Use these links to rapidly review the documentMRS. FIELDS' ORIGINAL COOKIES, INC. AND SUBSIDIARIES TABLE OF CONTENTS

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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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            

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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

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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.

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



|PART 1FINANCIAL INFORMATION
|----------------------------
|Item 1.                     
|                            
|                            
|                            
|                            
|Item 2.                     
|Item 3.                     
|Item 4.                     
|PART IIOTHER INFORMATION   
|Item 1.                     
|Item 5.                     
|Item 6.                     
|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             |       
|                                                                                                     | Accounts receivable, net of allowance for doubtful accounts of $140 and $124, respectively                        |                            |         | 1,600             |       
|                                                                                                     | Amounts due from franchisees and licensees, net of allowance for doubtful accounts of $973 and $953, respectively |                            |         | 3,367             |       
|                                                                                                     | Amounts due from affiliates                                                                                       |                            |         | 34                |       
|                                                                                                     | Inventories                                                                                                       |                            |         | 3,329             |       
|                                                                                                     | Prepaid rent and other                                                                                            |                            |         | 1,241             |       
|                                                                                                     | Assets held for sale                                                                                              |                            |         | 300               |       
|                                                                                                     |                                                                                                                   |                            |         |                   |       
|                                                                                                     |                                                                                                                   | Total current assets       |         |                   | 11,928
|                                                                                                     |                                                                                                                   |                            |         |                   |       
|PROPERTY AND EQUIPMENT, at cost:                                                                     |                                                                                                                   |                            |         |                   |       
|                                                                                                     | Leasehold improvements                                                                                            |                            |         | 32,548            |       
|                                                                                                     | Equipment and fixtures                                                                                            |                            |         | 26,744            |       
|                                                                                                     | Land                                                                                                              |                            |         | 240               |       
|                                                                                                     |                                                                                                                   |                            |         |                   |       
|                                                                                                     |                                                                                                                   |                            | 59,532  |                   |       
|                                                                                                     | Less accumulated depreciation and amortization                                                                    |                            |         | (43,698           | )     
|                                                                                                     |                                                                                                                   |                            |         |                   |       
|                                                                                                     |                                                                                                                   | Net property and equipment |         |                   | 15,834
|                                                                                                     |                                                                                                                   |                            |         |                   |       
|GOODWILL, net                                                                                        |                                                                                                                   |                            | 64,115  |                   |       
|TRADEMARKS AND OTHER INTANGIBLES, net of accumulated amortization of $8,137 and $7,936, respectively |                                                                                                                   |                            | 10,366  |                   |       
|DEFERRED LOAN COSTS, net of accumulated amortization of $12,214 and $11,516, respectively            |                                                                                                                   |                            | 4,600   |                   |       
|AMOUNTS DUE FROM AFFILIATES                                                                          |                                                                                                                   |                            | 1,500   |                   |       
|OTHER ASSETS                                                                                         |                                                                                                                   |                            | 354     |                   |       
|                                                                                                     |                                                                                                                   |                            |         |                   |       
|                                                                                                     |                                                                                                                   | $                          | 108,697 |                   | $     
|                                                                                                     |                                                                                                                   |                            |         |                   |       

