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**SECURITIESAND EXCHANGE COMMISSION****Washington, D.C.  20549**

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**FORM 10-Q**

| **(Mark One)** |                                                                                          |
|----------------|-----------------------------------------------------------------------------------------------|
| T              | **QUARTERLY REPORT UNDER  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**        |
|           |                                                                                          |
|           | **For the quarter ended    ****June 17, 2001**                            |
|           |
| **OR**         |
|           |                                                                                          |
| £         | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|           |                                                                                          |
|           | **For the transition period  from ______________ to ______________.**                         |
|                |                                                                                               |  |

**Commission file number 0-20792**

| **FRESH CHOICE, INC.**                                  |
|---------------------------------------------------------|
| (Exact  name of registrant as specified in its charter) |

 

 

| **Delaware******                                                                   | **77-0130849******     |
|------------------------------------------------------------------------------------|------------------------|
| (State  or other jurisdiction of                                                   | (I.R.S.  Employee      |
| incorporation  or organization)                                                    | Identification  No.)   |
|                                                                               |                   |
| **485 Cochrane Circle, Morgan Hill, California 95037******                         |
| (Address of  principal executives offices)                                         | (Zip  Code)            |
|                                                                               |                   |
| Registrant's  telephone number, including area code:                               | **(408) 776-0799****** |
|                                                                               |                   |
|                                                                                    |
| Former  name, former address and former fiscal year, if changed since last report. |

 

| Indicate by check 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.  T Yes £ No |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

APPLICABLE ONLY TO ISSUERS INVOLVED INBANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

| Indicate by check mark whether the registrant  has filed all documents and reports required to be filed by Section 12, 13 or  15(d) of the Securities Exchange Act of 1934 subsequent to the distribution  of securities under a plan confirmed by a court.   £ Yes £ No |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares of Common Stock,$.001 par value, outstanding as of July 16, 2001 was 5,870,375.

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**FRESH CHOICE, INC.**

**INDEX**

 

| PART I - FINANCIAL  INFORMATION |
|---------------------------------|
|                            |
|                            | Item 1 - Financial  Statements |
|                            |
|                            | Condensed  Consolidated Balance Sheets at June 17, 2001 and December 31, 2000 |
|                            |
|                            | Condensed  Consolidated Statements of Income for the Twelve and Twenty-Four Weeks ended June 17, 2001 and June 11, 2000 |
|                            |
|                            | Condensed  Consolidated Statements of Cash Flows for the Twenty-Four Weeks ended June 17, 2001 and June 11, 2000 |
|                            |
|                            | Notes  to Condensed Consolidated Financial Statements |
|                            |
|                            | Item  2 - Management's Discussion and Analysis of Financial Condition and Results of Operations |
|                            |
|                            | Item  3 - Quantitative and Qualitative Disclosures About Market Risk |
|                            |
| PART II - OTHER  INFORMATION    |
|                            |
|                            | 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                      |
|                            |
| INDEX TO FORM 10-Q  EXHIBITS    |
|                                 |  |  |

 
**PART I.  FINANCIAL INFORMATION**

**Item 1 - Financial Statements**

FRESHCHOICE, INC.CONDENSED CONSOLIDATED BALANCESHEETS(In thousands, except share and per shareamounts)(Unaudited)
 June  17,  2001 December  31,  2000    ASSETS         CURRENT ASSETS:     Cash and cash equivalents$4,642 $2,918  Receivables180 239  Inventories482 478  Prepaid expenses and  other current assets326 1,253            Total current assets5,630 4,888      PROPERTY AND  EQUIPMENT, net25,827 26,529      LEASE ACQUISITION  COSTS, net329 220      DEPOSITS AND OTHER  ASSETS577 522    TOTAL ASSETS$32,363 $32,159         LIABILITIES AND  STOCKHOLDERS' EQUITY         CURRENT LIABILITIES:     Accounts payable$1,803 $2,019  Accrued salaries and  wages1,667 1,200  Sales tax payable895 631  Other accrued expenses1,383 1,777  Store closure reserve5 364  Current portion of  long-term obligations1,625 1,805      Total current  liabilities7,378 7,796      CAPITAL LEASE  OBLIGATIONS310 485      LONG-TERM DEBT115 115      OTHER LONG-TERM  LIABILITIES1,511 1,762     Total liabilities9,314 10,158          STOCKHOLDERS' EQUITY     Convertible preferred stock, $.001 par value; 3.5 million  shares authorized; shares outstanding:   2001 and 2000 - 1,187,9065,175 5,175  Common stock - $.001  par value; 15 million shares authorized; shares outstanding: 2001 -  5,870,375; 2000 - 5,833,28242,464 42,405  Accumulated deficit(24,590)(25,579)    Total stockholders'  equity23,049 22,001    TOTAL LIABILITIES AND  STOCKHOLDERS' EQUITY$32,363 $32,159         The December 31, 2000  amounts are derived from the Company's audited financial statements.See accompanying notes  to condensed consolidated financial statements. 
 

 

FRESH CHOICE, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share amounts)(Unaudited)
 Twelve Weeks Ended Twenty-Four Weeks Ended    June  17, 2001 June  11, 2000 June  17, 2001 June  11, 2000               NET  SALES$18,215 $18,184 $35,800 $35,311               COSTS  AND EXPENSES:         Cost  of sales4,151 4,401 8,268 8,536  Restaurant  operating expenses:         Labor5,695 5,724 11,355 11,271  Occupancy  and other5,169 5,082 10,385 10,006  Depreciation  and amortization810 881 1,588 1,713  General  and administrative expenses1,615 1,480 3,068 2,833  Store  closure and asset impairment expenses- (8)- (8)       Total  costs and expenses17,440 17,560 34,664 34,351               OPERATING  INCOME775 624 1,136 960          Interest  income30 33 77 64 Interest  expense(89)(95)(188)(200)              Interest  expense, net(59)(62)(111)(136)              INCOME  BEFORE INCOME TAXES716 562 1,025 824          Provision  for income taxes28 15 36 22               NET  INCOME$688 $547 $989 $802               Basic  net income per common share$0.12 $0.09 $0.17 $0.14        ** ** ** ** ** ** ** **Shares  used in computing basic per share amounts5,842 5,770 5,838 5,766               Diluted  net income per common share$0.10 $0.08 $0.14 $0.11               Shares  used in computing diluted per share amounts7,106 7,148 7,106 7,127               See  accompanying notes to condensed consolidated financial statements.
 

