California Pizza Kitchen, Inc. (Nasdaq: CPKI) today reported revenues and net income for the second quarter ended July 4, 2010.

LOS ANGELES, Aug 05, 2010 (BUSINESS WIRE) -- California Pizza Kitchen, Inc. (Nasdaq: CPKI) today reported revenues and net income for the second quarter ended July 4, 2010.

Highlights for the second quarter of 2010 relative to the second quarter of 2009 were as follows:

  • Total revenues decreased 4.6% to $163.1 million
  • Comparable restaurant sales decreased 5.9%
  • Net income of $4.2 million, or $0.17 per diluted share

Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, stated "Earnings were at the high end of our recent guidance, but reflect the impact of not conducting the Thank You Card Program during the second quarter, as we did in 2009. With that challenging comparison behind us, we are encouraged that third quarter comparable restaurant sales to date are negative 0.9% and we are excited that our 2010 Thank You Card Program is now underway and runs through October 8th. The program has proven to be popular with guests and we are thrilled to raise the level of excitement this year with a cash grand prize of $100,000."

Rosenfield and Flax continued, "Additionally, the new menu items rolled out in June continue to perform extremely well. Product innovation remains a hallmark of our brand and we will continue to create unique, craveable menu items to drive traffic. We also look forward to the August launch of two new licensed products outside the frozen category in line with our strategy of leveraging the brand in this higher margin channel."

Rosenfield and Flax added, "As we look to the remainder of this year and into 2011, we plan to maximize long-term value for our shareholders by driving the brand through menu innovation and by enhancing free cash flow and return on invested capital, both inside and outside the restaurants' four walls."

Rosenfield and Flax concluded, "As a reminder, on April 12, 2010, we announced that the Company was exploring strategic alternatives. This process is continuing and the Company does not expect to make further comment unless its Board of Directors has approved a specific course of action."

Average weekly sales for the Company's 196 full service restaurants were $61,491 in the second quarter of 2010 compared to $64,171 in the same quarter last year.

During the second quarter, the Company opened a new full-service restaurant in Murray, UT. The Company's franchise partners also opened quick-service restaurants in the King of Prussia Service Plaza in Philadelphia, PA; the Honolulu International Airport in Honolulu, HI; the Kahului Airport (OGG) in Maui, HI; a kiosk in the Fresno Yosemite Airport in Fresno, CA; and in Dodger Stadium in Los Angeles, CA; as well as a full service restaurant in the Coyoacán neighborhood of Mexico City, Mexico.

Finally, the Company outlined its financial guidance for the third quarter of 2010 based on the following assumptions:

  • Comparable restaurant sales between negative 1.0% and positive 1.0%
  • Opening four Company-owned full service restaurants
  • Opening two international franchised full service restaurants
  • Opening one domestic franchise restaurant
  • Earnings estimated in the range of $0.17-$0.19 per diluted share

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 featuring an imaginative line of hearth-baked pizzas, including the original BBQ Chicken Pizza, and a broad selection of distinctive pastas, salads, appetizers, soups, sandwiches and desserts. The average guest check is approximately $15.00. Of the chain's 261 restaurants as of August 5, 2010, 206 are Company-owned and 55 operate under franchise or license agreements. CPK premium pizzas are available to sports and entertainment fans at three Southern California venues including Dodger Stadium, Angel Stadium of Anaheim and STAPLES Center. Included in the Company's portfolio of concepts is LA Food Show Grill & Bar, which has locations in Manhattan Beach and Beverly Hills, California. The Company also has a licensing arrangement with Nestle S.A. to manufacture and distribute a line of California Pizza Kitchen premium frozen products. For more details, visit 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," "guidance," "forecast" and similar words.

This release may also include measures that are not based on any standardized methodology prescribed by U.S. generally accepted accounting principles ("GAAP") and are not necessarily comparable to similar measures presented by other companies. This may include non-GAAP earnings per diluted share or other information. The Company believes that this non-GAAP information is useful as an additional means for investors to evaluate the Company's operating performance, when reviewed in conjunction with the Company's GAAP financial statements. This amount is not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the Company's business and operations.

