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 QUARTER ENDED OCTOBER 2, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-24912
WELCOME HOME, INC.
DELAWARE 56-1379322
(State of other Jurisdiction of (I.R.S. EMPLOYER
Incorporation or Organization) IDENTIFICATION NO.)
309 Raleigh Street
Wilmington, NC 28412
(Address of Principal Executive Offices) (Zip Code)
(910) 791-4312
(Registrant's Telephone Number, Including Area Code)
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 ( )
The aggregate market value of the voting stock held by non-affiliates of the
registrant was $500,000 as of November 16, 1999. Determination of affiliate
status for this purpose is not a determination of affiliate status for any other
purpose. As of November 16, 1999, there were 9,000,000 shares of the
registrant's common stock outstanding.
1
<PAGE>
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of October 2, 1999 and December 31, 1998..............................................3
Statements of Operations for the Three Months and Nine Months Ended
October 2, 1999 and October 3, 1998.................................................................4
Statements of Cash Flows for the Nine Months Ended
October 2, 1999 and October 3, 1998.................................................................5
Statement of Shareholders' Equity for the Nine Months Ended
October 2, 1999.....................................................................................6
Notes to Financial Statements...........................................................................7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS....................................................................7
PART II. OTHER INFORMATION............................................................................11
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES..............................................................................................11
</TABLE>
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
WELCOME HOME, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
October 2, December
1999 31, 1998
--------------------------
(Unaudited) (Audited)
--------------------------
(in thousands of dollars
except
share data)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 704 $ 784
Inventories 14,544 11,352
Due from affiliates - 530
Prepaid and other assets 81 66
- -----------------------------------------------------------------------------------------------------------
Total Current Assets 15,329 12,732
Property & equipment, net 3,972 4,769
Other assets 265 276
- -----------------------------------------------------------------------------------------------------------
Total Assets $ 19,566 $ 17,777
===========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ 1,025 $ 1,191
Notes payable - line of credit 9,091 6,154
Notes payable to Jordan Industries 400 -
Accounts payable 1,019 715
Accounts payable to affiliates 3,643 2,409
Accrued expenses 2,650 4,010
Accrued restructuring charges 524 447
- -----------------------------------------------------------------------------------------------------------
Total Current Liabilities 18,352 14,926
Note payable to Jordan Industries 400 -
- -----------------------------------------------------------------------------------------------------------
Total liabilities 18,752 14,926
Shareholders' equity:
Preferred stock, $0.01 par value;
1,000,000, shares authorized; none issued - -
Old common stock, $0.01 par value;
13,000,000 shares authorized; 8,500,000 shares issued - 85
New common stock, $0.01 par value;
10,000,000 shares authorized; 9,000,000 shares issued and 90 -
outstanding
Additional paid-in capital 15,900 20,790
Retained deficit (15,176) (13,139)
- -----------------------------------------------------------------------------------------------------------
Subtotal 814 7,736
Less treasury stock, at cost
(1,046,385 shares) - 4,885
- -----------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 814 2,851
- -----------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 19,566 $ 17,777
===========================================================================================================
</TABLE>
See Notes to Financial Statements
3
<PAGE>
WELCOME HOME, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 2, October 3, October 2, October 3,
1999 1998 1999 1998
-------------------------------------------------------
(in thousands of dollars (in thousands of dollars
except per share data) except per share data)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $ 13,966 $ 12,616 $ 35,268 $ 33,434
Cost of sales 7,265 6,962 18,792 18,818
- --------------------------------------------------------------------------------------------------------------------
Gross margin 6,701 5,654 16,476 14,616
Selling, general and administrative expenses
(excluding depreciation) 5,722 5,285 16,188 15,293
Depreciation 421 572 1,452 1,664
- --------------------------------------------------------------------------------------------------------------------
Operating income (loss) 558 (203) (1,164) (2,341)
Interest expense - Jordan Industries 17 21 44 89
Interest expense - other 216 237 637 661
Other expense 2 0 7 11
- --------------------------------------------------------------------------------------------------------------------
Income (loss) before bankruptcy reorganization costs
and income taxes 323 (461) (1,852) (3,102)
Bankruptcy reorganization costs 75 300 140 900
- --------------------------------------------------------------------------------------------------------------------
Income (loss) before provision for income taxes 248 (761) (1,992) (4,002)
Provision for income taxes 15 15 45 45
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 233 $ (776) $ (2,037) $ (4,047)
====================================================================================================================
Net income (loss) available to common shareholders $ 233 $ (887) $ (2,037) $ (4,382)
====================================================================================================================
