PIZZA INN, INC. PRESS RELEASE
Published on February 8, 2008
FOR
IMMEDIATE
RELEASE
Contact:
Danny
Meisenheimer
VP
of Brand
Management
Pizza
Inn, Inc.
469-384-5000
dmeisenheimer@pihq.com
PIZZA
INN, INC. REPORTS RESULTS FOR THE
SECOND QUARTER OF
FISCAL
YEAR 2008
3.8%
Domestic Chain-Wide Comparable
Sales Growth and New International Master Licenses Fuel Strong
Quarter
The
Colony, Texas –
February 5, 2008-- PIZZA INN, INC. (NASDAQ:PZZI) today reported net income
of $0.08 per
share for its second fiscal quarter ended December 23, 2007 versus net income
of
$0.01 per share for the same quarter in the prior fiscal year. The
quarter resulted in net income of $853,000 versus a net income of $152,000
for
the same quarter in the prior fiscal year on revenues of $12.7 million and
$11.5
million respectively. Operating performance for the second quarter of
fiscal year 2008 included the following:
|
|
•
Total
domestic chain-wide
comparable restaurant sales increased 3.8% for the second quarter
and 2.7%
year-to-date compared to the comparable periods in the prior fiscal
year.
|
|
|
•
Comparable
domestic buffet
restaurant sales increased 5.2% for the second quarter and 4.3%
year-to-date compared to the comparable periods in the prior fiscal
year.
|
|
|
•
Four
new domestic franchised
buffet restaurants opened
|
|
|
•
General
and administrative
expenses for the second quarter decreased 36% or $405,000 due primarily
to
lower payroll costs associated with reductions in headcount and lower
legal fees due to the settlement of litigation in the prior fiscal
year.
|
|
|
•
Income
of $150,000 associated
with the signing of master license agreement in the country of
Kuwait.
|
|
|
•
Income
of $284,000 related to
the settlement of
litigation.
|
|
|
•
Interest
expense decreased 100%
or $274,000 compared to the same quarter in the prior fiscal year
due to
the repayment of all outstanding debt in December
2006.
|
As
of the date of this press release,
the Company has repurchased approximately 604,000 shares of its common stock
under the 2007 Stock Purchase Plan approved by the Board of Directors in the
fourth quarter of fiscal 2007.
Charlie
Morrison, President and CEO,
commented, "Our business continues to strengthen. Our same store
sales growth momentum continues and reflects the investments made by our
franchisees in their businesses. Our four new franchised buffet
restaurants opened strong during the quarter and were a hit with customers
in
their markets. These openings and fewer restaurant closings
contributed to positive overall domestic chain-wide sales growth for the first
time in twelve quarters. We believe we have put the right team in
place to restore a strong restaurant operating culture to Pizza Inn, led by
our
newly-appointed Vice President of Operations, Jason Daniel. Jason
brings a wealth of experience to the table and is expected to ensure that we
deliver the experience that Pizza Inn customers have come to expect over the
past 50 years.”
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 bearing on our
operating results, performance or financial condition are our ability to
implement our growth strategies, national, regional and local economic
conditions affecting the restaurant/entertainment industry, competition within
the restaurant and entertainment industries, sales cannibalization, the success
of our franchise operations, negative publicity and fluctuations in results
of
operations, including those attributable to seasonality, government regulations,
weather, commodity, insurance and labor costs.
Pizza
Inn, Inc.
(www.pizzainn.com)
is headquartered in
The Colony, Texas, along with its distribution division, Norco Restaurant
Services Company. Pizza Inn franchises approximately 340 restaurants
and owns one restaurant with annual and domestic and international chain-wide
sales of approximately $147 million.
|
PIZZA
INN,
INC.
