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 | ||||