FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly period ended December 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- -------------
Commission file number: 1-10291
Spaghetti Warehouse, Inc.
(Exact name of registrant as specified in its charter)
Texas 75-1393176
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
402 West I-30, Garland, Texas 75043
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 972/226-6000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
------ -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of December 28, 1997: 5,526,904 shares of common stock, par
value $.01.
- 1 -
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SPAGHETTI WAREHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS 6/29/97 12/28/97
------ ------- --------
(Unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,916,983 $ 1,603,621
Accounts receivable 637,803 594,210
Inventories 616,253 630,068
Prepaid expenses 274,111 466,957
Deferred income taxes 469,145 18,304
----------- -----------
Total current assets 3,914,295 3,313,160
----------- -----------
Property and equipment, net 45,732,390 47,247,892
Assets scheduled for divestiture 1,534,714 -
Trademark and franchise rights, net 2,942,852 2,781,878
Deferred income taxes 3,961,274 4,095,021
Other assets 544,342 757,923
----------- -----------
$58,629,867 $58,195,874
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long-term debt $ 1,478,127 $ 1,813,116
Accounts payable 2,082,150 3,280,702
Accrued payroll and bonuses 1,673,336 1,098,856
Other accrued liabilities 915,226 1,039,232
----------- -----------
Total current liabilities 6,148,839 7,231,906
----------- -----------
Long-term debt, less current portion 6,405,226 4,986,083
Deferred compensation 141,901 190,732
Commitments and contingencies - -
Stockholders' equity:
Preferred stock of $1.00 par value;
authorized 1,000,000 shares;
no shares issued - -
Common stock of $.01 par value;
authorized 20,000,000 shares;
issued 6,527,835 shares at 6/29/97
and 6,584,245 shares at 12/28/97 65,278 65,842
Additional paid-in capital 36,246,849 36,499,964
Cumulative translation adjustment (611,499) (750,627)
Retained earnings 16,753,859 17,469,363
----------- -----------
52,454,487 53,284,542
Less cost of 872,341 shares at 6/29/97 and
1,057,341 shares at 12/28/97 of
common stock held in treasury (6,520,586) (7,497,389)
----------- -----------
45,933,901 45,787,153
=========== ===========
$58,629,867 $58,195,874
=========== ===========
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
SPAGHETTI WAREHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
26-Week Period 26-Week Period 13-Week Period 13-Week Period
Ended 12/29/96 Ended 12/28/97 Ended 12/29/96 Ended 12/28/97
Revenues:
<S> <C> <C> <C> <C>
Restaurant sales................... $ 31,921,962 $ 30,744,503 $ 15,343,895 $ 15,160,348
Franchise.......................... 490,238 295,148 155,216 120,014
Other.............................. 286,852 344,038 143,413 171,860
------------- ------------- ------------- -------------
Total revenues................ 32,699,052 31,383,689 15,642,524 15,452,222
------------- ------------- ------------- -------------
Costs and expenses:
Cost of sales...................... 8,456,422 8,006,266 4,094,652 3,970,384
Operating expenses................. 18,607,370 17,663,967 9,033,607 8,946,184
General and administrative......... 2,656,557 2,547,954 1,275,820 1,170,142
Depreciation and amortization...... 2,035,068 1,879,067 999,148 950,359
Reversal of restructuring charges.. (400,000) - (400,000) -
Impairment of long-lived assets.... 1,759,526 - - -
------------- ------------- ------------- -------------
Total costs and expenses...... 33,114,943 30,097,254 15,003,227 15,037,069
------------- ------------- ------------- -------------
Income (loss) from operations............ (415,891) 1,286,435 639,297 415,153
Net interest expense..................... 419,404 182,640 182,640 92,857
------------- ------------- ------------- -------------
Income (loss) before income tax
expense (benefit).................... (835,295) 1,104,433 456,657 322,296
Income tax expense (benefit).............. (279,991) 388,929 181,690 113,142
------------- ------------- ------------- -------------
