UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 28, 1998 Commission File Number 0-26270
INTERNATIONAL FRANCHISE SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 52-1853204
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
6701 Democracy Boulevard
Suite 300
Bethesda, Maryland 20817
(Address of principal executive offices) (Zip code)
(301) 897-4870
(Issuer'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 of 15(d) of the Securities and 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
As of August 1, 1998 7,034,324 shares of common stock par value, $.01 per share
were outstanding.
<PAGE>
INTERNATIONAL FRANCHISE SYSTEMS, INC.
FORM 10-QSB
QUARTERLY REPORT
For the Period Ended June 28, 1998
INDEX
Part I: FINANCIAL INFORMATION
Item 1 : Financial Statements
Condensed Consolidated Balance Sheet as of June 28, 1998
[Unaudited] and December 29, 1997 [Audited] 3 - 4
Condensed Consolidated Statements of Operations for the thirteen
week periods March 29, 1998 to June 28, 1998 and March 31, 1997 to
June 29, 1997 and for the twenty- six week periods December 29,
1997 to June 28, 1998 and December 30, 1996 to June 29, 1997
[Unaudited] 5
Condensed Consolidated Statement of Stockholders' Equity for the
twenty-six week period ended June 28, 1998 and the year ended
December 29, 1997 [Unaudited] 6
Condensed Consolidated Statements of Cash Flows for the twenty-six
week periods December 29, 1997 to June 28, 1998 and December 30,
1996 to June 29, 1997 [Unaudited] 7
Notes to Condensed Consolidated Financial Statements 8 -9
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations 10-13
Part II: OTHER INFORMATION 14
SIGNATURES 15
2
<PAGE>
INTERNATIONAL FRANCHISE SYSTEMS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 28, 1998 AND DECEMBER 29, 1997.
- -------------------------------------------------------------------------------
ASSETS:
Current Assets:
June 28, 1998 December 29, 1997
Cash and Cash Equivalents $1,276,742 $2,610,227
Trade Accounts Receivable - Net 2,275,060 2,050,094
Franchisee Loans 529,756 707,009
Other Receivables 940,693 611,690
Inventories 1,072,045 1,015,651
Prepaid Expenses and Accrued Income 561,374 65,776
Officer Loan Receivable 163,573 148,573
Due from Related Parties [D] 3,007,993 2,347,765
Deposits 420,080 308,318
----------- -----------
Total Current Assets 10,247,316 9,865,103
=========== ===========
Property and Equipment - Net 8,277,644 5,435,818
----------- -----------
Other Assets:
Intangible Assets 1,063,661 1,079,741
Marketable Securities 388,072 388,072
----------- -----------
Total Other Assets 1,451,733 1,467,813
=========== ===========
Total Assets $19,976,693 $16,768,734
----------- -----------
The Accompanying Notes are an Integral Part of these Condensed Consolidated
Financial Statements.
3
<PAGE>
INTERNATIONAL FRANCHISE SYSTEMS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 28, 1998 AND DECEMBER 29, 1997.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity: June 28, 1998 December 29, 1997
<S> <C> <C>
Current Liability:
Trade Accounts Payable $3,832,011 $2,691,247
Accrued Expenses and Other Payables 2,148,236 1,858,441
Obligations Under Capital Leases 140,601 111,604
Current Portion of Long-Term Debt 300,709 200,629
Taxes Payable 1,071,063 1,042,354
------------ ------------
Total Current Liabilities 7,492,620 5,904,275
------------ ------------
Total Current Liabilities
LongTerm Liabilities:
Long Term Debt 2,641,605 1,438,409
Obligations Under Capital Leases 123,277 76,843
------------ ------------
Total Long Term Liabilities 2,764,882 1,515,252
------------ ------------
Minority Interest 848,325 751,087
Stockholders' Equity:
$.01 Par Value, Preferred Stock, 1,000,000 Shares
Authorized, No Shares Issued and Outstanding -- --
$.01 Par Value, Common Stock - 19,000,000 Shares
Authorized and 7,034,324 Shares Issued and 7,027,324
Outstanding at March 1998 70,343 70,343
Additional Paid-in-Capital 6,493,041 6,493,041
Unrealized (Loss) on For-Sale Securities (388,073) (388,073)
Retained Earnings 2,419,435 2,148,616
Shares Held in Company Treasury (7,000) (14,000) (14,000)
Cumulative Foreign Currency Translation Adjustment 290,120 288,193
------------ ------------
Total Stockholders' Equity 8,870,866 8,598,120
=========== ===========
Total Liabilities and Stockholders' Equity $19,976,693 $16,768,734
------------ ------------
</TABLE>
The Accompanying Notes are an Integral Part of these Condensed Consolidated
Financial Statements.
