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Free Hospitality Publications
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Restaurant Industry News
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Tuesday October 24th, 2006 |
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Pizza Inn, Inc. Reports Results for the Fourth Quarter Fiscal Year 2006
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PIZZA INN, INC. (NASDAQ:PZZI) reported a net loss per share for its fourth quarter ended June 25, 2006 of ($0.43) versus a net loss of ($0.01) per share for the same quarter last year. |
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The quarter resulted in a net loss of ($4,421,000) versus a net loss of ($112,000) for the same quarter last year on revenues of $12.2 million and $13.7 million, respectively. For fiscal year 2006, net loss per share was ($0.59) versus a net income of $0.02 per share last year. Net loss for fiscal year 2006 was ($5,989,000) versus a net income of $204,000 last year on revenues of $50.6 million and $55.3 million, respectively.
Fourth Quarter FY 2006 versus Fourth Quarter FY 2005 Results
• Comparable buffet restaurant sales decreased 3.3% for the quarter. Chain-wide comparable restaurant sales decreased 3.7% for the quarter.
• Total chain-wide restaurant sales decreased 8.3% for the quarter due the decrease in comparable restaurant sales and a net reduction in franchised restaurants.
• The Company's revenues decreased approximately 11%, or $1,526,000, primarily due lower chain-wide restaurant sales, as discussed above, and lower cheese prices. The resulting reductions in food and supply sales and royalty revenue were partially offset by increased restaurant sales at our company-owned restaurants as a result of three additional company-owned buffet restaurants in fiscal year 2006.
• During the quarter the company incurred $180,000 of legal fees, as compared to $439,000 in the prior year, which is reflected in general and administrative expenses.
• General and administrative expenses in the quarter include non-cash stock compensation expense of $54,000 as compared to no expense in the prior year.
• During the fourth quarter of 2006 the Company incurred the following pre-tax items: - Bad debt provision of $201,000 related to accounts receivable from franchisees. - The Company accrued a $2,800,000 expense for the previously announced litigation settlement agreement with its former President and Chief Executive Officer. The settlement payments will be made over the course of the next six months. - A reduction in compensation expense of $126,000 due to a change in the estimate for the bonus accrual, the vast majority of which is reflected in general and administrative expenses. - A reduction of state tax expense of $109,000 and its related accrual due to a change in estimated state taxes, which is reflected in general and administrative expenses. - A charge of $125,000 for the write-off of capitalized software development expenses for an online-ordering system that has been abandoned by the Company due the recent decision to outsource certain distribution services. The company also incurred an expense of $20,000 to terminate a service agreement related to the online-ordering system. Both items are reflected in general and administrative expenses. - An impairment of $1,319,000 to the goodwill, equipment, building and improvements related to two company-owned buffet restaurants in Houston, Texas and a closed company-owned delivery/carryout restaurant in Little Elm, Texas.
FY 2006 versus FY 2005 Results
• Comparable buffet restaurant sales decreased 1.6% for the year. Chain-wide comparable restaurant sales decreased 2.2% for the year.
• Total chain-wide restaurant sales decreased 5.5% for the year due the decrease in comparable restaurant sales and a net reduction in franchised restaurants.
• The Company's revenues decreased approximately 8%, or $4,661,000, primarily due lower chain-wide restaurant sales, as discussed above, and lower cheese prices. The resulting reductions in food and supply sales and royalty revenue were partially offset by increased restaurant sales at our company-owned restaurants as a result of three additional company-owned buffet restaurants in fiscal year 2006.
• During FY 2006 the company incurred $1,417,000 of legal fees, as compared to $1,257,000 in the prior year, which is reflected in general and administrative expenses.
• General and administrative expenses in FY 2006 include non-cash stock compensation expense of $341,000 as compared to no expense in the prior year.
• In addition, the net effect of the items incurred in the fourth quarter, as discussed above, also reduced the Company's earnings in FY 2006.
The Company's President and CEO, Tim Taft, commented, "Although we were disappointed by the Company's recent operating performance, the performance was in line with our expectations. We are continuing to take the actions that we believe will improve the Company's performance in the future. A particularly important initiative is our recently announced agreements to outsource our distribution services, which will allow us to improve the store- level economics of our current and future franchisees through lower food and supply costs without negatively impacting the corporate bottom line. We also have a significant number of franchised restaurant remodels in the works and international expansion of franchised restaurants is gaining meaningful momentum. Furthermore, with the recent agreement to settle litigation with the Company's former CEO, we can direct more of our attention and resources to creating value for our shareholders and franchisees."
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