Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Jun. 29, 2014 | Sep. 23, 2014 | Dec. 29, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'PIZZA INN HOLDINGS, INC /MO/ | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 29-Jun-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Entity Central Index Key | '0000718332 | ' | ' |
Current Fiscal Year End Date | '--06-30 | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 9,317,672 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Entity Public Float | ' | ' | $44,400,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 |
Revenues: | ' | ' |
REVENUES: | $42,224 | $41,181 |
COSTS AND EXPENSES: | ' | ' |
Cost of sales | 36,325 | 34,767 |
Franchise expenses | 2,931 | 2,390 |
General and administrative expenses | 4,373 | 4,106 |
Pre-opening expenses | 161 | 286 |
Impairment of long-lived assets and other lease charges | 253 | 766 |
Bad debt | 253 | 205 |
Interest expense | 142 | 244 |
Total Expenses | 44,438 | 42,764 |
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES | -2,214 | -1,583 |
Income tax benefit | -760 | -504 |
LOSS FROM CONTINUING OPERATIONS. | -1,454 | -1,079 |
Loss from discontinued operations, net of taxes | -113 | -182 |
NET LOSS | ($1,567) | ($1,261) |
LOSS PER SHARE OF COMMON STOCK - BASIC: | ' | ' |
Loss from continuing operations Basic per share | ($0.17) | ($0.13) |
Loss from discontinued operations Basic per share | ($0.01) | ($0.03) |
Net loss Basic per share | ($0.18) | ($0.16) |
LOSS PER SHARE OF COMMON STOCK - DILUTED: | ' | ' |
Loss from continuing operations Diluted per shares | ($0.16) | ($0.13) |
Loss from discontinued operations Diluted per share | ($0.01) | ($0.02) |
Net loss Diluted per share | ($0.17) | ($0.15) |
Weighted average common shares outstanding - basic | 8,635 | 8,031 |
Weighted average common shares outstanding - diluted | 9,173 | 8,310 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Jun. 29, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS | ' | ' |
Cash and cash equivalents | $2,796 | $919 |
Accounts receivable, less allowance for doubtful accounts of $276 and $228, respectively | 3,276 | 3,139 |
Notes receivable | 81 | 292 |
Inventories | 1,703 | 1,615 |
Income tax receivable | 386 | 343 |
Deferred income tax assets | 951 | 882 |
Prepaid expenses and other | 173 | 307 |
Total current assets | 9,366 | 7,497 |
LONG-TERM ASSETS | ' | ' |
Property, plant and equipment, net | 5,133 | 4,711 |
Long-term notes receivable | 134 | 40 |
Long-term deferred tax asset | 939 | 168 |
Deposits and other | 396 | 119 |
Total assets | 15,968 | 12,535 |
CURRENT LIABILITIES | ' | ' |
Accounts payable - trade | 2,023 | 1,572 |
Accrued expenses | 926 | 792 |
Deferred rent | 163 | 249 |
Deferred revenues | 177 | 169 |
Bank debt | 500 | 669 |
Total current liabilities | 3,789 | 3,451 |
LONG-TERM LIABILITIES | ' | ' |
Bank debt, net of current portion | 267 | 1,856 |
Deferred rent, net of current portion | 822 | 708 |
Deferred revenues, net of current portion | 791 | 370 |
Deferred gain on sale of property | 34 | 59 |
Other long-term liabilities | 23 | 22 |
Total liabilities | 5,726 | 6,466 |
COMMITMENTS AND CONTINGENCIES (See Notes F and J) | ' | ' |
SHAREHOLDERS' EQUITY | ' | ' |
Common stock, $.01 par value; authorized 26,000,000 shares; issued 16,240,412 and 15,312,680 shares, respectively; outstanding 9,121,012 and 8,193,280 shares, respectively | 162 | 153 |
Additional paid-in capital | 15,905 | 10,174 |
Retained earnings | 18,811 | 20,378 |
Treasury stock at cost 7,119,400 shares | -24,636 | -24,636 |
Total shareholders' equity | 10,242 | 6,069 |
Total Liabilities & Shareholders' Equity | $15,968 | $12,535 |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $) | Jun. 29, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Parentheticals | ' | ' |
Accounts receivable, less allowance for Bad Debts | $276 | $228 |
Common Stock, shares authorized | 26,000,000 | 26,000,000 |
Common Stock, shares issued | 16,240,412 | 15,312,680 |
Common Stock, shares outstanding | 9,121,012 | 8,193,280 |
Treasury stock, Shares | 7,119,400 | 7,119,400 |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | Common Stock Shares | Common Stock Amount | Additional Paid-in Capital | Retained Earnings | Treasury Stock Shares | Treasury Stock Amount | Total |
In Thousands | USD ($) | USD ($) | USD ($) | ||||
BALANCE, at Jun. 24, 2012 | 8,021 | 151 | 9,154 | 21,639 | -7,119 | -24,636 | 6,308 |
Stock compensation expense | ' | ' | $150 | ' | ' | ' | $150 |
Stock options exercised | ' | ' | ' | ' | ' | ' | 0 |
Sale of Stock | 172 | 2 | 870 | ' | ' | ' | 872 |
Net loss | ' | ' | ' | -1,261 | ' | ' | -1,261 |
BALANCE, at Jun. 30, 2013 | 8,193 | 153 | 10,174 | 20,378 | -7,119 | -24,636 | 6,069 |
Stock compensation expense | ' | ' | 68 | ' | ' | ' | 68 |
Stock options exercised | 39 | ' | 82 | ' | ' | ' | 82 |
Sale of Stock | 889 | 9 | 5,581 | ' | ' | ' | 5,590 |
Net loss | ' | ' | ' | ($1,567) | ' | ' | ($1,567) |
BALANCE, at Jun. 29, 2014 | 9,121 | 162 | 15,905 | 18,811 | -7,119 | -24,636 | 10,242 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($1,567) | ($1,261) |
Adjustments to reconcile net loss to cash (used in) provided by operating activities: | ' | ' |
Impairment of fixed assets and other assets | 253 | 766 |
Depreciation and amortization | 1,454 | 1,304 |
(Gain) loss on the sale of assets | -97 | 129 |
Provision for bad debt | 48 | 25 |
Stock compensation expense | 68 | 150 |
Deferred income taxes | -840 | -671 |
Changes in operating assets and liabilities: | ' | ' |
Notes and accounts receivable | -70 | -283 |
Income tax receivable | -41 | 88 |
Inventories | -88 | 237 |
Prepaid expenses and other | -213 | 247 |
Deferred revenue | 404 | ' |
Accounts payable - trade | 451 | 10 |
Accrued expenses | 163 | -7 |
Cash (used) provided by operating activities | -75 | 734 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Proceeds from sale of assets | 106 | 184 |
Capital expenditures | -2,068 | -2,244 |
Cash used for investing activities | -1,962 | -2,060 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Borrowings of bank debt | ' | 3,460 |
Repayments of bank debt | -1,758 | -2,677 |
Proceeds from sale of stock | 5,590 | 872 |
Proceeds from exercise of stock options | 82 | ' |
Cash provided by financing activities | 3,914 | 1,655 |
Net increase in cash and cash equivalents | 1,877 | 329 |
Cash and cash equivalents, beginning of year | 919 | 590 |
Cash and cash equivalents, end of year | 2,796 | 919 |
CASH PAID FOR: | ' | ' |
Interest | 142 | 296 |
Income taxes (refunded) paid | $17 | ($67) |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||||
Jun. 29, 2014 | |||||
Summary of Significant Accounting Policies | ' | ||||
Summary of Significant Accounting Policies | ' | ||||
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |||||
Description of Business: | |||||
Pizza Inn Holdings, Inc. and its subsidiaries (collectively referred to as the “Company”, or in the first person notations of “we”, “us” and “our”) operate and franchise pizza buffet, delivery/carry-out and express restaurants domestically and internationally under the trademark “Pizza Inn” and operate and franchise domestic fast casual restaurants under the trademarks “Pie Five Pizza Company” or “Pie Five”. We provide or facilitate the procurement and distribution of food, equipment and supplies to our domestic and international system of restaurants through our Norco Restaurant Services Company (“Norco”) division and through agreements with third party distributors. | |||||
As of June 29, 2014, we owned and operated 15 restaurants comprised of 13 Pie Five restaurants (“Pie Five Units”) and two Pizza Inn buffet restaurants (“Buffet Units”). As of that date, we also had seven franchised Pie Five Units and 251 franchised Pizza Inn restaurants. The 180 domestic franchised Pizza Inn restaurants were comprised of 103 Buffet Units, 24 delivery/carry-out restaurants (“Delco Units”) and 53 express restaurants (“Express Units”). The 71 international franchised Pizza Inn restaurants were comprised of 18 Buffet Units, 45 Delco Units and 8 Express Units. Domestic restaurants were located predominantly in the southern half of the United States, with Texas, North Carolina, Arkansas and Mississippi accounting for approximately 34%, 14%, 12% and 6%, respectively, of the total number of domestic restaurants. | |||||
Principles of Consolidation: | |||||
The consolidated financial statements include the accounts of Pizza Inn Holdings, Inc. and its subsidiaries, all of which are wholly owned. All appropriate inter-company balances and transactions have been eliminated. | |||||
Reclassifications: | |||||
Certain reclassifications have been made to prior period amounts to conform to the current period presentation. | |||||
Cash and Cash Equivalents: | |||||
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. | |||||
Inventories: | |||||
Inventory, which consists primarily of food, paper products and supplies primarily warehoused by the Company’s third-party distributor, is stated at lower of cost or market, with cost determined according to the weighted average cost method. The valuation of inventory requires us to estimate the amount of obsolete and excess inventory. The determination of obsolete and excess inventory requires us to estimate the future demand for the Company’s products within specific time horizons, generally six months or less. If the Company’s demand forecast for specific products is greater than actual demand and the Company fails to reduce purchasing accordingly, the Company could be required to write down inventory, which would have a negative impact on the Company’s gross margin. | |||||
Closed Restaurants and Discontinued Operations: | |||||
The authoritative guidance on “Accounting for the Impairment or Disposal of Long-Lived Assets,” requires that discontinued operations that meet certain criteria be reflected in the statement of operations after results of continuing operations as a net amount. This guidance also requires that the operations of closed restaurants, including any impairment charges, be reclassified to discontinued operations for all periods presented. | |||||
The authoritative guidance on “Accounting for Costs Associated with Exit or Disposal Activities,” requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. This authoritative guidance also establishes that fair value is the objective for initial measurement of the liability. | |||||
Discontinued operations include losses from two Pizza Inn locations in Texas. One is a leased building associated with a Company-owned restaurant closed during fiscal 2008. The other is results of operations for a Company-owned restaurant that was closed in the fourth quarter of fiscal 2014 due to declining sales. | |||||
