10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended June 28, 2009

or

o 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: 0-25123

P.F. Chang’s China Bistro, Inc.

(Exact name of registrant as specified in its charter)

Delaware	86-0815086
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
7676 East Pinnacle Peak Road	85255
Scottsdale, Arizona	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:

(480) 888-3000

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 þ No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o (Do not check if smaller reporting company) Smaller reporting company o

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

As of June 28, 2009, there were 23,361,502 outstanding shares of the registrant’s Common Stock.

TABLE OF CONTENTS

Item	Page
PART I  FINANCIAL INFORMATION
1. Financial Statements		3
Consolidated Balance Sheets as of June 28, 2009 and December 28, 2008		3
Consolidated Statements of Income for the Three and Six Months Ended June 28, 2009 and June 29, 2008		4
Consolidated Statements of Equity for the Six Months Ended June 28, 2009		5
Consolidated Statements of Cash Flows for the Six Months Ended June 28, 2009 and June 29, 2008		6
Notes to Unaudited Consolidated Financial Statements		7
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
3. Quantitative and Qualitative Disclosures About Market Risk		27
4. Controls and Procedures		28
PART II  OTHER INFORMATION
1. Legal Proceedings		29
1A. Risk Factors		29
2. Unregistered Sales of Equity Securities and Use of Proceeds		29
3. Defaults Upon Senior Securities		29
4. Submission of Matters to a Vote of Security Holders		30
5. Other Information		30
6. Exhibits		31
Signatures		32
Index to Exhibits		33
Exhibit 10.33
Exhibit 10.35
Exhibit 10.36
Exhibit 31.1
Exhibit 31.2
Exhibit 31.3
Exhibit 32.1
Exhibit 32.2
Exhibit 32.3

2

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements

P.F. CHANG’S CHINA BISTRO, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

	June 28,			December 28,
	2009			2008
	(Unaudited)			(Note 1)
ASSETS
Current assets:
Cash and cash equivalents	$	31,462		$	40,951
Inventories		4,905			4,930
Other current assets		31,947			51,643
Total current assets		68,314			97,524
Property and equipment, net		508,568			524,004
Goodwill		6,819			6,819
Intangible assets, net		23,116			24,270
Other assets		16,926			14,746
Total assets	$	623,743		$	667,363
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	18,603		$	15,203
Construction payable		4,509			4,358
Accrued expenses		68,544			71,162
Unearned revenue		23,154			31,115
Current portion of long-term debt, including $1,353 and $3,502 due to related parties at June 28, 2009 and December 28, 2008, respectively		2,035			5,753
Total current liabilities		116,845			127,591
Long-term debt, including $131 and $1,073 due to related parties at June 28, 2009 and December 28, 2008, respectively		41,381			82,496
Lease obligations		110,747			113,178
Other liabilities		18,316			14,691
Commitments and contingencies (Note 10)		—			—
Total liabilities		287,289			337,956
Equity:
PFCB common stockholders’ equity:
Common stock, $0.001 par value, 40,000,000 shares authorized: 23,361,502 shares and 24,114,107 shares issued and outstanding at June 28, 2009 and December 28, 2008, respectively		28			27
Additional paid-in capital		211,160			206,667
Treasury stock, at cost, 4,460,924 shares and 3,634,979 shares at June 28, 2009 and December 28, 2008, respectively		(125,923	)		(106,372	)
Accumulated other comprehensive loss		(601	)		(755	)
Retained earnings		246,213			221,259
Total PFCB common stockholders’ equity		330,877			320,826
Noncontrolling interests		5,577			8,581
Total equity		336,454			329,407
Total liabilities and equity	$	623,743		$	667,363

See accompanying notes to unaudited consolidated financial statements.

3

P.F. CHANG’S CHINA BISTRO, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2009			2008			2009			2008
Revenues	$	301,360		$	301,533		$	611,197		$	607,450
Costs and expenses:
Cost of sales		79,657			82,132			162,729			165,662
Labor		98,111			99,971			198,818			203,352
Operating		48,809			49,366			99,500			97,427
Occupancy		17,403			17,511			34,781			35,137
General and administrative		20,523			19,128			40,337			37,649
Depreciation and amortization		18,575			17,150			37,071			33,520
Preopening expense		461			1,808			949			4,627
Partner investment expense		(91	)		(500	)		(555	)		(89	)
Total costs and expenses		283,448			286,566			573,630			577,285
Income from operations		17,912			14,967			37,567			30,165
Interest and other income (expense), net		(437	)		(949	)		(1,377	)		(1,883	)
Income from continuing operations before taxes		17,475			14,018			36,190			28,282
Provision for income taxes		(5,108	)		(3,636	)		(10,061	)		(7,217	)
Income from continuing operations, net of tax		12,367			10,382			26,129			21,065
Loss from discontinued operations, net of tax		(474	)		(525	)		(517	)		(854	)
Net income		11,893			9,857			25,612			20,211
Less: Net income attributable to noncontrolling interests		288			487			658			1,192
Net income attributable to PFCB	$	11,605		$	9,370		$	24,954		$	19,019
Basic income per share:
Income from continuing operations attributable to PFCB common stockholders	$	0.52		$	0.41		$	1.10		$	0.83
Loss from discontinued operations, net of tax, attributable to PFCB common stockholders		(0.02	)		(0.02	)		(0.03	)		(0.04	)
Net income attributable to PFCB common stockholders	$	0.50		$	0.39		$	1.07		$	0.79
Diluted income per share:
Income from continuing operations attributable to PFCB common stockholders	$	0.51		$	0.41		$	1.08		$	0.82
Loss from discontinued operations, net of tax, attributable to PFCB common stockholders		(0.02	)		(0.02	)		(0.03	)		(0.04	)
Net income attributable to PFCB common stockholders	$	0.49		$	0.39		$	1.05		$	0.78
Weighted average shares used in computation:
Basic		23,057			23,898			23,249			23,935
Diluted		23,526			24,247			23,660			24,271
Amounts attributable to PFCB:
Income from continuing operations, net of tax	$	12,079		$	9,895		$	25,471		$	19,873
Loss from discontinued operations, net of tax		(474	)		(525	)		(517	)		(854	)
Net income attributable to PFCB	$	11,605		$	9,370		$	24,954		$	19,019

See accompanying notes to unaudited consolidated financial statements.

