View Filing Data

Company stores that were closed are included in discontinued

operations in the accompanying Condensed Consolidated Statement

of Operations.

Portions of corporate administration and other have been allocated to segments.

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Dec. 25, 2011	Feb. 03, 2012
Document and Entity Information
Entity Registrant Name	PIZZA INN HOLDINGS, INC /MO/
Document Type	10-Q
Document Period End Date	Dec. 25, 2011
Amendment Flag	false
Entity Central Index Key	0000718332
Current Fiscal Year End Date	--06-26
Entity Common Stock, Shares Outstanding		8,020,919
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	2012
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 25, 2011	Dec. 26, 2010	Dec. 25, 2011	Dec. 26, 2010
REVENUES:
Food and supply sales	$ 8,138	$ 8,489	$ 17,044	$ 17,191
Franchise revenue	943	917	1,892	1,942
Restaurant sales	1,255	949	2,547	1,854
Total revenues	10,336	10,355	21,483	20,987
COSTS AND EXPENSES:
Cost of sales	8,611	8,473	17,861	17,177
Franchise expenses	521	344	973	820
General and administrative expenses	1,062	873	1,969	1,755
Costs associated with store closure	0	0	0	319
Bad debt	15	40	30	55
Interest expense	17	18	33	28
Total Expenses	10,226	9,748	20,866	20,154
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES	110	607	617	833
Income taxes	39	213	217	294
INCOME FROM CONTINUING OPERATIONS	71	394	400	539
Loss from discontinued operations, net of taxes	(15)	(15)	(31)	(31)
NET INCOME	$ 56	$ 379	$ 369	$ 508
EARNINGS PER SHARE OF COMMON STOCK - BASIC:
Income from continuing operations	$ 0.01	$ 0.05	$ 0.05	$ 0.07
Loss from discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Net income	$ 0.01	$ 0.05	$ 0.05	$ 0.06
EARNINGS PER SHARE OF COMMON STOCK - DILUTED:
Income from continuing operations	$ 0.01	$ 0.05	$ 0.05	$ 0.07
Loss from discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ (0.01)
Net income	$ 0.01	$ 0.05	$ 0.05	$ 0.06
Weighted average common shares outstanding - basic	8,013	8,011	8,012	8,011
Weighted average common and potential dilutive common shares outstanding	8,362	8,012	8,292	8,013

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 25, 2011	Jun. 26, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 509	$ 949
Accounts receivable, less allowance for bad debts of $189 and $162, respectively	3,280	3,128
Inventories	1,724	1,829
Income tax receivable	653	553
Deferred income tax assets	783	822
Prepaid expenses and other	403	232
Total current assets	7,352	7,513
LONG-TERM ASSETS
Property, plant and equipment, net	4,059	3,196
Long-term notes receivable	39	51
Deposits and other	486	392
Total Assets	11,936	11,152
CURRENT LIABILITIES
Accounts payable - trade	2,095	2,103
Accrued expenses	1,262	1,557
Deferred revenues	157	202
Bank debt	580	333
Total current liabilities	4,094	4,195
LONG-TERM LIABILITIES
Bank debt, net of current portion	809	482
Deferred tax liability	461	360
Deferred revenues, net of current portion	145	165
Deferred gain on sale of property	96	109
Other long-term liabilities	25	0
Total liabilities	5,630	5,311
COMMITMENTS AND CONTINGENCIES (See Note 3)	0	0
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	9,105	9,009
Retained earnings	21,686	21,317
Treasury stock at cost
Shares in treasury: 7,119,400	(24,636)	(24,636)
Total shareholders' equity	$ 6,306	$ 5,841

CONSOLIDATED BALANCE SHEET PARENTHETICALS - USD ($)	Dec. 25, 2011	Jun. 26, 2011
Parentheticals
Accounts receivable, allowance	$ 189	$ 162
Common stock, par or stated value	$ 0.01	$ 0.01
Common stock, shares authorized	26,000,000	26,000,000
Common Stock, shares issued	15,140,319	15,130,319
Common Stock, shares outstanding	8,020,919	8,010,919
Treasury Stock, Shares	7,119,400	7,119,400

