UNITED STATES
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 February 27, 1999
or
THE SECURITIES EXCHANGE ACT OF 1934
[ ] 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 1-9681
JENNIFER CONVERTIBLES, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2824646
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
419 Crossways Park Drive, Woodbury, New York 11797
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 496-1900
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 [ ]
(APPLICABLE ONLY TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of the issuer's common stock as of
February 27, 1999: 5,700,725
<PAGE>
JENNIFER CONVERTIBLES, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements
Part I - Financial Information
Item I - Financial Statements
Consolidated Balance Sheets - February 27, 1999
(Unaudited) and August 29, 1998.............................. 2
Comparative Consolidated Statements of Operations
(Unaudited) for the twenty-six weeks and
thirteen weeks ended February 27, 1999 and
February 28,1998 ............................................ 3
Comparative Consolidated Statements of Cash Flows
(Unaudited) for the twenty-six weeks and
thirteen weeks ended February 27, 1999 and
February 28,1998 ............................................ 4
Notes to Unaudited Consolidated Financial Statements........... 5
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations....................7
Part II - Other Information....................................11
1
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<TABLE>
<CAPTION>
JENNIFER CONVERTIBLES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except for share data)
ASSETS
February 27, 1999 August 29, 1998
----------------- ---------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,639 $ 4,384
Merchandise inventories 8,755 10,018
Accounts receivable 440 500
Due from Private Company and
Unconsolidated Licensees, current portion 1,183 601
Prepaid expenses and other current assets 548 388
------------ ------------
Total current assets 12,565 15,891
Due from Private Company and Unconsolidated Licensees, net
of reserves of $6,815 at February 27, 1999 and $6,696
at August 29, 1998 -- --
Store fixtures, equipment and leasehold improvements
at cost, net 5,567 6,147
Deferred lease costs and other intangibles, net 691 783
Goodwill, at cost, net 527 535
Other assets (primarily security deposits) 682 743
------------ ------------
$ 20,032 $ 24,099
============ ============
LIABILITIES AND (CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable, trade $ 11,186 $ 14,917
Customer deposits 9,264 6,892
Accrued expenses and other current liabilities 4,566 5,192
------------ ------------
Total current liabilities 25,016 27,001
Deferred rent and allowances 5,269 5,497
Long-term obligations under capital leases 177 49
------------ ------------
Total liabilities 30,462 32,547
Commitments and contingencies
(Capital Deficiency):
Preferred stock, par value $.01 per share
Authorized 1,000,000 shares
Series A Convertible Preferred-10,000 issued
and outstanding at February 27, 1999 and August 29, 1998 -- --
Series B Convertible Preferred-26,664 issued
and outstanding at February 27, 1999 -- --
Common stock, par value $.01 per share
Authorized 10,000,000 shares; issued and
outstanding 5,700,725 shares at February 27, 1999
and August 29, 1998 57 57
Additional paid in capital 27,821 27,710
Notes receivable from warrant holders (270) (270)
Accumulated (deficit) (38,038) (35,945)
------------ ------------
(10,430) (8,448)
------------ ------------
$ 20,032 $ 24,099
============ ============
See accompanying notes to unaudited consolidated financial statements.
