Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

May 9, 2000

Documents

10-Q: Quarterly report pursuant to Section 13 or 15(d)

Published on May 9, 2000



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q
(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 26, 2000.
----------------

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO
_______________.

COMMISSION FILE NUMBER 0-12919

PIZZA INN, INC.
(EXACT NAME OF REGISTRANT IN ITS CHARTER)


MISSOURI 47-0654575
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)


5050 QUORUM DRIVE
SUITE 500
DALLAS, TEXAS 75240
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES,
INCLUDING ZIP CODE)

(972) 701-9955
(REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR SUCH SHORTER PERIOD THAT THE REGISTRANT
WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]

INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND
REPORTS REQUIRED TO BE FILED BY SECTIONS 12, 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN
CONFIRMED BY A COURT. YES [X} NO [ ]

AT MAY 5, 2000, AN AGGREGATE OF 10,768,673 SHARES OF THE REGISTRANT'S
COMMON STOCK, PAR VALUE OF $.01 EACH (BEING THE REGISTRANT'S ONLY CLASS OF
COMMON STOCK), WERE OUTSTANDING.





PIZZA INN, INC.




Index
--------



PART I. FINANCIAL INFORMATION


Item 1. Financial Statements Page
- ------- ----------------------

Consolidated Statements of Operations for the three months and
nine months ended March 26, 2000 and March 28, 1999 3

Consolidated Balance Sheets at March 26, 2000 and June 27, 1999 4

Consolidated Statements of Cash Flows for the nine months
ended March 26, 2000 and March 28, 1999 5

Notes to Consolidated Financial Statements 7



Item 2.Management's Discussion and Analysis of Financial
- ------ ---------------------------------------------------
Condition and Results of Operations 10
-----------------------------------




PART II OTHER INFORMATION


Item 4 Submission of Matters to a Vote of Security Holders 12
- ------- ---------------------------------------------------


Item 6. Exhibits and Reports on Form 8-K 12
- ------- ---------------------------------------------

Signatures 13




PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL INFORMATION
- --------------------------------


PIZZA INN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)


THREE MONTHS ENDED NINE MONTHS ENDED
------------------- ------------------
MARCH 26, MARCH 28, MARCH 26, MARCH 28,

2000 1999 2000 1999
------------------- ------------------ ---------- ----------
REVENUES:

Food and supply sales . . . . . . . $ 13,934 $ 14,004 $ 43,555 $ 43,835
Franchise revenue . . . . . . . . . 1,365 1,364 4,233 4,214
Restaurant sales. . . . . . . . . . 595 576 1,753 1,722
Other income. . . . . . . . . . . . 73 73 151 192
------------------- ------------------ ---------- ----------
15,967 16,017 49,692 49,963
------------------- ------------------ ---------- ----------

COSTS AND EXPENSES:
Cost of sales . . . . . . . . . . . 13,260 13,330 41,658 42,277
Franchise expenses. . . . . . . . . 564 585 1,471 1,822
General and administrative expenses 936 789 2,773 2,597
Interest expense. . . . . . . . . . 187 140 505 396
------------------- ------------------ ---------- ----------
14,947 14,844 46,407 47,092
------------------- ------------------ ---------- ----------

INCOME BEFORE INCOME TAXES. . . . . . 1,020 1,173 3,285 2,871

Provision for income taxes. . . . . 347 373 1,121 897
------------------- ------------------ ---------- ----------

NET INCOME. . . . . . . . . . . . . . $ 673 $ 800 $ 2,164 $ 1,974
=================== ================== ========== ==========

BASIC EARNINGS PER COMMON SHARE . . . $ 0.06 $ 0.07 $ 0.19 $ 0.17
=================== ================== ========== ==========

DILUTED EARNINGS PER COMMON SHARE . . $ 0.06 $ 0.07 $ 0.19 $ 0.16
=================== ================== ========== ==========

DIVIDENDS DECLARED PER COMMON SHARE . $ 0.06 $ - $ 0.18 $ 0.12
=================== ================== ========== ==========

WEIGHTED AVERAGE COMMON SHARES. . . . 11,569 11,483 11,463 11,762
=================== ================== ========== ==========

WEIGHTED AVERAGE COMMON AND
DILUTIVE POTENTIAL COMMON SHARES. . 11,668 11,788 11,610 12,332
=================== ================== ========== ==========



See accompanying Notes to Consolidated Financial Statements.