Basic and diluted income (loss) per common share $ 0.03 $ (0.10) $ (0.23) $ (0.49)
====================================================================================================================
Weighted average common shares outstanding (in thousands) 9,000 9,000 9,000 9,000
====================================================================================================================
</TABLE>
See Notes to Financial Statements
4
<PAGE>
WELCOME HOME, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
October 2, October 3,
1999 1998
--------------------------
(in thousands of dollars
except per share data)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,037) $ (4,047)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 1,452 1,664
Changes in operating assets and liabilities:
Due from affiliates 530 -
Inventories (3,192) (2,321)
Prepaid expenses and other assets (4) 81
Accounts payable 138 3,498
Payables to affiliates 1,234 1,623
Accrued liabilities (1,283) (2,203)
- -----------------------------------------------------------------------------------------------------------
Net cash used in operating activities (3,162) (1,705)
- -----------------------------------------------------------------------------------------------------------
Cash flows used in investing activities:
Capital expenditures (655) (225)
Other - (9)
- -----------------------------------------------------------------------------------------------------------
Net cash used in investing activities (655) (234)
- -----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from advances from Jordan Industries 800 -
Repayment of advances from Jordan Industries - (1,004)
Proceeds from line of credit 41,104 38,332
Repayments - line of credit (38,167) (35,033)
- -----------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 3,737 2,295
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (80) 356
Cash and cash equivalents at beginning of period 784 845
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 704 $ 1,201
===========================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest - Jordan Industries $ 38 $ 89
===========================================================================================================
Interest - third party $ 637 $ 647
===========================================================================================================
</TABLE>
See Notes to Financial Statements
5
<PAGE>
WELCOME HOME, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands of dollars)
<TABLE>
<CAPTION>
Series A
Redeemable Additional Retained
Preferred Preferred Common Paid-In Earnings Treasury
Stock Stock Stock Capital (Deficit) Stock Total
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 $ - $ - $ 85 $ 20,790 $ (13,139) $ (4,885) $ 2,851
Net loss - - - - (2,037) - (2,037)
Issuance of new common stock
and cancellation of old
common stock - - 5 (4,890) - 4,885 -
- ----------------------------------------------------------------------------------------------------------------
Balance at October 2, 1999 $ - $ - $ 90 $ 15,900 $ (15,176) $ - $ 814
================================================================================================================
</TABLE>
See Notes to Financial Statements
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The financial statements have been prepared by Welcome Home, Inc. (the "Company"
or "Welcome Home") pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These financial statements should be read in conjunction with the
audited financial statements included in the Company's Annual Report on Form
10-K for the year ended December 31,1998.
The financial information included herein reflects all adjustments (consisting
of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the results for interim periods.
The Company's sales volume has historically varied between quarters based on
several factors including the Christmas shopping season and accordingly, the
results of operations for the three and nine months periods ended October 2,
1999 are not necessarily indicative of annual results of operations.
2. BANKRUPTCY PROCEEDINGS
On January 21, 1997, the Company filed a voluntary petition for relief under the
provisions of Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court"). On
September 28, 1998, the Bankruptcy Court approved a Plan of Reorganization (the
"Plan") for Welcome Home. The Plan became effective on November 2, 1998 and
Jordan Industries purchased the secured and unsecured claims amounting to
approximately $6.9 million (excluding all Jordan Industries and Cape Craftsmen
claims) for approximately $1.1 million. The Plan also provided that shareholders
of the Company would receive shares of a new class of common stock of Welcome
Home ("New Common Stock") on a prorated basis. The 500,000 shares of New Common
Stock were distributed on June 18, 1999 to owners of Welcome Home's old Common
Stock based on the shareholders' percentage of total old Common Stock
outstanding excluding old Common Stock held by Jordan Industries. The prior
year's earnings per share information has been restated. The restated amounts
were calculated assuming the shares of New Common Stock were outstanding during
these periods. The Bankruptcy Court granted a request by Welcome Home to emerge
from the Chapter 11 proceeding on May 19, 1999 and a formal order of closure was
issued on July 21, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Welcome Home is a specialty retailer of gifts and decorative home furnishings
and accessories in North America, with 122 stores located primarily in factory
outlet centers in 36 states. Welcome Home stores offer a broad product line of
1,500 to 2,500 Stock Keeping Units ("SKUs") consisting of 11 basic groups,
including decorative home textiles, framed art, furniture, candles, lighting,
fragrance, decorative accessories, decorative garden, music, special opportunity
merchandise and seasonal products. Welcome Home's products currently range in
price up to $1,500, with an average sales transaction of $20.60 for the nine
months ended October 2, 1999, as compared to $18.43 for the nine months ended
October 3, 1998.
