California Pizza Kitchen Reports Financial Results For The Fourth Quarter And Fiscal Year Ended December 28, 2003.Business Editors LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--Jan. 29, 2004 California Pizza Kitchen California Pizza Kitchen (NASDAQ: CPKI, known within the food industry as CPK) is a casual dining restaurant chain that specializes in California-style pizza. The restaurant was started in 1985 by attorneys Rick Rosenfield and Larry Flax in Beverly Hills, California, , Inc., (Nasdaq: CPKI CPKI California Pizza Kitchen, Inc ) today reported revenues and earnings for the fourth quarter and fiscal year ended December December: see month. 28, 2003. Highlights for the fourth quarter of 2003 relative to the same quarter last year were as follows: -- Total revenues up approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 17.8% to $96.1 million -- Comparable restaurant sales increase of 2.8% -- Net income before non-cash impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. , severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and tax benefit of $0.22 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared to net income of $0.22 per diluted share for the prior period -- Net income of $0.23 per diluted share compared to net income of $0.22 per diluted share for the prior period Highlights for fiscal 2003 compared to fiscal 2002 were as follows: -- Total revenues up approximately 17.5% to $359.9 million -- Comparable restaurant sales increase of 2.5% -- Net income before non-cash impairment, severance and tax benefit of $0.89 per diluted share, compared to net income before impairment and closure charges of $0.90 per diluted share -- Net income of $0.42 per diluted share compared to net income of $0.81 per diluted share for the prior period Rick Rosenfield Rosenfield is a surname and may refer to:
This page or section lists people with the surname Rosenfield. and Larry Lar´ry n. 1. Same as Lorry, or Lorrie. Flax flax, common name for members of the Linaceae, a family of annual herbs, especially members of the genus Linum, and for the fiber obtained from such plants. The flax of commerce (several varieties of L. , Co-CEO's of California Pizza Kitchen stated, "The fourth quarter caps a year of transition for California Pizza Kitchen. During the past year, we identified that while our core business was strong, based on the performance of our most recent classes, our site selection process needed to be significantly altered. We've we've Contraction of we have. we've have made those changes and now have a team and selection process in place that we believe will lead to new restaurant performance on a par with our pre- pre- word element [L.], before (in time or space). pre- pref. 1. Earlier; before; prior to: prenatal. 2. 2002 classes." Rosenfield and Flax continued, "In addition to significant development changes, we've also invested in management infrastructure to ensure operational excellence for new and existing stores. These initiatives are aimed at improving sales performance and financial results in all underperforming locations while simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics raising the standard for new restaurant development." As a result of a significant sales decline in one of the 2003 restaurants, the Company recorded a non-cash impairment charge of $1.7 million during the fourth quarter of 2003. Non-cash impairment charges for fiscal 2003 totaled $14.7 million, or $0.77 per diluted share, compared to $2.4 million, or $0.13 per diluted share in the prior year. The non-cash impairment charge included 12 restaurants in 2003 compared to two restaurants in 2002 and was in compliance with Statement of Financial Accounting Standards (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 144, "Accounting for the Impairment of Long-Lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. Assets." The Company also recorded a non-cash severance charge of approximately $401,000 during the fourth quarter of 2003 related to the management transition. Additionally, the higher than anticipated 2003 FICA FICA abbr. Federal Insurance Contributions Act Noun 1. FICA - a tax on employees and employers that is used to fund the Social Security system income tax - a personal tax levied on annual income tax tip credits and non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. resulted in an after tax benefit of $2.4 million or $0.12 per diluted share. This