|
||||||||||||||||
|
CONDENSED
CONSOLIDATED STATEMENTS
OF OPERATIONS
|
||||||||||||||||
|
(In
thousands, except per share
amounts)
|
||||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Three
Months
Ended
|
Six
Months
Ended
|
|||||||||||||||
|
December
23,
|
December
24,
|
December
23,
|
December
24,
|
|||||||||||||
|
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
|
REVENUES:
|
||||||||||||||||
|
Food
and supply
sales
|
$ | 11,174 | $ | 10,232 | $ | 21,953 | $ | 20,620 | ||||||||
|
Franchise
revenue
|
1,346 | 1,118 | 2,462 | 2,307 | ||||||||||||
|
Restaurant
sales
|
175 | 199 | 358 | 389 | ||||||||||||
| 12,695 | 11,549 | 24,773 | 23,316 | |||||||||||||
|
COSTS
AND
EXPENSES:
|
||||||||||||||||
|
Cost
of
sales
|
10,530 | 9,974 | 20,602 | 19,903 | ||||||||||||
|
Franchise
expenses
|
706 | 746 | 1,326 | 1,418 | ||||||||||||
|
General
and administrative
expenses
|
721 | 1,126 | 1,356 | 2,675 | ||||||||||||
|
Severance
|
79 | - | 379 | - | ||||||||||||
|
Bad
debts
|
35 | - | 58 | - | ||||||||||||
|
Loss
(gain) on sale of
assets
|
7 | (554 | ) | 7 | (564 | ) | ||||||||||
|
Other
income
|
- | (146 | ) | - | (179 | ) | ||||||||||
|
(Recovery)
provision for
litigation costs
|
(284 | ) | (108 | ) | (284 | ) | 302 | |||||||||
|
Interest
expense
|
- | 274 | - | 474 | ||||||||||||
| 11,794 | 11,312 | 23,444 | 24,029 | |||||||||||||
|
INCOME
(LOSS) FROM
CONTINUING
|
||||||||||||||||
|
OPERATIONS
BEFORE
TAXES
|
901 | 237 | 1,329 | (713 | ) | |||||||||||
|
Income
taxes
|
- | - | - | - | ||||||||||||
|
INCOME
(LOSS) FROM CONTINUING
OPERATIONS
|
901 | 237 | 1,329 | (713 | ) | |||||||||||
|
Income
(loss) from discontinued
operations, net of taxes
|
(48 | ) | (85 | ) | (131 | ) | (196 | ) | ||||||||
|
NET
INCOME
(LOSS)
|
$ | 853 | $ | 152 | $ | 1,198 | $ | (909 | ) | |||||||
|
EARNINGS
PER SHARE OF COMMON STOCK
- BASIC:
|
||||||||||||||||
|
Income
(loss) from continuing
operations
|
$ | 0.09 | $ | 0.02 | $ | 0.13 | $ | (0.07 | ) | |||||||
|
Income
(loss) from discontinued
operations
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
|
Net
income
(loss)
|
$ | 0.08 | $ | 0.01 | $ | 0.12 | $ | (0.09 | ) | |||||||
|
EARNINGS
PER SHARE OF COMMON STOCK
- DILUTED:
|
||||||||||||||||
|
Diluted
income (loss) per common
share
|
||||||||||||||||
|
Income
(loss) from continuing
operations
|
$ | 0.09 | $ | 0.02 | $ | 0.13 | $ | (0.07 | ) | |||||||
|
Income
(loss) from discontinued
operations
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
|
Net
income
(loss)
|
$ | 0.08 | $ | 0.01 | $ | 0.12 | $ | (0.09 | ) | |||||||
|
Weighted
average common shares
outstanding - basic
|
10,061 | 10,138 | 10,114 | 10,138 | ||||||||||||
|
Weighted
average
common
|
||||||||||||||||
|
shares
outstanding -
diluted
|
10,087 | 10,138 | 10,142 | 10,138 | ||||||||||||
|
PIZZA
INN,
INC.
|
||||||||||||||||
|
CONDENSED
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
|
||||||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Three
Months
Ended
|
Six
Months
Ended
|
|||||||||||||||
|
December
23,
|
December
24,
|
December
23,
|
December
24,
|
|||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Net
income
(loss)
|
$ | 853 | $ | 152 | $ | 1,198 | $ | (909 | ) | |||||||
|
Interest
rate swap (loss) gain -
(net of tax expense)
|
- | - | - | 14 | ||||||||||||
|
Comprehensive
income
(loss)
|
$ | 853 | $ | 152 | $ | 1,198 | $ | (895 | ) | |||||||
|
PIZZA
INN,
INC.
|
||||||||
|
CONDENSED
CONSOLIDATED BALANCE
SHEETS
|
||||||||
|
(In
thousands, except share
amounts)
|
||||||||
|
(Unaudited)
|
||||||||
|
December
23,
|
June
24,
|
|||||||
|
|
2007
|
2007
|
||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
and cash
equivalents
|
$ | 1,180 | $ | 1,879 | ||||
|
Accounts
receivable, less
allowance for bad debts
|
||||||||
|
of
$501 and $451,
respectively
|
3,607 | 2,716 | ||||||
|
Notes
receivable, current
portion
|
9 | 8 | ||||||
|
Inventories
|
1,351 | 1,518 | ||||||
|
Property
held for
sale
|
331 | 336 | ||||||
|
Deferred
income tax assets,
net
|
458 | 458 | ||||||
|
Prepaid
expenses and other
assets
|
281 | 165 | ||||||
|
Total
current
assets
|
7,217 | 7,080 | ||||||
|
LONG-TERM
ASSETS
|
||||||||
|
Property,
plant and equipment,
net
|
623 | 778 | ||||||
|
Notes
receivable
|
9 | 12 | ||||||
|
Re-acquired
development territory,
net
|
142 | 239 | ||||||
|
Deposits
and other
assets
|
139 | 85 | ||||||
| $ | 8,130 | $ | 8,194 | |||||
|
LIABILITIES
AND SHAREHOLDERS'
EQUITY
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
payable -
trade
|
$ | 2,018 | $ | 2,082 | ||||
|
Accrued
expenses
|
1,520 | 1,805 | ||||||
|
Total
current
liabilities
|
3,538 | 3,887 | ||||||
|
LONG-TERM
LIABILITIES
|
||||||||
|
Deferred
gain on sale of
property
|
197 | 209 | ||||||
|
Deferred
revenues
|
297 | 314 | ||||||
|
Other
long-term
liabilities
|
8 | 7 | ||||||
|
Total
liabilities
|
4,040 | 4,417 | ||||||
|
COMMITMENTS
AND
CONTINGENCIES
|
||||||||
|
SHAREHOLDERS'
EQUITY
|
||||||||
|
Common
stock, $.01 par value;
authorized 26,000,000
|
||||||||
|
shares;
issued 15,123,909 and
15,120,319 shares, respectively;
|
||||||||
|
outstanding
9,858,977 and
10,168,494 shares, respectively
|
151 | 151 | ||||||
|
Additional
paid-in
capital
|
8,473 | 8,471 | ||||||
|
Retained
earnings
|
15,996 | 14,799 | ||||||
|
Treasury
stock at
cost
|
||||||||
|
Shares
in treasury: 5,264,932 and
4,951,825, respectively
|
(20,530 | ) | (19,644 | ) | ||||
|
Total
shareholders'
equity
|
4,090 | 3,777 | ||||||
| $ | 8,130 | $ | 8,194 | |||||
|
PIZZA
INN,
INC.