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)
                                                                               13 Weeks Ended                    26 Weeks Ended
                                                                           July 4,         June 28,          July 4,         June 28,
                                                                            2010             2009             2010             2009
                                                                          -------          -------          -------          -------
Statement of Income:
Revenues:
  Restaurant sales                                                      $ 160,265        $ 167,975        $ 314,694        $ 326,703
  Royalties from licensing agreement                                        1,425            1,773            2,470            2,924
  Domestic franchise revenues                                                 813              702            1,485            1,325
  International franchise revenues                                            547              481            1,096            1,047
                                                                          -------          -------          -------          -------
    Total revenues                                                        163,050          170,931          319,745          331,999
Costs and expenses:
  Food, beverage and paper supplies                                        37,043           40,102           73,430           78,085
  Labor                                                                    59,867           62,577          118,679          123,679
  Direct operating and occupancy                                           36,604           36,017           71,687           70,813
                                                                          -------          -------          -------          -------
    Cost of sales                                                         133,514          138,696          263,796          272,577
  General and administrative                                               13,282           12,879           26,024           25,547
  Pre-opening costs                                                           600              972              902            1,701
                                                                           15,654           18,384           29,023           32,174
    Operating income before depreciation and amortization, store
    closure costs and litigation and settlement costs (1)
                                                                          -------          -------          -------          -------
  Depreciation and amortization                                             9,506            9,313           18,641           18,666
  Store closure costs                                                           -                -              466                -
  Litigation and settlement costs                                             480              238              769              561
                                                                          -------          -------          -------          -------
  Total costs and expenses                                                157,382          162,098          310,599          319,052
Operating income                                                            5,668            8,833            9,146           12,947
Interest income (expense), net                                                  6             (188 )            (30 )           (497 )
                                                                          -------          ------- ---      ------- ---      ------- ---
Income before income tax provision                                          5,674            8,645            9,116           12,450
Income tax provision                                                        1,482            2,547            2,425            3,760
                                                                          -------          -------          -------          -------
Net income                                                              $   4,192        $   6,098        $   6,691        $   8,690
                                                                      === =======      === =======      === =======      === =======
Net income per common share:
  Basic                                                                 $    0.17        $    0.25        $    0.28        $    0.36
  Diluted                                                               $    0.17        $    0.25        $    0.27        $    0.36
Shares used in computing net income per common share (in thousands):
  Basic                                                                    24,338           24,029           24,292           23,942
  Diluted                                                                  25,210           24,152           24,785           23,967
Operating Data:
Locations open at end of period                                               258              255              258              255
Company-owned full service restaurants open at end of period                  196              197              196              197
Average weekly company-owned full service restaurant sales              $  61,491        $  64,171        $  60,285        $  62,749
18-month comparable company-owned restaurant sales decrease                  -5.9 %           -6.5 %           -4.2 %           -6.3 %
(1) This is a non-GAAP measure and is not based on any
standardized methodology prescribed by GAAP and is not necessarily
comparable to similar measures presented by other companies. We
believe this measure provides additional information to facilitate
the comparison of our past and present financial results and
provides an additional means for investors to evaluate business
performance. However, use of this measure should not be construed
as an indication that our future results will be unaffected by
excluded items.
                                                                       13 Weeks Ended             26 Weeks Ended
                                                                    July 4,     June 28,       July 4,     June 28,
                                                                     2010         2009          2010         2009
                                                                  ----------   -----------   ----------   -----------
Statement of Income Percentages (1):
Revenues:
  Restaurant sales                                                 98.3 %       98.3 %        98.4 %       98.4 %
  Royalties from licensing agreement                                0.9 %        1.0 %         0.8 %        0.9 %
  Domestic franchise revenues                                       0.5 %        0.4 %         0.5 %        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                                23.1 %       23.9 %        23.3 %       23.9 %
  Labor                                                            37.4 %       37.3 %        37.7 %       37.9 %
  Direct operating and occupancy                                   22.8 %       21.4 %        22.8 %       21.7 %
                                                                  ----- ---    ----- ----    ----- ---    ----- ----
    Cost of sales                                                  83.3 %       82.6 %        83.8 %       83.5 %
  General and administrative                                        8.1 %        7.5 %         8.1 %        7.7 %
  Pre-opening costs                                                 0.4 %        0.6 %         0.3 %        0.5 %
                                                                    9.6 %       10.8 %         9.1 %        9.7 %
    Operating income before depreciation and amortization, store
    closure costs and litigation and settlement costs
                                                                  ----- ---    ----- ----    ----- ---    ----- ----
  Depreciation and amortization                                     5.8 %        5.4 %         5.8 %        5.6 %
    Store closure costs                                             0.0 %        0.0 %         0.1 %        0.0 %
  Litigation and settlement costs                                   0.3 %        0.1 %         0.2 %        0.2 %
                                                                  ----- ---    ----- ----    ----- ---    ----- ----
  Total costs and expenses                                         96.5 %       94.8 %        97.1 %       96.1 %
Operating income                                                    3.5 %        5.2 %         2.9 %        3.9 %
Other expense:
Interest income (expense), net                                      0.0 %       -0.1 %         0.0 %       -0.1 %
                                                                  ----- ---    ----- ----    ----- ---    ----- ----
Income before income tax provision                                  3.5 %        5.1 %         2.9 %        3.8 %
Income tax provision                                                0.9 %        1.5 %         0.8 %        1.1 %
                                                                  ----- ---    ----- ----    ----- ---    ----- ----
Net income                                                          2.6 %        3.6 %         2.1 %        2.7 %
                                                                  ===== ===    ===== ====    ===== ===    ===== ====
(1) Percentages are expressed as a percentage of total revenue
except for cost of sales which is expressed as a percentage of
restaurant sales.
      Selected Consolidated Balance Sheet Information
                  (Dollars in thousands)
                               July 4,       January 3,
                                2010            2010
                           --------------- ---------------
Cash and cash equivalents       $   9,009       $  21,424
Total assets                      337,000         350,258
Total debt                              -          22,300
Stockholders' equity              199,787         189,250
                                    California Pizza Kitchen, Inc.
                                             Units Summary
                                                      Total Units at                    Total Units at
                                                      --------------                    --------------
   Second Quarter 2010                                 April 4, 2010  Opened   Closed    July 4, 2010
   ------------------------------------------------   --------------  ------   ------   --------------
   Company-owned full service domestic                           196       1        1              196
   Company-owned ASAP domestic                                     7       -        1                6
   Company-owned LA Food Show                                      2       -        -                2
   Franchised domestic                                            16       3        -               19
   Franchised international                                       28       1        -               29
   Campus, sports & entertainment venues (seasonal)                4       2        -                6
                                                      --------------  ------   ------   --------------
   Total                                                         253       7        2              258
                                                      ==============  ======   ======   ==============

SOURCE: California Pizza Kitchen

###

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