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             |        
|                                                    | Current portion of long-term debt                                             |                             |         | 1,596             |        
|                                                    | Current portion of capital lease obligations                                  |                             |         | 314               |        
|                                                    | Accounts payable                                                              |                             |         | 8,497             |        
|                                                    | Accrued liabilities                                                           |                             |         | 3,812             |        
|                                                    | Current portion of store closure reserve                                      |                             |         | 678               |        
|                                                    | Accrued salaries, wages and benefits                                          |                             |         | 3,907             |        
|                                                    | Accrued interest payable                                                      |                             |         | 4,675             |        
|                                                    | Sales taxes payable                                                           |                             |         | 623               |        
|                                                    | Amounts due to affiliates                                                     |                             |         | 2,487             |        
|                                                    | Current portion of deferred revenue                                           |                             |         | 710               |        
|                                                    |                                                                               |                             |         |                   |        
|                                                    |                                                                               | Total current liabilities   |         |                   | 33,001 
|LONG-TERM DEBT, net of current portion and discount |                                                                               |                             | 139,939 |                   |        
|CAPITAL LEASE OBLIGATIONS, net of current portion   |                                                                               |                             | 158     |                   |        
|STORE CLOSURE RESERVE, net of current portion       |                                                                               |                             | 1,025   |                   |        
|DEFERRED REVENUE, net of current portion            |                                                                               |                             | 4,853   |                   |        
|                                                    |                                                                               |                             |         |                   |        
|                                                    |                                                                               | Total liabilities           |         |                   | 178,976
|                                                    |                                                                               |                             |         |                   |        
|STOCKHOLDER'S DEFICIT:                              |                                                                               |                             |         |                   |        
|                                                    | Common stock, $.01 par value; 1,000 shares authorized, 400 shares outstanding |                             |         |                  |        
|                                                    | Additional paid-in capital                                                    |                             |         | 64,575            |        
|                                                    | Deferred stock compensation                                                   |                             |         | (447              | )      
|                                                    | Accumulated deficit                                                           |                             |         | (134,276          | )      
|                                                    | Accumulated other comprehensive loss                                          |                             |         | (131              | )      
|                                                    |                                                                               |                             |         |                   |        
|                                                    |                                                                               | Total stockholder's deficit |         |                   | (70,279
|                                                    |                                                                               |                             |         |                   |        
|COMMITMENTS AND CONTINGENCIES                       |                                                                               |                             |         |                   |        
|                                                    |                                                                               | $                           | 108,697 |                   | $      
|                                                    |                                                                               |                             |         |                   |        

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         |       
|---------------------------------------------------------------------------------------------------- | --------------------------------------- | ---------------------- | ------
|
|
|REVENUES:                                                                                            |                                         |                        |       
|                                                                                                     | Net store and food sales                |                        | $     
|                                                                                                     | Franchising and licensing               |                        |       
|                                                                                                     | Mail order                              |                        |       
|                                                                                                     | Management fee revenue                  |                        |       
|                                                                                                     | Other operating revenue                 |                        |       
|                                                                                                     |                                         |                        |       
|                                                                                                     |                                         | Total revenues         |       
|                                                                                                     |                                         |                        |       
|OPERATING COSTS AND EXPENSES:                                                                        |                                         |                        |       
|                                                                                                     | Selling and store occupancy costs       |                        |       
|                                                                                                     | Cost of salesstore and food            |                        |       
|                                                                                                     | Franchising and licensing               |                        |       
|                                                                                                     | Mail order                              |                        |       
|                                                                                                     | General and administrative              |                        |       
|                                                                                                     | Stock compensation expense              |                        |       
|                                                                                                     | Store closure provision                 |                        |       
|                                                                                                     | Depreciation                            |                        |       
|                                                                                                     | Amortizationintangibles                |                        |       
|                                                                                                     | Other operating (income) expense, net   |                        |       
|                                                                                                     |                                         |                        |       
|                                                                                                     | Total operating costs and expenses      |                        |       
|                                                                                                     |                                         |                        |       
|                                                                                                     |                                         | Income from operations |       
|Interest expense, net                                                                                |                                         |                        | (4,457
|                                                                                                     |                                         |                        |       
|Loss before provision for income taxes, minority interest and cumulative effect of accounting change |                                         |                        | (2,357
|Provision for income taxes                                                                           |                                         |                        | (123  
|                                                                                                     |                                         |                        |       
|Loss before minority interest and cumulative effect of accounting change                             |                                         |                        | (2,480
|Minority interest                                                                                    |                                         |                        |      
|                                                                                                     |                                         |                        |       
|Loss before cumulative effect of accounting change                                                   |                                         |                        | (2,480
|Loss from cumulative effect of accounting change                                                     |                                         |                        |      
|                                                                                                     |                                         |                        |       
|                                                                                                     |                                         | Net loss               |       
|                                                                                                     |                                         |                        |       
|COMPREHENSIVE LOSS:                                                                                  |                                         |                        |       
|                                                                                                     | Net loss                                |                        | $     
|                                                                                                     | Foreign currency translation adjustment |                        |       
|                                                                                                     |                                         |                        |       
|                                                                                                     |                                         | Comprehensive loss     |       
|                                                                                                     |                                         |                        |       

