SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                ----------------
                                    FORM 10-K

(X) Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended January 2, 2001 or

( ) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _____ to _____

Commission file number:    333-79419

                          VOLUME SERVICES AMERICA, INC.
                          -----------------------------
             (Exact name of registrant as specified in its charter)

                 Delaware                                     57-0969174
-----------------------------------                 ----------------------------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                          Identification No.)

201 East Broad Street, Spartanburg, South Carolina              29306
--------------------------------------------------            ---------
    (Address of principal executive offices)                  (Zip code)

Registrant's telephone number, including area code:      (864) 598-8600
                                                     ---------------------

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.

                                 (X) YES ( ) NO

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 or any
amendment to this Form 10-K. (X)

The  aggregate  market  value  of  the  voting  stock  held  by   non-affiliates
(shareholders  holding less than 5% of the outstanding  common stock,  excluding
directors and officers), as of March 27, 2001, was $0.

The number of shares  outstanding of the  registrant's  Common Stock,  par value
$.01 per share, at March 27, 2001, was 100.

<PAGE>


                                     PART I

ITEM 1.  BUSINESS.

OVERVIEW

         Volume Services America,  Inc. ("Volume Services America"),  a Delaware
corporation, operates through its subsidiaries as a leading provider of food and
beverage  concession,  high-end  catering  and  merchandise  services for sports
facilities, convention centers and other entertainment facilities throughout the
United States. We currently provide services at 129 client facilities, typically
pursuant to long-term  contracts  that grant us the  exclusive  right to provide
various food and beverage (and, under some contracts,  merchandise) products and
services  within the  facility.  The  breakdown of  facilities  that we serve by
primary  client  category is as follows:  67 sports  facilities,  30  convention
centers and 32 other entertainment facilities. At two sports facilities, we have
contracts to provide full facility management services.

SERVICES AND CLIENT CATEGORIES

         Sports Facilities

         We currently  have  contracts to provide  services,  including food and
beverage concessions and, in some cases, the selling of merchandise,  at 67 such
facilities,  including stadiums and arenas. At some of these facilities, we also
provide  high-end  catering  services  for premium  seating,  luxury  suites and
in-stadium  restaurants.  These  facilities  host sports  teams as well as other
forms of  entertainment,  such as concerts and other large civic  events.  These
facilities may also host conventions, trade shows and meetings.

         Concession-style  sales of food and beverages represent the majority of
our business at sports facilities. High-end catering for premium seating, luxury
suites and in-stadium  restaurants is responsible for a  significantly  smaller,
but growing, portion of net sales at sports facilities.

         Our  contracts  with sport  facilities  are typically for terms ranging
from five to twenty years.  In general,  stadium and, to a lesser extent,  arena
contracts require a larger up-front or committed future capital  investment than
contracts  for  convention  centers  and  other  entertainment  facilities,  and
typically have a longer contract term.

         At two arenas,  we have  contracts to provide full facility  management
services. These services include licensing the arena (and its suites and premium
seats) for events,  providing  security and ushering,  maintaining the arena and
preparing it for events,  distributing  tickets,  printing  programs and selling
advertising.


                                        1
<PAGE>

         The following chart lists some of our major contracts within the sports
facilities category:
<TABLE>
<CAPTION>

NAME                               LOCATION                SPORTS TEAM TENANT            SEATING CAPACITY (SPORT)
----                               --------                ------------------            ------------------------
<S>                                <C>                     <C>                           <C>
ALLTEL Stadium Florida             Jacksonville, FL        Jacksonville Jaguars          73,000 (NFL)*
HHH Metrodome                      Minneapolis, MN         Minnesota Vikings,            64,000 (NFL) (College Football)
                                                           Minnesota Twins               44,000 (MLB)*
FedEx Field                        Landover, MD            Washington Redskins           80,000 (NFL)
Pacific Bell Ball Park             San Francisco, CA       San Francisco Giants          42,000 (MLB)
Palace of Auburn Hills             Auburn Hills, MI        Detroit Pistons               21,000 (NBA)*
Qualcomm Stadium                   San Diego, CA           San Diego Chargers,           71,400 (NFL)
                                                           San Diego Padres              60,750 (MLB)
RCA Dome                           Indianapolis, IN        Indianapolis Colts            60,000 (NFL)
Rose Bowl                          Pasadena, CA            N/A                           102,000 (College Football)
3Com Park                          San Francisco, CA       San Francisco 49ers,          68,000 (NFL)
Tropicana Field                    St. Petersburg, FL      Tampa Bay Devil Rays          48,500 (MLB)
Truman Sports Complex              Kansas City, MO         Kansas City Chiefs            79,000 (NFL)
                                                           Kansas City Royals            40,600 (MLB)
Yankee Stadium                      New York, NY           New York Yankees              55,000 (MLB)
<FN>
*     "NFL" means National  Football League,  "MLB" means Major League Baseball"
      and "NBA" means "National Basketball Association".
</FN>
</TABLE>

         Convention Centers

         We currently  have  contracts to provide  services,  including  banquet
catering and food court operations,  to 30 convention centers,  two of which are
located in Canada. Convention centers typically host conventions, industrial and
trade shows, company meetings,  banquets,  receptions and consumer  exhibitions,
such as auto, boat or computer shows.

         The services that we provide at convention  centers  typically  include
catering services, including planning, preparing and serving banquets, providing
food court  operations,  assisting in planning  events,  and marketing  clients'
facilities.

         Our contracts with  convention  centers are typically for terms ranging
from two to five  years.  In  general,  convention  center  contracts  are for a
shorter  contract  term than  contracts  for sports  facilities,  but  typically
require less  up-front or committed  future  capital  investment.  The following
chart lists some of our major contracts within the convention center category:
<TABLE>
<CAPTION>

                                                                                                   Size
Name                                        Location                                        (approx. sq. ft)1
----                                        --------                                        -----------------
<S>                                         <C>                                                  <C>
American Royal Center                       Kansas City, MO                                      372,000
Colorado Convention Center                  Denver, CO                                           300,000
Cow Palace                                  San Francisco, CA                                    300,000
Indiana Convention Center                   Indianapolis, IN                                     400,500
Jacob K. Javits Center                      New York, NY                                         900,000
Kentucky Fair & Expo Center                 Louisville, KY                                      1,068,000
Miami Beach Convention Center               Miami Beach, FL                                      503,000
National Trade Center                       Toronto, ON Canada                                  1,000,000
San Diego Convention Center                 San Diego, CA                                        349,000
Washington, DC Convention Center            Washington, DC                                       381,000
------------------
<FN>
1 Sources:   Tradeshow Week Exhibit Hall Directory 2000
</FN>
</TABLE>

                                        2
<PAGE>

         Other Entertainment Facilities

         We have  contracts  to  provide a wide  range of  services  to 32 other
entertainment  facilities located throughout the United States.  Such facilities
include horse racing tracks, music amphitheaters,  motor speedways, state parks,
skiing facilities, theme parks and zoos.

         While the  services  that we provide can vary widely  depending  on the
type of facility  concerned,  we primarily provide concession  services at theme
parks,  zoos and music  amphitheaters,  high-end  concession  services  at music
amphitheaters,  and in-facility  restaurants,  concession  services,  food court
operations and high-end catering services at horse racing tracks.

         The duration,  level of capital  investment  required and commission or
management  fee  structure  of  the  contracts  for  these  other  entertainment
facilities vary from facility to facility.

         The following  chart lists  examples of our contracts  within the other
entertainment facilities category:

<TABLE>
<CAPTION>
Name                                             Location                         Venue Type
----                                             --------                         ----------
<S>                                              <C>                              <C>
Alpine Valley Amphitheater                       Walworth, WI                     Music Amphitheater
Belmont, Saratoga and Aqueduct Tracks            New York                         Horse Racing Tracks
Chicago Auditorium Theater                       Chicago, IL                      Theater
DTE Energy Music Theater                         Pontiac, MI                      Music Amphitheater
Glen Helen Pavilion                              San Bernardino, CA               Music Amphitheater
Lake Perris State Park                           Perris, CA                       Marina Operation
Lake Placid Ski Resort                           Lake Placid, NY                  Ski Resort
Los Angeles Zoo                                  Los Angeles, CA                  Zoo
Sea Life Park                                    Oahu, HI                         Theme Park
Verizon Wireless Ampitheater                     Laguna Hills, CA                 Music Amphitheater
</TABLE>

Contracts

         We  typically  enter  into one of  three  types  of  contract  with our
         clients:

         o        Profit and Loss Contracts;

         o        Profit Sharing Contracts; and

         o        Management Fee Contracts.

         Each of  our  contracts  falls  into  one  of  these  three categories.
However, any particular contract may contain  elements of any of the other types
as well as other features specific to that contract.

         In general,  our contract  categories differ in the amount of risk that
we bear and potential reward (profits or fees) we can receive.  For example,  in
our  Profit  and Loss  Contracts,  we  generally  retain  most  profits  and are
responsible  for most  losses;  this  offers the  highest  potential  upside and
downside of our contracts. In our Profit Sharing Contracts, we generally receive
a share of profits, and sometimes a fee, and receive no payments if there are

                                        3
<PAGE>
losses.  In our  Management  Fee  Contracts,  we  generally  earn a fee  (but no
profits)  and are not  responsible  for  losses;  both our upside  and  downside
potential are low.

         Profit and Loss Contracts.  Under Profit and Loss Contracts, we receive
all of the  revenues  and  bear  all of the  expenses  of the  provision  of our
services at a facility.  These expenses include  commissions paid to the client.
Some of our Profit and Loss Contracts contain minimum guaranteed  commissions or
equivalent  payments  to the  client in  connection  with our  right to  provide
services within the particular facility, regardless of the level of sales at the
facility or whether a profit is being  generated at the facility.  As of January
2, 2001, we served 102 facilities under Profit and Loss Contracts.

         Profit Sharing Contracts. Under Profit Sharing Contracts, also commonly
referred  to in  the  industry  as  incentive  bonus  contracts,  we  receive  a
percentage  of any  profits  earned  from the  provision  of our  services  at a
facility after deducting expenses. These expenses include commissions payable to
the client. In addition, under some Profit Sharing Contracts, we receive a fixed
fee prior to the  determination  of profits  under the  contract.  Under  Profit
Sharing  Contracts,  we  generally  do not bear  responsibility  for any  losses
incurred in connection  with the provision of our services as we are  reimbursed
for our on-site  expenses.  However,  if a loss is incurred,  we typically  will
receive no payments under the contract other than  reimbursement of our expenses
and our fixed fee, if any. As of January 2, 2001, we served 19 facilities  under
Profit Sharing Contracts.

         Management Fee Contracts.  Under Management Fee Contracts, we receive a
management fee, typically  calculated as a fixed dollar amount and/or a fixed or
variable percentage of various categories of sales. In addition, some Management
Fee Contracts  entitle us to incentive fees based upon our performance under the
contract,  as measured by factors  such as revenues or operating  costs.  We are
reimbursed for all of our on-site expenses under these contracts.  As of January
2, 2001, we served 8 facilities under Management Fee Contracts.

         Substantially all of our contracts limit our ability to raise prices on
the food,  beverages  and  merchandise  we sell within the  particular  facility
without the client's consent.

         When we enter into new contracts, or extend or renew existing contracts
(particularly for sports facilities), we are often required to make some form of
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,  food service  equipment and/or grants to
owners or operators of facilities.  At the end of the contract term, all capital
investments that we have made typically  remain the property of the client,  but
generally  the client must  reimburse us for any  undepreciated  or  unamortized
capital  investments if the contract is terminated  early (other than due to our
default).

         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 we provide.

         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 the profits
under the contract.

         The  length  of  contracts  that we enter  into  with  clients  varies.
Contracts in connection  with sports  facilities  generally  require the highest
capital investments but have correspondingly  longer terms, typically of five to
twenty years. Convention center contracts generally require lower capital

                                        4
<PAGE>
investments and have average terms of two to five years. While our contracts are
generally terminable only in limited  circumstances,  some of our contracts give
the client the right to terminate  the contract  with or without cause on little
or no notice.

         We currently have a disagreement  with one of our major  customers.  We
and the customer are in  the process of negotiating  a settlement agreement that
would resolve all outstanding issues.  While the parties have not  yet agreed to
every provision, our expectation  is  that  we  will  probably  enter  into  the
settlement agreement in the near future.

Competition

         The  recreational  food  service  industry  is  highly  fragmented  and
competitive,  with several  national  food service  providers as well as a large
number of smaller  independent  businesses  serving  discrete local and regional
markets  and/or  competing  in  distinct  areas.  Those  companies  that  lack a
full-service  capability,  because,  for  example,  they cannot cater for luxury
suites at stadiums and arenas,  often bid for contracts in conjunction  with one
of the other national food service companies that can offer such services.

         We compete for contracts  against a variety of food service  providers.
However,  our major  competitors  are other  national  food  service  providers,
including ARAMARK,  Delaware North  Corporation,  Fine Host Corporation and Levy
Restaurants.   We  also  face   competition  from  regional  and  local  service
contractors,  some of which are better established within a specific  geographic
region.  Existing or potential  clients may also elect to "self  operate"  their
food services, eliminating the opportunity for us to compete for the account.

         Contracts  are  generally  gained  and  renewed  through a  competitive
bidding  process.  We selectively  bid on contracts to provide  services at both
privately owned and publicly  controlled  facilities.  The privately  negotiated
transactions  are  generally  competitive  in nature,  with several  other large
national  competitors  submitting  proposals.  Contracts for publicly controlled
facilities are generally  awarded  pursuant to a  request-for-proposal  process.
Successful  bidding on contracts for such publicly  controlled  facilities often
requires a long-term  effort focused on building  relationships in the community
in which the venue is located. We compete primarily on the following factors:

          o        the ability to make capital investments;

          o        service innovation;

          o        quality and breadth of products and services; and

          o        reputation within the industry.

         Based on the number of facilities  that we serve, we have a substantial
market  position.  Management  believes  that our  position  in the  market is a
competitive strength because it increases the likelihood that we will be invited
to bid for new  contracts to supply food and beverage  services to  recreational
facilities.  Another  competitive  strength is our  ability to make  significant
capital  investments  in  clients'  facilities,  which has  become an  important
competitive   factor  in  the  bidding  process  for  contracts  to  serve  some
facilities, particularly sports facilities.

         However,  some  of our  competitors  may be  prepared  to  accept  less
favorable financial returns than we are when bidding for contracts.  A number of
our competitors also have  substantially  greater  financial and other resources
than us.  Furthermore,  we have more  indebtedness than some of our competitors,
which could place us at a competitive disadvantage.

                                        5
<PAGE>
Purchasing

         We have a  national  distribution  contract  with  SYSCO to  cover  our
operations.  We also have a number of national  purchasing  programs  with major
product suppliers that enable our general managers to receive discounted pricing
on certain items. The purchase of other items, the most significant of which are
alcoholic  beverages that must, by law, be purchased  in-state,  is handled on a
local basis.

         We generally  purchase any equipment that we require  directly from the
manufacturer.  We  typically  obtain  several bids when filling our food service
equipment requirements.

Employees

         As of January 2, 2001, we had approximately 1,500 full-time  employees.
During calendar 2000,  approximately 31,700 employees were part-time or hired on
an event-by-event  basis. The number of part-time employees at any point in time
varies significantly due to the seasonal nature of the business.

         As of January 2, 2001,  approximately  38% of our employees,  including
full and part-time employees,  were covered by collective  bargaining agreements
with  several   different  unions.  We  have  not  experienced  any  significant
interruptions  or curtailments of operations due to disputes with our employees,
and we consider  our labor  relations to be good.  We have hired,  and expect to
continue to hire, a large number of qualified,  temporary  workers at particular
events. At some locations, local charitable groups raise funds by working at our
concessions operations in exchange for a percentage of gross revenues.

Seasonality

         Our net sales and  operating  results have varied,  and are expected to
continue to vary, from quarter to quarter as a result of factors which include:

         o        seasonal patterns within the industry;

         o        the unpredictability in the number,  timing  and type  of  new
                  contracts;

         o        the timing of contract expirations and special events; and

         o        the level of attendance at facilities that we serve.

         Business at the principal types of facilities that we serve is seasonal
in nature.  MLB and minor league  baseball sales are  concentrated in the second
and third quarters,  the majority of NFL activity occurs in the third and fourth
quarters and  convention  centers and arenas  generally host fewer events during
the summer months. Consequently, our results of operations for the first quarter
are  typically  substantially  lower than in other  quarters  and our results of
operations  for the third quarter are typically  higher than in other  quarters.
Results of  operations  for any  particular  quarter  may not be  indicative  of
results of operations in the future.

Intellectual Property

         We have the  patents,  trademarks,  trade names and  licenses  that are
necessary  for the  operation of our business as we currently  conduct it. We do
not consider our patents, trademarks, trade names and licenses to be material to
the operation of our business.

                                        6
<PAGE>
Government Regulation

         Our operations are subject to various governmental regulations, such as
those governing:

         o        the service of food and alcoholic beverages;

         o        minimum wage regulations;

         o        employment;

         o        environmental protection; and

         o        human health and safety.

         In  addition,  our  facilities  and  products  are  subject to periodic
inspection  by federal,  state,  and local  authorities.  The cost of regulatory
compliance   is  subject  to  additions  to  or  changes  in  federal  or  state
legislation, or changes in regulatory implementation.  If we fail to comply with
applicable  laws,  we  could be  subject  to civil  remedies,  including  fines,
injunctions, recalls, or seizures, as well as potential criminal sanctions.

