UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Quarterly Period Ended: April 3, 1999
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: 333-45179
MRS. FIELDS' ORIGINAL COOKIES, INC.
(Exact name of registrant specified in its charter)
<TABLE>
<S> <C>
DELAWARE 87-0552899
- --------------------------------------------------- --------------------------------------------------
(State or other jurisdiction of incorporation or (IRS employer identification no.)
organization)
2855 East Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121-7050
- --------------------------------------------------- --------------------------------------------------
(Address of principal executive offices) (Zip code)
</TABLE>
(801) 736-5600
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
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.
X yes no
The registrant had 400 shares of common stock, $0.01 par value, outstanding at
May 18, 1999.
<PAGE>
MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
<TABLE>
<S> <C>
Condensed Consolidated Balance Sheets as of April 3, 1999 and January 2, 1999.................... 3
Condensed Consolidated Statements of Operations for the thirteen weeks
ended April 3, 1999 and April 4, 1998............................................................ 5
Condensed Consolidated Statements of Cash Flows for the thirteen weeks
ended April 3, 1999 and April 4, 1998............................................................ 6
Notes to Condensed Consolidated Financial Statements............................................. 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...........16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................................................22
Item 6. Exhibits and Reports on Form 8-K................................................................22
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
<TABLE>
<S> <C> <C>
April 3, January 2,
1999 1999
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 10,492 $ 4,751
Accounts receivable, net of allowance for doubtful accounts of $75 and $74,
respectively 1,448 3,208
Amounts due from franchisees and licensees, net of allowance for doubtful
accounts of $992 and $1,078, respectively 4,980 6,003
Inventories 5,148 5,503
Prepaid rent and other 3,728 4,017
Deferred income tax assets, current portion 861 861
------------- ---------
Total current assets 26,657 24,343
----------- ---------
PROPERTY AND EQUIPMENT, at cost:
Leasehold improvements 32,598 29,914
Equipment and fixtures 12,267 17,108
Land 240 240
---------- ---------
45,105 47,262
Less accumulated depreciation and amortization (14,270) (15,465)
------------ ---------
Net property and equipment 30,835 31,797
----------- ---------
DEFERRED INCOME TAX ASSETS, net of current portion 2,638 2,638
------------ ---------
GOODWILL, net of accumulated amortization of $13,848 and $11,231, respectively
143,436 145,782
---------- ---------
TRADEMARKS AND OTHER INTANGIBLES, net of accumulated amortization of $2,924 and
$2,615, respectively 13,987 14,296
----------- ---------
DEFERRED LOAN COSTS, net of accumulated amortization of $1,858 and
$1,320, respectively 11,981 11,718
----------- ----------
OTHER ASSETS 448 1,332
--------- ----------
$ 229,982 $ 231,906
========= =========
</TABLE>
The accompanying notes to condensed
consolidated financial statements
are an integral part of these
balance sheets.
<PAGE>
MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(dollars in thousands, except share data)
LIABILITIES AND STOCKHOLDER'S EQUITY
<TABLE>
<S> <C> <C>
April 3, January 2,
1999 1999
(Unaudited)
CURRENT LIABILITIES:
Bank overdraft $ 3,000 $ 4,133
Current portion of long-term debt 2,825 8,046
Current portion of capital lease obligations 356 299
Accounts payable 18,113 10,723
Accrued liabilities 2,693 3,597
Store closure reserve, current portion 4,577 4,577
Accrued salaries, wages and benefits 2,727 3,155
Accrued interest payable 4,829 1,260
Sales taxes payable 650 962
Deferred income 217 318
------------ ---------
Total current liabilities 39,987 37,070
LONG-TERM DEBT, net of current portion 141,815 141,647
STORE CLOSURE RESERVE, net of current portion 9,415 10,134
CAPITAL LEASE OBLIGATIONS, net of current portion 1,297 997
----------- ---------
Total liabilities 192,514 189,848
--------- --------
MANDATORILY REDEEMABLE CUMULATIVE PREFERRED STOCK of PTI (a wholly owned
subsidiary), aggregate liquidation preference of $1,510 and $1,495,
respectively 1,351 1,261
----------- ---------
MINORITY INTEREST 113 119
------------ ---------
STOCKHOLDER'S EQUITY:
Common stock, $.01 par value; 1,000 shares authorized and 400 shares
outstanding - -
Additional paid-in capital 59,899 59,899
Accumulated deficit (23,895) (19,221)
---------- ----------
Total stockholder's equity 36,004 40,678
---------- ---------
$229,982 $231,906
======== ========
</TABLE>
The accompanying notes to condensed
consolidated financial statements
are an integral part of these
balance sheets.
<PAGE>
MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands)
<TABLE>
<S> <C> <C>
13 Weeks Ended 13 Weeks Ended
April 3, 1999 April 4, 1998
---------------- -------------
(Unaudited)
REVENUES:
Net store and food sales $ 37,129 $29,656
Franchising, net 6,416 1,363
Licensing, net 447 251
----------- ----------
Total revenues 43,992 31,270
--------- --------
OPERATING COSTS AND EXPENSES:
Selling and store occupancy costs 21,393 17,054
Cost of sales 11,931 7,758
General and administrative 5,324 4,250
Depreciation and amortization 5,396 2,881
---------- ---------
Total operating costs and expenses 44,044 31,943
--------- --------
Loss from operations (52) (673)
------------- ----------
OTHER INCOME (EXPENSE), net:
Interest expense (4,337) (2,756)
Interest income 38 176
Other expense (107) (13)
----------- -----------
Total other expense, net (4,406) (2,593)
---------- --------
Loss before provision for income taxes, preferred stock
accretion and dividends of subsidiaries and minority
interest (4,458) (3,266)
PROVISION FOR INCOME TAXES (104) (10)
----------- ---------
Loss before preferred stock accretion and dividends of
subsidiaries and minority interest (4,562) (3,276)
PREFERRED STOCK ACCRETION AND DIVIDENDS OF SUBSIDIARIES
(111) (111)
MINORITY INTEREST (1) (22)
------------- -------
Net loss $ (4,674) $(3,409)
========= =======
</TABLE>
The accompanying notes to condensed
consolidated financial statements
are an integral part of these
statements.