benefit was recorded in the fourth quarter and reduced the effective full year tax rate from 33.0% to 15.0%. There was no corresponding tax benefit in the prior year. Rosenfield and Flax concluded, "We continue to analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. our business in great detail and are committed to providing transparent (1) Refers to a change in hardware or software that, after installation, causes no noticeable change in operation. Also known as "feature transparency." Contrast with "seamless integration," which means that an additional component to the system can be added without incurring any disclosure to shareholders. As part of this approach, we are providing restaurant class operating data that illustrates performance. We are especially pleased with our 94 pre-2002 full service stores which represent 81.0% of our overall restaurant base. They are stronger than ever, achieving a 19.9% operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the quarter and a record 20.4% operating margin for the fiscal year. In terms of the 2002 and 2003 classes, we are disappointed with sales and operating margins. However, based on what we see, further impairment charges are not likely and we are making a concerted effort to improve performance at these locations." Average weekly sales for the Company's full service restaurants were $54,495 for the fourth quarter of 2003, compared to $55,106 for the same quarter last year, a 1.1% decrease. For the 2003 fiscal year, average weekly sales for the Company's full service restaurants were $54,896 compared to $55,712 for the prior year, or a 1.5% decrease. Full year average weekly sales for the five 2002 restaurants and three 2003 restaurants impaired See assistive technology. were $31,612 and $30,048, respectively. During the fourth quarter, the Company opened five new restaurants (San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , CA; Lyndhurst Lyndhurst, city (1990 pop. 15,982), Cuyahoga co., NE Ohio; inc. 1917. It is a residential suburb of Cleveland. , OH; Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; , TX; Long Beach, CA and Fairfax Fairfax, city (1990 pop. 19,622), historic seat of Fairfax co., NE Va., a residential suburb of Washington, D.C.; inc. 1892, as a city 1961 (at which time it became independent and no longer included in a county). There is some light manufacturing. , VA.) for a total of 22 restaurants in 2003. As outlined in the third quarter earnings release, management is maintaining its earnings outlook for the 2004 fiscal year of $0.95 to $1.00 per diluted share. Additionally, the Company anticipates first quarter earnings per diluted share to be in the range of $0.17 to $0.19. California Pizza Kitchen, Inc., founded in 1985, is a leading casual dining chain in the premium pizza pizza Food of Neapolitan origin. It consists of a flattened disk of bread dough, typically topped with olive oil, tomatoes, and mozzarella cheese, baked quickly, and served hot. Pizza is eaten throughout Italy, with regional variations in toppings. Pizza came to the U.S. segment. The Company's full service restaurants feature an imaginative line of hearth-baked pizzas, including the original BBQ BBQ barbecue Chicken Pizza, and a broad selection of distinctive pastas, salads, soups A list of different types of soup/stew. Broths (stocks, bouillons) Strained liquid from cooking things in water Consommés Clarified meat or fish broth
California Pizza Kitchen can be found on the World Wide Web at www.cpk.com. This press release includes certain "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Investors are cautioned that forward-looking statements are not guarantees of future performance and, therefore, undue reliance should not be placed on them. Forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Our actual results may 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 the execution of our expansion strategy, the continued availability of qualified employees, the maintenance of reasonable food and supply costs 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 Year Ended
December 28, December 29, December 28, December 29,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Statement of Income
Revenues:
Restaurant sales $94,879 $80,815 $356,260 $303,427
Franchise and
other revenues 1,190 721 3,627 2,895
------------ ------------ ------------ ------------
Total revenues 96,069 81,536 359,887 306,322