Net income (loss)......................... $ (555,304) $ 715,504 $ 274,967 $ 209,154
============= ============= ============= =============
Net income (loss) per common share:
Basic............................... ($ .10) $ .13 $ .05 $ .04
===== ===== ===== =====
Diluted............................. ($ .10) $ .12 $ .05 $ .04
===== ===== ===== =====
Weighted average common and common share
equivalents outstanding:
Basic............................... 5,640,641 5,659,161 5,648,726 5,662,827
Diluted............................. 5,640,641 5,863,205 5,764,775 5,891,787
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
SPAGHETTI WAREHOUSE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
26-Week
Periods Ended
-----------------------
12/29/96 12/28/97
-------- --------
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ (555,304) $ 715,504
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization expense 2,035,068 1,879,067
Reversal of restructuring charges (400,000) -
Impairment of long-lived assets 1,759,526 -
(Gain) loss on disposal of property and equipment 2,233 (38,386)
Deferred income taxes 1,046,792 319,267
Other, net 57,211 35,798
Changes in assets and liabilities:
Accounts receivable 174,513 40,797
Inventories 45,675 (13,815)
Prepaid expenses 143,568 (200,182)
Other assets (84,356) (240,983)
Accounts payabl 127,853 223,970
Accrued payroll and bonuses (434,469) (574,480)
Other accrued liabilities (105,471) 124,006
Accrued restructuring charges (80,800) -
----------- -----------
Net cash provided by operating activities 3,732,039 2,270,563
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (1,223,076) (3,332,962)
Proceeds from sales of property and equipment 660,539 1,625,700
----------- -----------
Net cash used in investing activities (562,537) (1,707,262)
----------- -----------
Cash flows from financing activities:
Net payments on long-term debt (9,400,520) (1,084,154)
Purchase of treasury shares (16,595) -
Proceeds from employee stock plans 213,811 235,679
----------- -----------
Net cash used in financing activities (9,203,304) (848,475)
----------- -----------
Effects of exchange rate changes on cash and cash equivalents (5,902) (28,188)
----------- -----------
Net decrease in cash and cash equivalents (6,039,704) (313,362)
Cash and cash equivalents at beginning of period 8,065,364 1,916,983
----------- -----------
Cash and cash equivalents at end of period $ 2,025,660 1,603,621
=========== ===========
Supplemental information:
Interest paid (net of amounts capitalized) $ 738,864 $ 293,772
Income taxes paid (net of refunds collected) $(1,316,126) $ 71,835
=========== ===========
Noncash financing activities:
Purchase of treasury shares paid for after end of period $ - $ 976,803
=========== ===========
</TABLE>
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<PAGE>
SPAGHETTI WAREHOUSE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
In the opinion of management, the accompanying condensed consolidated
financial statements contain all adjustments necessary for a fair
presentation of the consolidated financial position as of December 28, 1997
and the consolidated results of operations and cash flows for the 26-week
and 13-week periods ended December 28, 1997 and December<0- 95>29, 1996.
Operating results for the 26-week and 13-week periods ended December 28,
1997 are not necessarily indicative of the results to be expected for the
full fiscal year.
2. Accounting Policies
-------------------
During the interim periods the Company follows the accounting policies set
forth in its consolidated financial statements in its Annual Report (Form
10-K) (File No.1-10291). Reference should be made to such financial
statements for information on such accounting policies and further
financial details.
3. Impairment of Long-Lived Assets
-------------------------------
In the first quarter of fiscal 1997, the Company adopted Financial
Accounting Standards Board Statement No. 121 (SFAS 121) on accounting for
the impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to assets to be held and used. SFAS 121 also establishes
accounting standards for long-lived assets and certain identifiable
intangibles to be disposed of.
