-----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, UJR9nqlxlGdfBZdqlUFnjQ7gLidlwxbzr3KIwSyDF1tofAMyMDcmQYQwLweonGdY yFawGC5FTf65F827dsaOXw== 0000912057-96-014330.txt : 19960712 0000912057-96-014330.hdr.sgml : 19960712 ACCESSION NUMBER: 0000912057-96-014330 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19960711 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: 1934 Act SEC FILE NUMBER: 000-14749 FILM NUMBER: 96593384 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, 1996 / / 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 small business issuer as specified in its charter) COLORADO 84-0910696 (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) 265 TURNER DRIVE, DURANGO, CO 81301 (Address of principal executive offices) (Zip Code) (303) 259-0554 (Issuer's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 . ---- ---- At July 5, 1996 there were 2,905,149 shares of common stock outstanding. This document contains 17 pages including exhibits. The exhibit index is located on page 15. ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. FORM 10-Q FOR THE QUARTER ENDED May 31, 1996 TABLE OF CONTENTS PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements................................... 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K....................... 15 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS PAGE NO. -------- Financial Statements Balance Sheets - May 31, 1996 (unaudited) and February 29, 1996....... 4 Statements of Income - Three-month periods ended May 31, 1996 (unaudited) and May 31, 1995 (unaudited)............................. 6 Statements of Cash Flows Three-month periods ended May 31, 1996 (unaudited) and May 31, 1995 (unaudited)................................................... 7 3 ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. BALANCE SHEETS MAY 31, FEBRUARY 29, 1996 1996 ----------- ------------ ASSETS (UNAUDITED) CURRENT ASSETS Cash and cash equivalents $ 921,505 $ 528,787 Accounts and notes receivable - trade, less allowance for doubtful accounts of $43,196 at May 31 and $28,196 at February 29 1,602,582 1,463,901 Inventories 2,748,788 2,504,908 Deferred tax asset 59,219 59,219 Other 581,508 224,001 ----------- ----------- Total current assets 5,913,602 4,780,816 PROPERTY AND EQUIPMENT - AT COST Land 122,558 122,558 Building 3,558,692 3,596,905 Leasehold improvements 1,989,375 1,753,165 Machinery and equipment 5,533,366 4,898,174 Furniture and fixtures 2,578,546 2,330,057 Transportation equipment 228,259 228,816 ----------- ----------- 14,010,796 12,929,675 Less accumulated depreciation and amortization (2,744,388) (2,468,084) ----------- ----------- 11,266,408 10,461,591 OTHER ASSETS Notes and accounts receivable due after one year 100,206 111,588 Goodwill, net of accumulated amortization of $259,641 at May 31 and $253,740 at February 29 330,359 336,260 Other 574,130 624,185 ----------- ----------- 1,004,695 1,072,033 ----------- ----------- $18,184,705 $16,314,440 ----------- ----------- ----------- ----------- The accompanying notes are an integral part of these statements. 4 ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. BALANCE SHEETS - CONTINUED MAY 31, FEBRUARY 29, 1996 1996 ----------- ------------ LIABILITIES AND EQUITY (UNAUDITED) CURRENT LIABILITIES Short-term debt $ - $1,000,000 Current maturities of long-term debt 429,562 134,538 Accounts payable - trade 1,279,455 998,520 Accrued compensation 530,181 335,926 Accrued liabilities 184,292 214,460 Income taxes payable 11,198 54,229 ----------- ----------- Total current liabilities 2,434,688 2,737,673 LONG-TERM DEBT, less current maturities 4,193,290 2,183,877 DEFERRED INCOME TAXES 275,508 275,508 COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' EQUITY Common stock - authorized 7,250,000 shares, $.03 par value; issued 3,034,302 shares at May 31 and at February 29 91,029 91,029 Additional paid-in capital 9,703,985 9,703,985 Retained earnings 2,502,104 2,338,267 ----------- ----------- 12,297,118 12,133,281 Less common stock held in treasury, at cost - 129,153 shares at May 31 and at February 29 1,015,899 1,015,899 ----------- ----------- 11,281,219 11,117,382 ----------- ----------- $18,184,705 $16,314,440 ----------- ----------- ----------- ----------- The accompanying notes are an integral part of these statements. 