Property, Plant and Equipment: | |||||
Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Repairs and maintenance are charged to operations as incurred while major renewals and betterments are capitalized. Upon the sale or disposition of a fixed asset, the asset and the related accumulated depreciation or amortization is removed from the accounts and the gain or loss is included in operations. The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying asset and amortized over the estimated useful life of the asset. | |||||
Depreciation and amortization are computed on the straight-line method over the estimated useful lives of the assets or, in the case of leasehold improvements, over the term of the lease including any reasonably assured renewal periods, if shorter. The useful lives of the assets range from three to ten years. | |||||
Impairment of Long-Lived Asset and other Lease Charges: | |||||
The Company reviews long-lived assets for impairment when events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the assets compared to its carrying value. If impairment is recognized, the carrying value of the impaired asset is reduced to its fair value, based on discounted estimated future cash flows. During fiscal year 2014 and 2013, the Company tested its long-lived assets for impairment and recognized pre-tax, non-cash impairment charges of $0.3 million and $0.8 million, respectively, related to the carrying value of two Company-owned Buffet Units in Texas and three Company-owned Pie Five Units in Texas. | |||||
Accounts Receivable: | |||||
Accounts receivable consist primarily of receivables from food and supply sales and franchise royalties. The Company records a provision for doubtful receivables to allow for any amounts that may be unrecoverable based upon an analysis of the Company's prior collection experience, customer creditworthiness and current economic trends. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Finance charges may be accrued at a rate of 18% per year, or up to the maximum amount allowed by law, on past due receivables. The interest income recorded from finance charges is immaterial. | |||||
Notes Receivable: | |||||
Notes receivable primarily consist of accounts receivable from franchisees converted into notes. The majority of amounts and terms are contained under formal promissory and personal guarantee agreements. All notes allow for early payment without penalty. Fixed principle and interest payments are due weekly or monthly. Interest income is recognized monthly. Notes receivable mature at various dates through 2016 and bear interest at rates that range from 7% to 15% (8% average rate at June 29, 2014). | |||||
Management evaluates the creditworthiness of franchisees by considering credit history and sales to evaluate credit risk. Management determines interest rates based on credit risk of the underlining franchisee. The Company monitors payment history to determine whether or not a loan should be placed on a nonaccrual status or impaired. | |||||
The Company charges off notes receivable based on an account-by-account analysis of the borrower’s current economic conditions, monthly payments history and historical loss experience. The allowance for doubtful notes receivable is included with the allowance for doubtful accounts. | |||||
Notes receivable as of June 29, 2014 totaled $215,000, of which $81,000 is included in current assets, notes receivable and $134,000 is included in long-term notes receivable in the accompanying balance sheet. | |||||
The principal balance outstanding on the notes and advances receivable and expected principal collections for the next five years and thereafter were as follows as of June 29, 2014 (in thousands): | |||||
Notes | |||||
Receivable | |||||
2015 | 81 | ||||
2016 | 10 | ||||
2017 | 8 | ||||
2018 | 12 | ||||
2019 and thereafter | 104 | ||||
$ | 215 | ||||
There were no charge offs for the fiscal year ended June 29, 2014. | |||||
Income Taxes: | |||||
Income taxes are accounted for using the asset and liability method pursuant to the authoritative guidance on Accounting for Income Taxes. Deferred taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement and carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes for a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes future tax benefits to the extent that realization of such benefits is more likely than not. | |||||
Management evaluates the deferred tax asset at the end of each fiscal quarter to determine if an allowance against the deferred tax asset is required, and at the end of fiscal years 2014 and 2013 determined that it was more likely than not that the deferred tax asset would be fully realized based on the expectation of future taxable income and the future reversal of temporary differences. Therefore, no allowance was recorded. This determination and future estimates could be impacted by changes in future taxable income, the results of tax strategies or changes in tax laws. | |||||
The Company follows authoritative guidance that prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. This authoritative guidance requires that a company recognize in its financial statements the impact of tax positions that meet a “more likely than not” threshold, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of June 29, 2014 and June 30, 2013, the Company had no uncertain tax positions. Federal returns for tax years 2010 through 2013 remained open for examination as of June 29, 2014. | |||||
Pre-Opening Expense: | |||||
The Company's pre-opening costs are expensed as incurred and generally include payroll and other direct costs associated with training new managers and employees prior to opening a new restaurant, rent and other unit operating expenses incurred prior to opening, and promotional costs associated with the opening. | |||||
Revenue Recognition: | |||||
The Company recognizes food and supply revenue when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. The Company's Norco division sells food and supplies to franchisees on trade accounts under terms common in the industry. Norco sales are reflected under the caption "Food and supply sales." Shipping and handling costs billed to customers are recognized as revenue and the associated costs are included in cost of sales. | |||||
Franchise revenue consists of income from license fees, royalties, and area development and foreign master license sales. License fees are recognized as income when there has been substantial performance of the agreement by both the franchisee and the Company, generally at the time the restaurant is opened. Royalties are recognized as income when earned. For the years ended June 29, 2014 and June 30, 2013, 91% and 93%, respectively, of franchise revenue was comprised of recurring royalties. | |||||
Stock Options: | |||||
We account for stock options using the fair value recognition provisions of the authoritative guidance on Share-Based Payments. The Company uses the Black-Scholes formula to estimate the value of stock-based compensation for options granted to employees and directors and expects to continue to use this acceptable option valuation model in the future. The authoritative guidance also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow. | |||||
At June 29, 2014, the Company had one stock-based employee compensation plan, and one stock-based non-employee director compensation plan. Stock options under these plans are granted at exercise prices equal to the fair market value of the Company’s stock at the dates of grant. Generally those options vest ratably over various vesting periods. The Company’s stock-based compensation plans are described more fully in Note H. | |||||
Fair Value of Financial Instruments: | |||||
The carrying amounts of accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments. The Company had approximately $0.8 million in bank debt at June 29, 2014. The fair value of bank debt approximated its carrying value at June 29, 2014. | |||||
Contingencies: | |||||
Provisions for legal settlements are accrued when payment is considered probable and the amount of loss is reasonably estimable in accordance with the authoritative guidance on Accounting for Contingencies. If the best estimate of cost can only be identified within a range and no specific amount within that range can be determined more likely than any other amount within the range, and the loss is considered probable, the minimum of the range is accrued. Legal and related professional services costs to defend litigation are expensed as incurred. | |||||
Use of Management Estimates: | |||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect its reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent liabilities. The Company bases its estimates on historical experience and other various assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed periodically. Actual results could differ materially from estimates. | |||||
Fiscal Year: | |||||
The Company's fiscal year ends on the last Sunday in June. The fiscal year ended June 29, 2014 and the fiscal year ended June 30, 2013 contained 52 and 53 weeks, respectively. |
Property_Plant_and_Equipment
Property, Plant, and Equipment | 12 Months Ended | |||||||||
Jun. 29, 2014 | ||||||||||
Property, Plant, and Equipment: | ' | |||||||||
Property, Plant and Equipment Disclosure | ' | |||||||||
NOTE B – PROPERTY, PLANT AND EQUIPMENT: | ||||||||||
Property, and plant and equipment consist of the following (in thousands): | ||||||||||
Estimated Useful | June 29, | June 30, | ||||||||
Lives | 2014 | 2013 | ||||||||
Equipment, furniture and fixtures | 3 - 7 yrs | $ | 4,864 | $ | 4,668 | |||||
Software | 5 yrs | 424 | 367 | |||||||
Vehicle | 2 - 3 yrs | 19 | 19 | |||||||
Leasehold improvements | 10 yrs or lease term, if shorter | 4,820 | 4,611 | |||||||
10,127 | 9,665 | |||||||||
Less: accumulated depreciation/amortization | (4,994 | ) | (4,954 | ) | ||||||
$ | 5,133 | $ | 4,711 | |||||||
Depreciation and amortization expense was approximately $1.5 million and $1.3 million for the fiscal years ended June 29, 2014 and June 30, 2013, respectively. | ||||||||||
Accrued_Expneses
Accrued Expneses | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Accrued Expenses | ' | ||||||||
Accrued Expeses | ' | ||||||||
NOTE C - ACCRUED EXPENSES: | |||||||||
Accrued expenses consist of the following (in thousands): | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Compensation | $ | 455 | $ | 388 | |||||
Other | 244 | 243 | |||||||
Professional fees | 132 | 63 | |||||||
Insurance loss reserves | 95 | 98 | |||||||
$ | 926 | $ | 792 | ||||||
LongTerm_Debt
