California Pizza Kitchen Announces a 24% Increase in Earnings Per Share for the Second Quarter of 2008 and Raises Full Year Guidance

By: California Pizza Kitchen | 1 Shares 111 Reads

LOS ANGELES--(BUSINESS WIRE)--California Pizza Kitchen, Inc. (Nasdaq:CPKI) today reported revenues and net income for the second quarter ended June 29, 2008.

Highlights for the second quarter of 2008 relative to the same quarter a year ago were as follows:

Total revenues grew approximately 11.3% to $176.6 million
Comparable restaurant sales increased 1.4%
Net income of $6.6 million, or $0.26 per diluted share

Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, Inc., stated, "We are very pleased with our second quarter performance which was driven by the success of our Thank You Card Program, continued growth from ancillary revenue streams, and efficiencies gained through operational discipline and expense controls. Going forward we remain focused on menu innovation, superior guest service, and a disciplined approach to new full service restaurant growth. Additionally, we continue to develop our successful relationship with Kraft and are pursuing new opportunities with international and domestic franchising partners in key markets."

Rosenfield and Flax concluded, "Despite a challenging economic environment we are very pleased to increase our earnings per share estimates for the full year. We are able to do this as a result of our strong second quarter performance, better than anticipated year to date comparable restaurant sales of 1.0% and the successful completion of our $50.0 million share repurchase program. However, we remain cautious regarding continued economic weakness and as such, maintain our full year comparable restaurant sales estimate of negative 1% to 0%."

Average weekly sales for the Company's 190 full service restaurants were $68,708 in the second quarter of 2008 compared to $68,535 for the same quarter last year.

During the second quarter, the Company added three full service restaurants in Plymouth Meeting, Pennsylvania; Portland, Oregon and Chino Hills, California. In addition, the Company's international franchise partners WDI Corporation, Iris Co. Ltd. and Grupo Calpik, S.A. de C.V each added one full service restaurant in Tokyo, Japan; Seoul, Korea and Mexico City, Mexico, respectively.

The Company also raised its full-year earnings guidance based on the following assumptions:

Earnings per diluted share of $0.65-$0.70 compared to $0.59-$0.65 estimated on May 8, 2008
Comparable restaurant sales of negative 1% to 0%
Opening 12 full service restaurants
Opening nine international full service franchise restaurants
Opening two domestic CPK/ASAP franchise restaurants
Opening one LA Food Show restaurant

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.

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 $13.95. As of August 7, 2008 the company operates, licenses or franchises 244 locations, of which 201 are company-owned and 43 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.

Information about California Pizza Kitchen, Inc. can be found on the Company's website 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     Six Months Ended

                               June 29,   July 1,  June 29,   July 1,

                                 2008      2007      2008      2007

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



Statement of Income:



Revenues:

Restaurant sales               $173,772  $156,592  $336,540  $304,436

Royalties from Kraft licensing

 agreement                        1,526     1,073     2,397     1,786

Domestic franchise revenues         740       664     1,400     1,186

International franchise

 revenues                           589       252     1,007       540

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

Total revenues                  176,627   158,581   341,344   307,948



Costs and expenses:

Food, beverage and paper

 supplies                        43,468    38,426    83,155    74,802

Labor (1)                        64,177    56,912   126,276   113,111

Direct operating and occupancy   34,124    30,773    67,311    59,468

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

Cost of sales                   141,769   126,111   276,742   247,381



General and administrative (2)   13,066    12,206    26,126    24,997

Depreciation and amortization    10,481     9,022    21,432    17,563

Pre-opening costs                   958       852     2,626     2,203

Store closure costs                 839       768       839       768



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

Total costs and expenses        167,113   148,959   327,765   292,912



Operating income                  9,514     9,622    13,579    15,036



Other income (expense):

Interest income (expense), net      179        91      (322)      178

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

Total other income (expense)        179        91      (322)      178

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



Income before income tax

 provision                        9,693     9,713    13,257    15,214

Income tax provision              3,135     3,393     4,242     5,297

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

Net income                     $  6,558  $  6,320  $  9,015  $  9,917

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



Net income per common share:

