California Pizza Kitchen

UVA-S-F-1553.
xls
This spreadsheet supports STUDENT analysis of the case,

"California Pizza Kitchen" (UVA-F-1553)
March 31, 2008

Copyright (C) 2008, by the University of Virginia Darden School Foundation.
Exhibit 2
California Pizza Kitchen, Inc.
Consolidated Balance Sheet (in thousands)
1/1/2006
Assets
Current assets
Cash and cash equivalents
Investments in marketable securities
Other receivables
Inventories
Current deferred tax asset, net
Prepaid income tax
Other prepaid expenses & other current assets
Total current assets
Property and equipment, net
Noncurrent deferred tax asset, net
Goodwill and other intangibles
Other assets
Total assets
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable
Accrued compensation and benefits
Accrued rent
Deferred rent credits
Other accrued liabilities
Accrued income tax
Total current liabilities
Other liabilities
Deferred rent credits, net of current portion
Shareholders' equity:
Common stock
Additional paid-in-capital
Accumulated deficit
Accumulated comprehensive loss
Total shareholders' equity
Total liabilities & Shareholders' Equity
Sources of data: Company Annual and Quarterly Reports.
11,272 $
11,408
4,109
3,776
8,437
1,428
5,492
45,922
As of
12/31/2006
8,187 $
7,876
4,745
11,721
5,388
37,917
7/1/2007
7,178
10,709
4,596
11,834
8,769
6,444
49,530
213,408
4,513
5,967
4,444
274,254 $
255,382
5,867
5,825
5,522
310,513 $
271,867
6,328
5,754
6,300
339,779
7,054 $
13,068
13,253
4,056
9,294
46,725
15,044 $
15,042
14,532
4,494
13,275
3,614
66,001
14,115
15,572
14,979
5,135
13,980
9,012
72,793
5,383
24,810
8,683
27,486
8,662
32,436
197
231,159
(34,013)
(7)
197,336
193
221,163
(13,013)
291
228,647
(3,050)
208,343
225,888
274,254 $
310,513 $
339,779
Exhibit 3
Consolidated Income Statements (in thousands, except per-share data)
2006
Three Months Ended

7/2/2006
7/1/2007
$ 356,260 $ 418,799 $ 474,738 $ 547,968

3,627
3,653
4,861
6,633
359,887
422,452
479,599
554,601
$ 134,604 $ 156,592
1,564
1,989
136,168
158,581
2003
Restaurant sales
Franchise and other revenues
Total revenues
Food, beverage and paper supplies
Labor
Direct operating and occupancy
Cost of Sales
Fiscal Year(1)
2004
2005
87,806
129,702
70,273
287,781
103,813
152,949
83,054
339,816
118,480
173,751
92,827
385,058
135,848
199,744
108,558
444,150
33,090
49,272
26,214
108,576
38,426
56,912
30,773
126,111
General and administrative

Depreciation and amortization
Pre-opening costs
21,488
20,714
4,147
28,794
23,975
737
36,298
25,440
4,051
43,320
29,489
6,964
11,035
7,070
800
12,206
9,022
852
Severance charges(2)
Loss on impairment of PP&E
Store closure costs
Legal settlement reserve
Operating income
1,221
18,984
5,552
2,700
1,333
25,097
1,160
152
600
26,840
317
571
(349)
(32)
(143)
428
Interest income
Other income
Equity in loss of unconsolidated JV
Total other income (expense)
Income before income tax provision
Income tax provision (benefit)
Net income
Net income per common share:
Basic
Diluted
739
1,105
(22)
1,822
707
29,971
8,687
9,622
718
287
91
718
5,520
(82)
5,602 $
25,525
7,709
17,816 $
28,662
9,172
19,490 $
30,689
9,689
21,000
$
$
0.30 $
0.29 $
0.93 $
0.92 $
1.01 $
0.99 $
1.08
1.06
Selected Operating Data:

