California Pizza Kitchen Announces Financial Results for the Fourth Quarter and Fiscal Year Ended December 30, 2007

By: California Pizza Kitchen | 0 Shares 93 Reads

Management Updates Fiscal 2008 Guidance To Include Accelerated Stock Repurchase

LOS ANGELES--(BUSINESS WIRE)--Feb. 14, 2008--California Pizza Kitchen, Inc. (Nasdaq:CPKI) today reported revenues and net income for the fourth quarter and fiscal year ended December 30, 2007.

Highlights for the fourth quarter of 2007 relative to the same quarter a year ago were as follows:

-- Total revenues grew approximately 11.6% to $162.9 million

-- Comparable restaurant sales increased 1.8%

-- Net income of $4.8 million, or $0.17 per diluted share

Highlights for fiscal year 2007 relative to fiscal year 2006 were as follows:

-- Total revenues grew approximately 14.1% to $632.9 million

-- Comparable restaurant sales increased 3.8%

-- Net income of $16.2 million, or $0.55 per diluted share, including $0.21 per diluted share in charges primarily related to CPK/ASAP store closures

Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, Inc., stated, "Despite the current economic environment, California Pizza Kitchen has the advantage of being a premier global brand, capable of meaningful expansion in the U.S. and abroad. Domestically, we will continue to develop full service restaurants with particular focus on high visibility locations. We will also continue to build our relationship with Kraft, particularly with the introduction of exciting new products, and plan to expand our airport presence with additional franchised CPK/ASAP restaurants operated by HMSHost." Rosenfield and Flax continued, "Internationally, we are committed to partnering with high-quality franchisees who are capable of safeguarding our brand equity and pursuing long-term unit growth. This is another important, high-margin business for shareholders and one we believe has significant potential."

Rosenfield and Flax concluded, "As a public company, our responsibility is to enhance long-term shareholder value and we believe our recently announced accelerated stock repurchase demonstrates our commitment to that effort. By returning capital to shareholders in this fashion, we expect our earnings to be positively impacted by approximately $0.02 in 2008. Combined with the growth of our core domestic and international revenue streams we are confident in our ability to drive long-term shareholder value."

Average weekly sales for the Company's 183 full service restaurants increased 0.9% to $66,438 for the fourth quarter of 2007 compared to $65,858 for the same quarter last year.

For the fourth quarter of 2007, the Company added seven full service restaurants in San Bernardino, California; Clinton Township, Michigan; Stamford, Connecticut; Mesa, Arizona; Leawood, Kansas; Brandon, Florida; and Las Vegas, Nevada. In addition, the Company's international franchise partners Global Restaurant Concepts Inc. and Iris Co. Ltd. each added one full service restaurant in Makati City, Philippines and Seoul, South Korea, respectively.

The Company updated its previous earnings guidance for fiscal 2008 to include the recently announced accelerated stock repurchase as follows:

-- Comparable restaurant sales of negative 1.0% to 0.0%

-- Approximately 12 to 13 full service restaurants

-- A minimum of six international full service franchise restaurants

-- A minimum of four domestic CPK/ASAP franchise restaurants

-- One LA Food Show restaurant

-- Earnings of $0.56-$0.62 per diluted share, including approximately $0.02 accretion related to the accelerated stock repurchase

The Company will host a conference call today at approximately 4:30 pm ET. A webcast of the conference call can be accessed at www.cpk.com.

California Pizza Kitchen, Inc., founded in 1985, is a leading casual dining chain. The Company's full service restaurants feature an imaginative line of hearth-baked pizzas, including the original BBQ Chicken Pizza, and a broad selection of distinctive pastas, salads, soups, appetizers and sandwiches. The average guest check is approximately $13.37. As of February 14, 2008 the company operates, licenses or franchises 236 locations, of which 197 are company-owned and 39 operate under franchise or license agreements. The Company also has a licensing agreement with Kraft Pizza Company which manufactures and distributes a line of California Pizza Kitchen premium frozen pizzas.

California Pizza Kitchen, Inc. can be found on the internet at www.cpk.com.