Basic                          $   0.26  $   0.22  $   0.35  $   0.34

Diluted                        $   0.26  $   0.21  $   0.34  $   0.33



Shares used in computing net

 income per common share (in

 thousands) (3):



Basic                            25,308    29,129    26,037    29,127

Diluted                          25,436    30,236    26,132    30,163



Operating Data:

Locations open at end of

 period                             242       213       242       213

Company-owned full service

 restaurants open at end of

 period                             190       170       190       170

Average weekly company-owned

 full service restaurant sales $ 68,708  $ 68,535  $ 67,113  $ 67,232

18-month comparable company-

 owned restaurant sales

 increase                           1.4%      5.4%      1.0%      5.1%



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

(1) Labor expense for the three and six months ended June 29, 2008

 includes approximately $191,000 and $401,000 of stock-based

 compensation, respectively, compared to $201,000 and $420,000 in the

 three and six months ended July 1, 2007, respectively.

(2) General and administrative expense for the three and six months

 ended June 29, 2008 includes approximately $1.6 million and $3.0

 million of stock-based compensation, compared to $1.5 million and

 $3.5 million in the three and six months ended July 1, 2007,

 respectively.

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





                                      Quarter Ended   Six Months Ended

                                     June 29, July 1, June 29, July 1,

                                       2008    2007     2008    2007

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



Statement of Income Percentages (1):



Revenues:

Restaurant sales                        98.4%   98.7%    98.6%   98.9%

Royalties from Kraft licensing

 agreement                               0.9%    0.7%     0.7%    0.6%

Domestic franchise revenues              0.4%    0.4%     0.4%    0.3%

International franchise revenues         0.3%    0.2%     0.3%    0.2%

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

Total revenues                         100.0%  100.0%   100.0%  100.0%



Costs and expenses:

Food, beverage and paper supplies       25.0%   24.5%    24.7%   24.6%

Labor (2)                               36.9%   36.3%    37.5%   37.2%

Direct operating and occupancy          19.6%   19.7%    20.0%   19.5%

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

Cost of sales                           81.6%   80.5%    82.2%   81.3%



General and administrative (3)           7.4%    7.7%     7.7%    8.1%

Depreciation and amortization            5.9%    5.7%     6.3%    5.7%

Pre-opening costs                        0.5%    0.5%     0.8%    0.7%

Store closure costs                      0.5%    0.5%     0.2%    0.2%



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

Total costs and expenses                94.6%   93.9%    96.0%   95.1%



Operating income                         5.4%    6.1%     4.0%    4.9%



Other income (expense):

Interest income (expense), net           0.1%    0.1%    -0.1%    0.1%

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

Total other income (expense)             0.1%    0.1%    -0.1%    0.1%

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



Income before income tax provision       5.5%    6.1%     3.9%    4.9%

Income tax provision                     1.8%    2.1%     1.3%    1.7%

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

Net income                               3.7%    4.0%     2.6%    3.2%

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



(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 10 basis points

 attributable to stock-based compensation in both the three and six

 months ended June 29, 2008 and the three and six months ended July 1,

 2007.

(3) General and administrative percentage includes approximately 90

 basis points attributable to stock-based compensation in each of the

 three and six months ended June 29, 2008, compared to 90 and 110

 basis points in the three and six months ended July 1, 2007,

 respectively.





           Selected Consolidated Balance Sheet Information

                        (Dollars in thousands)





Selected Consolidated Balance Sheet Information  June 29, December 30,

                                                   2008       2007

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



Cash and cash equivalents                        $  8,921     $ 10,795

Total assets                                      368,598      367,128

Total debt                                         62,000       21,000

Stockholders' equity                              181,680      218,137





                    California Pizza Kitchen, Inc.

                            Units Summary





                 Total Units at                        Total Units at

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

Second Quarter   March 30, 2008 Opened Acquired Closed June 29, 2008

 2008

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

Company-owned

 full service

 domestic                   188      3        -      1            190

Company-owned

 ASAP domestic                9      -        -      -              9

Company-owned LA

 Food Show                    1      -        -      -              1

Franchised

 domestic                    17      -        -      -             17

Franchised

 international               19      3        -      -             22

Sports and

 entertainment

 venues                       3      -        -      -              3

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

Total                       237      6        -      1            242

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