FOR IMMEDIATE RELEASE
Contact:
Nancy Ellefson
VP of Finance
Pizza Inn, Inc.
469-384-5000
PIZZA INN, INC. REPORTS RESULTS FOR
FIRST QUARTER FISCAL YEAR 2010
Key elements of a sustainable growth strategy are in place and working
The Colony, Texas – November 5, 2009 -- PIZZA INN, INC. (NASDAQ:PZZI) today reported net income of $0.4 million, or $0.05 per share, for the fiscal quarter ended September 27, 2009, versus net income of $0.3 million, or $0.03 per share, for the same quarter of the prior fiscal year.
Highlights for the first quarter of fiscal year 2010 included:
| • | Sales from Company-owned restaurants increased 186%, or $0.4 million, in the first quarter of fiscal 2010 compared to the same quarter of the prior fiscal year, primarily due to the opening of new buffet locations in Denton, Texas in October, 2008 and Ft. Worth, Texas in September, 2009. | |||||||
| • | Comparable domestic buffet restaurant sales decreased 3.6% for the first quarter of fiscal 2010 compared to the same quarter of the prior fiscal year. | |||||||
| • | Chain-wide comparable domestic restaurant sales decreased 4.2% for the first quarter of fiscal 2010 compared to the same quarter of the prior fiscal year. | |||||||
| • | Franchise revenue for the first quarter of fiscal 2010 was flat to the same quarter of the prior fiscal year at $1.1 million despite the decline in same store sales due to four new franchise store openings in the current fiscal quarter compared to one new opening in the same quarter of the prior fiscal year. | |||||||
| • | For the second consecutive fiscal quarter, there were no buffet restaurant closures in the first quarter of fiscal 2010, compared to three such closures in the first quarter of fiscal 2009. | |||||||
Charlie Morrison, President and CEO, commented, "Over the past two years, we have communicated that the keys to long-term sustainable growth and rejuvenation of the Pizza Inn brand centered around slowing the rate of buffet closures, successfully opening new company-operated restaurants, and building a pipeline of new franchise openings for the future. First quarter results demonstrate that these initiatives are working. No buffet restaurants have been closed for two consecutive quarters, another new company-operated store has been successfully opened, and new franchise locations have been opened, with more slated to open during the remainder of the fiscal year.Although tough economic conditions have impacted same store sales, our top-line performance is ahead of the pizza category average and the health of our business is very good.”
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. ( ) 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | ||||||||
September 27, | September 28, | |||||||
| REVENUES: | 2009 | 2008 | ||||||
| Food and supply sales | $ | 8,395 | $ | 10,134 | ||||
| Franchise revenue | 1,062 | 1,064 | ||||||
| Restaurant sales | 543 | 190 | ||||||
| 10,000 | 11,388 | |||||||
| COSTS AND EXPENSES: | ||||||||
| Cost of sales | 8,116 | 9,655 | ||||||
| Franchise expenses | 467 | 479 | ||||||
| General and administrative expenses | 777 | 687 | ||||||
| Severance | -- | 37 | ||||||
| Bad debt | 15 | 15 | ||||||
| Interest expense | 14 | 12 | ||||||
| 9,389 | 10,885 | |||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE TAXES | 611 | 503 | ||||||
| Income taxes | 206 | 161 | ||||||
| INCOME FROM CONTINUING OPERATIONS | 405 | 342 | ||||||
| Loss from discontinued operations, net of taxes | (39 | ) | (49 | ) | ||||
| NET INCOME | 366 | 293 | ||||||
| EARNINGS PER SHARE OF COMMON STOCK - BASIC: | ||||||||
| Income from continuing operations | $ | 0.05 | $ | 0.04 | ||||
| Loss from discontinued operations | (0.00 | ) | (0.01 | ) | ||||