2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JENNIFER CONVERTIBLES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share data)
(unaudited)
Thirteen weeks Thirteen weeks Twenty-six weeks Twenty-six weeks
ended ended ended ended
February 27, 1999 February 28, 1998 February 27, 1999 February 28, 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 23,230 $ 25,281 $ 51,604 $ 53,188
----------- ----------- ----------- -----------
Cost of sales, including store occupancy,
warehousing, delivery and fabric protection 15,621 17,258 34,351 36,031
Selling, general and administrative expenses 8,529 8,141 18,415 17,156
Provision for amounts due from
Private Company and Unconsolidated Licensees 119 244 119 244
Loss from store closings -- 25 -- 25
Depreciation and amortization 411 442 832 882
----------- ----------- ----------- -----------
24,680 26,110 53,717 54,338
----------- ----------- ----------- -----------
Operating (loss) (1,450) (829) (2,113) (1,150)
----------- ----------- ----------- -----------
Other income (expense):
Royalty income 98 93 205 194
Interest income 19 15 66 38
Interest expense (36) (5) (87) (13)
Other income, net 10 53 68 116
----------- ----------- ----------- -----------
91 156 252 335
----------- ----------- ----------- -----------
(Loss) before income taxes (1,359) (673) (1,861) (815)
Income taxes 108 55 232 143
----------- ----------- ----------- -----------
Net (loss) ($1,467) ($728) ($2,093) ($958)
=========== =========== =========== ===========
Basic (loss) per common share ($0.26) ($0.13) ($0.37) ($0.17)
=========== =========== =========== ===========
Weighted average number of common shares 5,700,725 5,700,725 5,700,725 5,700,725
=========== =========== =========== ===========
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
3
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<TABLE>
<CAPTION>
JENNIFER CONVERTIBLES INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands) (unaudited)
Thirteen weeks Thirteen weeks Twenty-six weeks Twenty-six weeks
ended ended ended ended
February 27, 1999 February 28, 1998 February 27, 1999 February 28, 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) ($1,467) ($ 728) ($2,093) ($ 958)
Adjustments to reconcile net (loss)
to net cash provided by operating activities:
Depreciation and amortization 411 442 832 882
Provision for warranty costs 25 -- 50 --
Loss from store closings -- 25 -- 25
Deferred rent (123) (38) (228) (52)
Provision for losses on amounts due from
Private Company and Unconsolidated Licensees 119 244 119 244
Changes in operating assets and liabilities:
(Increase) decrease in merchandise inventories (585) 372 1,263 (1,267)
(Increase) in prepaid expenses & other current assets (313) (428) (160) (192)
Decrease in accounts receivable 580 1,429 60 577
(Increase) decrease in due from Private Company
and Unconsolidated Licensees (179) 174 (701) (477)
Decrease in deferred lease costs
and other intangibles 1 16 1 16
Decrease in other assets, net 2 11 62 21
(Decrease) in accounts payable trade (601) (7,514) (3,731) (5,035)
Increase (decrease) in customer deposits 2,384 (1,038) 2,372 (209)
Increase (decrease) in accrued expenses
and other payables 60 604 (308) (127)
------- ------- ------- -------
Net cash provided by (used in) operating activities 314 (6,429) (2,462) (6,552)
------- ------- ------- -------
Cash flows from investing activities:
Capital expenditures (95) (43) (154) (68)
(Decrease) increase in deferred lease costs
and other intangibles (2) 15 -- --
------- ------- ------- -------
Net cash (used in) investing activities (97) (28) (154) (68)
------- ------- ------- -------
Cash flows from financing activities:
Payments of obligations under capital leases (66) (60) (129) (97)
Sale of Series A Preferred Stock -- 5,000 -- 5,000
------- ------- ------- -------
Net cash (used in) provided by financing activities (66) 4,940 (129) 4,903
------- ------- ------- -------
Net increase (decrease) in cash and cash equivalents 151 (1,517) (2,745) (1,717)
Cash and cash equivalents at beginning of period 1,488 3,205 4,384 3,405
------- ------- ------- -------
Cash and cash equivalents at end of period $ 1,639 $ 1,688 $ 1,639 $ 1,688
======= ======= ======= =======
Supplemental disclosure of cash flow information:
Income taxes paid during the period $ 108 $ 55 $ 232 $ 143
======= ======= ======= =======
Interest paid $ 36 $ 5 $ 87 $ 13
======= ======= ======= =======
Supplemental disclosure of non-cash financing activities:
Issuance of Series B Preferred Stock-in settlement
of liability $ 111 -- $ 111 --
======= ======= ======= =======
See accompanying notes to unaudited consolidated financial statements.
4
</TABLE>
<PAGE>
JENNIFER CONVERTIBLES, INC.
Notes to Unaudited Consolidated Financial Statements
For the Twenty-Six Weeks Ended February 27, 1999
(In thousands except for share amounts)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of
Jennifer Convertibles, Inc. and subsidiaries (the "Company") and certain
licensees have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Due to many factors inherent in the retail
industry, the operating results for the interim period ended February 27, 1999
are not necessarily indicative of the results that may be expected for the year
ending August 28, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended August 29, 1998.
(2) MERCHANDISE INVENTORIES
Merchandise inventories are stated at the lower of cost (determined on
the first-in, first-out method) or market and are physically located, as
follows:
2/27/99 8/29/98
------- -------
Showrooms $ 4,023 $ 4,113
Warehouses 4,732 5,905
------- -------
$ 8,755 $10,018
Vendor discounts and allowances in respect to merchandise purchased by
the Company are included as a reduction of inventory and cost of sales.
(3) COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
CLASS ACTION AND DERIVATIVE ACTION LAWSUITS
Between December 6, 1994 and January 5, 1995, the Company was served
with eleven class action complaints and six derivative action lawsuits which
deal with losses suffered as a result of the decline in market value of the
Company's stock as well as the Company having "issued false and misleading
statements regarding future growth prospects, sales, revenues and net income".