Restaurant costs
and expenses:
Cost of sales 23,884 19,930 87,806 73,756
Labor 34,650 29,589 129,702 110,151
Direct operating
and occupancy 20,084 16,379 73,949 60,652
------------ ------------ ------------ ------------
Total
restaurant
operating
costs 78,618 65,898 291,457 244,559
General and
administrative 5,755 4,345 21,488 18,161
Depreciation and
amortization 4,491 4,014 17,578 14,971
Pre-opening 970 1,089 4,019 3,355
Severance charge 401 - 1,221 -
Loss on
impairment of
property and
equipment and
store closures 1,746 - 14,725 2,380
------------ ------------ ------------ ------------
Operating income 4,088 6,190 9,399 22,896
Other income
(expense):
Interest income 73 90 317 368
Equity in net
loss of
unconsolidated
joint venture (74) - (349) -
------------ ------------ ------------ ------------
Total other
income
(expense) (1) 90 (32) 368
------------ ------------ ------------ ------------
Income before
income tax
benefit/(provision) 4,087 6,280 9,367 23,264
Income tax
benefit/(provision) 329 (2,035) (1,411) (7,934)
------------ ------------ ------------ ------------
Net income $4,416 $4,245 $7,956 $15,330
============ ============ ============ ============
Net income per
common share:
Basic $0.23 $0.23 $0.42 $0.82
Diluted $0.23 $0.22 $0.42 $0.81
Shares used in
computing net
income per common
share (in thousands):
Basic 18,931 18,699 18,867 18,585
Diluted 19,019 19,009 19,027 18,871
Operating Data
System-wide
restaurants open
at end of period 168 149 168 149
Company-owned
restaurants open
at end of period 137 117 137 117
Average weekly
company-owned
full service
restaurant sales $54,495 $55,106 $54,896 $55,712
Comparable
company-owned
restaurant sales
increase 2.8% 4.2% 2.5% 4.3%
Quarter Ended Year Ended
December 28, December 29, December 28, December 29,
2003 2002 2003 2002
------------ ------------ ------------ -------------
Statement of
Income
Percentages (1)
Revenues:
Restaurant sales 98.8% 99.1% 99.0% 99.1%
Franchise and
other revenues 1.2 0.9 1.0 0.9
------------ ------------ ------------ -------------
Total revenues 100.0 100.0 100.0 100.0
Restaurant costs
and expenses:
Cost of sales 25.2 24.7 24.6 24.3
Labor 36.5 36.6 36.4 36.3
Direct operating
and occupancy 21.2 20.3 20.8 20.0
------------ ------------ ------------ -------------
Total
restaurant
operating
costs 82.9 81.6 81.8 80.6
General and
administrative 6.0 5.3 6.0 5.9
Depreciation and
amortization 4.7 4.9 4.9 4.9
Pre-opening 1.0 1.3 1.1 1.1
Severance charge 0.4 - 0.3 -
Loss on
impairment of
property and
equipment and
store closures 1.8 - 4.1 0.8
------------ ------------ ------------ -------------
Operating income 4.3 7.6 2.6 7.5
Other income
(expense):
Interest income 0.1 0.1 0.1 0.1
Equity in net
loss of
unconsolidated
joint venture (0.1) - (0.1) -
------------ ------------ ------------ -------------
Total other
income
(expense) - 0.1 - 0.1
------------ ------------ ------------ -------------
Income before
income tax
benefit/(provision) 4.3 7.7 2.6 7.6
Income tax
benefit/(provision) 0.3 (2.5) (0.4) (2.6)
------------ ------------ ------------ -------------
Net income 4.6% 5.2% 2.2% 5.0%
============ ============ ============ =============
Selected Consolidated Balance Sheet Information
(Dollars in thousands)
Selected Consolidated Balance Sheet December 28, December 29,
Information 2003 2002
------------ ------------
Cash and marketable securities $34,781 $31,261
Total assets 185,585 168,445
Total debt, including current portion - -
Shareholders' equity 146,115 134,121
(1) Percentages are expressed as a percentage of total revenues,
except for restaurant costs and expenses, which are expressed as a
percentage of restaurant sales.
California Pizza Kitchen, Inc.
Units Summary
Total Units at Total Units at
Fourth quarter 2003 Sept 28, 2003 Opened Closed Dec 28, 2003
-------------------------- -------------- ------ ------ --------------
Company owned domestic 134 5 2 137
Franchised domestic 22 0 0 22
Franchised international 8 1 0 9
-------------------------------------------
Total 164 6 2 168
-------------------------------------------
Total Units at Total Units at
Fiscal year 2003 Dec 29, 2002 Opened Closed Dec 28, 2003
-------------------------- -------------- ------ ------ --------------
Company owned domestic 117 22 2 137
Franchised domestic 24 0 2 22
Franchised international 8 2 1 9
-------------------------------------------
Total 149 24 5 168
-------------------------------------------
California Pizza Kitchen, Inc.
