<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the Quarterly Period Ended November 27, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File Number
333-33751
ARCHIBALD CANDY CORPORATION
Incorporated in the IRS Employer Identification
State of Illinois No. 36-0743280
1137 West Jackson Boulevard
Chicago, Illinois 60607
(312) 243-2700
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
filings requirements for the past 90 days.
Yes X No
----- -----
As of January 10, 2000, the number of shares outstanding of the
registrant's Common Stock was 19,200 shares, all of which was held by Fannie May
Holdings, Inc.
<PAGE>
ARCHIBALD CANDY CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED NOVEMBER 27, 1999
INDEX
-------
PART 1 -- FINANCIAL INFORMATION
- ------------------------------
<TABLE>
<CAPTION>
<S> <C>
ITEM 1 -- FINANCIAL STATEMENTS PAGE NO.
--------
CONDENSED CONSOLIDATED BALANCE SHEETS................................................ 1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED).......................... 3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)................ 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)........................... 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)..................... 6
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANAYLSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS........................................................ 11
</TABLE>
PART 11 -- OTHER INFORMATION
- ----------------------------
<TABLE>
<S> <C>
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K............................................ 13
SIGNATURES............................................................................. 14
</TABLE>
<PAGE>
Archibald Candy Corporation
(A Wholly Owned Subsidiary of Fannie May Holdings, Inc.)
Condensed Consolidated Balance Sheets
As of November 27, 1999 and August 28, 1999
(In thousands)
<TABLE>
<CAPTION>
November 27, August 28,
1999 1999
------------ ----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,532 $ 6,908
Accounts receivable, net 7,204 3,591
Inventories 47,265 38,554
Prepaid expenses and other current assets 5,808 3,048
-------- --------
Total current assets 64,809 52,101
Property, plant, and equipment, net 51,213 51,163
Goodwill, net 70,019 71,382
Noncompete agreements and other intangibles, net 398 402
Deferred financing fees, net 10,253 9,071
Investment in joint venture 1,874 1,934
Other assets 2,852 2,234
-------- --------
Total assets $201,418 $188,287
-------- --------
-------- --------
</TABLE>
See accompanying notes.
1
<PAGE>
Archibald Candy Corporation
(A Wholly Owned Subsidiary of Fannie May Holdings, Inc.)
Condensed Consolidated Balance Sheets
As of November 27, 1999 and August 28, 1999
(In thousands)
<TABLE>
<CAPTION>
November 27, August 28,
1999 1999
------------- ----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 24,805 $ 14,994
Revolving line of credit 17,000 8,000
Accrued liabilities 12,269 8,069
Payroll and related liabilities 2,319 3,331
Current portion of capital lease obligations 236 246
-------- --------
Total current liabilities 56,629 34,640
Due to affiliate 344 344
Long-term debt 170,000 170,000
Deferred rent 1,807 1,750
Capital lease obligations, less current portion 63 89
Shareholder's equity (deficit):
Common stock, $0.01 par value:
Authorized -- 25,000 shares
Issued and outstanding -- 19,200 shares -- --
Additional paid-in-capital 18,700 18,700
Accumulated deficit (46,179) (37,239)
Other comprehensive income 54 3
-------- --------
Total shareholder's equity (deficit) (27,425) (18,536)
-------- --------
Total liabilities and shareholder's equity (deficit) $201,418 $188,287
-------- --------
-------- --------
</TABLE>
See accompanying notes.
2
<PAGE>
Archibald Candy Corporation
(A Wholly Owned Subsidiary of Fannie May Holdings, Inc.)