PIZZA INN, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


MARCH 26, JUNE 27,
ASSETS 2000 1999
----------- ----------

(UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . $ 351 $ 509
Accounts receivable, less allowance for doubtful
accounts of $779 and $808, respectively. . . . . . . . . . . 5,203 4,588
Notes receivable, current portion, less allowance
for doubtful accounts of $200 and $144, respectively . . . . 636 814
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . 2,259 2,393
Deferred taxes, net. . . . . . . . . . . . . . . . . . . . . . 1,097 1,149
Prepaid expenses and other . . . . . . . . . . . . . . . . . . 607 591
----------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . 10,153 10,044
Property, plant and equipment, net . . . . . . . . . . . . . . . 1,740 1,754
Property under capital leases, net . . . . . . . . . . . . . . . 1,298 1,587
Deferred taxes, net. . . . . . . . . . . . . . . . . . . . . . . 3,707 4,407
Long-term notes receivable, less
allowance for doubtful accounts of $36 and $80,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . 320 380
Deposits and other . . . . . . . . . . . . . . . . . . . . . . . 599 414
----------- ----------
$ 17,817 $ 18,586
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade . . . . . . . . . . . . . . . . . . . $ 2,613 $ 2,641
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 1,707 1,795
Current portion of capital lease obligations . . . . . . . . . 524 428
----------- ----------
Total current liabilities. . . . . . . . . . . . . . . . . . 4,844 4,864

LONG-TERM LIABILITIES
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 8,418 5,700
Long-term capital lease obligations. . . . . . . . . . . . . . 951 1,244
Other long-term liabilities. . . . . . . . . . . . . . . . . . 710 719
----------- ----------
14,923 12,527
----------- ----------
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value; authorized 26,000,000 shares;
outstanding 11,412,153 and 11,407,945 shares, respectively. 150 149
Additional paid-in capital . . . . . . . . . . . . . . . . . . 7,764 7,321
Loans to officers. . . . . . . . . . . . . . . . . . . . . . . (2,507) -
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . 13,149 14,375
Treasury stock at cost
Shares in treasury: 3,561,096 and 3,519,231 respectively . . (15,662) (15,786)
----------- ----------
Total shareholders' equity . . . . . . . . . . . . . . . . . 2,894 6,059
----------- ----------
$ 17,817 $ 18,586
=========== ==========



See accompanying Notes to Consolidated Financial Statements.





PIZZA INN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)


NINE MONTHS ENDED
-------------------
MARCH 26, MARCH 28,
2000 1999
------------------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,164 $ 1,974
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 884 650
Provision for bad debt. . . . . . . . . . . . . . . . . . . . 75 177
Utilization of pre-reorganization net operating
loss carryforwards. . . . . . . . . . . . . . . . . . . . . 752 912
Changes in assets and liabilities:
Notes and accounts receivable . . . . . . . . . . . . . . . . (452) 293
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 134 (10)
Accounts payable - trade. . . . . . . . . . . . . . . . . . . (28) 1,038
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . (41) 11
Prepaid expenses and other. . . . . . . . . . . . . . . . . . (16) (57)
------------------- -----------
CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . 3,472 4,988
------------------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures. . . . . . . . . . . . . . . . . . . . . . (617) (731)
Proceeds from transfer of assets to capital lease . . . . . . . - 249
------------------- -----------
CASH USED FOR INVESTING ACTIVITIES. . . . . . . . . . . . . . (617) (482)
------------------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings of long-term bank debt . . . . . . . . . . . . . . . 3,218 1,700
Repayments of long-term bank debt and capital lease obligations (855) (216)
Dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . (2,095) (2,164)
Proceeds from exercise of stock options . . . . . . . . . . . . 143 35
Purchases of treasury stock . . . . . . . . . . . . . . . . . . (3,424) (5,606)
------------------- -----------
CASH USED FOR FINANCING ACTIVITIES. . . . . . . . . . . . . . (3,013) (6,251)
------------------- -----------

Net decrease in cash and cash equivalents . . . . . . . . . . . . (158) (1,745)
Cash and cash equivalents, beginning of period. . . . . . . . . . 509 2,335
------------------- -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . $ 351 $ 590
------------------- -----------



See accompanying Notes to Consolidated Financial Statements.






SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
(IN THOUSANDS)
(UNAUDITED)



NINE MONTHS ENDED
------------------
MARCH 26, MARCH 28,
2000 1999
------------------ ----------

CASH PAYMENTS FOR:

Interest . . . . . . . . . . . . . . . . . . . $ 399 $ 356
Income taxes . . . . . . . . . . . . . . . . . 75 -


NONCASH FINANCING AND INVESTING
ACTIVITIES:

Capital lease obligations incurred . . . . . . $ 158 $ 730
Stock issued to officers in exchange for loans 2,507 -


See accompanying Notes to Consolidated Financial Statements.





PIZZA INN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1) The accompanying consolidated financial statements of Pizza Inn, Inc.
(the "Company") have been prepared without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in the financial statements have been
omitted pursuant to such rules and regulations. The consolidated financial
statements should be read in conjunction with the notes to the Company's audited
consolidated financial statements in its Form 10-K for the fiscal year ended
June 27, 1999. Certain prior year amounts have been reclassified to conform with
current year presentation.

In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary to fairly present the Company's
financial position and results of operations for the interim periods. All
adjustments contained herein are of a normal recurring nature.

(2) On March 28, 2000, the Company's Board of Directors declared a quarterly
dividend of $.06 per share on the Company's common stock, payable April 21, 2000
to shareholders of record on April 7, 2000.

(3) The Company entered into an agreement effective March 31, 2000 with its
current lender to extend the term of its existing $9.5 million revolving credit
line through March 2002 and to modify certain financial covenants. In addition,
the Company entered into a $5,000,000 term note with monthly principal payments
of $104,000 maturing on March 31, 2004. Interest on the term loan is payable
monthly. Interest is provided for at a rate equal to prime less an interest
rate margin of .75%, or, at the Company's option, of the Eurodollar rate plus
1.5%. The Company has 120 days after the closing date to cause at least 50% of
the outstanding principal amount to be subject to a fixed interest rate.

(4) In June 1995, the Company adopted the par value method of accounting for
treasury share purchases with the intent to retire the shares purchased. In
December 1999, the Company changed its method of accounting for treasury shares
purchased, to the cost method because it is now the Company's intent to reissue
a portion of the shares held in treasury. Accordingly, retained earnings and
additional paid-in capital as of June 27, 1999 were adjusted by $13,195,000 and
$2,556,000.

In October 1999, the Company loaned $2,506,754 to certain officers of the
Company in the form of promissory notes due in June 2004 to acquire 900,000
shares of the Company's common stock through the exercise of vested stock
options previously granted to them in 1995 by the Company. The notes bear
interest at the same floating interest rate the Company pays on its credit
facility with Wells Fargo and are collaterized by certain real property and
existing Company stock owned by the officers. The notes are reflected as a
reduction to stockholders' equity. Common stock, additional paid-in capital,
retained earnings and treasury stock previously reported as of December 26, 1999
were adjusted as of March 26, 2000 by ($9,000), ($2,241,000), ($1,296,000) and
$3,546,000, respectively, to reflect the issuance of these stock options out of
treasury shares. The accounting for these options and this subsequent
adjustment has no net effect on stockholders' equity.


(5)
The following table shows the reconciliation of the numerator and denominator of
the basic EPS calculation to the numerator and denominator of the diluted EPS
calculation (in thousands, except per share amounts).





INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------ ------------- ----------

THREE MONTHS ENDED MARCH 26, 2000
BASIC EPS
Income Available to Common Shareholders . . . $ 673 11,569 $ 0.06
Effect of Dilutive Securities - Stock Options 99
------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions . . . . . . . . . . . . $ 673 11,668 $ 0.06
============ ============= ==========

THREE MONTHS ENDED MARCH 28, 1999
BASIC EPS
Income Available to Common Shareholders . . . $ 800 11,483 $ 0.07
Effect of Dilutive Securities - Stock Options 305
------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions . . . . . . . . . . . . $ 800 11,788 $ 0.07
============ ============= ==========


NINE MONTHS ENDED MARCH 26, 2000
BASIC EPS
Income Available to Common Shareholders . . . $ 2,164 11,463 $ 0.19
Effect of Dilutive Securities - Stock Options 147
------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions . . . . . . . . . . . . $ 2,164 11,610 $ 0.19
============ ============= ==========

NINE MONTHS ENDED MARCH 28, 1999
BASIC EPS
Income Available to Common Shareholders . . . $ 1,974 11,762 $ 0.17
Effect of Dilutive Securities - Stock Options 570
------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions . . . . . . . . . . . . $ 1,974 12,332 $ 0.16
============ ============= ==========






(6) Summarized in the following tables are net sales and operating revenues,
operating profit (loss), and geographic information (revenues) for the Company's
reportable segments for the three months and nine months ended March 26, 2000,
and March 28, 1999.




