FOR IMMEDIATE RELEASE
Conta ct:
Nancy Ellefson
VP of Finance
Pizza Inn, Inc.
469-384-5000
nellefson@pihq.com
PIZZA INN, INC. REPORTS RESULTS FOR
FISCAL YEAR 2009
CEO is encouraged by success of new Buffet prototype and its promise for the
future of the Pizza Inn brand
The Colony, Texas – September 23, 2009 -- PIZZA INN, INC. (NASDAQ:PZZI) today reported net income of $1.2 million, or $0.14 per share, for the fiscal year ended June 28, 2009, versus net income of $2.8 million, or $0.29 per share, for the prior fiscal year. The $0.15 difference in earnings per share is driven primarily by two factors. Due to a change in the availability and use of its net loss carryforwards, the Company reported tax expense of $0.5 million in fiscal year 2009 compared to a tax benefit of $0.1 million in fiscal year 2008, representing $0.07 of the earnings per share difference. In addition, the Company incurred litigation settlement expenses of $0.3 million in fiscal year 2009 versus a litigation settlement benefit of $0.3 million in fiscal year 2008, representing another $0.06 of the earnings per share difference. In the absence of these items, earning per share would have been $0.23 for fiscal year 2009 compared to $0.25 for fiscal year 2008.
Highlights for the fourth quarter and fiscal year 2009 included:
| • | Sales from Company-owned restaurants increased 153%, or $1.1 million, in fiscal 2009 compared to the prior year, primarily due to the opening of the buffet location in Denton, Texas in October of 2008. | |||||||
| • | Comparable domestic buffet restaurant sales decreased 1.3% for fiscal 2009 and 3.8% for the fourth quarter compared to the prior fiscal year. | |||||||
| • | Total comparable domestic restaurant sales decreased 2.0% for fiscal 2009 and 4.4% for the fourth quarter compared to the prior fiscal year. | |||||||
| • | Buffet unit and total unit closures for the fourth quarter and fiscal year 2009 were at their lowest in the last ten years. |
Charlie Morrison, President and CEO, commented, "Despite the tough economic conditions, we are seeing positive results from the changes we have made to the Pizza Inn concept. Comparable buffet restaurant sales have trended ahead of pizza segment averages, which is encouraging for the continued momentum of the brand. Our successful new buffet prototype, combined with a great incentive program for franchise development, has delivered 13 new buffet franchise agreements for the coming fiscal year. These new franchise agreements include both new and existing franchisees. We also opened our third company-owned restaurant in Ft. Worth, Texas last week and have plans to continue expanding our company-owned store base in the future.”
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 an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademark “Pizza Inn.” The Company and its distribution division, Norco Restaurant Services Company, are headquartered in The Colony, Texas. The Company’s common stock is listed on the Nasdaq Capital Market under the symbol “PZZI.”
PIZZA INN, INC. | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(In thousands, except per share amounts) |
Year Ended | ||||||||
June 28, | June 29, | |||||||
| REVENUES: | 2009 | 2008 | ||||||
| Food and supply sales | $ | 37,793 | $ | 43,807 | ||||
| Franchise revenue | 4,180 | 4,970 | ||||||
| Restaurant sales | 1,873 | 741 | ||||||
| 43,846 | 49,518 | |||||||
| COSTS AND EXPENSES: | ||||||||
| Cost of sales | 36,355 | 40,819 | ||||||
| Franchise expenses | 1,929 | 2,538 | ||||||
| General and administrative expenses | 3,217 | 2,911 | ||||||
| Severance | 68 | 391 | ||||||
| Provision for bad debts | 75 | 146 | ||||||
| Loss on sale of assets | -- | 9 | ||||||
| Provision for (recovery of) litigation costs | 263 | (284 | ) | |||||
| Interest expense | 57 | 46 | ||||||
| 41,964 | 46,576 | |||||||
| INCOME FROM CONTINUING | ||||||||
| OPERATIONS BEFORE TAXES | 1,882 | 2,942 | ||||||
| Income tax expense (benefit) | 531 | (99 | ) | |||||
| INCOME FROM | ||||||||
| CONTINUING OPERATIONS | 1,351 | 3,041 | ||||||
| Loss from discontinued | ||||||||
| operations, net of income tax benefit | (179 | ) | (216 | ) | ||||
| NET INCOME | $ | 1,172 | $ | 2,825 | ||||
| EARNINGS (LOSS) PER SHARE OF COMMON | ||||||||
| STOCK - BASIC: | ||||||||
| Income from continuing operations | $ | 0.16 | $ | 0.31 | ||||