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
November 27, November 28,
1999 1998
------------ ------------
<S> <C> <C>
Net sales $ 54,433 $ 29,648
Cost of sales, excluding depreciation 21,007 12,410
Selling, general, and administrative expenses, excluding depreciation
and amortization 33,515 15,641
Depreciation and amortization expense 3,144 1,170
Amortization of goodwill and other intangibles 1,268 407
Share of loss in joint venture 60 --
Management fees and other fees 133 169
--------- ---------
Operating (loss) (4,694) (149)
Other (income) and expense:
Interest expense 4,654 2,717
Interest income (102) (125)
Other income and expense (327) (163)
--------- ---------
Loss before income taxes (8,919) (2,578)
Provision for income taxes 21 10
---------- ---------
Net loss $ (8,940) $ (2,588)
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
3
<PAGE>
Archibald Candy Corporation
(A Wholly Owned Subsidiary of Fannie May Holdings, Inc.)
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
November 27, November 28,
1999 1998
-------------- -------------
<S> <C> <C>
Net (loss) $ (8,940) $ (2,588)
Other comprehensive income:
Foreign currency translation adjustments 51 --
--------- ---------
Comprehensive (loss) $ (8,889) $ (2,588)
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
4
<PAGE>
Archibald Candy Corporation
(A Wholly Owned Subsidiary of Fannie May Holdings, Inc.)
Condensed Consolidated Statements of Cash Flow (Unaudited)
For the Three Months Ended November 28, 1998 and November 27, 1999
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
November 27, November 28,
1999 1998
------------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (8,940) $ (2,588)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 4,412 1,577
Share of loss in joint venture 60 --
Changes in operating assets and liabilities:
Accounts receivable, net (3,613) (5,172)
Inventories (8,711) (2,216)
Prepaid expenses and other current assets (2,760) (590)
Other assets (645) (186)
Accounts payable and accrued liabilities 13,056 4,775
-------- --------
Net cash (used in) operating activities (7,141) (4,400)
INVESTING ACTIVITIES
Purchase of property, plant, and equipment (3,115) (880)
-------- --------
Net cash (used in) investing activities (3,115) (880)
FINANCING ACTIVITIES
Net borrowings under revolving line of credit 9,000 --
Principal payments of capital lease obligations (36) (48)
Costs related to financing (1,084) (310)
-------- --------
Net cash provided by (used in) financing activities 7,880 (358)
-------- --------
Net (decrease) in cash and cash equivalents (2,376) (5,638)
Cash and cash equivalents beginning of period 6,908 13,081
-------- --------
Cash and cash equivalents end of period $ 4,532 $ 7,443
-------- --------
-------- --------
SUPPLEMENTAL SCHEDULE OF CASH TRANSACTIONS
Interest paid $ 160 $ 249
-------- --------
-------- --------
</TABLE>
See accompanying notes.
5
<PAGE>
Archibald Candy Corporation
(A Wholly Owned Subsidiary of Fannie May Holdings, Inc.)
Notes to Condensed Consolidated Financial Statements (Unaudited)
November 27, 1999
Note 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Archibald Candy Corporation (Archibald) and its subsidiaries (collectively, the
Company) are manufacturers and retailers of boxed chocolates and other
confectionery items. The Company sells its Fannie May, Fanny Farmer, Sweet
Factory and Laura Secord candies in over 700 Company-operated stores and in
approximately 9,300 third-party retail outlets as well as through quantity
order, mail order and fundraising programs in the United States and Canada. The
Company (Archibald) is a wholly owned subsidiary of Fannie May Holdings, Inc.
The interim financial statements included herein have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes these disclosures are adequate to make the information
presented not misleading. In the opinion of management, all adjustments
necessary for fair presentation for the periods presented have been reflected
and are of a normal recurring nature. These financial statements should be read
in conjunction with the financial statements and notes thereto for the year
ended August 28, 1999. Certain amounts in the 1999 financial statements have
been reclassified to conform with the 2000 presentation.
Results of operations for the period from August 29, 1999 to November 27, 1999
are not necessarily indicative of the results that may be achieved for the
entire year.