7
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth certain selected income statement data of the
Company expressed as a percentage of net sales and certain operating statistics
of the Company:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 2, October 3, October 2, October 3,
1999 1998 1999 1998
-------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 52.0 55.2 53.3 56.3
Gross profit 48.0 44.8 46.7 43.7
Selling, general and administrative
expenses (excluding depreciation) 41.0 41.9 45.9 45.7
Depreciation 3.0 4.5 4.1 5.0
Operating income (loss) 4.0 (1.6) (3.3) (7.0)
Interest expense 1.7 2.0 1.9 2.2
Bankruptcy reorganization costs 0.5 2.4 0.4 2.7
Provision for income taxes 0.1 0.1 0.1 0.1
Net income (loss) 1.7% (6.2)% (5.8)% (12.1)%
OPERATING STATISTICS:
Stores open at period end 122 119 122 119
Total square feet of store space at
period end (in thousands) 342 335 342 335
Percentage increase (decrease) in
comparable store sales 8.1% (4.1)% 4.0% (0.4)%
</TABLE>
THREE MONTHS ENDED OCTOBER 2, 1999 AS COMPARED TO THREE MONTHS ENDED OCTOBER 3,
1998
NET SALES. Net sales for the three months ended October 2, 1999 increased by
$1.4 million or 10.7%, as compared to the three months ended October 3, 1998.
This increase reflects an increase in comparable store sales of 8.1%. The
Company showed an increase in its average sales transaction to $20.47 for the
quarter ended October 2, 1999 compared to $19.23 for the quarter ended October
3, 1998 on the same store basis.
GROSS PROFIT. Gross profit for the quarter ended October 2, 1999 increased $1.0
million, or 18.5%, as compared to the quarter ended October 3, 1998. Gross
profit as a percentage of sales increased to 48.0% from 44.8%, due primarily to
higher initial markups and lower markdowns during the third quarter of 1999. The
cost of markdowns decreased by 25.3% to $0.7 million for the quarter ended
October 2, 1999 compared to $1.0 million for the quarter ended October 3, 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative
expense for the quarter ended October 2, 1999 increased by $0.4 million, or
8.3%, as compared to the quarter ended October 3, 1998, due primarily to higher
rent due to less rent concessions from landlords. Selling and administrative
expense as a percentage of net sales decreased to 41.0% in the third quarter of
1999 as compared to 41.9% in the third quarter of 1998.
BANKRUPTCY REORGANIZATION COSTS. The Company recorded $0.3 million of bankruptcy
fees in the third quarter of 1998 and $75 thousand in 1999. These charges
represent the expenses associated with the Chapter 11 bankruptcy proceedings.
INTEREST EXPENSE - OTHER. Interest expense - other remained at $0.2 million for
the quarters ended October 2, 1999 and October 3, 1998.
NET INCOME (LOSS). The Company's net income for the quarter ended October 2,
1999 was $0.2 million as compared to a loss of $0.8 million for the quarter
ended October 3, 1998. The decrease in net loss of $1.0 million was due to a
comparable store sales increase and higher gross margin offset by slightly
higher selling, general and administrative expenses.
