MRS FIELDS ORIGINAL COOKIES INC - 10-Q Quarterly Report

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MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

ý		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 29, 2003
OR
o		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: 333-45179

MRS. FIELDS' ORIGINAL COOKIES, INC.
(Exact name of registrant specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		87-0552899 (IRS employer identification no.)
2855 East Cottonwood Parkway, Suite 400 Salt Lake City, Utah (Address of principal executive offices)		84121-7050 (Zip code)

Registrant's telephone number, including area code: (801) 736-5600

Indicate by check mark 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 ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act).

Yes o No ý

The registrant had 400 shares of common stock, $0.01 par value, outstanding at May 1, 2003.

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

*PART 1—FINANCIAL INFORMATION*
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of March 29, 2003 and December 28, 2002
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the 13 Weeks Ended March 29, 2003 and March 30, 2002
	Condensed Consolidated Statements of Cash Flows for the 13 Weeks Ended March 29, 2003 and March 30, 2002
	Notes to Condensed Consolidated Financial Statements
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosure About Market Risk
Item 4.	Controls and Procedures
*PART II—OTHER INFORMATION*
Item 1.	Legal Proceedings
Item 5.	Other Information
Item 6.	Exhibits and Reports on Form 8-K
Signatures
Certifications

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)
(Dollars in thousands)

ASSETS

			March 29, 2003			December 28, 2002
CURRENT ASSETS:
	Cash and cash equivalents		$	2,057		$	2,667
	Accounts receivable, net of allowance for doubtful accounts of $140 and $124, respectively			1,600			2,434
	Amounts due from franchisees and licensees, net of allowance for doubtful accounts of $973 and $953, respectively			3,367			4,493
	Amounts due from affiliates			34			—
	Inventories			3,329			2,998
	Prepaid rent and other			1,241			671
	Assets held for sale			300			—

		Total current assets		11,928			13,263

PROPERTY AND EQUIPMENT, at cost:
	Leasehold improvements			32,548			32,701
	Equipment and fixtures			26,744			27,737
	Land			240			240

				59,532			60,678
	Less accumulated depreciation and amortization			(43,698	)		(43,227	)

		Net property and equipment		15,834			17,451

GOODWILL, net				64,115			64,115
TRADEMARKS AND OTHER INTANGIBLES, net of accumulated amortization of $8,137 and $7,936, respectively				10,366			10,619
DEFERRED LOAN COSTS, net of accumulated amortization of $12,214 and $11,516, respectively				4,600			4,292
AMOUNTS DUE FROM AFFILIATES				1,500			1,500
OTHER ASSETS				354			349

			$	108,697		$	111,589

See accompanying notes to condensed consolidated financial statements.

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS—(Continued)

(Unaudited)
(Dollars in thousands, except share data)

LIABILITIES AND STOCKHOLDER'S DEFICIT

			March 29, 2003			December 28, 2002
CURRENT LIABILITIES:
	Bank borrowings under line of credit		$	5,702		$	972
	Current portion of long-term debt			1,596			1,718
	Current portion of capital lease obligations			314			373
	Accounts payable			8,497			12,243
	Accrued liabilities			3,812			4,051
	Current portion of store closure reserve			678			678
	Accrued salaries, wages and benefits			3,907			3,946
	Accrued interest payable			4,675			1,099
	Sales taxes payable			623			983
	Amounts due to affiliates			2,487			6,575
	Current portion of deferred revenue			710			13

		Total current liabilities		33,001			32,651
LONG-TERM DEBT, net of current portion and discount				139,939			140,236
CAPITAL LEASE OBLIGATIONS, net of current portion				158			203
STORE CLOSURE RESERVE, net of current portion				1,025			1,232
DEFERRED REVENUE, net of current portion				4,853			3,869

		Total liabilities		178,976			178,191

STOCKHOLDER'S DEFICIT:
	Common stock, $.01 par value; 1,000 shares authorized, 400 shares outstanding			—			—
	Additional paid-in capital			64,575			64,575
	Deferred stock compensation			(447	)		(493	)
	Accumulated deficit			(134,276	)		(130,549	)
	Accumulated other comprehensive loss			(131	)		(135	)

		Total stockholder's deficit		(70,279	)		(66,602	)

COMMITMENTS AND CONTINGENCIES
			$	108,697		$	111,589

See accompanying notes to condensed consolidated financial statements.

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)
(Dollars in thousands)

			13 Weeks Ended
			March 29, 2003			March 30, 2002
						(see Note 1)
REVENUES:
	Net store and food sales		$	21,581		$	30,742
	Franchising and licensing			7,493			8,860
	Mail order			2,810			2,254
	Management fee revenue			2,600			3,290
	Other operating revenue			19			133

		Total revenues		34,503			45,279

OPERATING COSTS AND EXPENSES:
	Selling and store occupancy costs			14,262			19,261
	Cost of sales—store and food			5,077			7,393
	Franchising and licensing			2,215			2,564
	Mail order			2,076			1,619
	General and administrative			7,004			7,849
	Stock compensation expense			46			—
	Store closure provision			71			—
	Depreciation			1,562			2,425
	Amortization—intangibles			247			275
	Other operating (income) expense, net			(157	)		345

	Total operating costs and expenses			32,403			41,731

		Income from operations		2,100			3,548
Interest expense, net				(4,457	)		(4,417	)

Loss before provision for income taxes, minority interest and cumulative effect of accounting change				(2,357	)		(869	)
Provision for income taxes				(123	)		(78	)

Loss before minority interest and cumulative effect of accounting change				(2,480	)		(947	)
Minority interest				—			6

Loss before cumulative effect of accounting change				(2,480	)		(941	)
Loss from cumulative effect of accounting change				—			(39,111	)

		Net loss	$	(2,480	)	$	(40,052	)

COMPREHENSIVE LOSS:
	Net loss		$	(2,480	)	$	(40,052	)
	Foreign currency translation adjustment			4			(44	)

		Comprehensive loss	$	(2,476	)	$	(40,096	)

See accompanying notes to condensed consolidated financial statements.

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
(Dollars in thousands)

				13 Weeks Ended
				March 29, 2003			March 30, 2002
							(see Note 1)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(2,480	)	$	(40,052	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Loss from cumulative effect of accounting change			—			39,111
		Depreciation and amortization			1,809			2,700
		Amortization of deferred loan costs and accretion of loan discount			726			610
		Stock compensation expense			46			—
		(Gain) loss on disposition of assets			(173	)		337
		Minority interest			—			(6	)
		Changes in assets and liabilities:
			Accounts receivable		834			6
			Amounts due from franchisees and licensees		1,126			809
			Amounts due to/from affiliates		(5,369	)		(2,622	)
			Inventories		(331	)		279
			Prepaid rent and other		(570	)		(1,824	)
			Other assets		6			1,780
			Accounts payable		(3,746	)		(9,826	)
			Accrued liabilities		(239	)		(504	)
			Store closure reserve		(207	)		(559	)
			Accrued salaries, wages and benefits		(39	)		(72	)
			Accrued interest payable		3,576			3,599
			Sales taxes payable		(360	)		(375	)
			Deferred revenue		1,681			(257	)

			Net cash used in operating activities		(3,710	)		(6,866	)

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of property and equipment				(423	)		(1,158	)
	Proceeds from sale of property and equipment				346			1,898

			Net cash (used in) provided by investing activities		(77	)		740

CASH FLOWS FROM FINANCING ACTIVITIES:
	Borrowings under line of credit				4,730			4,509
	Payment of debt financing costs				(1,006	)		—
	Principal payments on long-term debt				(447	)		(390	)
	Principal payments on capital lease obligations				(104	)		(244	)

			Net cash provided by financing activities		3,173			3,875

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH					4			(44	)

NET DECREASE IN CASH AND CASH EQUIVALENTS					(610	)		(2,295	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD					2,667			3,503

CASH AND CASH EQUIVALENTS AT END OF PERIOD				$	2,057		$	1,208

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid for interest			$	154		$	217

	Cash paid for income taxes			$	196		$	71

See accompanying notes to condensed consolidated financial statements.

