California Pizza Kitchen Inc. (CPKI, Financial) filed Quarterly Report for the period ended 2011-04-03.
California Pizza Kitchen Inc. has a market cap of $391.1 million; its shares were traded at around $15.91 with a P/E ratio of 23.8 and P/S ratio of 0.6. California Pizza Kitchen Inc. had an annual average earning growth of 6.3% over the past 10 years.
Direct operating and occupancy. Direct operating and occupancy costs decreased $0.1 million, or 0.2%, to $35.0 million in the first quarter of 2011 from $35.1 million in the first quarter of 2010. Direct operating and occupancy costs as a percentage of restaurant sales were 22.8% in the first quarter of 2011 compared to 22.7% in the first quarter of 2010. Excluding supplemental gift card revenue, direct operating and occupancy costs as a percentage of restaurant sales were 22.9% in each of the first quarter of 2011 and the first quarter of 2010. Improvement in utilities expense was the primary driver of the decrease in direct operating and occupancy costs, but was offset by an increase in expenses associated with our take-out call center, increased delivery charges and the effects of the delveraging of costs against lower sales. Deleveraging occurs when sales decline and fixed and semi-variable costs have a relatively larger impact as a percentage of revenues.
Depreciation and amortization. Depreciation and amortization decreased $0.1 million, or 1.2%, to $9.0 million in the first quarter of 2011 from $9.1 million in the first quarter of 2010. The decrease from prior year was primarily the result of fewer assets in the depreciable base as a result of the impairment of 10 stores in the third quarter of 2010, offset by depreciation incurred for the addition of nine new stores in 2010.
Investing activities. We use working capital and borrowings from our line of credit to fund the development and construction of new restaurants and remodel our existing restaurants. Net cash used in investing activities for the first quarter of 2011 was $4.9 million compared to $6.1 million for the first quarter of 2010 resulting from $1.9 million incurred on new restaurants and $3.0 million incurred on capitalized maintenance, remodeling and other costs. The decrease compared to the prior year was primarily the result of fewer restaurants undergoing remodel and lower home office maintenance expenditures.
Borrowings under the Facility bear interest at either the London Interbank Offered Rate (LIBOR) or the prime rate, at the Companys option, plus a spread ranging from 100 to 150 basis points for LIBOR loans or zero to 25 basis points for prime rate loans. The Company also pays a commitment fee on the unused facility ranging from 20 to 30 basis points per annum. Both the interest rate and the commitment fee depend on the lease adjusted leverage ratio as defined in the terms of the Facility. The Facility also includes a $15.0 million sublimit for standby letters of credit. As of April 3, 2011, the Company had no outstanding borrowings under the Facility. Availability under the Facility is reduced by outstanding letters of credit totaling $6.6 million as of April 3, 2011, which are used to support the Companys self-insurance programs. Available borrowings under the Facility were $143.4 million as of April 3, 2011. The Facility matures in May 2013. As of April 3, 2011, the Company was in compliance with all debt covenants.
As of April 3, 2011, the Company had cash and cash equivalents of $17.1 million managed by third-party financial institutions. At any point in time during the first quarter of 2011, the Company also had a range of approximately $5.0 million to $15.0 million in its operating accounts. These balances exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits. While the Company monitors the cash balances in its operating accounts on a daily basis and adjusts the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts. However, the Company can provide no assurances that access to its invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets.
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California Pizza Kitchen Inc. has a market cap of $391.1 million; its shares were traded at around $15.91 with a P/E ratio of 23.8 and P/S ratio of 0.6. California Pizza Kitchen Inc. had an annual average earning growth of 6.3% over the past 10 years.
Highlight of Business Operations:
Total Revenues. Total revenues decreased $0.7 million, or 0.5%, to $156.0 million in the first quarter of 2011 from $156.7 million in the first quarter of 2010 as the result of a $0.9 million decrease in restaurant sales, partially offset by a $0.2 million increase in domestic and international franchise revenues. The decrease in restaurant sales was primarily attributable to the $0.7 million decrease in supplemental gift card revenue which resulted from the cumulative adjustment recorded in the first quarter of 2010 when the Company first began to recognize such revenue. The restaurant sales decline was also related to the 2.1% decrease in full-service comparable restaurant sales. Domestic franchise revenue increased 13.1% and international franchise revenue increased 9.7% as the result of stronger comparable sales and additional revenue from new stores opened in 2010.Direct operating and occupancy. Direct operating and occupancy costs decreased $0.1 million, or 0.2%, to $35.0 million in the first quarter of 2011 from $35.1 million in the first quarter of 2010. Direct operating and occupancy costs as a percentage of restaurant sales were 22.8% in the first quarter of 2011 compared to 22.7% in the first quarter of 2010. Excluding supplemental gift card revenue, direct operating and occupancy costs as a percentage of restaurant sales were 22.9% in each of the first quarter of 2011 and the first quarter of 2010. Improvement in utilities expense was the primary driver of the decrease in direct operating and occupancy costs, but was offset by an increase in expenses associated with our take-out call center, increased delivery charges and the effects of the delveraging of costs against lower sales. Deleveraging occurs when sales decline and fixed and semi-variable costs have a relatively larger impact as a percentage of revenues.
Depreciation and amortization. Depreciation and amortization decreased $0.1 million, or 1.2%, to $9.0 million in the first quarter of 2011 from $9.1 million in the first quarter of 2010. The decrease from prior year was primarily the result of fewer assets in the depreciable base as a result of the impairment of 10 stores in the third quarter of 2010, offset by depreciation incurred for the addition of nine new stores in 2010.
Investing activities. We use working capital and borrowings from our line of credit to fund the development and construction of new restaurants and remodel our existing restaurants. Net cash used in investing activities for the first quarter of 2011 was $4.9 million compared to $6.1 million for the first quarter of 2010 resulting from $1.9 million incurred on new restaurants and $3.0 million incurred on capitalized maintenance, remodeling and other costs. The decrease compared to the prior year was primarily the result of fewer restaurants undergoing remodel and lower home office maintenance expenditures.
Borrowings under the Facility bear interest at either the London Interbank Offered Rate (LIBOR) or the prime rate, at the Companys option, plus a spread ranging from 100 to 150 basis points for LIBOR loans or zero to 25 basis points for prime rate loans. The Company also pays a commitment fee on the unused facility ranging from 20 to 30 basis points per annum. Both the interest rate and the commitment fee depend on the lease adjusted leverage ratio as defined in the terms of the Facility. The Facility also includes a $15.0 million sublimit for standby letters of credit. As of April 3, 2011, the Company had no outstanding borrowings under the Facility. Availability under the Facility is reduced by outstanding letters of credit totaling $6.6 million as of April 3, 2011, which are used to support the Companys self-insurance programs. Available borrowings under the Facility were $143.4 million as of April 3, 2011. The Facility matures in May 2013. As of April 3, 2011, the Company was in compliance with all debt covenants.
As of April 3, 2011, the Company had cash and cash equivalents of $17.1 million managed by third-party financial institutions. At any point in time during the first quarter of 2011, the Company also had a range of approximately $5.0 million to $15.0 million in its operating accounts. These balances exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits. While the Company monitors the cash balances in its operating accounts on a daily basis and adjusts the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts. However, the Company can provide no assurances that access to its invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets.
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