EXHIBIT 99.1
California Pizza Kitchen Announces
Financial Results for the Third Quarter Ended October 1, 2006
LOS ANGELES--(BUSINESS WIRE)--Nov. 9, 2006--California Pizza
Kitchen, Inc. (Nasdaq: CPKI) today reported revenues and net income
for the third quarter ended October 1, 2006. Highlights for the third
quarter of 2006 relative to the same quarter a year ago were as
follows:
-- Total revenues up approximately 14.7% to $142.8 million
-- Comparable restaurant sales increase of 5.6%
-- Net income of $6.7 million, or $0.34 per diluted share,
including the effects of stock-based compensation expense and
the October 6, 2005 lease accounting pronouncement
Rick Rosenfield and Larry Flax, co-CEOs of California Pizza
Kitchen, Inc., stated, "Once again, we are pleased with our third
quarter results which were driven by higher than anticipated
comparable restaurant sales. We credit our commitment to menu
innovation, guest satisfaction and the lifestyle component of our
brand which creates a lasting connection with our customers. We also
credit operational improvements and a more strategic real estate
approach, two factors that have contributed to our profitability."
Average weekly sales for the Company's 158 full service
restaurants increased 5.3% to a record-setting $66,971 for the third
quarter of 2006 compared to $63,615 for the same quarter last year.
Rosenfield and Flax continued, "Although we're primarily focused
on full service expansion, we continue to analyze and develop our
entire portfolio. To that point, our average weekly sales at ASAP have
improved materially from the beginning of the year and we anticipate
continued momentum as we refine the concept during 2007. In terms of
full service, we are excited about our sites for the coming year, and
with only 158 company-owned California Pizza Kitchens across the
country, we are confident that our development pipeline will remain
substantial for many years. To complement this unit expansion, we
understand the need to focus on execution in all areas of our business
and continue with the development of our brand."
During the third quarter of 2006, the Company added three new full
service restaurants in Hoover, Alabama; San Luis Obispo, California;
and Short Hills, New Jersey, as well as one ASAP in Chicago, Illinois.
The Company's franchise partner, WDI Corporation, also opened its
first full service restaurant in Tokyo, Japan.
For the fourth quarter of 2006, the Company expects to add nine
full service restaurants and two ASAPs. These openings, together with
a comparable restaurant sales increase of 5.0% to 6.0%, are expected
to result in earnings per diluted share of $0.13-$0.15. This is a
reduction from management's prior estimated range of $0.25 to $0.27
and is driven by four key factors. First, the Company now anticipates
that delays in new restaurant opening dates will reduce fourth quarter
results by approximately $0.06 per diluted share. Second, management
has recently concluded negotiations to secure early lease termination
and close the final negative cash flow restaurant previously
identified in 2003. This will adversely affect fourth quarter earnings
by $0.03 per diluted share however will be accretive in 2007. Third,
the Company will accelerate depreciation on three restaurants it plans
to remodel in 2007 in conjunction with lease renewals and other
requirements. This is expected to affect earnings by $0.01 per diluted
share. Finally, in line with the October 6, 2005 lease accounting
pronouncement FSP 13-1, management will take a non-cash charge of
approximately $0.02 per diluted share for pre-opening rent expense
associated with seven restaurants that will open in 2007.
The Company also announced guidance for fiscal 2007 based on the
following assumptions:
--Restaurant revenue growth of approximately 19.0% to 20.0%
--Eighteen month comparable restaurant sales growth of
approximately 4.5% to 5.5%
--16 to 18 new full service restaurants for 2007
--Six to seven new ASAP restaurants for 2007
--One new LA Food Show restaurant
--Earnings per diluted share of $1.31-$1.33
The Company will hold a conference call today at approximately
5:00 pm EST to discuss third quarter 2006 results. 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 and sandwiches. The average guest check is approximately $12.85.
As of November 9, 2006 the Company operates, licenses or franchises
201 restaurants, of which 171 are company-owned and 30 operate under
franchise or license agreements. The Company also has a licensing
arrangement with Kraft Pizza Company, which manufactures and
distributes a line of California Pizza Kitchen premium frozen pizzas.
