Pizza Inn, Inc. Reports Results for the Third Quarter Fiscal Year 2007
Chain Sees Continued Improvement in Operating Performance
PIZZA INN INC.
* Comparable buffet restaurant sales decreased 0.9% for the quarter.
Domestic chain-wide comparable restaurant sales decreased 2.0% for the
quarter.
* Total domestic chain-wide restaurant sales decreased 7% for the quarter
due to the decrease in comparable restaurant sales and a net reduction
in franchised restaurants.
* Lower legal expenses combined with the successful outsourcing of the
Company's warehouse management and delivery services have improved the
Company's operating income.
* During the quarter, general and administrative expenses decreased 30%,
or $391,000 due primarily to lower payroll costs as well as a reduction
in property taxes and insurance expenses resulting from the outsourcing
of certain distribution services.
* Interest expense decreased 99%, or $209,000 for the quarter compared to
the same quarter in the prior fiscal year due to the company paying off
all of its outstanding debt in December 2006.
The Company's President and CEO, Tim Taft, commented, "Building a better Pizza Inn requires the right combination of brand leadership and franchisee participation. By improving franchise unit-level economics we are seeing positive results in the areas of same-store sales and franchisee reinvestment, both of which are keys to the operating performance of the Company and the continued revitalization of the brand." Also during the quarter:
* Comparable buffet restaurant sales were positive in the month of March.
* Savings generated from the outsourcing of certain distribution services
have been passed on to franchisees in the form of lower food and supply
costs.
* The Company received commitments from an unprecedented number of
franchisees to remodel their restaurants.
* The Company further solidified its management and leadership team with
the addition of a Director of Operations and a Controller.
Operating results for the third fiscal quarter mark the second consecutive profitable quarter for Pizza Inn, further strengthening the Company's financial position.
"By eliminating the Company's debt and building a positive cash position, we can now focus our resources on the development and implementation of a long-term growth plan," said Charlie Morrison, Pizza Inn Chief Financial Officer.
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 361 restaurants and owns three restaurants with annual and domestic and international chain-wide sales of approximately $150 million.
Contact: Charlie Morrison Chief Financial Officer Pizza Inn, Inc. 469-384-5000[email protected] PIZZA INN, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended March 25, March 26, March 25, March 26, REVENUES: 2007 2006 2007 2006 Food and supply sales $10,202 $11,131 $30,822 $33,654 Franchise revenue 1,195 1,200 3,502 3,579 Restaurant sales 366 512 1,111 1,069 11,763 12,843 35,435 38,302 COSTS AND EXPENSES: Cost of sales 9,762 11,188 30,147 33,414 Franchise expenses 619 783 2,037 2,384 General and administrative expenses 909 1,300 3,956 4,398 Gain on sale of assets (6) --- (570) (149) Bad debt 20 100 20 100 Other income --- (2) (179) --- Total costs and expenses, net 11,304 13,369 35,411 40,147 OPERATING INCOME (LOSS) 459 (526) 24 (1,845) Interest expense (2) (211) (476) (579) INCOME (LOSS) BEFORE INCOME TAXES 457 (737) (452) (2,424) Income tax benefit --- 260 --- 856 NET INCOME (LOSS) $457 $(477) $(452) $(1,568) Basic earnings (loss) per common share $0.05 $(0.05) $(0.04) $(0.15) Diluted earnings (loss) per common share $0.05 $(0.05) $(0.04) $(0.15) Weighted average common shares outstanding 10,138 10,138 10,138 10,118 Weighted average common and potential dilutive common shares outstanding 10,139 10,138 10,138 10,118 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Three Months Ended Nine Months Ended March 25, March 26, March 25, March 26, 2007 2006 2007 2006 Net income (loss) $ 457 $(477) $(452) $(1,568) Interest rate swap gain -- (net of tax benefit of $0 and ($11) and $0 and ($59), respectively) --- 31 14 133 Comprehensive income (loss) $ 457 $(446) $(438) $(1,435) PIZZA INN, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) March 25, June 25, ASSETS 2007 2006 (unaudited) CURRENT ASSETS Cash and cash equivalents $1,115 $184 Accounts receivable, less allowance for doubtful accounts of $349 and $324, respectively 2,424 2,627 Accounts receivable - related parties 405 452 Notes receivable, current portion 19 52 Inventories 1,580 1,772 Assets held for sale 383 --- Current deferred income tax asset 458 1,145 Prepaid expenses and other 166 299 Total current assets 6,550 6,531 LONG-TERM ASSETS Property, plant and equipment, net 941 11,921 Non-current notes receivable 14 20 Re-acquired development territory, net 287 431 Deposits and other 120 98 $7,912 $19,001 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable - trade $2,422 $2,217 Accrued litigation expenses --- 2,800 Other accrued expenses 1,661 1,991 Current portion of long-term debt --- 8,044 Total current liabilities 4,083 15,052 LONG-TERM LIABILITIES Other long-term liabilities 610 437 4,693 15,489 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common Stock, $.01 par value; authorized 26,000,000 shares; issued 15,090,319 shares; and 10,138,494 outstanding 10,138,494 in both years 151 151 Additional paid-in capital 8,571 8,426 Retained earnings 14,141 14,593 Accumulated other comprehensive loss --- (14) Treasury stock at cost Shares in treasury: 4,951,825 in both years (19,644) (19,644) Total shareholders' equity 3,219 3,512 $7,912 $19,001 PIZZA INN, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended Nine Months Ended March 25, March 26, March 25, March 26, 2007 2006 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $457 $(477) $(452) $(1,568) Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities: Depreciation and amortization 113 316 561 884 Deferred rent expense (12) 1 (9) 32 Provision for bad debt 20 100 20 100 Stock compensation expense 48 88 145 285 Litigation expense accrual --- --- 302 --- Gain on sale of assets (6) (12) (570) (159) Deferred revenue --- --- 196 --- Changes in operating assets and liabilities: Notes and accounts receivable 151 296 269 491 Inventories (20) 346 192 (79) Accounts payable - trade (421) (49) 205 596 Accrued expenses (576) 219 (3,672) (166) Prepaid expenses and other 1,066 88 735 158 Cash provided by (used for) operating activities 820 916 (2,078) 574 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of assets 8 115 11,325 589 Capital expenditures --- (850) (246) (2,165) Cash provided by (used for) investing activities 8 (735) 11,079 (1,576) CASH FLOWS FROM FINANCING ACTIVITIES: Deferred financing costs --- --- (26) --- Change in line of credit, net --- (235) --- 1,047 Repayments of long-term bank debt --- --- (8,044) (110) Proceeds from exercise of stock options --- 60 --- 82 Cash (used for) provided by financing activities --- (175) (8,070) 1,019 Net increase in cash and cash equivalents 828 6 931 17 Cash and cash equivalents, beginning of period 287 184 184 173 Cash and cash equivalents, end of period $1,115 $190 $1,115 $190
SOURCE: Pizza Inn, Inc.
CONTACT: Charlie Morrison, Chief Financial Officer of Pizza Inn, Inc.,
+1-469-384-5000, or
Web site: http://www.pizzainn.com/