<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the quarterly period ended May 31, 1998
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 0-14749
Rocky Mountain Chocolate Factory, Inc.
(Exact name of registrant as specified in its charter)
Colorado 84-0910696
(State of incorporation) (I.R.S. Employer Identification No.)
265 Turner Drive, Durango, CO 81301
(Address of principal executive offices)
(970) 259-0554
(Registrant's telephone number, including area code)
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
--- ---
On July 6, 1998 the registrant had outstanding 2,591,449 shares of its common
stock, $.03 par value.
The exhibit index is located on page 14.
1
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ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
FORM 10-Q
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3-8
Statements of Income 3
Balance Sheets 4
Statements of Cash Flows 5
Notes to Interim Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended May 31,
1998 1997
<S> <C> <C>
REVENUES
Sales $4,808,806 $4,312,572
Franchise and royalty fees 764,742 775,111
Total revenues 5,573,548 5,087,683
COSTS AND EXPENSES
Cost of sales 2,559,119 2,228,892
Franchise costs 278,989 265,499
Sales and marketing 398,764 280,783
General and administrative 469,7174 59,337
Retail operating 1,445,886 1,489,979
Total costs and expenses 5,152,475 4,724,490
INCOME FROM OPERATIONS 421,073 363,193
OTHER INCOME (EXPENSE)
Interest expense (178,668) (167,658)
Interest income 25,337 15,459
Other, net (153,331) (152,199)
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 267,742 210,994
PROVISION FOR INCOME TAXES 103,535 81,550
INCOME FROM CONTINUING OPERATIONS 164,207 129,444
LOSS FROM DISCONTINUED OPERATIONS - NET OF
INCOME TAXES - (41,323)
NET INCOME $164,207 $88,121
BASIC EARNINGS (LOSS) PER COMMON SHARE
Continuing operations $.06 $.04
Discontinued operations - (.01)
Net income $.06 $.03
DILUTED EARNINGS (LOSS) PER COMMON SHARE
Continuing operations $.06 $.04
Discontinued operations - (.01)
Net income $.06 $.03
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,908,644 2,912,299
DILUTIVE EFFECT OF EMPLOYEE STOCK OPTIONS 17,431 10,011
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
ASSUMING DILUTION 2,926,075 2,922,310
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31, FEBRUARY 28,
1998 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $758,395 $1,795,381
Accounts and notes receivable, less
allowance for doubtful accounts of $202,173
and $214,152 2,215,636 2,174,618
Refundable income taxes 376,823 483,448
Inventories 2,794,981 2,567,966
Deferred income taxes 270,801 257,176
Other 196,762 103,195
Net current assets of discontinued operations 112,987 44,351
Total current assets 6,726,385 7,426,135
PROPERTY AND EQUIPMENT, NET 9,919,302 9,672,443
OTHER ASSETS
Net noncurrent assets of discontinued operations 1,599,332 1,555,681
Accounts and notes receivable 275,503 279,122
Goodwill, less accumulated amortization of
$338,469 and $325,848 583,531 596,152
Other 365,398 338,359
Total other assets 2,823,764 2,769,314
Total assets $19,469,451 $19,867,892
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $1,171,100 $1,132,900
Line of credit 1,500,000 -
Accounts payable 1,113,042 1,296,769
Accrued salaries and wages 803,275 707,737
Other accrued expenses 359,056 339,481
Total current liabilities 4,946,473 3,476,887
LONG-TERM DEBT, LESS CURRENT MATURITIES 5,688,091 5,993,273
DEFERRED INCOME TAXES 370,234 378,272
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Common stock, $.03 par value, 7,250,000 shares
authorized, 2,591,449 and 2,912,449 issued and
outstanding 77,743 87,373
Additional paid-in capital 7,010,220 8,719,604
Retained earnings 1,376,690 1,212,483
Total stockholders' equity 8,464,653 10,019,460
Total liabilities and stockholders' equity $19,469,451 $19,867,892
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $164,207 $88,121
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss from discontinued operations - 41,323
Depreciation and amortization 343,198 358,535
Gain on sale of property and equipment - (12,514)
Increase in notes and accounts receivable (167,399) (36,689)
Decrease in refundable income taxes 106,625 159,099
Increase in inventories (227,015) (145,706)
Increase in other assets (93,567) (61,916)
Decrease in accounts payable (183,727) (64,400)
Increase in income taxes payable - 43,714
Deferred income taxes (21,663) -
Increase in accrued liabilities 115,113 42,569
Decrease in deferred income - (93,000)
Net cash provided by operating activities of
continuing operations 35,772 319,136
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (482,413) (85,756)
Decrease in other assets 7,938 12,466
Net cash used in investing activities of
continuing operations (474,475) (73,290)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt - 758,270