5
<PAGE>
JENNIFER CONVERTIBLES, INC.
Notes to Unaudited Consolidated Financial Statements
For the Twenty-Six Weeks Ended February 27, 1999
(In thousands except for share amounts)
SETTLEMENT OF CLASS ACTION LITIGATION
On November 30, 1998, the court approved the settlement of the class
action litigation. The settlement provides for the payment to certain members of
the class and their attorneys of an aggregate maximum amount of $7,000 in cash
and Preferred Stock having a value of $370. The cash portion of the settlement
will be funded entirely by insurance company proceeds. In accordance with FASB
Statement NO. 5, the $370 value of the Preferred Stock had been accrued in the
fiscal year ended August 26, 1995.
The settlement of the class action litigation is a claims made
settlement. All claimants who purchased the Company's Common Stock during the
period from December 9, 1992 through December 2, 1994 and who held their stock
through December 2, 1994, will be entitled to participate in the settlement.
Based upon valid proofs of claim actually filed, the Company anticipates that it
will not have to issue more than $260 in Preferred Stock.
PROPOSED SETTLEMENT OF DERIVATIVE LITIGATION
As described in prior filings with the Securities and Exchange
Commission, the Company had entered into settlement agreements as to the
derivative litigation, subject, in the case of certain of such agreements, to
court approval of such settlement by a certain date. Such court approval was not
obtained by such date. The Company and the Private Company are negotiating with
respect to a new settlement. There can be no assurance that a settlement will be
reached or as to the terms of such settlement. The ultimate outcome of these
matters is not presently determinable.
A group of shareholders claiming to own approximately 8.5% of the
outstanding shares of the Company have filed (as a group) objections to the
fairness of the previously proposed settlement agreements which have been
terminated.
6
<PAGE>
JENNIFER CONVERTIBLES, INC.
Notes to Unaudited Consolidated Financial Statements
For the Twenty-Six Weeks Ended February 27, 1999
(In thousands except for share amounts)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS:
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THIS "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS"
CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE U. S. PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, AS AMENDED. THESE STATEMENTS INVOLVE
KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES THAT MAY CAUSE THE COMPANY'S ACTUAL
RESULTS OR OUTCOME TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD LOOKING
STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO THE RISK FACTORS SET FORTH UNDER THE CAPTION "RISK FACTORS" IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED AUGUST 29, 1998.
IN ADDITION TO STATEMENTS WHICH EXPLICITLY DESCRIBE SUCH RISKS AND
UNCERTAINTIES, INVESTORS ARE URGED TO CONSIDER STATEMENTS LABELED WITH THE TERMS
"BELIEVES," "BELIEF," "EXPECTS," "INTENDS," "PLANS" OR "ANTICIPATES" TO BE
UNCERTAIN AND FORWARD-LOOKING.
NET SALES:
The Company's sales decreased by 3.0% to $51,604 for the twenty-six
weeks ended February 27, 1999 as compared to $53,188 for the same period in the
prior year. Sales for the thirteen weeks ended February 27, 1999 decreased by
8.1% to $23,230 from $25,281 for the same period in the prior year. There were
142 stores in operation as of February 27, 1999 compared to 147 stores at the
end of the prior year fiscal quarter. Comparable store sales (those open for the
entire period in the current and prior year periods) decreased by 1.6% and 6.5%,
respectively. The decrease in sales is primarily attributable to the Jennifer
Leather division which decreased by 6.2% and 28.0%, respectively due to
manufacturer's delivery problems.
The Company has received a Notice of Termination of its Merchant
Agreement (effective April 21, 1999) in connection with its private label credit
card program offered through a financial service institution as a result of that
institution being sold. The Company is actively negotiating with others to
replace this program. There can be no assurance that a replacement program will
be obtained, which could affect sales.
7
<PAGE>
JENNIFER CONVERTIBLES, INC.
Notes to Unaudited Consolidated Financial Statements
For the Twenty-Six Weeks Ended February 27, 1999
(In thousands except for share amounts)
COST OF SALES:
TWENTY-SIX WEEKS ENDED FEBRUARY 27, 1999:
Cost of sales decreased by 4.7% to $34,351 (66.6% as a percentage of
sales) as compared to $36,031 (67.7% as a percentage of sales) for the same
period in the prior year. The dollar decrease of $1,680 is primarily
attributable to the lower sales volume. Merchandise costs as a percentage of
sales decreased by .5%. Freight costs declined by .4% (as a percentage of sales)
as well as customer repairs which declined by .2% (as a percentage of sales).