<PAGE>
MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<S> <C> <C>
13 Weeks Ended 13 Weeks Ended
April 3, 1999 April 4, 1998
Increase (Decrease) in Cash and Cash Equivalents (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,674) $ (3,409)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 5,396 2,881
Amortization of deferred loan costs 539 211
Loss on sale of assets 107 13
Preferred stock accretion and dividends of subsidiaries 111 111
Minority interest 1 22
Changes in assets and liabilities:
Accounts receivable 1,760 295
Amounts due from franchisees and licensees 1,023 430
Inventories 355 128
Prepaid rent and other 289 291
Other assets 916 67
Accounts payable and accrued liabilities 6,479 (1,948)
Bank overdraft (1,133) --
Store closure reserve (480) (704)
Accrued salaries, wages and benefits (428) 183
Accrued interest payable 3,569 2,531
Sales taxes payable (312) (548)
Deferred income (101) (241)
------------ ---------
Net cash provided by operating activities 13,417 313
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for acquisition expenses (97) (53)
Purchase of property and equipment (1,282) (1,226)
----------- ---------
Net cash used in investing activities (1,379) (1,279)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt (5,053) (195)
Payment of debt financing costs (800) --
Principal payments on capital lease obligations (423) (90)
Reduction in preferred stock (21) (21)
------------- -----------
Net cash used in financing activities (6,297) (306)
----------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,741 (1,272)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 4,751 16,287
---------- --------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 10,492 $15,015
======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 77 $ 14
====== ====
Cash paid for income taxes $ 164 $ 36
===== ====
</TABLE>
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
<PAGE>
MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared by Mrs. Fields' Original Cookies, Inc. and subsidiaries ("Mrs. Fields")
in accordance with the rules and regulations of the Securities and Exchange
Commission for Form 10-Q, and accordingly, do not include all of the information
and footnotes required by generally accepted accounting principles. In the
opinion of management, these condensed consolidated financial statements reflect
all adjustments, which consist only of normal recurring adjustments necessary to
present fairly the financial position of Mrs. Fields as of April 3, 1999 and
January 2, 1999, and the results of their operations and their cash flows for
the thirteen weeks ended April 3, 1999 and April 4, 1998. These unaudited
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto for the fiscal year
ended January 2, 1999 contained in Mrs. Fields' Form 10-K.
The results of operations for the thirteen weeks ended April 3, 1999 are not
necessarily indicative of the results that may be expected for the remainder of
the fiscal year ending January 1, 2000. Loss per share is not presented as Mrs.
Fields is wholly owned by Mrs. Fields' Holding Company, Inc. ("Mrs. Fields'
Holding") and therefore, its shares are not publicly traded.
(2) RECLASSIFICATIONS
Certain reclassifications have been made to the prior period's condensed
consolidated financial statements to conform with the current period's
presentation.
(3) PRO FORMA RESULTS OF OPERATIONS
The following unaudited pro forma information presents a summary of the
consolidated results of operations of Mrs. Fields assuming the Great American,
Deblan, Chocolate Chip, Karp, Cookie Conglomerate and Pretzelmaker acquisitions
and related financings had occurred at the beginning of the 13 weeks ended April
4, 1998. Pro forma adjustments have been made to give effect to amortization of
goodwill, interest expense on acquisition debt and certain other adjustments.
The pro forma results have been prepared for comparative purposes only and do
not purport to be indicative of the results of operations which actually would
have resulted had the acquisitions been consummated at the beginning of the
13 weeks ended April 4, 1998.
13 Weeks Ended
April 4, 1998
(Unaudited)
Total revenues............. $47,058
Income from operations..... 212
Net loss................... (3,989)
<PAGE>
MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(4) REPORTABLE SEGMENTS
Management evaluates performance at Mrs. Fields using two reportable
operating segments; namely, company-owned stores and related activity and
franchising and licensing activity. The segments are determined by revenue
source; direct sales or royalties and license fees. The company-owned stores
segment consists of both cookie and pretzel stores owned and operated by Mrs.
Fields. The franchising and licensing segment consists of cookie and pretzel
stores, which are owned and operated by third parties who pay Mrs. Fields an
initial franchise fee and monthly royalties based on a percentage of gross sales
and other licensing activity not related to cookie or pretzel stores. Sales and
transfers between segments are eliminated in consolidation.
Mrs. Fields evaluates performance of each segment based on contribution
margin. Mrs. Fields does not allocate any interest income, interest expense,
depreciation and amortization or assets to its reportable operating segments.
Segment revenue and contribution margin are presented in the following table.
<TABLE>
<S> <C> <C> <C>
Company-owned Stores Franchising and Licensing Total
13 weeks ended April 3, 1999
- ----------------------------
Total revenues $37,129 $6,863 $43,992
Contribution margin 6,001 4,667 10,668
13 weeks ended April 4, 1998
Total revenues $29,656 $1,614 $31,270
Contribution margin 4,844 1,614 6,458
</TABLE>
The reconciliation of contribution margin to net loss is as follows:
13 Weeks Ended 13 Weeks Ended
April 3, 1999 April 4, 1998
------------- -------------
Contribution margin $ 10,668 $ 6,458
General and
administrative expense (5,324) (4,250)
Depreciation and amortization (5,396) (2,881)
Interest expense (4,337) (2,756)
Other income (expense), net (285) 20
----------- -----------
Net loss $ (4,674) $ (3,409)
========= =========
Geographic segment information is as follows:
<TABLE>
<S> <C> <C> <C> <C>
International Domestic International
Domestic Company-owned Company-owned Franchising and Franchising
Stores Stores Licensing and Licensing
Total revenues
13 weeks ended April 3, 1999 $37,110 $21 $6,772 $89
13 weeks ended April 4, 1998 29,627 31 1,517 95
</TABLE>
Revenues from international franchising and licensing are generated from
Canada and Australia with no other countries having material representation.