8
<PAGE>
NINE MONTHS ENDED OCTOBER 2, 1999 AS COMPARED TO NINE MONTHS ENDED OCTOBER 3,
1998
NET SALES. Net sales for the nine months ended October 2, 1999 increased by $1.9
million or 5.5%, as compared to the nine months ended October 3, 1998. This
increase reflects comparable store sales gain of 4.0%. The Company showed an
increase in its average sales transaction to $20.66 for the nine months ended
October 2, 1999 compared to $18.44 for the nine months ended October 3, 1998 on
the same store basis.
GROSS PROFIT. Gross profit for the nine months ended October 2, 1999 increased
$1.9 million, or 12.7%, as compared to the nine months ended October 3, 1998.
Gross profit as a percentage of sales increased to 46.7% from 43.7%, due
primarily to higher initial markups and lower markdowns taken during the first
nine months of 1999. The cost of markdowns decreased by $0.3 million to $2.2
million for the nine months ended October 2, 1999, as compared to $2.5 million
for the nine months ended October 3, 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative
expense for the nine months ended October 2, 1999 increased by $0.9 million, or
5.9%, as compared to the nine months ended October 3, 1998, due primarily to
higher rent due to less rent concessions from landlords. In addition, selling
and administrative expense as a percentage of net sales increased to 45.9% in
the first nine months of 1999 as compared to 45.7% in the first nine months of
1998.
BANKRUPTCY REORGANIZATION COSTS. The Company recorded $0.9 million of bankruptcy
fees in the first nine months of 1998 and $140 thousand in 1999. These charges
represent the expenses associated with the Chapter 11 bankruptcy proceedings.
INTEREST EXPENSE - OTHER. Interest expense - other remained at $0.6 million for
the nine months ended October 2, 1999 and October 3, 1998.
NET LOSS. The Company's net loss for the nine months ended October 2, 1999 was
$2.0 million as compared to $4.0 million for the nine months ended October 3,
1998. The decrease in net loss of $2.0 million was due to lower bankruptcy costs
associated with the Chapter 11 bankruptcy proceedings, a comparable store sales
increase and higher gross margin offset by slightly higher selling, general and
administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a $3.0 million working capital deficit at October 2, 1999 as
compared to $2.2 million deficit at December 31, 1998. The decrease in working
capital was due primarily to an increase in notes payable - line of credit due
to the seasonality of the business offset by an increase in inventories and a
decrease in accrued expenses due to payments of bankruptcy settlements.
The Company expects to satisfy its anticipated demands and commitments for cash
in the next 12 months primarily from borrowings under its credit facility with
Fleet Capital Corporation. The terms of this facility are as follows:
o Borrowing base of $15.0 million
o Commencing on October 29, 1998 until October 29, 2003
o Secured by substantially all assets of the Company
o Interest calculated at 1 1/4% above prime.
The Company signed a commitment to enter into an $800,000 Promissory Note with
Jordan Industries that bears interest at 8.5%. The note calls for monthly
payments of interest only through April 30, 2000, and commencing on May 1, 2000,
the Company must make monthly payments of $66,667 plus accrued interest until
the note is paid in full. Welcome Home received the proceeds from this note on
February 11, 1999. The entire amount payable under this note remains
outstanding.
NET OPERATING LOSS CARRYFORWARDS AND DEFERRED TAX ASSETS
At December 31,1998, the Company had approximately $26.7 million of net
operating loss carryforwards for Federal income tax purposes ("NOL's"). Due to
the uncertainty of generating future taxable income, management believes it is
appropriate to fully reserve the deferred tax asset.
9
<PAGE>
YEAR 2000
The past practice of computer programs being written using two digits rather
than four to define the applicable year has resulted in the "Year 2000 Issue."
Any of the Company's computer programs or hardware that has date sensitive
software or embedded chips may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations or a temporary inability to
engage in normal business activities. In response to this issue, the Company
developed a Year 2000 Task Force ("Task Force") whose project scope included the
assessment and ongoing monitoring of all information technology computer
hardware and software and non-information technology equipment affected by the
Year 2000 Issue. The Company's plan to resolve the Year 2000 Issue involves the
following four phases: assessment, remediation, testing and implementation.
The Company's information technology infrastructure consists primarily of
externally developed software running in a mainframe environment. The Company
also has a network of personal computers, through local area networks. The local
area networks of personal computers and related software are substantially Year
2000 compliant.
