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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED April 3, 2011

OR

 

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 000-31149

 

 

California Pizza Kitchen, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		95-4040623
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

6053 West Century Boulevard, 11th Floor

Los Angeles, California 90045-6438

(Address of principal executive offices, including zip code)

(310) 342-5000

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     YES   x     NO   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).*     YES   ¨     NO   ¨

 

*	The registrant has not yet been phased into the interactive data requirements.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer     ¨		Accelerated filer     x		Non-accelerated filer     ¨		Smaller reporting company     ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     YES   ¨     No   x

As of April 29, 2011, 24,586,372 shares of the registrant’s Common Stock, $0.01 par value, were outstanding.

 

 

 

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California Pizza Kitchen, Inc. and Subsidiaries

TABLE OF CONTENTS

 

				Page No.
PART I - Financial Information
Item 1.		Financial Statements:
		Condensed Consolidated Balance Sheets at April 3, 2011 (unaudited) and January 2, 2011			3
		Condensed Consolidated Statements of Operations for the Three Months Ended April 3, 2011 and April 4, 2010 (unaudited)			4
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 3, 2011 and April 4, 2010 (unaudited)			5
		Notes to Condensed Consolidated Financial Statements (unaudited)			6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			12
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			18
Item 4.		Controls and Procedures			19
PART II - Other Information
Item 1.		Legal Proceedings			20
Item 1A.		Risk Factors			20
Item 6.		Exhibits			20
Signatures					21
Index to Exhibits					22

 

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PART I – FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS.

California Pizza Kitchen, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except for share data)

 

		April 3, 2011				January 2, 2011
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	17,054			$	21,230
Other receivables			10,238				11,594
Inventories			5,696				5,827
Current deferred tax asset, net			8,224				8,225
Prepaid rent			97				231
Other prepaid expenses			2,731				2,518
Total current assets			44,040				49,625
Property and equipment, net			236,535				241,446
Noncurrent deferred tax asset, net			22,180				22,101
Goodwill			4,622				4,622
Other intangibles, net			4,817				4,837
Other assets			8,421				8,313
Total assets		$	320,615			$	330,944
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	14,542			$	17,075
Accrued compensation and benefits			18,417				23,273
Accrued rent			20,072				20,424
Deferred rent credits			4,101				4,058
Other accrued liabilities			13,593				13,744
Gift card liability			8,852				14,577
Income taxes payable			59				—
Total current liabilities			79,636				93,151
Long-term debt			—				—
Other liabilities			9,967				9,886
Deferred rent credits, net of current portion			33,523				33,177
Income taxes payable, net of current portion			319				319
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock - $0.01 par value, 80,000,000 shares authorized, 24,583,702 and 24,579,797 shares issued and outstanding at April 3, 2011 and January 2, 2011, respectively			246				246
Additional paid-in capital			180,197				179,563
Retained earnings			16,727				14,602
Total stockholders’ equity			197,170				194,411
Total liabilities and stockholders’ equity		$	320,615			$	330,944

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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California Pizza Kitchen, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (unaudited)

(in thousands, except per share data)

 

		Three Months Ended
		April 3, 2011				April 4, 2010
Revenues:
Restaurant sales		$	153,549			$	154,429
Royalties from licensing agreement			1,052				1,044
Domestic franchise revenues			760				672
International franchise revenues			602				549
Total revenues			155,963				156,694
Costs and expenses:
Food, beverage and paper supplies			36,975				36,387
Labor			58,915				58,812
Direct operating and occupancy			35,001				35,083
Cost of sales			130,891				130,282
General and administrative			12,041				12,741
Depreciation and amortization			9,022				9,135
Pre-opening costs			233				302
Store closure costs			55				466
Litigation, settlement and other costs			929				289
Total costs and expenses			153,171				153,215
Operating income			2,792				3,479
Interest expense, net			(3	)			(36	)
Income before income tax provision			2,789				3,443
Income tax provision			664				943
Net income		$	2,125			$	2,500
Net income per common share:
Basic		$	0.09			$	0.10
Diluted		$	0.09			$	0.10
Weighted average shares used in calculating net income per common share:
Basic			24,583				24,233
Diluted			24,962				24,418

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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California Pizza Kitchen, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

 

