California Pizza Kitchen Announces Financial Results For The Fourth Qu

California Pizza Kitchen Announces Financial Results For The Fourth Quarter And Fiscal Year Ended January 2, 2005 And Reiterates Comfort with 2005 Guidance of $1.11 to $1.13

    Business Editors

    LOS ANGELES--(BUSINESS WIRE)--Feb. 3, 2005--California Pizza Kitchen, Inc. (Nasdaq:CPKI) today reported revenues and earnings for the fourth quarter and fiscal year ended January 2, 2005. Highlights for the fourth quarter of 2004 relative to the same quarter last year were as follows:

--	Total revenues up approximately 19.9% to $115.2 million
--	Comparable store sales increase of 7.7% on an 18 month basis and 6.3% on a 12 month basis
--	Net income of $6.2 million or $0.32 per fully diluted share compared to net income of $4.4 million or $0.23 per fully diluted share in the same quarter last year

    Highlights for the 2004 53-week fiscal year relative to the 2003 52-week fiscal year were as follows:

    -- Total revenues up approximately 17.4% to $422.5 million

    -- Comparable store sales increase of 8.0% on an 18 month basis
    and 6.9% on a 12 month basis

    -- Net income of $17.7 million or $0.92 per fully diluted share
    compared to net income of $8.0 million or $0.42 per fully
    diluted share for the prior period

    -- Net income before legal settlement reserve, accelerated
    depreciation, store closure costs, severance and impairment
    charges of $20.7 million or $1.07 per fully diluted share
    compared to $0.89 in the prior period

    The Company did not record any non-operating charges during the fourth quarter of 2004 compared to the impairment and severance charges of $2.1 million during the fourth quarter of 2003. Fiscal year 2004 included $1.3 million in legal settlement reserve, $1.1 million in accelerated depreciation and $2.7 million in store closure costs compared to $14.7 million and $1.2 million related to impairment and severance charges, respectively, in fiscal year 2003.
    Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, Inc., stated "We ended 2004 on very solid ground, with revenue and earnings exceeding our most recent guidance. Our continued focus on business and operational improvements, together with the introduction of new menu items, enabled us to leverage performance at all levels and has strengthened CPK for the long term."
    Fourth quarter average weekly sales for the Company's 138 full service restaurants increased 7.3% to $58,499 compared to $54,496 for the same quarter last year. Average weekly sales for the three months ended January 2, 2005 for the 18 and 22 restaurants in the Classes of 2002 and 2003, respectively, were $52,060 and $40,801, compared to $47,148 and $42,805 in the fourth quarter of 2003, respectively. Average weekly sales for the three months ended January 2, 2005 for the 4 restaurants in the Class of 2004 was $57,885.
    Rosenfield and Flax concluded, "Our corporate culture has been further invigorated by our alignment of strategic goals, enhanced financial performance-based incentives and increased focus on accountability. This emphasis allowed us to deliver operational momentum and measured improvement throughout 2004, and we fully intend the same discipline to impact our development pipeline and new-restaurant openings as we focus on 2005. We feel confident we have the right team and strategy in place and believe that CPK has never been better positioned in the marketplace."
    During the fourth quarter of 2004 the Company opened two new restaurants in Orem, Utah and Rancho Cucamonga, California and completed a "new prototype remodel" on one existing restaurant.
    The Company also reiterated guidance for 2005 based on the following assumptions:

    -- Restaurant revenue growth of approximately 9.0% to 10.0%

    -- Eighteen month comparable sales growth of approximately 3.5%
    to 4.5%

    -- Eight to ten new units to be opened in the first half of the
    year, with no less than 15 new full service restaurants for
    2005

    -- No less than two new ASAP restaurants in 2005, one opening in
    the second quarter and one in the fourth quarter

    -- Earnings per fully diluted share of $1.11 to $1.13

    For the first quarter of 2005, the Company expects to add a minimum of five new restaurants and remodel one restaurant. The pre-opening costs associated with new restaurant openings are expected to be no less than $1.1 million in the first quarter compared to $64,000 in the same quarter last year. These activities, together with anticipated 18 month comparable sales growth of 5.5% to 6.5%, are expected to result in earnings per fully diluted share in the range of $0.18 to $0.19.
    California Pizza Kitchen, Inc., founded in 1985, is a leading casual dining chain in the premium pizza segment. 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, appetizers, soups and sandwiches. The average guest check is approximately $11.96. The chain operates, licenses or franchises 172 restaurants as of February 3, 2005, of which 142 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 press release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act 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, Inc. 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 Jan. 2, Dec. 28, Jan. 2, Dec. 28, 2005 2003 2005 2003 --------- -------- --------- --------- Statement of Operations Data Revenues: Restaurant sales $114,027 $94,879 $418,799 $356,260 Franchise and other revenues 1,126 1,190 3,653 3,627 --------- -------- --------- --------- Total revenues 115,153 96,069 422,452 359,887

