UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K

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(MARK ONE)
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 2001

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)



|California                                                     | 95-4040623                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

6053 West Century Boulevard, 11th FloorLos Angeles, California    90045-6442

(310) 342-5000(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
                Common Stock, $0.01 par value (title of class)

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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K.     [X]

The aggregate market value of voting stock held by non-affiliates of
the registrant as of March 4 2002, was $302 million based upon the last
sales price reported for such date on The Nasdaq Stock Market's National
Market. For purposes of this disclosure, shares of Common Stock held by
persons who hold more than 5% of the outstanding shares of Common Stock and
shares held by officers and directors of the registrant, have been excluded
in that such persons may be deemed to be affiliates. This determination is
not necessarily conclusive.

As of March 4, 2002 there were 18,512,245 shares of the registrant's
Common Stock outstanding.



DOCUMENTS INCORPORATED BY REFERENCE

The registrant has incorporated by reference into Part III of this Form 10-K
portions of its proxy statement for the registrant's Annual Meeting of
Stockholders to be held May 7, 2002.









California Pizza Kitchen, Inc.
                        2001 ANNUAL REPORT ON FORM 10-K
                               INDEX



|Part I.   |                                                                                       | Page
|--------- | ------------------------------------------------------------------------------------- | ----
|Item 1.   | Business                                                                              | **  
|Item 2.   | Properties                                                                            | **  
|Item 3.   | Legal Proceedings                                                                     | **  
|Item 4.   | Submission of Matters to a Vote of Security Holders                                   | **  
|Part II.  |                                                                                       |     
|Item 5.   | Market for the Registrant's Common Equity and Related Stockholder Matters             | **  
|Item 6.   | Selected Consolidated Financial Data                                                  | **  
|Item 7.   | Management's Discussion and Analysis of Financial Condition and Results of Operations | **  
|Item 7a.  | Quantitative and Qualitative Disclosures About Market Risks                           | **  
|Item 8.   | Consolidated Financial Statements and Supplementary Data                              | **  
|Item 9.   | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  | **  
|Part III. |                                                                                       |     
|Item 10.  | Directors and Executive Officers of the Registrant                                    | **  
|Item 11.  | Executive Compensation                                                                | **  
|Item 12.  | Security Ownership of Certain Beneficial Owners and Management                        | **  
|Item 13.  | Certain Relationships and Related Transactions                                        | **  
|Part IV.  |                                                                                       |     
|Item 14.  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       | **  

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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" and elsewhere in this
report. The cautionary statements made in this report should be read as being
applicable to all forward-looking statements wherever they appear in this
report.

ASSUMPTIONS USED IN THIS REPORT

Throughout this report, our fiscal years ended
December 28, 1997, January 3, 1999, January 2, 2000, December 31, 2000 and
December 30, 2001 are referred to as years 1997, 1998, 1999, 2000 and 2001,
respectively. Our fiscal year consists of 52 or 53 weeks and ends on the Sunday
closest to December 31 in each year. Fiscal year 1998 included 53 weeks. All
other years shown are 52 weeks. Our quarters typically consist of 13 weeks.

PART I

ITEM 1. BUSINESS

Overview

California Pizza Kitchen is a leading casual dining
restaurant chain with a particular focus on the premium pizza segment. As of
March 11, 2002, we own, license or franchise 130 restaurants in 25 states, the
District of Columbia and four foreign countries, of which 101 are company-owned
and 29 operate under franchise or license arrangements. During our 17 years of
operating history, we have developed a recognized consumer brand and
demonstrated the appeal of our concept in a wide variety of geographic areas.

Our restaurants feature menu items that use imaginative
toppings and showcase recipes that capture tastes and flavors that customers
readily identify, but do not typically associate with pizza, pasta or salads,
including our original best sellers, the BBQ Chicken Pizza and the Thai Chicken
Pizza.  While we do offer traditional menu items, the success of our concept is
due to our ability to interpret food trends on our platform of pizza, pasta,
salads and appetizers, and to offer items that appeal to a variety of tastes.

Our restaurants, which feature an exhibition style kitchen
centered around an open-flame oven, provide a distinctive, casual dining
experience which is family friendly and has broad consumer appeal.

Our objectives are to continue to build our brand awareness
and customer loyalty, and extend our leadership position in the casual dining
and premium pizza segments. To obtain these objectives, we strive to offer
innovative menu items using high quality ingredients, including imported Italian
tomatoes and pastas, imported Kalamata olives, Japanese eggplant, black tiger
shrimp, imported cheeses and exotic lettuces and other fresh produce.  We offer
generous portions which results in a price-value relationship which we believe
has broad consumer appeal.  We intend to continue to expand our brand awareness
through disciplined company-owned restaurant growth.

Menu

We continuously experiment with food items and flavor
combinations in an attempt to create selections that are innovative and capture
distinctive tastes. We first applied our innovative approach to creating and
defining a new category of pizza - the premium pizza. For example, our signature
creation, the Original BBQ Chicken Pizza, utilizes barbecue sauce instead of
tomato sauce, and adds toppings of marinated chicken breast, smoked gouda and
mozzarella cheeses, sliced red onion and fresh cilantro. Our Original Thai
Chicken Pizza is created with a base of spicy peanut-ginger and sesame sauce,
and topped with marinated chicken breast, mozzarella cheese, roasted peanuts,
green onions, bean sprouts, julienne carrots and fresh cilantro. Our other
innovative pizzas include the Philly Cheesesteak Pizza, Grilled Garlic Shrimp
Pizza, Jamaican Jerk Chicken Pizza and Caramelized Pear and Gorgonzola Pizza.

We have broadened our menu beyond pizza to include pastas,
salads, soups, appetizers and desserts, and we strive to bring the same level of
creativity and innovation involved in developing our pizzas to our entire menu.
Among our other signature menu items are Chicken Tequila Fettucine which
captures Southwestern flavors in a rich tequila-lime and jalapeno cream sauce,
our BBQ Chicken Chopped Salad which uses both barbecue sauce and garden-herb
ranch dressing, Oriental Chicken Salad with crispy angel hair pasta, and our
hearth-baked Tortilla Spring Roll Appetizers which are sprinkled with parmesan
cheese and baked in our pizza ovens.

Our menu is also designed to satisfy customers who seek
traditional, American-style, tomato sauce-based pizza or authentic, Italian-style Neapolitan
pizza. For the traditionalist, we offer a variety of items such
as the Mushroom, Pepperoni and Sausage Pizza, the Fresh Tomato, Basil and Garlic
Pizza, and the Sweet and Spicy Italian Sausages Pizza which combines sweet
Italian sausage and grilled spicy Italian sausage, a tomato sauce base, roasted
red and yellow peppers and mild onions. Our Neapolitan pizzas are prepared on a
thin, crisp crust and include our Classic Margherita Pizza with imported
tomatoes, fresh mozzarella, fresh basil and parmesan cheese and our Rustica
Pizza made with imported tomatoes, fresh mozzarella, garlic, crushed chilies,
capers and Mediterranean olives.  Our menu similarly accommodates traditional
tastes in pastas and salads, with a variety of tomato sauce-based pastas and our
high quality versions of popular salads, including our Caesar Salad and Original
Chopped Salad.

All of our menu items are prepared to order in our full
service restaurants. This reinforces our customers' confidence in the freshness
and quality of our preparations and allows us to customize any dish to
accommodate specific dietary or taste preferences.

Our menu is continuously evolving to track the increasingly
discriminating and sophisticated palate of the American public. We regularly
review the sales mix of our menu items and replace lower selling items in each
category with new menu items once or twice a year. Because of our ability to
quickly adapt our menu, we believe that we are able to meet our customers'
changing tastes and expectations. Our entrees generally range in price from
$7.49 to $12.79 and our average guest check during 2001 was approximately
$11.00, including alcoholic beverages. We offer a variety of wines by the bottle
or the glass, as well as bottled and tap beers, primarily to complement our menu
offerings.

Operations

Restaurant management. We currently have 15
regional directors who report to our Vice President of Operations. Each regional
director oversees three to nine restaurants and supervises the general manager
for each restaurant within his or her area of control. The typical full service
restaurant management team consists of a general manager, who oversees the
entire operation of the restaurant, a kitchen manager and two other managers.
Additionally, depending upon the size and sales volume of a restaurant, we may
also employ another kitchen manager or a third manager in the dining area. Most
of our full service restaurants employ approximately 50 to 75 hourly employees,
many of whom work part-time. The general manager of each restaurant is
responsible for the day-to-day operation of that restaurant, including hiring,
training and development of personnel, as well as operating results. The kitchen
manager is responsible for product quality, food costs and kitchen labor costs.
Our full service restaurants are generally open Sunday through Thursday from
11:00 a.m. until 10:00 p.m., and on Friday and Saturday from 11:00 a.m. until
11:00 p.m.

Training. We strive to maintain quality and
consistency in each of our restaurants through the careful training and
supervision of personnel and the establishment of, and adherence to, high
standards relating to personal performance, food and beverage preparation and
maintenance of  facilities. We provide all new employees with complete
orientation and training for their positions to ensure they are able to meet our
high standards. Each location has certified trainers who provide classroom and
on-the-job instruction. Employees are certified for their positions by passing a
series of tests and evaluations. New restaurant managers are trained over a
nine-week period at a certified training restaurant. Training includes service,
kitchen and management responsibilities. An extensive series of interactive
modules and on-line quizzes are used in conjunction with on-the-job training.
Newly trained managers are then assigned to their home restaurant where they
spend one additional training week with their general manager. We place a high
priority on our continuing management development programs in order to ensure
that qualified managers are available for our future openings. In addition, we
have detailed written operating procedures, standards and controls, food quality
assurance systems, and safety programs. Once a year we hold a general manager
conference in which all of our general managers receive additional training on
financial information, food preparation, hospitality and other relevant topics.

When we open a new restaurant, we provide varying levels of
training to each employee as is necessary to ensure the smooth and efficient
operation of a California Pizza Kitchen restaurant from the first day it opens
to the public. Approximately two weeks prior to opening a new restaurant, our
dedicated training/opening team travels to the location to begin intensive
training of all new employees for that restaurant. Our training teams stay on
site during the first two weeks of operation. We believe this additional
investment in our new restaurants is important since it helps us provide our
customers with a quality dining experience from day one. We also make on-site
training teams available when our franchisees open new restaurants. After a
restaurant has been opened and is operating smoothly, the general manager
supervises the training of new employees.

Recruiting and retention. We seek to hire experienced
general managers and staff. We support our employees by offering competitive
wages, competitive benefits, including a 401(k) plan and salary deferral plan,
both with a discretionary match, medical insurance for all of our employees,
including part-time workers, generous discounts on dining, and an employee stock
purchase plan which allows all employees who have worked for us for at least a
year and who work a minimum of 20 hours per week to participate.

We attempt to motivate and retain our employees by providing
them with opportunities for increased responsibilities and advancement, as well
as performance-based cash incentives tied to sales, profitability and
qualitative measures such as our mystery shoppers, who anonymously evaluate
individual restaurants. Our most successful general managers are eligible for
promotion to senior general manager status and are entitled to receive more
lucrative compensation packages based on various performance criteria. We
believe we also enjoy the recruiting advantage of offering our general managers
restaurants that are easier to manage because they are generally smaller than
those of our competitors, have hours that typically do not extend late into the
night, and generally do not require management of a separate bar business. We
believe these advantages offer our managers an excellent quality of life
compared to many of our competitors.

Customer satisfaction. Customer satisfaction is of
extreme importance to us. To that end, we routinely solicit and analyze our
customers' opinions through periodic surveys of 20,000 to 25,000 randomly-selected guests. The
mystery shopper program is also an important tool in our
quality control efforts from both a food quality and customer service
perspective.

Marketing

Our marketing strategy focuses on communicating the
California Pizza Kitchen brand through many creative and non-traditional
avenues. As one of the pioneers of premium pizza, we continue to benefit from
national media attention which we believe provides us with a significant
competitive advantage. Rick Rosenfield and Larry Flax, our co-founders,
currently serve as the focal point of our public relations and media efforts
along with our creative menu. Over the last two years, we have appeared on the
Today Show, Extra, CNN, Women to Women, Third Rock from the Sun, Will
and Grace, and the feature film, Life as a House. Additionally, over
the last two years we have been the subject of feature stories appearing in
Forbesand Business Week.

We also engage to a limited extent in paid advertising
for individual restaurant locations, including billboards and newspaper ads. We
utilize a variety of printed marketing materials, including restaurant location
brochures, hotel concierge cards, take-out menus and direct and electronic
mailings. In 2001, we spent an aggregate of 1.0% of restaurant sales on
marketing efforts. We expect to continue investing approximately 1.0% of
restaurant sales in marketing efforts in the future.

We use the openings of our new restaurants as opportunities
to reach out to the media. Our openings are often featured on live local
television and radio broadcasts and receive coverage in local newspapers. We
employ a variety of marketing techniques in connection with our new restaurant
openings, including concierge parties, and invitations to media personalities
and community leaders. In addition, our openings are  associated with a
charitable event.

Our involvement in the community does not end once we have
opened a restaurant. In each of the markets in which we operate, we continuously
engage in a variety of charitable and civic causes and donate food and services
on an on-going basis. In 2001, we donated pizzas to the World Trade Center
rescue workers and contributed over $115,000 to the New York Police and Fire
Widow's and Children Benefit Fund. We have developed two cookbooks and the
proceeds from these cookbooks are donated to worthwhile children's charities.
These cookbooks are sold at our restaurants, through national bookstore chains
and through on-line retailers. In addition, we formed a California non-profit
public benefit corporation, the CPK Foundation, which supports designated
children's charities in the markets in which we operate.