		Three Months Ended
		April 3, 2011				April 4, 2010
Operating activities:
Net income		$	2,125			$	2,500
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			9,022				9,135
Stock-based compensation expense			711				1,130
Excess tax benefit from employee stock option exercises			—				62
Amortization of deferred rent credits			(1,016	)			(316	)
Changes in operating assets and liabilities:
Other receivables			1,356				4,230
Inventories			131				(70	)
Prepaid expenses and other assets			(187	)			(812	)
Net deferred tax assets			(108	)			(194	)
Liquor licenses			(15	)			(45	)
Accounts payable			(2,391	)			(3,180	)
Accrued liabilities			(4,619	)			(7,681	)
Gift card liability			(5,725	)			(4,756	)
Other liabilities			81				5
Deferred rent credits			1,405				2,674
Net cash provided by operating activities			770				2,682
Investing activities:
Capital expenditures *			(4,946	)			(6,069	)
Net cash used in investing activities			(4,946	)			(6,069	)
Financing activities:
Borrowings on credit facility			11,000				24,900
Repayments on credit facility			(11,000	)			(37,200	)
Net proceeds from issuance of common stock			—				1,751
Excess tax benefit from employee stock option exercises			—				(62	)
Net cash used in financing activities			—				(10,611	)
Net decrease in cash and cash equivalents			(4,176	)			(13,998	)
Cash and cash equivalents at beginning of period			21,230				21,424
Cash and cash equivalents at end of period		$	17,054			$	7,426
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes		$	71			$	507
Cash paid during the period for interest		$	36			$	67
Supplemental disclosure of non-cash investing activities:
* Property, plant and equipment purchased and included in accounts payable and other accrued liabilities		$	870			$	2,095
Supplemental disclosure of non-cash financing activities:
* Taxes related to employee option exercises included in accrued liabilities		$	47			$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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California Pizza Kitchen, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

April 3, 2011

(unaudited)

1. Basis of Presentation

As of April 3, 2011, California Pizza Kitchen, Inc. and its wholly owned subsidiaries (collectively, the “Company”) owned, operated, licensed or franchised 266 restaurants under the names California Pizza Kitchen, California Pizza Kitchen ASAP and LA Food Show in 32 states and 11 foreign countries, of which 207 are company-owned and 59 operate under franchise or license arrangements.

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month period ended April 3, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending January 1, 2012.

The condensed consolidated balance sheet at January 2, 2011 has been derived from the audited consolidated financial statements at that date, but does not include all the information and footnotes required by GAAP for complete financial statements.

The preparation of financial statements in accordance with GAAP requires the Company to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.

Certain reclassifications have been made to prior year balances to conform to the current year presentation.

2. Common Stock

In accordance with the Company’s stock option plan, employees exercised 42,313 options on a net-settled basis during the three months ended April 3, 2011 which resulted in the issuance of 3,171 shares of common stock.

3. Fair Value Measurement

Our financial instruments are primarily comprised of cash and cash equivalents, receivables, accounts payable, accrued liabilities and long-term debt. The Company believes the fair values of cash equivalents, accounts receivable, accounts payable and long-term debt approximate their carrying amounts due to their short durations. All borrowings are classified as long-term debt as our credit facility matures more than one year after the balance sheet date. Actual borrowings are generally short-term LIBOR contracts which mature every 30 days.

The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value of assets and liabilities. These tiers include:

 

•

Level 1: Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

 

•

Level 2: Defined as pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures.

 

•

Level 3: Defined as pricing inputs that are generally less observable than inputs from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

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We do not hold any marketable securities in current assets as of April 3, 2011. We primarily hold marketable securities in the form of investments in mutual funds within corporate owned life insurance (“COLI”) contracts to support our Executive Retirement Savings Plan. We also hold non-COLI mutual funds to support this plan. These securities, included in other assets in the consolidated balance sheets, are classified as trading securities. Gains or losses related to the program are reflected in net income. For assets that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets measured using significant other observable inputs are reported at fair value based on third-party broker statements which are derived from the fair value of the funds’ underlying investments.

The assets measured at fair value on a recurring basis at April 3, 2011 were as follows (in thousands):

 

		Fair Value Measurement at Reporting Date Using
		Quoted Prices in Active markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Deferred compensation mutual funds		$	282			$	—			$	—
Deferred compensation COLI			408				5,819				—
Balance at April 3, 2011		$	690			$	5,819			$	—

 

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4. Equity-Based Compensation

Stock-based compensation expense includes compensation expense, recognized over the applicable vesting periods, for both stock options and restricted stock awards granted by the Company. The impact of stock-based compensation expense for the quarter ended April 3, 2011 on income before income tax provision was $0.7 million or $0.03 on diluted earnings per share. The impact of stock-based compensation expense for the quarter ended April 4, 2010 on income before income tax provision was $1.1 million or $0.05 on diluted earnings per share.

Reported stock-based compensation was classified as follows (in thousands):

 

		Three Months Ended
		April 3, 2011				April 4, 2010
Labor		$	14			$	38
General and administrative			673				1,092
Total stock-based compensation expense		$	687			$	1,130
Capitalized stock-based compensation (1)		$	24			$	31

 

(1)	Capitalized stock-based compensation is included in property and equipment, net on the consolidated balance sheets.

No options were issued during the three months ended April 3, 2011 or April 4, 2010.