Payments on long-term debt (266,982) (215,947)
Proceeds from line of credit 2,825,000 -
Payments on line of credit (1,325,000) -
Repurchase of stock (1,767,764) -
Proceeds from exercise of stock options 48,750 -
Net cash (used in) provided by financing activities
of continuing operations (485,996) 542,323
NET CASH PROVIDED BY (USED IN) DISCONTINUED
OPERATIONS (112,287) 42,918
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,036,986) 831,087
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,795,381 792,606
CASH AND CASH EQUIVALENTS, END OF PERIOD $758,395 $1,623,693
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Nature of Operations
Rocky Mountain Chocolate Factory, Inc. (the "Company") is a manufacturer of
an extensive line of premium chocolate candy for sale to its franchised and
at its Company-owned Rocky Mountain Chocolate Factory stores located
throughout the United States, Guam, and Canada. The Company also sells
selected product through outside distribution channels, including but not
limited to national and international retailers, fundraising organizations
and others. The majority of the Company's revenues are generated from
wholesale and retail sales of candy. The balance of the Company's revenues
are generated from royalties and marketing fees, based on a franchisee's
monthly gross sales, and from franchise fees, which consist of fees earned
from the sale of franchises.
Basis of Presentation
The accompanying financial statements have been prepared by the Company,
without audit, and reflect all adjustments, which are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods. The statements have been prepared in accordance with generally
accepted accounting principles for interim financial reporting and Securities
and Exchange Commission regulations. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management, the
financial statements reflect all adjustments (of a normal and recurring
nature) which are necessary for a fair presentation of the financial
position, results of operations and cash flows for the interim periods. The
results of operations for the three months ended May 31, 1998 are not
necessarily indicative of the results to be expected for the entire fiscal
year.
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1998.
NOTE 2 - EARNINGS PER SHARE
Basic earnings per share is calculated using the weighted average number of
common shares outstanding. Diluted earnings per share is computed on the
basis of the weighted average number of common shares outstanding plus the
effect of outstanding stock options using the treasury stock method.
6
<PAGE>
NOTE 3 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
May 31, 1998 February 28, 1998
<S> <C> <C>
Ingredients and supplies $1,184,506 $1,153,433
Finished candy 1,610,475 1,414,533
$2,794,981 $2,567,966
</TABLE>
NOTE 4 - PROPERTY AND EQUIPMENT, NET
Property and equipment consists of the following:
<TABLE>
<CAPTION>
May 31, 1998 February 28, 1998
<S> <C> <C>
Land $ 513,618 $ 513,618
Building 3,665,581 3,665,581
Machinery and equipment 6,392,892 6,023,347
Furniture and fixtures 2,159,661 2,072,208
Leasehold improvements 1,485,767 1,389,608
Transportation equipment 296,920 293,357
14,514,439 13,957,719
Less accumulated depreciation 4,595,137 4,285,276
Property and equipment, net $9,919,302 $9,672,443
</TABLE>
NOTE 5 - STOCKHOLDERS' EQUITY
On May 15, 1998, the Company purchased 336,000 shares and certain of its
directors and executive officers purchased 104,000 shares of the Company's
issued and outstanding common stock at $5.15 per share from La Salle National
Bank of Chicago, Illinois, which obtained these shares through foreclosure
from certain shareholders. The Company loaned certain officers and directors
the funds to acquire 40,000 of the 104,000 shares purchased by them. The
loans are secured by the related shares, bear interest payable annually at
7.5% and are due May 15, 2003.
NOTE 6 - DISCONTINUED OPERATIONS
In December 1997, the Company decided its Fuzziwig's Candy Factory Store
("Fuzziwig's") segment did not meet its long-term strategic goals, and
accordingly, adopted a plan to discontinue its operations. On June 5, 1998,
the Company entered into a definitive agreement to sell substantially all the
assets of its Fuzziwig's segment for $1.6 million. The Company expects this
transaction to close on or about July 31, 1998.
7
<PAGE>
The operating results of Fuzziwig's have been segregated from continuing
operations and reported as separate line items net of applicable income taxes
in the income statements. The current assets, net noncurrent assets and net
cash flows of Fuzziwig's have been segregated and reported as separate line
items in the balance sheets and statements of cash flows. The financial
statements for prior periods have been restated to conform to this
presentation.