Total occupancy costs declined by $53 but increased as a percentage of sales by
.3% due to the lower sales volume. Warehouse expenses of $2,281, fabric
protection services of $1,091 and freight of $1,160 provided by the Private
Company compared to $2,715, $1,261 and $1,401, respectively, from the previous
year. Warehouse expenses reflect a reduction of $300 in the current quarter
($150 per month effective January 1, 1999) due to a reduction negotiated with
the Private Company.
THIRTEEN WEEKS ENDED FEBRUARY 27, 1999:
Cost of sales decreased by 9.5% to $15,621 (67.2% as a percentage of
sales) as compared to $17,258 (68.3% as a percentage of sales) for the same
period in the prior year. The dollar decrease of $1,637 is primarily
attributable to the lower sales volume. Freight costs (as a percentage of sales)
declined by .1%. Total occupancy costs declined by $53 but increased as a
percentage of sales by .9% due to the lower sales volume. Warehouse expenses of
$864, fabric protection services of $479 and freight of $539 provided by the
Private Company compared to $1,320, $599 and $606, respectively, from the
previous year. Warehouse expenses reflect a reduction of $300 in the current
quarter ($150 per month effective January 1, 1999) due to a reduction negotiated
with the Private Company.
SELLING, GENERAL AND ADMINISTRATIVE AND OTHER EXPENSES:
TWENTY-SIX WEEKS ENDED FEBRUARY 27, 1999:
Selling, general and administrative expenses were $18,415 (35.7% as a
percentage of sales) as compared to $17,156 (32.3% as a percentage of sales) for
the prior period, an increase of $1,259 or 7.3%. The increase in expenses was
caused by: A.) higher payroll expense of $344, principally because the Company
had assumed (effective January 1, 1998) certain payroll expenses previously
funded by the Private Company which amounted to an additional $460 in the
current period when compared to the prior year. B.) higher advertising expenses
of $309, and C.) higher costs of $263 in connection with an enhanced private
label credit card program compared to the prior year period and D.) lower levels
of credit adjustments related to cancelled customer orders of $759.
8
<PAGE>
JENNIFER CONVERTIBLES, INC.
Notes to Unaudited Consolidated Financial Statements
For the Twenty-Six Weeks Ended February 27, 1999
(In thousands except for share amounts)
THIRTEEN WEEKS ENDED FEBRUARY 27, 1999:
Selling, general and administrative expenses were $8,529 (36.7% as a
percentage of sales) as compared to $8,141 (32.2% as a percentage of sales) for
the prior period, an increase of $388 or 4.8%. The increase in expenses was
principally caused by lower levels of credit adjustments related to cancelled
customer orders of $617.
The Company's receivables from the Private Company, the Unconsolidated
Licensees and S.F.H.C. were $7,998 as of February 27, 1999 which had increased
by $701 from August 29, 1998. A reserve of $6,815 has been provided at February
27, 1999 and $6,696 at August 29, 1998. These entities have losses and/or
capital deficiencies and there can be no assurance that the gross receivables
will be collected. It is the Company's intention to continue to fund these
operations in the future. The Company has accounted for transactions with these
entities on an offset basis. If the result of the offset is a receivable due
from them, then such net amount will be generally recognized as income only at
the time when cash is received from these entities. As of April 12, 1999, $1,033
of the unreserved receivables at February 27, 1999 have been paid.
LIQUIDITY AND CAPITAL RESOURCES:
At February 27, 1999, the Company had an aggregate working capital
deficiency of $(12,451) compared to a deficiency of $(11,110) at August 29, 1998
and had available cash and cash equivalents of $1,639 compared to $4,384 at
August 29, 1998. This decrease in working capital since August 29, 1998 is due
principally to the net (loss) of $(2,093).
The Company funds the operations of the LP's which continue to generate
operating losses. All such losses have been consolidated in the Company's
consolidated financial statements. The Company's has also continued to fund the
operations of the Private Company, the Unconsolidated Licensees (other than
S.F.H.C.), and S.F.H.C.. As of February 27, 1999 the current receivables from
these entities were $1,183, and of this amount $1,033 has been paid by April 12,
1999. The balance is expected to be paid shortly. The Company and the Private
Company have entered into offset agreements that permit the two companies to
offset their current monthly obligations to each other in excess of a $1,000
credit extended by the Company to the Private Company. As part of such
agreements, the Private Company agreed to assume certain liabilities owed to the
Company by the Unconsolidated Licensees, other than S.F.H.C..