5 ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. STATEMENTS OF INCOME (unaudited) THREE-MONTH PERIODS ENDED ---------------------------- MAY 31, 1996 MAY 31, 1995 ------------ ------------ REVENUES Sales of chocolate $4,259,854 $3,023,797 Franchise and royalty fees 703,039 695,982 ---------- ---------- 4,962,893 3,719,779 ---------- ---------- COSTS AND EXPENSES Cost of chocolate sales 2,103,925 1,611,530 Franchise costs 485,467 449,533 General and administrative 414,058 347,460 Retail operating expenses 1,621,956 828,166 ---------- ---------- 4,625,406 3,236,689 ---------- ---------- Operating income 337,487 483,090 OTHER INCOME (EXPENSE) Interest expense (85,214) (61,838) Interest income 10,714 7,022 ---------- ---------- (74,500) (54,816) ---------- ---------- INCOME BEFORE INCOME TAX EXPENSE 262,987 428,274 INCOME TAX EXPENSE Provision for income taxes 99,150 160,603 ---------- ---------- INCOME ALLOCABLE TO COMMON STOCKHOLDERS $ 163,837 $ 267,671 ---------- ---------- ---------- ---------- PRIMARY INCOME PER COMMON AND EQUIVALENT SHARE $ .06 $ .10 ---------- ---------- ---------- ---------- Weighted average and equivalent shares 2,946,912 2,739,248 ---------- ---------- ---------- ---------- FULLY DILUTED INCOME PER COMMON AND EQUIVALENT SHARE $ .06 $ .10 ---------- ---------- ---------- ---------- Weighted average and equivalent shares 2,950,554 2,748,224 ---------- ---------- ---------- ---------- The accompanying notes are an integral part of these statements. 6 ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. STATEMENTS OF CASH FLOWS (unaudited) THREE-MONTH PERIODS ENDED ---------------------------- MAY 31, 1996 MAY 31, 1995 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 163,837 $ 267,671 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 282,205 159,388 Changes in operating assets and liabilities: Notes and accounts receivable (127,299) 80,039 Inventories (243,880) 68,663 Other assets (357,507) 43,822 Accounts payable 280,935 12,752 Income taxes payable (43,031) (106,382) Accrued liabilities 164,087 117,119 ----------- ----------- Net cash provided by operating activities 119,347 555,428 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of other assets 50,055 (17,741) Purchase of property and equipment (1,081,121) (1,459,706) ----------- ----------- Net cash used in investing activities (1,031,066) (1,477,447) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt 4,659,466 754,634 Principal payments on long-term debt (2,355,029) (52,842) Proceeds from line of credit - 150,000 Principal payments on line of credit (1,000,000) (150,000) Purchase and retirement of preferred stock - (26,025) ----------- ----------- Net cash provided by financing activities 1,304,437 675,767 ----------- ----------- NET INCREASE (DECREASE) IN CASH 392,718 (246,252) Cash and cash equivalents at beginning of period 528,787 382,905 ----------- ----------- Cash and cash equivalents at end of period $ 921,505 $ 136,653 ----------- ----------- ----------- ----------- CASH PAID DURING THE PERIOD FOR: Interest $ 86,798 $ 55,763 ----------- ----------- ----------- ----------- Taxes $ 154,714 $ 271,985 ----------- ----------- ----------- ----------- The accompanying notes are an integral part of these statements 7 ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. NOTES TO FINANCIAL STATEMENTS May 31, 1996 1. The interim financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in 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 that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended February 29, 1996. 2. These statements reflect all adjustments which, in the opinion of Management, are necessary for a fair presentation of the information contained therein. Results of operations for interim periods are not necessarily indicative of annual results. 3. Inventories consist of the following: MAY 31, 1996 FEBRUARY 29, 1996 ------------ ----------------- Ingredients and supplies $1,138,040 $1,117,517 Finished Candy 1,610,748 1,387,391 ---------- ---------- $2,748,788 $2,504,908 ---------- ---------- ---------- ---------- 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company derives its revenues from four principal sources: (1) factory sales, which consist of candy sales to its franchised store locations; (2) retail sales, which consist of candy sales at retail by its Company-owned stores; (3) franchise fees, which consist of fees earned from the sale of franchises; and (4) royalties and marketing fees. RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain unaudited financial information and other operating data related to the Company's operation: (ALL AMOUNTS OTHER THAN STORE DATA IN THOUSANDS) FIRST QUARTER FIRST QUARTER $ % FISCAL 1997 FISCAL 1996 CHANGE CHANGE ------------- ------------- -------- ------ REVENUE COMPONENT Factory Sales $1,728.1 $1,552.1 $ 176.0 11.3% Retail Sales 2,531.8 1,471.7 1,060.1 72.0 Franchise Fees 193.6 245.5 (51.9) (21.1) Royalties/Marketing fees 509.4 450.5 58.9 13.1 -------- -------- -------- ----- Total $4,962.9 $3,719.8 $1,243.1 33.4% -------- -------- -------- ----- -------- -------- -------- ----- STORE DATA ----------------- MAY 31, MAY 31, 1996 1995 ------- ------- Number Of Stores Open At End Of Period: Company 45 26 Franchised 162 133 --- --- Total 207 159 --- --- --- --- 9 