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by Mrs. Fields' Original Cookies, Inc. and subsidiaries ("Mrs. Fields" or the "Company") in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q and, accordingly, do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America. In the opinion of management, these condensed consolidated financial statements reflect all adjustments, which consist only of normal recurring adjustments, necessary to present fairly the financial position of Mrs. Fields as of March 29, 2003 and December 28, 2002, and the results of its operations and its cash flows for the periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 28, 2002 contained in Mrs. Fields' Annual Report on Form 10-K.

The results of operations for the 13 weeks ended March 29, 2003 are not necessarily indicative of the results that may be expected for the remainder of the fiscal year ending January 3, 2004. Loss per share information is not presented as Mrs. Fields is wholly owned by Mrs. Fields' Holding Company, Inc. ("Mrs. Fields' Holding") and, therefore, its shares are not publicly traded. Mrs. Fields' Holding is a wholly owned subsidiary of Mrs. Fields Famous Brands, Inc. ("MFFB").

The results of operations and cash flows for the 13 weeks ended March 30, 2002 have been restated to reflect the transitional provisions of the cumulative effect of a change in accounting principle. The Company completed its analysis of the impact of Statement of Financial Accounting Standards No. 142, ("SFAS 142") in the third quarter of 2002 and, in accordance with the requirements of SFAS 142, recorded the resultant cumulative effect of a change in accounting principle of $39.1 million effective as of the beginning of fiscal 2002.

(2) RECLASSIFICATIONS

Certain reclassifications have been made to the prior period's condensed consolidated financial statements to conform with the current period's presentation.

(3) RELATED PARTY TRANSACTIONS

The Company is party to various related party transactions with its parent company, Mrs. Fields' Holding, and with TCBY Holding Company, Inc., a wholly owned subsidiary of MFFB ("TCBY Holding"), and its subsidiaries (collectively, "TCBY"). The intercompany balance due to Mrs. Fields' Holding is principally the amount due under an Assignment and Assumption Agreement entered into on December 29, 2001 for the assignment of 20 Pretzel Time stores formerly owned and operated by Mrs. Fields' Holding.

Amounts receivable from TCBY represent amounts receivable under a management agreement, with the retention amount receivable classified as long-term. The amounts due to TCBY represent amounts due for excess royalties paid by TCBY under a license agreement to sell Mrs. Fields branded ice cream.

Amounts receivable from Riverport Equipment and Distribution Company, a subsidiary of TCBY ("Riverport"), are from the sale of equipment from the Company's closed stores.

Amounts due to MFFB represent amounts due under the Amended and Restated Tax Allocation Agreement among the Company, MFFB, Mrs. Fields' Holding, TCBY Holding and all of their respective subsidiaries.

Amounts due to/from affiliates as of March 29, 2003 and December 28, 2002 are as follows (in thousands):

		March 29, 2003		December 28, 2002
Amounts due from affiliates:
	Riverport	$	34	$	—
	TCBY—retention amount, long-term		1,500		1,500

		$	1,534	$	1,500

Amounts due to affiliates:
	Mrs. Fields' Holding—note payable	$	564	$	554
	Mrs. Fields' Holding		273		273
	Riverport		—		183
	TCBY		152		321
	MFFB—tax sharing		1,498		5,244

		$	2,487	$	6,575

(4) STORE CLOSURE RESERVE

The Company's management reviews the historical and projected operating performance of its stores on a periodic basis to identify under-performing stores for impairment of net property investment or for targeted closing. The Company's policy is to recognize an impairment loss for that portion of the net property investment determined to be impaired. Additionally, when a store is identified for targeted closing, the costs of closing the store are reserved. These costs consist primarily of estimated lease termination costs. Lease termination costs include both one-time settlement payments and continued contractual payments over time under the original lease agreements where no settlement can be reached with the landlord. As a result, although all stores targeted for closure may have been closed, the store closure reserve will continue to have a balance until all cash payments have been made. The Company does not accrue for future expected operating losses.

Management periodically reassesses the remaining store closure reserves based on all available relevant data. Reserves for closed stores that are settled on terms more favorable than were originally estimated and expensed through the store closure provision are reversed through the store closure provision in the statement of operations. As of March 29, 2003, the remaining store closure reserve was $1.7 million.

Consolidated Analysis

The following table presents a summary of the activity in the store closure reserve during the 13 weeks ended March 29, 2003 and March 30, 2002 (in thousands):

	Mrs. Fields, Inc. and Original Cookie Co						H&M						Pretzel Time						Great American					Pretzelmaker						Consolidated
	Business Combination and Subsequent Adjustments			Company Owned Stores Unrelated to Acquisition			Business Combination			Company Owned Stores Unrelated to Acquisition			Business Combination			Company Owned Stores Unrelated to Acquisition			Business Combination			Company Owned Stores Unrelated to Acquisition		Business Combination and Subsequent Adjustments			Company Owned Stores Unrelated to Acquisition			Business Combination and Subsequent Adjustments			Company Owned Stores Unrelated to Acquisition			Total Business Combinations and Company Owned Stores
Balance, December 28, 2002	$	376		$	849		$	240		$	2		$	23		$	25		$	348		$	—	$	47		$	—		$	1,034		$	876		$	1,910
Additional reserves for continuing company owned and franchised stores targeted for closure, for the 13 weeks ended March 29, 2003		—			31			—			—			—			56			—			—		—			—			—			87			87
Reversal during the 13 weeks ended March 29, 2003		(16	)		—			—			—			—			—			—			—		—			—			(16	)		—			(16	)
Utilization for the 13 weeks ended March 29, 2003		(84	)		(115	)		(12	)		—			(17	)		(25	)		(18	)		—		(7	)		—			(138	)		(140	)		(278	)

Balance, March 29, 2003	$	276		$	765		$	228		$	2		$	6		$	56		$	330		$	—	$	40		$	—		$	880		$	823		$	1,703

Balance, December 29, 2001	$	515		$	1,348		$	286		$	113		$	32		$	89		$	549		$	—	$	75		$	32		$	1,457		$	1,582		$	3,039
Utilization for the 13 weeks ended March 30, 2002		(121	)		(184	)		(12	)		(90	)		(5	)		—			(131	)		—		(8	)		(8	)		(277	)		(282	)		(559	)

Balance, March 30, 2002	$	394		$	1,164		$	274		$	23		$	27		$	89		$	418		$	—	$	67		$	24		$	1,180		$	1,300		$	2,480

(5) CREDIT FACILITY

On January 16, 2003, the Company entered into a Second Amended and Restated Loan and Security Agreement with Foothill Capital Corporation (the "Foothill Credit Facility"), pursuant to which the Company's former credit facility with LaSalle National Bank was replaced and all amounts outstanding under it were refinanced. The Foothill Credit Facility bears interest at the prime rate plus 1.75 percent. The Foothill Credit Facility also requires a monthly servicing fee of $5,000 and an anniversary fee of $200,000. The Foothill Credit Facility provides for $11.9 million of credit (assuming the Company satisfies certain borrowing base restrictions) comprised of a $9.9 million revolving line of credit for financing working capital and $2.0 million for letters of credit. The Foothill Credit Facility matures November 1, 2004 and is secured by substantially all of the assets of the Company.

(6) REPORTABLE SEGMENTS

Operating segments are components of the Company for which separate financial information is available that is evaluated regularly by management in deciding how to allocate resources and in assessing performance. This information is reported on the basis that it is used internally for evaluating segment performance. Mrs. Fields has four reportable operating segments; namely, company owned stores and related activity, franchising activity, licensing activity, and mail order activity. The segments are determined by revenue source: direct sales, royalties and license fees. The company owned stores segment consists of both cookie and pretzel stores owned and operated by Mrs. Fields along with sales of branded cookie dough to retailers. The franchising and licensing segments consist of cookie and pretzel stores, which are owned and operated by third parties who pay Mrs. Fields an initial franchise or license fee and monthly royalties based on a percentage of gross sales and other licensing activity not related to cookie or pretzel stores. The mail order segment includes sales generated from the Company's mail order gift catalog and web site. Sales and transfers between segments are eliminated in consolidation.

