estimates the carrying value of current assets and liabilities
to approximate their fair value based upon the nature of the
financial instruments and their relatively short duration.






|   |                              
|-- | -----------------------------
|9. | Commitments and Contingencies




Leases and Client
Contracts The Company
operates primarily at its clients premises pursuant to
written contracts. The length of a contract generally ranges
from 1 to 20 years. Certain of these client contracts
provide for payment by the Company to the client for both fixed
and variable commissions and royalties. Aggregate commission and
royalty expense under these agreements was $183,324,000,
$192,499,000 and $208,637,000 for fiscal years 2001, 2002, and
2003, respectively. Minimum guaranteed commission and royalty
expense was approximately $7,016,000, $7,625,000 and $7,818,000
for fiscal years 2001, 2002, and 2003, respectively.

The Company leases a number of real properties
and other equipment under varying lease terms which are
noncancelable. In addition, the Company has numerous
month-to-month leases. Rent expense was approximately $961,000,
$1,112,000 and $1,151,000 in fiscal 2001, fiscal 2002, and
fiscal 2003, respectively.

Future minimum commitments for all operating
leases and minimum commissions and royalties due under client
contracts are as follows:

|           |  |                |       |             |  |   |        | 
|---------- |  | -------------- | ----- | ----------- |  | - | ------ | 
|           |  |                |       | Commissions
|           |  | Operating      |       | and        
|Year       |  | Leases         |       | Royalties  
|           |  |                |       |            
|           |  |               
|           |  | (In thousands)
|2004       |  | $              | 526   |             |  | $ | 8,266  | 
|2005       |  |                | 435   |             |  |   | 7,995  | 
|2006       |  |                | 260   |             |  |   | 5,869  | 
|2007       |  |                | 66    |             |  |   | 3,269  | 
|2008       |  |                | 12    |             |  |   | 3,113  | 
|Thereafter |  |                |      |             |  |   | 9,864  | 
|           |  |                |       |             |  |   |        | 
|Total      |  | $              | 1,299 |             |  | $ | 38,376 | 
|           |  |                |       |             |  |   |        | 

Employment
Contracts The Company has
employment agreements and arrangements with its executive
officers and certain management personnel. The agreements
generally continue until terminated by the executive or the
Company, and provide for severance payments under certain
circumstances. The agreements include a covenant against
competition with the Company, which extends for a period of time
after termination for any reason. As of December 30, 2003,
if all of the employees under contract were to be terminated by
the Company without good cause (as defined) under these
contracts, the Companys liability would be approximately
$5.1 million.

Commitments
Pursuant to its contracts with various clients, the Company is
committed to spend approximately $12.4 million during 2004
and $1.7 million during 2005 for equipment improvements and
location contract rights.

At December 30, 2003, the Company has
$8,927,000 of letters of credit collateralizing the
Companys performance and other bonds, and $9,733,000 in
letters of credit collateralizing the self-insurance reserves of
the Company, and $1,550,000 in other letters of credit.

F-22



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

As of December 30, 2003, the Company has
long-term insurance liabilities and other long-term liabilities
of approximately $4,245,000 and $699,000, respectively, which
were estimated to become payable as follows:

|          |  |                |       |      |  |      |       |      |  |      |       |            |  |       |     |  |  |   |     |  |  |   |     |  |  |   |       | 
|--------- |  | -------------- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ---------- |  | ----- | --- |  |  | - | --- |  |  | - | --- |  |  | - | ----- | 
|          |  | 2005           |       | 2006 |  | 2007 |       | 2008 |  | 2009 |       | Thereafter |  | Total
|          |  |                |       |      |  |      |       |      |  |      |       |            |  |      
|          |  |               
|          |  | (In thousands)
|Insurance |  |                | 755   |      |  |      | 1,575 |      |  |      | 1,210 |            |  |       | 252 |  |  |   | 204 |  |  |   | 249 |  |  |   | 4,245 | 
|Other     |  |                | 484   |      |  |      | 116   |      |  |      | 50    |            |  |       | 50  |  |  |   |    |  |  |   |    |  |  |   | 699   | 
|          |  |                |       |      |  |      |       |      |  |      |       |            |  |       |     |  |  |   |     |  |  |   |     |  |  |   |       | 
|Total     |  | $              | 1,239 |      |  | $    | 1,691 |      |  | $    | 1,260 |            |  | $     | 302 |  |  | $ | 204 |  |  | $ | 249 |  |  | $ | 4,944 | 

Contingencies
On April 20, 2001 one of the Companys customers filed
for Chapter 11 bankruptcy. The Company had approximately
$3.2 million of receivables and leasehold improvements
recorded at the time of the filings relating to this customer.
In fiscal 2001, the Company wrote-off $2.5 million of other
assets primarily representing long-term receivables. In 2002,
the Company filed a bankruptcy claim in the amount of
$3.2 million. In fiscal 2003, the Company received a
settlement payment for approximately $0.8 million. Such
amount was recorded in selling, general and administrative
expenses.

Litigation
We are from time to time involved in various legal proceedings
incidental to the conduct of our business. In May 2003, a
purported class action entitled Holden v. Volume
Services America, Inc. et al. was filed against us
in the Superior Court of California for the County of Orange by
a former employee at one of the California stadiums we serve
alleging violations of local overtime wage, rest and meal period
and related laws with respect to this employee and others
purportedly similarly situated at any and all of the facilities
we serve in California. We had removed the case to the United
States District Court for the Central District of California,
but in November 2003 the court remanded the case back to the
California Superior Court. The purported class action seeks
compensatory, special and punitive damages in unspecified
amounts, penalties under the applicable local laws and
injunctions against the alleged illegal acts. We are in the
process of evaluating this case and, while our review is
preliminary, we believe that our business practices are, and
were during the period alleged, in compliance with the law. We
intend to vigorously defend this case. However, due to the early
stage of this case and our evaluation, we cannot predict the
outcome of this case and, if an ultimate ruling is made against
us, whether such ruling would have a material adverse effect on
our financial position or results of operations.

Laws and regulations concerning the discharge of
pollutants into the air and water, the handling and disposal of
hazardous materials, the investigation and remediation of
property contamination and other aspects of environmental
protection are in effect in all locations in which the Company
operates. The Companys current operations do not involve
material costs to comply with such laws and regulations, and
they have not given rise to, and are not expected to give rise
to, material liabilities under these laws and regulations for
investigation or remediation of contamination.

Claims for environmental liabilities arising out
of property contamination have been asserted against the Company
and the Companys predecessors from time to time, and in
some cases such claims have been associated with businesses,
including waste-disposal and waste-management businesses,
related to entities we acquired and have been based on conduct
that occurred prior to the Companys acquisition of those
entities. Several such claims were resolved during the 1990s in
bankruptcy proceedings involving some of the Companys
predecessors. More recently, private corporations asserted a
claim under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) against the
Company for contribution to address past and future remediation
costs at a site in Illinois. The site allegedly was used by,
among others, a waste disposal business related to a predecessor
for which the Company allegedly is responsible. In addition, the
United States Environmental Protection Agency, asserting
authority under CERCLA, recently issued a unilateral
administrative order concerning the same Illinois site naming
approximately 75 entities as respondents, including the
plaintiffs in the CERCLA lawsuit against us and the waste
disposal business for which the plaintiffs allege the Company is
responsible. Management believes that the Company has a valid

F-23



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

defense (including discharge in bankruptcy
related to certain bankruptcy proceedings filed in the 1990s) to
any claimed liability at this site and further believes that the
Companys potential liability, if any, is not likely to be
significant. However, because these claims are in their early
stages, management cannot predict at this time whether the
Company will eventually be held liable at this site or whether
such liability will be material. Furthermore, additional
environmental liabilities relating to any of the Companys
former operations or any entities the Company has acquired could
be identified and give rise to claims against the Company
involving significant losses.