Long-Term Debt | 12 Months Ended | ||||
Jun. 29, 2014 | |||||
Long-Term Debt | ' | ||||
Long-Term Debt | ' | ||||
NOTE D - LONG-TERM DEBT: | |||||
On August 28, 2012, the Company entered into a Loan and Security Agreement (the “F&M Loan Agreement”) with The F&M Bank & Trust Company (“F&M”) providing for a $2.0 million revolving credit facility (with a $500 thousand letter of credit subfacility), a $2.0 million fully funded term loan facility and a $6.0 million advancing term loan facility. An origination fee of 0.5% of the total credit facilities was paid at closing. At closing, F&M funded a $2.0 million term loan payable in 48 equal monthly installments of principal plus accrued interest at a fixed rate of 4.574% per annum. Amounts repaid under this fully funded term loan may not be reborrowed. Initial proceeds from the F&M Loan Agreement were used to repay amounts borrowed under a previous credit facility that subsequently was canceled. | |||||
On June 13, 2013 the Company entered into a First Amendment to the F&M Loan Agreement that revised certain financial covenants to address proceeds from the Company’s at-the-market offering of common stock. On September 10, 2013 the Company entered into a Second Amendment to the F&M Loan Agreement that specified the application of prepayments to the loan amortization schedule and revised certain definitions. | |||||
The Company could borrow, repay and reborrow under the revolving credit facility through August 28, 2014, at which time all amounts outstanding under the revolving credit facility would mature. The Company did not draw borrowings on the revolving credit facility during fiscal 2014 and has allowed it to expire. An unused commitment fee of 0.50% per annum was payable quarterly on the average unused portion of the revolving credit facility. | |||||
Through August 28, 2014, F&M had agreed to make up to $6.0 million in additional term loans to the Company. However, no amounts were outstanding on the advancing term loan facility at fiscal year end or the expiration of the advance period. | |||||
As security for the credit facilities, the Company has pledged substantially all of its assets including, but not limited to, accounts receivable, inventory and equipment. The F&M Loan Agreement contains various affirmative covenants which, among other things, require the Company to provide F&M with certain financial statements, compliance statements, reports and other information. The F&M Loan Agreement also contains various negative covenants which, among other things, require the Company to maintain certain financial ratios and restrict the ability of the Company to engage in certain activities. If an event of default occurs under the F&M Loan Agreement and any cure periods have expired, F&M may terminate all commitments under the credit facilities and declare all unpaid principal, interest and other amounts owing under the credit facilities to be immediately due and payable. | |||||
The Company was in compliance with all covenants under the F&M Loan Agreement as of June 29, 2014. As of June 29, 2014, the balance on the initial term loan facility was $0.8 million with an interest rate of 4.574% and scheduled monthly principle payments through September 1, 2016. As of June 29, 2014, the outstanding principal balance of the F&M term loan facility was payable as follows (in thousands): | |||||
Bank | |||||
Debt | |||||
2015 | $ | 500 | |||
2016 | 267 | ||||
2017 | - | ||||
2018 | - | ||||
2019 | - | ||||
$ | 767 | ||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Income Taxes | ' | ||||||||
Income Taxes | ' | ||||||||
NOTE E - INCOME TAXES: | |||||||||
Provision for income taxes from continuing operations consists of the following (in thousands): | |||||||||
Year Ended | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Current - Federal | $ | - | $ | - | |||||
Current - State | 18 | 33 | |||||||
Deferred - Federal | (722 | ) | (533 | ) | |||||
Deferred - State | (56 | ) | (4 | ) | |||||
Provision for income taxes | $ | (760 | ) | $ | (504 | ) | |||
Included in loss from discontinued operations is $59,000 and $94,000 of tax benefit for the fiscal years ended June 29, 2014 and June 30, 2013, respectively. | |||||||||
The effective income tax rate varied from the statutory rate for the years ended June 29, 2014 and June 30, 2013 as reflected below (in thousands): | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Federal income taxes based on 34% | |||||||||
of pre-tax income | $ | (763 | ) | $ | (538 | ) | |||
State income tax, net of federal effect | (52 | ) | 22 | ||||||
Permanent adjustments | 8 | 13 | |||||||
Other | 47 | (1 | ) | ||||||
$ | (760 | ) | $ | (504 | ) | ||||
The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands): | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Current | |||||||||
Reserve for bad debt | $ | 98 | $ | 81 | |||||
Deferred fees | 54 | 52 | |||||||
Other reserves and accruals | 798 | 749 | |||||||
950 | 882 | ||||||||
Non Current | |||||||||
Credit carryforwards | 24 | 129 | |||||||
Net operating loss carryforwards | 181 | 300 | |||||||
Depreciable assets | 734 | (261 | ) | ||||||
Total gross deferred tax asset | 1,889 | 1,050 | |||||||
Valuation allowance | - | - | |||||||
Net deferred tax asset | $ | 1,889 | $ | 1,050 | |||||
At the end of fiscal 2014, the Company had net operating loss carryforwards totaling $2.0 million that are available to reduce future taxable income and will begin to expire in 2031. Management believes that future operations will generate sufficient taxable income, along with the reversal of temporary differences, to fully realize the net deferred tax asset. |
Leases
Leases | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Leases: | ' | ||||||||
Leases | ' | ||||||||
NOTE F - LEASES: | |||||||||
Premises occupied by Company-owned restaurants are leased for initial terms of five to ten years, and each has multiple renewal terms. Certain lease agreements contain either a provision requiring additional rent if sales exceed specified amounts or an escalation clause based upon a predetermined multiple. | |||||||||
In fiscal 2007, the Company sold its corporate office building and distribution facility located at 3551 Plano Parkway, The Colony, Texas, and entered into a ten-year lease agreement for the corporate office building. | |||||||||
Future minimum rental payments under non-cancelable leases, net of subleases, with initial or remaining terms of one year or more at June 29, 2014 were as follows (in thousands): | |||||||||
Operating | |||||||||
Leases | |||||||||
2015 | $ | 1,669 | |||||||
2016 | 1,609 | ||||||||
2017 | 1,228 | ||||||||
2018 | 849 | ||||||||
2019 | 799 | ||||||||
Thereafter | 2,144 | ||||||||
$ | 8,298 | ||||||||
Rental expense consisted of the following (in thousands): | |||||||||
Year Ended | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Minimum rentals | $ | 1,448 | $ | 1,322 | |||||
Sublease rentals | (182 | ) | (182 | ) | |||||
$ | 1,266 | $ | 1,140 |
Employee_Benefits
Employee Benefits | 12 Months Ended |
Jun. 29, 2014 | |
Employee Benefits | ' |
Employee Benefits | ' |
NOTE G - EMPLOYEE BENEFITS: | |
The Company has a tax advantaged savings plan that is designed to meet the requirements of Section 401(k) of the Internal Revenue Code (the “Code”). The current plan is a modified continuation of a similar savings plan established by the Company in 1985. Employees who have completed six months of service and are at least 21 years of age are eligible to participate in the plan. The plan provides that participating employees may elect to have between 1% and 15% of their compensation deferred and contributed to the plan subject to certain IRS limitations. Effective June 27, 2005, the Company contributes on behalf of each participating employee an amount equal to 50% of the employee’s contributions up to 4% of compensation. Separate accounts are maintained with respect to contributions made on behalf of each participating employee. Employer matching contributions and earnings thereon are invested in the same investments as each participant’s employee deferral. The plan is subject to the provisions of the Employee Retirement Income Security Act, as amended, and is a profit sharing plan as defined in Section 401(k) of the Code. | |
For the years ended June 29, 2014 and June 30, 2013, total matching contributions to the tax advantaged savings plan by the Company on behalf of participating employees were approximately $12,400 and $33,500, respectively. |
Stock_Options
Stock Options | 12 Months Ended | ||||||||||||||||
Jun. 29, 2014 | |||||||||||||||||
Stock Options | ' | ||||||||||||||||
Stock Options | ' | ||||||||||||||||
NOTE H - STOCK OPTIONS: | |||||||||||||||||
In June 2005, the 2005 Employee Incentive Stock Option Award Plan (the “2005 Employee Plan”) was approved by the Company’s shareholders with a plan effective date of June 23, 2005. Under the 2005 Employee Plan, officers and employees of the Company are eligible to receive options to purchase shares of the Company’s common stock. Options are granted at market value of the stock on the date of grant, are subject to various vesting and exercise periods as determined by the Compensation Committee of the Board of Directors, and may be designated as non-qualified or incentive stock options. A total of 1,000,000 shares of common stock are authorized for issuance under the 2005 Employee Plan. During the 2014 fiscal year, options to purchase 139,228 shares were granted under the 2005 Employee Plan. Also during the 2014 fiscal year, 39,144 shares of common stock were issued upon the exercise of options. As of June 29, 2014, there were 471,828 shares available to be issued under the plan. | |||||||||||||||||
The shareholders also approved the 2005 Non-Employee Directors Stock Award Plan (the “2005 Directors Plan”) in June 2005, to be effective as of June 23, 2005. Directors not employed by the Company are eligible to receive stock options under the 2005 Directors Plan. Options for common stock equal to twice the number of shares of common stock acquired during the previous fiscal year, up to 40,000 shares per year, are automatically granted to each non-employee director on the first day of each fiscal year. Options are granted at market value of the stock on the first day of each fiscal year, with vesting periods beginning at a minimum of six months and with exercise periods up to ten years. A total of 650,000 shares of Company common stock are authorized for issuance pursuant to the 2005 Directors Plan as amended. During the 2014 fiscal year, 8,664 options were granted under the 2005 Directors Plan, all of which were outstanding at June 29, 2014. As of June 29, 2014, there were 207,830 shares available to be issued under the plan. | |||||||||||||||||
