Pizza Inn, Inc. Reports Results for the Second Quarter Fiscal Year 2006
PIZZA INN, INC.
Second Quarter FY 2006 versus Second Quarter FY 2005 Results
* Diluted EPS was ($0.06) versus $0.01 on a net loss of ($601,000)
versus net income of $51,000.
* Revenues decreased approximately 7%, or $1,016,000, primarily due to
lower comparable chainwide retail sales and fewer net stores. The
resulting reduction in food and supply sales and royalties were offset
partially by equipment sales, which were higher by $248,000 and
company-owned restaurant sales, which were higher by $96,000.
* Comparable chainwide retail sales were down 1.8%.
* Legal fees increased approximately $208,000 as the result of ongoing
litigation and related matters.
* Energy costs increased approximately $168,000.
* General and administrative expenses included non-cash executive stock
compensation expense of $94,000 for approximately 560,000 stock option
rights granted previously. The prior year did not include any non-
cash compensation expense.
* Preopening expenses for three new company-owned stores were $124,000.
The Company's President and CEO, Tim Taft, commented, "To successfully accomplish the Pizza Inn turnaround, our focus remains on the fundamentals of the business. We continue to make significant progress in the areas of new franchisee selection, existing franchisee evaluation, new store development and improved unit-level profitability. Additionally, our 2006 marketing plan is taking an entirely new approach to improving comparable store sales by focusing on the brand's competitive strengths. Much is being accomplished at Pizza Inn; however, much work remains."
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. is headquartered in The Colony, Texas, along with its distribution division, Norco Restaurant Services Company. Pizza Inn franchises approximately 378 restaurants and owns five restaurants with annual chainwide sales of approximately $155 million.
Pizza Inn, Inc. For more information contact:
3551 Plano Parkway Kevin Kleiner
The Colony, TX 75056 Controller
(469) 384-5203
For more information about the company, visit Pizza Inn at
http://www.pizzainn.com/
PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
December 25, December 26, December 25, December 26,
REVENUES: 2005 2004 2005 2004
Food and supply
sales $11,215 $12,301 $22,523 $25,123
Franchise revenue 1,199 1,225 2,379 2,565
Restaurant sales 339 243 557 498
12,753 13,769 25,459 28,186
COSTS AND EXPENSES:
Cost of sales 11,094 11,690 22,226 23,883
Franchise expenses 793 697 1,601 1,322
General and
administrative
expenses 1,547 1,165 3,098 2,187
13,434 13,552 26,925 27,392
OPERATING (LOSS) INCOME (681) 217 (1,466) 794
Gain on sale
of asset --- --- 147 ---
Interest expense (199) (138) (368) (274)
(LOSS) INCOME BEFORE
INCOME TAXES (880) 79 (1,687) 520
Provision for
income taxes (279) 28 (596) 184
NET (LOSS) INCOME $(601) $51 $(1,091) $336
Basic (loss) earnings
per common share $(0.06) $0.01 $(0.11) $0.03
Diluted (loss) earnings
per common share $(0.06) $0.01 $(0.11) $0.03
Weighted average
common shares 10,108 10,104 10,108 10,119
Weighted average
common and
potential dilutive
common shares 10,153 10,141 10,151 10,155
PIZZA INN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 25, June 26,
ASSETS 2005 2005
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $184 $173
Accounts receivable, less allowance
for doubtful accounts of $232 and $360,
respectively 3,265 3,419
Accounts receivable - related parties 559 622
Notes receivable, current portion,
less allowance for doubtful accounts
of $0 and $11, respectively 3 ---
Inventories 2,342 1,918
Property held for sale --- 301
Deferred tax assets, net 759 193
Prepaid expenses and other 299 355
Total current assets 7,411 6,981
LONG-TERM ASSETS
Property, plant and equipment, net 12,878 12,148
Property under capital leases, net 9 12
Long-term receivable 10 ---
Long-term receivable - related party 304 314
Goodwill 157 ---
Reacquired development territory 527 623
Deposits and other 201 177
$21,497 $20,255
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $2,607 $1,962
Accrued expenses 1,676 1,374
Current portion of long-term debt 8,881 406
Current portion of capital lease
obligations 11 11
Total current liabilities 13,175 3,753
LONG-TERM LIABILITIES
Long-term debt --- 7,297
Long-term capital lease obligations 7 13
Deferred tax liability, net 26 3
Other long-term liabilities 153 283
13,361 11,349
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value;
authorized 26,000,000 shares;
issued 15,060,319 and 15,046,319 shares,
respectively; outstanding 10,108,494 and
10,094,494 shares, respectively 151 150
Additional paid-in capital 8,223 8,005
Retained earnings 19,491 20,582
Accumulated other comprehensive loss (85) (187)
Treasury stock at cost
Shares in treasury: 4,951,825 and
4,951,825, respectively (19,644) (19,644)
Total shareholders' equity 8,136 8,906
$21,497 $20,255
PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
December 25, December 26,
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(1,091) $336
Adjustments to reconcile net (loss)
income to cash (used for) provided by
operating activities:
Depreciation and amortization 568 579
Gain on property held for sale (157) ---
Recovery of bad debt, net --- 30
Utilization of deferred taxes --- (52)
Stock compensation expense 197 ---
Deferred rent 31 ---
Changes in assets and liabilities:
Notes and accounts receivable 195 (134)
Inventories (425) (202)
Accounts payable - trade 645 156
Accrued expenses (385) (342)
Prepaid expenses and other 80 101
Cash (used for) provided by
operating activities (342) 472
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 474 ---
Capital expenditures (1,315) (354)
Cash used for investing
activities (841) (354)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term bank debt
and capital lease obligations (209) (438)
Borrowings of bank debt 1,381 ---
Stock buy back --- (117)
Proceeds from exercise of stock options 22 10
Cash provided by (used for)
financing activities 1,194 (545)
Net increase (decrease) in cash and
cash equivalents 11 (427)
Cash and cash equivalents, beginning
of period 173 617
Cash and cash equivalents, end of
period $184 $190
SOURCE: Pizza Inn, Inc.
CONTACT: Kevin Kleiner, Controller of Pizza Inn, Inc., +1-469-384-5203
Web site: http://www.pizzainn.com/