<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 29, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
For the transition period from to
--------------- ---------------
Commission file number 1-12104
BACK YARD BURGERS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 64-0737163
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2768 COLONY PARK DRIVE, MEMPHIS, TENNESSEE 38118
(Address of principal executive offices)
(901) 367-0888
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class - Common stock, par value $.01 per share
Outstanding at May 1, 1997 - 4,246,158
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE> 2
BACK YARD BURGERS, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
Part I - Financial Information
- ------------------------------
<S> <C> <C>
Item 1 - Unaudited Consolidated Financial Statements:
Balance Sheet as of March 29, 1997 and December 28, 1996 3
Statement of Income for the Thirteen Weeks Ended
March 29, 1997 and March 30, 1996 4
Statement of Cash Flows for the Thirteen Weeks Ended
March 29, 1997 and March 30, 1996 5
Notes to Unaudited Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-11
Part II - Other Information
- ---------------------------
Item 1 - Legal Proceedings 12
Item 2 - Changes in Securities 12
Item 3 - Defaults Upon Senior Securities 12
Item 4 - Submission of Matters to a Vote
of Security Holders 12
Item 5 - Other Information 12
Item 6 - Exhibits and Reports on Form 8-K 12
Signatures 13
- ----------
</TABLE>
2
<PAGE> 3
BACK YARD BURGERS, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 28,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 851 $ 1,101
Receivables, net 439 363
Inventories 159 150
Prepaid expenses and other current assets 86 31
----------- -----------
Total current assets 1,535 1,645
Note receivable 83 30
Property and equipment, at depreciated cost 7,932 8,131
Intangible assets 1,535 1,561
Other assets 202 205
----------- -----------
$ 11,287 $ 11,572
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 268 $ 564
Accrued expenses 641 507
Current installments of long-term debt 308 328
Total current liabilities 1,217 1,399
Long-term debt, less current installments 1,784 1,831
Other deferred liabilities 114 110
Deferred franchise fees 142 122
----------- -----------
Total liabilities 3,257 3,462
----------- -----------
Commitments and contingencies - -
Stockholders' equity
Preferred stock, $.01 par value, 2,000,000 shares authorized;
308,115 shares issued and outstanding at March 29, 1997
(309,506 at December 28, 1996) 3 3
Common stock, $.01 par value, 12,000,000 shares authorized;
4,246,158 outstanding at March 29, 1997
(4,240,766 at December 28, 1996) 42 42
Paid-in capital 9,962 9,956
Retained deficit (1,977) (1,891)
----------- -----------
Total stockholders' equity 8,030 8,110
----------- -----------
$ 11,287 $ 11,572
=========== ===========
</TABLE>
See accompanying notes to unaudited financial statements
3
<PAGE> 4
BACK YARD BURGERS, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------
MARCH 29, MARCH 30,
1997 1996
---- ----
<S> <C> <C>
Revenues:
Restaurant sales $ 5,461 $ 4,906
Franchise fees 21 19
Royalty fees 277 196
Advertising fees 72 50
Other 58 87
---------- ----------
Total revenues 5,889 5,258
---------- ----------
Expenses:
Cost of restaurant sales 1,826 1,658
Restaurant operating expenses 2,794 2,467
General and administrative 740 661
Advertising 286 229
Depreciation and amortization 269 281
---------- ----------
Total expenses 5,915 5,296
---------- ----------
Operating loss (26) (38)
Interest income 3 4
Interest expense (54) (57)
Other, net (9) 1
---------- ----------
Loss before income taxes (86) (90)
Income taxes -- --
---------- ----------
Net loss $ (86) $ (90)
========== ==========
Net loss per share $ (.02) $ (.02)
========== ==========
Weighted average number of common shares
and common equivalent shares outstanding 4,552 4,537
========== ==========
</TABLE>
See accompanying notes to unaudited financial statements
4
<PAGE> 5
BACK YARD BURGERS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------
MARCH 29, MARCH 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss $ (86) $ (90)
Adjustments to reconcile net loss to net cash
from operating activities
Depreciation and amortization of property and equipment 238 230
Amortization of intangible assets 27 26
Amortization of preopening costs 4 24
Provision for losses on receivables 30 15
(Increase) decrease in assets
Receivables (34) (68)
Inventories (9) -
Prepaid expenses and other current assets (60) 121
Other assets 3 4
Increase (decrease) in liabilities
Accounts payable and accrued expenses (162) (111)
Other deferred liabilities 4 6
Deferred franchise fees 20 13
---------- ----------
Net cash provided by (used in) operating activities (25) 170
---------- ----------
Cash flows from investing activities
Additions to property and equipment (164) (91)
---------- ----------
Net cash used in investing activities (164) (91)
---------- ----------
Cash flows from financing activities
Issuance of stock 6 5
Principal payments on long-term debt and capital leases (67) (57)
---------- ----------
Net cash used in financing activities (61) (52)
---------- ----------
Net increase (decrease) in cash and cash equivalents (250) 27
Cash and cash equivalents
Beginning of period 1,101 528
---------- ----------
End of period $ 851 $ 555
========== ==========
Supplemental disclosure of cash flow information
Income taxes paid $ - $ -
========== ==========
Interest paid $ 54 $ 57
========== ==========
</TABLE>
See accompanying notes to unaudited financial statements
5
<PAGE> 6
BACK YARD BURGERS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
Back Yard Burgers, Inc. (the "Company") owns and operates quick-service
restaurants and is engaged in the sale of franchises and the collection of
royalties based upon related franchise sales. The Company grants franchise
rights for the use of "Back Yard Burgers," "BYB" or "BY Burgers" trade names
and other associated trademarks, signs, emblems, logos, slogans and service
marks which have been or may be developed.
