FOR IMMEDIATE RELEASE
Contact:
Nancy Ellefson
VP of Finance
Pizza Inn, Inc.
469-384-5000
nellefson@pihq.com
PIZZA INN, INC. REPORTS RESULTS FOR
FISCAL YEAR 2008
Chain reports same store sales growth of 2.6% for fiscal year 2008
The Colony, Texas – September 25, 2008-- PIZZA INN, INC. (NASDAQ:PZZI) today reported net income of $2,825,000, or $0.29 per share, for the fiscal year ended June 29, 2008, versus net income of $206,000, or $0.02 per share, for the prior fiscal year. For the fourth quarter, the Company reported net income of $729,000, or $0.08 per share, for fiscal 2008 versus $658,000, or $0.06 per share, in the same quarter in the prior fiscal year. Highlights for the fourth quarter and fiscal year 2008 included:
| · | Comparable domestic buffet restaurant sales increased 2.3% for the fourth quarter and 3.5% for fiscal 2008 compared to the prior fiscal year. |
| · | Total comparable domestic restaurant sales increased 2.6% for fiscal 2008 and 1.8% for the fourth quarter compared to the prior fiscal year. |
| · | The fourth quarter of fiscal 2008 represented the 5th consecutive quarter of same store sales growth compared to the prior year. |
| · | General and administrative expenses decreased 23% in fiscal 2008 compared to the prior year despite fourth quarter expenses of $215,000, or $0.02 per share, related to an internal controls assessment and other compliance work in accordance with the Sarbanes-Oxley Act of 2002. |
Charlie Morrison, President and CEO, commented, "It has been a great year for Pizza Inn. We accomplished nearly all of our goals in the continued effort to turn around this brand. Our positive same store sales growth is evidence of a preference by customers to choose Pizza Inn’s quality over that of our competition. Much of the work completed this year will manifest itself in the opening of our next Company-operated restaurant in Denton, Texas next month. This buffet-style restaurant will showcase a new, yet familiar, look to the Pizza Inn brand which represents the future of Company-owned and franchised Pizza Inn’s everywhere.”
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. | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (In thousands, except per share amounts) | ||||||||
| Year Ended | ||||||||
| June 29, | June 24, | |||||||
| REVENUES: | 2008 | 2007 | ||||||
| Food and supply sales | $ | 43,807 | $ | 41,029 | ||||
| Franchise revenue | 4,970 | 4,622 | ||||||
| Restaurant sales | 741 | 774 | ||||||
| 49,518 | 46,425 | |||||||
| COSTS AND EXPENSES: | ||||||||
| Cost of sales | 40,819 | 39,170 | ||||||
| Franchise expenses | 2,538 | 2,633 | ||||||
| General and administrative expenses | 2,957 | 3,842 | ||||||
| Severance | 391 | - | ||||||
| Provision for bad debts | 146 | 96 | ||||||
| Loss (gain) on sale of assets | 9 | (570 | ) | |||||
| Other income | - | (159 | ) | |||||
| Impairment of long-lived assets | - | 48 | ||||||
| (Recovery of) provision for litigation costs | (284 | ) | 302 | |||||
| Interest expense | - | 476 | ||||||
| 46,576 | 45,838 | |||||||
| INCOME FROM CONTINUTING OPERATIONS BEFORE TAXES | 2,942 | 587 | ||||||
| Income taxes | (99 | ) | - | |||||
| INCOME FROM CONTINUING OPERATIONS | 3,041 | 587 | ||||||
| Loss from discontinued operations, net of income tax benefit | (216 | ) | (381 | ) | ||||
| NET INCOME | $ | 2,825 | $ | 206 | ||||
| EARNINGS (LOSS) PER SHARE OF COMMON | ||||||||
| STOCK - BASIC: | ||||||||
| Income from continuing operations | $ | 0.31 | $ | 0.06 | ||||
| Loss from discontinued operations | $ | (0.02 | ) | $ | (0.04 | ) | ||
| Net income | $ | 0.29 | $ | 0.02 | ||||
| EARNINGS (LOSS) PER SHARE OF COMMON | ||||||||
| STOCK - DILUTED: | ||||||||
| Income from continuing operations | $ | 0.31 | $ | 0.06 | ||||
| Loss from discontinued operations | $ | (0.02 | ) | $ | (0.04 | ) | ||
| Net income | $ | 0.29 | $ | 0.02 | ||||
| Weighted average common | ||||||||
| shares outstanding - basic | 9,761 | 10,145 | ||||||
| Weighted average common | ||||||||
| shares outstanding - diluted | 9,789 | 10,146 | ||||||