There are also other various claims and pending
legal actions against or indirectly involving the Company. It is
the opinion of management, after considering a number of
factors, including, but not limited to, the current status of
the litigation (including any settlement discussions), views of
retained counsel, the nature of the litigation, the prior
experience of the Company, and the amounts which the Company has
accrued for known contingencies, that the ultimate disposition
of these matters will not materially affect the financial
position or future results of operations of the Company.






|    |                           
|--- | --------------------------
|10. | Related Party Transactions




Management
Fees Certain
administrative and management functions were provided to the
Company by the Blackstone Group and GE Capital through
monitoring agreements. The Company paid Blackstone Management
Partners II L.P., an affiliate of Blackstone, a fee of
$250,000 in fiscal years 2001 and 2002 and $236,000 in fiscal
2003. GE Capital was paid management fees of $167,000 in fiscal
years 2001 and 2002 and $158,000 in fiscal 2003. Such amounts
are included in selling, general and administrative expenses.
These fees were ceased upon the closing of the IPO.

Blackstone Group was paid an $875,000 arrangers
fee in connection with the IPO. A portion of this amount was
capitalized on the Companys balance sheet as deferred
financing costs with the remainder charged to Additional Paid in
Capital, based on the relative fair value of each component of
the IDSs (See Note 1).

Leasing
Services GE Capital and
its affiliates provide leasing and financing services to the
Company. Payments to GE Capital and its affiliates for fiscal
years 2001, 2002 and 2003 for such services, net of discounts
earned, were approximately $95,000, $75,000 and $47,000,
respectively, and are included in selling, general and
administrative expenses.

Annual Bonus
Plan The Company maintains
a discretionary annual bonus plan subject to the board of
directors approval whereby general managers and senior
management personnel qualify for bonus payments in the event
that the Company has exceeded certain financial performance
targets determined on an annual basis.

Long Term Incentive
Compensation In connection
with its IPO, the Company adopted a Long Term Incentive Plan
(the LTIP) designed to strengthen the mutuality of
interests between executives and security holders. Under the
LTIP, the Compensation Committee determines who is eligible to
participate in the LTIP, the level of participation of each
individual in the incentive pool and the conditions that must be
satisfied for an individual to vest in their allocated incentive
pool amount. LTIP payouts may be in cash or shares of common
stock. The Compensation Committee has the power to amend or
terminate the LTIP at any time. No awards have been vested,
accrued or granted under the LTIP.






|    |                
|--- | ---------------
|11. | Retirement Plan




The Volume Services America 401(k) defined
contribution plan covers substantially all Volume Services
America employees. Employees may contribute up to
50 percent of their eligible earnings and the Company will
match 25 percent of employee contributions up to the first
6 percent of employee compensation, with an additional
discretionary match up to 50 percent as determined by the
board of directors. The Companys

F-24



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

contributions to the plan were approximately
$397,000 in fiscal 2001, $313,000 in fiscal 2002 and $314,000 in
fiscal 2003.

Multi-Employer Pension
Plans Certain of the
Companys union employees are covered by multi-employer
defined benefit pension plans administered by unions. Under the
Employee Retirement Income Security Act (ERISA), as
amended, an employer upon withdrawal from a multi-employer
pension plan is required to continue funding its proportionate
share of the plans unfunded vested benefits. Amounts
charged to expense and contributed to the plans were not
material for the periods presented.






|    |                        
|--- | -----------------------
|12. | Contract Related Losses




During fiscal years 2001 and 2002, several
contracts which the Company intends to continue operating were
identified as impaired, as the future undiscounted cash flows of
each of these contracts was estimated to be insufficient to
recover the related carrying value of the property and equipment
and contract rights associated with each contract. As such, the
carrying values of these contracts were written down to the
Companys estimate of fair value based on the present value
of the discounted future cash flows. In fiscal 2001, the Company
wrote down approximately $2.3 million of property and
equipment and contract rights. In addition, the Company recorded
an impairment charge of approximately $2.5 million for the
write down of other assets. In fiscal 2002, the Company wrote
down approximately $0.7 million in contract rights related
to a certain contract. In fiscal 2003, the Company wrote down
approximately $0.6 million of contract rights and other
assets for certain contracts that have been terminated and
approximately $0.2 million for the write-down of property
and equipment for a contract which has been assigned to a third
party.






|    |             
|--- | ------------
|13. | Other Income




During fiscal 2002, Service America, received
approximately $1.4 million from funds previously set aside
to satisfy creditors pursuant to a plan of reorganization
approved in 1993. Under the plan of reorganization, Service
America was required to deposit funds with a disbursing agent
for the benefit of its creditors. Any funds which remained
unclaimed by its creditors after a period of two years from the
date of distribution were forfeited and all interest in those
funds reverted back to Service America. Counsel has advised that
Service America has no obligation to escheat such funds. These
funds were recorded in Other income, net.






|    |                                
|--- | -------------------------------
|14. | Executive Employment Agreements




Effective April 15, 2002 the Company entered
into an Executive Employment Agreement (the
Agreement) with its Chief Executive Officer,
Lawrence E. Honig. The Agreement provides that Mr. Honig
would be employed as the Companys Chief Executive Officer
until April 14, 2004, subject to automatic one-year
extensions of the term of the Agreement and his employment with
the Company, unless earlier terminated. The Agreement may be
terminated by either party at any time for any reason, provided
that Mr. Honig gives the Company 60 days advance
written notice of his resignation. The agreement also may be
terminated by the Company for cause or by Mr. Honig for
good reason. Mr. Honigs base salary under the
agreement is $450,000, subject to increases at the discretion of
the Board of Directors. Mr. Honig is eligible to earn a
bonus pursuant to the Companys annual bonus plan, targeted
to be at least 50% of his base salary. Mr. Honig is also
entitled to participate in all employee benefits plans
maintained by the Company. In the case of termination of his
employment by the Company without cause or by Mr. Honig for
good reason, Mr. Honig will receive his annual base salary
and continued benefits for one year following the date of his
termination, plus any accrued but unpaid bonus amounts.