THREE MONTHS ENDED NINE MONTHS ENDED

MARCH 26, MARCH 28, MARCH 26, MARCH 28,
2000 1999 2000 1999
----------- ----------- ----------- -----------

NET SALES AND OPERATING REVENUES:
Food and Equipment Distribution . . $ 13,934 $ 14,004 $ 43,555 $ 43,835
Franchise and Other . . . . . . . . 1,960 1,940 5,986 5,936
Intersegment revenues . . . . . . . 206 196 624 650
----------- ----------- ----------- -----------
Combined . . . . . . . . . . . 16,100 16,140 50,165 50,421
Other Revenues. . . . . . . . . . . 73 73 151 192
Less intersegment revenues. . . . . (206) (196) (624) (650)
----------- ----------- ----------- -----------
Consolidated Revenues. . . . . $ 15,967 $ 16,017 $ 49,692 $ 49,963
=========== =========== =========== ===========


OPERATING PROFIT:
Food and Equipment Distribution (1) $ 722 $ 1,155 $ 1,904 $ 2,416
Franchise and Other (1) . . . . . . 769 413 2,822 1,823
Intersegment profit . . . . . . . . 12 50 167 163
----------- ----------- ----------- -----------
Combined . . . . . . . . . . . 1,503 1,618 4,893 4,402
Other Profit or loss. . . . . . . . 73 73 151 192
Less intersegment profit. . . . . . (12) (50) (167) (163)
Corporate administration and other. (544) (468) (1,592) (1,560)
----------- ----------- ----------- -----------
Income before taxes. . . . . . $ 1,020 $ 1,173 $ 3,285 $ 2,871
=========== =========== =========== ===========

GEOGRAPHIC INFORMATION (REVENUES):
United States . . . . . . . . . . . $ 15,571 $ 15,747 $ 48,756 $ 48,858
Foreign countries . . . . . . . . . 396 270 936 1,105
----------- ----------- ----------- -----------
Consolidated total . . . . . . $ 15,967 $ 16,017 $ 49,692 $ 49,963
=========== =========== =========== ===========


(1) Does not include full allocation of corporate administration




14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
- -----------------------

Quarter and nine months ended March 26, 2000 compared to the quarter and nine
months ended March 28, 1999.

Diluted earnings per share for the third quarter of the current fiscal year
were $0.06 versus $0.07 for the same period last year. For the nine months
ended March 26, 2000, diluted earnings per share increased 19% to $0.19 from
$0.16 for the same period last year. Net income for the quarter decreased 16%
to $673,000 from $800,000 for the same quarter last year. For the nine months
ended March 26, 2000, net income increased 10% to $2,164,000 from $1,974,000
compared to the same period last year.

Food and supply sales for the quarter decreased slightly compared to the
same period last year. For the nine month period, food and supply sales
decreased to $43,555,000 from $43,835,000 for the same period last year. This
decrease is the result of higher cheese prices in the first three quarters of
the prior year. Excluding the extraordinary change in cheese prices, food and
supply sales increased $1,436,000 year-to-date reflecting greater chainwide
sales.

Franchise revenue, which includes income from royalties, license fees and
area development and foreign master license (collectively, "Territory") sales,
increased $1,000 for the quarter and $19,000 for the nine month period, compared
to the same periods last year. These increases include higher on-going domestic
and international royalties of $129,000 due to higher chainwide sales, primarily
offset by recognition of higher Territory sales in the prior year.

Restaurant sales, which consists of revenue generated by Company-owned
training stores, for the quarter increased 3% or $19,000 compared to the same
period of the prior year. For the nine month period, restaurant sales increased
2% or $31,000. Sales for the nine month period were partially offset by the
lease expiration and closing of one training Delco store in August 1998.