The Company's information technology mainframe software applications that
support its critical processes have been remediated, tested and determined to be
Year 2000 compliant. However, the ultimate effectiveness of the information
technology will be unknown until January 1, 2000, and there is no assurance that
there will not be a material adverse effect.
The Company has no significant single supplier, vendor or customer ("external
agents") that is critical to its ongoing operations. To date, the Company is not
aware of any external agent with a Year 2000 issue that would materially impact
the Company's results of operations, liquidity or capital resources. However,
the Company has no means of ensuring that external agents are Year 2000
compliant. The inability of external agents principally financial institutions,
insurance companies, energy suppliers and other third party employee benefit
related providers - to complete their Year 2000 resolution process in a timely
manner could materially impact the Company. The effect of non-compliance by
external agents in not determinable.
The Company has and will continue to renovate, test and implement the software
and operating equipment for Year 2000 modifications. The total costs of the Year
2000 projects are estimated to be approximately $0.1 million. The results of
ongoing remediation and testing, however, could result in additional costs to
the Company.
Management of the Company believes it has an effective program in place to
resolve the impact of the Year 2000 issue in a timely manner and does not expect
the Year 2000 issue to have a material adverse effect on the Company . But, as
noted above, the Company has not yet completed the conversion of all information
technologies identified in its Year 2000 program. If the Company does not
complete any further Year 2000 work, the Company might be unable to effectively
account for or report its financial position and results of operations using its
current information technology. In addition, the ultimate effectiveness of the
remediated information technology will be unknown until January 1, 2000, and
there is no assurance that there will not be a material adverse effect. The
amount of the potential liability and lost revenue, if any, resulting from these
risks cannot be reasonably estimated at this time.
The Company currently has no formal contingency plans in place if it does not
complete all phases of the Year 2000 program. However, the progress of the Year
2000 program is being closely monitored, and additional measures will be taken
as risks are identified. The Company has completed about 98% of all its Year
2000 program and feels it will achieve 100% before December 1999.
FORWARD-LOOKING STATEMENTS
This Quarterly Report contains statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act on Form 10-Q
of 1933 and Section 21E of the Securities Exchange Act of 1934. Investors are
cautioned that all forward-looking statements involve risks and uncertainties,
including those arising out of economic, climatic, political, regulatory,
competitive and other factors. The forward-looking statements in this document
are intended to be subject to the safe harbor protection provided by Sections
27A and 21E. For a discussion identifying some important factors that could
cause actual results to vary materially from those anticipated in the
forward-looking statements, see certain of the Company's other filings with the
Securities and Exchange Commission including its Annual Report on form 10-K for
the year ended December 31, 1998.
10
<PAGE>
PART II. OTHER INFORMATION
WELCOME HOME, INC.
<TABLE>
<S> <C>
ITEM 1. LEGAL PROCEEDINGS: NONE
ITEM 2 CHANGES IN SECURITIES: NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES: NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS: NONE
ITEM 5. OTHER INFORMATION: NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS: NONE
(B) REPORTS FILED ON FORM 8-K: NONE
</TABLE>
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.
WELCOME HOME. INC.
BY:
/S/ MARK S. DUDECK
NAME: MARK S. DUDECK
TITLE: VICE PRESIDENT, TREASURER AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
NOVEMBER 16, 1999
11
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000922817
<NAME> WELCOME HOME, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> OCT-02-1999
<CASH> 704
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 14,544
<CURRENT-ASSETS> 15,329
<PP&E> 14,195
<DEPRECIATION> 10,223
<TOTAL-ASSETS> 19,566
<CURRENT-LIABILITIES> 18,352
<BONDS> 0
0
0
<COMMON> 90
<OTHER-SE> 724
<TOTAL-LIABILITY-AND-EQUITY> 19,566
<SALES> 13,966
<TOTAL-REVENUES> 13,966
<CGS> 7,265
<TOTAL-COSTS> 6,143
<OTHER-EXPENSES> 77
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 233
<INCOME-PRETAX> 248
<INCOME-TAX> 15
<INCOME-CONTINUING> 233
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 233
<EPS-BASIC> 0.03
<EPS-DILUTED> 0.03
</TABLE>