Information regarding activity for stock options under our plans is as follows:

 

		Shares				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (in years)				Aggregate Intrinsic Value
Outstanding at January 2, 2011			5,321,187			$	15.89
Options exercised			(42,313	)			14.67
Options cancelled			(2,167	)			17.77
Outstanding at April 3, 2011			5,276,707				15.90				4.47			$	7,599,656
Vested and exercisable at April 3, 2011			4,977,016				16.07				4.31			$	6,480,629

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between our closing stock price and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on April 3, 2011. This amount changes based on the fair market value of our stock. Total intrinsic value of options exercised for the quarter ended April 3, 2011 was $0.1 million.

 

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A summary of the status of the Company’s nonvested options as of April 3, 2011, and changes during the quarter ended April 3, 2011, is as follows:

 

		Nonvested Shares
		Shares				Weighted Average Grant Date Fair Value
Nonvested at January 2, 2011			483,118			$	4.78
Options vested			(183,380	)			4.91
Options cancelled			(47	)			5.47
Nonvested at April 3, 2011			299,691			$	4.70

As of April 3, 2011, total unrecognized stock-based compensation expense related to nonvested stock options was approximately $1.2 million, which is expected to be recognized over a weighted average period of approximately 1.4 years. As of April 3, 2011, there were 0.1 million shares of common stock available for issuance pursuant to future stock awards.

Information regarding activity for restricted shares under our plans is as follows:

 

		Shares				Weighted Average Grant Date Fair Value
Outstanding at January 2, 2011			243,612			$	18.33
Restricted shares granted			—				—
Restricted shares vested			(30,000	)			21.56
Restricted shares cancelled			—				—
Outstanding at April 3, 2011			213,612			$	17.88

Fair value of the restricted shares is based on our closing stock price on the date of grant. As of April 3, 2011, total unrecognized stock-based compensation expense related to nonvested restricted shares was $2.7 million, which is expected to be recognized over a weighted average period of approximately 1.9 years.

5. Income Taxes

We currently have significant deferred tax assets, which are subject to periodic recoverability assessments. Realizing these deferred tax assets principally depends upon achieving projected future taxable income. We may change our judgment regarding future profitability based on our expectations of future market conditions and other factors. We may adjust our deferred tax asset balances if our judgment changes.

The effective income tax rate was 23.8% for three months ended April 3, 2011 compared to 27.4% for the three months ended April 4, 2010. As of April 3, 2011, the Company’s effective income tax rate differs from the statutory income tax rate as the result of employment related tax credits and state tax credits.

Our tax rate may be affected by future acquisitions, changes in the geographic composition of our income from operations, changes in our estimates of credits or deductions as well as the resolution of issues arising from tax audits with various tax authorities.

The Company utilizes a “more likely than not” threshold and measurement criteria for uncertain tax positions recognized in the financial statements resulting from tax positions taken or expected to be taken in the Company’s tax return. The Company recognizes the financial statement effect of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination.

 

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As of April 3, 2011, the Company had $187,000 of total gross unrecognized tax benefits, excluding interest and penalties. The Company remains open to examination by state and local tax jurisdictions for tax years 2006 and forward. The Company has been audited by the Internal Revenue Service through the 2008 tax year.

6. Net Income Per Common Share

Reconciliation of the components included in the computation of basic and diluted net income per common share for the quarter ended April 3, 2011 and April 4, 2010, is as follows (in thousands):

 

		Three Months Ended
		April 3, 2011				April 4, 2010
Numerator for basic and diluted net income per common share		$	2,125			$	2,500
Denominator:
Denominator for basic net income per common share - weighted average shares			24,583				24,233
Dilutive effect of employee stock options			379				185
Denominator for diluted net income per common share - weighted average shares			24,962				24,418

For the quarter ended April 3, 2011 and April 4, 2010, approximately 0.3 million and 0.6 million stock options, respectively, have been excluded from the computation of diluted earnings per share because to do so would have been antidilutive for the periods presented.

 

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7. Commitments and Contingencies

On April 27, 2007, three former hourly restaurant employees in the State of California filed a class-action lawsuit in the San Francisco Superior Court. The parties purport to represent other current and former hourly California restaurant employees. The lawsuit alleges violations of state wage-and-hour laws involving the purchase of items of apparel required to be worn by hourly employees and reimbursement for laundering of these items of apparel and seeks unspecified monetary damages. On August 11, 2010, the Court granted class certification in this matter. We deny any liability with respect to these allegations and intend to vigorously defend ourselves in this action. An estimate of the possible loss, if any, or the range of the loss cannot be made at this time.

On July 3, 2007, two former hourly restaurant employees in the State of California filed a class-action lawsuit in the Los Angeles Superior Court alleging violations of state wage-and-hour laws. The parties purport to represent other current and former hourly California restaurant employees. The lawsuit alleges violations of state wage-and-hour laws involving allegations of work performed off the clock, improper reduction in hours, failure to provide meal and rest breaks and failure to reimburse employees for expenses incurred in the course of employment. The plaintiffs seek unspecified monetary damages. On April 22, 2008 and on April 25, 2008, former hourly employees in the State of California filed two additional lawsuits in Los Angeles Superior Court alleging similar wage-and-hour violations, and on December 4, 2008, the Court coordinated the three cases. In December 2008, a proposed settlement was not approved by the Court. The Company has accrued a loss contingency based on the proposed settlement which is not considered to be material to our consolidated financial position. We deny any liability with respect to these allegations and intend to vigorously defend ourselves in this action.

