---

 

 

 

• Comparable buffet restaurant sales increased 3.1% for the fourth quarter from the fourth quarter of fiscal 2006. For fiscal 2007, comparable buffet restaurant sales increased 0.8% from fiscal 2006, the first such annual increase in five years.

• Domestic chain-wide comparable restaurant sales increased 1.1% for the fourth quarter from the fourth quarter of fiscal 2006. For fiscal 2007, domestic chain-wide comparable restaurant sales decreased 0.7% from fiscal 2006.

• Overall domestic chain-wide restaurant sales decreased 3.2% for the fourth quarter from the fourth quarter of fiscal 2006 due to a net reduction in franchise openings driven by additional closures of underperforming restaurants.

• General and administrative expenses for fiscal 2007 were lower by $1.5 million compared to fiscal 2006. The reduction was due primarily to a reduction in payroll expenses of $416,000, driven primarily by the outsourcing of our warehousing and distribution activities, and a reduction in stock compensation expense of $355,000, due primarily to the reversal of prior expenses for unvested options that terminated. Occupancy costs for fiscal 2007 were lower by $211,000 compared to fiscal 2006, also due primarily to the outsourcing initiative.

• Net income for the fourth quarter improved $5,079,000 compared to the fourth quarter of fiscal 2006, due primarily to accrued expenses in the fourth quarter of fiscal 2006 of $2,800,000 related to the litigation settlement between the Company and its former CEO as well as an impairment expense in the fourth quarter of fiscal 2006 of $1,166,000 related to two Company-owned restaurants.

---

PIZZA INN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
				Year Ended
				June 24,		June 25,		June 26,
				2007		2006		2005
REVENUES:
	Food and supply sales		$	41,029	$	44,202	$	49,161
	Franchise revenue			4,622		4,799		5,162
	Restaurant sales			1,485		1,458		946
				47,136		50,459		55,269
COSTS AND EXPENSES:
	Cost of sales			40,101		43,762		46,617
	Franchise expenses			2,633		3,126		2,791
	General and administrative expenses			4,002		5,531		4,882
	Gain on sale of assets			(570)		(149)		-
	Impairment of long-lived assets and goodwill			48		1,319		-
	Litigation settlement accrual			302		2,800		-
	Other (income) expense			(159)		-		-
	Provision for bad debt			96		301		30
	Total costs and expenses, net			46,453		56,690		54,320
OPERATING INCOME (LOSS)				683		(6,231)		949
	Interest expense			477		787		590
INCOME (LOSS) BEFORE INCOME TAXES				206		(7,018)		359
	Provision (benefit) for income taxes			-		(1,029)		155
NET INCOME (LOSS)			$	206	$	(5,989)	$	204
Basic earnings (loss) per common share			$	0.02	$	(0.59)	$	0.02
Diluted earnings (loss) per common share			$	0.02	$	(0.59)	$	0.02
Weighted average common shares outstanding				10,145		10,123		10,105
Weighted average common and
	potentially dilutive common shares outstanding			10,146		10,123		10,142

PIZZA INN, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
							June 24,		June 25,
							2007		2006
ASSETS
CURRENT ASSETS
	Cash and cash equivalents					$	1,879	$	184
	Accounts receivable, less allowance for doubtful
			accounts of $451 and $324, respectively				2,716		2,627
	Accounts receivable - related parties						-		452
	Notes receivable, current portion						8		52
	Inventories						1,518		1,772
	Property held for sale						336		-
	Deferred income tax assets						458		1,145
	Prepaid expenses and other						165		299
			Total current assets				7,080		6,531
LONG-TERM ASSETS
	Property, plant and equipment, net						778		11,921
	Notes receivable						12		20
	Re-acquired development territory, net						239		431
	Deposits and other						85		98
						$	8,194	$	19,001
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable - trade					$	2,082	$	2,217
	Accrued expenses						1,805		4,791
	Current portion of long-term debt						-		8,044
			Total current liabilities				3,887		15,052
LONG-TERM LIABILITIES
	Deferred gain on sale of property						209		-
	Deferred revenues						314		379
	Other long-term liabilities						7		58
			Total liabilities				4,417		15,489
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
	Common stock, $.01 par value; authorized 26,000,000
		shares; issued 15,120,319 and 15,090,319 shares, respectively;
		outstanding 10,168,494 and 10,138,494 shares, respectively					151		151
	Additional paid-in capital						8,471		8,426
	Retained earnings						14,799		14,593
	Accumulated other comprehensive loss						-		(14)
	Treasury stock at cost
		Shares in treasury: 4,951,825 for both years					(19,644)		(19,644)
			Total shareholders' equity				3,777		3,512
						$	8,194	$	19,001

PIZZA INN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
							Year Ended
							June 24,			June 25,			June 26,
							2007			2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)					$	206		$	(5,989)		$	204
	Adjustments to reconcile net income (loss) to
		cash provided by (used for) operating activities:
		Depreciation and amortization					692			1,214			1,143
		Impairment of long-lived assets & goodwill					48			1,443			-
		Deferred rent expense					(9)			56			-
		Provision for bad debt					96			301			30
		Stock compensation expense					(14)			341			-
		Litigation expense accrual					302			2,800			-
		Gain on sale of assets					(570)			(149)			-
		Deferred income taxes					687			(1,029)			39
		Deferred revenue					196			542			-
	Changes in operating assets and liabilities:
		Notes and accounts receivable					320			884			(256)
		Inventories					254			145			(205)
		Accounts payable - trade					(135)			255			716
		Accrued expenses					(3,520)			7			(735)
		Prepaid expenses and other					76			414			152
		Cash (used for) provided by
		operating activities					(1,371)			1,235			1,088
CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from sale of assets						11,325			589			-
	Capital expenditures						(249)			(2,227)			(753)
		Cash provided by (used for)
		investing activities					11,076			(1,638)			(753)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Deferred financing costs						(25)			-			-
	Change in line of credit, net						-			747			(234)
	Repayments of long-term bank debt						(8,044)			(414)			(415)
	Purchases of treasury stock						-			-			(160)
	Proceeds from exercise of stock options						59			81			30
		Cash (used for) provided by
		financing activities					(8,010)			414			(779)
Net increase in cash and cash equivalents							1,695			11			(444)
Cash and cash equivalents, beginning of year							184			173			617
Cash and cash equivalents, end of year						$	1,879		$	184		$	173

---