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 DECEMBER 27, 1998.
--------------------
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 9, 1999, AN AGGREGATE OF 11,485,490 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
- ------- ------------------------------------------------------------------ ----
Consoldiated Statements of Operations for the three months
and six months ended December 27, 1998 and December 28, 1997 3
Consolidated Balance Sheets at December 27, 1998 and June 28, 1998 4
Condensed Consolidated Statements of Cash Flows 5
for the six months ended December 27, 1998 and December 28, 1997
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
- ------- ------------------------------------------------------------------
Financial Condition and Results of Operations 9
------------------------------------------------------------------ ----
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 27, DECEMBER 28, DECEMBER 27, DECEMBER 28,
REVENUES: 1998 1997 1998 1997
------------------- ----------------- ------------- -------------
Food and supply sales $ 15,390 $ 14,701 $ 29,832 $ 29,162
Franchise revenue 1,396 1,571 2,850 3,365
Restaurant sales 550 747 1,146 1,444
Other income 27 51 119 149
------------------- ----------------- ------------- -------------
17,363 17,070 33,947 34,120
------------------- ----------------- ------------- -------------
COSTS AND EXPENSES:
Cost of sales 14,221 13,259 27,715 26,313
Franchise expenses 740 755 1,546 1,658
General and administrative expenses 1,240 1,142 2,731 2,442
Interest expense 143 118 256 258
------------------- ----------------- ------------- -------------
16,344 15,274 32,248 30,671
------------------- ----------------- ------------- -------------
INCOME BEFORE INCOME TAXES 1,019 1,796 1,699 3,449
Provision for income taxes 314 611 524 1,173
------------------- ----------------- ------------- -------------
NET INCOME $ 705 $ 1,185 $ 1,175 $ 2,276
=================== ================= ============= =============
BASIC EARNINGS PER COMMON SHARE $ 0.06 $ 0.09 $ 0.10 $ 0.18
=================== ================= ============= =============
DILUTED EARNINGS PER COMMON SHARE $ 0.06 $ 0.09 $ 0.09 $ 0.17
=================== ================= ============= =============
DIVIDENDS DECLARED PER COMMON SHARE $ 0.06 $ 0.06 $ 0.12 $ 0.12
=================== ================= ============= =============
WEIGHTED AVERAGE COMMON SHARES 11,597 12,713 11,903 12,696
=================== ================= ============= =============
WEIGHTED AVERAGE COMMON AND
DILUTIVE POTENTIAL COMMON SHARES 12,206 13,868 12,606 13,579
=================== ================= ============= =============
<FN>
See accompanying Notes to Consolidated Financial Statements.
PIZZA INN, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 27, JUNE 28,
1998 1998
-------------- ---------
ASSETS (unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 578 $ 2,335
Accounts receivable, less allowance for doubtful
accounts of $809 and $825, respectively 6,847 6,021
Notes receivable, current portion, less allowance
for doubtful accounts of $202 and $174, respectively 621 741
Inventories 1,888 1,953
Prepaid expenses and other 469 556
-------------- ---------
Total current assets 10,403 11,606
LONG-TERM ASSETS
Property, plant and equipment, net 1,830 1,921
Property under capital leases, net 1,344 761
Deferred taxes, net 6,246 6,705
Long-term notes receivable, less
allowance for doubtful accounts of $38 and $8,respectively 479 436
Deposits and other 211 344
-------------- ---------
$ 20,513 $ 21,773
============== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 3,440 $ 2,014
Accrued expenses 2,515 2,507
Current portion of capital lease obligations 281 125
-------------- ---------
Total current liabilities 6,236 4,646
LONG-TERM LIABILITIES
Long-term debt 7,037 4,700
Long-term capital lease obligations 1,150 754
Other long-term liabilities 751 756
-------------- ---------
15,174 10,856
-------------- ---------
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value; authorized 26,000,000
shares; outstanding 11,499,570 and 12,528,436
shares, respectively (after deducting shares in
treasury: December - 3,420,486; June -2,381,386) 115 125
Additional paid-in capital 4,586 4,911
Retained earnings 638 5,881
-------------- ---------
Total shareholders' equity 5,339 10,917
-------------- ---------
$ 20,513 $ 21,773
============== =========
<FN>
See accompanying Notes to Consolidated Financial Statements.
