8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 5, 2008

Pizza Inn, Inc.

(Exact name of registrant as specified in its charter)

Missouri                                                      0-12919                                           47-0654575

(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)

3551 Plano Parkway, The Colony, Texas                                                                                     75056

(Address of principal executive offices)                                                                                     (Zip Code)

Registrant’s telephone number, including area code (469) 384-5000

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (seeGeneral Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On February 5, 2008, the Company issued a press release announcing the results for the second quarter of the 2008 fiscal year.  A copy of the press release is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Exhibit No.	Description of Exhibit
99.2	Press Release dated February 5, 2008 (furnished herewith)

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 hereunto duly authorized.

   Pizza Inn, Inc.

 Date:  February 8, 2008                                                                      By: /s/ Charles R. Morrison

            Charles R. Morrison

            President and Chief Executive Officer

            (Principal Executive Officer)

INDEX OF EXHIBITS

Exhibit No.	Description of Exhibit
99.2	Press Release dated February 5, 2008 (furnished herewith)

EX-99.2B BYLAWS

FOR IMMEDIATE RELEASE

Contact: Danny Meisenheimer

VP of Brand Management

Pizza Inn, Inc.

469-384-5000

dmeisenheimer@pihq.com

PIZZA INN, INC. REPORTS RESULTS FOR THE SECOND QUARTER OF

FISCAL YEAR 2008

3.8% Domestic Chain-Wide Comparable Sales Growth and New International Master Licenses Fuel Strong Quarter

The Colony, Texas – February 5, 2008-- PIZZA INN, INC. (NASDAQ:PZZI) today reported net income of $0.08 per share for its second fiscal quarter ended December 23, 2007 versus net income of $0.01 per share for the same quarter in the prior fiscal year.  The quarter resulted in net income of $853,000 versus a net income of $152,000 for the same quarter in the prior fiscal year on revenues of $12.7 million and $11.5 million respectively.  Operating performance for the second quarter of fiscal year 2008 included the following:

• Total domestic chain-wide comparable restaurant sales increased 3.8% for the second quarter and 2.7% year-to-date compared to the comparable periods in the prior fiscal year.

• Comparable domestic buffet restaurant sales increased 5.2% for the second quarter and 4.3% year-to-date compared to the comparable periods in the prior fiscal year.

• Four new domestic franchised buffet restaurants opened

• General and administrative expenses for the second quarter decreased 36% or $405,000 due primarily to lower payroll costs associated with reductions in headcount and lower legal fees due to the settlement of litigation in the prior fiscal year.

• Income of $150,000 associated with the signing of master license agreement in the country of Kuwait.

• Income of $284,000 related to the settlement of litigation.

• Interest expense decreased 100% or $274,000 compared to the same quarter in the prior fiscal year due to the repayment of all outstanding debt in December 2006.

As of the date of this press release, the Company has repurchased approximately 604,000 shares of its common stock under the 2007 Stock Purchase Plan approved by the Board of Directors in the fourth quarter of fiscal 2007.

Charlie Morrison, President and CEO, commented, "Our business continues to strengthen.  Our same store sales growth momentum continues and reflects the investments made by our franchisees in their businesses.  Our four new franchised buffet restaurants opened strong during the quarter and were a hit with customers in their markets.  These openings and fewer restaurant closings contributed to positive overall domestic chain-wide sales growth for the first time in twelve quarters.  We believe we have put the right team in place to restore a strong restaurant operating culture to Pizza Inn, led by our newly-appointed Vice President of Operations, Jason Daniel.  Jason brings a wealth of experience to the table and is expected to ensure that we deliver the experience that Pizza Inn customers have come to expect over the past 50 years.”

Certain statements in this press release, other than historical information, may be considered forward-looking statements, within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, and are subject to various risks, uncertainties and assumptions.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those anticipated, estimated or expected.  Among the key factors that may have a bearing on our operating results, performance or financial condition are our ability to implement our growth strategies, national, regional and local economic conditions affecting the restaurant/entertainment industry, competition within the restaurant and entertainment industries, sales cannibalization, the success of our franchise operations, negative publicity and fluctuations in results of operations, including those attributable to seasonality, government regulations, weather, commodity, insurance and labor costs.

Pizza Inn, Inc. (www.pizzainn.com) is headquartered in The Colony, Texas, along with its distribution division, Norco Restaurant Services Company.  Pizza Inn franchises approximately 340 restaurants and owns one restaurant with annual and domestic and international chain-wide sales of approximately $147 million.

PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
	Three Months Ended						Six Months Ended
	December 23,			December 24,			December 23,			December 24,
	2007			2006			2007			2006
REVENUES:
Food and supply sales	$	11,174		$	10,232		$	21,953		$	20,620
Franchise revenue		1,346			1,118			2,462			2,307
Restaurant sales		175			199			358			389
		12,695			11,549			24,773			23,316
COSTS AND EXPENSES:
Cost of sales		10,530			9,974			20,602			19,903
Franchise expenses		706			746			1,326			1,418
General and administrative expenses		721			1,126			1,356			2,675
Severance		79			-			379			-
Bad debts		35			-			58			-
Loss (gain) on sale of assets		7			(554	)		7			(564	)
Other income		-			(146	)		-			(179	)
(Recovery) provision for litigation costs		(284	)		(108	)		(284	)		302
Interest expense		-			274			-			474
		11,794			11,312			23,444			24,029
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAXES		901			237			1,329			(713	)
Income taxes		-			-			-			-
INCOME (LOSS) FROM CONTINUING OPERATIONS		901			237			1,329			(713	)
Income (loss) from discontinued operations, net of taxes		(48	)		(85	)		(131	)		(196	)
NET INCOME (LOSS)	$	853		$	152		$	1,198		$	(909	)
EARNINGS PER SHARE OF COMMON STOCK - BASIC:
Income (loss) from continuing operations	$	0.09		$	0.02		$	0.13		$	(0.07	)
Income (loss) from discontinued operations	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)
Net income (loss)	$	0.08		$	0.01		$	0.12		$	(0.09	)
EARNINGS PER SHARE OF COMMON STOCK - DILUTED:
Diluted income (loss) per common share
Income (loss) from continuing operations	$	0.09		$	0.02		$	0.13		$	(0.07	)
Income (loss) from discontinued operations	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)
Net income (loss)	$	0.08		$	0.01		$	0.12		$	(0.09	)
Weighted average common shares outstanding - basic		10,061			10,138			10,114			10,138
Weighted average common
shares outstanding - diluted		10,087			10,138			10,142			10,138

PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
	Three Months Ended				Six Months Ended
	December 23,		December 24,		December 23,		December 24,
	2007		2006		2007		2006
Net income (loss)	$	853	$	152	$	1,198	$	(909	)
Interest rate swap (loss) gain - (net of tax expense)		-		-		-		14
Comprehensive income (loss)	$	853	$	152	$	1,198	$	(895	)

PIZZA INN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
	December 23,			June 24,
	2007			2007
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,180		$	1,879
Accounts receivable, less allowance for bad debts
of $501 and $451, respectively		3,607			2,716
Notes receivable, current portion		9			8
Inventories		1,351			1,518
Property held for sale		331			336
Deferred income tax assets, net		458			458
Prepaid expenses and other assets		281			165
Total current assets		7,217			7,080
LONG-TERM ASSETS
Property, plant and equipment, net		623			778
Notes receivable		9			12
Re-acquired development territory, net		142			239
Deposits and other assets		139			85
	$	8,130		$	8,194
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade	$	2,018		$	2,082
Accrued expenses		1,520			1,805
Total current liabilities		3,538			3,887
LONG-TERM LIABILITIES
Deferred gain on sale of property		197			209
Deferred revenues		297			314
Other long-term liabilities		8			7
Total liabilities		4,040			4,417
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; authorized 26,000,000
shares; issued 15,123,909 and 15,120,319 shares, respectively;
outstanding 9,858,977 and 10,168,494 shares, respectively		151			151
Additional paid-in capital		8,473			8,471
Retained earnings		15,996			14,799
Treasury stock at cost
Shares in treasury: 5,264,932 and 4,951,825, respectively		(20,530	)		(19,644	)
Total shareholders' equity		4,090			3,777
	$	8,130		$	8,194

PIZZA INN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
	Six Months Ended
	December 23,			December 24,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	1,198		$	(909	)
Adjustments to reconcile net income (loss) to
cash provided (used) by operating activities:
Depreciation and amortization		171			448
Severance expense		379			-
Deferred rent expense		-			3
Stock compensation expense		2			97
(Recovery) provision for litigation costs		(284	)		302
Loss (gain) on sale of assets		7			(564	)
Provision for bad debts		58			-
Changes in operating assets and liabilities:
Notes and accounts receivable		(1,039	)		118
Inventories		167			212
Deferred revenue		(17	)		196
Accounts payable - trade		(64	)		626
Accrued expenses		(363	)		(3,096	)
Prepaid expenses and other		(51	)		(331	)
Cash provided (used) by operating activities		164			(2,898	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets		92			11,319
Capital expenditures		(69	)		(248	)
Cash provided by investing activities		23			11,071
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred financing costs		-			(26	)
Repayments of long-term bank debt		-			(8,044	)
Repurchase of common stock		(886	)		-
Cash used for financing activities		(886	)		(8,070	)
Net (decrease) increase in cash and cash equivalents		(699	)		103
Cash and cash equivalents, beginning of period		1,879			184
Cash and cash equivalents, end of period	$	1,180		$	287

PIZZA INN, INC.
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
(In thousands)
(Unaudited)
	Six Months Ended
	December 23,		December 24,
	2007		2006
CASH PAYMENTS FOR:
Interest	$	-	$	495
Income taxes		-		-
NON CASH FINANCING AND INVESTING
ACTIVITIES:
Loss on interest rate swap	$	-	$	22