REVENUES FACTORY SALES. Factory sales increased $176,000 or 11.3% to $1.7 million in the first quarter of fiscal 1997, compared to $1.6 million in the first quarter of fiscal 1996. This increase resulted from the larger number of franchised stores in existence throughout the quarter, augmented by the impact of a 2.6% price increase effected in January of 1996. Same store pounds purchased from the factory declined 10.2% in the first quarter of fiscal 1997 compared to the first quarter of fiscal 1996 partially offsetting the impact of increased stores and increased price. When computing same store pounds purchased from the factory, purchases by franchised stores open for 3 months in each period are compared. This decline in same store pounds purchased resulted primarily from the effect of different timing of product shipment for the Easter holiday in fiscal 1997 relative to fiscal 1996 (an earlier Easter in fiscal 1997 resulted in shipment of Easter product in the last quarter of fiscal 1996). RETAIL SALES. Retail sales increased $1,060,100 or 72.0% to $2.5 million in the first quarter of fiscal 1997, compared to $1.5 million in the first quarter of fiscal 1996. This increase resulted primarily from a larger number of Company-owned stores in existence throughout the quarter. The impact of a 2.7% same store sales decline at Company-owned stores partially offset the impact of this increased number of stores. The decline in same store sales is believed to result from the effect of lower foot traffic in the factory outlet mall environment in which most Company-owned stores operate and as a result of a decline in revenues in the second year of operation from grand opening levels of revenue at stores established in the last fiscal year at new factory outlet malls. Additionally, the majority of new Company-owned stores established in the last fiscal year were located in geographical areas where the Company is less well known and is seeking to establish name identification. The Company believes that growth in same store sales as well as in absolute volume levels are lower than they otherwise would be as a result of this effort to establish itself in new areas. ROYALTIES, MARKETING FEES AND FRANCHISE FEES. Royalties and marketing fees increased $58,900 or 13.1% to $509,400 in the first quarter of fiscal 1997, compared to $450,500 in the first quarter of fiscal 1996. This increase resulted from increased royalty income from a larger number of franchised stores operating in the first quarter of 1997 compared to the first quarter of fiscal 1996, augmented by the effect of increased same store sales at franchised stores of 1.2%. Franchise fee revenues in the first quarter of fiscal 1997 declined from that earned in the first quarter of fiscal 1996 ($193,600 in comparison with $245,500). Franchise signings declined to 6 in the first quarter of fiscal 1997 from 13 in the first 10 quarter of 1996, due to difficulty in obtaining appropriate locations for new franchised stores. COSTS AND EXPENSES COST OF CHOCOLATE SALES. Cost of chocolate sales, which includes costs incurred by the Company to manufacture candy sold to its Company-owned and franchised stores, increased 30.6% from $1.6 million in the first quarter of fiscal 1996 to $2.1 million in the first quarter of fiscal 1997. Cost of chocolate sales as a percentage of revenue decreased to 49.4% in the first quarter of fiscal 1997 from 53.3% in the first quarter of fiscal 1996. This improvement resulted from an increase in higher margin retail sales as a percentage of total revenue and from the impact of a 2.6% factory price increase. Although reduced factory margins were not a material adverse factor in the calculated overall cost of sales percentage relationship(decline in factory margins relative to first quarter of fiscal 1996 of .86% resulting from increased material usage and lesser labor efficiencies in the manufacture of the Company's products) for the quarter, the Company is experiencing factory margins approximately 2% lower than recent year historical averages. The Company is engaged in a concerted effort to correct for the cause of increased material usage, as well as to improve labor efficiencies with the goal of returning factory margins to historical levels and to continue the improvement which it had been experiencing in its margins. Factory margins have improved from lower numbers experienced in the second half of fiscal 1996 as a result of these efforts. There can be no guarantee that such margin improvements will continue or that reduced gross margin performance at the factory will not continue. FRANCHISE COSTS. Franchise costs increased 8.0% from $449,500 in the first quarter of fiscal 1996 to $485,500 in the first quarter of fiscal 1997. As a percentage of the total of royalty, marketing fees and franchise fee revenues, franchise costs increased to 69.1% of such fees in the first quarter of fiscal 1997 from 64.6% in the first quarter of fiscal 1996. Reduced franchise fee revenues relative to the first quarter of last year is the primary cause of this increase in relative percentage. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expense increased 19.2% from $347,500 in the first quarter of fiscal 1996 to $414,100 in the first quarter of fiscal 1997, as a result of increased expense for administrative support personnel. As a percentage of total revenues, general and administrative expense declined from 9.3% in the first quarter of fiscal 1996 to 8.3% in the first quarter of fiscal 1997, primarily due to a significant increase in total revenues, without a proportionate increase in general and administrative expense. 11 RETAIL OPERATING EXPENSES. Retail operating expenses increased from $828,200 in the first quarter of fiscal 1996 to $1,622,000 in the first quarter of fiscal 1997; an increase of 95.8%. This increase resulted partially from the effect of the larger number of Company-owned stores in existence throughout the first quarter and partially as a result of increased expenses incurred in the "startup" phase of many new stores established in late fiscal 1996 with such expenses continuing into the first quarter of fiscal 1997. As a percentage of retail sales revenues, retail operating expenses increased from 56.3% in the first quarter of fiscal 1996 to 64.1% in the first quarter of fiscal 1997 as a result of insufficient sales volume leveraging resulting from the decline in same store retail sales at Company-owned stores discussed above, partially as a result of this "start-up" effect and partially as a result of a greater "mix" of stores located in environments with a selling "season" beginning after the first quarter of the Company's fiscal year. The Company has begun a program of conversion of Company-owned store locations to franchised locations of stores not meeting minumum economic performance criteria. The Company intends to place for sale to franchisees Company-owned stores not meeting such criteria and thereby not justifying ongoing investment of Company funds and management time and attention. The Company does not expect such conversion and sale to have appreciable positive or negative impact on Company earnings performance because store profits sacrificed in such cases are expected to be approximately compensated for by royalties generated and cost of capital saved. Gains realized on store disposition are also not expected to be material to Company results of operations. There can be no guarantee, however, that such conversions of Company-owned stores to franchised locations will not create loss of Company-owned store profits in excess of royalties generated and cost of capital saved thereby producing negative impact on future Company profitability. OTHER EXPENSE Other expense of $74,500 incurred in the first quarter of fiscal 1997 increased 35.9% from the $55,000 incurred in the first quarter of fiscal 1996. This increase resulted from increased interest expense caused by borrowings in support of the Company's Company-owned store expansion. INCOME TAX EXPENSE The Company's effective income tax rate in the first quarter of fiscal 1997 was 37.7% approximating the 37.5% in the first quarter of fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES In the first quarter of fiscal 1997 the Company generated $119,347 in operating cash flow in comparison with $555,428 in the first quarter of fiscal 1996. Operating cash flow declined as a result of lower net income 12 generated in the current year first quarter relative to last year and as a result of investment in prepayments of development expense for new Fuzziwig's locations. At May 31, 1996, working capital was $3,478,914 in comparison with $2,043,143 at February 29, 1996, a $1,435,771 increase. This increase resulted primarily from fixed asset financing achieved recovering cash from investments in Company store operating assets previously funded from operating cash flows. Cash and cash equivalent balances increased from $528,787 at February 29, 1996 to $921,505 at May 31, 1996 as a result of this financing. The Company's current ratio was 2.4/1, at May 31, 1996 in comparison with 1.7/1 at February 29, 1996. The Company's long-term debt is comprised primarily of real estate mortgage financing provided by a local banking facility used to finance the Company Factory (unpaid balance as of May 31, 1996 $1,639,600), and Chattel mortgage financing (unpaid balance as of May 31, 1996 $2,979,700) provided by both local and national financing facilities and used to fund the Company store expansion. The Company possesses a $2,000,000 working capital line of credit at May 31, 1996 secured by accounts