Pizza Inn Holdings, Inc. Reports Results For Fourth Quarter And Full Fiscal Year 2012

Fourth Quarter Fiscal Year 2012 Highlights :
  • The Company opened an additional Pie Five restaurant
  • Company-owned restaurant sales increased 59.6% over the fourth quarter of fiscal 2011 to $1.9 million
  • Net income decreased $0.5 million from the fourth quarter of fiscal 2011 to a loss of $0.1 million due primarily to lower food and supply sales and the loss of deferred tax benefits
  • Compared to fourth quarter of fiscal 2011, domestic franchised buffet-style restaurant same store sales decreased 4.2% while total domestic franchised same store sales declined 4.4%
  • EBITDA decreased $0.2 million to $0.4 million

Fiscal Year 2012 Highlights :
  • The Company opened five Pie Five restaurants
  • Company-owned restaurant sales increased 45.9% to $6.1 million
  • Net income decreased $1.0 million to $0.3 million in fiscal 2012 due primarily to lower food and supply sales, higher costs associated with expanding the Pie Five concept and the loss of deferred tax benefits
  • EBITDA decreased $1.1 million to $1.8 million
  • Domestic franchised buffet-style restaurant same store sales decreased 1.0% while total domestic franchised same store sales declined 1.2%
  • A total of twelve franchised Pizza Inn restaurants were opened in fiscal 2012

THE COLONY, Texas, Sept. 24, 2012 (GLOBE NEWSWIRE) -- Pizza Inn Holdings, Inc. (Nasdaq:PZZI) today announced results for the fourth fiscal quarter and fiscal year ended June 24, 2012. Fourth quarter net income decreased $0.5 million year over year to a loss of $0.1 million, or $0.01 per share, compared to net income of $0.4 million, or $0.05 per share, for the same quarter of the prior fiscal year. The decline in net income was primarily attributable to lower food and supply sales and an increase in income tax expense in the fourth quarter ended June 24, 2012 when compared to the fourth quarter ended June 26, 2011. Fourth quarter revenues decreased to $10.9 million compared to $11.3 million for the same quarter of the prior fiscal year. Food and supply sales decreased by approximately $1.0 million, or 11.0%, due to a decrease in the average number of restaurants open in the current period, a 6.4% decrease in franchisee retail revenues and a decrease in non-proprietary food purchased from the Company by franchisees when compared to the prior year period. Company-owned restaurant sales increased 59.6% to $1.9 million due primarily to new store openings and partially offset the decrease in food and supply sales. Income tax expense exceeded the statutory rate during the fiscal 2012 fourth quarter due primarily to the loss of certain deferred tax benefits as a result of the cancellation of employee stock options during the quarter. During the fiscal 2011 fourth quarter, the accrual of tax benefits for foreign tax credits resulted in an income tax rate lower than statutory rates.

For the fiscal year ended June 24, 2012, net income was $0.3 million, or $0.04 per share, compared to $1.4 million, or $0.17 per share, for the prior fiscal year. The decline in net income was primarily attributable to a $1.7 million decline in food and supply sales, $0.3 million of pre-opening costs associated with the opening of five Pie Five stores during fiscal 2012, $0.1 million of costs associated with preparing the Company to support the growth of the Pie Five business and the franchising of Pizza Inn in China and an increase in income tax expense associated with changes in deferred tax attributes. Revenues were unchanged at $43.0 million during fiscal 2012 and fiscal 2011. Domestic franchised buffet-style restaurant same store sales decreased 1.0% while total domestic franchised same store sales decreased 1.2% compared to the prior fiscal year. For fiscal 2012, Company restaurant sales increased $1.9 million, or 45.9%, to $6.1 million due to new store openings.

"We continue to develop and expand our Pie Five concept with the addition of one new store opened in the fourth fiscal quarter and another opened in August," commented Clinton Coleman, Interim President and CEO. "We now have seven Pie Five locations open in the Dallas/Ft. Worth area and have signed leases for additional sites, with our next unit scheduled to open in Allen, Texas in October. We continue to invest in people and infrastructure in anticipation of continued development of Company-owned units of our Pie Five concept. We are offering Pie Five franchises in all non-registration states in the U.S. and are working on registering in all other states. Furthermore, we recently entered into a new financing agreement with The F&M Bank and Trust Company which provides an additional $6.0 million of term financing for new company-owned Pie Five locations." 

"We are disappointed that our food and supply sales remained below our historical average during the fourth quarter, although the trend did improve relative to the third quarter food and supply sales pace. We continue to evaluate new initiatives for providing high-quality non-proprietary food products to our franchisees," Mr. Coleman concluded.

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 the control of Pizza Inn Holdings. 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 the objectives and plans of Pizza Inn Holdings will be achieved. 

Pizza Inn Holdings, Inc. is an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademarks "Pizza Inn" and "Pie Five Pizza Company." 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."

