Introduction

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Introduction

This spreadsheet supports STUDENT analysis of the case, “California Pizza Kitchen” (Case 33)
By; Nour AbdulAziz, Maryam Barifah, Balquis Mekhlafi, Shrouq Al-Jaaidi
March 31, 2008
Copyright (C) 2008, by the University of Virginia Darden School Foundation.

Exh. 2

Exhibit 2
California Pizza Kitchen, Inc.
Consolidated Balance Sheet (in thousands)
As of
1/1/06 12/31/06 7/1/07
Assets
Current assets
Cash and cash equivalents $ 11,272 $ 8,187 $ 7,178
Investments in marketable securities 11,408
Other receivables 4,109 7,876 10,709
Inventories 3,776 4,745 4,596
Current deferred tax asset, net 8,437 11,721 11,834
Prepaid income tax 1,428 8,769
Other prepaid expenses & other current assets 5,492 5,388 6,444
Total current assets 45,922 37,917 49,530
Property and equipment, net 213,408 255,382 271,867
Noncurrent deferred tax asset, net 4,513 5,867 6,328
Goodwill and other intangibles 5,967 5,825 5,754
Other assets 4,444 5,522 6,300
Total assets $ 274,254 $ 310,513 $ 339,779
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable $ 7,054 $ 15,044 $ 14,115
Accrued compensation and benefits 13,068 15,042 15,572
Accrued rent 13,253 14,532 14,979
Deferred rent credits 4,056 4,494 5,135
Other accrued liabilities 9,294 13,275 13,980
Accrued income tax 3,614 9,012
Total current liabilities 46,725 66,001 72,793
Other liabilities 5,383 8,683 8,662
Deferred rent credits, net of current portion 24,810 27,486 32,436
Shareholders’ equity:
Common stock 197 193 291
Additional paid-in-capital 231,159 221,163 228,647
Accumulated deficit (34,013) (13,013) (3,050)
Accumulated comprehensive loss (7)
Total shareholders’ equity 197,336 208,343 225,888
Total liabilities & Shareholders’ Equity $ 274,254 $ 310,513 $ 339,779
Sources of data: Company Annual and Quarterly Reports.

Exh. 3

Exhibit 3
California Pizza Kitchen, Inc.
Consolidated Income Statements (in thousands, except per-share data)
Fiscal Year(1) Three Months Ended
2003 2004 2005 2006 7/2/06 7/1/07
Restaurant sales $ 356,260 $ 418,799 $ 474,738 $ 547,968 $ 134,604 $ 156,592
Franchise and other revenues 3,627 3,653 4,861 6,633 1,564 1,989
Total revenues 359,887 422,452 479,599 554,601 136,168 158,581
Food, beverage and paper supplies 87,806 103,813 118,480 135,848 33,090 38,426
Labor 129,702 152,949 173,751 199,744 49,272 56,912
Direct operating and occupancy 70,273 83,054 92,827 108,558 26,214 30,773
Cost of Sales 287,781 339,816 385,058 444,150 108,576 126,111
General and administrative 21,488 28,794 36,298 43,320 11,035 12,206
Depreciation and amortization 20,714 23,975 25,440 29,489 7,070 9,022
Pre-opening costs 4,147 737 4,051 6,964 800 852
Severance charges(2) 1,221
Loss on impairment of PP&E 18,984 1,160
Store closure costs 2,700 152 707 768
Legal settlement reserve 1,333 600
Operating income 5,552 25,097 26,840 29,971 8,687 9,622
Interest income 317 571 739 718 287 91
Other income 1,105
Equity in loss of unconsolidated JV (349) (143) (22)
Total other income (expense) (32) 428 1,822 718 287 91
Income before income tax provision 5,520 25,525 28,662 30,689 8,974 9,713
Income tax provision (benefit) (82) 7,709 9,172 9,689 2,961 3,393
Net income $ 5,602 $ 17,816 $ 19,490 $ 21,000 $ 6,013 $ 6,320
Net income per common share:
Basic $ 0.30 $ 0.93 $ 1.01 $ 1.08 $ 0.20 $ 0.22
Diluted $ 0.29 $ 0.92 $ 0.99 $ 1.06 $ 0.20 $ 0.21
Selected Operating Data:
Restaurants open at end of period 168 171 188 205 193 213
Company-owned open at end of period(3) 137 141 157 176 162 182
Avg weekly full service rest. sales(3) $ 54,896 $ 57,509 $ 62,383 $ 65,406 $ 65,427 $ 68,535
18-mo. comparable rest. sales growth(3) 3.4% 8.0% 7.5% 5.9% 4.8% 5.4%
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.

