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) September 20,
2007
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):
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02 Results of Operations and Financial Condition
On
September 20, 2007, Pizza Inn, Inc. issued a press release discussing financial
results of fiscal year 2007.
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(d)
Exhibits
|
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Exhibit
Number
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Description
|
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99.1
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Pizza
Inn, Inc. press release dated September 20,
2007.
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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: September
21,
2007 By:
/s/ Charles R. Morrison
Charles
R. Morrison,
Interim
President and Chief Executive
Officer
FOR
IMMEDIATE RELEASE
Contact:
Danny Meisenheimer
VP
of Brand Management
Pizza
Inn, Inc.
469-384-5000
dmeisenheimer@pihq.com
PIZZA
INN REPORTS RESULTS FOR FOURTH QUARTER AND
FISCAL
YEAR 2007
Operating
Performance Strengthens as Company Posts Positive
Same
Store Sales Growth in Q4
The
Colony, Texas – September 20, 2007-- PIZZA INN INC. (NASDAQ:PZZI) today
reported net income of $658,000, or $0.06 per share for the fourth quarter
of
the fiscal year ended June 24, 2007 versus ($4,421,000), or ($0.43) per share
for the fourth quarter of fiscal 2006. The Company also reported net income
of
$206,000, or $0.02 per share for fiscal 2007 versus a net loss of ($5,989,000),
or ($0.59) per share for fiscal 2006. Operating performance for the fourth
quarter and fiscal 2007 reflected the following:
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|
•
Comparable buffet restaurant sales increased 3.1% for the fourth
quarter
from the fourth quarter of fiscal 2006. For fiscal 2007, comparable
buffet
restaurant sales increased 0.8% from fiscal 2006, the first such
annual
increase in five years.
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|
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•
Domestic chain-wide comparable restaurant sales increased 1.1% for
the
fourth quarter from the fourth quarter of fiscal 2006. For fiscal
2007,
domestic chain-wide comparable restaurant sales decreased 0.7% from
fiscal
2006.
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•
Overall domestic chain-wide restaurant sales decreased 3.2% for the
fourth
quarter from the fourth quarter of fiscal 2006 due to a net reduction
in
franchise openings driven by additional closures of underperforming
restaurants.
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•
General and administrative expenses for fiscal 2007 were lower by
$1.5
million compared to fiscal 2006. The reduction was due primarily
to a
reduction in payroll expenses of $416,000, driven primarily by the
outsourcing of our warehousing and distribution activities, and a
reduction in stock compensation expense of $355,000, due primarily
to the
reversal of prior expenses for unvested options that terminated.
Occupancy
costs for fiscal 2007 were lower by $211,000 compared to fiscal 2006,
also
due primarily to the outsourcing
initiative.
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•
Net income for the fourth quarter improved $5,079,000 compared to
the
fourth quarter of fiscal 2006, due primarily to accrued expenses
in the
fourth quarter of fiscal 2006 of $2,800,000 related to the litigation
settlement
between the Company and its former CEO as well as an impairment expense
in
the fourth quarter of fiscal 2006 of $1,166,000 related to two
Company-owned restaurants.
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Operating
results for the fourth quarter mark the third consecutive profitable quarter
for
Pizza Inn, further strengthening the Company’s financial and cash
positions.
Charlie
Morrison, Interim CEO and Chief Financial Officer, commented, “We are encouraged
by our continued progress. We believe that our foundation is much stronger
as
evidenced by our increases in cash and the elimination of our debt. The fiscal
year end marks the fourth consecutive month of comparable buffet sales gains
and
reflects the momentum we have achieved in part due to the increasing number
of
franchisees remodeling their restaurants. We continue to strive to identify
ways
to reduce costs and improve the profitability of our franchisees to assist
in
the reinvestment in their businesses. While executing these initiatives, we
are
working on the long-term development of this chain, specifically in the areas
of
domestic and international restaurant growth.”
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 materially 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; success of its franchise operations;
national, regional and local economic conditions affecting the restaurant
industry; competition within the restaurant industry; restaurant sales
cannibalization; negative publicity; fluctuations in quarterly results of
operations, including seasonality; government regulations; weather; and
commodity, insurance and labor costs
Pizza
Inn, Inc. (www.pizzainn.com) is
headquartered in The Colony, Texas, along with its distribution division, Norco
Restaurant Services Company. Pizza Inn franchises approximately 350 restaurants
and owns one restaurant with annual domestic and international chain-wide sales
of approximately $145 million.
