SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 333-4578
CAFETERIA OPERATORS, L.P.
INCORPORATED IN DELAWARE I.R.S. EMPLOYER IDENTIFICATION
NO.75-2186655
6901 QUAKER AVENUE, LUBBOCK, TX 79413
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (806)792-7151
- -------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
- -------------------------------------------------------------------------------
Page 1 of 15
Exhibit Index Located on Page 14
<PAGE>
CAFETERIA OPERATORS, L.P.
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 1998(Unaudited) and December 30, 1997 3
Unaudited Condensed Consolidated Statements
Of Operations - For the thirteen weeks
ended June 30, 1998 and July 1, 1997 5
Unaudited Condensed Consolidated Statements
of Operations - For the twenty-six weeks
ended June 30, 1998 and July 1, 1997 6
Unaudited Condensed Consolidated Statement
of Partners' Deficit - For the twenty-six weeks
ended June 30, 1998 7
Unaudited Condensed Consolidated Statements
of Cash Flows - For the twenty-six weeks
ended June 30, 1998 and July 1, 1997 8
Notes to Unaudited Condensed Consolidated
Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION 13
SIGNATURES
Page 2
<PAGE>
<TABLE>
CAFETERIA OPERATORS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except par value amounts)
<CAPTION>
June 30, December 30,
1998 1997
----------- -----------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 7,927 $ 4,395
Accounts and notes receivable, net 843 856
Inventories 5,964 6,038
Prepaid expenses and other 1,627 1,122
----------- -----------
Total current assets 16,361 12,411
Property, plant and equipment, net 50,624 52,784
Receivable from affiliates 12,376 11,604
Other assets 504 515
----------- -----------
$ 79,865 $ 77,314
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial
statements.
(Continued on following page)
Page 3
<PAGE>
<TABLE>
CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(dollars in thousands, except par value amounts)
<CAPTION>
June 30, December 30,
1998 1997
----------- -----------
(Unaudited)
<S> <C> <C>
Liabilities and Partners' Deficit
Current liabilities:
Current maturities of long-term debt $ 5,493 $ 5,493
Trade accounts payable 4,726 4,212
Other payables and accrued expenses 15,979 15,008
Reserve for store closings - current 1,002 1,344
----------- -----------
Total current liabilities 27,200 26,057
Reserve for store closings, net of current portion 3,083 3,331
Long-term debt, net of current portion 63,459 66,205
Other payables 7,334 7,179
Excess of future lease payments over fair value,
net of amortization 2,584 2,837
Contingencies
Partners' deficit (23,795) (28,295)
----------- -----------
$ 79,865 $ 77,314
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial
statements.
Page 4
<PAGE>
<TABLE>
CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
<CAPTION>
Thirteen weeks ended
-------------------------
June 30, July 1,
1998 1997
----------- -----------
<S> <C> <C>
Sales $ 48,032 $ 49,787
Costs and expenses:
Cost of sales (excluding depreciation) 14,218 15,001
Selling, general and administrative 28,909 30,587
Depreciation and amortization 2,510 2,685
----------- -----------
45,637 48,273
----------- -----------
Operating income 2,395 1,514
Interest expense 70 78
----------- -----------
Net income $ 2,325 $ 1,436
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial
statements.
Page 5
<PAGE>
<TABLE>
CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
<CAPTION>
Twenty-six weeks ended
-------------------------
June 30, July 1,
1998 1997
----------- -----------
<S> <C> <C>
Sales $ 94,244 $ 97,140
Costs and expenses:
Cost of sales (excluding depreciation) 27,766 29,344
Selling, general and administrative 56,845 59,933
Depreciation and amortization 5,019 5,406
Net special charges 2,431
----------- -----------
89,630 97,114
----------- -----------
Operating income 4,614 26
Interest expense 114 134
----------- -----------
Net income (loss) $ 4,500 $ (108)
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial
statements.
Page 6
<PAGE>
<TABLE>
CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT
FOR THE TWENTY-SIX WEEKS ENDED JUNE 30, 1998
(dollars in thousands)
<CAPTION>
Total
General Limited Partners'
Partner Partners Capital
--------- --------- ---------
<S> <C> <C> <C>
Balance at
December 30, 1997 $ (40,788) $ 12,493 $ (28,295)
Net income 4,500 4,500
--------- --------- ---------
Balance at
June 30, 1998 $ (36,288) $ 12,493 $ (23,795)
========= ========= =========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial
statements.