9
<PAGE>
JENNIFER CONVERTIBLES, INC.
Notes to Unaudited Consolidated Financial Statements
For the Twenty-Six Weeks Ended February 27, 1999
(In thousands except for share amounts)
The Company has a Credit and Security Agreement ("Agreement") with its
principal supplier, Klaussner which gives the Company the right to extend
payment terms for merchandise shipped from 60 days to 81 days provided that a
late fee of .67% per month is paid for invoices the Company pays beyond the
normal 60 day terms. As of February 27, 1999, there were no amounts due over 60
days. As part of the Agreement, the Company granted a security interest in all
of its assets, as well as assigning leasehold interests, trademarks and a
licensee agreement to operate the Company's business in the event of default. On
December 11, 1997, the Company sold to Klaussner 10,000 shares of Series A
Convertible Preferred Stock ("Preferred Stock"), convertible into 1,424,500
shares of the Company's Common Stock for $5,000. These shares are non-voting,
have a liquidation preference of $5,000 and do not pay dividends (except if
declared on the Common Stock). The Preferred Stock is not convertible until
September 1, 1999, or earlier under certain circumstances (e.g. if another
person or group acquires 12.5% or more of the Common Stock or there are certain
changes in management or the Board of Directors), and has other rights
associated with it.
On November 30, 1998, the court approved a settlement of all the class
actions pending against the Company. The cash portion of the settlement will be
funded entirely by insurance company proceeds. Based upon the proofs of claim
filed, the Company anticipates that it will not have to issue more than $260 in
Preferred Stock and there will be no cash outlays by the Company other than
legal costs.
In fiscal 1998 and 1997, the Company and the LP's closed an aggregate
of six stores. In the twenty-six weeks ended February 27, 1999, two additional
stores were closed. A number of such closings were due to the Company's decision
to combine separate Jennifer Convertibles and Jennifer Leather stores located in
the same demographic areas into one store. The primary benefit of combining both
operations into one store was an elimination of the real estate expenses and
other expenses associated with the closed showroom. Additional benefits realized
included reductions of personnel and, in a number of cases, elimination of
duplicate office equipment and telephone lines. Although combining two stores
into one store generally reduces sales, management believes that sales at the
combined store will generate more profit due to the elimination or reduction of
expenses described above.
The Company anticipates approximately breakeven results for fiscal
1999, with positive operating cash flow. This cash flow, together with the
Credit and Security Agreement with Klaussner, will provide the Company, in the
opinion of management, with adequate cash flow to fund its operations for the
current fiscal year.
10
<PAGE>
JENNIFER CONVERTIBLES, INC.
PART II
OTHER INFORMATION
ITEMS 1. through 5. NOT APPLICABLE.
ITEM 6. (a) NONE
(b) REPORTS ON FORM 8-K
11
<PAGE>
JENNIFER CONVERTIBLES, INC.
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.
JENNIFER CONVERTIBLES, INC.
April 12, 1999 By: /s/ HARLEY J. GREENFIELD
----------------------------------------------
Harley J. Greenfield, Chairman of the
Board and Chief Executive Officer
April 12, 1999 By: /s/ GEORGE J. NADEL
----------------------------------------------
George J. Nadel, Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000806817
<NAME> JENNIFER CONVERTIBLES, INC.
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-28-1999
<PERIOD-START> NOV-29-1998
<PERIOD-END> FEB-27-1999
<EXCHANGE-RATE> 1
<CASH> 1,639,000
<SECURITIES> 0
<RECEIVABLES> 1,623,000
<ALLOWANCES> 0
<INVENTORY> 8,755,000
<CURRENT-ASSETS> 12,565,000
<PP&E> 13,889,591
<DEPRECIATION> 8,322,554
<TOTAL-ASSETS> 20,032,000
<CURRENT-LIABILITIES> 25,016,000
<BONDS> 0
0
367
<COMMON> 57,000
<OTHER-SE> (10,487,000)
<TOTAL-LIABILITY-AND-EQUITY> 20,032,000
<SALES> 23,230,000
<TOTAL-REVENUES> 23,230,000
<CGS> 15,621,000
<TOTAL-COSTS> 24,680,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,000
<INCOME-PRETAX> (1,359,000)
<INCOME-TAX> 108,000
<INCOME-CONTINUING> (1,467,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,467,000)
<EPS-PRIMARY> (0.26)
<EPS-DILUTED> (0.26)
</TABLE>
