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Unformatted text preview: This spreadsheet supports STUDENT analysis of the case, "California Pizza Kitchen" (Case 33) 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) As of 12/31/2006 7/1/2007 $11,272 11,408 4,109 3,776 8,437 1,428 5,492 45,922 $8,187 $7,178 7,876 4,745 11,721 5,388 37,917 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 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 $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 Other liabilities Deferred rent credits, net of current portion 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 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 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. Exhibit 3 California Pizza Kitchen, Inc. Consolidated Income Statements (in thousands, except per-share data) Restaurant sales Franchise and other revenues Total revenues Food, beverage and paper supplies Labor Direct operating and occupancy Cost of Sales General and administrative Depreciation and amortization Pre-opening costs Severance charges(2) Loss on impairment of PP&E Store closure costs Legal settlement reserve Operating income 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 Selected Operating Data: Restaurants open at end of period Company-owned open at end of period(3) Avg weekly full service rest. sales(3) 18-mo. comparable rest. sales growth(3) 2003 $356,260 3,627 359,887 87,806 129,702 70,273 287,781 21,488 20,714 4,147 1,221 18,984 Fiscal Year(1) 2004 2005 $418,799 $474,738 3,653 4,861 422,452 479,599 103,813 118,480 152,949 173,751 83,054 92,827 339,816 385,058 28,794 36,298 23,975 25,440 737 4,051 2006 $547,968 6,633 554,601 135,848 199,744 108,558 444,150 43,320 29,489 6,964 Three Months Ended 7/2/2006 7/1/2007 $134,604 $156,592 1,564 1,989 136,168 158,581 33,090 38,426 49,272 56,912 26,214 30,773 108,576 126,111 11,035 12,206 7,070 9,022 800 852 707 768 5,552 317 2,700 1,333 25,097 571 (349) (32) 5,520 (82) $5,602 (143) 428 25,525 7,709 $17,816 1,160 152 600 26,840 739 1,105 (22) 1,822 28,662 9,172 $19,490 $0.30 $0.29 $0.93 $0.92 $1.01 $0.99 $1.08 $1.06 $0.20 $0.20 $0.22 $0.21 168 137 $54,896 3.4% 171 141 $57,509 8.0% 188 157 $62,383 7.5% 205 176 $65,406 5.9% 193 162 $65,427 4.8% 213 182 $68,535 5.4% 29,971 718 8,687 287 9,622 91 718 30,689 9,689 $21,000 287 8,974 2,961 $6,013 91 9,713 3,393 $6,320 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. Exhibit 4 California Pizza Kitchen, Inc. Selected Historical Comparable Store Sales (Calendarized) CY03 California Pizza Kitchen Applebee's International, Inc. BJ's Restaurants, Inc. Brinker International(1) The Cheesecake Factory, Inc. Chipotle Mexican Grill, Inc. Darden Restaurants, Inc. -- Red Lobster Darden Restaurants, Inc. -- Olive Garden McCormick & Schmick's Seafood Restaurants, Inc. Panera Bread Company P.F. Chang's China Bistro RARE -- Longhorn Steakhouse Red Robin Gourmet Burgers Ruth's Chris Steak House, Inc. Sonic Corporation Texas Roadhouse, Inc. CY04 CY05 Q1 3.4% 9.3% 6.4% 4.8% 4.1% 3.3% 2.1% 0.7% 24.4% 0.0% 2.2% 1.1% 0.2% 5.1% 4.6% 4.1% 1.4% 1.6% 3.5% 4.8% 4.0% 1.9% 3.9% 13.3% -3.9% 4.7% 3.8% 2.7% 3.0% 5.0% 7.5% 11.6% 7.0% 7.6% 1.8% 4.6% 3.2% 1.7% 10.2% 4.2% 8.6% 3.0% 7.8% 1.2% 2.8% 3.8% 10.4% 5.4% 5.6% Note: (1) Brinker's comparable store sales is a blended rate for its various brands. Source of data: KeyBanc Capital Markets equity research. CY06 Q2 Q3 Q4 CY07 Q1 5.9% 5.6% 6.9% 4.7% 2.6% -1.8% 6.8% 5.9% 2.7% -2.0% -1.3% -0.8% 19.7% 14.5% 1.6% 9.4% 5.7% 2.5% 4.1% 2.8% 9.0% 3.2% 1.3% -1.0% 3.7% -0.4% 4.8% 3.3% 6.8% 6.0% 5.5% 4.3% 6.4% 1.2% -2.3% 5.3% -2.1% -1.6% 11.6% -2.1% 2.9% 2.9% 2.8% -0.5% -0.3% 0.8% 4.3% 4.0% 2.3% -1.1% 5.5% -2.1% 0.8% 10.1% 0.7% 2.9% 2.0% 2.0% -0.9% 1.5% 0.2% 7.4% 3.4% 3.3% -4.0% 6.9% -4.4% 0.4% 8.3% 4.6% 1.0% 2.8% 0.0% -2.5% -1.0% -0.5% 1.9% 2.0% 0.9% Exhibit 5 California Pizza Kitchen, Inc. 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 4/12/2007 5/11/2007 5/11/2007 5/11/2007 5/11/2007 Source of data: Selected firms' equity research. $40 37 NA 37 NA 39 $652.9 647.5 NA 650.7 644.2 647.5 $1.33 1.29 1.28 1.31 1.33 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 California Pizza Kitchen, Inc. Stock Price Comparison Value of $100 invested in CPK and S&P SmallCap 600 Restaurants Index $140 $130 $120 $110 $100 CPK S&P SmallCap 600 Restaurants $90 $80 3 -Jul-0624-Jul-0615-Aug-066-Sep-0627-Sep-06 19-Oct-069-Nov-06 1-Dec-0622-Dec-0619-Jan-07 9-Feb-072-Mar-07 26-Mar-0718-Apr-0710-May-071-Jun-0721-Jun-07 5-Jul-0625-Jul-06 16-Aug-067-Sep-0628-Sep-06 20-Oct-0613-Nov-066-Dec-0628-Dec-0624-Jan-0715-Feb-079-Mar-07 2-Apr-0724-Apr-07 17-May-078-Jun-0728-Jun-07 6-Jul-06 26-Jul-06 17-Aug-068-Sep-0629-Sep-06 23-Oct-0614-Nov-067-Dec-0629-Dec-0625-Jan-07 16-Feb-0713-Mar-073-Apr-0725-Apr-07 18-May-0712-Jun-072-Jul-07 7-Jul-06 27-Jul-06 18-Aug-0612-Sep-063-Oct-0624-Oct-0615-Nov-068-Dec-06 3-Jan-07 26-Jan-07 20-Feb-0714-Mar-074-Apr-0726-Apr-07 21-May-0713-Jun-07 10-Jul-0628-Jul-06 21-Aug-0613-Sep-064-Oct-0625-Oct-0616-Nov-0611-Dec-064-Jan-07 29-Jan-07 21-Feb-0715-Mar-075-Apr-0727-Apr-07 22-May-0714-Jun-07 11-Jul-06 1-Aug-0622-Aug-0614-Sep-065-Oct-0626-Oct-0617-Nov-0612-Dec-065-Jan-07 30-Jan-0722-Feb-0716-Mar-079-Apr-0730-Apr-0723-May-0715-Jun-07 12-Jul-06 2-Aug-0623-Aug-0615-Sep-066-Oct-06 27-Oct-0620-Nov-06 14-Dec-069-Jan-07 31-Jan-0723-Feb-0719-Mar-0711-Apr-072-May-0724-May-0718-Jun-07 13-Jul-063-Aug-06 25-Aug-0619-Sep-0610-Oct-06 1-Nov-0624-Nov-06 19-Dec-0616-Jan-07 6-Feb-0728-Feb-0722-Mar-0716-Apr-07 8-May-0731-May-0722-Jun-07 14-Jul-064-Aug-06 28-Aug-0620-Sep-06 12-Oct-062-Nov-06 