Page 7
<PAGE>
<TABLE>
CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<CAPTION>
Twenty-six weeks ended
-------------------------
June 30, July 1,
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 4,500 $ (108)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 5,019 5,406
(Gain) loss on disposition of assets (42) 199
Non-cash net special charges 2,431
Other, net 237 309
Changes in operating assets and liabilities:
Decrease in accounts and notes receivable 13 708
(Increase) decrease in inventories 74 (49)
Increase in prepaid expenses and other (505) (964)
Increase (decrease) in trade accounts
payable, other payables, accrued
expenses and other liabilities 1,487 (840)
----------- -----------
Net cash provided by operating activities 10,783 7,092
----------- -----------
Cash flows used in investing activities:
Purchases of property, plant and equipment (4,155) (2,687)
Expenditures charged to reserve for store
closings (669) (664)
Proceeds from the sale of property, plant
and equipment 1,100 16
Other, net 14 1
----------- -----------
Net cash used in investing activities (3,710) (3,334)
----------- -----------
Cash flows used in financing activities:
Payment of indebtedness (2,746) (2,746)
Increase in receivable from affiliates (772) (204)
Other, net (23) (19)
----------- -----------
Net cash used in financing activities (3,541) (2,969)
----------- -----------
Increase in cash and cash equivalents 3,532 789
Cash and cash equivalents at beginning of period 4,395 3,668
----------- -----------
Cash and cash equivalents at end of period $ 7,927 $ 4,457
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid, including $2,746 of interest in
1998 and 1997 classified as payment of
indebtedness $ 2,748 $ 2,750
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial
statements.
Page 8
<PAGE>
CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A: Summary of Significant Accounting Policies
Cafeteria Operators, L.P., a Delaware limited partnership (the
"Partnership"), is wholly owned by Furr's/Bishop's, Incorporated (the
"Company") and operates cafeterias. The financial statements presented herein
are the unaudited condensed consolidated financial statements of the
Partnership and its majority owned subsidiaries.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the consolidated financial statements, and notes thereto, which are
included in the Company's Form 10-K for the year ended December 30, 1997. In
the opinion of management, the accompanying unaudited condensed consolidated
financial statements include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation.
The results of operations for the twenty-six weeks ended June 30, 1998 may
not be indicative of the results that may be expected for the fiscal year
ending December 29, 1998.
Effective January 1, 1998, the Partnership adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" which
establishes standards for reporting and display of comprehensive income in a
full set of general-purpose financial statements. Comprehensive income
includes net income and other comprehensive income which is generally comprised
of changes in the fair value of available-for-sale marketable securities,
foreign currency translation adjustments and adjustments to recognize
additional minimum pension liabilities. The Partnership had an accumulated
other comprehensive loss at December 30, 1997 of $2,504,000 consisting entirely
of an adjustment to recognize additional minimum pension liability. The
Partnership had no other comprehensive income for the twenty-six weeks ended
June 30, 1998 and July 1, 1997.
The Partnership is assessing the reporting and disclosure requirements of
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information." This statement requires a
public business enterprise to report financial and descriptive information
about its reportable operating segments. The statement is effective for
financial statements for periods beginning after December 31, 1997, but is not
required for interim financial statements in the initial year of its
application. The Partnership will adopt the provisions of this statement in
its December 29, 1998 consolidated financial statements.
NOTE B: Income Tax
For state and federal income tax purposes, the Partnership is not a
tax-paying entity. As a result, the taxable income or loss, which may vary
substantially from income or loss reported for financial reporting purposes, is
included in the state and federal returns of the individual partners.
Accordingly, no provision for income taxes is reflected in the accompanying
financial statements.
Page 9
<PAGE>
NOTE C: Special Charges
For the quarter ended April 1, 1997, the Partnership recognized net
special charges of $2,431,000, including a charge of $1,888,000 for the
writedown of assets and adjustments to closed store reserves, a charge of
$1,835,000 to recognize the writedown of certain assets in accordance with
Statement of Financial Accounting Standards, No. 121, "Accounting for the
Impairment of Long-Lived Assets" ("SFAS121"), and a credit of $1,292,000
related to the settlement of a lawsuit previously filed against the Company.
