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| 8-K - PIZZA INN, INC. - RAVE RESTAURANT GROUP, INC. | pizza8k021011.htm |
FOR IMMEDIATE RELEASE
Contact:
Nancy Ellefson
VP of Finance
Pizza Inn, Inc.
469-384-5000
PIZZA INN, INC. REPORTS RESULTS FOR
SECOND QUARTER FISCAL YEAR 2011
Company continues new restaurant expansion in a difficult economy
The Colony, Texas – February 9, 2011 -- PIZZA INN, INC. (NASDAQ:PZZI) today reported net income of $0.4 million, or $0.05 per share, for the fiscal quarter ended December 26, 2010, versus net income of $0.4 million, or $0.05 per share, for the same quarter of the prior fiscal year on total revenue of $10.4 million for each of the fiscal quarters ended December 26, 2010 and December 27, 2009.
For the six months ended December 26, 2010, Company revenues were $21.0 million compared to $20.4 million for the same period in the prior fiscal year. Net income for the six months ended December 26, 2010 was $0.5 million, or $0.06 per share, compared to $0.8 million, or $0.09 per share, for the same period in the prior fiscal year. The decline in net income is primarily attributable to $0.3 million of depreciation expense associated with the closure of a company store opened prior to the rollout of the new buffet prototype.
Highlights for the second quarter of fiscal year 2011 included:
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Sales from Company-owned restaurants increased 20%, or $0.2 million, in the second quarter of fiscal 2011 compared to the same quarter of the prior fiscal year, primarily due to the opening of a new buffet location in Lewisville, Texas in December, 2010 and the acquisition of a delivery carryout location from a franchisee in September, 2010. The new buffet restaurant was the third such Company-owned location opened since September, 2009.
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Comparable domestic buffet restaurant sales decreased 2.2% for the second quarter of fiscal 2011 compared to the same quarter of the prior fiscal year.
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Chain-wide comparable domestic restaurant sales decreased 2.6% for the second quarter of fiscal 2011 compared to the same quarter of the prior fiscal year.
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The 0% First Year Royalty incentive program has resulted in seven buffet openings in the last six fiscal quarters, with an eighth buffet unit opened in the current quarter. Waived royalties under this incentive program were $58,000 for the second quarter of fiscal 2011 and $131,000 for the first six months of fiscal 2011. All of these new buffet units began or will begin paying royalties in fiscal year 2011 or 2012.
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Subsequent to quarter end, the Company entered into an amendment to its Loan Agreement with Amegy Bank that increased the term loan facility to $2.56 million, providing additional growth capital for continued Company-owned restaurant expansion.
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FOR IMMEDIATE RELEASE
Contact:
Nancy Ellefson
VP of Finance
Pizza Inn, Inc.
469-384-5000
Charlie Morrison, President and CEO, commented, "We successfully opened our fifth company store in December, the second opening of this fiscal year, and secured additional financing to continue with our growth plans. This, combined with openings of eight new buffet restaurants in the last 18 months across the US under our $0 First Year Royalty incentive program, continues to position us for future growth. Although we continue to face difficult commodity markets and price competition in our category, we expect to see continued improvement in same store sales for the balance of this fiscal year.”
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.”
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PIZZA INN, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except per share amounts)
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(Unaudited)
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Three Months Ended
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Six Months Ended
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Dec. 26,
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Dec. 27,
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Dec. 26,
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Dec. 27,
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REVENUES:
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2010
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2009
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2010
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2009
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Food and supply sales
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$ | 8,489 | $ | 8,616 | $ | 17,191 | $ | 17,011 | ||||||||
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Franchise revenue
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917 | 1,004 | 1,942 | 2,066 | ||||||||||||
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Restaurant sales
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949 | 791 | 1,854 | 1,334 | ||||||||||||
| 10,355 | 10,411 | 20,987 | 20,411 | |||||||||||||
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COSTS AND EXPENSES:
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Cost of sales
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8,473 | 8,461 | 17,177 | 16,577 | ||||||||||||
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Franchise expenses
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381 | 430 | 904 | 897 | ||||||||||||
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General and administrative expenses
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836 | 838 | 1,671 | 1,615 | ||||||||||||
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Costs associated with store closure
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- | - | 319 | - | ||||||||||||
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Bad debt
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40 | 25 | 55 | 40 | ||||||||||||
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Interest expense
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18 | 12 | 28 | 26 | ||||||||||||
| 9,748 | 9,766 | 20,154 | 19,155 | |||||||||||||
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INCOME FROM CONTINUING OPERATIONS BEFORE TAXES
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607 | 645 | 833 | 1,256 | ||||||||||||
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Income taxes
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205 | 217 | 277 | 423 | ||||||||||||
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INCOME FROM CONTINUING OPERATIONS
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402 | 428 | 556 | 833 | ||||||||||||
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Loss from discontinued operations, net of taxes
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(23 | ) | (41 | ) | (48 | ) | (80 | ) | ||||||||
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NET INCOME
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$ | 379 | $ | 387 | $ | 508 | $ | 753 | ||||||||
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EARNINGS PER SHARE OF COMMON STOCK - BASIC:
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Income from continuing operations
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$ | 0.05 | $ | 0.05 | $ | 0.07 | $ | 0.10 | ||||||||
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Loss from discontinued operations
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- | - | (0.01 | ) | (0.01 | ) | ||||||||||
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Net income
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$ | 0.05 | $ | 0.05 | $ | 0.06 | $ | 0.09 | ||||||||
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EARNINGS PER SHARE OF COMMON STOCK - DILUTED:
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Income from continuing operations
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$ | 0.05 | $ | 0.05 | $ | 0.07 | $ | 0.10 | ||||||||
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Loss from discontinued operations
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- | - | (0.01 | ) | (0.01 | ) | ||||||||||
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Net income
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$ | 0.05 | $ | 0.05 | $ | 0.06 | $ | 0.09 | ||||||||
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Weighted average common shares outstanding - basic
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8,011 | 8,011 | 8,011 | 8,011 | ||||||||||||
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Weighted average common and
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potential dilutive common shares outstanding
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8,012 | 8,011 | 8,013 | 8,011 | ||||||||||||