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                                                     |                                                    
|------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------------------ | ---------------------------------------------------
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                                                                             |                                                                    |                                                    
|                                                  | Net loss                                                                    |                                                                    | $                                                  
|                                                  | Adjustments to reconcile net loss to net cash used in operating activities: |                                                                    |                                                    
|                                                  |                                                                             | Loss from cumulative effect of accounting change                   |                                                    
|                                                  |                                                                             | Depreciation and amortization                                      |                                                    
|                                                  |                                                                             | Amortization of deferred loan costs and accretion of loan discount |                                                    
|                                                  |                                                                             | Stock compensation expense                                         |                                                    
|                                                  |                                                                             | (Gain) loss on disposition of assets                               |                                                    
|                                                  |                                                                             | Minority interest                                                  |                                                    
|                                                  |                                                                             | Changes in assets and liabilities:                                 |                                                    
|                                                  |                                                                             |                                                                    | Accounts receivable                                
|                                                  |                                                                             |                                                                    | Amounts due from franchisees and licensees         
|                                                  |                                                                             |                                                                    | Amounts due to/from affiliates                     
|                                                  |                                                                             |                                                                    | Inventories                                        
|                                                  |                                                                             |                                                                    | Prepaid rent and other                             
|                                                  |                                                                             |                                                                    | Other assets                                       
|                                                  |                                                                             |                                                                    | Accounts payable                                   
|                                                  |                                                                             |                                                                    | Accrued liabilities                                
|                                                  |                                                                             |                                                                    | Store closure reserve                              
|                                                  |                                                                             |                                                                    | Accrued salaries, wages and benefits               
|                                                  |                                                                             |                                                                    | Accrued interest payable                           
|                                                  |                                                                             |                                                                    | Sales taxes payable                                
|                                                  |                                                                             |                                                                    | Deferred revenue                                   
|                                                  |                                                                             |                                                                    |                                                    
|                                                  |                                                                             |                                                                    | Net cash used in operating activities              
|                                                  |                                                                             |                                                                    |                                                    
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                                                             |                                                                    |                                                    
|                                                  | Purchase of property and equipment                                          |                                                                    |                                                    
|                                                  | Proceeds from sale of property and equipment                                |                                                                    |                                                    
|                                                  |                                                                             |                                                                    |                                                    
|                                                  |                                                                             |                                                                    | Net cash (used in) provided by investing activities
|                                                  |                                                                             |                                                                    |                                                    
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                                                             |                                                                    |                                                    
|                                                  | Borrowings under line of credit                                             |                                                                    |                                                    
|                                                  | Payment of debt financing costs                                             |                                                                    |                                                    
|                                                  | Principal payments on long-term debt                                        |                                                                    |                                                    
|                                                  | Principal payments on capital lease obligations                             |                                                                    |                                                    
|                                                  |                                                                             |                                                                    |                                                    
|                                                  |                                                                             |                                                                    | Net cash provided by financing activities          
|                                                  |                                                                             |                                                                    |                                                    
|EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH   |                                                                             |                                                                    | 4                                                  
|                                                  |                                                                             |                                                                    |                                                    
|NET DECREASE IN CASH AND CASH EQUIVALENTS         |                                                                             |                                                                    | (610                                               
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD  |                                                                             |                                                                    | 2,667                                              
|                                                  |                                                                             |                                                                    |                                                    
|CASH AND CASH EQUIVALENTS AT END OF PERIOD        |                                                                             | $                                                                  | 2,057                                              
|                                                  |                                                                             |                                                                    |                                                    
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                                                             |                                                                    |                                                    
|                                                  | Cash paid for interest                                                      |                                                                    | $                                                  
|                                                  |                                                                             |                                                                    |                                                    
|                                                  | Cash paid for income taxes                                                  |                                                                    | $                                                  
|                                                  |                                                                             |                                                                    |                                                    

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,
2002Amounts due from affiliates:Riverport

$
34

$
TCBYretention amount, long-term


1,500


1,500$
1,534

$
1,500Amounts due to affiliates:Mrs. Fields' Holdingnote payable

$
564

$
554Mrs. Fields' Holding


273


273Riverport





183TCBY


152


321MFFB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.