Revenues from international company-owned stores are immaterial.
There were no customers who accounted for more than 10% of Mrs. Fields' total
revenues or either segment's revenues.
<PAGE>
MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(5) SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
Mrs. Fields' obligation related to its $140,000,000 aggregate principal amount
of 10 1/8 percent Series A, B and C Senior Notes due 2004 is fully and
unconditionally guaranteed ("the Guarantee") on a senior basis by four of Mrs.
Fields' wholly owned subsidiaries. The Guarantee is a general unsecured
obligation of The Mrs. Fields' Brand, Inc., Great American Cookies, Inc.,
Pretzel Time, Inc. and Pretzelmaker Holdings, Inc. ("the Guarantors"), rank
senior in right of payment to all subordinated indebtedness of the Guarantors
and rank equal in right of payment with all existing and future senior
indebtedness of the Guarantors. There are no restrictions on Mrs. Fields'
ability to obtain cash dividends or other distributions of funds from the
Guarantors, except those imposed by applicable law. The following supplemental
financial information sets forth, on a condensed consolidating basis, balance
sheets, statements of operations and statements of cash flows for Mrs. Fields'
Original Cookies, Inc. (the "Parent Company"), the Guarantor Subsidiaries and
the Non-guarantor Subsidiaries (which include Mrs. Fields' Cookies Australia,
Mrs. Fields' Cookies (Canada) Ltd., H & M Canada, and Fairfield Foods, Inc. and
three partially owned subsidiaries). Mrs. Fields has not presented separate
financial statements and other disclosures concerning the Guarantors because
management has determined that such information is not material.
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
AS OF APRIL 3, 1999
(Unaudited)
(dollars in thousands)
<TABLE>
<S> <C> <C> <C> <C> <C>
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
ASSETS $
CURRENT ASSETS:
Cash and cash equivalents $ 8,840 $ 1,570 $ 82 $ $ 10,492
Accounts receivable, net 1,435 13 1,448
Amounts due from franchisees and
licensees, net 998 3,982 4,980
Inventories 4,088 1,051 9 5,148
Other current assets and amounts due
from (to) affiliates, net 27,590 (22,234) (767) 4,589
Total current assets 42,951 (15,631) (663) 26,657
PROPERTY AND EQUIPMENT, net 29,152 1,514 169 30,835
INTANGIBLES, net 82,720 86,389 295 169,404
INVESTMENT IN SUBSIDIARIES 64,984 (64,984) --
OTHER ASSETS 2,928 125 33 3,086
$ 222,735 $ 72,397 $ (166) $ (64,984) $ 229,982
LIABILITIES AND STOCKHOLDER'S
EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term debt
and capital lease obligations $ 2,822 $ 359 $ $ $ 3,181
Accounts payable 19,851 1,363 (101) 21,113
Accrued liabilities 13,580 2,113 15,693
Total current liabilities 36,253 3,835 (101) 39,987
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, net of current portion 142,973 139 143,112
OTHER ACCRUED LIABILITIES 9,415 9,415
MANDATORILY REDEEMABLE CUMULATIVE PREFERRED
STOCK 1,351 1,351
MINORITY INTEREST 1 112 113
STOCKHOLDER'S EQUITY (DEFICIT) 34,094 67,072 (66) (65,096) 36,004
$ 222,735 $ 72,397 $ (166) $ (64,984) $229,982
</TABLE>
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE 13 WEEKS ENDED APRIL 3, 1999
(Unaudited)
(dollars in thousands)
<TABLE>
<S> <C> <C> <C> <C> <C>
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
TOTAL REVENUES $ 38,257 $ 6,635 $ 59 $ (959) $ 43,992
OPERATING COSTS AND EXPENSES:
Selling and store occupancy costs 21,632 83 (322) 21,393
Cost of sales 9,330 3,217 21 (637) 11,931
General and administrative 5,270 54 5,324
Depreciation and amortization 3,745 1,651 5,396
Total operating costs and
expenses 39,977 4,922 104 (959) 44,044
(Loss) income from operations (1,720) 1,713 (45) (52)
INTEREST EXPENSE AND
OTHER, net (4,379) (27) (4,406)
(Loss) income before provision for
income taxes and equity in net loss
of consolidated subsidiaries (6,099) 1,686 (45) (4,458)
PROVISION FOR INCOME TAXES (104) (104)
(Loss) income before preferred stock
accretion and dividends of
subsidiaries and equity in net loss
of consolidated subsidiaries (6,203) 1,686 (45) (4,562)
PREFERRED STOCK ACCRETION AND DIVIDENDS
OF SUBSIDIARIES (111) (111)
EQUITY IN NET LOSS OF CONSOLIDATED
SUBSIDIARIES 1,500 (1,501) (1)
NET (LOSS) INCOME $ (4,703) $ 1,575 $ (45) $ (1,501) $ (4,674)
</TABLE>
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE 13 WEEKS ENDED APRIL 3, 1999
(Unaudited)
(dollars in thousands)
<TABLE>
<S> <C> <C> <C> <C> <C>
Parent Guarantor Non-Guarantor
Company Subsidiary Subsidiaries Eliminations Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES $ 19,701 $ (6,261) $ (23) $ $ 13,417
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for acquisitions (97) (97)