4
<PAGE>
INTERNATIONAL FRANCHISE SYSTEMS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Thirteen Week Period For the Twenty-six Week Period
March 29, 1998 March 30, December 29, December 30,
to June 28, 1997 to 1997 to June 28, 1996 to
1998 June 29, 1997 1998 June 29,
1997
<S> <C> <C> <C> <C>
Revenue:
Sales by Company Owned Stores $974,603 $1,030,626 $1,955,632 $1,939,351
Commissary Sales 5,342,645 4,042,559 10,039,054 7,961,599
Franchise Fees 135,260 122,095 257,915 255,372
Rental Income 626,462 540,355 1,195,473 1,031,706
Royalty Sales 1,300,210 957,971 2,360,562 1,844,745
Computer Sales 185,289 291,079 391,627 569,602
Other Operating Income 87,166 69,942 170,769 146,651
------------ ------------ ------------ ------------
Total Revenue 8,651,635 7,054,627 16,371,032 13,749,026
------------ ------------ ------------ ------------
Cost of Sales
Company Owned Stores 382,826 614,543 753,440 1,176,900
Commissary 4,998,409 3,445,331 9,210,341 6,834,735
Other Operating Expenses 841,053 1,037,487 1,824,385 2,048,418
------------ ------------ ------------ ------------
Total Cost of Sales 6,222,288 5,097,361 11,788,166 10,060,053
------------ ------------ ------------ ------------
Gross Margin 2,429,347 1,957,266 4,582,866 3,688,973
------------ ------------ ------------ ------------
Amortization/Depreciation 85,970 196,526 305,372 382,147
Gain [Loss] on Sale of Fixed Assets 2,442 88,434 2,442 88,434
Administrative Expenses 1,967,158 1,563,246 3,743,621 2,945,671
------------ ------------ ------------ ------------
Operating Income/(Loss) 378,661 285,928 536,315 449,589
Interest Income 96,853 47,582 182,503 106,634
Interest Expense (52,659) (20,906) (52,659) (50,979)
------------ ------------ ------------ ------------
Net Interest Income 44,194 26,676 129,844 55,655
Income from Continuing Operations 422,855 312,604 666,159 505,244
(Loss) from Discontinued Operations -- 349 -- (68,022)
Extraordinary Income After Tax -- 1,756,038 -- 1,756,038
Minority Interest (53,588) -- (97,238) --
Income Tax (173,387) -- (298,102) --
------------ ------------ ------------ ------------
Net Income $195,879 $2,068,991 $270,819 $2,193,260
Earnings/(Loss) Per Share:
Income from Continuing Operations $0.03 $0.05 $0.04 $0.08
Loss from Discontinued Operations $0.00 $0.00 $0.00 $(0.01)
Extraordinary Income $0.00 $0.26 $0.00 $0.26
------------ ------------ ------------ ------------
Net Income (Loss) Per Share $0.03 $0.31 $0.04 $0.33
------------ ------------ ------------ ------------
Weighted Average Number of Shares Outstanding
7,034,324 6,727,324 7,034,324 6,727,324
------------ ------------ ------------ ------------
</TABLE>
The Accompanying Notes are an Integral Part of these Condensed Consolidated
Financial Statements.