4

P.F. CHANG’S CHINA BISTRO, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(Unaudited)

	PFCB Common Stockholders
												Accumulated
						Additional						other
	Common Stock					paid-in			Treasury			comprehensive			Retained		Noncontrolling
	Shares			Amount		capital			stock			loss			earnings		interests			Total
Balances, December 28, 2008		24,114		$	27	$	206,667		$	(106,372	)	$	(755	)	$	221,259	$	8,581		$	329,407
Issuance of common stock under stock option plans		78			1		926			—			—			—		—			927
Issuance of common stock under employee stock purchase plan		21			—		349			—			—			—		—			349
Issuance of restricted stock under incentive plans, net of forfeitures		(25	)		—		—			—			—			—		—			—
Purchases of treasury stock		(826	)		—		—			(19,551	)		—			—		—			(19,551	)
Share-based compensation expense(1)		—			—		4,112			—			—			—		—			4,112
Tax benefit from share-based compensation, net		—			—		106			—			—			—		—			106
Unrealized loss on derivatives		—			—		—			—			154			—		—			154
Distributions to noncontrolling interest partners		—			—		—			—			—			—		(1,103	)		(1,103	)
Contributions from noncontrolling interest partners		—			—		—			—			—			—		10			10
Purchases of noncontrolling interests		—			—		(1,000	)		—			—			—		(2,275	)		(3,275	)
Partner investment expense		—			—		—			—			—			—		(555	)		(555	)
Partner bonus expense, imputed		—			—		—			—			—			—		261			261
Net income		—			—		—			—			—			24,954		658			25,612
Balances, June 28, 2009		23,362		$	28	$	211,160		$	(125,923	)	$	(601	)	$	246,213	$	5,577		$	336,454

⁽¹⁾ Share-based compensation expense includes equity-settled awards only

See accompanying notes to unaudited consolidated financial statements.

5

P.F. CHANG’S CHINA BISTRO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	June 28,			June 29,
	2009			2008
Operating Activities:
Net income	$	25,612		$	20,211
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		37,071			34,091
Share-based compensation		5,058			4,481
Net lease termination charges in discontinued operations		712			—
Partner investment expense		(555	)		(89	)
Partner bonus expense, imputed		261			507
Deferred income taxes		(1,542	)		1,622
Tax benefit from share-based compensation, net		(106	)		(140	)
Other		61			54
Changes in operating assets and liabilities:
Inventories		25			(73	)
Other current assets		23,818			1,624
Other assets		(1,342	)		(1,599	)
Accounts payable		3,400			(1,614	)
Accrued expenses		(5,002	)		3,695
Unearned revenue		(7,961	)		(6,295	)
Lease obligations		(1,644	)		12,651
Other long-term liabilities		999			600
Net cash provided by operating activities		78,865			69,726
Investing Activities:
Capital expenditures		(20,773	)		(45,792	)
Capitalized interest		(97	)		(437	)
Net cash used in investing activities		(20,870	)		(46,229	)
Financing Activities:
Repayments of long-term debt		(44,857	)		(10,783	)
Purchases of treasury stock		(19,551	)		(10,014	)
Purchases of noncontrolling interests		(3,275	)		(5,366	)
Proceeds from stock options exercised and employee stock purchases		1,276			588
Distributions to noncontrolling interest partners		(1,103	)		(2,058	)
Payments of capital lease obligations		(90	)		(83	)
Contributions from noncontrolling interest partners		10			170
Tax benefit from share-based compensation, net		106			140
Net cash used in financing activities		(67,484	)		(27,406	)
Net decrease in cash and cash equivalents		(9,489	)		(3,909	)
Cash and cash equivalents at the beginning of the period		40,951			24,055
Cash and cash equivalents at the end of the period	$	31,462		$	20,146
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	2,259		$	3,186
Cash paid for income taxes, net of refunds	$	3,801		$	3,376
Supplemental Disclosure of Non-Cash Items:
Purchases of noncontrolling interests through issuance of long-term debt	$	—		$	2,431
Change in construction payable	$	151		$	(5,379	)

See accompanying notes to unaudited consolidated financial statements.

6

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Business and Basis of Presentation

As of June 28, 2009, P.F. Chang’s China Bistro, Inc. (the “Company” or “PFCB”) owned and operated 190 full service restaurants throughout the United States under the name of P.F. Chang’s China Bistro (the “Bistro”). The Company also owned and operated 161 quick casual restaurants under the name of Pei Wei Asian Diner (“Pei Wei”).

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 28, 2009 are not necessarily indicative of the results that may be expected for the year ending January 3, 2010.

The consolidated balance sheet at December 28, 2008 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2008.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Principles of Consolidation and Presentation

The Company’s consolidated financial statements include the accounts and operations of the Company and its majority-owned subsidiaries. All material balances and transactions between the consolidated entities have been eliminated. In accordance with the Company’s fiscal 2009 adoption of Statement of Financial Accounting Standards (“SFAS”) No. 160, Noncontrolling Interests in Consolidated Statements, an amendment of ARB No. 51 (“SFAS 160”), noncontrolling interests (previously shown as minority interest) are reported below net income under the heading “Net income attributable to noncontrolling interests” in the consolidated income statements and shown as a component of equity in the consolidated balance sheets. See Recent Accounting Pronouncements for further discussion.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) approved the FASB Accounting Standards Codification (“the Codification”) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the Securities and Exchange Commission (“SEC”), will be superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification will become nonauthoritative. The Codification does not change GAAP, but instead introduces a new structure that will combine all authoritative standards into a comprehensive, topically organized online database. The Codification will be effective for interim or annual periods ending after September 15, 2009, and will impact the Company’s financial statement disclosures beginning with the quarter ending September 27, 2009 as all future references to authoritative accounting literature will be referenced in accordance with the Codification. There will be no changes to the content of the Company’s financial statements or disclosures as a result of implementing the Codification.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS 165”), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before the financial statements are issued or available to be issued (“subsequent events”). SFAS 165 requires disclosure of the date through which the entity has evaluated subsequent events and the basis for that date. For public entities, this is the date the financial statements are issued. SFAS 165 does not apply to subsequent events or transactions that are within the scope of other GAAP and will not result in significant changes in the subsequent events reported by the Company. SFAS 165 is effective for interim or annual periods ending after June 15, 2009. The Company implemented SFAS 165 during the quarter ended June 28, 2009. The Company evaluated for subsequent events through July 22, 2009, the issuance date of the Company’s financial statements. No recognized or non-recognized subsequent events were noted.