Purchase of property and equipment,
net (1,282) (1,282)
Net cash used in investing
activities (1,379) (1,379)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt and
capital lease obligations (4,588) (888) (5,476)
Payment of debt financing fees (800) (800)
Reduction in preferred stock (21) (21)
Net cash used in financing
activities (5,388) (909) (6,297)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 12,934 (7,170) (23) 5,741
CASH AND CASH EQUIVALENTS, beginning of
the period 3,539 1,134 78 4,751
CASH AND CASH EQUIVALENTS, end of the
period $ 16,473 $ (6,036) $ 55 $ $ 10,492
</TABLE>
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JANUARY 2, 1999
(Unaudited)
(dollars in thousands)
<TABLE>
<S> <C> <C> <C> <C> <C>
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
ASSETS $
CURRENT ASSETS:
Cash and cash equivalents $ 3,539 $ 1,134 $ 78 $ - $ 4,751
Accounts receivable, net 2,860 304 44 - 3,208
Amounts due from franchisees and
licensees, net 1,297 4,706 - - 6,003
Inventories 4,631 863 9 - 5,503
Other current assets and amounts due
from (to) affiliates, net 39,368 (33,898) (592) - 4,878
Total current assets 51,695 (26,891) (461) - 24,343
PROPERTY AND EQUIPMENT, net 29,900 1,654 243 - 31,797
INTANGIBLES, net 75,875 95,601 320 - 171,796
INVESTMENT IN SUBSIDIARIES 66,484 - - (66,484) -
OTHER ASSETS 3,688 252 30 - 3,970
$ 227,642 $ 70,616 $ 132 $ (66,484) $ 231,906
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term debt and
capital lease obligations $ 7,141 $ 1,204 $ - $ - $ 8,345
Accounts payable 14,223 564 69 - 14,856
Accrued liabilities 10,956 2,895 18 - 13,869
Total current liabilities 32,320 4,663 87 - 37,070
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, net of current portion 142,367 216 61 - 142,644
OTHER ACCRUED LIABILITIES 10,134 - - - 10,134
MANDATORILY REDEEMABLE CUMULATIVE PREFERRED
STOCK - 1,261 - - 1,261
MINORITY INTEREST - - - 119 119
STOCKHOLDER'S EQUITY (DEFICIT) 42,821 64,476 (16) (66,603) 40,678
$ 227,642 $ 70,616 $ 132 $ (66,484) $231,906
</TABLE>
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE 13 WEEKS ENDED APRIL 4, 1998
(Unaudited)
(dollars in thousands)
<TABLE>
<S> <C> <C> <C> <C> <C>
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
TOTAL REVENUES $ 30,273 $ 251 $ 746 $ - $ 31,270
OPERATING COSTS AND EXPENSES:
Selling and store occupancy costs 17,054 - - - 17,054
Cost of sales 7,758 - - - 7,758
General and administrative 3,506 276 468 - 4,250
Depreciation and amortization 2,449 319 113 - 2,881
Total operating costs and
expenses 30,767 595 581 - 31,943
(Loss) income from operations (494) (344) 165 - (673)
INTEREST EXPENSE AND
OTHER, net (2,601) 8 - - (2,593)
(Loss) income before provision for
income taxes and equity in net loss
of consolidated subsidiaries (3,095) (336) 165 - (3,266)
PROVISION FOR INCOME TAXES (10) - - - (10)
(Loss) income before preferred stock
accretion and dividends of
subsidiaries and equity in net loss
of consolidated subsidiaries (3,105) (336) 165 - (3,276)
PREFERRED STOCK ACCRETION AND DIVIDENDS
OF SUBSIDIARIES - - (111) - (111)
EQUITY IN NET LOSS OF CONSOLIDATED
SUBSIDIARIES - (22) - (22)
NET (LOSS) INCOME $ (3,105) $ (336) $ 32 $ - $ (3,409)
</TABLE>
<PAGE>
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE 13 WEEKS ENDED APRIL 4, 1998
(Unaudited)
(dollars in thousands)
<TABLE>
<S> <C> <C> <C> <C> <C>
Parent Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES $ 627 $ (314) $ - $ - $ 313
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for acquisitions (53) - - - (53)
Purchase of property and
equipment, net (1,221) - (5) - (1,226)
Net cash used in investing
activities (1,274) - (5) - (1,279)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt and
capital lease obligations (90) - (195) - (285)
Reduction in preferred stock - - (21) - (21)
Net cash used in financing
activities (90) - (216) - (306)
NET DECREASE IN CASH AND CASH EQUIVALENTS (737) (314) (221) - (1,272)
CASH AND CASH EQUIVALENTS, beginning of
period 14,685 725 877 - 16,287
CASH AND CASH EQUIVALENTS, end of period $ 13,948 $ 411 $ 656 $ - $ 15,015
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Mrs. Fields' Original Cookies, Inc. ("Mrs. Fields"), a Delaware
corporation, is a wholly owned subsidiary of Mrs. Fields' Holding Company, Inc.
("Mrs. Fields' Holding"). Mrs. Fields' Holding is a majority owned subsidiary of
Capricorn Investors II, L.P. ("Capricorn"). Mrs. Fields has nine wholly owned
operating subsidiaries; namely, Great American Cookie Company, Inc., The Mrs.
Fields' Brand, Inc., Pretzel Time, Inc., Pretzelmaker Holdings, Inc., Mrs.
Fields' Cookies Australia, Mrs. Fields' Cookies (Canada) Ltd., H & M Canada,
Pretzelmaker of Canada and Fairfield Foods, Inc.; and three partially owned
subsidiaries.
