THE COLONY, Texas — Pizza Inn warned in a regulatory filing that results for fiscal 2006, ended June 25, will be down significantly compared to 2005.
According to the filing, multiple factors played a role in what will amount to a pre-tax loss of $7 million for the year, including:
- restaurant closure write-downs of $1.4 million;
- a 10 percent reduction in food sales at its Norco distribution arm;
- a 7 percent reduction in franchise revenue due to unit closures;
- a $341,000 increase in stock compensation expenses;
- increased legal fees associated with lawsuits against its former chief executive, Ronald Parker, and its former legal counsel;
- and $2.8 million for future payments to settle litigation with Parker.
On Sept. 24, Pizza Inn and Parker agreed on a settlement relating to arbitration it filed against him in 2005. (Pizza Inn settles with Parker, former CEO, for $2.8 million
.) At issue was Pizza Inn's termination of Parker for cause in December 2004, and Parker's claims against the company for alleged defamation and alleged wrongful termination. Parker originally sought $7 million in severance payments, $800,000 in legal expenses and $2.9 million in other alleged damages.
In the settlement, Pizza Inn and Parker denied wrongdoing and liability, agreed to mutual releases of liability and agreed to dismiss all pending claims with prejudice. Pizza Inn agreed to pay Parker $2.8 million over six months.