Under the terms of the agreement, Mr. Honig
was to be granted options on 3% of the Companys common
stock pursuant to a long-term equity incentive plan that was to
be implemented within 180 days after the date of the
Agreement. In the event of certain corporate transactions, such
as the IPO, the Company had guaranteed that these options would
have a value equal to $1 million. Because the Company did
not

F-25



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##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

implement a long-term equity incentive plan and
therefore did not grant Mr. Honig these options, the
Company amended the Agreement to provide that he would be paid
the $1 million guaranteed option value to which he was
originally entitled upon the closing of the IPO. Such amount was
paid on December 10, 2003 in connection with the closing of
the IPO.






|    |                                                
|--- | -----------------------------------------------
|15. | Quarterly Results of Operations
    (Unaudited)




Quarterly operating results for the years ended
December 31, 2002 and December 30, 2003 are as follows:

|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|------------------------------------ |  | -------------- | ------ | ------- |  | ------- | ------- | ------- |  | ----- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                     |  | First          |        | Second  |  | Third   |         | Fourth  |  |      
|                                     |  | Quarter        |        | Quarter |  | Quarter |         | Quarter |  | Total
|                                     |  |                |        |         |  |         |         |         |  |      
|                                     |  |               
|                                     |  | (In thousands)
|Year Ended December 31, 2002         |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|Net sales                            |  | $              | 87,840 |         |  | $       | 166,421 |         |  | $     | 195,100 |   |  | $ | 127,801 |   |  | $ | 577,162 |  
|Cost of sales                        |  |                | 74,799 |         |  |         | 134,279 |         |  |       | 156,459 |   |  |   | 105,392 |   |  |   | 470,929 |  
|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|Gross profit                         |  |                | 13,041 |         |  |         | 32,142  |         |  |       | 38,641  |   |  |   | 22,409  |   |  |   | 106,233 |  
|Selling, general, and administrative |  |                | 11,633 |         |  |         | 14,951  |         |  |       | 16,015  |   |  |   | 12,658  |   |  |   | 55,257  |  
|Depreciation and amortization        |  |                | 5,593  |         |  |         | 6,679   |         |  |       | 6,734   |   |  |   | 7,179   |   |  |   | 26,185  |  
|Transaction related expenses         |  |                |       |         |  |         |        |         |  |       |        |   |  |   | 597     |   |  |   | 597     |  
|Contract related losses              |  |                |       |         |  |         | 699     |         |  |       |        |   |  |   |        |   |  |   | 699     |  
|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|Operating income (loss)              |  |                | (4,185 | )       |  |         | 9,813   |         |  |       | 15,892  |   |  |   | 1,975   |   |  |   | 23,495  |  
|Interest expense, net                |  |                | 5,357  |         |  |         | 5,175   |         |  |       | 5,129   |   |  |   | 5,081   |   |  |   | 20,742  |  
|Other income, net                    |  |                | (1,384 | )       |  |         | (34     | )       |  |       | (28     | ) |  |   | (110    | ) |  |   | (1,556  | )
|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|Income (loss) before income taxes    |  |                | (8,158 | )       |  |         | 4,672   |         |  |       | 10,791  |   |  |   | (2,996  | ) |  |   | 4,309   |  
|Income tax provision (benefit)       |  |                | (1,288 | )       |  |         | 831     |         |  |       | 1,008   |   |  |   | (738    | ) |  |   | (187    | )
|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|Net income (loss)                    |  | $              | (6,870 | )       |  | $       | 3,841   |         |  | $     | 9,783   |   |  | $ | (2,258  | ) |  | $ | 4,496   |  
|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  

|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|------------------------------------ |  | -------------- | ------ | ------- |  | ------- | ------- | ------- |  | ----- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                     |  | First          |        | Second  |  | Third   |         | Fourth  |  |      
|                                     |  | Quarter        |        | Quarter |  | Quarter |         | Quarter |  | Total
|                                     |  |                |        |         |  |         |         |         |  |      
|                                     |  |               
|                                     |  | (In thousands)
|Year Ended December 30, 2003         |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|Net sales                            |  | $              | 96,900 |         |  | $       | 172,733 |         |  | $     | 214,636 |   |  | $ | 131,788 |   |  | $ | 616,057 |  
|Cost of sales                        |  |                | 81,655 |         |  |         | 140,664 |         |  |       | 173,378 |   |  |   | 108,289 |   |  |   | 503,986 |  
|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|Gross profit                         |  |                | 15,245 |         |  |         | 32,069  |         |  |       | 41,258  |   |  |   | 23,499  |   |  |   | 112,071 |  
|Selling, general, and administrative |  |                | 13,375 |         |  |         | 14,177  |         |  |       | 17,719  |   |  |   | 14,320  |   |  |   | 59,591  |  
|Depreciation and amortization        |  |                | 6,475  |         |  |         | 6,895   |         |  |       | 6,956   |   |  |   | 6,793   |   |  |   | 27,119  |  
|Transaction related expenses         |  |                |       |         |  |         |        |         |  |       |        |   |  |   | 2,577   |   |  |   | 2,577   |  
|Contract related losses              |  |                | 110    |         |  |         | 537     |         |  |       |        |   |  |   | 184     |   |  |   | 831     |  
|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|Operating income (loss)              |  |                | (4,715 | )       |  |         | 10,460  |         |  |       | 16,583  |   |  |   | (375    | ) |  |   | 21,953  |  
|Interest expense, net                |  |                | 5,071  |         |  |         | 5,124   |         |  |       | 4,833   |   |  |   | 17,735  |   |  |   | 32,763  |  
|Other income, net                    |  |                | (5     | )       |  |         | (14     | )       |  |       | (8      | ) |  |   | (28     | ) |  |   | (55     | )
|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|Income (loss) before income taxes    |  |                | (9,781 | )       |  |         | 5,350   |         |  |       | 11,758  |   |  |   | (18,082 | ) |  |   | (10,755 | )
|Income tax provision (benefit)       |  |                | (3,236 | )       |  |         | 2,474   |         |  |       | 1,084   |   |  |   | (6,659  | ) |  |   | (6,337  | )
|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  
|Net income (loss)                    |  | $              | (6,545 | )       |  | $       | 2,876   |         |  | $     | 10,674  |   |  | $ | (11,423 | ) |  | $ | (4,418  | )
|                                     |  |                |        |         |  |         |         |         |  |       |         |   |  |   |         |   |  |   |         |  

F-26



---



##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Certain amounts in the quarter ended July 2,
2002 have been reclassified from the presentation as filed in
the Companys report on Form 10-Q with the
Securities & Exchange Commission for that quarterly
period to conform to the financial statement presentation used
for the year ended December 31, 2002. The reclassification
from cost of sales to selling, general and administrative
expenses in the second quarter of fiscal 2002 was $417,000.






|    |                                                    
|--- | ---------------------------------------------------
|16. | Non-Guarantor Subsidiaries Financial
    Statements







The $105,245,000 in 13.5% Subordinated Notes are
jointly and severally guaranteed by each of Centerplates
direct and indirect wholly owned subsidiaries, except for
certain non-wholly owned U.S. subsidiaries and one
non-U.S. subsidiary. The redeemed $100,000,000 in
11 1/4 Senior Subordinated Notes were jointly guaranteed by
Centerplate and all of the subsidiaries of Volume Services
America, except for certain non-wholly owned
U.S. subsidiary and one non-U.S. subsidiary. The
following table sets forth the condensed consolidating financial
statements of Centerplate as of and for the periods ended
December 30, 2002 and December 31, 2003 (in the case
of the balance sheet) and for the years ended January 1,
2002, December 31, 2002 and December 30, 2003 (in the
case of the statement of operations and the cash flows). The
Company has restated its consolidating financial statements to
report the results of operations of Centerplate separately from
the results of operations of the subsidiaries that guarantee the
subordinated notes included in its IDSs (the combined
guarantor subsidiaries).






| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | Consolidating Condensed Statement of
    Operations and Comprehensive Loss, Year Ended 
     January 1, 2002




|                                          |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  
|----------------------------------------- |  | -------------- | ------ | ------------ |  | ------------- | ------- | ------------ |  | ------------ | ------ | - |  | - | ----- |  |  | - | ------- | -
|                                          |  |                |        | Combined     |  | Combined      |         |              |  |             
|                                          |  |                |        | Guarantor    |  | Non-guarantor |         |              |  |             
|                                          |  | Centerplate    |        | Subsidiaries |  | Subsidiaries  |         | Eliminations |  | Consolidated
|                                          |  |                |        |              |  |               |         |              |  |             
|                                          |  |               
|                                          |  | (In thousands)
|Net sales                                 |  | $              |       |              |  | $             | 518,714 |              |  | $            | 24,399 |   |  | $ |      |  |  | $ | 543,113 |  
|Cost of sales                             |  |                |       |              |  |               | 424,623 |              |  |              | 21,973 |   |  |   |      |  |  |   | 446,596 |  
|Selling, general, and administrative      |  |                |       |              |  |               | 46,503  |              |  |              | 1,605  |   |  |   |      |  |  |   | 48,108  |  
|Depreciation and amortization             |  |                |       |              |  |               | 23,678  |              |  |              | 814    |   |  |   |      |  |  |   | 24,492  |  
|Transaction related expenses              |  |                |       |              |  |               |        |              |  |              |       |   |  |   |      |  |  |   |        |  
|Contract related losses                   |  |                |       |              |  |               | 4,762   |              |  |              |       |   |  |   |      |  |  |   | 4,762   |  
|                                          |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  
|Operating income                          |  |                |       |              |  |               | 19,148  |              |  |              | 7      |   |  |   |      |  |  |   | 19,155  |  
|Interest expense                          |  |                |       |              |  |               | 23,429  |              |  |              |       |   |  |   |      |  |  |   | 23,429  |  
|Other income, net                         |  |                |       |              |  |               | (213    | )            |  |              | (29    | ) |  |   |      |  |  |   | (242    | )
|                                          |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  
|Income (loss) before income taxes         |  |                |       |              |  |               | (4,068  | )            |  |              | 36     |   |  |   |      |  |  |   | (4,032  | )
|Income tax benefit                        |  |                |       |              |  |               | (432    | )            |  |              |       |   |  |   |      |  |  |   | (432    | )
|Loss in earnings of subsidiaries          |  |                | (3,600 | )            |  |               |        |              |  |              |       |   |  |   | 3,600 |  |  |   |        |  
|                                          |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  
|Net income (loss)                         |  |                | (3,600 | )            |  |               | (3,636  | )            |  |              | 36     |   |  |   | 3,600 |  |  |   | (3,600  | )
|Other comprehensive loss foreign currency |  |                |       |              |  |               |        |              |  |              | (209   | ) |  |   |      |  |  |   | (209    | )
|                                          |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  
|Comprehensive loss                        |  | $              | (3,600 | )            |  | $             | (3,636  | )            |  | $            | (173   | ) |  | $ | 3,600 |  |  | $ | (3,809  | )
|                                          |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  




F-27



---



##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                                                
| | -------------------------------------------------------------------------------
| | Consolidating Condensed Statement of Cash
    Flows, Year Ended January 1, 2002




|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |         |         |  
|------------------------------------- | ------------------------------------------------------- | ----------------------------------------- | - | ------------ | - | ------------- | ------ | ------------ | ------- | - | ---- | ---- | ---- | - | ------ | ------- | ------- | -
|                                      |                                                         |                                           |   | Combined     |   | Combined      |        |             
|                                      |                                                         |                                           |   | Guarantor    |   | Non-guarantor |        |             
|                                      |                                                         | Centerplate                               |   | Subsidiaries |   | Subsidiaries  |        | Consolidated
|                                      |                                                         |                                           |   |              |   |               |        |             
|                                      |                                                         |                                          
|                                      |                                                         | (In thousands)                           
|Cash flows from operating activities  |                                                         | $                                         |  |              |   | $             | 24,874 |              |         | $ | (135 | )    |      | $ | 24,739 |        
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |        
|Cash flows from investing activities: |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |        
|                                      | Purchase of property and equipment                      |                                           |   |             |   |               |        | (7,785       | )       |   |      | (267 | )    |   |        | (8,052  | )      
|                                      | Proceeds from sale of property, plant and
    equipment |                                           |   |             |   |               |        | 139          |         |   |      |     |      |   |        | 139     |        
|                                      | Purchase of contract rights                             |                                           |   |             |   |               |        | (21,367      | )       |   |      |     |      |   |        | (21,367 | )      
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |        
|                                      |                                                         | Net cash used in investing activities     |   |              |  |               |        |              | (29,013 | ) |      |      | (267 | ) |        |         | (29,280 | )
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |        
|Cash flows from financing activities: |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |        
|                                      | Net borrowings  revolving loans                        |                                           |   |             |   |               |        | 6,750        |         |   |      |     |      |   |        | 6,750   |        
|                                      | Principal payments on long-term debt                    |                                           |   |             |   |               |        | (1,150       | )       |   |      |     |      |   |        | (1,150  | )      
|                                      | Principal payments on capital lease obligations         |                                           |   |             |   |               |        | (149         | )       |   |      |     |      |   |        | (149    | )      
|                                      | Decrease in bank overdrafts                             |                                           |   |             |   |               |        | (454         | )       |   |      |     |      |   |        | (454    | )      
|                                      | Increase in loans to related parties                    |                                           |   |             |   |               |        | (40          | )       |   |      |     |      |   |        | (40     | )      
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |        
|                                      |                                                         | Net cash provided by financing activities |   |              |  |               |        |              | 4,957   |   |      |      |     |   |        |         | 4,957   |  
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |        
|Increase (decrease) in cash           |                                                         |                                           |  |              |   |               | 818    |              |         |   | (402 | )    |      |   | 416    |        
|Cash and cash equivalents:            |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |        
|                                      | Beginning of year                                       |                                           |   |             |   |               |        | 14,158       |         |   |      | 568  |      |   |        | 14,726  |        
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |        
|                                      | End of year                                             |                                           | $ |             |   |               | $      | 14,976       |         |   | $    | 166  |      |   | $      | 15,142  |        
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |      |      |      |   |        |        




F-28



---



##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                             
| | ------------------------------------------------------------
| | Consolidating Condensed Balance Sheet,
    December 31, 2002