Adoption of SFAS 121 requires the Company to review its long-lived assets
and certain identifiable intangibles to be held and used for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset or group of assets may not be recoverable. The Company
groups and evaluates its assets for impairment at the individual restaurant
level. The Company considers each restaurant's historical operating losses
a primary indicator of potential impairment. The Company deems a
restaurant's assets to be impaired if a forecast of undiscounted future
cash flows directly related to the assets, including disposal value, if
any, is less than their carrying amount. If a restaurant's assets are
deemed to be impaired, the loss is measured as the amount by which the
carrying amount of the assets exceeds their estimated fair market value.
The Company recorded a pre-tax, non-cash charge of $1,759,526 during the
first quarter of fiscal 1997 as a result of adopting SFAS 121. This charge
related to the write-down of the Company's Cappellini's restaurant in
Addison, Texas to its estimated fair market value. This restaurant was
subsequently closed in December 1996 due to unfavorable operating results.
-5-
<PAGE>
4 Reversal of Restructuring Charges
---------------------------------
In the third quarter of fiscal 1996, the Company implemented a
restructuring plan intended to strengthen its competitive position and
improve cash flow and profitability. In conjunction with the plan, the
Company closed seven under-performing restaurants in February 1996 and
identified one additional restaurant to be sold as an operating unit. The
Company recorded a pre-tax charge of $13.9 million in the third quarter of
fiscal 1996 to cover costs related to the execution of this plan, including
the write-down of property and equipment to its estimated net realizable
value, severance packages, and various other store closing and corporate
obligations.
As a result of obtaining more favorable disposal terms on the seven
restaurant properties closed in the restructuring plan, total costs
relating to this plan were less than the originally recorded charge. The
Company therefore reversed $400,000 in pre-tax restructuring charges in the
second quarter of fiscal 1997.
5 New Accounting Pronouncements
-----------------------------
In the second quarter of fiscal 1998, the Company adopted Financial
Accounting Standards Board Statement No. 128 (SFAS 128), "Earnings per
Share," effective for periods ending after December 15, 1997. As a result,
the Company's reported earnings per share for fiscal 1997 were restated.
The effect of this accounting change on previously reported earnings (loss)
per share (EPS) data was as follows:
<TABLE>
<CAPTION>
26-Week Period 13-Week Period
Ended 12/29/96 Ended 12/29/96
Per share amounts:
<S> <C> <C>
Primary EPS as reported ($ .10) $ .05
Effect of SFAS 128 .00 .00
------ ------
Basic EPS as restated ($ .10) $ .05
===== =====
Fully diluted EPS as reported ($ .10) $ .05
Effect of SFAS 128 .00 .00
------ ------
Diluted EPS as restated ($ .10) $ .05
===== =====
</TABLE>
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth selected operating data as a percentage of
total revenues for the periods indicated. All information is derived from the
accompanying condensed consolidated statements of operations.
<TABLE>
<CAPTION>
26-Week 13-Week
Periods Ended Periods Ended
12/29/96 12/28/97 12/29/96 12/28/97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues........................................... 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Costs and expenses:
Cost of sales................................ 25.9 25.5 26.2 25.7
Operating expenses........................... 56.9 56.3 57.8 57.9
General and administrative................... 8.1 8.1 8.1 7.6
Depreciation and amortization................ 6.2 6.0 6.4 6.1
Reversal of restructuring charges............ (1.2) 0.0 (2.6) 0.0
Impairment of long-lived assets.............. 5.4 0.0 0.0 0.0
--- --- --- ---
Total costs and expenses........... 101.3 95.9 95.9 97.3
----- ---- ---- ----
Income (loss) from operations...................... (1.3) 4.1 4.1 2.7
Net interest expense............................... 1.3 0.6 1.2 0.6
--- --- --- ---
Income (loss) before income taxes.................. (2.6) 3.5 2.9 2.1
Income tax expense (benefit)....................... (0.9) 1.2 1.1 0.7
---- --- --- ---
Net income (loss).................................. (1.7%) 2.3% 1.8% 1.4%
==== === === ===
</TABLE>
Results of Operations
- ---------------------
Revenues
--------
Revenues decreased $190,302, or 1.2%, during the quarter ended December 28,
1997 in comparison to the same quarter in the preceding year. The prior year
closure of Cappellini's and sale of the Richmond, Virginia restaurant to a
franchisee, coupled with a 0.2% decline in same-store sales (stores open the
full period in both fiscal years) were responsible for the decline in revenue.