NOTE D: Contingencies
The Partnership, in the ordinary course of business, is a party to various
legal actions. In the opinion of management, these actions ultimately will be
disposed of in a manner which will not have a material adverse effect upon the
Partnership's financial condition or results of operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Thirteen Weeks Ended June 30, 1998 Compared to Thirteen Weeks Ended July 1,
1997
Results of operations. Sales for the second fiscal quarter of 1998 were
$48.0 million, a decrease of $1.8 million from the same quarter of 1997.
Operating income for the second quarter of 1998 was $2.4 million compared to
operating income of $1.5 million in the comparable period in the prior year.
The net income for the second quarter of 1998 was $2.3 million compared to net
income of $1.4 million in the second quarter of 1997.
Sales. Restaurant sales in comparable units were 2.33% higher in the
second quarter of 1998 than the same quarter of 1997. Sales for the second
fiscal quarter were $2.7 million lower than the same period of the prior year
due to a decline in the number of units at period end from 110 in 1997 to 101
in 1998. Management anticipates that one or two additional units will close in
the second half of 1998. A letter of intent has been executed for the
acquisition of a site in Sante Fe, New Mexico for a new unit that would open in
the second quarter of 1999. Sales by Dynamic Foods to third parties were $186
thousand lower in the second quarter of 1998 than the second quarter of the
prior year, reflecting an effort by management to improve margins by focusing
on sales to a smaller number of higher volume accounts.
Cost of sales. Excluding depreciation, cost of sales was 29.6% of sales
for the second quarter of 1998 as compared to 30.1% for the same quarter of
1997. The decrease in the percentage of sales was the result of changes in
pricing and menu mix. Produce costs in the current period were significantly
higher than the prior year period.
Selling, general and administrative. Selling, general and administrative
("SG&A") expense was lower in the aggregate by $1.7 million in the second
quarter of 1998 as compared to 1997 due primarily to there being fewer units
included in the operating results. Other changes in SG&A expense included an
increase of $97 thousand in marketing expense and $75 thousand in rent expense.
Page 10
<PAGE>
Depreciation and amortization. Depreciation and amortization expense was
lower by $175 thousand in the second quarter of 1998 due primarily to lower
depreciation on property, plant and equipment having been written down in
accordance with SFAS121.
Interest expense. Interest expense was $70 thousand in the second quarter
of 1998, which was slightly lower than the comparable period in the prior year.
In accordance with Statement of Financial Accounting Standards No. 15, the
Partnership's debt that was restructured at January 2, 1996 was recorded at the
sum of all future principal and interest payments and there is no recognition
of interest expense thereon.
Twenty-six Weeks Ended June 30, 1998 Compared to Twenty-six Weeks Ended July 1,
1997
Results of operations. Sales for the first twenty-six weeks of 1998 were
$94.2 million, a decrease of $2.9 million from the same period of 1997.
Operating income for the first twenty-six weeks of 1998 was $4.6 million
compared to operating income of $26 thousand in the comparable period in the
prior year. The operating income for the twenty-six weeks of 1997 included net
special charges of $2.4 million. The net income for the first twenty-six weeks
of 1998 was $4.5 million compared to a net loss of $108 thousand in the same
period of 1997.
Sales. Restaurant sales in comparable units were 2.71% higher in the
first twenty-six weeks of 1998 than the same period of 1997. Sales for the
first twenty-six weeks were $4.9 million lower than the same period of the
prior year due to there being nine fewer units included in operating results.
Sales by Dynamic Foods to third parties were $343 thousand lower in the first
twenty-six weeks of 1998 than the same period of the prior year.
Cost of sales. Excluding depreciation, cost of sales was 29.5% of sales
for the first twenty-six weeks of 1998 as compared to 30.2% for the same period
of 1997. The decrease in the percentage of sales was the result of changes in
pricing and menu mix. Produce costs in the current period were higher than the
prior year period.
Selling, general and administrative. Selling, general and administrative
("SG&A") expense was lower in the aggregate by $3.1 million in the first
twenty-six weeks of 1998 as compared to 1997 due primarily to there being fewer
units included in the operating results. Other changes in SG&A expense
included an increase in 1998 of $198 thousand in marketing expense and $271
thousand in labor and related benefits and a decrease of $238 thousand in
utility expenses.
Depreciation and amortization. Depreciation and amortization expense was
lower by $387 thousand in the first twenty-six weeks of 1998 due primarily to
lower depreciation on property, plant and equipment having been written down in
accordance with SFAS121.
