California Pizza Kitchen Announces Financial Results for the Third Quarter 2009

November 5, 2009 4:05 PM EST

LOS ANGELES--(BUSINESS WIRE)-- California Pizza Kitchen, Inc. (Nasdaq: CPKI) today reported revenues and net income for the third quarter ended September 27, 2009.

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

    --  Total revenues decreased 5.3% to $164.8 million
    --  Full service comparable restaurant sales decreased 8.0%
    --  Net income increased 16.8% to $5.8 million
    --  Earnings per diluted share increased 20% to $0.24
    --  Outstanding debt of $37.0 million, a $13.0 million reduction from the
        second quarter of 2009

Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, Inc., stated, "Our ability to drive bottom-line results in the current environment was largely due to the sustainable operating efficiencies we realized throughout 2009. To complement this success, we have launched several revenue and traffic building initiatives in the fourth quarter in addition to yesterday's new menu introduction. These initiatives include our sales productivity report, take-out call center, catering program and an expanded wine program. These efforts are in line with our strategy which we believe will enhance our brand equity, maximize financial performance and build shareholder value over the long run."

Average weekly sales for the Company's 198 full service restaurants were $60,945 in the third quarter of 2009 compared to $66,718 for the same quarter last year.

During the third quarter of 2009, the Company added one full service restaurant in Cherry Hill, New Jersey. In addition, one of the Company's franchise partners launched the first California Pizza Kitchen on a college campus, opening a fast-casual location at Hofstra University in Hempstead, New York.

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

    --  Comparable restaurant sales between negative 5.5% and negative 6.5%
    --  Opening one international full service franchise restaurant
    --  Earnings estimated in the range of $0.16-$0.18 per diluted share

In 2010, the Company anticipates opening eight full service restaurants, while franchise partners are expected to open eight international and two domestic franchise locations.

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 November 5, 2009 the Company operates, licenses or franchises 256 locations, of which 208 are company-owned and 48 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                 Nine Months Ended

                      September 27,  September 28,  September 27,  September 28,

                      2009           2008           2009           2008

 Statement of
 Income:

 Revenues:

 Restaurant sales     $ 161,156      $ 170,816      $ 487,860      $ 507,356

 Royalties from
 Kraft licensing        2,501          1,850          5,425          4,248
 agreement

 Domestic franchise     714            721            2,039          2,120
 revenues

 International          468            571            1,515          1,579
 franchise revenues

 Total revenues         164,839        173,958        496,839        515,303

 Costs and expenses:

 Food, beverage and     37,009         42,396         115,094        125,551
 paper supplies

 Labor (1)              60,929         62,557         184,608        188,833

 Direct operating       35,819         36,140         106,633        103,451
 and occupancy

 Cost of sales          133,757        141,093        406,335        417,835

 General and            12,617         13,314         38,725         39,441
 administrative (2)

 Depreciation and       10,060         11,044         28,726         32,475
 amortization

 Pre-opening costs      243            1,085          1,944          3,712

 Store closure costs    185            -              185            839

 Total costs and        156,862        166,536        475,915        494,302
 expenses

 Operating income       7,977          7,422          20,924         21,001

 Interest expense,      (166    )      (447    )      (663    )      (769    )
 net

 Income before
 income tax             7,811          6,975          20,261         20,232
 provision

 Income tax             2,020          2,015          5,780          6,257
 provision

 Net income           $ 5,791        $ 4,960        $ 14,481       $ 13,975

 Net income per
 common share:

 Basic                $ 0.24         $ 0.20         $ 0.60         $ 0.55

 Diluted              $ 0.24         $ 0.20         $ 0.60         $ 0.54

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

 Basic                  24,123         24,603         24,029         25,572

 Diluted                24,286         24,679         24,098         25,660

 Operating Data:

 Locations open at      255            249            255            249
 end of period

 Company-owned full
 service restaurants
 open at

 end of period          197            194            197            194

 Average weekly
 company-owned full
 service

 restaurant sales     $ 60,945       $ 66,718       $ 62,141       $ 66,998

 18-month comparable
 company-owned

 full service
 restaurant sales       -8.0    %      -2.4    %      -6.9    %      -0.2    %
 decrease

     Labor expense for the three and nine months ended September 27, 2009
(1)  includes approximately $0.1 million and $0.4 million of stock-based
     compensation, respectively, compared to $0.2 million and $0.6 million in
     the three and nine months ended September 28, 2008, respectively.