Mrs. Fields evaluates performance of each segment based on contribution margin. Contribution margin is computed as the difference between the revenues generated by a reportable segment and the selling and store occupancy costs and cost of sales related to that reportable segment. Contribution margin is used as a measure of the operating performance of an operating segment. Mrs. Fields does not allocate any revenue generated from the TCBY management fee, general and administrative expense, other income (expense), interest expense, depreciation and amortization or assets to its reportable operating segments. Mrs. Fields does not separate the costs incurred while performing activities for the TCBY Management Agreement from costs of operating Mrs. Fields, as most of Mrs. Fields' employees support both companies, therefore the activity of managing TCBY is not reported as a separate segment. Segment revenue and contribution margin are presented in the following table (in thousands):

	Company Owned Stores		Franchising		Licensing		Mail Order		Total
13 weeks ended March 29, 2003
Revenue	$	21,581	$	6,170	$	1,323	$	2,810	$	31,884
Contribution Margin		2,242		4,113		1,165		734		8,254
13 weeks ended March 30, 2002
Revenue	$	30,742	$	6,038	$	2,822	$	2,254	$	41,856
Contribution Margin		4,088		3,834		2,462		635		11,019

The reconciliation of contribution margin to net loss is as follows (in thousands):

		13 Weeks Ended
		March 29, 2003			March 30, 2002
Contribution margin		$	8,254		$	11,019
Management fee revenue			2,600			3,290
Other operating revenue			19			133
General and administrative expense			(7,004	)		(7,849	)
Stock compensation expense			(46	)		—
Store closure provision			(71	)		—
Other operating income (expense), net			157			(345	)
Minority interest			—			6
Interest expense, net			(4,457	)		(4,417	)
Depreciation and amortization			(1,809	)		(2,700	)
Provision for income taxes			(123	)		(78	)

Loss before cumulative effect of accounting change			(2,480	)		(941	)
Loss from cumulative effect of accounting change			—			(39,111	)

	Net loss	$	(2,480	)	$	(40,052	)

The assets of the Company primarily relate to company owned stores and related activity. Assets relating to franchising and licensing activity are primarily amounts due from franchisees and licensees and goodwill relating to franchising concepts. As of March 29, 2003 and December 28, 2002, amounts due from franchisees and licensees, net were $3.4 million and $4.5 million, respectively.

The Company has one licensee, Nonni's, that accounted for $1.0 million and $2.4 million, or 73.5 percent and 86.0 percent of the revenue of the licensing segment for the 13 weeks ended March 29, 2003 and March 30, 2002, respectively. The Company has one customer, Quill Corporation, that accounted for $575,000 and $445,000, or 20.5 percent and 19.7 percent of the revenue of the mail order business segment for the 13 weeks ended March 29, 2003 and March 30, 2002, respectively. There were no other customers or licensees that accounted for more than 10.0 percent of the Company's total revenue or any individual segment's revenue. At March 29, 2003, the Company had a receivable of $742,000 from Nonni's, which represented 14.9 percent of the Company's total combined receivables. Additionally, the Company had a receivable of $522,000 from International Multifoods Corporation, which represented 10.5 percent of the Company's total combined receivables. At March 29, 2003, the Company had deferred revenue of $1.9 million under the Nonni's licensing agreement. This amount will be recognized into income during fiscal years 2003 and 2004.

(7) TAX SHARING DISTRIBUTION

During the 13 weeks ended March 29, 2003, the Company recorded distributions of $1.2 million due to its ultimate parent, MFFB, under a tax sharing agreement that was entered into in September 2001. Mrs. Fields paid $5.0 million to MFFB in March 2003 relating to its obligations under the tax sharing agreement, which was accrued at December 28, 2002.

(8) SUBSEQUENT EVENT

On May 7, 2003, the Board of Directors of the Company accepted the resignation of Larry A. Hodges as President, Chief Executive Officer and Director of the Company. Mr. Hodges' resignation will be effective on May 14, 2003. Under terms of his employment agreement, Mr. Hodges will receive 28 months of salary as severance, the first year of which will be paid semi-monthly, and the balance in a lump sum at the end of the first year. These payments are not expected to be material to the Company's liquidity. The severance expense will be accrued in the quarter ending June 28, 2003.

Under terms of a stockholder agreement, there are put and call rights with respect to Mr. Hodges' MFFB common stock, and, if exercised, his options on MFFB common stock. Negotiations to resolve the outcome of arrangements with respect to such stock are not complete.

The Company's Board of Directors named Stephen Russo as the new President, Chief Executive Officer and Director of the Company effective on May 15, 2003.

(9) SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Company's obligation related to its $140.0 million total principal amount of Senior Notes due 2004 is fully and unconditionally guaranteed on a joint and several basis and on a senior basis by five of the Company's wholly owned subsidiaries (the "Guarantors"). These guarantees are general unsecured obligations of the Guarantors, rank senior in right of payment to all subordinated indebtedness of the Guarantors and rank pari passu in right of payment with all existing and future senior indebtedness of the Guarantors. There are no restrictions on the Company's ability to obtain cash dividends or other distributions of funds from the Guarantors, except those imposed by applicable law. The following supplemental financial information sets forth, on a condensed consolidating basis, balance sheets, statements of operations and statements of cash flows for Mrs. Fields' Original Cookies, Inc. (the "Parent Company"), Great American Cookie Company, Inc., Pretzelmaker, Inc., Pretzel Time, Inc., Mrs. Fields Gifts, Inc. and Mrs. Fields' Cookies Australia, which are Guarantors (collectively, the "Guarantor Subsidiaries") and Mrs. Fields' Cookies (Canada) Ltd., Pretzelmaker Canada, Sunshine Pretzel Time, Inc., Peachtree Pretzel Time, Inc., CMBC, Inc. and two partially owned subsidiaries (collectively, the "Non-guarantor Subsidiaries"). The Company has not presented separate financial statements and other disclosures concerning the Guarantor Subsidiaries because management has determined that such information is not material to investors.

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

AS OF MARCH 29, 2003

(Unaudited)
(Dollars in thousands)

			Parent Company			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	1,665		$	183	$	209		$	—		$	2,057
	Accounts receivable, net			1,157			443		—			—			1,600
	Amounts due from franchisees and licensees, net			1,319			2,034		14			—			3,367
	Amounts due from affiliates			44,992			—		—			(44,958	)		34
	Inventories			1,562			1,764		3			—			3,329
	Other current assets			1,314			221		6			—			1,541

		Total current assets		52,009			4,645		232			(44,958	)		11,928
PROPERTY AND EQUIPMENT, net				12,810			3,024		—			—			15,834
INTANGIBLES, net				19,225			55,256		—			—			74,481
INVESTMENT IN SUBSIDIARIES				16,810			—		—			(16,810	)		—
AMOUNTS DUE FROM AFFILIATES				1,500			—		—			—			1,500
OTHER ASSETS				4,943			11		—			—			4,954

			$	107,297		$	62,936	$	232		$	(61,768	)	$	108,697

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	1,907		$	3	$	—		$	—		$	1,910
	Accounts payable and bank borrowings			12,421			1,778		—			—			14,199
	Amounts due to affiliates			1,698			45,476		271			(44,958	)		2,487
	Accrued liabilities			13,152			1,211		42			—			14,405

		Total current liabilities		29,178			48,468		313			(44,958	)		33,001
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, net of current portion				140,082			15		—			—			140,097
STORE CLOSURE RESERVE, net of current portion				1,025			—		—			—			1,025
DEFERRED REVENUE, net of current portion				4,853			—		—			—			4,853
STOCKHOLDER'S EQUITY (DEFICIT)				(67,841	)		14,453		(81	)		(16,810	)		(70,279	)

			$	107,297		$	62,936	$	232		$	(61,768	)	$	108,697

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE 13 WEEKS ENDED MARCH 29, 2003

(Unaudited)
(Dollars in thousands)

				Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
	Net store and food sales			$	21,528		$	—		$	53		$	—		$	21,581
	Franchising and licensing				3,662			5,873			50			(2,092	)		7,493
	Mail order				—			2,810			—			—			2,810
	Management fee revenue				2,600			—			—			—			2,600
	Other operating revenue				19			—			—			—			19

		Total revenues			27,809			8,683			103			(2,092	)		34,503

OPERATING COSTS AND EXPENSES:
	Selling and store occupancy costs				15,755			—			45			(1,538	)		14,262
	Cost of sales—store and food				5,904			(10	)		10			(827	)		5,077
	Franchising and licensing				164			2,074			(23	)		—			2,215
	Mail order				—			2,076			—			—			2,076
	General and administrative				5,631			1,033			67			273			7,004
	Stock compensation expense				46			—			—			—			46
	Store closure provision				71			—			—			—			71
	Depreciation and amortization				1,583			226			—			—			1,809
	Other operating income				(157	)		—			—			—			(157	)