Exh. 4

Exhibit 4
California Pizza Kitchen, Inc.
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.

Exh. 5

Exhibit 5
California Pizza Kitchen, Inc.
Selected Forecasts for California Pizza Kitchen
Date of Price 2007E 2008E 2009E
Firm Report Target Revenues EPS Revenues EPS Revenues EPS
Oppenheimer and Co. Inc. 4/9/07 $ 40 $ 652.9 $ 1.33 NA NA NA NA
CIBC World Markets 4/12/07 37 647.5 1.29 755.1 1.57 NA NA
KeyBanc Capital Markets 5/11/07 NA NA 1.28 NA 1.55 NA NA
RBC Capital Markets 5/11/07 37 650.7 1.31 753.1 1.59 878.2 1.90
Morgan Keegan & Co., Inc. 5/11/07 NA 644.2 1.33 742.1 1.58 NA NA
MKM Partners 5/11/07 39 647.5 1.34 754.3 1.69 NA NA
Source of data: Selected firms’ equity research.

Exh. 6

Exhibit 6 Date CPK S&P SmallCap 600 Restaurants
California Pizza Kitchen, Inc. 3-Jul-06 100 100 Jul-06 94
Stock Price Comparison 5-Jul-06 99 99 -0.013267359 agt 06 95 0.0121239996
6-Jul-06 97 98 -0.0023144321 Sep-06 104 0.0898060651
7-Jul-06 96 97 -0.0154653411 94 Oct-06 110 0.0553664231
10-Jul-06 101 98 0.0067321178 Nov-06 109 -0.0020130958
11-Jul-06 100 97 -0.0042630259 Dec-06 110 0.0022704656
12-Jul-06 103 95 -0.0258555559 Jan-07 110 0.0037109205
13-Jul-06 98 92 -0.022778847 Feb-07 113 0.0306553306
14-Jul-06 97 92 -0.0026161082 Mar-07 111 -0.0171985797
17-Jul-06 98 92 0.0023282544 Apr-07 113 0.0135314407
18-Jul-06 96 92 -0.0048515143 May-07 112 -0.0048594796
19-Jul-06 99 94 0.0257349682 Jun-07 109 -0.0334471717
20-Jul-06 94 91 -0.0348542459 0.1499463184
21-Jul-06 95 90 -0.0096102191
24-Jul-06 97 93 0.0292610897
25-Jul-06 98 95 0.0270531401
26-Jul-06 96 92 -0.0348071496
27-Jul-06 95 90 -0.0202610904
28-Jul-06 95 91 0.0102496081
31-Jul-06 97 91 0.003103366
1-Aug-06 94 90 -0.0192467872 95
2-Aug-06 93 91 0.0161667021
3-Aug-06 95 92 0.0130141484
4-Aug-06 95 93 0.0067181331
7-Aug-06 96 92 -0.0073464848
8-Aug-06 100 92 0.0002653693
9-Aug-06 95 90 -0.0267362339
10-Aug-06 98 91 0.0179604446
11-Aug-06 97 92 0.0069622136
14-Aug-06 99 94 0.0226037111
15-Aug-06 102 96 0.0213239331
16-Aug-06 105 98 0.0149659094
17-Aug-06 105 99 0.0112331364
18-Aug-06 105 99 0.005843601
Note: 21-Aug-06 102 98 -0.0088514976
Adjusted for the June 2007 50% stock dividend. With such a dividend, an owner of two shares of CPK stock was given an additional share. 22-Aug-06 101 98 -0.0007188675
The effect was to increase CPK shares by a third yet maintain the overall capitalization of the equity. 23-Aug-06 99 97 -0.0101820597
24-Aug-06 99 97 -0.0067087829
Sources of data: Yahoo! Finance and Datastream. 25-Aug-06 97 96 -0.0095120167
28-Aug-06 100 97 0.0102568474
29-Aug-06 102 99 0.0243833844
30-Aug-06 104 100 0.007742148
31-Aug-06 104 99 -0.0073285022
1-Sep-06 106 100 0.0058457063 104
5-Sep-06 106 101 0.0100682128
6-Sep-06 103 99 -0.0131554067
7-Sep-06 102 99 -0.0061042374
8-Sep-06 104 100 0.0168553251
11-Sep-06 104 101 0.0077191842
12-Sep-06 109 104 0.0300489168
13-Sep-06 109 105 0.0079323661
14-Sep-06 109 105 -0.0046339443
15-Sep-06 110 106 0.0157091212
18-Sep-06 108 105 -0.0092950606
19-Sep-06 109 105 -0.0005686224
20-Sep-06 112 107 0.0212578877