This release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include projections of earnings, revenue or other financial items, statements of the plans, strategies and objectives of management for future operations, statements concerning proposed new products or developments, statements regarding future economic conditions or performance, statements of belief and statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect," "anticipate" and similar words.

Investors are cautioned that forward-looking statements are not guarantees of future performance and, therefore, undue reliance should not be placed on them. Our actual results may and will likely differ materially from the expectations referred to herein. Among the key factors that may have a direct bearing on our operating results, performance and financial condition are changing consumer preferences and demands, the execution of our expansion strategy, the continued availability of qualified employees and our management team, the maintenance of reasonable food and supply costs, our relationships with our distributors and numerous other matters discussed in the Company's filings with the Securities and Exchange Commission. California Pizza Kitchen undertakes no obligation to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.



     Selected Unaudited Consolidated Financial and Operating Data

    (Dollars in thousands, except for per share and operating data)





                               Quarter Ended      Twelve Months Ended

                            December   December   December   December

                               30,        31,        30,        31,

                              2007       2006       2007       2006

                            ---------  ---------  ---------  ---------



 Statement of Income:



 Revenues:

    Restaurant sales        $160,223   $143,972   $624,324   $547,968

    Royalties from Kraft

     licensing agreement       1,660      1,255      4,710      3,691

    Domestic franchise

     revenues                    606        519      2,460      2,138

    International

     franchise revenues          443        225      1,390        804

                            ---------  ---------  ---------  ---------

       Total revenues        162,932    145,971    632,884    554,601



 Costs and expenses:

    Food, beverage and

     paper supplies           40,101     35,686    153,954    135,848

    Labor (1)                 58,090     52,103    228,664    199,744

    Direct operating and

     occupancy                33,736     29,460    124,476    108,558

                            ---------  ---------  ---------  ---------

       Cost of sales         131,927    117,249    507,094    444,150



    General and

     administrative (2)       11,563     10,670     48,391     43,320

    Depreciation and

     amortization             10,166      8,061     37,146     29,489

    Pre-opening costs          2,608      4,419      7,167      6,964

    Store closure costs            -        707      9,269        707



                            ---------  ---------  ---------  ---------

    Total costs and

     expenses                156,264    141,106    609,067    524,630



 Operating income              6,668      4,865     23,817     29,971



 Other (expense) income,

  net:

    Interest expense            (244)         -       (362)         -

    Interest income               35         52        289        718

                            ---------  ---------  ---------  ---------

       Total other

        (expense) income,

        net                     (209)        52        (73)       718

                            ---------  ---------  ---------  ---------



 Income before income tax

  provision                    6,459      4,917     23,744     30,689

 Income tax provision          1,614      1,186      7,578      9,689

                            ---------  ---------  ---------  ---------

 Net income                 $  4,845   $  3,731   $ 16,166   $ 21,000

                            =========  =========  =========  =========



 Net income per common

  share:

    Basic                   $   0.17   $   0.13   $   0.56   $   0.72

    Diluted                 $   0.17   $   0.13   $   0.55   $   0.70



 Shares used in computing

  net income per common

  share (in thousands)

  (3):



    Basic                     28,365     28,591     28,843     29,118

    Diluted                   28,628     29,457     29,609     29,818



 Operating Data:

 Locations open at end of

  period                         231        205        231        205

 Company-owned full service

  restaurants open at end

  of period                      183        166        183        166

 Average weekly company-

  owned full service

  restaurant sales          $ 66,438   $ 65,858   $ 67,461   $ 65,406

 18-month comparable

  company-owned restaurant

  sales increase                 1.8%       6.9%       3.8%       5.9%



 ---------------------------------------------------------------------

 (1) Labor expense for the three and twelve months ended December 30,

  2007 includes approximately $218,000 and $849,000 of stock-based

  compensation, respectively, compared to $210,000 and $917,000 in the

  three and twelve months ended December 31, 2006, respectively.

 (2) General and administrative expense for the three and twelve

  months ended December 30, 2007 includes approximately $985,000 and

  $5.8 million of stock-based compensation, respectively, compared to

  $1.1 million and $5.0 million in the three and twelve months ended

  December 31, 2006, respectively.

