EX-99.1 2 d56657exv99w1.htm PRESS RELEASE exv99w1
 

EXHIBIT 99.1
For Immediate Release
ROCKY MOUNTAIN CHOCOLATE FACTORY
REPORTS RECORD FY2008 REVENUES AND EARNINGS
AFTER-TAX RETURN ON BEGINNING SHAREHOLDERS’ EQUITY EXCEEDS 34% FOR
FISCAL YEAR
COMPANY DECLARES FIRST QUARTER CASH DIVIDEND OF $0.10 PER SHARE
DURANGO, Colorado (May 8, 2008)—Rocky Mountain Chocolate Factory, Inc. (Nasdaq/GM “RMCF”), which franchises gourmet chocolate and confection stores and manufactures an extensive line of premium chocolates and other confectionery products, today reported record revenues and earnings for the fiscal year ended February 29, 2008 (FY2008).
“We are very pleased to report another year of growth in revenues and net income during Fiscal 2008, despite a very difficult retail environment during the second half of the fiscal year,” noted Bryan Merryman, Chief Operating Officer and Chief Financial Officer of Rocky Mountain Chocolate Factory, Inc. “Our revenues rose 1% to a record $31.9 million, while total system-wide sales at franchised and company-owned stores increased 4% to $113.3 million. Net income increased 5% to approximately $5.0 million, diluted earnings per share rose 7% to a record $0.76, and our after-tax return on beginning shareholders’ equity reached a record 34% during fiscal 2008.”
“Our franchisees opened 35 new stores during the course of the fiscal year,” continued Merryman. “This increased the total number of Rocky Mountain Chocolate Factory locations in operation to 330 as of February 29, 2008.
For the fiscal year ended February 29, 2008, total pounds of confectionery products purchased from the factory by franchisees decreased 4%, due to a 9% decrease in same store pounds purchased from the factory by franchised stores, somewhat offset by a net increase of 3% in the number of franchised stores in operation. Same store sales at franchised stores were unchanged relative to the previous fiscal year. The Company believes the 9% decrease in same store pounds purchased was due to a product mix shift from factory-made products to products made in the store such as caramel apples and fudge. This trend has continued into the Company’s first quarter of fiscal 2009, with same store pounds purchased decreasing an additional 15% in the two months ended April 30, 2008 when compared with the same period in the previous year.
For the three months ended February 29, 2008, revenues decreased 7% to $8.3 million, compared with $8.9 million in the fourth quarter of the previous fiscal year. Comparable-store sales at franchised retail locations declined 4.8% when compared with the quarter ended February 28, 2007.
Net earnings decreased 8% to $1.3 million in the fourth quarter of FY2008, versus $1.4 million in the corresponding period of the previous fiscal year. Basic and diluted earnings per share decreased 5%, to $0.21 basic and $0.21 diluted, in the most recent quarter, compared with $0.22 basic and $0.22 diluted in the year-earlier period.
“Sales at most Rocky Mountain Chocolate Factory stores are greatly influenced by the levels of ‘foot traffic’ in regional shopping malls and other retail environments where the stores are located, and widely reported declines in such traffic resulted in lower revenues and earnings in the fourth quarter of our 2008 fiscal year,” continued Merryman. “In light of the significant uncertainties surrounding the U.S. economy and retail trends in coming months, combined with decreasing same store pounds purchased by franchisees, we do not

 

 

feel comfortable providing specific revenue and earnings guidance for Fiscal 2009 at the present time. If recent economic and consumer spending trends continue but do not deteriorate further, we are likely to report a modest decline in earnings for the current fiscal year. We will resume our tradition of providing more specific guidance to the investment community when macro-economic factors and product mix shift trends can be evaluated with greater certainty. Fortunately, we believe we are in excellent financial position and well able to withstand the recessionary forces currently buffeting the U.S. economy. Our working capital as of February 29, 2008 exceeded $5 million, we had a current ratio of 2.4-to-1.0, there was no long-term debt outstanding on our balance sheet, and shareholders’ equity exceeded $11.6 million.”
On May 10, 2007 and February 19, 2008 the Board of Directors authorized the repurchase of up to $5 million and $3 million, respectively, of the Company’s common stock in the open market or in private transactions. The timing of any such transactions will depend on a variety of factors, including market conditions, and the program may be suspended or discontinued at any time. To date, the Company has repurchased approximately 419,000 shares of common stock under these authorizations. During the past eight years, the Company has repurchased approximately 3,909,000 shares of its common stock under repurchase authorizations at an average price of $5.82 per share (number of shares and price per share adjusted for stock splits and stock dividends).
The Company also announced that its Board of Directors has approved a first quarter cash dividend of $0.10 per share, to be paid June 13, 2008 to shareholders of record June 2, 2008.
The Company will host a conference call today, Thursday, May 8, 2008, at 4:15 p.m. EDT to discuss FY2008 results and other topics of interest. To participate in the conference call, please dial 800-860-2442 (international/local participants dial 412-858-4600) approximately five minutes prior to 4:15 p.m. EDT and ask to be connected to the Rocky Mountain Chocolate Factory Conference Call. A replay of the conference call will be available one hour after completion of the call until May 15, 2008 at 5:00 pm EDT by dialing 877-344-7529 (international/local participants dial 412-317-0088) and entering conference I.D. # 419284.
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 Global Market under the symbol “RMCF”.
Certain statements in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve risks and uncertainties, and the Company undertakes no obligation to update any forward-looking information. Risks and uncertainties that could cause cash flows to decrease or actual results to differ materially include, without limitation, seasonality, consumer interest in the Company’s products, general economic conditions, consumer and retail trends, costs and availability of raw materials, competition and other risks. Readers are referred to the Company’s periodic reports filed with the SEC, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. The information contained in this press release is a statement of the Company’s present intentions, beliefs or expectations and is based upon, among other things, the existing business environment, industry conditions, market conditions and prices, the economy in general and the Company’s assumptions. The Company may change its intentions, beliefs or expectations at any time and without notice, based upon any changes in such factors, in its assumptions or otherwise. The cautionary statements contained or referred to in this press release should be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on its behalf may issue.
For Further Information, Contact Bryan J. Merryman COO/CFO (970) 259-0554