21-Sep-06 110 106 -0.0169156749
22-Sep-06 109 105 -0.0092730926
25-Sep-06 109 106 0.0165098019
26-Sep-06 109 106 -0.0003580837
27-Sep-06 111 106 -0.0013305018
28-Sep-06 111 105 -0.0101714022
29-Sep-06 109 104 -0.0112595123
2-Oct-06 110 104 -0.0001570722 110
3-Oct-06 111 104 0.0059434975
4-Oct-06 117 109 0.0406038522
5-Oct-06 118 109 0.005827914
6-Oct-06 117 109 -0.0058190138
9-Oct-06 118 109 0.0030015758
10-Oct-06 117 108 -0.0071323474
11-Oct-06 115 107 -0.0101725567
12-Oct-06 120 110 0.0308820544
13-Oct-06 120 111 0.0088369231
16-Oct-06 121 112 0.0082227211
17-Oct-06 120 111 -0.010503134
18-Oct-06 120 111 -0.0059187517
19-Oct-06 119 110 -0.0088325747
20-Oct-06 118 109 -0.0075460458
23-Oct-06 119 110 0.0120554249
24-Oct-06 120 111 0.0092922104
25-Oct-06 120 111 0.0038932419
26-Oct-06 120 112 0.0052196395
27-Oct-06 118 110 -0.0195569359
30-Oct-06 120 111 0.0096765412
31-Oct-06 118 110 -0.0067405265
1-Nov-06 116 109 -0.0091552945 109
2-Nov-06 115 109 -0.0059025702
3-Nov-06 112 106 -0.0262808468
6-Nov-06 118 108 0.0258066176
7-Nov-06 118 108 -0.0001254107
8-Nov-06 119 109 0.0074754164
9-Nov-06 116 107 -0.0189233604
10-Nov-06 114 108 0.011598396
13-Nov-06 111 108 0.0002759728
14-Nov-06 112 110 0.013443692
15-Nov-06 112 111 0.0115081919
16-Nov-06 111 112 0.0034988133
17-Nov-06 112 111 -0.004169308
20-Nov-06 113 111 -0.000465196
21-Nov-06 113 111 0.0022780717
22-Nov-06 113 111 0.0014908229
24-Nov-06 112 111 -0.0041729709
27-Nov-06 108 108 -0.0260984635
28-Nov-06 112 108 -0.0008303558
29-Nov-06 116 109 0.0092422373
30-Nov-06 115 109 -0.003044216
1-Dec-06 115 108 -0.0055313611 110
4-Dec-06 118 111 0.0248408124
5-Dec-06 116 111 0.0016208251
6-Dec-06 116 110 -0.0094640318
7-Dec-06 118 110 0.0008415842
8-Dec-06 118 110 -0.0000494633
11-Dec-06 119 110 0.0002720617
12-Dec-06 119 109 -0.0086047029
13-Dec-06 120 109 -0.0037909964
14-Dec-06 120 109 0.0057331698
15-Dec-06 119 109 -0.0032609778
18-Dec-06 119 108 -0.0051197523
19-Dec-06 118 108 -0.0006777789
20-Dec-06 118 109 0.0074103846
21-Dec-06 117 109 -0.0034909236
22-Dec-06 117 109 0.0016264638
26-Dec-06 120 110 0.0102175922
27-Dec-06 122 111 0.0131312132
28-Dec-06 122 111 -0.0025385047
29-Dec-06 122 110 -0.0085158449
3-Jan-07 123 110 0.00049362 110
4-Jan-07 124 110 -0.0040950243
5-Jan-07 122 108 -0.0139951946
8-Jan-07 123 108 0.0008038989
9-Jan-07 124 109 0.010241478
10-Jan-07 126 110 0.0043731054
11-Jan-07 131 112 0.0172678245
12-Jan-07 134 112 0.0030398833
16-Jan-07 133 112 -0.0028367075
17-Jan-07 132 111 -0.0062730986
18-Jan-07 130 110 -0.0079765109
19-Jan-07 129 110 0.0003699684
22-Jan-07 129 109 -0.0099361424
23-Jan-07 129 110 0.0071471262
24-Jan-07 130 111 0.0071953119
25-Jan-07 129 109 -0.0180929936
26-Jan-07 130 108 -0.0045503413
29-Jan-07 130 108 0.0004520909
30-Jan-07 131 109 0.0088871037
31-Jan-07 130 111 0.0169706622
1-Feb-07 131 112 0.0047224057 113
2-Feb-07 132 112 0.0053821051
5-Feb-07 131 111 -0.0106339171
6-Feb-07 131 111 0.0035990598
7-Feb-07 130 112 0.0065136249
8-Feb-07 131 112 -0.0000242377
9-Feb-07 130 111 -0.007247255
