PIZZA INN, INC. Q2 FY2008 PRESS RELEASE
Published on May 9, 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 THIRD QUARTER OF
FISCAL
YEAR 2008
Momentum
continues with 1.1% Domestic Chain-wide Comparable Sales Growth
The Colony, Texas – May 7, 2008--
PIZZA INN, INC. (NASDAQ:PZZI) today reported basic and diluted net income
of $0.09 per share for its third fiscal quarter ended March 23, 2008 compared to
$0.05 per share in the same quarter in the prior fiscal year. The
quarter resulted in net income of $898,000, versus net income of $457,000 for
the same quarter in the prior fiscal year, on revenues of $11,668,000 and
$11,583,000, respectively.
Operating
performance for the third quarter of fiscal year 2008 included the
following:
|
·
|
Comparable
domestic buffet restaurant sales increased 1.8% for the third quarter and
3.4% year-to-date from the prior fiscal
year.
|
|
·
|
Comparable
domestic chain-wide sales increased 1.1% for the third quarter and 2.3%
year-to-date from the prior fiscal
year.
|
|
·
|
General
and administrative expenses were lower by 23% for the third quarter and
43% year-to-date compared to the prior fiscal
year.
|
|
·
|
The
Company recorded income of $714,000 related to the release of a valuation
allowance against its deferred tax asset. This amount was
offset by an expense of $498,000 for income taxes estimated for the nine
months ended March 23, 2008.
|
As of
April 7, 2008, the Company had repurchased substantially all of the 1,016,000
shares of Company stock authorized 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, "We are making excellent progress toward
our goal of revitalizing the Pizza Inn brand. We continue to see momentum in our
sales performance even in a tough economic environment. As we
celebrate our 50th anniversary this year, our franchisees and supplier partners
are focused on executing the fundamentals that have fueled our five decades of
success, including the delivery of fresh, hot pizzas to customers at home or in
our restaurants with an unmatched level of service .”
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 the restaurant and entertainment industries, success of franchise
operations, negative publicity, seasonality, government regulations, weather and
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. The Company is a franchisor and
food and supply distributor to a system of franchised and company owned
restaurants operating both domestically and internationally under the trade name
“Pizza Inn.”
|
PIZZA
INN, INC.
|
||||||||||||||||
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
|
(In
thousands, except per share amounts)
|
||||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
March
23,
|
March
25,
|
March
23,
|
March
25,
|
|||||||||||||
|
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
| REVENUES: | ||||||||||||||||
|
Food
and supply sales
|
$ | 10,316 | $ | 10,202 | $ | 32,269 | $ | 30,822 | ||||||||
|
Franchise
revenue
|
1,181 | 1,195 | 3,643 | 3,502 | ||||||||||||
|
Restaurant
sales
|
171 | 186 | 529 | 574 | ||||||||||||
| 11,668 | 11,583 | 36,441 | 34,898 | |||||||||||||
|
COSTS
AND EXPENSES:
|
||||||||||||||||
|
Cost
of sales
|
9,554 | 9,568 | 30,156 | 29,472 | ||||||||||||
|
Franchise
expenses
|
623 | 619 | 1,949 | 2,037 | ||||||||||||
|
General
and administrative expenses
|
661 | 857 | 2,017 | 3,531 | ||||||||||||
|
Severance
|
4 | - | 383 | - | ||||||||||||
|
Provision
for bad debts
|
100 | 20 | 158 | 20 | ||||||||||||
|
Loss
(gain) on sale of assets
|
2 | (6 | ) | 9 | (570 | ) | ||||||||||
|
Other
income
|
- | - | - | (179 | ) | |||||||||||
|
(Recovery)
provision for litigation costs
|
- | - | (284 | ) | 302 | |||||||||||
|
Interest
expense
|
- | 2 | - | 475 | ||||||||||||
| 10,944 | 11,060 | 34,388 | 35,088 | |||||||||||||
|