These declines were partially offset by the opening of a new store in Mesquite,
Texas, during the second quarter. The decline in same-store sales resulted from
a 1.5% decrease in customer counts offset by a 1.4% check average increase.
Second quarter same-store sales in stores operating under the Italian Grill
format increased 4.9% over prior year while the traditional Spaghetti Warehouse
stores experienced a decline of 2.7%.
Revenues for the six months ended December 28, 1997 declined $1.3 million,
or 4.0%, compared to the same period last year. The decline was due to the
reduction of the two stores mentioned above, a 0.8% decline in same-store sales
and a $195,000 decrease in franchise income compared to the previous year. The
decrease in franchise income is attributable to prior year franchise fees
-7-
<PAGE>
relating to the sale of the Richmond, Virginia restaurant and an exclusive
territory agreement to the Company's Virginia franchisee. Additionally, due to
insufficient sales and profitability in the franchisee's three stores, the
Company has received no royalty income from its Virginia franchisee in the
current year. As a result, there is no assurance that any future royalty income
will be realized from the Company's Virginia franchisee. The six-month decrease
in same-store sales was due to a 2.3% decline in customer counts offset by a
1.5% increase in check average. Same-store sales for the first six months
increased 4.0% over prior year in Italian Grill stores and declined 2.8% in
traditional Spaghetti Warehouse stores. Due to these favorable Italian Grill
sales results, the Company plans to convert an additional eight to 10
traditional Spaghetti Warehouse stores to the Italian Grill format during the
next 12 months.
Costs and Expenses
------------------
Cost of Sales
-------------
Cost of sales as a percentage of total revenues was 25.7% for the second
quarter as compared to 26.2% for the same quarter last year. For the first six
months of fiscal 1998, cost of sales as a percentage of revenues was 25.5%
compared to 25.9% during the same period last year. These decreases are
attributable to the closing of Cappellini's, lower commodity prices on certain
dairy and poultry products and tighter inventory controls. Cappellini's food
costs as a percentage of revenues were higher than typical Company restaurants.
Cost of sales as a percentage of revenues is anticipated to increase modestly in
future periods as additional units are converted to the Italian Grill format.
Operating Expenses
------------------
Operating expenses as a percentage of total revenues were 57.9% for the
second quarter as compared to 57.8% for the same quarter last year. Second
quarter marketing expenditures increased substantially over prior year due to
costs associated with the Company's recent television advertising campaign. The
increase in marketing expenditures was largely offset by decreases in workers'
compensation and employee medical plan costs compared to the prior year.
For the first six months of fiscal 1998, operating expenses as a percentage
of total revenues were 56.3% compared to 56.9% in the corresponding period last
year. The six-month decline was attributable to reductions in restaurant labor
expenses and workers' compensation costs, partially offset by increased
marketing expenditures. Additionally, the prior year closure of Cappellini's and
sale of the Richmond, Virginia restaurant also contributed to the six-month
decline since these units had higher operating expenses as a percentage of
revenues than typical Company restaurants.
General and Administrative Expenses (G&A)
-----------------------------------------
G&A expenses as a percentage of total revenues were 7.6% for the second
quarter as compared to 8.2% for the second quarter last year. This decline is
primarily attributable to reduced corporate employee costs and legal fees. G&A
expenses for the first six months were 8.1% of total revenues in both fiscal
1998 and fiscal 1997.