		Total operating costs and expenses			28,997			5,399			99			(2,092	)		32,403

			Income (loss) from operations		(1,188	)		3,284			4			—			2,100
Interest expense, net					(4,405	)		(52	)		—			—			(4,457	)

Income (loss) before provision for income taxes					(5,593	)		3,232			4						(2,357	)
Provision for income taxes					(65	)		(57	)		(1	)		—			(123	)

Net income (loss)				$	(5,658	)	$	3,175		$	3		$	—		$	(2,480	)

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE 13 WEEKS ENDED MARCH 29, 2003

(Unaudited)
(Dollars in thousands)

			Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations		Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			$	(3,984	)	$	203		$	71	$	—	$	(3,710	)

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of property and equipment			(423	)		—			—		—		(423	)
	Proceeds from sales of property and equipment			346			—			—		—		346

		Net cash provided by (used in) investing activities		(77	)		—			—		—		(77	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Principal payments on long-term debt and capital lease obligations			(551	)		—			—		—		(551	)
	Payment of debt financing costs			(1,006	)		—			—		—		(1,006	)
	Bank borrowings and drafts in transit			4,730			—			—		—		4,730

		Net cash provided by (used in) financing activities		3,173			—			—		—		3,173

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH				—			(21	)		25		—		4

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				(888	)		182			96		—		(610	)
CASH AND CASH EQUIVALENTS, beginning of period				2,553			1			113		—		2,667

CASH AND CASH EQUIVALENTS, end of period			$	1,665		$	183		$	209	$	—	$	2,057

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Interest paid		$	154		$	—		$	—	$	—	$	154

	Income taxes paid		$	196		$	—		$	—	$	—	$	196

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 28, 2002

(Unaudited)
(Dollars in thousands)

			Parent Company			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	2,553		$	1	$	113		$	—		$	2,667
	Accounts receivable, net			2,299			135		—			—			2,434
	Amounts due from franchisees and licensees, net			2,206			2,266		21			—			4,493
	Amounts due from affiliates, net			40,893			—		—			(40,893	)		—
	Inventories			2,412			583		3			—			2,998
	Other current assets			671			—		—			—			671

	Total current assets			51,034			2,985		137			(40,893	)		13,263
PROPERTY AND EQUIPMENT, net				15,941			1,510		—			—			17,451
INTANGIBLES, net				19,807			54,760		167			—			74,734
INVESTMENT IN SUBSIDIARIES				16,425			—		—			(16,425	)		—
AMOUNTS DUE FROM AFFILIATES				1,500			—		—			—			1,500
OTHER ASSETS				4,251			390		—			—			4,641

			$	108,958		$	59,645	$	304		$	(57,318	)	$	111,589

LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	2,089		$	2	$	—		$	—		$	2,091
	Accounts payable and borrowings under line of credit			12,399			814		2			—			13,215
	Amounts due to affiliates			1,655			44,754		1,059			(40,893	)		6,575
	Accrued liabilities			9,909			809		52			—			10,770

		Total current liabilities		26,052			46,379		1,113			(40,893	)		32,651
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, net of current portion				140,423			16		—			—			140,439
STORE CLOSURE RESERVE, net of current portion				1,232			—		—			—			1,232
DEFERRED REVENUE, net of current portion				3,869			—		—			—			3,869
STOCKHOLDER'S EQUITY (DEFICIT)				(62,618	)		13,250		(809	)		(16,425	)		(66,602	)

			$	108,958		$	59,645	$	304		$	(57,318	)	$	111,589

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE 13 WEEKS ENDED MARCH 30, 2002

(Unaudited)
(Dollars in thousands)

				Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
	Net store and food sales			$	30,685		$	—		$	57		$	—		$	30,742
	Franchising and licensing				2,629			9,311			74			(3,154	)		8,860
	Mail order				2,254			—			—			—			2,254
	Management fee revenue				3,290			—			—			—			3,290
	Other operating revenue				133			—			—			—			133

		Total revenues			38,991			9,311			131			(3,154	)		45,279

OPERATING COSTS AND EXPENSES:
	Selling and store occupancy costs				21,302			—			45			(2,086	)		19,261
	Cost of sales—store and food				7,388			(10	)		15			—			7,393
	Franchising and licensing				1,073			2,559			—			(1,068	)		2,564
	Mail order				1,619			—			—			—			1,619
	General and administrative				2,577			5,079			193			—			7,849
	Depreciation and amortization				2,283			378			39			—			2,700
	Other operating expenses, net				345			—			—			—			345

		Total operating costs and expenses			36,587			8,006			292			(3,154	)		41,731

			Income (loss) from operations		2,404			1,305			(161	)		—			3,548
	Interest expense, net				(4,357	)		(60	)		—			—			(4,417	)

	Income (loss) before provision for income taxes, minority interest and cumulative effect of accounting change				(1,953	)		1,245			(161	)		—			(869	)
PROVISION FOR INCOME TAXES					(78	)		—			—			—			(78	)

	Income (loss) before minority interest and cumulative effect of accounting change				(2,031	)		1,245			(161	)		—			(947	)
MINORITY INTEREST					6			—			—			—			6

	Income (loss) before cumulative effect of accounting change				(2,025	)		1,245			(161	)		—			(941	)
LOSS FROM CUMULATIVE EFFECT OF ACCOUNTING CHANGE					(39,111	)		—			—			—			(39,111	)

NET INCOME (LOSS)				$	(41,136	)	$	1,245		$	(161	)	$	—		$	(40,052	)

MRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE 13 WEEKS ENDED MARCH 30, 2002

(Unaudited)
(Dollars in thousands)

			Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			$	(6,303	)	$	(618	)	$	55		$	—	$	(6,866	)

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of property and equipment			(1,158	)		—			—			—		(1,158	)
	Proceeds from sales of property and equipment			1,846			52						—		1,898

		Net cash provided by (used in) Investing activities		688			52			—			—		740

CASH FLOWS FROM FINANCING ACTIVITIES:
	Principal payments on long-term debt and capital lease obligations			(617	)		(17	)		—			—		(634	)
	Bank overdraft and bank borrowings			4,509			—			—			—		4,509

		Net cash provided by (used in) financing activities		3,892			(17	)		—			—		3,875

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH				—			—			(44	)		—		(44	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				(1,723	)		(583	)		11			—		(2,295	)
CASH AND CASH EQUIVALENTS, beginning of period				3,441			(21	)		83			—		3,503

CASH AND CASH EQUIVALENTS, end of period			$	1,718		$	(604	)	$	94		$	—	$	1,208

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Interest paid		$	212		$	5		$	—		$	—	$	217
	Income taxes paid			71			—			—			—		71

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Information

This report contains forward-looking statements. Forward-looking statements include the words "may," "will," "estimate," "continue," "believe," "expect" or "anticipate" and other similar words. These forward-looking statements generally relate to our plans and objectives for future operations and are based upon management's reasonable estimates of future results or trends. Although the Company believes that the plans and objectives reflected in or suggested by such forward-looking statements are based upon assumptions that are reasonable, the Company may not achieve such plans or objectives. Actual results may differ materially from projected results due, but not limited, to unforeseen developments, including developments relating to the following:

•: the availability and adequacy of cash flow to satisfy obligations, including debt service on the senior notes and additional funds required for working capital,
•: the current negative stockholder's equity and the ability to solicit new franchisees,
•: the ability to sell company-owned stores to franchisees,
•: economic, competitive, demographic, business and other conditions in various markets,
•: the seasonal nature of operations,
•: actions taken or failed to be taken by third parties, including the Company's customers, suppliers, competitors and shareholders, as well as legislative, regulatory, judicial and other governmental authorities,
•: changes in business strategy, capital improvements or development plans or in personnel or their compensation,
•: performance by franchisees and licensees,
•: difficulties or delays in developing and introducing anticipated new products or failure of customers to accept new product offerings,
•: changes in consumer preferences and the Company's ability to adequately anticipate such changes,
•: changes in raw materials and employee labor costs,
•: the termination of, or inability to renew on favorable terms, material agreements,
•: changes in relationships with the Company's franchisees and licensees,
•: changes in customer traffic, and
•: acts of war or terrorist incidents.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report may not occur.