Expansion strategy and site selection

Our restaurant expansion strategy focuses primarily on
further penetrating existing markets. As such, we anticipate over the next
several years that 70% to 80% of our new restaurants will be in existing
markets. This clustering approach enables us to increase brand awareness and
improve our operating and marketing efficiencies. For example, clustering
enables us to reduce costs associated with regional supervision of restaurant
operations and provides us with the opportunity to leverage marketing costs over
a greater number of restaurants. We also believe this approach reduces the risks
involved with opening new restaurants given that we better understand the
competitive conditions, consumer tastes, demographics and discretionary spending
patterns in our existing markets. In addition, our ability to hire qualified
employees is enhanced in markets in which we are well known.

We believe that our site-selection strategy is critical to
our success and we devote substantial effort to evaluating each potential site
at the highest levels within our organization. We identify areas within our
target markets that meet our demographic requirements, focusing on daytime and
evening populations, shopping patterns, availability of personnel and household
income levels. We will presently only consider expanding to new markets that
will meet our strict demographic criteria. Our site selection criteria are
flexible given that we operate restaurants in regional shopping malls, in-line
shopping centers, retail and entertainment centers, free-standing buildings in
commercial and residential neighborhoods, office buildings and hotels. Our
prototype full service restaurant is approximately 4,800 to 5,000 square feet
and has 150 seats. However, we have the ability to operate a full service
restaurant in less than 4,000 square feet, particularly if we are able to secure
additional patio seating.

Our full service restaurants will continue to represent the
majority of our growth in the near term. We do, however, own three ASAP
restaurants which were opened in 2000. These sites are currently under
evaluation and we may convert these premises into full service restaurants in
the future.

In 2002, we intend to open a minimum of 17 company-owned,
full service restaurants and have signed leases or letters of intent for all of
these sites.

With the exception of the five sites for which we own the
real estate, we operate our restaurants under leases. We do not intend to
purchase real estate for any of our sites in the future. We believe that the
size and flexibility of our formats provide us with a competitive advantage in
securing sites. We have several long-standing relationships with major mall
developers and owners, and are therefore afforded the opportunity to negotiate
multiple location deals.

Unit level economics

For 2001, sales of our 79 full service restaurants, open
for the entire period, averaged $2.8 million and generated average restaurant-level pre-tax
cash flow of $565,000 per store. Our prototype full service
restaurant is approximately 4,800 to 5,000 square feet. Our average cash
investment, net of landlord contributions, was approximately $1.3 million for
the 16 full service restaurants opened between January 2001 and December 2001,
excluding pre-opening costs which averaged approximately $170,000 per
restaurant. We expect that in the future our cash investment, net of landlord
contributions, will average approximately $1.3 million, excluding pre-opening
costs, which are anticipated to be approximately $175,000 per restaurant.

Restaurant franchise and licensing arrangements

With a focus on customer service and an effort to expand
and leverage the California Pizza Kitchen brand, we introduced and franchised
the concept of 'California Pizza Kitchen ASAP' in 1996.  Our ASAP restaurants
are designed specifically for the 'grab and go' customer in non-traditional
locations and are typically 600 to 1,000 square feet in size with a limited menu
and common area seating. In addition to our franchised ASAP concept, we
franchise on a limited basis our full service restaurants. Our largest ASAP
franchisee, HMSHost Corporation, operates 19 California Pizza Kitchen ASAP
restaurants, primarily in airports, throughout the United States under a
development and franchise arrangement. Mirage Resorts operates one full service
California Pizza Kitchen restaurant in a high-profile resort in Las Vegas,
Nevada. We also have a franchisee operating one ASAP restaurant in Thousand
Oaks, California and one full service restaurant in Ventura, California; an
international franchisee operating four full service restaurants with two in
Singapore and one each in Malaysia and Indonesia; and another international
franchisee operating three full service restaurants in the Philippines. During
2002, we expect our franchisees to open an additional two full service
restaurants.

Our development agreement with HMSHost grants it limited
exclusive rights to open new ASAP restaurants in airports, travel plazas along
toll-roads and in mall food court locations; however, any location proposed by
HMSHost is subject to approval by us in our sole discretion. If HMSHost
determines not to submit a bid or proposal for a new airport, travel plaza or
mall location or determines not to include us in the proposal or bid, we are
free to bid ourselves or to license another party to operate an ASAP in that
location. Under our agreement, HMSHost may only develop a franchised restaurant
in a mall when it obtains a master concessionaire agreement with the landlord to
provide all food services within the food court or other multiple-concept area.
Once we have agreed to HMSHost development of an ASAP restaurant in an airport
or travel plaza location, we may not license or operate a full service
restaurant ourselves at those locations. There is no corresponding prohibition
with respect to mall locations.

HMSHost retains its limited exclusive rights for the
development of ASAP restaurants until May 2003, after which it may continue our
agreement for three additional terms which ultimately expire in 2018. We have
the right to terminate the agreement if HMSHost does not open 25 restaurants by
May 2003. HMSHost pays an initial franchise fee of $20,000 for each ASAP
restaurant at a new location and $10,000 for each additional ASAP restaurant at
an existing location, and continuing royalties at rates of 5% to 5.5% of gross
sales. HMSHost franchise agreements typically terminate at the same time as a
HMSHost concessionaire agreement to operate at an airport or mall terminates.

Our territorial development agreements with our other
franchisees grant them the exclusive right to an identified territory subject to
meeting development obligations. Our basic franchise agreement with these
franchisees generally requires payment of an initial fee of between $55,000 and
$65,000 for a full service restaurant, as well as continuing royalties at a rate
of 5% to 6% of gross revenue. Most of our franchise agreements contain a ten- or
20-year term.

Agreement with Kraft Pizza Company

We have entered into a strategic alliance with Kraft
Pizza Company to manufacture and distribute a line of California Pizza Kitchen
premium frozen pizzas in the United States and Canada. Kraft currently makes and
distributes frozen versions of seven of our pizzas: the Five Cheese and Tomato
Pizza, BBQ Chicken Pizza, Garlic Chicken Pizza, Rosemary Chicken Potato Pizza,
Portobello Mixed Mushroom Pizza, Sausage, Pepperoni & Mushroom Pizza and
Thai Chicken Pizza. Our frozen pizzas are currently sold in supermarkets in 19
markets across the US including Los Angeles, San Francisco, Chicago, Denver and
Phoenix to name just a few. We intend to continue to expand our distribution
area to include additional selected markets, with a continued focus on those
markets in which our restaurants are located.

Management information systems

All of our restaurants use computerized management
information systems, which are designed to improve operating efficiencies,
provide corporate management timely access to financial and marketing data, and
reduce restaurant and corporate administrative time and expense. Our restaurant
systems include a point-of-sale system which facilitates the movement of
customer food and beverage orders from the dining areas to the appropriate menu
item preparation area within the restaurant. The data captured by our restaurant
level systems include restaurant sales, cash and credit card receipts,
quantities of each menu item sold, customer counts and daily labor expense. This
information is generally transmitted to the corporate office daily. Each week,
every restaurant prepares a flash profit and loss statement that is compared to
budget and the prior year.

Our corporate information systems provide management with
operating reports that show restaurant performance comparisons with budget and
prior year results both for the current accounting period and year-to-date.
These systems allow us to closely monitor restaurant sales, cost of sales, labor
expense and other restaurant trends on a daily, weekly and monthly basis. We
believe these systems will enable both restaurant and corporate management to
adequately manage the operational and financial performance of our restaurants
as necessary to support our planned expansion.

Purchasing

Our purchasing staff procures all of our food
ingredients, products and supplies. We seek to obtain the highest quality
ingredients, products and supplies from reliable sources at competitive prices.
To that end, we continually research and evaluate various food ingredients,
products and supplies for consistency and compare them to our detailed
specifications. Specific qualified manufacturers and growers are then inspected
and approved for use. This process is repeated at least once a year. To maximize
our purchasing efficiencies and obtain the lowest possible prices for our
ingredients, products and supplies, while maintaining the highest quality, our
centralized purchasing staff generally negotiates all prices in one of two
formats: (a) fixed price contracts generally with terms of between one month to
one year or (b) based on monthly commodity pricing formulas.

In order to provide the freshest ingredients and products,
and to maximize operating efficiencies between purchase and usage, each
restaurant's kitchen manager determines its daily usage requirements for food
ingredients, products and supplies. The kitchen manager orders accordingly from
approved local vendors and our national master distributor. The kitchen managers
also inspect all deliveries daily to ensure that the items received meet our
quality specifications and negotiated prices. We have competitively priced, high
quality alternative manufacturers, vendors, growers and distributors available
should the need arise.

Employees

As of the date of this report, we have approximately
6,900 employees, including approximately 94 employees located at our corporate
headquarters. Our employees are not covered by any collective bargaining
agreement. We consider our employee relations to be very good.

Competition

The restaurant industry is intensely competitive. We
compete on the basis of the taste, quality and price of food offered, customer
service, ambiance, location and overall dining experience. We believe that our
concept, attractive price-value relationship and quality of food and service
enable us to differentiate ourselves from our competitors. Although we believe
we compete favorably with respect to each of these factors, many of our direct
and indirect competitors are well-established national, regional or local chains
and some have substantially greater financial, marketing, and other resources
than we do. We also compete with many other restaurant and retail establishments
for site locations and restaurant level employees. The packaged food industry is
also intensely competitive.

Trademarks

Our registered trademarks and service marks include,
among others, the word mark "California Pizza Kitchen", "ASAP California Pizza
Kitchen" and our stylized logo set forth on the front and back pages of this
report. We have registered all of our marks with the United States Patent and
Trademark Office. We have registered our most significant
trademarks and service marks in more than 20 foreign countries, in addition to
the Benelux Customs Union and the European Union. In order to better protect
our brand, we have also registered our ownership of the Internet domain names
"www.cpk.com" and "www.californiapizzakitchen.com". We believe that our
trademarks, service marks and other proprietary rights have significant value
and are important to our brand-building efforts and the marketing of our
restaurant concepts. We have vigorously protected our proprietary rights in the
past and expect to continue to do so. We cannot predict, however, whether steps
taken by us to protect our proprietary rights will be adequate to prevent
misappropriation of these rights or the use by others of restaurant features
based upon, or otherwise similar to, our concept. It may be difficult for us to
prevent others from copying elements of our concept and any litigation to
enforce our rights will likely be costly.

Government regulation

Our restaurants are subject to licensing and regulation
by state and local health, sanitation, safety, fire and other authorities,
including licensing and regulation requirements for the sale of alcoholic
beverages and food. To date, we have not experienced an inability to obtain or
maintain any necessary licenses, permits or approvals, including restaurant,
alcoholic beverage and retail licensing. The development and construction of
additional restaurants will also be subject to compliance with applicable
zoning, land use and environmental regulations. We are also subject to federal
regulation and state laws that regulate the offer and sale of franchises and
substantive aspects of a licensor-licensee relationship. Various federal and
state labor laws govern our relationship with our employees and affect operating
costs. These laws include minimum wage requirements, overtime, unemployment tax
rates, workers' compensation rates, citizenship requirements and sales taxes. In
addition, the federal Americans with Disabilities Act prohibits discrimination
on the basis of disability in public accommodations and employment.

Risk Factors

Our growth strategy requires us to open new
restaurants at an accelerated pace.  We may not be able to achieve this planned
expansion.

We are pursuing an accelerated, but disciplined growth
strategy which to be successful depends on our ability, and the ability of our
franchisees and licensees, to open new restaurants and to operate these new
restaurants on a profitable basis.  The success of our planned expansion will be
dependent upon numerous factors, many of which are beyond our control, including
the hiring, training and retention of qualified operating personnel, especially
managers, identification and availability of suitable restaurant sites,
competition for restaurant sites, negotiation of favorable lease terms, timely
development of new restaurants, including the availability of construction
materials and labor, management of construction and development costs of new
restaurants, securing required governmental approvals and permits, competition
in our markets, and general economic conditions.  If any of these risks actually
occur, our business, financial condition, operating results or cash flows could
be materially adversely affected.

Our success depends on our ability to locate a sufficient
number of suitable new restaurant sites.

One of our biggest challenges in meeting our growth
objectives will be to secure an adequate supply of suitable new restaurant
sites. We have experienced delays in opening some of our restaurants and may
experience delays in the future. There can be no assurance that we will be able
to find sufficient suitable locations for our planned expansion in any future
period. Delays or failures in opening new restaurants could materially adversely
affect our business, financial condition, operating results or cash flows.

We could face labor shortages which could slow our
growth.

Our success depends in part upon our ability to attract,
motivate and retain a sufficient number of qualified employees, including
restaurant managers, kitchen staff and servers, necessary to keep pace with our
expansion schedule. Qualified individuals of the requisite caliber and number
needed to fill these positions are in short supply in some areas. Although we
have not experienced any significant problems in recruiting or retaining
employees, any future inability to recruit and retain sufficient individuals may
delay the planned openings of new restaurants. Any such delays or any material
increases in employee turnover rates in existing restaurants could have a
material adverse effect on our business, financial condition, operating results
or cash flows. Additionally, competition for qualified employees could require
us to pay higher wages to attract sufficient employees, which could result in
higher labor costs.

Our expansion into new markets may present increased risks
due to our unfamiliarity with the area.

As part of our expansion strategy we will be opening up restaurants in
markets which we have no prior operating experience.  These new markets may have
different competitive conditions, consumer tastes and discretionary spending
patterns than our restaurants in our existing markets. In addition, our new
restaurants will typically take several months to reach budgeted operating
levels due to problems associated with new restaurants, including lack of market
awareness, inability to hire sufficient staff and other factors.  Although we
have attempted to mitigate these factors by paying careful attention to training
and staffing needs, there can be no assurance that we will be successful in
operating new restaurants on a profitable basis.

Our expansion may strain our infrastructure which could
slow our restaurant development.

