California Pizza Kitchen Announces Financial Results for the Second Quarter 2009

By: California Pizza Kitchen | 0 Shares 111 Reads

LOS ANGELES--(BUSINESS WIRE)--Aug. 6, 2009-- California Pizza Kitchen, Inc. (Nasdaq:CPKI) today reported revenues and net income for the second quarter ended June 28, 2009.

Highlights for the second quarter of 2009 relative to the same quarter a year ago were as follows:

Total revenues decreased 3.2% to $170.9 million
Full service comparable restaurant sales decreased 6.5%
Net income was $6.1 million, or $0.25 per diluted share
Outstanding debt was reduced by $17.0 million to $50.0 million from the first quarter of 2009

Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, Inc., stated, "Our second quarter results reflect the success we've had managing costs and driving operating efficiencies. In fact, internal initiatives in every targeted area have exceeded expectations. However, while a lower cost structure is very important, we understand the need to drive traffic and revenue as our industry continues to face top-line pressure. To that end, following the success of our Thank You Card program, we've launched an advertising campaign for the third quarter, a new loyalty program, and an internal sales program to drive the average revenue per employee. We remain cautiously optimistic given the economic uncertainty, but look forward to the next few quarters, where comparable restaurant sales ease."

Average weekly sales for the Company's 197 full service restaurants were $64,171 in the second quarter of 2009 compared to $68,708 for the same quarter last year.

During the second quarter of 2009, the Company added three full service restaurants in Norcross, Georgia, and Sacramento and Valencia, California. In addition, one of the Company's franchise partners opened a full service restaurant in Guadalajara, Mexico.

The Company also outlined its financial guidance for the third quarter of 2009 based on the following assumptions:

Comparable restaurant sales of approximately negative 6.5% to negative 7.5%
Opening one full service restaurant
Opening one domestic franchise location
Opening one international full service franchise restaurant
Earnings per diluted share of approximately $0.19-$0.21

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 $14.30. As of August 6, 2009 the Company operates, licenses or franchises 254 locations, of which 208 are company-owned and 46 operate under franchise or license agreements. The Company also has a licensing agreement with Kraft Pizza Company which manufactures and distributes a variety of California Pizza Kitchen premium frozen products.

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," "guidance" 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 deteriorating economic conditions, revenue from third party licensees and franchisees, changing consumer preferences and demands, the continued availability of qualified employees and our management team, the maintenance of reasonable food and supply costs, our exposure to the California market 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 28,           June 29,           June 28,           June 29,

                                                                           2009               2008               2009               2008

 Statement of Income:

 Revenues:

 Restaurant sales                                                          $    167,975       $    173,772       $    326,703       $    336,540

 Royalties from Kraft licensing agreement                                       1,773              1,526              2,924              2,397

 Domestic franchise revenues                                                    702                740                1,325              1,400

 International franchise revenues                                               481                589                1,047              1,007

 Total revenues                                                                 170,931            176,627            331,999            341,344

 Costs and expenses:

 Food, beverage and paper supplies                                              40,102             43,468             78,085             83,155

 Labor (1)                                                                      62,577             64,177             123,679            126,276

 Direct operating and occupancy                                                 36,017             34,124             70,813             67,311

 Cost of sales                                                                  138,696            141,769            272,577            276,742

 General and administrative (2)                                                 13,117             13,066             26,108             26,126

 Depreciation and amortization                                                  9,313              10,481             18,666             21,432

 Pre-opening costs                                                              972                958                1,701              2,626

 Store closure costs                                                            -                  839                -                  839

 Total costs and expenses                                                       162,098            167,113            319,052            327,765

 Operating income                                                               8,833              9,514              12,947             13,579

 Interest (expense) income, net                                                 (188    )          179                (497    )          (322    )

 Income before income tax provision                                             8,645              9,693              12,450             13,257

 Income tax provision                                                           2,547              3,135              3,760              4,242

 Net income                                                                $    6,098         $    6,558         $    8,690         $    9,015

 Net income per common share:

 Basic                                                                     $    0.25          $    0.26          $    0.36          $    0.35