12-Feb-07 129 111 -0.0050539577
13-Feb-07 130 112 0.0131775907
14-Feb-07 129 113 0.0075566751
15-Feb-07 129 113 0.0022596154
16-Feb-07 120 113 0.000719528
20-Feb-07 120 115 0.0094669734
21-Feb-07 123 117 0.0221990076
22-Feb-07 122 117 -0.0020671715
23-Feb-07 122 118 0.006167811
26-Feb-07 121 116 -0.0088827203
27-Feb-07 116 112 -0.0352424964
28-Feb-07 117 113 0.005806077
1-Mar-07 117 113 -0.0029824899 111
2-Mar-07 116 111 -0.0118209013
5-Mar-07 114 109 -0.0174063766
6-Mar-07 118 111 0.0157767895
7-Mar-07 118 111 -0.0043782409
8-Mar-07 117 111 0.0065102567
9-Mar-07 117 112 0.0051012936
12-Mar-07 117 112 0.0045168654
13-Mar-07 117 110 -0.0208388734
14-Mar-07 118 111 0.0051354221
15-Mar-07 117 111 0.0000736902
16-Mar-07 115 110 -0.010193054
19-Mar-07 117 111 0.0114891188
20-Mar-07 117 111 0.0058142388
21-Mar-07 116 113 0.0105124515
22-Mar-07 115 113 0.0010378952
23-Mar-07 115 113 0.0025558797
26-Mar-07 118 112 -0.0082974579
27-Mar-07 117 112 -0.0048018625
28-Mar-07 117 111 -0.0089677356
29-Mar-07 118 111 0.0035162782
30-Mar-07 120 112 0.0073019529
2-Apr-07 120 112 0.0043786032 113
3-Apr-07 122 114 0.0189881082
4-Apr-07 120 113 -0.0086040929
5-Apr-07 121 113 0.0000719235
9-Apr-07 121 113 -0.0048185262
10-Apr-07 119 113 0.0034687929
11-Apr-07 117 112 -0.0152915476
12-Apr-07 119 112 0.0000243784
13-Apr-07 120 112 0.0024865313
16-Apr-07 122 114 0.0184325074
17-Apr-07 121 114 -0.002721998
18-Apr-07 121 113 -0.001101348
19-Apr-07 122 112 -0.009012248
20-Apr-07 124 114 0.0112468255
23-Apr-07 125 113 -0.0065056207
24-Apr-07 121 113 -0.0037315229
25-Apr-07 121 114 0.0117922819
26-Apr-07 122 114 -0.0005254233
27-Apr-07 124 113 -0.0111113766
30-Apr-07 122 110 -0.019161995
1-May-07 124 111 0.0094848612 112
2-May-07 126 112 0.0079558766
3-May-07 125 112 -0.0068761803
4-May-07 123 112 0.0019016042
7-May-07 125 113 0.0070809811
8-May-07 124 113 0.0025370285
9-May-07 126 113 0.0048443073
10-May-07 125 111 -0.019835464
11-May-07 135 113 0.0131160378
14-May-07 132 112 -0.0041543887
15-May-07 130 111 -0.0095076401
16-May-07 130 112 0.0111170968
17-May-07 128 111 -0.0121573186
18-May-07 129 112 0.0063741113
21-May-07 134 113 0.0104750305
22-May-07 133 113 0.006340405
23-May-07 132 113 -0.0079055171
24-May-07 133 112 -0.0023664067
25-May-07 133 113 0.0097301222
29-May-07 133 113 -0.0045305271
30-May-07 133 113 0.0002408014
31-May-07 134 113 0.0034907795
1-Jun-07 135 114 0.007653 109
4-Jun-07 135 115 0.0079043855
5-Jun-07 134 114 -0.0058581755
6-Jun-07 132 111 -0.0304376752
7-Jun-07 126 109 -0.0194093861
8-Jun-07 128 110 0.0121710444
11-Jun-07 126 109 -0.0058024691
12-Jun-07 124 108 -0.0123183907
13-Jun-07 124 109 0.0107872966
14-Jun-07 124 110 0.0065426141
15-Jun-07 125 110 0.0013593337
18-Jun-07 124 110 -0.0048129134
19-Jun-07 123 109 -0.0051834032
20-Jun-07 121 108 -0.0134124452
21-Jun-07 118 105 -0.020897559
22-Jun-07 117 104 -0.0088781067
25-Jun-07 115 104 -0.0063536703
26-Jun-07 115 104 0.0064467098
27-Jun-07 117 106 0.0107277698
28-Jun-07 117 105 -0.0051008579
29-Jun-07 118 104 -0.005282374
2-Jul-07 121 105 0.0047117012
-0.0038169177