Mrs. Fields primarily operates and franchises retail stores, which sell
freshly baked cookies, brownies, pretzels and other food products through six
specialty retail chains. As of April 3, 1999, Mrs. Fields owned and operated 141
Mrs. Fields Cookies stores, 110 Original Cookie Company stores, 107 Great
American Cookies stores, 65 Hot Sam Pretzels stores, 84 Pretzel Time stores, 9
Pretzelmaker stores in the United States and one Pretzel Time store in Canada.
Additionally, Mrs. Fields has franchised or licensed 858 stores in the United
States and 133 stores in several other countries. As of April 3, 1999, Mrs.
Fields owned and operated 426 core stores and 90 stores which are in the process
of being closed or franchised. All of the stores in the process of being closed
or franchised are expected to be closed or franchised by the end of fiscal year
2000.
Mrs. Fields' business follows seasonal trends and is also affected by
climate and weather conditions. Because Mrs. Fields' stores are heavily
concentrated in shopping malls, the Mrs. Fields' sales performance is
significantly dependent on the performance of those malls. Mrs. Fields
experiences its highest revenues in the fourth quarter due to the holiday
season.
Results of Operations
The following table sets forth, for the periods indicated, certain
information relating to the operations of Mrs. Fields expressed in thousands of
dollars and percentage changes from period to period. Data in the table reflects
the consolidated results of Mrs. Fields for the 13 weeks ended April 3, 1999 and
the 13 weeks ended April 4, 1998. As supplemental information the table also
segregates the statement of operations data into a core stores and stores in the
process of being closed or franchised format.
% CHG
For the 13 Weeks Ended FROM
APRIL APRIL 1998 TO
3, 1999 4, 1998 1999
(Dollars in thousands)
Statement of Operations Data:
Revenues:
Net store and food sales.......... $ 37,129 $29,656 25.2%
Franchising, net.................. 6,416 1,363 370.7
Licensing, net.................... 447 251 78.1
----------- ----------
Total revenues.................. 43,992 31,270 40.7
--------- --------
Operating Costs and Expenses:
Selling and store occupancy costs. 21,393 17,054 25.4
Cost of sales..................... 11,931 7,758 53.8
General and administrative........ 5,324 4,250 25.3
Depreciation and amortization 5,396 2,881 87.3
---------- ---------
Total operating costs and 44,044 31,943 37.9
--------- --------
expenses
Other Income (Expense):
Interest expense.................. (4,337) (2,756) 57.4
Interest income................... 38 176 (78.4)
Other expenses, net............... (323) (156) 107.1
------------ -----------
Total other expense, net (4,622) (2,736)
----------- ----------
Net loss........................ $ (4,674) $ (3,409) 37.1%
========== =========
.
% CHG
For the 13 Weeks Ended FROM
APRIL APRIL 1998 TO
3, 1999 4, 1998 1999
(Dollars in thousands)
Supplemental Information
Core stores:
Net store and food sales........... $ 32,601 $25,700 26.9%
-------- -------
Operating costs and expenses:
Selling and store occupancy costs 17,772 13,583 30.8
Cost of sales.................... 8,311 6,671 24.6
Depreciation and amortization.... 1,970 1,034 90.1
---------- --------
Total operating costs and
expenses....................... 28,053 21,288 31.8
--------- -------
Core stores contribution $ 4,548 $ 4,412 3.1%
========= =======
Stores in the process of being closed
or franchised:
Net store and food sales........... $ 4,528 $ 3,956 14.5
-------- ------
Operating costs and expenses:
Selling and store occupancy costs.. 3,621 3,471 4.3
Cost of sales...................... 1,424 1,087 31.0
Depreciation and amortization...... 101 109 (0.7)
----------- ---------
Total operating costs and
expenses....................... 5,146 4,667 10.3
---------- --------
Stores in the process of being
closed or franchised contribution $ (618) $ (711) (13.1)%
=========== ========
<TABLE>
<S> <C> <C>
Company-owned and Franchised or Licensed Store Activity April 3, 1999 April 4, 1998
-------------- -------------
Company- Franchised Company- Franchised
Owned or Licensed Owned or Licensed
Stores open as of the beginning of the 13 weeks ended 566 972 481 553
Stores opened (including relocations) 6 21 3 22
Stores closed (including relocations) (19) (10) (5) (29)
Non-core (exit plan) stores closed (September 18, 1996 (29) (6) -
forward)
Non-core (exit plan) stores franchised (September 18, 1996 (10) 10 (2) 2
forward)
Stores acquired from franchisees 2 (2) 1 (1)
------ ------- ----- ------
Stores open as of the end of the 13 weeks ended 516 991 472 547
==== ==== ==== ===
</TABLE>
13 Weeks Ended April 3, 1999 Compared to the 13 Weeks Ended April 4, 1998
Revenues
Net Store and Food Sales. Total net store sales increased $7,473,000,
or 25.2%, from $29,656,000 to $37,129,000 for the 13 weeks ended April 3,
1999 compared to the 13 weeks ended April 4, 1998.
Net store sales from core stores increased $6,901,000, or 26.9%, from
$25,700,000 to $32,601,000 for the 13 weeks ended April 3, 1999 compared to the
13 weeks ended April 4, 1999. The increase in net store sales from core stores
was primarily attributable to the operation of 66 Great American and 2
Pretzelmaker core stores obtained in connection with the acquisitions in August
and November 1998, respectively. In addition sales were higher due to a calendar
shift which caused the Easter holiday to occur in the first quarter of fiscal
1999 compared to the second quarter in fiscal 1998. The first quarter of 1999
therefore received the benefit from these holiday sales.
On a comparable store basis (adjusted for the calendar shifts),
system-wide core store sales were up 0.8% during the 13 weeks ended April 3,
1999 compared to the same period in 1998. Pretzel Time core stores drove the
positive results by posting a 9.5% increase in comparable store sales offsetting
the flat results posted by the core cookie stores.