|                                                   |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |         |         |  
|-------------------------------------------------- | -------------------------- | ------------------------------ | ------ | ------------ | ------ | ------------- | ------- | ------------ | ------- | ------------ | ----- | ------ | ------ | - | ------ | ------- | ------ | - | ------- | ------- | ------- | -
|                                                   |                            |                                |        | Combined     |        | Combined      |         |              |         |             
|                                                   |                            |                                |        | Guarantor    |        | Non-guarantor |         |              |         |             
|                                                   |                            | Centerplate                    |        | Subsidiaries |        | Subsidiaries  |         | Eliminations |         | Consolidated
|                                                   |                            |                                |        |              |        |               |         |              |         |             
|                                                   |                            |                               
|                                                   |                            | (In thousands)                
|ASSETS                                            
|Current assets:                                    |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|                                                   | Cash and cash equivalents  |                                | $      |             |        |               | $       | 10,150       |         |              | $     | 224    |        |   | $      |        |        |   | $       | 10,374  |        
|                                                   | Accounts receivable        |                                |        |             |        |               |         | 15,309       |         |              |       | 1,179  |        |   |        |        |        |   |         | 16,488  |        
|                                                   | Other current assets       |                                |        |             |        |               |         | 24,948       |         |              |       | 1,147  |        |   |        | (7,295  | )      |   |         | 18,800  |        
|                                                   |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|                                                   |                            | Total current assets           |        |              |        |               |         |              | 50,407  |              |       |        | 2,550  |   |        |         | (7,295 | ) |         |         | 45,662  |  
|Property and equipment                             |                            |                                |       |              |        |               | 52,951  |              |         |              | 3,108 |        |        |   |       |         |        |   | 56,059  |        
|Contract rights, net                               |                            |                                |       |              |        |               | 101,017 |              |         |              | 685   |        |        |   |       |         |        |   | 101,702 |        
|Cost in excess of net assets acquired, net         |                            |                                |       |              |        |               | 46,457  |              |         |              |      |        |        |   |       |         |        |   | 46,457  |        
|Investment in subsidiaries                         |                            |                                | (5,268 | )            |        |               |        |              |         |              |      |        |        |   | 5,268  |         |        |   |         |        
|Other assets                                       |                            |                                |       |              |        |               | 30,290  |              |         |              | 22    |        |        |   |       |         |        |   | 30,312  |        
|                                                   |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|Total assets                                       |                            | $                              | (5,268 | )            |        | $             | 281,122 |              |         | $            | 6,365 |        |        | $ | (2,027 | )       |        | $ | 280,192 |        
|                                                   |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|                                                  
|LIABILITIES AND STOCKHOLDERS
    DEFICIENCY      
|Current liabilities:                               |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|                                                   | Intercompany liabilities   |                                | $      |             |        |               | $       |              |         |              | $     | 7,295  |        |   | $      | (7,295  | )      |   | $       |         |        
|                                                   | Other current liabilities  |                                |        |             |        |               |         | 55,047       |         |              |       | 1,431  |        |   |        |        |        |   |         | 56,478  |        
|                                                   |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|                                                   |                            | Total current liabilities      |        |              |       |               |         |              | 55,047  |              |       |        | 8,726  |   |        |         | (7,295 | ) |         |         | 56,478  |  
|Long-term debt                                     |                            |                                |       |              |        |               | 224,250 |              |         |              |      |        |        |   |       |         |        |   | 224,250 |        
|Other liabilities                                  |                            |                                |       |              |        |               | 4,732   |              |         |              |      |        |        |   |       |         |        |   | 4,732   |        
|                                                   |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|                                                   |                            | Total liabilities              |        |              |       |               |         |              | 284,029 |              |       |        | 8,726  |   |        |         | (7,295 | ) |         |         | 285,460 |  
|                                                   |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|Stockholders deficiency:                          |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|                                                   | Common stock               |                                |        | 215          |        |               |         | 215          |         |              |       |       |        |   |        | (215    | )      |   |         | 215     |        
|                                                   | Additional paid-in capital |                                |        | 67,202       |        |               |         | 67,202       |         |              |       |       |        |   |        | (67,202 | )      |   |         | 67,202  |        
|                                                   | Accumulated deficit        |                                |        | (21,566      | )      |               |         | (19,649      | )       |              |       | (1,917 | )      |   |        | 21,566  |        |   |         | (21,566 | )      
|                                                   | Treasury stock and other   |                                |        | (51,119      | )      |               |         | (50,675      | )       |              |       | (444   | )      |   |        | 51,119  |        |   |         | (51,119 | )      
|                                                   |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|                                                   |                            | Total stockholders deficiency |        |              | (5,268 | )             |         |              | (2,907  | )            |       |        | (2,361 | ) |        |         | 5,268  |   |         |         | (5,268  | )
|                                                   |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        
|Total liabilities and stockholders
    deficiency |                            | $                              | (5,268 | )            |        | $             | 281,122 |              |         | $            | 6,365 |        |        | $ | (2,027 | )       |        | $ | 280,192 |        
|                                                   |                            |                                |        |              |        |               |         |              |         |              |       |        |        |   |        |         |        |   |         |        




F-29



---



##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------
| | Consolidating Condensed Statement of
    Operations and Comprehensive Income, Year Ended 
     December 31, 2002




|                                            |  |                |       |              |  |               |         |              |  |              |        |   |  |   |        |   |  |   |         |  
|------------------------------------------- |  | -------------- | ----- | ------------ |  | ------------- | ------- | ------------ |  | ------------ | ------ | - |  | - | ------ | - |  | - | ------- | -
|                                            |  |                |       | Combined     |  | Combined      |         |              |  |             
|                                            |  |                |       | Guarantor    |  | Non-guarantor |         |              |  |             
|                                            |  | Centerplate    |       | Subsidiaries |  | Subsidiaries  |         | Eliminations |  | Consolidated
|                                            |  |                |       |              |  |               |         |              |  |             
|                                            |  |               
|                                            |  | (In thousands)
|Net sales                                   |  | $              |      |              |  | $             | 547,188 |              |  | $            | 29,974 |   |  | $ |       |   |  | $ | 577,162 |  
|Cost of sales                               |  |                |      |              |  |               | 444,767 |              |  |              | 26,162 |   |  |   |       |   |  |   | 470,929 |  
|Selling, general, and administrative        |  |                |      |              |  |               | 52,369  |              |  |              | 2,888  |   |  |   |       |   |  |   | 55,257  |  
|Depreciation and amortization               |  |                |      |              |  |               | 25,209  |              |  |              | 976    |   |  |   |       |   |  |   | 26,185  |  
|Transaction related expenses                |  |                |      |              |  |               | 597     |              |  |              |       |   |  |   |       |   |  |   | 597     |  
|Contract related losses                     |  |                |      |              |  |               | 699     |              |  |              |       |   |  |   |       |   |  |   | 699     |  
|                                            |  |                |       |              |  |               |         |              |  |              |        |   |  |   |        |   |  |   |         |  
|Operating income (loss)                     |  |                |      |              |  |               | 23,547  |              |  |              | (52    | ) |  |   |       |   |  |   | 23,495  |  
|Interest expense                            |  |                |      |              |  |               | 20,727  |              |  |              | 15     |   |  |   |       |   |  |   | 20,742  |  
|Other income, net                           |  |                |      |              |  |               | (1,553  | )            |  |              | (3     | ) |  |   |       |   |  |   | (1,556  | )
|                                            |  |                |       |              |  |               |         |              |  |              |        |   |  |   |        |   |  |   |         |  
|Income (loss) before income taxes           |  |                |      |              |  |               | 4,373   |              |  |              | (64    | ) |  |   |       |   |  |   | 4,309   |  
|Income tax benefit                          |  |                |      |              |  |               | (148    | )            |  |              | (39    | ) |  |   |       |   |  |   | (187    | )
|Equity in earnings of subsidiaries          |  |                | 4,496 |              |  |               |        |              |  |              |       |   |  |   | (4,496 | ) |  |   |        |  
|                                            |  |                |       |              |  |               |         |              |  |              |        |   |  |   |        |   |  |   |         |  
|Net income (loss)                           |  |                | 4,496 |              |  |               | 4,521   |              |  |              | (25    | ) |  |   | (4,496 | ) |  |   | 4,496   |  
|Other comprehensive income foreign currency |  |                |      |              |  |               |        |              |  |              | 27     |   |  |   |       |   |  |   | 27      |  
|                                            |  |                |       |              |  |               |         |              |  |              |        |   |  |   |        |   |  |   |         |  
|Comprehensive income                        |  | $              | 4,496 |              |  | $             | 4,521   |              |  | $            | 2      |   |  | $ | (4,496 | ) |  | $ | 4,523   |  
|                                            |  |                |       |              |  |               |         |              |  |              |        |   |  |   |        |   |  |   |         |  