Costs and expenses: Cost of sales 28,572 23,884 103,813 87,806 Labor 40,795 34,650 152,949 129,702 Direct operating and occupancy 23,140 20,084 87,874 73,949 --------- -------- --------- --------- Total restaurant operating costs 92,507 78,618 344,636 291,457

General and administrative 8,195 5,755 28,097 21,488 Depreciation and amortization 5,145 4,491 20,277 17,578 Pre-opening costs 450 970 714 4,019 Severance charge - 401 - 1,221 Loss on impairment of property and equipment - 1,746 - 14,725 Store closure costs - - 2,700 - Legal settlement reserve - - 1,333 -

--------- -------- --------- --------- Operating income 8,856 4,088 24,695 9,399

Other income (expense): Interest income 197 73 571 317 Equity in net loss of unconsolidated joint venture (34) (74) (143) (349) --------- -------- --------- --------- Total other income (expense) 163 (1) 428 (32) --------- -------- --------- ---------

Income before income tax provision 9,019 4,087 25,123 9,367 Income tax provision (benefit) 2,793 (329) 7,396 1,411 --------- -------- --------- --------- Net income $6,226 $4,416 $17,727 $7,956 ========= ======== ========= ========= Net income per common share: Basic $0.32 $0.23 $0.93 $0.42 Diluted $0.32 $0.23 $0.92 $0.42

Shares used in computing net income per common share (in thousands):

Basic 19,168 18,931 19,125 18,867 Diluted 19,435 19,019 19,267 19,027

Operating Data: Restaurants open at end of period 171 168 171 168 Company-owned restaurants open at end of period 141 137 141 137 Average weekly company-owned full service restaurant sales $58,499 $54,496 $57,509 $54,896 12 month comparable company- owned restaurant sales increase 6.3% 2.8% 6.9% 2.5% 18 month comparable company- owned restaurant sales increase 7.7% 4.0% 8.0% 3.4%

Quarter Ended Year Ended Jan. 2, Dec. 28, Jan. 2, Dec.28, 2005 2003 2005 2003 ------ ------ ------ ------ Statement of Operations Percentages (1) Revenues: Restaurant sales 99.0 % 98.8 % 99.1 % 99.0 % Franchise and other revenues 1.0 1.2 0.9 1.0 ------ ------ ------ ------ Total revenues 100.0 100.0 100.0 100.0

Costs and expenses: Cost of sales 25.1 25.2 24.8 24.6 Labor 35.8 36.5 36.5 36.4 Direct operating and occupancy 20.3 21.2 21.0 20.8 ------ ------ ------ ------ Total restaurant operating costs 81.1 82.9 82.3 81.8

General and administrative 7.1 6.0 6.7 6.0 Depreciation and amortization 4.5 4.7 4.8 4.9 Pre-opening costs 0.4 1.0 0.2 1.1 Severance charge - 0.4 - 0.3 Loss on impairment of property and equipment - 1.8 - 4.1 Store closure costs - - 0.6 - Legal settlement reserve - - 0.3 -

------ ------ ------ ------ Operating income 7.7 4.3 5.8 2.6

Other income (expense): Interest income 0.2 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 provision 7.8 4.3 5.9 2.6 Income tax provision (benefit) 2.4 (0.3) 1.8 0.4 ------ ------ ------ ------ Net income 5.4 % 4.6 % 4.2 % 2.2 % ====== ====== ====== ======

(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.

Selected Consolidated Balance Sheet Information (Dollars in thousands)

Selected Consolidated Balance Sheet Information January 2, December 28, 2005 2003 --------- ----------

Cash and cash equivalents $17,719 $15,877 Marketable securities 26,415 18,904 Total assets 211,489 185,585 Shareholders' equity 168,850 146,113

California Pizza Kitchen, Inc. Units Summary

Total Units at Total Units at Third Quarter 2004 Sep 26, 2004 Opened Closed Jan. 2, 2005 ---------------------------------------- ------ ------ ------------ Company owned full service domestic 136 2 1(a) 137 Company owned ASAP domestic 4 - - 4 Franchised domestic 20 - - 20 Franchised international 9 1 - 10 -------------- ----- ------ ------------- Total 169 3 1 171 -------------- ----- ------ -------------

(a) Closed last day of fiscal year, January 2, 2005

To aid in a full understanding of our performance, we provide full service restaurant class operating data for the 94 stores opened prior to 2002 (Pre-2002), the 18 stores opened in 2002 (Class of 2002), the 22 stores opened in 2003 (Class of 2003) and the four stores opened in 2004 (Class of 2004).