 Diluted                                                                   $    0.25          $    0.26          $    0.36          $    0.34

 Shares used in computing net income per common share (in thousands):

 Basic                                                                          24,029             25,308             23,942             26,037

 Diluted                                                                        24,152             25,436             23,967             26,132

 Operating Data:

 Locations open at end of period                                                255                242                255                242

 Company-owned full service restaurants open at end of period                   197                190                197                190

 Average weekly company-owned full service restaurant sales                $    64,171        $    68,708        $    62,749        $    67,113

 18-month comparable company-owned full service restaurant sales                -6.5    %          1.5     %          -6.3    %          1.1     %

 (decrease) increase

 (1) Labor expense for the three and six months ended June 28, 2009

 includes approximately $121,000 and $259,000 of stock-based

 compensation, respectively, compared to $191,000 and $401,000 in the

 three and six months ended June 29, 2008, respectively.

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

 ended June 28, 2009 includes approximately $1.7 million and $3.3

 million of

 stock-based compensation, respectively, compared to $1.6 million

 and $3.0 million in the three and six months ended June 29, 2008,

 respectively.



                                           Quarter Ended     Six Months Ended

                                           June 28, June 29, June 28, June 29,

                                           2009     2008     2009     2008

 Statement of Income Percentages (1):

 Revenues:

 Restaurant sales                          98.3  %  98.4  %  98.4  %  98.6  %

 Royalties from Kraft licensing agreement  1.0   %  0.9   %  0.9   %  0.7   %

 Domestic franchise revenues               0.4   %  0.4   %  0.4   %  0.4   %

 International franchise revenues          0.3   %  0.3   %  0.3   %  0.3   %

 Total revenues                            100.0 %  100.0 %  100.0 %  100.0 %

 Costs and expenses:

 Food, beverage and paper supplies         23.9  %  25.0  %  23.9  %  24.7  %

 Labor (2)                                 37.3  %  36.9  %  37.9  %  37.5  %

 Direct operating and occupancy            21.4  %  19.6  %  21.7  %  20.0  %

 Cost of sales                             82.6  %  81.6  %  83.5  %  82.2  %

 General and administrative (3)            7.7   %  7.4   %  7.9   %  7.7   %

 Depreciation and amortization             5.4   %  5.9   %  5.6   %  6.3   %

 Pre-opening costs                         0.6   %  0.5   %  0.5   %  0.8   %

 Store closure costs                       0.0   %  0.5   %  0.0   %  0.2   %

 Total costs and expenses                  94.8  %  94.6  %  96.1  %  96.0  %

 Operating income                          5.2   %  5.4   %  3.9   %  4.0   %

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

 Income before income tax provision        5.1   %  5.5   %  3.8   %  3.9   %

 Income tax provision                      1.5   %  1.8   %  1.1   %  1.3   %

 Net income                                3.6   %  3.7   %  2.7   %  2.6   %

 (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 28, 2009 and the three and six months ended June

 29, 2008.

 (3) General and administrative percentage includes approximately 100

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

 three and six months ended June 28, 2009, compared to 90 basis

 points in each of the three and six months ended June 29, 2008.



Selected Consolidated Balance Sheet Information

(Dollars in thousands)

Selected Consolidated Balance Sheet Information   June 28,       December 28,

                                                  2009           2008

Cash and cash equivalents                         $     13,657   $      14,392

Total assets                                            363,443         368,413

Total debt                                              50,000          74,000

Stockholders' equity                                    188,951         174,532



California Pizza Kitchen, Inc.

Units Summary

                                      Total Units at                            Total Units at

Second Quarter 2009                   March 29, 2009  Opened  Acquired  Closed  June 28, 2009

Company-owned full service domestic   194             3       -         -       197

Company-owned ASAP domestic           9               -       -         -       9

Company-owned LA Food Show            2               -       -         -       2

Franchised domestic                   19              -       -         1       18

Franchised international              26              1       -         -       27

Sports and entertainment venues       2               -       -         -       2

Total                                 252             4       -         1       255