Net store sales from stores in the process of being closed or
franchised decreased $572,000, or 14.5%, from $3,956,000 to $4,528,000 for the
13 weeks ended April 3, 1999 compared to the 13 weeks ended April 4, 1998. This
decrease results from closing 29 stores and franchising 10 stores during the 13
weeks ended April 3, 1999 and the effect of closing or franchising 13 stores
during the 13 weeks ended April 4, 1998. In addition, 39 stores were closed and
24 franchised over the remainder of fiscal year 1998, which were in operation
during the 13 weeks ended April 4, 1998.
Franchising Revenues. Franchising revenues increased $5,053,000, or
370.7%, from $1,363,000 to $6,416,000 for the 13 weeks ended April 3, 1999
compared to the 13 weeks ended April 4, 1998. The increase in franchising
revenues was primarily attributable to batter sales made to franchisees from the
Atlanta batter facility purchased in August 1998 and the addition of 201 Great
American and 205 Pretzelmaker franchisees due to the acquisitions of these
companies in August and November 1998, respectively.
Licensing Revenues. Licensing revenues increased $196,000, or 78.1%,
from $251,000 to $447,000 for the 13 weeks ended April 3, 1999 compared to the
13 weeks ended April 4, 1998. The increase in licensing revenues was primarily
attributable to a Mrs. Fields branded dry cookie mix license fee earned during
the 13 weeks ended April 3, 1999 that did not occur during the same period of
fiscal 1998.
Operating Costs and Expenses
Selling and Store Occupancy Costs. Total selling and store occupancy
costs increased $4,339,000, or 25.4%, from $17,054,000 to $21,393,000 for the 13
weeks ended April 3, 1999 compared to the 13 weeks ended April 4, 1998.
Selling and store occupancy costs for core stores increased by
$4,189,000, or 30.8%, from $13,583,000 to $17,772,000 for the 13 weeks ended
April 3, 1999 compared to the 13 weeks ended April 4, 1998. Within this overall
increase, selling expenses increased by $2,875,000, or 36.3%, from $7,920,000 to
$10,795,000 for the 13 weeks ended April 3, 1999 compared to the 13 weeks ended
April 4, 1998. Store occupancy costs increased $1,314,000, or 23.2%, from
$5,663,000 to $6,977,000 for the 13 weeks ended April 3, 1999 compared to the 13
weeks ended April 4, 1998. These increases were primarily attributable to the 66
Great American and 2 Pretzelmaker core stores obtained in connection with the
acquisitions in August and November 1998, respectively, coupled with the opening
of eight new core stores during the 13 weeks ended April 3, 1999 and lease
renewal increases.
Selling and store occupancy costs for stores in the process of being
closed or franchised increased $150,000, or 4.3%, from $3,471,000 to $3,621,000
for the 13 weeks ended April 3, 1999 compared to the 13 weeks ended April 4,
1998. This increase was primarily the result of the additional stores the
Company identified as being non-core stores during the fourth quarter of 1998.
Cost of Sales. Total food cost of sales increased $4,173,000, or
53.8%, from $7,758,000 to $11,931,000 for the 13 weeks ended April 3, 1999
compared to the 13 weeks ended April 4, 1998.
Food cost of sales for core stores increased $1,640,000, or 24.6%, from
$6,671,000 to $8,311,000 for the 13 weeks ended April 3, 1999. This increase was
primarily the result of the addition of 66 Great American and 2 Pretzelmaker
core stores in August and November 1998, respectively.
Food cost of sales for stores in the process of being closed or
franchised decreased $337,000, or 31.0%, from $1,087,000 to $1,424,000 for the
13 weeks ended April 3, 1999 compared to the 13 weeks ended April 4, 1998. This
decrease was primarily the result of closing 48 stores and franchising 10 stores
during the 13 weeks ended April 3, 1999 and the effect of closing or franchising
13 stores during the 13 weeks ended April 4, 1998. In addition, 39 stores were
closed and 24 franchised over the remainder of fiscal year 1998, which were in
operation during the 13 weeks ended April 4, 1998.
General and Administrative Expenses. General and administrative
expenses increased $1,074,000, or 25.3%, from $4,250,000 to $5,324,000 for the
13 weeks ended April 3, 1999 compared to the 13 weeks ended April 4, 1998. The
increase in general and administrative expenses was primarily attributable to
the acquisitions of Great American and Pretzelmaker.
Depreciation and Amortization. Total depreciation and amortization
expense increased by $2,515,000, or 87.3%, from $2,881,000 to $5,396,000 for the
13 weeks ended April 3, 1999 compared to the 13 weeks ended April 4, 1998. This
increase was primarily attributable to increased goodwill and fixed assets from
the Great American and Pretzelmaker acquisitions.
Depreciation and amortization expense for core stores increased
$936,000, or 90.5%, from $1,034,000 to $1,970,000 for the 13 weeks ended April
3, 1999 compared to the 13 weeks ended April 4, 1998. This increase in
depreciation and amortization expense was primarily attributable to the
acquisitions of 66 Great American and 2 Pretzelmaker core stores in August and
November 1998, respectively, and six newly opened core stores during the 13
weeks ended April 3, 1999.
Interest Expense. Interest expense, net, increased $1,581,000, or
57.4%, from $2,756,000 to $4,337,000 for the 13 weeks ended April 3, 1999
compared to the 13 weeks ended April 4, 1998. This increase was primarily
attributable to interest on the $40,000,000 in high yield notes, which were
issued in August 1998.
Interest Income. Interest income, decreased $138,000, or 78.4%, from
$176,000 to $38,000 for the 13 weeks ended April 3, 1999 compared to the 13
weeks ended April 4, 1998. This decrease was primarily the result of interest
income earned in 1998 on excess cash provided by the $100,000,000 in high yield
notes which were put in place in November 1997 that was not earned in fiscal
1999.