7

In April 2009, the FASB issued FASB Staff Position (“FSP”) FAS No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP FAS 107-1 and APB 28-1”), which amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about the fair value of financial instruments for interim reporting periods, as well as annual reporting periods. FSP FAS 107-1 and APB 28-1 are effective for all interim and annual reporting periods ending after June 15, 2009 and did not impact the Company’s consolidated financial statements.

In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). This change is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under Statement No. 141R (revised 2007), “Business Combinations” (“SFAS 141R”) and other GAAP. The requirement for determining useful lives must be applied prospectively to intangible assets acquired after the effective date and the disclosure requirements must be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of FSP 142-3 did not impact the Company’s consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, (“SFAS 161”). SFAS 161 requires companies to provide enhanced disclosures about derivative instruments and hedging activities to enable investors to better understand the effects of such instruments and activities on a company’s financial position, financial performance and cash flows. Under SFAS 161, companies are required to disclose the fair value of derivative instruments and their gains and losses in a tabular format. SFAS 161 is effective for fiscal years beginning after November 15, 2008. The implementation of SFAS 161 did not impact the Company’s consolidated financial statements.

In February 2008, the FASB issued FSP FAS 157-2, Effective Date of FASB Statement No. 157, which delayed the effective date of Statement No. 157, “Fair Value Measurements” (“SFAS 157”), for most nonfinancial assets and nonfinancial liabilities until fiscal years beginning after November 15, 2008. The implementation of SFAS 157 for nonfinancial assets and nonfinancial liabilities did not impact the Company’s consolidated financial statements.

In December 2007, the FASB issued SFAS 141R, which establishes principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the target at the acquisition date. SFAS 141R is effective for fiscal years beginning after December 15, 2008 with early application prohibited. The Company adopted SFAS 141R at the beginning of fiscal 2009, and this guidance will be implemented for any future business combinations entered into after the effective date.

SFAS 160 — Noncontrolling Interests

In December 2007, the FASB issued SFAS 160 which changes the accounting and reporting for minority interests such that they will be recharacterized as noncontrolling interests and classified as a component of equity. This new consolidation method significantly changes the accounting for transactions with minority interest holders. SFAS 160 is effective for fiscal years beginning after December 15, 2008 with early application prohibited.

As a result of adopting SFAS 160, at the start of fiscal 2009, the Company no longer records an intangible asset when the purchase price of a noncontrolling interest exceeds the book value at the time of buyout. Any excess or shortfall for buyouts of noncontrolling interests in mature restaurants is recognized as an adjustment to additional paid-in capital in stockholders’ equity. Any shortfall resulting from the early buyout of noncontrolling interests will continue to be recognized as a benefit in partner investment expense up to the initial amount recognized at the time of buy-in. Additionally, operating losses can be allocated to noncontrolling interests even when such allocation results in a deficit balance (i.e. book value can go negative).

The Company presents noncontrolling interests (previously shown as minority interest) as a component of equity on the consolidated balance sheets. Minority interest expense is no longer separately reported as a reduction to net income on the consolidated income statement, but is instead shown below net income under the heading “net income attributable to noncontrolling interests.” Total provision for income taxes remains unchanged; however, the Company’s effective tax rate as calculated from the balances shown on the consolidated income statement has changed as net income attributable to noncontrolling interests is no longer included as a deduction in the determination of income from continuing operations. The adoption of SFAS 160 did not have any other material impact on the Company’s consolidated financial statements.

8

2. Discontinued Operations

Discontinued operations include results attributable to 10 Pei Wei restaurants that were closed during the fourth quarter of 2008 and Taneko Japanese Tavern (“Taneko”), a third restaurant concept developed in 2006 and the assets of which were sold on August 1, 2008. Loss from discontinued operations includes both the historical results of operations as well as estimated and actual lease termination costs associated with the 10 closed Pei Wei restaurants and Taneko.

Loss from discontinued operations, net of tax is comprised of the following (in thousands):

	Three Months Ended						Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2009			2008			2009			2008
Revenues	$	—		$	3,022		$	—		$	6,424
Loss from discontinued operations before income tax benefit(1)		(778	)		(831	)		(848	)		(1,367	)
Income tax benefit		304			306			331			513
Loss from discontinued operations, net of tax	$	(474	)	$	(525	)	$	(517	)	$	(854	)

(1) Includes net impact of non-cash charges and credits recognized for the three and six months ended June 28, 2009 in connection with lease settlement activity.

The Company is pursuing lease termination agreements with each of the closed Pei Wei restaurant’s landlords as well as potential sub-tenant agreements. Lease termination agreements for six of the ten locations had been executed as of June 28, 2009.

Activity associated with the lease termination accrual is summarized below (in thousands):

	Lease Termination
	Accrual
Balance, December 28, 2008	$	2,379
Cash payments		(1,505	)
Charges		1,402
Balance, June 28, 2009	$	2,276

Charges include additional amounts recognized based on updated estimates of anticipated lease termination costs for certain closed locations where the accrual recorded at the time of lease termination was insufficient. Cash payments include settlement payments and ongoing rent payments. Through June 28, 2009, the Company has recognized a total of $4.0 million in lease termination charges for the closed Pei Wei locations which was reported in discontinued operations. The lease termination accrual is included in accrued expenses on the consolidated balance sheets with the timing of payments uncertain.

3. Income from Continuing Operations Attributable to PFCB per Share

Basic income from continuing operations attributable to PFCB per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted income from continuing operations attributable to PFCB per share is computed based on the weighted average number of shares of common stock and potentially dilutive securities, which includes options, restricted stock and restricted stock units (“RSUs”) outstanding under the Company’s stock option plans and the employee stock purchase plan. For the three months ended June 28, 2009 and June 29, 2008, 2.2 million and 2.4 million, respectively, of the Company’s shares were excluded from the calculation due to their anti-dilutive effect. For the six months ended June 28, 2009 and June 29, 2008, 2.3 million and 2.4 million, respectively, of the Company’s shares were excluded from the calculation due to their anti-dilutive effect.

9

4. Intangible Assets

Intangible assets were historically recognized upon the Company’s buyout of noncontrolling interests when the Company’s purchase price exceeded the imputed fair value at the time of the partners’ original investment. In accordance with the Company’s adoption of SFAS 160, beginning December 29, 2008, an intangible asset is no longer recognized upon buyout of noncontrolling interests. Instead, any excess of the Company’s purchase price over the imputed fair value is recognized as additional paid-in capital in equity. Intangible assets outstanding as of December 28, 2008 will continue to be amortized over their useful lives.