Note 2. INVENTORIES
Inventories at November 27, 1999 and August 28, 1999 are comprised of the
following:
<TABLE>
<CAPTION>
November 27, August 28,
1999 1999
----------- -----------
<S> <C> <C>
Raw materials ............... $ 15,980 $ 13, 557
Work in process ............. 379 333
Finished goods .............. 30,906 24,664
----------- -----------
$ 47,265 $ 38,554
----------- -----------
----------- -----------
</TABLE>
Note 3. LONG-TERM DEBT
Long-term debt at November 27, 1999 and August 28, 1999 is comprised of $170
million of 10.25% senior secured notes due July 1, 2004.
Note 4. INCOME TAXES
The provision for income taxes differs from the amount of income tax expense
computed by applying the United States federal income tax rate due to the
benefit of the net operating losses that were not recognized in prior periods.
6
<PAGE>
Archibald Candy Corporation
(A Wholly Owned Subsidiary of Fannie May Holdings, Inc.)
Notes to Condensed Consolidated Financial Statements (Unaudited)
November 27, 1999
Note 5. ACQUISITIONS
On December 7, 1998, the Company acquired Sweet Factory Group, Inc. ("Sweet
Factory") for $25 million in cash and the assumption of approximately $10
million of debt. On June 8, 1999, Archibald's newly incorporated subsidiary,
Archibald Candy (Canada) Corporation, a Canadian company, acquired substantially
all of the assets of the Laura Secord retail business of Nestle Canada, Inc.
("Nestle") for approximately $44 million. Both acquisitions were accounted for
under the purchase method. The allocation of the purchase prices are
preliminary, pending final fixed-asset and intangible valuations. The following
summarizes the purchase price allocation and cash paid:
<TABLE>
<S> <C>
Book value of assets acquired ............... $ 44,164
Goodwill and other intangibles .............. 42,561
Liabilities assumed ......................... (7,801)
--------
Cash paid ................................... $ 78,924
--------
</TABLE>
Based on unaudited data, the following table presents selected financial
information for the Company and its subsidiaries on a pro forma basis for the
comparable period in the prior year:
<TABLE>
<CAPTION>
Three Months Ended
November 28,
1998
------------------
<S> <S>
Net sales ................................. $ 55,753
Net loss .................................. $ (4,570)
</TABLE>
The pro forma results are not necessarily indicative of future operations or the
actual results that would have occurred had the acquisitions been made August
31, 1998.
Note 6. GUARANTOR SUBSIDIARIES
The Company's obligations under its Senior Secured notes due 2004 are fully and
unconditionally guaranteed on a senior secured, joint and several basis by each
of the Company's subsidiaries (other than its inactive subsidiaries)
(collectively, the "Guarantor Subsidiaries"). The Company directly or indirectly
wholly owns each of the Guarantor Subsidiaries. None of the Company's
subsidiaries is subject to any restriction on its ability to pay dividends or
make distributions to the Company. The following condensed consolidating
financial information illustrates the composition of the Company and the
Guarantor Subsidiaries as and for certain dates and periods. Separate financial
statements of the respective Guarantor Subsidiaries have not been provided
because the Company's management determined that such additional information
would not be useful in assessing the financial composition of the Guarantor
Subsidiaries.
