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UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 28, 2004                                                 
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to          .                                  

Commission file number 001-31904


CENTERPLATE, INC.


(Exact name of registrant as specified in its charter)


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

http://www.centerplate.com


(Registrants URL)


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


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

None


þ o


þ


þ o






DOCUMENTS INCORPORATED BY REFERENCE












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CENTERPLATE, INC.


FISCAL YEAR 2004


FORM 10-K


ANNUAL REPORT





TABLE OF CONTENTS


|         |  |                                                                                                                  |  |      |     | 
|-------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|         |  |                                                                                                                  |  | Page |    
|         |  |                                                                                                                  |  |      |    
|PART I  
|Item 1.  |  | Business                                                                                                         |  |      | 1   | 
|Item 2.  |  | Properties                                                                                                       |  |      | 10  | 
|Item 3.  |  | Legal Proceedings                                                                                                |  |      | 10  | 
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                              |  |      | 11  | 
|        
|PART II 
|Item 5.  |  | Market for Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities |  |      | 12  | 
|Item 6.  |  | Selected Financial Data                                                                                          |  |      | 15  | 
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition
    and Results of Operations                        |  |      | 18  | 
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                                                       |  |      | 32  | 
|Item 8.  |  | Financial Statements and Supplementary Data                                                                      |  |      | F-1 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure                         |  |      | 33  | 
|Item 9A. |  | Controls and Procedures                                                                                          |  |      | 33  | 
|Item 9B. |  | Other Information                                                                                                |  |      | 35  | 
|        
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                                               |  |      | 35  | 
|Item 11. |  | Executive Compensation                                                                                           |  |      | 38  | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters               |  |      | 43  | 
|Item 13. |  | Certain Relationships and Related Transactions                                                                   |  |      | 45  | 
|Item 14. |  | Principal Accountant Fees and Services                                                                           |  |      | 47  | 
|        
|PART IV 
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                       |  |      | 47  | 



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PART I


Introductory Note


Throughout this Annual Report on Form 10-K, we refer to
Centerplate, Inc., a Delaware corporation formerly known as
Volume Services America Holdings, Inc., as
Centerplate, and, together with its consolidated
operations, as we, our and
us, unless otherwise indicated. Any reference to
VSA refers to our wholly owned subsidiary, Volume
Services America, Inc., a Delaware corporation, and its
consolidated operations, unless otherwise indicated. Centerplate
is a holding company and has no direct operations. In addition
to VSA, Centerplates subsidiaries also include Volume
Services, Inc. (VS) and Service America Corporation
(Service America), each a Delaware corporation.


When discussing the number of facilities we serve, we have
counted all facilities held by a single client as one facility,
even though we sometimes service more than one building or
location for a particular client. For instance, under our client
relationship with the New York Racing Association, which is
included as one facility, we service buildings at three
different locations: the Aqueduct Racetrack, Belmont Park
Racetrack and Saratoga Race Course.







|        |         
|------- | --------
|Item 1. | Business

Overview






| |   |                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | One of the two largest providers to National Football League
    (NFL) facilities (10 teams);                                                                                 
|
| |  | The third largest provider to Major League Baseball
    (MLB) facilities (6 teams);                                                                                           
|
| |  | The largest provider to minor league baseball and spring
    training facilities (25 teams); and                                                                                
|
| |  | One of the largest providers to major convention centers, which
    we define as those with greater than approximately
    300,000 square feet of exhibition space (10 centers).







| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | 24 World Series games;                                                                  
|
| |  | Nine U.S. Presidential Inaugural Balls (including six
    inaugural balls held in 2005);
|
| |  | 10 Super Bowls (including Super Bowl XXXIX held in 2005);                               
|
| |  | Eight NCAA Final Four Mens Basketball Tournaments; and                                 
|
| |  | 14 World Cup Soccer games.                                                              

History




1



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Clients and Services




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













2



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|                                    |  |      |    |     |      |  |    |      |  |  |    |    
|----------------------------------- |  | ---- | -- | --- | ---- |  | -- | ---- |  |  | -- | ---
|                                    |  | 2005 |    |     | 2006 |  |    | 2007 | 
|                                    |  |      |    |     |      |  |    |      | 
|Facility Category                   |  |      |    |     |      |  |    |      |  |  |    |    
|Sports facilities                   |  |      | 8  |     |      |  | 12 |      |  |  | 6  |    
|Convention centers                  |  |      | 10 |     |      |  | 5  |      |  |  | 7  |    
|Other entertainment facilities      |  |      | 14 |     |      |  | 3  |      |  |  | 1  |    
|                                    |  |      |    |     |      |  |    |      | 
|Total number of contracts           |  |      | 32 |     |      |  | 20 |      |  |  | 14 |    
|Percentage of fiscal 2004 net sales |  |      | 13 | .8% |      |  | 22 | .4%  |  |  | 15 | .3%



| |              
| | -------------
| | Concentration





| |                  
| | -----------------
| | Sports Facilities







3



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|                                   |  |                    |  |                      |  |            
|---------------------------------- |  | ------------------ |  | -------------------- |  | -----------
|                                   |  |                    |  |                      |  | Seating    
|                                   |  |                    |  |                      |  | Capacity   
|Facility Name                      |  | Location           |  | Sports Team Tenant   |  | (Sport)    
|                                   |  |                    |  |                      |  |            
|ALLTEL Stadium                     |  | Jacksonville, FL   |  | Jacksonville Jaguars |  | 73,000(NFL)
|Arrowhead Stadium                  |  | Kansas City, MO    |  | Kansas City Chiefs   |  | 79,000(NFL)
|FedEx Field                        |  | Landover, MD       |  | Washington Redskins  |  | 92,000(NFL)
|HHH Metrodome                      |  | Minneapolis, MN    |  | Minnesota Vikings    |  | 64,000(NFL)
|                                   |  |                    |  | Minnesota Twins      |  | 44,000(MLB)
|INVESCO Field at Mile High Stadium |  | Denver, CO         |  | Denver Broncos       |  | 76,000(NFL)
|Kaufmann Stadium                   |  | Kansas City, MO    |  | Kansas City Royals   |  | 40,600(MLB)
|Louisiana Superdome                |  | New Orleans, LA    |  | New Orleans Saints   |  | 70,054(NFL)
|Monster Park                       |  | San Francisco, CA  |  | San Francisco 49ers  |  | 68,000(NFL)
|New Orleans Arena                  |  | New Orleans, LA    |  | New Orleans Hornets  |  | 18,500(NBA)
|Palace of Auburn Hills             |  | Auburn Hills, MI   |  | Detroit Pistons      |  | 21,000(NBA)
|Qualcomm Stadium                   |  | San Diego, CA      |  | San Diego Chargers   |  | 71,400(NFL)
|RCA Dome                           |  | Indianapolis, IN   |  | Indianapolis Colts   |  | 60,000(NFL)
|SBC Park                           |  | San Francisco, CA  |  | San Francisco Giants |  | 42,000(MLB)
|Safeco Field                       |  | Seattle, WA        |  | Seattle Mariners     |  | 47,145(MLB)
|The Coliseum                       |  | Nashville, TN      |  | Tennessee Titans     |  | 68,500(NFL)
|Tropicana Field                    |  | St. Petersburg, FL |  | Tampa Bay Devil Rays |  | 48,500(MLB)
|Xcel Energy Center                 |  | St. Paul, MN       |  | Minnesota Wild       |  | 18,064(NHL)
|Yankee Stadium                     |  | New York, NY       |  | New York Yankees     |  | 55,000(MLB)



| |                   
| | ------------------
| | Convention Centers







4



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|                                         |  |                  |  |             |           | 
|---------------------------------------- |  | ---------------- |  | ----------- | --------- | 
|                                         |  |                  |  | Size       
|                                         |  |                  |  | (Approx.   
|Facility Name                            |  | Location         |  | Sq. Ft.)(1)
|                                         |  |                  |  |            
|Dallas Convention Center                 |  | Dallas, TX       |  |             | 1,019,142 | 
|Indiana Convention Center                |  | Indianapolis, IN |  |             | 477,873   | 
|Jacob K. Javits Center                   |  | New York, NY     |  |             | 814,400   | 
|Kentucky Fair & Expo Center              |  | Louisville, KY   |  |             | 1,068,050 | 
|Sacramento Civic Center                  |  | Sacramento, CA   |  |             | 158,288   | 
|San Diego Convention Center              |  | San Diego, CA    |  |             | 616,363   | 
|Vancouver Convention & Exhibition Centre |  | Vancouver, BC    |  |             | 108,000   | 
|Washington Convention Center             |  | Washington, DC   |  |             | 725,000   | 






|    |                                                                
|--- | ---------------------------------------------------------------
|(1) | Source: Tradeshow Weeks Major Exhibit Hall Directory
    2004.



| |                               
| | ------------------------------
| | Other Entertainment Facilities









|                                                                                                |  |                  |  |                 
|----------------------------------------------------------------------------------------------- |  | ---------------- |  | ----------------
|Facility Name                                                                                   |  | Location         |  | Venue Type      
|                                                                                                |  |                  |  |                 
|Dover Downs                                                                                     |  | IL, TN           |  | Speedway        
|DTE Energy Music Theatre                                                                        |  | Auburn Hills, MI |  | Amphitheater    
|Los Angeles Zoo                                                                                 |  | Los Angeles, CA  |  | Zoo             
|National Hot Rod Association                                                                    |  | FL, GA, IN, OH   |  | Speedways       
|New York Racing Association (Belmont Park and Aqueduct
    Racetracks and Saratoga Race Course) |  | NY               |  | Horse Racetracks

Client Contracts








| |                          
| | -------------------------
| | Profit and Loss Contracts



5



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| |                         
| | ------------------------
| | Profit Sharing Contracts





| |                         
| | ------------------------
| | Management Fee Contracts





| |                                    
| | -----------------------------------
| | Additional Contract Characteristics







6



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Sales and Marketing










Competition




| |            
| | -----------
| | Competitors











| |                          
| | -------------------------
| | Competition for Contracts



7



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Suppliers












Controls




Employees






8



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Seasonality of Operations






Regulatory Matters












Environmental Matters




9



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Intellectual Property




Available Information









|        |           
|------- | ----------
|Item 2. | Properties

Properties











|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

Litigation






10



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Holden v. Volume Services America, Inc. et al.


Perez v. Volume Services Inc, d/b/a Centerplate, Perez Holden. Holden. Holden, Perez, Perez









|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders





| |   |                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | To approve amendments to our Restated Certificate of
    Incorporation and Amended and Restated Bylaws to eliminate the
    classification of our Board of Directors;                                                               
|
| |  | To approve amendments to our Restated Certificate of
    Incorporation and Amended and Restated Bylaws to permit
    vacancies on our Board of Directors to be filled by either the
    remaining board members or security holders;
|
| |  | To elect three directors to fill vacancies on our Board of
    Directors;                                                                                                                                                           
|
| |  | To approve an amendment to our Restated Certificate of
    Incorporation to change our name to Centerplate,
    Inc.; and                                                                                                         
|
| |  | To approve our Long-Term Performance Plan, to replace our then
    current incentive plan.                                                                                                                                          





| |                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. Proposal 1  Approving amendments to our
    Restated Certificate of Incorporation and Amended and Restated
    By-Laws to elimination the classification of our Board of
    Directors:

|                 |  |  |            | 
|---------------- |  |  | ---------- | 
|For:             |  |  | 20,386,814 | 
|Against:         |  |  | 76,049     | 
|Abstain:         |  |  | 28,489     | 
|Broker Non-Vote: |  |  | 0          | 

11



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| |                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. Proposal 2  Approving amended to our
    Restated Certificate of Incorporation and Amended and Restated
    By-Laws to permit vacancies on our Board of Directors to be
    filled by either the remaining board members or security holders:

|                 |  |  |            | 
|---------------- |  |  | ---------- | 
|For:             |  |  | 19,778,635 | 
|Against:         |  |  | 989,885    | 
|Abstain:         |  |  | 22,832     | 
|Broker Non-Vote: |  |  | 0          | 



| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | 3. Proposal 3  Electing three directors to
    fill vacancies on our Board of Directors:

|                |  |      |            |  |           |  |         | 
|--------------- |  | ---- | ---------- |  | --------- |  | ------- | 
|                |  | For: |            |  | Withheld: | 
|                |  |      |            |  |           | 
|Sue Ling Gin    |  |      | 20,419,999 |  |           |  | 71,353  | 
|Alfred Poe      |  |      | 20,419,749 |  |           |  | 71,603  | 
|Glenn R. Zander |  |      | 20,327,449 |  |           |  | 163,903 | 



| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | 4. Proposal 4  Approving an amendment to
    our Restated Certificate of Incorporation to change our name to
    Centerplate, Inc.:

|                 |  |  |            | 
|---------------- |  |  | ---------- | 
|For:             |  |  | 20,447,027 | 
|Against:         |  |  | 21,174     | 
|Abstain:         |  |  | 23,151     | 
|Broker Non-Vote: |  |  | 0          | 



| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | 5. Proposal 5  Approving Our Long-Term
    Performance Plan to replace our current incentive plan:

|                 |  |  |            | 
|---------------- |  |  | ---------- | 
|For:             |  |  | 13,721,533 | 
|Against:         |  |  | 896,974    | 
|Abstain:         |  |  | 248,789    | 
|Broker Non-Vote: |  |  | 5,624,056  | 




PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities



|               |  |      |       |  |     |   |       | 
|-------------- |  | ---- | ----- |  | --- | - | ----- | 
|               |  | High |       |  | Low |  
|               |  |      |       |  |     |  
|Fiscal 2003    |  |      |       |  |     |   |       | 
|Fourth Quarter |  | $    | 16.60 |  |     | $ | 15.10 | 
|Fiscal 2004    |  |      |       |  |     |   |       | 
|First Quarter  |  | $    | 17.80 |  |     | $ | 15.37 | 
|Second Quarter |  | $    | 16.70 |  |     | $ | 12.98 | 
|Third Quarter  |  | $    | 14.85 |  |     | $ | 13.20 | 
|Fourth Quarter |  | $    | 14.71 |  |     | $ | 11.86 | 

12



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|               |  |      |       |  |     |    |       | 
|-------------- |  | ---- | ----- |  | --- | -- | ----- | 
|               |  | High |       |  | Low |   
|               |  |      |       |  |     |   
|Fiscal 2003    |  |      |       |  |     |    |       | 
|Fourth Quarter |  | C$   | 21.25 |  |     | C$ | 19.55 | 
|Fiscal 2004    |  |      |       |  |     |    |       | 
|First Quarter  |  | C$   | 23.40 |  |     | C$ | 20.35 | 
|Second Quarter |  | C$   | 22.16 |  |     | C$ | 17.44 | 
|Third Quarter  |  | C$   | 19.35 |  |     | C$ | 17.50 | 
|Fourth Quarter |  | C$   | 18.72 |  |     | C$ | 14.70 | 



Dividend Policy and Restrictions








| |   |                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Nothing requires us to pay dividends;                                                                                                                                                                                               
|
| |  | While our current dividend policy contemplates the distribution
    of a substantial portion of our excess cash, this policy could
    be modified or revoked at any time;                                                          
|
| |  | Even if our dividend policy were not modified or revoked, the
    actual amount of dividends distributed under the policy and the
    decision to make any distribution is entirely at the discretion
    of our board of directors;
|
| |  | The amount of dividends distributed is subject to debt covenant
    restrictions under our indenture, our credit facility and other
    indebtedness;                                                                               
|
| |  | The distribution and amount of dividends distributed is subject
    to state law restrictions;                                                                                                                                      
|
| |  | Our board of directors may determine to use or retain our cash
    for other purposes;                                                                                                                                              
|
| |  | Our stockholders have no contractual or other legal right to
    dividends; and                                                                                                                                                     
|
| |  | We may not have enough cash to pay dividends due to changes to
    our operating earnings, working capital requirements and
    anticipated cash needs.                                                                             





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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We may not pay dividends if the payment will exceed the
    quarterly base dividend level in any fiscal quarter; provided
    that if the payment is less than the quarterly base dividend
    level in any fiscal quarter, 50% of the difference between the
    aggregate amount of dividends actually paid and the quarterly
    base dividend level for the quarter will be available for the
    payment of dividends at a later date. The quarterly base
    dividend level for any given fiscal quarter equals 85% of our
    excess cash (as defined below) for the 12-month period ending on
    the last day of our then most recently ended fiscal quarter for
    which internal financial statements are available at the time
    the dividend is declared and paid, divided by four (4).
    Excess cash means, with respect to any period,
    Adjusted EBITDA, as defined in the indenture, minus the sum of
    (i) cash interest expense and (ii) cash income tax
    expense, in each case, for the period;
|
| |  | We may not pay any dividends if not permitted under any of our
    senior indebtedness;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | We may not pay any dividends while interest on the subordinated
    notes is being deferred or, after the end of any interest
    deferral, so long as any deferred interest has not been paid in
    full; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | We may not pay any dividends if a default or event of default
    under the indenture has occurred and is continuing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            