INCOME
(LOSS) FROM CONTINUING
|
||||||||||||||||
|
OPERATIONS
BEFORE TAXES
|
724 | 523 | 2,053 | (190 | ) | |||||||||||
|
Income
taxes
|
(216 | ) | - | (216 | ) | - | ||||||||||
|
INCOME
(LOSS) FROM
|
||||||||||||||||
|
CONTINUING
OPERATIONS
|
940 | 523 | 2,269 | (190 | ) | |||||||||||
|
Loss
from discontinued
|
||||||||||||||||
|
operations,
net of income tax benefit
|
(42 | ) | (66 | ) | (173 | ) | (262 | ) | ||||||||
|
NET
INCOME (LOSS)
|
$ | 898 | $ | 457 | $ | 2,096 | $ | (452 | ) | |||||||
|
EARNINGS
PER SHARE OF COMMON
|
||||||||||||||||
|
STOCK
- BASIC:
|
||||||||||||||||
|
Income
(loss) from continuing operations
|
$ | 0.10 | $ | 0.06 | $ | 0.23 | $ | (0.02 | ) | |||||||
|
Loss
from discontinued operations
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
|
Net
income (loss)
|
$ | 0.09 | $ | 0.05 | $ | 0.21 | $ | (0.04 | ) | |||||||
|
EARNINGS
PER SHARE OF COMMON
|
||||||||||||||||
|
STOCK
- DILUTED:
|
||||||||||||||||
|
Income
(loss) from continuing operations
|
$ | 0.10 | $ | 0.06 | $ | 0.23 | $ | (0.02 | ) | |||||||
|
Loss
from discontinued operations
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
|
Net
income (loss)
|
$ | 0.09 | $ | 0.05 | $ | 0.21 | $ | (0.04 | ) | |||||||
|
Weighted
average common shares
|
||||||||||||||||
|
outstanding
- basic
|
9,634 | 10,138 | 9,955 | 10,139 | ||||||||||||
|
Weighted
average common
|
||||||||||||||||
|
shares
outstanding - diluted
|
9,670 | 10,139 | 9,987 | 10,139 | ||||||||||||
|
PIZZA
INN, INC.
|
||||||||||||||||
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
March
23,
|
March
25,
|
March
23,
|
March
25,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Net
income (loss)
|
$ | 898 | $ | 457 | $ | 2,096 | $ | (452 | ) | |||||||
|
Interest
rate swap gain - (net of tax expense
|
||||||||||||||||
|
of
$0) for all periods
|
- | - | - | 14 | ||||||||||||
|
Comprehensive
income (loss)
|
$ | 898 | $ | 457 | $ | 2,096 | $ | (438 | ) | |||||||
|
PIZZA
INN, INC.
|
||||||||
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(In
thousands, except share amounts)
|
||||||||
|
March
23,
|
June
24,
|
|||||||
|
ASSETS
|
2008
|
2007
|
||||||
|
(Unaudited)
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 1,013 | $ | 1,879 | ||||
|
Accounts
receivable, less allowance for bad debts
|
||||||||
|
of
$589 and $451, respectively
|
3,067 | 2,716 | ||||||
|
Notes
receivable, current portion
|
6 | 8 | ||||||
|
Inventories
|
1,385 | 1,518 | ||||||
|
Property
held for sale
|
313 | 336 | ||||||
|
Deferred
income tax assets, net
|
1,105 | 458 | ||||||
|
Prepaid
expenses and other assets
|
273 | 165 | ||||||
|
Total
current assets
|
7,162 | 7,080 | ||||||
|
LONG-TERM
ASSETS
|
||||||||
|
Property,
plant and equipment, net
|
600 | 778 | ||||||
|
Notes
receivable
|
9 | 12 | ||||||
|
Re-acquired
development territory, net
|
78 | 239 | ||||||
|
Deposits
and other assets
|
104 | 85 | ||||||
| $ | 7,953 | $ | 8,194 | |||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
payable - trade
|
$ | 1,677 | $ | 2,082 | ||||
|
Accrued
expenses
|
1,817 | 1,805 | ||||||
|
Total
current liabilities
|
3,494 | 3,887 | ||||||
|
LONG-TERM
LIABILITIES
|
||||||||
|
Deferred
gain on sale of property
|
190 | 209 | ||||||
|
Deferred
revenues
|
295 | 314 | ||||||
|
Other
long-term liabilities
|
23 | 7 | ||||||
|
Total
liabilities
|
4,002 | 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
9,499,417 and 10,168,494 shares, respectively
|
151 | 151 | ||||||
|
Additional
paid-in capital
|
8,485 | 8,471 | ||||||
|
Retained
earnings
|
16,894 | 14,799 | ||||||
|
Treasury
stock at cost
|
||||||||
|
Shares
in treasury: 5,624,492 and 4,951,825, respectively
|
(21,579 | ) | (19,644 | ) | ||||
|
Total
shareholders' equity
|
3,951 | 3,777 | ||||||
| $ | 7,953 | $ | 8,194 | |||||
|
|
||||||||
|
PIZZA
INN, INC.