Supplemental Information
(,000)
Full Full Service
Weekly (,000) Service Restaurant
# of Sales Net Restaurant Cashflow
Fourth quarter 2003 Stores Average Sales Cashflow %(1)
------- ------- -------- ---------- -----------
Pre-2002 94 58,341 71,818 14,278 19.9%
Prior year 96 55,641 69,440 13,613 19.6%
Year over year change 4.9% 3.4% 4.9% 30bps
Class of 2002 18 47,148 11,033 1,334 12.1%
Prior year 18 51,783 10,416 1,185 11.4%
Year over year change -9.0% 5.9% 12.6% 70bps
Class of 2003 22 42,805 11,038 560 5.1%
Prior year - - - -
Year over year change - - - -
Total full service 134 54,496 93,888 16,172 17.2%
Prior year 114 55,106 79,856 14,798 18.5%
Year over year change -1.1% 17.6% 9.3% -130 bps
(,000)
Full Full Service
Weekly (,000) Service Restaurant
# of Sales Net Restaurant Cashflow
Fiscal year 2003 Stores Average Sales Cashflow %(1)
------- ------- -------- ---------- -----------
Pre-2002 94 57,644 286,780 58,520 20.4%
Prior year 96 55,798 278,541 55,930 20.1%
Year over year change 3.3% 3.0% 4.6% 30bps
Class of 2002 18 46,696 43,707 5,053 11.6%
Prior year 18 54,627 21,602 2,744 12.7%
Year over year change -14.5% 102.3% 84.2% -110 bps
Class of 2003 22 43,274 22,330 1,053 4.7%
Prior year - - - -
Year over year change - - - -
Total full service 134 54,896 352,817 64,626 18.3%
Prior year 114 55,712 300,143 58,674 19.5%
Year over year change -1.5% 17.5% 10.1% -120 bps
(1) Cashflow percentages are expressed as a percentage of Net Sales
The following reconciliation of net income is provided to assist the reader with understanding the financial impact of the non-cash impairment, severance and tax adjustments during the quarter and year (unaudited, in thousands, except per share data):
Quarter Ended Year Ended
December 28, December 29, December 28, December 29,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net income as
reported $4,416 $4,245 $7,956 $15,330
Tax rate
adjustment for
net income as
reported (1) (1,678) - (1,680) 2,380
Severance charge 401 - 1,221 -
Loss on
impairment of
property and
equipment and
store closures 1,746 - 14,725 2,380
Tax benefit
related to
severance and
impairment
charges (2) (709) - (5,262) (809)
------------ ------------- ------------ ------------
Net income,
excluding
severance,
impairment and
tax benefit $4,176 $4,245 $16,960 $16,901
============ ============= ============ ============
Basic net income per
common share:
Net income $0.23 $0.23 $0.42 $0.82
Tax rate adjustment
for net income as
reported (1) (0.09) (0.09)
Severance charge 0.02 - 0.07 -
Loss on impairment
of property and
equipment and
store closures 0.09 - 0.78 0.13
Tax benefit (2) (0.03) - (0.28) (0.04)
------------ ------------- ------------ ------------
Basic net income,
excluding
severance,
impairment and
tax benefit per
common share $0.22 $0.23 $0.90 $0.91
============ ============= ============ ============
Diluted net income
per common share:
Net income $0.23 $0.22 $0.42 $0.81
Tax rate adjustment
for net income as
reported (1) (0.09) (0.09)
Severance charge 0.02 - 0.06 -
Loss on impairment
of property and
equipment and
store closures 0.09 - 0.77 0.13
Tax benefit (2) (0.03) - (0.27) (0.04)
------------ ------------- ------------ ------------
Diluted net income,
excluding
severance,
impairment and
tax benefit per
common share $0.22 $0.22 $0.89 $0.90
============ ============= ============ ============
(1) Represents the effect of a normalized 33.0% tax rate on net income
as reported
(2) Represents the effect of a 33.0% normalized rate for severance and
impairment charges
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