14



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                                                      |                     |                                      |       |      |      |   |       |      |   |   |       |      |   |      |       |      |   |   |       |      |  
|------------------------------------------------------------------------------------- | ------------------- | ------------------------------------ | ----- | ---- | ---- | - | ----- | ---- | - | - | ----- | ---- | - | ---- | ----- | ---- | - | - | ----- | ---- | -
|                                                                                      |                     | Fiscal(1)                            |      
|                                                                                      |                     |                                      |      
|                                                                                      |                     | 2000                                 |       |      | 2001 |   |       | 2002 |   |   | 2003  |      |   | 2004 |      
|                                                                                      |                     |                                      |       |      |      |   |       |      |   |   |       |      |   |      |      
|                                                                                      |                     | (In millions, except per share data) |      
|Statement of operations data:                                                         |                     |                                      |       |      |      |   |       |      |   |   |       |      |   |      |       |      |   |   |       |     
|Net sales                                                                             |                     | $                                    | 522.5 |      |      | $ | 543.1 |      |   | $ | 577.2 |      |   | $    | 616.1 |      |   |   | 607.2 |     
|Cost of sales                                                                         |                     |                                      | 424.2 |      |      |   | 446.6 |      |   |   | 470.9 |      |   |      | 504.0 |      |   |   | 492.5 |     
|Selling, general and administrative                                                   |                     |                                      | 47.9  |      |      |   | 48.1  |      |   |   | 55.3  |      |   |      | 59.6  |      |   |   | 61.5  |     
|Depreciation and amortization                                                         |                     |                                      | 26.3  |      |      |   | 24.5  |      |   |   | 26.2  |      |   |      | 27.1  |      |   |   | 26.6  |     
|Transaction related expenses                                                          |                     |                                      | 1.1   |      |      |   |      |      |   |   | 0.6   |      |   |      | 2.6   |      |   |   |      |     
|Contract related losses                                                               |                     |                                      | 2.5   |      |      |   | 4.8   |      |   |   | 0.7   |      |   |      | 0.8   |      |   |   | 0.4   |     
|                                                                                      |                     |                                      |       |      |      |   |       |      |   |   |       |      |   |      |      
|Operating income                                                                      |                     |                                      | 20.6  |      |      |   | 19.2  |      |   |   | 23.5  |      |   |      | 22.0  |      |   |   | 26.1  |     
|                                                                                      | Interest expense(2) |                                      |       | 26.6 |      |   |       | 23.4 |   |   |       | 20.7 |   |      |       | 32.8 |   |   |       | 25.0 |  
|                                                                                      | Other income, net   |                                      |       | (0.5 | )    |   |       | (0.2 | ) |   |       | (1.5 | ) |      |       | (0.1 | ) |   |       | (0.3 | )
|                                                                                      |                     |                                      |       |      |      |   |       |      |   |   |       |      |   |      |      
|Income (loss) before income taxes                                                     |                     |                                      | (5.5  | )    |      |   | (4.0  | )    |   |   | 4.3   |      |   |      | (10.7 | )    |   |   | 1.4   |     
|Income tax benefit                                                                    |                     |                                      | 1.3   |      |      |   | 0.4   |      |   |   | 0.2   |      |   |      | 6.3   |      |   |   | 1.0   |     
|                                                                                      |                     |                                      |       |      |      |   |       |      |   |   |       |      |   |      |      
|Net income (loss)(5)                                                                  |                     |                                      | (4.2  | )    |      |   | (3.6  | )    |   |   | 4.5   |      |   |      | (4.4  | )    |   |   | 2.3   |     
|Accretion of conversion options                                                       |                     |                                      |      |      |      |   |      |      |   |   |      |      |   |      |      |      |   |   | 0.3   |     
|                                                                                      |                     |                                      |       |      |      |   |       |      |   |   |       |      |   |      |      
|Net income (loss) available to common stock with or without the
    conversion option |                     | $                                    | (4.2  | )    |      | $ | (3.6  | )    |   | $ | 4.5   |      |   | $    | (4.4  | )    |   | $ | 2.0   |     
|                                                                                      |                     |                                      |       |      |      |   |       |      |   |   |       |      |   |      |      

|                                                           |                              |                                      |       |       |      |   |       |       |   |   |       |      |  |      |       |       |   |   |       |      | 
|---------------------------------------------------------- | ---------------------------- | ------------------------------------ | ----- | ----- | ---- | - | ----- | ----- | - | - | ----- | ---- |  | ---- | ----- | ----- | - | - | ----- | ---- | 
|                                                           |                              | 2000                                 |       |       | 2001 |   |       | 2002  |   |   | 2003  |      |  | 2004 |      
|                                                           |                              |                                      |       |       |      |   |       |       |   |   |       |      |  |      |      
|                                                           |                              | (In millions, except per share data) |      
|Per share data(8):                                         |                              |                                      |       |       |      |   |       |       |   |   |       |      |  |      |       |       |   |   |       |     
|Net income (loss) per share with conversion option:        |                              |                                      |       |       |      |   |       |       |   |   |       |      |  |      |       |       |   |   |       |     
|                                                           | Basic                        |                                      | $     |      |      |   | $     |      |   |   | $     |     |  |      | $     | (0.31 | ) |   | $     | 0.17 | 
|                                                           | Diluted                      |                                      | $     |      |      |   | $     |      |   |   | $     |     |  |      | $     | (0.31 | ) |   | $     | 0.17 | 
|Net income (loss) per share without conversion option      |                              |                                      |       |       |      |   |       |       |   |   |       |      |  |      |       |       |   |   |       |     
|                                                           | Basic                        |                                      | $     | (0.31 | )    |   | $     | (0.26 | ) |   | $     | 0.33 |  |      | $     | (0.31 | ) |   | $     | 0.09 | 
|                                                           | Diluted                      |                                      | $     | (0.31 | )    |   | $     | (0.26 | ) |   | $     | 0.33 |  |      | $     | (0.31 | ) |   | $     | 0.09 | 
|                                                           | Dividends declared per share |                                      | $     |      |      |   | $     |      |   |   | $     |     |  |      | $     | 0.09  |   |   | $     | 0.79 | 
|Cash flow data:                                            |                              |                                      |       |       |      |   |       |       |   |   |       |      |  |      |       |       |   |   |       |     
|Net cash provided by operating activities                  |                              | $                                    | 22.7  |       |      | $ | 24.7  |       |   | $ | 38.6  |      |  | $    | 27.2  |       |   |   | 28.4  |     
|Net cash used in investing activities                      |                              | $                                    | (12.9 | )     |      | $ | (29.3 | )     |   | $ | (45.0 | )    |  | $    | (23.3 | )     |   |   | (6.5  | )   
|Net cash provided by (used in) financing activities        |                              | $                                    | (7.3  | )     |      | $ | 5.0   |       |   | $ | 1.7   |      |  | $    | 8.7   |       |   |   | (20.1 | )   
|Other data:                                                |                              |                                      |       |       |      |   |       |       |   |   |       |      |  |      |       |       |   |   |       |     
|Maintenance capital expenditures(3)                        |                              | $                                    | 8.3   |       |      | $ | 12.7  |       |   | $ | 31.2  |      |  | $    | 8.3   |       |   |   | 18.2  |     
|Growth capital expenditures(3)                             |                              |                                      | 5.6   |       |      |   | 16.7  |       |   |   | 16.4  |      |  | $    | 15.6  |       |   |   | 5.7   |     
|                                                           |                              |                                      |       |       |      |   |       |       |   |   |       |      |  |      |      
|Aggregate capital expenditures(3)                          |                              | $                                    | 13.9  |       |      | $ | 29.4  |       |   | $ | 47.6  |      |  | $    | 23.9  |       |   | $ | 23.9  |     
|Ratio of earnings to fixed charges(4)                      |                              |                                      |      |       |      |   |      |       |   |   | 1.2   | x    |  |      |      |       |   |   | 1.1   | x   
|Deficiency in the coverage of earnings to fixed charges(4) |                              | $                                    | (5.5  | )     |      | $ | (4.0  | )     |   |   |      |      |  |      | (10.7 | )     |   |   |      |     

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|                                           |  |               |       |  |        |   |       |          |  |   |          |  |  |          |       |  |  |   |       | 
|------------------------------------------ |  | ------------- | ----- |  | ------ | - | ----- | -------- |  | - | -------- |  |  | -------- | ----- |  |  | - | ----- | 
|                                           |  | 1/2/01        |       |  | 1/1/02 |   |       | 12/31/02 |  |   | 12/30/03 |  |  | 12/28/04 |      
|                                           |  |               |       |  |        |   |       |          |  |   |          |  |  |          |      
|                                           |  | (In millions) |      
|Balance sheet data:                        |  |               |       |  |        |   |       |          |  |   |          |  |  |          |       |  |  |   |       | 
|Total assets                               |  | $             | 265.7 |  |        | $ | 265.9 |          |  | $ | 280.2    |  |  | $        | 322.3 |  |  | $ | 299.0 | 
|Long-term debt (including current portion) |  | $             | 219.1 |  |        | $ | 224.6 |          |  | $ | 225.4    |  |  | $        | 186.5 |  |  | $ | 170.2 | 

|                                  |                                                  |               |      |      |      |   |      |      |  |   |      |      |  |      |       |      |  |   |      |      | 
|--------------------------------- | ------------------------------------------------ | ------------- | ---- | ---- | ---- | - | ---- | ---- |  | - | ---- | ---- |  | ---- | ----- | ---- |  | - | ---- | ---- | 
|                                  |                                                  | Fiscal(1)     |     
|                                  |                                                  |               |     
|                                  |                                                  | 2000          |      |      | 2001 |   |      | 2002 |  |   | 2003 |      |  | 2004 |      
|                                  |                                                  |               |      |      |      |   |      |      |  |   |      |      |  |      |      
|                                  |                                                  | (In millions) |     
|EBITDA:                           |                                                  |               |      |      |      |   |      |      |  |   |      |      |  |      |       |      |  |   |      |     
|Net income (loss)(5)              |                                                  | $             | (4.2 | )    |      | $ | (3.6 | )    |  | $ | 4.5  |      |  | $    | (4.4  | )    |  | $ | 2.3  |     
|Income tax benefit                |                                                  |               | 1.3  |      |      |   | 0.4  |      |  |   | 0.2  |      |  |      | 6.3   |      |  |   | 1.0  |     
|                                  |                                                  |               |      |      |      |   |      |      |  |   |      |      |  |      |      
|Income (loss) before income taxes |                                                  | $             | (5.5 | )    |      | $ | (4.0 | )    |  | $ | 4.3  |      |  | $    | (10.7 | )    |  | $ | 1.4  |     
|Adjustments:                      |                                                  |               |      |      |      |   |      |      |  |   |      |      |  |      |       |      |  |   |      |     
|                                  | Interest expense(2)                              |               |      | 26.6 |      |   |      | 23.4 |  |   |      | 20.7 |  |      |       | 32.8 |  |   |      | 25.0 | 
|                                  | Depreciation and amortization                    |               |      | 26.3 |      |   |      | 24.5 |  |   |      | 26.2 |  |      |       | 27.1 |  |   |      | 26.6 | 
|                                  |                                                  |               |      |      |      |   |      |      |  |   |      |      |  |      |      
|EBITDA(6)                         |                                                  | $             | 47.4 |      |      | $ | 43.9 |      |  | $ | 51.2 |      |  | $    | 49.2  |      |  | $ | 53.0 |     
|                                  |                                                  |               |      |      |      |   |      |      |  |   |      |      |  |      |      
|Unusual item included in EBITDA:  |                                                  |               |      |      |      |   |      |      |  |   |      |      |  |      |       |      |  |   |      |     
|                                  | Return of bankruptcy funds to Service America(7) |               |      |     |      |   |      |     |  |   | $    | 1.4  |  |      |       |     |  |   |      |     | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We have adopted a 52-53 week period ending on the previous
    Tuesday closest to December 31 as our fiscal year. The
    2001, 2002, 2003 and 2004 fiscal years consisted of
    52 weeks, and the 2000 fiscal year consisted of
    53 weeks.                                                                                                                                                                                                                                                                                                                                 
|   
|(2) | Interest expense for fiscal 2003 includes a $5.3 million
    non-cash charge related to the early extinguishment of debt as a
    result of the refinancing of VSAs 1998 credit facility and
    $7.2 million in expenses associated with the repurchase of
    the notes that VSA issued in 1999 (the 1999 notes).
    Interest expense for fiscal 2004 includes a $1.2 million
    non-cash charge related to the repayment of the remaining 1999
    senior subordinated notes and a $2.0 million non-cash
    charge for the change in the fair value of our derivatives.
|   
|(3) | The sum of maintenance and growth capital expenditures equals
    the sum of contract rights acquired, (purchase of contract
    rights) and the purchase of property and equipment, for the
    relevant periods as displayed in the statement of cash flows, as
    follows:                                                                                                                                                                                                                                                                                                  

|                               |                                                        |               |      |     |      |   |      |      |  |   |      |      |  |      |      |      |  |   |      |      | 
|------------------------------ | ------------------------------------------------------ | ------------- | ---- | --- | ---- | - | ---- | ---- |  | - | ---- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|                               |                                                        | Fiscal(1)     |     
|                               |                                                        |               |     
|                               |                                                        | 2000          |      |     | 2001 |   |      | 2002 |  |   | 2003 |      |  | 2004 |     
|                               |                                                        |               |      |     |      |   |      |      |  |   |      |      |  |      |     
|                               |                                                        | (In millions) |     
|Statement of cash flow data:   |                                                        |               |      |     |      |   |      |      |  |   |      |      |  |      |      |      |  |   |      |     
|                               | Contract rights acquired (purchase of contract rights) |               | $    | 7.5 |      |   | $    | 21.3 |  |   | $    | 37.7 |  |      | $    | 16.0 |  |   | $    | 15.9 | 
|                               | Purchase of property and equipment                     |               |      | 6.4 |      |   |      | 8.1  |  |   |      | 9.9  |  |      |      | 7.9  |  |   |      | 8.0  | 
|                               |                                                        |               |      |     |      |   |      |      |  |   |      |      |  |      |     
|Aggregate capital expenditures |                                                        | $             | 13.9 |     |      | $ | 29.4 |      |  | $ | 47.6 |      |  | $    | 23.9 |      |  | $ | 23.9 |     
|                               |                                                        |               |      |     |      |   |      |      |  |   |      |      |  |      |     



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Maintenance capital expenditures are capital expenditures made
    to secure renewals of our existing contracts and maintain these
    contracts following renewal. Growth capital expenditures are
    those made to secure new contracts and maintain these contracts
    during their initial term. Accordingly, growth capital
    expenditures in any given year consist of up-front capital
    investments in new contracts and additional committed
    investments in existing contracts that have never previously
    been renewed.
|
| | From year to year, our aggregate capital expenditures can vary
    considerably. This is because (a) the pattern of renewals
    (which may give rise to maintenance capital expenditures) varies
    based on the term of existing contracts, and (b) our
    pattern of obtaining new contracts (which may give rise to
    growth capital expenditures) varies over time.                                                                                                                                                                  

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We believe that the identification and separation of maintenance
    and growth capital expenditures are important factors in
    evaluating our financial results. While we strive to maintain
    our present level of EBITDA by securing renewals of our existing
    contracts, we cannot be assured that we will maintain our
    present level of EBITDA in part because we cannot predict the
    future financial requirements of our clients. Contracts may be
    renewed at significantly different commission rates and, thus,
    significantly different levels of EBITDA, depending on the
    clients financial requirements at the time of renewal. See
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Liquidity and
    Capital Resources.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | For purposes of determining the ratio of earnings to fixed
    charges, earnings are defined as income (loss) before income
    taxes 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. Where earnings are inadequate to cover fixed charges,
    the deficiency is reported.
|   
|(5) | In accordance with Statement of Financial Accounting Standards
    No. 142, Goodwill and Other Intangible Assets
    or (SFAS 142), effective January 2, 2002, we
    discontinued the amortization of goodwill and trademarks and
    identified intangible assets which we believe have indefinite
    lives. Adjusted net loss to give effect to SFAS 142 would
    have been $1.8 million for fiscal 2000 and
    $1.1 million for fiscal 2001.                                                                                                                  
|   
|(6) | EBITDA is not a measure in accordance with GAAP. EBITDA is not
    intended to represent cash flows from operations as determined
    by GAAP and should not be used as an alternative to income
    (loss) before taxes or net income (loss) as an indicator of
    operating performance or to cash flows as a measure of
    liquidity. We believe that EBITDA is an important measure of the
    cash returned on our investment in capital expenditures under
    our contracts.                                                                                  



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Adjusted EBITDA, as defined in the indenture
    governing our 13.50% Subordinated Notes issued in 2003,
    which we sometimes refer to as the 2003 notes or the
    subordinated notes, is determined as EBITDA, as
    adjusted for transaction related expenses, contract related
    losses, other non-cash charges, and the annual management fee
    paid to affiliates of Blackstone and GE Capital through 2003,
    less any non-cash credits. We present this discussion of
    Adjusted EBITDA because covenants in the indenture governing our
    subordinated notes contain ratios based on this measure. For
    example, our ability to incur additional debt and make
    restricted payments requires a ratio of Adjusted EBITDA to fixed
    charges of 2.0 to 1.0, except that we may incur certain debt and
    make certain restricted payments without regard to the ratio,
    and may incur an unlimited amount of indebtedness in connection
    with the issuance of additional IDSs so long as the ratio of the
    aggregate principal amount of the additional notes to the number
    of the additional shares of our common stock will not exceed the
    equivalent ratio represented by the then existing IDSs.
|
| | On a historical basis, we made the following adjustments to
    EBITDA to compute Adjusted EBITDA:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                                                                     |  |                              |      |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   |      |  
|-------------------------------------------------------------------- |  | ---------------------------- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | - |  | ---- | ---- | - |  | - | ---- | -
|                                                                     |  | Fiscal(1)                    |     
|                                                                     |  |                              |     
|                                                                     |  | 2000                         |      |   | 2001 |   |      | 2002 |  |   | 2003 |   |  | 2004 |     
|                                                                     |  |                              |      |   |      |   |      |      |  |   |      |   |  |      |     
|                                                                     |  | (In millions, except ratios) |     
|EBITDA                                                               |  | $                            | 47.4 |   |      | $ | 43.9 |      |  | $ | 51.2 |   |  | $    | 49.2 |   |  | $ | 53.0 |  
|Adjustments: Transaction related expenses                            |  |                              | 1.1  |   |      |   |     |      |  |   | 0.6  |   |  |      | 2.6  |   |  |   |     |  
|Contract related losses                                              |  |                              | 2.5  |   |      |   | 4.8  |      |  |   | 0.7  |   |  |      | 0.8  |   |  |   | 0.4  |  
|Non-cash compensation                                                |  |                              | 0.3  |   |      |   | 0.1  |      |  |   | 0.6  |   |  |      | 0.1  |   |  |   |     |  
|Management fees paid to affiliates of Blackstone and GE Capital      |  |                              | 0.4  |   |      |   | 0.4  |      |  |   | 0.4  |   |  |      | 0.4  |   |  |   |     |  
|                                                                     |  |                              |      |   |      |   |      |      |  |   |      |   |  |      |     
|Adjusted EBITDA                                                      |  | $                            | 51.7 |   |      | $ | 49.2 |      |  | $ | 53.5 |   |  | $    | 53.1 |   |  | $ | 53.4 |  
|                                                                     |  |                              |      |   |      |   |      |      |  |   |      |   |  |      |     
|Unusual item included in EBITDA and Adjusted EBITDA:                 |  |                              |      |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   |      |  
|Return of bankruptcy funds to Service America (see note 8
    below) |  |                              |     |   |      |   |     |      |  |   | 1.4  |   |  |      |     |   |  |   |     |  
|Ratio of Adjusted EBITDA to fixed charges                            |  |                              | 2.1  | x |      |   | 2.2  | x    |  |   | 2.8  | x |  |      | 2.1  | x |  |   | 2.2  | x

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| |                                                  
| | -------------------------------------------------
| | Explanations of the adjustments are listed below:



| |   |                                      
| | - | -------------------------------------
| |  | Transaction related expenses include:



| |   |                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | For fiscal 2000, $1.1 million of cash non-recurring
    corporate costs consisting primarily of expenses incurred in
    connection with the analysis of a potential recapitalization and
    strategic investment opportunities;
|
| |  | For fiscal 2002, $0.6 million of acquisition related cash
    costs relating primarily to expenses incurred in connection with
    the structuring and evaluation of financing and recapitalization
    strategies; and          
|
| |  | For fiscal 2003, $2.6 million in expenses related to
    executive compensation associated with the issuance of the IDSs.                                                                                                        



| |   |                                 
| | - | --------------------------------
| |  | Contract related losses include:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | For fiscal 2000, $1.5 million of non-cash charges related
    to the write-down of impaired assets for certain contracts where
    the estimated future cash flows from the contract were
    insufficient to cover the carrying cost of the related
    long-lived assets, $0.7 million of non-cash charges related
    to the write-off of assets related to litigation settlement and
    a non-recurring $0.3 million cash expense in related legal
    fees;
|
| |  | For fiscal 2001, $4.8 million of non-cash charges related
    to the write-down of impaired assets for certain contracts where
    the estimated future cash flows from the contract were
    insufficient to cover the carrying cost of the related
    long-lived assets;                                                                                                                                                                                      
|
| |  | For fiscal 2002, $0.7 million of non-cash charges related
    to the write-down of impaired assets for a contract which was
    terminated;                                                                                                                                                                                                                                                                                                                      
|
| |  | For fiscal 2003, $0.8 million of non-cash charges for the
    write-down of impaired assets for certain terminated and/or
    assigned contracts; and                                                                                                                                                                                                                                                                                                            
|
| |  | For fiscal 2004, $0.4 million of non-cash charges for the
    write-down of impaired assets for certain terminated contracts
    and contracts for which we intend to continue operations.                                                                                                                                                                                                                                                                       



| |   |                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Non-cash compensation expenses related to the revaluation of
    partnership units purchased by certain members of our management
    financed with nonrecourse loans include for fiscal 2000, 2001,
    2002 and 2003, $0.3 million, $0.1 million,
    $0.6 million and $0.1 million, respectively.
|
| |  | Management fees paid to affiliates of Blackstone and GE Capital
    include $0.4 million for each of fiscal 2000, 2001, 2002
    and 2003. The management fees were paid quarterly in arrears and
    ceased upon the closing of the IPO.                                                           



| |                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For purposes of calculating the ratio of Adjusted EBITDA to
    fixed charges, fixed charges includes interest expense
    (excluding amortization of deferred financing fees) plus
    capitalized interest, the earned discount or yield with respect
    to the sale of receivables and cash dividends on preferred stock.



| |     |                                                                                                                                                                                            
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (7) | During fiscal 2002, Service America received approximately
    $1.4 million from funds previously set aside to satisfy
    creditors pursuant to a plan of reorganization approved in 1993.
|
| | (8) | Per share information was adjusted for a 40,920 (rounded to the
    nearest share) for one split of the common stock that was
    effective December 2, 2003.                              






