Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

February 6, 2001

Documents

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

Published on February 6, 2001



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q
(MARK ONE)

[X}QARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 24, 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 FEBRUARY 2, 2001, AN AGGREGATE OF 10,587,113 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 six
months ended December 24, 2000 and December 26, 1999 3

Consolidated Balance Sheets at December 24, 2000 and June 25, 2000 4

Consolidated Statements of Cash Flows for the six months ended
December 24, 2000 and December 26, 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 SIX MONTHS ENDED
------------------- -----------------
DECEMBER 24, DECEMBER 26, DECEMBER 24, DECEMBER 26,
REVENUES: 2000 1999 2000 1999
------------------- ----------------- ------------- -------------

Food and supply sales . . . . . . . $ 13,502 $ 14,292 $ 28,230 $ 29,621
Franchise revenue . . . . . . . . . 1,338 1,399 2,739 2,868
Restaurant sales. . . . . . . . . . 582 581 1,151 1,158
Other income. . . . . . . . . . . . 98 59 216 78
------------------- ----------------- ------------- -------------
15,520 16,331 32,336 33,725
------------------- ----------------- ------------- -------------

COSTS AND EXPENSES:
Cost of sales . . . . . . . . . . . 12,710 13,814 26,635 28,398
Franchise expenses. . . . . . . . . 597 280 1,181 907
General and administrative expenses 1,163 929 2,183 1,837
Interest expense. . . . . . . . . . 248 179 503 318
------------------- ----------------- ------------- -------------
14,718 15,202 30,502 31,460
------------------- ----------------- ------------- -------------

INCOME BEFORE INCOME TAXES. . . . . . 802 1,129 1,834 2,265

Provision for income taxes. . . . . 273 384 659 772
------------------- ----------------- ------------- -------------

NET INCOME. . . . . . . . . . . . . . $ 529 $ 745 $ 1,175 $ 1,493
=================== ================= ============= =============

BASIC EARNINGS PER COMMON SHARE . . . $ 0.05 $ 0.06 $ 0.11 $ 0.13
=================== ================= ============= =============

DILUTED EARNINGS PER COMMON SHARE . . $ 0.05 $ 0.06 $ 0.11 $ 0.13
=================== ================= ============= =============

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

WEIGHTED AVERAGE COMMON SHARES. . . . 10,723 11,570 10,729 11,411
=================== ================= ============= =============

WEIGHTED AVERAGE COMMON AND
POTENTIAL DILUTIVE COMMON SHARES. . 10,725 11,691 10,735 11,581
=================== ================= ============= =============


See accompanying Notes to Consolidated Financial Statements.







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


DECEMBER 24, JUNE 25,
ASSETS 2000 2000
-------------- ----------

(UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . $ 403 $ 484
Accounts receivable, less allowance for doubtful
accounts of $774 and $776, respectively. . . . . . . . . . . 5,146 4,681
Notes receivable, current portion, less allowance
for doubtful accounts of $280 and $260, respectively . . . . 1,010 810
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . 2,439 2,910
Deferred taxes, net. . . . . . . . . . . . . . . . . . . . . . 1,117 1,117
Prepaid expenses and other . . . . . . . . . . . . . . . . . . 465 566
-------------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . 10,580 10,568
Property, plant and equipment, net . . . . . . . . . . . . . . . 3,379 1,650
Property under capital leases, net . . . . . . . . . . . . . . . 899 1,165
Deferred taxes, net. . . . . . . . . . . . . . . . . . . . . . . 2,768 3,312
Long-term notes receivable, less
allowance for doubtful accounts of $21 and $66,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . 13 262
Deposits and other . . . . . . . . . . . . . . . . . . . . . . . 568 734
-------------- ----------
$ 18,207 $ 17,691
============== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade . . . . . . . . . . . . . . . . . . . $ 2,264 $ 2,251
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 1,916 1,797
Current portion of long-term debt. . . . . . . . . . . . . . . 1,250 1,250
Current portion of capital lease obligations . . . . . . . . . 556 534
-------------- ----------
Total current liabilities. . . . . . . . . . . . . . . . . . 5,986 5,832