Exh. 6
CPK
S&P SmallCap 600 Restaurants
Value of $100 invested in CPK and S&P SmallCap 600 Restaurants Index

Exh. 7

Exhibit 7
California Pizza Kitchen, Inc.
Comparative Restaurant Financial Data, 2006 Fiscal Year (in millions, except per-share data)
Fiscal Year End 7/2/07 EBITDA Net Profit Earnings Dividends Book Value
Month Share Price Revenue Margin Margin Per Share 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. Dec. 24.28 1,338 15.9% 6.5% 1.17 0.20 6.49 0.80
BJ’s Restaurants, Inc. Dec. 20.05 239 9.6% 4.1% 0.41 0.00 7.78 1.05
Brinker International(1) 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
The Cheesecake Factory, Inc. Dec. 24.57 1,315 12.2% 6.2% 1.02 0.00 9.09 1.00
Chipotle Mexican Grill, Inc. 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
Panera Bread Company Dec. 46.02 829 16.3% 7.2% 1.87 0.00 12.53 1.25
P.F. Chang’s China Bistro 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
Red Robin Gourmet Burgers Dec. 40.19 619 13.7% 4.9% 1.82 0.00 14.68 1.05
Ruth’s Chris Steak House, Inc. 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
Texas Roadhouse, Inc. Dec. 12.81 597 12.5% 5.7% 0.44 0.00 4.30 0.90
Current Current Total Shr. Debt/ Interest T. Capital Return On
Assets Liabilities Debt Equity Capital Coverage Turnover Capital Equity
California Pizza Kitchen $ 38 $ 66 $0 $ 208 0.0% NMF 2.7 10.1% 10.1%
Applebee’s International, Inc. 105 187 175 487 26.5% 11.7 2.0 14.0% 18.0%
BJ’s Restaurants, Inc. 96 36 0 203 0.0% NMF 1.2 4.9% 4.9%
Brinker International(1) 242 497 502 1,076 31.8% 14.4 2.6 13.2% 18.0%
Buffalo Wild Wings, Incorporated 75 26 0 116 0.0% NMF 2.4 14.0% 14.0%
The Cheesecake Factory, Inc. 203 163 0 712 0.0% NMF 1.8 11.4% 11.4%
Chipotle Mexican Grill, Inc. 179 61 0 474 0.0% NMF 1.7 8.8% 8.7%
Darden Restaurants, Inc.(2) 378 1,026 645 1,230 34.4% 10.9 3.1 20.6% 27.5%
Frisch’s Restaurants, Inc. 12 31 43 101 30.1% 5.9 2.0 7.9% 9.1%
McCormick & Schmick’s 30 40 0 160 0.2% NMF 1.9 8.3% 8.3%
Panera Bread Company 128 110 0 398 0.0% NMF 2.1 15.1% 15.1%
P.F. Chang’s China Bistro 65 104 19 290 6.2% NMF 3.0 11.1% 11.5%
RARE Hospitality International Inc.(3) 125 134 166 360 31.6% 29.2 1.9 9.8% 13.9%
Red Robin Gourmet Burgers 29 70 114 244 31.9% 7.7 1.7 9.3% 12.5%
Ruth’s Chris Steak House, Inc. 26 59 68 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%
Texas Roadhouse, Inc. 53 78 36 319 10.2% 19.9 1.7 9.7% 10.7%
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.