A summary of stock option transactions under all of the Company’s stock option plans and information about fixed-price stock options is as follows: | |||||||||||||||||
Year Ended | |||||||||||||||||
29-Jun-14 | 30-Jun-13 | ||||||||||||||||
Weighted- | Weighted- | ||||||||||||||||
Average | Average | ||||||||||||||||
Exercise | Exercise | ||||||||||||||||
Shares | Price | Shares | Price | ||||||||||||||
Outstanding at beginning | |||||||||||||||||
of year | 851,306 | $ | 2.54 | 486,506 | $ | 2.8 | |||||||||||
Granted | 147,892 | $ | 4.92 | 464,800 | $ | 2.7 | |||||||||||
Exercised | (39,144 | ) | $ | 2.12 | - | ||||||||||||
Forfeited/Canceled/Expired | (38,856 | ) | $ | 3.15 | (100,000 | ) | $ | 4.72 | |||||||||
Outstanding at end of year | 921,198 | $ | 2.92 | 851,306 | $ | 2.54 | |||||||||||
Exercisable at end of year | 473,659 | $ | 2.43 | 459,439 | $ | 2.42 | |||||||||||
Weighted-average fair value of | |||||||||||||||||
options granted during the year | $ | 3.64 | $ | 1.29 | |||||||||||||
Total intrinsic value of | |||||||||||||||||
options exercised | $ | 82,845 | $ | - | |||||||||||||
At June 29, 2014, the total intrinsic value of options outstanding was $3.1 million and of options exercisable was $1.2 million. | |||||||||||||||||
The following table provides information on options outstanding and options exercisable as of June 29, 2014: | |||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||
Weighted- | |||||||||||||||||
Average | |||||||||||||||||
Options | Remaining | Weighted- | Options | Weighted- | |||||||||||||
Range of | Outstanding | Contractual | Average | Exercisable | Average | ||||||||||||
Exercise Prices | at June 29, 2014 | Life (Years) | Exercise Price | at June 29, 2014 | Exercise Price | ||||||||||||
$1.55 - 1.95 | 136,506 | 5.2 | $1.90 | 136,506 | $1.90 | ||||||||||||
$1.96 - 2.35 | 130,000 | 4 | $2.32 | 130,000 | $2.32 | ||||||||||||
$2.36 - 2.75 | 412,000 | 8.2 | $2.57 | 88,000 | $2.65 | ||||||||||||
$2.76 - 3.30 | 115,000 | 6.4 | $3.13 | 115,000 | $3.13 | ||||||||||||
$3.31 - 3.81 | 41,528 | 8.5 | $3.81 | 4,153 | $0.00 | ||||||||||||
$5.51 - 5.74 | 8,664 | 0.7 | $5.74 | - | $0.00 | ||||||||||||
$5.95 - 6.05 | 62,500 | 9.8 | $6.02 | - | $0.00 | ||||||||||||
$8.16 | 15,000 | 9.4 | $8.16 | - | $0.00 | ||||||||||||
921,198 | 7 | $2.92 | 473,659 | $2.43 | |||||||||||||
We determine fair value following the authoritative guidance as follows: | |||||||||||||||||
Valuation and Amortization Method. We estimate the fair value of share-based awards granted using the Black-Scholes option valuation model. We amortize the fair value of all awards on a straight-line basis over the requisite service periods, which are generally the vesting periods. | |||||||||||||||||
Expected Life. The expected life of awards granted represents the period of time that they are expected to be outstanding. Unless a life is specifically stated, we determine the expected life using the “simplified method” in accordance with Staff Accounting Bulletin No. 110 since we do not have sufficient historical share option exercise experience. | |||||||||||||||||
Expected Volatility. Using the Black-Scholes option valuation model, we estimate the volatility of our common stock at the date of grant based on the historical volatility of our common stock. | |||||||||||||||||
Risk-Free Interest Rate. We base the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. | |||||||||||||||||
Expected Dividend Yield. We have not paid any cash dividends on our common stock in the last ten years and we do not anticipate paying any cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero in the Black-Scholes option valuation model. | |||||||||||||||||
Expected Forfeitures. We use historical data to estimate pre-vesting option forfeitures. We record stock-based compensation only for those awards that are expected to vest. | |||||||||||||||||
The following weighted average assumptions were used for options granted or had options been granted: | |||||||||||||||||
June 29, | June 30, | ||||||||||||||||
Fiscal Years Ended | 2014 | 2013 | |||||||||||||||
Expected life (in years) | 6 | 6 | |||||||||||||||
Expected volatility | 42.8 | % | 48.9 | % | |||||||||||||
Risk-free interest rate | 1.5 | % | 1.1 | % | |||||||||||||
Expected forfeiture rate | 58.2 | % | 61.8 | % | |||||||||||||
The share based compensation expense is included in general and administrative expense in the statement of operations. | |||||||||||||||||
At June 29, 2014, the Company had unvested options to purchase 447,539 shares with a weighted average grant date fair value of $2.00. The total remaining unrecognized compensation cost related to unvested awards amounted to approximately $0.3 million at June 29, 2014. The weighted average remaining requisite service period of the unvested awards was 21.1 months. Stock compensation expense of $0.1 million and $0.2 million was recognized in fiscal years 2014 and 2013, respectively. |
Shareholders_Equity
Shareholders' Equity | 12 Months Ended |
Jun. 29, 2014 | |
Shareholders' Equity | ' |
Stockholders' Equity | ' |
NOTE I - SHAREHOLDERS’ EQUITY: | |
On April 22, 2009, the board of directors of the Company amended the stock repurchase plan first authorized on May 23, 2007, and previously amended on June 2, 2008, by increasing the aggregate number of shares of common stock the Company may repurchase under the plan to a total of 3,016,000 shares. No shares were repurchased during fiscal 2014 and, as of June 29, 2014, there were 848,425 shares available to repurchase under the plan. | |
On May 20, 2013, the Company entered into an At-the-Market Issuance Sales Agreement with MLV & Co. LLC (“MLV”) pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $3,000,000 from time to time through MLV, acting as agent (the “ATM Offering”). The ATM Offering is being undertaken pursuant to Rule 415 and a universal shelf Registration Statement on Form S-3 which was declared effective by the SEC on May 13, 2013. The Company pays to MLV a fee equal to 3% of the gross sales price in addition to reimbursing certain costs. Through June 29, 2014, the Company had sold an aggregate of 1,060,949 shares of common stock in the ATM Offering, realizing net proceeds of $5.6 million. Expenses associated with the ATM Offering were $43,000 and $52,000 in fiscal 2014 and fiscal 2013, respectively, which includes fees and expense reimbursement to MVL and legal and other offering expenses incurred by the Company. |
Commitment_and_Contingencies
Commitment and Contingencies | 12 Months Ended |
Jun. 29, 2014 | |
Commitment and Contingencies | ' |
Commitments and Contingencies | ' |
NOTE J - COMMITMENTS AND CONTINGENCIES: | |
The Company is subject to various claims and contingencies related to employment agreements, franchise disputes, lawsuits, taxes, food product purchase contracts and other matters arising out of the normal course of business. Management believes that any such claims and actions currently pending are either covered by insurance or would not have a material adverse effect on the Company's annual results of operations or financial condition if decided in a manner that is unfavorable to us. |
Earnings_per_Share_EPS
Earnings per Share (EPS) | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Earnings per Share (EPS) | ' | ||||||||
Earnings per Share (EPS) | ' | ||||||||
NOTE K - EARNINGS PER SHARE: | |||||||||
The Company computes and presents earnings per share (“EPS”) in accordance with the authoritative guidance on Earnings Per Share. Basic EPS excludes the effect of potentially dilutive securities while diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised, converted or resulted in the issuance of common stock that then shared in the earnings of the entity. | |||||||||
The following table shows the reconciliation of the numerator and denominator of the basic EPS calculation to the numerator and denominator of the diluted EPS calculation (in thousands, except per share amounts). | |||||||||
Year Ended | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Loss from continuing operations | $ | (1,454 | ) | $ | (1,079 | ) | |||
Discontinued operations | (113 | ) | (182 | ) | |||||
Net loss available to common stockholders | $ | (1,567 | ) | $ | (1,261 | ) | |||
BASIC: | |||||||||
Weighted average common shares | 8,635 | 8,031 | |||||||
Loss from continuing operations per common share | $ | (0.17 | ) | $ | (0.13 | ) | |||
Discontinued operations per common share | (0.01 | ) | (0.03 | ) | |||||
Net loss per common share | $ | (0.18 | ) | $ | (0.16 | ) | |||
DILUTED: | |||||||||
Weighted average common shares | 8,635 | 8,031 | |||||||
Stock options | 538 | 279 | |||||||
Weighted average common shares outstanding | 9,173 | 8,310 | |||||||
Loss from continuing operations per common share | $ | (0.16 | ) | $ | (0.13 | ) | |||
Discontinued operations per common share | (0.01 | ) | (0.02 | ) | |||||
Net loss per common share | $ | (0.17 | ) | $ | (0.15 | ) | |||
At June 29, 2014, options to purchase 75,000 shares of common stock at an exercise price of $5.51 were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares during the year. |
Segment_Reporting
Segment Reporting | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Segment Reporting | ' | ||||||||
Segment Reporting | ' | ||||||||
NOTE L– SEGMENT REPORTING: | |||||||||
The Company has two reportable operating segments as determined by management using the “management approach” as defined by the authoritative guidance on Disclosures about Segments of an Enterprise and Related Information: (1) Franchising and Food and Supply Distribution, and (2) Company-owned Restaurants. These segments are a result of differences in the nature of the products and services sold. Corporate administration costs, which include, but are not limited to, general accounting, human resources, legal and credit and collections, are partially allocated to the two operating segments. Other revenue consists of nonrecurring items. | |||||||||
The Franchising and Food and Supply Distribution segment establishes franchisees and franchise territorial rights and sells and distributes proprietary and non-proprietary food and other items to franchisees. Revenue for this segment is derived from the sale of distributed products and franchise royalties, franchise fees and sale of area development and foreign master license rights. Assets for this segment include equipment, furniture and fixtures. | |||||||||
The Company-owned Restaurant segment includes sales and operating results for all Company-owned restaurants. Assets for this segment include equipment, furniture and fixtures for the Company-owned restaurants. | |||||||||