LONG-TERM LIABILITIES
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 10,552 9,842
Long-term capital lease obligations. . . . . . . . . . . . . . 529 813
Other long-term liabilities. . . . . . . . . . . . . . . . . . 755 715
-------------- ----------
17,822 17,202
-------------- ----------
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value; authorized 26,000,000 shares;
issued 14,954,919 and 14,954,789 shares, respectively
outstanding 10,686,803 and 10,645,380 shares, respectively. 150 150
Additional paid-in capital . . . . . . . . . . . . . . . . . . 7,823 7,708
Loans to officers. . . . . . . . . . . . . . . . . . . . . . . (2,325) (2,250)
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . 12,894 13,163
Treasury stock at cost
Shares in treasury: 4,268,116 and 4,309,409 respectively . . (18,157) (18,282)
-------------- ----------
Total shareholders' equity . . . . . . . . . . . . . . . . . 385 489
-------------- ----------
$ 18,207 $ 17,691
============== ==========


See accompanying Notes to Consolidated Financial Statements.







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


SIX MONTHS ENDED
------------------
DECEMBER 24, DECEMBER 26,
2000 1999
------------------ --------------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,175 $ 1,493
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 676 570
Provision for bad debt. . . . . . . . . . . . . . . . . . . . 125 25
Utilization of pre-reorganization net operating
loss carryforwards. . . . . . . . . . . . . . . . . . . . . 544 427
Changes in assets and liabilities:
Notes and accounts receivable . . . . . . . . . . . . . . . . (541) (158)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 471 (412)
Accounts payable - trade. . . . . . . . . . . . . . . . . . . 13 (357)
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . 119 (164)
Prepaid expenses and other. . . . . . . . . . . . . . . . . . 311 129
------------------ --------------
CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . . . . 2,893 1,553
------------------ --------------

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures. . . . . . . . . . . . . . . . . . . . . . (2,067) (444)
------------------ --------------
CASH USED FOR INVESTING ACTIVITIES. . . . . . . . . . . . . . (2,067) (444)
------------------ --------------

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings of long-term bank debt . . . . . . . . . . . . . . . 2,235 3,300
Repayments of long-term bank debt and capital lease obligations (1,787) (767)
Dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . (1,243) (1,374)
Proceeds from exercise of stock options . . . . . . . . . . . . 298 71
Officer loan payment. . . . . . . . . . . . . . . . . . . . . . 165 -
Purchases of treasury stock . . . . . . . . . . . . . . . . . . (575) (2,471)
------------------ --------------
CASH USED FOR FINANCING ACTIVITIES. . . . . . . . . . . . . . (907) (1,241)
------------------ --------------

Net decrease in cash and cash equivalents . . . . . . . . . . . . (81) (132)
Cash and cash equivalents, beginning of period. . . . . . . . . . 484 509
------------------ --------------
Cash and cash equivalents, end of period. . . . . . . . . . . . . $ 403 $ 377
------------------ --------------



See accompanying Notes to Consolidated Financial Statements.





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


SIX MONTHS ENDED
-----------------
DECEMBER 24, DECEMBER 26,
2000 1999
----------------- -------------

CASH PAYMENTS FOR:

Interest . . . . . . . . . . . . . . . . . . . $ 525 $ 214
Income taxes . . . . . . . . . . . . . . . . . 25 60


NONCASH FINANCING AND INVESTING
ACTIVITIES:

Stock issued to officers in exchange for loans $ 303 $ -
Capital lease obligations incurred . . . . . . - 158



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 25, 2000. 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) 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, to the Eurodollar rate plus
1.5%. The Company entered into an amendment to this agreement, effective
December 28, 2000, modifying certain financial covenants, as a result of a new
construction loan as noted below. The Company has used approximately $2.0
million of its credit line to fund costs of the new building project, including
the land acquisition and certain development costs incurred to date.

The Company entered into an agreement effective December 28, 2000 with its
current lender to provide up to $8.125 million of financing for the construction
of the Company's new headquarters, training center and distribution facility.
The construction loan will convert to a term loan upon completion of the
construction phase and the then unpaid principal balance will mature on December
28, 2007. The term loan will amortize over a term of twenty years, with
principal and interest payments due monthly. Interest is provided for at a rate
equal to prime less an interest rate margin of .50% prior to loan conversion and
.75% following loan conversion, or, at the Company's option, to the Eurodollar
rate plus 1.5%. The Company has the obligation after the conversion date to
cause the outstanding principal amount to be subject to a fixed interest rate.