Other Expenses. Other expenses, increased $167,000, or 107.1%, from
$156,000 to $323,000 for the 13 weeks ended April 3, 1999 compared to the 13
weeks ended April 4, 1998. This increase was primarily attributable to increased
losses on fixed asset dispositions and increased tax provisions.
Net Loss. The net loss increased by $1,265,000, or 37.1%, from
$3,409,000 to $4,674,000 for the 13 weeks ended April 3, 1999 compared to the 13
weeks ended April 4, 1998 due to the combination of factors described above.
Contribution from Core Stores. Contribution from core stores decreased
by $136,000, or 3.1%, from $4,412,000 to $4,548,000 for the 13 weeks ended April
3, 1999 compared to the 13 weeks ended April 4, 1998, primarily as a result of
higher cost of goods at the "Mrs. Fields" stores. Most of the increase in cost
of goods was caused by higher prices for butter which were higher in the first
quarter of 1999 compared to the first quarter of 1998. This decrease was
partially offset by a calendar shift resulting in Easter holiday sales occurring
in the first quarter of fiscal 1999 compared to the second quarter in fiscal
1998.
Negative Contribution from Stores in the Process of Being Closed or
Franchised. The negative contribution from stores in the process of being closed
or franchised decreased by $93,000, or 13.1%, from $711,000 to $618,000 for the
13 weeks ended April 3, 1999 compared to the 13 weeks ended April 4, 1998. This
decrease was primarily the result of closing 48 stores and franchising 10 stores
during the 13 weeks ended April 3, 1999 and the effect of closing or franchising
13 stores during the 13 weeks ended April 4, 1998. In addition, 39 stores were
closed and 24 franchised over the remainder of fiscal year 1998, which were in
operation during the 13 weeks ended April 4, 1998.
Liquidity and Capital Resources
General
Mrs. Fields' principal sources of liquidity are cash flows from
operations, cash on hand and available borrowings under Mrs. Fields' existing
revolving credit facility. As of April 3, 1999, Mrs. Fields has $10,492,000 of
cash and cash equivalents on hand and $2,200,000 additional borrowings available
under its revolving credit facility. Mrs. Fields expects to use its existing
cash, cash flows from operations and its credit facility to provide working
capital, finance capital expenditures and to meet debt service requirements,
including the June 1, 1999 interest payment. Based on current operations and
anticipated cost savings, Mrs. Fields believes that its sources of liquidity
will be adequate to meet its anticipated requirements for working capital,
capital expenditures, scheduled debt service requirements and other general
corporate purposes. There can be no assurance, however, that Mrs. Fields'
business will continue to generate cash flows at or above current levels or that
cost savings can be achieved.
April 3, 1999 Compared to January 2, 1999
As of April 3, 1999, Mrs. Fields had liquid assets (cash and cash
equivalents and accounts receivable) of $16,920,000, an increase of 21.2%, or
$2,958,000, from January 2, 1999 when liquid assets were $13,962,000. Cash
increased $5,741,000, or 120.8%, to $10,492,000 at April 3, 1999 from $4,751,000
at January 2, 1999, primarily the result of increased cash provided by
operations and better collections on accounts receivable and better management
of payables. Accounts receivable decreased $2,783,000, or 30.2%, to $6,428,000
at April 3, 1999 from $9,211,000 at January 2, 1999 due to the seasonality of
the business and improved collections.
Mrs. Fields' working capital decreased by $603,000 to a negative
$13,330,000 at April 3, 1999 from a negative $12,727,000 at January 2, 1999.
This decrease is due to increases in current liabilities which more than offset
the increases in current assets discussed above. Current liabilities increased
$2,917,000 primarily from increased accounts payable and accrued interest
payable of $10,959,000 partially offset by a decrease in the current portion of
long-term debt of $5,221,000. Days in accounts payable has increased from an
average of 30 days during the first quarter of 1998 to an average of 45 days
during the first quarter of 1999.
Long-term assets decreased $4,238,000, or 2.0%, to $203,325,000 at
April 3, 1999 from $207,563,000 at January 2, 1999. This decrease was primarily
the result of scheduled depreciation and amortization of fixed assets, goodwill
and deferred loan costs.
Mrs. Fields' cash flows from operating activities of $13,417,000 for
the 13 weeks ended April 3, 1999, resulted primarily from store sales and
franchising and licensing revenues net of costs and expenses incurred to
generate these sales and better management of cash flows.
Mrs. Fields utilized $1,379,000 of cash in investing activities during
the 13 weeks ended April 3, 1999, primarily for capital expenditures relating to
store remodels and renovations.
Mrs. Fields utilized $6,297,000 of cash in financing activities during
the 13 weeks ended April 3, 1999, primarily for the payment of debt related to
the Pretzel Time acquisition.
The specialty cookie and pretzel businesses do not require the
maintenance of significant receivables or inventories; however, Mrs. Fields
continually invests in its business by upgrading and remodeling stores and
adding new stores, carts, and kiosks as opportunities arise. Investments in
these long-term assets, which are key to generating current sales, reduce Mrs.
Fields' working capital. During the 13 weeks ended April 3, 1999 and April 4,
1998, Mrs. Fields expended $1,282,000 and $1,226,000, respectively, for capital
assets and expects to expend a total of approximately $7,000,000 in 1999.
Management anticipates that these expenditures will be funded with cash
generated from operations and short-term borrowings under its credit facility as
needed.
Year 2000
Management has assessed the Year 2000 issue and has determined that all
internal information technology systems including financial software, corporate
networks, the AS400 system and all other systems are Year 2000 compliant with
the exception of:
(1) systems used for collecting and communicating sales data from
retail locations, and (2) internally developed plant production and
distribution software.
This assessment was based primarily on independent, third-party verification
from Mrs. Fields' vendors and suppliers.