| Net income | $ | 0.05 | $ | 0.03 | ||||
| EARNINGS PER SHARE OF COMMON STOCK - DILUTED: | ||||||||
| Income from continuing operations | $ | 0.05 | $ | 0.04 | ||||
| Loss from discontinued operations | (0.00 | ) | (0.01 | ) | ||||
| Net income | $ | 0.05 | $ | 0.03 | ||||
| Weighted average common shares outstanding - basic | 8,011 | 8,946 | ||||||
| Weighted average common and | ||||||||
| potential dilutive common shares outstanding | 8,011 | 8,970 | ||||||
PIZZA INN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
September 27, | June 28, | |||||||
| ASSETS | 2009 (unaudited) | 2009 | ||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 91 | $ | 274 | ||||
| Accounts receivable, less allowance for bad debts | ||||||||
| of $92 and $203, respectively | 2,746 | 2,559 | ||||||
| Income tax receivable | -- | 80 | ||||||
| Inventories | 1,359 | 1,371 | ||||||
| Property held for sale | 17 | 17 | ||||||
| Deferred income tax assets | 618 | 618 | ||||||
| Prepaid expenses and other | 480 | 233 | ||||||
| Total current assets | 5,311 | 5,152 | ||||||
| LONG-TERM ASSETS | ||||||||
| Property, plant and equipment, net | 2,210 | 1,743 | ||||||
| Deferred income tax assets | 86 | 86 | ||||||
| Deposits and other | 102 | 81 | ||||||
| $ | 7,709 | $ | 7,062 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable - trade | $ | 1,742 | $ | 1,806 | ||||
| Deferred revenues | 325 | 132 | ||||||
| Accrued expenses | 1,129 | 1,009 | ||||||
| Total current liabilities | 3,196 | 2,947 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Deferred gain on sale of property | 153 | 159 | ||||||
| Deferred revenues | 236 | 246 | ||||||
| Bank debt | 645 | 621 | ||||||
| Other long-term liabilities | 24 | 37 | ||||||
| Total liabilities | 4,254 | 4,010 | ||||||
| COMMITMENTS AND CONTINGENCIES (See Note 3) | ||||||||
| 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 8,010,919 shares, respectively | 151 | 151 | ||||||
| Additional paid-in capital | 8,778 | 8,741 | ||||||
| Retained earnings | 19,162 | 18,796 | ||||||
| Treasury stock at cost | ||||||||
| Shares in treasury: 7,119,400 and 7,119,400, respectively | (24,636 | ) | (24,636 | ) | ||||
| Total shareholders' equity | 3,455 | 3,052 | ||||||
| $ | 7,709 | $ | 7,062 | |||||
PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(In thousands)
(Unaudited)
Three Months Ended | ||||||||
September 27, | September 28, | |||||||
2009 | 2008 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 366 | $ | 293 | ||||
| Adjustments to reconcile net income to | ||||||||
| cash used for operating activities: | ||||||||
| Depreciation and amortization | 72 | 83 | ||||||
| Stock compensation expense | 37 | 55 | ||||||
| Provision for bad debts | 15 | 15 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Notes and accounts receivable | (122 | ) | 209 | |||||
| Inventories | 12 | (20 | ) | |||||
| Accounts payable - trade | (64 | ) | (866 | ) | ||||
| Accrued expenses | (43 | ) | (327 | ) | ||||
| Deferred revenue | 177 | 12 | ||||||
| Prepaid expenses and other | (281 | ) | (120 | ) | ||||
| Cash provided (used) for operating activities | 169 | (666 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Capital expenditures | (539 | ) | (407 | ) | ||||
| Cash used for investing activities | (539 | ) | (407 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Change in line of credit, net | 24 | 301 | ||||||
| Cash overdraft | 163 | 582 | ||||||
| Repurchase of common stock | -- | (814 | ) | |||||
| Cash provided by financing activities | 187 | 69 | ||||||
| Net decrease in cash and cash equivalents | (183 | ) | (1,004 | ) | ||||
| Cash and cash equivalents, beginning of period | 274 | 1,157 | ||||||
| Cash and cash equivalents, end of period | $ | 91 | $ | 153 | ||||