         The United States Food and Drug  Administration  (the "FDA")  regulates
and inspects our kitchens.  Every  commercial  kitchen in the United States must
meet the FDA's  minimum  standards  relating to the  handling,  preparation  and
delivery of food, including requirements  relating to  the  temperature of food,
the  cleanliness  of the kitchen and the hygiene of its  personnel.  We are also
subject to various state,  local and federal laws  regarding the  disposition of
property and leftover foodstuffs. The cost of compliance with FDA regulations is
subject to additions to or changes in FDA regulations.

         We serve alcoholic beverages at many facilities, and are subject to the
"dram-shop"  statutes  of the  states  in which we  serve  alcoholic  beverages.
"Dram-shop" statutes generally provide that serving alcohol to an intoxicated or
minor  patron is a violation  of law. In most  states,  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.  We sponsor regular training  programs
in  cooperation  with state  authorities  to minimize the  likelihood of serving
alcoholic  beverages to intoxicated or minor  patrons,  and we maintain  general
liability insurance that includes liquor liability coverage.

         We are also subject to licensing  with respect to the sale of alcoholic
beverages  in the  states  in which we serve  alcoholic  beverages.  Failure  to
receive or retain,  or the  suspension  of,  liquor  licenses  or permits  would
interrupt  or  terminate  our  ability  to serve  alcoholic  beverages  at those
locations.  A few of our contracts  require us to pay liquidated  damages during
any period in which our liquor  license for the  relevant  facility is suspended
and most  contracts  are  subject to  termination  in the event that we lose our
liquor license for the relevant facility.

General Information

         Volume Services  America was formed on December 31, 1992. Its principal
offices are at 201 East Broad Street,  Spartanburg,  SC 29306, and its telephone
number is (864) 598-8600. Volume Services America is the wholly-owned subsidiary
of Volume  Services  America  Holdings,  Inc.  ("Volume  Holdings"),  a Delaware
corporation.   Volume  Holdings'  subsidiaries  include  Volume  Services,  Inc.
("Volume Services") and Service America Corporation ("Service America"),  each a
Delaware corporation.

                                        7
<PAGE>
         We have no  operations  or assets in any  foreign  country  other  than
Canada. During 2000, our Canadian revenues and Canadian assets were less than 3%
of our total revenues and assets, respectively.

ITEM 2.  PROPERTIES.

         We lease our corporate headquarters of approximately 19,300 square feet
in Spartanburg, South Carolina, the headquarters of Service America in Stamford,
Connecticut of approximately  3,500 square feet, and a regional office in Fords,
New Jersey.

         We  currently  provide our  services at 129 client  facilities,  all of
which are  owned or  leased  by our  clients.  Our  contracts  with our  clients
generally  permit us to use  certain  areas  within the  facility to perform our
administrative  functions and fulfill our warehousing  needs, as well as provide
food and beverage services.


ITEM 3.  LEGAL PROCEEDINGS.

         We are  from  time  to  time  involved  in  various  legal  proceedings
incidental to the conduct of our  business.  In the opinion of  management,  any
liability  arising  out of any  currently  pending  proceeding  will  not have a
material adverse effect on our financial condition or results of operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         We did not submit any matters to a vote of security  holders during the
fourth quarter of our 2000 fiscal year.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Each registrant,  other than Volume  Holdings,  is a direct or indirect
wholly-owned  subsidiary  of Volume  Holdings.  There is no  established  public
trading  market for the equity  securities of Volume  Holdings.  As of March 27,
2001, the latest  practicable  date, there were four holders of Volume Holdings'
common stock. During our 2000 fiscal year, we did not sell any equity securities
that were not registered under the Securities Act of 1933, as amended.

ITEM 6.  SELECTED FINANCIAL DATA.

         The following  selected  consolidated  financial data is that of Volume
Holdings,  Volume  Services  America's  parent  company.  Volume  Holdings  is a
guarantor of the senior notes issued by Volume Services  America in 1999 and has
no substantial operations or assets other than its investment in Volume Services
America.  As a result,  the  consolidated  financial  condition  and  results of
operations  of Volume  Holdings  are  substantially  the same as those of Volume
Services America.  This table contains selected  financial data and is qualified
by the more detailed consolidated  financial statements,  including notes to the
financial statements,  of Volume Holdings. The selected financial data should be
read in conjunction with the consolidated financial statements and "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
included in this Annual Report on Form 10-K.

                                        8
<PAGE>
<TABLE>
<CAPTION>

                     Volume Services America Holdings, Inc.
                              (Dollars in millions)

Statement of Operations Data                       1996          1997           1998          1999           2000
                                                 --------      --------       --------      --------        ------
<S>                                            <C>           <C>           <C>            <C>           <C>
Net sales...................................   $    190.4    $    196.0    $    283.4     $    431.5    $    522.5
Depreciation and amortization...............         12.6          12.9          18.2           26.8          26.3
Operating income(a).........................          2.9           4.8           8.7           16.5          20.6
Interest expense............................          7.3           7.9          11.3           23.0          26.6
Loss before income taxes,
    extraordinary item and cumulative
    effect of change in accounting
    principle...............................         (3.9)         (2.8)         (2.2)          (6.1)         (5.5)
Income tax provision (benefit)..............         --             0.3           1.5           (1.5)         (1.3)
Net loss(b).................................         (3.9)         (3.1)         (5.2)          (5.6)         (4.2)

Balance Sheet Data
Total assets................................        117.3         137.8         269.5          278.6         265.7
Total debt(c)...............................         69.7          79.0         161.3          224.0         219.1
Total stockholders' equity (deficiency).....         21.9          25.1          52.2           (2.4)         (6.5)

Other Data
Net cash provided by operating activities...         11.0          15.3           2.5           16.1          22.7
Net cash used in investing activities.......        (13.5)        (31.0)         (5.3)         (25.4)        (12.9)
Net cash provided by (used in) financing
    activities..............................         (0.4)         15.9           6.3           12.8          (7.3)
EBITDA as defined(d)........................         16.3          20.8          32.1           47.1          51.7
Ratio of earnings to fixed charges(e).......         --            --            --             --            --
<FN>
--------------------------------------------
(a)      Operating income includes a non-cash charge  of $2.5,  $1.4,  $1.4  and
         $2.5 in fiscal years 1997, 1998, 1999  and 2000,  respectively, related
         to contract termination costs (in fiscal 1997 and 1998), the write-down
         of  long-lived  assets  identified  as  impaired and  a  contract  loss
         provision  (in  fiscal  1999)  and the write-down  of long-lived assets
         identified   as   impaired  and compensation expense (in fiscal  2000).
         Operating  income for fiscal years 1996,  1997, 1998,  1999  and   2000
         includes  management fees paid to  equity owners  of  $0.3, $0.3, $0.3,
         $0.4 and $0.4, respectively.
(b)      Net loss for Volume  Holdings  includes an  extraordinary  loss (net of
         income  taxes) of $1.5 and $0.9 for the non-cash  write-off of deferred
         financing   costs  in  fiscal   years  1998  and  1999,   respectively.
         Additionally,  net loss for fiscal  1999  includes a charge of $0.3 for
         the effect of a change in accounting principle (net of income taxes).
(c)      Includes the current portion of long-term debt.
(d)      EBITDA as defined is net income (loss) before  interest expense, income
         tax expense, depreciation and amortization, and:

         o        for fiscal year  1997,  a  $2.5  non-cash  charge  related  to
                  contract termination costs;

         o        for fiscal year 1998, $3.1 of non-recurring severance expenses
                  associated with Volume  Services'  employees and other Service
                  America  expenses  incurred in connection with the acquisition
                  of Service America, $1.4 of non-cash charges related to

                                       9
<PAGE>

                  contract  termination  costs for Volume  Holdings,  and a $1.5
                  extraordinary loss on debt extinguishment, net of taxes.

         o        for fiscal year 1999, $1.5 of  non-recurring  expenses related
                  to  downsizing  the  Service  America   corporate   office  in
                  connection  with the acquisition of Service  America,  $1.4 of
                  non-cash  charges related to the write-down of impaired assets
                  for certain  contracts and a contract loss  provision,  a $0.9
                  extraordinary loss on debt  extinguishment,  net of taxes, and
                  $0.3  for the  cumulative  effect  of a change  in  accounting
                  principle, net of taxes.

         o        for  fiscal  year  2000,  $1.1  of   non-recurring   strategic
                  corporate  costs,  $1.5 of  non-cash  charges  related  to the
                  write-down of impaired assets for certain contracts,  $0.7 for
                  the write-off of assets related to a litigation settlement and
                  $0.3 in related  legal fees and $0.3 in non-cash  compensation
                  expense.

         o        for fiscal 1996,  1997, 1998, 1999 and 2000, $0.3, $0.3, $0.3,
                  $0.4 and  $0.4,  respectively,  for  management  fees  paid to
                  equity owners.

         We  believe  that  EBITDA,  as  defined,  provides  useful  information
         regarding our ability to service debt.  However, it is not a measure in
         accordance with generally accepted accounting principles and should not
         be  considered  as an  alternative  to net  income  or cash  flow  data
         prepared in accordance with generally accepted  accounting  principles.
         Our measure of EBITDA,  as defined,  may not be comparable to similarly
         titled  measures used by other  companies due to differences in methods
         of calculation.

(e)      For  purposes of  determining  the ratio of earnings to fixed  charges,
         earnings   are  defined  as  income   (loss)   before   income   taxes,
         extraordinary  item and  cumulative  effect  of  change  in  accounting
         principle plus fixed charges. Fixed charges include interest expense on
         all  indebtedness,   amortization  of  deferred   financing  costs  and
         one-third  of rental  expense on  operating  leases  representing  that
         portion  of rental  expense  deemed  to be  attributable  to  interest.
         Earnings were  insufficient to cover fixed charges by $3.9, $2.8, $2.2,
         $6.1 and  $5.5 for  fiscal  years  1996,  1997,  1998,  1999 and  2000,
         respectively.
</FN>
</TABLE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

Fiscal 2000 Compared to Fiscal 1999

         Net Sales.  Net sales  increased  21.1% or $91.0  million  from  $431.5
million in fiscal 1999 to $522.5  million in fiscal  2000.  The increase was due
primarily to new service contracts which generated  additional revenues of $50.2
million. In addition, ten NFL games, six post-season playoff games and four 1999
regular  season games that occurred in January 2000  contributed  an increase in
net sales of $12.0  million.  Of the  remaining  $28.8 million  increase,  $16.4
million  was the result of an  increase  in net sales at our  convention  center
venues due primarily to an increase in corporate event bookings.


         Cost of  sales.  Cost  of  sales  of  $424.2  million  in  fiscal  2000
increased,  as a percentage  of net sales,  1.8% from fiscal  1999.  The primary
component of the increase was higher  commission  costs  associated with our new
service contracts.


         Selling,  general and administrative  expenses.  Selling,  general, and
administrative  expenses of $47.9  million in fiscal  2000  decreased  0.7%,  as
percentage of net sales from fiscal 1999. The decline was due primarily to fixed
expenses  including  corporate  and field support  overhead  costs which show no
marked increase as a result of the higher net sales.

                                       10
<PAGE>
         Depreciation and  amortization.  Depreciation and amortization of $26.3
million for fiscal 2000 decreased $0.5 million from the prior year period.


         Transaction related expenses.  Costs of $1.1 million incurred in fiscal
2000 consists primarily of non-recurring  strategic  corporate costs. For fiscal
1999,  $1.5 million in expenses  were incurred  primarily  relating to personnel
costs,  rental costs, and  professional  fees associated with the acquisition of
Service  America  in  August,   1998  (the  "Acquisition")  and  the  subsequent
downsizing of Service America's headquarters in Stamford, CT.


         Contract  related  losses.  Contract  related losses of $2.5 million in
fiscal 2000 include an impairment charge of approximately  $1.5 million relating
to the  property  and  equipment,  contract  rights and other assets for certain
contracts which we continue to operate.  Contract related losses also reflects a
$0.7  million  charge  for the  write-off  of  assets  related  to a  litigation
settlement  involving a terminated  contract  and $0.3 million in related  legal
fees.


         Operating  income.  Operating  income increased $4.1 million from $16.5
million  in fiscal  1999 to $20.6  million  in fiscal  2000.  The  increase  was
primarily due to the factors discussed above.


         Interest.  Interest  expense  increased  $3.6  million  in fiscal  2000
chiefly  associated with  approximately one additional month of interest expense
on  Volume  Service  America's  $100.0  million  in senior  subordinated  notes,
increased  borrowings on Volume Service  America's  revolving line of credit and
higher  interest rates on adjustable rate debt during fiscal 2000 as compared to
fiscal 1999.


Fiscal 1999 Compared to Fiscal 1998

         Net sales.  Net sales  increased  52.2% or $148.1  million  from $283.4
million  in fiscal  1998 to $431.5  million in fiscal  1999.  The  increase  was
primarily  due to the  Acquisition,  which  resulted in the  inclusion of $186.8
million  in net sales for fiscal  1999 as  compared  to $75.5  million in fiscal
1998.  Excluding  the effect of the  Acquisition,  net sales  increased by $36.7
million  as a result of the  addition  of eight new  contracts,  which  together
generated $41.3 million in net sales.  The  improvement was partially  offset by
the loss of net sales associated with the closure of several accounts.

         Cost of sales. Cost of sales of $342.5 million in fiscal 1999 increased
$120.0  million from fiscal 1998  primarily  due to the  Acquisition  and to the
overall  increase  in net  sales.  Cost of sales as a  percentage  of net  sales
increased from 78.5% in fiscal 1998 to 79.4% in fiscal 1999 primarily reflecting
the higher variable costs, especially  commissions,  associated with two service
contracts acquired by Service America.

         Selling,    general   and   administrative.    Selling,   general   and
administrative  expenses  increased  $13.2  million from $29.5 million in fiscal
1998 to $42.7  million in fiscal 1999,  primarily due to the  Acquisition.  As a
percentage of net sales, selling,  general and administrative  expenses declined
from 10.4% in fiscal 1998 to 9.9% in fiscal 1999.  Overhead expense,  one of the
elements of selling, general and administrative expenses, declined substantially
due  to the  savings  achieved  through  the  elimination  of  duplicate  costs.
Offsetting  these savings was an increase in other elements of selling,  general
and  administrative  expenses  primarily  due to the  increased  cost  structure
associated with operating  convention centers,  the primary component of Service
America's business.


                                       11
<PAGE>
         Depreciation and amortization.  Depreciation and amortization increased
47.4% from $18.2  million in fiscal 1998 to $26.8 million in fiscal 1999. Of the
$8.6  million  increase,  $4.8  million was due to an  increase in  amortization
arising from the application of purchase  accounting related to the Acquisition.
The  remaining  $3.8 million  increase was primarily  due to  depreciation  as a
result of the  assets  acquired  in the  Acquisition  and  fiscal  1999  capital
expenditures of $26.3 million.

         Transaction  related expenses.  We incurred $1.5 million in transaction
related  expenses in fiscal 1999 as  compared  to $3.1  million in fiscal  1998.
These expenses relate to personnel  costs,  rental costs and  professional  fees
associated with the downsizing of the Stamford, Connecticut office in connection
with the Acquisition.

         Contract related losses.  We incurred  non-cash contract related losses
of $1.4  million in both fiscal 1999 and 1998.  The $1.4 million  recognized  in
fiscal 1999 resulted  primarily from our  determination  that certain  contracts
that  we  intend  to  continue  operating  are  impaired,  in  that  the  future
undiscounted  cash flows of these  contracts is estimated to be  insufficient to
recover the related  carrying  value of the property and  equipment and contract
rights  associated  with the  contracts.  As a result,  we have written down the
carrying  value of these  contracts  to our  estimate of fair value based on the
present value of the  discounted  future cash flows.  The $1.4 million in fiscal
1998 relates to the write-off of assets relating to three terminated  concession
contracts.

         Operating  income.  Operating  income  increased $7.8 million from $8.7
million in 1998 to $16.5 million in fiscal 1999.  The increase was primarily due
to the factors discussed above.

         Interest.  Interest  expense  increased  $11.7  million in fiscal  1999
chiefly  associated with the issuance of Volume Service America's $100.0 million
in senior subordinated notes issued in March 1999 and interest related to Volume
Service America's revolving line of credit entered into in December 1998.

Liquidity and Capital Resources

         For fiscal 2000,  net cash provided by operating  activities  was $22.7
million  compared to $16.1 million in fiscal 1999. The $6.6 million increase was
primarily  due to  increased  operating  activities  as a result  of the  higher
overall sales mainly associated with our new service contracts.

         For  fiscal  2000,  net cash  used in  investing  activities  was $12.9
million compared to $25.4 million in fiscal 1999. For the 2000 period, the $12.9
million in investing activities primarily reflects investments for the purchases
of property and equipment and  investments in contract rights in connection with
maintaining and/or renewing existing contracts.  The higher capital expenditures
in the 1999 period  reflect  $17.5  million in  investments  for newly  acquired
service contracts.

         For fiscal 2000, net cash used in financing activities was $7.3 million
compared to $12.8  million in cash  provided by financing  activities  in fiscal
1999. The fiscal 2000 activity  primarily reflects the repayment of $3.5 million
borrowed under the Volume Service  America's  revolving credit facility and $1.2
million of senior secured debt. The 1999 figure  reflects the issuance of $100.0
million of senior  subordinated  notes,  and the use of proceeds to retire $45.0
million of senior secured debt and $0.5 million of GE Capital debt, redeem $49.5
million of stock, and pay related fees of $6.2 million. Excluding the financing,
$9.5 million was borrowed  under the revolving  credit  facility to fund working
capital and capital expenditures in fiscal 1999.