Intangible assets consist of the following (in thousands):

	June 28,			December 28,
	2009			2008
Intangible assets, gross	$	29,863		$	29,863
Accumulated amortization		(6,747	)		(5,593	)
Intangible assets, net	$	23,116		$	24,270

5. Accrued Expenses

Accrued expenses consist of the following (in thousands):

	June 28,		December 28,
	2009		2008
Accrued payroll	$	21,224	$	25,409
Accrued insurance		17,490		16,130
Sales and use tax payable		5,726		5,026
Property tax payable		3,699		4,151
Accrued rent		3,090		4,315
Other accrued expenses		17,315		16,131
Total accrued expenses	$	68,544	$	71,162

6. Long-Term Debt

Credit Facility

On August 31, 2007, the Company entered into a senior credit facility (“Credit Facility”) with several commercial financial institutions, which allows for borrowings of up to $150.0 million. The Credit Facility expires on August 30, 2013 and contains customary representations, warranties, negative and affirmative covenants, including a requirement to maintain a maximum leverage ratio, as defined, of 2.5:1 and a minimum fixed charge coverage ratio, as defined, of 1.25:1, as well as customary events of default and certain default provisions that could result in acceleration of the Credit Facility. The Company was in compliance with these restrictions and conditions as of June 28, 2009 as the Company’s leverage ratio was 1.26:1 and the fixed charge coverage ratio was 2.17:1.

The Credit Facility is guaranteed by the Company’s material existing and future domestic subsidiaries. As of June 28, 2009, the Company had borrowings outstanding under the Credit Facility totaling $40.0 million as well as $11.2 million committed for the issuance of letters of credit, which is required by insurance companies for the Company’s workers’ compensation and general liability insurance programs. The Company repaid $40.0 million of the $80.0 million of outstanding borrowings under the Credit Facility during the first half of fiscal 2009. Available borrowings under the Credit Facility were $98.8 million at June 28, 2009.

10

Interest Rate Swap

During the second quarter of fiscal 2008, the Company entered into an interest rate swap with a notional amount of $40.0 million. The purpose of this transaction is to provide a hedge against the effects of changes in interest rates on a portion of the Company’s current variable rate borrowings. The Company has designated the interest rate swap as a cash flow hedge of its exposure to variability in future cash flows attributable to interest payments on a $40.0 million tranche of floating rate debt.

Under the terms of the interest rate swap, the Company pays a fixed rate of 3.32% on the $40.0 million notional amount and receives payments from its counterparty based on the 1-month LIBOR rate for a term ending on May 20, 2010, effectively resulting in a fixed rate on the LIBOR component of the $40.0 million notional amount. Interest rate differentials paid or received under the swap agreement are recognized as adjustments to interest expense.

At June 28, 2009 and December 28, 2008, the recorded fair value of the interest rate swap was a liability of $1.0 million and $1.2 million, respectively ($0.6 million and $0.8 million, net of tax, respectively). The interest rate swap is reported in the consolidated balance sheets within accrued expenses at June 28, 2009 and other liabilities at December 28, 2008 and is offset by a corresponding amount in equity, representing the net unrealized losses included in accumulated other comprehensive loss. Such amounts will be recognized in the consolidated income statement over the remainder of the term ending on May 20, 2010. At June 28, 2009 and December 28, 2008, accumulated other comprehensive loss, as reflected in equity, consisted of unrealized losses on derivatives totaling $0.6 million and $0.8 million, net of tax, respectively. For the three and six months ended June 28, 2009, a $0.1 million and $0.2 million unrealized gain, respectively, was recorded in other comprehensive loss. For the three and six months ended June 29, 2008, a $2.0 thousand unrealized loss was recorded in other comprehensive loss. There was no hedge ineffectiveness recognized during the period ended June 28, 2009 and June 29, 2008.

7. Fair Value Measurements

The Company’s financial assets and financial liabilities measured at fair value are summarized below (in thousands):

	Fair Value Measurements as of June 28, 2009
				Quoted Prices in
				Active Markets for
				Identical		Significant Other			Significant
	June 28,			Assets/Liabilities		Observable Inputs			Unobservable Inputs
	2009			(Level 1)		(Level 2)			(Level 3)		Valuation Technique
Money markets	$	22,704		$	—	$	22,704		$	—	market approach
401(k) Restoration Plan investments		2,546			—		2,546			—	market approach
Interest rate swap liability		(973	)		—		(973	)		—	income approach
Total	$	24,277		$	—	$	24,277		$	—

The Company invests excess cash in money market funds and reflects these amounts within cash and cash equivalents on the consolidated balance sheet at a net value of 1:1 for each dollar invested. As of June 28, 2009, $17.1 million of the Company’s money market investments were guaranteed by the federal government under the Treasury Temporary Guarantee Program for Money Market Funds. This program expires on September 18, 2009. Other money market investments held by the Company were invested primarily in government backed securities at June 28, 2009.

The Company’s 401(k) Restoration Plan investments are considered trading securities and are reported at fair value based on third party broker statements. The realized and unrealized holding gains and losses related to these investments are recorded in interest and other income (expense), net in the consolidated income statements.

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The fair value of the Company’s interest rate swap is estimated using the net present value of a series of cash flows on both the fixed and floating legs of the swap. These cash flows are based on yield curves which take into account the contractual terms of the derivative, including the period to maturity and market-based parameters such as interest rates and volatility. The yield curves used in the valuation model are based on published data for counterparties with an AA rating. Market practice in pricing derivatives initially assumes all counterparties have the same credit quality. The Company mitigates derivative credit risk by transacting with highly rated counterparties. Management has evaluated the credit and nonperformance risks associated with its derivative counterparty and believes them to be insignificant and not warranting a credit adjustment at June 28, 2009. See Note 6 for a discussion of the Company’s interest rate swap.

8. Share-Based Compensation

Equity-Classified Awards

The Company may grant stock options for a fixed number of shares to certain employees and directors with an exercise price equal to or greater than the fair value of the shares at the date of grant. The Company also may grant restricted stock and RSUs with the fair value determined based on the Company’s closing stock price on the date of grant. The estimated fair value of share-based compensation plans is amortized to expense over the vesting period.

