-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jb9DKsgdIBtx2/jL1JoA4ndLq3bGKIcWGiQzcCc9WE72IzUWxtHnfH66wW7VbkhR BTbsS1QPxA7+Qcu7q83kiQ== 0000950134-03-007365.txt : 20030508 0000950134-03-007365.hdr.sgml : 20030508 20030508130622 ACCESSION NUMBER: 0000950134-03-007365 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030508 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROCKY MOUNTAIN CHOCOLATE FACTORY INC CENTRAL INDEX KEY: 0000785815 STANDARD INDUSTRIAL CLASSIFICATION: SUGAR & CONFECTIONERY PRODUCTS [2060] IRS NUMBER: 840910696 STATE OF INCORPORATION: CO FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14749 FILM NUMBER: 03687633 BUSINESS ADDRESS: STREET 1: 265 TURNER DR CITY: DURANGO STATE: CO ZIP: 81301 BUSINESS PHONE: 3032590554 MAIL ADDRESS: STREET 1: 265 TURNER DRIVE CITY: DURANGO STATE: CO ZIP: 81301 8-K 1 d05611e8vk.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 8, 2003 ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. (Exact name of registrant as specified in is charter) Colorado 0-14749 84-0910696 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.)
265 Turner Drive Durango, Colorado 81303 (Address, including zip code, of principal executive offices) Registrant's telephone number, including area code: (970) 259-0554 ================================================================================ ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The Company has issued a press release for the three months and year ending February 28, 2003. The press release includes amounts determined in accordance with Generally Accepted Accounting Principles (GAAP) as well as some amounts which were not determined in accordance with GAAP. Non-GAAP measures include Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and net income before provision for loss on accounts and notes receivable and related foreclosure costs related to the insolvency of a single franchisee. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits Item Exhibit 99.1 Press Release, dated May 8, 2003. 2 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. ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. Date: May 8, 2003 By: /s/ Bryan J. Merryman ----------------------------------------- Bryan J. Merryman, Chief Operating Officer, Chief Financial Officer, Treasurer and Director 3 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------ ----------- 99.1 Press Release, dated May 8, 2003
EX-99.1 3 d05611exv99w1.txt PRESS RELEASE EXHIBIT 99.1 FOR IMMEDIATE RELEASE ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. REPORTS FY2003 OPERATING RESULTS AND ANNOUNCES CASH DIVIDEND POLICY COMPANY TO BEGIN PAYING CASH DIVIDENDS AT $0.30 ANNUALIZED RATE, A 4% YIELD AT CURRENT SHARE PRICES DURANGO, Colorado (May 8, 2003)--Rocky Mountain Chocolate Factory, Inc. (Nasdaq/NMS: "RMCF"), which franchises gourmet chocolate and confection stores and manufactures an extensive line of premium chocolates and other confectionery products, today reported its operating results for FY2003. The Company also announced that it will begin paying cash dividends on common stock, for the first time in its history, at an initial annualized rate of $0.30 per share, a 4% yield at current share prices. For the fiscal year ended February 28, 2003, non-retail revenues increased 1.3 percent to $18.1 million, compared with $17.8 million in the corresponding period of the previous fiscal year. Retail revenues decreased 12.8 percent to $1.4 million (vs. $1.6 million) due to a planned reduction in the number of Company-owned stores in operation. Comparable-store sales at franchised stores decreased approximately 3.5% and same-store pounds purchased by franchised stores decreased 10.6% in FY 2003, when compared with the previous fiscal year. The Company believes the decrease in same store pounds purchased by franchised stores is due to a continued product mix shift from factory-made products to store-made products. Net income declined to $852,000, or $0.34 per basic share ($0.32 diluted), in FY2003, compared with $1,995,000, or $0.81 per basic share ($0.76 diluted), in the fiscal year ended February 28, 2002. Excluding the ($1,666,000) provision discussed below, the Company would have reported net income of $1,889,000 (1), or $0.76 per basic (1) and $0.70 per diluted share (1), for the fiscal year ended February 28, 2003. (Note: Footnote 1 below provides a discussion of how and why the Company has provided amounts for net income and earnings per share that have been adjusted for the provision discussed below. Further in this release are tables that reconcile these non-GAAP