Special charges. The results of operations for the quarter ended April 1,
1997 included net special charges of $2.4 million, which included charges of
$1.9 million for the writedown of assets and adjustments to closed store
reserves and $1.8 million to recognize the writedown of certain assets in
accordance with SFAS121 and a credit of $1.3 million related to the settlement
of a lawsuit previously filed against the Company.
Page 11
<PAGE>
Interest expense. Interest expense was $114 thousand in the first
twenty-six weeks of 1998, which was slightly lower than the comparable period
in the prior year. In accordance with Statement of Financial Accounting
Standards No. 15, the Partnership's debt that was restructured at January 2,
1996 was recorded at the sum of all future principal and interest payments and
there is no recognition of interest expense thereon.
LIQUIDITY AND CAPITAL RESOURCES OF
CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
During the twenty-six weeks ended June 30, 1998, cash provided by
operating activities of the Partnership was $10.8 million compared to $7.1
million in the same period of 1997. The Partnership made capital expenditures
of $4.2 million during the first twenty-six weeks of 1998 compared to $2.7
million during the same period of 1997. Cash and cash equivalents were $7.9
million at June 30, 1998 compared to $4.5 million at July 1, 1997. The current
ratio of the Partnership was .60:1 at June 30, 1998 compared to .47:1 at July
1, 1997 and .48:1 at December 30, 1997. The Partnership's total assets at June
30, 1998 aggregated $79.9 million, compared to $81.3 million at July 1, 1997
and $77.3 million at December 30, 1997.
The improvement in results of operations in the twenty-six weeks ended
June 30, 1998 over the comparable period of the prior year reflects the impact
of the present marketing program, operating cost controls, as well as milder
winter weather in most of the company's markets at the beginning of the current
year.
The Partnership's restaurants are a cash business. Funds available from
cash sales are not needed to finance receivables and are not generally needed
immediately to pay for food, supplies and certain other expenses of the
restaurants. Therefore, the business and operations of the Partnership have
not historically required proportionately large amounts of working capital,
which is generally consistent with similar restaurant companies.
Total scheduled maturities of long-term debt and interest classified as
long-term debt of the Partnership and its subsidiaries over the next five
calendar years are: $2.7 million in the remainder of 1998, $5.5 million in
1999, $5.5 million in 2000 and $55.3 million in 2001.
The Partnership has outstanding $66.4 million of 12% Notes due December
31, 2001, which includes $20.6 million of interest to maturity. Under the
terms of the indenture covering the 12% Notes, a semi-annual cash interest
payment of approximately $2.7 million is due on each March 31 and September 30.
The obligations of the Partnership under the 12% Notes are secured by a
security interest in and a lien on all of the personal property of the
Partnership and mortgages on all fee and leasehold properties of the
Partnership (to the extent such properties are mortgageable).
The Partnership has outstanding $2.5 million of 10.5% Notes due December
31, 2001. A semi-annual cash interest payment of approximately $134 thousand
is due on each June 30 and December 31.
In 1993, the Partnership entered into an amendment of a master sublease
agreement pursuant to which it leased 43 properties from Kmart Corporation
("Kmart"). Pursuant to the amendment and subject to the terms and conditions
Page 12
<PAGE>
thereof, two properties were removed from the master sublease, and the
aggregate monthly rent for the period January 1, 1997 through and including
December 31, 1999 were reduced by 20%. The reductions in rent were subject to
termination by Kmart if Kevin E. Lewis ceased to be Chairman of the Board of
Directors of the Company. Mr. Lewis was not elected to the Board of Directors,
or as Chairman of the Board, at the meeting of stockholders on May 28, 1998,
and accordingly, Kmart has notified the Company of its intent to terminate the
reductions in rent. The additional rent payments through December 31, 1999
will amount to approximately $1.8 million. The Company accounts for its rental
payments under the straight-line method, and the increase in rent through
December 31, 1999 will be amortized over the remaining life of the leases,
which run through December 31, 2003, December 31, 2007, June 29, 2008 and
December 31, 2008. The increase in annual rent expense will be approximately
$288 thousand.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
(a) The Company filed a declaratory judgement lawsuit in state
district court in Lubbock, Texas in which it asks the court to find
that the Company is not obligated to make severance payments that
have been demanded by Theodore Papit, the former President and CEO
of the Company. Mr. Papit submitted his resignation on May 28,
1998, following the election at the Company's annual meeting of
shareholders of a slate of directors proposed by Teacher's
Insurance and Annuity Association of America (TIAA), the Company's
largest shareholder. He subsequently demanded payment of more than
$500,000 of severance and other amounts that he claimed were owing
to him under a "President and Chief Executive Officer Agreement"
dated March 23, 1998. This Agreement was approved by a split vote
of the board of directors after TIAA had publicly announced that it
might take action affecting the control of the Company. The
Company has requested a jury trial and believes that there are a
number of grounds that will support the court in granting the
requested relief, among them being that the Agreement is void as an
interested party transaction that did not receive the necessary
approval of independent, disinterested directors, the terms of the
Agreement are not fair to the Company and the Agreement was entered
into by the Company without the benefit of full disclosure by Mr.