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

General




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Overview






Critical Accounting Policies






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Recoverability of Property and Equipment, Contract Rights,
    Cost in Excess of Net Assets Acquired and Other Intangible
    Assets. As of December 28, 2004, net property and
    equipment of $48.2 million and net contract rights of
    $88.0 million were recorded. In accordance with Statement
    of Financial Accounting Standards (SFAS)
    No. 144, we evaluate long-lived assets with definite lives
    for possible impairment when an event occurs which would
    indicate that its carrying amount may not be recoverable. The
    impairment analysis is made at the contract level and evaluates
    the net property and equipment as well as the contract rights
    related to that contract. The undiscounted future cash flows
    from a contract are compared to the carrying value of the
    related long-lived assets. If the undiscounted future cash flows
    are lower than the carrying value, an impairment charge is
    recorded. The amount of the impairment charge is equal to the
    difference between the balance of the long-lived assets and the
    future discounted cash flows related to the assets (using a rate
    based on our incremental borrowing rate). As we base our
    estimates of undiscounted future cash flows on past operating
    performance, including anticipated labor and other cost
    increases, and prevailing market conditions, we cannot make
    assurances that our estimates are achievable. Different
    conditions or assumptions, if significantly negative or
    unfavorable, could have a material adverse effect on the outcome
    of our evaluation and our financial condition or future results
    of operations. Events that would trigger an evaluation at the
    contract level include the loss of a tenant team, intent to
    cease operations at a facility due to contract termination or
    other means, the bankruptcy of a client, discontinuation of a
    sports league or a significant increase in competition that
    could reduce the future profitability of the contract, among
    others. As of December 28, 2004, cost in excess of net
    assets acquired of $41.1 million and other intangible
    assets (trademarks) of $17.5 million were recorded. In
    accordance with SFAS No. 142, on

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | an annual basis, we test our indefinite-lived intangible assets
    (cost in excess of net assets acquired and trademarks) for
    impairment. Additionally, cost in excess of net assets acquired
    is tested between annual tests if an event occurs or
    circumstances change that would more likely than not reduce the
    fair value of a reporting unit below its carrying amount. We
    have determined that the reporting unit for testing the cost in
    excess of net assets acquired for impairment is Centerplate. In
    performing the annual cost in excess of net assets acquired
    assessment, we compare the fair value of Centerplate to its net
    asset carrying amount, including cost in excess of net assets
    acquired and trademarks. If the fair value of Centerplate
    exceeds the carrying amount, then it is determined that cost in
    excess of net assets acquired is not impaired. Should the
    carrying amount exceed the fair value, then we would need to
    perform the second step in the impairment test to determine the
    amount of the cost in excess of net assets acquired write-off.
    Fair value for these tests is determined based upon a discounted
    cash flow model, using a rate based on our incremental borrowing
    rate. As we base our estimates of cash flows on past operating
    performance, including anticipated labor and other cost
    increases and prevailing market conditions, we cannot make
    assurances that our estimates are achievable. Different
    conditions or assumptions, if significantly negative or
    unfavorable, could have a material adverse effect on the outcome
    of our evaluation and on our financial condition or future
    results of operations. In performing the annual trademark
    assessment, management compares the fair value of the intangible
    asset to its carrying value. Fair value is determined based on a
    discounted cash flow model, using a rate based on our
    incremental borrowing rate. If the carrying amount of the
    intangible asset exceeds its fair value, an impairment loss will
    be recognized for the excess amount. If the fair value is
    greater than the carrying amount, no further assessment is
    performed. We performed our annual assessments of cost in excess
    of net assets acquired and trademarks on March 30, 2004 and
    determined that no impairment exists.
|
| |  | Insurance. We have a high deductible insurance program
    for general liability, auto liability and workers
    compensation risk. We are required to estimate and accrue for
    the amount of losses that we expect to incur. These amounts are
    recorded in cost of sales and selling, general and
    administrative expenses on the statement of operations and
    accrued liabilities and long-term liabilities on the balance
    sheet. Our estimates consider a number of factors, including
    historical experience and an actuarial assessment of the
    liabilities for reported claims and claims incurred but not
    reported. While we use outside parties to assist us in making
    these estimates, it is difficult to provide assurance that the
    actual amounts may not be materially different than what we have
    recorded. In addition we are self-insured for employee medical
    benefits and related liabilities. Our liabilities are based on
    historical trends and claims filed and are estimated for claims
    incurred but not reported. While the liabilities represent
    managements best estimate, actual results could differ
    significantly from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Accounting Treatment for IDSs, Common Stock Owned by Initial
    Equity Investors and Derivative Financial Instruments. Our
    IDSs include common stock and subordinated notes, the latter of
    which has three embedded derivative features. The embedded
    derivative features include a call option, a change of control
    put option, and a term-extending option on the notes. The call
    option allows us to repay the principal amount of the
    subordinated notes after the fifth anniversary of the issuance,
    provided that we also pay all of the interest that would have
    been paid during the initial 10-year term of the notes,
    discounted to the date of repayment at a risk-free rate. Under
    the change of control put option, the holders have the right to
    cause us to repay the subordinated notes at 101% of face value
    upon a change of control, as defined in the subordinated note
    agreement. The term-extending option allows us to unilaterally
    extend the term of the subordinated notes for two five-year
    periods at the end of the initial 10-year period provided that
    we are in compliance with the requirements of the indenture. We
    have accounted for these embedded derivatives in accordance with
    SFAS No. 133, Accounting for Derivative Instruments
    and Hedging Activities, as amended and interpreted. Based on
    SFAS No. 133, as amended and interpreted, the call
    option and the change of control put option are required to be
    separately valued. As of December 28, 2004, these embedded
    derivatives were fair valued and determined to be insignificant.
    The term extending option was determined to not be separable
    from the underlying subordinated notes. Accordingly, it will not
    be separately accounted for in the current or future periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



| |                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In connection with the IPO, those investors who held stock prior
    to the IPO (the Initial Equity Investors) entered
    into an amended and restated stockholders agreement, which
    provides that, upon

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | any post-offering sale of common stock by the Initial Equity
    Investors, at the option of the Initial Equity Investors, we
    will exchange a portion of their common stock for subordinated
    notes at an exchange rate of $9.30 principal amount of
    subordinated notes for each share of common stock (so that,
    after such exchange, the Initial Equity Investors will have
    shares of common stock and subordinated notes in the appropriate
    proportions to represent integral numbers of IDSs). We have
    concluded that the portion of the Initial Equity Investors
    common stock exchangeable for subordinated debt should be
    classified on its consolidated balance sheet according to the
    guidance provided by Accounting Series Release No. 268
    (FRR Section 211), Redeemable Preferred Stocks.
    Accordingly, at December 28, 2004 we have recorded
    $14.4 million as Common stock with conversion option
    exchangeable for subordinated debt, net of discount on the
    balance sheet. This amount was accreted to the face amount due
    of $14.4 million using the effective interest method over
    the life of the Initial Equity Investors minimum required
    180-day holding period following the IPO. The accretion of
    approximately $317,000 in fiscal 2004 was a deemed dividend to
    the Initial Equity Investors. In addition, we have determined
    that the option conveyed to the Initial Equity Investors to
    exchange common stock for subordinated debt in order to
    form IDSs is an embedded derivative in accordance with
    SFAS No. 133. Centerplate has recorded a liability for
    the fair value of this embedded derivative of approximately
    $4.7 million as of December 28, 2004. This option is
    fair-valued each reporting period with the change in the fair
    value recorded in interest expense in the accompanying
    consolidated statement of operations.
|
| | The common stock held by the Initial Equity Investors has been
    treated as a separate class of common stock for presentation of
    earnings per share at December 28, 2004. Although the
    common stock held by the Initial Equity Investors is part of the
    same class of stock as the common stock included in the IDSs for
    purposes of Delaware corporate law, the right to convert that is
    granted in our amended and restated stockholders agreement as
    described above causes the stock held by the Initial Equity
    Investors to have features of a separate class of stock for
    accounting purposes. The deemed dividend of approximately
    $317,000 conveyed to the Initial Equity Investors discussed
    above requires a two class earnings per share calculation.
    Accordingly, at December 28, 2004, Centerplate has shown
    separate earnings per share for the stock held by the Initial
    Equity Investors and the stock included in the IDSs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Deferred Income Taxes. We recognize deferred tax assets
    and liabilities based on the expected future tax consequences of
    temporary differences between the carrying amounts and the tax
    basis of assets and liabilities. Our primary deferred tax assets
    relate to net operating losses and credit carryovers. The
    realization of these deferred tax assets depends upon our
    ability to generate future income. If our results of operations
    are adversely affected, not all of our deferred tax assets, if
    any, may be realized.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We accounted for the issuance of IDS units in December 2003 by
    allocating the proceeds for each IDS unit to the underlying
    stock and subordinated notes based upon the relative fair values
    of each at that time. Accordingly, the portion of the aggregate
    IDSs outstanding that represents subordinated notes has been
    accounted for as long-term debt bearing a stated interest rate
    of 13.5% maturing on December 10, 2013. There can be no
    assurances that the Internal Revenue Service or the courts will
    not seek to challenge the treatment of these notes as debt or
    the amount of interest expense deducted, although to date we
    have not been notified that the notes should be treated as
    equity rather than debt for U.S. federal and state income
    tax purposes. Such reclassification would result in an
    additional tax liability and cause Centerplate to utilize at a
    faster rate more of its deferred tax assets than it otherwise
    would.

Seasonality and Quarterly Results






| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | Seasonality and variations in scheduling of sporting and other
    events;
|
| |  | Unpredictability in the number, timing and type of new contracts;         
|
| |  | Timing of contract expirations and special events; and                    
|
| |  | Level of attendance at the facilities which we serve.                     

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|            |  |           |         |           |        |   |        |              |                 |        |        |                 |                |           |        |            |        |   |       |   |  |   |       |  
|----------- |  | --------- | ------- | --------- | ------ | - | ------ | ------------ | --------------- | ------ | ------ | --------------- | -------------- | --------- | ------ | ---------- | ------ | - | ----- | - |  | - | ----- | -
|            |  | 2004      |         |           |       
|            |  |           |        
|            |  |           |         | Basic and |        |   |        |              | Basic and       |        |        | Basic Diluted   |               
|            |  |           |         | Diluted   |        |   |        |              | Diluted         |        |        | Earnings (Loss) |               
|            |  |           |         | Operating |        |   |        |              | Earnings (Loss) |        |        | per Share       |               
|            |  |           |         | Operating |        |   | Income |              |                 | Net    |        |                 | per Share with |           |        | without    |       
|            |  |           |         | Income    |        |   | (Loss) |              |                 | Income |        |                 | Conversion     |           |        | Conversion |       
|            |  | Net Sales |         |           | (Loss) |   |        | per Share(1) |                 |        | (Loss) |                 |                | Option(1) |        |            | Option |  
|            |  |           |         |           |        |   |        |              |                 |        |        |                 |                |           |        |            |        |  
|1st Quarter |  | $         | 98,236  |           |        | $ | (4,336 | )            |                 | $      | (0.19  | )               |                | $         | (9,177 | )          |        | $ | (0.37 | ) |  | $ | (0.42 | )
|2nd Quarter |  | $         | 173,725 |           |        | $ | 10,861 |              |                 | $      | 0.48   |                 |                | $         | 5,394  |            |        | $ | 0.27  |   |  | $ | 0.23  |  
|3rd Quarter |  | $         | 201,066 |           |        | $ | 14,963 |              |                 | $      | 0.66   |                 |                | $         | 5,733  |            |        | $ | 0.25  |   |  | $ | 0.25  |  
|4th Quarter |  | $         | 134,127 |           |        | $ | 4,609  |              |                 | $      | 0.20   |                 |                | $         | 370    |            |        | $ | 0.02  |   |  | $ | 0.02  |  

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

|            |  |           |         |           |        |   |        |              |           |        |        |   |                 |              |        |   |  |   |       |   |  |  |  | 
|----------- |  | --------- | ------- | --------- | ------ | - | ------ | ------------ | --------- | ------ | ------ | - | --------------- | ------------ | ------ | - |  | - | ----- | - |  |  |  | 
|            |  | 2002      |         |           |       
|            |  |           |         |           |       
|            |  |           |         | Basic and |        |   |        |              |          
|            |  |           |         | Diluted   |        |   |        |              |          
|            |  |           |         | Operating |        |   |        |              | Basic and |        |        |  
|            |  |           |         | Operating |        |   | Income |              |           | Net    |        |   | Diluted         |              |        |  
|            |  |           |         | Income    |        |   | (Loss) |              |           | Income |        |   | Earnings (Loss) |              |        |  
|            |  | Net Sales |         |           | (Loss) |   |        | per Share(1) |           |        | (Loss) |   |                 | per Share(1) |        |   | 
|            |  |           |         |           |        |   |        |              |           |        |        |   |                 |              |        |   | 
|1st Quarter |  | $         | 87,840  |           |        | $ | (4,185 | )            |           | $      | (0.31  | ) |                 | $            | (6,870 | ) |  | $ | (0.50 | ) |  |  |  | 
|2nd Quarter |  | $         | 166,421 |           |        | $ | 9,813  |              |           | $      | 0.72   |   |                 | $            | 3,841  |   |  | $ | 0.28  |   |  |  |  | 
|3rd Quarter |  | $         | 195,100 |           |        | $ | 15,892 |              |           | $      | 1.17   |   |                 | $            | 9,783  |   |  | $ | 0.72  |   |  |  |  | 
|4th Quarter |  | $         | 121,801 |           |        | $ | 1,975  |              |           | $      | 0.15   |   |                 | $            | (2,258 | ) |  | $ | (0.17 | ) |  |  |  | 






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

Results of Operations




| |                                    
| | -----------------------------------
| | Fiscal 2004 Compared to Fiscal 2003

Net sales


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Cost of sales


Selling, general and administrative expenses


Depreciation and amortization


Transaction related expenses


Contract related losses


Operating income


Interest expense


Other income, net


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Income taxes




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

Net sales.


Cost of sales.


Selling, general and administrative expenses.


Depreciation and amortization.


Transaction related expenses.


Contract related losses.


Operating income.


Interest expense.


24



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Other income, net.


Income taxes.




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





Liquidity and Capital Resources






25



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26



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| |  |                        |      |  |      |   |       |      |  |   |      |  |  |                |      |  |  |   |       |  |  | 
| |  | ---------------------- | ---- |  | ---- | - | ----- | ---- |  | - | ---- |  |  | -------------- | ---- |  |  | - | ----- |  |  | 
| |  | Contracts Expiring in: |      |  |     
| |  |                        |      |  |     
| |  | 2005                   |      |  | 2006 |   |       | 2007 |  |   | 2008 |  |  | 2009 and After |      |  | 
| |  |                        |      |  |      |   |       |      |  |   |      |  |  |                |      |  | 
| |  | (In millions)          |      |  |     
| |  | $                      | 83.6 |  |      | $ | 135.8 |      |  | $ | 93.1 |  |  | $              | 47.2 |  |  | $ | 237.5 |  |  | 









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







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



27



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| |                         
| | ------------------------
| | Contemplated Refinancing







28



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##### Table of Contents



Contractual Commitments




|                               |  |                        |       |           |        |  |      |       |  |     |       |  |           |         |       |  |  |  |       | 
|------------------------------ |  | ---------------------- | ----- | --------- | ------ |  | ---- | ----- |  | --- | ----- |  | --------- | ------- | ----- |  |  |  | ----- | 
|                               |  | Payments Due by Period |      
|                               |  |                        |      
|                               |  |                        |       | Less Than |        |  | 1-3  |       |  | 4-5 |       |  | More Than |        
|                               |  | Total                  |       |           | 1 Year |  |      | Years |  |     | Years |  |           | 5 Years |      
|                               |  |                        |       |           |        |  |      |       |  |     |       |  |           |         |      
|                               |  | (In millions)          |      
|Long-term borrowings           |  |                        | 170.2 |           |        |  |     |       |  |     |      |  |           |         | 65.0  |  |  |  | 105.2 | 
|Interest for fixed rate debt   |  |                        | 143.7 |           |        |  | 19.2 |       |  |     | 54.3  |  |           |         | 28.4  |  |  |  | 41.8  | 
|Insurance                      |  |                        | 11.5  |           |        |  | 5.8  |       |  |     | 3.6   |  |           |         | 1.6   |  |  |  | 0.5   | 
|Operating leases               |  |                        | 1.9   |           |        |  |     |       |  |     | 1.7   |  |           |         | 0.2   |  |  |  |      | 
|Commissions and royalties      |  |                        | 41.5  |           |        |  | 8.0  |       |  |     | 9.2   |  |           |         | 6.3   |  |  |  | 18.0  | 
|Capital Commitments(1)         |  |                        | 11.8  |           |        |  | 8.5  |       |  |     | 3.3   |  |           |         |      |  |  |  |      | 
|Other long-term liabilities(2) |  |                        | 0.7   |           |        |  |     |       |  |     | 0.5   |  |           |         | 0.2   |  |  |  |      | 
|                               |  |                        |       |           |        |  |      |       |  |     |       |  |           |         |      
|Total Contractual              |  |                        | 381.3 |           |        |  | 41.5 |       |  |     | 72.6  |  |           |         | 101.7 |  |  |  | 165.5 | 
|                               |  |                        |       |           |        |  |      |       |  |     |       |  |           |         |      






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



|                             |  |                        |      |           |        |   |      |       |     |       |           |         |  |   |   |  |  |   |   | 
|---------------------------- |  | ---------------------- | ---- | --------- | ------ | - | ---- | ----- | --- | ----- | --------- | ------- |  | - | - |  |  | - | - | 
|                             |  | Payments Due by Period
|                             |  |                       
|                             |  |                        |      | Less Than |        |   | 1-3  |       | 4-5 |       | More Than
|Other Commercial Commitments |  | Total                  |      |           | 1 Year |   |      | Years |     | Years |           | 5 Years
|                             |  |                        |      |           |        |   |      |       |     |       |           |        
|Letters of credit            |  | $                      | 18.7 |           |        | $ | 18.7 |       |     | $     |          |         |  | $ |  |  |  | $ |  | 

New Accounting Standards


Share-Based Payment


Consolidation of Variable Interest Entities Consolidated Financial
Statements.