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10- QSB and therefore do not include
all information and notes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. The statements do reflect all adjustments
(consisting of only normal recurring accruals) which are, in the opinion of
management, necessary to present fairly the financial position and results of
operations and cash flows in conformity with generally accepted accounting
principles. The statements should be read in conjunction with the Notes to
Financial Statements for the year ended December 28, 1996 included in the
Company's 1996 Annual Report.
The financial statements include the accounts of Back Yard Burgers, Inc.
and its wholly-owned subsidiaries, Little Rock Back Yard Burgers, Inc. and
Atlanta Burgers BYB Corporation, as well as the Back Yard Burgers National
Advertising Fund. All significant intercompany transactions have been
eliminated.
The results of operations for the thirteen-week period is not necessarily
indicative of the results to be expected for the full year.
The Company maintains its financial records on a 52-53 week fiscal year
ending on the Saturday closest to December 31.
NOTE 2 - NET INCOME PER SHARE
The Company calculates earnings per share based on the weighted average number
of common shares and common equivalent shares outstanding. Common equivalent
shares represent dilutive stock options and warrants, reduced by the number of
shares which could be repurchased at the average fair market value during the
year with the proceeds of the options and warrants.
NOTE 3 - DEFERRED FRANCHISE FEES
Amounts received for certain franchise and area development rights, net of
commissions paid, have been deferred. Revenues on individual franchise fees
are recognized when substantially all of the initial services required of the
Company have been performed, which generally coincides with the opening of the
franchises. Under the terms of the franchise agreements, these fees are
non-refundable, and may be recognized as income should the franchisee fail to
perform as agreed. Area development fees are recognized on a pro-rata basis as
each unit opens. At March 29, 1997, deferred fees include franchise and area
development rights sold during the following years:
<TABLE>
<S> <C>
1997 $ 41
1995 59
Previous Years 42
--------
$ 142
========
</TABLE>
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company is party to several pending legal proceedings and claims. Although
the outcome of the proceedings and claims cannot be determined with certainty,
management of the Company is of the opinion that it is unlikely that these
proceedings and claims will have a material adverse effect on the financial
condition or results of operations of the Company.
6
<PAGE> 7
SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain qualifying forward-looking statements. Certain information
included in this Form 10-QSB may contain statements that are forward-looking,
such as statements related to financial items and results, plans for future
expansion and other business development activities, capital spending or
financing sources, capital structure and the effects of regulation and
competition. Such forward- looking information involves important risks and
uncertainties that could significantly impact anticipated results in the future
and, accordingly, such results may differ materially from those expressed in
any forward-looking statements by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" below.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company's revenues are derived primarily from Company-operated restaurant
sales, franchise fees and royalty fees. Certain expenses (cost of restaurant
sales, restaurant operating expenses, depreciation and amortization and
advertising) relate directly to Company-operated restaurants, while general and
administrative expenses relate to both Company-operated restaurants and
franchise operations. The Company's revenues and expenses are affected by the
number and timing of the opening of additional restaurants. Sales for new
restaurants in the period immediately following their opening tend to be high
because of trial by public and promotional activities. As a result, the timing
of openings can affect the average volume and other period-to-period
comparisons.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to total revenue,
unless otherwise indicated, of certain items included in the Company's
historical operations and operating data for the periods indicated.