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Dec. 25, 2011	Dec. 26, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 369	$ 508
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	389	546
Stock compensation expense	73	60
Deferred tax	39	(92)
Provision for bad debts	30	55
Net income adjusted for non-cash items	900	1,077
Changes in operating assets and liabilities:
Notes and accounts receivable	(282)	(192)
Inventories	105	(394)
Accounts payable - trade	(8)	(25)
Accrued expenses	(169)	(243)
Deferred revenue	(78)	58
Prepaid expenses and other	(283)	(18)
Net changes in operating assets and liabilities	(715)	(814)
Cash provided by operating activities	185	263
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(1,222)	(1,313)
Cash used by investing activities	(1,222)	(1,313)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	23	0
Change in bank debt, net	574	615
Cash provided by financing activities	597	615
Net decrease in cash and cash equivalents	(440)	(435)
Cash and cash equivalents, beginning of period	949	761
Cash and cash equivalents, end of period	509	326
CASH PAYMENTS FOR:
Interest	32	27
Income taxes - net	$ 57	$ 290

Statement of Financial Position, Classified - USD ($)	Dec. 25, 2011	Jun. 26, 2011
Statement of Financial Position, Classified
LIABILITIES AND SHAREHOLDERS' EQUITY	$ 11,936	$ 11,152

Summary of Significant Accounting Policies

6 Months Ended

Dec. 25, 2011

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(1)	Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All appropriate intercompany balances and transactions have been eliminated.

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.

Fiscal Quarters

The three and six month periods ended December 25, 2011 and December 26, 2010, each contained 13 weeks and 26 weeks, respectively.

Revenue Recognition

The Company recognizes 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. Food and supply sales revenues, including shipping and handling costs, are recognized upon delivery of the product. Revenue from restaurant sales is recognized when food and beverage products are sold. The Company reports revenue net of sales taxes collected from customers and remitted to governmental taxing authorities.

Franchise revenue consists of income from license fees, royalties, and area development and foreign master license fees. License fees are recognized as income when there has been substantial performance under the agreement by the Company. Domestic license fees are generally recognized at the time the restaurant is opened. Foreign master license fees are generally recognized upon execution of the agreement as all material services relating to the sale have been substantially performed by the Company and the fee has been collected. Royalties are recognized as income when earned.

Stock-Based Compensation

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.

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 and actual results could differ materially from estimates.

Reclassification

Certain items have been reclassified in the prior year financial statements to conform to current year presentation.

Long-Term Debt

6 Months Ended

Dec. 25, 2011

Long-Term Debt

Long-Term Debt

(2)	Long-Term Debt

On January 11, 2010, the Company entered into a Loan Agreement with Amegy Bank National Association (“Amegy”) providing for a $2.0 million revolving credit facility (with a $250 thousand letter of credit subfacility) and a $1.0 million term loan facility. On January 10, 2011, the Company and Amegy entered into a First Amendment to Loan Agreement increasing the Company's term loan facility and amending certain other provisions of the Loan Agreement. On October 26, 2011, the Company and Amegy entered into an Amended and Restated Loan Agreement further increasing the Company’s term loan facility and amending certain other provisions of the Loan Agreement. As amended, the Amegy credit facility provides a $2.0 million revolving credit facility (with a $250 thousand letter of credit subfacility) and a $4.0 million term loan facility, in addition to $0.7 million in existing term loans.

The Company may borrow, repay and re-borrow under the Amegy revolving credit facility through January 11, 2013, at which time all amounts outstanding under the revolving credit facility mature. Availability under the revolving credit facility is limited by advance rates on eligible inventory and accounts receivable. Interest on indebtedness from time to time outstanding under the revolving credit facility is computed at the greater of Amegy’s prime rate or 5% and is payable monthly. A commitment fee of 0.25% per annum is payable quarterly on the average unused portion of the revolving credit facility.