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PIZZA
INN, INC.
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||||||||
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CONSOLIDATED
STATEMENTS OF OPERATIONS
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||||||||
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(In
thousands, except per share amounts)
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||||||||
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Year
Ended
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||||||||
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June
24,
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June
25,
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June
26,
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||||||
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2007
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2006
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2005
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||||||
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REVENUES:
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||||||||
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Food
and supply sales
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$
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41,029
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$
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44,202
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$
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49,161
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||
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Franchise
revenue
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4,622
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4,799
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5,162
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|||||
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Restaurant
sales
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1,485
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1,458
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946
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|||||
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47,136
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50,459
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55,269
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||||||
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COSTS
AND EXPENSES:
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||||||||
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Cost
of sales
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40,101
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43,762
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46,617
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|||||
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Franchise
expenses
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2,633
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3,126
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2,791
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|||||
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General
and administrative expenses
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4,002
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5,531
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4,882
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|||||
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Gain
on sale of assets
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(570)
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(149)
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-
|
|||||
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Impairment
of long-lived assets and goodwill
|
48
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1,319
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-
|
|||||
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Litigation
settlement accrual
|
302
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2,800
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-
|
|||||
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Other
(income) expense
|
(159)
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-
|
-
|
|||||
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Provision
for bad debt
|
96
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301
|
30
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|||||
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Total
costs and expenses, net
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46,453
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56,690
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54,320
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|||||
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OPERATING
INCOME (LOSS)
|
683
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(6,231)
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949
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|||||
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Interest
expense
|
477
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787
|
590
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|||||
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INCOME
(LOSS) BEFORE INCOME TAXES
|
206
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(7,018)
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359
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|||||
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Provision
(benefit) for income taxes
|
-
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(1,029)
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155
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|||||
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NET
INCOME (LOSS)
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$
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206
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$
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(5,989)
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$
|
204
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||
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Basic
earnings (loss) per common share
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$
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0.02
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$
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(0.59)
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$
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0.02
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||
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Diluted
earnings (loss) per common share
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$
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0.02
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$
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(0.59)
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$
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0.02
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||
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Weighted
average common shares outstanding
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10,145
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10,123
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10,105
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|||||
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Weighted
average common and
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||||||||
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potentially
dilutive common shares outstanding
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10,146
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10,123
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10,142
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PIZZA
INN, INC.
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|||||||||
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CONSOLIDATED
BALANCE SHEETS
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|||||||||
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(In
thousands, except share amounts)
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|||||||||
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June
24,
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June
25,
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||||||||
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2007
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2006
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|||||||
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ASSETS
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|||||||||
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CURRENT
ASSETS
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|||||||||
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Cash
and cash equivalents
|
$
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1,879
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$
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184
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|||||
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Accounts
receivable, less allowance for doubtful
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|||||||||
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accounts
of $451 and $324, respectively
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2,716
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2,627
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|||||||
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Accounts
receivable - related parties
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-
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452
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|||||||
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Notes
receivable, current portion
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8
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52
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|||||||
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Inventories
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1,518
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1,772
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|||||||
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Property
held for sale
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336
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-
|
|||||||
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Deferred
income tax assets
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458
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1,145
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|||||||
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Prepaid
expenses and other
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165
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299
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|||||||
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Total
current assets
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7,080
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6,531
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|||||||
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LONG-TERM
ASSETS
|
|||||||||
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Property,
plant and equipment, net
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778
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11,921
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|||||||
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Notes
receivable
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12
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20
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|||||||
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Re-acquired
development territory, net
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239
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431
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|||||||
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Deposits
and other
|
85
|
98
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|||||||
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$
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8,194
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$
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19,001
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||||||
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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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2,082
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$
|
2,217
|
|||||
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Accrued
expenses
|
1,805
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4,791
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|||||||
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Current
portion of long-term debt
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-
|
8,044
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|||||||
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Total
current liabilities
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3,887
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15,052
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|||||||
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LONG-TERM
LIABILITIES
|
|||||||||
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Deferred
gain on sale of property
|
209
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-
|
|||||||
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Deferred
revenues
|
314
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379
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|||||||
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Other
long-term liabilities
|
7
|
58
|
|||||||
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Total
liabilities
|
4,417
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15,489
|
|||||||
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COMMITMENTS
AND CONTINGENCIES
|
|||||||||
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SHAREHOLDERS'
EQUITY
|
|||||||||
|
Common
stock, $.01 par value; authorized 26,000,000
|
|||||||||
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shares;
issued 15,120,319 and 15,090,319 shares, respectively;
|
|||||||||
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outstanding
10,168,494 and 10,138,494 shares, respectively
|
151
|
151
|
|||||||
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Additional
paid-in capital
|
8,471
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8,426
|
|||||||
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Retained
earnings
|
14,799
|
14,593
|
|||||||
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Accumulated
other comprehensive loss
|
-
|
(14)
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|||||||
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Treasury
stock at cost
|
|||||||||
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Shares
in treasury: 4,951,825 for both years
|
(19,644)
|
(19,644)
|
|||||||
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Total
shareholders' equity
|
3,777
|
3,512
|
|||||||
|
$
|
8,194
|
$
|
19,001
|
||||||
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PIZZA
INN, INC.