Summarized financial information for the discontinued operations follows:
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1998 1997
<S> <C> <C>
Sales $627,955 $719,792
Loss before taxes (36,847) (67,358)
Loss from discontinued operations,
net of income taxes (22,597) (41,323)
</TABLE>
NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1998 1997
<S> <C> <C>
Interest paid $154,773 $ 156,027
Income taxes refunded (3,090) (147,298)
</TABLE>
NOTE 8 - YEAR 2000 COMPLIANCE
The Company recognizes that the arrival of the year 2000 poses a unique
worldwide challenge to the ability of all systems to recognize the date
change from December 31, 1999, to January 1, 2000. The Company has completed
preliminary assessment of its computer and business processes, and is
establishing mitigations to provide for their continued functionality. An
assessment of the readiness of the external entities with which the Company
interfaces is ongoing.
The Company expects that the principal costs will be those associated with
the remediation and testing of its computer applications. This effort is
following a process of inventory, scoping and analysis, modification, testing
and implementation. These efforts will be met primarily from existing
resources through reprioritization of technology development initiatives.
The Company expects to complete the majority of its efforts in this area
during 1998 with final completion in mid-1999. The estimated cost for this
project is between $60,000 and $100,000 and is being funded through operating
cash flows. The cost of the project and the expected completion dates are
based on management's best estimates.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results
of operations of the Company should be read in conjunction with the unaudited
financial statements and related notes of the Company included elsewhere in
this report. This Management's Discussion and Analysis of Financial Condition
and Results of Operations and other parts of this Quarterly Report on Form
10-Q contain forward-looking statements that involve risks and uncertainties.
The Company's ability to successfully achieve expansion of its Rocky Mountain
Chocolate Factory franchise system depends on many factors not within the
Company's control including the availability of suitable sites for new store
establishment and the availability of qualified franchisees to support such
expansion.
Efforts to reverse the decline in same store pounds purchased from the
factory by franchised stores and to increase total factory sales depends on
many factors not within the Company's control including the receptivity of
its franchise system and of customers in potential new distribution channels
to its product introductions and promotional programs.
As a result, the actual results realized by the Company could differ
materially from the results discussed in or contemplated by the
forward-looking statements made herein. Words or phrases such as "will,"
"anticipate," "expect," "believe," "intend," "estimate," "project," "plan" or
similar expressions are intended to identify forward-looking statements.
Readers are cautioned not to place undue reliance on the forward-looking
statements made in this Quarterly Report on Form 10-Q.
Results of Operations
Three Months Ended May 31, 1998 Compared to the Three Months Ended
May 31, 1997
Income from continuing operations for the three months ended May 31, 1998 was
$164,200 or $.06 per share versus $129,400 or $.04 per share for the three
months ended May 31, 1997. Loss from discontinued operations was $41,300 or
$.01 per share for the three months ended May 31, 1997. Net income was
$164,200 for the three months ended May 31, 1998 or $.06 per share versus
$88,100 or $.03 per share for the three months ended May 31, 1997.
9
<PAGE>
Revenues
<TABLE>
<CAPTION>
Three Months Ended
May 31, %
($'s in thousands) 1998 1997 Change Change
<S> <C> <C> <C> <C>
Factory sales $2,465.0 $1,834.1 $630.9 34.4%
Retail sales 2,343.8 2,478.5 (134.7) (5.4)
Franchise fees 65.9 203.5 (137.6) (67.6)
Royalty and Marketing fees 698.8 571.6 127.2 22.3
Total $5,573.5 $5,087.7 $485.8 9.5%
</TABLE>
Factory Sales
Factory sales increased $631,000 or 34.4% to $2.5 million in the first
quarter of fiscal 1999, compared to $1.8 million in the first quarter of
fiscal 1998. This was due to a shift in product mix from lower price point
bulk products to higher price point packaged products driven by sales to new
distribution channels, and to an increase in the number of franchised stores
from 174 as of May 31, 1997 to 185 as of May 31, 1998. Total pounds shipped
by the factory increased 16% to 428,000 in the first quarter of fiscal 1999
from 370,000 in the first quarter of fiscal 1998. The increase in pounds
shipped was due primarily to an 80% increase in pounds shipped in the first
quarter of fiscal 1999 versus the first quarter of fiscal 1998 related to
packaged products as discussed above. Same store pounds purchased from the
factory by franchised stores declined by 0.6% in the first quarter of fiscal
1999 compared to the first quarter of fiscal 1998, partially offsetting
increased factory sales. The decline in same store pounds purchased from the
factory resulted primarily from increased sales at franchised stores of
store-made product and product purchased from authorized vendors relative to
factory-made products.
