Rocky Mountain Chocolate Factory, Inc. (Nasdaq: RMCF) yesterday announced higher revenues and earnings for the second quarter and first half of FY2002.

For the quarter ended August 31, 2001, non-retail revenues increased 23 percent to $4.3 million, compared with $3.5 million in the second quarter of FY2001. Retail revenues decreased 82 percent to $384,000, reflecting the successful execution of the Company's strategy to exit its Company-owned store program. On May 1, 2001, the Company completed the conversion of substantially all of its Company-owned stores to franchised-owned stores in order to focus its resources on supporting and growing its franchise base. Comparable-store sales at franchised stores were approximately the same when compared with the second quarter of FY2001.

Net earnings for the second quarter of FY2002 increased 20 percent to a record $608,000, compared with $505,000 in the second quarter of the previous fiscal year. Basic earnings per share increased 27 percent to a record $0.33 in the most recent quarter, compared with $0.26 in the second quarter of FY2001. Diluted earnings per share rose 19 percent to a record $0.31 in the second quarter of FY2002, compared with $0.26 in the prior-year period.

For the six months ended August 31, 2001, non-retail revenues increased 18 percent to $8.0 million, versus $6.7 million in the corresponding period of the previous fiscal year. Retail revenues decreased 76 percent to $961,000 as a result of the Company's strategy to exit its Company-owned store program. Comparable-store sales at franchised stores for the six-month period ended August 31, 2001 were approximately the same when compared with the first half of FY2001.

Net earnings increased 32 percent to a record $959,000 for the six months ended August 31, 2001, compared with $724,000 during the same period in FY2001. Basic earnings per share improved 50 percent to a record $0.51 during the first half of FY2002, compared with $0.34 in the six months ended August 31, 2000. Diluted earnings per share totaled a record $0.49 in the six months ended August 31, 2001, which represented a 44 percent increase when compared with $0.34 in the corresponding period of the previous fiscal year.

"We are pleased to report continued growth in factory product sales and other non-retail revenues during the second quarter and first half of fiscal 2002," stated Bryan J. Merryman, Chief Operating Officer of Rocky Mountain Chocolate Factory, Inc. "Following the successful conversion of our remaining Company-owned stores to franchised retail outlets, we have been able to focus on new merchandising and marketing programs in support of our franchisees."

"We recently unveiled a new retail store concept that has been greeted with enthusiasm by patrons of the four Rocky Mountain Chocolate Factory stores that incorporate the new contemporary look," continued Merryman. "We have also redesigned our corporate logo and the packaging for our gift line of chocolates and confections. The opening of thirteen new franchised stores during the first half of fiscal 2002 was in line with corporate objectives, and we expect to exceed our goal of 20 new store openings for the full year."
                              STORE INFORMATION

                                    New stores opened
                                  during the six months    Stores open as of
                                  ended August 31, 2001     August 31, 2001

     United States:
        Franchised Stores                   13                     196
        Company-owned Stores                 0                       4
                                            13                     200

     International Licensed Stores           0                      28
     Total                                  13                     228


                             STATEMENTS OF INCOME
                     (in millions, except per share data)

                               Three Months Ended       Three Months Ended
                                   August 31,               August 31,
                               2001         2000         2001          2000

     Revenues
       Factory sales         $3,264        $2,580        69.6%        46.2%
       Royalty and
        marketing fees          926           821        19.7%        14.7%
       Franchise fees           116           108         2.5%         1.9%
       Retail sales             384         2,076         8.2%        37.2%
       Total revenues         4,690         5,585       100.0%       100.0%

     Costs and Expenses
       Cost of sales          2,125         2,262        45.3%        40.5%
       Franchise costs          363           269         7.7%         4.8%
       Sales and marketing      323           281         6.9%         5.0%
       General and
        administrative          408           408         8.7%         7.3%
       Retail operating         219         1,048         4.7%        18.8%
       Depreciation and
        amortization            229           312         4.9%         5.6%
       Total costs
        and expenses          3,667         4,580        78.2%        82.0%

     Income from Operations   1,022         1,005        21.8%        18.0%

     Other Income (Expense)
       Interest expense        (125)         (195)       (2.7%)       (3.5%)
       Interest income           80            14         1.7%         0.2%
       Other, net               (45)         (181)       (1.0%)       (3.3%)

     Income Before
      Income Taxes              977           824        20.8%        14.7%

     Provision for
      Income Taxes              369           319         7.9%         5.7%

     Net Income                $608          $505        12.9%         9.0%

     Basic Earnings
      per Common Share        $0.33         $0.26

     Diluted Earnings
      per Common Share        $0.31         $0.26

     Weighted Average
      Common Shares
      Outstanding         1,848,164     1,956,784

     Dilutive Effect
      of Employee
      Stock Options         112,687         5,571

     Weighted Average
      Common Shares
      Outstanding,
      Assuming Dilution   1,960,851     1,962,355


                             STATEMENTS OF INCOME
                     (in millions, except per share data)

                                Six Months Ended          Six Months Ended
                                   August 31,                August 31,
                               2001         2000         2001          2000

     Revenues
       Factory sales         $5,850        $5,011        65.6%        46.3%
       Royalty and
        marketing fees        1,708         1,539        19.1%        14.2%
       Franchise fees           403           198         4.5%         1.8%
       Retail sales             962         4,075        10.8%        37.7%
       Total revenues         8,923        10,823       100.0%       100.0%

     Costs and Expenses
       Cost of sales          4,011         4,523        44.9%        41.8%
       Franchise costs          684           528         7.7%         4.9%
       Sales and marketing      611           569         6.8%         5.3%
       General and
        administrative          925           861        10.4%         7.9%
       Retail operating         577         2,202         6.5%        20.3%
       Depreciation and
        amortization            454           640         5.1%         5.9%
       Total costs
        and expenses          7,262         9,322        81.4%        86.1%

     Income from Operations   1,661         1,501        18.6%        13.9%

     Other Income (Expense)
       Interest expense        (244)         (344)       (2.7%)       (3.2%)
       Interest income          125            24         1.4%         0.2%
       Other, net              (119)         (320)       (1.3%)       (3.0%)

     Income Before
      Income Taxes            1,542         1,181        17.3%        10.9%

     Provision for
      Income Taxes              583           457         6.5%         4.2%

     Net Income                $959          $724        10.8%         6.7%

     Basic Earnings
      per Common Share        $0.51         $0.34

     Diluted Earnings
      per Common Share        $0.49         $0.34

     Weighted Average
      Common Shares
      Outstanding         1,863,125     2,100,349

     Dilutive Effect
      of Employee
      Stock Options          83,660         9,704

     Weighted Average
      Common Shares
      Outstanding,
      Assuming Dilution   1,946,785     2,110,053


                         SELECTED BALANCE SHEET DATA
                                (in millions)

                                      August 31, 2001     February 28, 2001
                                                              (audited)

     Current Assets                         $6,866              $5,607
     Total assets                          $16,814             $15,042
     Current Liabilities                    $3,657              $4,358
     Long-Term Debt,
      Less Current Maturities               $4,912              $3,297
     Stockholders' Equity                   $7,528              $7,062


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 and the effect of government regulations.