The Pizza Inn logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4933
         
PIZZA INN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
         
         
  Three Months Ended Year Ended
  June 24, 2012 June 26, 2011 June 24, 2012 June 26, 2011
         
REVENUES: $ 10,872 $ 11,328  $ 43,001  $ 43,036
         
COSTS AND EXPENSES:        
Cost of sales  9,104  9,167  35,828  35,021
Franchise expenses  507  546  2,072  1,834
General and administrative expenses  1,108  795  4,094  3,372
Costs associated with store closure  --  --  --  319
Settlement costs  --  300  --  300
Bad debt  30  15  95  85
Interest expense  39  16  110  65
   10,788  10,839  42,199  40,996
         
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES  84  489  802  2,040
         
Income taxes  167  67  419  621
         
INCOME FROM CONTINUING OPERATIONS  (83)  422  383  1,419
         
Loss from discontinued operations, net of taxes  (16)  (15)  (61)  (62)
         
NET INCOME  $ (99)  $ 407  $ 322  $ 1,357
         
EARNINGS (LOSS) PER SHARE OF COMMON STOCK - BASIC:        
Income from continuing operations  $ (0.01)  $ 0.05  $ 0.05  $ 0.18
Loss from discontinued operations  $ (0.00)  $ (0.00)  $ (0.01)  $ (0.01)
Net income  $ (0.01)  $ 0.05  $ 0.04  $ 0.17
         
EARNINGS (LOSS) PER SHARE OF COMMON STOCK - DILUTED:        
Income from continuing operations  $ (0.01)  $ 0.05  $ 0.05  $ 0.18
Loss from discontinued operations  $ (0.00)  $ (0.00)  $ (0.01)  $ (0.01)
Net income  $ (0.01)  $ 0.05  $ 0.04  $ 0.17
         
Weighted average common shares outstanding - basic 8,021 8,011 8,017 8,011
         
Weighted average common shares outstanding - diluted 8,143 8,033 8,194 8,019
 
PIZZA INN HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
     
ASSETS June 24, 2012 June 26, 2011
     
CURRENT ASSETS    
Cash and cash equivalents  $ 590  $ 949
Accounts receivable, less allowance for doubtful accounts of $253 and $162, respectively  3,098  3,128
Inventories  1,852  1,829
Income tax receivable  431  553
Deferred income tax assets  1,078  822
Prepaid expenses and other  256  232
Total current assets  7,305  7,513
     
LONG-TERM ASSETS    
Property, plant and equipment, net  4,794  3,196
Long-term notes receivable  27  51
Deposits and other  372  392
   $ 12,498  $ 11,152
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES    
Accounts payable - trade  $ 1,562  $ 2,103
Accrued expenses  1,756  1,557
Deferred revenues  200  202
Bank debt  765  333
Total current liabilities  4,283  4,195
     
LONG-TERM LIABILITIES    
Bank debt, net of current portion  977  482
Deferred tax liability  699  360
Deferred revenues, net of current portion  125  165
Deferred gain on sale of property  84  109
Other long-term liabilities  22  --
Total liabilities  6,190  5,311
     
COMMITMENTS AND CONTINGENCIES    
     
SHAREHOLDERS' EQUITY    
Common stock, $.01 par value; authorized 26,000,000 'shares; issued 15,140,319 and 15,130,319 shares, respectively; outstanding 8,020,919 and 8,010,919 shares, respectively  151  151
Additional paid-in capital  9,154  9,009
Retained earnings  21,639  21,317
Treasury stock at cost    
7,119,400 shares  (24,636)  (24,636)
Total shareholders' equity   6,308  5,841
   $ 12,498  $ 11,152
 
PIZZA INN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
       
  Three Months Ended Year Ended
  June 24, 2012 June 26, 2011 June 24, 2012 June 26, 2011
         
CASH FLOWS FROM OPERATING ACTIVITIES:        
         
Net income   $ (99)  $ 407  $ 322  $ 1,357
Adjustments to reconcile net income to cash provided by operating activities:        
Depreciation and amortization  283  162  946  851
Provision for bad debt  26  (86)  91  (16)
Stock compensation expense  17  30  121  103
Deferred income taxes  37  121  83  310
Changes in operating assets and liabilities:        
Notes and accounts receivable  333  201  (61)  (433)
Income tax receivable  122  (491)  122  (491)
Inventories  (163)  (122)  (23)  (340)
Prepaid expenses and other  133  (152)  (42)  (282)
Accounts payable - trade  (539)  432  (541)  320
Accrued expenses  138  172  154  189
 Cash provided by operating activities  288  674  1,172  1,568
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
         
Capital expenditures  (274)  (345)  (2,482)  (1,865)
Cash used for investing activities  (274)  (345)  (2,482)  (1,865)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
         
Borrowings of bank debt  --  10  1,795  670
Repayments of bank debt  (119)  (94)  (868)  (185)
Proceeds from exercise of stock options  1  --  24  --
         
Cash provided by financing activities  (118)  (84)  951  485
         
Net (decrease) increase in cash and cash equivalents  (104)  245  (359)  188
Cash and cash equivalents, beginning of period  694  704  949  761
Cash and cash equivalents, end of period  $ 590  $ 949  $ 590  $ 949
         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
         
CASH PAID FOR:        
       
Interest  $ 81  $ 65  $ 26  $ 16
Income taxes - net  $ 6  $ 670  $ (31)  $ 160
 
PIZZA INN HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands)
         
  Three Months Ended Year Ended
  June 24, 2012 June 26, 2011 June 24, 2012 June 26, 2011
         
Net Income   $ (99)  $ 407  $ 322  $ 1,357
Interest Expense   39  16  110  65
Taxes   167  67  419  621
Depreciation and Amortization   296  162  946  851
EBITDA   $ 403  $ 652  $ 1,797  $ 2,894
CONTACT: Jerry L. Trojan         Chief Financial Officer         Pizza Inn Holdings, Inc.         469-384-5000

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