Share-based compensation expense recognized for equity-classified awards is based on awards ultimately expected to vest, and as such, it must be reduced for estimated or actual forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The fair value for options granted during the three and six months ended June 29, 2008 was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions.

	Three and Six Months
	Ended
	June 29, 2008(1)
Weighted average risk-free interest rate		3.1	%
Expected life of options (years)		5.5
Expected stock volatility		35.0	%
Expected dividend yield		0.0	%

⁽¹⁾ There were no stock options granted during the three and six months ended June 28, 2009

Liability-Classified Awards

Performance Units

During the first quarter of fiscal 2009, the Company awarded 600,000 performance units to each of the Company’s Co-Chief Executive Officers pursuant to the Company’s 2006 Equity Incentive Plan. Each award will vest on January 1, 2012, at which time the value of such awards, if any, will be determined and paid in cash.

The cash value of the performance units will be equal to the amount, if any, by which the Company’s final average stock price, as defined in the agreements, exceeds the strike price. The strike price will be adjusted, either up or down, based on the percentage change in the Russell 2000 Index during the performance period, as defined in the agreements, which approximates three years. The total value of the performance units is subject to a maximum value of $12.50 per unit. If the Company’s stock appreciation is less than the Russell 2000 Index, the performance units will have no value. In the event of an executive’s involuntary separation without cause or due to a change in control (as both terms are defined in the executive employment agreements) occurs prior to the end of the performance period, the performance period will end and the maximum value per unit may be calculated at a reduced amount. Additionally, if the Company’s final average stock price declines compared to the original strike price, the total value of the performance units, if any, will be reduced by 50 percent.

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The performance units have been classified as liability awards in other liabilities in the consolidated balance sheet, as they will be cash-settled at the end of the performance period. The fair value of the performance units is remeasured at each reporting period until the awards are settled. The fair value per performance unit was $5.52 and was calculated using a Monte-Carlo simulation model which incorporates the historical performance, volatility and correlation of the Company’s stock price and the Russell 2000 Index. At June 28, 2009, the recorded liability of the performance units was $0.8 million.

Cash-Settled Awards

During the second quarter of fiscal 2009, the Company issued cash-settled stock appreciation rights (“SARs”) and cash-settled stock-based awards (“stock-based awards”) to members of its Board of Directors. The cash value of the SARs will be based on the appreciation of the Company’s stock price on the date of settlement compared to the Company’s stock price on the date of grant. At the election of each director, the settlement date of SARs and stock-based awards was deferred until the earlier of the date they cease serving on the Company’s Board of Directors or a change in control of the Company. The SARs and stock-based awards are classified as liability awards in other liabilities in the consolidated balance sheet, as they will be paid in cash on the settlement date.

The fair value of the cash-settled awards was estimated at June 28, 2009 using a Black-Scholes option pricing model with the following weighted average assumptions:

	Three and Six Months			Three and Six Months
	Ended			Ended
	June 28, 2009(1)			June 28, 2009(1)
	Stock-Based Awards			SARs
Weighted average risk-free interest rate		3.0	%		2.3	%
Expected life of cash-settled awards (years)		9.9			4.5
Expected stock volatility		43.3	%		43.6	%
Expected dividend yield		0.0	%		0.0	%

⁽¹⁾ There were no cash-settled awards granted during the three and six months ended June 29, 2008

The fair value of the SARS is equal to the value calculated per the Black-Scholes model. The fair value of the stock-based awards is equal to the sum of the value calculated per the Black-Scholes model and the Company’s stock price. The fair value of cash-settled awards will be remeasured at each reporting period until the awards are settled. At June 28, 2009, the recorded liability of the cash-settled awards was $0.1 million.

Share-based compensation expense for all liability-classified awards are recognized ratably over the service period with fair value fluctuations recognized as cumulative adjustments to share-based compensation expense at the end of each reporting period.

Share-Based Compensation

Share-based compensation from continuing operations for equity and liability-classified awards is classified as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 28, 2009			June 29, 2008			June 28, 2009			June 29, 2008
Equity-classified awards:
Labor	$	88		$	137		$	191		$	296
General and administrative		1,911			2,021			3,921			4,147
Liability-classified awards:
General and administrative		731			—			946			—
Total share-based compensation		2,730			2,158			5,058			4,443
Less: tax benefit		(811	)		(581	)		(1,431	)		(1,182	)
Total share-based compensation, net of tax	$	1,919		$	1,577		$	3,627		$	3,261

Share-based compensation presented above excludes approximately $18,000 and $38,000 ($12,000 and $25,000, net of tax) for the three and six months ended June 29, 2008, respectively, related to discontinued operations. There was no share-based compensation recorded in discontinued operations for the three and six months ended June 28, 2009.

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At June 28, 2009, non-vested share-based compensation for equity-classified awards, (net of actual forfeitures for options and estimated forfeitures for restricted stock), totaled $6.2 million for stock options and $4.6 million for restricted stock. This expense will be recognized over the remaining weighted average vesting period, which is approximately 1.3 years for stock options and 1.6 years for restricted stock.

9. Segment Reporting

The Company operates exclusively in the United States food-service industry and has determined that its reportable segments are those that are based on the Company’s methods of internal reporting and management structure. The Company’s reportable segments are Bistro and Pei Wei. There were no material amounts of revenues or transfers among reportable segments.

The table below presents information about reportable segments (in thousands):

			Shared Services
	Total		and Other			Bistro		Pei Wei
For the Three Months Ended June 28, 2009:
Revenues	$	301,360	$	—		$	227,144	$	74,216
Segment profit		38,517		(489	)		31,533		7,473
Capital expenditures		12,587		341			9,494		2,752
Depreciation and amortization		18,575		489			13,646		4,440
For the Three Months Ended June 29, 2008:
Revenues	$	301,533	$	—		$	231,972	$	69,561
Segment profit		34,916		(361	)		30,323		4,954
Capital expenditures		19,139		109			14,944		4,086
Depreciation and amortization		17,150		361			12,794		3,995
For the Six Months Ended June 28, 2009:
Revenues	$	611,197	$	—		$	462,285	$	148,912
Segment profit		77,640		(907	)		64,339		14,208
Capital expenditures		20,773		1,963			14,790		4,020
Depreciation and amortization		37,071		907			27,374		8,790
For the Six Months Ended June 29, 2008:
Revenues	$	607,450	$	—		$	468,061	$	139,389
Segment profit		71,160		(692	)		60,617		11,235
Capital expenditures		45,792		199			35,173		10,420
Depreciation and amortization		33,520		692			25,059		7,769
As of June 28, 2009:
Total assets	$	623,743	$	21,756		$	492,751	$	109,236
Goodwill		6,819		—			6,566		253
As of December 28, 2008:
Total assets	$	667,363	$	20,478		$	534,224	$	112,661
Goodwill		6,819		—			6,566		253

