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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) JANUARY 27, 2006
PIZZA INN, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 0-12919 47-0654575
(State or other jurisdiction of incorporation) (Commission File Number) (IRS
Employer Identification No.)
3551 PLANO PARKWAY, THE COLONY, TEXAS 75056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (469) 384-5000
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 7.01 REGULATION FD DISCLOSURE.
Pizza Inn, Inc. elects to disclose the information in the press release
furnished as Exhibit 99.1 to this report and incorporated herein by reference
through Form 8-K pursuant to Regulation FD.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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99.1 Press Release dated January 27, 2006 (furnished herewith and
- ---- ---------------------------------------------------------------------
incorporated herein by reference)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Pizza Inn, Inc.
Date: January 30, 2006 By: /s/Rod J. McDonald
Rod J. McDonald, Secretary
P R E S S R E L E A S E
FOR IMMEDIATE RELEASE
PIZZA INN, INC. REPORTS RESULTS FOR THE
SECOND QUARTER FISCAL YEAR 2006
THE COLONY, TEXAS - January 27, 2006 - PIZZA INN, INC. (NASDAQ:PZZI) today
reported a net loss per share for its second quarter ended December 25, 2005 of
($0.06) versus earnings of $0.01 per share for the same quarter last year. The
quarter resulted in a net loss of ($601,000) versus net income of $51,000 for
the same quarter last year on revenues of $12.8 million and $13.8 million,
respectively.
SECOND QUARTER FY 2006 VERSUS SECOND QUARTER FY 2005 RESULTS
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Diluted EPS was ($0.06) versus $0.01 on a net loss of ($601,000)
versus net income of $51,000.
Revenues decreased approximately 7%, or $1,016,000, primarily due to lower
comparable chainwide retail sales and fewer net stores. The resulting reduction
in food and supply sales and royalties were offset partially by equipment sales,
which were higher by $248,000 and company-owned restaurant sales, which were
higher by $96,000.
Comparable chainwide retail sales were down 1.8%.
Legal fees increased approximately $208,000 as the result of ongoing
litigation
and related matters.
Energy costs increased approximately $168,000.
General and administrative expenses included non-cash executive stock
compensation expense of $94,000 for approximately 560,000 stock option rights
granted previously. The prior year did not include any non-cash compensation
expense.
Preopening expenses for three new company-owned stores were $124,000.
The Company's President and CEO, Tim Taft, commented, "To successfully
accomplish the Pizza Inn turnaround, our focus remains on the fundamentals of
the business. We continue to make significant progress in the areas of new
franchisee selection, existing franchisee evaluation, new store development and
improved unit-level profitability. Additionally, our 2006 marketing plan is
taking an entirely new approach to improving comparable store sales by focusing
on the brand's competitive strengths. Much is being accomplished at Pizza Inn;
however, much work remains."
Certain statements in this press release, other than historical information, may
be considered forward-looking statements, within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, and
are subject to various risks, uncertainties and assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may differ from those anticipated, estimated or
expected. Among the key factors that may have a direct bearing on Pizza Inn's
operating results, performance or financial condition are its ability to
implement its growth strategies, national, regional and local economic
conditions affecting the restaurant/ entertainment industry, competition within
each of the restaurant and entertainment industries, store sales
cannibalization, success of its franchise operations, negative publicity,
fluctuations in quarterly results of operations, including seasonality,
government regulations, weather, commodity, insurance and labor costs.
Pizza Inn, Inc. is headquartered in The Colony, Texas, along with its
distribution division, Norco Restaurant Services Company. Pizza Inn franchises
approximately 378 restaurants and owns five restaurants with annual chainwide
sales of approximately $155 million.
P R E S S R E L E A S E
Pizza Inn, Inc. For more information contact:
3551 Plano Parkway Kevin Kleiner
The Colony, TX 75056 Controller
(469) 384-5203
PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
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DECEMBER 25, DECEMBER 26, DECEMBER 25, DECEMBER 26,
REVENUES:. . . . . . . . . . . . . . . . . . . . 2005 2004 2005 2004
-------------------- ------------------ -------------- --------------
Food and supply sales. . . . . . . . . . . . . $ 11,215 $ 12,301 $ 22,523 $ 25,123
Franchise revenue. . . . . . . . . . . . . . . 1,199 1,225 2,379 2,565
Restaurant sales . . . . . . . . . . . . . . . 339 243 557 498
-------------------- ------------------ -------------- --------------
12,753 13,769 25,459 28,186
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COSTS AND EXPENSES:
Cost of sales. . . . . . . . . . . . . . . . . 11,094 11,690 22,226 23,883
Franchise expenses . . . . . . . . . . . . . . 793 697 1,601 1,322
General and administrative expenses. . . . . . 1,547 1,165 3,098 2,187
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13,434 13,552 26,925 27,392
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OPERATING (LOSS) INCOME. . . . . . . . . . . . . (681) 217 (1,466) 794
Gain on sale of asset. . . . . . . . . . . . . - - 147 -
Interest expense . . . . . . . . . . . . . . . (199) (138) (368) (274)
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(LOSS) INCOME BEFORE
INCOME TAXES . . . . . . . . . . . . . . . . . (880) 79 (1,687) 520
Provision for income taxes . . . . . . . . . . (279) 28 (596) 184
-------------------- ------------------ -------------- --------------
NET (LOSS) INCOME. . . . . . . . . . . . . . . . $ (601) $ 51 $ (1,091) $ 336