On May 19, 2008, a class-action lawsuit was filed in the State of California in the San Diego Superior Court against the Company. The lawsuit was filed by a former restaurant manager on behalf of himself and other current and former restaurant managers employed in California. The lawsuit alleges violations of state wage-and-hour laws involving the exempt status of managers, alleges violations of meal and rest breaks and unpaid overtime and seeks unspecified monetary damages. On October 7, 2010, the Company entered into a proposed settlement of all claims in the action. This proposed settlement is subject to court approval. The proposed settlement does not involve any admission of wrongdoing or liability and, subject to court approval, will result in the dismissal of the lawsuit’s claims against the Company. Under the proposed settlement, class members can submit claims pursuant to a Court approved process whereby the Company would pay an amount not to exceed $4.0 million to settle claims asserted on behalf of the class. The Company has accrued a legal settlement reserve based on its best estimate of costs to be incurred relative to this case. The Company anticipates plaintiffs’ counsel will be filing a motion in the Superior Court in the near future requesting approval of the proposed settlement. The Company cannot provide any assurances that the Court will approve the proposed settlement.

Other than the aforementioned class-action lawsuits, we are subject to certain private lawsuits, administrative proceedings and other claims that arise in the ordinary course of our business. Such claims typically involve claims from guests, employees and others related to operational issues common to the food service industry. A number of such claims may exist at any given time. We could be affected by adverse publicity resulting from such allegations, regardless of whether such allegations are valid or whether we are found to be liable. From time to time, we are also involved in lawsuits with respect to infringements of, or challenges to, our registered trademarks.

 

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

This report contains forward-looking statements that involve risks and uncertainties. These statements relate to our future plans, objectives, expectations and intentions. These statements may be identified by the use of words such as “expects,” “anticipates,” “intends,” “plans” and similar expressions. Our actual results could differ materially from those discussed in these statements. Factors that could contribute to these differences include those discussed under “Risk Factors” of our 2010 Annual Report on Form 10-K. The forward-looking statements speak only as of the date of this report and undue reliance should not be placed on these statements. We disclaim any obligation to update any forward-looking statements contained herein after the date of this report except as otherwise required by our periodic reporting obligations under applicable federal securities laws. The cautionary statements made in this report should be read as being applicable to all forward-looking statements wherever they appear in this report.

General

California Pizza Kitchen, Inc. and its subsidiaries (collectively, referred to herein as the “Company” or in the first person notations “we”, “us” and “our”) is a leading casual dining restaurant chain with a particular focus on the premium pizza segment. As of April 3, 2011, we own, license or franchise 266 locations in 32 states and 11 foreign countries. We have 59 locations that operate under franchise or license agreements and use the California Pizza Kitchen and California Pizza Kitchen ASAP brand names and trademarks.

The following table details the number of locations as of April 3, 2011:

 

		Total Units at January 2, 2011				Opened				Closed				Total Units at April 3, 2011
First Quarter 2011
Company-owned full-service domestic			200				1				1				200
Company-owned ASAP domestic			5				—				1				4
Company-owned LA Food Show			2				—				—				2
Company-owned full-service international			1				—				—				1
Franchised domestic			20				—				—				20
Franchised international			32				2				1				33
Campus, sports & entertainment venues (seasonal)			6				—				—				6
Total			266				3				3				266

Through a licensing agreement with Nestlé USA, Inc. (“Nestlé”), California Pizza Kitchen branded frozen pizzas are available in approximately 22,000 locations in all 50 states.

We opened our first restaurant in 1985 in Beverly Hills, California and during our 26 years of operating history, we believe we have developed strong brand awareness and demonstrated the appeal of our concept in a wide variety of geographic areas. Our restaurants, which feature an exhibition-style kitchen centered around an open-flame oven, provide a distinctive casual dining experience that is family friendly and has a broad consumer appeal.

We manage our operations by restaurant and have aggregated our operations into one reportable segment. We analyze this segment in terms of our company-owned full-service restaurants.

Overview

Our revenues are comprised of restaurant sales, license fees, domestic franchise royalties and international franchise royalties. Our restaurant sales are primarily comprised of food and beverage sales and also include supplemental gift card revenue. License fees are from our trademark license agreement with Nestlé, and domestic and international franchise royalties consist of monthly royalty income and initial franchise fees.

Cost of sales is comprised of food, beverage and paper supplies, labor and direct operating and occupancy expenses. The components of food, beverage and paper supplies are variable and increase with sales volume. Labor costs include direct hourly and management wages, stock-based compensation, bonuses and taxes and benefits for restaurant employees. Direct operating and occupancy costs include restaurant supplies, marketing costs, fixed rent, percentage rent, common area maintenance charges, utilities, real estate taxes, repairs and maintenance and other related restaurant costs. Direct operating and occupancy costs generally increase with sales volume but decline as a percentage of restaurant sales.