California Pizza Kitchen, Inc. can be found on the internet 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 Nine Months Ended
October 1, October 2, October 1, October 2,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Statement of Income:
Revenues:
Restaurant sales $140,874 $123,097 $403,996 $350,931
Franchise and other
revenues 1,890 1,371 4,634 3,301
---------- ---------- ---------- ----------
Total revenues 142,764 124,468 408,630 354,232
Costs and expenses:
Food, beverage and paper
supplies 34,904 30,500 100,162 87,206
Labor(1) 50,742 44,126 147,641 128,953
Direct operating and
occupancy 27,591 23,831 79,099 68,704
---------- ---------- ---------- ----------
Cost of sales 113,237 98,457 326,902 284,863
General and
administrative(2) 11,260 8,632 32,650 23,910
Depreciation and
amortization 7,386 6,560 21,427 18,610
Pre-opening costs 1,112 1,012 2,545 3,058
Loss on impairment of
property and equipment - 1,015 - 1,116
Store closure costs - 770 - 770
---------- ---------- ---------- ----------
Total costs and expenses 132,995 116,446 383,524 332,327
Operating income 9,769 8,022 25,106 21,905
Other income (expense):
Interest income 154 181 666 576
Other income - - - 1,106
Equity in net loss of
unconsolidated joint
venture - - - (22)
---------- ---------- ---------- ----------
Total other income 154 181 666 1,660
---------- ---------- ---------- ----------
Income before income tax
provision 9,923 8,203 25,772 23,565
Income tax provision 3,272 2,656 8,503 7,553
---------- ---------- ---------- ----------
Net income $6,651 $5,547 $17,269 $16,012
========== ========== ========== ==========
Net income per common
share:
Basic $0.34 $0.29 $0.88 $0.83
Diluted $0.34 $0.28 $0.86 $0.81
Shares used in computing
net income per common
share (in thousands):
Basic 19,298 19,419 19,529 19,337
Diluted 19,644 20,004 19,968 19,649
Operating Data:
Restaurants open at end
of period 197 185 197 185
Company-owned full
service restaurants open
at end of period 158 148 158 148
Average weekly company-
owned full service
restaurant sales $66,971 $63,615 $65,247 $62,237
18 month comparable
company-owned restaurant
sales increase 5.6% 7.1% 5.6% 8.3%
------------------------------------
(1) Labor expense for the three and nine months ended October 1, 2006
includes approximately $202,000 and $706,000 of stock-based
compensation, respectively, compared to none in the three and nine
months ended October 2, 2005, respectively.
(2) General and administrative expense for the three and nine months
ended October 1, 2006 includes approximately $1.4 million and $3.8
million of stock-based compensation, respectively, compared to none
in the three and nine months ended October 2, 2005, respectively.
Quarter Ended Nine Months Ended
October 1, October 2, October 1, October 2,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Statement of Income
Percentages(1):
Revenues:
Restaurant sales 98.7% 98.9% 98.9% 99.1%
Franchise and other
revenues 1.3% 1.1% 1.1% 0.9%
---------- ---------- ---------- ----------
Total revenues 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Food, beverage and paper
supplies 24.8% 24.8% 24.8% 24.8%
Labor(2) 36.0% 35.8% 36.5% 36.7%
Direct operating and
occupancy 19.6% 19.4% 19.6% 19.6%
---------- ---------- ---------- ----------
Cost of sales 80.4% 80.0% 80.9% 81.2%
General and
administrative(3) 7.9% 6.9% 8.0% 6.7%
Depreciation and
amortization 5.2% 5.3% 5.2% 5.3%
Pre-opening costs 0.8% 0.8% 0.6% 0.9%
Loss on impairment of
property and equipment 0.0% 0.8% 0.0% 0.3%
Store closure costs 0.0% 0.6% 0.0% 0.2%
---------- ---------- ---------- ----------
Total costs and expenses 93.2% 93.6% 93.9% 93.8%
Operating income 6.8% 6.4% 6.1% 6.2%
Other income (expense):
Interest income 0.1% 0.1% 0.2% 0.2%
Other income 0.0% 0.0% 0.0% 0.3%
Equity in net loss of
unconsolidated joint
venture 0.0% 0.0% 0.0% 0.0%
---------- ---------- ---------- ----------
Total other income 0.1% 0.1% 0.2% 0.5%
---------- ---------- ---------- ----------
Income before income tax
provision 7.0% 6.6% 6.3% 6.7%
Income tax provision 2.3% 2.1% 2.1% 2.1%
---------- ---------- ---------- ----------
Net income 4.7% 4.5% 4.2% 4.5%
========== ========== ========== ==========
(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 of stock-
based compensation in each of the three and nine months ended October
1, 2006, respectively, compared to none in each of the three and nine
months ended October 2, 2005.