7
<PAGE>
Condensed Consolidating Balance Sheet
As of November 27, 1999
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Archibald Candy Guarantor
Corporation Subsidiaries Eliminations Consolidated
---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,058 $ 2,474 $ -- $ 4,532
Accounts receivable, net 6,838 366 -- 7,204
Inventories 36,237 11,078 (50) 47,265
Prepaid expenses and other current
assets 1,038 4,770 -- 5,808
--------- --------- -------- ---------
Total current assets: 46,171 18,688 (50) 64,809
Property, plant and equipment, net 23,871 27,342 -- 51,213
Goodwill, net 63,147 6,872 -- 70,019
Noncompete agreements and
other intangibles, net 86 312 -- 398
Deferred financing fees, net 10,253 -- -- 10,253
Other assets 2,662 2,064 -- 4,726
Intercompany 30,009 (30,009) -- --
Investment in subsidiary 12,791 -- (12,791) --
--------- --------- -------- ---------
Total assets $ 188,990 $ 25,269 $(12,84l) $ 201,418
---------- --------- -------- ---------
---------- --------- -------- ---------
LIABILITIES AND SHAREHOLDER'S
EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 17,538 $ 7,267 $ -- $ 24,805
Revolving line of credit 17,000 -- -- 17,000
Accrued liabilities 9,817 2,452 -- 12,269
Payroll and related liabilities 1,682 637 -- 2,319
Current portion of capital lease
obligations 21 215 -- 236
--------- --------- --------- ---------
Total current liabilities 46,058 10,571 -- 56,629
Due to affiliate 344 -- -- 344
Long-term debt 170,000 -- -- 170,000
Deferred rent -- 1,807 -- 1,807
Capital lease obligations, less
current portion 13 50 -- 63
Total shareholder's equity (deficit) (27,425) 12,841 (12,841) (27,425)
--------- --------- --------- ---------
Total liabilities and shareholder's
equity (deficit) $ 188,990 $ 25,269 $ (12,841) $ 201,418
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
8
<PAGE>
Archibald Candy Corporation
(A Wholly Owned Subsidiary of Fannie May Holdings, Inc.)
Consolidating Statement of Operations for the
Three Months Ended November 27, 1999
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Archibald Candy Guarantor
Corporation Subsidiaries Eliminations Consolidated
--------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 28,932 $ 25,501 $ -- $ 54,433
Cost of sales, excluding depreciation 11,830 9,285 (108) 21,007
Selling, general, and administrative expenses,
excluding depreciation and amortization 16,142 17,373 -- 33,515
Depreciation and amortization expense 1,303 1,841 -- 3,144
Amortization of goodwill and other intangibles 1,119 149 -- 1,268
Share of loss in joint venture -- 60 -- 60
Management fees and other fees 133 -- -- 133
--------- --------- -------- ---------
Operating income (loss) (1,595) (3,207) 108 (4,694)
Other (income) expense:
Interest expense 4,554 209 (109) 4,654
Interest income (211) -- 109 (102)
Other income and expenses (190) (245) 108 (327)
Equity in loss of subsidiaries 3,171 -- (3,171) --
--------- --------- -------- --------
Income (loss) before income taxes (8,919) (3,171) 3,171 (8,919)
Provision for income taxes 21 -- -- 21
--------- --------- -------- --------
Net income (loss) $ (8,940) $ (3,171) $ 3,171 $ (8,940)
--------- --------- -------- --------
--------- --------- -------- --------
</TABLE>
9
<PAGE>
Archibald Candy Corporation
(A Wholly Owned Subsidiary of Fannie May Holdings, Inc.)
Consolidating Statement of Cash Flows for the
Three Months Ended November 27, 1999
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Archibald Candy Guarantor
Corporation Subsidiaries Eliminations Consolidated
--------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (8,940) $ (3,171) $ 3,171 $ (8,940)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization 2,422 1,990 -- 4,412
Equity in loss of subsidiaries 3,171 -- (3,171) --
Share of loss in joint venture -- 60 -- 60
Changes in operating assets and liabilities:
Accounts receivables, net (5,899) 2,286 -- (3,613)
Inventories (4,889) (3,822) -- (8,711)
Prepaid expenses and other current assets (95) (2,665) -- (2,760)
Intercompany 231 (231) -- --
Other assets (455) (190) -- (645)
Accounts payable and accrued liabilities 7,642 5,414 -- 13,056
-------- -------- --------- ---------
Net cash provided by (used in) investing activities (6,812) (329) -- (7,141)
INVESTING ACTIVITIES
Purchase of property, plant, and equipment (2,287) (828) -- (3,115)
--------- -------- --------- --------
Net cash provided by (used in) investing activities (2,287) (828) -- (3,115)
FINANCING ACTIVITIES
Net borrowings under revolving line of credit 9,000 -- -- 9,000
Principle payments of capital lease obligations (14) (22) -- (36)
Costs related to refinancing (119) (965) -- (1,084)
--------- -------- --------- --------
Net cash provided by (used in) financing activities 8,867 (987) -- 7,880
--------- -------- --------- --------
Net decrease in cash and cash equivalents (232) (2,144) -- (2,376)
Cash and cash equivalents beginning of period 2,290 4,618 -- 6,908
-------- -------- --------- --------
Cash and cash equivalents end of period $ 2,058 $ 2,474 $ -- $ 4,532
-------- -------- --------- --------
-------- -------- --------- --------
</TABLE>
10
<PAGE>
Archibald Candy Corporation
(A Wholly Owned Subsidiary of Fannie May Holdings, Inc.)