General and administrative costs include all corporate and administrative functions that support existing operations and provide infrastructure to facilitate our future growth. Components of this category include management, supervisory and staff salaries and related employee benefits, stock-based compensation, travel and relocation costs, information systems, training, corporate rent and legal, professional and consulting fees.

 

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Depreciation and amortization principally includes depreciation on capital expenditures for restaurants.

Pre-opening costs, which are expensed as incurred, currently consist of rent from the date construction begins through the restaurant opening date, the costs of hiring and training the initial work force, travel, the cost of food used in training, marketing costs, the cost of the initial stocking of operating supplies and other direct costs related to the opening of a restaurant.

Store closure costs may include lease termination costs, landlord fees, severance charges or other expenses related to the closure of a company-owned restaurant.

Litigation, settlement and other costs include external legal costs related to defending or settling various employee-related lawsuits or claims, whether class-action or individual, regardless of merit, and the costs to review strategic alternatives.

Our fiscal year consists of 52 or 53 weeks and ends on the Sunday closest to December 31 in each year. The three-month periods ended April 3, 2011 and April 4, 2010 each consisted of 13 weeks. In calculating comparable company-owned full-service restaurant sales, we include a restaurant in the comparable base once it has been open for 18 months. As of April 3, 2011, we had 191 company-owned restaurants that met this criterion.

Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. When we prepare these financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to gift card revenue recognition, self-insurance, leasing activities, income taxes, intangible assets, long-lived assets and stock-based compensation. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different conditions or using different assumptions. For a detailed discussion of our critical accounting policies please refer to our 2010 Annual Report on Form 10-K. Our critical accounting policies and estimates have not changed materially during the three months ended April 3, 2011.

 

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Results of Operations

Our operating results for the three months ended April 3, 2011 and April 4, 2010 are expressed as a percentage of revenues below, except for cost of sales, which is expressed as a percentage of restaurant sales:

 

		Three Months Ended
		April 3, 2011				April 4, 2010
Statement of Operations Percentages:
Revenues:
Restaurant sales			98.4	%			98.5	%
Royalties from licensing agreement			0.7	%			0.7	%
Domestic franchise revenues			0.5	%			0.4	%
International franchise revenues			0.4	%			0.4	%
Total revenues			100.0	%			100.0	%
Costs and expenses:
Food, beverage and paper supplies			24.1	%			23.6	%
Labor			38.4	%			38.1	%
Direct operating and occupancy			22.8	%			22.7	%
Cost of sales			85.3	%			84.4	%
General and administrative			7.7	%			8.1	%
Pre-opening costs			0.1	%			0.2	%
Operating income before depreciation and amortization, store closure costs and litigation, settlement and other costs (1)			8.2	%			8.5	%
Depreciation and amortization			5.8	%			5.8	%
Store closure costs			0.0	%			0.3	%
Litigation, settlement and other costs			0.6	%			0.2	%
Total costs and expenses			98.2	%			97.8	%
Operating income			1.8	%			2.2	%
Interest expense, net			0.0	%			0.0	%
Income before income tax provision			1.8	%			2.2	%
Income tax provision			0.4	%			0.6	%
Net income			1.4	%			1.6	%

The following table presents costs of sales as a percentage of restaurant sales excluding supplemental gift card revenue:

 

Food, beverage and paper supplies			24.2	%			23.8	%
Labor			38.5	%			38.4	%
Direct operating and occupancy			22.9	%			22.9	%
Cost of sales			85.6	%			85.1	%

 

(1)

This is a non-GAAP measure and is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. We believe this measure provides additional information to facilitate the comparison of our past and present financial results and provides an additional means for investors to evaluate business performance. However, use of this measure should not be construed as an indication that our future results will be unaffected by excluded items.

(2)	For the three months ended April 3, 2011, other costs represent expenses related to the review of strategic alternatives.

 

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Three Months Ended April 3, 2011 Compared to the Three Months Ended April 4, 2010

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.

Food, beverage and paper supplies. Food, beverage and paper supplies increased $0.6 million, or 1.6%, to $37.0 million in the first quarter of 2011 from $36.4 million in the first quarter of 2010. Food, beverage and paper supplies as a percentage of restaurant sales were 24.1% in the first quarter of 2011 compared to 23.6% in the first quarter of 2010. Excluding supplemental gift card revenue, food, beverage and paper supplies as a percentage of restaurant sales were 24.2% in the first quarter of 2011 compared to 23.8% in the first quarter of 2010. The increase in food, beverage and paper supplies as a percentage of restaurant sales was primarily the result of the commodity inflation of our produce and dairy goods.