         For fiscal 1999,  net cash provided by operating  activities  was $16.1
million  compared to $2.5 million  provided by operating  activities  for fiscal
1998.  The $13.6 million  increase in cash provided by operating  activities was
primarily due to increased operating activity, mainly as the result of the

                                       12
<PAGE>
Acquisition  and higher  overall  sales due to the  addition  of new NFL and MLB
venues and a $3.9 million net increase in working capital.

         For  fiscal  1999,  net cash  used in  investing  activities  was $25.4
million  compared to $5.3 million in fiscal 1998. The primary  components of net
cash used in investing  activities  were the purchase of property and  equipment
and  investment  in contract  rights in  connection  with  acquiring or renewing
contracts.  In fiscal 1999, Volume Holdings made $17.5 million in investments in
property and  equipment  and  contract  rights for newly  acquired  contracts as
compared to $8.6  million in fiscal  1998.  Investments  made in the purchase of
property and  equipment  and contract  rights for existing  contracts  were $8.8
million in fiscal 1999 as compared to $10.2  million in fiscal year 1998.  These
investments  were  partially  offset by proceeds  from the sale of property  and
equipment  which were $.9  million  and $15.9  million in fiscal  years 1999 and
1998,  respectively.  Of the $15.9  million in proceeds for fiscal  1998,  $12.6
million was due to the termination of our Ericsson Stadium contract.

         For fiscal 1999,  net cash provided by financing  activities  was $12.8
million  compared to $6.3 million in fiscal 1998.  The 1999 figure  reflects the
issuance of $100.0 million of senior subordinated notes, and the use of proceeds
to retire  $45.0  million of senior  secured debt and $0.5 million of debt to GE
Capital,  redeem $49.5  million of stock,  and pay related fees of $6.2 million.
Excluding this financing,  $9.5 million was borrowed under the revolving  credit
facility to fund working  capital and capital  expenditures  and bank overdrafts
increased $7.4 million. This is compared to $6.9 million in borrowings under the
revolving  credit  facility,  a $1.8 million  decline in bank overdrafts and the
receipt of $3.5  million of cash equity from two  Blackstone  partnerships  (BCP
Volume, L.P. and BCP Offshore Volume L.P.) in fiscal 1998.

         Our liquidity is generated from cash flows from operations as described
above  and  from  revolving  credit  borrowings  available  through  our  credit
facility.  In December  1998,  we entered into this credit  facility  with Chase
Manhattan Bank, Goldman Sachs Credit Partners and other lenders to refinance the
pre-Acquisition  debt of Volume Services and Service America.  At closing of the
facility,  we borrowed  $160.0 million in term loans to refinance that debt, and
we repaid  $45.0  million of these term  loans from the  proceeds  of our senior
notes  issuance  in 1999.  The credit  facility  also  includes a $75.0  million
revolving credit facility.

         We use the money we borrow under the revolving  credit facility to fund
our working capital needs and for the capital  investments we make in connection
with our contracts.  Revolving credit borrowings may be made at prime rate or at
a LIBO rate  (available  for various  interest  periods) plus, in each case, the
applicable  margin.  All  borrowings  under the credit  facility  are secured by
substantially  all the assets of Volume  Holdings and most of its  subsidiaries,
including Volume Services and Service America.

         At January 2, 2001,  $51.1 million of the revolving credit facility was
available to be borrowed  under our credit  facility.  At that date,  there were
$6.0 million in outstanding borrowings and $17.9 million of outstanding, undrawn
letters of credit reducing availability.

Future Liquidity and Capital Resources

         We believe  that cash flow from  operating  activities,  together  with
borrowings available under the revolving credit facility,  will be sufficient to
fund our currently  anticipated  capital investment  requirements,  interest and
principal payment obligations and working capital requirements. We are currently

                                       13
<PAGE>
committed under client  contracts to fund capital  investments of  approximately
$25.6  million and $4.1 million in 2001 and 2002,  respectively.  We  anticipate
total capital investments of $32.5 million in fiscal 2001.

New Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments and Hedging  Activities" (SFAS 133), as amended by SFAS 137 and SFAS
138.  SFAS 133, as amended,  is effective  for us beginning  January 3, 2001 and
establishes  accounting and reporting  standards requiring that every derivative
instrument  be  recorded in the  balance  sheet as either an asset or  liability
measured  at  its  fair  value.  The  statement  requires  that  changes  in the
derivative's   fair  value  be   recognized   currently  in  earnings  or  other
comprehensive  income depending on whether a derivative is designed as part of a
hedge transaction. We have assessed the effect of this standard and believe that
adoption of this statement,  as amended,  will not have a material impact on our
financial position, results of operations or cash flows.

Forward Looking and Cautionary Statements

         Except for the historical information and discussions contained herein,
statements   contained  in  this  Form  10-K  may  constitute  "forward  looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995. These  statements  involve a number of risks,  uncertainties  and other
factors that could cause actual results to differ materially,  including,  among
other things:

         o        our high degree  of  leverage  and  significant  debt  service
                  obligations;

         o        our history of net losses;

         o        the level of attendance at events held  at the  facilities  at
                  which we provide our services and the level of spending on the
                  services that we provide at such events;

         o        the risk of labor  stoppages  affecting  sports teams at whose
                  facilities  we provide  our  services;

         o        the risk of  sports  facilities  at which we  provide services
                  losing their  sports team  tenants;

         o        our ability to retain  existing clients or obtain new clients;

         o        the highly competitive nature of the recreational food service
                  industry;

         o        any future  changes in  management;

         o        general  risks  associated  with the food  industry;  and

         o        future  changes  in government regulation.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         We are  exposed to  interest  rate  volatility  with regard to existing
issuances of variable rate debt.  We use interest rate swaps to reduce  interest
rate  volatility to achieve a desired  proportion of variable  versus fixed rate
debt, based on current and projected market conditions. The table below provides
information  about our  derivative  financial  instruments  and other  financial
instruments that are sensitive to changes in interest rates,  including interest
rate  swaps and debt  obligations.  For debt  obligations,  the  table  presents
principal  cash flows and related  weighted  average  interest rates by expected
maturity dates. For interest rate swaps and caps, the table presents notional

                                       14
<PAGE>
amounts and weighted average interest rates by expected  (contractual)  maturity
dates.  Notional  amounts are used to calculate the  contractual  payments to be
exchanged  under the  contract.  Weighted  average  variable  rates are based on
implied forward rates in the yield curve at the reporting date.
<TABLE>
<CAPTION>

                                 January 2, 2001
                                                                                                             Fair
                                                                                                            Value
                                  2001      2002      2003      2004      2005    Thereafter     Total      1/2/01
                                  ----      ----      ----      ----      ----    ----------     -----      ------
                                                                 (In Millions)
<S>                             <C>       <C>       <C>       <C>       <C>       <C>          <C>        <C>
Long-term debt:

    Variable rate:........      $  1.2    $   1.2   $  1.2    $  6.2    $   1.2    $   106.7    $ 117.7    $ 117.7

    Average interest rate:         9.6%       9.6%     9.6%      9.6%       9.6%         9.6%

    Fixed rate:...........      $   0     $    0     $   0     $   0     $   0     $   100.0    $ 100.0    $  87.0

    Average interest rate:        11.25%     11.25%   11.25%    11.25%     11.25%

Short-term debt:

    Variable rate:              $  1.0                                                          $   1.0    $   1.0

    Average interest rate:         8.9%

</TABLE>
<TABLE>
<CAPTION>

                                                                                                                 Fair
                                      Notional          Strike           Reference                              Value
                                       Amount            Rate              Rate              Period             1/2/01
                                     ----------       ----------       ------------        ----------          -------

<S>                                     <C>              <C>              <C>               <C>
Purchased interest rate cap             10.0             7.5%             3 month           4/15/99 -           $0.00
                                                                           LIBOR             6/16/01

                                                                       Fair Value
                                                         2001            1/2/01
                                                         ----          ----------

Interest rate swap

  Fixed to variable                                      $30.0           $(0.1)

  Average pay rate                                       6.4%

  Floor receive rate                                     5.4%


</TABLE>

ITEM 8    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



Volume Services America Holdings, Inc.

Independent Auditors' Report

Consolidated Financial Statements
Years Ended December 28, 1999 and
January 2, 2001

                                       15
<PAGE>



INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
  Volume Services America Holdings, Inc.:

We have audited the accompanying  consolidated balance sheets of Volume Services
America Holdings,  Inc. and subsidiaries (the "Company") as of December 28, 1999
and January 2, 2001, and the related  consolidated  statements of operations and
comprehensive  loss,  stockholders'  deficiency,  and cash flows for each of the
three years in the period ended January 2, 2001. 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 auditing standards generally accepted
in the  United  States of  America.  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 at December 28, 1999
and January 2, 2001,  and the results of its  operations  and its cash flows for
each of the three years in the period ended January 2, 2001 in  conformity  with
accounting principles generally accepted in the United States of America.



/s/ Deloitte & Touche, LLP

March 9, 2001


                                       16
<PAGE>
<TABLE>
<CAPTION>



VOLUME SERVICES AMERICA HOLDINGS, INC.


CONSOLIDATED BALANCE SHEETS
DECEMBER 28, 1999 AND JANUARY 2, 2001 (In Thousands, Except Per Share Data)
------------------------------------------------------------------------------------------------------------------------------------


                                                                                        December 28,      January 2,
ASSETS                                                                                     1999              2001
<S>                                                                                     <C>               <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                             $    12,281       $    14,726
  Accounts receivable, less allowance for doubtful accounts of $1,348 and
    $876 at December 28, 1999 and January 2, 2001, respectively                               16,935            19,386
  Merchandise inventories                                                                     10,947            11,524
  Prepaid expenses and other                                                                   6,870             2,524
  Deferred tax asset                                                                           3,756             2,064
                                                                                        ------------       -----------
           Total current assets                                                               50,789            50,224
                                                                                        ------------       -----------

PROPERTY AND EQUIPMENT:
  Leasehold improvements                                                                      44,518            47,036
  Merchandising equipment                                                                     43,261            43,746
  Vehicles and other equipment                                                                 6,953             7,473
  Construction in process                                                                        474               203
                                                                                         -----------       -----------
           Total                                                                              95,206            98,458
  Less - accumulated depreciation and amortization                                           (25,805)          (35,770)
                                                                                         -----------       -----------
           Property and equipment, net                                                        69,401            62,688
                                                                                         -----------       -----------

OTHER ASSETS:
  Contract rights, net                                                                        73,808            70,793
  Cost in excess of net assets acquired, net                                                  50,000            48,228
  Deferred financing costs, net                                                               11,459             9,948
  Trademarks, net                                                                             18,422            17,735
  Other                                                                                        4,742             6,080
                                                                                         -----------       -----------
           Total other assets                                                                158,431           152,784
                                                                                         -----------       -----------

TOTAL ASSETS                                                                             $   278,621       $   265,696
                                                                                         ===========       ===========

</TABLE>


                                       17
<PAGE>
<TABLE>
<CAPTION>


VOLUME SERVICES AMERICA HOLDINGS, INC.


CONSOLIDATED BALANCE SHEETS (Continued)
DECEMBER 28, 1999 AND JANUARY 2, 2001 (In Thousands, Except Per Share Data)
------------------------------------------------------------------------------------------------------------------------------------


                                                                                         December 28,         January 2,
LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                    1999                 2001

<S>                                                                                        <C>                <C>
CURRENT LIABILITIES:
  Short-term note payable                                                                  $        -         $   1,000
  Current maturities of long-term debt                                                          1,150             1,150
  Current maturities of capital lease obligation                                                  206               225
  Accounts payable                                                                             17,116            14,838
  Accrued salaries and vacations                                                                8,050             8,707
  Liability for insurance                                                                       2,186             2,522
  Accrued taxes, including income taxes                                                         2,706             2,536
  Accrued commissions and royalties                                                            10,258            12,332
  Accrued interest                                                                              3,873             4,005
  Other                                                                                         4,304             3,164
                                                                                           ----------         ---------
           Total current liabilities                                                           49,849            50,479
                                                                                           ----------         ---------

LONG-TERM LIABILITIES:
  Long-term debt                                                                              222,200           216,550
  Capital lease obligation                                                                        416               191
  Deferred income taxes                                                                         5,091             2,242
  Liability for insurance                                                                       1,370             1,608
  Other liabilities                                                                             2,081             1,135
                                                                                           ----------         ---------
           Total long-term liabilities                                                        231,158           221,726
                                                                                           ----------         ---------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY:
  Common stock, $0.01 par value - authorized:  1,000 shares; issued:
      526 shares; outstanding:  332 shares                                                        -                 -
  Additional paid-in capital                                                                   66,474            66,754
  Accumulated deficit                                                                         (18,243)          (22,462)
  Accumulated other comprehensive loss                                                           (198)             (262)
  Treasury stock - at cost (194 shares)                                                       (49,500)          (49,500)
  Loans to related parties                                                                       (919)           (1,039)
                                                                                           ----------         ---------
          Total stockholders' deficiency                                                       (2,386)           (6,509)
                                                                                           ----------         ---------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                             $   278,621        $ 265,696
                                                                                           ===========        =========


See notes to consolidated financial statements.

</TABLE>


                                      18
<PAGE>
<TABLE>
<CAPTION>


VOLUME SERVICES AMERICA HOLDINGS, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
YEARS ENDED DECEMBER 29, 1998, DECEMBER 28, 1999 AND JANUARY 2, 2001
(In Thousands)
------------------------------------------------------------------------------------------------------------------------------------


                                                                     December 29,       December 28,        January 2,
                                                                        1998                 1999              2001

<S>                                                                <C>                    <C>               <C>
Net sales                                                          $    283,441           $  431,453        $  522,533
Cost of sales                                                           222,533              342,489           424,160
Selling, general and administrative                                      29,464               42,713            47,860
Depreciation and amortization                                            18,197               26,815            26,300
Transaction related expenses                                              3,081                1,529             1,105
Contract related losses                                                   1,423                1,422             2,524
                                                                   ------------            ---------        ----------

Operating income                                                          8,743               16,485            20,584
Interest expense                                                         11,322               23,029            26,577
Other income, net                                                          (359)                (476)             (486)
                                                                   ------------            ---------        ----------

Loss before income taxes                                                 (2,220)              (6,068)           (5,507)
Income tax provision (benefit)                                            1,518               (1,549)           (1,288)
                                                                   ------------            ---------        ----------

Loss before extraordinary item and
  cumulative effect of change in accounting
  principle                                                              (3,738)              (4,519)           (4,219)
Extraordinary loss on debt extinguishment,
  net of taxes                                                           (1,499)                (873)                -
Cumulative effect of change in accounting
  principle, net of taxes                                                    -                  (256)                -
                                                                    -----------            ---------        ----------

Net loss                                                                 (5,237)              (5,648)           (4,219)
Other comprehensive loss - foreign currency
  translation adjustment                                                    (67)                (131)              (64)
                                                                    -----------            ---------        ----------

Comprehensive loss                                                  $    (5,304)           $  (5,779)       $   (4,283)
                                                                    ===========            =========        ==========


See notes to consolidated financial statements.

</TABLE>


                                       19
<PAGE>
<TABLE>
<CAPTION>


VOLUME SERVICES AMERICA HOLDINGS, INC.