==================== ================== ============== ==============
BASIC (LOSS) EARNINGS PER COMMON SHARE . . . . . $ (0.06) $ 0.01 $ (0.11) $ 0.03
==================== ================== ============== ==============
DILUTED (LOSS) EARNINGS PER COMMON SHARE . . . . $ (0.06) $ 0.01 $ (0.11) $ 0.03
==================== ================== ============== ==============
WEIGHTED AVERAGE COMMON SHARES . . . . . . . . . 10,108 10,104 10,108 10,119
==================== ================== ============== ==============
WEIGHTED AVERAGE COMMON AND
POTENTIAL DILUTIVE COMMON SHARES . . . . . . . 10,153 10,141 10,151 10,155
==================== ================== ============== ==============
PIZZA INN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
DECEMBER 25, JUNE 26,
ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 2005
--------------------- ---------------------
(unaudited)
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $ 184 $ 173
Accounts receivable, less allowance for doubtful
accounts of $232 and $360, respectively . . . . . . . . . . . 3,265 3,419
Accounts receivable - related parties . . . . . . . . . . . . . . 559 622
Notes receivable, current portion, less allowance
for doubtful accounts of $0 and $11, respectively . . . . . . 3 -
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,342 1,918
Property held for sale. . . . . . . . . . . . . . . . . . . . . . - 301
Deferred tax assets, net. . . . . . . . . . . . . . . . . . . . . 759 193
Prepaid expenses and other. . . . . . . . . . . . . . . . . . . . 299 355
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Total current assets. . . . . . . . . . . . . . . . . . . . . 7,411 6,981
LONG-TERM ASSETS
Property, plant and equipment, net. . . . . . . . . . . . . . . . 12,878 12,148
Property under capital leases, net. . . . . . . . . . . . . . . . 9 12
Long-term receivable. . . . . . . . . . . . . . . . . . . . . . . 10 -
Long-term receivable - related party . . . . . . . . . . . . . . 304 314
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 -
Reacquired development territory. . . . . . . . . . . . . . . . . 527 623
Deposits and other. . . . . . . . . . . . . . . . . . . . . . . . 201 177
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$ 21,497 $ 20,255
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade. . . . . . . . . . . . . . . . . . . . . $ 2,607 $ 1,962
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . 1,676 1,374
Current portion of long-term debt . . . . . . . . . . . . . . . . 8,881 406
Current portion of capital lease obligations. . . . . . . . . . . 11 11
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Total current liabilities . . . . . . . . . . . . . . . . . . 13,175 3,753
LONG-TERM LIABILITIES
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . - 7,297
Long-term capital lease obligations . . . . . . . . . . . . . . . 7 13
Deferred tax liability, net . . . . . . . . . . . . . . . . . . . 26 3
Other long-term liabilities . . . . . . . . . . . . . . . . . . . 153 283
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13,361 11,349
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value; authorized 26,000,000
shares; issued 15,060,319 and 15,046,319 shares, respectively;
outstanding 10,108,494 and 10,094,494 shares, respectively. . . 151 150
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . 8,223 8,005
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 19,491 20,582
Accumulated other comprehensive loss. . . . . . . . . . . . . . . (85) (187)
Treasury stock at cost
Shares in treasury: 4,951,825 and 4,951,825, respectively . . . (19,644) (19,644)
--------------------- ---------------------
Total shareholders' equity. . . . . . . . . . . . . . . . . . 8,136 8,906
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$ 21,497 $ 20,255
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PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
------------------
DECEMBER 25, DECEMBER 26,
2005 2004
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income. . . . . . . . . . . . . . . . . . . . . . . . $ (1,091) $ 336
Adjustments to reconcile net (loss) income to
cash (used for) provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . 568 579
Gain on property held for sale . . . . . . . . . . . . . . . . (157) -
Recovery of bad debt, net. . . . . . . . . . . . . . . . . . . - 30
Utilization of deferred taxes. . . . . . . . . . . . . . . . . - (52)
Stock compensation expense . . . . . . . . . . . . . . . . . . 197 -
Deferred rent. . . . . . . . . . . . . . . . . . . . . . . . . 31 -
Changes in assets and liabilities:
Notes and accounts receivable. . . . . . . . . . . . . . . . . 195 (134)
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . (425) (202)
Accounts payable - trade . . . . . . . . . . . . . . . . . . . 645 156
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . (385) (342)
Prepaid expenses and other . . . . . . . . . . . . . . . . . . 80 101
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CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES . . . . . . . (342) 472
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets . . . . . . . . . . . . . . . . . . 474 -
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . (1,315) (354)
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CASH USED FOR INVESTING ACTIVITIES . . . . . . . . . . . . . . (841) (354)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term bank debt and capital lease obligations. (209) (438)
Borrowings of bank debt. . . . . . . . . . . . . . . . . . . . . 1,381 -
Stock buy back . . . . . . . . . . . . . . . . . . . . . . . . . - (117)
Proceeds from exercise of stock options. . . . . . . . . . . . . 22 10
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CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES . . . . . . . 1,194 (545)
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Net increase (decrease) in cash and cash equivalents . . . . . . . 11 (427)
Cash and cash equivalents, beginning of period . . . . . . . . . . 173 617
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Cash and cash equivalents, end of period . . . . . . . . . . . . . $ 184 $ 190
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