Corporate administration and other assets primarily include the deferred tax asset, cash and short-term investments, as well as furniture and fixtures located at the corporate office and trademarks and other intangible assets. All assets are located within the United States. | |||||||||
Summarized in the following tables are net sales and operating revenues, depreciation and amortization expense, income from continuing operations before taxes, capital expenditures and assets for the Company's reportable segments as of and for the years ended June 29, 2014 and June 30, 2013 (in thousands): | |||||||||
Year Ended | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Net sales and operating revenues: | |||||||||
Franchising and food and supply distribution | $ | 32,253 | $ | 33,683 | |||||
Company-owned restaurants (1) | 9,971 | 7,498 | |||||||
Consolidated revenues | $ | 42,224 | $ | 41,181 | |||||
Depreciation and amortization: | |||||||||
Franchising and food and supply distribution | $ | 19 | $ | - | |||||
Company-owned restaurants (1) | 1,244 | 1,050 | |||||||
Combined | 1,263 | 1,050 | |||||||
Corporate administration and other | 191 | 254 | |||||||
Depreciation and amortization | $ | 1,454 | $ | 1,304 | |||||
Loss from continuing operations before taxes | |||||||||
Franchising and food and supply distribution (2) | $ | 762 | $ | 2,136 | |||||
Company-owned restaurants (1) (2) | (1,212 | ) | (1,173 | ) | |||||
Combined | (450 | ) | 963 | ||||||
Impairment of long-lived assets and other lease charges | (253 | ) | (766 | ) | |||||
Corporate administration and other (2) | (1,511 | ) | (1,780 | ) | |||||
Loss from continuing operations before taxes | $ | (2,214 | ) | $ | (1,583 | ) | |||
Capital Expenditures: | |||||||||
Franchising and food and supply distribution | $ | - | $ | - | |||||
Company-owned restaurants | 1,918 | 2,110 | |||||||
Corporate administration | 150 | 134 | |||||||
Combined capital expenditures | $ | 2,068 | $ | 2,244 | |||||
Assets: | |||||||||
Franchising and food and supply distribution | $ | 5,231 | $ | 4,909 | |||||
Company-owned restaurants | 4,631 | 4,696 | |||||||
Corporate administration | 6,106 | 2,930 | |||||||
Combined assets | $ | 15,968 | $ | 12,535 | |||||
(1) | Company stores that were closed are included in discontinued operations in the accompanying Condensed | ||||||||
Consolidated Statement of Operations. | |||||||||
(2) | Portions of corporate administration and other have been allocated to segments. | ||||||||
The following table provides information on our foreign and domestic revenues: | |||||||||
Geographic information (revenues): | |||||||||
United States | $ | 41,342 | $ | 40,123 | |||||
Foreign countries | 882 | 1,058 | |||||||
Consolidated total | $ | 42,224 | $ | 41,181 | |||||
ACCOUNTING_POLICIES_Policies
ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||
Jun. 29, 2014 | |||||
ACCOUNTING POLICIES | ' | ||||
Description of Business: | ' | ||||
Description of Business: | |||||
Pizza Inn Holdings, Inc. and its subsidiaries (collectively referred to as the “Company”, or in the first person notations of “we”, “us” and “our”) operate and franchise pizza buffet, delivery/carry-out and express restaurants domestically and internationally under the trademark “Pizza Inn” and operate and franchise domestic fast casual restaurants under the trademarks “Pie Five Pizza Company” or “Pie Five”. We provide or facilitate the procurement and distribution of food, equipment and supplies to our domestic and international system of restaurants through our Norco Restaurant Services Company (“Norco”) division and through agreements with third party distributors. | |||||
As of June 29, 2014, we owned and operated 15 restaurants comprised of 13 Pie Five restaurants (“Pie Five Units”) and two Pizza Inn buffet restaurants (“Buffet Units”). As of that date, we also had seven franchised Pie Five Units and 251 franchised Pizza Inn restaurants. The 180 domestic franchised Pizza Inn restaurants were comprised of 103 Buffet Units, 24 delivery/carry-out restaurants (“Delco Units”) and 53 express restaurants (“Express Units”). The 71 international franchised Pizza Inn restaurants were comprised of 18 Buffet Units, 45 Delco Units and 8 Express Units. Domestic restaurants were located predominantly in the southern half of the United States, with Texas, North Carolina, Arkansas and Mississippi accounting for approximately 34%, 14%, 12% and 6%, respectively, of the total number of domestic restaurants | |||||
Principles of Consolidation | ' | ||||
Principles of Consolidation: | |||||
The consolidated financial statements include the accounts of Pizza Inn Holdings, Inc. and its subsidiaries, all of which are wholly owned. All appropriate inter-company balances and transactions have been eliminated. | |||||
Reclassifications | ' | ||||
Reclassifications: | |||||
Certain reclassifications have been made to prior period amounts to conform to the current period presentation. | |||||
Cash and Cash Equivalents | ' | ||||
Cash and Cash Equivalents: | |||||
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. | |||||
Inventories | ' | ||||
Inventories: | |||||
Inventory, which consists primarily of food, paper products and supplies primarily warehoused by the Company’s third-party distributor, is stated at lower of cost or market, with cost determined according to the weighted average cost method. The valuation of inventory requires us to estimate the amount of obsolete and excess inventory. The determination of obsolete and excess inventory requires us to estimate the future demand for the Company’s products within specific time horizons, generally six months or less. If the Company’s demand forecast for specific products is greater than actual demand and the Company fails to reduce purchasing accordingly, the Company could be required to write down inventory, which would have a negative impact on the Company’s gross margin. | |||||
Closed Restaurants and Discontinued Operations: | ' | ||||
Closed Restaurants and Discontinued Operations: | |||||
The authoritative guidance on “Accounting for the Impairment or Disposal of Long-Lived Assets,” requires that discontinued operations that meet certain criteria be reflected in the statement of operations after results of continuing operations as a net amount. This guidance also requires that the operations of closed restaurants, including any impairment charges, be reclassified to discontinued operations for all periods presented. | |||||
The authoritative guidance on “Accounting for Costs Associated with Exit or Disposal Activities,” requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. This authoritative guidance also establishes that fair value is the objective for initial measurement of the liability. | |||||
Discontinued operations include losses from two Pizza Inn locations in Texas. One is a leased building associated with a Company-owned restaurant closed during fiscal 2008. The other is results of operations for a Company-owned restaurant that was closed in the fourth quarter of fiscal 2014 due to declining sales. | |||||
Property, Plant and Equipment | ' | ||||
Property, Plant and Equipment: | |||||
Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Repairs and maintenance are charged to operations as incurred while major renewals and betterments are capitalized. Upon the sale or disposition of a fixed asset, the asset and the related accumulated depreciation or amortization is removed from the accounts and the gain or loss is included in operations. The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying asset and amortized over the estimated useful life of the asset. | |||||
Depreciation and amortization are computed on the straight-line method over the estimated useful lives of the assets or, in the case of leasehold improvements, over the term of the lease including any reasonably assured renewal periods, if shorter. The useful lives of the assets range from three to ten years. | |||||
Impairment of Long-Lived Assets and other Lease charges | ' | ||||
Impairment of Long-Lived Asset and other Lease Charges: | |||||
The Company reviews long-lived assets for impairment when events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of the assets compared to its carrying value. If impairment is recognized, the carrying value of the impaired asset is reduced to its fair value, based on discounted estimated future cash flows. During fiscal year 2014 and 2013, the Company tested its long-lived assets for impairment and recognized pre-tax, non-cash impairment charges of $0.3 million and $0.8 million, respectively, related to the carrying value of two Company-owned Buffet Units in Texas and three Company-owned Pie Five Units in Texas. | |||||
Accounts Receivable | ' | ||||
Accounts Receivable: | |||||
Accounts receivable consist primarily of receivables from food and supply sales and franchise royalties. The Company records a provision for doubtful receivables to allow for any amounts that may be unrecoverable based upon an analysis of the Company's prior collection experience, customer creditworthiness and current economic trends. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Finance charges may be accrued at a rate of 18% per year, or up to the maximum amount allowed by law, on past due receivables. The interest income recorded from finance charges is immaterial. | |||||
Notes Receivable | ' | ||||
Notes Receivable: | |||||
Notes receivable primarily consist of accounts receivable from franchisees converted into notes. The majority of amounts and terms are contained under formal promissory and personal guarantee agreements. All notes allow for early payment without penalty. Fixed principle and interest payments are due weekly or monthly. Interest income is recognized monthly. Notes receivable mature at various dates through 2016 and bear interest at rates that range from 7% to 15% (8% average rate at June 29, 2014). | |||||
Management evaluates the creditworthiness of franchisees by considering credit history and sales to evaluate credit risk. Management determines interest rates based on credit risk of the underlining franchisee. The Company monitors payment history to determine whether or not a loan should be placed on a nonaccrual status or impaired. | |||||
The Company charges off notes receivable based on an account-by-account analysis of the borrower’s current economic conditions, monthly payments history and historical loss experience. The allowance for doubtful notes receivable is included with the allowance for doubtful accounts. | |||||
Notes receivable as of June 29, 2014 totaled $215,000, of which $81,000 is included in current assets, notes receivable and $134,000 is included in long-term notes receivable in the accompanying balance sheet. | |||||