 

FRESHCHOICE, INC.CONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS(In thousands)(Unaudited)
 Twenty-Four  Weeks Ended    June 17,  2001 June 11,  2000         OPERATING ACTIVITIES:    Net income$989 $802 Adjustments to  reconcile net income to net cash provided by operating activities:     Depreciation and  amortization1,696 1,850  Store closure and  asset impairment expenses- (8) Issuance of stock  options for consulting services4 7  Loss on disposal of  property and equipment36 62  Deferred rent(251)(243) Change in operating  assets and liabilities:     Receivables59 62  Inventories(16)(18) Prepaid expenses and  other current assets927 (42) Accounts payable(216)(574) Accrued salaries and  wages467 144  Other accrued expenses(130)66  Store closure reserve(359)(150)     Net cash provided by  operating activities3,206 1,958          INVESTING ACTIVITIES:     Capital expenditures(1,114)(1,464) Deposits and other  assets(68)40  Proceeds from sale of  property and equipment- 2           Net cash used in  investing activities(1,182)(1,422)        FINANCING ACTIVITIES:     Common stock sales55 45  Long term debt -  repayments(125)(125) Capital lease  obligations - repayments(230)(233)         Net cash used in  financing activities(300)(313)        INCREASE IN CASH AND  CASH EQUIVALENTS1,724 223      CASH AND CASH  EQUIVALENTS:     Beginning of period2,918 2,458          End of period$4,642 $2,681         Supplemental  Disclosure of Cash Flow Information:     Cash paid during the  period for interest$111 $177          See accompanying notes  to condensed consolidated financial statements    
 

 

FRESH CHOICE, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTSFor the TwelveWeeks and Twenty-Four weeks Ended June 17, 2001 and June 11, 2000(Unaudited)

1.           CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS

             The accompanying condensed consolidatedfinancial statements have been prepared by the Company without audit andreflect all adjustments, consisting of normal recurring adjustments and accruals,which are, in the opinion of management, necessary for a fair statement offinancial position and the results of operations for the interim periods.  The statements have been prepared inaccordance with the regulations of the Securities and Exchange Commission, butomit certain information and footnote disclosures necessary to present thestatements in accordance with generally accepted accounting principles.  For further information, refer to thefinancial statements and notes thereto included in the Company's Annual Reporton Form 10-K for the fiscal year ended December 31, 2000.

2.           NETINCOME PER SHARE

             Basic earnings per share (“EPS”) excludes theeffect of potentially dilutive securities and is computed by dividing theCompany’s net income by the weighted average of its common shares outstandingfor the period.  Diluted EPS reflectsthe potential dilution that could occur if securities or other contracts toissue common stock were exercised or converted into common stock.  The Company converts common stock optionsand warrants into potential dilutive shares using the treasury stock method andconverts preferred stock into potential dilutive shares using the “ifconverted” method.

             A reconciliation of the components of basicand diluted net income per share follows:
 Twelve  Weeks Ended Twenty-Four Weeks Ended     June 17, 2001 June 11, 2000 June 17, 2001 June 11, 2000      (In  thousands, except per share data)                  Net  income$688 $547 $989 $802      Shares                  Average  common shares outstanding5,842 5,770 5,838 5,766           Stock  options76 190 80 173  Convertible  preferred stock1,188 1,188 1,188 1,188       Total  shares and diluted shares7,106 7,148 7,106 7,127      Basic  net income per common share$0.12 $0.09 $0.17 $0.14      Diluted  net income per common share$0.10 $0.08 $0.14 $0.11      
 

 

             The following table presents the totaldilutive securities which the Company excluded for each period presented fromits diluted EPS computation because the exercise price of the securitiesexceeded the average fair value of the Company’s common stock:
 Twelve Weeks Ended  Twenty-Four Weeks Ended     June 17, 2001 June 11, 2000 June 17, 2001 June 11, 2000      (In  thousands)                 Potential  Dilutive Securities                  Stock  options excluded689 340 687 380  Stock  warrants100 138 100 138 
 

3.          INCOME TAXES

             Despite net operating loss carryforwardsavailable to offset taxable income, the Company recorded an income taxprovision for the twenty-four weeks ended June 17, 2001, due to projected 2001net income being subject to alternative minimum tax.  The Company’s net deferred tax assets consist primarily of thetax benefit related to operating loss carryforwards and asset write-downs, inconnection with store closure reserves, that are not deductible for taxpurposes until the assets are disposed. The Company will continue to provide a valuation allowance for itsdeferred tax assets until it becomes more likely than not, in management'sassessment, that the Company's deferred tax assets will be realized.

4.           BORROWING ARRANGEMENTS

              On June 17, 2001, the Company had$1,075,000 of long-term debt borrowed under the terms of a $4,000,000 loan andsecurity agreement (the “Agreement”), of which the entire amount was includedin the current portion of long-term obligations as the Agreement expires onDecember 29, 2001.  As of June 17, 2001,the Company had an additional $1,450,000 available for borrowing under theAgreement.  The Company intends torefinance the balance on this loan with another financial institution when orbefore the Agreement expires.

             Borrowings under the Agreementinitially bear interest at the prime rate (7.0% at June 17, 2001) plus 1.25%and, once repaid, can be re-borrowed until the agreement expires.  The $1,500,000 term loan converted under theAgreement on December 29, 1999 is payable at 1/60th of the convertedbalance each month plus interest at 1.75% above the prime rate.  All borrowings, including any term loans,are fully payable on December 29, 2001. Aggregate borrowings in excess of $2,500,000 bear an additional 0.5%interest.  The Agreement also providesfor a monthly collateral monitoring fee and a 0.5% unused line fee.

              TheAgreement requires the Company to maintain a minimum net worth and debt servicecoverage ratio and to not exceed maximum interest and debt to cash flow ratiosand limits its aggregate indebtedness. The Agreement also requires approval before paying dividends and limitsthe Company’s fixed asset acquisitions based on its operating cash flows.