-8-
<PAGE>
Depreciation and Amortization (D&A)
-----------------------------------
D&A as a percentage of total revenues was 6.1% for the second quarter as
compared to 6.4% for the same quarter last year. For the 26-week period ending
December 28, 1997, D&A as a percentage of revenues was 6.0% compared to 6.2% for
the first half of fiscal 1997. Elimination of depreciation expense at the two
closed stores and certain restaurant assets becoming fully depreciated
contributed to these declines in D&A as a percentage of total revenues.
Reversal of Restructuring Charges
---------------------------------
As a result of obtaining more favorable disposal terms on the seven
restaurant properties closed in the February 1996 restructuring plan, total
costs relating to this plan were less than the $13.9 million charge recorded in
the third quarter of fiscal 1996. As a result, the Company reversed $400,000 in
pre-tax restructuring charges in the second quarter of fiscal 1997. See Note 4
of Notes to Condensed Consolidated Financial Statements for further information.
Impairment of Long-Lived Assets
-------------------------------
The Company adopted Financial Accounting Standards Board Statement No. 121
during the first quarter of fiscal 1997, resulting in a pre-tax, non-cash
impairment charge of $1,759,526. This charge related to the write-down of the
Company's Cappellini's restaurant in Addison, Texas to its estimated fair market
value. See Note 3 of Notes to Condensed Consolidated Financial Statements for
further information.
Net Interest Expense
--------------------
Net interest expense decreased from $182,640 during the second quarter of
fiscal 1997 to $92,857 during the second quarter of fiscal 1998. Net interest
expense decreased from $419,404 during the first six months of fiscal 1997 to
$182,002 during the current year. These current year declines are attributable
to decreased average debt outstanding under the Company's credit facilities in
comparison to corresponding periods last year.
Income Taxes
------------
The Company's effective tax rate in the second quarter was 35.1% as
compared to 39.8% in the same quarter last year. For the first half of fiscal
1998, the effective tax rate was a provision of 35.2% compared to a benefit of
33.5% during the same period last year. The decline in the second quarter
effective tax rate is attributable to the fact that a higher proportion of
consolidated pre-tax earnings was generated by the Company's Canadian operations
in fiscal 1998 as compared to fiscal 1997. These Canadian earnings are taxed at
a lower rate than the U.S. statutory rate thereby reducing the Company's overall
tax rate. The tax benefit for the first six months of fiscal 1997 is
attributable to pre-tax losses incurred as a result of adopting FASB Statement
No. 121.
-9-
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Company's working capital deficit increased from $2.2 million at
June<0- 95>29, 1997 to $3.9 million on December 28, 1997. The increase is
primarily attributable to the second quarter repurchase of 185,000 shares of
common stock, which was paid subsequent to December 28, 1997. The Company is
currently operating with a working capital deficit, which is common in the
restaurant industry since restaurant companies do not normally require
significant investment in either accounts receivable or inventory.
Net cash provided by operating activities was $2.3 million during the
second quarter as compared to $3.7 million during the same quarter last year.
The decrease is attributable to the fiscal 1997 receipt of prior year income tax
refunds and changes in certain components of working capital.
Long-term debt outstanding on December 28, 1997 consisted of a $6.8 million
fixed rate term loan borrowed under the Company's existing bank credit facility.
The Company had an additional $5.0 million available under its bank revolving
credit facility on December 28, 1997.
In fiscal 1994, the Company's Board of Directors authorized a program for
the repurchase of up to 1,000,000 shares of the Company's common stock for
investment purposes. As of December 28, 1997, the Company had repurchased
996,041 shares of common stock under this program, including 185,000 shares
purchased in the second quarter.
Capital expenditures were $3.3 million for the first six months of fiscal
1998 as compared to $1.2 million for the same period last year. Current year
expenditures relate primarily to the purchase and construction of the Mesquite
restaurant, the purchase of a second restaurant property scheduled to open in
the fourth quarter of fiscal 1998 and the conversion of three traditional
Spaghetti Warehouse restaurants to the Italian Grill format.