Retail Sales
Retail sales decreased $135,000 or 5.4% to $2.3 million in the first quarter
of fiscal 1999, compared to $2.5 million in the first quarter of fiscal 1998.
This decrease resulted from the sale or closure in the first quarter of
fiscal 1998 of five underperforming Company-owned stores, partially offset by
an increase in comparable store sales of 3.0%.
Royalties, Marketing Fees and Franchise Fees
Royalties and marketing fees increased $127,000 or 22.3% to $699,000 in the
first quarter of fiscal 1999, compared to $572,000 in the first quarter of
fiscal 1998. This increase resulted from an increase in the number of
franchised stores operating to 185 in the first quarter of fiscal 1999
compared to 174 in the first quarter of fiscal 1998 and an increase in same
store sales at franchised stores of approximately 9%. Franchise fee revenues
decreased in the first quarter of fiscal 1999 due to a reduction in the
number of new franchisees versus the first quarter of fiscal 1998. The
Company expects its strategy of diversifying into new distribution channels
to continue to reduce the percentage of the Company's profitability derived
from the sale of new franchises to operate Rocky Mountain Chocolate Factory
stores.
10
<PAGE>
Costs and Expenses
Cost of Sales
Cost of sales as a percentage of sales increased to 53.2% in the first
quarter of fiscal 1999 versus 51.7% in the first quarter of fiscal 1998.
This increase resulted from lower retail sales (due to fewer company stores),
which generate higher margins than factory sales, and was partially offset by
increased margins on both factory and retail sales. Company-owned store
margins for the first quarter of 1999 improved to 62.0% from 61.6% in the
first quarter of fiscal 1998 as a result of a focus on higher margin
products. Factory margins improved to 32.3% in the first quarter of fiscal
1999 from 30.4% in the first quarter of fiscal 1998 as a result of improved
manufacturing efficiencies realized from increased volume.
Franchise Costs
Franchise costs increased 5.1% from $265,000 in the first quarter of fiscal
1998 to $279,000 in the first quarter of fiscal 1999. As a percentage of
total royalty and marketing fees and franchise fee revenue, franchise costs
increased to 36.5% in the first quarter of fiscal 1999 from 34.3% in the
first quarter of fiscal 1998. This increase as a percentage of royalty,
marketing and franchise fees is primarily a result of a 67.6% decrease in
income from franchise fees and to a lesser extent increased franchise support
costs.
Sales and Marketing
Sales and Marketing costs increased 42% to $399,000 in the first quarter of
fiscal 1999 from $281,000 in fiscal 1998. This increase is due to: (1)
expansion of the Company's sales and marketing group to support a larger base
of franchised and Company-owned stores; (2) expansion of promotional programs
and marketing materials made available to franchised and Company-owned
stores; (3) establishment of a sales force focused on new distribution
opportunities; and (4) enhanced customer service and new product marketing
programs.
General and Administrative
General and administrative expenses increased 2.3% from $459,000 in the first
quarter of fiscal 1998 to $470,000 in the first quarter of fiscal 1999. As a
percentage of total revenues, general and administrative expenses declined
from 9.0% in fiscal 1998 to 8.4% in fiscal 1999. The Company expects the
trend of decreasing general and administrative expenses as a percentage of
sales to continue due to its policy of controlling and maintaining its
current cost structure.
Retail Operating Expenses
Retail operating expenses decreased from $1.49 million in the first quarter
of fiscal 1998 to $1.45 million in the first quarter of fiscal 1999; a
decrease of 3.0%. This decrease resulted from closing and selling certain
Company-owned stores. Retail operating expenses, as a percentage of retail
sales, increased slightly from 60.1% in the first quarter of fiscal 1998 to
61.7% in the first quarter of fiscal
11
<PAGE>
1999.
Other Expense
Other expense of $153,000 incurred in the first quarter of fiscal 1999
approximated the $152,000 incurred in the first quarter of fiscal 1998. This
resulted from increased interest expense related to borrowings in support of
the Company's fiscal 1996 and 1997 Company-owned store expansion offset by
increased interest income from excess cash balances.
Income Tax Expense
The Company's effective income tax rate in the first quarter of fiscal 1998
was 38.7%, which is approximately the same rate as the first quarter of
fiscal 1999.
Discontinued Operations
In December 1997, the Company decided its Fuzziwig's Candy Factory Store
segment did not meet its long-term strategic goals, and accordingly, made
the decision to dispose of these operations. See "NOTE 6 - DISCONTINUED
OPERATIONS" of notes to interim financial statements.