Papit and consideration by the board of directors of material
information regarding his management of the Company.
(b) The Company and certain of its subsidiaries (including the
Partnership), the Cavalcade Pension Plan, the Cavalcade Pension
Plan Committee (consisting of Donald Dodson, Kevin Lewis, Alton
Smith and Carlene Stewart), Kmart Corporation and its pension plan
and Michael Levenson are defendants in a lawsuit brought against
them in U.S. District Court in Denver, Colorado by Robert H. Aull
("Plaintiff"), a former employee of the Company and a participant
in the Cavalcade Pension Plan. The Plaintiff has requested that
the court certify a class of other plaintiffs who are similarly
situated and seeks unspecified damages.
Page 13
<PAGE>
The Plaintiff's allegations (all of which are disputed by the
Company) include: (i)that accrued benefits under the Cavalcade
Pension Plan have been improperly reduced, (ii) the "freeze" of the
Plan on June 30, 1989 was improper, (iii) an insufficient amount of
assets was transferred from the Kmart pension plan to the Cavalcade
Pension Plan in connection with the acquisition of the Company from
Kmart effected by Mr. Levenson and his affiliates, (iv) rent
concessions allowed to the Company by Kmart constituted prohibited
transactions that have bestowed illegal benefits upon the Company
and Mr. Lewis. In July 1998, the court deferred to November 1998 a
scheduled hearing on all pending motions in recognition of the
expressed desire of the parties to pursue mediation of the dispute
with the objective of achieving a settlement of all claims, which
is proceeding.
The Company has been defending this litigation vigorously.
Management believes that the Company, its affiliates and the Plan
Committee have meritorious defenses to the claims of the Plaintiff.
Management also believes that the Cavalcade Pension Plan is
adequately funded to satisfy existing benefit levels and that any
increase in benefits that might result from this litigation could
be paid by the Plan from Plan assets or from increased future
contributions to the Plan in amounts that would not have a material
adverse effect on the financial condition or results of operations
of the Partnership. Because of the inherent uncertainty of
litigation, management cannot offer assurance that the litigation
will be resolved on terms that are favorable to the Partnership or
that will avoid the incurrence of material expense by the
Partnership.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
No reports on Form 8K were filed during the quarter ended June 30,
1998.
Page 14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAFETERIA OPERATORS, L.P.
by FURR'S/BISHOP'S, INCORPORATED, its Managing General Partner
BY: /s/ Suzanne Hopgood /s/ Alton R. Smith
------------------------- ---------------------------
Suzanne Hopgood Alton R. Smith
Chairman of the Board, Principal Accounting Officer
President and Chief Executive Officer
DATE: August 12, 1998
Page 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CAFETERIA OPERATORS, L.P. FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD
ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1998
<PERIOD-START> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> 7,927
<SECURITIES> 0
<RECEIVABLES> 867
<ALLOWANCES> 24
<INVENTORY> 5,964
<CURRENT-ASSETS> 16,361
<PP&E> 103,666
<DEPRECIATION> 53,042
<TOTAL-ASSETS> 79,865
<CURRENT-LIABILITIES> 27,200
<BONDS> 63,459
0
0
<COMMON> 0
<OTHER-SE> (23,795)
<TOTAL-LIABILITY-AND-EQUITY> 79,865
<SALES> 94,244
<TOTAL-REVENUES> 94,244
<CGS> 27,766
<TOTAL-COSTS> 27,766
<OTHER-EXPENSES> 61,864
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114
<INCOME-PRETAX> 4,500
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,500
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