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED DECEMBER 29, 1998, DECEMBER 28, 1999 AND JANUARY 2, 2001
(In Thousands, Except Per Share Data)
------------------------------------------------------------------------------------------------------------------------------------

                                                                                    Accumulated
                                                        Additional                     Other                    Loans to
                                   Common     Common     Paid-in     Accumulated    Comprehensive   Treasury    Related
                                   Shares     Stock      Capital       Deficit         Loss          Stock      Parties       Total

<S>                                <C>         <C>      <C>            <C>             <C>          <C>          <C>       <C>
BALANCE, DECEMBER 30, 1997          339        $ -      $ 33,857       $ (7,358)       $   -        $    -       $(1,318)  $ 25,181
  Capital investment                 37          -         3,750              -            -             -          (250)     3,500
  Shares issued in acquisition      150          -        28,867              -            -             -             -     28,867
  Loans to related parties            -          -             -              -            -             -            (3)        (3)
  Foreign currency translation        -          -             -              -          (67)            -             -        (67)
  Net loss                            -          -             -         (5,237)           -             -             -     (5,237)
                                   ----         ---     --------      ---------       -------      -------       -------   --------

BALANCE, DECEMBER 29, 1998          526          -        66,474        (12,595)         (67)            -        (1,571)     52,241
  Stock redemption                 (194)         -             -              -            -       (49,500)            -    (49,500)
  Loans to related parties            -          -             -              -            -             -          (912)      (912)
  Repayment of investor notes         -          -             -              -            -             -         1,564      1,564
  Foreign currency translation        -          -             -              -         (131)            -             -       (131)
  Net loss                            -          -             -         (5,648)          -              -             -     (5,648)
                                   ----         ---     --------      ---------       -------      --------      --------   --------

BALANCE, DECEMBER 28, 1999          332          -        66,474        (18,243)        (198)      (49,500)         (919)    (2,386)
  Noncash compensation                -          -           280              -            -             -             -        280
  Loans to related parties            -          -             -              -            -             -          (120)      (120)
  Foreign currency translation        -          -             -              -          (64)            -             -        (64)
  Net loss                            -          -             -         (4,219)           -             -             -     (4,219)
                                   ----         ---     --------      ---------       -------     --------       -------   --------

BALANCE, JANUARY 2, 2001            332        $ -      $ 66,754      $ (22,462)      $ (262)     $(49,500)      $(1,039)  $ (6,509)
                                   ====        ====     ========      =========       ======      ========       =======   ========


See notes to consolidated financial statements

</TABLE>


                                       20
<PAGE>
<TABLE>
<CAPTION>

VOLUME SERVICES AMERICA HOLDINGS, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 29, 1998, DECEMBER 28, 1999 AND JANUARY 2, 2001
(In Thousands)
------------------------------------------------------------------------------------------------------------------------------------


                                                                                      Years Ended
                                                                  -----------------------------------------------------
                                                                     December 29,       December 28,      January 2,
                                                                       1998                1999             2001

<S>                                                                  <C>                    <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                           $    (5,237)           $ (5,648)        $ (4,219)
  Adjustments to reconcile net loss to net cash provided
    by operating activities:
    Extraordinary item                                                     1,499                 873                -
    Cumulative effect of change in accounting principle                        -                 256                -
    Depreciation and amortization                                         18,197              26,815           26,300
    Amortization of deferred financing costs                                 551               1,475            1,511
    Contract related losses                                                1,423               1,422            2,220
    Noncash compensation                                                       -                   -              280
    Deferred tax change                                                    1,159              (3,267)          (1,158)
    Gain on disposition of assets                                            (15)                (13)            (256)
    Other                                                                    242                (131)             (64)
    Changes in assets and liabilities, net of effect of
      acquisition:
      Decrease (increase) in assets:
        Accounts and notes receivable                                     (2,361)                855           (3,218)
        Merchandise inventories                                               15              (1,362)            (577)
        Prepaid expenses                                                    (470)             (2,577)           2,407
        Other assets                                                      (1,479)               (639)          (1,798)
      Increase (decrease) in liabilities:
        Accounts payable                                                  (4,459)             (4,857)              74
        Accrued salaries and vacations                                       453                (466)             657
        Liability for insurance                                              733              (1,609)             574
        Other liabilities                                                 (7,799)              4,963              (49)
                                                                     -----------            --------          -------
           Net cash provided by operating activities                       2,452              16,090           22,684
                                                                     -----------            --------          -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Decrease in restricted cash                                                  2                   -                -
  Cash purchased in acquisition of Service America                         1,587                   -                -
  Payment of acquisition costs                                            (2,820)                  -                -
  Purchase of minority interest stock of Service America                    (631)                  -                -
  Purchase of property and equipment                                     (12,635)            (10,418)          (6,399)
  Proceeds from sale of property and equipment                             3,349                 887              965
  Proceeds from assets held for sale                                      12,575                   -                -
  Additions to assets held for sale                                         (607)                  -                -
  Purchase of contract rights                                             (6,169)            (15,882)          (7,477)
                                                                     -----------             -------          -------
           Net cash used in investing activities                          (5,349)            (25,413)         (12,911)
                                                                     -----------             -------          -------
</TABLE>



                                      21
<PAGE>
<TABLE>
<CAPTION>


VOLUME SERVICES AMERICA HOLDINGS, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
YEARS ENDED DECEMBER 29, 1998, DECEMBER 28, 1999 AND JANUARY 2, 2001
(In Thousands)
------------------------------------------------------------------------------------------------------------------------------------


                                                                                         Years Ended
                                                                  ------------------------------------------------------
                                                                      December 29,        December 28,     January 2,
                                                                        1998                1999              2001

<S>                                                                        <C>                <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings - revolving loans                                         $ 6,897            $ 9,500         $ (3,500)
  Principal payments on long-term debt                                    (154,291)           (46,650)          (1,150)
  Proceeds from long-term debt                                             160,000            100,000                -
  Payments of financing costs                                               (7,859)            (6,600)               -
  Principal payments on capital lease obligations                             (103)              (189)            (206)
  Increase (decrease) in bank overdrafts                                    (1,842)             5,563           (2,352)
  Net increase (decrease) in loans to related parties                           (3)               652             (120)
  Capital contribution                                                       3,500                  -                -
  Redemption of stock                                                            -            (49,500)               -
                                                                           -------           --------         --------
           Net cash provided by (used in) financing activities               6,299             12,776           (7,328)
                                                                           -------           --------         --------

INCREASE IN CASH                                                             3,402              3,453            2,445

CASH AND CASH EQUIVALENTS:
  Beginning of year                                                          5,426              8,828           12,281
                                                                           -------           --------         --------

  End of year                                                              $ 8,828           $ 12,281         $ 14,726
                                                                           =======           ========         ========

SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid                                                            $ 5,892           $ 17,790         $ 24,934
                                                                           =======           ========         ========
  Income taxes paid                                                        $   449           $    578         $    391
                                                                           =======           ========         ========
  Noncash activities:
    Other                                                                  $   250
                                                                           =======
    Capital lease obligation                                               $   914
                                                                           =======
    Purchase of Service America for stock and note payable                 $28,867
                                                                           =======


See notes to consolidated financial statements.

</TABLE>


                                      22
<PAGE>


VOLUME SERVICES AMERICA HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 29, 1998, DECEMBER 28, 1999 AND JANUARY 2, 2001
--------------------------------------------------------------------------------



1.    GENERAL

      Volume Services America Holdings,  Inc.  ("Volume  Holdings," 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 Holdings'  financial
      information is therefore substantially the same as that of 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").  The  Company  is  owned by its  senior  management,
      Blackstone Capital Partners II Merchant Banking Fund, L.P. ("BCP II"), and
      General Electric Capital Corporation ("GE Capital"). GE Capital controlled
      36.4% of the  Company  at January  2,  2001.  As of  January 2, 2001,  the
      remainder of the Company's capital stock was owned by limited partnerships
      controlled by BCP Volume L.P. and BCP Offshore Volume L.P.  ("Blackstone")
      (59.4%) and by current and former management  employees of Volume Services
      (4.2%).

      At January 2, 2001, the Company had approximately 129 contracts to provide
      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.  Contracts  to provide  these  services  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.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

      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 1998 and 1999
      fiscal  years  consisted  of 52 weeks and fiscal  year 2000  contained  53
      weeks.

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

      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 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.
      Only the  amount of the fees  received  are  included  in net  sales  when
      earned.


                                      23
<PAGE>


      The  aggregate  amount  of  sales  recognized  by the  Company  and  sales
      collected on behalf of others under management fee contracts from services
      provided  to the  end  users  of  the  products  is  defined  as  "managed
      revenues."  The Company's  total  managed  revenues for fiscal years 1998,
      1999  and  2000  were   approximately   $315,728,000,   $452,679,000   and
      $542,324,000, respectively.

      Merchandise   Inventories  -  Merchandise  inventories  consist  of  food,
      beverage, and team and other merchandise. Inventory is valued primarily at
      the lower of cost or market, determined on the first-in, first-out basis.

      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 and 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:

      o        Leasehold improvements -   generally 10 years -   limited by  the
               lease term or contract term, if applicable

      o        Merchandising equipment - generally 5 to 10 years  limited by the
               contract term, if applicable

      o        Vehicles and other equipment - generally 2 to 10 years limited by
               the contract term, if applicable

      Contract  Rights  -  Contract  rights,  net of  accumulated  amortization,
      consist primarily of certain directly  attributable  costs incurred by the
      Company in obtaining or renewing contracts with clients and the fair value
      of contract rights acquired related to the acquisitions of Volume Services
      in 1995 and Service  America  in 1998.  These  costs for  the  Company are
      amortized over the contract life of each such contract, including optional
      renewal periods where the option to renew rests solely with  the  Company.
      Accumulated  amortization  was  approximately  $22,163,000 at December 28,
      1999 and $29,789,000 at January 2, 2001.

      Cost in  Excess of Net  Assets  Acquired  - Cost in  excess of net  assets
      acquired  (goodwill) is being amortized on the straight-line basis over 30
      years.  Accumulated  amortization was approximately $3,206,000 at December
      28, 1999 and $4,977,000 at January 2, 2001.

      Trademarks - Trademarks are being amortized on a straight-line  basis over
      30  years.   Accumulated  amortization  was  approximately  $2,178,000  at
      December 28, 1999 and $2,865,000 at January 2, 2001.

      Deferred Financing Costs - Deferred financing costs are being amortized as
      interest  expense over the life of the respective  debt using the interest
      method.  Accumulated amortization was approximately $1,550,000 at December
      28, 1999 and $3,062,000 at January 2, 2001.

      Impairment of Long-Lived Assets and Contract Losses - The Company accounts
      for  impairment  of  long-lived  assets in  accordance  with  Statement of
      Financial  Accounting  Standards  ("SFAS")  No.  121,  Accounting  for the
      Impairment of Long-Lived  Assets and for Long-Lived  Assets to be Disposed
      Of.  SFAS  No.  121  requires  that  long-lived  assets  be  reviewed  for
      impairment  whenever events or changes in circumstances  indicate that the
      book value of the asset may not be  recoverable.  In accordance  with SFAS
      No. 121, the Company estimates the future undiscounted cash flows expected
      to result from the use of the asset and its eventual  disposition.  If the
      sum of the  expected  future  undiscounted  cash  flows  is less  than the
      carrying   amount  of  the  asset,   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.


                                      24
<PAGE>
      The Company assesses cost in excess of net assets acquired  (goodwill) for
      impairment  whenever  facts and  circumstances  indicate that the carrying
      amount  may not be  fully  recoverable.  To  analyze  recoverability,  the
      Company projects future undiscounted cash flows over the remaining life of
      goodwill.  If the sum of the expected  future  undiscounted  cash flows is
      less  than  the  carrying  amount  of  goodwill,  an  impairment  loss  is
      recognized.  Measurement of an impairment  loss for goodwill is based upon
      the  difference  between the  carrying  amount of goodwill  and the future
      undiscounted cash flows.

      Derivative  Financial  Instruments - The Company uses derivative financial
      instruments,  including interest rate swaps, caps and floors as a means of
      hedging  exposure to  interest  rate risks.  All hedging  instruments  are
      designated as hedges and are highly  correlated to the underlying  risk as
      required by accounting  principles generally accepted in the United States
      of  America.  Instruments  that do not qualify  for hedge  accounting  are
      marked-to-market with changes recognized in current earnings.  The Company
      is the end-user and does not utilize  these  instruments  for  speculative
      purposes.  The Company has  rigorous  standards  regarding  the  financial
      stability and credit standing of its major counterparties.

      Interest  rate swaps and caps  involve the  periodic  exchange of payments
      without the  exchange of  underlying  principal or notional  amounts.  Net
      payments are recognized as an adjustment to interest  expense.  Should the
      swaps or caps be terminated,  unrealized  gains or losses are deferred and
      amortized  over the shorter of the remaining  original term of the hedging
      instrument or the remaining life of the underlying debt instrument.

      Insurance  - At the  beginning  of  fiscal  1999,  the  Company  adopted a
      premium-based   insurance  program  for  general   liability,   automobile
      liability  and  workers'  compensation  risk.  Prior to fiscal  1999,  the
      Company  was  primarily  self-insured  for general  liability,  automobile
      liability and workers' compensation risks,  supplemented by stop-loss type
      insurance policies.  Management determines its estimate of the reserve for
      self-insurance  considering  a number  of  factors,  including  historical
      experience and 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 5.14% and
      5.98% at December  28,  1999 and 4.92% and 5.11% at January 2,  2001),  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 28, 1999 and January 2, 2001 were  $3,398,000  and
      $2,755,000, respectively. The related undiscounted amounts were $3,884,000
      and $3,256,000, respectively.

      The Company became  self-insured for employee health insurance in December
      1999.  Prior to December 1999, the Company had a  premium-based  insurance
      program. The employee health  self-insurance  liability is based on claims
      filed and  estimates  for  claims  incurred  but not  reported.  The total
      liability recorded by the Company at December 28, 1999 and January 2, 2001
      was $196,000 and $793,000, respectively.

      Cash  Overdrafts  - The  Company has  included in accounts  payable on the
      accompanying   consolidated   balance  sheets  cash  overdrafts   totaling
      $9,420,000  and  $7,068,000  at  December  28,  1999 and  January 2, 2001,
      respectively.

      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  loss.  These  amounts were not  significant  for any
      period reported.


                                      25
<PAGE>
      Transaction  Related  Expenses -  Transaction  related  expenses in fiscal
      years 1998 and 1999 primarily  include  personnel costs,  rental costs and
      professional fees associated with downsizing Service America Corporation's
      Stamford, Connecticut office (see Note 5). Transaction related expenses in
      fiscal year 2000 consist  primarily of  nonrecurring  strategic  corporate
      costs.

      Income Taxes - The Company recognizes  deferred tax assets and liabilities
      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  1998  and  1999  have  been
      reclassified,  where  applicable,  to conform to the  financial  statement
      presentation used in 2000.

      Noncash  Compensation  - The Company has elected to follow the  accounting
      provisions  of  Accounting  Principles  Board  Opinion  ("APBO")  No.  25,
      Accounting for Stock Issued to Employees for Stock-Based Compensation.

      New  Accounting  Standards  -  In  June  1998,  the  Financial  Accounting
      Standards  Board  issued  Statement  of  Financial   Accounting  Standards
      ("SFAS")  No.  133,  Accounting  for  Derivative  Instruments  and Hedging
      Activities,  as amended by SFAS No. 137 and SFAS No. 138. SFAS No. 133, as
      amended,  is  effective  for the  Company  beginning  January  3, 2001 and
      establishes  accounting  and  reporting  standards  requiring  that  every
      derivative  instrument be recorded in the balance sheet as either an asset
      or  liability  measured at its fair value.  The  statement  requires  that
      changes in the derivative's fair value be recognized currently in earnings
      or other  comprehensive  income  depending  on  whether  a  derivative  is
      designed as part of a hedge  transaction.  The Company  has  assessed  the
      effect  of  this  standard  and  has  determined  that  adoption  of  this
      statement,  as amended,  will not have a material  impact on the Company's
      financial position, results of operations or cash flows.


3.    CHANGE IN ACCOUNTING PRINCIPLE

      In fiscal year 1999,  the Company  adopted the  provisions of the American
      Institute  of Certified  Public  Accountants  Statement of Position  98-5,
      Reporting on the Costs of Start-up  Activities,  which requires that costs
      of start-up  activities be expensed as incurred,  as of December 28, 1999.
      As a  result,  the  Company  recorded  a  charge  of  $256,000  net of tax
      (approximately $170,000) reflecting the effect of the change in accounting
      principle during fiscal year 1999.


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  and the  allowance  for  doubtful  accounts.  Actual
      results could differ from those estimates.


                                      26
<PAGE>
      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  December  29,  1998,  December  28, 1999 and  January 2, 2001,  the
      Company had one customer that accounted for  approximately  15.8%,  11.1%,
      and 9.8% of operating revenues, respectively.

      The Company's  revenues and earnings are dependent on various factors such
      as  attendance  levels and the number of games played by the  professional
      football and baseball  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 the teams are on strike.


5.    ACQUISITION

      On August 24, 1998, Volume Holdings,  BCP Volume L.P., BCP Offshore Volume
      L.P. and VSI Management Direct L.P. ("VSI  Management"),  together with GE
      Capital and certain management shareholders of Service America,  purchased
      substantially   all  of  the  capital   stock  of  Service   America  (the
      "Acquisition").  The purchase  price was $32.8 million which  consisted of
      (a)  $1,000 in cash (b) 150 newly  issued  shares of the  Volume  Holdings
      common stock  representing  approximately  28.5% of the outstanding common
      stock of Volume  Holdings on a fully  diluted basis after giving effect to
      such  issuance  (c) the  issuance to GE Capital of a 6.0% per annum senior
      subordinated  promissory  note,  due on December 31, 1999, in an aggregate
      principal amount of $500,000 and (d) $2.8 million of transaction costs. By
      December 1998, the Company had purchased the remainder of Service  America
      capital stock and  contributed all of the Service America capital stock to
      Volume  Services  America.  The purchase  method of accounting was used to
      establish  and  record  a new  cost  basis  for the  assets  acquired  and
      liabilities  assumed.  The  difference  between the purchase price and the
      fair market  values of the assets  acquired  and  liabilities  assumed was
      recorded as goodwill in the amount of $44.5 million and is being amortized
      over 30 years.  The  results of  Service  America's  operations  have been
      included in the  Company's  statement of operations  beginning  August 25,
      1998 (date of acquisition).

      The following unaudited pro forma financial information presents a summary
      of   consolidated   results  of  operations  as  if  the  Service  America
      acquisition  had occurred as of January 1, 1998,  after  giving  effect to
      certain adjustments,  including amortization of goodwill, interest expense
      on acquisition debt and related income tax effects.  The pro forma results
      have been prepared for comparative  purposes only and do not purport to be
      indicative  of what would have occurred had the  acquisition  been made on
      that date, nor are they necessarily  indicative of results which may occur
      in the future.