California Pizza Kitchen, Inc. Supplemental Information (,000) Weekly (,000) Restaurant Restaurant Fourth Quarter # of Sales Restaurant Operating Operating 2004 Stores Average Sales Margin (1) Margin % (2) ---------------------------------------------------------------------

Pre-2002 Q4, 2004 94 63,917 83,741 17,778 21.2% Q4, 2003 94 58,341 71,818 14,278 19.9% Year over year change 9.6% 16.6% 24.5% 130 bps Q3, 2004 94 64,731 78,436 15,864 20.2%

Class of 2002 Q4, 2004 18 52,060 13,119 2,028 15.5% Q4, 2003 18 47,148 11,033 1,334 12.1% Year over year change 10.4% 18.9% 52.0% 340 bps Q3, 2004 18 50,899 11,896 1,473 12.4%

Class of 2003 Q4, 2004 22 40,801 12,555 1,138 9.1% Q4, 2003 22 42,805 11,038 560 5.1% Year over year change -4.7% 13.7% 103.2% 400 bps Q3, 2004 22 43,120 12,332 1,001 8.1%

Class of 2004 Q4, 2004 4 57,885 2,911 351 12.1% Q3, 2004 2 54,462 1,136 22 1.9%

Total full service Q4, 2004 138 58,499 112,326 21,295 19.0% Q4, 2003 134 54,496 93,888 16,172 17.2% Year over year change 7.3% 19.6% 31.7% 180 bps Q3, 2004 136 59,237 103,800 18,360 17.7%

(,000) Weekly (,000) Restaurant Restaurant Fiscal Year # of Sales Restaurant Operating Operating 2004 Stores Average Sales Margin Margin % ---------------------------------------------------------------------

Pre-2002 YTD, 2004 94 62,983 312,703 63,721 20.4% YTD, 2003 94 57,644 286,780 58,520 20.4% Year over year change 9.3% 9.0% 8.9% - bps

Class of 2002 YTD, 2004 18 49,721 47,420 6,163 13.0% YTD, 2003 18 46,696 43,707 5,053 11.6% Year over year change 6.5% 8.5% 22.0% 140 bps

Class of 2003 YTD, 2004 22 40,744 47,496 3,101 6.5% YTD, 2003 22 43,274 22,330 1,053 4.7% Year over year change -5.8% 112.7% 194.5% 180 bps

Class of 2004 YTD, 2004 4 55,387 5,380 601 11.2%

Total full service YTD, 2004 138 57,509 412,999 73,586 17.8% YTD, 2003 134 54,896 352,817 64,626 18.3% Year over year change 4.8% 17.1% 13.9% (50)bps

(1) Restaurant operating margin is defined as restaurant sales less restaurant operating costs.

(2) Restaurant operating margin percentages are expressed as a percentage of restaurant sales.

The following reconciliation of net income is provided to assist the reader with understanding the financial impact of the accelerated depreciation, severance charge, store closure costs, impairment charges and legal settlement reserve during the quarter and year (unaudited, in thousands, except per share data):

Quarter Ended Year Ended Jan. 2, Dec. 28, Jan. 2, Dec. 28, 2005 2003 2005 2003 ------- ------- -------- --------

Net income as reported $6,226 $4,416 $17,727 $7,956 Accelerated depreciation - - 1,089 - Severance charge - 401 - 1,221 Store closure costs - - 2,700 - Impairment of property, plant and equipment - 1,746 - 14,725 Legal settlement reserve - - 1,333 - Income tax benefit - (2,387) (2,182) (6,942) ------- ------- -------- -------- Net income excluding severance, accelerated depreciation, store closures and impairment charges $6,226 $4,176 $20,667 $16,960 ======= ======= ======== ========

Basic net income per common share: Net income $0.32 $0.23 $0.93 $0.42 Accelerated depreciation - - 0.06 - Severance charge - 0.02 - 0.07 Store closure costs - - 0.14 - Impairment of property, plant and equipment - 0.09 - 0.78 Legal settlement reserve - - 0.07 - Income tax benefit - (0.12) (0.12) (0.37) ------- ------- -------- -------- Basic net income excluding severance, accelerated depreciation, store closures and impairment charges, per common share $0.32 $0.22 $1.08 $0.90 ======= ======= ======== ========

Diluted net income per common share: Net income $0.32 $0.23 $0.92 $0.42 Accelerated depreciation - - 0.06 - Severance charge - 0.02 - 0.06 Store closure costs - - 0.14 - Impairment of property, plant and equipment - 0.09 - 0.77 Legal settlement reserve - - 0.07 - Income tax benefit - (0.12) (0.12) (0.36) ------- ------- -------- -------- Diluted net income excluding severance, accelerated depreciation, store closures and impairment charges, per common share $0.32 $0.22 $1.07 $0.89 ======= ======= ======== ========

--30--TJJ/la*

CONTACT: California Pizza Kitchen Sarah Grover (Media) or Sue Collyns (Investors) 310-342-5000

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: RESTAURANTS FOODS/BEVERAGES RETAIL EARNINGS SOURCE: California Pizza Kitchen

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