 

 

STORE INFORMATION
                 
    New stores opened during        
    the year ended     Stores open as of  
    February 29, 2008     February 29, 2008  
United States:
                
Franchised Stores
     32       284  
Company-owned Stores
     0       5  
International Licensed Stores
     3       41  
 
            
Total
     35       330  
 
            
STATEMENTS OF INCOME
(in thousands, except per share data)
                                 
    Three Months Ended February 28 and 29   Three Months Ended February 28 and 29
    2008   2007   2008   2007
Revenues
                                
Factory sales
   $ 5,971     $ 6,365       72.1 %     71.3 %
Royalty and marketing fees
     1,564       1,676       18.9 %     18.8 %
Franchise fees
     173       173       2.1 %     1.9 %
Retail sales
     577       717       6.9 %     8.0 %
Total revenues
     8,285       8,931       100.0 %     100.0 %
 
                                
Costs and Expenses
                                
Cost of sales
     4,339       4,442       52.4 %     49.7 %
Franchise costs
     315       423       3.8 %     4.7 %
Sales and marketing
     427       466       5.2 %     5.2 %
General and administrative
     615       748       7.4 %     8.4 %
Retail operating
     259       359       3.1 %     4.0 %
Depreciation and amortization
     198       191       2.4 %     2.2 %
Total costs and expenses
     6,153       6,629       74.3 %     74.2 %
 
                                
Income from Operations
     2,132       2,302       25.7 %     25.8 %
 
                                
Other Income (Expense)
                                
Interest expense
     (2 )     —       —       —  
Interest income
     19       18       0.2 %     0.2 %
Other, net
     17       18       0.2 %     0.2 %
 
                                
Income Before Income Taxes
     2,149       2,320       25.9 %     26.0 %
 
                                
Provision for Income Taxes
     819       877       9.9 %     9.8 %
 
                                
Net Income
   $ 1,330     $ 1,443       16.0 %     16.2 %
 
                                
Basic Earnings per Common Share
   $ 0.21     $ 0.22                  
Diluted Earnings per Common Share
   $ 0.21     $ 0.22                  
 
                                
Weighted Average Common Shares Outstanding
     6,240,125       6,417,707                  
Dilutive Effect of Employee Stock Options
     142,436       203,325                  
Weighted Average Common Shares Outstanding, Assuming Dilution
     6,382,561       6,621,032                  

 

 

STATEMENTS OF INCOME
(in thousands, except per share data)
                                 
    Year ended February 28 and 29   Year ended February 28 and 29
    2008   2007   2008   2007
Revenues
                                
Factory sales
   $ 23,758     $ 22,709       74.5 %     71.9 %
Royalty and marketing fees
     5,697       5,604       17.9 %     17.8 %
Franchise fees
     623       634       2.0 %     2.0 %
Retail sales
     1,800       2,626       5.6 %     8.3 %
Total revenues
     31,878       31,573       100.0 %     100.0 %
 
                                
Costs and Expenses
                                
Cost of sales
     16,678       15,989       52.3 %     50.6 %
Franchise costs
     1,499       1,570       4.7 %     5.0 %
Sales and marketing
     1,503       1,538       4.7 %     4.9 %
General and administrative
     2,506       2,539       7.9 %     8.0 %
Retail operating
     995       1,502       3.1 %     4.8 %
Depreciation and amortization
     783       874       2.5 %     2.8 %
Total costs and expenses
     23,964       24,012       75.2 %     76.1 %
 
                                
Income from Operations
     7,914       7,561       24.8 %     23.9 %
 
                                
Other Income (Expense)
                                
Interest expense
     (2 )     —       — %     — %
Interest income
     103       67       0.3 %     0.2 %
Other, net
     101       67       0.3 %     0.2 %
 
                                
Income Before Income Taxes
     8,015       7,628       25.1 %     24.1 %
 
                                
Provision for Income Taxes
     3,054       2,883       9.6 %     9.1 %
 
                                
Net Income
   $ 4,961     $ 4,745       15.5 %     15.0 %
 
                                
Basic Earnings per Common Share
   $ 0.78     $ 0.74                  
Diluted Earnings per Common Share
   $ 0.76     $ 0.71                  
 
                                
Weighted Average Common Shares Outstanding
     6,341,286       6,432,123                  
Dilutive Effect of Employee Stock Options
     159,386       227,350                  
Weighted Average Common Shares Outstanding, Assuming Dilution
     6,500,672       6,659,473                  
SELECTED BALANCE SHEET DATA
(in thousands)
                 
    February 29, 2008   February 28, 2007
Current Assets
   $ 8,963     $ 10,759  
Total assets
   $ 16,148     $ 18,456  
Current Liabilities
   $ 3,811     $ 3,256  
Stockholders’ Equity
   $ 11,655     $ 14,515