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In addition to using consolidated GAAP results in evaluating the Company’s financial results, a primary measure used by executive management in assessing the performance of existing restaurant businesses is segment profitability (sometimes referred to as restaurant operating income). Segment profitability is defined as income from operations before general and administrative, preopening and partner investment expenses, but including a deduction for net income attributable to noncontrolling interests. Because preopening and partner investment expenses are solely related to expansion of the Company’s business, they make an accurate assessment of its ongoing operations more difficult and are therefore excluded. Additionally, general and administrative expenses are only included in the Company’s consolidated financial results as these costs relate to support of both restaurant businesses and are generally not specifically identifiable to individual restaurant operations. As the Company’s expansion is funded entirely from its ongoing restaurant operations, segment profitability is a consideration when determining whether and when to open additional restaurants.

	For the Three Months Ended						For the Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2009			2008			2009			2008
Segment profit	$	38,517		$	34,916		$	77,640		$	71,160
Less: General and administrative		(20,523	)		(19,128	)		(40,337	)		(37,649	)
Less: Preopening expense		(461	)		(1,808	)		(949	)		(4,627	)
Less: Partner investment expense		91			500			555			89
Less: Interest and other income (expense), net		(437	)		(949	)		(1,377	)		(1,883	)
Add: Net income attributable to noncontrolling interests		288			487			658			1,192
Income from continuing operations before taxes	$	17,475		$	14,018		$	36,190		$	28,282

10. Commitments and Contingencies

The Company is engaged in various legal actions, which arise in the ordinary course of its business. The Company is also currently under examination by various taxing authorities for years not closed by the statute of limitations. Although there can be no assurance as to the ultimate disposition of these matters, it is the opinion of the Company’s management, based upon the information available at this time, that the outcome of these matters, individually or in the aggregate, will not have a material adverse effect on the results of operations, liquidity or financial condition of the Company.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This information should be read in conjunction with the consolidated financial statements and notes thereto included in Item 1 of Part I of this Quarterly Report and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 28, 2008 contained in our 2008 Annual Report on Form 10-K.

Some of the statements in this section contain forward-looking statements, which involve risks and uncertainties. In some cases, you can identify forward-looking statements by terms such as may, will, should, expect, plan, intend, forecast, anticipate, believe, estimate, predict, potential, continue or the negative of these terms or other comparable terminology. The forward-looking statements contained in this section involve known and unknown risks, uncertainties and situations that may cause our or our industry’s actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. Factors that might cause actual events or results to differ materially from those indicated by these forward-looking statements may include the matters listed under “Risk Factors” in Item 1A (a detailed description of which can be found under the caption “Risk Factors” in our most recently filed Form 10-K) and elsewhere in this Form 10-Q, including, but not limited to, failure of our existing or new restaurants to achieve predicted results, changes in general economic and political conditions that affect consumer spending; our initiatives to improve the operating performance of our Pei Wei concept; changes in food costs; and our dependence on the financial performance of restaurants concentrated in certain geographic areas. Because we cannot guarantee future results, levels of activity, performance or achievements, you should not place undue reliance on these forward-looking statements.

Overview

We own and operate two restaurant concepts in the Asian niche: P.F. Chang’s China Bistro (“Bistro”) and Pei Wei Asian Diner (“Pei Wei”).

Bistro

As of June 28, 2009, we owned and operated 190 full service Bistro restaurants that feature a blend of high quality, traditional Chinese cuisine and attentive service in a high energy contemporary bistro setting. P.F. Chang’s was formed in early 1996 with the acquisition of the four original Bistro restaurants and the hiring of an experienced management team. Utilizing a partnership management philosophy, we embarked on a strategic expansion of the concept targeted at major metropolitan areas throughout the United States. We own and operate all of our restaurants with the exception of two Bistro restaurants located in Hawaii which are operated under a joint venture arrangement in which we own a noncontrolling interest.

We intend to open eight new Bistros in 2009, one of which was open by the end of the second quarter of 2009. We have signed lease agreements for all of our development planned for fiscal 2009 and we have exercised our lease renewal options for all leases that are scheduled to expire in 2009. Our Bistro restaurants typically range in size from 6,000 to 7,500 square feet and require an average total cash investment of approximately $2.8 million to $3.0 million and total invested capital of approximately $4.0 million per restaurant (net of estimated landlord reimbursements). Total invested capital includes the present value of the operating lease obligation for the initial lease term of each property, which can vary greatly depending on the specific trade area. Preopening expenses are expected to average approximately $350,000 to $400,000 per restaurant during 2009.

Pei Wei

As of June 28, 2009, we owned and operated 161 quick casual Pei Wei restaurants that serve freshly prepared, wok-seared, contemporary pan-Asian cuisine in a relaxed, warm environment with friendly, attentive counter service and take-out flexibility. We opened our first Pei Wei restaurant in July 2000 in the Phoenix, Arizona area and have expanded the concept significantly since that time. We closed 10 Pei Wei restaurants during the fourth quarter of 2008 and the results of these restaurants are reported within discontinued operations in our consolidated financial statements for all periods presented. See Note 2 to our consolidated financial statements for further discussion.

We intend to open seven new Pei Wei restaurants in 2009, two of which were open by the end of the second quarter of 2009. We have signed lease agreements for all of our development planned for fiscal 2009. Our Pei Wei restaurants are generally 2,800 to 3,400 square feet in size and require an average total cash investment of approximately $800,000 to $900,000 and total invested capital of approximately $1.5 million per restaurant (net of estimated landlord reimbursements). Total invested capital includes the present value of the operating lease obligation for the initial lease term of each property, which can vary greatly depending on the specific trade area. Preopening expenses are expected to average approximately $140,000 to $160,000 per restaurant during fiscal 2009.

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Global Brand Development

The Company is actively pursuing international expansion of its Bistro restaurants. During the second quarter of fiscal 2009, the Company signed two development and licensing agreements with partners who will develop and operate Bistro restaurants in international markets.