We also face the risk that our existing systems and
procedures, restaurant management systems, financial controls, and information
systems will be inadequate to support our planned expansion. We cannot predict
whether we will be able to respond on a timely basis to all of the changing
demands that our planned expansion will impose on management and these systems
and controls. If we fail to continue to improve our information systems and
financial controls or to manage other factors necessary for us to achieve our
expansion objectives, our business, financial condition, operating results or
cash flows could be materially adversely affected.

Our restaurant expansion strategy focuses primarily on
further penetrating existing markets. This strategy can cause sales in some of
our existing restaurants to decline.

In accordance with our expansion strategy, we intend to
open new restaurants primarily in our existing markets. Since we typically draw
customers from a relatively small radius around each of our restaurants, the
sales performance and customer counts for restaurants near the area in which a
new restaurant opens may decline due to cannibalization of the existing
restaurant's customer base.

Our planned expansion into retail distribution channels
through the introduction of our premium frozen pizzas could dilute the value of
our brand.

We have entered into a strategic alliance with Kraft
Pizza Company to distribute a line of premium frozen pizzas through supermarkets
and other retail outlets. Although sales of these frozen products in the
geographic markets in which they are currently available have been encouraging,
we run the risk that the availability of a frozen product could dilute the value
of our brand to the extent that consumers perceive our frozen products to be
unappealing or of a lower quality.

Our operations are susceptible to changes in food and
supply costs which could adversely affect our margins.

Our profitability depends, in part, on our ability to
anticipate and react to changes in food and supply costs. Our centralized
purchasing staff negotiates prices for all of our ingredients and supplies
through either contracts (terms of one month up to one year) or commodity
pricing formulas. Our master distributor delivers goods at a set, flat fee per
case twice a week to all of our restaurants. Our contract with our master
distributor, Meadowbrook Meat Company, Inc., expires in June 2004. Furthermore,
various factors beyond our control, including adverse weather conditions and
governmental regulations, could also cause our food and supply costs to
increase. We cannot predict whether we will be able to anticipate and react to
changing food and supply costs by adjusting our purchasing practices. A failure
to do so could adversely affect our operating results and cash flows.

Changes in consumer preferences or discretionary consumer
spending could negatively impact our results.

Our restaurants feature pizzas, pastas, salads and appetizers
in an upscale, family-friendly, casual environment. Our continued success
depends, in part, upon the popularity of these foods and this style of informal
dining. Shifts in consumer preferences away from this cuisine or dining style
could materially adversely affect our future profitability. Also, our success
depends to a significant extent on numerous factors affecting discretionary
consumer spending, including economic conditions, disposable consumer income and
consumer confidence. Adverse changes in these factors could reduce customer
traffic or impose practical limits on pricing, either of which could materially
adversely affect our business, financial condition, operating results or cash
flows. Like other restaurant chains, we can also be materially adversely
affected by negative publicity concerning food quality, illness, injury,
publication of government or industry findings concerning food products served
by us, or other health concerns or operating issues stemming from one restaurant
or a limited number of restaurants.

Forty-six percent of our restaurants are located in
California. As a result, we are highly sensitive to negative occurrences in that
state.

We and our franchisees currently operate a total of 53
restaurants in California, of which 42 are concentrated in the greater Los
Angeles and San Diego metropolitan areas. As a result, we are particularly
susceptible to adverse trends and economic conditions in California, including
adverse consequences stemming from higher energy prices for gas and electricity.
In addition, given our geographic concentration, negative publicity regarding
any of our restaurants in California could have a material adverse effect on our
business and operations, as could other regional occurrences such as local
strikes, earthquakes or other natural disasters.

The restaurant industry is affected by litigation and
publicity concerning food quality, health and other issues which can cause
customers to avoid our restaurants and result in liabilities.

We are sometimes the subject of complaints or litigation
from customers or employees alleging illness, injury or other food quality,
health or operational concerns.  Adverse publicity resulting from these
allegations may materially adversely affect us and our restaurants, regardless
of whether the allegations are valid or whether California Pizza Kitchen is
liable.  In fact, we are subject to the same risks of adverse publicity
resulting from these sorts of allegations even if the claim  actually involves
one of our franchisees or licensees.  Further, employee claims against us based
on, among other things, discrimination, harassment or wrongful termination may
divert our financial and management resources that would otherwise be used to
benefit the future performance of our operations.  We have been subject to these
employee claims before, and a significant increase in the number of these claims
or any increase in the number of successful claims could materially adversely
affect our business, financial condition, operating results or cash flows.  We
also are subject to some states' "dram shop" statutes.  These statutes
generally provide a person injured by an intoxicated person the right to recover
damages from an establishment that wrongfully served alcoholic beverages to the
intoxicated person.



ITEM 2. PROPERTIES

Our corporate headquarters are located in Los Angeles,
California. We occupy this facility under a lease which terminates in August
2002, with an option to extend until August 2007. We lease the majority of our
restaurant facilities, although we own our restaurants in: Alpharetta, Georgia;
Grapevine, Texas; Scottsdale, Arizona; Schaumburg, Illinois; and one location in
Atlanta, Georgia. The majority of our leases are for ten- or fifteen-year terms
and include options to extend the terms. The majority of our leases also include
both minimum rent and percentage-of-sales rent provisions.

Current restaurant locations

As of March 11, 2002, we own 101 restaurants in 21 states
and the District of Columbia. We franchise or license our concept to other
restaurant operators including: HMSHost Corporation, which operates 19 ASAP
restaurants; Mirage Resorts, which operates one full service Las Vegas casino
restaurant; a franchisee, which operates one ASAP and one full service
restaurant in California; and two franchisees, which currently operate a total
of seven full service restaurants in Singapore, Malaysia, Indonesia  and the
Philippines.

1. All of our company-owned restaurants are full service,
except for three ASAP restaurants.
2. Includes one restaurant in the Chicago area in which we
are the general partner and own approximately 70% of the total partnership
interests.



ITEM 3. LEGAL PROCEEDINGS

Occasionally, we are a defendant in litigation arising in
the ordinary course of our business, including claims resulting from 'slip and
fall' accidents, employment-related claims and claims from guests or employees
alleging illness, injury or other food quality, health or operational concerns.
To date, none of these types of litigation, all of which are covered by
insurance, has had a material effect on us and, as of the date of this report,
we are not a party to any material litigation.

We are one of the defendants to a lawsuit filed on March 11,
1998 in the 152nd Judicial District Court of Harris County, Texas, brought by
The Chair King, Inc., as the named plaintiff in a class action suit under the
Telephone Consumer Protection Act of 1991. We have reached an agreement with the
named plaintiff as to the form of a Memorandum of Understanding dated January
25, 2002.  We expect the Memorandum of Understanding to constitute a full and
final settlement of this lawsuit.  The terms of this settlement are immaterial
to us.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our shareholders
during the fourth quarter of 2001.



PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the Nasdaq National Market
under the symbol "CPKI." Public trading of our common stock commenced on August
2, 2000. The following table sets forth, for the periods indicated, the high and
low sales prices as reported on the Nasdaq market.



|                                                                                                                                               | High                                                                                                                                                                                                                                                                                                                                                                                                                                 | Low                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Fiscal 2000:
     Third Quarter
     Fourth Quarter
Fiscal 2002:
     First Quarter
     Second Quarter
     Third Quarter
     Fourth Quarter | $ 29.00
                                                                            35.13
     
                                                                          $ 31.88
                                                                           28.13
                                                                           25.05
                                                                           26.05 | $ 19.00
                                                                           26.63
     
                                                                          $ 21.36
                                                                           21.24
                                                                            14.98
                                                                           15.45

As of March 4, 2002, there were approximately 168 holders of
record of common stock. On March 4, 2002, the last sale price reported on the
Nasdaq National Market for our common stock was $19.70 per share.

Dividend Policy

We currently intend to retain all future earnings for the
operation and expansion of our business and do not anticipate paying cash
dividends on our common stock in the foreseeable future. We have not paid any
cash dividends since 1992 when dividends were paid in connection with PepsiCo,
Inc.'s acquisition of a controlling interest in us.

Our credit agreement with Bank of America, N.A. currently
prohibits us from declaring or paying any dividends or other distributions on
any shares of our capital stock other than dividends payable solely in shares of
capital stock or the stock of our subsidiaries. Any payment of cash dividends in
the future will be at the discretion of our board of directors and will depend
upon our results of operations, earnings, capital requirements, contractual
restrictions contained in our credit agreement with Bank of America, N.A., or
other agreements, and other factors deemed relevant by our board.

ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial and
operating data for each of the five fiscal years in the period ended December
30, 2001 are derived from our audited consolidated financial statements. The
audited consolidated financial statements and accompanying notes for each of the
three fiscal years in the period ended December 30, 2001, and the report of
independent auditors on those years, are included elsewhere in this report. This
selected consolidated financial and operating data should be read in conjunction
with the consolidated financial statements and accompanying notes, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
other financial information included elsewhere in this report.



Selected Consolidated Financial and Operating Data

(dollars in thousands, except per share,
operating data and footnotes)



`Fiscal Year
                                                -----------------------------------------------------
                                                  2001       2000       1999       1998       1997
                                                ---------  ---------  ---------  ---------  ---------
Statement of Operations  Data:
Revenues:
 Restaurant sales............................. $ 246,445  $ 208,322  $ 176,933  $ 165,028  $ 159,391
 Franchise and other revenues.................     2,817      2,482      2,260      2,013      1,025
                                                ---------  ---------  ---------  ---------  ---------
   Total revenues.............................   249,262    210,804    179,193    167,041    160,416
Costs and expenses:
 Cost of sales................................    60,950     51,748     44,740     43,201     43,361
 Labor........................................    88,898     74,341     63,701     58,547     57,321
 Direct operating and occupancy...............    49,344     41,079     35,848     34,171     36,481
                                                ---------  ---------  ---------  ---------  ---------
   Total restaurant operating costs...........   199,192    167,168    144,289    135,919    137,163

 General and administrative...................    15,489     14,349     13,123     13,890     15,896
 Depreciation and amortization................    11,996      9,568      8,234      7,543      7,807
 Pre-opening costs............................     2,867      1,650        763        234        445
 Loss on impairment of property and
  equipment and restaurant closures...........       --       1,839        200         85      9,604
 Non-recurring  compensation charge(1)........       --       1,949        --         --         --
                                                ---------  ---------  ---------  ---------  ---------
Operating income (loss).......................    19,718     14,281     12,584      9,370    (10,499)

Other income (expense):
  Bank financing fees.........................       --         --        (998)       --         --
  Interest income ............................       632        469        306         56        160
  Interest expense............................       (25)    (1,881)    (3,721)    (4,012)    (1,090)
                                                ---------  ---------  ---------  ---------  ---------
   Total other income (expense),..............       607     (1,412)    (4,413)    (3,956)      (930)
                                                ---------  ---------  ---------  ---------  ---------
Income (loss) before income tax
 benefit (provision)..........................    20,325     12,869      8,171      5,414    (11,429)
Income tax benefit (provision)(2)(3)..........    (7,114)    (4,504)    (2,772)     5,139       (251)
                                                ---------  ---------  ---------  ---------  ---------
Net income (loss).............................    13,211      8,365      5,399     10,553    (11,680)
Redeemable preferred stock dividend(4)........       --         --         --         --     (33,783)
Redeemable preferred stock accretion..........       --      (3,512)    (5,147)    (4,478)       --
                                                ---------  ---------  ---------  ---------  ---------
Net income (loss) attributable to
 common shareholders(5)(6).................... $  13,211  $   4,853  $     252  $   6,075  $ (45,463)
                                                =========  =========  =========  =========  =========

Net income per common share(7):
   Basic...................................... $    0.72  $    0.35  $    0.02
   Diluted.................................... $    0.71  $    0.35  $    0.02
Shares used in computing net income
 per common share (in thousands)(7):
   Basic......................................    18,308     13,703     10,800
   Diluted....................................    18,611     14,013     11,168

Selected Operating Data:
System-wide restaurants open at end of year...       131        112         96         90         80
Company-owned restaurants open
 at end of year...............................        99         82         70         67         66
Average weekly company-owned full
 service restaurant sales..................... $  54,438  $  53,809  $  49,490  $  47,490     43,514
Comparable company-owned
 restaurant sales increase(8).................       3.3%       7.8%       4.1%       6.1%       0.6%

                                                                      Fiscal Year
                                                -----------------------------------------------------
                                                  2001       2000       1999       1998       1997
                                                ---------  ---------  ---------  ---------  ---------
Selected Balance Sheet Data:
Cash and cash equivalents..................... $  19,788  $  12,649  $   5,686  $  14,553  $   5,455
Total assets..................................   145,335    116,977     94,750     96,155     82,915
Total debt, including current portion.........       --         --      40,085     45,385     47,157
Redeemable preferred stock....................       --         --      43,921     38,774     33,783
Shareholders' equity (deficiency).............   114,106     92,318     (9,829)   (10,439)   (16,840)`

(1) Non-recurring compensation charge of $1.9 million in 2000
represents the performance based stock options becoming exerciseable in
accordance with variable plan accounting under Accounting Principle Board
Opinion No. 25. The performance based stock options were granted to Frederick R.
Hipp, our Chief Executive Officer and President.

(2) Net loss for 1997 was unfavorably impacted by the
recording of a $7.6 million deferred tax asset valuation allowance. We recorded
the valuation allowance in 1997 due to uncertainty at the time of our ability to
realize the benefit of the net deferred tax asset.

(3) Net income for 1998 was favorably impacted by the
reversal of a $7.6 million deferred tax asset valuation allowance that was
previously provided for in 1997. We eliminated the valuation allowance in 1998
due to our belief that current year activity made realization of this benefit
more likely than not.

(4) In 1997, we declared a redeemable preferred stock
dividend payable to our common shareholders.

(5) Net income (loss) attributable to common shareholders
includes the effect of the accretion of the liquidation preference on the
redeemable preferred stock which reduces net income or increases net loss
attributable to common shareholders for the relative periods.