Liquidity and Capital Resources
As of May 31, 1998 working capital was $1,780,000, compared with $3,949,000
as of February 28, 1998, a $2,169,000 decrease. This decrease is primarily
the result of the use of working capital to repurchase 336,000 shares of the
Company's common stock at $5.15 per share or $1,730,000 and cash flows used
by investing and other financing activities in excess of cash flows generated
by operating activities.
Cash and cash equivalent balances decreased from $1,795,000 as of February
28, 1998 to $758,000 as of May 31, 1998 as a result of cash flows used by
investing and financing activities in excess of cash flows generated by
operating activities. The Company's current ratio was 1.4 to 1 at May 31,
1998 in comparison with 2.1 to 1 at February 28, 1998.
The Company's long-term debt is comprised primarily of a real estate mortgage
facility used to finance the Company's factory expansion (unpaid balance as
of May 31, 1998 $2.0 million), and chattel mortgage notes (unpaid balance as
of May 31, 1998 $4.9 million) used to fund the fiscal 1996 and 1997
Company-owned store expansion.
The Company has a $2.0 million ($500,000 available as of May 31, 1998)
working capital line of credit collateralized by substantially all of the
Company's assets with exception of the Company's retail store assets. The
line is subject to renewal in July, 1998.
On May 15, 1998, the Company used its credit line to purchase and cancel
336,000 shares of its common stock for a purchase price of $1,730,000. The
Company is currently negotiating an extension of and an increase in its line
of credit. The
12
<PAGE>
Company is also in the process of securing certain fixed asset based
financings, the proceeds of which will be used to reduce amounts outstanding
on its credit line.
The Company believes cash flows generated by operating activities and
available financing will be sufficient to fund the Company's operations at
least through the end of fiscal 1999.
Impact of Inflation
Inflationary factors such as increases in the costs of ingredients and labor
directly affect the Company's operations. Most of the Company's leases
provide for cost-of-living adjustments and require it to pay taxes, insurance
and maintenance expenses, all of which are subject to inflation.
Additionally the Company's future lease costs for new facilities may include
potentially escalating costs of real estate and construction. There is no
assurance that the Company will be able to pass on increased costs to its
customers.
Depreciation expense is based on the historical cost to the Company of its
fixed assets, and is therefore potentially less than it would be if it were
based on current replacement cost. While property and equipment acquired in
prior years will ultimately have to be replaced at higher prices, it is
expected that replacement will be a gradual process over many years.
Seasonality
The Company is subject to seasonal fluctuations in sales, which cause
fluctuations in quarterly results of operations. Historically, the strongest
sales of the Company's products have occurred during the Christmas holiday
and summer vacation seasons. In addition, quarterly results have been, and
in the future are likely to be, affected by the timing of new store openings
and sales of franchises. Because of the seasonality of the Company's
business and the impact of new store openings and sales of franchises,
results for any quarter are not necessarily indicative of results that may be
achieved in other quarters or for a full fiscal year.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
27.1 Financial Data Schedule for the three months ended May 31, 1998.
27.2 Restated Financial Data Schedule for the three months ended
May 31, 1997.
B. Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated May 18, 1998,
reporting in item 5 the purchase by the Company and certain of its
officers and directors of 336,000 and 104,000 shares of its common
stock, respectively, from La Salle National Bank of Chicago, Illinois.
The Company retired the 336,000 shares of the Company's common stock
that it purchased.
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.
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
(Registrant)
Date: July 14,1998 /s/ Bryan J. Merryman
----------------------------------------------
Bryan J. Merryman, Vice President - Finance
Chief Financial Officer and authorized officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> MAY-31-1998
<CASH> 758,395
<SECURITIES> 0
<RECEIVABLES> 2,417,809
<ALLOWANCES> 202,173
<INVENTORY> 2,794,981
<CURRENT-ASSETS> 6,726,385
<PP&E> 14,514,439
<DEPRECIATION> 4,595,137
<TOTAL-ASSETS> 19,469,451
<CURRENT-LIABILITIES> 4,946,473
<BONDS> 5,688,091
0
0
<COMMON> 77,743
<OTHER-SE> 8,386,910
<TOTAL-LIABILITY-AND-EQUITY> 19,469,451
<SALES> 4,808,806
<TOTAL-REVENUES> 5,573,548
<CGS> 2,559,119
<TOTAL-COSTS> 5,152,475
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 153,331
<INCOME-PRETAX> 267,742
<INCOME-TAX> 103,535
<INCOME-CONTINUING> 164,207
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 164,207
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C>
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