Exh. 8

Exhibit 8
California Pizza Kitchen, Inc.
Interest Rates and Yields
U.S. Treasury Securities Average Average
Bills Notes & Bonds Corporate bonds (Moody’s) Prime LIBOR
3-month 6-month 3-year 10-year 30-year Aaa 3 Baa Lending 3-month
2000 5.85% 5.92% 6.22% 6.03% 5.94% 7.62% 8.36% 9.23% 6.55%
2001 3.45% 3.39% 4.09% 5.02% 5.49% 7.08% 7.95% 6.91% 3.63%
2002 1.62% 1.69% 3.10% 4.61% …… 6.49% 7.80% 4.67% 1.79%
2003 1.02% 1.06% 2.10% 4.01% …… 5.67% 6.77% 4.12% 1.22%
2004 1.38% 1.58% 2.78% 4.27% …… 5.63% 6.39% 4.34% 1.67%
2005 3.16% 3.40% 3.93% 4.29% …… 5.24% 6.06% 6.19% 3.63%
2006: Jan. 4.20% 4.30% 4.35% 4.42% …… 5.29% 6.24% 7.38% 4.68%
Feb. 4.41% 4.51% 4.64% 4.57% 4.54% 5.35% 6.27% 7.50% 4.82%
Mar. 4.51% 4.61% 4.74% 4.72% 4.73% 5.53% 6.41% 7.63% 4.99%
Apr. 4.59% 4.72% 4.89% 4.99% 5.06% 5.84% 6.68% 7.75% 5.15%
May. 4.72% 4.81% 4.97% 5.11% 5.20% 5.95% 6.75% 7.88% 5.23%
June 4.79% 4.95% 5.09% 5.11% 5.15% 5.89% 6.78% 7.13% 5.51%
July 4.96% 5.09% 5.07% 5.09% 5.13% 5.85% 6.76% 8.25% 5.49%
Aug. 4.98% 4.99% 4.85% 4.88% 5.00% 5.68% 6.59% 8.25% 5.40%
Sept. 4.82% 4.90% 4.69% 4.72% 4.85% 5.51% 6.43% 8.25% 5.37%
Oct. 4.89% 4.91% 4.72% 4.73% 4.85% 5.51% 6.42% 8.25% 5.37%
Nov. 4.95% 4.96% 4.64% 4.60% 4.69% 5.33% 6.20% 8.25% 5.37%
Dec. 4.85% 4.88% 4.58% 4.56% 4.68% 5.32% 6.22% 8.25% 5.36%
2007: Jan. 4.96% 4.94% 4.79% 4.76% 4.85% 5.40% 6.34% 8.25% 5.36%
Feb. 5.02% 4.97% 4.75% 4.72% 4.82% 5.39% 6.28% 8.25% 5.36%
Mar. 4.97% 4.90% 4.51% 4.56% 4.72% 5.30% 6.27% 8.25% 5.35%
Apr. 4.88% 4.87% 4.60% 4.69% 4.87% 5.47% 6.39% 8.25% 5.36%
May. 4.77% 4.80% 4.69% 4.75% 4.90% 5.47% 6.39% 8.25% 5.36%
June 4.63% 4.77% 5.00% 5.10% 5.20% 5.79% 6.70% 8.25% 5.36%
Sources of data: Economic Report of the President and Fannie Mae website.
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Exh. 9