(6) Net income for 1998 was favorably impacted by the
reversal of a $7.6 million deferred tax asset valuation allowance. Assuming an
effective tax rate of 33.9%, consistent with fiscal year 1999, net income before
redeemable preferred stock accretion would have been reduced by $6.9 million.

(7) See notes 2 and 9 of notes to audited consolidated
financial statements for an explanation of the method used to calculate the net
income per common share and shares used in computing net income per common
share, basic and diluted.

(8) Company-owned restaurants are included in the computation
of comparable restaurant sales after they have been open 12 months.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Overview

As of March 11, 2002, we own and operate 101 casual
dining restaurants under the names "California Pizza Kitchen" and "California
Pizza Kitchen ASAP" in 21 states and the District of Columbia. We also franchise
our concept and currently have 29 additional restaurants which operate under
franchise or license arrangements. During our 17 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 concept was, and remains,
to take our customers' favorite food cravings and put them on a pizza - to
figuratively put the world on a pizza.

We opened our first casual dining restaurant in 1985 in
Beverly Hills, California and grew steadily to 25 restaurants by early 1992. Our
concept, with its signature line of innovative, premium pizzas, open-flame ovens
in exhibition-style kitchens and excellent guest service, attracted PepsiCo,
Inc. which bought a controlling interest in our company in May 1992.

During the approximately five-year period when PepsiCo was
our controlling shareholder, we opened 60 restaurants, 16 of which have
subsequently been closed. We experimented with different locations and different
restaurant sizes, ranging from 3,600 square feet to more than 11,000 square
feet. Our rapid expansion strained our infrastructure, resulted in a variety of
management and operational changes, diverted our attention from the execution of
our concept and led to disappointing operating results and financial
performance, including a decline in comparable restaurant sales in 1996.

At the end of 1996, PepsiCo concluded that it would sell or
otherwise divest all of its restaurant businesses, including California Pizza
Kitchen. In September 1997, we consummated a series of transactions to effect a
merger and leveraged recapitalization through which an investor group led by
Bruckmann, Rosser, Sherrill & Co., L.P. acquired a 67.4% interest in our
company.

Since the beginning of 1998, we have instituted an
accelerated, but disciplined, growth plan, focusing largely on further
penetrating our existing markets. Between January 1998 and December 2001, we
opened 31 new company-owned, full service restaurants and three ASAP
restaurants. We intend to open a minimum of 17 company-owned, full service
restaurants in 2002. We have signed lease agreements or letters of intent for
all of these restaurants. We anticipate that our new restaurants will require a
cash investment, net of landlord contributions of approximately $1.3 million per
restaurant. Pre-opening expenses for each of these new restaurants is expected
to average approximately $175,000 per restaurant.  Additionally, our new
restaurants experience higher cost of sales, labor and direct operating and
occupancy costs for approximately their first 90 days of operations in both
percentage and dollar terms when compared with our mature restaurants.
Accordingly, the volume and timing of new restaurant openings has had, and is
expected to continue to have an impact on pre-opening expenses, cost of sales,
labor and direct operating and occupancy costs until our restaurant operating
base is large enough to mitigate these opening costs and inefficiencies.

Our revenues are comprised of restaurant sales, franchise
royalties and other income. Our restaurant sales are comprised almost entirely
of food and beverage sales. Our franchise royalties and other revenues consist
primarily of monthly royalty income and initial franchise fees.

Cost of sales is composed of food, beverage and paper supply
expenses. The components of cost of sales are variable and increase with sales
volume. Labor costs include direct hourly and management wages, bonuses, 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, travel, information systems, training, corporate rent and professional
and consulting fees. Depreciation and amortization principally includes
depreciation on capital expenditures for restaurants. Pre-opening costs, which
are expensed as incurred, consist of 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 new restaurant.

In calculating company-owned comparable restaurant sales, we
include a restaurant in the comparable base once it has been open for 12 months.
As of December 30, 2001, we had 79 full service  company-owned restaurants which
met this criterion.

Results of operations

Our operating results for 2001, 2000 and 1999 are
expressed as a percentage of revenues below, except for the components of
restaurant operating costs and expenses, which are expressed as a percentage of
restaurant sales:

`2001        2000        1999
                                            ----------  ----------  ----------
Revenues:
  Restaurant sales........................       98.9 %      98.8 %      98.7 %
  Franchise and other revenues............        1.1         1.2         1.3
                                            ----------  ----------  ----------
    Total revenues........................      100.0       100.0       100.0

Costs and expenses:
  Cost of sales...........................       24.7        24.8        25.3
  Labor...................................       36.1        35.7        36.0
  Direct operating and occupancy..........       20.0        19.7        20.3
                                            ----------  ----------  ----------
Total restaurant operating costs..........       80.8        80.2        81.6
  General and administrative..............        6.2         6.8         7.3
  Depreciation and amortization...........        4.8         4.5         4.6
  Pre-opening costs.......................        1.2         0.8         0.4
  Loss on impairment of property and
   equipment and restaurant closures......        --          0.9         0.1
  Non-recurring  compensation charge......        --          0.9         --
                                            ----------  ----------  ----------
Operating income..........................        7.9         6.8         7.0
                                            ----------  ----------  ----------
Other income (expense) :
  Bank financing fees.....................        --          --         (0.6)
  Interest income ........................        0.3         0.2         0.2
  Interest expense........................        --         (0.9)       (2.1)
                                            ----------  ----------  ----------
Total other income (expense)..............        0.2        (0.7)       (2.5)
                                            ----------  ----------  ----------

Income before income tax provision........        8.2         6.1         4.5
Income tax provision......................       (2.9)       (2.1)       (1.5)
                                            ----------  ----------  ----------
Net income................................        5.3 %       4.0 %       3.0 %
                                            ==========  ==========  ==========`



2001 (52 weeks) compared to 2000 (52 weeks)

Total Revenues. Total revenues increased by $38.5
million, or 18.2%, to $249.3 million in 2001 from $210.8 million in 2000 due to
a $38.1 million increase in restaurant sales and a $335,000 increase in
franchise and other revenues. The increase in restaurant sales was due to $12.2
million in additional sales from a full year of operations for the 11
restaurants that opened in 2000, $18.9 million in sales derived from the 16
restaurants opened in 2001 and the purchase of one of our franchise restaurants
in June 2001 and $7.0 million from comparable restaurant sales increases of
3.3%. The increase in comparable restaurant sales was driven by increases in
average check of approximately 3.3% and flat customer counts compared to 2000.
Approximately 2.8% of the increase in average check was due to price increases
with the remainder due to modest shifts in our menu mix. Franchise and other
revenue growth was due to the increase in royalties from Kraft's distribution of
our frozen pizza, a full year of operations from the six new franchise
restaurants that opened in 2000 and the initial franchise fees and royalties
from the two franchise restaurants that opened in 2001.

Cost of sales. Cost of sales increased by $9.3
million, or 17.8%, to $61.0 million in 2001 from $51.7 million in 2000. Cost of
sales as a percentage of restaurant sales decreased to 24.7% in 2001 from 24.8%
in the prior year. This reduction was primarily a result of increased
operational efficiencies and the price increases taken in the second and the
fourth quarter of 2001.

Labor. Labor increased by $14.6 million, or 19.6%, to
$88.9 million in 2001 from $74.3 million in 2000. Labor as a percentage of
restaurant sales increased to 36.1% in 2001 from 35.7% in the prior year. The
increase in labor as a percentage of restaurant sales was primarily due to
higher hourly labor which increased to 21.7% of restaurant sales in 2001 from
21.4% in the prior year as a result of inefficiencies related to new store
openings and higher management labor as a percentage of sales resulting from the
hiring of additional managers in anticipation of new store openings.  We expect
labor to remain relatively flat in 2002 as our current restaurant base should be
large enough to offset new store labor inefficiencies.

Direct operating and occupancy. Direct operating and
occupancy increased by $8.3 million, or 20.1%, to $49.3 million in 2001 from
$41.1 million in 2000. Direct operating and occupancy as a percentage of
restaurant sales increased to 20.0% in 2001 from 19.7% from the prior year. The
increase was due primarily to higher natural gas and electricity costs and
higher CAM charges for new restaurant openings. We expect direct operating and
occupancy costs as a percentage of sales to remain relatively flat in  2002 as a
result of the Company's increasing revenue base.

General and administrative. General and administrative
increased by $1.1 million, or 7.9%, to $15.5 million in 2001 from $14.3 million
in 2000. General and administrative as a percentage of total revenue decreased
to 6.2% in 2001 from 6.8% in the prior year. The increase in general and
administrative expenses was primarily a result of higher travel and moving
expenses related to manager relocations for our new restaurants and higher
personnel costs related to new management positions. The decrease in general and
administrative expenses as a percentage of revenues was primarily a result of
the Company's increasing revenue base and its ability to leverage its general
and administrative personnel, coupled with the elimination of our co-founders'
salaries effective October 1, 2000. We anticipate general and administrative
expenses to continue to improve as a percent of sales as a result of
administrative efficiencies and a higher revenue base.

Depreciation and amortization. Depreciation and
amortization increased by $2.4 million, or 25.4%, to $12.0 million in 2001 from
$9.6 million in 2000. The increase was primarily due to the 16 new
restaurants opened during 2001 and a full year of depreciation on the 11
restaurants opened in 2000.

Pre-opening costs. Pre-opening costs increased by $1.2
million to $2.9 million in 2001 from $1.7 million in 2000. The increase was due
to the 16 restaurants that opened in 2001 compared to the 11 restaurants
that opened in 2000, as well as pre-opening costs incurred related to
restaurants that we plan to open in the first quarter of 2002.

Loss on impairment of property and equipment and
restaurant closures. The $1.8 million loss on impairment of property and
equipment for 2000 relates to the write-down of one restaurant in accordance
with Statement of Financial Accounting Standard (SFAS) No. 121.

Non-recurring compensation charge. The non-recurring
compensation charge of $1.9 million  in 2000 represents performance-based stock
options granted to Frederick R. Hipp, our Chief Executive Officer and President.
Upon closing of the initial public offering, these options became exerciseable
triggering a variable plan accounting charge in accordance with Accounting
Principles Board Opinion (APB) No. 25.

Interest income (expense).  Interest income, net of
interest expense, increased by $2.0 million to $607,000 in 2001 from interest
expense of $1.4 million for 2000. The increase was a result of the interest
earned on the cash balances since the repayment of our term note and the pay-down of
the revolving line of credit on August 7, 2000 from the proceeds of our
initial public offering.

Income tax provision. The income tax provision for
2001 and 2000 was based on annual effective tax rates applied to the income
before income tax provision. The 35.0% tax rate in 2001 and 2000,  comprises the
federal and state statutory rates based on the annual estimated effective tax
rate for the respective years.

Net income. Net income increased by $4.8 million, or
57.9%, to $13.2 million in 2001 from $8.4 million in 2000. Net income as a
percentage of revenues increased to 5.3% in 2001 from 4.0% in 2000. The increase
was due to the elimination of interest expense in favor of interest income in
2001 and by the $1.8 million write down of one restaurant in 2000 in accordance
with SFAS No. 121 and the $1.9 million non-recurring compensation charge for
performance-based stock options in accordance with APB No. 25.

2000 (52 weeks) compared to 1999 (52 weeks)

Total Revenues. Total revenues increased by $31.6
million, or 17.6%, to $210.8 million in 2000 from $179.2 million in 1999 due to
a $31.4 million increase in restaurant sales and a $222,000 increase in
franchise and other revenues. The increase in restaurant sales was due to $6.8
million in sales from a full year of operations for the five restaurants that
opened in 1999, $2.6 million in sales from the consolidation of our limited
partnership restaurant, $9.9 million in sales derived from the 11
restaurants opened in 2000, and $13.5 million from comparable restaurant sales
increases of 7.8%. This increase in restaurant sales was offset by the loss of
revenue from the two restaurants which were closed in 1999. The increase in
comparable restaurant sales was driven by increases in customer counts of
approximately 4.4% and increases in the average check of approximately 3.3%
compared to 1999. Approximately one-half of the increase in average check is due
to price increases taken in 1999 and 2000, with the remainder due to modest
shifts in our menu mix. Franchise and other revenue growth was due primarily to
a full year of operations for the seven new franchise restaurants that opened in
1999 and the six franchise restaurants that opened in 2000.

Cost of sales. Cost of sales increased by $7.0
million, or 15.7%, to $51.7 million in 2000 from $44.7 million in 1999. Cost of
sales as a percentage of restaurant sales decreased to 24.8% in 2000 from 25.3%
in the prior year. This reduction was primarily a result of increased
operational efficiencies and the price increases taken in the second and the
fourth quarter of 2000.

Labor. Labor increased by $10.6 million, or 16.7%, to
$74.3 million in 2000 from $63.7 million in 1999. Labor as a percentage of
restaurant sales decreased to 35.7% in 2000 from 36.0% in the prior year. The
decrease in labor as a percentage of restaurant sales was primarily due to lower
hourly labor as a percentage of sales resulting from higher weekly store sales
in 2000 compared to the prior year. Hourly labor as a percentage of sales
decreased to 21.3% in 2000 from 21.7% in 1999.

Direct operating and occupancy. Direct operating and
occupancy increased by $5.3 million, or 14.6%, to $41.1 million in 2000 from
$35.8 million in 1999. Direct operating and occupancy as a percentage of
restaurant sales decreased to 19.7% in 2000 from 20.3% from the prior year. The
reduction was due primarily to higher net sales spread over relatively fixed
restaurant level operating and occupancy expenses.