|
||||||||
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
|
(In
thousands)
|
||||||||
|
(Unaudited)
|
||||||||
|
Nine
Months Ended
|
||||||||
|
March
23,
|
March
25,
|
|||||||
|
2008
|
2007
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
income (loss)
|
$ | 2,096 | $ | (452 | ) | |||
|
Adjustments
to reconcile net income (loss) to
|
||||||||
|
cash
provided (used) by operating activities:
|
||||||||
|
Depreciation
and amortization
|
275 | 561 | ||||||
|
Deferred
tax
|
(647 | ) | (9 | ) | ||||
|
Stock
compensation expense
|
14 | 145 | ||||||
|
Provision
for litigation costs
|
- | 302 | ||||||
|
Loss
(gain) on sale of assets
|
9 | (570 | ) | |||||
|
Provision
for bad debts
|
158 | 20 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Notes
and accounts receivable
|
(504 | ) | 269 | |||||
|
Inventories
|
133 | 192 | ||||||
|
Accounts
payable - trade
|
(405 | ) | 205 | |||||
|
Accrued
expenses
|
12 | (3,476 | ) | |||||
|
Prepaid
expenses and other
|
(84 | ) | 735 | |||||
|
Cash
provided (used) by operating activities
|
1,057 | (2,078 | ) | |||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Proceeds
from sale of assets
|
108 | 11,325 | ||||||
|
Capital
expenditures
|
(96 | ) | (246 | ) | ||||
|
Cash
provided by investing activities
|
12 | 11,079 | ||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Deferred
financing costs
|
- | (26 | ) | |||||
|
Repayments
of long-term bank debt
|
- | (8,044 | ) | |||||
|
Repurchase
of common stock
|
(1,935 | ) | - | |||||
|
Cash
used for financing activities
|
(1,935 | ) | (8,070 | ) | ||||
|
Net
(decrease) increase in cash and cash equivalents
|
(866 | ) | 931 | |||||
|
Cash
and cash equivalents, beginning of period
|
1,879 | 184 | ||||||
|
Cash
and cash equivalents, end of period
|
$ | 1,013 | $ | 1,115 | ||||
|
PIZZA
INN, INC.
|
||||||||
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
|
(In
thousands)
|
||||||||
|
(Unaudited)
|
||||||||
|
Nine
Months Ended
|
||||||||
|
March
23,
|
March
25,
|
|||||||
|
2008
|
2007
|
|||||||
|
CASH
PAYMENTS FOR:
|
||||||||
|
Interest
|
$ | - | $ | 495 | ||||
|
Income
taxes paid (refunded)
|
195 | (680 | ) | |||||
|
NON
CASH FINANCING AND INVESTING
|
||||||||
|
ACTIVITIES:
|
||||||||
|
Gain
on interest rate swap
|
$ | - | $ | 22 | ||||