receivable and inventories which line had a $-0- balance at that date. The Company possesses fixed asset availability lines of credit totaling $5,000,000 for use by the Company in its Company-owned store expansion program (balance utilized and owed at May 31, 1996, under these availability lines, $2,300,000). For the balance of fiscal 1997, the Company anticipates making $4.7 million in capital expenditures. Of this sum, approximately $4.5 million is anticipated to be used for the opening of new Company-owned stores, with the balance anticipated to be used for the purchase of capital equipment for the factory, as well as for additional computer equipment for the Company's administrative functions. The Company believes that cash flow from operating activities and available bank lines of fixed asset and working capital credit will be sufficient to service debt, fund anticipated capital expenditures and provide necessary working capital at least through the end of fiscal 1997. There can be no guarantee, however, that unforeseen events will not require the Company to secure additional sources of financing. The Company may also seek additional financing from time to time, through borrowings or public or private offerings of equity or debt securities, to fund its future expansion plans. IMPACT OF INFLATION 13 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 cost for new facilities may reflect potentially escalating cost of real estate and construction. There is no assurance that the Company will be able to pass on its increased costs to its customers. Depreciation expense is based on the historical cost to the Company of its fixed assets, and therefore is 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 and summer vacations 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 of for a full fiscal year. EFFECT OF NEW ACCOUNTING STANDARD Financial Accounting Standard (FAS) 121, "Accounting for the Impairment of Long-Lived Assets", is effective for fiscal years beginning after December 15, 1995. This standard provided for the reduction of asset values of assets defined in the Standard as long-lived, with the impact of this reduction being charged to results of operations. The Company adopted this accounting standard as of its fiscal year beginning March 1, 1996. There was no impact on results of operations for the quarter ended May 31, 1996 of adoption of this standard. 14 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 11.1 Statement regarding computation of earnings per common share (filed herewith at page 17). (b) REPORTS ON FORM 8-K No reports on form 8-K were filed during the three months ended May 31, 1996. 15 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. Date: July 10, 1996 /s/ Franklin E. Crail ----------------- -------------------------------------- Franklin E. Crail (Chairman of the Board, President and Treasurer) Date: July 10, 1996 /s/ Lawrence C. Rezentes ----------------- -------------------------------------- Lawrence C. Rezentes (Vice President - Finance) 16 EX-11.1 2 EXHIBIT 11.1 EXHIBIT 11.1 ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. COMPUTATION OF INCOME PER COMMON SHARE THREE-MONTH PERIODS ENDED ------------------------------- MAY 31, 1996 MAY 31, 1995 ------------ ------------ PRIMARY INCOME PER SHARE Net income allocable to common and common equivalent shares $ 163,837 $ 267,671 ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding 2,905,149 2,641,817 Net effect of dilutive stock options based on the Treasury Stock Method using average market price 41,763 97,431 ---------- ---------- Weighted average number of common and common equivalent shares outstanding 2,946,912 2,739,248 ---------- ---------- ---------- ---------- PRIMARY INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ .06 $ .10 ---------- ---------- ---------- ---------- FULLY DILUTED INCOME PER SHARE Net income allocable to common and equivalent shares $ 163,837 $ 267,671 ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding 2,905,149 2,641,817 Net effect of dilutive stock options based on the Treasury Stock Method using the greater of the average or ending market price 45,405 106,407 ---------- ---------- Weighted average number of common and common equivalent shares outstanding 2,950,554 2,748,224 ---------- ---------- ---------- ---------- INCOME PER COMMON AND COMMON EQUIVALENT SHARES ASSUMING FULL DILUTION $ .06 $ .10 ---------- ---------- ---------- ---------- 17 EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS FEB-28-1997 MAR-01-1996 MAY-31-1996 921,505 0 1,602,582 0 2,748,788 5,913,602 14,010,796 2,744,388 18,184,705 2,434,688 4,193,290 0 0 91,029 11,190,190 18,184,705 4,259,854 4,962,893 2,103,925 4,625,406 0 0 74,500 262,987 99,150 163,837 0 0 0 163,837 .06 .06
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