Cautionary Statement Regarding Forward-Looking Statements




29



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

30



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| |   |                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The pricing and termination provisions of our contracts may
    constrain our ability to recover costs and to make a profit on
    our contracts.                                                                                                                              
|
| |  | We have a history of losses and may experience losses in the
    future.                                                                                                                                                                                                       
|
| |  | We may not be able to recover our capital investments in
    clients facilities, which may significantly reduce our
    profits or cause losses.                                                                                                                              
|
| |  | If the sports team tenant of a facility we serve relocates or
    the ownership of a facility we serve changes, we may lose the
    contract for that facility.                                                                                                                
|
| |  | If we were to lose any of our largest clients, our results of
    operations could be significantly harmed.                                                                                                                                                                    
|
| |  | A contraction of MLB that eliminates any of the teams playing in
    any of the facilities we serve would likely have a material
    adverse effect on our results of operations.                                                                                              
|
| |  | We may not have sufficient funds available to make capital
    investments in clients facilities necessary to maintain
    these relationships or to obtain new accounts.                                                                                                     
|
| |  | An increase in capital investments or commissions to renew
    client relationships may lower our operating results for such
    facilities.                                                                                                                                   
|
| |  | Our historical rapid growth rates may not be indicative of
    future results, given the limitations set under our current
    capital structure and dividend policy and our reliance on other
    financing sources.                                                          
|
| |  | If labor or other operating costs increase, we may not be able
    to make a corresponding increase in the prices of our products
    and services and our profitability may decline significantly.                                                                            
|
| |  | We could incur costs defending against claims involving
    violations of wage and hour laws.                                                                                                                                                                                  
|
| |  | We may incur significant liabilities or reputational harm if
    claims of illness or injury associated with our service of food
    and beverage to the public are brought against us.                                                                                        
|
| |  | The loss of any of our liquor licenses or permits could
    adversely affect our ability to carry out our business.                                                                                                                                                            
|
| |  | If one of our employees sells alcoholic beverages to an
    intoxicated or minor patron, we may be liable to third parties
    for the acts of the patron.                                                                                                                     
|
| |  | If we fail to comply with applicable governmental regulations,
    we may become subject to lawsuits and other liabilities or
    restrictions on our operations which could significantly reduce
    our net sales and cash flow and undermine the growth of our
    business.
|
| |  | We are subject to litigation, which, if determined adversely,
    could be material.                                                                                                                                                                                           
|
| |  | We may be subject to potential environmental liabilities.                                                                                                                                                                                                                      
|
| |  | We depend on a relatively small executive management team and
    the loss of any of them could adversely affect our business.                                                                                                                                                 
|
| |  | We could incur significant liability for withdrawing from
    multi-employer pension plans.                                                                                                                                                                                    
|
| |  | If we fail to remain competitive within our industry, we will
    not be able to maintain our clients or obtain new clients, which
    would materially adversely affect our financial condition,
    results of operations and liquidity.                                     
|
| |  | Our net sales could decline if there were a labor stoppage
    affecting any of the sports teams at whose facilities we provide
    our services.                                                                                                                              
|
| |  | An outbreak or escalation of any insurrection or armed conflict
    involving the United States or any other national or
    international calamity could significantly harm our business.                                                                                     
|
| |  | A terrorist attack on any facility which we serve, particularly
    large sports facilities, could significantly harm our business,
    and our contracts do not provide for the recovery by us of our
    cost in the event of a terrorist attack on a facility.              

31



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| |   |                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We may not be able to obtain insurance, or obtain insurance on
    commercially acceptable terms, which could result in a material
    adverse effect on our financial condition, results of operations
    or liquidity.
|
| |  | Weak economic conditions within the United States could
    adversely affect our business.                                                                                                                               








|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk

Interest rate risk 


|                 |                     |                       |  |   |      |  |  |      |   |  |      |   |   |      |   |    |            |      |  |       |   |  |   |       |      |   |   |       |   | 
|---------------- | ------------------- | --------------------- |  | - | ---- |  |  | ---- | - |  | ---- | - | - | ---- | - | -- | ---------- | ---- |  | ----- | - |  | - | ----- | ---- | - | - | ----- | - | 
|                 |                     | 2005                  |  |   | 2006 |  |  | 2007 |   |  | 2008 |   |   | 2009 |   |    | Thereafter |      |  | Total |  
|                 |                     |                       |  |   |      |  |  |      |   |  |      |   |   |      |   |    |            |      |  |       |  
|                 |                     | (In millions)         | 
|Fixed rate debt: |                     |                       |  |   |      |  |  |      |   |  |      |   |   |      |   |    |            |      |  |       |   |  |   |       |      |   |   |      
|                 | Represented by IDSs |                       |  |  |      |  |  |     |   |  |      |  |   |      |   |   |            |      |  |      |   |  | $ | 105.2 |      |   | $ | 105.2 |  
|                 |                     | Average interest rate |  |   |     |  |  |      |  |  |      |   |  |      |   |    |           |      |  |       |  |  |   |       | 13.5 | % |   |       |  | 
|                 | Term loans          |                       |  |  |      |  |  |     |   |  |      |  |   |      | $ | 65 | .0         |      |  |      |   |  |   |      |      |   | $ | 65.0  |  
|                 |                     | Average interest rate |  |   |     |  |  |      |  |  |      |   |  |      |   |    | 7          | .24% |  |       |  |  |   |       |     |   |   |       |  | 



Market risk 




32



---












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

CENTERPLATE, INC.


TABLE OF CONTENTS


|                                                                                                                                                       |                                                                                                      |      |     |     | 
|------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------- | ---- | --- | --- | 
|                                                                                                                                                       |                                                                                                      | Page |    
|                                                                                                                                                       |                                                                                                      |      |    
|REPORT OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM                                                                                            |                                                                                                      |      | F-2 |    
|CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 30, 2003
    AND DECEMBER 28, 2004 AND FOR THE THREE YEARS IN THE PERIOD
    ENDED DECEMBER 28, 2004: |                                                                                                      |      |     |    
|                                                                                                                                                       | Consolidated Balance Sheets                                                                          |      |     | F-3 | 
|                                                                                                                                                       | Consolidated Statements of Operations                                                                |      |     | F-5 | 
|                                                                                                                                                       | Consolidated Statements of
    Stockholders Equity (Deficiency) and Comprehensive Income
    (Loss) |      |     | F-6 | 
|                                                                                                                                                       | Consolidated Statements of Cash Flows                                                                |      |     | F-7 | 
|                                                                                                                                                       | Notes to Consolidated Financial
    Statements                                                       |      |     | F-9 | 
|EX-10.2: CENTERPLATE DEFERRED COMPENSATION PLAN                                                                                                       
|EX-12.1: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES                                                                                            
|EX-21.1: SUBSIDIARIES                                                                                                                                 
|EX-31.1: CERTIFICATION                                                                                                                                
|EX-31.2: CERTIFICATION                                                                                                                                
|EX-32.1: CERTIFICATION                                                                                                                                
|EX-32.2: CERTIFICATION                                                                                                                                



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




















F-2



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##### Table of Contents






CENTERPLATE, INC.


CONSOLIDATED BALANCE SHEETS


DECEMBER 30, 2003 AND DECEMBER 28, 2004


|                        |                                                                                                                                             |                              |         |         |              |   |         |         |         | 
|----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ------- | ------- | ------------ | - | ------- | ------- | ------- | 
|                        |                                                                                                                                             | December 30,                 |         |         | December 28, |  
|                        |                                                                                                                                             | 2003                         |         |         | 2004         |  
|                        |                                                                                                                                             |                              |         |         |              |  
|                        |                                                                                                                                             | (In thousands, except share  |        
|                        |                                                                                                                                             | data)                        |        
|ASSETS                 
|CURRENT ASSETS:         |                                                                                                                                             |                              |         |         |              |   |         |        
|                        | Cash and cash equivalents                                                                                                                   |                              | $       | 22,929  |              |   | $       | 24,777  |        
|                        | Restricted cash                                                                                                                             |                              |         | 13,628  |              |   |         |        |        
|                        | Accounts receivable, less allowance for doubtful accounts of
    $348 and $495 at December 30, 2003 and December 28,
    2004, respectively |                              |         | 17,737  |              |   |         | 21,876  |        
|                        | Merchandise inventories                                                                                                                     |                              |         | 14,865  |              |   |         | 16,549  |        
|                        | Prepaid expenses and other                                                                                                                  |                              |         | 3,322   |              |   |         | 3,315   |        
|                        | Deferred tax asset                                                                                                                          |                              |         | 4,121   |              |   |         | 5,238   |        
|                        |                                                                                                                                             |                              |         |         |              |  
|                        |                                                                                                                                             | Total current assets         |         |         | 76,602       |   |         |         | 71,755  | 
|                        |                                                                                                                                             |                              |         |         |              |  
|PROPERTY AND EQUIPMENT: |                                                                                                                                             |                              |         |         |              |   |         |        
|                        | Leasehold improvements                                                                                                                      |                              |         | 45,828  |              |   |         | 43,635  |        
|                        | Merchandising equipment                                                                                                                     |                              |         | 54,635  |              |   |         | 57,435  |        
|                        | Vehicles and other equipment                                                                                                                |                              |         | 9,791   |              |   |         | 11,532  |        
|                        | Construction in process                                                                                                                     |                              |         | 168     |              |   |         | 32      |        
|                        |                                                                                                                                             |                              |         |         |              |  
|                        |                                                                                                                                             | Total                        |         |         | 110,422      |   |         |         | 112,634 | 
|                        | Less accumulated depreciation and amortization                                                                                              |                              |         | (57,671 | )            |   |         | (64,412 | )      
|                        |                                                                                                                                             |                              |         |         |              |  
|                        |                                                                                                                                             | Property and equipment, net  |         |         | 52,751       |   |         |         | 48,222  | 
|                        |                                                                                                                                             |                              |         |         |              |  
|OTHER LONG-TERM ASSETS: |                                                                                                                                             |                              |         |         |              |   |         |        
|                        | Contract rights, net                                                                                                                        |                              |         | 101,512 |              |   |         | 87,981  |        
|                        | Restricted cash                                                                                                                             |                              |         | 8,420   |              |   |         | 8,420   |        
|                        | Cost in excess of net assets acquired                                                                                                       |                              |         | 46,457  |              |   |         | 41,142  |        
|                        | Deferred financing costs, net                                                                                                               |                              |         | 13,017  |              |   |         | 11,707  |        
|                        | Trademarks                                                                                                                                  |                              |         | 17,274  |              |   |         | 17,523  |        
|                        | Deferred tax asset                                                                                                                          |                              |         | 2,790   |              |   |         | 8,259   |        
|                        | Other                                                                                                                                       |                              |         | 3,450   |              |   |         | 4,037   |        
|                        |                                                                                                                                             |                              |         |         |              |  
|                        |                                                                                                                                             | Total other long-term assets |         |         | 192,920      |   |         |         | 179,069 | 
|                        |                                                                                                                                             |                              |         |         |              |  
|TOTAL ASSETS            |                                                                                                                                             | $                            | 322,273 |         |              | $ | 299,046 |        
|                        |                                                                                                                                             |                              |         |         |              |  



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##### Table of Contents



CENTERPLATE, INC.


CONSOLIDATED BALANCE SHEETS  (Continued)


DECEMBER 30, 2003 AND DECEMBER 28, 2004


|                                                                                                              |                                                                     |                                                                                                                   |                             |          |              |         |         |          |     |         | 
|------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------- | -------- | ------------ | ------- | ------- | -------- | --- | ------- | 
|                                                                                                              |                                                                     | December 30,                                                                                                      |                             |          | December 28, |        
|                                                                                                              |                                                                     | 2003                                                                                                              |                             |          | 2004         |        
|                                                                                                              |                                                                     |                                                                                                                   |                             |          |              |        
|                                                                                                              |                                                                     | (In thousands, except share                                                                                       |                            
|                                                                                                              |                                                                     | data)                                                                                                             |                            
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                         
|CURRENT LIABILITIES:                                                                                          |                                                                     |                                                                                                                   |                             |          |              |         |         |         
|                                                                                                              | Short-term note payable                                             |                                                                                                                   | $                           | 4,000    |              |         | $       |         |    
|                                                                                                              | Current maturities of long-term debt                                |                                                                                                                   |                             | 12,250   |              |         |         |         |    
|                                                                                                              | Accounts payable                                                    |                                                                                                                   |                             | 18,054   |              |         |         | 19,103   |    
|                                                                                                              | Accrued salaries and vacations                                      |                                                                                                                   |                             | 11,297   |              |         |         | 11,237   |    
|                                                                                                              | Liability for insurance                                             |                                                                                                                   |                             | 4,537    |              |         |         | 5,777    |    
|                                                                                                              | Accrued taxes, including income taxes                               |                                                                                                                   |                             | 3,947    |              |         |         | 4,543    |    
|                                                                                                              | Accrued commissions and royalties                                   |                                                                                                                   |                             | 14,053   |              |         |         | 15,702   |    
|                                                                                                              | Liability for derivatives                                           |                                                                                                                   |                             | 2,654    |              |         |         | 4,655    |    
|                                                                                                              | Accrued interest                                                    |                                                                                                                   |                             | 1,566    |              |         |         | 552      |    
|                                                                                                              | Accrued dividends                                                   |                                                                                                                   |                             | 1,982    |              |         |         | 1,487    |    
|                                                                                                              | Advance deposits                                                    |                                                                                                                   |                             | 2,023    |              |         |         | 3,737    |    
|                                                                                                              | Other                                                               |                                                                                                                   |                             | 3,059    |              |         |         | 3,450    |    
|                                                                                                              |                                                                     |                                                                                                                   |                             |          |              |        
|                                                                                                              |                                                                     |                                                                                                                   | Total current liabilities   |          |              | 79,422  |         |          |     | 70,243  | 
|                                                                                                              |                                                                     |                                                                                                                   |                             |          |              |        
|LONG-TERM LIABILITIES:                                                                                        |                                                                     |                                                                                                                   |                             |          |              |         |         |         
|                                                                                                              | Long-term debt                                                      |                                                                                                                   |                             | 170,245  |              |         |         | 170,245  |    
|                                                                                                              | Liability for insurance                                             |                                                                                                                   |                             | 4,245    |              |         |         | 5,681    |    
|                                                                                                              | Other liabilities                                                   |                                                                                                                   |                             | 699      |              |         |         | 651      |    
|                                                                                                              |                                                                     |                                                                                                                   |                             |          |              |        
|                                                                                                              |                                                                     |                                                                                                                   | Total long-term liabilities |          |              | 175,189 |         |          |     | 176,577 | 
|                                                                                                              |                                                                     |                                                                                                                   |                             |          |              |        
|COMMITMENTS AND CONTINGENCIES                                                                                 |                                                                     |                                                                                                                   |                             |          |              |         |         |         
|COMMON STOCK WITH CONVERSION OPTION, PAR VALUE $0.01,
    EXCHANGEABLE FOR SUBORDINATED DEBT, NET OF DISCOUNT |                                                                     |                                                                                                                   | 14,035                      |          |              |         | 14,352  |         
|                                                                                                              |                                                                     |                                                                                                                   |                             |          |              |        
|STOCKHOLDERS EQUITY:                                                                                         |                                                                     |                                                                                                                   |                             |          |              |         |         |         
|                                                                                                              | Common stock, $0.01 par value  authorized:
    100,000,000 shares; |                                                                                                                   |                             |          |              |         |         |          |    
|                                                                                                              |                                                                     | issued: 18,463,995 shares without conversion option;
    outstanding: 18,463,995 shares without conversion option |                             |          | 185          |         |         |          | 185 |        
|                                                                                                              |                                                                     | issued: 21,531,152 shares with conversion option;
    outstanding: 4,060,997 shares with conversion option        |                             |          | 215          |         |         |          | 215 |        
|                                                                                                              | Additional paid-in capital                                          |                                                                                                                   |                             | 218,598  |              |         |         | 218,331  |    
|                                                                                                              | Accumulated deficit                                                 |                                                                                                                   |                             | (44,655  | )            |         |         | (60,492  | )  
|                                                                                                              | Accumulated other comprehensive income                              |                                                                                                                   |                             | 224      |              |         |         | 575      |    
|                                                                                                              | Treasury stock  at cost (17,470,153 shares)                        |                                                                                                                   |                             | (120,940 | )            |         |         | (120,940 | )  
|                                                                                                              |                                                                     |                                                                                                                   |                             |          |              |        
|                                                                                                              |                                                                     |                                                                                                                   | Total stockholders equity  |          |              | 53,627  |         |          |     | 37,874  | 
|                                                                                                              |                                                                     |                                                                                                                   |                             |          |              |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                    |                                                                     | $                                                                                                                 | 322,273                     |          |              | $       | 299,046 |         
|                                                                                                              |                                                                     |                                                                                                                   |                             |          |              |        



F-4



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CENTERPLATE, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS


YEARS ENDED DECEMBER 31, 2002, DECEMBER 30, 2003
AND DECEMBER 28, 2004


|                                                                                             |  |                                       |            |   |              |   |            |              |  |   |            |  
|-------------------------------------------------------------------------------------------- |  | ------------------------------------- | ---------- | - | ------------ | - | ---------- | ------------ |  | - | ---------- | -
|                                                                                             |  | December 31,                          |            |   | December 30, |   |            | December 28, | 
|                                                                                             |  | 2002                                  |            |   | 2003         |   |            | 2004         | 
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|                                                                                             |  | (In thousands, except per share data) |           
|Net sales                                                                                    |  | $                                     | 577,162    |   |              | $ | 616,057    |              |  | $ | 607,154    |  
|Cost of sales                                                                                |  |                                       | 470,929    |   |              |   | 503,986    |              |  |   | 492,462    |  
|Selling, general and administrative                                                          |  |                                       | 55,257     |   |              |   | 59,591     |              |  |   | 61,540     |  
|Depreciation and amortization                                                                |  |                                       | 26,185     |   |              |   | 27,119     |              |  |   | 26,644     |  
|Transaction related expenses                                                                 |  |                                       | 597        |   |              |   | 2,577      |              |  |   |           |  
|Contract related losses                                                                      |  |                                       | 699        |   |              |   | 831        |              |  |   | 411        |  
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Operating income                                                                             |  |                                       | 23,495     |   |              |   | 21,953     |              |  |   | 26,097     |  
|Interest expense                                                                             |  |                                       | 20,742     |   |              |   | 32,763     |              |  |   | 25,010     |  
|Other income, net                                                                            |  |                                       | (1,556     | ) |              |   | (55        | )            |  |   | (266       | )
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Income (loss) before income taxes                                                            |  |                                       | 4,309      |   |              |   | (10,755    | )            |  |   | 1,353      |  
|Income tax benefit                                                                           |  |                                       | (187       | ) |              |   | (6,337     | )            |  |   | (967       | )
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Net income (loss)                                                                            |  |                                       | 4,496      |   |              |   | (4,418     | )            |  |   | 2,320      |  
|Accretion of conversion option                                                               |  |                                       |           |   |              |   |           |              |  |   | (317       | )
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Net income (loss) available to common stockholders with or
    without the conversion option |  | $                                     | 4,496      |   |              | $ | (4,418     | )            |  | $ | 2,003      |  
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Basic Net Income (Loss) per share with conversion option                                     |  | $                                     |           |   |              | $ | (0.31      | )            |  | $ | 0.17       |  
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Diluted Net Income (Loss) per share with conversion option                                   |  | $                                     |           |   |              | $ | (0.31      | )            |  | $ | 0.17       |  
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Basic Net Income (Loss) per share without conversion option                                  |  | $                                     | 0.33       |   |              | $ | (0.31      | )            |  | $ | 0.09       |  
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Diluted Net Income (Loss) per share without conversion option                                |  | $                                     | 0.33       |   |              | $ | (0.31      | )            |  | $ | 0.09       |  
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Weighted average shares outstanding with conversion option                                   |  |                                       |           |   |              |   | 364,738    |              |  |   | 4,060,997  |  
|Weighted average shares outstanding without conversion option                                |  |                                       | 13,612,829 |   |              |   | 13,898,426 |              |  |   | 18,463,995 |  
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Total weighted average shares outstanding                                                    |  |                                       | 13,612,829 |   |              |   | 14,263,164 |              |  |   | 22,524,992 |  
|                                                                                             |  |                                       |            |   |              |   |            |              | 
|Dividends declared per share                                                                 |  | $                                     |           |   |              | $ | 0.09       |              |  | $ | 0.79       |  
|                                                                                             |  |                                       |            |   |              |   |            |              | 



F-5



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##### Table of Contents






CENTERPLATE, INC.


