news releases

Pizza Inn, Inc. Reports Results for the First Quarter Fiscal Year 2007
PRNewswire-FirstCall
THE COLONY, Texas

PIZZA INN, INC. today reported a net loss per share for its first quarter ended September 24, 2006 of ($0.10) versus a net loss of ($0.05) per share for the same quarter last year. The quarter resulted in a net loss of ($1,061,000) versus a net loss of ($490,000) for the same quarter last year on revenues of $12.0 million and $12.9 million, respectively.

   *  Comparable buffet restaurant sales decreased 0.9% for the quarter.
      Chain-wide comparable restaurant sales decreased 1.8% for the quarter.
   *  Total chain-wide domestic restaurant sales decreased 6% for the
      quarter due to the decrease in comparable restaurant sales and a net
      reduction in franchised restaurants.
   *  The Company's revenues decreased approximately 7%, or $863,000,
      primarily due to lower chain-wide restaurant sales, as discussed
      above, and lower cheese prices.  The resulting reductions in food and
      supply sales and royalty revenue were partially offset by increased
      restaurant sales at company-owned restaurants as a result of the
      opening of three additional company-owned buffet restaurants in fiscal
      year 2006 and increased franchise fees from the opening of new
      international and domestic restaurants.
   *  During the quarter the Company incurred $540,000 of legal fees, as
      compared to $615,000 in the prior year, which is reflected in general
      and administrative expenses.
   *  During the quarter the Company incurred non-cash stock compensation
      expense of $42,000 as compared to $103,000 in the prior year, which is
      reflected in general and administrative expenses.
   *  During the quarter the Company incurred a $410,000 provision for
      litigation costs for the Company's potential liability related to
      outstanding litigation, which is broken out separately in the
      statement of operations.

The Company's President and CEO, Tim Taft, commented, "We recently began outsourcing distribution services and passing on the cost savings to franchisees through lower product prices, which we believe will improve franchisee economics without compromising the Company's profitability. We believe that these initiatives will help us achieve our goal of reinvigorating the Company's growth, and we are continuing to see early signs of improving trends through significant increases in franchised restaurant remodels and a growing development pipeline of new franchised restaurants."

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 from those anticipated, estimated or expected. Among the key factors that may have a direct bearing on Pizza Inn's operating results, performance or financial condition are its ability to implement its growth strategies, national, regional and local economic conditions affecting the restaurant/ entertainment industry, competition within each of the restaurant and entertainment industries, store sales cannibalization, success of its franchise operations, negative publicity, fluctuations in quarterly results of operations, including seasonality, government regulations, weather, commodity, insurance and labor costs.

Pizza Inn, Inc. (http://www.pizzainn.com/ ) is headquartered in The Colony, Texas, along with its distribution division, Norco Restaurant Services Company. Pizza Inn franchises approximately 362 restaurants and owns three restaurants with annual domestic and international chain-wide sales of approximately $150 million.

   Pizza Inn, Inc.
   3551 Plano Parkway
   The Colony, TX  75056

   For more information contact:
   Clinton J. Coleman
   Interim Chief Financial Officer
   (469) 384-5201



                             PIZZA INN, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per share amounts)
                               (Unaudited)

                                        Three Months Ended
                                 September 24,         September 25,
  REVENUES:                           2006                  2005

    Food and supply sales           $10,388               $11,308
    Franchise revenue                 1,189                 1,180
    Restaurant sales                    370                   218
    Gain on sale of assets               10                   147
    Other Income                         33                   ---

                                     11,990                12,853

  COSTS AND EXPENSES:
    Cost of sales                    10,178                11,093
    Franchise expenses                  672                   808
    General and
     administrative expenses          1,591                 1,590
    Provision for litigation costs      410                   ---
    Interest expense                    200                   169

                                     13,051                13,660

  LOSS BEFORE INCOME TAXES           (1,061)                 (807)

    Benefit for income taxes            ---                  (317)

  NET LOSS                          $(1,061)                $(490)

  Basic loss per common share        $(0.10)               $(0.05)

  Diluted loss per common share      $(0.10)               $(0.05)

  Weighted average common
   shares outstanding                10,138                10,108