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PIZZA INN, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands, except share amounts)
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December 26,
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June 27,
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ASSETS
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2010 (unaudited)
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2010
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CURRENT ASSETS
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Cash and cash equivalents
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$ | 326 | $ | 761 | ||||
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Accounts receivable, less allowance for bad debts
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of $232 and $178, respectively
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2,999 | 2,678 | ||||||
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Income tax receivable
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- | 184 | ||||||
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Inventories
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1,883 | 1,489 | ||||||
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Property held for sale
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16 | 16 | ||||||
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Deferred income tax assets
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742 | 723 | ||||||
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Prepaid expenses and other
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288 | 260 | ||||||
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Total current assets
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6,254 | 6,111 | ||||||
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LONG-TERM ASSETS
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Property, plant and equipment, net
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2,943 | 2,167 | ||||||
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Deferred income tax assets
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121 | 48 | ||||||
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Deposits and other
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113 | 132 | ||||||
| $ | 9,431 | $ | 8,458 | |||||
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES
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Accounts payable - trade
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$ | 1,758 | $ | 1,783 | ||||
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Deferred revenues
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314 | 236 | ||||||
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Accrued expenses
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1,126 | 1,360 | ||||||
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Bank debt
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313 | 110 | ||||||
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Total current liabilities
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3,511 | 3,489 | ||||||
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LONG-TERM LIABILITIES
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Deferred gain on sale of property
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121 | 134 | ||||||
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Deferred revenues
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186 | 207 | ||||||
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Bank debt
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632 | 220 | ||||||
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Other long-term liabilities
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32 | 27 | ||||||
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Total liabilities
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4,482 | 4,077 | ||||||
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COMMITMENTS AND CONTINGENCIES
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SHAREHOLDERS' EQUITY
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Common stock, $.01 par value; authorized 26,000,000
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shares; issued 15,130,319 and 15,130,319 shares, respectively;
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outstanding 8,010,919 and 8,010,919 shares, respectively
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151 | 151 | ||||||
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Additional paid-in capital
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8,966 | 8,906 | ||||||
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Retained earnings
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20,468 | 19,960 | ||||||
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Treasury stock at cost
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Shares in treasury: 7,119,400 and 7,119,400, respectively
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(24,636 | ) | (24,636 | ) | ||||
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Total shareholders' equity
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4,949 | 4,381 | ||||||
| $ | 9,431 | $ | 8,458 | |||||
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PIZZA INN, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(In thousands)
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(Unaudited)
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Six Months Ended
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December 26,
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December 27,
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2010
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2009
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income
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$ | 508 | $ | 753 | ||||
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Adjustments to reconcile net income to
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cash provided by operating activities:
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Depreciation and amortization
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546 | 164 | ||||||
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Stock compensation expense
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60 | 79 | ||||||
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Deferred tax
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(92 | ) | - | |||||
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Provision for bad debts
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55 | 40 | ||||||
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Changes in operating assets and liabilities:
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Notes and accounts receivable
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(192 | ) | (571 | ) | ||||
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Inventories
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(394 | ) | (315 | ) | ||||
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Accounts payable - trade
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(25 | ) | 172 | |||||
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Accrued expenses
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(243 | ) | 196 | |||||
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Deferred revenue
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58 | 119 | ||||||
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Prepaid expenses and other
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(18 | ) | (238 | ) | ||||
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Cash provided by operating activities
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263 | 399 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Capital expenditures
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(1,313 | ) | (634 | ) | ||||
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Cash used by investing activities
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(1,313 | ) | (634 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Change in line of credit, net
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615 | 38 | ||||||
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Cash provided by financing activities
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615 | 38 | ||||||
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Net decrease in cash and cash equivalents
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(435 | ) | (197 | ) | ||||
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Cash and cash equivalents, beginning of period
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761 | 274 | ||||||
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Cash and cash equivalents, end of period
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$ | 326 | $ | 77 | ||||