| PIZZA INN, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except share amounts) | ||||||||
| June 29, | June 24, | |||||||
| ASSETS | 2008 | 2007 | ||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 1,157 | $ | 1,879 | ||||
| Accounts receivable, less allowance for doubtful | ||||||||
| accounts of $128 and $451, respectively | 2,773 | 2,716 | ||||||
| Notes receivable, current portion | 6 | 8 | ||||||
| Income tax receivable | 272 | - | ||||||
| Inventories | 1,396 | 1,518 | ||||||
| Property held for sale | 301 | 336 | ||||||
| Deferred income tax assets | 555 | 458 | ||||||
| Prepaid expenses and other | 235 | 165 | ||||||
| Total current assets | 6,695 | 7,080 | ||||||
| LONG-TERM ASSETS | ||||||||
| Property, plant and equipment, net | 635 | 778 | ||||||
| Notes receivable | 7 | 12 | ||||||
| Deferred income tax assets | 237 | - | ||||||
| Re-acquired development territory, net | 46 | 239 | ||||||
| Deposits and other | 215 | 85 | ||||||
| $ | 7,835 | $ | 8,194 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable - trade | $ | 2,380 | $ | 2,082 | ||||
| Accrued expenses | 1,316 | 1,805 | ||||||
| Total current liabilities | 3,696 | 3,887 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Deferred gain on sale of property | 184 | 209 | ||||||
| Deferred revenues, net of current portion | 283 | 314 | ||||||
| Other long-term liabilities | 18 | 7 | ||||||
| Total liabilities | 4,181 | 4,417 | ||||||
| COMMITMENTS AND CONTINGENCIES (See Notes D, F and I) | ||||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Common stock, $.01 par value; authorized 26,000,000 | ||||||||
| shares; issued 15,130,319 and 15,120,319 shares, respectively; | ||||||||
| outstanding 9,104,361 and 10,168,494 shares, respectively | 151 | 151 | ||||||
| Additional paid-in capital | 8,543 | 8,471 | ||||||
| Retained earnings | 17,624 | 14,799 | ||||||
| Treasury stock at cost | ||||||||
| Shares in treasury: 6,025,958 and 4,951,825, respectively | (22,664 | ) | (19,644 | ) | ||||
| Total shareholders' equity | 3,654 | 3,777 | ||||||
| $ | 7,835 | $ | 8,194 | |||||
| PIZZA INN, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| Year Ended | ||||||||
| June 29, | June 24, | |||||||
| 2008 | 2007 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 2,825 | $ | 206 | ||||
| Adjustments to reconcile net income to cash | ||||||||
| provided by (used for) operating activities: | ||||||||
| Depreciation and amortization | 342 | 692 | ||||||
| Impairment of long-lived assets and goodwill | - | 48 | ||||||
| Deferred rent expense (benefit) | 54 | (9 | ) | |||||
| Provision for bad debt | 146 | 96 | ||||||
| Stock compensation expense (benefit) | 51 | (14 | ) | |||||
| Litigation expense (benefit) | - | 302 | ||||||
| Loss (gain) on sale of assets | 9 | (570 | ) | |||||
| Deferred income taxes | (334 | ) | 687 | |||||
| Changes in operating assets and liabilities: | ||||||||
Deferred revenue | (53 | ) | 196 | |||||
Notes and accounts receivable | (196 | ) | 320 | |||||
Income tax receivable | (272 | ) | - | |||||
Inventories | 122 | 254 | ||||||
Accounts payable - trade | 298 | (135 | ) | |||||
Accrued expenses | (490 | ) | (3,520 | ) | ||||
Prepaid expenses and other | (83 | ) | 76 | |||||
| Cash provided by (used for) operating activities | 2,419 | (1,371 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Proceeds from sale of assets | 108 | 11,325 | ||||||
| Capital expenditures | (249 | ) | (249 | ) | ||||
| Cash (used for) provided by investing activities | (141 | ) | 11,076 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Deferred financing costs | - | (25 | ) | |||||
| Repayments of long-term bank debt | - | (8,044 | ) | |||||
| Purchases of treasury stock | (3,020 | ) | - | |||||
| Proceeds from exercise of stock options | 20 | 59 | ||||||
| Cash used for financing activities | (3,000 | ) | (8,010 | ) | ||||
| Net (decrease) increase in cash and cash equivalents | (722 | ) | 1,695 | |||||
| Cash and cash equivalents, beginning of year | 1,879 | 184 | ||||||
| Cash and cash equivalents, end of year | $ | 1,157 | $ | 1,879 | ||||