F-30



---



##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                                                  
| | ---------------------------------------------------------------------------------
| | Consolidating Condensed Statement of Cash
    Flows, Year Ended December 31, 2002




|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |         |         |  
|------------------------------------- | ------------------------------------------------------- | ----------------------------------------- | - | ------------ | - | ------------- | ------ | ------------ | ------- | - | --- | ---- | ---- | - | ------ | ------- | ------- | -
|                                      |                                                         |                                           |   | Combined     |   | Combined      |        |             
|                                      |                                                         |                                           |   | Guarantor    |   | Non-guarantor |        |             
|                                      |                                                         | Centerplate                               |   | Subsidiaries |   | Subsidiaries  |        | Consolidated
|                                      |                                                         |                                           |   |              |   |               |        |             
|                                      |                                                         |                                          
|                                      |                                                         | (In thousands)                           
|Cash flows from operating activities  |                                                         | $                                         |  |              |   | $             | 37,906 |              |         | $ | 667 |      |      | $ | 38,573 |        
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |        
|Cash flows from investing activities: |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |        
|                                      | Purchase of property and equipment                      |                                           |   |             |   |               |        | (9,292       | )       |   |     | (609 | )    |   |        | (9,901  | )      
|                                      | Proceeds from sale of property, plant and
    equipment |                                           |   |             |   |               |        | 2,515        |         |   |     |     |      |   |        | 2,515   |        
|                                      | Purchase of contract rights                             |                                           |   |             |   |               |        | (37,660      | )       |   |     |     |      |   |        | (37,660 | )      
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |        
|                                      |                                                         | Net cash used in investing activities     |   |              |  |               |        |              | (44,437 | ) |     |      | (609 | ) |        |         | (45,046 | )
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |        
|Cash flows from financing activities: |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |        
|                                      | Net borrowings  revolving loans                        |                                           |   |             |   |               |        | 2,250        |         |   |     |     |      |   |        | 2,250   |        
|                                      | Principal payments on long-term debt                    |                                           |   |             |   |               |        | (1,150       | )       |   |     |     |      |   |        | (1,150  | )      
|                                      | Principal payments on capital lease obligations         |                                           |   |             |   |               |        | (267         | )       |   |     |     |      |   |        | (267    | )      
|                                      | Increase in bank overdrafts                             |                                           |   |             |   |               |        | 968          |         |   |     |     |      |   |        | 968     |        
|                                      | Increase in loans to related parties                    |                                           |   |             |   |               |        | (96          | )       |   |     |     |      |   |        | (96     | )      
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |        
|                                      |                                                         | Net cash provided by financing activities |   |              |  |               |        |              | 1,705   |   |     |      |     |   |        |         | 1,705   |  
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |        
|Increase (decrease) in cash           |                                                         |                                           |  |              |   |               | (4,826 | )            |         |   | 58  |      |      |   | (4,768 | )      
|Cash and cash equivalents:            |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |        
|                                      | Beginning of year                                       |                                           |   |             |   |               |        | 14,976       |         |   |     | 166  |      |   |        | 15,142  |        
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |        
|                                      | End of year                                             |                                           | $ |             |   |               | $      | 10,150       |         |   | $   | 224  |      |   | $      | 10,374  |        
|                                      |                                                         |                                           |   |              |   |               |        |              |         |   |     |      |      |   |        |        




F-31



---



##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                             
| | ------------------------------------------------------------
| | Consolidating Condensed Balance Sheet,
    December 30, 2003




|                                                                                                             |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |          |         | 
|------------------------------------------------------------------------------------------------------------ | -------------------------- | --------------------------------------- | ------- | ------------ | ------- | ------------- | -------- | ------------ | ------- | ------------ | ------ | ----- | ----- | - | ------ | ------ | ------ | - | ------- | -------- | ------- | 
|                                                                                                             |                            |                                         |         | Combined     |         | Combined      |          |              |         |             
|                                                                                                             |                            |                                         |         | Guarantor    |         | Non-guarantor |          |              |         |             
|                                                                                                             |                            | Centerplate                             |         | Subsidiaries |         | Subsidiaries  |          | Eliminations |         | Consolidated
|                                                                                                             |                            |                                         |         |              |         |               |          |              |         |             
|                                                                                                             |                            |                                        
|                                                                                                             |                            | (In thousands)                         
|ASSETS                                                                                                      
|Current assets:                                                                                              |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |         
|                                                                                                             | Cash and cash equivalents  |                                         | $       | 192          |         |               | $        | 22,504       |         |              | $      | 233   |       |   | $      |       |        |   | $       | 22,929   |        
|                                                                                                             | Restricted cash            |                                         |         |             |         |               |          | 13,628       |         |              |        |      |       |   |        |       |        |   |         | 13,628   |        
|                                                                                                             | Accounts receivable        |                                         |         |             |         |               |          | 15,619       |         |              |        | 2,118 |       |   |        |       |        |   |         | 17,737   |        
|                                                                                                             | Other current assets       |                                         |         |             |         |               |          | 20,722       |         |              |        | 1,586 |       |   |        |       |        |   |         | 22,308   |        
|                                                                                                             |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |         
|                                                                                                             |                            | Total current assets                    |         |              | 192     |               |          |              | 72,473  |              |        |       | 3,937 |   |        |        |       |   |         |          | 76,602  | 
|Property and equipment                                                                                       |                            |                                         |        |              |         |               | 49,240   |              |         |              | 3,511  |       |       |   |       |        |        |   | 52,751  |         
|Contract rights, net                                                                                         |                            |                                         | 362     |              |         |               | 100,209  |              |         |              | 941    |       |       |   |       |        |        |   | 101,512 |         
|Cost in excess of net assets acquired, net                                                                   |                            |                                         | 6,974   |              |         |               | 39,483   |              |         |              |       |       |       |   |       |        |        |   | 46,457  |         
|Intercompany receivable (payable)                                                                            |                            |                                         | 172,222 |              |         |               | (164,951 | )            |         |              | (7,271 | )     |       |   |       |        |        |   |        |         
|Investment in subsidiaries                                                                                   |                            |                                         | (10,523 | )            |         |               |         |              |         |              |       |       |       |   | 10,523 |        |        |   |        |         
|Other assets                                                                                                 |                            |                                         | 11,322  |              |         |               | 33,617   |              |         |              | 12     |       |       |   |       |        |        |   | 44,951  |         
|                                                                                                             |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |         
|Total assets                                                                                                 |                            | $                                       | 180,549 |              |         | $             | 130,071  |              |         | $            | 1,130  |       |       | $ | 10,523 |        |        | $ | 322,273 |         
|                                                                                                             |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |         
|LIABILITIES AND STOCKHOLDERS EQUITY
    (DEFICIENCY)                                                       
|Current liabilities                                                                                          |                            | $                                       | 5,388   |              |         | $             | 72,454   |              |         | $            | 1,580  |       |       | $ |       |        |        | $ | 79,422  |         
|Long-term debt                                                                                               |                            |                                         | 105,245 |              |         |               | 65,000   |              |         |              |       |       |       |   |       |        |        |   | 170,245 |         
|Other liabilities                                                                                            |                            |                                         | 2,254   |              |         |               | 2,690    |              |         |              |       |       |       |   |       |        |        |   | 4,944   |         
|                                                                                                             |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |         
|                                                                                                             |                            | Total liabilities                       |         |              | 112,887 |               |          |              | 140,144 |              |        |       | 1,580 |   |        |        |       |   |         |          | 254,611 | 
|                                                                                                             |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |         
|Common stock with conversion option, par value
    $0.01 exchangeable for subordinated debt, net of discount |                            |                                         | 14,035  |              |         |               |         |              |         |              |       |       |       |   |       |        |        |   | 14,035  |         
|Stockholders equity (deficiency):                                                                           |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |         
|                                                                                                             | Common stock               |                                         |         | 400          |         |               |          |             |         |              |        |      |       |   |        |       |        |   |         | 400      |        
|                                                                                                             | Additional paid-in capital |                                         |         | 218,598      |         |               |          |             |         |              |        |      |       |   |        |       |        |   |         | 218,598  |        
|                                                                                                             | Accumulated deficit        |                                         |         | (44,655      | )       |               |          | (10,073      | )       |              |        | (674  | )     |   |        | 10,747 |        |   |         | (44,655  | )      
|                                                                                                             | Treasury stock and other   |                                         |         | (120,716     | )       |               |          |             |         |              |        | 224   |       |   |        | (224   | )      |   |         | (120,716 | )      
|                                                                                                             |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |         
|                                                                                                             |                            | Total stockholders equity (deficiency) |         |              | 53,627  |               |          |              | (10,073 | )            |        |       | (450  | ) |        |        | 10,523 |   |         |          | 53,627  | 
|                                                                                                             |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |         
|Total liabilities and stockholders equity
    (deficiency)                                                  |                            | $                                       | 180,549 |              |         | $             | 130,071  |              |         | $            | 1,130  |       |       | $ | 10,523 |        |        | $ | 322,273 |         
|                                                                                                             |                            |                                         |         |              |         |               |          |              |         |              |        |       |       |   |        |        |        |   |         |         