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) beta 0.85
Debt/Total Capital
Actual 10% 20% 30% Actual 10% 20% 30%
Beta Levered 0.85 0.8706332681 0.8922931792 0.9150583116
Interest rate (1) 6.16% 6.16% 6.16% 6.16%
Tax rate 32.5% 32.5% 32.5% 32.5%
Earnings before income taxes and interest(2) 30,054 30,054 30,054 30,054 ROE 0.089863118 0.0952250508 0.1019274667 0.1105448587
Interest expense 0 1,391 2,783 4,174
Earnings before taxes 30,054 28,663 27,271 25,880 EPS 0.6968417439
Income taxes 9,755 9,303 8,852 8,400
Net income 20,299 19,359 18,419 17,480
Book value:
Debt 0 22,589 45,178 67,766
Equity 225,888 203,299 180,710 158,122
Total capital 225,888 225,888 225,888 225,888
Market value:
Debt(3) 0 22,589 45,178 67,766
Equity(4) 643,773 628,516 613,259 598,002
Market value of capital 643,773 651,105 658,437 665,769 Actual 10% 20% 30%
Number of shares outstanding 29130 29130 29130 29130 Market value per share 22.1 22.3516967844 22.6033935689 22.8550903533
Book Value per share 7.7544799176 7.7544799176 7.7544799176 7.7544799176
Notes: Selisih 14.3455200824 14.5972168668 14.8489136513 15.1006104357
(1) Interest rate of CPK’s credit facility with Bank of America: LIBOR + 0.80%.
(2) EBIT includes interest income.
(3) 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).
Source: Case writer analysis based on CPK financial data.
0 Debt/Total Capital
Actual 10% 20% 30%
interest tax shield 0 7341.36 14682.72 22024.08
jumlah saham beredar 29130 29130 29130 29130
market value per share 22.1 22.3516967844 22.6033935689 22.8550903533
jumlah saham yang dibeli kembali 0 1010.6078396573 1998.7087276218 2965.0462523827
jmlh shm yg dbeli kembali(dibulatkan) 0 1010 1998 2965
jumlah saham setelah repurchase 29130 28120 27132 26165
Debt/Total Capital
Actual 10% 20% 30%
net income 20299 19359.1766435776 18419.3532871551 17479.5299307327
jumlah saham setelah repurchase 29130 28120 27132 26165
EPS 0.6968417439 0.6884486715 0.6788793044 0.6680500642

CAPM

Actual 10% 20% 30%
Beta 0.85 0.8706332681 0.8922931792 0.9150583116
RF 0.052 0.052 0.052 0.052
RM 0.149946 0.14995 0.1499463184 0.1499463184
MRP 0.0979463184 0.0979463184 0.0979463184 0.0979463184
Cost of equity 13.53% 13.73% 13.94% 14.16%

WACC

Actual 10% 20% 30%
Debt(3) 0 22588.8 45177.6 67766.4
Equity(4) 643773 628516.127330804 613259.254661609 598002.381992414
Market value of capital 643773 651104.927330805 658436.854661609 665768.781992414
Cost of debt 6.16% 6.16% 6.16% 6.16%
(1-tax) 0.675 0.675 0.675 0.675
Ke 0.1352543706 0.1372753233 0.1393968318 0.1416265927
W debt 0 0.0346930257 0.0686134132 0.1017866891
W equity 1 0.9653069743 0.9313865868 0.8982133109
WACC 13.53% 13.40% 13.27% 13.14%

Sheet1

(Number in Thousands Except Price per Share) Debt to Total Capital Level
Actual 10% 20% 30%
MV Equity $ – 0 $ 22,589.00 $ 45,178.00 $ 67,766.00
Tax Rate 32.5% 32.5% 32.5% 32.5%
PV Tax Shield $ – 0 $ 7,341.43 $ 14,682.85 $ 22,023.95
# Of Shares Before Announcement 29,130 29,130 29,130 29,130
Increase in Value to Shareholders $ – 0 $ 0.25 $ 0.50 $ 0.76
Original Price $ 22.10 $ 22.10 $ 22.10 $ 22.10
Share Price After Announcement $ 22.10 $ 22.35 $ 22.60 $ 22.86
MV Equity $ – 0 $ 22,589.00 $ 45,178.00 $ 67,766.00
New Share Price $ 22.10 $ 22.35 $ 22.60 $ 22.86
# of Shares Able to Repurshase – 1,011 1,999 2,965
# of Original Shares 29,130 29,130 29,130 29,130
# of Shares After Repurchase 29,130 28,119 27,131 26,165

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