General and administrative. General and administrative
increased by $1.2 million, or 9.3%, to $14.3 million in 2000 from $13.1 million
in 1999. General and administrative as a percentage of total revenue decreased
to 6.8% in 2000 from 7.3% in the prior year. The increase in general and
administrative expenses was primarily a result of higher travel and moving
expenses related to manager relocations for our new restaurants and higher
personnel costs related to new management positions. The decrease in general and
administrative expenses as a percentage of revenues was primarily a result of
the Company's increasing revenue base and its ability to leverage its general
and administrative personnel.

Depreciation and amortization. Depreciation and
amortization increased by $1.4 million, or 16.2%, to $9.6 million in 2000 from
$8.2 million in 1999. The increase was primarily due to the 11 new
restaurants opened during 2000 and a full year of depreciation on the
restaurants opened in 1999.

Pre-opening costs. Pre-opening costs increased by
$887,000 to $1.7 million in 2000 from $763,000 in 1999. The increase was due to
the 11 restaurants that opened in 2000 compared to the five restaurants that
opened in 1999, as well as pre-opening costs incurred in connection with the
restaurants that we plan to open in the first quarter of 2001.

Loss on impairment of property and equipment and
restaurant closures. Loss on impairment of property and equipment and
restaurant closures increased by $1.6 million to $1.8 million in 2000 from
$200,000 in 1999.  The increase related to the write-down of one restaurant in
accordance with SFAS No. 121.  In 1999, we implemented a new point of sale
systems in all of our restaurant locations and as a result, we incurred $200,000
related to the write-off of our old point of sale system.

Non-recurring compensation charge. Non-recurring
compensation charge of $1.9 million represents the performance-based stock
options granted to Frederick R. Hipp, our Chief Executive Officer and President.
Upon closing of the initial public offering, these options were exercised
triggering a variable plan accounting charge in accordance with APB No. 25.

Bank financing fees. Bank financing fees of $1.0
million in 1999 represents the unamortized costs relating to our prior credit
agreement, which were written off when we refinanced our senior credit facility
in 1999.

Interest expense. Interest expense decreased by $2.0
million to $1.4 million in 2000 from $3.4 million in 1999. The decrease was
primarily a result of a lower debt balance due to payments made under our prior
credit facility, a lower interest rate due to a new credit facility that was put
in place in October 1999, and the repayment of our term note and the pay-down of
the revolving line of credit on August 7, 2000 with the proceeds from our
initial public offering.

Income tax provision. The income tax provision for
2000 and 1999 was based on annual effective tax rates applied to the income
before income tax provision. The 35.0% and 33.9% tax rate in 2000 and 1999, respectively,  comprises the
federal and state statutory rates based on the annual estimated effective tax
rate for the respective years.

Net income. Net income increased by $3.0 million, or
54.9%, to $8.4 million in 2000 from $5.4 million in 1999. Net income as a
percentage of revenues increased to 4.0% in 2000 from 3.0% in 1999. The increase
was due to the lower operating costs and interest expense offset by the $1.8
million write down of one restaurant in 2000 in accordance with SFAS No. 121 and
the $1.9 million non-recurring compensation charge for performance- based stock
options in accordance with APB No. 25.

Potential fluctuations in quarterly results and seasonality

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 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
within the one month immediately preceding, and the month of, opening a new
restaurant. In addition, our experience to date has been that labor and direct
operating and occupancy costs associated with a newly opened restaurant for the
first three months of operation are often materially greater than what will 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 and labor and direct operating and occupancy
costs. As a result of our plans to open new restaurants at an accelerated pace,
we anticipate that we will experience significantly increased pre-opening costs,
labor and direct operating and occupancy costs in 2002.

Our business is also subject to seasonal fluctuations.
Historically, sales in most of our restaurants have been higher during the
summer months and winter holiday season. As a result, we expect our highest
earnings to occur in those periods. As a result of all of these factors, results
for any one-quarter are not necessarily indicative of the results to be expected
for any other quarter or for any year.

Liquidity and capital resources

In recent years we have funded our capital requirements
primarily through cash flow from operations and proceeds from the initial public
offering of our stock.  In 2001, net cash flow provided by operating activities
was $32.7 million compared to $21.2 million in 2000 and $13.6 million in 1999.
Net cash flow provided by operating activities exceeded net income for 2001 due
to the effects of depreciation and amortization and the net changes in operating
assets and liabilities.  The net change in operating assets and liabilities in
2001 was primarily due to an increase in accrued liabilities.  In 2000 and 1999,
net cash flow provided by operating activities exceeded the net income for both
periods due to the effects of depreciation and amortization, loss on impairment
of property and equipment, restaurant closure and a non-recurring compensation
charge in 2000.

We use cash to fund the development and construction of new
restaurants and remodel our existing restaurants. Net cash used in investing
activities in 2001 was $32.8 million, of which $24.8 million was spent on new
restaurants and $6.0 million was spent on remodels and capitalized maintenance.
We opened 16 new restaurants in 2001 compared to 11 in 2000. Net cash used in
investing activities for 2000 was $22.3 million, of which $16.8 million was
spent on new restaurants opened in 2000 and $5.1 million was spent on remodels.
Net cash used in investing activities for 1999 was $17.3 million, of which
approximately $7.7 million was spent on five new restaurants opened in 1999,
$2.1 million was spent on remodels and $3.3 million was spent on our new point
of sale system. We expect to open a minimum of 17 full service restaurants in
2002. We expect that our planned future restaurants will require, on average, a
total cash investment per restaurant, after landlord contributions, of
approximately $1.3 million. Additionally, we anticipate pre-opening costs on
average to be approximately $175,000, however, any unexpected delays in
construction, labor shortages or other factors could result in higher than
anticipated pre-opening costs. Our capital expenditures for 1999 through 2001
were financed primarily through internally generated funds.

Net cash provided by financing activities was $7.2 million in
2001 compared to $7.9 million in 2000. Financing activities in 2001 consisted
primarily of $4.3 million from the sale of securities, net of underwriting fees
and expenses associated with our follow-on offering; and $2.9 million from
employee common stock option exercises. Financing activities in fiscal 2000
consisted primarily of $72.0 million from the sale of securities, net of
underwriting fees and expenses, offset by debt payments of $40.0 million and
cash payments of $23.7 million to our preferred shareholders upon conversion of
their preferred stock into common stock. Net cash used in financing activities
for 1999 was $5.2 million and was related to our debt payments made under our
term loan and revolving line of credit which were incurred in connection with
the merger and leveraged recapitalization transaction in 1997. As of December
30, 2001 we have a $20.0 million revolving line of credit, of which nothing is
currently outstanding. The line of credit expires on June 30, 2004 and bears
interest at either the bank base rate minus 0.75% or LIBOR plus 1.0%.

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 the 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 our credit facility, will be
sufficient to satisfy our working capital and capital expenditures 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 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.

New Accounting Standards

In June 2001, The Financial Accounting Standards Board
issued Statements of Financial Accounting Standards (SFAS) No. 141,
"Business Combinations", and No. 142, "Goodwill and Other
Intangible Assets", effective for fiscal years beginning after December 15,
2001.  SFAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001.  Under SFAS 142, goodwill
(and intangible assets deemed to have indefinite lives) will no longer be
amortized but will be subject to annual impairment tests.  Other intangible
assets will continue to be amortized over their useful lives.  As of December
30, 2001, the Company has insignificant balances of goodwill and therefore has
immaterial goodwill amortization expense in its results of operations.  The
Company will apply the new rules on accounting for goodwill and other intangible
assets beginning in the first quarter of 2002.  Application of the non-
amortization and impairment provisions of SFAS 142 is not anticipated to be
significant.

In August 2001, the Financial Accounting Standards Board
issued SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," which addresses financial accounting and reporting for
the impairment or disposal of long-lived assets and supersedes SFAS
No. 121, "Accounting for the Impairment or Disposal of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," and the accounting and
reporting provisions of Accounting Principles Board (APB) Opinion No. 30,
"Reporting the Results of Operations" for a disposal of a segment of a
business. SFAS 144 is effective for fiscal years beginning after
December 15, 2001, with earlier application encouraged. The Company expects
to adopt SFAS 144 as of December 31, 2001 and it does not expect that
the adoption of the Statement will have a significant impact on the Company's
financial position and results of operations.

Inflation

The primary inflationary factors affecting our operations
are food and labor costs. A large number of our restaurant personnel are paid at
rates based on the applicable minimum wage, and increases in the minimum wage
directly affect our labor costs. Many of our leases require us to pay taxes,
maintenance, repairs, insurance and utilities, all of which are generally
subject to inflationary increases. We believe inflation has not had a material
impact on our results of operations in recent years.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Our market risk exposures are related to our cash and
cash equivalents. We invest our excess cash in highly liquid short-term
investments with maturities of less than three months as of the date of
purchase. These investments are not held for trading or other speculative
purposes. Changes in interest rates affect the investment income we earn on our
investments and, therefore, impact our cash flows and results of operations.

In addition, we have a $20.0 million line of credit agreement
with Bank of America, N.A. which expires on June 30, 2004. Interest on the line
of credit is calculated on either the bank base rate minus 0.75% or LIBOR plus
1.0%. Currently, there is no outstanding balance under this agreement. Should we
draw on this line in the future, changes in interest rates would affect the
interest expense on these loans and, therefore, impact our cash flows and
results of operations.

Many of the food products purchased by us are affected by
changes in weather, production, availability, seasonality and other factors
outside our control. In an effort to control some of this risk, we have entered
into some fixed price purchase commitments with terms of no more than a year. In
addition, we believe that almost all of our food and supplies are available from
several sources, which helps to control food commodity risks.





ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



---



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                                                        | Page
|------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|Report of Independent Auditors                                                                                                                          | F-2 
|Consolidated Financial Statements:                                                                                                                      |     
|Consolidated Balance Sheets at December
30, 2001 and December 31, 2000                                                                                  | F-3 
|Consolidated Statements of Income for the Years Ended
December 30, 2001,
     December 31, 2000 and January 2, 2000                                     | F-4 
|Consolidated Statements of Shareholders' Equity
(Deficiency) for the Years
              Ended December 30, 2001, December 31, 2000 and January
2, 2000 | F-5 
|Consolidated Statements of Cash Flows for the Years Ended
December 30,
              2001, December 31, 2000 and  January 2, 2000                       | F-6 
|Notes to Consolidated Financial
Statements                                                                                                              | F-8 





---





REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders of
California Pizza Kitchen, Inc.

We have audited the accompanying consolidated balance sheets
of California Pizza Kitchen, Inc. and Subsidiaries (the "Company") as of
December 30, 2001 and December 31, 2000, and the related consolidated statements
of income, shareholders' equity (deficiency) and cash flows for each of the
three fiscal years in the period ended December 30, 2001. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of California Pizza Kitchen, Inc. and Subsidiaries at December 30, 2001
and December 31, 2000 and the consolidated results of their operations and their
cash flows for each of the three fiscal years in the period ended December 30,
2001 in conformity with accounting principles generally accepted in the United
States.



/s/ Ernst & Young LLP

Long Beach, California
January 25, 2002

---

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

            December 30, 2001 and December 31, 2000
(in thousands, except for share data)

`2001       2000
                                                                                ---------  ---------
                                    Assets
Current assets:
  Cash and cash equivalents................................................... $  19,788  $  12,649
  Trade accounts receivable...................................................     4,741      3,495
  Inventories.................................................................     1,777      1,609
  Prepaid expenses and other current assets...................................       877      2,003
                                                                                ---------  ---------
Total current assets..........................................................    27,183     19,756
Property and equipment, net...................................................   109,530     88,771
Deferred taxes................................................................     6,241      5,953
Other assets..................................................................     2,381      2,497
                                                                                ---------  ---------
Total assets.................................................................. $ 145,335  $ 116,977
                                                                                =========  =========
                     Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable............................................................ $   3,246  $   3,473
  Accrued compensation and benefits...........................................     9,117      9,273
  Accrued rent................................................................     5,870      4,763
  Other accrued liabilities...................................................     6,959      4,416
  Accrued income tax .........................................................     3,460      1,212
                                                                                ---------  ---------
Total current liabilities.....................................................    28,652     23,137
Other liabilities.............................................................     2,577      1,522
Shareholders' equity:
  Common Stock--$0.01 par value, 80,000,000 shares authorized,
   18,425,343 and 17,889,091 shares issued and outstanding
   at December 30, 2001 and December 31, 2000, respectively...................       184        179
  Additional paid-in capital..................................................   206,624    198,052
  Accumulated deficit.........................................................   (92,702)  (105,913)
                                                                                ---------  ---------
Total shareholders' equity ...................................................   114,106     92,318
                                                                                ---------  ---------
Total liabilities and shareholders' equity ................................... $ 145,335  $ 116,977
                                                                                =========  =========`

See accompanying notes.

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CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF INCOME

       Years ended December 30, 2001, December 31, 2000 and January 2, 2000
(in thousands, except for per share data)

`2001        2000        1999
                                            ----------  ----------  ----------
Revenues:
  Restaurant sales........................ $  246,445  $  208,322  $  176,933
  Franchise and other revenues............      2,817       2,482       2,260
                                            ----------  ----------  ----------
    Total revenues........................    249,262     210,804     179,193

Costs and expenses:
  Cost of sales...........................     60,950      51,748      44,740
  Labor...................................     88,898      74,341      63,701
  Direct operating and occupancy..........     49,344      41,079      35,848
                                            ----------  ----------  ----------
Total restaurant operating costs..........    199,192     167,168     144,289
  General and administrative..............     15,489      14,349      13,123
  Depreciation and amortization...........     11,996       9,568       8,234
  Pre-opening costs.......................      2,867       1,650         763
  Loss on impairment of property and
   equipment and restaurant closures......        --        1,839         200
  Non-recurring  compensation charge......        --        1,949         --
                                            ----------  ----------  ----------
Operating income..........................     19,718      14,281      12,584
                                            ----------  ----------  ----------
Other income (expense) :
  Bank financing fees.....................        --          --         (998)
  Interest income ........................        632         469         306
  Interest expense........................        (25)     (1,881)     (3,721)
                                            ----------  ----------  ----------
Total other income (expense)..............        607      (1,412)     (4,413)
                                            ----------  ----------  ----------

Income before income tax provision........     20,325      12,869       8,171
Income tax provision......................     (7,114)     (4,504)     (2,772)
                                            ----------  ----------  ----------
Net income................................     13,211       8,365       5,399
Redeemable preferred stock accretion......        --       (3,512)     (5,147)
                                            ----------  ----------  ----------
Net income attributable to common
 shareholders............................. $   13,211  $    4,853  $      252
                                            ==========  ==========  ==========
Net income per common share:
  Basic................................... $     0.72  $     0.35  $     0.02
                                            ==========  ==========  ==========
  Diluted................................. $     0.71  $     0.35  $     0.02
                                            ==========  ==========  ==========
Shares used in calculating net income per
 common share:
  Basic...................................     18,308      13,703      10,800
                                            ==========  ==========  ==========
  Diluted.................................     18,611      14,013      11,168
                                            ==========  ==========  ==========`

See accompanying notes.