5
<PAGE>
INTERNATIONAL FRANCHISE SYSTEMS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY [UNAUDITED]
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Additional (Loss) Currency Total
Number of Paid-in Retained on For Sale Translation Treasury Stockholders'
Shares Amount Capital Earnings Securities Adjustments Stock Equity
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1995 6,727,324 $67,273 6,489,611 $511,898 -- $31,622 -- $7,100,404
Foreign Currency Translation
Adjustment -- -- -- -- -- 218,778 -- 218,778
Net [Loss] for the fifty-two weeks
ended December 29, 1996 -- -- -- (139,808) -- -- -- (139,808)
--------- -------- ---------- ----------- ---------- -------- ------- ----------
Balance - December 29, 1996 6,727,324 $67,273 6,489,611 $372,090 $250,400 -- $7,179,374
Issue of Shares to Domino's Pizza
International, Inc. 300,000 3,000 -- -- -- -- -- 3,000
Redeemed Employee Options 7,000 70 3,430 -- -- -- -- 3,500
Unrealized gain/(loss)
On Available-for-Sale Securities -- -- -- -- (388,073) -- -- (388,073)
Foreign Currency Translation
Adjustment -- -- -- -- 37,793 -- 37,793
Minority Share of Reserves -- -- -- (569,558) -- -- -- (569,558)
Purchase Shares for Treasury -- -- -- -- -- -- (14,000) (14,000)
Net Income for the fifty-two weeks
ended December 28, 1997 -- -- -- 2,346,084 -- -- 2,346,084
--------- -------- ---------- ----------- ---------- -------- ------- ----------
Balance - December 28, 1997 7,034,324 $ 70,343 $6,493,041 $ 2,148,616 $ (388,073) $288,193 (14,000) $8,598,120
========= ======== ========== =========== ========== ======== ======= ==========
Net Income for the period
December 29, 1997 to June 28, 1998 -- -- -- 270,819 -- -- -- 270,819
Foreign Currency Translation
Adjustment -- -- -- -- -- 1,927 -- 1,927
Balance - June 28, 1998 7,034,324 $ 70,343 $6,493,041 $ 2,419,435 $ (388,073) $290,120 (14,000) $8,870,866
========= ======== ========== =========== ========== ======== ======= ==========
</TABLE>
Foreign Currency Translation -The functional currency for the Company's foreign
operations is the British pound sterling. The translation from the British pound
sterling into U.S. dollars is performed for balance sheet accounts using the
current exchange rate in effect at the balance sheet date and for revenue and
expense accounts using a weighted average exchange rate during the period. The
gains or losses resulting from such translations are included in stockholders'
equity. Equity transactions are denominated in British Pound sterling have been
translated into U.S. dollars using the effective rate of exchange at date of
issuance.
The Accompanying Notes are an Integral Part of these Condensed Consolidated
Financial Statements.
6
<PAGE>
INTERNATIONAL FRANCHISE SYSTEMS, INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Twenty-Six Week Period
December 29, December 28,
1997 to 1996 to
June 28, 1998 June 29, 1997
<S> <C> <C>
Net Cash From Continuing Operations $929,781 $663,982
Net Cash From Discontinued Operations -- --
----------- -----------
Net Cash - Operating Activities 929,781 663,982
Investing Activities:
Purchase of Property, Equipment and Capitalized Costs (3,147,198) (857,886)
Proceeds on Disposal of Property and Equipment 178,526 328,934
Advances to Officer (15,000) --
Loan to Related Party (660,228) --
----------- -----------
Net Cash - Investing Activities (3,643,900) (528,952)
----------- -----------
Financing Activities:
Share of Shares in Subsidiary -- 3,125,062
New Bank Loan 1,638,489 260,236
Payment of Debt (259,782) (255,726)
Proceeds from Sale of Common Stock -- --
----------- -----------
Net Cash - Financing Activities 1,378,707 3,129,572
----------- -----------
Effect of Exchange Rate Changes on Cash 1,927 29,766
Net [Decrease] in Cash and Cash Equivalents (1,333,485) 3,294,368
Cash and Cash Equivalents - Beginning of Periods 2,610,227 664,123
----------- -----------
Cash and Cash Equivalents - End of Periods 1,276,742 3,958,491
----------- -----------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the periods for:
Interest Paid 52,659 43,610
Taxes Paid -- --
Supplemental Disclosures of Non-Cash Financing and Investing Activities:
Assignment of Consulting Agreements -- --
Fixed Assets acquired under Capital leases -- --
</TABLE>
The Accompanying Notes are an Integral Part of these Condensed Consolidated
Financial Statements.