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------
MARCH 29, MARCH 30,
1997 1996
---- ----
<S> <C> <C>
Revenues
Restaurant sales 92.7% 93.3%
Franchise fees .4 .4
Royalty fees 4.7 3.7
Advertising fees 1.2 .9
Other operating revenue 1.0 1.7
----- -----
Total revenue 100.0% 100.0%
===== =====
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------
MARCH 29, MARCH 30,
1997 1996
---- ----
<S> <C> <C>
Costs and Expenses
Cost of restaurant sales (1) 33.4% 33.8%
Restaurant operating expenses (1) 51.2 50.3
General and administrative 12.6 12.6
Advertising 4.9 4.4
Depreciation and amortization 4.6 5.3
Operating loss (.4) (.7)
Interest income - .1
Interest expense .9 1.1
Other, net (.2) -
Loss before income taxes (1.5) (1.7)
Income taxes - -
Net income (1.5) (1.7)
</TABLE>
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------
MARCH 29, MARCH 30,
1997 1996
---- ----
($000'S)
<S> <C> <C>
System-wide restaurant sales
Company-operated $ 5,461 $ 4,906
Franchised 7,573 5,221
------- -------
Total $13,034 $10,127
======= =======
Average annual sales per restaurant open for a
full year (2)
Company-operated $ 712 $ 656
Franchised $ 665 $ 586
System-wide $ 682 $ 617
Number of restaurants
Company-operated 32 32
Franchised 46 37
------- -------
Total 78 69
======= =======
</TABLE>
(1) As a percentage of restaurant sales.
(2) Includes sales for restaurants open for entire trailing twelve-month
period. Restaurants are included in the calculation after the completion
of six months of operation as sales during the period immediately after
the opening tend to be higher due to promotions and trial by public.
8
<PAGE> 9
COMPARISON OF THE COMPANY'S RESULTS FOR THE THIRTEEN WEEKS ENDED MARCH 29, 1997
AND MARCH 30, 1996.
RESTAURANT SALES increased 11.3% to $5,461,000 during the thirteen weeks
ended March 29, 1997 compared to $4,906,000 for the same 1996 period. This
increase is primarily the result of an increase in same-store sales at
restaurants open for more than one year of 5.8%, as well as a price increase of
approximately 3.5% effective at the beginning of the 1996 third quarter. The
increase in same-store sales, coupled with new stores not included in the
same-store sales calculation, accounted for approximately $370,000 in
additional sales while the price increases improved sales by approximately
$185,000. Management of the Company believes that the increase in same-store
sales is the result of improvement in service, as well as a marketing strategy
which is focused on increasing customer awareness and improving store-level
margins.
ROYALTY FEES increased 41.3% to $277,000 during the thirteen week period
ended March 29, 1997 compared to $196,000 during the same period in 1996. The
increase is due to an increase in franchised restaurant sales upon which the
fees are based. The sales increase resulted partially from a net increase of
eight franchised restaurants. Twelve franchised restaurants were opened, and
four were closed since March 30, 1996. Additionally, comparable same-store
sales at franchised restaurants open for more than one year increased 7.0%,
representing an increase in royalty fees of approximately $12,000.
ADVERTISING FEES increased 44.0% to $72,000 for the thirteen weeks ended
March 29, 1997 compared to $50,000 during the comparable period in 1996. The
increase is related to the increase in franchised restaurant sales as noted
above.
COST OF RESTAURANT SALES, consisting of food and paper costs, totaled
$1,826,000 for the thirteen weeks ended March 29, 1997 and $1,658,000 during
the same period in 1996, decreasing as a percentage of restaurant sales to
33.4% from 33.8%. This percentage decrease is primarily the result of the
price increase noted above, as well as decreases in all paper costs. These
decreases were partially offset by increases of approximately 9.0% and 3.8% in
the costs of beef and chicken, respectively.
RESTAURANT OPERATING EXPENSES, consisting of labor, supplies, utilities,
rent and certain other unit level operating expenses, increased to $2,794,000
for the thirteen weeks ended March 29, 1997 from $2,467,000 in the same prior
year period. This represents an increase as a percentage of restaurant sales
to 51.2% from 50.3% for the same period in 1996. The increase, as a percentage
of sales, relates primarily to an increase of approximately 2.0% in promotional
activities coupled with discounts designed to generate activity at the store
level. This increase was partially offset by an increase in same-store sales
at existing restaurants of 5.8% which results in expenses of a fixed and semi-
variable nature, such as management payroll, repairs, rent, utilities, taxes
and insurance, representing a smaller percentage of sales.