27-Nov-06 20-Dec-0617-Jan-07 7-Feb-07 1-Mar-07 23-Mar-0717-Apr-07 9-May-07 4-Jun-07 25-Jun-07 17-Jul-06 7-Aug-06 29-Aug-0621-Sep-06 13-Oct-063-Nov-0628-Nov-06 21-Dec-0618-Jan-07 8-Feb-07 5-Mar-07 27-Mar-0719-Apr-0711-May-07 5-Jun-07 26-Jun-07 18-Jul-06 8-Aug-06 30-Aug-0622-Sep-06 16-Oct-066-Nov-06 29-Nov-06 26-Dec-0622-Jan-0712-Feb-076-Mar-07 28-Mar-0720-Apr-07 15-May-076-Jun-07 27-Jun-07 19-Jul-06 9-Aug-06 31-Aug-0625-Sep-0617-Oct-067-Nov-0630-Nov-06 27-Dec-0623-Jan-0714-Feb-078-Mar-0729-Mar-0723-Apr-07 16-May-077-Jun-07 29-Jun-07 20-Jul-0610-Aug-06 1-Sep-06 26-Sep-06 18-Oct-068-Nov-06 4-Dec-06 21-Jul-0611-Aug-06 5-Sep-06 2-Oct-06 30-Oct-0621-Nov-06 15-Dec-0611-Jan-071-Feb-07 26-Feb-0720-Mar-0712-Apr-07 4-May-0729-May-0720-Jun-07 31-Jul-06 24-Aug-0618-Sep-06 9-Oct-06 31-Oct-0622-Nov-06 18-Dec-0612-Jan-075-Feb-0727-Feb-0721-Mar-0713-Apr-077-May-0730-May-07 14-Aug-06 11-Sep-06 11-Oct-06 10-Nov-065-Dec-06 13-Dec-068-Jan-07 2-Feb-07 10-Jan-07 13-Feb-077-Mar-07 30-Mar-07 1-May-07 25-May-0719-Jun-07 12-Mar-07 10-Apr-07 3-May-07 14-May-07 11-Jun-07 Date 3-Jul-06 5-Jul-06 6-Jul-06 7-Jul-06 10-Jul-06 11-Jul-06 12-Jul-06 13-Jul-06 14-Jul-06 17-Jul-06 18-Jul-06 19-Jul-06 20-Jul-06 21-Jul-06 24-Jul-06 25-Jul-06 26-Jul-06 27-Jul-06 28-Jul-06 31-Jul-06 1-Aug-06 2-Aug-06 3-Aug-06 4-Aug-06 7-Aug-06 8-Aug-06 9-Aug-06 CPK S&P SmallCap 600 Restaurants 100 100 99 99 97 98 96 97 101 98 100 97 103 95 98 92 97 92 98 92 96 92 99 94 94 91 95 90 97 93 98 95 96 92 95 90 95 91 97 91 94 90 93 91 95 92 95 93 96 92 100 92 95 90 Exhibit 7 California Pizza Kitchen, Inc. Comparative Restaurant Financial Data, 2006 Fiscal Year (in millions, except per-share data) Fiscal Year End 7/2/2007 Month Share Price Revenue EBITDA Margin Net Profit Earnings Margin Per Share Dividends Book Value Per Share Per Share Beta California Pizza Kitchen Dec. $22.10 $555 10.7% 3.8% $0.71 $0.00 $7.20 0.85 Applebee's International, Inc. BJ's Restaurants, Inc. Brinker International(1) Buffalo Wild Wings, Incorporated The Cheesecake Factory, Inc. Chipotle Mexican Grill, Inc. Darden Restaurants, Inc.(2) Frisch's Restaurants, Inc. McCormick & Schmick's Panera Bread Company P.F. Chang's China Bistro RARE Hospitality International Inc. (3) Red Robin Gourmet Burgers Ruth's Chris Steak House, Inc. Sonic Corporation Texas Roadhouse, Inc. Dec. Dec. June Dec. Dec. Dec. May May Dec. Dec. Dec. Dec. Dec. Dec. Aug. Dec. 24.28 20.05 29.37 41.78 24.57 86.00 44.14 30.54 25.66 46.02 35.37 26.76 40.19 16.80 22.00 12.81 1,338 239 4,151 278 1,315 823 5,721 291 308 829 938 987 619 272 693 597 15.9% 9.6% 12.0% 13.3% 12.2% 13.0% 13.2% 31.6% 9.7% 16.3% 10.5% 11.6% 13.7% 15.6% 24.9% 12.5% 6.5% 4.1% 4.7% 5.8% 6.2% 5.0% 5.9% 3.1% 4.3% 7.2% 3.6% 5.1% 4.9% 8.7% 11.4% 5.7% 1.17 0.41 1.49 0.93 1.02 1.28 2.16 1.78 0.92 1.87 1.24 1.45 1.82 1.01 0.88 