Labor. Labor increased $0.1 million, or 0.2%, to $58.9 million in the first quarter of 2011 from $58.8 million in the first quarter of 2010. As a percentage of restaurant sales, labor was 38.4% in the first quarter of 2011 compared to 38.1% in the first quarter of 2010. Excluding supplemental gift card revenue, labor as a percentage of restaurant sales was 38.5% in the first quarter of 2011 compared to 38.4% in the first quarter of 2010. The increase in labor as a percentage of revenue was primarily related to increases in management labor expense and taxes and benefits, partially offset by lower hourly labor expense as a result of efficiencies achieved in hourly labor management related to our menu optimization initiatives.

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.

General and administrative. General and administrative costs decreased $0.7 million, or 5.5%, to $12.0 million in the first quarter of 2011 from $12.7 million in the first quarter of 2010. General and administrative costs as a percentage of total revenues were 7.7% in the first quarter of 2011 compared to 8.1% in the first quarter of 2010. The decrease was primarily the result of lower bonus and stock-based compensation expense as well as reduced travel and entertainment expenses.

Pre-opening costs. Pre-opening costs decreased $0.1 million, or 22.8%, to $0.2 million in the first quarter of 2011 from $0.3 million in the first quarter of 2010. The decrease in pre-opening costs primarily related to lower construction period rent as the result of fewer stores under construction in first quarter of 2011 compared to the first quarter of 2010.

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.

Store closure costs. Store closure costs were $0.1 million in the first quarter of 2011 compared to $0.5 million in the first quarter of 2010. The decrease in store closure costs was principally attributable to the types of costs incurred. Store closure costs in the first quarter of 2011 primarily related to severance charges while the expenses in first quarter of 2010 related to termination fees. Severance charges related to store closures are typically lower than termination fees.

Litigation, settlement and other costs. We incurred $0.9 million in litigation, settlement and other costs in the first quarter of 2011 compared to $0.3 million in the first quarter of 2010. The increase was primarily the result of the on-going defense costs associated with class-action lawsuits and the accrued legal costs associated with the strategic alternatives process. See “Legal Proceedings” in Part II, Item 1 for a further description of current litigation.

Interest expense, net. Net interest expense decreased to $3,000 in the first quarter of 2011 compared to $36,000 in the first quarter of the prior year. The decrease in net interest expense resulted from a lower average debt balance in the first quarter of 2011 compared to the first quarter of 2010.

 

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Income tax provision. The effective income tax rate was 23.8% for first quarter of 2011 compared to 27.4% for the first quarter of 2010. Our effective income tax rate for the first quarter of 2011 differs from the statutory income tax rate primarily as the result of employment-related tax credits and state tax credits, with an increase in state tax credits driving the effective tax rate decrease as compared to the first quarter of 2010.

Factors That May Influence Future Results of Operations

Our quarterly operating results may fluctuate significantly as a result of a variety of factors, including the timing of new restaurant openings and related expenses, profitability of new restaurants, increases or decreases in comparable restaurant sales, general economic conditions, consumer confidence in the economy, changes in consumer preferences, competitive factors, changes in food costs, changes in labor costs, war and weather conditions. In the past, we have experienced significant variability in pre-opening costs from quarter to quarter. These fluctuations are primarily a function of the timing of restaurant openings. We typically incur the most significant portion of pre-opening costs associated with a given restaurant in the month of opening. In addition, our experience to date has been that labor and direct operating and occupancy costs associated with a newly opened restaurant during the first three to four months of operation are often materially greater than what would be expected after that time, both in aggregate dollars and as a percentage of restaurant sales. Accordingly, the number and timing of new restaurant openings in any quarter has had, and is expected to continue to have, a significant impact on quarterly pre-opening costs, labor and direct operating and occupancy costs.

We expect to focus our efforts in 2011 on the restaurants we currently operate, and as such, plan to open approximately five new company-owned locations in 2011. One location opened in the first quarter, and the remaining four are expected to open in the second half of the year; two of these openings will be CPK/ASAP conversions to full-service restaurants. We estimate capital expenditures of approximately $25.0 million, excluding landlord contributions, which will be used primarily for building new locations, remodels, CPK/ASAP conversions and capitalized maintenance. We expect to finance these capital expenditures with cash flows from operations. We will continue to review our portfolio for underperforming restaurants, and where advantageous, exit such locations. We anticipate closing three company-owned restaurants in the second quarter of 2011. We also expect our international franchisees to open approximately 10 restaurants in 2011, of which two locations opened in the first quarter of 2011, two locations will open in the second quarter of 2011 and the remainder will open in the second half of the year. Franchise openings may change based on the ability of our franchise partners to execute their expansion plans.

We expect to continue to experience higher commodity costs and increased labor wage rates during the remainder of fiscal 2011. To offset some of these inflationary pressures, we have a series of cost reduction programs planned. We began implementation of our menu optimization program in the first quarter of 2011 which targets margin and productivity improvements by eliminating items that have low sales volumes and require labor intensive preparation. We expect operating expenses to continue to be reduced as a result of this program.

