-----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, PTN5HvOmpo2/e3xriylLtbg0xu5LQ0jCVCcHvLL3XJavwSjTX2BkNL+fUXIlkniu 38APEBeks5bcYDFLdqJexg== 0001047469-98-027394.txt : 19980716 0001047469-98-027394.hdr.sgml : 19980716 ACCESSION NUMBER: 0001047469-98-027394 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980715 SROS: NASD 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-14749 FILM NUMBER: 98666607 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 10-Q 1 10-Q 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 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 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. STATEMENTS OF INCOME
Three Months Ended May 31, 1998 1997 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
The accompanying notes are an integral part of these financial statements. 3 ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. BALANCE SHEETS
MAY 31, FEBRUARY 28, 1998 1998 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
The accompanying notes are an integral part of these financial statements. 4 ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. STATEMENTS OF CASH FLOWS
Three Months Ended May 31, 1998 1997 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
The accompanying notes are an integral part of these financial statements. 5 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 NOTE 3 - INVENTORIES Inventories consist of the following:
May 31, 1998 February 28, 1998 Ingredients and supplies $1,184,506 $1,153,433 Finished candy 1,610,475 1,414,533 $2,794,981 $2,567,966
NOTE 4 - PROPERTY AND EQUIPMENT, NET Property and equipment consists of the following:
May 31, 1998 February 28, 1998 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
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 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:
Three Months Ended May 31, 1998 1997 Sales $627,955 $719,792 Loss before taxes (36,847) (67,358) Loss from discontinued operations, net of income taxes (22,597) (41,323)
NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION
Three Months Ended May 31, 1998 1997 Interest paid $154,773 $ 156,027 Income taxes refunded (3,090) (147,298)
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 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 $.03 per share for the three months ended May 31, 1997. 9 Revenues
Three Months Ended May 31, % ($'s in thousands) 1998 1997 Change Change 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%
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 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 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 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 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 EX-27.1 2 EXHIBIT 27.1
5 3-MOS FEB-28-1999 MAR-01-1998 MAY-31-1998 758,395 0 2,417,809 202,173 2,794,981 6,726,385 14,514,439 4,595,137 19,469,451 4,946,473 5,688,091 0 0 77,743 8,386,910 19,469,451 4,808,806 5,573,548 2,559,119 5,152,475 0 0 153,331 267,742 103,535 164,207 0 0 0 164,207 .06 .06
EX-27.2 3 EXHIBIT 27.2
5 3-MOS FEB-28-1998 MAR-01-1997 MAY-31-1997 1,623,693 0 1,953,845 215,249 2,228,271 6,853,093 12,922,913 3,681,629 19,225,457 3,145,953 6,136,416 0 0 87,369 9,779,694 19,225,457 4,312,572 5,087,683 2,228,892 4,724,490 0 0 152,199 210,994 81,550 129,444 (41,323) 0 0 88,121 .03 .03
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