GENERAL AND ADMINISTRATIVE COSTS increased to $740,000 from $661,000, or
12.6% as a percentage of total revenues for both the thirteen weeks ended March
29, 1997 and the same period in 1996. The increase of $79,000 is primarily the
result of the addition of operations management personnel in the Little Rock
market and at the corporate level, an individual to reactivate franchise sales
which were suspended during 1996, and an MIS specialist to direct point of sale
maintenance and upgrade programs, as well as personnel costs related to an
increased level of restaurant management training programs to facilitate
superior customer service.
ADVERTISING EXPENSE increased 24.9% to $286,000 for the thirteen weeks
ended March 29, 1997 from $229,000 same period in 1996. This is the result of
an increase in advertising fees, as described above, which are used for the
development and production of marketing campaigns and collateral material.
Additionally, the amount allocated for local marketing and media purposes was
increased by 0.6%, as a percentage of Company-operated restaurant sales,
effective at the beginning of 1997.
9
<PAGE> 10
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews the carrying value of its long-lived and intangible assets
for possible impairment whenever events or changes in circumstances indicate
that the carrying amount of assets may not be recoverable. A new cost basis is
established for impaired assets based on the fair value of these assets as of
the date the assets are determined to be impaired.
Certain of the Company's restaurants have have been identified as
underperforming and have initiated action plans to improve their
underperforming status. Should these plans prove unsuccessful, some or all of
these stores' assets may become impaired.
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures totaled $164,000 for the thirteen weeks ended March 29,
1997 and $91,000 for the same period of 1996. Generally, the Company purchases
its restaurant buildings and leases the properties for its Company-operated
restaurants. The average monthly lease cost for the 22 Company-operated
restaurants on leased sites at March 29, 1997 is approximately $2,900 per
month. For the eight restaurants where the Company leases the building as well
as the site, the average monthly lease cost is approximately $4,600.
Cash from operations for the Company is primarily affected by net earnings
adjusted for deferred franchise fees and non-cash expenses which consist
primarily of depreciation and amortization. Depreciation and amortization
totaled $269,000 for the thirteen weeks ended March 29, 1997 and $281,000 for
the same 1996 period. This decrease is primarily the result of equipment at
certain Company-operated stores becoming fully depreciated. Receivables, net,
increased $129,000 during the thirteen weeks ended March 29, 1997, primarily
due to the acceptance of a note in the amount of $125,000 as consideration for
a Company-operated store which was closed and sold during the first quarter.
The remaining increase is due to the timing of collections from franchisees.
Cash provided by (used in) operations for the thirteen week period ended
March 29, 1997 and March 30, 1996 totaled ($25,000) and $170,000, respectively.
Since January 1, 1995, the addition of restaurants and equipment has been
financed primarily through cash from operations and debt.
On October 4, 1996, the Company received a commitment from a leasing
company for a loan transaction . This commitment provides the Company with up
to $2,000,000 and bears interest at approximately 13.0%. Additionally, on
January 23, 1997, the Company entered into a loan agreement with a financial
institution which provides the Company with a loan commitment of up to $765,000
and bears interest at the prime rate plus 1%. Both of the above commitments
are secured by real and personal property to be acquired and/or constructed
with the commitment proceeds. There are no borrowings outstanding under either
of the above commitments at March 29, 1997.
The Company believes that it currently has sufficient resources to fund
anticipated capital expenditures of approximately $2,800,000 during the
remainder of 1997. These resources include the borrowing commitments described
above in addition to the Company's internally generated cash flow. Additional
growth in 1998 may require the Company to obtain additional debt or equity
financing.
SEASONALITY AND INFLATION
While the Company does not believe that seasonality affects its operations in a
material manner, first quarter results will generally be lower than other
quarters due to seasonal climate conditions in the locations of many of its
restaurants. Management does not believe that inflation has had a material
effect on income during the thirteen weeks ended March 29, 1997. Increases in
food, labor or other operating costs could adversely affect the Company's
operations. In the past, however, the Company generally has been able to
increase menu prices or modify its operating procedures to substantially
offset increases in operating costs. However, because of the intense
competition in the quick-service restaurant industry, there can be no certainty
that the Company will be able to successfully continue this practice.
10
<PAGE> 11
KNOWN TRENDS AND UNCERTAINTIES
Labor will continue to be a critical factor during the remainder of 1997. In
most areas where the Company operates restaurants, there is a shortage of
suitable labor. This, in itself, could result in higher wages as the
competition for employees intensifies, not only in the quick-service restaurant
industry, but in practically all retail and service industries. It will be
crucial for the Company to develop programs to attract and retain quality
employees. Effective September 1, 1997, the minimum wage will increase to
$5.15 per hour from $4.75 per hour. This increase could have a negative impact
on operating margins.