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(DEFICIENCY)


AND COMPREHENSIVE INCOME (LOSS)


YEARS ENDED DECEMBER 31, 2002, DECEMBER 30, 2003,
AND DECEMBER 28, 2004


|                           |                                                                                       |                                   |            |            |            |   |     |            |  |  |            |   |  |            |     |   |             |       |               |         |   |   |          |          |   |         |      |     |       |   |          |         |   |   |        |       |   |   |         |         |  
|-------------------------- | ------------------------------------------------------------------------------------- | --------------------------------- | ---------- | ---------- | ---------- | - | --- | ---------- |  |  | ---------- | - |  | ---------- | --- | - | ----------- | ----- | ------------- | ------- | - | - | -------- | -------- | - | ------- | ---- | --- | ----- | - | -------- | ------- | - | - | ------ | ----- | - | - | ------- | ------- | -
|                           |                                                                                       | Common                            |            |            | Common     |   |     | Common     |  |  |            |   |  |            |     |   | Accumulated |       |               |         |   |   |          |         
|                           |                                                                                       | Shares                            |            |            | Stock      |   |     | Shares     |  |  | Common     |   |  |            |     |   |             | Other |               |         |   |   |          |          |  
|                           |                                                                                       | without                           |            |            | without    |   |     | with       |  |  | Stock with |   |  | Additional |     |   |             |       | Comprehensive |         |   |   |          | Loans to |   |         |     
|                           |                                                                                       | Conversion                        |            |            | Conversion |   |     | Conversion |  |  | Conversion |   |  | Paid-In    |     |   | Accumulated |       |               | Income  |   |   | Treasury |          |   | Related |      |     |      
|                           |                                                                                       | Option                            |            |            | Option     |   |     | Option     |  |  | Option     |   |  | Capital    |     |   | Deficit     |       |               | (Loss)  |   |   | Stock    |          |   | Parties |      |     | Total |  
|                           |                                                                                       |                                   |            |            |            |   |     |            |  |  |            |   |  |            |     |   |             |       |               |         |   |   |          |          |   |         |      |     |       |  
|                           |                                                                                       | (In thousands, except share data) |           
|Balance, January 1, 2002   |                                                                                       |                                   |           |            |            |   |    |            |  |  | 21,531,152 |   |  |            | 215 |   |             |       | 66,637        |         |   |   | (26,062  | )        |   |         | (471 | )   |       |   | (49,500  | )       |   |   | (1,079 | )     |   |   | (10,260 | )      
|                           | Noncash compensation                                                                  |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               | 565     |   |   |          |         |   |         |      |    |       |   |          |        |   |   |        |      |   |   |         | 565     |  
|                           | Loans to related parties                                                              |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          |         |   |         |      |    |       |   |          |        |   |   |        | (96   | ) |   |         | (96     | )
|                           | Foreign currency translation                                                          |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          |         |   |         |      | 27  |       |   |          |        |   |   |        |      |   |   |         | 27      |  
|                           | Net income                                                                            |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          | 4,496    |   |         |      |    |       |   |          |        |   |   |        |      |   |   |         | 4,496   |  
|                           |                                                                                       |                                   |            |            |            |   |     |            |  |  |            |   |  |            |     |   |             |       |               |         |   |   |          |          |   |         |      |     |       |  
|Balance, December 31, 2002 |                                                                                       |                                   |           |            |            |   |    |            |  |  | 21,531,152 |   |  |            | 215 |   |             |       | 67,202        |         |   |   | (21,566  | )        |   |         | (444 | )   |       |   | (49,500  | )       |   |   | (1,175 | )     |   |   | (5,268  | )      
|                           | Proceeds from IDS issuance, net                                                       |                                   |            | 18,463,995 |            |   |     | 185        |  |  |            |  |  |            |     |  |             |       |               | 151,332 |   |   |          |         |   |         |      |    |       |   |          |        |   |   |        | 1,241 |   |   |         | 152,758 |  
|                           | Derivative liability                                                                  |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          | (2,654   | ) |         |      |    |       |   |          |        |   |   |        |      |   |   |         | (2,654  | )
|                           | Common Stock, par value $0.01 exchangeable for subordinated
    debt, net of discount |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          | (14,035  | ) |         |      |    |       |   |          |        |   |   |        |      |   |   |         | (14,035 | )
|                           | Repurchase of stock                                                                   |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          |         |   |         |      |    |       |   |          | (71,440 | ) |   |        |      |   |   |         | (71,440 | )
|                           | Noncash compensation                                                                  |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               | 64      |   |   |          |         |   |         |      |    |       |   |          |        |   |   |        |      |   |   |         | 64      |  
|                           | Loans to related parties                                                              |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          |         |   |         |      |    |       |   |          |        |   |   |        | (66   | ) |   |         | (66     | )
|                           | Foreign currency translation                                                          |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          |         |   |         |      | 668 |       |   |          |        |   |   |        |      |   |   |         | 668     |  
|                           | Dividends declared                                                                    |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          | (1,982   | ) |         |      |    |       |   |          |        |   |   |        |      |   |   |         | (1,982  | )
|                           | Net loss                                                                              |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          | (4,418   | ) |         |      |    |       |   |          |        |   |   |        |      |   |   |         | (4,418  | )
|                           |                                                                                       |                                   |            |            |            |   |     |            |  |  |            |   |  |            |     |   |             |       |               |         |   |   |          |          |   |         |      |     |       |  
|Balance, December 30, 2003 |                                                                                       |                                   | 18,463,995 |            |            |   | 185 |            |  |  | 21,531,152 |   |  |            | 215 |   |             |       | 218,598       |         |   |   | (44,655  | )        |   |         | 224  |     |       |   | (120,940 | )       |   |   |       |       |   |   | 53,627  |        
|                           | Payment of issuance costs                                                             |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               | (267    | ) |   |          |         |   |         |      |    |       |   |          |        |   |   |        |      |   |   |         | (267    | )
|                           | Foreign currency translation                                                          |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          |         |   |         |      | 351 |       |   |          |        |   |   |        |      |   |   |         | 351     |  
|                           | Accretion of conversion option                                                        |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          | (317     | ) |         |      |    |       |   |          |        |   |   |        |      |   |   |         | (317    | )
|                           | Dividends declared                                                                    |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          | (17,840  | ) |         |      |    |       |   |          |        |   |   |        |      |   |   |         | (17,840 | )
|                           | Net income                                                                            |                                   |            |           |            |   |     |           |  |  |            |  |  |            |     |  |             |       |               |        |   |   |          | 2,320    |   |         |      |    |       |   |          |        |   |   |        |      |   |   |         | 2,320   |  
|                           |                                                                                       |                                   |            |            |            |   |     |            |  |  |            |   |  |            |     |   |             |       |               |         |   |   |          |          |   |         |      |     |       |  
|Balance, December 28, 2004 |                                                                                       |                                   | 18,463,995 |            |            | $ | 185 |            |  |  | 21,531,152 |   |  | $          | 215 |   |             | $     | 218,331       |         |   | $ | (60,492  | )        |   | $       | 575  |     |       | $ | (120,940 | )       |   | $ |       |       |   | $ | 37,874  |        
|                           |                                                                                       |                                   |            |            |            |   |     |            |  |  |            |   |  |            |     |   |             |       |               |         |   |   |          |          |   |         |      |     |       |  

|                                                                         |  |              |       |  |              |   |        |              |  |   |       | 
|------------------------------------------------------------------------ |  | ------------ | ----- |  | ------------ | - | ------ | ------------ |  | - | ----- | 
|                                                                         |  | December 31, |       |  | December 30, |   |        | December 28, | 
|                                                                         |  | 2002         |       |  | 2003         |   |        | 2004         | 
|                                                                         |  |              |       |  |              |   |        |              | 
|Net income (loss)                                                        |  | $            | 4,496 |  |              | $ | (4,418 | )            |  | $ | 2,320 | 
|Other comprehensive income  foreign currency
    translation adjustment |  |              | 27    |  |              |   | 668    |              |  |   | 351   | 
|                                                                         |  |              |       |  |              |   |        |              | 
|Comprehensive income (loss)                                              |  | $            | 4,523 |  |              | $ | (3,750 | )            |  | $ | 2,671 | 
|                                                                         |  |              |       |  |              |   |        |              | 



F-6



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##### Table of Contents






CENTERPLATE, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


YEARS ENDED DECEMBER 31, 2002, DECEMBER 30, 2003,
AND DECEMBER 28, 2004


|                                      |                                                                                              |                                          |                                     |                                   |                                           |  |        |              |        |   |        |         |        |   |        |        |  
|------------------------------------- | -------------------------------------------------------------------------------------------- | ---------------------------------------- | ----------------------------------- | --------------------------------- | ----------------------------------------- |  | ------ | ------------ | ------ | - | ------ | ------- | ------ | - | ------ | ------ | -
|                                      |                                                                                              | Years Ended                              |                                    
|                                      |                                                                                              |                                          |                                    
|                                      |                                                                                              | December 31,                             |                                     |                                   | December 30,                              |  |        | December 28, |       
|                                      |                                                                                              | 2002                                     |                                     |                                   | 2003                                      |  |        | 2004         |       
|                                      |                                                                                              |                                          |                                     |                                   |                                           |  |        |              |       
|                                      |                                                                                              | (In thousands)                           |                                    
|CASH FLOWS FROM OPERATING ACTIVITIES: |                                                                                              |                                          |                                     |                                   |                                           |  |        |              |        |   |        |        
|                                      | Net income (loss)                                                                            |                                          | $                                   | 4,496                             |                                           |  | $      | (4,418       | )      |   | $      | 2,320   |       
|                                      | Adjustments to reconcile net income (loss) to net cash provided
    by operating activities: |                                          |                                     |                                   |                                           |  |        |              |        |   |        |         |       
|                                      |                                                                                              | Depreciation and amortization            |                                     |                                   | 26,185                                    |  |        |              | 27,119 |   |        |         | 26,644 |  
|                                      |                                                                                              | Amortization of deferred financing costs |                                     |                                   | 1,431                                     |  |        |              | 6,906  |   |        |         | 1,814  |  
|                                      |                                                                                              | Contract related losses                  |                                     |                                   | 699                                       |  |        |              | 831    |   |        |         | 411    |  
|                                      |                                                                                              | Noncash compensation                     |                                     |                                   | 565                                       |  |        |              | 64     |   |        |         |       |  
|                                      |                                                                                              | Derivative noncash interest              |                                     |                                   |                                          |  |        |              |       |   |        |         | 2,001  |  
|                                      |                                                                                              | Deferred tax change                      |                                     |                                   |                                          |  |        |              | (6,178 | ) |        |         | (1,272 | )
|                                      |                                                                                              | (Gain) loss on disposition of assets     |                                     |                                   | 70                                        |  |        |              | (69    | ) |        |         | 103    |  
|                                      |                                                                                              | Other                                    |                                     |                                   | 27                                        |  |        |              | 668    |   |        |         | 351    |  
|                                      |                                                                                              | Changes in assets and liabilities:       |                                     |                                   |                                           |  |        |              |        |   |        |         |        |  
|                                      |                                                                                              |                                          | Decrease (increase) in assets:      |                                   |                                           |  |        |              |        |   |        |         |        |   |       
|                                      |                                                                                              |                                          |                                     | Accounts receivable               |                                           |  | 1,898  |              |        |   | (1,080 | )       |        |   | (4,139 | )     
|                                      |                                                                                              |                                          |                                     | Merchandise inventories           |                                           |  | (461   | )            |        |   | (1,183 | )       |        |   | (1,684 | )     
|                                      |                                                                                              |                                          |                                     | Prepaid expenses                  |                                           |  | 115    |              |        |   | (970   | )       |        |   | 7      |       
|                                      |                                                                                              |                                          |                                     | Other assets                      |                                           |  | (1,920 | )            |        |   | 1,525  |         |        |   | (1,412 | )     
|                                      |                                                                                              |                                          | Increase (decrease) in liabilities: |                                   |                                           |  |        |              |        |   |        |         |        |   |       
|                                      |                                                                                              |                                          |                                     | Accounts payable                  |                                           |  | (1,147 | )            |        |   | 1,974  |         |        |   | (617   | )     
|                                      |                                                                                              |                                          |                                     | Accrued salaries and vacations    |                                           |  | 137    |              |        |   | 2,614  |         |        |   | (60    | )     
|                                      |                                                                                              |                                          |                                     | Liability for insurance           |                                           |  | 2,670  |              |        |   | 2,340  |         |        |   | 2,676  |       
|                                      |                                                                                              |                                          |                                     | Accrued commissions and royalties |                                           |  | 1,726  |              |        |   | 426    |         |        |   | 155    |       
|                                      |                                                                                              |                                          |                                     | Other liabilities                 |                                           |  | 2,082  |              |        |   | (3,410 | )       |        |   | 1,141  |       
|                                      |                                                                                              |                                          |                                     |                                   |                                           |  |        |              |       
|                                      |                                                                                              |                                          |                                     |                                   | Net cash provided by operating activities |  |        | 38,573       |        |   |        | 27,159  |        |   |        | 28,439 |  
|                                      |                                                                                              |                                          |                                     |                                   |                                           |  |        |              |       
|CASH FLOWS FROM INVESTING ACTIVITIES: |                                                                                              |                                          |                                     |                                   |                                           |  |        |              |        |   |        |        
|                                      | Purchase of property and equipment                                                           |                                          |                                     | (9,901                            | )                                         |  |        | (7,904       | )      |   |        | (7,969  | )     
|                                      | Proceeds from sale of property and equipment                                                 |                                          |                                     | 2,515                             |                                           |  |        | 585          |        |   |        | 809     |       
|                                      | Purchase of contract rights                                                                  |                                          |                                     | (37,660                           | )                                         |  |        | (16,029      | )      |   |        | (15,900 | )     
|                                      | Return of unamortized capital investment                                                     |                                          |                                     |                                  |                                           |  |        |             |        |   |        | 16,531  |       
|                                      |                                                                                              |                                          |                                     |                                   |                                           |  |        |              |       
|                                      |                                                                                              |                                          |                                     |                                   | Net cash used in investing activities     |  |        | (45,046      | )      |   |        | (23,348 | )      |   |        | (6,529 | )
|                                      |                                                                                              |                                          |                                     |                                   |                                           |  |        |              |       



F-7



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##### Table of Contents



CENTERPLATE, INC.


CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)


YEARS ENDED DECEMBER 31, 2002, DECEMBER 30, 2003,
AND DECEMBER 28, 2004


|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |       |  |       |         |         |  
|-------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | --------------------------------------------------- | ------ | ------ | ------------ |  | ------ | ------------ | ----- |  | ----- | ------- | ------- | -
|                                                               |                                                                                            | Years Ended                                         |       
|                                                               |                                                                                            |                                                     |       
|                                                               |                                                                                            | December 31,                                        |        |        | December 30, |  |        | December 28, |      
|                                                               |                                                                                            | 2002                                                |        |        | 2003         |  |        | 2004         |      
|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |      
|                                                               |                                                                                            | (In thousands)                                      |       
|CASH FLOWS FROM FINANCING ACTIVITIES:                          |                                                                                            |                                                     |        |        |              |  |        |              |       |  |       |        
|                                                               | Net borrowings (payments)  revolving loans                                                |                                                     | $      | 2,250  |              |  | $      | (11,000      | )     |  | $     | (4,000  | )      
|                                                               | Principal payments on long-term debt                                                       |                                                     |        | (1,150 | )            |  |        | (110,400     | )     |  |       |        |        
|                                                               | Proceeds from issuance of long-term debt                                                   |                                                     |        |       |              |  |        | 65,000       |       |  |       |        |        
|                                                               | Proceeds from issuance of stock, net                                                       |                                                     |        |       |              |  |        | 151,517      |       |  |       |        |        
|                                                               | Proceeds from issuance of subordinated notes                                               |                                                     |        |       |              |  |        | 105,245      |       |  |       |        |        
|                                                               | Payment of existing subordinated notes                                                     |                                                     |        |       |              |  |        | (87,750      | )     |  |       | (12,250 | )      
|                                                               | Repurchase of stock                                                                        |                                                     |        |       |              |  |        | (71,440      | )     |  |       |        |        
|                                                               | Proceeds from loans to related parties                                                     |                                                     |        |       |              |  |        | 1,241        |       |  |       |        |        
|                                                               | Payments of debt issuance costs                                                            |                                                     |        |       |              |  |        | (12,837      | )     |  |       | (267    | )      
|                                                               | Restricted cash                                                                            |                                                     |        |       |              |  |        | (22,048      | )     |  |       | 13,628  |        
|                                                               | Principal payments on capital lease obligations                                            |                                                     |        | (267   | )            |  |        |             |       |  |       |        |        
|                                                               | Payments of financing costs                                                                |                                                     |        |       |              |  |        |             |       |  |       | (504    | )      
|                                                               | Increase in bank overdrafts                                                                |                                                     |        | 968    |              |  |        | 1,282        |       |  |       | 1,666   |        
|                                                               | Loans to related parties                                                                   |                                                     |        | (96    | )            |  |        | (66          | )     |  |       |        |        
|                                                               | Dividend payments                                                                          |                                                     |        |       |              |  |        |             |       |  |       | (18,335 | )      
|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |      
|                                                               |                                                                                            | Net cash provided by (used in) financing activities |        |        | 1,705        |  |        |              | 8,744 |  |       |         | (20,062 | )
|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |      
|INCREASE (DECREASE) IN CASH                                    |                                                                                            |                                                     | (4,768 | )      |              |  | 12,555 |              |       |  | 1,848 |        
|CASH AND CASH EQUIVALENTS:                                     |                                                                                            |                                                     |        |        |              |  |        |              |       |  |       |        
|                                                               | Beginning of year                                                                          |                                                     |        | 15,142 |              |  |        | 10,374       |       |  |       | 22,929  |        
|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |      
|                                                               | End of year                                                                                |                                                     | $      | 10,374 |              |  | $      | 22,929       |       |  | $     | 24,777  |        
|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |      
|SUPPLEMENTAL CASH FLOW INFORMATION:                            |                                                                                            |                                                     |        |        |              |  |        |              |       |  |       |        
|                                                               | Interest paid                                                                              |                                                     | $      | 18,493 |              |  | $      | 35,029       |       |  | $     | 22,209  |        
|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |      
|                                                               | Income taxes paid                                                                          |                                                     | $      | 188    |              |  | $      | 125          |       |  | $     | 124     |        
|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |      
|SUPPLEMENTAL NON CASH FLOW INVESTING AND FINANCING ACTIVITIES: |                                                                                            |                                                     |        |        |              |  |        |              |       |  |       |        
|                                                               | Reduction in cost of net assets acquired due to the recognition
    of acquired tax assets |                                                     | $      |       |              |  | $      |             |       |  | $     | 5,314   |        
|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |      
|                                                               | Capital investment commitment                                                              |                                                     | $      |       |              |  | $      |             |       |  | $     | 1,744   |        
|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |      
|                                                               | Dividends declared and unpaid                                                              |                                                     | $      |       |              |  | $      | 1,982        |       |  | $     | 1,487   |        
|                                                               |                                                                                            |                                                     |        |        |              |  |        |              |      



F-8



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##### Table of Contents






CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


YEARS ENDED DECEMBER 31, 2002, DECEMBER 30, 2003
AND DECEMBER 28, 2004




|   |        
|-- | -------
|1. | GENERAL









|   |                                           
|-- | ------------------------------------------
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation


Fiscal Year


Cash and Cash Equivalents


Restricted Cash


Revenue Recognition


Merchandise Inventories


F-9



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##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Depreciation




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

Contract Rights


Cost in Excess of Net Assets Acquired and
Trademarks




Deferred Financing Costs


Impairment of Long-Lived Assets and Contract
Losses


F-10



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##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Accounting Treatment for IDSs, Common Stock Owned by Initial
Equity Investors and Derivative Financial
Instruments






F-11



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##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Insurance




Cash Overdrafts


Dividends


Foreign Currency


Transaction Related Expenses


Interest


Income Taxes


F-12



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Segment Reporting


Reclassifications


Noncash Compensation


New Accounting Standards






|   |                                    
|-- | -----------------------------------
|3. | SIGNIFICANT RISKS AND UNCERTAINTIES