7
<PAGE>
INTERNATIONAL FRANCHISE SYSTEMS, INC.
- -------------------------------------------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
- -------------------------------------------------------------------------------
(A) Significant Accounting Policies
Significant accounting policies of INTERNATIONAL FRANCHISE SYSTEMS,
INC. [the "Company"] are set forth in the Company's Form 10-KSB for the
year ended December 28, 1997, as filed with the Securities and Exchange
Commission.
(B) Basis of Reporting
The balance sheet as of June 28, 1998, the statements of operations for
the period December 29, 1997 to June 28, 1998, and for the period
December 30, 1996 to June 29, 1997, the statement of stockholders'
equity for the period December 29, 1997 to June 28, 1998 and the
statements of cash flows for the period December 29, 1997 to June 28,
1998 and for the period December 30, 1996 to June 29, 1997 have been
prepared by the Company without audit. The accompanying interim
condensed unaudited financials have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions of Form 10-QSB and Regulation SB.
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 the management of the Company,
such statements include all adjustments [consisting only of normal
recurring items] which are considered necessary for a fair presentation
of the financial position of the Company at June 28, 1998, and the
results of its operations and cash flows for the thirteen week period
then ended. It is suggested that these unaudited financial statements
be read in conjunction with the financial statements and notes
contained in the Company's Form 10-KSB for the year ended December 28,
1997.
Certain reclassifications may have been made to the 1997 financial
statements to conform to classification used in 1998.
(C) Due from Related Parties
Crescent Capital owns 4,700,000 share or approximately 67% of
International Franchise Systems, Inc. outstanding stock. The Company
has loaned funds to Crescent Capital of $3,007,993. These loans are
interest bearing and principal and interest are payable on or before
September 29, 1998.
(D) Related Party Transactions
On March 11, 1998, the Company received an offer from IFS Acquisition
Corporation, an affiliate of Crescent Capital, Inc., the Company's
largest shareholder, to participate in a
8
<PAGE>
merger which would result in all of the shareholders other than
Crescent Capital, Inc. receiving $2.80 per share for each share of the
Company's stock. The Board of Directors named a Special Committee of
directors, comprised of Bernard Goldman and David Coffer, to consider
the offer. The Special Committee hired legal and financial advisors and
is considering the offer.
On April 17, 1998, the Special Committee announced that an agreement
had been reached on the financial terms of the merger and that the
public shareholders would receive $3.60 per share if the transaction is
completed. The proposed merger is subject to, among other things (i)
execution of a definitive merger agreement containing customary
representations, warranties, covenants and conditions (including a
financial condition), and (ii) compliance with all applicable
regulatory and governmental requirements. Accordingly, there can be no
assurance that the proposed merger will be consummated.
On July 24, 1998, a Proxy Statement was sent to shareholders seeking
approval of the merger. On August 19, 1998, in a Special Meeting,
shareholders voted "FOR" the merger.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Result
of Operations
Overview
Income before extraordinary items taxes and minority interest for the thirteen
week period ended June 28, 1998 was higher than the same period of the previous
year due to more stores open, an increase in average weekly sales, and improved
commissary efficiencies ($422,854 in 1998 versus $312,604 in 1997). During the
thirteen week period ended June 28, 1998, the Company opened 8 delivery units
which brings the total to 167 units operating in the United Kingdom and Ireland.
