updated 2/9/2011 6:17:22 PM ET 2011-02-09T23:17:22

THE COLONY, Texas, Feb. 9, 2011 (GLOBE NEWSWIRE) -- 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:

  • 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.
  • 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.
  • 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.
  • 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.
  • 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.

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."

The Pizza Inn logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4933

PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
         
  Three Months Ended Six Months Ended
  Dec. 26, Dec. 27, Dec. 26, Dec. 27,
REVENUES: 2010 2009 2010 2009
         
Food and supply sales  $ 8,489  $ 8,616  $ 17,191  $ 17,011
Franchise revenue  917  1,004  1,942  2,066
Restaurant sales  949  791  1,854  1,334
   10,355  10,411  20,987  20,411
         
COSTS AND EXPENSES:        
Cost of sales  8,473  8,461  17,177  16,577
Franchise expenses  381  430  904  897
General and administrative expenses  836  838  1,671  1,615
Costs associated with store closure  --  --  319  --
Bad debt  40  25  55  40
Interest expense  18  12  28  26
   9,748  9,766  20,154  19,155
         
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES  607  645  833  1,256
Income taxes  205  217  277  423
INCOME FROM CONTINUING OPERATIONS  402  428  556  833
         
Loss from discontinued operations, net of taxes  (23)  (41)  (48)  (80)
NET INCOME  $ 379  $ 387  $ 508  $ 753
         
EARNINGS PER SHARE OF COMMON STOCK - BASIC:        
Income from continuing operations  $ 0.05  $ 0.05  $ 0.07  $ 0.10
Loss from discontinued operations  --   --   (0.01)  (0.01)
Net income  $ 0.05  $ 0.05  $ 0.06  $ 0.09
         
EARNINGS PER SHARE OF COMMON STOCK - DILUTED:        
         
Income from continuing operations  $ 0.05  $ 0.05  $ 0.07  $ 0.10
Loss from discontinued operations  --   --   (0.01)  (0.01)
Net income  $ 0.05  $ 0.05  $ 0.06  $ 0.09
         
Weighted average common shares outstanding - basic 8,011 8,011 8,011 8,011
         
Weighted average common and        
potential dilutive common shares outstanding 8,012 8,011 8,013 8,011
 
PIZZA INN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
     
  December 26, June 27,
ASSETS 2010 (unaudited) 2010
     
CURRENT ASSETS    
Cash and cash equivalents  $ 326  $ 761
Accounts receivable, less allowance for bad debts    
of $232 and $178, respectively  2,999  2,678
Income tax receivable  --  184
Inventories  1,883  1,489
Property held for sale  16  16
Deferred income tax assets  742  723
Prepaid expenses and other  288  260
Total current assets  6,254  6,111
     
LONG-TERM ASSETS    
Property, plant and equipment, net  2,943  2,167
Deferred income tax assets  121  48
Deposits and other  113  132
   $ 9,431  $ 8,458
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES    
Accounts payable - trade  $ 1,758  $ 1,783
Deferred revenues  314  236
Accrued expenses  1,126  1,360
Bank debt  313  110
Total current liabilities  3,511  3,489
     
LONG-TERM LIABILITIES    
Deferred gain on sale of property  121  134
Deferred revenues  186  207
Bank debt  632  220
Other long-term liabilities  32  27
Total liabilities  4,482  4,077
     
COMMITMENTS AND CONTINGENCIES     
     
SHAREHOLDERS' EQUITY    
Common stock, $.01 par value; authorized 26,000,000    
shares; issued 15,130,319 and 15,130,319 shares, respectively;  
outstanding 8,010,919 and 8,010,919 shares, respectively  151  151
Additional paid-in capital  8,966  8,906
Retained earnings  20,468  19,960
Treasury stock at cost    
Shares in treasury: 7,119,400 and 7,119,400, respectively  (24,636)  (24,636)
Total shareholders' equity   4,949  4,381
   $ 9,431  $ 8,458
 
PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
     
  Six Months Ended
  December 26, December 27,
  2010 2009
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
     
Net income  $ 508  $ 753
Adjustments to reconcile net income to     
cash provided by operating activities:    
Depreciation and amortization  546  164
Stock compensation expense  60  79
Deferred tax  (92)  --
Provision for bad debts  55  40
Changes in operating assets and liabilities:    
Notes and accounts receivable  (192)  (571)
Inventories  (394)  (315)
Accounts payable - trade  (25)  172
Accrued expenses  (243)  196
Deferred revenue  58  119
Prepaid expenses and other  (18)  (238)
Cash provided by operating activities  263  399
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
     
Capital expenditures  (1,313)  (634)
Cash used by investing activities  (1,313)  (634)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Change in line of credit, net  615  38
Cash provided by financing activities   615  38
     
Net decrease in cash and cash equivalents  (435)  (197)
Cash and cash equivalents, beginning of period  761  274
Cash and cash equivalents, end of period  $ 326  $ 77
CONTACT: Nancy Ellefson
         VP of Finance
         Pizza Inn, Inc.
         469-384-5000

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