PIZZA INN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
------------------
DECEMBER 27, DECEMBER 28,
1998 1997
------------------ --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,175 $ 2,276
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 430 471
Provision for bad debt 92 25
Utilization of pre-reorganization net operating
loss carryforwards 459 1,104
Changes in assets and liabilities:
Notes and accounts receivable (841) (719)
Inventories 65 126
Accounts payable - trade 1,426 380
Accrued expenses 66 (695)
Prepaid expenses and other 150 (380)
------------------ --------------
CASH PROVIDED BY OPERATING ACTIVITIES 3,022 2,588
------------------ --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (388) (250)
Proceeds from transfer of assets to capital lease 249 -
Acquisition of area development territory - (986)
------------------ --------------
CASH USED FOR INVESTING ACTIVITIES (139) (1,236)
------------------ --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term bank debt 2,337 -
Repayments of long-term bank debt and capital lease obligations (117) (1,453)
Dividends paid (1,424) (765)
Proceeds from exercise of stock options 21 405
Purchases of treasury stock (5,457) (1,306)
------------------ --------------
CASH USED FOR FINANCING ACTIVITIES (4,640) (3,119)
------------------ --------------
Net decrease in cash and cash equivalents (1,757) (1,767)
Cash and cash equivalents, beginning of period 2,335 2,037
------------------ --------------
Cash and cash equivalents, end of period $ 578 $ 270
------------------ --------------
<FN>
See accompanying Notes to Consolidated Financial Statements.
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
-----------------
DECEMBER 27, DECEMBER 28,
1998 1997
----------------- -------------
CASH PAYMENTS FOR:
Interest $ 193 $ 279
Income taxes - 80
NONCASH FINANCING AND INVESTING
ACTIVITIES:
Capital lease obligations incurred $ 669 $ -
PIZZA INN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) The accompanying condensed 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
condensed or omitted pursuant to such rules and regulations. The condensed
consolidated financial statements should be read in conjunction with the notes
to the Company's audited consolidated financial statements in its Form 10-K/A
for the fiscal year ended June 28, 1998.
In the opinion of management, the accompanying unaudited condensed 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) In October 1998, the Company's Board of Directors declared a quarterly
dividend of $.06 per share on the Company's common stock, payable January 22,
1999 to shareholders of record on January 11, 1999. The Company's balance sheet
as of December 27, 1998 includes a current liability of $690,000 for dividends
declared and payable.
(3) In September 1998, the Company signed an agreement with its current
lender to extend the term of its existing $9.5 million revolving credit line
through August 2000 and to modify certain financial covenants. As of December
27, 1998, the Company was in compliance with all of its debt covenants.
(4)
Effective December 28, 1997, the Company adopted SFAS 128, "Earnings Per Share",
which establishes standards for computing and presenting earnings per share
(EPS). The statement requires dual presentation of basic and diluted EPS on the
face of the income statement for entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic EPS
computation, to the numerator and denominator of the diluted EPS calculation.
Basic EPS excludes the effect of potentially dilutive securities while diluted
EPS reflects the potential dilution that would occur if securities or other
contracts to issue common stock were exercised, converted or resulted in the
issuance of common stock that then shared in the earnings of the entity. 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 27, 1998
BASIC EPS
Income Available to Common Shareholders $ 705 11,597 $ 0.06
Effect of Dilutive Securities - Stock Options 609
------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions $ 705 12,206 $ 0.06
============ ============= ==========
THREE MONTHS ENDED DECEMBER 28, 1997
BASIC EPS
Income Available to Common Shareholders $ 1,185 12,713 $ 0.09
Effect of Dilutive Securities - Stock Options 1,155
------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions $ 1,185 13,868 $ 0.09
============ ============= ==========
SIX MONTHS ENDED DECEMBER 27, 1998
BASIC EPS
Income Available to Common Shareholders $ 1,175 11,903 $ 0.10
Effect of Dilutive Securities - Stock Options 703
------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions $ 1,175 12,606 $ 0.09
============ ============= ==========
SIX MONTHS ENDED DECEMBER 28, 1997
BASIC EPS
Income Available to Common Shareholders $ 2,276 12,696 $ 0.18
Effect of Dilutive Securities - Stock Options 883
------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions $ 2,276 13,579 $ 0.17
============ ============= ==========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
- -----------------------
Quarter and six months ended December 27, 1998 compared to the quarter and six
months ended December 28, 1997.
