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/