5.           STORE CLOSURE RESERVE

             The store closure reserve of $364,000 atDecember 31, 2000 consisted of the $32,000 remaining cash payments to be madeon an agreement to settle the lease obligation on the Company’s last remainingrestaurant in Houston that was closed in 2000 and the $332,000 of cash paymentsto be made for the buyout andtermination of the lease on a former Fresh Choice restaurant in the WashingtonD.C. market that the Company sold in 1996.

             At June 17, 2001 the Company’sstore closure reserve of $5,000 consisted of the remaining cash payment to bemade on an agreement to settle the lease obligation of its last remainingrestaurant in Houston that was closed in 2000.

6.           CONVERTIBLEPREFERRED STOCK

             TheCompany’s outstanding Series B non-voting convertible preferred stock iscurrently held by one entity and is convertible, at the holders’ option, intoSeries A voting convertible preferred stock on a one-for-one basis.  Although no Series A preferred stock iscurrently outstanding, holders of Series A preferred stock, if any, would beentitled to vote with common stockholders on all matters submitted to a vote ofstockholders.  When and if issued, theholders of a majority of the outstanding Series A preferred stock will have aseparate right to approve certain corporate actions.

             Infiscal 1998, the Company failed to achieve a specified earnings target whichconstituted an event of default of the terms of the preferred stock agreementand which triggered the right of the Series A preferred stockholders to elect amajority of the Company’s Board of Directors. The holder of the Series B preferred stock has not initiated any actionto convert such shares into shares of Series A preferred stock nor has itexercised its right to elect a majority of the Board of Directors.  In March, 2001 such holder notified theCompany that it has no present intention of exercising such right; however, ithas not waived any of its rights under the agreement.

7.           RECENTLYISSUED ACCOUNTING STANDARDS

             In July 2001, the FinancialAccounting Standards Board issued Statement of Financial Accounting Standards(“SFAS”) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and OtherIntangible Assets”. SFAS No. 141 requires that all business combinations beaccounted for under the purchase method. The statement further requiresseparate recognition of intangible assets that meet one of two criteria. Thestatement applies to all business combinations initiated after June 30, 2001.

             SFAS No. 142 requires that anintangible asset that is acquired shall be initially recognized and measuredbased on its fair value. The statement also provides that intangible assetsshall be tested for impairment annually, or more frequently if circumstancesindicate potential impairment, through a comparison of fair value to itscarrying amount. SFAS No. 142 is effective for fiscal periods beginning afterDecember 15, 2001. The Company is currently evaluating the impact of the newaccounting standards on existing intangible assets.

**Item 2 - Management’sDiscussion and Analysis of Financial Condition and Results of Operations**

             The following discussion isintended to highlight significant changes in the Company's financial positionand results of operations for the twenty-four weeks ended June 17, 2001.  The interim Financial Statements and thisManagement's Discussion and Analysis of Financial Condition and Results ofOperations should be read in conjunction with the Consolidated FinancialStatements and Notes thereto for the fiscal year endedDecember 31, 2000 and the related Management's Discussion andAnalysis of Financial Condition and Results of Operations, both of which arecontained in the Company's Annual Report on Form 10-K for the fiscal year endedDecember 31, 2000.

             Certain statements set forth inthis discussion and analysis of financial condition and results of operationsincluding anticipated store openings, planned capital expenditures and trendsin or expectations regarding the Company’s operations constitute“forward-looking statements” within the meaning of the Private SecuritiesLitigation Reform Act of 1995.  Suchstatements are based on currently available operating, financial andcompetitive information and are subject to various risks and uncertainties.  Actual future results and trends may differmaterially depending on a variety of factors as set forth under the heading“Business Risks”.  In particular, theCompany’s plans to open new restaurants could be affected by the Company’sability to locate suitable restaurant sites, construct new restaurants in atimely manner and obtain additional financing.
*Liquidity andCapital Resources*
             TheCompany’s primary capital requirements have been for the expansion of itsrestaurant operations and remodeling of its restaurants.  The Company has traditionally financed theserequirements with funds from equity offerings, cash flow from operations,landlord allowances, capital equipment leases and short-term bank debt.  The Company does not have significantreceivables or inventory and receives trade credit based upon negotiated termsin purchasing food and supplies.

             The Company has a $4,000,000 loan andsecurity agreement (the “Agreement”) with a finance company. The Agreementexpires on December 29, 2001 and provides for one-year renewalsthereafter.  During the twenty-fourweeks ended June 17, 2001, the Company paid $125,000 of principal borrowed on a$1,500,000 term loan converted under the Agreement on December 29, 1999.   OnJune 17, 2001, the Company had $1,075,000 of long term debt borrowed under theterms of the Agreement, of which the entire amount was included in the currentportion of long-term obligations as the Agreement expires on December 29,2001.  As of June 17, 2001, the Companyhad an additional  $1,450,000 availablefor borrowing under the terms of the Agreement.  The Company has been notified by the lender that it does notintend to renew the Agreement.  TheCompany intends to refinance the balance on this loan with another financialinstitution when or before the Agreement expires.

             Borrowings under the Agreementinitially bear interest at the prime rate (7.0% at June 17, 2001) plus 1.25%and, once repaid, can be re-borrowed until the agreement expires.  The $1,500,000 term loan converted under theAgreement on December 29, 1999 is payable at 1/60th of the convertedbalance each month plus interest at 1.75% above the prime rate.  All borrowings, including any term loans,are fully payable on December 29, 2001. Aggregate borrowings in excess of $2,500,000 bear an additional 0.5%interest.  The Agreement also providesfor a monthly collateral monitoring fee and a 0.5% unused line fee.

             The Agreement requires the Company tomaintain a minimum net worth and debt service coverage ratio and to not exceedmaximum interest and debt to cash flow ratios and limits its aggregateindebtedness.  The Agreement alsorequires approval before paying dividends and limits the Company’s fixed assetacquisitions based on its operating cash flows.

             Long-termobligations at June 17, 2001 also included $860,000 of capital leaseobligations, of which $550,000 was included in the current portion of long-termobligations, and a $115,000 note for site construction costs.