F-32



---



##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------
| | Consolidating Condensed Statement of
    Operations and Comprehensive Income (Loss), Year Ended
    December 30, 2003




|                                            |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  
|------------------------------------------- |  | -------------- | ------ | ------------ |  | ------------- | ------- | ------------ |  | ------------ | ------ | - |  | - | ----- |  |  | - | ------- | -
|                                            |  |                |        | Combined     |  | Combined      |         |              |  |             
|                                            |  |                |        | Guarantor    |  | Non-guarantor |         |              |  |             
|                                            |  | Centerplate    |        | Subsidiaries |  | Subsidiaries  |         | Eliminations |  | Consolidated
|                                            |  |                |        |              |  |               |         |              |  |             
|                                            |  |               
|                                            |  | (In thousands)
|Net sales                                   |  | $              |       |              |  | $             | 579,329 |              |  | $            | 36,728 |   |  |   |      |  |  | $ | 616,057 |  
|Cost of sales                               |  |                |       |              |  |               | 472,706 |              |  |              | 31,280 |   |  |   |      |  |  |   | 503,986 |  
|Selling, general, and administrative        |  |                | 57     |              |  |               | 55,653  |              |  |              | 3,881  |   |  |   |      |  |  |   | 59,591  |  
|Depreciation and amortization               |  |                | 116    |              |  |               | 26,192  |              |  |              | 811    |   |  |   |      |  |  |   | 27,119  |  
|Transaction related expenses                |  |                |       |              |  |               | 2,577   |              |  |              |       |   |  |   |      |  |  |   | 2,577   |  
|Contract related losses                     |  |                |       |              |  |               | 647     |              |  |              | 184    |   |  |   |      |  |  |   | 831     |  
|                                            |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  
|Operating income (loss)                     |  |                | (173   | )            |  |               | 21,554  |              |  |              | 572    |   |  |   |      |  |  |   | 21,953  |  
|Interest expense                            |  |                | 42     |              |  |               | 32,721  |              |  |              |       |   |  |   |      |  |  |   | 32,763  |  
|Other income, net                           |  |                | (4     | )            |  |               | (43     | )            |  |              | (8     | ) |  |   |      |  |  |   | (55     | )
|                                            |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  
|Income (loss) before income taxes           |  |                | (211   | )            |  |               | (11,124 | )            |  |              | 580    |   |  |   |      |  |  |   | (10,755 | )
|Income tax provision (benefit)              |  |                | 586    |              |  |               | (6,927  | )            |  |              | 4      |   |  |   |      |  |  |   | (6,337  | )
|Equity in earnings of subsidiaries          |  |                | (3,621 | )            |  |               |        |              |  |              |       |   |  |   | 3,621 |  |  |   |        |  
|                                            |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  
|Net income (loss)                           |  |                | (4,418 | )            |  |               | (4,197  | )            |  |              | 576    |   |  |   | 3,621 |  |  |   | (4,418  | )
|Other comprehensive income foreign currency |  |                |       |              |  |               |        |              |  |              | 668    |   |  |   |      |  |  |   | 668     |  
|                                            |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  
|Comprehensive income (loss)                 |  | $              | (4,418 | )            |  | $             | (4,197  | )            |  | $            | 1,244  |   |  | $ | 3,621 |  |  | $ | (3,750  | )
|                                            |  |                |        |              |  |               |         |              |  |              |        |   |  |   |       |  |  |   |         |  




F-33



---



##### Table of Contents






CENTERPLATE, INC. (FORMERLY VOLUME SERVICES
AMERICA HOLDINGS, INC.)





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                                                  
| | ---------------------------------------------------------------------------------
| | Consolidating Condensed Statement of Cash
    Flows, Year Ended December 30, 2003