Restaurants open at end of period
168
171
188
Company-owned open at end of period(3)
137
141
157
54,896 $
57,509 $
62,383 $
3.4%
8.0%
7.5%
Avg weekly full service rest. sales
(3)
18-mo. comparable rest. sales growth
(3)
768
287
9,713
3,393
6,320
$
$
0.20 $
0.20 $
0.22
0.21
205
193
213
176
162
182
65,406
5.9%
65,427 $
4.8%
Notes:
(1)
For the Years Ended December 31, 2006, January 1, 2006 and January 2, 2005, December 28, 2003.
(2)
Severance charges represent payments to former President/CEO and former SVP/Senior Development Officer under terms of their separation agreements.
(3)
Data for company-owned restaurants.
Sources of data: Company Annual and Quarterly Reports and quarterly company earnings conference calls.
91
8,974
2,961
6,013 $
68,535
5.4%
Exhibit 4
Selected Historical Comparable Store Sales (Calendarized)
CY06
CY07
CY03
CY04
CY05
Q1
Q2
Q3
Q4
Q1
California Pizza Kitchen
3.4%
9.3%
6.4%
4.8%
5.9%
5.6%
6.9%
4.7%
Applebee's International, Inc.
4.1%
4.8%
1.8%
2.6%
-1.8%
-2.3%
-1.1%
-4.0%
BJ's Restaurants, Inc.
3.3%
4.0%
4.6%
6.8%
5.9%
5.3%
5.5%
6.9%
Brinker International(1)
2.1%
1.9%
3.2%
2.7%
-2.0%
-2.1%
-2.1%
-4.4%
The Cheesecake Factory, Inc.
0.7%
3.9%
1.7%
-1.3%
-0.8%
-1.6%
0.8%
0.4%
Chipotle Mexican Grill, Inc.
24.4%
13.3%
10.2%
19.7% 14.5%
11.6%
10.1%
8.3%
Darden Restaurants, Inc. -- Red Lobster
0.0%
-3.9%
4.2%
1.6%
9.4%
-2.1%
0.7%
4.6%
Darden Restaurants, Inc. -- Olive Garden
2.2%
4.7%
8.6%
5.7%
2.5%
2.9%
2.9%
1.0%
McCormick & Schmick's Seafood Restaurants, Inc.
1.1%
3.8%
3.0%
4.1%
2.8%
2.9%
2.0%
2.8%
Panera Bread Company
0.2%
2.7%
7.8%
9.0%
3.2%
2.8%
2.0%
0.0%
P.F. Chang's China Bistro
5.1%
3.0%
1.2%
1.3%
-1.0%
-0.5%
-0.9%
-2.5%
RARE -- Longhorn Steakhouse
4.6%
5.0%
2.8%
3.7%
-0.4%
-0.3%
1.5%
-1.0%
Red Robin Gourmet Burgers
4.1%
7.5%
3.8%
4.8%
3.3%
0.8%
0.2%
-0.5%
Ruth's Chris Steak House, Inc.
1.4%
11.6%
10.4%
6.8%
6.0%
4.3%
7.4%
1.9%
Sonic Corporation
1.6%
7.0%
5.4%
5.5%
4.3%
4.0%
3.4%
2.0%
Texas Roadhouse, Inc.
3.5%
7.6%
5.6%
6.4%
1.2%
2.3%
3.3%
0.9%
Note:
(1)
Brinker's comparable store sales is a blended rate for its various brands.
Source of data: KeyBanc Capital Markets equity research.
Exhibit 5
Selected Forecasts for California Pizza Kitchen
Firm
Oppenheimer and Co. Inc.
CIBC World Markets
KeyBanc Capital Markets
RBC Capital Markets
Morgan Keegan & Co., Inc.
MKM Partners
Date of Price
2007E
Report Target Revenues
EPS
4/9/2007 $ 40 $
4/12/2007
37
5/11/2007
NA
5/11/2007
37
5/11/2007
NA
5/11/2007
39
Source of data: Selected firms' equity research.
652.9 $ 1.33
647.5
1.29
NA
1.28
650.7
1.31
644.2
1.33
647.5
1.34
2008E
Revenues EPS
NA
755.1
NA
753.1
742.1
754.3
NA
1.57
1.55
1.59
1.58
1.69
2009E
Revenues EPS
NA
NA
NA
NA
NA
NA
878.2 1.90
NA
NA
NA
NA
Exhibit 6
Stock Price Comparison
Value of $100 invested in CPK and S&P SmallCap 600 Restaurants Index
140
130
120
110
100
90
80
CPK
S&P SmallCap 600 Restaurants
Date
CPK S&P SmallCap 600 Restaurants
3-Jul-06
100
100
5-Jul-06
99
99
6-Jul-06
97
98
7-Jul-06
96
97
10-Jul-06
101
98
11-Jul-06
100
97
12-Jul-06
103
95
13-Jul-06
98
92
14-Jul-06
97
92
17-Jul-06
98
92
18-Jul-06
96
92
19-Jul-06
99
94
20-Jul-06
94
91
21-Jul-06
95
90
24-Jul-06
97
93
25-Jul-06
98
95
26-Jul-06
96
92
27-Jul-06
95
90
28-Jul-06
95
91
31-Jul-06
97
91
1-Aug-06
94
90
2-Aug-06
93
91
3-Aug-06
95
92
4-Aug-06
95
93
7-Aug-06
96
92
8-Aug-06
100
92
9-Aug-06
95
90
Exhibit 7
Comparative Restaurant Financial Data, 2006 Fiscal Year (in millions, except per-share data)
Fiscal Year End
7/2/2007
Month Share Price
Net Profit
Earnings
Dividends
Book Value
Margin
Margin
Per Share
Per Share
Per Share
Beta
Dec. $
22.10
555
10.7%
3.8% $
0.71
7.20
0.85
Dec.
24.28
1,338
15.9%
6.5%
1.17
0.20
6.49
0.80
Dec.
20.05
239
9.6%
4.1%
0.41
0.00
7.78
1.05
June
29.37
4,151
12.0%
4.7%
1.49
0.20
8.59
0.90
Buffalo Wild Wings, Incorporated
Dec.
41.78
278
13.3%
5.8%
0.93
0.00
6.61
1.10
Dec.
24.57
1,315
12.2%
6.2%
1.02
0.00
9.09
1.00
Dec.
86.00
823
13.0%
5.0%
1.28
0.00
14.56
NA
Darden Restaurants, Inc.(2)
May
44.14
5,721
13.2%
5.9%
2.16
0.40
8.37
1.00
Frisch's Restaurants, Inc.
May
30.54
291
31.6%
3.1%
1.78
0.44
19.84
0.60
McCormick & Schmick's
Dec.
25.66
308
9.7%
4.3%
0.92
0.00
11.20
1.10
Dec.
46.02
829
16.3%
7.2%
1.87
0.00
12.53
1.25
Dec.
35.37
938
10.5%
3.6%
1.24
0.00
11.41
1.10
RARE Hospitality International Inc.(3)
Dec.
26.76
987
11.6%
5.1%
1.45
0.00
11.17
0.57
Dec.
40.19
619
13.7%
4.9%
1.82
0.00
14.68
1.05
Dec.
16.80
272
15.6%
8.7%
1.01
0.00
2.93
NA
Sonic Corporation
Aug.
22.00
693
24.9%
11.4%
0.88
0.00
4.66
0.90
Dec.
12.81
597
12.5%
5.7%
0.44
0.00
4.30
0.90
Current
Current
Total
Shr.
Debt/
Interest
T. Capital
Assets
Liabilities
Debt
Equity
Capital
Coverage
Turnover
Capital Equity
66 $
0 $
0.00
Return On
208
0.0%
NMF
2.7
10.1% 10.1%
187
175
487
26.5%
11.7
2.0
14.0% 18.0%
96
36
203
0.0%
NMF
1.2
242
497
502
1,076
31.8%
14.4
2.6
13.2% 18.0%
Buffalo Wild Wings, Incorporated
38
105
EBITDA
Revenue
4.9%
4.9%
75
26
116
0.0%
NMF
2.4
14.0% 14.0%
203
163
712
0.0%
NMF
1.8
11.4% 11.4%
179
61
474
0.0%
NMF
1.7
Darden Restaurants, Inc.(2)
378
1,026
645
1,230
34.4%
10.9
3.1
Frisch's Restaurants, Inc.
12
31
43
101
30.1%
5.9
2.0
7.9%
9.1%
McCormick & Schmick's
30
40
160
0.2%
NMF
1.9
8.3%
8.3%
128
110
398
0.0%
NMF
2.1
15.1% 15.1%