Mrs. Fields is currently replacing its sales collection systems with
software and hardware that is Year 2000 compliant. Programming and development
of the software is complete and has been installed in approximately 80% of its
stores. Mrs. Fields projects installation will be complete by August 1999. The
estimated cost of this project is $1.9 million and includes software development
and new store computers and registers. The costs to complete this project are
included in Mrs. Fields' 1999 budget. Funding for this project is being provided
by internal cash flow and by a lease finance company.
Upgrades of the plant production and distribution software will take place
in the first and second quarters of 1999 at an estimated cost of $10,000. To
date, approximately 50% of the upgrades have been implemented. Mrs. Fields is
confident that this time table will be met. No information technology projects
have been deferred as a result of its Year 2000 efforts.
Mrs. Fields is neither dependent on the proper operation of the sales
collection systems nor the plant production and distribution software to run the
day-to-day operations of the business. Therefore, failure or malfunction of
these systems due to untimely or incomplete remediation would not have a
material adverse effect on its results of operations.
Mrs. Fields is in the process of assessing Year 2000 issues with respect to
its significant vendors and financial institutions as to their compliance plans
and whether any Year 2000 issues will impede the ability of such vendors to
continue providing goods and services to Mrs. Fields. Failure of Mrs. Fields'
key suppliers to remedy their own Year 2000 issues could delay shipments of
essential products, thereby disrupting Mrs. Fields' operations. Furthermore,
Mrs. Fields relies on various service providers, such as utility and
telecommunication service companies, which are beyond its control. This
assessment is approximately 60% complete with final completion anticipated by
the end of the second quarter of 1999. Based upon the results of the assessment
to date, Mrs. Fields is not aware of any Year 2000 issues relating to its
significant vendors, financial institutions or its non-information technology
systems.
Mrs. Fields does not have a contingency plan in place to address untimely
or incomplete remediation of Year 2000 issues, but it intends to develop such
plans during the first half of 1999. These contingency plans are expected to
address issues related to significant vendors and financial institutions.
Inflation
The impact of inflation on the earnings of the business has not been
significant in recent years. Most of Mrs. Fields' leases contain escalation
clauses (however, such leases are accounted for on a straight-line basis as
required by generally accepted accounting principles which minimizes
fluctuations in operating income) and many of Mrs. Fields' employees are paid
hourly wages at the Federal minimum wage level. Minimum wage increases will
negatively impact Mrs. Fields' payroll costs in the short term, but management
believes such impact can be offset in the long term through operational
efficiency gains and, if necessary, through product price increases.
Forward-looking Information
This report contains certain forward-looking statements based on our
current expectations and projections about future events, developed from the
information currently available to us. The forward-looking statements include,
among other things, our expectations and estimates about Mrs. Fields' Original
Cookies, Inc. ("Mrs. Fields) future financial performance, including growth in
net sales and earnings, cash flows from operations, capital expenditures, the
ability to refinance indebtedness, and the sale of assets. These forward-looking
statements are subject to risks, uncertainties and assumptions, including the
following:
o Our ability to combine the businesses of companies acquired during the year
with Mrs. Fields and to realize the expected benefits and cost savings
from our acquisitions;
o Our ability to meet our debt and interest obligations,
o Performance by franchisees and licensees;
o Difficulties or delays in developing and introducing anticipated new
products or failure of customers to accept new product offerings;
o Changes in consumer preferences and our ability to adequately anticipate
such changes;
o The seasonal nature of our operations;
o Changes in general economic and business conditions;
o Actions by competitors, including new product offerings and marketing and
promotional successes;
o Claims which might be made against Mrs. Fields, including product liability
claims;
o Changes in business strategy, new product lines, changes in raw ingredient
and employee labor costs;
o Changes in our relationships with our franchisees and licensees;
o Changes in mall customer traffic and
o The inability of our vendors, service providers and financial institutions
to resolve Year 2000 issues in a timely manner.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this report may not occur.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, Mrs. Fields is involved in routine
litigation, including franchise disputes. Mrs. Fields is not a party to any
legal proceedings which, in the opinion of management of Mrs. Fields, after
consultation with legal counsel, is material to Mrs. Fields' business, financial
condition or results of operations beyond amounts provided for in the
accompanying financial statements.
Mrs. Fields' stores and products are subject to regulation by numerous
governmental authorities, including, without limitation, federal, state and
local laws and regulations governing health, sanitation, environmental
protection, safety and hiring and employment practices.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
27.1 Financial data schedule (for SEC use only)
(b) Forms 8-K
None
<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.
MRS. FIELDS' ORIGINAL COOKIES, INC.
/s/Larry A. Hodges May 18, 1999
Larry A. Hodges, President & CEO Date
/s/Michael Ward May 18, 1999
Michael Ward, Chief Financial Officer Date
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Jan-1-1999
<PERIOD-START> Jan-3-1999
<PERIOD-END> Apr-3-1999
<EXCHANGE-RATE> 1
<CASH> 10,492
<SECURITIES> 0
<RECEIVABLES> 7,495
<ALLOWANCES> 1,067
<INVENTORY> 5,148
<CURRENT-ASSETS> 26,675
<PP&E> 45,105
<DEPRECIATION> 14,270
<TOTAL-ASSETS> 229,982
<CURRENT-LIABILITIES> 36,806
<BONDS> 146,293
1,351
0
<COMMON> 0
<OTHER-SE> 36,004
<TOTAL-LIABILITY-AND-EQUITY> 229,982
<SALES> 37,129
<TOTAL-REVENUES> 43,992
<CGS> 11,931
<TOTAL-COSTS> 44,044
<OTHER-EXPENSES> 107
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,337
<INCOME-PRETAX> (4,458)
<INCOME-TAX> (104)
<INCOME-CONTINUING> (4,562)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,674)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