Overview

Mrs. Fields' Original Cookies, Inc. ("Mrs. Fields" or the "Company") is a wholly owned subsidiary of Mrs. Fields' Holding Company, Inc. ("Mrs. Fields' Holding"). Mrs. Fields' Holding is a wholly owned subsidiary of Mrs. Fields Famous Brands, Inc. ("MFFB"), which was established to combine Mrs. Fields' Holding and TCBY Holding Company, Inc. ("TCBY") under a common parent.

Mrs. Fields has ten wholly owned operating subsidiaries: Great American Cookie Company, Inc., Pretzel Time, Inc., Pretzelmaker, Inc., Mrs. Fields Gifts, Inc., Mrs. Fields Cookies Australia, Mrs. Fields Cookies (Canada) Ltd., Pretzelmaker Canada, Inc., Sunshine Pretzel Time, Inc., Peachtree Pretzel Time, Inc., CMBC, Inc. and two partially owned subsidiaries.

The Company operates, develops and franchises retail bakery stores and cafes, which sell freshly baked cookies, brownies, pretzels and other food products through four specialty branded concepts: Mrs. Fields Cookies, Great American Cookies, Pretzel Time and Pretzelmaker. In addition, the Company operates retail bakery stores that operate under two other branded concepts: Original Cookie Company and Hot Sam Pretzels.

During mid-to-late 2001 and early 2002, the Company opened 57 company-owned stores in Wal-Mart locations. Sales and operating performance at the Wal-Mart locations did not meet expectations. Based upon the operating trends of the Wal-Mart locations, and to eliminate future operational losses from these locations, management determined to close the Company's stores located within Wal-Mart. The Company negotiated a release from these locations from Wal-Mart effective September 28, 2002.

The Company's business follows seasonal trends and economic conditions and is also affected by climate and weather conditions, which in turn affect mall traffic. Because the Company's stores are heavily concentrated in shopping malls, the Company's sales performance is significantly dependent on the performance of those malls. The Company typically experiences its highest revenues in the fourth quarter of the calendar year due to the holiday season.

Results of Operations of Mrs. Fields

The following table sets forth, for the periods indicated, certain information relating to the operations of Mrs. Fields and percentage changes from period to period (in thousands, except other data).

				13 Weeks Ended
				March 29, 2003			March 30, 2002			% Change
Statement of Operations Data:
REVENUES:
	Net store and food sales			$	21,581		$	30,742		(29.8	)
	Franchising and licensing				7,493			8,860		(15.4	)
	Mail order				2,810			2,254		24.7
	Management fee revenue				2,600			3,290		(21.0	)
	Other operating revenue				19			133		(85.7	)

		Total revenues			34,503			45,279		(23.8	)

OPERATING COSTS AND EXPENSES:
	Selling and store occupancy costs				14,262			19,261		(26.0	)
	Cost of sales—stores and food				5,077			7,393		(31.3	)
	Franchising and licensing				2,215			2,564		(13.6	)
	Mail order				2,076			1,619		28.2
	General and administrative				7,004			7,849		(10.8	)
	Stock compensation expense				46			—		NM
	Store closure provision				71			—		NM
	Depreciation				1,562			2,425		(35.6	)
	Amortization—goodwill and intangibles				247			275		(10.2	)
	Other operating (income) expense, net				(157	)		345		NM

		Total operating costs and expenses			32,403			41,731		(22.4	)

			Income from operations		2,100			3,548		(40.8	)
Interest expense, net					(4,457	)		(4,417	)	0.9

Loss before provision for income taxes, minority interest and cumulative effect of accounting change					(2,357	)		(869	)	171.2
Provision for income taxes and minority interest					(123	)		(72	)	70.8

Loss before cumulative effect of accounting change					(2,480	)		(941	)	163.5
Loss from cumulative effect of accounting change					—			(39,111	)	NM

Net loss				$	(2,480	)	$	(40,052	)	(93.8	)

Cash flows from operating activities				$	(3,710	)	$	(6,866	)

Cash flows from investing activities				$	(77	)	$	740

Cash flows from financing activities				$	3,173		$	3,875

OTHER DATA:
	Number of Company owned store unit weeks(1)				4,131			5,316		(22.3	)
	Unit week average ("UWA") sales(1)			$	5,198		$	5,755		(9.7	)
	Year-over-year comparable store sales percent(1)				(7.1	)%		(1.8	)%
	Unit weeks—stores open more than 13 months				4,082			4,884		(16.4	)
	UWA sales—stores open more than 13 months			$	5,223		$	5,416		(3.6	)

(1): Unit weeks refer to the number of company owned stores open at the end of each fiscal week multiplied by number of weeks in the period. Unit week average sales is calculated by dividing the net store sales by the number of unit weeks. Year-over-year comparable store sales is calculated by comparing the change in company owned store sales for stores that have been open more than 13 months. Management uses unit weeks, unit week average sales and year-over-year comparable store sales information to measure operating performance at the company owned stores business segment and store level. Unit weeks, unit week average sales and year-over-year comparable store sales are not measures defined in accounting principles generally accepted in the United States of America and should not be considered in isolation or as a substitute for measures of performance in accordance with accounting principles generally accepted in the United States of America.

13 Weeks Ended March 29, 2003
Compared to the 13 Weeks Ended March 30, 2002

Income From Operations—Overview. Income from operations was $2.1 million for the 13 weeks ended March 29, 2003 compared to $3.5 million for the 13 weeks ended March 30, 2002, a decrease in income from operations of $1.4 million. This decrease in income from operations was primarily attributable to reductions in contribution from store operations of $1.8 million, contribution from franchising and licensing of $1.0 million; management fee income of $700,000 offset by an increase in contribution from mail order of $100,000 and reductions in general and administrative expense of $800,000, depreciation and amortization expense of $900,000 and other operating expense of $500,000.

Store contribution was $2.2 million for the 13 weeks ended March 29, 2003, a decrease of $1.8 million or 45.2 percent, from store contribution of $4.0 million for the 13 weeks ended March 30, 2002. The decrease was a result of a 7.1 percent decrease in same store comparable sales for the 2003 period from the 2002 period resulting in a decrease in contribution of approximately $1.1 million. Management believes the decrease in same store comparable sales was the result of reduced mall traffic due to the general economic instability, the war in Iraq, and Easter weekend occurring in March 2002 compared to April 2003. Additionally, the decrease in store sales resulted from approximately 1,185 fewer store weeks in the first quarter of 2003 compared to the first quarter of 2002 resulting in a decrease in contribution of approximately $700,000. Contribution as a percent of sales for the 13 weeks ended March 29, 2002 was 11.3 percent compared to 13.3 percent for the 13 weeks ended March 30, 2002. This decrease in contribution percentage was primarily attributable to lower per unit sales volume experienced during the 2003 period compared to the 2002 period resulting in limited leverage of fixed operating costs including rents, labor and other store expenses.

Franchising and licensing contribution was $5.3 million for the 13 weeks ended March 29, 2003, a decrease of $1.0 million or 16.2 percent, from franchising and licensing contribution of $6.3 million for the 13 weeks ended March 30, 2002. This decrease was principally due to the revenue recognized from a sale of recipes in January 2002 for $1.6 million and a decrease in initial franchise fees of $200,000 from the sale of corporate stores to franchisees. These decreases were offset by an increase in royalties and license fees earned for Mrs. Fields branded soft-baked cookies and candies sold in retail stores, ice cream and premium hot cocoa of $300,000 and an increase in franchise royalties of $500,000 as a result of corporate stores sold to franchisees in fiscal 2002.

Mail order contribution was $700,000 for the 13 weeks ended March 29, 2003, an increase of $100,000 or 15.6 percent, from $600,000 for the 13 weeks ended March 30, 2002. This increase was attributable to an increase in mail order sales of $600,000 offset by an increase in mail order product and operating expenses of $500,000.

