Pizza Inn, Inc. Reports Results for the First Quarter Fiscal Year 2007
PIZZA INN, INC.
* Comparable buffet restaurant sales decreased 0.9% for the quarter.
Chain-wide comparable restaurant sales decreased 1.8% for the quarter.
* Total chain-wide domestic restaurant sales decreased 6% for the
quarter due to the decrease in comparable restaurant sales and a net
reduction in franchised restaurants.
* The Company's revenues decreased approximately 7%, or $863,000,
primarily due to lower chain-wide restaurant sales, as discussed
above, and lower cheese prices. The resulting reductions in food and
supply sales and royalty revenue were partially offset by increased
restaurant sales at company-owned restaurants as a result of the
opening of three additional company-owned buffet restaurants in fiscal
year 2006 and increased franchise fees from the opening of new
international and domestic restaurants.
* During the quarter the Company incurred $540,000 of legal fees, as
compared to $615,000 in the prior year, which is reflected in general
and administrative expenses.
* During the quarter the Company incurred non-cash stock compensation
expense of $42,000 as compared to $103,000 in the prior year, which is
reflected in general and administrative expenses.
* During the quarter the Company incurred a $410,000 provision for
litigation costs for the Company's potential liability related to
outstanding litigation, which is broken out separately in the
statement of operations.
The Company's President and CEO, Tim Taft, commented, "We recently began outsourcing distribution services and passing on the cost savings to franchisees through lower product prices, which we believe will improve franchisee economics without compromising the Company's profitability. We believe that these initiatives will help us achieve our goal of reinvigorating the Company's growth, and we are continuing to see early signs of improving trends through significant increases in franchised restaurant remodels and a growing development pipeline of new franchised restaurants."
Certain statements in this press release, other than historical information, may be considered forward-looking statements, within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, and are subject to various risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ from those anticipated, estimated or expected. Among the key factors that may have a direct bearing on Pizza Inn's operating results, performance or financial condition are its ability to implement its growth strategies, national, regional and local economic conditions affecting the restaurant/ entertainment industry, competition within each of the restaurant and entertainment industries, store sales cannibalization, success of its franchise operations, negative publicity, fluctuations in quarterly results of operations, including seasonality, government regulations, weather, commodity, insurance and labor costs.
Pizza Inn, Inc. (http://www.pizzainn.com/ ) is headquartered in The Colony, Texas, along with its distribution division, Norco Restaurant Services Company. Pizza Inn franchises approximately 362 restaurants and owns three restaurants with annual domestic and international chain-wide sales of approximately $150 million.
Pizza Inn, Inc.
3551 Plano Parkway
The Colony, TX 75056
For more information contact:
Clinton J. Coleman
Interim Chief Financial Officer
(469) 384-5201
PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 24, September 25,
REVENUES: 2006 2005
Food and supply sales $10,388 $11,308
Franchise revenue 1,189 1,180
Restaurant sales 370 218
Gain on sale of assets 10 147
Other Income 33 ---
11,990 12,853
COSTS AND EXPENSES:
Cost of sales 10,178 11,093
Franchise expenses 672 808
General and
administrative expenses 1,591 1,590
Provision for litigation costs 410 ---
Interest expense 200 169
13,051 13,660
LOSS BEFORE INCOME TAXES (1,061) (807)
Benefit for income taxes --- (317)
NET LOSS $(1,061) $(490)
Basic loss per common share $(0.10) $(0.05)
Diluted loss per common share $(0.10) $(0.05)
Weighted average common
shares outstanding 10,138 10,108
Weighted average common and
potential dilutive common
shares outstanding 10,138 10,108
PIZZA INN, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
September 24, June 25,
ASSETS 2006 2006
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $184 $184
Accounts receivable, less
allowance for doubtful accounts
of $326 and $324, respectively 2,272 2,627
Accounts receivable -
related parties 412 452
Notes receivable, current portion,
less allowance 43 52
Inventories 1,710 1,772
Assets held for sale 10,664 ---
Current deferred income
tax asset 1,138 1,145
Prepaid expenses and other 228 299
Total current assets 16,651 6,531
LONG-TERM ASSETS
Property, plant and
equipment, net 1,091 11,921
Non-current notes receivable 18 20
Re-acquired development
territory, net 383 431
Deposits and other 115 98
$18,258 $19,001
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $2,079 $2,217
Accrued litigation expenses 3,110 2,800
Other accrued expenses 2,247 1,991
Current portion of
long-term debt 7,936 8,044
Total current liabilities 15,372 15,052
LONG-TERM LIABILITIES
Other long-term liabilities 427 437
15,799 15,489
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value;
authorized 26,000,000
shares; issued 15,090,319 and
15,090,319 shares, respectively;
outstanding 10,138,494 and
10,138,494 shares, respectively 151 151
Additional paid-in capital 8,468 8,426
Retained earnings 13,532 14,593
Accumulated other
comprehensive loss (48) (14)
Treasury stock at cost
Shares in treasury:
4,951,825 and 4,951,825,
respectively (19,644) (19,644)
Total shareholders' equity 2,459 3,512
$18,258 $19,001
PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
September 24, September 25,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,061) $(490)
Adjustments to reconcile net
loss to cash provided by
operating activities:
Depreciation and amortization 311 276
Deferred rent expense 2 31
Stock compensation expense 42 103
Litigation expense accrual 410 ---
Gain on sale of assets (10) (157)
Deferred revenue 112 38
Deferred income tax on
stock compensation expense --- (35)
Changes in operating assets and
liabilities (net of
businesses acquired):
Notes and accounts receivable 406 342
Inventories 62 (369)
Accounts payable - trade (138) 540
Accrued expenses 30 (163)
Prepaid expenses and other 51 (111)
Cash provided by operating
activities 217 5
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 10 474
Capital expenditures (94) (347)
Cash (used for) provided by
investing activities (84) 127
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred financing costs (25) ---
Change in line of credit, net (6) (46)
Repayments of long-term bank debt (102) (102)
Proceeds from exercise of
stock options --- 22
Cash used for financing
activities (133) (126)
Net increase in cash and
cash equivalents --- 6
Cash and cash equivalents,
beginning of period 184 173
Cash and cash equivalents,
end of period $184 $179
SOURCE: Pizza Inn, Inc.
CONTACT: Clinton J. Coleman, Interim Chief Financial Officer of Pizza
Inn, Inc., +1-469-384-5201
Web site: http://www.pizzainn.com/