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 |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ---- | --- | - | ------------ | - | -------------- | --- | ------------ | - | ------------ | -
|
|Balance, December 28, 2002                                                                                                         |  | $                                        | 376  |     | $ | 849          |   | $              | 240 |              | $ | 2            |  
|Additional reserves for continuing company owned and franchised stores targeted for closure, for the 13 weeks ended March 29, 2003 |  |                                          |     |     |   | 31           |   |                |    |              |   |             |  
|Reversal during the 13 weeks ended March 29, 2003                                                                                  |  |                                          | (16  | )   |   |             |   |                |    |              |   |             |  
|Utilization for the 13 weeks ended March 29, 2003                                                                                  |  |                                          | (84  | )   |   | (115         | ) |                | (12 | )            |   |             |  
|                                                                                                                                   |  |                                          |      |     |   |              |   |                |     |              |   |              |  
|Balance, March 29, 2003                                                                                                            |  | $                                        | 276  |     | $ | 765          |   | $              | 228 |              | $ | 2            |  
|                                                                                                                                   |  |                                          |      |     |   |              |   |                |     |              |   |              |  
|Balance, December 29, 2001                                                                                                         |  | $                                        | 515  |     | $ | 1,348        |   | $              | 286 |              | $ | 113          |  
|Utilization for the 13 weeks ended March 30, 2002                                                                                  |  |                                          | (121 | )   |   | (184         | ) |                | (12 | )            |   | (90          | )
|                                                                                                                                   |  |                                          |      |     |   |              |   |                |     |              |   |              |  
|Balance, March 30, 2002                                                                                                            |  | $                                        | 394  |     | $ | 1,164        |   | $              | 274 |              | $ | 23           |  
|                                                                                                                                   |  |                                          |      |     |   |              |   |                |     |              |   |              |  



(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 |      
|Contribution Margin           |  |                      | 2,242  |             |   | 4,113     |  |            | 1,165 |      
|13 weeks ended March 30, 2002 |  |                      |        |             |   |           |  |            |       |      
|Revenue                       |  | $                    | 30,742 |             | $ | 6,038     |  | $          | 2,822 |      
|Contribution Margin           |  |                      | 4,088  |             |   | 3,834     |  |            | 2,462 |      



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

13 Weeks EndedMarch 29, 2003

March 30, 2002Contribution margin

$
8,254

$
11,019Management fee revenue


2,600


3,290Other operating revenue


19


133General and administrative expense


(7,004
)

(7,849
)Stock compensation expense


(46
)

Store closure provision


(71
)

Other operating income (expense), net


157


(345
)Minority interest





6Interest 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 rankpari passuin 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          |    
|                                                                     | Accounts receivable, net                                        |                           |         | 1,157                  |        |                             | 443    |              |     |             |    
|                                                                     | Amounts due from franchisees and licensees, net                 |                           |         | 1,319                  |        |                             | 2,034  |              |     | 14           |    
|                                                                     | Amounts due from affiliates                                     |                           |         | 44,992                 |        |                             |       |              |     |             |    
|                                                                     | Inventories                                                     |                           |         | 1,562                  |        |                             | 1,764  |              |     | 3            |    
|                                                                     | Other current assets                                            |                           |         | 1,314                  |        |                             | 221    |              |     | 6            |    
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |     |              |    
|                                                                     |                                                                 | Total current assets      |         |                        | 52,009 |                             |        | 4,645        |     |              | 232
|PROPERTY AND EQUIPMENT, net                                          |                                                                 |                           | 12,810  |                        |        | 3,024                       |        |              |    |              |    
|INTANGIBLES, net                                                     |                                                                 |                           | 19,225  |                        |        | 55,256                      |        |              |    |              |    
|INVESTMENT IN SUBSIDIARIES                                           |                                                                 |                           | 16,810  |                        |        |                            |        |              |    |              |    
|AMOUNTS DUE FROM AFFILIATES                                          |                                                                 |                           | 1,500   |                        |        |                            |        |              |    |              |    
|OTHER ASSETS                                                         |                                                                 |                           | 4,943   |                        |        | 11                          |        |              |    |              |    
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |     |              |    
|                                                                     |                                                                 | $                         | 107,297 |                        | $      | 62,936                      |        | $            | 232 |              | $  
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |     |              |    
|LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)                       |                                                                 |                           |         |                        |        |                             |        |              |     |              |    
|CURRENT LIABILITIES:                                                 |                                                                 |                           |         |                        |        |                             |        |              |     |              |    
|                                                                     | Current portion of long-term debt and capital lease obligations |                           | $       | 1,907                  |        | $                           | 3      |              | $   |             |    
|                                                                     | Accounts payable and bank borrowings                            |                           |         | 12,421                 |        |                             | 1,778  |              |     |             |    
|                                                                     | Amounts due to affiliates                                       |                           |         | 1,698                  |        |                             | 45,476 |              |     | 271          |    
|                                                                     | Accrued liabilities                                             |                           |         | 13,152                 |        |                             | 1,211  |              |     | 42           |    
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |     |              |    
|                                                                     |                                                                 | Total current liabilities |         |                        | 29,178 |                             |        | 48,468       |     |              | 313
|LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, net of current portion |                                                                 |                           | 140,082 |                        |        | 15                          |        |              |    |              |    
|STORE CLOSURE RESERVE, net of current portion                        |                                                                 |                           | 1,025   |                        |        |                            |        |              |    |              |    
|DEFERRED REVENUE, net of current portion                             |                                                                 |                           | 4,853   |                        |        |                            |        |              |    |              |    
|STOCKHOLDER'S EQUITY (DEFICIT)                                       |                                                                 |                           | (67,841 | )                      |        | 14,453                      |        |              | (81 | )            |    
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |     |              |    
|                                                                     |                                                                 | $                         | 107,297 |                        | $      | 62,936                      |        | $            | 232 |              | $  
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |     |              |    