The first development and licensing agreement was signed with M.H. Alshaya, the Middle East’s leading retailer, to develop 34 Bistro restaurants throughout the Middle East over the next 10 years. The first restaurant is scheduled to open in Kuwait City by the end of fiscal 2009.

The second development and licensing agreement was signed with Alsea S.A.B. de C.V., the leading quick service restaurant operator in Mexico, to develop 30 Bistro restaurants in Mexico over the next 10 years. The first restaurant is scheduled to open in Mexico City by the end of fiscal 2009.

The Company continues to engage in discussions with additional potential partners regarding expansion of the Bistro into various international markets.

Critical Accounting Policies

Our critical accounting policies are those that require significant judgment. There have been no material changes to the critical accounting policies previously reported in our 2008 Annual Report on Form 10-K.

Results of Operations

The following tables set forth certain unaudited quarterly information for the three and six month periods ended June 28, 2009 and June 29, 2008, respectively. This quarterly information has been prepared on a basis consistent with the audited financial statements and, in the opinion of management, includes all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. Our quarterly operating results may fluctuate significantly as a result of a variety of factors, and operating results for any quarter are not necessarily indicative of results for a full fiscal year.

One of the factors that has in the past caused fluctuations in our operating results is the amount and timing of preopening expenses. Historically, we have experienced variability in the amount and percentage of revenues attributable to preopening expenses. We typically incur the most significant portion of preopening expenses associated with a given restaurant within the two months immediately preceding, and the month of, the opening of the restaurant. Additionally, there may be variability in the amount and percentage of revenues attributable to partner investment expense as a result of the timing of opening new Pei Wei restaurants where we continue to offer partnership interests and the timing of our purchases of existing partner interests.

In addition, our experience to date has been that labor and operating costs associated with a newly opened restaurant for the first several months of operation are materially greater than what can be expected after that time, both in aggregate dollars and as a percentage of revenues. Accordingly, the volume and timing of new restaurant openings has historically had a meaningful impact on preopening, labor, operating and partner investment expenses.

Noncontrolling Interests

We adopted SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, at the beginning of fiscal 2009. SFAS 160 changes the accounting and reporting for minority interests, which are now recharacterized as noncontrolling interests and classified as a component of equity. Minority interest expense is no longer separately reported as a reduction to net income on the consolidated income statements and is instead shown below net income under the heading “Net income attributable to noncontrolling interests.” See Note 1 to our consolidated financial statements for further discussion of our adoption of SFAS 160.

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Results for the three months ended June 28, 2009 and June 29, 2008

Our consolidated operating results were as follows (dollars in thousands):

	Three Months Ended
	June 28,			% of			June 29,			% of
	2009			Revenues			2008			Revenues			Change			% Change
Revenues	$	301,360			100.0	%	$	301,533			100.0	%	$	(173	)		(0.1	%)
Costs and expenses:
Cost of sales		79,657			26.4	%		82,132			27.2	%		(2,475	)		(3.0	%)
Labor		98,111			32.6	%		99,971			33.2	%		(1,860	)		(1.9	%)
Operating		48,809			16.2	%		49,366			16.4	%		(557	)		(1.1	%)
Occupancy		17,403			5.8	%		17,511			5.8	%		(108	)		(0.6	%)
General and administrative		20,523			6.8	%		19,128			6.3	%		1,395			7.3	%
Depreciation and amortization		18,575			6.2	%		17,150			5.7	%		1,425			8.3	%
Preopening expense		461			0.2	%		1,808			0.6	%		(1,347	)		(74.5	%)
Partner investment expense		(91	)		0.0	%		(500	)		(0.2	%)		409			(81.8	%)
Total costs and expenses		283,448			94.1	%		286,566			95.0	%		(3,118	)		(1.1	%)
Income from operations		17,912			5.9	%		14,967			5.0	%		2,945			19.7	%
Interest and other income (expense), net		(437	)		(0.1	%)		(949	)		(0.3	%)		512			(54.0	%)
Income from continuing operations before taxes		17,475			5.8	%		14,018			4.6	%		3,457			24.7	%
Provision for income taxes		(5,108	)		(1.7	%)		(3,636	)		(1.2	%)		(1,472	)		40.5	%
Income from continuing operations, net of tax		12,367			4.1	%		10,382			3.4	%		1,985			19.1	%
Loss from discontinued operations, net of tax		(474	)		(0.2	%)		(525	)		(0.2	%)		51			(9.7	%)
Net income		11,893			3.9	%		9,857			3.3	%		2,036			20.7	%
Less: Net income attributable to noncontrolling interests		288			0.1	%		487			0.2	%		(199	)		(40.9	%)
Net income attributable to PFCB	$	11,605			3.9	%	$	9,370			3.1	%	$	2,235			23.9	%

Certain percentage amounts may not sum to total due to rounding.

Selected operating statistics for the Bistro were as follows (dollars in thousands):

	Three Months Ended
	June 28,			% of			June 29,			% of
	2009			Revenues			2008			Revenues			Change			% Change
Revenues	$	227,144			100.0	%	$	231,972			100.0	%	$	(4,828	)		(2.1	%)
Costs and expenses:
Cost of sales		59,749			26.3	%		62,999			27.2	%		(3,250	)		(5.2	%)
Labor		73,286			32.3	%		76,153			32.8	%		(2,867	)		(3.8	%)
Operating		36,373			16.0	%		36,603			15.8	%		(230	)		(0.6	%)
Occupancy		12,412			5.5	%		12,730			5.5	%		(318	)		(2.5	%)
Depreciation and amortization		13,646			6.0	%		12,794			5.5	%		852			6.7	%
Preopening expense		280			0.1	%		1,271			0.5	%		(991	)		(78.0	%)
Partner investment expense		(20	)		0.0	%		(500	)		(0.2	%)		480			(96.0	%)
Net income attributable to noncontrolling interests		145			0.1	%		370			0.2	%		(225	)		(60.8	%)

Certain percentage amounts may not sum to total due to rounding.