Domino units opened include 161 delivery units, (12 that are Company owned) and
6 units that are "call and collect".
In a move to strengthen IFS's investment value and future growth potential, in
June 1997, the Company sold a 15% interest in its Domino's subsidiary for $3.125
million. After expenses and taxes, the Company realized a net profit of $2.0
million from the sale. The Company is using the proceeds from the sale to help
finance a new commissary and administrative center to support continuing rapid
growth of Domino's in the UK. In connection with the sale, the purchaser has an
option to acquire an additional 5% interest in the company's Domino's
subsidiary.
In December 1997, the Company sold the last two Haagen Dazs units. The first
quarter 1997 trading loss is shown as discontinued operations in the 1997 first
quarter financial statements.
The Company opened a sit down restaurant, Pizzazz, in December 1995, to further
increase awareness of the Domino's brand. The restaurant was closed in June 1996
after the Company determined that the success of the concept would require too
much management attention to be redirected from the Company's primary business.
Accordingly, the Company reported the losses from Pizzazz as a loss from
discontinued operations in the 1997 first quarter financial statements. The
Company subleased the property commencing April 1997.
10
<PAGE>
Results of Operations
<TABLE>
<CAPTION>
For the Thirteen Weeks Ended
Income Statement Data June 28, 1998 June 29, 1997
Revenues: (%) (%)
<S> <C> <C>
Sales by Company Owned Stores 11.3 14.1
Commissary Sales 61.8 57.9
Franchise Fees 1.6 1.9
Rental Income 7.2 7.3
Royalty Sales 15.0 13.4
Computer Sales 2.1 4.1
All Other Revenues 1.0 1.1
----- -----
Total Revenues 100.0 100.0
Cost of Sales:
Company Owned Stores (1) 64.5 60.7
Commissary Sales (1) 93.6 87.4
Other Cost of Sales (1) 36.0 53.2
----- -----
Total Cost of Sales 71.9 73.2
Gross Margin 21.4 26.8
Administrative 16.1 21.4
Amortization/Depreciation 1.0 2.8
Sale Of Fixed Assets -- (0.6)
----- -----
Operating Income 4.3 2.8
Other Income 0.5 0.4
----- -----
Continuing Operations 4.9 3.2
Discontinued Operations - (Loss) -- (0.5)
----- -----
Income/(Loss) before Extraordinary Income 4.9 2.7
===== =====
</TABLE>
Notes:
(1) as a percentage of respective revenue
Comparison of the Thirteen Week Periods March 29, 1998 to June 28, 1998 and
March 30, 1997 to June 29, 1997.
Revenue
Total revenue for the thirteen week period ended June 28, 1998 was $8.7 million,
an increase of 22.6% against the same period of 1997. The main constituents of
this increase arose from royalty income which increased by approximately $0.4
million, and commissary sales which increased by $1.3 million.
11
<PAGE>
For the period ended June 28, 1998, system wide sales totalled $23.6 million
versus $17.5 million in the second quarter of 1997. This represents a 25.9%
improvement from the previous year. This increase in system-wide sales is the
primary reason for the increase in royalty income and commissary sales. Sales at
Company owned stores decreased by approximately $55,000 for the period ended
June 28, 1998 as compared to the period ended June 29, 1997. The decrease was
attributed to more open corporate units (12 versus 11) and better sales
performance at its flagship store in Milton Keynes.
Cost and Expenses
The Company experienced an increase in cost of sales against the same thirteen
week period in 1997 from approximately $5.1 million to $6.2, an increase of 22%.
The cost of sales as a percentage of commissary sales was higher to the same
period of the previous year (93.6% vs 87.4%) primarily because of higher
distribution costs and lower margin on cheese. The cost of sales as a percentage
of Company owned store sales increased from 60.7% in the same period in 1997 to
64.5% in 1998. This is the result of new stores and under-performing stores
acquired in the first quarter of 1998.
