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Pizza Inn, Inc. Reports Results for the Third Quarter Fiscal Year 2007

Chain Sees Continued Improvement in Operating Performance

PIZZA INN INC. today reported net income per share for its third fiscal quarter ended March 25, 2007 of $0.05 versus a net loss of ($0.05) per share for the same quarter in the prior fiscal year. The quarter resulted in net income of $457,000 versus a net loss of ($477,000) for the same quarter in the prior fiscal year on revenues of $11.8 million and $12.8 million, respectively.

   * 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. (https://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 [email protected]