(3) In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101, which provides the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements,
must be adopted by the Company in its fiscal fourth quarter. Based on
preliminary analysis, the Company does not expect the adoption of SAB 101 to
have a material effect on its consolidated financial statements.












(4) 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 DECEMBER 24, 2000
BASIC EPS
Income Available to Common Shareholders . . . $ 529 10,723 $ 0.05
Effect of Dilutive Securities - Stock Options 2
------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions . . . . . . . . . . . . $ 529 10,725 $ 0.05
============ ============= ==========

THREE MONTHS ENDED DECEMBER 26, 1999
BASIC EPS
Income Available to Common Shareholders . . . $ 745 11,570 $ 0.06
Effect of Dilutive Securities - Stock Options 121
------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions . . . . . . . . . . . . $ 745 11,691 $ 0.06
============ ============= ==========



SIX MONTHS ENDED DECEMBER 24, 2000
BASIC EPS
Income Available to Common Shareholders $ 1,175 10,729 $ 0.11
Effect of Dilutive Securities - Stock Options 6
DILUTED EPS ------------
Income Available to Common Shareholders
& Assumed Conversions $ 1,175 10,735 $ 0.11
============ ============= ==========

SIX MONTHS ENDED DECEMBER 26, 1999
BASIC EPS
Income Available to Common Shareholders $ 1,493 11,411 $ 0.13
Effect of Dilutive Securities - Stock Options 170
--------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions $ 1,49 11,581 $ 0.13
============ ============= ==========


(5) 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 six months ended December 24, 2000,
and December 26, 1999.







THREE MONTHS ENDED SIX MONTHS ENDED
------------------- -----------------

DECEMBER 24, DECEMBER 26, DECEMBER 24, DECEMBER 26,
2000 1999 2000 1999
--------------- -------------- -------------- --------------

(In thousands). . . . . . . . (In thousands)
NET SALES AND OPERATING REVENUES:
Food and Equipment Distribution . . $ 13,502 $ 14,292 $ 28,230 $ 29,621
Franchise and Other . . . . . . . . 1,920 1,980 3,890 4,026
Intersegment revenues . . . . . . . 213 201 419 418
--------------- -------------- -------------- --------------
Combined. . . . . . . . . . . . . 15,635 16,473 32,539 34,065
Other revenues. . . . . . . . . . . 98 59 216 78
Less intersegment revenues. . . . . (213) (201) (419) (418)
--------------- -------------- -------------- --------------
Consolidated revenues . . . . . . $ 15,520 $ 16,331 $ 32,336 $ 33,725
=============== ============== ============== ==============

OPERATING PROFIT:
Food and Equipment Distribution (1) $ 756 $ 578 $ 1,563 $ 1,182
Franchise and Other (1) . . . . . . 629 1,085 1,321 2,053
Intersegment profit . . . . . . . . 66 123 127 179
--------------- -------------- -------------- --------------
Combined. . . . . . . . . . . . . 1,451 1,786 3,011 3,414
Other profit or loss. . . . . . . . 98 59 216 78
Less intersegment profit. . . . . . (66) (123) (127) (179)
Corporate administration and other. (681) (593) (1,266) (1,048)
--------------- -------------- -------------- --------------
Income before taxes . . . . . . . $ 802 $ 1,129 $ 1,834 $ 2,265
=============== ============== ============== ==============

GEOGRAPHIC INFORMATION (REVENUES):
United States . . . . . . . . . . . $ 15,382 $ 16,113 $ 31,973 $ 33,186
Foreign countries . . . . . . . . . 138 218 363 539
--------------- -------------- -------------- --------------
Consolidated total. . . . . . . . $ 15,520 $ 16,331 $ 32,336 $ 33,725
=============== ============== ============== ==============


(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 six months ended December 24, 2000 compared to the quarter and six
months ended December 26, 1999.

Diluted earnings per share for the second quarter of the current fiscal
year were $0.05 versus $0.06 for the same period last year. For the six months
ended December 24, 2000, diluted earnings per share decreased 16% to $0.11 from
$0.13 for the same period last year. Net income for the quarter decreased 29%
to $529,000 from $745,000 for the same quarter last year. For the six months
ended December 24, 2000, net income decreased 21% to $1,175,000 from $1,493,000
compared to the same period last year.