8.8%
8.7%
20.6% 27.5%
65
104
19
290
6.2%
NMF
3.0
11.1% 11.5%
125
134
166
360
31.6%
29.2
1.9
9.8% 13.9%
29
70
114
244
31.9%
7.7
1.7
9.3% 12.5%
26
59
68
###
50.0%
12.8
2.0
18.6% 34.9%
Sonic Corporation
43
78
159
392
28.9%
15.0
1.3
15.3% 20.1%
53
78
36
319
10.2%
19.9
1.7
9.7% 10.7%
RARE Hospitality International Inc.(3)
Notes:
(1)
Brinker's restaurant brands include Chili's Grill & Bar, Romano's Macaroni Grill, On The Border and Maggiano's.
(2)
Darden's restaurant brands include Red Lobster and The Olive Garden.
(3)
RARE's restaurant brands include LongHorn Steakhouse, The Capital Grille and Bugaboo Creek Steak House.
Sources of data: Value Line Investment Survey, 2007; Standard & Poor's Stock Report, 2007 and company Annual Reports and websites.
Exhibit 8
Interest Rates and Yields
2000
2001
2002
2003
2004
2005
2006: Jan.
Feb.
Mar.
Apr.
May.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
2007: Jan.
Feb.
Mar.
Apr.
May.
June
U.S. Treasury Securities

