Pizza Inn Holdings, Inc. Reports Results for Fourth Quarter and Full Fiscal Year 2012

Fourth Quarter Fiscal Year 2012 Highlights:

• The Company opened an additional Pie Five restaurant
• Company-owned restaurant sales increased 59.6% over the fourth quarter of fiscal 2011 to $1.9 million
• Net income decreased $0.5 million from the fourth quarter of fiscal 2011 to a loss of $0.1 million due primarily to lower food and supply sales and the loss of deferred tax benefits
• Compared to fourth quarter of fiscal 2011, domestic franchised buffet-style restaurant same store sales decreased 4.2% while total domestic franchised same store sales declined 4.4%
• EBITDA decreased $0.2 million to $0.4 million

Fiscal Year 2012 Highlights:

• The Company opened five Pie Five restaurants
• Company-owned restaurant sales increased 45.9% to $6.1 million
• Net income decreased $1.0 million to $0.3 million in fiscal 2012 due primarily to lower food and supply sales, higher costs associated with expanding the Pie Five concept and the loss of deferred tax benefits
• EBITDA decreased $1.1 million to $1.8 million
• Domestic franchised buffet-style restaurant same store sales decreased 1.0% while total domestic franchised same store sales declined 1.2%
• A total of twelve franchised Pizza Inn restaurants were opened in fiscal 2012

THE COLONY, Texas, Sept. 24, 2012 (GLOBE NEWSWIRE) -- Pizza Inn Holdings, Inc. (Nasdaq:PZZI) today announced results for the fourth fiscal quarter and fiscal year ended June 24, 2012. Fourth quarter net income decreased $0.5 million year over year to a loss of $0.1 million, or $0.01 per share, compared to net income of $0.4 million, or $0.05 per share, for the same quarter of the prior fiscal year. The decline in net income was primarily attributable to lower food and supply sales and an increase in income tax expense in the fourth quarter ended June 24, 2012 when compared to the fourth quarter ended June 26, 2011. Fourth quarter revenues decreased to $10.9 million compared to $11.3 million for the same quarter of the prior fiscal year. Food and supply sales decreased by approximately $1.0 million, or 11.0%, due to a decrease in the average number of restaurants open in the current period, a 6.4% decrease in franchisee retail revenues and a decrease in non-proprietary food purchased from the Company by franchisees when compared to the prior year period. Company-owned restaurant sales increased 59.6% to $1.9 million due primarily to new store openings and partially offset the decrease in food and supply sales. Income tax expense exceeded the statutory rate during the fiscal 2012 fourth quarter due primarily to the loss of certain deferred tax benefits as a result of the cancellation of employee stock options during the quarter. During the fiscal 2011 fourth quarter, the accrual of tax benefits for foreign tax credits resulted in an income tax rate lower than statutory rates.

For the fiscal year ended June 24, 2012, net income was $0.3 million, or $0.04 per share, compared to $1.4 million, or $0.17 per share, for the prior fiscal year. The decline in net income was primarily attributable to a $1.7 million decline in food and supply sales, $0.3 million of pre-opening costs associated with the opening of five Pie Five stores during fiscal 2012, $0.1 million of costs associated with preparing the Company to support the growth of the Pie Five business and the franchising of Pizza Inn in China and an increase in income tax expense associated with changes in deferred tax attributes. Revenues were unchanged at $43.0 million during fiscal 2012 and fiscal 2011. Domestic franchised buffet-style restaurant same store sales decreased 1.0% while total domestic franchised same store sales decreased 1.2% compared to the prior fiscal year. For fiscal 2012, Company restaurant sales increased $1.9 million, or 45.9%, to $6.1 million due to new store openings.

"We continue to develop and expand our Pie Five concept with the addition of one new store opened in the fourth fiscal quarter and another opened in August," commented Clinton Coleman, Interim President and CEO. "We now have seven Pie Five locations open in the Dallas/Ft. Worth area and have signed leases for additional sites, with our next unit scheduled to open in Allen, Texas in October. We continue to invest in people and infrastructure in anticipation of continued development of Company-owned units of our Pie Five concept. We are offering Pie Five franchises in all non-registration states in the U.S. and are working on registering in all other states. Furthermore, we recently entered into a new financing agreement with The F&M Bank and Trust Company which provides an additional $6.0 million of term financing for new company-owned Pie Five locations." 

"We are disappointed that our food and supply sales remained below our historical average during the fourth quarter, although the trend did improve relative to the third quarter food and supply sales pace. We continue to evaluate new initiatives for providing high-quality non-proprietary food products to our franchisees," Mr. Coleman concluded.

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 the control of Pizza Inn Holdings. 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 the objectives and plans of Pizza Inn Holdings will be achieved. 

Pizza Inn Holdings, Inc. is an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademarks "Pizza Inn" and "Pie Five Pizza Company." 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."

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