During 1996, the cost of beef and chicken, the largest single component of
the cost of restaurant sales, was below prices of recent years. During the
thirteen weeks ended March 29, 1997, the cost of beef and chicken rose 9.0% and
3.8%, respectively. Management of the Company expects additional increases in
these costs in the future and that it will be difficult to raise menu prices to
fully cover these anticipated increases due to the competitive state of the
quick-service restaurant industry. Additional margin improvements would have
to be made through operational improvements, equipment advances and increased
volumes to help offset these increases.
Due to the competitive nature of the restaurant industry, site selection
will become more difficult as an increasing number of businesses will be vying
for locations with similar characteristics. This could result in higher
occupancy costs for prime locations.
The future success of the Company will be determined, to a great extent, by
its ability to positively address these issues.
CONVERSION OF PREFERRED STOCK
In accordance with the provisions of the Company's Certificate of Incorporation
regarding preferred stock, as a result of the Company's having attained after
tax net income in excess of $600,000 during 1994, each share of preferred stock
is convertible into one share of common stock, at the option of the holder.
The Company notified preferred stockholders of their right to convert preferred
stock to common stock, and anticipates that all shares of preferred stock will
be converted. Such conversion began on April 5, 1995, at which time there were
1,199,979 shares of preferred stock outstanding. As of March 29, 1997, 890,473
shares had been converted.
LEGAL PROCEEDINGS
The Company is involved in certain legal proceedings. See "Legal Proceedings"
below.
11
<PAGE> 12
PART II OTHER INFORMATION
Item 1 Legal Proceedings
The Company is involved in litigation incidental to its business, including,
but not necessarily limited to, claims alleging violations of the Civil Rights
Act of 1964 and/or discrimination. Aside from the cost of defense, such
litigation is not presently considered by management to be material to the
financial condition or results of operations of the Company.
<TABLE>
<S> <C>
Item 2 Changes in Securities
None
Item 3 Defaults Upon Senior Securities
Not Applicable
Item 4 Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
Exhibits
11 - Calculation of Income Per Share
27 - Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information only and not filed.
Reports on Form 8-K
None
</TABLE>
12
<PAGE> 13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
BACK YARD BURGERS, INC.
Date: May 12, 1997 By:/s/Lattimore M. Michael
- ------------------ -----------------------
Lattimore M. Michael
Chairman and Chief
Executive Officer
Date: May 12, 1997 By:/s/Stephen J. King
- ------------------ ---------------------
Stephen J. King Chief
Financial Officer
13
<PAGE> 1
EXHIBIT 11
BACK YARD BURGERS, INC.
COMPUTATION OF INCOME (LOSS) PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS
ENDED
-----
MARCH 29, MARCH 30,
1997 1996
---- ----
<S> <C> <C>
Net Loss $ (86) $ (90)
========= =========
Weighted average number
of common shares outstanding
during the period 4,244 4,208
Preferred shares convertible
to common shares 308 329
--------- ---------
4,552 4,537
========= =========
Primary loss per share $ (.02) $ (.02)
========= =========
Primary weighted average number
of common shares outstanding
during the period 4,244 4,208
Preferred shares convertible
to common shares 308 329
--------- ---------
4,552 4,537
========= =========
Fully diluted loss per share
$ (.02) $ (.02)
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 29, 1997 AND THE CONSOLIDATED STATEMENT OF
INCOME FOR THE THREE MONTHS ENDED MARCH 29, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-3-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> MAR-29-1997
<EXCHANGE-RATE> 1
<CASH> 851
<SECURITIES> 0
<RECEIVABLES> 439 <F1>
<ALLOWANCES> 0
<INVENTORY> 159
<CURRENT-ASSETS> 1,535
<PP&E> 7,932 <F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,287
<CURRENT-LIABILITIES> 1,217
<BONDS> 0
0
3
<COMMON> 42
<OTHER-SE> 7,985
<TOTAL-LIABILITY-AND-EQUITY> 11,287
<SALES> 5,461
<TOTAL-REVENUES> 5,889
<CGS> 1,826
<TOTAL-COSTS> 4,620
<OTHER-EXPENSES> 1,271
<LOSS-PROVISION> 30
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> (86)
<INCOME-TAX> 0
<INCOME-CONTINUING> (86)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (86)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
<FN>
<F1>* ASSET VALUE REPRESENTS NET AMOUNT
</FN>
</TABLE>