Seasonality

Our business is subject to seasonal fluctuations and adverse weather. Our results of operations have historically been impacted by seasonality, which directly impacts tourism at our coastal California locations. The summer months (June through August) have traditionally been higher sales volume periods than other periods of the year. Holidays, severe winter weather, hurricanes, thunderstorms and similar conditions may impact restaurant sales volumes seasonally in some of the markets where we operate. Many of our restaurants are located in or near shopping centers and malls that typically experience seasonal fluctuations in sales. As a result of these and other factors, our financial results for any given quarter may not be indicative of the results that may be achieved for a full fiscal year. Further, there can be no assurance that these same seasonal trends will occur in 2011.

 

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Liquidity and capital resources

The following table presents a summary of our cash flows for the three months ended April 3, 2011 and April 4, 2010 (in thousands):

 

		Three Months Ended
		April 3, 2011				April 4, 2010
Net cash provided by operating activities		$	770			$	2,682
Net cash used in investing activities			(4,946	)			(6,069	)
Net cash used in financing activities			—				(10,611	)
Net decrease in cash and cash equivalents		$	(4,176	)		$	(13,998	)

Operating activities. We fund our capital requirements principally through cash flow from operations and borrowings from our line of credit. Net cash provided by operating activities was $0.8 million in the first quarter of 2011 compared to $2.7 million in the first quarter of 2010. Net cash provided by operating activities was less than net income in the first quarter of 2011 and exceeded net income in the first quarter of 2010 primarily as the result of the cumulative increase in depreciation and amortization and non-cash compensation charges in the first quarter of 2011 as compared to the first quarter of 2010. Other than the effects of changes in non-cash items, the decrease in net cash provided by operating activities in the first quarter of 2011 as compared to the first quarter of 2010 primarily related to less cash provided by other receivables, deferred rent credits as the result of fewer additions for new store leases in the current year and other liabilities as well as an increased use of cash for the gift card liability as the result of higher gift card redemptions. These changes were partially offset by a decrease in cash used for inventories, prepaid expenses, deferred tax assets, accounts payable and accrued liabilities.

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.

Financing activities. Approximately no net cash was used in financing activities for the first quarter of 2011 compared to $10.6 million for the first quarter of 2010. Prior year activity included the $12.3 million net repayment of debt under the credit facility in the prior year, offset by $1.7 million in net proceeds from stock option exercises.

The Company has a five-year revolving credit facility (the “Facility”) with a syndicate of banks, featuring a maximum available borrowing capacity of $150.0 million. The Facility contains an uncommitted option to increase, subject to satisfaction of certain conditions, the maximum borrowing capacity by up to an additional $50.0 million. The Facility contains certain restrictive and financial covenants, including that the Company maintain a minimum consolidated fixed charge coverage ratio and a maximum lease adjusted leverage ratio. The Facility is guaranteed by one of the Company’s subsidiaries and stipulates certain events of default.

Borrowings under the Facility bear interest at either the London Interbank Offered Rate (“LIBOR”) or the prime rate, at the Company’s 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 Company’s 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.

Future capital requirements. Our capital requirements, including costs related to opening additional restaurants, have been and will continue to be significant. Our future cash requirements and the adequacy of available funds will depend on many factors, including the pace of expansion, real estate markets, site locations and the nature of arrangements negotiated with landlords. We believe that our current cash balances, together with anticipated cash flows from operations and funds anticipated to be available from the Facility, will be sufficient to satisfy our working capital and capital expenditure requirements on a short-term and long-term basis. Changes in our operating plans, acceleration of our expansion plans, lower than anticipated sales, increased expenses, failure to meet financial covenant requirements under the Facility or other events may cause us to seek additional financing sooner than anticipated. Additional financing may not be available on acceptable terms, or at all. Failure to obtain additional financing as needed could have a material adverse effect on our business and results of operations. The Company expects to use any excess working capital generated in 2011 to finance capital expenditures and to build our cash reserves.

 

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As of April 3, 2011, we had no financing transactions, arrangements or other relationships with any unconsolidated entities or related parties. Additionally, we had no financing arrangements involving synthetic leases or trading activities involving commodity contracts.

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.

Off-Balance Sheet Arrangements

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities (“VIEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of April 3, 2011, we are not involved in any VIE transactions and do not otherwise have any off-balance sheet arrangements.

Contractual Obligations

As of April 3, 2011 we had no long-term borrowings. The following table summarizes our contractual commitments as of the period indicated (in thousands):

 

		As of April 3,  2011				As of January 2,  2011
Operating lease obligations (1)		$	215,259			$	220,026
Purchase obligations (2)			4,958				—
Unrecognized tax benefits (3)			—				—
		$	220,217			$	220,026

 

(1)	Represents aggregate minimum lease payments. Most of the leases require contingent rent in addition to the minimum rent based on a percentage of sales and require expenses incidental to the use of the property.

(2)	Purchase obligations represent estimated construction commitments and exclude agreements that are cancelable without significant penalty.