measurements to GAAP financial information.) A ($1,666,000) non-cash, non-recurring charge in the third quarter of FY2003 resulted from the insolvency of a single franchisee that purchased 18 Rocky Mountain Chocolate Factory stores from the Company in FY2001 and FY2002 as the Company was exiting its Company-owned store program. Additionally, the Company financed the franchisee's opening of two new stores. Management believes that the overall weak economy and retail environment which resulted in the worst holiday selling season in the Company's history was primarily responsible for the franchisee's insolvency. In December 2002, the Company foreclosed on four of the stores previously operated by the franchisee and plans to operate one such retail outlet as a Company-owned store and sell three stores to other franchisees. Of the remaining 16 stores, one has been sold to another franchisee, 14 have been closed (with certain fixtures and equipment reclaimed by the Company for use in new or existing stores), and one continues to be operated by the franchisee. The non-cash charge did not result in violation of any of the Company's bank debt covenants. For the three months ended February 28, 2003, revenues decreased slightly to $4.8 million, compared with $4.9 million in the fourth quarter of the previous fiscal year. Comparable-store sales at franchised retail outlets decreased approximately 7% and same-store pounds purchased by franchised stores decreased 10.8% when compared with the fourth quarter of FY2002, due to continued softness in customer traffic in shopping malls and some of the other retail venues where Rocky Mountain Chocolate Factory stores are located. The Company reported net income of $250,000, or $0.10 per basic and $0.09 per diluted share, in the most recent quarter. These results compared with net income of $424,000, or $0.17 per basic and $0.16 per diluted share, in the year-earlier period. "Exclusive of the non-recurring writedown related to the insolvency of a single franchisee, the Company would have earned approximately $0.70 per diluted share in Fiscal 2003, compared with $0.76 per diluted share in the previous fiscal year," stated Bryan Merryman, Chief Operating Officer of Rocky Mountain Chocolate Factory, Inc. "In light of the sharp deterioration in shopping mall traffic and consumer spending during the second half of Fiscal 2003, we consider these results acceptable, although below management's earlier expectations. EBITDA (1) totaled $3,978,000 for the year, versus $4,275,000 in Fiscal 2002, and we ended the year with $1.3 million of cash in the bank, a current ratio of 2.7-to-1.0 and a debt-to-equity ratio of 43%." (Note: Footnote 1 below provides a discussion of how and why the Company uses EBITDA, a non-GAAP measure of earnings before interest, taxes, depreciation, amortization and provision for loss on accounts and notes receivable and related foreclosure costs related to the insolvency of a single franchisee, in this release. Further in this release are tables that reconcile this non-GAAP measurement to GAAP financial information.) "As we noted in an earlier press release, it is not a policy of Rocky Mountain Chocolate Factory, Inc. to finance store purchases or store capital costs for franchisees, although we made an exception in the transfer of certain stores to franchisees when we chose to sell most of our Company-owned stores and focus primarily on franchise operations," continued Merryman. "At the end of Fiscal 2003, notes receivable totaled less than $1.1 million, with less than $300,000 due from any single franchisee, and we consider the Company adequately reserved against potential risks in its receivables portfolio." "Our franchisees opened 27 new stores during Fiscal 2003," continued Merryman. "This exceeded management's original goal of 25 store openings for the year and increased the total number of Rocky Mountain Chocolate Factory stores in operation to 230 at the end of the fiscal year. We currently expect franchisees to open 25-30 new stores in the fiscal year ending February 29, 2004 and, assuming that the U.S. economy does not deteriorate any further, the Company expects to achieve record earnings in Fiscal 2004". The Company also announced that it will begin paying quarterly cash dividends on common stock for the first time in its history. On September 16, 2003 an initial quarterly cash dividend of $0.075 per share will be paid on common stock to shareholders of record as of September 2, 2003. "We have taken steps to reduce expenses and enhance operating efficiencies in order to position the