Use of Estimates


Certain Risk Concentrations




F-13



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##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |     
|-- | ----
|4. | DEBT



|                                                |  |                |         |   |      |   |         | 
|----------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | 
|                                                |  | 2003           |         |   | 2004 |  
|                                                |  |                |         |   |      |  
|                                                |  | (In thousands) |        
|VSA senior subordinated notes  Issued in 1999  |  | $              | 12,250  |   |      | $ |        | 
|Term Loans  2003 Credit Agreement              |  |                | 65,000  |   |      |   | 65,000  | 
|Revolving loans  2003 Credit Agreement         |  |                | 4,000   |   |      |   |        | 
|Centerplate subordinated notes  Issued in 2003 |  |                | 105,245 |   |      |   | 105,245 | 
|                                                |  |                |         |   |      |  
|                                                |  |                | 186,495 |   |      |   | 170,245 | 
|Less  current portion of long-term debt        |  |                | (16,250 | ) |      |   |        | 
|                                                |  |                |         |   |      |  
|Total long-term debt                            |  | $              | 170,245 |   |      | $ | 170,245 | 
|                                                |  |                |         |   |      |  

1998 Credit Agreement


Senior Subordinated Notes Issued in 1999




F-14



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##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Initial Public Offering


2003 Credit Agreement




Subordinated Notes Issued in 2003


Use of Proceeds


F-15



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|           |  |   |         | 
|---------- |  | - | ------- | 
|2005       |  |   |        | 
|2006       |  |   |        | 
|2007       |  |   |        | 
|2008       |  | $ | 65,000  | 
|2009       |  |   |        | 
|Thereafter |  |   | 105,245 | 
|           |  |   |        
|Total      |  | $ | 170,245 | 
|           |  |   |        



|   |             
|-- | ------------
|5. | INCOME TAXES

|                                                                                                                   |                                                        |                |        |        |      |   |        |        |  
|------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------ | -------------- | ------ | ------ | ---- | - | ------ | ------ | -
|                                                                                                                   |                                                        | 2003           |        |        | 2004 |  
|                                                                                                                   |                                                        |                |        |        |      |  
|                                                                                                                   |                                                        | (In thousands) |       
|Deferred tax liabilities:                                                                                          |                                                        |                |        |        |      |   |        |       
|                                                                                                                   | Intangibles (goodwill, contract rights and trademarks) |                | $      | (5,298 | )    |   | $      | (6,489 | )
|                                                                                                                   | Differences between book and tax basis of property     |                |        | (1,569 | )    |   |        | (1,804 | )
|                                                                                                                   | Other                                                  |                |        | (875   | )    |   |        | (445   | )
|                                                                                                                   |                                                        |                |        |        |      |  
|                                                                                                                   |                                                        |                | (7,742 | )      |      |   | (8,738 | )     
|                                                                                                                   |                                                        |                |        |        |      |  
|Deferred tax assets:                                                                                               |                                                        |                |        |        |      |   |        |       
|                                                                                                                   | Bad debt reserves                                      |                |        | 108    |      |   |        | 154    |  
|                                                                                                                   | Inventory reserves                                     |                |        | 60     |      |   |        | 186    |  
|                                                                                                                   | Other reserves and accrued liabilities                 |                |        | 3,963  |      |   |        | 5,597  |  
|                                                                                                                   | General business and AMT credit carryforwards          |                |        | 5,167  |      |   |        | 7,988  |  
|                                                                                                                   | Accrued compensation and vacation                      |                |        | 2,314  |      |   |        | 1,333  |  
|                                                                                                                   | Net operating loss carryforward                        |                |        | 3,041  |      |   |        | 6,977  |  
|                                                                                                                   |                                                        |                |        |        |      |  
|                                                                                                                   |                                                        |                | 14,653 |        |      |   | 22,235 |       
|Net deferred tax asset                                                                                             |                                                        | $              | 6,911  |        |      | $ | 13,497 |       
|                                                                                                                   |                                                        |                |        |        |      |  
|Net deferred tax asset is recognized as follows in the
    accompanying 2003 and 2004 consolidated balance sheets: |                                                        |                |        |        |      |   |        |       
|                                                                                                                   | Current deferred tax asset                             |                | $      | 4,121  |      |   | $      | 5,238  |  
|                                                                                                                   | Noncurrent deferred tax asset                          |                |        | 2,790  |      |   |        | 8,259  |  
|                                                                                                                   |                                                        |                |        |        |      |  
|Net deferred tax asset                                                                                             |                                                        | $              | 6,911  |        |      | $ | 13,497 |       
|                                                                                                                   |                                                        |                |        |        |      |  



F-16



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##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                               |  |                   |      |   |              |   |        |              |  |   |        |  
|------------------------------ |  | ----------------- | ---- | - | ------------ | - | ------ | ------------ |  | - | ------ | -
|                               |  | Fiscal Year Ended |     
|                               |  |                   |     
|                               |  | December 31,      |      |   | December 30, |   |        | December 28, | 
|                               |  | 2002              |      |   | 2003         |   |        | 2004         | 
|                               |  |                   |      |   |              |   |        |              | 
|                               |  | (In thousands)    |     
|Current provision (benefit)    |  | $                 | (187 | ) |              | $ | (159   | )            |  | $ | 305    |  
|Deferred benefit               |  |                   |     |   |              |   | (6,178 | )            |  |   | (1,272 | )
|                               |  |                   |      |   |              |   |        |              | 
|Total benefit for income taxes |  | $                 | (187 | ) |              | $ | (6,337 | )            |  | $ | (967   | )
|                               |  |                   |      |   |              |   |        |              | 



|                               |                                                  |                   |    |     |              |  |     |              |   |  |     |      |  
|------------------------------ | ------------------------------------------------ | ----------------- | -- | --- | ------------ |  | --- | ------------ | - |  | --- | ---- | -
|                               |                                                  | Fiscal Year Ended |   
|                               |                                                  |                   |   
|                               |                                                  | December 31,      |    |     | December 30, |  |     | December 28, |  
|                               |                                                  | 2002              |    |     | 2003         |  |     | 2004         |  
|                               |                                                  |                   |    |     |              |  |     |              |  
|Statutory rate                 |                                                  |                   | 34 | %   |              |  | (34 | )%           |   |  | 34  | %   
|Differences:                   |                                                  |                   |    |     |              |  |     |              |   |  |     |     
|                               | State income taxes                               |                   |    | 2   |              |  |     | (4           | ) |  |     | 20   |  
|                               | Nondeductible expenses (meals and entertainment) |                   |    | 2   |              |  |     | 1            |   |  |     | 9    |  
|                               | Adjustment to valuation allowance                |                   |    | (31 | )            |  |     | (9           | ) |  |     |     |  
|                               | Non-cash interest expense                        |                   |    |    |              |  |     |             |   |  |     | 51   |  
|                               | Federal tax credits                              |                   |    | (5  | )            |  |     | (13          | ) |  |     | (142 | )
|                               | Reserve for potential tax assessments            |                   |    | (9  | )            |  |     |             |   |  |     | (44  | )
|                               | Nondeductible compensation                       |                   |    | 4   |              |  |     |             |   |  |     |     |  
|                               | Other                                            |                   |    | (1  | )            |  |     |             |   |  |     |     |  
|                               |                                                  |                   |    |     |              |  |     |              |  
|Total benefit for income taxes |                                                  |                   | (4 | )%  |              |  | (59 | )%           |   |  | (72 | )%  
|                               |                                                  |                   |    |     |              |  |     |              |  





F-17



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                    
|-- | -------------------
|6. | EQUITY TRANSACTIONS

Loans to Related Parties


Noncash Compensation




|   |                                    
|-- | -----------------------------------
|7. | FAIR VALUE OF FINANCIAL INSTRUMENTS



Long-Term Debt


|                 |                     |                       |  |   |      |  |  |      |   |  |      |   |   |      |   |      |            |   |  |       |   |  |   |       |       |   |   |       |   | 
|---------------- | ------------------- | --------------------- |  | - | ---- |  |  | ---- | - |  | ---- | - | - | ---- | - | ---- | ---------- | - |  | ----- | - |  | - | ----- | ----- | - | - | ----- | - | 
|                 |                     | 2005                  |  |   | 2006 |  |  | 2007 |   |  | 2008 |   |   | 2009 |   |      | Thereafter |   |  | Total |  
|                 |                     |                       |  |   |      |  |  |      |   |  |      |   |   |      |   |      |            |   |  |       |  
|                 |                     | (Dollars in millions) | 
|Fixed rate debt: |                     |                       |  |   |      |  |  |      |   |  |      |   |   |      |   |      |            |   |  |       |   |  |   |       |       |   |   |      
|                 | Represented by IDSs |                       |  |  |      |  |  |     |   |  |      |  |   |      |   |     |            |   |  |      |   |  | $ | 105.2 |       |   | $ | 105.2 |  
|                 |                     | Average interest rate |  |   |     |  |  |      |  |  |      |   |  |      |   |      |           |   |  |       |  |  |   |       | 13.50 | % |   |       |  | 
|                 | Term Loans          |                       |  |  |      |  |  |     |   |  |      |  |   |      | $ | 65.0 |            |   |  |      |   |  |   |      |       |   | $ | 65.0  |  
|                 |                     | Average interest rate |  |   |     |  |  |      |  |  |      |   |  |      |   |      | 7.24       | % |  |       |  |  |   |       |      |   |   |       |  | 

Current Assets and Current Liabilities


F-18



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                              
|-- | -----------------------------
|8. | COMMITMENTS AND CONTINGENCIES

Leases and Client Contracts






|           |  |                |       |             |           |   |        | 
|---------- |  | -------------- | ----- | ----------- | --------- | - | ------ | 
|           |  |                |       | Commissions |          
|           |  | Operating      |       |             | and       |  
|Year       |  | Leases         |       |             | Royalties |  
|           |  |                |       |             |           |  
|           |  | (In thousands) |      
|2005       |  | $              | 724   |             |           | $ | 8,010  | 
|2006       |  |                | 646   |             |           |   | 5,883  | 
|2007       |  |                | 314   |             |           |   | 3,323  | 
|2008       |  |                | 159   |             |           |   | 3,167  | 
|2009       |  |                | 33    |             |           |   | 3,088  | 
|Thereafter |  |                |      |             |           |   | 18,033 | 
|           |  |                |       |             |           |  
|Total      |  | $              | 1,876 |             |           | $ | 41,504 | 
|           |  |                |       |             |           |  

Employment Contracts


Commitments




F-19



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|          |  |      |       |  |      |                |       |      |  |   |       |  |  |      |     |  |            |   |     |       |  |   |     |  |  |   |       | 
|--------- |  | ---- | ----- |  | ---- | -------------- | ----- | ---- |  | - | ----- |  |  | ---- | --- |  | ---------- | - | --- | ----- |  | - | --- |  |  | - | ----- | 
|          |  | 2006 |       |  | 2007 |                |       | 2008 |  |   | 2009  |  |  | 2010 |     |  | Thereafter |   |     | Total | 
|          |  |      |       |  |      |                |       |      |  |   |       |  |  |      |     |  |            |   |     |       | 
|          |  |      |       |  |      | (In thousands) |       |      |  |   |      
|Insurance |  |      | 2,115 |  |      |                | 1,579 |      |  |   | 1,219 |  |  |      | 285 |  |            |   | 221 |       |  |   | 262 |  |  |   | 5,681 | 
|Other     |  |      | 425   |  |      |                | 86    |      |  |   | 60    |  |  |      | 40  |  |            |   | 40  |       |  |   | 0   |  |  |   | 651   | 
|          |  |      |       |  |      |                |       |      |  |   |       |  |  |      |     |  |            |   |     |       | 
|Total     |  | $    | 2,540 |  |      | $              | 1,665 |      |  | $ | 1,279 |  |  | $    | 325 |  |            | $ | 261 |       |  | $ | 262 |  |  | $ | 6,332 | 
|          |  |      |       |  |      |                |       |      |  |   |       |  |  |      |     |  |            |   |     |       | 

Contingencies


Litigation




Holden v. Volume Services America, Inc. et al.


Perez v. Volume Services Inc, d/b/a Centerplate, Perez


F-20



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Holden. Holden. Holden, Perez, Perez






|   |                           
|-- | --------------------------
|9. | RELATED PARTY TRANSACTIONS

Management Fees




Leasing Services


Financing Commitment Letter




|    |              
|--- | -------------
|10. | BENEFIT PLANS



Long-Term Performance Plan




F-21



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Multi-Employer Pension Plans




|    |                        
|--- | -----------------------
|11. | CONTRACT RELATED LOSSES





|    |             
|--- | ------------
|12. | OTHER INCOME





|    |                                
|--- | -------------------------------
|13. | EXECUTIVE EMPLOYMENT AGREEMENTS



F-22



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |            
|--- | -----------
|14. | STOCK SPLIT





|    |                        
|--- | -----------------------
|15. | DEMAND FOR REGISTRATION







|    |                  
|--- | -----------------
|16. | SUBSEQUENT EVENTS



F-23



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                                            
|--- | -------------------------------------------
|17. | QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)



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

|                                     |  |                |         |   |         |   |         |         |  |   |         |   |  |       |         |   |  |   |         |  
|------------------------------------ |  | -------------- | ------- | - | ------- | - | ------- | ------- |  | - | ------- | - |  | ----- | ------- | - |  | - | ------- | -
|                                     |  | First          |         |   | Second  |   |         | Third   |  |   | Fourth  |   |  |      
|Year Ended December 28, 2004         |  | Quarter        |         |   | Quarter |   |         | Quarter |  |   | Quarter |   |  | Total |        
|                                     |  |                |         |   |         |   |         |         |  |   |         |   |  |       |        
|                                     |  | (In thousands) |        
|Net sales                            |  | $              | 98,236  |   |         | $ | 173,725 |         |  | $ | 201,066 |   |  | $     | 134,127 |   |  | $ | 607,154 |  
|Cost of sales                        |  |                | 82,147  |   |         |   | 140,546 |         |  |   | 161,933 |   |  |       | 107,836 |   |  |   | 492,462 |  
|Selling, general, and administrative |  |                | 13,547  |   |         |   | 15,596  |         |  |   | 17,514  |   |  |       | 14,883  |   |  |   | 61,540  |  
|Depreciation and amortization        |  |                | 6,878   |   |         |   | 6,601   |         |  |   | 6,656   |   |  |       | 6,509   |   |  |   | 26,644  |  
|Contract related losses              |  |                |        |   |         |   | 121     |         |  |   |        |   |  |       | 290     |   |  |   | 411     |  
|                                     |  |                |         |   |         |   |         |         |  |   |         |   |  |       |        
|Operating income (loss)              |  |                | (4,336  | ) |         |   | 10,861  |         |  |   | 14,963  |   |  |       | 4,609   |   |  |   | 26,097  |  
|Interest expense, net                |  |                | 6,976   |   |         |   | 7,052   |         |  |   | 4,759   |   |  |       | 6,223   |   |  |   | 25,010  |  
|Other income, net                    |  |                | (57     | ) |         |   | (38     | )       |  |   | (75     | ) |  |       | (96     | ) |  |   | (266    | )
|                                     |  |                |         |   |         |   |         |         |  |   |         |   |  |       |        
|Income (loss) before income taxes    |  |                | (11,255 | ) |         |   | 3,847   |         |  |   | 10,279  |   |  |       | (1,518  | ) |  |   | 1,353   |  
|Income tax provision (benefit)       |  |                | (2,078  | ) |         |   | (1,547  | )       |  |   | 4,546   |   |  |       | (1,888  | ) |  |   | (967    | )
|                                     |  |                |         |   |         |   |         |         |  |   |         |   |  |       |        
|Net income (loss)                    |  | $              | (9,177  | ) |         | $ | 5,394   |         |  | $ | 5,733   |   |  | $     | 370     |   |  | $ | 2,320   |  
|                                     |  |                |         |   |         |   |         |         |  |   |         |   |  |       |        

F-24



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                
|--- | -----------------------------------------------
|18. | NON-GUARANTOR SUBSIDIARIES FINANCIAL STATEMENTS

1 4




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

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

F-25



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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

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

F-26



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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

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

F-27



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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

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

F-28



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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

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

F-29



---



##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                             
| | ------------------------------------------------------------
| | Consolidating Condensed Balance Sheet, December 28,
    2004

|                                                                                                             |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |       |       |       |   |         |          |         | 
|------------------------------------------------------------------------------------------------------------ | -------------------------- | --------------------------------------- | ------- | --------- | ------------ | - | ------------- | ------------ | ------- | - | ------------ | ----- | ----- | ------------ | ----- | ----- | ----- | - | ------- | -------- | ------- | 
|                                                                                                             |                            |                                         |         | Combined  |              |   | Combined      |              |         |   |              |      
|                                                                                                             |                            |                                         |         | Guarantor |              |   | Non-Guarantor |              |         |   |              |      
|                                                                                                             |                            | Centerplate                             |         |           | Subsidiaries |   |               | Subsidiaries |         |   | Eliminations |       |       | Consolidated |      
|                                                                                                             |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |      
|                                                                                                             |                            | (In thousands)                          |        
|ASSETS                                                                                                      
|Current assets:                                                                                              |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |       |       |       |   |         |         
|                                                                                                             | Cash and cash equivalents  |                                         | $       | 195       |              |   | $             | 24,142       |         |   | $            | 440   |       |              | $     |      |       |   | $       | 24,777   |        
|                                                                                                             | Accounts receivable        |                                         |         |          |              |   |               | 19,840       |         |   |              | 2,036 |       |              |       |      |       |   |         | 21,876   |        
|                                                                                                             | Other current assets       |                                         |         | 7         |              |   |               | 23,724       |         |   |              | 1,371 |       |              |       |      |       |   |         | 25,102   |        
|                                                                                                             |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |      
|                                                                                                             |                            | Total current assets                    |         |           | 202          |   |               |              | 67,706  |   |              |       | 3,847 |              |       |       |      |   |         |          | 71,755  | 
|Property and equipment, net                                                                                  |                            |                                         |        |           |              |   | 44,591        |              |         |   | 3,631        |       |       |              |      |       |       |   | 48,222  |         
|Contract rights, net                                                                                         |                            |                                         | 253     |           |              |   | 86,908        |              |         |   | 820          |       |       |              |      |       |       |   | 87,981  |         
|Cost in excess of net assets acquired                                                                        |                            |                                         | 6,974   |           |              |   | 34,168        |              |         |   |             |       |       |              |      |       |       |   | 41,142  |         
|Intercompany receivable (payable)                                                                            |                            |                                         | 152,899 |           |              |   | (147,525      | )            |         |   | (5,374       | )     |       |              |      |       |       |   |        |         
|Investment in subsidiaries                                                                                   |                            |                                         | (6,847  | )         |              |   |              |              |         |   |             |       |       |              | 6,847 |       |       |   |        |         
|Other assets                                                                                                 |                            |                                         | 9,462   |           |              |   | 39,567        |              |         |   | 917          |       |       |              |      |       |       |   | 49,946  |         
|                                                                                                             |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |      
|Total assets                                                                                                 |                            | $                                       | 162,943 |           |              | $ | 125,415       |              |         | $ | 3,841        |       |       | $            | 6,847 |       |       | $ | 299,046 |         
|                                                                                                             |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |      
|                                                                                                            
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)                                                           
|Current liabilities                                                                                          |                            | $                                       | 6,607   |           |              | $ | 60,669        |              |         | $ | 2,967        |       |       | $            |      |       |       | $ | 70,243  |         
|Long-term debt                                                                                               |                            |                                         | 105,245 |           |              |   | 65,000        |              |         |   |             |       |       |              |      |       |       |   | 170,245 |         
|Other liabilities                                                                                            |                            |                                         |        |           |              |   | 6,332         |              |         |   |             |       |       |              |      |       |       |   | 6,332   |         
|                                                                                                             |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |      
|                                                                                                             |                            | Total liabilities                       |         |           | 111,852      |   |               |              | 132,001 |   |              |       | 2,967 |              |       |       |      |   |         |          | 246,820 | 
|                                                                                                             |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |      
|Common stock with conversion option, par value $0.01
    exchangeable for subordinated debt, net of discount |                            |                                         | 14,352  |           |              |   |              |              |         |   |             |       |       |              |      |       |       |   | 14,352  |         
|Stockholders equity (deficiency):                                                                           |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |       |       |       |   |         |         
|                                                                                                             | Common stock               |                                         |         | 400       |              |   |               |             |         |   |              |      |       |              |       |      |       |   |         | 400      |        
|                                                                                                             | Additional paid-in capital |                                         |         | 218,331   |              |   |               |             |         |   |              |      |       |              |       |      |       |   |         | 218,331  |        
|                                                                                                             | Accumulated deficit        |                                         |         | (61,627   | )            |   |               | (6,586       | )       |   |              | 299   |       |              |       | 7,422 |       |   |         | (60,492  | )      
|                                                                                                             | Treasury stock and other   |                                         |         | (120,365  | )            |   |               |             |         |   |              | 575   |       |              |       | (575  | )     |   |         | (120,365 | )      
|                                                                                                             |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |      
|                                                                                                             |                            | Total stockholders equity (deficiency) |         |           | 36,739       |   |               |              | (6,586  | ) |              |       | 874   |              |       |       | 6,847 |   |         |          | 37,874  | 
|                                                                                                             |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |      
|Total liabilities and stockholders equity (deficiency)                                                      |                            | $                                       | 162,943 |           |              | $ | 125,415       |              |         | $ | 3,841        |       |       | $            | 6,847 |       |       | $ | 299,046 |         
|                                                                                                             |                            |                                         |         |           |              |   |               |              |         |   |              |       |       |              |      