The Company may borrow under the term loan facility through October 31, 2012. Advances for such term loans are limited by a percentage of the costs of equipment and leasehold improvements for new restaurant locations of the Company. Interest only is payable monthly on each term loan for up to 120 days after the initial advance. Thereafter, each term loan is payable in 36 equal monthly installments of principal plus accrued interest. Interest on each term loan accrues at either (a) the greater of 6% or Amegy’s prime rate plus 1% or (b) at the Company’s option, a fixed rate determined by Amegy. A fee of 0.5% of the total term loan facility was paid at closing.

The obligations of the Company under the Loan Agreement are guaranteed by each of the subsidiaries of the Company and are secured by a pledge of all of the stock of such subsidiaries as well as security interests in substantially all of the assets of the Company and its subsidiaries including, but not limited to, accounts receivable, inventory and equipment. The Amended and Restated Loan Agreement contains various affirmative covenants which, among other things, require the Company to provide Amegy with certain financial statements, compliance statements, reports and other information. The Amended and Restated 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. The Company is in compliance with all covenants as of the reporting date. If an event of default occurs under the Amended and Restated Loan Agreement, Amegy 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. As of December 25, 2011 the balance on the term loan facility was $1.4 million with an interest rate of 6% and the balance on the revolving credit facility was zero with an interest rate of 5%.

Commitment and Contingencies

6 Months Ended

Dec. 25, 2011

Commitment and Contingencies

Commitments and Contingencies

(3)	Commitments and Contingencies

On April 22, 2009 the Company’s board of directors amended the stock purchase plan first adopted on May 23, 2007 and previously amended on June 2, 2008, to increase the number of shares of common stock the Company may repurchase to a total of 3,016,000 shares. As of December 25, 2011, up to an additional 848,425 shares could be purchased under the plan.

The Company is subject to other claims and legal actions in the ordinary course of its business. The Company believes that all such claims and actions currently pending against it are either adequately covered by insurance or would not have a material adverse effect on the Company’s annual results of operations, cash flows or financial condition if decided in a manner that is unfavorable to the Company.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Number 5
-Paragraph 9, 10, 11, 12
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-Name Accounting Standards Codification
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-Paragraph 1
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+ Details

Stock-Based Compensation

6 Months Ended

Dec. 25, 2011

Stock-Based Compensation

Stock-Based Compensation

(4)	Stock-Based Compensation

For the quarter and six months ended December 25, 2011, we recognized stock-based compensation expense of $30,000 and $72,700. As of December 25, 2011, unamortized stock-based compensation expense was $0.1 million.

The following table summarizes the number of shares of the Company’s common stock subject to outstanding stock options:

	Six Months Ended
	December 25, 2011			December 26, 2010

Outstanding at beginning of year		604,036			565,510

Granted		94,032			20,996
Exercised		(10,000	)		-
Forfeited/Canceled/Expired		(15,000	)		(25,000	)

Outstanding at end of period		673,068			561,506

Exercisable at end of period		511,702			404,010

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Section 50
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+ Details

Earnings Per Share (EPS)

6 Months Ended

Dec. 25, 2011

Earnings Per Share (EPS)

Earnings Per Share (EPS)

(5)	Earnings per Share (EPS)

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).