                                                         Pro Forma
                                                      (in thousands)
                                                        Year Ended
                                                           1998

       Net sales                                         $ 405,900
       Loss before extraordinary item                       (9,900)
       Net loss                                            (11,900)




                                      27
<PAGE>
6.    DEBT

      Long-term debt consists of the following (in thousands):

                                                         1999            2000

      Term B borrowings                                $113,850        $112,700
      Revolving loans                                     9,500           5,000
      Senior subordinated notes                         100,000         100,000
                                                       --------        --------
                                                        223,350         217,700
      Less - current portion of long-term debt           (1,150)         (1,150)
                                                       --------        --------

      Total long-term debt                             $222,200        $216,550
                                                       ========        ========


      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").  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.  All  borrowings  under the  credit  facility  are  secured  by
      substantially  all the assets of Volume  Holdings  and the majority of its
      subsidiaries,   including  Volume  Services  and  Service   America.   The
      commitments  under the  Revolving  Credit  Facility are  available to fund
      capital  investment  requirements,  working capital and general  corporate
      needs of the  Company.  In  conjunction  with the  credit  agreement,  the
      Company  recognized  an  extraordinary  loss of  $1,499,000,  net of taxes
      (approximately  $999,000),  in its statement of  operations  for the early
      extinguishment of its previous debt in fiscal year 1998.

      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 discussed below.

      Installments of Term Loan B are due in consecutive quarterly  installments
      on the last day of each fiscal  quarter with 25% of the  following  annual
      amounts being paid on each installment date:  $1,150,000 in each year from
      2001 through 2005, and $106,950,000 in 2006.

      The  Revolving  Credit  Facility  allows  the  Company  to  borrow  up  to
      $75,000,000  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. The Revolving Credit Facility
      will  mature on  December  3, 2004.  At January  2, 2001,  $6,000,000  was
      outstanding under the Revolving Credit Facility,  consisting of $5,000,000
      in  Revolving  Loans  and  $1,000,000  in  Swingline  Loans  (included  in
      short-term  note  payable),  and  approximately  $17,901,000 of letters of
      credit were outstanding but undrawn.

      Borrowings  under the credit  agreement  bear  interest at floating  rates
      based  upon the  interest  rate  option  elected  by the  Company  and the
      Company's  leverage  ratio.  The interest  rates at December 28, 1999 were
      9.94% for Term Loan B and 10.5% for the  Revolving  Credit  Facility.  The
      interest  rates at January  2, 2001 were  10.25% for Term Loan B and 11.5%
      for the Revolving Credit Facility.


                                      28
<PAGE>
      The credit  agreement  calls for  mandatory  prepayment of the loans under
      certain  circumstances and optional prepayment without penalty. The credit
      agreement  contains  covenants  that  require  the  Company to comply with
      certain  financial  covenants,  including a maximum net leverage ratio, an
      interest coverage ratio and a minimum consolidated cash net worth test  as
      defined.   At January 2, 2001,  the  Company  was in  compliance  with all
      covenants.  In addition,  Volume  Services  America is  restricted  in its
      ability  to pay  dividends  and  other  restricted  payments  in an amount
      greater than approximately $49,500,000 at January 2, 2001.

      Senior  Subordinated  Notes - On March 4, 1999,  Volume  Services  America
      completed a private placement of 11-1/4% 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 have been
      registered  under the Securities Act of 1933. The notes mature on March 1,
      2009 and  interest  is  payable on March 1 and  September  1 of each year,
      beginning on September 1, 1999. Such notes are unsecured, are subordinated
      to all the existing debt and any future debt of Volume  Services  America,
      rank  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 is guaranteed by the Company
      and all of the subsidiaries of Volume Services America, except for certain
      non-wholly owned U.S. subsidiaries and one non-U.S. subsidiary.

      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 Volume  Holdings  of 194  shares of Volume  Holdings  common  stock for
      $49,500,000  and the  repayment by Volume  Holdings of a $500,000  note in
      favor of GE Capital and (iii) pay fees and expenses incurred in connection
      with the notes and the consent  from lenders to an amendment to the Credit
      Agreement.   In  conjunction  with  the  notes,  Volume  Services  America
      recognized an extraordinary loss of $873,000,  net of taxes (approximately
      $570,000),  in its statement of operations for the early extinguishment of
      $45,000,000 of Term Loans in fiscal year 1999.

      Aggregate  annual  maturities of long-term  debt at January 2, 2001 are as
follows (in thousands):

      2001                                                   $  1,150
      2002                                                      1,150
      2003                                                      1,150
      2004                                                      6,150
      2005                                                      1,150
      Thereafter                                              206,950
                                                             --------

      Total                                                  $217,700
                                                             ========




                                      29
<PAGE>



7.    CAPITAL LEASE OBLIGATION

      The Company is obligated to make minimum  lease  payments  under a capital
      lease  agreement.  The  following  is a schedule of future  minimum  lease
      payments  under the capital  lease  together with the present value of the
      net minimum lease payments as of January 2, 2001 (in thousands):

       Fiscal Year

       2001                                                               $ 250
       2002                                                                 196
                                                                          -----
       Total minimum lease payments                                         446
       Less - amount representing interest                                  (30)
                                                                          -----
       Present value of minimum lease payments                              416
       Less - current portion of capital lease obligation                  (225)
                                                                          -----

       Total long-term capital lease obligation                           $ 191
                                                                          =====


      Under the terms of the lease  agreement,  certain  equipment is pledged to
secure performance as follows (in thousands):

        Equipment                                                         $ 914
        Accumulated depreciation                                           (251)
                                                                          -----

        Total                                                             $ 663
                                                                          =====



8.    INCOME TAXES
<TABLE>
<CAPTION>

      The components of deferred taxes are (in thousands):

                                                                               1999            2000

       <S>                                                                   <C>            <C>
       Deferred tax liabilities:
         Intangibles (goodwill, contract rights and trademarks)              $ (9,746)      $  (6,711)
         Other prepaid assets                                                    (525)           (455)
                                                                             --------       ---------
                                                                              (10,271)         (7,166)
                                                                             --------       ---------
      Deferred tax assets:
        Difference between book and tax basis of property                          17           1,129
        Bad debt reserves                                                         461             334
        Inventory reserves                                                         73             203
        Other reserves and accrued liabilities                                  3,503           2,789
        General business credit carryforwards                                   1,491             822
        Accrued compensation and vacation                                         867             954
        Net operating loss carryforward                                         2,524             757
                                                                             --------       ---------
                                                                                8,936           6,988
                                                                             --------       ---------

       Net deferred tax liabilities                                          $ (1,335)      $    (178)
                                                                             ========       =========

      Net deferred tax liability is recognized as follows in the
        accompanying 1999 and 2000 consolidated balance sheets:
        Current deferred tax asset                                           $  3,756       $   2,064
        Noncurrent deferred tax liability                                      (5,091)         (2,242)
                                                                             --------       ---------

      Net deferred tax liability                                             $ (1,335)      $    (178)
                                                                             ========       =========


</TABLE>

                                      30
<PAGE>
      At January 2, 2001,  the  Company  has  approximately  $17,500,000  of net
      operating   loss   carryforwards,   $13,000,000  of  which  are  from  the
      acquisition of Service  America.  These  carryforwards  begin to expire in
      years 2008  through  2020.  The  Company's  future  ability to utilize the
      acquired  Service  America net operating loss  carryforward  is limited to
      some  extent by  section  382 of the  Internal  Revenue  Code of 1986,  as
      amended.  The general  business  credit  carryforwards  begin to expire in
      2005.

      As of December 28, 1999,  there was a change in  management's  estimate of
      certain items relating to the basis of tax liabilities that existed at the
      date of the acquisition of Service  America.  The effect of adjustments to
      these liabilities,  which approximates $970,000, was applied as a decrease
      to goodwill attributable to the acquisition.
<TABLE>
<CAPTION>

      The provision (benefit) for income taxes is as follows (in thousands):

                                                                           Fiscal Year Ended
                                                         -------------------------------------------------------------
                                                                 December 29,         December 28,          January 2,
                                                                    1998                 1999                   2001

      <S>                                                          <C>                  <C>                   <C>
      Current provision (benefit)                                  $  359               $ 1,718               $  (130)
      Deferred provision (benefit)                                  1,159                (3,267)               (1,158)
                                                                   ------               -------               -------

      Total provision (benefit) for income taxes                   $1,518               $(1,549)              $(1,288)
                                                                   ======               =======               =======

</TABLE>

      The  difference  between  the  statutory  federal  income tax rate and the
effective tax rate on net loss is as follows:
<TABLE>
<CAPTION>

                                                                      Fiscal Year Ended
                                             ----------------------------------------------------------
                                                    December 29,         December 28,        January 2,
                                                       1998                  1999               2001

<S>                                                     <C>                  <C>                  <C>
Statutory rate                                          (34)%                (34)%                (34)%
Differences:
  State income taxes                                     33                   (3)                  (1)
  Nondeductible expenses (meals and
    entertainment)                                        2                    1                    4
  Adjustment to valuation allowance                      58                    -                    -
  Goodwill                                                8                    8                    9
  Federal tax credits                                     -                   (2)                  (1)
  Foreign tax reserve                                     -                    3                    -
  Other                                                   1                    1                    -
                                                        ---                  ---                  ---

Total provision (benefit) for income taxes               68 %                (26)%                (23)%
                                                        ===                  ===                  ===
</TABLE>


9.    EQUITY TRANSACTIONS

      Stock  Redemption  - From the  proceeds of the Senior  Subordinated  Notes
      described in Note 5, Volume Services  America paid a $50,000,000  dividend
      in 1999 to Volume  Holdings.  Volume  Holdings used the proceeds to redeem
      194 shares of its common  stock (the  "Stock  Redemption")  and to repay a
      $500,000 note in favor of GE Capital.

      Loans to Related  Parties - At December 28, 1999 and January 2, 2001,  the
      Company has made loans to VSI  Management  and another  partnership  which
      hold an indirect ownership in the Company. The loans were used to fund the
      repurchase of  partnership  interests  from former  members of management.
      Accordingly,   these   amounts  have  been  included  as  a  reduction  to
      stockholders' equity.


                                      31
<PAGE>
      Noncash  Compensation  -  During  the  current  year,  certain  management
      employees  purchased  units  in two  partnerships  that  have an  indirect
      ownership in the Company.  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
      loss,  for fiscal year 2000.  Had  compensation  costs been  determined as
      prescribed by SFAS No. 123, Accounting for Stock-Based  Compensation,  the
      effect on the Company's net earnings would not have been significant.


10.   INTEREST RATE HEDGING ARRANGEMENTS

      Effective  April 15,  1999,  the  Company  entered  into an  interest  cap
      transaction  with the Union Bank of California  ("UBOC") for a $10,000,000
      notional amount for $4,200.  The interest rate cap protects the Company if
      the three-month LIBOR exceeds 7.5% through January 16, 2001.

      The Company  entered into an interest rate swap  transaction  on April 16,
      1999 with UBOC for a  $30,000,000  notional  amount with no up front cost.
      This swap provides that the Company pays to UBOC one-month  LIBOR and that
      UBOC pays to the  Company  5.375%  each month  until  April 20,  2001.  On
      October 20, 1999,  the Company sold an interest rate floor on this swap to
      UBOC  and   received   $34,000.   The   interest   rate   floor  is  being
      marked-to-market.  Consequently, in the event that one-month LIBOR is less
      than 5.375% the Company must instead pay 5.375%.

      The counterparties to the Company's interest rate exchange  agreements are
      major  financial  institutions.  Such financial  institutions  are leading
      market-makers  in the  financial  derivatives  markets and are expected to
      fully perform under the terms of such exchange agreements.


11.   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
      28, 1999 and January 2, 2001 approximates the fair value of the Term Loans
      and Revolving Credit Facility based upon the variable rate of interest and
      frequent  repricing.  The Company  estimates  the fair value of the Senior
      Subordinated   Notes  to  be   approximately   $87,000,000   (book   value
      $100,000,000)  based on  third-party  quotations  for the same or  similar
      issues.

      Interest  Rate Hedging  Arrangements  - At December 28, 1999,  the Company
      estimates  the fair values of the interest  rate swap,  cap and floor as a
      loss of $450,250, a loss of $5,100 and a gain of $1,900, respectively.  At
      January 2, 2001,  the Company  estimates  the fair values of the  interest
      rate  swap,  cap and floor as a loss of  $114,389,  $0 and a loss of $620,
      respectively.  These figures  represent the estimated  amounts the Company
      would pay or receive to terminate these financial  instrument  agreements,
      as quoted by the financial institution.

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



                                      32
<PAGE>
12.   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   $86,489,000,   $131,056,000  and
      $168,782,000 for fiscal years 1998, 1999 and 2000,  respectively.  Minimum
      guaranteed  commission and royalty expense was  approximately  $3,634,000,
      $9,955,000  and   $10,223,000  for  fiscal  years  1998,  1999  and  2000,
      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 $1,317,000,
      $1,085,000  and  $1,080,000  in fiscal 1998,  fiscal 1999 and fiscal 2000,
      respectively.

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

                                                     Commissions
                                   Operating             and
      Year                           Leases           Royalties

      2001                          $  404             $ 8,630
      2002                             330               6,609
      2003                             273               5,461
      2004                             131               4,710
      2005                               2               4,471
      Thereafter                         -              20,034
                                    ------             -------

      Total                         $1,140             $49,915
                                    ======             =======

      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
      January  2,  2001,  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 $6.0 million.

      Commitments - Pursuant to its contracts with various clients,  the Company
      is committed to spend approximately $20,297,000 during 2001 and $4,062,000
      during 2002 for  equipment  improvements  and  location  contract  rights.
      Subsequent to fiscal year end 2000, the Company signed contract extensions
      obligating it to expend $5,275,000 in capital investments in 2001.

      At  January 2,  2001,  the  Company  has  $5,314,000  of letters of credit
      collateralizing the Company's  performance and other bonds, and $3,145,000
      in letters of credit  collateralizing  the self-insurance  reserves of the
      Company, and $9,442,000 in other letters of credit.

      Litigation - There are 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.



                                      33
<PAGE>
13.   RELATED PARTY TRANSACTIONS

      Management  Fees - Certain  administrative  and  management  functions are
      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 1998,
      1999 and 2000.   GE Capital was  paid  management  fees  of  approximately
      $42,000 in fiscal year 1998 and  $167,000 in  fiscal years 1999  and 2000.
      Such amounts are included in selling, general and administrative expenses.

      The Company also paid fees of $2,400,000 in 1998 to the  Blackstone  Group
      for consulting and advisory  services in connection with the  Acquisition,
      in accordance  with the terms of an arrangement  entered into in May 1998.
      Such amounts were included in goodwill.

      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 1998, 1999 and 2000 for such services,  net of
      discounts earned, were approximately $1,900,000, $185,000 and $165,000 and
      are included in selling,  general and administrative expenses. The Company
      also leases equipment from GE Capital under a capital lease (Note 7).

      Management  Incentive  Agreement - During 1998,  the Company  introduced a
      discretionary   incentive  plan  whereby   general   managers  and  senior
      management  personnel qualify for incentive payments in the event that the
      Company has exceeded certain financial  performance  targets determined on
      an annual  basis.  The  Company  has accrued  approximately  $865,000  and
      $1,597,000 in accrued salaries and vacations in the  accompanying  balance
      sheets at December  28, 1999 and January 2, 2001,  respectively,  for such
      incentives  payable  to certain  general  managers  and senior  management
      personnel.   These   amounts  are  included  in  selling,   general,   and
      administrative expenses.


14.   RETIREMENT PLAN

      Effective  February 15, 2000,  the Volume  Service  401(k) plan was merged
      into the Service America 40l(k) plan,  forming the Volume Services America
      401(k)  defined  contribution  plan.  This plan covers  substantially  all
      Volume Services America  employees.  Employees may contribute up to 16% of
      their  eligible  earnings  and the  Company  will  match  25% of  employee
      contributions  up to  the  first  6% of  employee  compensation,  with  an
      additional  discretionary match up to 50%. The Company's  contributions to
      the previous  individual  plans and the combined  plan were  approximately
      $185,000 for fiscal 1998, $178,000 for fiscal 1999 and $319,000 for fiscal
      2000.

      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.



                                      34
<PAGE>
15.   CONTRACT RELATED LOSSES

      The Company  terminated  three  concession  contracts in fiscal 1998.  The
      Company  recognized a loss of approximately  $1,423,000 for the year ended
      December 29, 1998, which relates to the writeoff of assets relating to the
      contracts.

      During fiscal 1999 and 2000,  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. The Company wrote down approximately  $573,000 of property and
      equipment and $448,000 of contract rights in fiscal 1999 and approximately
      $976,000  of property  and  equipment,  $221,000  of  contract  rights and
      $269,000 of other assets in fiscal 2000.

      During  fiscal 1999,  the Company  recorded a loss for an  underperforming
      contract  to reserve  for the  estimated  future  losses of  approximately
      $401,000.

      On June  12,  1998,  Service  America  commenced  arbitration  proceedings
      through the American Arbitration Association in New York, New York against
      Silver  Huntington  Realty LLC and Silver Huntington LLC (see Note 12). In
      May 2000, the arbitrator  reached a decision in this matter.  The decision
      provided for no payment  from either  party to the other.  As a result the
      Company  wrote off related  assets in the amount of $754,000  and recorded
      approximately $305,000 in related legal fees.