             Operating activities for thetwenty-four weeks ended June 17, 2001 provided $3,206,000 of cash flows.  The $927,000 decrease in prepaid expenses and other current assets wasprimarily related to the prepayment of January rents in the prior fiscalyear.  The accrued salary and wagesincrease of $467,000 at the end of the quarter was primarily due to the accrualof an additional week of salary and wages in the period.  In addition, the store closure reservedecrease of  $359,000 was primarily dueto the payment of the lease termination fee on a former Fresh Choice restaurantin the Washington D.C. market that the Company sold in 1996.  During the same period, the Company invested$1,114,000 in property and equipment including the opening of a third FreshChoice Express test location during the first quarter of 2001.

             The store closure reserve of $5,000 atJune 17, 2001 consisted of the remaining cash payment to be made on anagreement to settle the lease obligation on the Company’s last remainingrestaurant in Houston that was closed in 2000.

             The Company’s outstanding Series Bnon-voting convertible preferred stock is currently held by one entity and isconvertible, at the holders’ option, into Series A voting convertible preferredstock on a one-for-one basis.  Althoughno Series A preferred stock is currently outstanding, holders of Series Apreferred stock, if any, would be entitled to vote with common stockholders onall matters submitted to a vote of stockholders.  When and if issued, the holders of a majority of the outstandingSeries A preferred stock will have a separate right to approve certaincorporate actions.

             Infiscal 1998, the Company failed to achieve a specified earnings target (beforeinterest, taxes, depreciation and amortization) of at least $5,500,000 whichconstituted an event of default of the terms of the preferred stock agreementand which triggered the right of the Series A preferred stockholders to elect amajority of the Company’s Board of Directors. The holder of the Series B preferred stock has not initiated any actionto convert such shares into shares of Series A preferred stock nor has itexercised its right to elect a majority of the Board of Directors.  In March, 2001 such holder notified theCompany that it has no present intention of exercising such right; however, theholder has not waived any of its rights under the agreement.

             The Company’s continued growthdepends to a significant degree on its ability to open new restaurants and tooperate such restaurants profitably. The Company currently has signed leases for three new Fresh Choicerestaurants in California, two of which are expected to open in 2001.  In addition, the Company expects to open anadditional Fresh Choice Express test location in Texas during 2001.  The Company continues to look for sites,primarily in its core Northern California markets as well as in SouthernCalifornia, for expansion beyond 2001. The Company’s ability to implement an expansion strategy will dependupon a variety of factors, including its continued profitability and theCompany’s ability to obtain funds.  See“Business Risks” included herein.  TheCompany believes its operating cash requirements and fiscal 2001 capitalrequirements can be met through existing cash balances, cash provided byoperations and its borrowing arrangements. The Company is seeking additional debt financing to provide greaterflexibility as it resumes restaurant expansion.

 

*Impact of Inflation*

             Many of the Company’s employees arepaid hourly rates related to the federal and state minimum wage laws.  Accordingly, increases in the minimum wagecould materially increase the Company’s labor costs.  In addition, the cost of food commodities utilized by the Companyare subject to market supply and demand pressures.  Shifts in these costs may have a significant impact on the Company’sfood costs.  The Company anticipatesthat increases in these costs may be offset through pricing and other costcontrol efforts; however, there is no assurance that the Company would be ableto pass such costs on to its guests or that even if it were able to do so, itcould do so in a short period of time.

*Business Risks*

             Certaincharacteristics and dynamics of the Company's business and of financial marketsin general create risks to the Company's long-term success and to predictablefinancial results.  These risks include:

             *Operating Losses and Historical Declines inComparable Store Sales*.  TheCompany's profitability began to decline in the second half of 1994.  In the fourth quarter of 1994, the Companyreported its first operating loss, and reported operating losses in both 1995and 1996.  The Company reported a modestprofit in 1997 but again incurred an operating loss in 1998.  The Company reported a profit for 1999, 2000and for the twenty-four weeks ended June 17, 2001.  There can be no assurance that the Company will continue to beprofitable over the long or short term.

             Beginning late in the third quarterof fiscal 1994, the Company began reporting comparable store salesdeclines.  Comparable store salescontinued to decline in each quarter through the end of 1998.  The Company reported comparable store salesdeclines of 4.6%, 15.3%, 5.9%, 2.7% and 4.8% for fiscal years 1994, 1995, 1996,1997 and 1998, respectively.  During1999 and 2000, the Company reported positive comparable store sales in eachquarter and reported a comparable store sales increase of 3.5% and 7.3% forfiscal years 1999 and 2000, respectively.  The Company also reported a comparable store sales increase of 3.6% forthe twenty-four weeks ended June 17, 2001. There can be no assurance that comparable store sales will continue toimprove.

             *Expansion*.  The Company believes its growth depends to a significant degreeon its ability to open new restaurants and to operate such restaurantsprofitably.  While the Company intends toresume its expansion with two new Fresh Choice restaurants expected to open in2001, there can be no assurance that these restaurants will be successful.  The Company’s ability to successfullyimplement an expansion strategy will depend on a variety of factors, includingthe selection and availability of affordable sites, the selection andavailability of capital to finance restaurant expansion and equipment costs,the ability to hire and train qualified management and personnel, the abilityto control food and other operating costs, and other factors, many of which arebeyond the Company’s control.

             TheCompany’s expansion plans may include entering new geographic regions in whichthe Company has no previous operating experience.  There can be no assurance that the concept will be successful inregions outside of California, Texas and Washington where tastes and restaurantpreferences may be different.

             *Lease Renewals*.  As existing restaurant leases expire, the Company must negotiatenew leases or lease extensions in order to continue operations at existingrestaurants.  There can be no assurancethat the Company will be able to renew these leases on favorable terms or atall.  If the Company is unable to obtainfavorable terms on new leases or extensions on existing leases, it wouldincrease costs and reduce the Company's operating margins.  Moreover, if the Company is unable to renewexisting leases and is unable to find suitable alternate locations, theCompany's revenue and operating results would be adversely affected.

             *GeographicConcentration*.  As of July 16, 2001, 37 of the Company's 49restaurants were located in California, primarily in Northern California.  Accordingly, the Company is susceptible tofluctuations in its business caused by adverse economic conditions in thisregion.  In addition, net sales atcertain of the Company's restaurants have been adversely affected when a newCompany restaurant has been opened in relatively close geographic proximity,and such pressure may continue to depress annual comparable store sales.  There can be no assurance that expansionwithin existing or future geographic markets will not adversely affect theindividual financial performance of Company restaurants in such markets or theCompany's overall results of operations. In addition, given the Company's present geographic concentration inNorthern California, adverse weather conditions in the region or negativepublicity relating to an individual Company restaurant could have a morepronounced adverse affect on net sales than if the Company's restaurants weremore broadly dispersed.