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|||||||||||||
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CONSOLIDATED
STATEMENTS OF CASH FLOWS
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|||||||||||||
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(In
thousands)
|
|||||||||||||
|
Year
Ended
|
|||||||||||||
|
June
24,
|
June
25,
|
June
26,
|
|||||||||||
|
2007
|
2006
|
2005
|
|||||||||||
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CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||||||||
|
Net
income (loss)
|
$
|
206
|
$
|
(5,989)
|
$
|
204
|
|||||||
|
Adjustments
to reconcile net income (loss) to
|
|||||||||||||
|
cash
provided by (used for) operating activities:
|
|||||||||||||
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Depreciation
and amortization
|
692
|
1,214
|
1,143
|
||||||||||
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Impairment
of long-lived assets & goodwill
|
48
|
1,443
|
-
|
||||||||||
|
Deferred
rent expense
|
(9)
|
56
|
-
|
||||||||||
|
Provision
for bad debt
|
96
|
301
|
30
|
||||||||||
|
Stock
compensation expense
|
(14)
|
341
|
-
|
||||||||||
|
Litigation
expense accrual
|
302
|
2,800
|
-
|
||||||||||
|
Gain
on sale of assets
|
(570)
|
(149)
|
-
|
||||||||||
|
Deferred
income taxes
|
687
|
(1,029)
|
39
|
||||||||||
|
Deferred
revenue
|
196
|
542
|
-
|
||||||||||
|
Changes
in operating assets and liabilities:
|
|||||||||||||
|
Notes
and accounts receivable
|
320
|
884
|
(256)
|
||||||||||
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Inventories
|
254
|
145
|
(205)
|
||||||||||
|
Accounts
payable - trade
|
(135)
|
255
|
716
|
||||||||||
|
Accrued
expenses
|
(3,520)
|
7
|
(735)
|
||||||||||
|
Prepaid
expenses and other
|
76
|
414
|
152
|
||||||||||
|
Cash
(used for) provided by
|
|||||||||||||
|
operating
activities
|
(1,371)
|
1,235
|
1,088
|
||||||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||||||||
|
Proceeds
from sale of assets
|
11,325
|
589
|
-
|
||||||||||
|
Capital
expenditures
|
(249)
|
(2,227)
|
(753)
|
||||||||||
|
Cash
provided by (used for)
|
|||||||||||||
|
investing
activities
|
11,076
|
(1,638)
|
(753)
|
||||||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||||||||
|
Deferred
financing costs
|
(25)
|
-
|
-
|
||||||||||
|
Change
in line of credit, net
|
-
|
747
|
(234)
|
||||||||||
|
Repayments
of long-term bank debt
|
(8,044)
|
(414)
|
(415)
|
||||||||||
|
Purchases
of treasury stock
|
-
|
-
|
(160)
|
||||||||||
|
Proceeds
from exercise of stock options
|
59
|
81
|
30
|
||||||||||
|
Cash
(used for) provided by
|
|||||||||||||
|
financing
activities
|
(8,010)
|
414
|
(779)
|
||||||||||
|
Net
increase in cash and cash equivalents
|
1,695
|
11
|
(444)
|
||||||||||
|
Cash
and cash equivalents, beginning of year
|
184
|
173
|
617
|
||||||||||
|
Cash
and cash equivalents, end of year
|
$
|
1,879
|
$
|
184
|
$
|
173
|
|||||||