Cost of sales remained consistent for the quarter and decreased 1% or
$619,000 for the nine month period. This decrease is due to favorably lower
cheese prices in the current year though partially offset by payroll costs which
were capitalized as software development costs in the prior year.
Additionally, transportation, depreciation and amortization costs were higher in
the current year. As a percentage of sales for the quarter, cost of sales
remained the same at 91%. For the nine months, cost of sales, as a percentage
of sales decreased from 93% to 92%.

Franchise expenses include selling, general and administrative expenses
directly related to the sale and continuing service of franchises and
Territories. These costs decreased 4% or $21,000 for the quarter and 19% or
$351,000 for the nine month period compared to the same periods last year. This
decrease was primarily due to lower marketing expense and lower compensation
expense relating to franchise sales.

General and administrative expenses increased 19% or $147,000 for the
quarter and increased 7% or $176,000 for the first nine months, compared to the
same periods last year. This is a result of higher insurance costs, higher
franchise and property taxes, and payroll costs that were capitalized as
software development costs in the prior year.

Interest expense increased 34% or $47,000 for the quarter and 28% or
$109,000 for the first nine months, compared to the same period of the prior
year. This is a result of higher average debt and slightly higher average
interest rates.




LIQUIDITY AND CAPITAL RESOURCES

During the first nine months of fiscal 2000, the Company utilized cash
provided by operations in the amount of $3,472,000, bank borrowings of
$3,218,000, and a portion of its cash balances to purchase 942,000 shares of its
own common stock for $3,424,000 and to pay dividends of $2,095,000 on the
Company's common stock.

Capital expenditures of $617,000 during the first nine months included
computer equipment and upgrades, a cash register system for each of the three
Company-owned stores, and leasehold improvements at the Company-owned stores,
corporate office and distribution facility.

The Company continues to realize substantial benefit from the
utilization of its net operating loss carryforwards (which currently total $7.5
million and expire in 2005) to reduce its federal tax liability from the 34% tax
rate reflected on its statement of operations to an actual payment of
approximately 2% of taxable income. Management believes that future operations
will generate sufficient taxable income, along with the reversal of temporary
differences, to fully realize its net deferred tax asset balance ($4.8 million
as of March 26, 2000) without reliance on material, non-routine income. Taxable
income in future years at the current level would be sufficient for full
realization of the net tax asset.

The Company entered into an agreement effective March 31, 2000 with its
current lender to extend the term of its existing $9.5 million revolving credit
line through March 2002 and to modify certain financial covenants. In addition,
the Company entered into a $5,000,000 term note with monthly principal payments
of $104,000 maturing on March 31, 2004. Interest on the term loan is payable
monthly. Interest is provided for at a rate equal to prime less an interest
rate margin of .75%, or, at the Company's option, of the Eurodollar rate plus
1.5%. The Company has 120 days after the closing date to cause at least 50% of
the outstanding principal amount to be subject to a fixed interest rate.

This report contains certain forward-looking statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995) relating to
the Company that are based on the beliefs of the management of the Company, as
well as assumptions and estimates made by and information currently available to
the Company's management. When used in this report, the words "anticipate,"
"believe," "estimate," "expect," "intend" and similar expressions, as they
relate to the Company or the Company's management, identify forward-looking
statements. Such statements reflect the current views of the Company with
respect to future events and are subject to certain risks, uncertainties and
assumptions relating to the operations and results of operations of the Company
as well as its customers and suppliers, including as a result of competitive
factors and pricing pressures, shifts in market demand, general economic
conditions and other factors including but not limited to, changes in demand for
Pizza Inn products or franchises, the impact of competitors' actions, changes in
prices or supplies of food ingredients, and restrictions on international trade
and business. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions or estimates prove incorrect, actual results
may vary materially from those described herein as anticipated, believed,
estimated, expected or intended.

PART II. OTHER INFORMATION


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ---------------------------------------------------------------------

None


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------------

Exhibits:

10.1 Second Amended and Restated Loan Agreement between the Company and
Wells Fargo Bank (Texas), N.A. dated March 31, 2000.

No reports on Form 8-k were filed in the quarter for which this report is
filed.


------
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 thereunto duly authorized.


PIZZA INN, INC.
Registrant




By: /s/Ronald W. Parker
---------------------
Ronald W. Parker
Executive Vice President and
Principal Financial Officer





By: /s/Shawn Preator
-----------------
Shawn Preator
Controller and
Principal Accounting Officer







Dated: May 9, 2000

------
SIGNATURES
----------