California Pizza Kitchen Announces Financial Results for the Fourth Quarter and Fiscal Year 2010

2011-02-10
  • Send
  • PDF
  • Print
  • Bookmark
  • Go Back
  • Text Size:

    • California Pizza Kitchen Total revenues decreased 5.9% to $157.9 million. Total revenues increased 3.2% excluding the additional week of fourth quarter 2009 restaurant sales.

    California Pizza Kitchen, Inc. (Nasdaq:CPKI) today reported financial results for the fourth quarter and fiscal year 2010 ending January 2, 2011.

    “We were pleased to deliver fourth quarter earnings that exceeded our previous guidance and that our comparable restaurant sales, absent the inclement weather and holiday shift, were positive. Strong labor management also helped us achieve lower costs as a percentage of restaurant sales.”

    Highlights for the 13-week fourth quarter of 2010 relative to the 14-week fourth quarter of 2009 were as follows:

    • Total revenues decreased 5.9% to $157.9 million. Total revenues increased 3.2% excluding the additional week of fourth quarter 2009 restaurant sales.
    • Full-service comparable restaurant sales decreased 1.1% including an estimated 1.4% negative impact due to unfavorable weather conditions and the holiday shift.
    • Non-GAAP net income of $4.1 million, or $0.17 per diluted share, excluding the effects of litigation and settlement costs, expenses related to the review of strategic alternatives, store closure costs, and the related tax benefits (please refer to the reconciliation table).
    • Net income of $0.4 million or $0.02 per diluted share.

    Highlights for the 52-week fiscal year 2010 relative to the 53-week fiscal year 2009 were as follows:

    • Total revenues decreased 3.4% to $642.2 million. Total revenues decreased 1.2% excluding the additional week in the fourth quarter of 2009 .
    • Full-service comparable restaurant sales decreased 2.4%.
    • Non-GAAP net income of $17.1 million, or $0.69 per diluted share, excluding the effects of the non-cash impairment write-down of 10 full-service restaurants, litigation and proposed settlement costs, expenses related to the review of strategic alternatives, store closure costs and the related tax benefits (please refer to the reconciliation table).
    • Net loss of $0.4 million, or negative $0.02 per diluted share.

    Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, stated, “We were pleased to deliver fourth quarter earnings that exceeded our previous guidance and that our comparable restaurant sales, absent the inclement weather and holiday shift, were positive. Strong labor management also helped us achieve lower costs as a percentage of restaurant sales.”

    Rosenfield and Flax continued, “In 2011, we are strategically focused on enhancing our brand and evolving our menu to drive traffic and further differentiate California Pizza Kitchen from its casual dining competitors. As part of that effort, we are also targeting margin improvement by streamlining our menu and implementing a series of productivity initiatives. As always, our overriding goal in managing our strong, debt free balance sheet is to increase our return on assets, bolster cash flow and maximize system-wide performance. We believe this will lead to long term and sustainable growth in shareholder value.”

    Average weekly sales for the Company’s 200 full-service restaurants were $57,687 in the fourth quarter of 2010 compared to $57,949 in the same quarter last year.

    During the fourth quarter of 2010, the Company opened full-service restaurants in Bridgewater, NJ; Pittsburgh, PA; Tucson, AZ; and Shanghai, China. International franchise partners opened a full-service restaurant in Mexico City, Mexico, the Company’s ninth location in the country, and a third full-service restaurant in Dubai, UAE.

    The Company also outlined financial guidance for the first quarter of 2011 based on the following estimates and assumptions:

    • Full-service comparable restaurant sales between negative 1.0% and negative 2.0% (includes the effects of 172 weather related/store closure days in January 2011 versus only 64 such days in January 2010).
    • Opening one Company-owned full-service restaurant.
    • Opening two international franchised restaurants.
    • Earnings in the range of $0.03 to $0.05 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. Of the chain's 265 restaurants, 207 are company-owned and 58 operate under franchise or license agreements. There are currently 33 restaurants located internationally in China, Japan, Philippines, Malaysia, Singapore, Mexico, South Korea, Guam, India, Indonesia and United Arab Emirates. CPK premium pizzas are also available to sports and entertainment fans at three Southern California venues including Dodger Stadium, Angel Stadium of Anaheim and STAPLES Center. Also 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. 