             *Sensitivityto Economic Conditions and Consumer Spending.*  The restaurant industry historically has beensubject to substantial cyclical variation. Currently, leading economic indicators suggest that the economy,particularly in California, is slowing. A continued downturn in the general economy or a decline in consumerspending in the restaurant industry could have a material adverse effect on theCompany’s financial performance, as restaurant sales tend to decline duringrecessionary periods.  A prolongedeconomic downturn could alter customers’ purchasing decisions, which mostlikely would have a material adverse impact on the Company’s revenue andresults of operations.

             *California Energy Crisis.*  California is in the midst of an energycrisis that could disrupt the Company's operations and has increased theCompany's expenses.  In the event of anacute power shortage, when power reserves for California fall below 1.5%, electricityproviders have on some occasions implemented, and may in the future implement,rolling blackouts.  If blackoutsinterrupt the power supply to Company restaurants, such restaurants wouldtemporarily be unable to continue operations. Any such interruption in an individual Company restaurant's ability tocontinue operations would result in lost revenue.  In addition, as a result of the energy crisis many of theelectricity suppliers have raised their rates substantially. Because theCompany has a large percentage of its restaurants in California, its operatingcosts will be affected by this increase in electricity prices.  As a result, the Company's operating resultsare likely to be affected by the current California energy crisis.

             *Volatility of Stock Price*.  The market price of the Company's CommonStock has fluctuated substantially since the initial public offering of theCommon Stock in December 1992. Changes in general conditions in the economy,the financial markets or the restaurant industry, natural disasters or otherdevelopments affecting the Company or its competitors could cause the marketprice of the Company's Common Stock to fluctuate substantially.  In addition, in recent years the stockmarket has experienced extreme price and volume fluctuations.  This volatility has had significant effecton the market prices of securities issued by many companies, including theCompany, for reasons sometimes unrelated to the operating performance of thesecompanies.  Any shortfall in theCompany's net sales or earnings from levels expected by securities analystscould have an immediate and significant adverse effect on the trading price ofthe Company's Common Stock in any given period.  Additionally, such shortfalls may not become apparent until latein the fiscal quarter, which could result in an even more immediate andsignificant adverse effect on the trading price of the Company's Common Stock.

             *Seasonality and Quarterly Fluctuations* TheCompany's restaurants have typically experienced seasonal fluctuations, as adisproportionate amount of net sales and net income are generally realized inthe second and third fiscal quarters. In addition, the Company's quarterly results of operations have been,and may continue to be, materially impacted by the timing of new restaurantopenings and restaurant closings.  Thefourth quarter normally includes 16 weeks of operations as compared with 12weeks for each of the three prior quarters. The fourth quarter of 2000 included 17 weeks.  As a result of these factors, net sales and net income in thefourth quarter are not comparable to results in each of the first three fiscalquarters, and net sales and net income can be expected to decline in the firstquarter of each fiscal year in comparison to the fourth quarter of the priorfiscal year.  Comparable store sales,which had been negative for four consecutive years through fiscal year 1998,may again turn negative.

             *Dependence on Key Personnel*.  The success of the Company depends on theefforts of key management personnel. The Company's success will depend on its ability to motivate and retainits key crewmembers and to attract qualified personnel, particularly generalmanagers, for its restaurants.  TheCompany faces significant competition in the recruitment of qualifiedcrewmembers.

 

             *Restaurant Industry*.  The restaurant industry is affected bychanges in consumer tastes, as well as national, regional and local economicconditions and demographic trends.  Theperformance of individual restaurants, including the Company's restaurants, maybe affected by factors such as traffic patterns, demographic considerations,and the type, number and location of competing restaurants.  In addition, factors such as inflation,increased food, labor and crewmember benefit costs, and the availability ofexperienced management and hourly crewmembers may also adversely affect therestaurant industry in general and the Company's restaurants inparticular.  Restaurant operating costsare affected by increases in the minimum hourly wage, unemployment tax rates,and various federal, state and local governmental regulations, including thoserelating to the sale of food and alcoholic beverages.  There can be no assurance that the restaurant industry ingeneral, and the Company in particular, will be successful.

             *Competition*.  The Company's restaurants compete with the rapidly growingmid-price, full-service casual dining segment; with traditional limited-servicebuffet, soup, and salad restaurants; and, increasingly, with quick-serviceoutlets.  The Company's competitorsinclude national and regional chains, as well as local owner-operatedrestaurants.  Key competitive factors inthe industry are the quality and value of the food products offered, qualityand speed of service, price, dining experience, restaurant location and theambiance of facilities.  Many of theCompany's competitors have been in existence longer than the Company, have amore established market presence, and have substantially greater financial,marketing and other resources than the Company, which may give them certaincompetitive advantages.  The Companybelieves that its ability to compete effectively will continue to depend inlarge measure upon its ability to offer a diverse selection of high-quality,fresh food products with an attractive price/value relationship.

             *Ability to Obtain Additional Financing*.  The Company intends to resume restaurantexpansion in 2001. The Company’s ability to implement an expansion strategywill depend upon a variety of factors, including its ability to obtainfunds.  The Company believes itsnear-term capital requirements can be met through its existing cash balances,cash provided by operations and its available loan and security agreement.  However, the Company is seeking additionalfinancing to provide greater flexibility. There can be no assurance that the Company will be able to obtainadditional financing when needed on acceptable terms or at all.

*             Control by Major Shareholder.* Crescent Real Estate Equities Limited Partnership (“Crescent”) holds1,187,906 shares of Series B non-voting convertible preferred stock, which isconvertible into Series A voting convertible preferred stock at any time at theoption of the holder.  Upon conversion,holders of Series A preferred stock would be entitled to vote with commonstockholders and would have a separate right to approve certain corporateactions, such as amending the Company’s Certificate of Incorporation or Bylaws,effecting a merger or sale of the Company, or making a fundamental change inthe Company’s business activity.  Inaddition, because the Company did not achieve a specified earnings target in1998, the holders of Series A preferred stock would have the right to elect amajority of the Company’s Board of Directors. These factors could have the effect of delaying, deferring or preventinga change in control of the Company and, as a result, could discourageacquisition bids for the Company and limit the price that investors are willingto pay for shares of common stock.