| Loss from discontinued operations | $ | (0.02 | ) | $ | (0.02 | ) | ||
| Net income | $ | 0.14 | $ | 0.29 | ||||
| EARNINGS (LOSS) PER SHARE OF COMMON | ||||||||
| STOCK - DILUTED: | ||||||||
| Income from continuing operations | $ | 0.16 | $ | 0.31 | ||||
| Loss from discontinued operations | $ | (0.02 | ) | $ | (0.02 | ) | ||
| Net income | $ | 0.14 | $ | 0.29 | ||||
| Weighted average common | ||||||||
| shares outstanding - basic | 8,580 | 9,761 | ||||||
| Weighted average common | ||||||||
| shares outstanding - diluted | 8,580 | 9,789 | ||||||
PIZZA INN, INC. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands, except share amounts) |
June 28, | June 29, | |||||||
| ASSETS | 2009 | 2008 | ||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 274 | $ | 1,157 | ||||
| Accounts receivable, less allowance for doubtful | ||||||||
| accounts of $203 and $128, respectively | 2,559 | 2,773 | ||||||
| Income tax receivable | 80 | 272 | ||||||
| Inventories | 1,371 | 1,396 | ||||||
| Property held for sale | 17 | 301 | ||||||
| Deferred income tax assets | 618 | 555 | ||||||
| Prepaid expenses and other | 233 | 241 | ||||||
| Total current assets | 5,152 | 6,695 | ||||||
| LONG-TERM ASSETS | ||||||||
| Property, plant and equipment, net | 1,743 | 635 | ||||||
| Deferred income tax assets | 86 | 237 | ||||||
| Re-acquired development territory, net | -- | 46 | ||||||
| Deposits and other | 81 | 222 | ||||||
| $ | 7,062 | $ | 7,835 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable - trade | $ | 1,806 | $ | 2,380 | ||||
| Deferred revenues | 132 | 134 | ||||||
| Accrued expenses | 1,009 | 1,182 | ||||||
| Total current liabilities | 2,947 | 3,696 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Deferred gain on sale of property | 159 | 184 | ||||||
| Deferred revenues, net of current portion | 246 | 283 | ||||||
| Bank debt | 621 | -- | ||||||
| Other long-term liabilities | 37 | 18 | ||||||
| Total liabilities | 4,010 | 4,181 | ||||||
| COMMITMENTS AND CONTINGENCIES (See Notes F and I) | ||||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Common stock, $.01 par value; authorized 26,000,000 | ||||||||
| shares; issued 15,130,319 and 15,130,319 shares, respectively; | ||||||||
| outstanding 8,010,919 and 9,104,361 shares, respectively | 151 | 151 | ||||||
| Additional paid-in capital | 8,741 | 8,543 | ||||||
| Retained earnings | 18,796 | 17,624 | ||||||
| Treasury stock at cost | ||||||||
| Shares in treasury: 7,119,400 and 6,025,958, respectively | (24,636 | ) | (22,664 | ) | ||||
| Total shareholders' equity | 3,052 | 3,654 | ||||||
| $ | 7,062 | $ | 7,835 | |||||
PIZZA INN, INC. | |||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | |||||||
(In thousands) |
| Year Ended | ||||||||
June 28, | June 29, | |||||||
2009 | 2008 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 1,172 | $ | 2,825 | ||||
| Adjustments to reconcile net income to cash | ||||||||
| provided by (used for) operating activities: | ||||||||
| Depreciation and amortization | 290 | 342 | ||||||
| Provision for bad debt | 75 | 146 | ||||||
| Stock compensation expense | 198 | 51 | ||||||
| Loss on sale of assets | -- | 9 | ||||||
| Deferred income taxes | 88 | (334 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Notes and accounts receivable | 146 | (196 | ) | |||||
| Income tax receivable | 192 | (272 | ) | |||||
| Inventories | 25 | 122 | ||||||
| Accounts payable - trade | (574 | ) | 298 | |||||
| Accrued expenses | (175 | ) | (489 | ) | ||||
| Prepaid expenses and other | 80 | (83 | ) | |||||
| Cash provided by operating activities | 1,517 | 2,419 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Proceeds from sale of assets | -- | 108 | ||||||
| Capital expenditures | (1,049 | ) | (249 | ) | ||||
| Cash used for investing activities | (1,049 | ) | (141 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net borrowings of long-term bank debt | 621 | -- | ||||||
| Purchases of treasury stock | (1,972 | ) | (3,020 | ) | ||||
| Proceeds from exercise of stock options | -- | 20 | ||||||
| Cash used for financing activities | (1,351 | ) | (3,000 | ) | ||||
| Net decrease in cash and cash equivalents | (883 | ) | (722 | ) | ||||
| Cash and cash equivalents, beginning of year | 1,157 | 1,879 | ||||||
| Cash and cash equivalents, end of year | $ | 274 | $ | 1,157 | ||||