     General and administrative expense for the three and nine months ended
(2)  September 27, 2009 includes approximately $1.5 million and $4.7 million of
     stock-based compensation, respectively, compared to $1.6 million and $4.6
     million in the three and nine months ended September 28, 2008,respectively.

                      Quarter Ended                 Nine Months Ended

                      September 27,  September 28,  September 27,  September 28,

                      2009           2008           2009           2008

 Statement of Income
 Percentages (1):

 Revenues:

 Restaurant sales     97.8  %        98.2  %        98.2  %        98.5  %

 Royalties from
 Kraft licensing      1.5   %        1.1   %        1.1   %        0.8   %
 agreement

 Domestic franchise   0.4   %        0.4   %        0.4   %        0.4   %
 revenues

 International        0.3   %        0.3   %        0.3   %        0.3   %
 franchise revenues

 Total revenues       100.0 %        100.0 %        100.0 %        100.0 %

 Costs and expenses:

 Food, beverage and   23.0  %        24.8  %        23.6  %        24.7  %
 paper supplies

 Labor (2)            37.8  %        36.6  %        37.8  %        37.2  %

 Direct operating     22.2  %        21.2  %        21.9  %        20.4  %
 and occupancy

 Cost of sales        83.0  %        82.6  %        83.3  %        82.4  %

 General and          7.7   %        7.7   %        7.8   %        7.7   %
 administrative (3)

 Depreciation and     6.1   %        6.3   %        5.8   %        6.3   %
 amortization

 Pre-opening costs    0.1   %        0.6   %        0.4   %        0.7   %

 Store closure costs  0.1   %        0.0   %        0.0   %        0.2   %

 Total costs and      95.2  %        95.7  %        95.8  %        95.9  %
 expenses

 Operating income     4.8   %        4.3   %        4.2   %        4.1   %

 Interest expense,    -0.1  %        -0.3  %        -0.1  %        -0.2  %
 net

 Income before
 income tax           4.7   %        4.0   %        4.1   %        3.9   %
 provision

 Income tax           1.2   %        1.1   %        1.2   %        1.2   %
 provision

 Net income           3.5   %        2.9   %        2.9   %        2.7   %

(1)  Percentages are expressed as a percentage of total revenues, except for
     cost of sales which is expressed as a percentage of restaurant sales.

     Labor percentage includes approximately 10 basis points attributable to
(2)  stock-based compensation in both the three and nine months ended September
     27, 2009 and the three and nine months ended September 28, 2008.

     General and administrative percentage includes approximately 90 basis
(3)  points attributable to stock-based compensation in the three and nine
     months ended September 27, 2009 and the three and nine months ended
     September 28, 2008.

 Selected Consolidated Balance Sheet Information

 (Dollars in thousands)

 Selected Consolidated Balance  September 27,  December 28,

 Sheet Information              2009           2008

 Cash and cash equivalents      $ 14,345       $ 14,392

 Total assets                     351,486        368,413

 Total debt                       37,000         74,000

 Stockholders' equity             197,466        174,532

 California Pizza
 Kitchen, Inc.

 Units Summary

                    Total Units at                            Total Units at

 Third Quarter      June 28, 2009   Opened  Acquired  Closed  September 27, 2009
 2009

 Company-owned
 full service       197             1       -         1       197
 domestic

 Company-owned      9               -       -         -       9
 ASAP domestic

 Company-owned LA   2               -       -         -       2
 Food Show

 Franchised         18              1       -         1       18
 domestic

 Franchised         27              -       -         -       27
 international

 Sports and
 entertainment      2               -       -         -       2
 venues

 Total              255             2       -         2       255

    Source: California Pizza Kitchen, Inc.

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