 
*Results ofOperations*
                            Thefollowing table sets forth items in the Company's statements of operations as apercentage of sales and certain operating data for the periods indicated:

 
 Twelve Weeks Ended Twenty-Four Weeks Ended    (Dollars  in thousands)June 17, 2001 June 11, 2000 June 17, 2001 June 11, 2000      NET  SALES$18,215 100.0%$18,184 100.0%$35,800 100.0%$35,311 100.0%COSTS  AND EXPENSES:                 Cost  of sales4,151 22.8%4,401 24.2%8,268 23.1%8,536 24.2% Restaurant  operating expenses:        -   -    Labor5,695 31.3%5,724 31.5%11,355 31.7%11,271 31.9% Occupancy  and other5,169 28.4%5,082 27.9%10,385 29.0%10,006 28.3% Depreciation  and amortization810 4.4%881 4.9%1,588 4.4%1,713 4.9% General  and administrative expenses1,615 8.9%1,480 8.1%3,068 8.6%2,833 8.0% Restructuring  and asset impairment expenses    (8)-%-   (8)-%          Total  costs and expenses17,440 95.8%17,560 96.6%34,664 96.8%34,351 97.3%         OPERATING  INCOME775 4.2%624 3.4%1,136 3.2%960 2.7% Interest  income30 0.2%33 0.2%77 0.2%64 0.2% Interest  expense(89)(0.5)%(95)(0.5)%(188)(0.5)%(200)(0.6)%          Interest  expense, net(59)(0.3)%(62)(0.3)%(111)(0.3)%(136)(0.4)%                          INCOME  BEFORE INCOME TAXES716 3.9%562 3.1%1,025 2.9%824 2.3%Provision  for income taxes28 0.1%15 0.1%36 0.1%22 -%         NET  INCOME$688 3.8%$547 3.0%$989 2.8%$802 2.3%         Number  of restaurants:                 Open  at beginning of period49   49   48   50                  Open  at end of period49   50   49   50                
 

 

 

 

             The following table presents the componentsof average operating income on a per restaurant basis, based on theaverage number of Fresh Choice restaurants open during the period (theCompany’s three Fresh Choice Express restaurants are excluded):

AVERAGE FRESH CHOICE RESTAURANTS
 Twelve  Weeks Ended Twenty-Four  Weeks Ended    (Dollars in thousands)June  17, 2001  June  11, 2000  June  17, 2001   June  11, 2000                         NET SALES$390 100.0%$374 100.0%$766 100.0%$727 100.0%                 COSTS AND EXPENSES:                 Cost of sales88 22.6%90 24.1%175 22.9%175 24.1% Restaurant operating expenses:                 Labor122 31.2%117 31.4%242 31.6%231 31.8% Occupancy and other111 28.5%106 28.1%223 29.2%207 28.4% Depreciation and amortization17 4.3%18 4.8%34 4.4%35 4.8%          Total costs and expenses338 86.6%331 88.4%674 88.1%648 89.1%         RESTAURANT OPERATING  INCOME$52 13.4%$43 11.6%$92 11.9%$79 10.9%         Average Fresh Choice  restaurants open46.0   48.0   46.0   48.1                
(This table excludes Fresh Choice Expressrestaurants)

*Results ofOperations:  Twelve Weeks Ended June 17,2001Compared to Twelve Weeks Ended June 11, 2000*

             *NetSales*.  Net sales for thequarter ended June 17, 2001 were $18,215,000, an increase of $31,000, or 0.2%,from sales of $18,184,000 for the quarter ended June 11, 2000. The primarycomponents of the net increase in sales were:

 
Increase  in comparable store sales$427,000    Incremental  sales from new restaurants60,000    Absence  of sales from closed restaurants(456,000)   $31,000   
 

             The Company operated an average of 49.0restaurants in the twelve weeks ended June 17, 2001 compared to 49.8restaurants in the twelve weeks ended June 11, 2000.  Sales at the Company’s 46 comparable Fresh Choice restaurants,which include restaurants open at least 18 months, increased 2.4% in the secondquarter of 2001 versus the second quarter of 2000.  Comparable store guest counts decreased 2.3%, while thecomparable store average check increased 4.9% to $7.60, reflecting priceincreases and coupon offers at a lower discount.

             Net sales per Fresh Choice restaurantaveraged $390,000 in the second quarter of 2001, an increase of 4.3% over netsales per restaurant of $374,000 in the second quarter of 2000 due tocomparable store sales increases as noted above and closure of lower salesvolume restaurants.

 

             *Costs and Expenses*. Cost of sales (food and beverage costs) was 22.8% of sales in the secondquarter of 2001 compared to 24.2% in the second quarter of 2000.  Food and beverage costs declined as apercentage of sales due to the combined effect of controlling food cost perguest and increases in the average check.

             *RestaurantOperating Expenses*. Restaurant operating expenses (labor, occupancy and other) were 59.7% ofsales in the second quarter of 2001 compared to 59.4% of sales in the secondquarter of 2000, an increase of 0.3% of sales.

             Labor costs as a percentage of sales were31.3% for the second quarter of 2001 compared to 31.5% in the second quarter of2000.  Labor costs as a percentage ofsales were lower, despite average wage increases, due to increased sales aswell as a higher average check.

             Occupancy and other expenses as a percentageof sales were 28.4% for the second quarter of 2001 compared to 27.9% of salesin the second quarter of 2000, an increase of .5% of sales.  The increase is due primarily to increasesin gas and electricity costs which were up $137,000 or 30.0% over the prioryear.  These increases were partiallyoffset by efficiencies on other costs resulting from the higher sales andhigher average check.

             *Depreciationand Amortization*. Depreciation and amortization expenses were 4.4% of sales in the secondquarter of 2001 a decrease of 0.5% of sales from the first quarter of2000.  The decrease resulted fromincreased sales leverage and a declining depreciable asset base for olderrestaurant equipment.