    Selected Unaudited Consolidated Financial and Operating Data
    (Dollars in thousands, except for per share and operating data)
           
     
    13 Weeks Ended 14 Weeks Ended 52 Weeks Ended 53 Weeks Ended
    January 2, January 3, January 2, January 3,
      2011     2010     2011     2010  
     
    Statement of Operations:
     
    Revenues:
    Restaurant sales $ 154,616 $ 164,326 $ 630,606 $ 652,185
    Royalties from licensing agreement 1,892 2,314 6,122 7,739
    Domestic franchise revenues 776 645 3,100 2,684
    International franchise revenues   658     563     2,403     2,078  
    Total revenues 157,942 167,848 642,231 664,686
     
    Costs and expenses:
    Food, beverage and paper supplies 37,159 39,088 148,732 154,181
    Labor 57,982 62,742 237,133 247,350
    Direct operating and occupancy   35,331     35,340     142,420     141,973  
    Cost of sales 130,472 137,170 528,285 543,504
     
    General and administrative 12,702 13,046 50,731 50,791
    Pre-opening costs 990 (101 ) 3,269 1,843
     

    Operating income before depreciation and amortization,
    loss on impairment of property and equipment, store closure
    costs and litigation, settlement and other costs (1)
           
      13,778     17,733     59,946     68,548  
     
    Depreciation and amortization 8,994 11,454 37,006 40,181
    Loss on impairment of property and equipment - 22,941 18,702 22,941
    Store closure costs 650 354 1,708 539
    Litigation, settlement and other costs (2)   2,254     630     8,759     1,609  
    Total costs and expenses 156,062 185,494 648,460 661,408
     
    Operating income (loss) 1,880 (17,646 ) (6,229 ) 3,278
     
    Interest income (expense), net   6     (125 )   (16 )   (788 )
     
    Income (loss) before income tax provision (benefit) 1,886 (17,771 ) (6,245 ) 2,490
    Income tax provision (benefit)   1,446     (7,871 )   (5,839 )   (2,091 )
    Net income (loss) $ 440   $ (9,900 ) $ (406 ) $ 4,581  
     
    Net income (loss) per common share:
    Basic $ 0.02 $ (0.41 ) $ (0.02 ) $ 0.19
    Diluted $ 0.02 $ (0.41 ) $ (0.02 ) $ 0.19
     
    Shares used in computing net income (loss) per common share (in thousands):
     
    Basic 24,583 24,173 24,488 24,061
    Diluted (3) 25,093 24,173 24,488 24,140
     
    Operating Data:
    Locations open at end of period 266 253 266 253
    Company-owned full service restaurants open at
    end of period 200 196 200 196
    Average weekly company-owned full service
    restaurant sales $ 57,687 $ 57,949 $ 59,393 $ 61,029
    18-month comparable company-owned full service
    restaurant sales decrease -1.1 % -5.8 % -2.4 % -6.6 %
                     
     
    (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.

    (2) For the 13 and 52 weeks ended January 2, 2011, other costs represent expenses related to the review of strategic alternatives.
    (3) For the 14 weeks ended January 3, 2010 and the 52 weeks ended January 2, 2011, stock options have been excluded from the shares used in the computation of net loss per diluted share because of their antidilutive effect.
     

     

        13 Weeks Ended   14 Weeks Ended   52 Weeks Ended   53 Weeks Ended
    January 2, January 3, January 2, January 3,
    2011   2010   2011   2010  
     
    Statement of Operations Percentages (1):
     
    Revenues:
    Restaurant sales 97.9 % 97.9 % 98.2 % 98.1 %
    Royalties from licensing agreement 1.2 % 1.4 % 0.9 % 1.2 %
    Domestic franchise revenues 0.5 % 0.4 % 0.5 % 0.4 %
    International franchise revenues 0.4 % 0.3 % 0.4 % 0.3 %
    Total revenues 100.0 % 100.0 % 100.0 % 100.0 %
     
    Costs and expenses:
    Food, beverage and paper supplies 24.0 % 23.8 % 23.6 % 23.6 %
    Labor 37.5 % 38.2 % 37.6 % 37.9 %
    Direct operating and occupancy 22.9 % 21.5 % 22.6 % 21.8 %
    Cost of sales 84.4 % 83.5 % 83.8 % 83.3 %
     
    General and administrative 8.0 % 7.8 % 7.9 % 7.6 %
    Pre-opening costs 0.6 % -0.1 % 0.5 % 0.3 %
     

