New Buffet Prototype Delivers Strong Results
Company Sets Up Incentives for Future Development
THE COLONY, Texas, Feb. 10, 2009 (GLOBE NEWSWIRE) -- Pizza Inn, Inc. (Nasdaq:PZZI) today reported net income of $136,000, or $0.02 per share, for the second quarter ended December 28, 2008, versus net income of $853,000, or $0.08 per share, for the second quarter of the prior fiscal year. Highlights for the quarter ended December 28, 2008, included:
* Comparable domestic buffet restaurant sales decreased 3.3% for the quarter compared to the same period of the prior fiscal year. * Total domestic restaurant sales decreased 5.8% for the quarter compared to the same period of the prior fiscal year. * Seven new franchise restaurants and one new domestic Company-owned restaurant opened during the quarter. * The new company-owned buffet restaurant located in Denton, TX reported sales for the quarter of $412,000, representing only 11 weeks of operation since opening on October 15, 2008. * The Company recorded a $263,000 litigation settlement during the quarter, compared to a $284,000 litigation recovery in the same period of the prior fiscal year. Additionally, the Company recorded $74,000 of income tax expense for the quarter compared to no income tax expense for the same period of the prior fiscal year. In the absence of these items, net income per share would have been $0.05 for the second quarter of fiscal 2009 compared to $0.06 for the same period in the prior year.
Charlie Morrison, President and CEO, commented, "If you adjust for one-time, non-operating expenses, our underlying business performance remains stable. Our new prototype buffet-style restaurant in Denton, TX has been a big hit with customers and existing franchisees. Sales during the first 11 weeks of operation averaged more than $35,000 per week. Last month we announced our new franchise incentive program offering 0% royalties for the first year of operation for new buffet restaurants as a means to stimulate demand for this new prototype in otherwise challenging financial times. We expect banks to look favorably on this incentive as a way to loosen tight lending standards so that many others can realize their dream of owning their own Pizza Inn franchise. Since opening our Denton store, two additional franchise locations, leveraging the look and feel of the new prototype, have successfully opened. We are also in the market looking for real estate for additional Company-owned locations."
Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond Pizza Inn's control. Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that Pizza Inn's objectives and plans will be achieved.
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 320 restaurants and owns two restaurants with annual and domestic and international chain-wide sales of approximately $135 million.
The Pizza Inn logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4933
PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended Ended
------------------ ------------------
Dec. 28, Dec. 23, Dec. 28, Dec. 23,
REVENUES: 2008 2007 2008 2007
-------- -------- -------- --------
Food and supply sales $ 9,645 $ 11,174 $ 19,779 $ 21,953
Franchise revenue 1,044 1,346 2,108 2,462
Restaurant sales 589 175 779 358
-------- -------- -------- --------
11,278 12,695 22,666 24,773
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of sales 9,376 10,530 19,031 20,602
Franchise expenses 470 706 949 1,326
General and
administrative expenses 856 704 1,543 1,327
Severance -- 79 37 379
Provision for bad debts 30 35 45 58
Loss on sale of assets -- 7 -- 7
(Recovery) provision for
litigation costs 263 (284) 263 (284)
Interest expense 16 17 28 29
-------- -------- -------- --------
11,011 11,794 21,896 23,444
-------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS BEFORE TAXES 267 901 770 1,329
Income taxes 74 -- 235 --
-------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS 193 901 535 1,329
Loss from discontinued
operations, net of
taxes (57) (48) (106) (131)
-------- -------- -------- --------
NET INCOME $ 136 $ 853 $ 429 $ 1,198