Company Owned and Franchised or Licensed Store Activity. As of March 29, 2003, there were 311 company owned stores and 1,022 franchised or licensed stores in operation. The store activity for the 13 week period ended March 29, 2003 and the 13 weeks ended March 30, 2002 is summarized as follows:

	March 29, 2003				March 30, 2002
	Company owned		Franchised or Licensed		Company owned		Franchised or Licensed
Stores open as of the beginning of the fiscal year	330		1,038		474		1,017
Stores opened (including relocations and acquisitions)	2		20		—		20
Stores closed (including relocations)	(16	)	(41	)	(17	)	(35	)
Wal-Mart stores (closed) opened	—		—		9		(6	)
Stores sold to franchisees	(5	)	5		(14	)	14
Stores acquired from franchisees	—		—		3		(3	)

Stores open as of the end of the fiscal year	311		1,022		455		1,007

Net Store and Food Sales. Total net store and food sales, which includes sales from stores and sales of frozen cookie dough product to retail markets, were $21.6 million for the 13 weeks ended March 29, 2003, a decrease of $9.1 million or 29.8 percent, from $30.7 million for the 13 weeks ended March 30, 2002. Frozen cookie dough product sales were $100,000 for the 13 weeks ended March 29, 2003 and March 30, 2002.

Store sales were $21.5 million for the 13 weeks ended March 29, 2003, a decrease of $9.1 million or 29.8 percent, from $30.6 million for the 13 weeks ended March 30, 2002. The decrease in store sales was principally due to i) approximately 1,185 fewer store weeks (excluding Wal-Mart locations) for the 13 weeks ended March 29, 2003 compared to the same period in 2002 resulting in a sales shortfall from normalized unit week average ("UWA") of $6.5 million, ii) a 7.1 percent reduction or $1.6 million in same store sales, which management believes was a result of reduced mall traffic due to the continued economic instability, the war in Iraq and the Easter shopping weekend occurring in March 2002 compared to April 2003 and iii) a decrease in sales from the Company's Wal-Mart locations of $1.0 million for the 13 weeks ended March 29, 2003 compared to the same period in 2002 due to the closure of Wal-Mart locations in September 2002.

Cost of Sales—Store and Food. Cost of sales was $5.1 million for the 13 weeks ended March 29, 2003, a decrease of $2.3 million or 31.3 percent, from $7.4 million for the 13 weeks ended March 30, 2003.

Cost of sales, stores only, was $5.0 million for the 13 weeks ended March 29, 2003, a decrease of $2.3 million or 31.1 percent, from $7.3 million for the 13 weeks ended March 30, 2002. This decrease was due to fewer operating stores as a result of the closure of the Wal-Mart locations, approximately 1,185 fewer unit weeks and cost containment strategies implemented, including the closing of non-performing stores. Cost of sales, stores only, as a percent of sales was 23.3 percent and 23.7 percent for the 13 weeks ended March 29, 2003 and March 30, 2002, respectively. This decrease was the result of the closure of non-performing stores and the Wal-Mart locations in September 2002.

Selling and Store Occupancy Costs. Total selling and store occupancy costs were $14.3 million for the 13 weeks ended March 29, 2003, a decrease of $5.0 million or 26.0 percent, from $19.3 million for the 13 weeks ended March 30, 2002. This decrease was due to fewer stores opened during the 2003 13 week period compared to the 2002 13 week period. Selling and store occupancy costs increased from 62.9 percent of sales for the 2002 13 week period to 66.4 percent of sales for the 2003 13 week period.

Labor costs were 29.9 percent of sales and 30.6 percent sales for the 13 weeks ended March 29, 2003 and March 30, 2002, respectively. This decrease was primarily the result of tightening of staffing levels in conjunction with the lower sales volumes and the closure of the Wal-Mart locations.

Store occupancy costs were 25.9 percent of sales and 23.5 percent of sales for the 13 weeks ended March 29, 2003 and March 30, 2002, respectively. This increase in store occupancy costs was due to increases in base rents and the inability to obtain leverage on the rents as a result of lower store sales volumes.

Other store expense was 10.5 percent of sales and 8.9 percent of sales for the 13 weeks ended March 29, 2003 and March 30, 2002, respectively. This increase was due to increased costs for property and liability insurance, utilities and other costs for which the stores were unable to obtain leverage as a result of lower store sales volumes.

Franchising and Licensing Revenues. Franchising and licensing revenues were $7.5 million for the 13 weeks ended March 29, 2003, a decrease of $1.4 million or 15.4 percent, from $8.9 million for the 13 weeks ended March 30, 2002. Franchising revenues were $6.2 million for the 2003 13 week period, an increase of $200,000 or 3.3 percent, from $6.0 million for the 2002 13 week period. This increase was primarily due to an increase in franchise royalties of $500,000 offset by a decrease of initial franchise fees of $200,000 and lower batter sales of $100,000.

Licensing revenues were $1.3 million for the 13 weeks ended March 29, 2003, a decrease of $1.5 million or 53.1 percent, from $2.8 million for the 13 weeks ended March 30, 2002. This decrease was principally due to a decrease in licensing revenues from the sale of certain recipes under a licensing agreement with a national manufacturer of soft-baked cookies of $1.6 million and international license fees of $100,000. This decrease was offset by an increase in licensing royalties earned under licensing agreements for Mrs. Fields branded soft baked cookies, candies and premium hot cocoa of $300,000.

Franchising and Licensing Expenses. Franchising and licensing expenses were $2.2 million for the 13 weeks ended March 29, 2003, a decrease of $400,000 or 13.6 percent, from $2.6 million for the 13 weeks ended March 30, 2002. This decrease was principally due to reduction of $200,000 in operating and administrative costs of the Company's batter facility that sells cookie batter to the Company's Great American Cookie franchisees, and a $200,000 reduction in administrative costs associated with the Company's international and domestic licensing group.

Mail Order Revenues. Mail order revenues were $2.8 million for the 13 week period ended March 29, 2003, an increase $500,000 or 24.7 percent, from $2.3 million for the 13 week period ended March 30, 2002. Mail order revenues consist of sales through the Company's catalog and web-site. This increase in revenues was due to additional sales to affiliation with other gift catalogs, Internet sales, and increased sales to the airline industry.

Mail Order Expense. Mail order expenses were $2.1 million for the 13 weeks ended March 29, 2003, an increase of $500,000 or 28.2 percent, from $1.6 million for the 13 weeks ended March 30, 2002. This increase in expense was due to an increase in cost of sales of $300,000 associated with the increased sales volume, increased marketing and operating costs of $50,000, and increased labor costs of $60,000.

Management Fee Revenues. Management fee revenue was $2.6 million for the 13 weeks ended March 29, 2003, a decrease of $700,000 or 21.0 percent, from $3.3 million for the 13 weeks ended March 30, 2003. The decrease was due to a decrease in the management fee effective October 1, 2002 as a result of an amendment to the TCBY Management Agreement.

General and Administrative Expense. General and administrative expenses were $7.0 million for the 13 weeks ended March 29, 2003, a decrease of $800,000 or 10.8 percent, from $7.8 million for the 13 weeks ended March 30, 2002. General and administrative expenses include operations and supervision costs associated with store and franchise operations and general and administrative costs of the Company.

Operations and supervision expenses were $1.6 million for the 13 weeks ended March 29, 2003, a decrease of $200,000 or 11.1 percent, from $1.8 million for the 13 weeks ended March 30, 2002. This decrease was principally due to decreases in payroll and related costs resulting from the Company's staff reductions in late 2002.

General and administrative expenses were $5.4 million for the 13 weeks ended March 29, 2003, a decrease of $600,000 or 10.0 percent, from $6.0 million for 13 weeks ended March 30, 2002. This decrease in expenses was principally due to the Company's staff reductions in late 2002 resulting in cost savings of approximately $100,000, and reductions in marketing costs of $100,000, postage and supplies of $200,000 and other cost saving measures of $200,000.

Stock Compensation Expense. Stock compensation expense was $46,000 for the 13 weeks ended March 29, 2003.

Store Closure Provision. Store closure provision was $71,000 for the 13 weeks ended March 29, 2003. This was principally due to additional reserves established for lease guarantees on stores sold to franchisees.