    Operating income before depreciation and amortization,
    loss on impairment of property and equipment, store closure
    costs and litigation, settlement and other costs
           
    8.7 % 10.6 % 9.3 % 10.3 %
     
    Depreciation and amortization 5.7 % 6.8 % 5.8 % 6.0 %
    Loss on impairment of property and equipment 0.0 % 13.7 % 2.9 % 3.5 %
    Store closure costs 0.4 % 0.2 % 0.3 % 0.1 %
    Litigation, settlement and other costs 1.4 % 0.4 % 1.4 % 0.2 %
    Total costs and expenses 98.8 % 110.5 % 101.0 % 99.5 %
     
    Operating income (loss) 1.2 % -10.5 % -1.0 % 0.5 %
     
    Other expense:
    Interest income (expense), net 0.0 % -0.1 % 0.0 % -0.1 %
     
    Income (loss) before income tax provision (benefit) 1.2 % -10.6 % -1.0 % 0.4 %
    Income tax provision (benefit) 0.9 % -4.7 % -0.9 % -0.3 %
    Net income (loss) 0.3 % -5.9 % -0.1 % 0.7 %
     
    (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)
       
     
    January 2, January 3,
    2011 2010
     
    Cash and cash equivalents $ 21,230 $ 21,424
    Total assets 330,944 350,258
    Total debt - 22,300
    Stockholders' equity 194,411 189,250
     

     

    California Pizza Kitchen, Inc.
    Units Summary
             
     
    Total Units at Total Units at
    Fourth Quarter 2010 October 3, 2010 Opened Closed January 2, 2011
    Company-owned full service domestic 199 3 2 200
    Company-owned ASAP domestic 6 - 1 5
    Company-owned LA Food Show 2 - - 2
    Company-owned full service international - 1 - 1
    Franchised domestic 20 - - 20
    Franchised international 30 2 - 32
    Campus, sports & entertainment venues (seasonal) 6   -   -   6
    Total 263   6   3   266
     

     

    The following reconciliation of net income (loss) to non-GAAP net income is provided to assist the reader with understanding the financial impact of the non-cash impairment charges, litigation and proposed legal settlement costs, expenses related to the review of strategic alternatives and store closure costs during the quarter and year (unaudited, in thousands, except per share data):

      13 Weeks Ended   52 Weeks Ended
    January 2, January 2,

     

    		 2011 2011  
     
     
    Net income (loss) as reported $ 440 $ (406 )
    Impairment of property, plant and equipment - 18,702
    Store closure costs 650 1,708
    Litigation, settlement and other costs (1) 2,254 8,759
    Net change to income tax provision   803   (11,616 )
    Net income excluding impairment, store closure
    and litigation, settlement and other costs $ 4,147 $ 17,147  
     
     
    Basic net income (loss) per common share:
    Net income (loss) as reported $ 0.02 $ (0.02 )
    Impairment of property, plant and equipment - 0.76
    Store closure costs 0.03 0.07
    Litigation, settlement and other costs 0.09 0.36
    Net change to income tax provision   0.03   (0.47 )
    Basic net income excluding impairment, store closure,
    and litigation, settlement and other costs $ 0.17 $ 0.70  
     
     
    Diluted net income (loss) per common share:
    Net income (loss) as reported $ 0.02 $ (0.02 )
    Impairment of property, plant and equipment - 0.75
    Store closure costs 0.03 0.07
    Litigation, settlement and other costs 0.09 0.35
    Net change to income tax provision   0.03   (0.46 )
    Diluted net income excluding impairment, store closure,
    and litigation, settlement and other costs $ 0.17 $ 0.69  
     
     
    Basic 24,583 24,488
    Diluted (2) 25,093 24,904
     

    (1) For the 13 and 52 weeks ended January 2, 2011, other costs represent expenses related to the review of strategic alternatives.

     

    (2) For the 52 weeks ended January 2, 2011, stock options have been included in the calculation of non-GAAP net income per diluted share because their effect is no longer antidilutive.

     

  • Send
  • PDF
  • Print
  • Bookmark
  • Go Back
  • Text Size:
  • ev Score
    2823
    • Ads by Nevistas
  • Restaurant Loans

    • Newsletters
    Restaurant
    Industry News
     
    Hospitality
    Newsletter
     
    Hospitality
    Trends
     
    Hospitality
    Technology
     
    Your Email Address
     
     
    //