16.   QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

      Quarterly  operating  results  for the years ended  December  28, 1999 and
      January 2, 2001 are as follows (in thousands):
<TABLE>
<CAPTION>

        Year Ended                             First        Second          Third        Fourth
        December 28, 1999                     Quarter       Quarter        Quarter       Quarter         Total

<S>                                         <C>           <C>           <C>            <C>            <C>
Net sales                                   $ 66,290      $ 116,341     $ 147,058      $ 101,764      $ 431,453
Cost of sales                                 54,314         90,206       115,033         82,936        342,489
Selling, general, and administrative           9,444         10,453        13,244          9,572         42,713
Depreciation and amortization                  6,347          6,818         6,721          6,929         26,815
Transaction related expenses                   1,018            209           328            (26)         1,529
Contract related losses                           -              -             -           1,422          1,422
                                             -------        -------      --------      ---------       --------
Operating income (loss)                       (4,833)         8,655        11,732            931         16,485
Interest expense, net                          4,632          5,923         6,215          6,259         23,029
Other income, net                               (101)          (113)          (53)          (209)          (476)
                                             -------        -------      --------      ---------       --------
Income (loss) before income taxes             (9,364)         2,845         5,570         (5,119)        (6,068)
Income tax provision (benefit)                (2,670)         2,650          (187)        (1,342)        (1,549)
                                             -------        -------      --------      ---------       --------
Income (loss) before extraordinary
  item and cumulative effect of
  changes in accounting principles            (6,694)           195         5,757         (3,777)        (4,519)
Extraordinary loss on debt
  extinguishment, net of taxes                  (873)             -             -              -           (873)
Cumulative effect of change in
  accounting principles, net of
  taxes                                         (256)             -             -              -           (256)
                                            --------         ------       -------       --------       --------

Net income (loss)                           $ (7,823)        $  195       $ 5,757       $ (3,777)      $ (5,648)
                                            ========         ======       =======       ========       ========


                                      35
<PAGE>

    Year Ended                               First         Second         Third         Fourth
  January 2, 2001                           Quarter       Quarter        Quarter       Quarter         Total

Net sales                                   $ 80,120      $ 143,637     $ 188,289      $ 110,487      $ 522,533
Cost of sales                                 64,243        115,733       151,810         92,374        424,160
Selling, general, and administrative           9,577         13,037        14,235         11,011         47,860
Depreciation and amortization                  6,489          6,686         6,791          6,334         26,300
Transaction related expenses                     770             12             9            314          1,105
Contract related losses                          205          1,809           510              -          2,524
                                            --------      ---------     ---------       --------       --------
Operating income (loss)                       (1,164)         6,360        14,934            454         20,584
Interest expense, net                          6,602          6,551         6,773          6,651         26,577
Other income, net                                (48)          (109)         (135)          (194)          (486)
                                            --------      ---------     ---------       --------       --------
Income (loss) before income taxes             (7,718)           (82)        8,296         (6,003)        (5,507)
Income tax provision (benefit)                   124         (2,129)        2,112         (1,395)        (1,288)
                                            --------      ---------     ---------       --------       --------

Net income (loss)                           $ (7,842)      $  2,047       $ 6,184       $  (4,608)     $ (4,219)
                                            ========       ========       =======       =========      ========

</TABLE>


17.   NON-GUARANTOR SUBSIDIARIES FINANCIAL STATEMENTS

      The senior subordinated notes are jointly and severally  guaranteed by the
      Company and all of the subsidiaries of Volume Service America,  except for
      certain  non-wholly owned U.S.  subsidiaries and one non-U.S.  subsidiary.
      The  following  table  sets  forth the  condensed  consolidated  financial
      statements of the Parent Company, Guarantor Subsidiaries and Non-Guarantor
      Subsidiaries as of and for the periods ended December 28, 1999 and January
      2,  2001  (in the  case of the  balance  sheet)  and for the  years  ended
      December 29,  1998,  December 28, 1999 and January 2, 2001 (in the case of
      the statement of operations and the cash flows):

      Consolidating Condensed Statement of Operations and Comprehensive Loss,
      Year Ended December 29, 1998 (in thousands)
<TABLE>
<CAPTION>

                                                      Combined        Combined
                                       Parent         Guarantor     Non-guarantor
                                       Company       Subsidiaries    Subsidiaries   Eliminations  Consolidated
<S>                                      <C>           <C>              <C>            <C>            <C>
Net sales                                $     -       $273,482         $9,959         $    -         $283,441
Cost of sales                                  -        214,776          7,757              -          222,533
Selling, general, and administrative           -         27,755          1,709              -           29,464
Depreciation and amortization                  -         17,333            864              -           18,197
Transaction related expenses                   -          3,081              -              -            3,081
Contract related losses                        -          1,423              -              -            1,423
                                         -------       --------         ------         ------         --------
Operating income (loss)                        -          9,114           (371)             -            8,743
Interest expense                               -         11,322              -              -           11,322
Other income, net                              -           (359)             -              -             (359)
                                         -------       --------         ------         ------         --------
Loss before income taxes                       -         (1,849)          (371)             -           (2,220)
Income tax provision                           -          1,518              -              -            1,518
                                         -------       --------         ------         ------         --------
Loss before extraordinary item                 -         (3,367)          (371)             -           (3,738)
Extraordinary loss                             -         (1,499)             -              -           (1,499)
Loss of subsidiaries                      (5,237)             -              -          5,237                -
Net loss                                  (5,237)        (4,866)          (371)         5,237           (5,237)

Other comprehensive loss                      -              -             (67)            -               (67)
                                         -------       --------         ------       -------          --------

Comprehensive loss                      $ (5,237)      $ (4,866)        $ (438)      $ 5,237          $ (5,304)
                                        ========       ========         ======       =======          ========

</TABLE>


                                      36
<PAGE>
<TABLE>
<CAPTION>


      Consolidating Condensed Statement of Cash Flows, Year Ended December 29, 1998 (in thousands)

                                                                 Combined            Combined
                                                       Parent     Guarantor        Non-guarantor
                                                      Company   Subsidiaries       Subsidiaries   Consolidated

<S>                                                   <C>          <C>               <C>              <C>
Cash flows from operating activities                  $   (49)     $  2,935          $ (434)          $  2,452
                                                      -------      --------          ------           --------

Cash flows from investing activities:
  Decrease in restricted cash                               -             2               -                  2
  Cash purchased in acquisition of Service America          -         1,587               -              1,587
  Payment of acquisition costs                         (2,820)            -               -             (2,820)
  Purchase of minority interest stock of Service
    America                                              (631)            -               -               (631)
  Purchase of property and equipment                        -       (12,313)           (322)           (12,635)
  Proceeds from sale of property and equipment              -         3,349               -              3,349
  Proceeds from assets held for sale                        -        12,575               -             12,575
  Additions to assets held for sale                         -          (607)              -               (607)
  Purchase of contract rights                               -        (6,164)             (5)            (6,169)
                                                      -------      --------          ------           --------
           Net cash used in investing activities       (3,451)       (1,571)           (327)            (5,349)
                                                      -------      --------          ------           --------

Cash flows from financing activities:
  Net borrowings - revolving loans                          -         6,897               -              6,897
  Principal payments on long-term debt                      -      (154,291)              -           (154,291)
  Proceeds from long-term debt                              -       160,000               -            160,000
  Payments of financing costs                               -        (7,859)              -             (7,859)
  Principal payments on capital lease obligations           -          (103)              -               (103)
  Decrease in bank overdrafts                               -        (2,555)            713             (1,842)
  Increase in loans to related parties                      -            (3)              -                 (3)
  Capital contributions                                 3,500             -               -              3,500
                                                       ------      --------          ------           --------
           Net cash provided by financing activities    3,500         2,086             713              6,299
                                                       ------      --------          ------           --------

Increase (decrease) in cash                                 -         3,450             (48)             3,402

Cash and cash equivalents:
  Beginning of year                                         -         5,242             184              5,426
                                                       ------      --------          ------            -------

  End of year                                          $    -      $  8,692          $  136            $ 8,828
                                                       ======      ========          ======            =======


</TABLE>


                                      37
<PAGE>
<TABLE>
<CAPTION>

      Consolidating Condensed Balance Sheet, December 28, 1999 (in thousands)

                                                        Combined       Combined
                                          Parent       Guarantor     Non-guarantor
Assets                                   Company      Subsidiaries   Subsidiaries  Eliminations   Consolidated

<S>                                        <C>           <C>            <C>            <C>            <C>
Current assets:
  Cash and cash equivalents                $      -      $  9,392       $  2,889       $      -       $ 12,281
  Accounts receivable                             -        15,619          1,316              -         16,935
  Other current assets                            -        29,775            869         (9,071)        21,573
                                           --------      --------       --------       --------       --------
           Total current assets                   -        54,786          5,074         (9,071)        50,789
Property and equipment                            -        65,343          4,058              -         69,401
Contract rights, net                              -        71,814          1,994              -         73,808
Cost in excess of net assets
  acquired, net                                   -        50,000              -              -         50,000
Investment in subsidiaries                   (2,386)            -              -          2,386              -
Other assets                                      -        34,616              7              -         34,623
                                           --------      --------       --------       --------       --------

Total assets                               $ (2,386)     $276,559       $ 11,133       $ (6,685)      $278,621
                                           ========      ========       ========       ========       ========

Liabilities and Stockholders' Deficiency

Current liabilities:
  Intercompany liabilities                 $      -      $      -       $  9,071       $ (9,071)      $      -
  Other current liabilities                       -        46,220          3,629              -         49,849
                                           --------      --------       --------       --------       --------

           Total current liabilities              -        46,220         12,700         (9,071)        49,849
Long-term debt                                    -       222,200              -              -        222,200
Other liabilities                                 -         8,958              -              -          8,958
                                           --------      --------       --------       --------       --------
           Total liabilities                      -       277,378         12,700         (9,071)       281,007
                                           --------      --------       --------       --------       --------

Stockholders' deficiency:
  Common stock                                    -             -              -              -              -
  Additional paid-in capital                 66,474        16,974              -        (16,974)        66,474
  Accumulated deficit                       (18,243)      (16,874)        (1,369)        18,243        (18,243)
  Treasury stock and other                  (50,617)         (919)          (198)         1,117        (50,617)
                                           --------      --------       --------       --------       --------
           Total stockholders' deficiency    (2,386)         (819)        (1,567)         2,386         (2,386)
                                           --------      --------       --------       --------       --------

Total liabilities and stockholders'
  deficiency                               $ (2,386)     $276,559       $ 11,133       $ (6,685)      $278,621
                                           ========      ========       ========       ========       ========

</TABLE>


                                      38
<PAGE>
<TABLE>
<CAPTION>


      Consolidating Condensed Statement of Operations and Comprehensive Loss, Year Ended December 28, 1999 (in thousands)

                                                    Combined         Combined
                                     Parent         Guarantor      Non-guarantor
                                     Company      Subsidiaries     Subsidiaries    Eliminations  Consolidated

<S>                                   <C>            <C>              <C>             <C>             <C>
Net sales                             $      -       $ 402,150        $ 29,303        $     -         $ 431,453
Cost of sales                                -         318,627          23,862              -           342,489
Selling, general, and administrative         -          39,123           3,590              -            42,713
Depreciation and amortization                -          24,402           2,413              -            26,815
Transaction related expenses                 -           1,529               -              -             1,529
Contract related losses                      -             972             450              -             1,422
                                      --------       ---------        --------        -------         ---------
Operating income (loss)                      -          17,497          (1,012)             -            16,485
Interest expense                             -          23,029               -              -            23,029
Other income, net                            -            (461)            (15)             -              (476)
                                      --------       ---------        --------        -------         ---------
Loss before income taxes                     -          (5,071)           (997)             -            (6,068)
Income tax benefit                           -          (1,549)              -              -            (1,549)
                                      --------       ---------        --------        -------         ---------
Loss before extraordinary item
  and cumulative effect of change in
  accounting principle                       -          (3,522)           (997)             -            (4,519)
Extraordinary item, net of taxes             -            (873)              -              -              (873)
Cumulative effect of change in
  accounting principle, net of taxes         -            (256)              -              -              (256)
Loss in earnings of subsidiaries        (5,648)              -               -          5,648                 -
                                      --------       ---------        --------        -------          --------
Net loss                                (5,648)         (4,651)           (997)         5,648            (5,648)
Other comprehensive loss -
  foreign currency                           -               -            (131)            -               (131)
                                      --------       ---------        --------        -------          --------

Comprehensive loss                    $ (5,648)      $  (4,651)       $ (1,128)      $ 5,648           $ (5,779)
                                      ========       =========        ========       =======           ========

</TABLE>


                                      39
<PAGE>
<TABLE>
<CAPTION>


      Consolidating Condensed Statement of Cash Flows, Year Ended December 28, 1999 (in thousands)

                                                                      Combined       Combined
                                                          Parent      Guarantor    Non-guarantor
                                                          Company   Subsidiaries   Subsidiaries     Consolidated

<S>                                                     <C>           <C>             <C>              <C>
Cash flows from operating  activities                   $      -      $ 11,759        $ 4,331          $ 16,090
                                                        --------      --------        -------          --------
Cash flows from investing activities:
  Purchase of property and equipment                           -        (9,423)          (995)          (10,418)
  Proceeds from sale of property, plant and equipment          -           887              -               887
  Purchase of contract rights                                  -       (15,221)          (661)          (15,882)
                                                        --------      --------        -------          --------
           Net cash used in investing activities               -       (23,757)        (1,656)          (25,413)
                                                        --------      --------        -------          --------

Cash flows from financing activities:
  Net borrowings - revolving loans                             -         9,500              -             9,500
  Principal payments on long-term debt                         -       (46,650)             -           (46,650)
  Proceeds from long-term debt                                 -       100,000              -           100,000
  Payments of financing costs                                  -        (6,600)             -            (6,600)
  Principal payments on capital lease obligations              -          (189)             -              (189)
  Increase in bank overdrafts                                  -         5,483             80             5,563
  Dividend from subsidiary                                49,500       (49,500)             -                 -
  Redemption of stock                                    (49,500)            -              -           (49,500)
  Increase in loans to related parties                         -           652              -               652
                                                       ---------       -------        -------         ---------
           Net cash provided by financing activities           -        12,696             80            12,776
                                                       ---------       -------        -------         ---------

Increase in cash                                               -           698          2,755             3,453
Cash and cash equivalents:
  Beginning of year                                            -         8,692            136             8,828
                                                        --------       -------        -------         ---------

  End of year                                           $      -       $ 9,390        $ 2,891         $  12,281
                                                        ========       =======        =======         =========

</TABLE>


                                      40
<PAGE>
<TABLE>
<CAPTION>


      Consolidating Condensed Balance Sheet, January 2, 2001 (in thousands)

                                                         Combined      Combined
                                          Parent        Guarantor    Non-guarantor
Assets                                   Company      Subsidiaries    Subsidiaries  Eliminations   Consolidated

<S>                                        <C>           <C>             <C>            <C>           <C>
Current assets:
  Cash and cash equivalents                $      -      $ 14,158        $   568        $     -       $ 14,726
  Accounts receivable                             -        17,272          2,114              -         19,386
  Other current assets                            -        23,791            990         (8,669)        16,112
                                           --------      --------        -------        -------       --------
           Total current assets                   -        55,221          3,672         (8,669)        50,224
Property and equipment                            -        59,045          3,643              -         62,688
Contract rights, net                              -        69,506          1,287              -         70,793
Cost in excess of net assets acquired, net        -        48,228              -              -         48,228
Investment in subsidiaries                   (6,509)            -              -          6,509              -
Other assets                                      -        33,738             25              -         33,763
                                           --------      --------        -------        -------       --------

Total assets                               $ (6,509)     $265,738        $ 8,627        $ (2,160)     $265,696
                                           ========      ========        =======        ========      ========

Liabilities and Stockholders' Deficiency

Current liabilities:
  Intercompany liabilities                 $      -      $      -        $ 8,669        $ (8,669)     $     -
  Other current liabilities                       -        48,331          2,148               -        50,479
                                           --------      --------        -------        --------      --------
           Total current liabilities              -        48,331         10,817          (8,669)       50,479
Long-term debt                                    -       216,550              -               -       216,550
Other liabilities                                 -         5,176              -               -         5,176
                                           --------      --------        -------        --------      --------
           Total liabilities                      -       270,057         10,817          (8,669)      272,205
                                           --------      --------        -------        --------      --------

Stockholders' deficiency:
  Common stock                                    -             -              -              -              -
  Additional paid-in capital                 66,754        66,754              -        (66,754)        66,754
  Accumulated deficit                       (22,462)      (20,534)        (1,928)        22,462        (22,462)
  Treasury stock and other                  (50,801)      (50,539)          (262)        50,801        (50,801)
                                           --------      --------        -------        -------       --------
           Total stockholders' deficiency    (6,509)       (4,319)        (2,190)         6,509         (6,509)
                                           --------      --------        -------        -------       --------

Total liabilities and stockholders'
  deficiency                               $ (6,509)     $265,738        $ 8,627       $ (2,160)      $265,696
                                           ========      ========        =======       ========       ========

</TABLE>


                                      41
<PAGE>

<TABLE>
<CAPTION>

      Consolidating Condensed Statement of Operations and Comprehensive Loss, Year Ended
      January 2, 2001 (in thousands)

                                                     Combined          Combined
                                         Parent      Guarantor        Non-guarantor
                                        Company     Subsidiaries      Subsidiaries    Eliminations  Consolidated
<S>                                    <C>           <C>              <C>              <C>           <C>
Net sales                              $      -      $ 491,232        $ 31,301         $    -        $ 522,533
Cost of sales                                 -        398,063          26,097              -          424,160
Selling, general, and administrative          -         44,491           3,369              -           47,860
Depreciation and amortization                 -         23,870           2,430              -           26,300
Transaction related expenses                  -          1,105               -              -            1,105
Contract related losses                       -          2,524               -              -            2,524
                                       --------      ---------        --------         ------        ---------
Operating income (loss)                       -         21,179            (595)             -           20,584
Interest expense                              -         26,577                              -           26,577
Other income, net                             -           (450)            (36)             -             (486)
                                       --------      ---------        --------         ------        ---------
Loss before income taxes                      -         (4,948)           (559)             -           (5,507)
Income tax expense                            -         (1,288)              -              -           (1,288)
Loss in earnings of subsidiaries         (3,035)             -               -          3,035                -
                                       --------      ---------        --------         ------        ---------
Net loss                                 (3,035)        (3,660)           (559)         3,035           (4,219)
Other comprehensive loss
  foreign currency                           -              -              (64)             -              (64)
                                       --------      --------         --------         ------        ---------

Comprehensive loss                     $ (3,035)     $  (3,660)       $   (623)       $ 3,035        $  (4,283)
                                       ========      =========        ========        =======        =========


      Consolidating Condensed Statement of Cash Flows, Year Ended January 2, 2001 (in thousands)

                                                                     Combined         Combined
                                                         Parent      Guarantor      Non-guarantor
                                                         Company   Subsidiaries     Subsidiaries   Consolidated

Cash flows from operating  activities                    $     -      $ 22,159       $    525          $ 22,684
                                                         -------      --------       --------          --------
Cash flows from investing activities:
  Purchase of property and equipment                           -        (5,877)          (522)           (6,399)
  Proceeds from sale of property, plant and equipment          -           965              -               965
  Purchase of contract rights                                  -        (6,677)          (800)           (7,477)
                                                         -------      --------       --------          --------
           Net cash used in investing activities               -       (11,589)        (1,322)          (12,911)
                                                         -------      --------       --------          --------

Cash flows from financing activities:
  Net borrowings - revolving loans                             -        (3,500)             -            (3,500)
  Principal payments on long-term debt                         -        (1,150)             -            (1,150)
  Principal payments on capital lease obligations              -          (206)             -              (206)
  Increase in bank overdrafts                                  -          (828)        (1,524)           (2,352)
  Increase in loans to related parties                         -          (120)             -              (120)
                                                         -------      --------       --------          --------
           Net cash used in financing activities               -        (5,804)        (1,524)           (7,328)
                                                         -------      --------       --------          --------

Increase (decrease) in cash                                    -         4,766         (2,321)            2,445
Cash and cash equivalents:
  Beginning of year                                            -         9,392          2,889            12,281
                                                         -------      --------       --------          --------

  End of year                                            $     -      $ 14,158       $    568          $ 14,726
                                                         =======      ========       ========          ========
</TABLE>


                                      42
<PAGE>
ITEM  9   CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE.

          Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The following  table provides  information  about each of our directors
and executive officers.
<TABLE>
<CAPTION>

         Name                                               Age    Position

         <S>                                                <C>    <C>
         John T. Dee.................................       62     Chief Executive Officer and Chairman of the
                                                                   Board of Directors
         Kenneth R. Frick............................       45     Executive Vice President and Chief Financial Officer
         Janet L. Steinmayer.........................       45     Executive Vice President, General Counsel and
                                                                       Secretary
         Howard A. Lipson............................       37     Director
         David Blitzer ..............................       31     Director
         Peter Wallace...............................       26     Director
</TABLE>

         John T. Dee,  Chief  Executive  Officer  and  Chairman  of the Board of
Directors.  Mr. Dee has served as Chief  Executive  Officer and  Chairman of the
Board of Directors of Volume  Services  America  since August 1998.  Mr. Dee has
served as President,  Chief Executive  Officer and a director of Service America
since January 1993 and as a consultant to Service  America from November 1992 to
January 1993. He has been Chairman of the Board of Directors of Service  America
since  January  1997.  From  1989 to 1992,  Mr.  Dee was  President  of Top Food
Services,  Inc., a company  engaged in the food service  business.  From 1980 to
1989,  he  was  Group  President  at  ARAMARK  (a  food  service  company)  with
responsibility  for ARAMARK's  recreational  food service and public  restaurant
operations. From 1979 to 1980, he held senior positions, including President, at
Sportservice  Corporation  (a food service  company),  and was  responsible  for
concessions and merchandise operations at airports,  theaters,  stadiums, arenas
and  racetracks.  From  1968 to 1979,  he held  various  positions  at  ARAMARK,
including Vice  President-Sales  and President of the Leisure  Services Group, a
division of ARAMARK engaged in the recreational food service industry.

         Kenneth R. Frick, Executive Vice President and Chief Financial Officer.
Mr. Frick has served as Chief Financial Officer of Volume Services America since
August 1998 and as Chief  Financial  Officer of Volume  Services  since 1995. He
served as Vice  President  from  August 1998 to  December  2000,  when he became
Executive  Vice  President.  Mr.  Frick  has  18  years  of  experience  in  the
recreational  food service industry,  14 of them with Volume Services.  Prior to
becoming Chief  Financial  Officer of Volume Services in 1995, Mr. Frick was the
Controller for Volume Services, and for seven years was Assistant Controller and
Southeast  Regional  Controller  of Volume  Services.  Mr.  Frick is a certified
public accountant.

         Janet L. Steinmayer,  Executive Vice  President,  General  Counsel  and
Secretary.  Ms.  Steinmayer  has been  General  Counsel and  Secretary of Volume
Services  America since August 1998.  She served as Vice  President  from August
1998 to December 2000, when she became Executive Vice President.  Ms. Steinmayer
has been  Corporate  Vice  President,  General  Counsel and Secretary of Service
America  since  November   1993.   From  1992  to  1993,  she  was  Senior  Vice
President--External  Affairs and General Counsel of Trans World  Airlines,  Inc.
("TWA").  From 1990 to 1991, she served as Vice  President--Law,  Deputy General
Counsel and  Corporate  Secretary  at TWA. Ms.  Steinmayer  was a partner at the
Connecticut law firm of Levett, Rockwood & Sanders, P.C. from 1988 to 1990.

                                       43
<PAGE>

         Howard A. Lipson, Director. Mr. Lipson  is  Senior Managing Director of
The Blackstone Group L.P., referred to in this Annual Report on Form 10-K as the
"Blackstone  Group",  which he joined in 1988.  He has been a director of Volume
Services America since 1995.  Prior to joining the Blackstone  Group, Mr. Lipson
was a member of the Mergers and  Acquisitions  Group of Salomon Brothers Inc. He
currently serves on the Board of Directors of Allied Waste Industries, Inc., AMF
Group Inc., Ritvik Holdings Inc. and Roses, Inc. and is a member of the Advisory
Committee of Graham Packaging Company.

         David Blitzer, Director. Mr. Blitzer is a  Senior  Managing Director of
the Blackstone Group, which he joined in 1991. He has been a director  of Volume
Services  America  since  1995.  Mr.  Blitzer  is  also  a  director  of  Allied
Waste  Industries,  Inc.,  Haynes  International,  Inc.,  Republic  Technologies
International, Inc. and The Imperial Home Decor Group Inc.

         Peter Wallace, Director.  Mr. Wallace  has  been  associated  with  the
Blackstone Group since 1997 and  became  an  Associate  in  2001.  He has been a
director of Volume Services America since October 1999.

         The  discussion  of the  amended  stockholders'  agreement  in "Certain
Relationships and Related Transactions -- Amended Stockholders' Agreement" below
(with respect to the rights of  management  and various  Blackstone  entities to
appoint directors) and the discussion of the employment agreements in "Executive
Compensation" below, are incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION.

Executive Compensation

         The table below provides information  concerning the total compensation
of the Chief  Executive  Officer  and all  other  executive  officers  of Volume
Services  America based on 2000 salary and bonuses.  These officers are referred
to together as the "Named Executives".


                                       44
<PAGE>
<TABLE>
<CAPTION>

                                                                 Annual Compensation
                                                    -----------------------------------------------
                                                                                  Other Annual            All Other
                                            Year        Salary      Bonus(1)      Compensation(2)         Compensation
                                           ------       -------     --------      ---------------         ------------
<S>                                        <C>          <C>         <C>                   <C>                 <C>
John T. Dee
Chief Executive Officer and Chairman of
the Board of Directors............         2000         $489,918    $137,500                    --            5,912(3)
                                           1999          467,354     137,895                    --            7,497
                                           1998          483,716          --                    --               --
Kenneth R. Frick
Executive Vice President and Chief
Financial Officer.....................     2000          206,635      50,000                    --            2,370(4)
                                           1999          194,808      40,000                    --            2,852
                                           1998          153,175      20,535                    --            4,584
Janet L. Steinmayer
Executive Vice President, General
Counsel and Secretary...............       2000          269,318      31,917                    --              236(5)
                                           1999          256,876      59,737                    --              199
                                           1998          291,900     150,000                18,300               --
------------------
<FN>
(1)      Bonuses are made pursuant to Volume  Service  America's  bonus plan for
         general managers and senior management  personnel.  Eligible  personnel
         qualify for bonus  payments in the event that Volume  Services  America
         exceeds annual  financial  performance  targets or at the discretion of
         the board of directors.
(2)      Perquisites  and other  personal  benefits did not exceed the lesser of
         $50,000 or 10% of the total salary and bonus of any Named Executive for
         the years shown.
(3)      Amounts included under "All Other Compensation"  for Mr. Dee  for  2000
         consists of the Company's contributions of $2,625 under the 401(k) Plan
         and $3,287 in insurance premiums.
(4)      Amounts included under "All Other  Compensation" for Mr. Frick for 2000
         consists of the Company's contributions of $2,107 under the 401(k) Plan
         and $263 in insurance premiums.
(5)      Amounts included under "All Other Compensation" for Ms.  Steinmayer for
         2000 consists of $236 in insurance premiums.
</FN>
</TABLE>

Director Compensation

         Directors  of Volume  Services  America  do not  receive  compensation,
except in their capacity as officers or employees.

Employment and Severance Agreements

         We have entered into the following  arrangements with our directors and
executive officers:

         On  August  24,  1998,  Volume  Holdings  entered  into  an  employment
agreement with Mr. Dee. The agreement  provides that Mr. Dee will be employed by
Volume  Holdings at an annual base salary of $465,000  for a term of five years,
subject to earlier  termination by Volume  Holdings for or without Cause,  or by
Mr. Dee for Good Reason,  each as defined in the agreement.  Mr. Dee is entitled
to a bonus at the discretion of the Board of Directors of Volume Holdings and to
participate  in  any  executive  bonus  plan  and  all  employee  benefit  plans
maintained by Volume Holdings.  The agreement  provides for severance pay in the
case of a termination  by Volume  Holdings  without Cause or by Mr. Dee for Good

                                       45
<PAGE>
Reason in an amount equal to Mr. Dee's annual base salary for the balance of the
term of employment  and ancillary  benefits.  During and for two years after Mr.
Dee's employment, Mr. Dee has agreed that, without the written consent of Volume
Holdings, he will not:

     o    be engaged, in any capacity, in any business that competes with Volume
          Holdings' business; or

     o    solicit any person who was employed by Volume  Holdings  during the 12
          months preceding such solicitation.

         On November  17,  1995,  Volume  Services  entered  into an  employment
agreement with Mr. Frick. The agreement provides that Mr. Frick will be employed
by Volume  Services  until he resigns or is dismissed by Volume  Services for or
without Cause,  as defined in the  agreement.  Mr. Frick's base salary under the
contract is $204,750  subject to annual  review.  Mr. Frick is also  entitled to
receive an annual bonus pursuant to any management  incentive  compensation plan
established by Volume Services.  In the case of termination of employment due to
resignation,  Mr. Frick will receive his salary up to the 30th day following his
resignation and any accrued but unpaid bonus. In the case of termination without
Cause by Volume Services, Mr. Frick will receive a one-time payment of two times
his base annual  salary plus any  accrued but unpaid  bonus.  During and for two
years after his employment, Mr. Frick has agreed not to:

     o    solicit employees of Volume Services to cease such employment  without
          the written consent of Volume Services; or

     o    have any  involvement  in any  capacity  in any  contract  concessions
          business  similar to that of Volume  Services  in those  states in the
          United  States in which Volume  Services  does business and over which
          Mr. Frick has had supervisory responsibility.

        A letter agreement dated January 5, 2001  provides  for  benefits to Mr.
Frick in the event that (a) all or substantially all of the business  of  Volume
Holdings  and its  subsidiaries  is sold  before  December  31, 2001 and (b) Mr.
Frick's  employment is terminated due to the employer's  material  breach or its
termination  by the  employer  for any reason  other than Just Cause,  permanent
disability or death.  The benefits include a lump sum payment of three times Mr.
Frick's annual compensation, a subsidy for 18 months of COBRA coverage, payments
for accrued but unpaid vacation and bonus,  reimbursement for incurred expenses,
and outplacement counseling and support services for up to 18 months.

         On  September  29, 1998,  Volume  Holdings  entered into an  employment
agreement with Ms.  Steinmayer.  The agreement provides that Ms. Steinmayer will
be employed by Volume  Holdings at an annual base salary of $180,000,  plus $250
per hour for each hour that she works in excess of 24 hours per week,  until the
agreement  is  terminated  by Volume  Holdings for or without  Cause,  or by Ms.
Steinmayer for Good Reason, each as defined in the agreement.  Ms. Steinmayer is
entitled  to a bonus at the  discretion  of the  Board of  Directors  of  Volume
Holdings and to participate in any executive bonus plan and all employee benefit
plans maintained by Volume Holdings. The agreement provides for severance pay in
the case of a termination by Volume Holdings without Cause or by Ms.  Steinmayer
for Good Reason in an amount equal to two times her compensation in the one year
period prior to the date of  termination  (annualized in the case of termination
prior to the end of the first year), plus ancillary benefits. During and for two
years  after Ms.  Steinmayer's  employment,  she has  agreed  that she will not,
without the prior written consent of Volume Holdings:

     o    have any  involvement in any enterprise  which provides food services,
          as defined in the  agreement in any of the states in the United States
          in which Volume Holdings operates; or

     o    solicit any employee of Volume Holdings to leave its employment.

        A letter agreement dated January 5, 2001  provides  for  benefits to Ms.
Steinmayer in the event that all or substantially  all of the business of Volume
Holdings  and  its  subsidiaries  is  sold  before December  31,  2001  and  Ms.
Steinmayer's employment is terminated with Good Reason or for reasons other than
Cause,  death or  diability.  The  benefits  include a lump sum payment of three
times Ms.  Steinmayer's  annual  compensation,  payments  for accrued but unpaid
vacation and bonus,  reimbursement for incurred  expenses,  title to her company
automobile free of lease  or other obligations  and  reimbursement  for up to 18
months of COBRA coverage.

                                       46
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         Volume  Services  America  is  a  wholly  owned  subsidiary  of  Volume
Holdings.  The  following  table and  accompanying  footnotes  set forth certain
information  concerning the beneficial  ownership of the Volume  Holdings common
stock. Except as disclosed below, none of our officers or directors beneficially
owns any of our stock.  Except as indicated in the  footnotes to this table,  we
believe  that the  persons  named in the table have sole  voting and  investment
power with respect to all shares shown as beneficially owned by them.
<TABLE>
<CAPTION>


                                                                          Shares
Name and Address                                                 Beneficially Owned            Percentage Owner
<S>                                                                     <C>                         <C>
Blackstone Management Associates II L.L.C.(1)
Peter G. Peterson(1)
Stephen A. Schwarzman(1)
345 Park Avenue
New York, NY  10154....................................                 211.8                       63.7%

BCP Volume L.P.(1)
Blackstone Capital Partners II Merchant
   Banking Fund L.P.(1)
345 Park Avenue
New York, NY  10154....................................                 157.0                       47.2%

General Electric Capital Corporation(2)
Recreational Services L.L.C.(2)
201 High Ridge Road
Stamford, Connecticut  06927...........................                 120.8                       36.3%

BCP Offshore Volume L.P.(1)
Blackstone Offshore Capital Partners II L.P.(1)
345 Park Avenue
New York, NY  10154....................................                 40.7                        12.3%

VSI Management Direct L.P.(1)(3)
VSI Management I, L.L.C. (1)(3)
Kenneth R. Frick(3)
c/o Volume Services, Inc.
201 East Broad Street
Spartanburg, South Carolina  29306.....................                 14.1                         4.2%
<FN>
(1)      Blackstone  Management  Associates  II L.L.C.  ("BMA II") is one of two
         managing members of VSI Management I, L.L.C.  ("VSI I"). BMA II is also
         the general partner of Blackstone  Capital Partners II Merchant Banking
         Fund L.P. ("BCP II") and the investment  general  partner of Blackstone
         Offshore  Capital  Partners II L.P.  ("BOC II").  BMA II thus exercises
         shared  voting and  dispositive  power with  respect to VSI I (see note
         (3)) and sole voting and  dispositive  authority with respect to BCP II
         and  BOC  II.  BCP II is the  general  partner  of BCP  Volume  L.P and
         exercises sole voting and dispositive power with respect to its shares.
         BOC  II is the  general  partner  for  BCP  Offshore  Volume  L.P.  and
         exercises sole voting and dispositive power with respect to its shares.
         VSI I is the  general  partner  for  VSI  Management  Direct  L.P.  and
         exercises sole voting and dispositive power with respect to its shares.

                                       47
<PAGE>
         Messrs.  Peter G. Peterson and Stephen A. Schwarzman are members of BMA
         II, which has or shares  investment  and voting control over the shares
         held or  controlled by each of the  foregoing  entities.  Each of these
         individuals disclaims beneficial ownership of such shares.

