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

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



SOURCE: California Pizza Kitchen

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