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CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)

       Years ended December 30, 2001, December 31, 2000 and January 2, 2000

(in thousands, except for per share data)

`New Class B
                                               Common Stock         Common Stock   Additional
                                         -------------------- -------------------   Paid-in    Accumulated
                                           Shares     Amount   Shares     Amount    Capital     Deficit      Total
                                         -----------  ------- ---------  --------  ----------  ----------  ---------
Balances at January 3, 1999............. 10,468,673      105   269,600         3     109,130    (119,677)   (10,439)
 Exercise of employee stock
  options...............................    158,297        1       --        --          135         --         136
 Tax benefit from employee
  stock option exercises................        --       --        --        --          222         --         222
 Conversion of New Class B to
  common stock..........................    269,600        3  (269,600)       (3)        --          --         --
 Preferred stock accretion..............        --       --        --        --       (5,147)        --      (5,147)
 Net income.............................        --       --        --        --          --        5,399      5,399
                                         -----------  ------- ---------  --------  ----------  ----------  ---------
Balances at January 2, 2000............. 10,896,570      109       --        --      104,340    (114,278)    (9,829)
 Exercise of employee stock
  options...............................    111,583        1       --        --           49         --          50
 Issuance of common stock, net
  of issuance costs of $7,594...........  5,300,000       53       --        --       71,853         --      71,906
 Conversion of preferred stock
  into common stock.....................  1,580,938       16       --        --       23,698         --      23,714
 Compensation expense from stock
  option exercise, net..................        --       --        --        --        1,624         --       1,624
 Preferred stock accretion..............        --       --        --        --       (3,512)        --      (3,512)
 Net income.............................        --       --        --        --          --        8,365      8,365
                                         -----------  ------- ---------  --------  ----------  ----------  ---------
Balances at December 31, 2000........... 17,889,091      179       --        --      198,052    (105,913)    92,318
 Exercise of employee stock
  options...............................    206,871        2       --        --        1,104         --       1,106
 Shares redeemed upon exercise of
  employee stock option.................     (9,160)     --        --        --          --          --         --
 Issuance of common stock, net
  of issuance costs of $844.............    200,000        2       --        --        4,339         --       4,341
 Issuance of common stock, under
  employee stock purchase plan..........    138,541        1       --        --        1,774         --       1,775
 Tax benefit from employee stock option
 exercises and employee stock purchase
  plan disqualifying dispositions.......        --       --        --        --        1,355         --       1,355
 Net income.............................        --       --        --        --          --       13,211     13,211
                                         -----------  ------- ---------  --------  ----------  ----------  ---------
Balances at December 30, 2001........... 18,425,343  $   184       --   $    --   $  206,624  $  (92,702) $ 114,106
                                         ===========  ======= =========  ========  ==========  ==========  =========`

See accompanying notes.

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CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

       Years ended December 30, 2001, December 31, 2000 and January 2, 2000
(in thousands)

`2001      2000      1999
                                                     --------  --------  --------
Operating activities:
Net income......................................... $ 13,211  $  8,365  $  5,399
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Depreciation and amortization....................   11,996     9,568     8,086
  Amortization of bank fees........................      --        --        148
  Bank financing fees .............................      --        --        998
  Minority interest in limited partnerships........      --         38       --
  Loss on impairment of property and
   equipment and restaurant closures...............      --      1,839       200
  Non-recurring compensation charge................      --      1,949       --
  Change in deferred tax asset.....................     (288)   (1,199)    1,348
  Changes in operating assets and liabilities:
    Trade accounts receivable......................   (1,246)   (2,003)      588
    Inventories....................................     (168)     (388)      (31)
    Prepaid expenses and other assets..............    1,243      (795)   (1,493)
    Accounts payable...............................     (227)     (204)     (924)
    Accrued liabilities............................    8,144     2,962      (355)
    Other liabilities..............................       54     1,108      (361)
                                                     --------  --------  --------
Net cash provided by operating activities..........   32,719    21,240    13,603
                                                     --------  --------  --------
Investing activities:
Capital expenditures...............................  (32,755)  (22,323)  (17,318)
Proceeds from sale of property and equipment.......      --        --         12
                                                     --------  --------  --------
Net cash used in investing activities..............  (32,755)  (22,323)  (17,306)
                                                     --------  --------  --------
Financing activities:
Proceeds from long-term debt.......................      --        --     25,000
Payments on long-term debt.........................      (47)  (40,038)  (45,300)
Proceeds from revolving line of credit.............      --        --     15,000
Net proceeds from issuance of common stock.........    7,222    71,956       136
Payment related to variable accounting charge......      --       (325)      --
Redemption of preferred stock......................      --    (23,719)      --
                                                     --------  --------  --------
Net cash provided by (used in) financing activities    7,175     7,874    (5,164)
                                                     --------  --------  --------
Net increase (decrease) in cash and cash
 equivalents.......................................    7,139     6,791    (8,867)
Cash and cash equivalents at beginning of year.....   12,649     5,686    14,553
Cash from consolidation of investment
   in limited partnership..........................      --        172       --
                                                     --------  --------  --------
Cash and cash equivalents at end of year........... $ 19,788  $ 12,649  $  5,686
                                                     ========  ========  ========
Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Interest....................................... $     25  $  2,037  $  3,640
    Income taxes................................... $  3,737  $  4,673  $  1,303`

Supplemental disclosure of non-cash financing activities:

During the fiscal year ended December 30, 2001, one of
our officers exercised options to purchase 14,375 shares of common stock with an
aggregate exercise price of $214 by exchanging 9,160 shares previously owned.

During the fiscal year ended December 31, 2000, the Company
began consolidating its limited partnership restaurant.  Assets and liabilities
acquired upon consolidation, excluding cash, were $35 and $102,
respectively.

On August 7, 2000, the Company redeemed all outstanding
shares of preferred stock at its liquidation value of $47,433 for a right to
receive cash of $23,719 and 1,580,938 shares of common stock.

During the fiscal year ended January 3, 1999, certain
employees and non-employees exercised stock options. Compensation expense
incurred by the Company related to the option exercises was approximately $123.



See accompanying notes.

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CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       Years ended December 30, 2001, December 31, 2000 and January 2, 2000

                   (in thousands, except for share and per share data)

1. Description of Business

Nature of Business

As of December 30, 2001, California Pizza Kitchen, Inc.
and its wholly owned subsidiaries (the "Company") owns, operates, licenses or
franchises 131 restaurants under the names California Pizza Kitchen and
California Pizza Kitchen ASAP in 25 states and the District of Columbia, and
four foreign countries, of which 99 are company-owned and 32 operate under
franchise or license arrangements.

The Company manages its operations by restaurant. The Company
has aggregated its operations to one reportable segment.

2. Summary of Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements
include the accounts of California Pizza Kitchen, Inc. and its wholly owned
subsidiaries. In addition, the Company was a general partner in two limited
partnerships which were formed to operate two restaurants in Chicago of which
one was closed in December 1999. In January 2000, the Company acquired a
majority interest in its remaining limited partnership restaurant.  As such,
beginning January 3, 2000, the Company consolidated the financial statements of
the limited partnership with its own financial statements.  Prior to fiscal
2000, the Company accounted for its ownership in the limited partnerships (which
are not material) under the equity method of accounting.  All significant
intercompany balances and transactions have been eliminated.

Fiscal Year End

The Company's fiscal year ends on the Sunday closest to
December 31. The Company's fiscal years ended December 30, 2001, December 31,
2000 and January 2, 2000, each covered 52 weeks. For purposes of the
accompanying consolidated financial statements, the years ended December 30,
2001, December 31, 2000 and January 2, 2000 may be referred to as the fiscal
years 2001, 2000 and 1999, respectively.

Use of Estimates

The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires
management 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 income and
expenses during the reporting period. Actual results could differ from those
estimates.

Reclassifications

Certain reclassifications have been made to the December
31, 2000 consolidated financial statements to conform with the December 30, 2001
presentation.

Cash and Cash Equivalents

The Company considers all highly liquid investments with
maturities of three months or less when purchased to be cash equivalents. The
Company places its cash deposits with highly qualified financial institutions.

Trade Accounts Receivable

The Company negotiates reimbursements from landlords for the
construction of new restaurants.  These reimbursements reduce the capitalized
costs of new restaurants.  Included in trade accounts receivable are contractual
amounts due from landlords related to new restaurant construction costs.  The
amounts due are for restaurants that opened in each of their respective years.
As of December 30, 2001 and December 31, 2000, the Company has recorded
receivables related to construction improvement allowances of $3,619 and $2,373,
respectively, and has reduced property and equipment by these amounts
accordingly.

Inventories

Inventories consist of food and beverage, uniforms and
supplies. Inventories are stated at the lower of cost (first-in, first-out
method) or market.

Property and Equipment

Property and equipment is recorded at cost.  Property and
equipment is depreciated over the assets' estimated useful lives using the
straight-line method. Leasehold improvements are amortized using the straight-line
method over the estimated useful life of the asset or the term of the
related lease, whichever is shorter. The lives for furniture, fixtures, and
equipment are ten years. The lives for buildings and leasehold improvements are
the shorter of ten to 20 years or the term of the related operating lease.

Liquor License

Transferable liquor licenses, included in other long-term
assets, which have a market value are carried at the lower of cost or market and
are not amortized.

Gift Certificates

The Company sells gift certificates and recognizes
deferred revenue, included in accrued liabilities, for gift certificates
outstanding until the gift certificates are redeemed.

Income Taxes

The Company utilizes the liability method of accounting for
income taxes as set forth in Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes". Under the liability method,
deferred taxes are determined based on the difference between the financial
statement and the tax basis of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to reverse.
Recognition of deferred tax assets is limited to amounts considered by
management to be more likely than not of realization in future periods.

Restaurant and Franchise Revenues

Revenues from the operation of Company-owned restaurants
are recognized when sales occur. All fees from franchised operations are
included in revenue as earned. Royalty fees are based on franchised restaurants'
revenues and are recorded by the Company in the period the related franchised
restaurants' revenues are earned.

Advertising Costs

The Company expenses advertising costs as incurred.
Advertising expenses totaled $2,433 in fiscal 2001, $2,226 in fiscal 2000 and
$2,100 in fiscal 1999.

Operating Leases

The Company accounts for operating leases on a straight-line
basis according to SFAS No. 13, "Accounting for Operating Leases". The
Company leases restaurant and office facilities that have terms expiring between
2002 and 2021. The restaurant facilities primarily have renewal clauses of ten to
20 years exercisable at the option of the Company with rent escalation clauses
stipulating specific rent increases, some of which are based on the consumer
price index. Certain of these leases require the payment of contingent rentals
based on a percentage of gross revenues, as defined.

Pre-opening Costs

The Company follows Statement of Position (SOP) 98-5,
"Reporting on the Costs of Start-up Activities," which was issued by the
Accounting Standards Executive Committee and provides guidance on the financial
reporting of the start-up costs and organization costs. The SOP requires costs
of start-up activities and organization costs to be expensed as incurred.

Earnings Per Share

The Company calculates net income per share in accordance
with SFAS No. 128, "Earnings Per Share".  Basic Earnings Per Share (EPS) is
computed by dividing net income or loss attributable to common shareholders by
the weighted average of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock (convertible preferred stock, warrants to
purchase common stock and common stock options using the treasury stock method)
were exercised or converted into common stock. Potential common shares in the
diluted EPS computation are excluded where their effect would be antidilutive.

Fair Value of Financial Instruments

The fair values of the Company's cash and cash
equivalents, trade accounts receivable, accounts payable and all other current
liabilities approximate the carrying values because of the short maturities of
these instruments.

Concentrations of Credit Risk

Financial instruments that potentially subject the
Company to concentrations of credit risk consist primarily of cash and cash
equivalents. The Company places its cash and cash equivalents with high quality
financial institutions. At times, balances in the Company's cash accounts may
exceed the Federal Deposit Insurance Corporation (FDIC) limit.

The Company maintains a food distribution contract with its
sole master distributor, Meadowbrook Meat Company, Inc., that potentially
subjects the Company to a concentration of business risk.  This contract expires
in June 2004.  Management of the Company believes it will be able to negotiate a
similarly-priced contract with either its current sole master distributor or
another distributor.

Recent Accounting Pronouncements

In June 2001, The Financial Accounting Standards Board
issued SFAS No. 141, "Business Combinations", and No. 142,
"Goodwill and Other Intangible Assets", effective for fiscal years
beginning after December 15, 2001.  Statement 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001.  Under SFAS 142, goodwill (and intangible assets deemed to have
indefinite lives) will no longer be amortized but will be subject to annual
impairment tests.  Other intangible assets will continue to be amortized over
their useful lives.  As of December 30, 2001, the Company has insignificant
balances of goodwill and therefore has immaterial goodwill amortization expense
in its results of operations.  The Company will apply the new rules on
accounting for goodwill and other intangible assets beginning in the first
quarter of 2002.  Application of the non-amortization and impairment provisions
of SFAS 142 is not anticipated to be significant.