(3)

Because of the uncertainty with respect to the timing of future cash flows associated with unrecognized tax benefits at April 3, 2011, the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Accordingly, $319,000 of unrecognized tax benefits and associated interest and penalties have been excluded from the contractual obligations table above.

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risk exposures are related to our cash and cash equivalents and marketable securities. Cash equivalents may from time-to-time include money market funds which are invested in highly liquid short-term debt investments with maturities of less than three months as of the date of purchase. Changes in interest rates affect the investment income we could earn on our cash and cash equivalents and, therefore, impact our cash flows and results of operations. As of April 3, 2011, we did not hold any money market funds in our cash and cash equivalents nor any other short-term investments or marketable securities in our current assets. We are, however, subject to market risk related to the marketable securities that we hold as investments in mutual funds and corporate owned life insurance (“COLI”) contracts used to support our Executive Retirement Savings Plan to the extent these investments are not equivalent to the related liability. These marketable securities are included in other assets on the consolidated balance sheets. The full impact of gains or losses in marketable securities related to the program is reflected in net income. Activity within the COLI investments is generally not subject to income tax.

 

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ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our co-CEOs and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating these disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In connection with the preparation of this quarterly report on Form 10-Q, as of April 3, 2011, an evaluation was performed under the supervision and with the participation of our management, including the co-CEOs and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our Company’s co-CEOs and CFO concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of April 3, 2011.

Change in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the quarter ended April 3, 2011 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

ITEM 1.

LEGAL PROCEEDINGS

On May 19, 2008, a class-action lawsuit was filed in the San Diego Superior Court against California Pizza Kitchen. The lawsuit was filed by a former restaurant manager on behalf of himself and other current and former restaurant managers employed in California. The lawsuit alleged violations of state wage-and-hour laws involving the exempt status of managers, resulting in alleged violations of meal and rest breaks and unpaid overtime, and sought unspecified monetary damages. On October 7, 2010, the Company entered into a proposed settlement of all claims in the action. This proposed settlement is subject to court approval. The proposed settlement does not involve any admission of wrongdoing or liability and, subject to court approval, will result in the dismissal of the lawsuit’s claims against the Company. Under the proposed settlement, class members can submit claims pursuant to a Court approved process whereby the Company would pay an amount not to exceed $4.0 million to settle claims asserted on behalf of the class. The Company has accrued a legal settlement reserve based on its best estimate of costs to be incurred relative to this case. The Company anticipates filing a motion in the Superior Court in the near future requesting approval of the proposed settlement. The Company cannot provide any assurances that the Court will approve the proposed settlement.

On April 27, 2007, three former hourly restaurant employees in the State of California filed a class-action lawsuit in the San Francisco Superior Court. The parties purport to represent other current and former California restaurant employees. The lawsuit alleges violations of state wage-and-hour laws involving the purchase and reimbursement for laundering of uniforms and sought unspecified monetary damages. On August 11, 2010, the Court granted class certification in this matter. We deny any liability with respect to these allegations and intend to vigorously defend ourselves in this action. An estimate of the possible loss, if any, or the range of the loss cannot be made at time.

On July 3, 2007, two former hourly restaurant employees in the State of California filed a class-action lawsuit in the Los Angeles Superior Court alleging violations of state wage-and-hour laws. On April 22, 2008 and on April 25, 2008, former hourly employees in the State of California filed two additional lawsuits in Los Angeles Superior Court alleging similar wage-and-hour violations, and on December 4, 2008, the Court coordinated the three cases. The parties purport to represent other current and former hourly California restaurant employees. The lawsuit alleges violations of state wage-and-hour laws involving allegations of work performed off the clock, improper reduction in hours, failure to provide meal and rest breaks, and failure to reimburse employees for expenses incurred in the course of employment. The plaintiffs sought unspecified monetary damages. In December 2008, a proposed settlement was not approved by the Court. The Company has accrued a loss contingency based on the proposed settlement which is not considered to be material to our consolidated financial position. We deny any liability with respect to these allegations and intend to vigorously defend ourselves in this action.

 

ITEM 1A.

RISK FACTORS

Descriptions of the risk factors associated with the Company are contained in Item 1A, “Risk Factors,” of our 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2011. There have been no material changes to our risk factors described in the 10-K for the year ended January 2, 2011 during the quarter ended April 3, 2011.

 

ITEM 6.

EXHIBITS

The Exhibit Index on page 22 of this Quarterly Report on Form 10-Q lists the exhibits that are filed or furnished, as applicable, as part of this Quarterly Report on Form 10-Q.

 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 6, 2011

 

 

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INDEX TO EXHIBITS

 

3.1(A)		Certificate of Incorporation
3.2(A)		By-laws
4.1(A)		Specimen Common Stock Certificate
31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Principal Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3		Certification of Principal Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.3		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

(A)	Incorporated by reference to the registrant’s current report on Form 8-K filed December 22, 2004.

 

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