Diluted earnings per share for the second quarter of the current fiscal
year decreased 33% to $.06 from $.09 for the same period last year. For the six
months ended December 27, 1998, diluted earnings per share decreased 47% to $.09
from $.17 for the same period last year. Net income for the quarter decreased
41% to $705,000 from $1,185,000 for the same quarter last year. For the six
months ended December 27, 1998, net income decreased 48% to $1,175,000 from
$2,276,000 for the same period last year. Net income and earnings per share for
the quarter and six months decreased primarily because of a lower volume of food
product sales from lower chainwide sales, and lower revenues from area
development territory sales. Restaurant cost of sales, as a percentage of
sales, throughout our franchise community was up approximately 4 percentage
points, due to extraordinarily higher cheese prices. This caused an adverse
effect on chainwide sales because of decreased franchisee advertising as well as
delayed new store openings and remodelings. The subsequent sharp drop in cheese
prices in late January 1999 has already favorably affected comparable store
sales growth.
Food and supply sales for the quarter increased 5% to $15,390,000 from
$14,701,000 compared to the same period last year. This was primarily due to
higher revenues from food sales due to higher cheese prices and increased
equipment sales during the quarter, which were partially offset by a lower
volume of food product sold due to lower chainwide sales as discussed above.
For the six month period, food and supply sales increased 2% to $29,832,000 from
$29,162,000 for the same period last year. During the first six months, food
product revenues increased due to higher cheese prices, which were partially
offset by a lower volume of food product sales.
Franchise revenue, which includes income from royalties, license fees and
area development and foreign master license (collectively, "Territory") sales,
for the quarter decreased 11% or $175,000 compared to the same period of the
prior year. The decrease in the quarter was primarily due to lower income
recognized from Territory sales and license fees. For the six month period,
franchise revenue decreased 15% or $515,000. The prior year's six month period
included the recognition of proceeds from the sale of foreign master license
rights in Brazil, the Palestinian Territories and Korea in the amount of
$346,000 and area development fees of $120,000. Current year revenues include
partial recognition of proceeds from the sale of foreign master license rights
in Puerto Rico in the amount of $50,000 and area development fees of $56,000.
Royalty revenue was down $109,000 compared to the first six months of last year,
mainly resulting from a 4% decrease in chainwide sales and a slightly lower
average royalty rate due to more restaurants within area development
territories.
Restaurant sales, which consist of revenue generated by Company-owned
stores, for the quarter decreased 26% or $197,000 compared to the same period of
the prior year. For the six month period, restaurant sales decreased 21% or
$298,000. This was due to the sale of one full service store to a licensee in
December 1997 and the lease expiration and closing of one Delco store in August
1998. The Company owned and operated five and three stores for the periods
ending December 27, 1998 and December 28, 1997, respectively.
Cost of sales increased 7% or $962,000 and 5% or $1,402,000 for the quarter
and six month periods, respectively. The increases are primarily due to the
increase in domestic food sales due to higher cheese prices and increased
equipment sales. As a percentage of sales for the quarter and the first six
months, cost of sales increased to 89% from 86% compared to the same periods
last year. This was primarily due to the significantly higher cost of cheese,
an increase in transportation expenses, an increase in allocation of corporate
services expenses related to the Company's distribution center, and a lower
volume of food product sold.
Franchise expenses include selling, general and administrative expenses
directly related to the sale and service of franchises and Territories. These
expenses decreased 2% or $15,000 for the quarter and 7% or $112,000 for the six
month period compared to the same periods last year. The decreases were due to
an increase in corporate services expenses allocation to the distribution center
resulting in a corresponding decrease in franchise expenses, and decreases in
travel expenses. These decreases were partially offset by increased trade show
spending. Additionally, franchise expenses for the first six months of the
prior year also included the amortization of the Company's cost basis in a
reacquired area development Territory.
General and administrative expenses increased 9% or $98,000 for the quarter
and 12% or $289,000 for the first six months, compared to the same periods last
year. This is principally due to an increase in the allowance for doubtful
accounts, as well as higher insurance expense and professional fees. These
increases were partially offset by a higher allocation of corporate services
expenses to the distribution center to accurately reflect the total operating
costs of the center.
Interest expense increased 21% or $25,000 for the quarter compared to the
same period of the prior year. This is a result of higher average debt, which
was offset slightly by lower average interest rates. Interest expense was
unchanged for the six month period compared to last year.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of fiscal 1999, the Company utilized cash
provided by operations in the amount of $3,022,000, bank borrowings of
$2,337,000, and a portion of its cash balances to purchase 1,039,100 shares of
its own common stock for $5,457,000 and to pay dividends of $1,424,000 on the
Company's common stock.