In August 2001, the Financial Accounting Standards Board
issued SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," which addresses financial accounting and reporting for
the impairment or disposal of long-lived assets and supersedes SFAS
No. 121, "Accounting for the Impairment or Disposal of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," and the accounting and
reporting provisions of Accounting Principles Board (APB) Opinion No. 30,
"Reporting the Results of Operations" for a disposal of a segment of a
business. SFAS 144 is effective for fiscal years beginning after
December 15, 2001, with earlier application encouraged. The Company expects
to adopt SFAS 144 as of December 31, 2001 and it does not expect that
the adoption of the Statement will have a significant impact on the Company's
financial position and results of operations.





3. Property and Equipment

Property and equipment consist of the following at
December 30, 2001 and December 31, 2000:

`2001        2000
                                                    ----------  ----------
   Land........................................... $    5,786  $    5,786
   Buildings......................................      9,231       8,908
   Furniture, fixtures and equipment..............     66,751      50,703
   Leasehold improvements.........................     97,354      80,917
   Construction in progress.......................      3,939       3,975
                                                    ----------  ----------
                                                      183,061     150,289
   Less accumulated depreciation and amortization.     73,531      61,518
                                                    ----------  ----------
                                                   $  109,530  $   88,771
                                                    ==========  ==========`



The Company on an annual basis reviews the carrying value of
long-lived assets in accordance with SFAS No. 121, "Accounting for Impairment or
Disposal of Long-Lived Assets," on a restaurant by restaurant basis. In
accordance with SFAS No. 121, the Company recognizes the impairment of certain
property and equipment by reducing the carrying value of the assets to the
estimated fair value based on discounted cash flows of each under-performing
restaurant. There were no increases in accumulated depreciation and
amortization, other than in the ordinary course of business for 2001. The
Company increased accumulated depreciation and amortization and recorded a loss
on impairment of property and equipment in the amount of $1,839 at December 31,
2000.

4. Long-term Debt

Upon completion of the Company's initial public offering
in August 2000, the Company repaid all borrowings outstanding under its 1999
credit agreement.  On December 15, 2000, the Company replaced its 1999 credit
agreement with a $20,000 revolving line of credit with Bank of America, N.A., of
which zero is outstanding as of December 30, 2001.  The new credit line bears
interest at either the bank base rate minus 0.75% or LIBOR plus 1.0% and expires
on June 30, 2004.  The terms of the credit facility include financial covenants
which the Company was in compliance with as of December 30, 2001.

The new credit agreement provides for the issuance of letters
of credit, which reduce the availability under the revolving line. Letters of
credit outstanding in connection with various insurance programs totaled $1,470
and $420 at December 30, 2001 and December 31, 2000, respectively.

5. Income Taxes

The details of the provision for income taxes for the
years 2001, 2000 and 1999 are set forth below:

`2001        2000         1999
                                                 ----------  -----------  ----------
   Current:
     Federal................................... $   (6,280) $    (4,775) $   (1,052)
     State.....................................     (1,121)        (829)       (372)
                                                 ----------  -----------  ----------
                                                    (7,401)      (5,604)     (1,424)
                                                 ----------  -----------  ----------
   Deferred:
     Federal...................................        263          997      (1,151)
     State.....................................         24          103        (197)
                                                 ----------  -----------  ----------
                                                       287        1,100      (1,348)
                                                 ----------  -----------  ----------
                                                $   (7,114) $    (4,504) $   (2,772)
                                                 ==========  ===========  ==========`

The income tax provision differs from the federal statutory
rate because of the effect of the following items for the fiscal years 2001,
2000 and 1999:

`2001        2000         1999
                                                 ----------  -----------  ----------
   Statutory rate..............................      (35.0)%      (35.0)%     (34.0)%
   State income taxes, net of federal benefit..       (3.6)        (4.2)       (4.5)
   General business and tip tax credit.........        8.4          7.2         4.9
   Other.......................................       (4.8)        (3.0)       (0.3)
                                                 ----------  -----------  ----------
                                                     (35.0)%      (35.0)%     (33.9)%
                                                 ==========  ===========  ==========`

Deferred income taxes reflect the net tax effects of
temporary differences between the carrying value of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's net deferred tax asset at December 30,
2001 and December 31, 2000 consist of the following:

`2001         2000
                                                             -----------  ----------
   Deferred tax assets:
     Asset impairment reserves............................. $       710  $    3,321
     Insurance reserves....................................         241         246
     Vacation reserves.....................................         559         470
     Other accruals........................................       1,624         651
     Tax credits...........................................         315         290
     Accrued rent..........................................         376         555
     Book depreciation over tax depreciation...............       1,924         420
     Partnership basis.....................................         492         --
                                                             -----------  ----------
       Net deferred tax asset.............................. $     6,241  $    5,953
                                                             ===========  ==========`

6. Preferred Stock

Prior to the closing of the initial public offering in
August 2000, the Company had 10,151,771 shares of Series A 12 1/2% Cumulative
Compounding Preferred Stock issued and outstanding and 10,151,771 shares of
Series B 13 1/2% Cumulative Compounding Preferred Stock issued and outstanding.
The Series A Preferred Stock is entitled to receive cash dividends of $0.2387
per share per annum and all dividends are cumulative, whether or not declared,
and are payable annually in arrears. Unpaid dividends accrue interest at 14.5%
annually. The Series B Preferred Stock is entitled to receive cash dividends of
$0.1983 per share per annum and all dividends are cumulative, whether or not
declared, and are payable annually in arrears. Unpaid dividends accrue interest
at 15.5% annually. The accretion on the Preferred Stock related to the unpaid
dividends is reflected in the consolidated statement of shareholders' equity
(deficiency) as a reduction of additional paid-in capital and an increase in the
preferred stock book value.

Upon closing of the Company's initial public offering in
August 2000, all shares of Series A 12 1/2% Cumulative Compounding Preferred
Stock and Series B 13 1/2% Cumulative Compounding Preferred Stock plus the
accrued but unpaid dividends were automatically converted into a right to
receive cash of $23,719 and 1,580,938 shares of common stock.  Upon conversion
of the preferred stock all other rights previously assigned ceased.

7. Shareholders' Equity

The Company completed its initial public offering in
August, 2000. The offering resulted in the issuance of 5,300,000 shares of
common stock at $15.00 per share, resulting in net proceeds to the Company of
approximately $71.9 million. Upon consummation of the offering, all shares of
Series A 12 1/2% cumulative compounding preferred stock and Series B 13 1/2%
cumulative compounding preferred stock were automatically converted into a right
to receive $23.7 million in cash and 1,580,938 shares of common stock.
Additionally, upon completion of the Company's public offering, options to
purchase 111,583 shares of common stock were exercised.

On January 15, 2001 and July 16, 2001, employees purchased
69,873 and 68,668 shares of common stock from the Company under the Company's
employee stock purchase plan.  The net proceeds to the Company were $891 and
$885, respectively.

On February 13, 2001, the Company completed a follow-on
offering for 4,400,000 shares of common stock, of which 200,000 shares were sold
by the Company and 4,200,000 shares were sold by selling shareholder shares.
The shares were sold at a price of $25.94 per share, resulting in net proceeds
to the Company of approximately $4.3 million.

On November 30, 1999, the shareholder of New Class B Common
Stock converted all of its shares into 269,600 shares of Common Stock.

8. Common Stock Option Plans

In 1998, the Company adopted the 1998 Stock Based
Incentive Compensation Plan ("1998 Plan"). The 1998 Plan allows for the Company
to reward, retain and attract valued employees, directors and independent
contractors. In fiscal 2001 the Company increased the amount of shares reserved
under the 1998 Plan for future awards from 2,500,000 shares to 3,500,000 shares.
Options under the 1998 Plan may be either nonqualified options or incentive
stock options. Nonqualified options may be granted at prices determined by the
Company's Board of Directors. Incentive stock options may be granted at not less
than 100% of fair value on the date of grant for employees owning 10% or less of
the Company's stock and at not less than 110% for employees owning more than 10%
of the Company's stock. The terms governing the exercise of options and direct
stock bonuses are determined by the Company's Board of Directors.

Shares subject to option under the Plans were as follows:

`Weighted
                                                                  Average
                                                                  Exercise
                                                      Shares       Price
                                                    -----------  ----------

   Outstanding at January 3, 1999..................    556,954  $     1.86

   Granted.........................................    274,500        8.44
   Exercised.......................................   (158,297)       0.86
   Canceled........................................        --           --
                                                    -----------
   Outstanding at January 2, 2000..................    673,157        4.78
   Granted.........................................    503,500       14.83
   Exercised.......................................   (111,583)       0.45
   Canceled........................................    (18,452)       6.46
                                                    -----------
   Outstanding at December 31, 2000................  1,046,622       10.05
   Granted.........................................    606,000       21.46
   Exercised.......................................   (206,871)       6.37
   Canceled........................................   (200,262)      14.86
                                                    -----------
   Outstanding at December 30, 2001................  1,245,489  $    15.43
                                                    ===========`

The following table summarizes information regarding options
outstanding and options  exercisable at December 30, 2001:

`Weighted                 Number
                                 Average    Weighted  Exercisable   Weighted
                      Number    Remaining    Average     as of       Average
     Range of           of     Contractual  Exercise  December 30,  Exercise
  Exercise Prices     Shares      Life        Price       2001        Price
------------------- ---------- -----------  --------- ------------  ---------
$2.50..............   124,746        6.64  $    2.50       65,371  $    2.50
 6.54 -- 9.26......   190,890        7.76       8.51       74,506       8.60
 15.00.............   405,728        6.36      15.00      138,364      15.00
 19.65 -- 22.10....   524,125        9.25      21.37       47,625      22.00
                    ----------                        ------------
                    1,245,489        7.82  $   15.43      325,866  $   12.05
                    ==========                        ============`

Options available for future grant totaled 1,218,403 and
615,066 shares at December 30, 2001 and December 31, 2000, respectively.

On August 2, 2000 in connection with the Company's initial
public offering, options to purchase 110,696 shares of common stock were
exercised.  These options required the Company to reimburse 20% of the taxable
gain incurred upon exercise to the employee.  As a result, the Company incurred
a variable plan accounting charge of $1,949 in accordance with APB No. 25,
"Accounting for Stock Issued to Employees", representing the difference between
the fair value of the stock at the time of exercise and the option strike price
plus the 20% tax reimbursement.

The Company has elected to follow APB No. 25, and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under SFAS
No. 123, "Accounting for Stock Based Compensation," requires use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB No. 25, because the exercise price of the Company's employee
stock options equals or exceeds the fair value of the underlying stock on the
date of grant, no compensation expense is recognized.

Pro forma information regarding net income is required by
SFAS No. 123, which also requires that the information be determined as if the
Company has accounted for its employee stock options granted subsequent to
December 31, 1994, under the fair value method of that Statement. The fair value
of these options was estimated at the date of grant using a Black-Scholes option
pricing model with the following assumptions for the fiscal years ended 2001,
2000 and 1999.

`2001       2000      1999
                                               ---------  --------  --------

   Risk free interest rate...................      5.00 %    5.20 %    5.43 %
   Expected lives (in years).................      5.00      5.00      5.00
   Dividend yield............................      0.00 %    0.00 %    0.00 %
   Expected volatility.......................      0.35 %    0.35 %    0.00 %`

The Black-Scholes option valuation model was developed for
use in estimating the fair value of the traded options which have no vesting
restrictions and are usually transferable. In addition, option valuation models
require the input of highly subjective assumptions, including the expected stock
price and expected volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
estimate of fair value, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee
stock options.

For purposes of pro forma disclosures, the estimated fair
value of the options is amortized to expense over the options' vesting period.
Under SFAS No. 123, the Company would have incurred an additional compensation
expense of $1,915, $515 and $92 for the fiscal years 2001, 2000 and 1999,
respectively.  As a result, diluted earnings per share would have been reduced
by $0.10, $0.02 and $0.01 for 2001, 2000 and 1999, respectively.

9. Net Income Per Common Share

Reconciliation of basic and diluted net income per common
share in accordance with SFAS No. 128 for the fiscal years ended December 30,
2001, December 31, 2000 and January 2, 2000 is as follows:

`2001       2000      1999
                                               ---------  --------  --------
Numerator for basic and diluted net income
 per share attributable to common
 shareholders................................ $  13,211  $  4,853  $    252
                                               =========  ========  ========
Denominator (in thousands):
  Denominator for basic net income per
   common share--weighted average shares.....    18,308    13,703    10,800
  Employee stock options.....................       303       310       368
                                               ---------  --------  --------
  Denominator for diluted net income per
   common share--weighted average shares.....    18,611    14,013    11,168
                                               =========  ========  ========`

There were no shares considered antidilutive for the purposes
of this computation.

10. Commitments and Contingencies

Commitments

The Company leases certain restaurant facilities and its
corporate headquarters under noncancelable operating leases with terms ranging
from five to 20 years. The restaurant leases generally require payment of
contingent rental based on a percentage of sales and require payment of various
expenses incidental to the use of property. Rent expense on all operating leases
approximated $14,888 for fiscal 2001, $12,234 for fiscal 2000 and $10,719 for
fiscal 1999, including contingent rental expense of $1,255, $924 and $615 for
the fiscal years 2001, 2000 and 1999, respectively. Most leases contain renewal
options and may be subject to periodic adjustments for inflation and scheduled
escalations.