	Three Months Ended
	December 25, 2011						December 26, 2010
	Diluted			Basic			Diluted			Basic

Income from continuing operations	$	71		$	71		$	394		$	394
Discontinued operations		(15	)		(15	)		(15	)		(15	)
Net income available to common stockholders	$	56		$	56		$	379		$	379

Weighted average common shares		8,013			8,013			8,011			8,011
Dilutive stock options		349			-			1			-
Average common shares outstanding		8,362			8,013			8,012			8,011

Income from continuing operations per share	$	0.01		$	0.01		$	0.05		$	0.05
Discontinued operations loss per common share		-			-			-			-
Net income per common share	$	0.01		$	0.01		$	0.05		$	0.05

	Six Months Ended
	December 25, 2011						December 26, 2010
	Diluted			Basic			Diluted			Basic

Income from continuing operations	$	400		$	400		$	539		$	539
Discontinued operations		(31	)		(31	)		(31	)		(31	)
Net income available to common stockholders	$	369		$	369		$	508		$	508

Weighted average common shares		8,012			8,012			8,011			8,011
Dilutive stock options		280			-			2			-
Average common shares outstanding		8,292			8,012			8,013			8,011

Income from continuing operations per share	$	0.05		$	0.05		$	0.07		$	0.07
Discontinued operations loss per common share		-			-			(0.01	)		(0.01	)
Net income per common share	$	0.05		$	0.05		$	0.06		$	0.06

For the three and six months ended December 26, 2010, options to purchase 565,506 shares of common stock at exercise prices ranging from $1.85 to $3.30 per share were not included in the computation of diluted EPS because the options’ exercise prices were greater than the average market price of the common shares for the period.

Income Taxes

6 Months Ended

Dec. 25, 2011

Income Taxes

Income Taxes

(7)	Income Taxes

For the three and six month periods ended December 25, 2011, income tax expense of $39,000 and $217,000, respectively, was calculated on an effective income tax rate that is consistent with the statutory U.S. federal income tax rate of 34% adjusted for state income tax effects and permanent difference items. 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 of $0.8 million.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

Segment Reporting

6 Months Ended

Dec. 25, 2011

Segment Reporting

Segment Reporting

(8)	Segment Reporting

Summarized in the following tables are net sales and operating revenues, operating income and geographic information (revenues) for the Company’s reportable segments for the three month and six month periods ended December 25, 2011 and December 26, 2010 (in thousands). Operating income reported below excludes income tax provision and discontinued operations.

	Three Months Ended						Six Months Ended
	December 25,			December 26,			December 25,			December 26,
	2011			2010			2011			2010
Net sales and operating revenues:
Food and supply distribution	$	8,138		$	8,489		$	17,044		$	17,191
Pizza Inn franchise and company operations (1)		1,852			1,866			3,863			3,796
Pie Five company operations		346			-			576			-
Consolidated revenues	$	10,336		$	10,355		$	21,483		$	20,987

Depreciation and amortization:
Food and supply distribution	$	-		$	-		$	-		$	-
Pizza Inn franchise and company operations (1)		103			81			215			483
Pie Five company operations		42			-			54			-
Combined		145			81			269			483
Corporate administration and other		61			37			120			63
Depreciation and amortization	$	206		$	118		$	389		$	546

Income from continuing operations before taxes:
Food and supply distribution (2)	$	273		$	553		$	791		$	1,052
Pizza Inn franchise and company operations (1) (2)		355			391			793			423
Pie Five company operations (2)		(179	)		-			(140	)		-
Combined		449			944			1,444			1,475
Corporate administration and other (2)		(339	)		(337	)		(827	)		(642	)
Operating income	$	110		$	607		$	617		$	833

Geographic information (revenues):
United States	$	10,020		$	10,105		$	20,921		$	20,497
Foreign countries		316			250			562			490
Consolidated total	$	10,336		$	10,355		$	21,483		$	20,987

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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+ Details

Discontinued Operations and Disposal Groups

6 Months Ended

Dec. 25, 2011

Discontinued Operations and Disposal Groups

Closed restaurants and discontinued operations

(6)	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 the 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.

Loss from discontinued operations reflects costs associated with a former Company owned restaurant in Houston, Texas that was closed during the quarter ended September 23, 2007. This property is on the market for sub-lease. Because we believe that the property will sub-lease at or above the contracted lease rates, we have not reserved any additional costs related to our obligations under this non-cancelable lease.

- Definition

The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations).

+ References

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+ Details