Depreciation and Amortization Expense. Total depreciation and amortization expense was $1.8 million for the 13 weeks ended March 29, 2003, a decrease of $900,000 or 33.3 percent, from $2.7 million for the 13 weeks ended March 30, 2002. Depreciation expense was $1.6 million for 13 weeks ended March 29, 2003, a decrease of $800,000 or 33.3 percent, from $2.4 million for 13 weeks ended March 30, 2002. This decrease was principally due to fewer store assets as a result of store closures, the sale of corporate stores to franchisees and impairment of store assets recorded in fiscal 2002. Amortization expense was $247,000 for the 13 weeks ended March 29, 2003, a decrease of $28,000 or 10.2 percent, from $275,000 for the 13 weeks ended March 30, 2002

Other Operating Income, Net. Other operating income, net was $157,000 for the 13 weeks ended March 29, 2003, an increase of $502,000 from other operating expense, net of $345,000 for the 13 weeks ended March 30, 2002. The increase in other operating income was the result of a net gain on stores sold to franchisees in 2003 compared to a net loss on stores sold to franchisees in 2002.

Interest Expense, Net. Interest expense, net was $4.5 million for the 13 weeks ended March 29, 2003 and for the 13 weeks ended March 30, 2002. This comparability was primarily due to reduction in the Company's borrowings under capital leases and other note obligations offset by increased amortization of loan fees incurred for the replacement of the Company's credit facility.

Provision for Income Taxes. Provision for income taxes was $123,000 for the 13 week period ended March 29, 2003 compared to $78,000 for the 13 week period ended March 30, 2002. Provision for income taxes primarily consists of state and foreign income taxes.

Cumulative Effect of Accounting Change. The Company recorded a non-cash charge of approximately $39.1 million to reduce the carrying value of the goodwill associated with its company owned stores reporting unit in the 13 weeks ended March 20, 2002. Such charge is non-operational in nature and was recorded as a cumulative effect of an accounting change upon the mandatory adoption of SFAS No. 142 effective the beginning of fiscal 2002.

Liquidity and Capital Resources

General. The Company's principal sources of liquidity are cash flows from operating activities, cash on hand, available borrowings under its revolving credit facility and proceeds from the sale of company owned stores to franchisees. At March 29, 2003, the Company had $2.0 million of unrestricted cash and $4.2 million available under its $9.9 million revolving line of credit. The terms of the Company's indenture governing its outstanding senior notes limit the Company's ability to borrow under the credit facility to a total of $9.9 million, excluding letters of credit. At March 29, 2003, the Company had outstanding borrowings of $5.7 million and outstanding letters of credit totaling $1.6 million.

Management believes the Company's operations have been negatively impacted over the past two years by reduced mall traffic due to the recession during 2001 and the continued economic instability, the events of September 11, 2001 and the war in Iraq that commenced during the first quarter of 2003. The Company has incurred net losses from the date of its formation resulting in a stockholder's deficit of $70.3 million at March 29, 2003. The Company used $3.7 million of cash for operating activities during the 13 weeks ended March 29, 2003. The Company used $77,000 of cash for investing activities during the 13 weeks ended March 29, 2003, primarily for purchases of capital expenditures offset by proceeds from the sale of five company owned stores to franchisees. The Company generated $3.2 million of cash from financing activities during the 13 weeks ended March 29, 2003, principally from borrowings under the revolving line of credit offset by payments of debt financing costs and the Company's long-term debt and capital leases.

As of March 29, 2003, the Company had liquid assets (unrestricted cash and cash equivalents and accounts receivable) of $6.9 million, a decrease of $2.6 million from December 28, 2002 when liquid assets were $9.5 million. Current assets were $11.9 million at March 29, 2003, a decrease of $1.3 million from $13.3 million at December 28, 2002. This decrease was primarily the result of a decrease in cash and cash equivalents, accounts receivable and amounts due from franchisees and licensees offset by an increase in inventories, prepaid rent and other and assets held for sale. Long-term assets were $96.8 million at March 29, 2003, a decrease of $1.5 million from $98.3 million at December 28, 2002. This decrease was due to recurring depreciation of property and equipment and amortization of intangibles offset by an increase in deferred loan costs.

Current liabilities were $33.0 million at March 29, 2003, an increase of $300,000 from $32.7 million at December 28, 2002. This increase was primarily due to an increase in bank borrowings and accrued interest payable, which was partially offset by a decrease in accounts payable, accrued liabilities, amounts due to affiliates and sales tax payable.

The Company's working capital deficit of $21.1 million at March 29, 2003 increased by $1.7 million from a deficit of $19.4 million at December 28, 2002, for the reasons described above.

During 2003, the Company expects that its principal uses of cash will be for working capital, capital expenditures, store closure obligations, debt service requirements, payments to MFFB in accordance with the Tax Allocation Agreement and other general corporate purposes. In March 2003, Mrs. Fields paid MFFB $5.0 million relating to its obligations under of the Tax Allocation Agreement for fiscal 2002. During fiscal 2003, Mrs. Fields expects to pay MFFB approximately $3.5 million relating to its fiscal 2003 obligations under the Tax Allocation Agreement. The Company expects that its principal sources of cash will be provided by operating activities, proceeds from the sale of assets including the sale of company owned stores to new or existing franchisees and borrowings from the revolving line of credit. In March 2003, the Company received $2.0 million from a supplier as an advance to develop a beverage concept at company owned and franchised stores.

The Company is highly leveraged. In addition to its new credit facility with Foothill, the Company has $140 million of senior unsecured notes due on December 1, 2004 (the "Senior Notes"). These notes require semi-annual interest payments of approximately $7.1 million on June 1 and December 1. Due to borrowing restrictions under its senior note indenture and required maintenance of financial covenants under its new credit facility, the Company's ability to obtain additional debt financing is significantly limited. Therefore, the Company may sell additional company owned stores, defer capital expenditures and extend vendor payments to meet its debt service obligations. The Company believes that its sources of cash will be adequate to meet its cash requirements anticipated for the next 12 months. The Company is in compliance with its covenants underlying its Foothill Credit Facility and its Senior Notes at March 29, 2003. After giving effect to the severance expense for Mr. Hodges, which will be accrued in the quarter ending June 28, 2003, the Company may not be in compliance with the minimum trailing twelve month adjusted EBITDA financial covenant of the Foothill Credit Facility for the period ending June 28, 2003. The Company has commenced discussions with Foothill regarding alternative ways to address the issues raised by the severance expense. While there can be no assurances that the Company will be successful in its discussions with Foothill, management believes that Foothill and the Company will resolve this satisfactorily.

Mrs. Fields, Mrs. Fields' Holding, MFFB and TCBY have engaged an investment banking firm to act as financial advisors to assist in the evaluation of various financing alternatives, which may include, among other alternatives, the refinancing of the Senior Notes. There can be no assurances that the Company will be successful in refinancing the Senior Notes or consummating any other recommended financing alternatives.

Inflation

The impact of inflation on the operations of the business has not been significant in recent years. Most of the Company's leases contain escalation clauses. However, such leases are accounted for on a straight-line basis as required by accounting principles generally accepted in the United States of America, which minimizes fluctuations in operating income. In addition, some of our employees are paid hourly wages at the Federal minimum wage level. Minimum wage increases will negatively impact our payroll costs in the short term, but management believes such impact can be offset in the long term through lower staffing of store operations and, if necessary, through product price increases.

Critical Accounting Policies

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses in the Company's consolidated financial statements. Management has reviewed the accounting policies that it uses to prepare the Company's consolidated financial statements and believes that the following policies are the most important to the portrayal of the Company's financial condition and the results of its operations while requiring the use of judgments and estimates about the effects of matters that are inherently uncertain.

Related Party Transactions. Mrs. Fields has contractual relationships with various affiliates, primarily TCBY and Mrs. Fields' Holding, which are intended to be fair to the parties involved in the transactions and on terms similar to what could be negotiated with independent third parties. Sometimes the Company is required to negotiate the agreements for both sides of the transactions. Also, inherent in any contractual relationship is the interpretation of the intent of the agreement at a later time when unanticipated events occur. When situations like these occur, the Company attempts to objectively determine the terms of the transaction or interpret the intent of the agreement on a fair and independent basis. However, there is no guarantee that we will be successful in doing so. Individual affiliate transactions or a series of related transactions in excess of $1.0 million require a resolution by the Company's board of directors. Individual affiliate transactions or a series of related transactions in excess of $5.0 million require an "opinion of fairness" by an accounting, appraisal or investment banking firm.

Tax Sharing Agreement. The Company is subject to an Amended and Restated Tax Allocation Agreement with MFFB and Mrs. Fields' Holding (the "Tax Allocation Agreement"). The Tax Allocation Agreement is among MFFB, Mrs. Fields' Holding, TCBY Holding, and all of their respective subsidiaries (collectively, the "Group").