The principal balance outstanding on the notes and advances receivable and expected principal collections for the next five years and thereafter were as follows as of June 29, 2014 (in thousands): | |||||
Notes | |||||
Receivable | |||||
2015 | 81 | ||||
2016 | 10 | ||||
2017 | 8 | ||||
2018 | 12 | ||||
2019 and thereafter | 104 | ||||
$ | 215 | ||||
There were no charge offs for the fiscal year ended June 29, 2014. | |||||
Income Taxes | ' | ||||
Income Taxes: | |||||
Income taxes are accounted for using the asset and liability method pursuant to the authoritative guidance on Accounting for Income Taxes. Deferred taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement and carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes for a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes future tax benefits to the extent that realization of such benefits is more likely than not. | |||||
Management evaluates the deferred tax asset at the end of each fiscal quarter to determine if an allowance against the deferred tax asset is required, and at the end of fiscal years 2014 and 2013 determined that it was more likely than not that the deferred tax asset would be fully realized based on the expectation of future taxable income and the future reversal of temporary differences. Therefore, no allowance was recorded. This determination and future estimates could be impacted by changes in future taxable income, the results of tax strategies or changes in tax laws. | |||||
The Company follows authoritative guidance that prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. This authoritative guidance requires that a company recognize in its financial statements the impact of tax positions that meet a “more likely than not” threshold, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of June 29, 2014 and June 30, 2013, the Company had no uncertain tax positions. Federal returns for tax years 2010 through 2013 remained open for examination as of June 29, 2014. | |||||
Pre-Opening Expense | ' | ||||
Pre-Opening Expense: | |||||
The Company's pre-opening costs are expensed as incurred and generally include payroll and other direct costs associated with training new managers and employees prior to opening a new restaurant, rent and other unit operating expenses incurred prior to opening, and promotional costs associated with the opening. | |||||
Revenue Recognition | ' | ||||
Revenue Recognition: | |||||
The Company recognizes food and supply revenue when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. The Company's Norco division sells food and supplies to franchisees on trade accounts under terms common in the industry. Norco sales are reflected under the caption "Food and supply sales." Shipping and handling costs billed to customers are recognized as revenue and the associated costs are included in cost of sales. | |||||
Franchise revenue consists of income from license fees, royalties, and area development and foreign master license sales. License fees are recognized as income when there has been substantial performance of the agreement by both the franchisee and the Company, generally at the time the restaurant is opened. Royalties are recognized as income when earned. For the years ended June 29, 2014 and June 30, 2013, 91% and 93%, respectively, of franchise revenue was comprised of recurring royalties. | |||||
Stock Options | ' | ||||
Stock Options: | |||||
We account for stock options using the fair value recognition provisions of the authoritative guidance on Share-Based Payments. The Company uses the Black-Scholes formula to estimate the value of stock-based compensation for options granted to employees and directors and expects to continue to use this acceptable option valuation model in the future. The authoritative guidance also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow. | |||||
At June 29, 2014, the Company had one stock-based employee compensation plan, and one stock-based non-employee director compensation plan. Stock options under these plans are granted at exercise prices equal to the fair market value of the Company’s stock at the dates of grant. Generally those options vest ratably over various vesting periods. The Company’s stock-based compensation plans are described more fully in Note H. | |||||
Fair Value of Financial Instruments | ' | ||||
Fair Value of Financial Instruments: | |||||
The carrying amounts of accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments. The Company had approximately $0.8 million in bank debt at June 29, 2014. The fair value of bank debt approximated its carrying value at June 29, 2014. | |||||
Contingencies | ' | ||||
Contingencies: | |||||
Provisions for legal settlements are accrued when payment is considered probable and the amount of loss is reasonably estimable in accordance with the authoritative guidance on Accounting for Contingencies. If the best estimate of cost can only be identified within a range and no specific amount within that range can be determined more likely than any other amount within the range, and the loss is considered probable, the minimum of the range is accrued. Legal and related professional services costs to defend litigation are expensed as incurred. | |||||
Use of Management Estimates | ' | ||||
Use of Management Estimates: | |||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect its reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent liabilities. The Company bases its estimates on historical experience and other various assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed periodically. Actual results could differ materially from estimates. | |||||
Fiscal years | ' | ||||
Fiscal Year: | |||||
The Company's fiscal year ends on the last Sunday in June. The fiscal year ended June 29, 2014 and the fiscal year ended June 30, 2013 contained 52 and 53 weeks, respectively. | |||||
Receivables_Loans_Notes_Receiv
Receivables, Loans, Notes Receivable, and Others (Table) | 12 Months Ended | ||||
Jun. 29, 2014 | |||||
Receivables, Loans, Notes Receivable, and Others: | ' | ||||
Schedule of Receivables with Imputed Interest | ' | ||||
The principal balance outstanding on the notes and advances receivable and expected principal collections for the next five years and thereafter were as follows as of June 29, 2014 (in thousands): | |||||
Notes | |||||
Receivable | |||||
2015 | 81 | ||||
2016 | 10 | ||||
2017 | 8 | ||||
2018 | 12 | ||||
2019 and thereafter | 104 | ||||
$ | 215 |
Property_and_plant_and_equipme
Property, and plant and equipment (Tables) | 12 Months Ended | |||||||||
Jun. 29, 2014 | ||||||||||
Property, and plant and equipment: | ' | |||||||||
Property, and plant and equipment | ' | |||||||||
Property, and plant and equipment consist of the following (in thousands): | ||||||||||
Estimated Useful | June 29, | June 30, | ||||||||
Lives | 2014 | 2013 | ||||||||
Equipment, furniture and fixtures | 3 - 7 yrs | $ | 4,864 | $ | 4,668 | |||||
Software | 5 yrs | 424 | 367 | |||||||
Vehicle | 2 - 3 yrs | 19 | 19 | |||||||
Leasehold improvements | 10 yrs or lease term, if shorter | 4,820 | 4,611 | |||||||
10,127 | 9,665 | |||||||||
Less: accumulated depreciation/amortization | (4,994 | ) | (4,954 | ) | ||||||
$ | 5,133 | $ | 4,711 | |||||||
Accrued_Expenses_Table
Accrued Expenses (Table) | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Payables and Accruals: | ' | ||||||||
Schedule of Accrued Liabilities | ' | ||||||||
Accrued expenses consist of the following (in thousands): | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Compensation | $ | 455 | $ | 388 | |||||
Other | 244 | 243 | |||||||
Professional fees | 132 | 63 | |||||||
Insurance loss reserves | 95 | 98 | |||||||
$ | 926 | $ | 792 | ||||||
Long_Term_Debt_Table
Long Term Debt (Table) | 12 Months Ended | ||||
Jun. 29, 2014 | |||||
Long Term Debt (Table): | ' | ||||
Schedule of Debt | ' | ||||
As of June 29, 2014, the outstanding principal balance of the F&M term loan facility was payable as follows (in thousands): | |||||
Bank | |||||
Debt | |||||
2015 | $ | 500 | |||
2016 | 267 | ||||
2017 | - | ||||
2018 | - | ||||
2019 | - | ||||
$ | 767 |
Income_Tax_Tables
Income Tax (Tables) | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Income Tax: | ' | ||||||||
Provision for income taxes from continuing operations | ' | ||||||||
Provision for income taxes from continuing operations consists of the following (in thousands): | |||||||||
Year Ended | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Current - Federal | $ | - | $ | - | |||||
Current - State | 18 | 33 | |||||||
Deferred - Federal | (722 | ) | (533 | ) | |||||
Deferred - State | (56 | ) | (4 | ) | |||||
Provision for income taxes | $ | (760 | ) | $ | (504 | ) | |||
Effective income tax rate reconciliation | ' | ||||||||
The effective income tax rate varied from the statutory rate for the years ended June 29, 2014 and June 30, 2013 as reflected below (in thousands): | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Federal income taxes based on 34% | |||||||||
of pre-tax income | $ | (763 | ) | $ | (538 | ) | |||
State income tax, net of federal effect | (52 | ) | 22 | ||||||
Permanent adjustments | 8 | 13 | |||||||
Other | 47 | (1 | ) | ||||||
$ | (760 | ) | $ | (504 | ) | ||||
Deferred Tax Assets and Liabilities | ' | ||||||||
The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands): | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Current | |||||||||
Reserve for bad debt | $ | 98 | $ | 81 | |||||
Deferred fees | 54 | 52 | |||||||
Other reserves and accruals | 798 | 749 | |||||||
950 | 882 | ||||||||
Non Current | |||||||||
Credit carryforwards | 24 | 129 | |||||||
Net operating loss carryforwards | 181 | 300 | |||||||
Depreciable assets | 734 | (261 | ) | ||||||
Total gross deferred tax asset | 1,889 | 1,050 | |||||||
Valuation allowance | - | - | |||||||
Net deferred tax asset | $ | 1,889 | $ | 1,050 | |||||
Lease_Tables
Lease (Tables) | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Lease: | ' | ||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | ' | ||||||||
Future minimum rental payments under non-cancelable leases, net of subleases, with initial or remaining terms of one year or more at June 29, 2014 were as follows (in thousands): | |||||||||
Operating | |||||||||
Leases | |||||||||
2015 | $ | 1,669 | |||||||
2016 | 1,609 | ||||||||
2017 | 1,228 | ||||||||
2018 | 849 | ||||||||
2019 | 799 | ||||||||
Thereafter | 2,144 | ||||||||
$ | 8,298 | ||||||||
Schedule of Rent Expense | ' | ||||||||
Rental expense consisted of the following (in thousands): | |||||||||
Year Ended | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Minimum rentals | $ | 1,448 | $ | 1,322 | |||||