 (3) Includes effect of 3-for-2 stock split effective June 19, 2007.





                                                      Twelve Months

                                  Quarter Ended            Ended

                                December  December  December  December

                                   30,       31,       30,       31,

                                  2007      2006      2007     2006

                                --------  --------  --------  --------



 Statement of Income

  Percentages (1):



 Revenues:

    Restaurant sales               98.3%     98.6%     98.6%     98.8%

    Royalties from Kraft

     licensing agreement            1.0%      0.9%      0.8%      0.7%

    Domestic franchise revenues     0.4%      0.3%      0.4%      0.4%

    International franchise

     revenues                       0.3%      0.2%      0.2%      0.1%

                                --------  --------  --------  --------

       Total revenues             100.0%    100.0%    100.0%    100.0%



 Costs and expenses:

    Food, beverage and paper

     supplies                      25.0%     24.8%     24.7%     24.8%

    Labor (2)                      36.3%     36.2%     36.6%     36.5%

    Direct operating and

     occupancy                     21.0%     20.4%     19.9%     19.8%

                                --------  --------  --------  --------

       Cost of sales               82.3%     81.4%     81.2%     81.1%



    General and administrative

     (3)                            7.1%      7.3%      7.6%      7.8%

    Depreciation and

     amortization                   6.2%      5.5%      5.9%      5.3%

    Pre-opening costs               1.6%      3.0%      1.1%      1.3%

    Store closure costs             0.0%      0.5%      1.5%      0.1%



                                --------  --------  --------  --------

    Total costs and expenses       95.9%     96.7%     96.2%     94.6%



 Operating income                   4.1%      3.3%      3.8%      5.4%



 Other (expense) income, net:

    Interest expense              (0.1)%      0.0%      0.0%      0.0%

    Interest income                 0.0%      0.0%      0.0%      0.1%

                                --------  --------  --------  --------

       Total other (expense)

        income, net               (0.1)%      0.0%      0.0%      0.1%

                                --------  --------  --------  --------



 Income before income tax

  provision                         4.0%      3.4%      3.8%      5.5%

 Income tax provision               1.0%      0.8%      1.2%      1.7%

                                --------  --------  --------  --------

 Net income                         3.0%      2.6%      2.6%      3.8%

                                ========  ========  ========  ========



 (1) Percentages are expressed as a percentage of total revenues,

  except for cost of sales which is expressed as a percentage of

  restaurant sales.

 (2) Labor percentage includes approximately 20 and 10 basis points of

  stock-based compensation in the three and twelve months ended

  December 30, 2007, respectively, compared to 20 basis points in each

  of the three and twelve months ended December 31, 2006.

 (3) General and administrative percentage includes approximately 60

  and 90 basis points of stock-based compensation in the three and

  twelve months ended December 30, 2007, respectively, compared to 80

  and 90 basis points in the three and twelve months ended December

  31, 2006, respectively.



           Selected Consolidated Balance Sheet Information

                        (Dollars in thousands)





Selected Consolidated Balance                       December  December

                                                       30,       31,

Sheet Information                                     2007      2006

                                                    --------  --------



Cash and cash equivalents                           $ 10,795  $  8,187

Total assets                                         366,211   310,513

Total debt                                            21,000         -

Stockholders' equity                                 219,519   208,343



                    California Pizza Kitchen, Inc.

                            Units Summary





                              Total                             Total

                            Units at                          Units at

                           ---------                         ---------

 Fourth Quarter 2007       September                         December

                            30, 2007 Opened  Acquired Closed  30, 2007

 ------------------------- --------- ------- -------- ------ ---------

 Company-owned full

  service domestic               176       7       -       -       183

 Company-owned ASAP

  domestic                        10       -       -       1         9

 Company-owned LA Food

  Show                             1       -       -       -         1

 Franchised domestic              17       -       -       -        17

 Franchised international         16       2       -       -        18

 Sports and entertainment

  venues                           3       -       -       -         3

                           -------------------------------------------

 Total                           223       9       -       1       231

                           ===========================================