F-30



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##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | Consolidating Condensed Statement of Operations and
    Comprehensive Income, Year Ended December 28, 2004

|                                                                           |  |                |         |           |              |   |               |              |  |   |              |   |  |              |        |   |  |   |         |  
|-------------------------------------------------------------------------- |  | -------------- | ------- | --------- | ------------ | - | ------------- | ------------ |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                                           |  |                |         | Combined  |              |   | Combined      |              |  |   |              |  
|                                                                           |  |                |         | Guarantor |              |   | Non-Guarantor |              |  |   |              |  
|                                                                           |  | Centerplate    |         |           | Subsidiaries |   |               | Subsidiaries |  |   | Eliminations |   |  | Consolidated |       
|                                                                           |  |                |         |           |              |   |               |              |  |   |              |   |  |              |       
|                                                                           |  | (In thousands) |        
|Net sales                                                                  |  | $              |        |           |              | $ | 566,653       |              |  | $ | 40,501       |   |  | $            |       |   |  | $ | 607,154 |  
|Cost of sales                                                              |  |                |        |           |              |   | 458,692       |              |  |   | 33,770       |   |  |              |       |   |  |   | 492,462 |  
|Selling, general, and administrative                                       |  |                | 1,184   |           |              |   | 55,294        |              |  |   | 5,062        |   |  |              |       |   |  |   | 61,540  |  
|Depreciation and amortization                                              |  |                | 109     |           |              |   | 25,484        |              |  |   | 1,051        |   |  |              |       |   |  |   | 26,644  |  
|Contract related losses                                                    |  |                |        |           |              |   | 411           |              |  |   |             |   |  |              |       |   |  |   | 411     |  
|                                                                           |  |                |         |           |              |   |               |              |  |   |              |   |  |              |       
|Operating income (loss)                                                    |  |                | (1,293  | )         |              |   | 26,772        |              |  |   | 618          |   |  |              |       |   |  |   | 26,097  |  
|Interest expense                                                           |  |                | 17,408  |           |              |   | 7,602         |              |  |   |             |   |  |              |       |   |  |   | 25,010  |  
|Intercompany interest, net                                                 |  |                | (15,611 | )         |              |   | 15,611        |              |  |   |             |   |  |              |       |   |  |   |        |  
|Other income, net                                                          |  |                | (4      | )         |              |   | (258          | )            |  |   | (4           | ) |  |              |       |   |  |   | (266    | )
|                                                                           |  |                |         |           |              |   |               |              |  |   |              |   |  |              |       
|Income (loss) before income taxes                                          |  |                | (3,086  | )         |              |   | 3,817         |              |  |   | 622          |   |  |              |       |   |  |   | 1,353   |  
|Income tax benefit                                                         |  |                | (945    | )         |              |   | (22           | )            |  |   |             |   |  |              |       |   |  |   | (967    | )
|Equity in earnings of subsidiaries                                         |  |                | 3,326   |           |              |   |              |              |  |   |             |   |  |              | (3,326 | ) |  |   |        |  
|                                                                           |  |                |         |           |              |   |               |              |  |   |              |   |  |              |       
|Net income                                                                 |  |                | 1,185   |           |              |   | 3,839         |              |  |   | 622          |   |  |              | (3,326 | ) |  |   | 2,320   |  
|Accretion of conversion option                                             |  |                | (317    | )         |              |   |              |              |  |   |             |   |  |              |       |   |  |   | (317    | )
|                                                                           |  |                |         |           |              |   |               |              |  |   |              |   |  |              |       
|Net income available to common stock with or without conversion
    option |  |                | 868     |           |              |   | 3,839         |              |  |   | 622          |   |  |              | (3,326 | ) |  |   | 2,003   |  
|                                                                           |  |                |         |           |              |   |               |              |  |   |              |   |  |              |       
|Net income                                                                 |  |                | 1,185   |           |              |   | 3,839         |              |  |   | 622          |   |  |              | (3,326 | ) |  |   | 2,320   |  
|Other comprehensive income foreign currency translation
    adjustment     |  |                |        |           |              |   |              |              |  |   | 351          |   |  |              |       |   |  |   | 351     |  
|                                                                           |  |                |         |           |              |   |               |              |  |   |              |   |  |              |       
|Comprehensive income                                                       |  | $              | 1,185   |           |              | $ | 3,839         |              |  | $ | 973          |   |  | $            | (3,326 | ) |  | $ | 2,671   |  
|                                                                           |  |                |         |           |              |   |               |              |  |   |              |   |  |              |       

F-31



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##### Table of Contents



CENTERPLATE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                                                  
| | ---------------------------------------------------------------------------------
| | Consolidating Condensed Statement of Cash Flows, Year
    Ended December 28, 2004

|                                                      |                                                     |                                                     |      |           |              |   |               |              |         |   |              |        |        |   |        |         |         |  
|----------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ---- | --------- | ------------ | - | ------------- | ------------ | ------- | - | ------------ | ------ | ------ | - | ------ | ------- | ------- | -
|                                                      |                                                     |                                                     |      | Combined  |              |   | Combined      |              |         |  
|                                                      |                                                     |                                                     |      | Guarantor |              |   | Non-Guarantor |              |         |  
|                                                      |                                                     | Centerplate                                         |      |           | Subsidiaries |   |               | Subsidiaries |         |   | Consolidated |       
|                                                      |                                                     |                                                     |      |           |              |   |               |              |         |   |              |       
|                                                      |                                                     | (In thousands)                                      |     
|Cash flows Provided by (used in) operating activities |                                                     | $                                                   | (456 | )         |              | $ | 25,916        |              |         | $ | 2,979        |        |        | $ | 28,439 |        
|                                                      |                                                     |                                                     |      |           |              |   |               |              |         |   |              |       
|Cash flows from investing activities:                 |                                                     |                                                     |      |           |              |   |               |              |         |   |              |        |        |   |        |        
|                                                      | Purchase of property and equipment                  |                                                     |      |          |              |   |               | (6,987       | )       |   |              | (982   | )      |   |        | (7,969  | )      
|                                                      | Proceeds from sale of property, plant and equipment |                                                     |      |          |              |   |               | 702          |         |   |              | 107    |        |   |        | 809     |        
|                                                      | Contract rights acquired, net                       |                                                     |      |          |              |   |               | (15,900      | )       |   |              |       |        |   |        | (15,900 | )      
|                                                      | Return of unamortized capital investment            |                                                     |      |          |              |   |               | 16,531       |         |   |              |       |        |   |        | 16,531  |        
|                                                      |                                                     |                                                     |      |           |              |   |               |              |         |   |              |       
|                                                      |                                                     | Net cash used in investing activities               |      |           |             |   |               |              | (5,654  | ) |              |        | (875   | ) |        |         | (6,529  | )
|                                                      |                                                     |                                                     |      |           |              |   |               |              |         |   |              |       
|Cash flows from financing activities:                 |                                                     |                                                     |      |           |              |   |               |              |         |   |              |        |        |   |        |        
|                                                      | Net repayments  revolving loans                    |                                                     |      |          |              |   |               | (4,000       | )       |   |              |       |        |   |        | (4,000  | )      
|                                                      | Payment of existing subordinated notes              |                                                     |      |          |              |   |               | (12,250      | )       |   |              |       |        |   |        | (12,250 | )      
|                                                      | Payments of debt issuance costs                     |                                                     |      | (267      | )            |   |               |             |         |   |              |       |        |   |        | (267    | )      
|                                                      | Transfers from restricted cash                      |                                                     |      |          |              |   |               | 13,628       |         |   |              |       |        |   |        | 13,628  |        
|                                                      | Payments of financing costs                         |                                                     |      | (263      | )            |   |               | (241         | )       |   |              |       |        |   |        | (504    | )      
|                                                      | Increase in bank overdrafts                         |                                                     |      |          |              |   |               | 1,666        |         |   |              |       |        |   |        | 1,666   |        
|                                                      | Dividend payments                                   |                                                     |      | (18,335   | )            |   |               |             |         |   |              |       |        |   |        | (18,335 | )      
|                                                      | Change in intercompany, net                         |                                                     |      | 19,324    |              |   |               | (17,427      | )       |   |              | (1,897 | )      |   |        |        |        
|                                                      |                                                     |                                                     |      |           |              |   |               |              |         |   |              |       
|                                                      |                                                     | Net cash provided by (used in) financing activities |      |           | 459          |   |               |              | (18,624 | ) |              |        | (1,897 | ) |        |         | (20,062 | )
|                                                      |                                                     |                                                     |      |           |              |   |               |              |         |   |              |       
|Increase in cash                                      |                                                     |                                                     | 3    |           |              |   | 1,638         |              |         |   | 207          |        |        |   | 1,848  |        
|Cash and cash equivalents:                            |                                                     |                                                     |      |           |              |   |               |              |         |   |              |        |        |   |        |        
|                                                      | Beginning of period                                 |                                                     |      | 192       |              |   |               | 22,504       |         |   |              | 233    |        |   |        | 22,929  |        
|                                                      |                                                     |                                                     |      |           |              |   |               |              |         |   |              |       
|                                                      | End of period                                       |                                                     | $    | 195       |              |   | $             | 24,142       |         |   | $            | 440    |        |   | $      | 24,777  |        
|                                                      |                                                     |                                                     |      |           |              |   |               |              |         |   |              |       

F-32



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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of disclosure controls and procedures.


Changes in internal control over financial reporting.


Managements Report on Internal Control Over Financial
Reporting.




| |   |                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of Centerplate;                                                                                                                                                                                          
|
| |  | provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of Centerplate are being made
    only in accordance with authorizations of management and
    directors of Centerplate; and
|
| |  | provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of
    Centerplates assets that could have a material effect on
    the financial statements.                                                                                                                                       



Internal Control  Integrated Framework.




33



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Report of Independent Registered Public Accounting Firm.




Internal Control 
Integrated Framework








Internal
Control  Integrated Framework Internal Control  Integrated
Framework


34



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|         |                   
|-------- | ------------------
|Item 9B. | Other Information.






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



|                    |  |     |    |  |          |                                                                
|------------------- |  | --- | -- |  | -------- | ---------------------------------------------------------------
|Name                |  | Age |    |  | Position
|                    |  |     |    |  |         
|Lawrence E. Honig   |  |     | 57 |  |          | Chairman of the Board of Directors and Chief Executive Officer 
|Felix P. Chee       |  |     | 58 |  |          | Director                                                       
|Sue Ling Gin        |  |     | 63 |  |          | Director                                                       
|Alfred Poe          |  |     | 55 |  |          | Director                                                       
|Peter F. Wallace    |  |     | 29 |  |          | Director                                                       
|David M. Williams   |  |     | 63 |  |          | Director                                                       
|Glenn R. Zander     |  |     | 58 |  |          | Director                                                       
|Janet L. Steinmayer |  |     | 49 |  |          | President, General Counsel and Secretary                       
|Kenneth R. Frick    |  |     | 49 |  |          | Executive Vice President, Chief Financial Officer and Treasurer

Lawrence E. Honig


Felix P. Chee


35



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Sue Ling Gin


Alfred Poe


Peter F. Wallace


David M. Williams


Glenn R. Zander


Janet L. Steinmayer


36



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Kenneth R. Frick


Composition of the Board






Committees of the Board




Section 16(a) Beneficial Ownership Reporting
Compliance




Code of Ethics




37



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|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



| |                          
| | -------------------------
| | Compensation of Directors





| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |  | $30,000 per year;                                                                                                          
|
| |  | An additional $1,000 for attending board meetings in person
    ($500 if by telephone);                                    
|
| |  | An additional $500 for attending committee meetings of the board
    of directors in person ($250 if by telephone); and    
|
| |  | If serving as a committee chair, an additional $500 for
    attending a committee meeting in person ($250 if by telephone).



| |                                   
| | ----------------------------------
| | Compensation of Executive Officers



Summary Compensation Table


|                            |                                    |                     |      |           |        |   |         |         |     |   |              |         |  |   |        |           |    
|--------------------------- | ---------------------------------- | ------------------- | ---- | --------- | ------ | - | ------- | ------- | --- | - | ------------ | ------- |  | - | ------ | --------- | ---
|                            |                                    | Annual Compensation |     
|                            |                                    |                     |     
|                            |                                    |                     |      | All Other |       
|Name and Principal Position |                                    | Year                |      |           | Salary |   |         | Bonus   |     |   | Compensation |        
|                            |                                    |                     |      |           |        |   |         |         |     |   |              |        
|Lawrence E. Honig(1)        |                                    |                     | 2004 |           |        | $ | 450,000 |         |     | $ | 221,200      |         |  | $ | 7,677  | (3)      
|                            | Chairman of the Board of Directors |                     |      | 2003      |        |   | $       | 450,000 |     |   | $            | 154,000 |  |   | $      | 1,232,668 | (3)
|                            | and Chief Executive Officer        |                     |      | 2002      |        |   | $       | 315,000 | (2) |   | $            | 150,000 |  |   | $      | 52,331    |    
|Janet L. Steinmayer         |                                    |                     | 2004 |           |        | $ | 431,125 |         |     | $ | 148,400      |         |  | $ | 13,691 | (4)      
|                            | Senior Executive Vice President,   |                     |      | 2003      |        |   | $       | 354,192 |     |   | $            | 88,300  |  |   | $      | 416,156   | (4)
|                            | General Counsel and Secretary      |                     |      | 2002      |        |   | $       | 278,654 |     |   | $            | 73,750  |  |   | $      | 890       |    
|Kenneth R. Frick            |                                    |                     | 2004 |           |        | $ | 250,000 |         |     | $ | 73,700       |         |  | $ | 16,163 | (5)      
|                            | Executive Vice President, Chief    |                     |      | 2003      |        |   | $       | 235,000 |     |   | $            | 58,600  |  |   | $      | 121,146   | (5)
|                            | Financial Officer and Treasurer    |                     |      | 2002      |        |   | $       | 225,000 |     |   | $            | 69,750  |  |   | $      | 10,798    |    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | On April 15, 2002, Mr. Honig entered into an
    employment agreement with us to serve as our chief executive
    officer at an annual base salary of $450,000. Mr. Honig was
    appointed chairman of our board of directors in December 2003.                                                                                                                                                                                           
|   
|(2) | Reflects portion of Mr. Honigs salary for the period
    beginning with his employment April 15, 2002, through the
    end of fiscal 2002.                                                                                                                                                                                                                                                                                                
|   
|(3) | The amount for 2004 consists of term life and medical insurance
    premiums, while the amount for 2003 consists of a $1,000,000
    change in control payment under Mr. Honigs employment
    agreement, a one-time $225,000 IPO-related incentive payment and
    $7,668 in term life and medical insurance premiums.
    Mr. Honig used all of the after-tax proceeds of his change
    in control payment to purchase IDSs in the IPO.
|   
|(4) | The amount for 2004 consists of term life insurance premiums,
    while the amount for 2003 consists of a one-time $410,625
    IPO-related incentive payment and $5,531 in term life insurance
    premiums.                                                                                                                                                                                                                              
|   
|(5) | The amount for 2004 consists of term life and medical insurance
    premiums, while the amount for 2003 consists of a one-time
    $104,625 IPO-related incentive payment, $3,000 in employer
    contributions to a 401(k) plan and $13,521 in term life and
    medical insurance premiums.                                                                                                                                              

38



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| |                                               
| | ----------------------------------------------
| | Management Employment and Severance Agreements



Mr. Honig.




Ms. Steinmayer.


Mr. Frick.


39



---



##### Table of Contents





Savings Plan






| |   |                                                        
| | - | -------------------------------------------------------
| |  | Employees covered by a collective bargaining agreement;
|
| |  | Nonresident aliens; and                                
|
| |  | Leased employees.                                      



Deferred Compensation Plan






| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | Members of a select group of highly compensated or management
    employees; or
|
| |  | Selected by the compensation committee as participants.                        