|                                      |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |          |         |  
|------------------------------------- | ------------------------------------------------------- | ----------------------------------------- | --- | ------------ | ---- | ------------- | ------ | ------------ | ------- | - | ----- | ------ | ------ | - | ------ | -------- | ------- | -
|                                      |                                                         |                                           |     | Combined     |      | Combined      |        |             
|                                      |                                                         |                                           |     | Guarantor    |      | Non-guarantor |        |             
|                                      |                                                         | Centerplate                               |     | Subsidiaries |      | Subsidiaries  |        | Consolidated
|                                      |                                                         |                                           |     |              |      |               |        |             
|                                      |                                                         |                                          
|                                      |                                                         | (In thousands)                           
|Cash flows from operating activities  |                                                         | $                                         | 852 |              |      | $             | 24,877 |              |         | $ | 1,430 |        |        | $ | 27,159 |         
|                                      |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |         
|Cash flows from investing activities: |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |         
|                                      | Purchase of property and equipment                      |                                           |     |             |      |               |        | (6,507       | )       |   |       | (1,397 | )      |   |        | (7,904   | )      
|                                      | Proceeds from sale of property, plant and
    equipment |                                           |     |             |      |               |        | 585          |         |   |       |       |        |   |        | 585      |        
|                                      | Purchase of contract rights                             |                                           |     |             |      |               |        | (16,029      | )       |   |       |       |        |   |        | (16,029  | )      
|                                      |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |         
|                                      |                                                         | Net cash used in investing activities     |     |              |     |               |        |              | (21,951 | ) |       |        | (1,397 | ) |        |          | (23,348 | )
|                                      |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |         
|Cash flows from financing activities: |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |         
|                                      | Net repayments  revolving loans                        |                                           |     |             |      |               |        | (11,000      | )       |   |       |       |        |   |        | (11,000  | )      
|                                      | Principal payments on long-term debt                    |                                           |     |             |      |               |        | (110,400     | )       |   |       |       |        |   |        | (110,400 | )      
|                                      | Proceeds from issuance of long-term debt                |                                           |     |             |      |               |        | 65,000       |         |   |       |       |        |   |        | 65,000   |        
|                                      | Proceeds from issuance of stock, net                    |                                           |     | 151,517      |      |               |        |             |         |   |       |       |        |   |        | 151,517  |        
|                                      | Proceeds from issuance of subordinated notes            |                                           |     | 105,245      |      |               |        |             |         |   |       |       |        |   |        | 105,245  |        
|                                      | Payment of existing subordinated notes                  |                                           |     |             |      |               |        | (87,750      | )       |   |       |       |        |   |        | (87,750  | )      
|                                      | Repurchase of common stock                              |                                           |     | (71,440      | )    |               |        |             |         |   |       |       |        |   |        | (71,440  | )      
|                                      | Proceeds from loans to related parties                  |                                           |     | 1,241        |      |               |        |             |         |   |       |       |        |   |        | 1,241    |        
|                                      | Payment of debt issuance costs                          |                                           |     | (11,417      | )    |               |        | (1,420       | )       |   |       |       |        |   |        | (12,837  | )      
|                                      | Restricted cash                                         |                                           |     |             |      |               |        | (22,048      | )       |   |       |       |        |   |        | (22,048  | )      
|                                      | Increase in bank overdrafts                             |                                           |     |             |      |               |        | 1,282        |         |   |       |       |        |   |        | 1,282    |        
|                                      | Loans to related parties                                |                                           |     | (66          | )    |               |        |             |         |   |       |       |        |   |        | (66      | )      
|                                      | Change in intercompany, net                             |                                           |     | (175,928     | )    |               |        | 175,952      |         |   |       | (24    | )      |   |        |         |        
|                                      |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |         
|                                      |                                                         | Net cash provided by financing activities |     |              | (848 | )             |        |              | 9,616   |   |       |        | (24    | ) |        |          | 8,744   |  
|                                      |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |         
|Increase (decrease) in cash           |                                                         |                                           | 4   |              |      |               | 12,542 |              |         |   | 9     |        |        |   | 12,555 |         
|Cash and cash equivalents:            |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |         
|                                      | Beginning of year                                       |                                           |     | 188          |      |               |        | 9,962        |         |   |       | 224    |        |   |        | 10,374   |        
|                                      |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |         
|                                      | End of year                                             |                                           | $   | 192          |      |               | $      | 22,504       |         |   | $     | 233    |        |   | $      | 22,929   |        
|                                      |                                                         |                                           |     |              |      |               |        |              |         |   |       |        |        |   |        |         




F-34



---



##### Table of Contents








|         |                                              
|-------- | ---------------------------------------------
|Item 9A. | Internal Control over Financial
    Reporting

Evaluation of disclosure controls and
procedures.As a result of
clarifications in the accounting for IDSs, we have determined
that the portion of the stock owned by the Initial Equity
Investors exchangeable for subordinated notes should be treated
as mezzanine equity and that the option to effect such an
exchange represents a derivative that should be recorded at fair
value on our balance sheet. We have determined that we must also
reflect two classes of stock on our financial statements as a
result of the Initial Equity Investors option to effect
such an exchange and make other related changes. These changes
in accounting treatment and certain related matters are
reflected in this Amendment No. 1 to Annual Report on
Form 10-K/A.

We maintain disclosure controls and procedures
that are designed to ensure that information required to be
disclosed in our report under the Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and
Exchange Commissions rules and forms, and that such
information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding
required disclosures. Any controls and procedures, no matter how
well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives. Our
management, with the participation of our Chief Executive
Officer and Chief Financial Officer, has evaluated the
effectiveness of the design and operation of our disclosure
controls and procedures as of December 30, 2003. Based upon
that evaluation and subject to the foregoing, our Chief
Executive Officer and Chief Financial Officer concluded that the
design and operation of our disclosure controls and procedures
provided reasonable assurance that the disclosure controls and
procedures are effective to accomplish their objectives.

Changes in internal control over financial
reporting.There was no change in our
internal control over financial reporting that occurred during
the fourth fiscal quarter of 2003 covered by this Amendment
No. 1 to Annual Report on Form 10-K/A that has
materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting. However
this amendment does reflect the recent resolution of the issues
surrounding the accounting for IDSs as described above.



PART IV





|         |                                                                     
|-------- | --------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules,
    and Reports on Form 8-K

(a) The following documents are filed as a
part of this report:

1. Financial Statements: See Index to
Consolidated Financial Statements under Item 8 on
Page F-1 of this report.

2. Financial Statement Schedules: None.

3. Exhibits

The following exhibits are filed herewith.

|        |    |               |  |                                                                                                                                                                                                                     
|------- | -- | ------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |              
|Number  |    | Exhibit Title
|        |    |              
|        | 31 | .1            |  | Certification of Principal Executive Officer of
    Centerplate, Inc., pursuant to Rule 13a-14 of the
    Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.
|        | 31 | .2            |  | Certification of Principal Financial Officer of
    Centerplate, Inc., pursuant to Rule 13a-14 of the
    Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.
|        | 32 | .1            |  | Certification of Principal Executive Officer of
    Centerplate, Inc., pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                            
|        | 32 | .2            |  | Certification of Principal Financial Officer of
    Centerplate, Inc., pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                            

16



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##### Table of Contents



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, thereto duly authorized, on
December      , 2004.



| |                                                  
| | -------------------------------------------------
| | CENTERPLATE, INC.                                
| | (FORMERLY VOLUME SERVICES AMERICA HOLDINGS, INC.)
|
| | By: /s/ LAWRENCE E. HONIG                        

| |  | 
| |  | 
| |  | 

| |                        
| | -----------------------
| | Name: Lawrence E. Honig

| |        |                                                                   
| | ------ | ------------------------------------------------------------------
| | Title: | Chief Executive Officer and Chairman of the
    Board of Directors

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed by the
following persons on behalf of the registrant and in the
capacities and on the date indicated.

|                                       |  |                                                                                                                      |  |                   |  | 
|-------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | 
|                                       |  |                                                                                                                      |  |                  
|Name                                   |  | Title                                                                                                                |  | Date             
|                                       |  |                                                                                                                      |  |                  
|                                      
|/s/ LAWRENCE E. HONIGLawrence E. Honig |  | Chief Executive Officer and Chairman of the Board
    of Directors
    (Principal Executive Officer)                 |  | December   , 2004
|                                      
|/s/ KENNETH R. FRICKKenneth R. Frick   |  | Executive Vice President, Chief Financial Officer
    and Treasurer (Principal Financial and
    Accounting Officer) |  | December   , 2004
|                                      
|/s/ FELIX P. CHEEFelix P. Chee         |  | Director                                                                                                             |  | December   , 2004
|                                      
|/s/ SUE LING GINSue Ling Gin           |  | Director                                                                                                             |  | December   , 2004
|                                      
|/s/ ALFRED POEAlfred Poe               |  | Director                                                                                                             |  | December   , 2004
|                                      
|/s/ PETER WALLACEPeter Wallace         |  | Director                                                                                                             |  | December   , 2004
|                                      
|/s/ DAVID M. WILLIAMSDavid M. Williams |  | Director                                                                                                             |  | December   , 2004
|                                      
|/s/ GLENN ZANDERGlenn Zander           |  | Director                                                                                                             |  | December   , 2004

17