November 27, 1999
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
This report updates Archibald Candy Corporation's Annual Report on Form 10-K for
the fiscal year ended August 28, 1999, in accordance with the instructions to
form 10-Q. It is presumed that the reader has read the annual report on form
10-K.
FORWARD LOOKING STATEMENTS
Some information included in the report may constitute forward-looking
statements that involve a number of risks and uncertainties. From time to time,
information provided by Archibald Candy Corporation or statements made by its
employees may contain other forward-looking statements. Factors that could cause
actual results to differ materially from the forward-looking statements include,
but are not limited to: general economic conditions including inflation,
interest rate fluctuations, trade restrictions, and general debt levels;
competitive factors including price pressures, technological development, and
products offered by competitors; inventory risks due to changes in market demand
or business strategies; and changes in effective tax rates. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date made. Archibald Candy Corporation undetakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise.
THREE MONTHS ENDED NOVEMBER 27, 1999 COMPARED TO THE THREE MONTHS ENDED NOVEMBER
28, 1998.
NET SALES. Net sales for the three months ended November 28, 1999 were $54.4
million, an increase of $24.8 million, or 83.8%, from $29.6 million for the
three months ended November 27, 1998. This increase was primarily a result of
the acquisition of Sweet Factory, $15.8 million and Laura Secord, $9.7
million. With respect to the Company's historical Fannie May/Fanny Farmer
product lines, same store sales increased 0.5%, while sales through the
Company's third party retail customers and other specialty distribution
channels declined $0.6 million from $13.5 million during the three months
ended November 27, 1999 to $12.9 million during the three months ended
November 28, 1998 reflecting in part the launch in October 1998 of the
Company's card and gift business and the heavy initial promotional support
for these products.
GROSS PROFIT. Gross profit for the three months ended November 27, 1999 was
$33.4 million, an increase of $16.2 million, or 94.2%, from $17.2 million for
the three months ended November 28, 1998. Gross profit as a percentage of net
sales increased to 61.4% for the three months ended November 27, 1999 from
58.1% for the three months ended November 28, 1998. This increase in gross
margin was due primarily to the higher margins associated with sales by the
Company's Sweet Factory stores and improved margins in the Company's
historical Fannie May/Fanny Farmer product lines due to a shift in mix to
higher margin retail sales.
SELLING, GENERAL AND ADMINISTRATIVE. SG&A expenses were $33.5 million for the
three months ended November 27, 1999, an increase of $17.9 million, or 114.7%,
from $15.6 million for the three months ended November 28, 1998. As a percentage
of net sales, SG&A expenses increased to 61.6% for the three months ended
November 27, 1999 from 52.7% for the three months ended November 28, 1998. This
increase in expense ratios primarily reflects the lower proportion of sales
through third-party retail and specialty distribution channels by the Company's
newly acquired Sweet Factory and Laura Secord businesses, as compared to the
historical Fannie May/Fannie Farmer business. Expense ratios required to support
these specialty distribution channels are lower than that required to support
the Company's retail stores during the first fiscal quarter.
11
<PAGE>
EBITDA. Earnings before interest, income taxes, depreciation, and the
amortization (EBITDA) was $0.1 million for the three months ended November 27,
1999, a decrease of $1.4 million, or 93.3%, from $1.5 million for the three
months ended November 28, 1998. As a percentage of net sales, EBITDA was 0.2%
for the three months ended November 27, 1999 as compared to 5.1% for the three
months ended November 28, 1998. This decline in EBITDA is due primarily to the
additional support costs associated with the Company's newly acquired
businesses, partially offset by the higher margins associated with the Company's
Sweet Factory stores and improved margins in the Company's historical Fannie
May/Fanny Farmer product lines.