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           |    
|                                                | Franchising and licensing         |                                    |                               | 3,662                  |        |                             | 5,873 |              |       | 50           |    
|                                                | Mail order                        |                                    |                               |                       |        |                             | 2,810 |              |       |             |    
|                                                | Management fee revenue            |                                    |                               | 2,600                  |        |                             |      |              |       |             |    
|                                                | Other operating revenue           |                                    |                               | 19                     |        |                             |      |              |       |             |    
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                |                                   | Total revenues                     |                               |                        | 27,809 |                             |       | 8,683        |       |              | 103
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|OPERATING COSTS AND EXPENSES:                   |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                | Selling and store occupancy costs |                                    |                               | 15,755                 |        |                             |      |              |       | 45           |    
|                                                | Cost of salesstore and food      |                                    |                               | 5,904                  |        |                             | (10   | )            |       | 10           |    
|                                                | Franchising and licensing         |                                    |                               | 164                    |        |                             | 2,074 |              |       | (23          | )  
|                                                | Mail order                        |                                    |                               |                       |        |                             | 2,076 |              |       |             |    
|                                                | General and administrative        |                                    |                               | 5,631                  |        |                             | 1,033 |              |       | 67           |    
|                                                | Stock compensation expense        |                                    |                               | 46                     |        |                             |      |              |       |             |    
|                                                | Store closure provision           |                                    |                               | 71                     |        |                             |      |              |       |             |    
|                                                | Depreciation and amortization     |                                    |                               | 1,583                  |        |                             | 226   |              |       |             |    
|                                                | Other operating income            |                                    |                               | (157                   | )      |                             |      |              |       |             |    
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                |                                   | Total operating costs and expenses |                               |                        | 28,997 |                             |       | 5,399        |       |              | 99 
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                |                                   |                                    | Income (loss) from operations |                        |        | (1,188                      | )     |              | 3,284 |              |    
|Interest expense, net                           |                                   |                                    | (4,405                        | )                      |        | (52                         | )     |              |      |              |    
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|Income (loss) before provision for income taxes |                                   |                                    | (5,593                        | )                      |        | 3,232                       |       |              | 4     |              |    
|Provision for income taxes                      |                                   |                                    | (65                           | )                      |        | (57                         | )     |              | (1    | )            |    
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    
|Net income (loss)                               |                                   | $                                  | (5,658                        | )                      | $      | 3,175                       |       | $            | 3     |              | $  
|                                                |                                   |                                    |                               |                        |        |                             |       |              |       |              |    