             *Generaland Administrative Expenses*. General and administrative expenses were 8.9% of sales in the secondquarter of 2001 compared to 8.1% of sales in the second quarter of 2000.  The increase is primarily the result ofhigher payroll and payroll related expenses at the Company’s corporate officedue primarily to wage increases, increased incentive accruals and being fullystaffed in the second quarter of 2001 versus several open positions in thesecond quarter of 2000.

             *InterestExpense, net*.  Interestexpense, net was  $59,000 in the secondquarter of 2001 compared to $62,000 in the second quarter of 2000. Thisdecrease is due to decreased borrowings. Interest expense consists of fees related to securing the Company’sborrowing arrangements and interest expense on outstanding borrowings andcapital lease obligations.

             *IncomeTaxes*.  Despite net operatingloss carryforwards available to offset taxable income, the Company recorded anincome tax provision for the first quarter of 2001, due to projected 2001 netincome being subject to alternative minimum tax.  The Company’s net deferred tax assets consist primarily of thetax benefit related to operating loss carryforwards and asset write-downs, inconnection with store closure reserves, that are not deductible for taxpurposes until the assets are disposed. The Company will continue to provide a valuation allowance for itsdeferred tax assets until it becomes more likely than not, in management'sassessment, that the Company's deferred tax assets will be realized.

 
* 

*Results ofOperations:  Twenty-Four Weeks EndedJune 17,2001Compared to Twenty-Four Weeks Ended June 11, 2000*

             *NetSales.*  Net sales for thetwenty-four weeks ended June 17, 2001 (first two quarters of 2001) were$35,800,000, an increase of $489,000, or 1.4%, from sales of $35,311,000 forthe twenty-four weeks ended June 11, 2000 (first two quarters of 2000). Theprimary components of the net change in sales were:

 
Increase  in comparable store sales$1,233,000    Incremental  sales from new restaurants247,000    Absence  of sales from closed restaurants(991,000)   $489,000   
 

             The Company operated an average of48.9 restaurants in the first two quarters of 2001 compared to 49.5 restaurantsin the first two quarters of 2000. Sales at the Company’s 46 comparable stores, which include restaurantsopen at least 18 months, increased 3.6% in the first two quarters of 2001versus the first two quarters of 2000. Comparable store guest counts decreased 0.8%, while the comparable storeaverage check increased 4.4% to $7.53, reflecting price increases and couponofferings at a lower discount.

             Net sales per Fresh Choicerestaurant averaged $766,000 in the first two quarters of 2001, an increase of5.4% over net sales per restaurant of $727,000 in the first two quarters of2000 due to comparable store sales increases as noted above and closure oflower sales volume restaurants.

             *Costsand Expenses.*  Cost of sales(food and beverage costs) was 23.1% of sales in the first two quarters of 2001compared to 24.2% in the first two quarters of 2000, a decrease of 1.1% ofsales.  Food and beverage costs declinedas a percentage of sales due to the combined effect of controlling food costper guest and increases in the average check.

             *RestaurantOperating Expenses*. Restaurant operating expenses (labor, occupancy and other) were 60.7% ofsales in the first two quarters of 2001 compared to 60.2% of sales in the firsttwo quarters of 2000, an increase of .5% of sales.

             Labor costs as a percentage of sales were31.7% in the first two quarters of 2001 compared to 31.9% in the first twoquarters of 2000, a decrease of 0.2% of sales. The labor costs as a percentage of sales were lower, despite averagewage increases, due to increased sales as well as a higher average check.

             Occupancy and other expenses as a percentageof sales were 29.0% in the first two quarters of 2001 compared to 28.3% ofsales in the first two quarters of 2000, an increase of 0.7% of sales.  The increase is due primarily to increasesin gas and electricity costs which were up $317,000 or 37.0% over the prioryear.  In addition advertising increasedto 3.3% of sales versus 3.0% of sales in the first two quarters of 2001.  These increases were partially offset byefficiencies on other costs resulting from the higher sales and higher averagecheck.

             *Depreciationand Amortization.* Depreciation and amortization expenses were 4.4% of sales in the firsttwo quarters of 2001 compared to 4.9% of sales in the first two quarters of2000.  The decrease resulted fromincreased sales leverage and a declining depreciable asset base for olderrestaurant equipment.

             *Generaland Administrative Expenses.* General and administrative expenses were 8.6% of sales in the first twoquarters of 2001 compared to 8.0% of sales in the first two quarters of2000.  The increase is primarily theresult of higher payroll and payroll related expenses at the Company’scorporate office due primarily to wage increases, increased incentive accrualsand being fully staffed in the first two quarters of 2001 versus several openpositions in the first two quarters of 2000.

 

             *InterestExpense, net*.  Interestexpense was  $111,000 in the first twoquarters of 2001 compared to $136,000 in the first two  quarters of 2000. This decrease is due todecreased borrowings and increased interest earned on its average cashbalances. Interest expense consists of fees related to securing the Company’sborrowing arrangements and interest expense on outstanding borrowings andcapital lease obligations. Interest income increased in the first half of 2000due to higher interest earned on its average cash balances.

             *IncomeTaxes*.  Despite net operatingloss carryforwards available to offset taxable income, the Company recorded anincome tax provision for the first two quarters of 2001, due to projected 2001net income being subject to alternative minimum tax.  The Company’s net deferred tax assets consist primarily of thetax benefit related to operating loss carryforwards and asset write-downs, inconnection with store closure reserves, that are not deductible for taxpurposes until the assets are disposed. The Company will continue to provide a valuation allowance for itsdeferred tax assets until it becomes more likely than not, in management'sassessment, that the Company's deferred tax assets will be realized.

**Item 3  - Quantitative and Qualitative Disclosures About Market Risk**

             The Company is exposed to interest rate riskprimarily through its borrowing activities. The Company has not used derivative financial instruments to hedge suchrisks.  There is inherent roll-over riskfor borrowings as they mature and are renewed at current market rates.  The extent of this risk is not quantifiableor predictable because of the variability of future interest rates and businessfinancing requirements.  If market rateswere to increase immediately by 10 percent from levels at June 17, 2001, thefair value of the Company’s borrowings would not be materially affected asborrowings are primarily subject to variable interest rates.