The Tax Allocation Agreement provides for compensation to the Company for any utilization of the Company's net operating loss and capital loss carryforwards that existed as of the date of the Mrs. Fields Reorganization. Pursuant to this agreement, on a quarterly basis, a hypothetical federal income tax liability is calculated for each subsidiary or subgroup of subsidiaries as if each subsidiary or subgroup of subsidiaries filed its own U.S. Federal Income Tax Return. The exact amount of any compensation to the Company or MFFB is contingent upon the length of time between the utilization date and the date of the Mrs. Fields Reorganization and is subject to additional calculations as defined in the Supplement to Tax Allocation Agreement.

Impairment of Goodwill and Intangible Assets. On an annual basis, the Company completes a valuation of the intangible assets associated with its various operating segments. To the extent that the fair value associated with the intangible asset is less than the recorded value, the Company writes down the value of the related intangible asset. The valuation of the intangible assets is affected by, among other things, the Company's business plan for the future, estimated results of future operations and the comparable companies that are used to value the Company's intangible assets. Changes in the business plan or operating results that are different than the projections used to develop the valuation of the intangible assets have an impact on the valuation of the intangible assets. Also, the decision to use one company versus another company as a benchmark may have an impact on the valuation of the intangible assets.

Impairment of Long-lived Assets. The Company reviews its long-lived assets for impairment when circumstances indicate that the book value of an asset may not be fully recovered by the undiscounted net cash flow generated over the remaining life of the related asset or group of assets. If the cash flows generated by the asset are not sufficient to recover the remaining book value of the asset, the Company is required to write down the value of the asset. In evaluating whether the asset will generate sufficient cash flow to recover its book value, the Company estimates the amount of cash flow that will be generated by the asset and the remaining life of the asset. In making our estimate, the Company considers the performance trends related to the asset, the likelihood that the trends will continue or change, both at the asset level as well as at the national economic level, and the length of time that we expect to retain the asset.

Allowance for Doubtful Accounts. The Company sells product to and receives royalties from its franchisees and sells product to other customers. Sometimes these franchisees and customers are unable or unwilling to pay for the products that they receive or royalties that they owe. Factors that affect the Company's ability to collect amounts that are due to Mrs. Fields include the financial strength of a franchisee or customer and its operations, the economic strength of the mall where the franchisee is located and the overall strength of the retail economy. Mrs. Fields is required to establish an estimated allowance for the amounts included in accounts receivable that it will not be able to collect in the future. To establish this allowance, it evaluates the customer's or franchisee's financial strength, payment history, reported sales and the availability of collateral to offset potential losses. If the assumptions that are used to determine the allowance for doubtful accounts change, Mrs. Fields may have to provide for a greater level of expense in future periods or to reverse amounts provided in prior periods.

Store Closure Reserve. The Company periodically closes under-performing stores, either individually or as part of an overall store closure plan. When a store is targeted for closure, the Company records a provision for costs that will be incurred in closing the store, which are predominately estimated lease termination costs. The costs include both settlement payments and continued contractual payments over time under original lease agreements. The amount of the provision is allocated between current amounts that are estimated to be paid within one year and long-term amounts that are estimated to be paid thereafter. The amount of the estimated reserve and the timing of the payments are affected by Mrs. Fields' ability to settle with the landlord for amounts less than the amount reserved and the timing of the payments agreed to in the settlement.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities," an interpretation of Accounting Research Bulletin No. 51, "Consolidated Financial Statements." FIN 46 addresses the consolidation of entities whose equity holders have either (a) not provided sufficient equity at risk to allow the entity to finance its own activities or (b) do not possess certain characteristics of a controlling financial interest. FIN 46 requires the consolidation of these entities, known as variable interest entities ("VIEs"), by the primary beneficiary of the entity. The primary beneficiary is the entity, if any, that is subject to a majority of the risk of loss from the VIE's activities, entitled to receive a majority of the VIE's residual returns, or both. FIN 46 applies immediately to variable interests in VIEs created or obtained after January 31, 2003. For variable interests in a VIE created before February 1, 2003, FIN 46 is applied to the VIE no later than the end of the first interim or annual reporting period beginning after June 15, 2003 (the quarter ending September 27, 2003 for the Company). FIN 46 requires certain disclosures in financial statements issued after January 31, 2003, if it is reasonably possible that the Company will consolidate or disclose information about VIEs when the interpretation becomes effective. We are currently evaluating what impact, if any, FIN 46 may have on the Company's consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

There have been no significant changes in market risks since the end of the Company's fiscal year ended December 28, 2002. For more information, please read the consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended December 28, 2002.

ITEM 4. CONTROLS AND PROCEDURES

Based on their evaluation, as of a date within 90 days of the filing of this Form 10-Q, the Company's Chief Executive Officer and Chief Financial Officer have concluded the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's reports filed or submitted under the Securities Exchange Act of 1934. There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of business, Mrs. Fields is involved in routine litigation, including franchise disputes. Mrs. Fields is not a party to any legal proceedings, which in the opinion of management of Mrs. Fields, after consultation with legal counsel, are material to Mrs. Fields' business, financial condition or results of operations beyond amounts provided for in the accompanying consolidated financial statements.

Mrs. Fields' stores and products are subject to regulation by numerous governmental authorities, including, without limitation, federal, state and local laws and regulations governing health, sanitation, environmental protection, safety and hiring and employment practices.

ITEM 5. OTHER INFORMATION

As disclosed elsewhere in this Quarterly Report on Form 10-Q and on a Current Report on Form 8-K filed on May 7, 2003, effective May 14, 2003, Larry A. Hodges, President, Chief Executive Officer and Director of the Company, resigned from the Company and Stephen Russo will succeed him, effective May 15, 2003, as President, Chief Executive Officer and Director of the Company. A copy of Mr. Russo's employment agreement with the Company was filed as an exhibit to the Current Report.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)	Exhibits
	10.1	Employment Agreement, dated as of May 7, 2003, by and among Mrs. Fields' Original Cookies, Inc., Mrs. Fields Famous Brands, Inc. and Stephen Russo, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 7, 2003 and incorporated herein by reference.
	99.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b)	Reports Filed On Form 8-K
	A Form 8-K was filed on February 4, 2003, in which it was reported that Mrs. Fields' Original Cookies, Inc. entered into a Second Amended and Restated Loan and Security Agreement with Foothill Capital Corporation.
	A Form 8-K was filed on April 8, 2003, in which it was reported that Mrs. Fields Famous Brands, Inc. acquired an aggregate of $27,950,000 principal amount of the 14% Senior Secured Discount Notes due 2005 of Mrs. Fields' Holding Company, Inc.
	A Form 8-K was filed on May 7, 2003, in which it was reported that, effective May 14, 2003, Larry A. Hodges, President, Chief Executive Officer and Director of the Company, will resign from the Company and Stephen Russo will succeed him, effective May 15, 2003, as President, Chief Executive Officer and Director of the Company.

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.

MRS. FIELDS' ORIGINAL COOKIES, INC.

/s/ LARRY A. HODGES Larry A. Hodges, President and Chief Executive Officer		May 13, 2003 Date
/s/ SANDRA M. BUFFA Sandra M. Buffa, Senior Vice President and Chief Financial Officer (Chief Financial and Principal Accounting Officer)		May 13, 2003 Date

SARBANES-OXLEY SECTION 302(a) CERTIFICATION

I, Larry A. Hodges, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Mrs. Fields' Original Cookies, Inc.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

May 13, 2003

/s/ LARRY A. HODGES

Larry A. Hodges
President and Chief Executive Officer

SARBANES-OXLEY SECTION 302(a) CERTIFICATION

I, Sandra M. Buffa, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Mrs. Fields' Original Cookies, Inc.;

2.

3.

4.

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

Date: May 13, 2003

/s/ SANDRA M. BUFFA

Sandra M. Buffa
Chief Financial Officer

EXHIBIT INDEX

Exhibit Number		Description of Document
10.1		Employment Agreement, dated as of May 7, 2003, by and among Mrs. Fields' Original Cookies, Inc., Mrs. Fields Famous Brands, Inc. and Stephen Russo, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 7, 2003 and incorporated herein by reference.
99.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.