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  |              | $
|                                                     |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|                                                     | Purchase of property and equipment                                 |                                                     |        | (423                   | )     |                             |  |              |     |             |  
|                                                     | Proceeds from sales of property and equipment                      |                                                     |        | 346                    |       |                             |  |              |     |             |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|                                                     |                                                                    | Net cash provided by (used in) investing activities |        |                        | (77   | )                           |   |             |     |              | 
|                                                     |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|                                                     | Principal payments on long-term debt and capital lease obligations |                                                     |        | (551                   | )     |                             |  |              |     |             |  
|                                                     | Payment of debt financing costs                                    |                                                     |        | (1,006                 | )     |                             |  |              |     |             |  
|                                                     | Bank borrowings and drafts in transit                              |                                                     |        | 4,730                  |       |                             |  |              |     |             |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|                                                     |                                                                    | Net cash provided by (used in) financing activities |        |                        | 3,173 |                             |   |             |     |              | 
|                                                     |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH      |                                                                    |                                                     |       |                        |       | (21                         | ) |              | 25  |              |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                    |                                                     | (888   | )                      |       | 182                         |   |              | 96  |              |  
|CASH AND CASH EQUIVALENTS, beginning of period       |                                                                    |                                                     | 2,553  |                        |       | 1                           |   |              | 113 |              |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|CASH AND CASH EQUIVALENTS, end of period             |                                                                    | $                                                   | 1,665  |                        | $     | 183                         |   | $            | 209 |              | $
|                                                     |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|                                                     | Interest paid                                                      |                                                     | $      | 154                    |       | $                           |  |              | $   |             |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |   |              |     |              |  
|                                                     | Income taxes paid                                                  |                                                     | $      | 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          |      
|                                                                     | Accounts receivable, net                                        |                           |         | 2,299                  |        |                             | 135    |              |      |             |      
|                                                                     | Amounts due from franchisees and licensees, net                 |                           |         | 2,206                  |        |                             | 2,266  |              |      | 21           |      
|                                                                     | Amounts due from affiliates, net                                |                           |         | 40,893                 |        |                             |       |              |      |             |      
|                                                                     | Inventories                                                     |                           |         | 2,412                  |        |                             | 583    |              |      | 3            |      
|                                                                     | Other current assets                                            |                           |         | 671                    |        |                             |       |              |      |             |      
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     | Total current assets                                            |                           |         | 51,034                 |        |                             | 2,985  |              |      | 137          |      
|PROPERTY AND EQUIPMENT, net                                          |                                                                 |                           | 15,941  |                        |        | 1,510                       |        |              |     |              |      
|INTANGIBLES, net                                                     |                                                                 |                           | 19,807  |                        |        | 54,760                      |        |              | 167  |              |      
|INVESTMENT IN SUBSIDIARIES                                           |                                                                 |                           | 16,425  |                        |        |                            |        |              |     |              |      
|AMOUNTS DUE FROM AFFILIATES                                          |                                                                 |                           | 1,500   |                        |        |                            |        |              |     |              |      
|OTHER ASSETS                                                         |                                                                 |                           | 4,251   |                        |        | 390                         |        |              |     |              |      
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     |                                                                 | $                         | 108,958 |                        | $      | 59,645                      |        | $            | 304  |              | $    
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|LIABILITIES AND STOCKHOLDER'S DEFICIT                                |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|CURRENT LIABILITIES:                                                 |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     | Current portion of long-term debt and capital lease obligations |                           | $       | 2,089                  |        | $                           | 2      |              | $    |             |      
|                                                                     | Accounts payable and borrowings under line of credit            |                           |         | 12,399                 |        |                             | 814    |              |      | 2            |      
|                                                                     | Amounts due to affiliates                                       |                           |         | 1,655                  |        |                             | 44,754 |              |      | 1,059        |      
|                                                                     | Accrued liabilities                                             |                           |         | 9,909                  |        |                             | 809    |              |      | 52           |      
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     |                                                                 | Total current liabilities |         |                        | 26,052 |                             |        | 46,379       |      |              | 1,113
|LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, net of current portion |                                                                 |                           | 140,423 |                        |        | 16                          |        |              |     |              |      
|STORE CLOSURE RESERVE, net of current portion                        |                                                                 |                           | 1,232   |                        |        |                            |        |              |     |              |      
|DEFERRED REVENUE, net of current portion                             |                                                                 |                           | 3,869   |                        |        |                            |        |              |     |              |      
|STOCKHOLDER'S EQUITY (DEFICIT)                                       |                                                                 |                           | (62,618 | )                      |        | 13,250                      |        |              | (809 | )            |      
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      
|                                                                     |                                                                 | $                         | 108,958 |                        | $      | 59,645                      |        | $            | 304  |              | $    
|                                                                     |                                                                 |                           |         |                        |        |                             |        |              |      |              |      