Food and supply sales for the quarter decreased 6% to $13,502,000 from
$14,292,000 compared to the same period last year. For the six month period,
food and supply sales decreased 5% to $28,230,000 from $29,621,000 for the same
period last year. This decrease is the result of lower chainwide sales and
lower cheese prices in the first two quarters of this year.

Franchise revenue, which includes income from royalties, license fees and
area development and foreign master license (collectively, "Territory") sales,
decreased 4% or $61,000 for the quarter and 4% or $129,000 for the six month
period, compared to the same periods last year. These decreases are primarily
the result of lower royalties due to lower chainwide sales in the first and
second quarters of the current year.

Restaurant sales, which consists of revenue generated by Company-owned
training stores remained consistent for the quarter compared to the same period
of the prior year. For the six month period, restaurant sales decreased 1% or
$7,000.

Cost of sales decreased 8% or $1,104,000 for the quarter and decreased 6%
or $1,763,000 for the six month period. This decrease is due to lower chainwide
sales and lower cheese prices in the current year. These lower costs are
partially offset by higher depreciation and amortization costs, and higher
transportation costs in the current year. As a percentage of sales for the
quarter, cost of sales decreased to 90% from 93% compared to the same period of
the prior year. For the six months, cost of sales, as a percentage of sales,
decreased from 92% to 91%.

Franchise expenses include selling, general and administrative expenses
directly related to the sale and continuing service of franchises and
Territories. These costs increased 113% or $317,000 for the quarter and 30% or
$274,000 for the six month period compared to the same periods last year. This
increase was primarily due to lower marketing materials expense in the prior
year and lower compensation expense relating to franchise sales in the prior
year.

General and administrative expenses increased 25% or $234,000 for the
quarter and increased 19% or $346,000 for the first six months, compared to the
same periods last year. This is a result of higher bad debt expense, increased
insurance costs, and programming costs that were capitalized as software
development costs in the prior year. Salaries and wages increased 2% and 3% for
the quarter and year-to-date, respectively.

Interest expense increased 39% or $69,000 for the quarter and 58% or
$185,000 for the first six months, compared to the same period of the prior
year. This is a result of higher average debt and higher average interest
rates.




LIQUIDITY AND CAPITAL RESOURCES

During the first six months of fiscal 2001 the Company utilized cash
provided by operations in the amount of $2,893,000, net bank borrowings of
$710,000, and a portion of its cash balance to purchase 173,707 shares of its
own common stock for $575,000 and to pay dividends of $1,243,000 on the
Company's common stock.

Capital expenditures of $2,067,000 during the first six months included the
land acquisition for the new Corporate headquarters, vehicle upgrades, and
computer equipment and system upgrades.

The Company continues to realize substantial benefit from the
utilization of its net operating loss carryforwards (which currently total $6.6
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 ($3.9 million
as of December 24, 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, to the Eurodollar
rate plus 1.5%. The Company entered into an amendment to this agreement,
effective December 28, 2000, modifying certain financial covenants, as a result
of a new construction loan as noted below. The Company has used approximately
$2.0 million of its credit line to fund costs of the new building project,
including the land acquisition and certain development costs incurred to date.

The Company entered into an agreement effective December 28, 2000 with its
current lender to provide up to $8.125 million of financing for the construction
of the Company's new headquarters, training center and distribution facility.
The construction loan will convert to a term loan upon completion of the
construction phase and the then unpaid principal balance will mature on December
28, 2007. The term loan will amortize over a term of twenty years, with
principal and interest payments due monthly. Interest is provided for at a rate
equal to prime less an interest rate margin of .50% prior to loan conversion and
.75% following loan conversion, or, at the Company's option, to the Eurodollar
rate plus 1.5%. The Company has the obligation after the conversion date to
cause 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 First Amendment to the Second Amended and Restated Loan Agreement
between the Company and Wells Fargo Bank (Texas), N.A. dated December 28, 2000.

10.2 Construction Loan Agreement between the Company and Wells Fargo Bank
(Texas), N.A. dated December 28, 2000.

10.3 Promissory Note between the Company and Wells Fargo Bank (Texas), N.A.
dated December 28, 2000.

10.4 Form of Executive Employment Contract.

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
President and
Principal Financial Officer





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







Dated: February 6, 2001