|
||||||||
|
CONDENSED
CONSOLIDATED STATEMENTS
OF CASH FLOWS
|
||||||||
|
(In
thousands)
|
||||||||
|
(Unaudited)
|
||||||||
|
Six
Months
Ended
|
||||||||
|
December
23,
|
December
24,
|
|||||||
|
2007
|
2006
|
|||||||
|
CASH
FLOWS FROM OPERATING
ACTIVITIES:
|
||||||||
|
Net
income
(loss)
|
$ | 1,198 | $ | (909 | ) | |||
|
Adjustments
to reconcile net
income (loss) to
|
||||||||
|
cash
provided (used) by operating
activities:
|
||||||||
|
Depreciation
and
amortization
|
171 | 448 | ||||||
|
Severance
expense
|
379 | - | ||||||
|
Deferred
rent
expense
|
- | 3 | ||||||
|
Stock
compensation
expense
|
2 | 97 | ||||||
|
(Recovery)
provision for
litigation costs
|
(284 | ) | 302 | |||||
|
Loss
(gain) on sale of
assets
|
7 | (564 | ) | |||||
|
Provision
for bad
debts
|
58 | - | ||||||
|
Changes
in operating assets and
liabilities:
|
||||||||
|
Notes
and accounts
receivable
|
(1,039 | ) | 118 | |||||
|
Inventories
|
167 | 212 | ||||||
|
Deferred
revenue
|
(17 | ) | 196 | |||||
|
Accounts
payable -
trade
|
(64 | ) | 626 | |||||
|
Accrued
expenses
|
(363 | ) | (3,096 | ) | ||||
|
Prepaid
expenses and
other
|
(51 | ) | (331 | ) | ||||
|
Cash
provided (used) by operating
activities
|
164 | (2,898 | ) | |||||
|
CASH
FLOWS FROM INVESTING
ACTIVITIES:
|
||||||||
|
Proceeds
from sale of
assets
|
92 | 11,319 | ||||||
|
Capital
expenditures
|
(69 | ) | (248 | ) | ||||
|
Cash
provided by investing
activities
|
23 | 11,071 | ||||||
|
CASH
FLOWS FROM FINANCING
ACTIVITIES:
|
||||||||
|
Deferred
financing
costs
|
- | (26 | ) | |||||
|
Repayments
of long-term bank
debt
|
- | (8,044 | ) | |||||
|
Repurchase
of common
stock
|
(886 | ) | - | |||||
|
Cash
used for financing
activities
|
(886 | ) | (8,070 | ) | ||||
|
Net
(decrease) increase in cash
and cash equivalents
|
(699 | ) | 103 | |||||
|
Cash
and cash equivalents,
beginning of period
|
1,879 | 184 | ||||||
|
Cash
and cash equivalents, end of
period
|
$ | 1,180 | $ | 287 | ||||
|
PIZZA
INN,
INC.
|
||||||||
|
SUPPLEMENTAL
DISCLOSURES OF CASH
FLOW INFORMATION
|
||||||||
|
(In
thousands)
|
||||||||
|
(Unaudited)
|
||||||||
|
Six
Months
Ended
|
||||||||
|
December
23,
|
December
24,
|
|||||||
|
2007
|
2006
|
|||||||
|
CASH
PAYMENTS
FOR:
|
||||||||
| Interest | $ | - | $ | 495 | ||||
|
Income
taxes
|
- | - | ||||||
|
NON
CASH FINANCING AND
INVESTING
|
||||||||
|
ACTIVITIES:
|
||||||||
|
Loss
on interest rate
swap
|
$ | - | $ | 22 | ||||