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           |    
|                                                 | Franchising and licensing                                                                                     |                                    |                               | 2,629                  |        |                             | 9,311 |              |       | 74           |    
|                                                 | Mail order                                                                                                    |                                    |                               | 2,254                  |        |                             |      |              |       |             |    
|                                                 | Management fee revenue                                                                                        |                                    |                               | 3,290                  |        |                             |      |              |       |             |    
|                                                 | Other operating revenue                                                                                       |                                    |                               | 133                    |        |                             |      |              |       |             |    
|                                                 |                                                                                                               |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                 |                                                                                                               | Total revenues                     |                               |                        | 38,991 |                             |       | 9,311        |       |              | 131
|                                                 |                                                                                                               |                                    |                               |                        |        |                             |       |              |       |              |    
|OPERATING COSTS AND EXPENSES:                    |                                                                                                               |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                 | Selling and store occupancy costs                                                                             |                                    |                               | 21,302                 |        |                             |      |              |       | 45           |    
|                                                 | Cost of salesstore and food                                                                                  |                                    |                               | 7,388                  |        |                             | (10   | )            |       | 15           |    
|                                                 | Franchising and licensing                                                                                     |                                    |                               | 1,073                  |        |                             | 2,559 |              |       |             |    
|                                                 | Mail order                                                                                                    |                                    |                               | 1,619                  |        |                             |      |              |       |             |    
|                                                 | General and administrative                                                                                    |                                    |                               | 2,577                  |        |                             | 5,079 |              |       | 193          |    
|                                                 | Depreciation and amortization                                                                                 |                                    |                               | 2,283                  |        |                             | 378   |              |       | 39           |    
|                                                 | Other operating expenses, net                                                                                 |                                    |                               | 345                    |        |                             |      |              |       |             |    
|                                                 |                                                                                                               |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                 |                                                                                                               | Total operating costs and expenses |                               |                        | 36,587 |                             |       | 8,006        |       |              | 292
|                                                 |                                                                                                               |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                 |                                                                                                               |                                    | Income (loss) from operations |                        |        | 2,404                       |       |              | 1,305 |              |    
|                                                 | Interest expense, net                                                                                         |                                    |                               | (4,357                 | )      |                             | (60   | )            |       |             |    
|                                                 |                                                                                                               |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                 | Income (loss) before provision for income taxes, minority interest and cumulative effect of accounting change |                                    |                               | (1,953                 | )      |                             | 1,245 |              |       | (161         | )  
|PROVISION FOR INCOME TAXES                       |                                                                                                               |                                    | (78                           | )                      |        |                            |       |              |      |              |    
|                                                 |                                                                                                               |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                 | Income (loss) before minority interest and cumulative effect of accounting change                             |                                    |                               | (2,031                 | )      |                             | 1,245 |              |       | (161         | )  
|MINORITY INTEREST                                |                                                                                                               |                                    | 6                             |                        |        |                            |       |              |      |              |    
|                                                 |                                                                                                               |                                    |                               |                        |        |                             |       |              |       |              |    
|                                                 | Income (loss) before cumulative effect of accounting change                                                   |                                    |                               | (2,025                 | )      |                             | 1,245 |              |       | (161         | )  
|LOSS FROM CUMULATIVE EFFECT OF ACCOUNTING CHANGE |                                                                                                               |                                    | (39,111                       | )                      |        |                            |       |              |      |              |    
|                                                 |                                                                                                               |                                    |                               |                        |        |                             |       |              |       |              |    
|NET INCOME (LOSS)                                |                                                                                                               | $                                  | (41,136                       | )                      | $      | 1,245                       |       | $            | (161  | )            | $  
|                                                 |                                                                                                               |                                    |                               |                        |        |                             |       |              |       |              |    