  Weighted average common and

   potential dilutive common
   shares outstanding                10,138                10,108



                             PIZZA INN, INC.
                       CONSOLIDATED BALANCE SHEETS
                   (In thousands, except share amounts)

                                   September 24,           June 25,
  ASSETS                              2006                   2006
                                   (unaudited)

  CURRENT ASSETS
    Cash and cash equivalents          $184                   $184
    Accounts receivable, less
     allowance for doubtful accounts
     of $326 and $324, respectively   2,272                  2,627
    Accounts receivable -
     related parties                    412                    452
    Notes receivable, current portion,
     less allowance                      43                     52
    Inventories                       1,710                  1,772
    Assets held for sale             10,664                    ---
    Current deferred income
     tax asset                        1,138                  1,145
    Prepaid expenses and other          228                    299
        Total current assets         16,651                  6,531

  LONG-TERM ASSETS
    Property, plant and
     equipment, net                   1,091                 11,921
    Non-current notes receivable         18                     20
    Re-acquired development
     territory, net                     383                    431
    Deposits and other                  115                     98
                                    $18,258                $19,001

  LIABILITIES AND SHAREHOLDERS' EQUITY
  CURRENT LIABILITIES
    Accounts payable - trade         $2,079                 $2,217
    Accrued litigation expenses       3,110                  2,800
    Other accrued expenses            2,247                  1,991
    Current portion of
     long-term debt                   7,936                  8,044
        Total current liabilities    15,372                 15,052

  LONG-TERM LIABILITIES
    Other long-term liabilities         427                    437
                                     15,799                 15,489

  COMMITMENTS AND CONTINGENCIES

  SHAREHOLDERS' EQUITY
    Common Stock, $.01 par value;
     authorized 26,000,000
     shares; issued 15,090,319 and
     15,090,319 shares, respectively;
     outstanding 10,138,494 and
     10,138,494 shares, respectively    151                    151
    Additional paid-in capital        8,468                  8,426
    Retained earnings                13,532                 14,593
    Accumulated other
     comprehensive loss                 (48)                   (14)
    Treasury stock at cost
      Shares in treasury:
      4,951,825 and 4,951,825,
      respectively                  (19,644)               (19,644)
        Total shareholders' equity    2,459                  3,512
                                    $18,258                $19,001



                             PIZZA INN, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                               (Unaudited)

                                          Three Months Ended
                                   September 24,        September 25,
                                       2006                 2005

  CASH FLOWS FROM OPERATING ACTIVITIES:

    Net loss                        $(1,061)                $(490)
    Adjustments to reconcile net
     loss to cash provided by
     operating activities:
      Depreciation and amortization     311                   276
      Deferred rent expense               2                    31
      Stock compensation expense         42                   103
      Litigation expense accrual        410                   ---
      Gain on sale of assets            (10)                 (157)
      Deferred revenue                  112                    38
      Deferred income tax on
       stock compensation expense       ---                   (35)
    Changes in operating assets and
     liabilities (net of
     businesses acquired):
      Notes and accounts receivable     406                   342
      Inventories                        62                  (369)
      Accounts payable - trade         (138)                  540
      Accrued expenses                   30                  (163)
      Prepaid expenses and other         51                  (111)
     Cash provided by operating
      activities                        217                     5

  CASH FLOWS FROM INVESTING ACTIVITIES:

    Proceeds from sale of assets         10                   474
    Capital expenditures                (94)                 (347)
      Cash (used for) provided by
       investing activities             (84)                  127

  CASH FLOWS FROM FINANCING ACTIVITIES:
    Deferred financing costs            (25)                  ---
    Change in line of credit, net        (6)                  (46)
    Repayments of long-term bank debt  (102)                 (102)
    Proceeds from exercise of
     stock options                      ---                    22
      Cash used for financing
       activities                      (133)                 (126)

  Net increase in cash and
   cash equivalents                     ---                     6
  Cash and cash equivalents,
   beginning of period                  184                   173
  Cash and cash equivalents,
   end of period                       $184                  $179

SOURCE: Pizza Inn, Inc.

CONTACT: Clinton J. Coleman, Interim Chief Financial Officer of Pizza
Inn, Inc., +1-469-384-5201