0.44 0.20 0.00 0.20 0.00 0.00 0.00 0.40 0.44 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6.49 7.78 8.59 6.61 9.09 14.56 8.37 19.84 11.20 12.53 11.41 11.17 14.68 2.93 4.66 4.30 0.80 1.05 0.90 1.10 1.00 NA 1.00 0.60 1.10 1.25 1.10 0.57 1.05 NA 0.90 0.90 Current Assets Current Liabilities Total Debt Shr. Equity Debt/ Capital Interest Coverage T. Capital Turnover Return On Capital Equity California Pizza Kitchen $38 $66 $0 $208 0.0% NMF 2.7 10.1% 10.1% Applebee's International, Inc. BJ's Restaurants, Inc. Brinker International(1) Buffalo Wild Wings, Incorporated The Cheesecake Factory, Inc. Chipotle Mexican Grill, Inc. Darden Restaurants, Inc.(2) Frisch's Restaurants, Inc. McCormick & Schmick's Panera Bread Company P.F. Chang's China Bistro RARE Hospitality International Inc. (3) Red Robin Gourmet Burgers Ruth's Chris Steak House, Inc. Sonic Corporation Texas Roadhouse, Inc. 105 96 242 75 203 179 378 12 30 128 65 125 29 26 43 53 187 36 497 26 163 61 1,026 31 40 110 104 134 70 59 78 78 175 0 502 0 0 0 645 43 0 0 19 166 114 68 159 36 487 203 1,076 116 712 474 1,230 101 160 398 290 360 244 68 392 319 26.5% 0.0% 31.8% 0.0% 0.0% 0.0% 34.4% 30.1% 0.2% 0.0% 6.2% 31.6% 31.9% 50.0% 28.9% 10.2% 11.7 NMF 14.4 NMF NMF NMF 10.9 5.9 NMF NMF NMF 29.2 7.7 12.8 15.0 19.9 2.0 1.2 2.6 2.4 1.8 1.7 3.1 2.0 1.9 2.1 3.0 1.9 1.7 2.0 1.3 1.7 14.0% 4.9% 13.2% 14.0% 11.4% 8.8% 20.6% 7.9% 8.3% 15.1% 11.1% 9.8% 9.3% 18.6% 15.3% 9.7% 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. 18.0% 4.9% 18.0% 14.0% 11.4% 8.7% 27.5% 9.1% 8.3% 15.1% 11.5% 13.9% 12.5% 34.9% 20.1% 10.7% Exhibit 8 California Pizza Kitchen, Inc. 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 (Dollars in thousands, except share data; figures based on end of June 2007) Actual Debt/Total Capital 10% 20% 30% Interest rate (1) Tax rate 6.16% 32.5% 6.16% 32.5% 6.16% 32.5% 6.16% 32.5% 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 0 225,888 225,888 22,589 203,299 225,888 45,178 180,710 225,888 67,766 158,122 225,888 0 22,589 45,178 67,766 643,773 643,773 628,516 651,105 613,259 658,437 598,002 665,769 Book value: Debt Equity Total capital Market value: Debt(3) Equity(4) Market value of capital Notes: (1) Interest rate of CPK's credit facility with Bank of America: LIBOR + 0.80%. EBIT includes interest income. Market values of debt equal book values. (4) Actual market values of equity equals the share price ($22.10) multiplied by the current number of shares outstanding (29.13 million). (2) (3) Source: Case writer analysis based on CPK financial data. ...
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This note was uploaded on 11/22/2011 for the course FIN 505 taught by Professor Chingshing during the Spring '11 term at Solano Community College.

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