Capital expenditures of $388,000 during the first six months included
$219,000 for upgrading the Company's computer system (including compliance with
Year 2000 issues). During the first six months, $249,000 of the computer
system's upgrades was transferred to a 36-month capitalized lease.
In October 1998, the Company's Board of Directors declared a quarterly
dividend of $.06 per share on the Company's common stock, payable January 22,
1999 to shareholders of record on January 11, 1999. The Company's balance sheet
as of December 27, 1998 includes a current liability of $690,000 for dividends
declared and payable.
The Company continues to realize substantial benefit from the utilization
of its net operating loss carryforwards (which currently total $13.1 million and
expire in 2005) to reduce its federal tax liability from the 34% or 31% 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 ($6.2 million as of December
27, 1998) 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 continues to assess its computerized systems to determine their
ability to correctly identify the year 2000 and is devoting the necessary
internal and external resources to replace, upgrade or modify all significant
systems related to the year 2000. The Company's assessment, purchase of new
equipment and installation of new software are completed. The conversion and
testing of data began in October 1998 and is approximately 65% completed.
Management anticipates that all systems will be year 2000 compliant by June
1999. The Company's existing software system had a remaining book value of
$92,000 at December 27, 1998 which will be amortized over six months through
June 1999.
Because third party computer failures could also have a material impact on
a company's ability to conduct business, confirmations are being requested from
our material vendors and suppliers to certify that plans are being developed by
them to address and become compliant with the year 2000 issues. As of February
9, 1999, the Company had received responses from approximately 80% from such
parties and all the responding companies have provided written assurances that
they expect to address all their significant year 2000 issues on a timely basis.
The Company believes that any year 2000 impact on its franchisee base will have
no material effect on the Company's results of operations since sales
information is not currently communicated through computer systems. Through the
assessment of the Company's critical non-information technology systems,
management has determined that no modifications are required for year 2000
compliance in this area.
Currently, the Company can not clearly identify or therefore address the
most reasonably likely worse case scenario regarding year 2000 compliance.
Additionally, we plan to have all new compliance systems noted above fully
implemented by June 1999. Therefore, management does not believe there is an
immediate need for a contingency plan. However, during the implementation
process, management plans to closely monitor any problems which should arise
requiring a contingency plan and to then expeditiously develop such alternative
plan based on these specific needs.
Although management presently believes the Company is taking appropriate
steps to assess and correct its year 2000 issues, due to the general uncertainty
inherent in the year 2000 issue, in part due to the uncertainty of year 2000
readiness of third parties, management is unable to determine at this time
whether year 2000 issues will have a material adverse effect on the Company's
results of operations or financial condition.
New software, testing, and conversion of systems and applications will cost
approximately $450,000 and new hardware components will cost approximately
$300,000. Total system upgrades are expected to position the Company for
anticipated future growth and enhance corporate service capabilities. Of these
costs, approximately $631,000 has been incurred as of December 27, 1998. All
the above capital expenditures are to be funded through a 36-month capitalized
lease.
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
- ---------------------------------------------------------------------
At the Annual Meeting of Shareholders on December 15, 1998, the Company's
shareholders elected all four nominees to the Board of Directors. The results of
the voting were as follows:
NOMINEE FOR VOTES WITHHELD
------- --- ---------------
Bobby L. Clairday 9,318,662 52,391
Ronald W. Parker 9,318,593 52,460
Ramon D. Phillips 9,318,662 52,391
Butler E. Powell 9,318,662 52,391
The shareholders also approved the proposed amendment of the Company's 1993
Stock Award Plan. The results of the voting were as follows:
FOR AGAINST ABSTAIN
--- ------- -------
8,490,926 860,572 19,555
The shareholders also approved the proposed amendment of the Company's 1993
Outside Directors Stock Award Plan. The results of the voting were as follows:
FOR AGAINST ABSTAIN BROKER NON-VOTES
--- ------- ------- -----------------
8,980,010 342,026 49,016 1
The Annual Meeting of Shareholders was adjourned until January 30, 1999 at
10:00 a.m. at the Company's offices for the sole matter of voting on the
proposed amendment to the Company's Restated Articles of Incorporation. At the
close of the January 30, 1999 meeting the shareholders approved the proposed
amendment, with the voting as follows:
FOR AGAINST ABSTAIN BROKER NON-VOTES
--- ------- ------- -----------------
6,462,349 114,933 43,873 3,668,097
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------------
There are no exhibits filed with this report. 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/Nancy Deemer
----------------
Nancy Deemer
Controller and
Principal Accounting Officer
Dated: February 8, 1999