Company for an acceptable level of profitability in the currently uncertain economic environment," stated Frank Crail, Chairman and Chief Executive Officer of Rocky Mountain Chocolate Factory, Inc. "We believe that future cash flows from operations will permit the payment of significant cash dividends, and the Board of Directors has voted to share these cash flows with our shareholders." "Our Board of Directors is committed to a sustainable long-term dividend policy, and for this reason we will begin paying quarterly cash dividends at an annualized rate of $0.30 per share, which will provide a 4% yield at current share prices," continued Crail. "Because our company's capital expenditure requirements are modest, we could afford to pay out a higher portion of anticipated earnings in cash dividends, and the Board will monitor future operating results to determine if the dividend payout ratio should be increased in the future." THE COMPANY WILL HOST A CONFERENCE CALL AT 4:15 P.M. EST TODAY TO DISCUSS THE COMPANY'S PERFORMANCE FOR THE QUARTER AND FISCAL YEAR ENDED FEBRUARY 28, 2003, THE OUTLOOK FOR THE FUTURE AND RELATED ISSUES. SHAREHOLDERS AND OTHER INTERESTED PARTIES MAY PARTICIPATE IN THE CONFERENCE CALL BY DIALING 800-915-4836 A FEW MINUTES BEFORE 4:15 P.M. EST TODAY. A REPLAY WILL BE AVAILABLE TWO HOURS AFTER THE COMPLETION OF THE CONFERENCE CALL FROM MAY 8, 2003 UNTIL MAY 15, 2003 BY DIALING 800-428-6051 FOR PARTICIPANTS IN THE US/CANADA (INTERNATIONAL/LOCAL PARTICIPANTS DIAL 973-709-2089) AND ENTERING THE ACCESS ID NUMBER 292249. Rocky Mountain Chocolate Factory, Inc., headquartered in Durango, Colorado, is an international franchiser of gourmet chocolate and confection stores and a manufacturer of an extensive line of premium chocolates and other confectionery products. The Company's common stock is listed on The Nasdaq National Market under the symbol "RMCF". This press release contains forward-looking information that involves risks and uncertainties, and the Company undertakes no obligation to update any forward-looking information. Risks and uncertainties that could cause actual results to differ materially include, without limitation, seasonality, consumer interest in the Company's products, general economic conditions, consumer trends, costs and availability of raw materials, competition, the effect of government regulations, and other risks disclosed in the Company's filings with the Securities and Exchange Commission. FOR FURTHER INFORMATION, CONTACT BRYAN J. MERRYMAN COO/CFO (970) 259-0554 OR RJ FALKNER & COMPANY, INC., INVESTOR RELATIONS COUNSEL AT (880) 377-9893 OR VIA EMAIL AT info@rjfalkner.com FOOTNOTE 1: EBITDA is defined as earnings before interest, taxes, depreciation, amortization and provision for loss on accounts and notes receivable and related foreclosure costs related to the insolvency of a single franchisee. EBITDA is presented solely as a supplemental disclosure because the Company believes that it is a widely used measure of operating performance and is a principal basis for valuation. The Company uses EBITDA as a primary measure of the operating performance of the Company. EBITDA should not be construed as an alternative to operating income as an indicator of the Company's operating performance, cash flow from operating activities as a measure of liquidity, or any other measure determined in accordance with accounting principles generally accepted in the United States of America. The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments which are not reflected in EBITDA. Also, other companies that report EBITDA information may calculate EBITDA in a different manner than the Company. The Company has also provided amounts for net income and earnings per share that have been adjusted for the provision for loss on accounts and notes receivable and related foreclosure costs related to the insolvency of a single franchisee because the Company believes it is important to understand its performance adjusted for this non-cash, non recurring event. The following table reconciles operating income to EBITDA.
(in thousands) Three Months Ended February 28, Twelve Months Ended February 28, 2003 2002 2003 2002 Operating income $ 416 $ 694 $ 1,497 $ 3,370 Depreciation and amortization 202 231 815 905 Provision for loss on accounts and notes receivable and related foreclosure costs -- -- 1,666 -- EBITDA $ 618 $ 925 $ 3,978 $ 4,275
The following table reconciles net income and net income per share (each based upon generally accepted accounting principles, or "GAAP") to adjusted net income and adjusted net income per share.