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  |              | $
|                                                     |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|                                                     | Purchase of property and equipment                                 |                                                     |        | (1,158                 | )     |                             |    |              |     |             |  
|                                                     | Proceeds from sales of property and equipment                      |                                                     |        | 1,846                  |       |                             | 52  |              |     |              |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|                                                     |                                                                    | Net cash provided by (used in) Investing activities |        |                        | 688   |                             |     | 52           |     |              | 
|                                                     |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|                                                     | Principal payments on long-term debt and capital lease obligations |                                                     |        | (617                   | )     |                             | (17 | )            |     |             |  
|                                                     | Bank overdraft and bank borrowings                                 |                                                     |        | 4,509                  |       |                             |    |              |     |             |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|                                                     |                                                                    | Net cash provided by (used in) financing activities |        |                        | 3,892 |                             |     | (17          | )   |              | 
|                                                     |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH      |                                                                    |                                                     |       |                        |       |                            |     |              | (44 | )            |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                    |                                                     | (1,723 | )                      |       | (583                        | )   |              | 11  |              |  
|CASH AND CASH EQUIVALENTS, beginning of period       |                                                                    |                                                     | 3,441  |                        |       | (21                         | )   |              | 83  |              |  
|                                                     |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|CASH AND CASH EQUIVALENTS, end of period             |                                                                    | $                                                   | 1,718  |                        | $     | (604                        | )   | $            | 94  |              | $
|                                                     |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    |                                                                    |                                                     |        |                        |       |                             |     |              |     |              |  
|                                                     | Interest paid                                                      |                                                     | $      | 212                    |       | $                           | 5   |              | $   |             |  
|                                                     | Income taxes paid                                                  |                                                     |        | 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
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 EndedMarch 29, 2003

March 30, 2002

% ChangeStatement 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

24.7Management 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

28.2General and administrative


7,004


7,849

(10.8
)Stock compensation expense


46




NMStore closure provision


71




NMDepreciation


1,562


2,425

(35.6
)Amortizationgoodwill and intangibles


247


275

(10.2
)Other operating (income) expense, net


(157
)

345

NMTotal 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
)
0.9Loss before provision for income taxes, minority interest and cumulative effect of accounting change


(2,357
)

(869
)
171.2Provision for income taxes and minority interest


(123
)

(72
)
70.8Loss before cumulative effect of accounting change


(2,480
)

(941
)
163.5Loss from cumulative effect of accounting change





(39,111
)
NMNet loss

$
(2,480
)
$
(40,052
)
(93.8
)Cash flows from operating activities

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

$
(77
)
$
740Cash flows from financing activities

$
3,173

$
3,875OTHER 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
)


---





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 |  
|------------------------------------------------------ |  | -------------- | - | -------------- | -
|
|Stores open as of the beginning of the fiscal year     |  | 330            |   | 1,038          |  
|Stores opened (including relocations and acquisitions) |  | 2              |   | 20             |  
|Stores closed (including relocations)                  |  | (16            | ) | (41            | )
|Wal-Mart stores (closed) opened                        |  |               |   |               |  
|Stores sold to franchisees                             |  | (5             | ) | 5              |  
|Stores acquired from franchisees                       |  |               |   |               |  
|                                                       |  |                |   |                |  
|Stores open as of the end of the fiscal year           |  | 311            |   | 1,022          |  
|                                                       |  |                |   |                |  



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.

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.

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                                                                                                                                                                                                                                                                                                                                    
|    |  | 99.1                                                                                                                                                                                                                                                                                                                                    
|(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. HODGESLarry A. Hodges, President and Chief Executive Officer                                                                |  | May 13, 2003Date
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------
|/s/SANDRA M. BUFFASandra M. Buffa, Senior Vice President and Chief Financial Officer
(Chief Financial and Principal Accounting Officer) |  | May 13, 2003Date





SARBANES-OXLEY SECTION 302(a) CERTIFICATION

I, Larry A. Hodges, certify that:

|May 13, 2003 |  | /s/LARRY A. HODGESLarry A. Hodges
President and Chief Executive Officer
|------------ |  | -----------------------------------------------------------------------





SARBANES-OXLEY SECTION 302(a) CERTIFICATION

I, Sandra M. Buffa, certify that:

|Date: May 13, 2003 |  | /s/SANDRA M. BUFFASandra 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.