RAVE Restaurant (RAVE) 8-K Results of Operations and Financial Condition

FOR IMMEDIATE RELEASE

Contact:

Nancy Ellefson

VP of Finance

Pizza Inn, Inc.

469-384-5000

PIZZA INN, INC. REPORTS RESULTS FOR

THIRD QUARTER FISCAL YEAR 2010

Company maintains consistent profit performance despite challenging competitive environment

The Colony, Texas – May 10, 2010 -- PIZZA INN, INC. (NASDAQ:PZZI) today reported net income of $0.4 million, or $0.05 per share, for the fiscal quarter ended March 28, 2010, compared to similar net income of $0.4 million, or $0.05 per share, for the same quarter of the prior fiscal year.  Total revenue for the third fiscal quarter of 2010 declined to $10.2 million from $10.8 million in the same period of fiscal 2009.

For the nine months ended March 28, 2010, Company revenues were $30.6 million compared to $33.4 million for the same period in the prior fiscal year.  Net income for the nine months ended March 28, 2010 was $1.1 million, or $0.14 per share, compared to $0.8 million, or $0.09 per share, for the same period in the prior fiscal year, representing a 41.1% increase in net income.

Highlights for the third quarter of fiscal year 2010 included:

● Sales from Company-owned restaurants increased 35%, or $0.2 million, in the third quarter of fiscal 2010 compared to the same quarter of the prior fiscal year, primarily due to the opening of a new buffet location in Ft. Worth, Texas in September, 2009.

● Comparable domestic buffet restaurant sales decreased 9.2% for the third quarter of fiscal 2010 compared to the same quarter of the prior fiscal year.

● Chain-wide comparable domestic restaurant sales decreased 9.8% for the third quarter of fiscal 2010 compared to the same quarter of the prior fiscal year.

● Franchise revenue for the third quarter of fiscal 2010 remained flat to the same quarter of the prior fiscal year despite the decline in same store sales, primarily due to franchise fees related to new domestic and international openings.

● Two new domestic buffet stores were opened with one closure during the third quarter compared to no new domestic buffet stores opened and four closures in the same quarter of the prior fiscal year.

Charlie Morrison, President and CEO, commented, "Significant winter weather events coupled with deep discount, traffic driving strategies from our competitors made for a difficult operating environment in restaurants open more than a year.  However, we still achieved slight growth in income from continuing operations driven by the continued development of new stores in the US and internationally.  By the end of the fiscal year, we expect to have opened more restaurants than we closed for the first time in 11 years.”

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 Pizza Inn’s control.  Although the assumptions underlying these forward-looking statements are believed to be reasonabl e, 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 Pizza Inn’s objectives and plans will be achieved.

Pizza Inn, Inc. (www.pizzainn.comwww.pizzainn.com) is an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademark “Pizza Inn.”  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.”

PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
	Three Months Ended						Nine Months Ended
	March 28,			March 29,			March 28,			March 29,
REVENUES:	2010			2009			2010			2009
Food and supply sales	$	8,378		$	9,136		$	25,389		$	28,915
Franchise revenue		1,041			1,056			3,107			3,164
Restaurant sales		760			565			2,094			1,344
		10,179			10,757			30,590			33,423
COSTS AND EXPENSES:
Cost of sales		8,163			8,829			24,740			27,860
Franchise expenses		524			497			1,421			1,446
General and administrative expenses		868			793			2,483			2,336
Severance		-			12			-			49
Bad debt		15			15			55			60
Provision for litigation costs		-			-			-			263
Interest expense		26			17			52			45
		9,596			10,163			28,751			32,059
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES		583			594			1,839			1,364
Income taxes		183			203			606			438
INCOME FROM CONTINUING OPERATIONS		400			391			1,233			926
Loss from discontinued operations, net of taxes		(38	)		(30	)		(118	)		(136	)
NET INCOME	$	362		$	361		$	1,115		$	790
EARNINGS PER SHARE OF COMMON STOCK - BASIC:
Income from continuing operations	$	0.05		$	0.05		$	0.15		$	0.11
Loss from discontinued operations		-			-			(0.01	)		(0.02	)
Net income	$	0.05		$	0.05		$	0.14		$	0.09
EARNINGS PER SHARE OF COMMON STOCK - DILUTED:
Income from continuing operations	$	0.05		$	0.05		$	0.15		$	0.11
Loss from discontinued operations		-			-			(0.01	)		(0.02	)
Net income	$	0.05		$	0.05		$	0.14		$	0.09
Weighted average common shares outstanding - basic		8,011			8,522			8,011			8,725
Weighted average common and
potential dilutive common shares outstanding		8,011			8,522			8,011			8,725

PIZZA INN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
	March 28,			June 28,
ASSETS	2009 (unaudited)			2009
CURRENT ASSETS
Cash and cash equivalents	$	579		$	274
Accounts receivable, less allowance for bad debts
of $132 and $203, respectively		3,236			2,559
Income tax receivable		-			80
Inventories		1,563			1,371
Property held for sale		16			17
Deferred income tax assets		618			618
Prepaid expenses and other		331			233
Total current assets		6,343			5,152
LONG-TERM ASSETS
Property, plant and equipment, net		2,139			1,743
Deferred income tax assets		86			86
Deposits and other		154			81
	$	8,722		$	7,062
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade	$	1,706		$	1,806
Deferred revenues		292			132
Accrued expenses		1,721			1,009
Short-term bank debt		110			-
Total current liabilities		3,829			2,947
LONG-TERM LIABILITIES
Deferred gain on sale of property		140			159
Deferred revenues		217			246
Bank debt		220			621
Other long-term liabilities		27			37
Total liabilities		4,433			4,010
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; authorized 26,000,000
shares; issued 15,130,319 and 15,130,319 shares, respectively;
outstanding 8,010,919 and 8,010,919 shares, respectively		151			151
Additional paid-in capital		8,863			8,741
Retained earnings		19,911			18,796
Treasury stock at cost
Shares in treasury: 7,119,400 and 7,119,400, respectively		(24,636	)		(24,636	)
Total shareholders' equity		4,289			3,052
	$	8,722		$	7,062

PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
	Nine Months Ended
	March 28,			March 29,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,115		$	790
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization		258			222
Stock compensation expense		122			150
Provision for litigation costs		-			263
Provision for bad debts		55			60
Changes in operating assets and liabilities:
Notes and accounts receivable		(652	)		438
Inventories		(192	)		129
Accounts payable - trade		(100	)		(701	)
Accrued expenses		712			(238	)
Deferred revenue		160			-
Prepaid expenses and other		(232	)		(8	)
Cash provided by operating activities		1,246			1,105
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(650	)		(984	)
Cash used by investing activities		(650	)		(984	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in line of credit, net		(291	)		527
Repurchase of common stock		-			(1,466	)
Cash used for financing activities		(291	)		(939	)
Net increase (decrease) in cash and cash equivalents		305			(818	)
Cash and cash equivalents, beginning of period		274			1,157
Cash and cash equivalents, end of period	$	579		$	339