Pizza Inn Reports Results for First Quarter Fiscal Year 2008
Company Posts Positive Same Store Sales Growth and Earnings in Q1
Pizza Inn, Inc.
-- Comparable buffet restaurant sales increased 3.4% for the first quarter. -- Total domestic chain-wide comparable restaurant sales increased 1.4% for the first quarter. -- The Company recorded a charge of $300,000 or ($0.03) per share, in the quarter related to the departure of the company's previous CEO. After adjusting for this expense, the Company would have posted diluted earnings per share of $0.06. -- General and administrative expenses for the first quarter were lower by approximately 59%, or $914,000, due primarily to lower legal fees related to various litigation issues settled during fiscal 2007. -- Interest expense decreased 100%, or $200,000, compared to the same quarter in the prior fiscal year due to the Company eliminating all outstanding debt in December 2006.
Operating results for the first quarter mark the fourth consecutive profitable quarter for Pizza Inn, further strengthening the Company's financial and cash positions. It also marks seven consecutive months of comparable buffet sales growth.
Charlie Morrison, Interim CEO and Chief Financial Officer, commented, "Our momentum in same store sales through remodeling and operational execution demonstrates our progress in revitalizing the Pizza Inn brand. Working with our franchisee leadership, we are closing in on modifications to our buffet restaurant, taking the best elements of our existing prototype and combining these with a service and hospitality platform that deliver an exceptional customer experience in a more efficient restaurant. This new prototype will be introduced in 2008 as a company-owned restaurant and will be offered through our domestic and international franchise sales channels."
Further details of the new prototype will be released in the near future.
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 materially 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; success of its franchise operations; national, regional and local economic conditions affecting the restaurant industry; competition within the restaurant industry; restaurant sales cannibalization; negative publicity; fluctuations in quarterly results of operations, including seasonality; government regulations; weather; and 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 346 restaurants and owns one restaurant with annual domestic and international chain-wide sales of approximately $145 million.
Contact: Danny Meisenheimer VP of Brand Management 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 September 23, September 24, REVENUES: 2007 2006 Food and supply sales $10,779 $10,388 Franchise revenue 1,116 1,189 Restaurant sales 183 190 12,078 11,767 COSTS AND EXPENSES: Cost of sales 10,072 9,929 Franchise expenses 620 672 General and administrative expenses 635 1,549 Severance 300 - Bad debt 23 - Gain on sale of assets - (10) Other income - (33) Provision for litigation costs - 410 Interest expense - 200 11,650 12,717 INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES 428 (950) Income taxes - - INCOME (LOSS) FROM CONTINUING OPERATIONS 428 (950) Income (loss) from discontinued operations, net of taxes (83) (111) NET INCOME (LOSS) 345 (1,061) EARNINGS PER SHARE OF COMMON STOCK - BASIC: Income (loss) from continuing operations $0.04 $(0.09) Income (loss) from discontinued operations (0.01) $(0.01) Net income (loss) $0.03 $(0.10) EARNINGS PER SHARE OF COMMON STOCK - DILUTED: Diluted income (loss) per common share Income (loss) from continuing operations $0.04 $(0.09) Income (loss) from discontinued operations (0.01) (0.01) Net income (loss) $0.03 $(0.10) Weighted average common shares outstanding - basic 10,166 10,138 Weighted average common and potential dilutive common shares outstanding 10,167 10,138 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Three Months Ended September 23, September 24, 2007 2006 Net income (loss) $345 $(1,061) Interest rate swap (loss) gain - (net of tax expense of $0 and $29, respectively) - (34) Comprehensive income (loss) $345 $(1,095) PIZZA INN, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) (Unaudited) September 23, June 24, ASSETS 2007 2007 CURRENT ASSETS Cash and cash equivalents $1,320 $1,879 Accounts receivable, less allowance for bad debts of $472 and $451, respectively 3,074 2,716 Notes receivable, current portion 7 8 Inventories 1,334 1,518 Property held for sale 336 336 Deferred income tax assets 458 458 Prepaid expenses and other 251 165 Total current assets 6,780 7,080 LONG-TERM ASSETS Property, plant and equipment, net 752 778 Notes receivable 12 12 Re-acquired development territory, net 190 239 Deposits and other 115 85 $7,849 $8,194 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable - trade $1,780 $2,082 Accrued expenses 1,458 1,805 Total current liabilities 3,238 3,887 LONG-TERM LIABILITIES Deferred gain on sale of property 203 209 Deferred revenues 301 314 Other long-term liabilities 20 7 Total liabilities 3,762 4,417 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common stock, $.01 par value; authorized 26,000,000 shares; issued 15,121,518 and 15,120,319 shares, respectively; outstanding 10,153,689 and 10,168,494 shares, respectively 151 151 Additional paid-in capital 8,471 8,471 Retained earnings 15,144 14,799 Treasury stock at cost Shares in treasury: 4,967,829 and 4,951,825, respectively (19,679) (19,644) Total shareholders' equity 4,087 3,777 $7,849 $8,194 PIZZA INN, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended September 23, September 24, 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $345 $(1,061) Adjustments to reconcile net income (loss) to cash (used) provided by operating activities: Depreciation and amortization 84 311 Severance accrual expense 300 - Deferred rent expense - 2 Stock compensation expense - 42 Litigation expense accrual - 410 Gain on sale of assets - (10) Provision for bad debts 23 - Deferred revenue - 112 Changes in operating assets and liabilities: Notes and accounts receivable (380) 406 Inventories 184 62 Accounts payable - trade (302) (138) Accrued expenses (646) 30 Prepaid expenses and other (92) 51 Cash (used) provided by operating activities (484) 217 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of assets - 10 Capital expenditures (40) (94) Cash used for investing activities (40) (84) CASH FLOWS FROM FINANCING ACTIVITIES: Deferred financing costs - (25) Change in line of credit, net - (6) Repayments of long-term bank debt - (102) Repurchase of common stock (35) - Cash used for financing activities (35) (133) Net decrease in cash and cash equivalents (559) - Cash and cash equivalents, beginning of period 1,879 184 Cash and cash equivalents, end of period $1,320 $184 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Three Months Ended September 23, September 24, 2007 2006 CASH PAYMENTS FOR: Interest $- $200 Income taxes - - NON CASH FINANCING AND INVESTING ACTIVITIES: Capital lease obligations incurred Loss on interest rate swap $- $(27)
First Call Analyst:
SOURCE: Pizza Inn, Inc.
CONTACT: Danny Meisenheimer, VP of Brand Management of Pizza Inn, Inc.,
Web site: http://www.pizzainn.com/