(2)      Recreational Services L.L.C.  ("Recreational  Services")  is a  limited
         liability company, the managing member of which is GE Capital.

(3)      VSI Management  Direct L.P. is  a  limited  partnership,  the   general
         partner of which is VSI I. The managing members of VSI I are Kenneth R.
         Frick,  our Executive Vice President and Chief Financial Officer,   and
         BMA II, and they exercise shared voting and dispositive  power over the
         shares owned  by  VSI  Management  Direct L.P.   Mr.   Frick  disclaims
         beneficial  ownership of such shares.
</FN>
</TABLE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Assignment and Assumption Agreement

         Pursuant to an assignment and  assumption  agreement,  Service  America
assigned the promissory  notes and common stock of Compass Group PLC ("Compass")
received from the sale to Compass of Service America's institutional vending and
dining  business,  which were  valued by the  parties at $108.4  million,  to GE
Capital in consideration for:

     o    the forgiveness of $17.9 million of debt and interest and $3.8 million
          of accrued dividends owed by Service America to GE Capital; and

     o    the assumption by GE Capital of a percentage of certain  categories of
          liabilities on Service  America's balance sheet as of the closing date
          of  the  Compass   transaction.   These  percentages   represented  an
          approximation   of  the  amount  of  each   category  of   liabilities
          attributable to all  institutional  vending and dining operations sold
          by Service America on or prior to September 27, 1996.

         On April 20, 2000,  we entered  into an agreement  with GE Capital that
terminated  the  assignment  and  assumption  agreement.  Under the  termination
agreement,  GE Capital paid us $1,018,299  and  reimbursed us for  approximately
$17,500.  After the final payment,  we became  responsible for the entire actual
amount of all  liabilities  previously  covered by the assignment and assumption
agreement  except for those  specified as  reimburseable  under the  termination
agreement.

Tax Indemnity Agreement

         Service America ceased being a member of the General  Electric  Company
consolidated  group,  referred to as the "GE  Consolidated  Group",  for federal
income tax purposes by reason of the Acquisition.  Accordingly,  Service America
and GE Capital in January  1997 entered into a tax  indemnity  agreement.  Under
this agreement:

     o    GE  Capital  agreed to  indemnify  Service  America  for,  and  became
          entitled to any refund of, all consolidated or combined federal, state
          and local income taxes payable  while Service  America was a member of
          the GE Consolidated Group; and

                                       48
<PAGE>
     o    as authorized by the consolidated return Treasury Regulations,  the GE
          Consolidated  Group  became  entitled  to  re-attribute  to itself the
          portion of Service  America's net operating losses that did not exceed
          the amount of  "disallowed  losses" (as defined in those  regulations)
          which GE Capital realized in connection with the  recapitalization  of
          Service  America  effected  in  January  1997 by GE  Capital  and some
          members of Service America's management.

Amended Stockholders' Agreement

         On December 21, 1995,  VSI Management  Direct L.P. ("VSI  Management"),
BCP Volume L.P.,  BCP Offshore  Volume L.P. and Volume  Holdings  entered into a
stockholders'  agreement.  On August 24, 1998,  these parties,  together with GE
Capital  and  Recreational  Services,  entered  into  an  amended  and  restated
stockholders' agreement. In the discussion of the stockholders' agreement below,
we refer to BCP  Volume  L.P.  and BCP  Offshore  Volume  L.P.  collectively  as
"Blackstone".

         Management;  Board of Directors.  The Board of Volume  Holdings will be
comprised of a Chairman, one director appointed by VSI Management (provided that
the Chairman is not a partner of VSI Management and that VSI Management consults
with  Blackstone  prior to the  appointment)  and three  directors  appointed by
Blackstone  (provided  that  Blackstone  is the  sole  Controlling  Stockholder,
defined  in the  agreement).  If  Blackstone  ceases to be the sole  Controlling
Stockholder,  each of  Blackstone  and GE Capital will have the right to appoint
two  directors.  Until GE  Capital is  entitled  to  appoint a  director,  it is
entitled  to  appoint an  Observer,  as  defined  in the  agreement,  who is not
entitled to vote on any Board matters.

         Transfers of Shares.  No  transfers  of the shares of Volume  Holdings'
common stock,  referred to as the "Shares",  may be made by any stockholder,  as
defined  in the  agreement,  within  one  year  from  the  date  of the  amended
stockholders' agreement other than:

     o    to a defined  category of persons  affiliated  with or  successors  in
          title to existing stockholders, each of whom agrees to be bound by the
          terms of the amended  stockholders'  agreement,  each referred to as a
          "Permitted Transferee";

     o    pursuant to a public offering of the Shares; or

     o    in accordance with the exercise of the drag-along or tag-along  rights
          discussed below.

         If either of Blackstone or Recreational  Services,  for these purposes,
referred to as the  "Transferring  Stockholder",  intends to transfer its Shares
while the amended  stockholders'  agreement is in effect (other than by way of a
public  offering  or  pursuant  to Rule 144  under  the  Securities  Act or to a
Permitted  Transferee) and the Transferring  Stockholder still beneficially owns
at least one-third of the number of Shares on a fully diluted basis that it held
at the date of the amended stockholders' agreement,  then each other stockholder
will have the right to require the purchaser of such Transferring  Stockholder's
Shares to purchase the same proportion of the Shares that such stockholder owns,
on the same terms as those offered to the Transferring Stockholder,  referred to
as the "tag-along right".

         If all of the Controlling Stockholders accept an offer by a party other
than a  stockholder,  referred to as a "Third  Party",  to  purchase  all of the
Shares owned by the  stockholders  (and the Controlling  Stockholder to whom the
offer was made still owns at least  one-third  of the Shares  owned by it at the
date of the amended stockholders'  agreement),  then each stockholder is obliged
to transfer its Shares to the Third Party on the same terms as those accepted by
the Controlling Stockholders, referred to as the "drag-along right".

                                       49
<PAGE>

         After one year from the date of the amended stockholders'  agreement, a
stockholder may also transfer Shares:

     o    pursuant  to  a  transfer   that  is  exempt  from  the   registration
          requirements of the Securities Act; or

     o    if such stockholder is not a Controlling  Stockholder,  after offering
          the Shares first to Volume Holdings and then to each of Blackstone and
          Recreational  Services in proportion to their  respective  holdings of
          Shares.

         Unless a stockholder  transfers  Shares pursuant to a public  offering,
Rule 144 under the Securities Act or the drag-along  right,  all transferees are
required to become bound by the terms of the amended stockholders' agreement.

         Restrictions on Corporate Action. For so long as Recreational  Services
owns at least 20% of the Shares, we may not take certain  fundamental  corporate
actions  without the consent of each of  Recreational  Services and  Blackstone,
including the amendment of the certificate of incorporation or by-laws of Volume
Holdings  or the  modification  of any  stock  option,  bonus or  benefit  plan.
Similarly,  as long as  Recreational  Services  owns at least 20% of the Shares,
Volume  Holdings  may not enter into any  transaction  with  Blackstone,  or its
affiliates, without the consent of Recreational Services, except for:

     o    the payment of regular fees or expenses to its directors;

     o    transactions that are reasonable in the light of industry practice and
          that  are of a  value  not  greater  than  $500,000  individually  and
          $1,000,000 in the aggregate in any one year;

     o    the payment of the monitoring fee discussed below; or

     o    transaction  fees up to 1% of the value of a company being acquired by
          Volume  Holdings,  as long as GE Capital also receives a  proportional
          fee  based on  Recreational  Services'  Share  ownership  relative  to
          Blackstone's Share ownership.

         Annual Fees. The amended stockholders' agreement permits the payment of
annual monitoring fees by Volume Holdings of $250,000 to Blackstone and $167,000
to GE Capital. The fees payable to Blackstone and GE Capital have been accounted
for as an expense.

         Registration Rights. Blackstone has the right to demand registration of
the Shares by Volume Holdings under the Securities Act at any time, subject to a
maximum  of three such  registrations.  Recreational  Services  has the right to
demand such registration on one occasion only, at any time on or after the third
anniversary of the date of the amended stockholders' agreement.

         Financings.  The amended  stockholders'  agreement  also obliged Volume
Holdings to use its reasonable  best efforts to consummate a financing by August
24, 1999.  The proceeds of the financing  were to be applied to pay related fees
and expenses, to repay debt of Volume Holdings and to repurchase Shares from the
holders in  accordance  with a formula set out in the  exchange  agreement  with
respect to our senior notes.  Volume  Holdings  satisfied  this  requirement  by
consummation of the senior credit  facilities and the issuance of Volume Service
America's senior notes.


                                       50
<PAGE>
Leasing Services

         GE  Capital  and its  affiliates  provided  us  leasing  and  financing
services  during  2000 on  arms-length  terms.  Payments  to GE Capital  and its
affiliates during 2000, net of discounts earned, were approximately $165,000. We
also  lease  equipment from GE Capital under  a capital  lease;  payments  to GE
Capital under this lease were approximately $200,000 in 2000.

Loans to VSI Partnerships

         During 1999 and 2000,  VSI Management and VSI Management II, L.P. ("VSI
Management II") repurchased some of their partnership interests from some former
members of management.  To fund this purchase,  Volume  Services  America loaned
$854,000 to VSI  Management and $185,000 to VSI Management II. The loans were on
arms-length  terms, with interest  accruing at the applicable  federal rate, and
the full amount of the loans remained outstanding at January 2, 2001.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)  See financial statements beginning at page 17.

(b)  We did not file any Current  Report on Form 8-K during the last  quarter of
     our 2000 fiscal year.

(c)  Exhibits:
<TABLE>
<CAPTION>

         No.      Description
         ---      -----------
         <S>      <C>
         2.       See Exhibit 10.1

         3.1      Restated Certificate of Incorporation of Volume Services America, Inc. Incorporated by reference to Exhibit 3.1 to
                  our Registration Statement on Form S-4, Commission File No. 333-79419 (the "Form S-4").

         3.2      By-laws of Volume Services America, Inc.  Incorporated by reference to Exhibit 3.2 to the Form S-4.

         3.3      Restated Certificate of Incorporation of Volume Services America Holdings, Inc. Incorporated by reference to
                  Exhibit 3.3 to the Form S-4.

         3.4      By-laws of Volume Services America Holdings, Inc. Incorporated by reference to Exhibit 3.4 to the Form S-4.

         3.5      Restated Certificate of Incorporation of Volume Services, Inc. Incorporated by reference to Exhibit 3.5 to the
                  Form S-4.

         3.6      By-laws of Volume Services, Inc. Incorporated by reference to Exhibit 3.6 to the Form S-4.

         3.7      Restated Certificate of Incorporation of Service America Corporation. Incorporated by reference to Exhibit 3.7 to
                  the Form S-4.

         3.8      By-laws of Service America Corporation. Incorporated by reference to Exhibit 3.8 to the Form S-4.

         3.9      Articles of Incorporation of Events Center Catering, Inc. Incorporated by reference to Exhibit 3.9 to the Form
                  S-4.


                                       51
<PAGE>
         3.10     Articles of Incorporation of Service America Concessions Corporation. Incorporated by reference to Exhibit 3.10 to
                  the Form S-4.

         3.11     By-laws of Service America Concessions Corporation. Incorporated by reference to Exhibit 3.11 to the Form S-4.

         3.12     Articles of Incorporation of Service America Corporation of Wisconsin. Incorporated by reference to Exhibit 3.12
                  to the Form S-4.

         3.13     By-laws of Service America Corporation of Wisconsin. Incorporated by reference to Exhibit 3.13 to the Form S-4.

         3.14     Articles of Incorporation of Servo-Kansas, Inc. Incorporated by reference to Exhibit 3.14 to the Form S-4.

         3.15     By-laws of Servo-Kansas, Inc. Incorporated by reference to Exhibit 3.15 to the Form S-4.

         3.16     Articles of Incorporation of Servomation Duchess, Inc. Incorporated by reference to Exhibit 3.16 to the Form S-4.

         3.17     By-laws of Servomation Duchess, Inc. Incorporated by reference to Exhibit 3.17 to the Form S-4.

         3.18     Articles of Incorporation of SVM of Texas, Inc. Incorporated by reference to Exhibit 3.18 to the Form S-4.

         3.19     By-laws of SVM of Texas, Inc. Incorporated by reference to Exhibit 3.19 to the Form S-4.

         3.20     Certificate of Incorporation of Volume Services, Inc. Incorporated by reference to Exhibit 3.20 to the Form S-4.

         3.21     By-laws of Volume Services, Inc. Incorporated by reference to Exhibit 3.21 to the Form S-4.

         4.1      Indenture, dated as of March 4, 1999, between Volume Services America, Inc. and Norwest Bank Minnesota, National
                  Association. Incorporated by reference to Exhibit 4.1 to the Form S-4.

         4.2      Exchange and Registration Rights Agreement, dated March 4, 1999, between Volume Services America, Inc., Chase
                  Securities Inc. and Goldman, Sachs & Co. Incorporated by reference to Exhibit 4.2 to the Form S-4.

         10.1     Purchase Agreement, dated February 25, 1999, between Volume Services America, Inc., Chase Securities Inc. and
                  Goldman, Sachs & Co.  Incorporated by reference to Exhibit 1 to the Form S-4.

         10.2     Share Exchange Agreement, dated as of July 27, 1998, among VSI Acquisition II Corporation,  as Buyer, the
                  Stockholders of the Buyer  and the  Sellers  specified  therein.  Incorporated  by reference to Exhibit 10.1 to
                  the Form S-4.

         10.3     Amended  and  Restated  Stockholders'  Agreement,  dated as of August 24, 1998,  among VSI  Acquisition II
                  Corporation,  BCP Volume L.P., BCP Offshore  Volume L.P., VSI Management  Direct L.P.,  General Electric  Capital
                  Corporation and Recreational Services  L.L.C.  Incorporated by reference to Exhibit 10.2 to the Form S-4.

         10.4     Credit Agreement, dated as of December 3, 1998, among Volume Services America, Inc., Volume Services America
                  Holdings, Inc., certain financial institutions as the Lenders, Goldman Sachs Credit Partners L.P., Chase
                  Securities Inc., Chase Manhattan Bank Delaware and The Chase Manhattan Bank. Incorporated by reference to Exhibit
                  10.3 to the Form S-4.

                                       52
<PAGE>
         10.4.1   First Amendment, dated as of February 8, 1999 to the Credit Agreement, dated as of December 3, 1998, among Volume
                  Services America, Inc., Volume Services America Holdings, Inc., certain financial institutions as the Lenders,
                  Goldman Sachs Credit Partners L.P., Chase Securities Inc., Chase Manhattan Bank Delaware and The Chase Manhattan
                  Bank.

         10.5     Volume Services, Inc., Deferred Compensation Plan, Enrollment Information and Forms. Incorporated by reference to
                  Exhibit 10.4 to the Form S-4.

         10.6     Volume Services America, 1999 Bonus Plan. Incorporated by reference to Exhibit 10.5 to the Form S-4.

         10.7     Service America Corporation, Deferred Compensation Plan, effective as of February 9, 1999. Incorporated by
                  reference to Exhibit 10.6 to the Form S-4.

         10.8     Employment Agreement dated as of August 24, 1998, by and between VSI Acquisition II Corporation and John T. Dee.
                  Incorporated by reference to Exhibit 10.7 to the Form S-4.

         10.9     Employment Agreement dated as of November 17, 1998, by and between Volume Services, Inc. (a Delaware corporation)
                  and Kenneth R. Frick. Incorporated by reference to Exhibit 10.8 to the Form S-4.

         10.9.1   Letter agreement dated January 5, 2001 by Volume Services America, Inc., amending terms of the Employment
                  Agreement by and between Volume Services, Inc. ad Kenneth R. Frick.

         10.10    Employment Agreement, dated as of September 29, 1998, by and between VSI Acquisition Corporation and Janet L.
                  Steinmayer. Incorporated by reference to Exhibit 10.10 to the Form S-4.

         10.10.1  Letter agreement dated January 5, 2001 by Volume Services America, Inc., amending terms of the Employment
                  Agreement by and between VSI Acquisition Corporation and Janet L. Steinmayer.

         *12      Computation of Ratio of Earnings to Fixed Charges

         *21      List of Subsidiaries

         ------------------
         *Filed herewith
</TABLE>

(d)      Financial Statement Schedules

                    SUPPLEMENTAL INFORMATION TO BE FURNISHED
  WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH
        HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT

         We have not sent to shareholders any annual report to security holders,
proxy statement, form of proxy or other proxy soliciting material during or with
respect to our 2000 fiscal year.



                                       53
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 27, 2001.


                          Volume Services America, Inc.


                            By: /s/ Kenneth R. Frick
                               --------------------------------------------
                             Name: Kenneth R. Frick
                         Title:    Executive Vice President and Chief Financial
                                     Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been  signed  below by the  following  persons on behalf of each
registrant and in the capacities indicated on March 27, 2001.

Signature                                                  Title


/s/ John T. Dee                             Chief Executive Officer and Chairman
------------------------------
    John T. Dee                             (Principal Executive Officer)


/s/ Kenneth R. Frick                        Executive Vice President and Chief
------------------------------              Financial Officer
    Kenneth R. Frick                       (Principal Financial Officer)


/s/ Howard A. Lipson
------------------------------
    Howard A. Lipson


/s/ David Blitzer                                    Directors
------------------------------
    David Blitzer



/s/ Peter Wallace
------------------------------
    Peter Wallace




                                       54