The Spaghetti Warehouse Italian Grill concept is an updated version of the
traditional Spaghetti Warehouse and features new decor, an expanded menu and
greater customer value. The menu was broadened to include grilled entrees, new
sandwiches, appetizers and pizza. Additionally, traditional menu items were
improved, and selected portion sizes increased to enhance the price/value
relationship offered to customers.
The Company will continue its Italian Grill re-positioning strategy during
the remainder of fiscal 1998. In addition to the three units converted during
the first six months of fiscal 1998, the Company converted its Arlington, Texas
location to the Italian Grill format in January 1998. Current plans call for the
conversion of four to five additional Spaghetti Warehouse restaurants to the
Italian Grill format during the remainder of the fiscal year.
In addition to Italian Grill conversions, the Company plans to open two to
three new Italian Grill units and to continue to make necessary replacements and
upgrades to existing restaurants and information systems during the next 12
months. Total planned capital expenditures relating to all projects during the
next 12 months are approximately $8.5 million. Cash flow from operations,
current cash balances and amounts available under the Company's revolving credit
facility are expected to be sufficient to fund planned capital expenditures and
payment of required term loan maturities for the next 12 months.
-10-
<PAGE>
Forward-Looking Information
- ---------------------------
Statements contained in this Form 10-Q that are not historical facts,
including, but not limited to, statements found in this Item 2, Management's
Discussion and Analysis of Financial Condition and Results of Operations, are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 that involve a number of risks
and uncertainties. The actual results of the future events described in such
forward-looking statements in this Form 10-Q could differ materially from those
stated in such forward-looking statements. The following factors, among others,
could cause actual results to differ materially: adverse retail industry
conditions, industry competition and other competitive factors, government
regulation and possible future litigation, seasonality of business, as well as
the risks and uncertainties discussed in this Form 10-Q.
-11-
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
Exhibit
Number Document Description
------- --------------------
27.1 Financial Data Schedule
-12-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Spaghetti Warehouse, Inc.
Dated: February 10, 1998 By: /s/Phillip Ratner
----------------- -----------------
Phillip Ratner
Chairman and
Chief Executive Officer
Dated: February 10, 1998 By: /s/Robert E. Bodnar
----------------- -------------------
Robert E. Bodnar
Treasurer, Controller and
Principal Accounting Officer
-13-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27.1
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the
accompanying condensed consolidated financial statements and is qualified in its
entirety by reference to such financial statements.
<ARTICLE> 5
<LEGEND>
Exhibit 27.1
</LEGEND>
<CIK> 0000775298
<NAME> Spaghetti Warehouse, Inc.
<MULTIPLIER> 1
<CURRENCY> 1.00
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1.00
<CASH> 1,603,621
<SECURITIES> 0
<RECEIVABLES> 594,210
<ALLOWANCES> 0
<INVENTORY> 630,068
<CURRENT-ASSETS> 3,313,160
<PP&E> 75,087,871
<DEPRECIATION> 27,839,979
<TOTAL-ASSETS> 58,195,874
<CURRENT-LIABILITIES> 7,231,906
<BONDS> 4,986,083
0
0
<COMMON> 65,842
<OTHER-SE> 45,721,311
<TOTAL-LIABILITY-AND-EQUITY> 58,195,874
<SALES> 30,744,503
<TOTAL-REVENUES> 31,383,689
<CGS> 8,006,266
<TOTAL-COSTS> 25,670,233
<OTHER-EXPENSES> 4,427,021
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 182,002
<INCOME-PRETAX> 1,104,433
<INCOME-TAX> 388,929
<INCOME-CONTINUING> 715,504
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 715,504
<EPS-PRIMARY> .13
<EPS-DILUTED> .12
</TABLE>