Sublease rentals | (182 | ) | (182 | ) | |||||
$ | 1,266 | $ | 1,140 | ||||||
Stock_Option_Activity_Tables
Stock Option Activity (Tables) | 12 Months Ended | ||||||||||||||||
Jun. 29, 2014 | |||||||||||||||||
Stock Option Activity | ' | ||||||||||||||||
Stock Option Activity | ' | ||||||||||||||||
A summary of stock option transactions under all of the Company’s stock option plans and information about fixed-price stock options is as follows: | |||||||||||||||||
Year Ended | |||||||||||||||||
29-Jun-14 | 30-Jun-13 | ||||||||||||||||
Weighted- | Weighted- | ||||||||||||||||
Average | Average | ||||||||||||||||
Exercise | Exercise | ||||||||||||||||
Shares | Price | Shares | Price | ||||||||||||||
Outstanding at beginning | |||||||||||||||||
of year | 851,306 | $ | 2.54 | 486,506 | $ | 2.8 | |||||||||||
Granted | 147,892 | $ | 4.92 | 464,800 | $ | 2.7 | |||||||||||
Exercised | (39,144 | ) | $ | 2.12 | - | ||||||||||||
Forfeited/Canceled/Expired | (38,856 | ) | $ | 3.15 | (100,000 | ) | $ | 4.72 | |||||||||
Outstanding at end of year | 921,198 | $ | 2.92 | 851,306 | $ | 2.54 | |||||||||||
Exercisable at end of year | 473,659 | $ | 2.43 | 459,439 | $ | 2.42 | |||||||||||
Weighted-average fair value of | |||||||||||||||||
options granted during the year | $ | 3.64 | $ | 1.29 | |||||||||||||
Total intrinsic value of | |||||||||||||||||
options exercised | $ | 82,845 | $ | - | |||||||||||||
Options_Exercisable_Table
Options Exercisable (Table) | 12 Months Ended | ||||||||||
Jun. 29, 2014 | |||||||||||
Other Liabilities: | ' | ||||||||||
Schedule of Options Indexed to Issuer's Equity | ' | ||||||||||
The following table provides information on options outstanding and options exercisable as of June 29, 2014: | |||||||||||
Options Outstanding | Options Exercisable | ||||||||||
Weighted- | |||||||||||
Average | |||||||||||
Options | Remaining | Weighted- | Options | Weighted- | |||||||
Range of | Outstanding | Contractual | Average | Exercisable | Average | ||||||
Exercise Prices | at June 29, 2014 | Life (Years) | Exercise Price | at June 29, 2014 | Exercise Price | ||||||
$1.55 - 1.95 | 136,506 | 5.2 | $1.90 | 136,506 | $1.90 | ||||||
$1.96 - 2.35 | 130,000 | 4 | $2.32 | 130,000 | $2.32 | ||||||
$2.36 - 2.75 | 412,000 | 8.2 | $2.57 | 88,000 | $2.65 | ||||||
$2.76 - 3.30 | 115,000 | 6.4 | $3.13 | 115,000 | $3.13 | ||||||
$3.31 - 3.81 | 41,528 | 8.5 | $3.81 | 4,153 | $0.00 | ||||||
$5.51 - 5.74 | 8,664 | 0.7 | $5.74 | - | $0.00 | ||||||
$5.95 - 6.05 | 62,500 | 9.8 | $6.02 | - | $0.00 | ||||||
$8.16 | 15,000 | 9.4 | $8.16 | - | $0.00 | ||||||
921,198 | 7 | $2.92 | 473,659 | $2.43 | |||||||
Weighted_Average_Assumptions_T
Weighted Average Assumptions (Table) | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Compensation Related Costs, Retirement Benefits: | ' | ||||||||
Schedule of Assumptions Used | ' | ||||||||
The following weighted average assumptions were used for options granted or had options been granted: | |||||||||
June 29, | June 30, | ||||||||
Fiscal Years Ended | 2014 | 2013 | |||||||
Expected life (in years) | 6 | 6 | |||||||
Expected volatility | 42.8 | % | 48.9 | % | |||||
Risk-free interest rate | 1.5 | % | 1.1 | % | |||||
Expected forfeiture rate | 58.2 | % | 61.8 | % | |||||
Earnings_Per_Share_Table
Earnings Per Share (Table) | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Earnings Per Share: | ' | ||||||||
Schedule of Earnings Per Share, Basic and Diluted | ' | ||||||||
The following table shows the reconciliation of the numerator and denominator of the basic EPS calculation to the numerator and denominator of the diluted EPS calculation (in thousands, except per share amounts). | |||||||||
Year Ended | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Loss from continuing operations | $ | (1,454 | ) | $ | (1,079 | ) | |||
Discontinued operations | (113 | ) | (182 | ) | |||||
Net loss available to common stockholders | $ | (1,567 | ) | $ | (1,261 | ) | |||
BASIC: | |||||||||
Weighted average common shares | 8,635 | 8,031 | |||||||
Loss from continuing operations per common share | $ | (0.17 | ) | $ | (0.13 | ) | |||
Discontinued operations per common share | (0.01 | ) | (0.03 | ) | |||||
Net loss per common share | $ | (0.18 | ) | $ | (0.16 | ) | |||
DILUTED: | |||||||||
Weighted average common shares | 8,635 | 8,031 | |||||||
Stock options | 538 | 279 | |||||||
Weighted average common shares outstanding | 9,173 | 8,310 | |||||||
Loss from continuing operations per common share | $ | (0.16 | ) | $ | (0.13 | ) | |||
Discontinued operations per common share | (0.01 | ) | (0.02 | ) | |||||
Net loss per common share | $ | (0.17 | ) | $ | (0.15 | ) | |||
Segment_Reporting_Information_
Segment Reporting Information (Tables) | 12 Months Ended | ||||||||
Jun. 29, 2014 | |||||||||
Segment Reporting Information | ' | ||||||||
Segment Reporting Information | ' | ||||||||
Company's reportable segments as of and for the years ended June 29, 2014 and June 30, 2013 (in thousands): | |||||||||
Year Ended | |||||||||
June 29, | June 30, | ||||||||
2014 | 2013 | ||||||||
Net sales and operating revenues: | |||||||||
Franchising and food and supply distribution | $ | 32,253 | $ | 33,683 | |||||
Company-owned restaurants (1) | 9,971 | 7,498 | |||||||
Consolidated revenues | $ | 42,224 | $ | 41,181 | |||||
Depreciation and amortization: | |||||||||
Franchising and food and supply distribution | $ | 19 | $ | - | |||||
Company-owned restaurants (1) | 1,244 | 1,050 | |||||||
Combined | 1,263 | 1,050 | |||||||
Corporate administration and other | 191 | 254 | |||||||
Depreciation and amortization | $ | 1,454 | $ | 1,304 | |||||
Loss from continuing operations before taxes | |||||||||
Franchising and food and supply distribution (2) | $ | 762 | $ | 2,136 | |||||
Company-owned restaurants (1) (2) | (1,212 | ) | (1,173 | ) | |||||
Combined | (450 | ) | 963 | ||||||
Impairment of long-lived assets and other lease charges | (253 | ) | (766 | ) | |||||
Corporate administration and other (2) | (1,511 | ) | (1,780 | ) | |||||
Loss from continuing operations before taxes | $ | (2,214 | ) | $ | (1,583 | ) | |||
Capital Expenditures: | |||||||||
Franchising and food and supply distribution | $ | - | $ | - | |||||
Company-owned restaurants | 1,918 | 2,110 | |||||||
Corporate administration | 150 | 134 | |||||||
Combined capital expenditures | $ | 2,068 | $ | 2,244 | |||||
Assets: | |||||||||
Franchising and food and supply distribution | $ | 5,231 | $ | 4,909 | |||||
Company-owned restaurants | 4,631 | 4,696 | |||||||
Corporate administration | 6,106 | 2,930 | |||||||
Combined assets | $ | 15,968 | $ | 12,535 | |||||
Schedule of Revenue from External Customers by Geographical Areas | ' | ||||||||
The following table provides information on our foreign and domestic revenues: | |||||||||
Geographic information (revenues): | |||||||||
United States | $ | 41,342 | $ | 40,123 | |||||
Foreign countries | 882 | 1,058 | |||||||
Consolidated total | $ | 42,224 | $ | 41,181 |
Notes_Receivables_Details
Notes Receivables (Details) (USD $) | Jun. 29, 2014 |
Accounts Receivalble details | ' |
Finance charges may be accrued at a rate per year | 18.00% |
Notes Receivables details | ' |
Notes receivable bear interest rate minimum | 7.00% |
Notes receivable bear interest rate maximum | 15.00% |
Total notes receivables | $215,000 |
Current notes receivables | 81,000 |
Long term notes receivables | $134,000 |
Expected_principal_collections
Expected principal collections for the next five years and thereafter (Details) (USD $) | Jun. 29, 2014 |
In Thousands, unless otherwise specified | |
Expected principal collections for the next five years and thereafter | ' |
Notes Recevables 2015 | $81 |
Notes Recevables 2016 | 10 |
Notes Recevables 2017 | 8 |
Notes Recevables 2018 | 12 |
Notes Recevables 2019 and there after | 104 |
Total Notes Receivables | $215 |
Property_and_plant_and_equipme1
Property, and plant and equipment consist of the following (Details) (USD $) | Jun. 29, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Property, and plant and equipment consist of the following | ' | ' |
Equipment, furniture and fixtures with estimated life of 3 to 7 years | $4,864 | $4,668 |
Software with estimated life of 5 years | 424 | 367 |
Vehicle with estimated life of 2 to 3 years | 19 | 19 |
Leasehold improvements with estimated life of 10 yrs or lease term, if shorter | 4,820 | 4,611 |
Gross Total of Property, and plant and equipment | 10,127 | 9,665 |
Less: accumulated depreciation/amortization | -4,994 | -4,954 |
Net Total of Property, and plant and equipment | $5,133 | $4,711 |
Depreciation_and_amortization_
Depreciation and amortization expense (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 |
Depreciation and amortization expense Details | ' | ' |
Depreciation and amortization expense | $1,500 | $1,300 |
Accrued_expenses_consist_of_th
Accrued expenses consist of the following (details) (USD $) | Jun. 29, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Accrued expenses consist of the following | ' | ' |
Compensation accrued | $455 | $388 |
Other | 244 | 243 |
Professional fees accrued | 132 | 63 |
Insurance loss reserves | 95 | 98 |
Total accrued expense | $926 | $792 |
Loan_and_Security_Agreement_wi
Loan and Security Agreement with F & M Bank & Trust Company (details) (USD $) | Aug. 28, 2014 | Jun. 29, 2014 | Aug. 28, 2012 |
In Millions, unless otherwise specified | |||
Loan and Security Agreement with F & M Bank & Trust Company: | ' | ' | ' |
Revolving credit facility provided | ' | ' | $2 |
Fully Funded Term loan facility | ' | ' | 2 |
Advancing term loan facility | 6 | ' | 6 |
Unused commitment fee per annum is payable quarterly | ' | ' | 0.50% |
F & M funded term loan payable | ' | ' | 2 |
Term loan payable in equal monthly installments | ' | ' | 48 |
Accrued interest at a fixed rate | ' | 4.57% | 4.57% |
Term loan facility balance | ' | $0.80 | ' |
Outstanding_principal_balance_
Outstanding principal balance of the F&M term loan facility was payable as follows (Details) (Bank Debt) (USD $) | Jun. 29, 2014 |
In Thousands, unless otherwise specified | |
Outstanding principal balance of the F&M term loan facility was payable as follows | ' |
Outstanding principal balance payable in 2015 | $500 |
Outstanding principal balance payable in 2016 | 267 |
Outstanding principal balance payable in 2017 | 0 |
Outstanding principal balance payable in 2018 | 0 |
Outstanding principal balance payable in 2019 | 0 |
Total Outstanding principal balance payable, | $767 |
Provision_for_income_taxes_fro
Provision for income taxes from continuing operations consists of the following (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 |
Provision for income taxes from continuing operations consists of the following | ' | ' |