(in thousands, except per share data) Three Months Ended February 28, Twelve Months Ended February 28, 2003 2002 2003 2002 Net income $ 249 $ 424 $ 852 $ 1,995 Adjustments: Provision for loss on accounts and notes receivable and related foreclosure costs -- -- 1,666 -- Income tax effect for above adjustment -- -- (629) -- Adjusted net income $ 249 $ 424 $ 1,889 $ 1,995 Basic earnings per common share $ 0.10 $ 0.17 $ 0.34 $ 0.81 Provision for loss on accounts and notes receivable and related foreclosure costs, net of tax 0.00 0.00 0.42 0.00 Adjusted basic earnings per common share $ 0.10 $ 0.17 $ 0.76 $ 0.81 Diluted earnings per common share $ 0.09 $ 0.16 $ 0.32 $ 0.76 Provision for loss on accounts and notes receivable and related foreclosure costs, net of tax 0.00 0.00 0.38 0.00 Adjusted diluted earnings per common share $ 0.09 $ 0.16 $ 0.70 $ 0.76
STORE INFORMATION
New stores opened during the year ended Stores open as of February 28, 2003 February 28, 2003 ------------------------ ----------------- United States: Franchised Stores 26 196 Company-owned Stores - 8 --- --- 26 204 International Licensed Stores 1 26 --- --- Total 27 230 === ===
SELECTED BALANCE SHEET DATA (in thousands)
February 28, 2003 February 28, 2002 Current Assets $ 7,654 $ 7,032 Total assets $ 16,084 $ 16,795 Current Liabilities $ 2,873 $ 3,092 Long-Term Debt, Less Current Maturities $ 3,073 $ 4,325 Stockholders' Equity $ 9,891 $ 8,821
Interim Unaudited STATEMENTS OF OPERATIONS (in thousands, except per share data)
Three Months Ended February 28, Three Months Ended February 28, 2003 2002 2003 2002 REVENUES Factory sales $ 3,193 $ 3,392 66.7% 69.1% Royalty and marketing fees 1,019 1,012 21.3% 20.6% Franchise fees 89 63 1.8% 1.3% Retail sales 489 441 10.2% 9.0% Total revenues 4,790 4,908 100.0% 100.0% COSTS AND EXPENSES Cost of sales 2,572 2,380 53.7% 48.5% Franchise costs 322 310 6.7% 6.3% Sales and marketing 455 381 9.5% 7.8% General and administrative 575 792 12.0% 16.1% Retail operating 248 120 5.2% 2.5% Depreciation and amortization 202 231 4.2% 4.7% Total costs and expenses 4,374 4,214 91.3% 85.9% INCOME FROM OPERATIONS 416 694 8.7% 14.1% OTHER INCOME (EXPENSE) Interest expense (42) (91) -0.9% -1.8% Interest income 27 79 0.6% 1.6% Other, net (15) (12) -0.3% -0.2% INCOME BEFORE INCOME TAXES 401 682 8.4% 13.9% PROVISION FOR INCOME TAXES 152 258 3.2% 5.3% NET INCOME $ 249 $ 424 5.2% 8.6% BASIC EARNINGS PER COMMON SHARE $ .10 $ .17 DILUTED EARNINGS PER COMMON SHARE $ .09 $ .16 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,499,619 2,474,453 DILUTIVE EFFECT OF EMPLOYEE STOCK OPTIONS 160,634 243,400 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, ASSUMING DILUTION 2,660,253 2,717,853
STATEMENTS OF INCOME (in thousands, except per share data)
Year ended February 28, Year ended February 28, 2003 2002 2003 2002 REVENUES Factory sales $ 13,905 $ 13,619 71.4% 70.1% Royalty and marketing fees 3,768 3,545 19.4% 18.2% Franchise fees 389 670 2.0% 3.4% Retail sales 1,399 1,605 7.2% 8.3% Total revenues 19,461 19,439 100.0% 100.0% COSTS AND EXPENSES Cost of sales 9,997 9,613 51.4% 49.5% Franchise costs 1,246 1,287 6.4% 6.6% Sales and marketing 1,441 1,293 7.4% 6.6% General and administrative 1,967 2,096 10.1% 10.8% Retail operating 833 875 4.3% 4.5% Depreciation and amortization 815 905 4.2% 4.7% Provision for loss on accounts and notes receivable and related foreclosure costs 1,666 -- 8.5% 0.0% Total costs and expenses 17,965 16,069 92.3% 82.7% INCOME FROM OPERATIONS 1,496 3,370 7.7% 17.3% OTHER INCOME (EXPENSE) Interest expense (297) (437) -1.5%% -2.2% Interest income 171 275 0.9% 1.4% Other, net (126) (162) -0.6% -0.8% INCOME BEFORE INCOME TAXES 1,370 3,208 7.1% 16.5% PROVISION FOR INCOME TAXES 518 1,213 2.7% 6.2% NET INCOME $ 852 $ 1,995 4.4% 10.3% BASIC EARNINGS PER COMMON SHARE $ .34 $ .81 DILUTED EARNINGS PER COMMON SHARE $ .32 $ .76 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,495,417 2,473,268 DILUTIVE EFFECT OF EMPLOYEE STOCK OPTIONS 209,939 163,120 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, ASSUMING DILUTION 2,705,356 2,636,388
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