 

**PART II. ****OTHER****INFORMATION**
**Item 1 - Legal Proceedings**Not  Applicable.  **Item 2 - Changes in  Securities**Not  Applicable.  **Item 3 - Defaults upon Senior  Securities**Not  Applicable.
**Item 4 - Submission of Mattersto a Vote of Security Holders**                           The Company held its Annual Meeting ofStockholders on May 24, 2001.  Thestockholders voted on proposals on:

                           (1) The election of two (2) Class IIIdirectors, Everett F. Jefferson and Barry E. Krantz, to hold office for athree-year term and until their successors are elected and qualified.  The proposal was approved by the followingvote:

 
 NomineeForWithheld     Everett  F. Jefferson5,245,902287,785 Barry E. Krantz5,491,75741,930
                                (2)The approval of the Company’s 2001 Employee Stock Purchase Plan. The plan wasapproved by the following vote:

 
 ForAgainstAbstain     5,383,493107,45942,745
                                (3)The appointment of Deloitte & Touche LLP as the Company’s independentaccountants for the fiscal year ending December 30, 2001.  The proposal was approved by the followingvote:

 
 ForAgainstAbstain     5,481,93710,19041,560
** **
**Item 5 - Other Information**Not  Applicable.
**Item 6 - Exhibits and Reportson Form 8-K**

(a)         Exhibits.  The exhibits listed in the accompanyingindex to  Form 10-Q Exhibits arefiled or incorporated by reference as part of this report.

(b)         Reportson Form 8-K.  No reports on Form 8-Kwere filed during the quarter ended June 17, 2001.

 

**SIGNATURES**

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.
   FRESH CHOICE, INC. (Registrant)     /S/  Everett F. Jefferson Everett F. Jefferson President and Chief Executive Officer (Principal Executive Officer)     /S/  David E. Pertl David E. Pertl Senior Vice President and Chief Financial  Officer (Principal Financial and Accounting Officer)  Dated:   July 31, 2001 
**INDEX TO FORM 10-Q EXHIBITS**
EXHIBIT  NO.DESCRIPTION    3.1(1) Restated  Certificate of Incorporation of Fresh Choice, Inc.    3.2(8) Amended  By-Laws of Fresh Choice, Inc. dated April 11, 1996    3.3(10) Certificate  of Amendment of Restated Certificate of Incorporation of Fresh Choice, Inc.    3.4(10) Certificate  of Designation of Series A Voting Participating Convertible Preferred Stock  of Fresh Choice, Inc.    3.5(10) Certificate  of Designation of Series B Non-Voting Participating Convertible Preferred  Stock of Fresh Choice, Inc.    3.6(10) Certificate  of Designation of Series C Non-Voting Participating Convertible Preferred  Stock of Fresh Choice, Inc.    4.1(10) Registration  Rights Agreement dated September 13, 1996 between Fresh Choice, Inc. and  Crescent Real Estate Equities Limited Partnership    10.1(1) Form  of Indemnity Agreement for directors and officers    10.2(2)(3)Second  Amended and Restated 1988 Stock Option Plan    10.3(2)(3)1992  Employee Stock Purchase Plan    10.8(8) Preferred  Stock Purchase Agreement with Crescent Real Estate Equities Limited  Partnership dated April 26, 1996    10.18(6) Warrant  to Purchase up to 75,000 Shares of the Company's Common Stock issued to  Silicon Valley Bank on December 20, 1995    10.19(6) Common  Stock Purchase Warrant to Purchase 100,000 Shares of the Company's Common  Stock issued to Bain & Company, dated December 15, 1995    10.26(11)(3)Employment  Offer Letter to David E. Pertl dated January 24, 1997    10.27(11)(3)Employment  Offer Letter to Everett F. Jefferson dated January 30, 1997    10.28(11)(3)Amendment  to Employment Offer Letter to Everett F. Jefferson dated February 10, 1997    10.34(13)(3)Consulting  Agreement with Charles A. Lynch dated April 17, 1998    10.36(14) Loan  and Security Agreement dated December 29, 1998 with FINOVA Capital  Corporation    10.37(14)(3)Form  of Severance Agreement with Senior Vice Presidents    10.39(15)(3)Officer  Incentive Plan for fiscal year 2000    10.40(15)(3)Senior  Vice President of Operations Incentive Plan for fiscal year 2000    10.41(16)(3)2001  Home Office Incentive Plan    10.42(16)(3)Senior  Vice President of Operations 2001 Incentive Plan****
 
  EXHIBIT  NO.DESCRIPTION  (1)Incorporated  by reference from the Exhibits with corresponding numbers filed with the  Company's Registration Statement on Form S-1 (No. 33-53904) filed October 29,  1992, as amended by Amendment No. 1 to Form S-1 (No. 33-53904) filed December  7, 1992, except that Exhibit 3.1 is incorporated by reference from Exhibit  3.1C and Exhibit 3.2 is incorporated by reference from Exhibit 3.2B.  (2)Incorporated  by reference from the Exhibits with corresponding numbers filed with the  Company's Quarterly Report on Form 10-Q for the quarter ended September 4,  1994.  (3)Agreements  or compensatory plans covering executive officers and directors of Fresh Choice,  Inc.  (6)Incorporated  by reference from the Exhibits with corresponding numbers filed with the  Company's Annual Report on Form 10-K for the year ended December 31, 1995.  (8)Incorporated  by reference from the Exhibits with corresponding numbers filed with the  Company's Quarterly Report on Form 10-Q for the quarter ended March 24, 1996.  (10)Incorporated  by reference from the Exhibits with corresponding numbers filed with the  Company's Quarterly Report on Form 10-Q for the quarter ended September 8,  1996.  (11)Incorporated  by reference from the Exhibits with corresponding numbers filed with the  Company's Annual Report on Form 10-K for the year ended December 29, 1996.  (13)Incorporated  by reference from the Exhibits with corresponding numbers filed with the  Company's Quarterly Report on Form 10-Q for the quarter ended June 14, 1998.  (14)Incorporated  by reference from the Exhibits with corresponding numbers filed with the  Company's Annual Report on Form 10-K/A for the year ended December 27, 1998.  (15)Incorporated  by reference from the Exhibits with corresponding numbers filed with the  Company's Annual Report on Form 10-K for the year ended December 26, 1999.  (16)Incorporated  by reference from the Exhibits with corresponding numbers filed with the  Company's Annual Report on Form 10-K for the year ended December 31, 2000.
 *