Current - Federal | $0 | $0 |
Current - State | 18 | 33 |
Deferred - Federal | -722 | -533 |
Deferred - State | -56 | -4 |
Provision for income taxes | -760 | -504 |
Tax benefit Included in loss from discontinued operations | $59,000 | $94,000 |
Effective_income_tax_rate_vari
Effective income tax rate varied from the statutory rate (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 |
Effective income tax rate varied from the statutory rate | ' | ' |
Federal income taxes based on 34% of pre-tax income | ($763) | ($538) |
State income tax, net of federal effect | -52 | 22 |
Permanent adjustments | 8 | 13 |
Other adjustments | 47 | -1 |
Total tax net | ($760) | ($504) |
Tax_effects_of_temporary_diffe
Tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (Details) (USD $) | Jun. 29, 2014 | Jun. 30, 2013 |
In Thousands, unless otherwise specified | ||
Current | ' | ' |
Reserve for bad debt | $98 | $81 |
Deferred fees | 54 | 52 |
Other reserves and accruals | 798 | 749 |
Total gross current deferred tax asset | 950 | 882 |
Non Current | ' | ' |
Credit carryforwards, | 24 | 129 |
Net operating loss carryforwards, | 181 | 300 |
Depreciable assets | 734 | -261 |
Total gross deferred tax asset | 1,889 | 1,050 |
Valuation allowance | 0 | 0 |
Net deferred tax asset | $1,889 | $1,050 |
Future_minimum_rental_payments
Future minimum rental payments under non-cancelable leases (Details) (Operating Leases) (USD $) | Jun. 29, 2014 |
In Thousands, unless otherwise specified | |
Future minimum rental payments under non-cancelable leases | ' |
Future minimum rental payments under non-cancelable leases in 2015 | $1,669 |
Future minimum rental payments under non-cancelable leases in 2016 | 1,609 |
Future minimum rental payments under non-cancelable leases in 2017 | 1,228 |
Future minimum rental payments under non-cancelable leases in 2018 | 849 |
Future minimum rental payments under non-cancelable leases in 2019 | 799 |
Future minimum rental payments under non-cancelable leases Thereafter | 2,144 |
Future minimum rental payments under non-cancelable leases, | $8,298 |
Rental_expense_consisted_of_th
Rental expense consisted of the following (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 |
Rental expense consisted of the following | ' | ' |
Minimum rentals | $1,448 | $1,322 |
Sublease rentals | -182 | -182 |
Total rental expense | $1,266 | $1,140 |
Employee_Benefits_Details
Employee Benefits (Details) (USD $) | 12 Months Ended | |
Jun. 29, 2014 | Jun. 30, 2013 | |
EMPLOYEE BENEFITS Details | ' | ' |
Contributions to the tax advantaged savings plan | $12,400 | $33,500 |
Company contributes on behalf of each participating employee an amount equal to the percentage contributed by employees | 50.00% | ' |
Maximum percentage of contribution by the employer as compensation | 4.00% | ' |
Common_stock_to_outstanding_st
Common stock to outstanding stock options (Details) | Shares | Weighted-Average Exercise Price |
Outstanding at beginning of year at Jun. 24, 2012 | 486,506 | 2.8 |
Granted | 464,800 | 2.7 |
Exercised | 0 | 0 |
Forfeited/Canceled/Expired-shares | -100,000 | 4.72 |
Exercisable at end of period at Jun. 30, 2013 | 459,439 | 2.42 |
Outstanding at end of year at Jun. 30, 2013 | 851,306 | 2.54 |
Outstanding at beginning of year, at Jun. 30, 2013 | 851,306 | 2.54 |
Granted, | 147,892 | 4.92 |
Exercised, | -39,144 | 2.12 |
Forfeited/Canceled/Expired-shares, | -38,856 | 3.15 |
Exercisable at end of period, at Jun. 29, 2014 | 473,659 | 2.43 |
Outstanding at end of year, at Jun. 29, 2014 | 921,198 | 2.92 |
Total_intrinsic_value_of_optio
Total intrinsic value of options (Details) (USD $) | Jun. 29, 2014 | Jun. 30, 2013 |
Total intrinsic value of options | ' | ' |
Weighted-average fair value of options granted during the year | $3.64 | $1.29 |
Total intrinsic value of options exercised | $82,845 | ' |
Total intrinsic value of options outstanding | 3,100,000 | ' |
Total intrinsic value of options exercisable | 1,200,000 | ' |
Options_outstanding_and_option
Options outstanding and options exercisable (Details) | Shares Outstanding at June 29, 2014 | Weighted-Average Remaining Contractual Life (Years) | Options Outstanding Weighted-Average Exercise Price | Shares Exercisable at June 29, 2014 | Options Exercisable Weighted-Average Exercise Price |
Total Options outstanding and options exercisable at Jun. 30, 2013 | 0 | ' | ' | ' | ' |
Range of Exercise Prices 1.55 - 1.95 | 136,506 | 5.2 | 1.9 | 136,506 | 1.9 |
Range of Exercise Prices 1.96 - 2.35 | 130,000 | 4 | 2.32 | 130,000 | 2.32 |
Range of Exercise Prices 2.36 - 2.75 | 412,000 | 8.2 | 2.57 | 88,000 | 2.65 |
Range of Exercise Prices 2.76 - 3.30 | 115,000 | 6.4 | 3.13 | 115,000 | 3.13 |
Range of Exercise Prices 3.31 - 3.81 | 41,528 | 8.5 | 3.81 | 4,153 | 0 |
Range of Exercise Prices 5.51 - 5.74 | 8,664 | 0.7 | 5.74 | ' | 0 |
Range of Exercise Prices 5.95 - 6.05 | 62,500 | 9.8 | 6.02 | ' | 0 |
Range of Exercise Prices 8.16 | 15,000 | 9.4 | 8.16 | ' | 0 |
Total Options outstanding and options exercisable, at Jun. 29, 2014 | 921,198 | 7 | 2.92 | 473,659 | 2.43 |
Weighted_average_assumptions_D
Weighted average assumptions (Details) | 12 Months Ended | |
Jun. 29, 2014 | Jun. 30, 2013 | |
Weighted average assumptions | ' | ' |
Expected life (in years) | 6 | 6 |
Expected volatility | 42.80% | 48.90% |
Risk-free interest rate | 1.50% | 1.10% |
Expected forfeiture rate | 58.20% | 61.80% |
StockBased_Compensation_detail
Stock-Based Compensation (details) In Millions (USD $) | 12 Months Ended | |
Jun. 29, 2014 | Jun. 30, 2013 | |
Stock-Based Compensation During The Period: | ' | ' |
Recognized stock-based compensation expense | $0.10 | $0.20 |
Stock_Options_Details
Stock Options (Details) (USD $) | Jun. 29, 2014 |
Stock Options Details | ' |
Total shares of common stock are authorized for issuance under the 2005 Employee Plan | 1,000,000 |
Options to purchase Shares granted under the Employee plan. | 139,228 |
Shares available to be granted under the Employee plan. | 471,828 |
Total shares of common stock are authorized for issuance under the 2005 Directors Plan | 650,000 |
Options to purchase Shares granted under the Directors plan. | 8,664 |
Shares available to be granted under the Directors plan. | 207,830 |
Company had unvested options to purchase shares | 447,539 |
Weighted average grant date fair value per share | $2 |
Weighted average remaining requisite service period of the unvested awards in months | 21.1 |
Stock_repurchase_plan_Details
Stock repurchase plan (Details) | Jun. 30, 2013 | Apr. 22, 2009 |
Stock repurchase plan | ' | ' |
Aggregate number of shares of common stock the Company may repurchase under the plan | ' | 3,016,000 |
Shares available to repurchase under the plan. | 848,425 | ' |
Sales_Agreement_with_MLV_Co_LL
Sales Agreement with MLV & Co. LLC (Details) (USD $) | Jun. 29, 2014 | 20-May-13 |
Sales Agreement with MLV & Co. LLC | ' | ' |
Company may offer and sell shares of its common stock having an aggregate offering price | ' | $3,000,000 |
The Company pays to MLV a fee equal to the gross sales price | ' | 3.00% |
Company had sold an aggregate of shares of common stock in the ATM offering | 1,060,949 | ' |
Realizing net proceeds in the ATM offering | $5,600,000 | ' |
ATM_offering_Expenses_Details
ATM offering Expenses (Details) (USD $) | 12 Months Ended | |
Jun. 29, 2014 | Jun. 30, 2013 | |
ATM offering Expenses Details | ' | ' |
Expenses associated with the ATM offering were | $43,000 | $52,000 |
Earnings_per_Share_EPS_Consist
Earnings per Share (EPS) Consists of the Following (Details) (USD $) | 12 Months Ended | |
Jun. 29, 2014 | Jun. 30, 2013 | |
Earnings per Share (EPS) Consists of the Following | ' | ' |
Loss from continuing operations | ($1,454) | ($1,079) |
Loss from Discontinued operations | -113 | -182 |
Net loss available to common stockholders | ($1,567) | ($1,261) |
Weighted average common shares basic | 8,635 | 8,031 |
Loss from continuing operations per share basic | ($0.17) | ($0.13) |
Discontinued operations per common share basic | ($0.01) | ($0.03) |
Net loss per common share basic | ($0.18) | ($0.16) |
Weighted average common shares diluted | 8,635 | 8,031 |
Stock options diluted | 538 | 279 |
Weighted average common shares outstanding diluted | 9,173 | 8,310 |
Loss from continuing operations per share diluted | ($0.16) | ($0.13) |
Discontinued operations per common share diluted | ($0.01) | ($0.02) |
Net loss per common share diluted | ($0.17) | ($0.15) |
Shares_not_included_in_the_com
Shares not included in the computation of diluted EPS (Details) (USD $) | Jun. 29, 2014 |
Shares not included in the computation of diluted EPS | ' |
No of Shares not included in the computation of diluted EPS | 75,000 |
Exercise price of Shares not included in the computation of diluted EPS | $5.51 |
Segment_Reporting_Operating_In
Segment Reporting Operating Income and Geographic Information (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jun. 29, 2014 | Jun. 30, 2013 |
Net sales and operating revenues: | ' | ' |
Franchising and food and supply distribution Net sales and operating revenues | $32,253 | $33,683 |
Company-owned restaurants Net sales and operating revenues (1). | 9,971 | 7,498 |
Consolidated revenues. | 42,224 | 41,181 |
Depreciation and amortization: | ' | ' |
Franchising and food and supply distribution Depreciation and amortization | 19 | 0 |
Company-owned restaurants Depreciation and amortization (1) | 1,244 | 1,050 |
Combined Depreciation and amortization | 1,263 | 1,050 |
Corporate administration and other | 191 | 254 |
Depreciation and amortization total | 1,454 | 1,304 |
Loss from continuing operations before taxes | ' | ' |
Franchising and food and supply distribution (2) | 762 | 2,136 |
Company-owned restaurants (1) (2) | -1,212 | -1,173 |
Combined Loss from continuing operations before taxes | -450 | 963 |
Impairment of long-lived assets and other lease charges, | -253 | -766 |
Corporate administration and other (2) | -1,511 | -1,780 |
Segment Loss from continuing operations before taxes, | -2,214 | -1,583 |
Capital Expenditures: | ' | ' |
Franchising and food and supply distribution Capital Expenditures | 0 | 0 |
Company-owned restaurants Capital Expenditures | 1,918 | 2,110 |
Corporate administration Capital Expenditures | 150 | 134 |
Combined capital expenditures | 2,068 | 2,244 |
Assets segments: | ' | ' |
Franchising and food and supply distribution Assets | 5,231 | 4,909 |
Company-owned restaurants Assets | 4,631 | 4,696 |
Corporate administration Assets | 6,106 | 2,930 |
Combined assets | 15,968 | 12,535 |
Geographic information (revenues): | ' | ' |
United States | 41,342 | 40,123 |
Foreign countries | 882 | 1,058 |
Consolidated total | $42,224 | $41,181 |