The aggregate future minimum annual lease payments under
noncancelable operating leases for the fiscal year end December 30, 2001 are as
follows:

`Fiscal year ending:
     2002.................................... $  14,509
     2003....................................    14,349
     2004....................................    14,326
     2005....................................    14,296
     2006....................................    13,933
     Thereafter..............................    63,693
                                               ---------
                                              $ 135,106
                                               =========`

Contingencies

Occasionally, the Company is a defendant in litigation
arising in the ordinary course of our business, including claims resulting from
'slip and fall' accidents, employment-related claims and claims from guests or
employees alleging illness, injury or other food quality, health or operational
concerns. To date, none of these types of litigation, all of which are covered
by insurance, has had a material effect on the Company and, as of the date of
this report, the Company is not a party to any material litigation.

11. Employee Benefit Plans

In January 1994, the Company established a defined
contribution plan for certain qualified employees as defined. Participants may
contribute from 1% to 15% of pretax compensation, subject to certain limitation.
The plan provides for certain discretionary contributions by the Company. The
Company has recorded contribution expense of $131, $216 and $200 for fiscal
2001, 2000 and 1999, respectively.  The contributions are made subsequent to
each fiscal year end.

In November 1999, the Company adopted an employee stock
purchase plan (Purchase Plan) under Section 423 of the Internal Revenue Code of
1986 which became effective with the initial public offering in August 2000 and
reserved 375,000 shares for issuance thereunder.  The Purchase Plan allows
eligible employees to purchase common stock at a discount, but only through
payroll deductions, during concurrent 24 month offering periods.  Each offering
period will be divided into four consecutive six month purchase periods.  The
price at which the stock is purchased under the Purchase Plan is equal to 85% of
the lower of the fair market value of the common stock on the first day of the
offering period and the fair market value of the common stock on the last day of
the purchase period.

On January 15, 2001 and July 16, 2001, employees purchased
69,873 and 68,668 shares of common stock from the Company under the Company's
employee stock purchase plan.  The net proceeds to the Company were $891 and
$885, respectively.

12. Related Party Transactions

In connection with the Company's initial public offering,
the Company's Chief Executive Officer exercised options to purchase 110,696
shares of common stock.  Under the agreement granting these options, the Company
was required to pay an amount equal to 20% of the gain recognized by the Chief
Executive Officer for federal income tax purposes, which was $325.  In addition,
the Company loaned its Chief Executive Officer $586, which is equal to the
difference between the cash payment and the total income tax liability he
incurred as a result of this exercise.  The full recourse promissory note
currently bears interest at 5.0% and is due two years after the date of
exercise. As of December 30, 2001, the amount outstanding on this loan totaled
$415 and is included in other assets.

On August 24, 2001, the Company loaned one of its officers
$65. The loan is supported by a full recourse promissory note which bears
interest at 7.5% per annum. As of December 30, 2001, the amount outstanding on
this loan totaled $65 and is included in other assets.

13. Quarterly Financial Data (Unaudited)

Summarized unaudited quarterly financial data (in
thousands, except net income (loss) per share).

`Quarter Ended:                                   Apr 1, 2001  July 1, 2001  Sept 30, 2001  Dec 30, 2001
                                                 -----------  ------------  -------------  ------------

   Total revenues.............................. $    52,027  $     60,329  $      64,271  $     67,635
   Income from operations...................... $     4,873  $      4,946  $       5,056  $      4,843
   Net income.................................. $     3,308  $      3,325  $       3,369  $      3,210
   Net income attributable
    to common shareholders..................... $     3,308  $      3,325  $       3,369  $      3,210
   Diluted net income per share
     attributable to common shareholders....... $      0.18  $       0.18  $        0.18  $      (0.17)


Quarter Ended:                                   Apr 2, 2000  July 2, 2000   Oct 1, 2000   Dec 31, 2000
                                                 -----------  ------------  -------------  ------------

   Total revenues.............................. $    48,266  $     52,639  $      54,969  $     54,930
   Income from operations...................... $     1,985  $      2,420  $       5,047  $      4,829
   Net income.................................. $       796  $      1,092  $       3,190  $      3,287
   Preferred stock accretion................... $     1,458  $      1,472  $         582  $        --
   Net income (loss)  attributable
    to common shareholders..................... $      (662) $       (380) $       2,608  $      3,287
   Diluted net income (loss) per share
     attributable to common shareholders....... $     (0.06) $      (0.04) $        0.17  $      (0.18)`



14. Subsequent Events

On January 15, 2002, employees purchased 67,465 shares of
common stock from the Company under the Company's employee stock purchase plan.
The net proceeds to the Company were approximately $889.









ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.



PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

See the information set forth in the sections entitled
"Proposal No. 1--Election of Directors," "Executive Compensation and Other
Matters" and "Compliance with Section 16(a) of the Securities Exchange Act
of 1934" in the Company's Proxy Statement for the 2002 annual meeting of
stockholders to be filed with the Securities and Exchange Commission within 120
days after the end of the fiscal year ended December 30, 2001 (the "2002 Proxy
Statement"), which is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

See the information set forth in the section entitled
"Executive Compensation and Other Matters" in the 2002 Proxy Statement, which is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

See the information set forth in the section entitled
"Security Ownership of Certain Beneficial Owners and Management" in the 2002
Proxy Statement, which is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See the information set forth in the sections entitled
"Certain Relationships and Related Transactions" and "Compensation Committee
Interlocks and Insider Participation" in the 2002 Proxy Statement, which is
incorporated herein by reference.



PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON

FORM 8-K

(a) 1. FINANCIAL STATEMENTS

See Item 8 of this Form 10-K.

2. FINANCIAL STATEMENT SCHEDULES

All schedules have been omitted as they are either not
required, not applicable, or the information has otherwise been shown in the
consolidated financial statements or notes thereafter.

3. EXHIBITS

The exhibits listed on the accompanying index to exhibits are
incorporated by reference into this Form 10-K.

---

EXHIBIT INDEX



|Exhibit Number | Description                                                                                                                                                                                                         
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1(B)         | Amended and Restated Articles of Incorporation, and
amendments thereto                                                                                                                                              
|3.2(A)         | Amended and Restated Bylaws                                                                                                                                                                                         
|4.1(A)         | Specimen Common Stock Certificate                                                                                                                                                                                   
|4.2(A)         | Registration Rights Agreement dated September 30, 1997                                                                                                                                                              
|10.1(A)        | Memorandum of Understanding Regarding Form of Agreement
between Host Marriott Services and California Pizza Kitchen, Inc. dated May 12,
1998                                                                        
|10.2(A)        | Third Amended and Restated Employment Agreement of Richard L.
Rosenfield dated July 6, 2000                                                                                                                         
|10.3(A)        | Third Amended and Restated Employment Agreement of Larry S.
Flax dated July 6, 2000                                                                                                                                 
|10.4(A)        | Severance Agreement between Frederick R. Hipp and California
Pizza Kitchen, Inc. dated March 31, 1998                                                                                                               
|10.5(A)        | Severance Agreement between Tom N. Jenneman and California
Pizza Kitchen, Inc. dated November [sic], 1999                                                                                                           
|10.6(A)        | California Pizza Kitchen, Inc. Employee Stock Purchase Plan
adopted on November 2, 1999, as amended on June 23, 2000                                                                                                
|10.7(A)        | California Pizza Kitchen, Inc. 1998 Stock-Based Incentive
Compensation Plan adopted February 5, 1998, as amended on July 21, 1998 and
November 2, 1999 and forms of stock option agreement thereunder               
|10.8(A)        | California Pizza Kitchen, Inc. Non-Qualified Stock Option
Agreements between California Pizza Kitchen, Inc. and Frederick R. Hipp dated
March 31, 1998                                                              
|10.9(A)        | Share Repurchase Agreement dated as of July 27, 2000 by and
between California Pizza Kitchen, Inc. and Bruckmann, Rosser, Sherrill &
Co., L.P.                                                                      
|10.10(B)       | Promissory Note between California Pizza Kitchen, Inc. and
Frederick R. Hipp dated August 2, 2000                                                                                                                   
|10.11(B)       | Termination Agreement dated as of July 31, 2000 by and among
California Pizza Kitchen, Inc., Bruckmann Rosser, Sherrill & Co., L.P.,
Richard L. Rosenfield, Larry S. Flax and the additional investors named therein
|10.12(B)       | Credit Agreement by and between California Pizza Kitchen,
Inc. and Bank Of America, N.A., dated December 15, 2000                                                                                                   
|10.13(B)       | Master Subsidiary Guaranty issued from Bank of America, N.A.
by CPK Management Company and California Pizza Kitchen of Illinois, Inc. dated
December 15, 2000                                                       
|10.14(C)       | Third and Fourth Amendments to California Pizza Kitchen, Inc.
1998 Stock-Based Incentive Compensation Plan dated as of July 28, 2000 and May
1, 2001                                                                
|23.1           | Consent of Ernst & Young LLP                                                                                                                                                                                        

1. Incorporated by reference to the Registrant's
Registration Statement on Form S-1 (Registration No. 333-37778).
2. Incorporated by reference to the Registrant's
Registration Statement on Form S-1 (Registration No. 333-53088).
3. Incorporated by reference from the Registrant's Form 10-Q
for the quarterly period ended April 1, 2001.

---

SIGNATURES

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

Dated: March 11, 2002

| | California Pizza Kitchen, Inc.                 
| | -----------------------------------------------
| | By:                                            
| | Chief Executive Officer, President and Director
| |                                                

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

|Signature                                        | Title                                                                         | Date          
|------------------------------------------------ | ----------------------------------------------------------------------------- | --------------
|/s/ Larry S. Flax 
Larry S. Flax                 | Co-Chairman of the Board and Director                                         | March 11, 2002
|/s/ Richard L. Rosenfield 
Richard L. Rosenfield | Co-Chairman of the Board and Director                                         | March 11, 2002
|/s/ Frederick R. Hipp 
Frederick R. Hipp         | Chief Executive Officer, President and Director
(Principal Executive Officer) | March 11, 2002
|/s/ Harold O. Rosser 
Harold O. Rosser           | Director                                                                      | March 11, 2002
|/s/ Bruce C. Bruckmann 
Bruce C. Bruckmann       | Director                                                                      | March 11, 2002
|/s/ Fortunato N. Valenti 
Fortunato N. Valenti   | Director                                                                      | March 11, 2002
|/s/ Charles G. Phillips 
Charles G. Phillips     | Director                                                                      | March 11, 2002
|/s/ Rick J. Caruso  
Rick J. Caruso              | Director                                                                      | March 11, 2002
|/s/ Gregory S. Levin 
Gregory S. Levin           | Vice President, Chief Financial Officer and Chief Accounting Officer          | March 11, 2002

---

EXHIBIT INDEX



|Exhibit Number | Description                                                                                                                                                                                                         
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1(B)         | Amended and Restated Articles of Incorporation, and
amendments thereto                                                                                                                                              
|3.2(A)         | Amended and Restated Bylaws                                                                                                                                                                                         
|4.1(A)         | Specimen Common Stock Certificate                                                                                                                                                                                   
|4.2(A)         | Registration Rights Agreement dated September 30, 1997                                                                                                                                                              
|10.1(A)        | Memorandum of Understanding Regarding Form of Agreement
between Host Marriott Services and California Pizza Kitchen, Inc. dated May 12,
1998                                                                        
|10.2(A)        | Third Amended and Restated Employment Agreement of Richard L.
Rosenfield dated July 6, 2000                                                                                                                         
|10.3(A)        | Third Amended and Restated Employment Agreement of Larry S.
Flax dated July 6, 2000                                                                                                                                 
|10.4(A)        | Severance Agreement between Frederick R. Hipp and California
Pizza Kitchen, Inc. dated March 31, 1998                                                                                                               
|10.5(A)        | Severance Agreement between Tom N. Jenneman and California
Pizza Kitchen, Inc. dated November [sic], 1999                                                                                                           
|10.6(A)        | California Pizza Kitchen, Inc. Employee Stock Purchase Plan
adopted on November 2, 1999, as amended on June 23, 2000                                                                                                
|10.7(A)        | California Pizza Kitchen, Inc. 1998 Stock-Based Incentive
Compensation Plan adopted February 5, 1998, as amended on July 21, 1998 and
November 2, 1999 and forms of stock option agreement thereunder               
|10.8(A)        | California Pizza Kitchen, Inc. Non-Qualified Stock Option
Agreements between California Pizza Kitchen, Inc. and Frederick R. Hipp dated
March 31, 1998                                                              
|10.9(A)        | Share Repurchase Agreement dated as of July 27, 2000 by and
between California Pizza Kitchen, Inc. and Bruckmann, Rosser, Sherrill &
Co., L.P.                                                                      
|10.10(B)       | Promissory Note between California Pizza Kitchen, Inc. and
Frederick R. Hipp dated August 2, 2000                                                                                                                   
|10.11(B)       | Termination Agreement dated as of July 31, 2000 by and among
California Pizza Kitchen, Inc., Bruckmann Rosser, Sherrill & Co., L.P.,
Richard L. Rosenfield, Larry S. Flax and the additional investors named therein
|10.12(B)       | Credit Agreement by and between California Pizza Kitchen,
Inc. and Bank Of America, N.A., dated December 15, 2000                                                                                                   
|10.13(B)       | Master Subsidiary Guaranty issued from Bank of America, N.A.
by CPK Management Company and California Pizza Kitchen of Illinois, Inc. dated
December 15, 2000                                                       
|10.14(C)       | Third and Fourth Amendments to California Pizza Kitchen, Inc.
1998 Stock-Based Incentive Compensation Plan dated as of July 28, 2000 and May
1, 2001                                                                
|23.1           | Consent of Ernst & Young LLP                                                                                                                                                                                        

1. Incorporated by reference to the Registrant's
Registration Statement on Form S-1 (Registration 333-37778).
2. Incorporated by reference to the Registrant's
Registration Statement on Form S-1 (Registration 333-53088).
3. Incorporated by reference from the Registrant's Form 10-Q
for the quarterly period ended April 1, 2001

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