Income
Operating income of $378,661 was achieved in the period against operating income
of $285,928 in the comparable period in 1997. This increase in profitability
resulted from increased gross margin results which offset an increase in
operating and administrative expense.
Liquidity and Capital Resources
At June 28, 1998, the Company's working capital of $2.8 million compared to $4.4
million at June 29, 1997, and $4.0 million at December 29, 1997. The Company's
trade receivable has increased by $205,000 from the end of the year as the
Company sales increased. The Company's receivable from related parties increased
by $660,000 and inventories and other receivables have decreased by $128,000.
Total current liabilities have increased by $1.6 million from the year end. The
principle increase in current liabilities is related almost entirely to the
accrual for expenses and costs related to the construction of the new
commissary.
The Company anticipates it will spend $500,000 to open additional corporate
stores in 1998. The Company is not obligated to open any additional Company
owned stores through the end of 1998 under the Master Franchise Agreement.
To support the Company's continuing growth, the Company is constructing a new
administrative office and new commissary. The Company estimates the cost of the
new facility to be approximately 3.4 million pound sterling ($5.5 million). The
Company has secured financing from National Westminster Bank for approximately
70% of the total cost. The building construction cost will be financed over 15
years at a fixed rate interest rate of 8.75%. The equipment will be financed
over a 5 year lease. The Company believes its existing commissary will
adequately service the dough production needs of existing and projected new
franchisees for the next twelve months. The
12
<PAGE>
Company believes it can finance its obligations from existing cash balances and
projected cash flows. The new facility is forecasted to open in September 1998.
The Company does not anticipate that the loan to Crescent Capital will be repaid
before September 1998.
If the Company's plans change or its assumptions or estimates prove to be
inaccurate, the Company may require additional funds to achieve increased sales.
If such funds are unavailable, the Company will have to reduce its operations to
a level consistent with its available funding.
Exchange Rate
The weighted exchange rate for the thirteen weeks ended June 28, 1998 ($1.6354
per British pound sterling) was approximately 1% lower than the exchange rate
during the comparable period in 1997 ($1.6370 per British pound sterling).
Inflation
The primary inflationary factor affecting the Company's operations is the cost
of food. As the cost of food has increased, the Company has historically been
able to offset these increases through economies of scale and improved operating
procedures, although there is no assurance that such offsets will continue. To
date, inflation has not had a material effect on the Company's operations.
13
<PAGE>
Part II OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any litigation or
governmental proceedings that management believes
would result in judgements or fines that would have a
material adverse effect on the Company.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Exhibits
(a) Exhibits
None.
(b) Reports on Form 8-K
May 19, 1998 Acceptance of Merger Agreement
14
<PAGE>
SIGNATURES
- -------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL FRANCHISE SYSTEMS, INC.
Date: August 19, 1998 By: /s/ Colin Halpern
Colin Halpern, President
(Principal Executive Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-START> DEC-29-1997
<PERIOD-END> JUN-28-1998
<CASH> 1,276,742
<SECURITIES> 0
<RECEIVABLES> 2,275,060
<ALLOWANCES> 0
<INVENTORY> 1,072,045
<CURRENT-ASSETS> 10,247,316
<PP&E> 8,277,644
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,976,693
<CURRENT-LIABILITIES> 7,492,620
<BONDS> 0
<COMMON> 70,343
0
0
<OTHER-SE> (388,073)
<TOTAL-LIABILITY-AND-EQUITY> 19,976,693
<SALES> 5,342,645
<TOTAL-REVENUES> 8,651,635
<CGS> 6,222,288
<TOTAL-COSTS> 6,222,288
<OTHER-EXPENSES> 1,967,158
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (52,659)
<INCOME-PRETAX> 422,855
<INCOME-TAX> (173,387)
<INCOME-CONTINUING> 422,855
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 195,879
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