Bills
Notes & Bonds
3-month
6-month
3-year
10-year
5.85%
5.92%
6.22%
6.03%
3.45%
3.39%
4.09%
5.02%
1.62%
1.69%
3.10%
4.61%
1.02%
1.06%
2.10%
4.01%
1.38%
1.58%
2.78%
4.27%
3.16%
3.40%
3.93%
4.29%
4.20%
4.41%
4.51%
4.59%
4.72%
4.79%
4.96%
4.98%
4.82%
4.89%
4.95%
4.85%
4.96%
5.02%
4.97%
4.88%
4.77%
4.63%
4.30%
4.51%
4.61%
4.72%
4.81%
4.95%
5.09%
4.99%
4.90%
4.91%
4.96%
4.88%
4.94%
4.97%
4.90%
4.87%
4.80%
4.77%
4.35%
4.64%
4.74%
4.89%
4.97%
5.09%
5.07%
4.85%
4.69%
4.72%
4.64%
4.58%
4.79%
4.75%
4.51%
4.60%
4.69%
5.00%
4.42%
4.57%
4.72%
4.99%
5.11%
5.11%
5.09%
4.88%
4.72%
4.73%
4.60%
4.56%
4.76%
4.72%
4.56%
4.69%
4.75%
5.10%
Sources of data: Economic Report of the President and Fannie Mae website.
30-year
5.94%
5.49%
......
......
......
......
......
4.54%
4.73%
5.06%
5.20%
5.15%
5.13%
5.00%
4.85%
4.85%
4.69%
4.68%
4.85%
4.82%
4.72%
4.87%
4.90%
5.20%
Corporate bonds (Moody's)

Aaa 3
Baa
7.62%
8.36%
7.08%
7.95%
6.49%
7.80%
5.67%
6.77%
5.63%
6.39%
5.24%
6.06%
5.29%
5.35%
5.53%
5.84%
5.95%
5.89%
5.85%
5.68%
5.51%
5.51%
5.33%
5.32%
5.40%
5.39%
5.30%
5.47%
5.47%
5.79%
6.24%
6.27%
6.41%
6.68%
6.75%
6.78%
6.76%
6.59%
6.43%
6.42%
6.20%
6.22%
6.34%
6.28%
6.27%
6.39%
6.39%
6.70%
Average
Prime
Lending
9.23%
6.91%
4.67%
4.12%
4.34%
6.19%
Average
LIBOR
3-month
6.55%
3.63%
1.79%
1.22%
1.67%
3.63%
7.38%
7.50%
7.63%
7.75%
7.88%
7.13%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
4.68%
4.82%
4.99%
5.15%
5.23%
5.51%
5.49%
5.40%
5.37%
5.37%
5.37%
5.36%
5.36%
5.36%
5.35%
5.36%
5.36%
5.36%
Exhibit 9
CALIFORNIA PIZZA KITCHEN
Pro Forma Tax Shield Effect of Recapitalization Scenarios
ollars in thousands, except share data; figures based on end of June 2007)
Debt/Total Capital
10%
20%
30%
Current Share Price
Actual
22.1
Interest rate (1)

Tax rate
Risk Free
MRP
Growth
6.16%
32.5%
4.7%
5.0%
4.70%
6.16%
32.5%
4.7%
5.0%
4.70%
6.16%
32.5%
4.7%
5.0%
4.70%
6.16%
32.5%
4.7%
5.0%
4.70%
Earnings before income taxes and interest(2)
30,054
30,054
30,054
30,054
Interest expense
Earnings before taxes
Income taxes
Net income
0
30,054
9,755
20,299
1,391
28,663
9,303
19,359
2,783
27,271
8,852
18,419
4,174
25,880
8,400
17,480
Book value:
Debt
Equity
0
225,888
22,589
203,299
45,178
180,710
67,766
158,122
Total capital
225,888
225,888
225,888
225,888
Debt(3)
22,589
45,178
67,766
Equity(4)
Market value of capital
643,773
643,773
628,516
651,105
613,259
658,437
598,002
665,769
Market value:

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UVA-S-F-1553.

This spreadsheet supports STUDENT analysis of the case,

March 31, 2008

Three Months Ended

$ 356,260 $ 418,799 $ 474,738 $ 547,968

General and administrative

Selected Operating Data:

Company-owned open at end of period(3)

Avg weekly full service rest. sales

18-mo. comparable rest. sales growth

Data for company-owned restaurants.