-------- -------- -------- --------
EARNINGS PER SHARE OF
COMMON STOCK - BASIC:
Income from continuing
operations $ 0.02 $ 0.09 $ 0.06 $ 0.13
Loss from discontinued
operations -- (0.01) (0.01) (0.01)
-------- -------- -------- --------
Net income $ 0.02 $ 0.08 $ 0.05 $ 0.12
======== ======== ======== ========
EARNINGS PER SHARE OF
COMMON STOCK - DILUTED:
Income from continuing
operations $ 0.02 $ 0.09 $ 0.06 $ 0.13
Loss from discontinued
operations -- (0.01) (0.01) (0.01)
-------- -------- -------- --------
Net income $ 0.02 $ 0.08 $ 0.05 $ 0.12
======== ======== ======== ========
Weighted average common
shares outstanding
- basic 8,713 10,061 8,827 10,114
======== ======== ======== ========
Weighted average common
shares outstanding -
diluted 8,713 10,087 8,832 10,142
======== ======== ======== ========
PIZZA INN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
Dec. 28,
2008 June 29,
(Unaudited) 2008
ASSETS -------- --------
CURRENT ASSETS
Cash and cash equivalents $ 150 1,157
Accounts receivable, less allowance for
bad debts of $172 and $128, respectively 3,110 2,773
Notes receivable, current portion 6 6
Income tax receivable 5 272
Inventories 1,315 1,396
Property held for sale 311 301
Deferred income tax assets, net 555 555
Prepaid expenses and other assets 250 235
-------- --------
Total current assets 5,702 6,695
LONG-TERM ASSETS
Property, plant and equipment, net 1,361 635
Notes receivable 3 7
Deferred income tax assets 237 237
Re-acquired development territory, net -- 46
Deposits and other assets 155 215
-------- --------
$ 7,458 $ 7,835
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 1,590 2,380
Outstanding checks in excess of cash in
bank 302 --
Accrued expenses 1,121 1,316
-------- --------
Total current liabilities 3,013 3,696
LONG-TERM LIABILITIES
Deferred gain on sale of property 172 184
Deferred revenues 267 283
Other long-term liabilities 2 18
Debt 992 --
-------- --------
Total liabilities 4,446 4,181
-------- --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; authorized
26,000,000 shares; issued 15,130,319 and
15,130,319 shares, respectively;
outstanding 8,615,759 and 9,104,361
shares, respectively 151 151
Additional paid-in capital 8,645 8,543
Retained earnings 18,053 17,624
Treasury stock at cost
Shares in treasury: 6,514,560 and
6,025,958, respectively (23,837) (22,664)
-------- --------
Total shareholders' equity 3,012 3,654
-------- --------
$ 7,458 $ 7,835
======== ========
PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
------------------
Dec. 28, Dec. 23,
2008 2007
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 429 $ 1,198
Adjustments to reconcile net income to
cash (used) provided by operating activities:
Depreciation and amortization 143 171
Severance expense -- 379
Stock compensation expense 102 2
Provision for (recovery of) litigation costs 263 (284)
Loss on sale of assets -- 7
Provision for bad debts 45 58
Changes in operating assets and liabilities:
Notes and accounts receivable (111) (1,039)
Inventories 81 167
Deferred revenue 28 (17)
Accounts payable - trade (790) (64)
Accrued expenses (486) (363)
Prepaid expenses and other -- (51)
------- -------
Cash (used) provided by operating activities (296) 164
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets -- 92
Capital expenditures (832) (69)
------- -------
Cash (used) provided by investing activities (832) 23
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in line of credit, net 992 --
Outstanding checks in excess of cash in bank 302 --
Repurchase of common stock (1,173) (886)
------- -------
Cash provided by (used) for financing
activities 121 (886)
------- -------
Net decrease in cash and cash equivalents (1,007) (699)
Cash and cash equivalents, beginning of period 1,157 1,879
------- -------
Cash and cash equivalents, end of period $ 150 $ 1,180
======= =======
PIZZA INN, INC.
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
(In thousands)
(Unaudited)
Six Months Ended
---------------------
Dec. 28, Dec. 23,
2008 2007
------- -------
CASH PAYMENTS FOR:
Interest $ 25 $ 29
Income taxes 196 --