Annual Bonus Plan






40



---



##### Table of Contents





Long-Term Performance Plan




















41



---



##### Table of Contents









Long-Term Performance Plan  Awards in Last Fiscal
Year


|                    |  |               |  |             |               |  |  |                                          |  |  |        |     |  |         |  |     |  |  |  |    
|------------------- |  | ------------- |  | ----------- | ------------- |  |  | ---------------------------------------- |  |  | ------ | --- |  | ------- |  | --- |  |  |  | ---
|                    |  |               |  | Performance |               |  | 
|                    |  | Number of     |  |             | or Other      |  |  | Estimated Future Payouts Under Non-Stock | 
|                    |  | Shares, Units |  |             | Period Until  |  |  | Price-Based Plans                        | 
|                    |  | or Other      |  |             | Maturation or |  |  |                                          | 
|Name                |  | Rights        |  |             | Payment       |  |  | Threshold                                |  |  | Target |     |  | Maximum | 
|                    |  |               |  |             |               |  |  |                                          |  |  |        |     |  |         | 
|Lawrence E. Honig   |  |               |  | (1)         |               |  |  | (2)                                      |  |  |        | (3) |  |         |  | (4) |  |  |  | (5)
|Janet L. Steinmayer |  |               |  | (1)         |               |  |  | (2)                                      |  |  |        | (3) |  |         |  | (4) |  |  |  | (5)
|Kenneth R. Frick    |  |               |  | (1)         |               |  |  | (2)                                      |  |  |        | (3) |  |         |  | (4) |  |  |  | (5)






|    |                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Between 50% and 150% of the participants highest
    total compensation (highest annual salary plus
    highest annual bonus) during the performance period.
|   
|(2) | October 13, 2004 through fiscal 2006 for the 2004
    Class Awards; fiscal 2005 through fiscal 2007 for the 2005
    Class Awards.                             
|   
|(3) | 50% of total compensation                                                                                                                                      
|   
|(4) | 100% of total compensation                                                                                                                                     
|   
|(5) | 150% of total compensation                                                                                                                                     

42



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|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters





| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | Each person who is known by us to own beneficially more than 5%
    of our capital stock or IDSs;
|
| |  | Each member of our board of directors;                                                           
|
| |  | Each of our named executive officers; and                                                        
|
| |  | All members of our board of directors and our executive officers
    as a group.                 



|                                                            |  |              |           |  |              |  |      |           |  |  |            |  |  |  |      |  
|----------------------------------------------------------- |  | ------------ | --------- |  | ------------ |  | ---- | --------- |  |  | ---------- |  |  |  | ---- | -
|                                                            |  | Number of    |           |  |              |  |      |           | 
|                                                            |  | Shares of    |           |  | Percent of   |  |      | Number of |  |  | Percent of | 
|Name of Beneficial Owner                                    |  | Common Stock |           |  | Common Stock |  |      | IDS Units |  |  | IDSs       | 
|                                                            |  |              |           |  |              |  |      |           |  |  |            | 
|Blackstone(1)                                               |  |              | 2,586,495 |  |              |  | 11.5 | %         |  |  | 0          |  |  |  | 0    |  
|FMR Corp.(2)                                                |  |              | 2,186,240 |  |              |  | 9.7  | %         |  |  | 2,186,240  |  |  |  | 11.8 | %
|T. Rowe Price Associates, Inc.(3)                           |  |              | 1,497,800 |  |              |  | 6.6  | %         |  |  | 1,497,800  |  |  |  | 8.1  | %
|GE Capital(4)                                               |  |              | 1,474,502 |  |              |  | 6.5  | %         |  |  | 0          |  |  |  | 0    |  
|Schroder Investment Management North America, Inc.(5)       |  |              | 1,219,300 |  |              |  | 5.4  | %         |  |  | 1,219,300  |  |  |  | 6.6  | %
|Lawrence E. Honig(6)                                        |  |              | 40,000    |  |              |  | *    |           |  |  | 40,000     |  |  |  | *    |  
|Janet L. Steinmayer                                         |  |              | 0         |  |              |  | 0    |           |  |  | 0          |  |  |  | 0    |  
|Kenneth R. Frick(7)                                         |  |              | 198,948   |  |              |  | *    |           |  |  | 26,472     |  |  |  | *    |  
|Felix P. Chee                                               |  |              | 0         |  |              |  | 0    |           |  |  | 0          |  |  |  | 0    |  
|Sue Ling Gin                                                |  |              | 0         |  |              |  | 0    |           |  |  | 0          |  |  |  | 0    |  
|Alfred Poe                                                  |  |              | 0         |  |              |  | 0    |           |  |  | 0          |  |  |  | 0    |  
|Peter F. Wallace(8)                                         |  |              | 0         |  |              |  | 0    |           |  |  | 0          |  |  |  | 0    |  
|David M. Williams                                           |  |              | 0         |  |              |  | 0    |           |  |  | 0          |  |  |  | 0    |  
|Glenn R. Zander                                             |  |              | 0         |  |              |  | 0    |           |  |  | 0          |  |  |  | 0    |  
|All directors and executive officers as a group (9 persons) |  |              | 238,948   |  |              |  | 1.1  | %         |  |  | 66,472     |  |  |  | *    |  






| |   |              
| | - | -------------
| | * | Less than 1%.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Blackstone refers collectively to Blackstone
    Management Associates II L.L.C., Blackstone Capital
    Partners II Merchant Banking Fund L.P., Blackstone
    Offshore Capital Partners II L.P., VSI Management I L.L.C.,
    BCP Volume L.P., BCP Offshore Volume, L.P. and VSI Management
    Direct L.P. Of the 2,586,495 shares of our common stock
    held by Blackstone: (a) 1,916,765 shares are owned by
    BCP Volume L.P., for which Blackstone Capital Partners II
    Merchant Banking Fund L.P. is the general partner and
    exercises sole voting and investment power with respect to its
    shares; (b) 497,254 shares are owned by BCP Offshore
    Volume L.P., for which Blackstone Offshore Capital
    Partners II L.P. is the general partner and exercises sole
    voting and investment power with respect to its shares; and
    (c) 172,476 shares are owned by VSI Management Direct
    L.P., for which VSI Management I L.L.C. is the general partner
    and exercises sole voting and investment power with respect to
    its shares.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | With respect to Blackstone Capital Partners II Merchant
    Banking Fund L.P. and Blackstone Offshore Capital
    Partners II L.P., Blackstone Management Associates II
    L.L.C. is the general partner and investment general partner,
    respectively, and thus exercises sole voting and investment
    power with respect to these two entities. With respect to VSI
    Management I L.L.C., Blackstone Management Associates II

43



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##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | L.L.C. is one of two managing members, along with Kenneth R.
    Frick, our executive vice president and chief financial officer,
    and thus exercises shared voting and investment power with
    respect to this entity. Messrs. Peter G. Peterson and
    Stephen A. Schwarzman are the founding members of Blackstone
    Management Associates II L.L.C. and, as such, may also be
    deemed to share beneficial ownership of the shares held or
    controlled by each of these entities. Each of these individuals
    and Blackstone Management Associates II L.L.C., Blackstone
    Capital Partners II Merchant Banking Fund L.P.,
    Blackstone Offshore Capital Partners II, L.P. and VSI
    Management I L.L.C. disclaim beneficial ownership of such
    shares. The address of each Blackstone entity or individual is
    c/o The Blackstone Group L.P., 345 Park Avenue, New York,
    New York 10154.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | FMR Corp. owns 2,186,240 of our IDS units through two of its
    wholly-owned subsidiaries as follows: (a) 2,166,580 IDS
    units are owned by Fidelity Management & Research
    Company as a result of acting as an investment adviser to
    various investment companies; and (b) 19,660 IDS units are
    owned by Fidelity Management Trust Company as a result of
    it serving as investment manager of the institutional accounts.
    Edward C. Johnson III, as Chairman of FMR Corp., may be
    deemed to beneficially own the units controlled by FMR Corp.
    Mr. Johnson and FMR Corp. each have sole investment power
    over the 2,166,580 IDS units owned by Fidelity
    Management & Research Company and Fidelity Management
    Trust Company and sole voting power over the 19,660 IDS
    units owned by Fidelity Management Trust Company. Voting
    power over the 1,033,875 IDS units attributable to Fidelity
    Capital & Income Fund rests with the Funds Boards
    of Trustees. This information is as of December 31, 2004,
    as set forth in a Schedule 13G filed by FMR Corp. with the
    SEC on February 14, 2005. The address of FMR Corp. and each
    Fidelity entity is 82 Devonshire Street, Boston, Massachusetts
    02109.
|   
|(3) | T. Rowe Price Associates, Inc. (Price Associates)
    owns 1,497,800 of our IDS units as follows: (a) 246,100 IDS
    units are owned by Price Associates directly; 1,250,000 IDS
    units are owned by T. Rowe Price Small Cap Value Fund,
    Inc., one of the registered investment companies sponsored by
    Price Associates, to which it also serves as investment adviser.
    This information is as of December 31, 2004, as set forth
    in a Schedule 13G filed by Price Associates with the SEC on
    February 8, 2005. The address of Price Associates and T.
    Rowe Price Small Cap Value Fund, Inc. is 100 E. Pratt
    Street, Baltimore, Maryland 21202.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(4) | These shares of common stock are owned by Recreational Services
    L.L.C., which is a limited liability company, the managing
    member of which is GE Capital. GE Capital exercises sole voting
    and investment power with respect to these shares. The address
    of GE Capital is 401 Main Avenue, Norwalk, Connecticut 06851.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(5) | This information is as of December 31, 2004, as set forth
    in a Schedule 13G filed by Schroder Investment Management
    North America, Inc. with the SEC on February 14, 2005. The
    address of Schroder Investment Management North America, Inc. is
    875 Third Avenue, 22nd Floor, New York, New York 10022.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(6) | Of the 40,000 IDS units owned by Mr. Honig,
    38,000 units were purchased in connection with our IPO, and
    2,000 units were purchased in the open market on
    March 10, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(7) | The 26,472 IDS units listed in the table for Mr. Frick were
    acquired in connection with our IPO. Of the 198,948 shares
    of our common stock listed in the table for Mr. Frick,
    26,472 shares are attributable to the IDS units owned by
    Mr. Frick and the remaining 172,476 shares are owned
    by VSI Management Direct L.P. Mr. Frick is one of two
    managing members of VSI Management I L.L.C., which is the sole
    general partner of VSI Management Direct L.P. Therefore,
    Mr. Frick may be deemed to beneficially own the
    172,476 shares of our common stock directly owned by VSI
    Management Direct L.P.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(8) | Mr. Wallace is an employee of Blackstone, but does not have
    voting or investment power over the shares of common stock
    beneficially owned by Blackstone.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



44



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##### Table of Contents








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions

Amended and Restated Stockholders Agreement








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The sale and exchange must comply with applicable laws,
    including, without limitation, securities laws, laws relating to
    redemption of common stock and laws relating to the issuance of
    debt;                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | The sale and exchange must occur pursuant to an effective
    registration statement in the United States and a receipted
    prospectus for all the provinces of Canada;                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | The sale and exchange will not conflict with or cause a default
    under any material financing agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The sale and exchange will not cause a mandatory suspension of
    dividends or deferral of interest under any material financing
    agreement as of the measurement date immediately following the
    proposed sale and exchange date;                                                                                                                                                                                                                                                                                                                                              
|
| |  | The Initial Equity Investors will have given us at least 30 but
    not more than 60 days advance notice of the
    transaction; and                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | The Initial Equity Investors have agreed that in connection with
    the sale and exchange, while our credit facility is outstanding,
    the Initial Equity Investors will pay to us from the proceeds of
    the sale an amount equal to five months interest on the
    aggregate principal amount of the subordinated notes that we
    have issued in the exchange (unless the amounts have been
    otherwise paid by or on behalf of the Initial Equity Investors),
    and we will deposit the amount in the cash collateral account
    maintained under our credit facility.





Registration Rights Agreement






| |   |                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Initial Equity Investors collectively have three demand
    registration rights relating to the shares of our common stock
    or IDSs held by the Initial Equity Investors, subject to the
    requirement that the securities, including any piggyback
    securities, covered by each demand registration have an
    aggregate public offering price of at least
    $10 million; and
|
| |  | the Initial Equity Investors and Messrs. Honig and Frick
    have an unlimited number of piggyback registration rights
    relating to the shares of our common stock or IDSs held by each
    of them.                                                                                                                                                                                      

45



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##### Table of Contents



Exercise of Demand Registration Rights.










Observer Rights




Commitment Letter from GE Capital




46



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##### Table of Contents










|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services

Independent Auditors Fees




|                       |  |      |           |  |      |   |           | 
|---------------------- |  | ---- | --------- |  | ---- | - | --------- | 
|                       |  | 2004 |           |  | 2003 |  
|                       |  |      |           |  |      |  
|Audit Fees:(1)         |  | $    | 1,450,500 |  |      | $ | 1,758,494 | 
|Audit-Related Fees(2): |  |      |          |  |      |   | 32,609    | 
|Tax Fees:              |  |      |          |  |      |   |          | 
|All other fees:        |  |      |          |  |      |   |          | 
|                       |  |      |           |  |      |  
|TOTAL                  |  | $    | 1,450,500 |  |      | $ | 1,791,103 | 
|                       |  |      |           |  |      |  






|    |                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Audit fees for fiscal 2003 include fees in connection with our
    IPO and for fiscal 2004 include fees associated with our
    contemplated secondary registration statement to be filed in
    fiscal 2005.
|   
|(2) | Audit-related fees consisted of fees in connection with internal
    controls readiness project under the Sarbanes-Oxley Act of 2002.                                                                        

Advance Approval Policy







PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules





| |                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------
| | 1. Financial Statements: See Index to Consolidated
    Financial Statements under Item 8 on Page F-1 of this
    report.
|
| | 2. Financial Statement Schedules: None.                                                                                 
|
| | 3. Exhibits                                                                                                             

47



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##### Table of Contents





|        |    |                        |  |                                                                                                                                                                                                                                                                                                                   
|------- | -- | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                       
|Number  |    | Description of Exhibit
|        |    |                       
|        | 3  | .1(1)                  |  | Restated Certificate of Incorporation of Centerplate, Inc.                                                                                                                                                                                                                                                        
|       
|        | 3  | .2(2)                  |  | Amendments to Restated Certificate of Incorporation adopted on
    October 13, 2004.                                                                                                                                                                                                                              
|       
|        | 3  | .3(3)                  |  | Amended and Restated By-Laws of Centerplate, Inc.                                                                                                                                                                                                                                                                 
|       
|        | 3  | .4(2)                  |  | Amendments to Amended and Restated By-Laws adopted on
    October 13, 2004.                                                                                                                                                                                                                                       
|       
|        | 4  | .1(4)                  |  | Indenture, dated as of December 10, 2003, among Volume
    Services America Holdings, Inc., the guarantors thereto and The
    Bank of New York, as Trustee.                                                                                                                                                      
|       
|        | 4  | .2(4)                  |  | Form of Subordinated Note (included in Exhibit 4.3).                                                                                                                                                                                                                                                              
|       
|        | 4  | .3(4)                  |  | Registration Rights Agreement dated as of December 10,
    2003, among Volume Services America Holdings, Inc., BCP Volume
    L.P., BCP Offshore Volume L.P., Management Direct L.P., Lawrence
    E. Honig, Kenneth R. Frick and Recreational Services, L.L.C.                                                   
|       
|        | 4  | .4(4)                  |  | Amended and Restated Stockholders Agreement. dated as of
    December 10, 2003, among Volume Services America Holdings,
    Inc., BCP Volume L.P., BCP Offshore Volume L.P., VSI Management
    Direct L.P. and Recreational Services, L.L.C.                                                                     
|       
|        | 4  | .5(5)                  |  | Form of stock certificate for common stock.                                                                                                                                                                                                                                                                       
|       
|        | 4  | .6(4)                  |  | Global IDS Certificate.                                                                                                                                                                                                                                                                                           
|       
|        | 4  | .7(3)                  |  | Board Observer Agreement, dated December 10, 2003, between
    Volume Services America Holdings, Inc. and Blackstone Capital
    Partners II Merchant Banking Fund.                                                                                                                                               
|       
|        | 10 | .1(4)                  |  | Credit Agreement, dated as of December 10, 2003, among
    Volume Services America, Inc., Volume Services America Holding,
    Inc., certain financial institutions as the Lenders, CIBC World
    Markets Corp. as Lead Arranger and KeyBank as the Fronting Bank,
    Swingline Lender and Administrative Agent.
|       
|        | 10 | .2                     |  | Form of Centerplate Deferred Compensation Plan.*                                                                                                                                                                                                                                                                  
|       
|        | 10 | .3(6)                  |  | Employment Agreement dated as of November 17, 1995, by and
    between Volume Services, Inc. (a Delaware corporation) and
    Kenneth R. Frick.*                                                                                                                                                                  
|       
|        | 10 | .4(6)                  |  | Employment Agreement dated as of September 29, 1998, by and
    between VSI Acquisition II Corporation and Janet L.
    Steinmayer.*                                                                                                                                                                              
|       
|        | 10 | .5(7)                  |  | Amended and Restated Employment Agreement, dated as of
    July 23, 2004, by and between Volume Services America
    Holdings, Inc. and Lawrence E. Honig*                                                                                                                                                        
|       
|        | 10 | .6(8)                  |  | Amendment and Waiver Agreement, dated as of July 1, 2003,
    by and between Volume Services America Holdings, Inc. and
    Lawrence E. Honig.*                                                                                                                                                                   
|       
|        | 10 | .7(9)                  |  | Centerplate, Inc. Long-Term Performance Plan.*                                                                                                                                                                                                                                                                    
|       
|        | 10 | .8(10)                 |  | Form of Award Letter under Long-Term Performance Plan for senior
    executive officers.*                                                                                                                                                                                                                         
|       
|        | 10 | .9(10)                 |  | Form of Award Letter under Long-Term Performance Plan for
    participants other than senior executive officers.*                                                                                                                                                                                                 
|       
|        | 12 | .1                     |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                
|       
|        | 21 | .1                     |  | Subsidiaries of Centerplate, Inc.                                                                                                                                                                                                                                                                                 
|       
|        | 31 | .1                     |  | Certification of Principal Executive Officer of Volume Services
    America Holdings, Inc. pursuant to Rule 13a-14 of the Securities
    Exchange Act of 1934, as adopted pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002.                                                                          
|       
|        | 31 | .2                     |  | Certification of Principal Financial Officer of Volume Services
    America Holdings, Inc. pursuant to Rule 13a-14 of the Securities
    Exchange Act of 1934, as adopted pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002.                                                                          
|       
|        | 32 | .1                     |  | Certification of Principal Executive Officer of Volume Services
    America Holdings, Inc. pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                                                                                                      
|       
|        | 32 | .2                     |  | Certification of Principal Financial Officer of Volume Services
    America Holdings, Inc. pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                                                                                                      

48



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##### Table of Contents








| |     |                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to the Form S-1/ A filed on
    December 4, 2003.                       
|
| | (2) | Incorporated by reference to the Form 10-Q for the
    quarterly period ended September 28, 2004. 
|
| | (3) | Incorporated by reference to the Form 10-K filed for the
    fiscal year ended December 30, 2003. 
|
| | (4) | Incorporated by reference to the Form 8-K filed on
    December 22, 2003.                         
|
| | (5) | Incorporated by reference to the Form S-1/ A filed on
    November 7, 2003.                       
|
| | (6) | Incorporated by reference to the Form S-1/ A filed on
    May 14, 2003.                           
|
| | (7) | Incorporated by reference to the Form 10-Q filed for the
    quarterly period ended June 29, 2004.
|
| | (8) | Incorporated by reference to the Form S-1/ A filed on
    August 26, 2003.                        
|
| | (9) | Incorporated by reference to the Form 8-K filed on
    October 18, 2004.                          



|     |                                                                          
|---- | -------------------------------------------------------------------------
|(10) | Incorporated by reference to the Form 8-K filed on
    November 23, 2004.



| |   |                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------
| | * | Management contract or compensatory plan or arrangement required
    to be filed and herein incorporated as an exhibit.

49



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##### Table of Contents






SIGNATURES






| |                  
| | -----------------
| | CENTERPLATE, INC.



| |     |                      
| | --- | ---------------------
| | By: | /s/ Lawrence E. Honig

| |                                                                                                          
| | ---------------------------------------------------------------------------------------------------------
| |                                                                                                          
| | Name:     Lawrence E. Honig                                                                              
| | Title:       Chairman of the
    Board of Directors and 
                     Chief
    Executive Officer



|                                           |  |                                                                                                                  |  |               |  | 
|------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------- |  | ------------- |  | 
|Name                                       |  | Title                                                                                                            |  | Date         
|                                          
|/s/ Lawrence E. HonigLawrence
    E. Honig |  | Chairman of the Board of Directors and Chief Executive
    Officer
    (Principal Executive Officer)             |  | March 9, 2005
|                                          
|/s/ Kenneth R. FrickKenneth
    R. Frick   |  | Executive Vice President, Chief Financial Officer and Treasurer
    (Principal Financial and Accounting Officer) |  | March 9, 2005
|                                          
|/s/ Felix P. CheeFelix
    P. Chee         |  | Director                                                                                                         |  | March 9, 2005
|                                          
|/s/ Sue Ling GinSue
    Ling Gin           |  | Director                                                                                                         |  | March 9, 2005
|                                          
|/s/ Alfred PoeAlfred
    Poe               |  | Director                                                                                                         |  | March 9, 2005
|                                          
|/s/ Peter WallacePeter
    Wallace         |  | Director                                                                                                         |  | March 9, 2005
|                                          
|/s/ David M. WilliamsDavid
    M. Williams |  | Director                                                                                                         |  | March 9, 2005
|                                          
|/s/ Glenn ZanderGlenn
    Zander           |  | Director                                                                                                         |  | March 9, 2005

50