OPERATING LOSS. Operating loss was $4.7 million for the three months ended
November 27, 1999; an increase of $4.6 million from a loss of $0.1 million for
the three months ended November 28, 1998. Operating loss increased primarily due
to an increase in depreciation and amortization associated with the Company's
newly acquired businesses.
LIQUIDITY AND CAPITAL RESOURCES
Net loss was $8.9 million for the three months ended November 27,
1999 compared to $2.6 million for the three months ended November 28, 1998.
Net loss included noncash depreciation and amortization charges of $4.4
million for the three months ended November 27, 1999 and $1.6 million for the
three months ended November 28, 1998. Net cash used in operating activities
was $7.1 million for the three months ended November 27, 1999 compared to
$4.4 million used for the three months ended November 28, 1998.
Net cash used in investing activities increased to $3.1 million of the
three months ended November 27, 1999 from $0.9 million for the three months
ended November 28, 1998. The increase in capital expenditures was due to
investments in shop and office facilities.
As of November 27, 1999, the Company had $8.0 million available for
borrowings under a $25 million revolving credit facility (the "Credit
Family") which matures on April 15, 2001. Borrowings under the revolving line
of credit at November 27, 1999 reflects seasonal trends and should decline
significantly after the holiday selling season. As of November 27, 1999, the
Company had outstanding $170 million of 10.25% senior secured notes due
July 1, 2004.
The Company believes that available cash flow, together with cash on
the Company's balance sheet and available borrowings under the Credit Family,
will provide sufficient funds to meet the Company's debt service obligations,
projected capital expenditures and working capital requirements for the
foreseeable future.
YEAR 2000 READINESS DISCLOSURE
In July 1996, the Emerging Issues Task Force of the Financial
Accounting Standards Board reached a consensus on Issue 96-14, Accounting for
the Costs Associated with Modifying Computer Software for the year 2000, which
provides that costs associated with modifying computer software for the year
2000 be expensed as incurred.
The Company has surveyed substantially all of its computer systems
and has contacted suppliers and consultants to address year 2000 issues for
the software and hardware used by the Company. As of the date of this filing,
the Company upgraded and improved its internal computer systems, which work
has been completed. The Company's computer systems appear to be year 2000
compliant. The Company does not believe that the costs incurred with making
its computer systems year 2000 compliant were material.
12
<PAGE>
PART 11 -- OTHER INFORMATION
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT 27.1 -- FINANCIAL DATA SCHEDULE FOR THE QUARTER ENDED
NOVEMBER 27, 1999.
(b) NO REPORTS WERE FILED ON FORM 8-K FOR THE QUARTER ENDED
NOVEMBER 27, 1999.
13
<PAGE>
SIGNATURE
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.
ARCHIBALD CANDY CORPORATION
DATE: JANUARY 10, 2000 BY:/S/ THOMAS G. KASVIN
-----------------------
THOMAS G. KASVIN
VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-26-2000
<PERIOD-START> AUG-29-1999
<PERIOD-END> NOV-27-1999
<CASH> 4,532
<SECURITIES> 0
<RECEIVABLES> 7,258
<ALLOWANCES> (54)
<INVENTORY> 47,265
<CURRENT-ASSETS> 64,809
<PP&E> 95,759
<DEPRECIATION> (44,546)
<TOTAL-ASSETS> 201,418
<CURRENT-LIABILITIES> 56,629
<BONDS> 170,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 201,418
<SALES> 54,433
<TOTAL-REVENUES> 54,433
<CGS> 21,007
<TOTAL-COSTS> 38,120
<OTHER-EXPENSES> (327)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,552
<INCOME-PRETAX> (8,919)
<INCOME-TAX> 21
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,940)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