(3) General and administrative percentage includes approximately 100
and 90 basis points of stock-based compensation in the three and nine
months ended October 1, 2006, respectively, compared to none in each
of the three and nine months ended October 2, 2005.
Selected Consolidated Balance Sheet Information
(Dollars in thousands)
Selected Consolidated Balance Sheet October 1, January 1,
Information 2006 2006
------------------------
Cash and cash equivalents $3,168 $11,272
Marketable securities - 11,408
Total assets 286,631 274,254
Stockholders' equity 199,213 197,336
California Pizza Kitchen, Inc.
Units Summary
Total Units Total Units
at at
------------ ---------------
Third Quarter 2006 July 2, 2006 Opened Acquired Closed October 1, 2006
- ------------------ ------------ ------ -------- ------ ---------------
Company-owned full
service domestic 155 3 - - 158
Company-owned ASAP
domestic 6 1 - - 7
Company-owned LA
Food Show 1 - - - 1
Franchised
domestic 18 - - 1 17
Franchised
international 13 1 - - 14
------------ ------ -------- ------ ---------------
Total 193 5 - 1 197
============ ====== ======== ====== ===============
California Pizza Kitchen, Inc.
Supplemental Information
Cost of
Sales
Weekly (,000) (,000) as a
Third Quarter # of Sales Restaurant Cost of Percentage
2006 Stores Average Sales Sales(1) of Sales
- --------------- ------- ------- ---------- -------- -----------
Full Service
Restaurants
Q3, 2006 158 66,971 136,592 109,489 80.2%
Q3, 2005 148 63,615 120,288 95,928 79.7%
Year over year
change 5.3% 13.6% 14.1% (50) bps
ASAP
Restaurants
Q3, 2006 7 37,311 3,278 2,850 86.9%
Q3, 2005 5 29,772 1,935 1,702 88.0%
Year over year
change 25.3% 69.4% 67.5% 110 bps
LA Food Show
Q3, 2006 1 77,273 1,004 898 89.4%
Q3, 2005 1 67,255 874 827 94.6%
Year over year
change 14.9% 14.9% 8.6% 520 bps
Total
restaurants
Q3, 2006 166 65,816 140,874 113,237 (2) 80.4%
Q3, 2005 154 62,522 123,097 98,457 80.0%
Year over year
change 5.3% 14.4% 15.0% (40) bps
(1) Cost of sales includes food, beverage and paper supplies, labor,
and direct operating and occupancy costs.
(2) Cost of sales includes approximately $202,000, or 10 basis
points, of stock-based compensation in the third quarter of 2006
compared to none in the third quarter of 2005.
California Pizza Kitchen, Inc.
Supplemental Information
Cost of
Sales
Weekly (,000) (,000) as a
# of Sales Restaurant Cost of Percentage
Fiscal Year 2006 Stores Average Sales Sales(1) of Sales
- ----------------- ------- ------- ---------- ----------- -----------
Full Service
Restaurants
YTD, 2006 158 65,247 393,049 317,272 80.7%
YTD, 2005 148 62,237 344,226 278,744 81.0%
Year over year
change 4.8% 14.2% 13.8% 30 bps
ASAP Restaurants
YTD, 2006 7 35,623 7,970 6,917 86.8%
YTD, 2005 5 29,340 5,159 4,603 89.2%
Year over year
change 21.4% 54.5% 50.3% 240 bps
LA Food Show
YTD, 2006 1 76,340 2,977 2,713 91.1%
YTD, 2005 1 67,199 1,546 1,516 98.1%
Year over year
change 13.6% 92.6% 79.0% 700 bps
Total restaurants
YTD, 2006 166 64,262 403,996 326,902 (2) 80.9%
YTD, 2005 154 61,248 350,931 284,863 81.2%
Year over year
change 4.9% 15.1% 14.8% 30 bps
(1) Cost of sales includes food, beverage and paper supplies, labor,
and direct operating and occupancy costs.
(2) Cost of sales includes approximately $706,000, or 10 basis
points, of stock-based compensation in the nine months ended October
1, 2006 compared to none in the nine months ended October 2, 2005.
CONTACT: California Pizza Kitchen, Inc.
Media: Sarah Grover
Investors: Sue Collyns
310-342-5000