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Selected operating statistics for Pei Wei were as follows (dollars in thousands):

	Three Months Ended
	June 28,			% of			June 29,		% of
	2009			Revenues			2008		Revenues			Change			% Change
Revenues	$	74,216			100.0	%	$	69,561		100.0	%	$	4,655			6.7	%
Costs and expenses:
Cost of sales		19,908			26.8	%		19,133		27.5	%		775			4.1	%
Labor		24,825			33.4	%		23,818		34.2	%		1,007			4.2	%
Operating		12,436			16.8	%		12,763		18.3	%		(327	)		(2.6	%)
Occupancy		4,991			6.7	%		4,781		6.9	%		210			4.4	%
Depreciation and amortization		4,440			6.0	%		3,995		5.7	%		445			11.1	%
Preopening expense		181			0.2	%		537		0.8	%		(356	)		(66.3	%)
Partner investment expense		(71	)		(0.1	%)		—		0.0	%		(71	)		—
Net income attributable to noncontrolling interests		143			0.2	%		117		0.2	%		26			22.2	%

Certain percentage amounts may not sum to total due to rounding. Percentages over 100% are not displayed.

Revenues

Our revenues are derived primarily from food and beverage sales. Each segment contributed as follows:

Bistro: The decrease in revenues was attributable to a $15.6 million decline in revenues for stores that opened prior to the second quarter of 2008, due to a significant reduction in overall guest traffic combined with a very slight decline in the average check. The decrease was partially offset by incremental new store revenues of $10.8 million, comprised of a full quarter of revenues for the 12 new stores that opened during the last three quarters of 2008 and revenues generated by the one new Bistro restaurant that opened during 2009.

Pei Wei: The increase in revenues was attributable to incremental new store revenues of $5.3 million, comprised of a full quarter of revenues for the 14 new stores that opened during the last three quarters of 2008 and revenues generated by the two new Pei Wei restaurants that opened during 2009. The increase was partially offset by a decrease of $0.6 million for stores that opened prior to the second quarter of 2008, due to a decline in the average check, largely offset by an increase in overall guest traffic.

Costs and Expenses

Cost of Sales

Cost of sales is comprised of the cost of food and beverages. Cost of sales as a percentage of revenues decreased at both Bistro and Pei Wei due to the net impact of favorable product mix shifts combined with operational efficiencies. We negotiate annual pricing agreements for many of our key commodities and such contracts provide for consistent beef and seafood costs, as well as unfavorable wok oil and poultry costs for fiscal 2009 compared to fiscal 2008.

Labor

Labor expenses consist of restaurant management salaries, hourly staff payroll costs, other payroll-related items and imputed partner bonus expense. Imputed partner bonus expense represents the portion of restaurant level operating results that is allocable to certain noncontrolling partners, but is presented as bonus expense for accounting purposes. Each segment contributed as follows:

Bistro: Labor expenses as a percentage of revenues decreased primarily due to improved labor efficiencies in culinary and hospitality positions, partially offset by the impact of decreased leverage on lower average weekly sales on the portion of labor expenses that is fixed in nature and higher management incentive accruals.

Pei Wei: Labor expenses as a percentage of revenues decreased primarily due to improved labor efficiencies in culinary and hospitality positions and, to a lesser extent, lower manager salaries resulting from reduced management headcount. This decrease was partially offset by higher expenses associated with the utilization of additional key hourly employees and higher management incentive accruals.

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Operating

Operating expenses consist primarily of various restaurant-level costs such as repairs and maintenance, utilities and marketing, certain of which are variable and may fluctuate with revenues. Our experience to date has been that operating costs during the first four to nine months of a newly opened restaurant are materially greater than what can be expected after that time, both in aggregate dollars and as a percentage of revenues. Marketing expenses are also included in operating expenses. As these expenditures are discretionary in nature, the timing and amount of marketing spend will vary. Each segment contributed as follows:

Bistro: Operating expenses as a percentage of revenues increased primarily due to the impact of decreased leverage on lower average weekly sales on the portion of operating costs that is fixed in nature and higher marketing spend, partially offset by lower net utilities costs resulting from favorable rates and lower usage.

Pei Wei: Operating expenses as a percentage of revenues decreased primarily due to reduced marketing spend and lower net utilities costs resulting from favorable rates partially offset by increased usage, partially offset by the impact of decreased leverage on lower average weekly sales on the portion of operating costs that is fixed in nature.

Occupancy

Occupancy costs include both fixed and variable portions of rent, common area maintenance charges, property and general liability insurance and property taxes. Each segment contributed as follows:

Bistro: Occupancy costs as a percentage of revenues was consistent with prior year primarily due to lower contingent rent expense offset by the impact of decreased leverage on lower average weekly sales.

Pei Wei: Occupancy costs as a percentage of revenues decreased primarily due to lower property tax expense, partially offset by the impact of decreased leverage on lower average weekly sales.

General and Administrative

General and administrative expenses are comprised of costs associated with corporate and administrative functions that support restaurant development and operations and provide infrastructure to support future growth including, but not limited to, management and staff compensation, employee benefits, travel, legal and professional fees, technology and market research.

Consolidated general and administrative costs increased primarily due to higher management incentive accruals, higher share-based compensation expense primarily driven by the performance unit award grants issued to our co-CEOs during the first quarter of 2009, and to a lesser extent, additional compensation expense resulting from unrealized holding gains associated with investments in the 401(k) Restoration Plan, partially offset by lower consulting fees expense.

Depreciation and Amortization

Depreciation and amortization expenses include the depreciation of fixed assets, gains and losses on disposal of assets and the amortization of intangible assets, software and non-transferable liquor license fees.

Depreciation and amortization increased at both Bistro and Pei Wei primarily due to additional depreciation on restaurants that opened during the last three quarters of fiscal 2008 and during fiscal 2009. As a percentage of revenues, depreciation and amortization increased at both Bistro and Pei Wei primarily due to the impact of decreased leverage resulting from lower average weekly sales.

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Preopening Expense

Preopening expenses, which are expensed as incurred, consist of expenses incurred prior to opening a new restaurant and are comprised principally of manager salaries and relocation costs, employee payroll and related training costs. Preopening expenses also include straight-line rent expense for the period between the possession date of leased premises and the restaurant opening date. Each segment contributed as follows:

Bistro: Preopening expense decreased primarily due to the impact of opening no new restaurants during the second quarter of 2009 compared to opening five new restaurants during the second quarter of 2008, partially offset by the timing of expenses for new restaurant openings scheduled for the remainder of fiscal 2009 compared to fiscal 2008.

Pei Wei: Preopening expense decreased primarily due to the impact of opening one new restaurant during the second quarter of 2009 compared to opening four new restaurants during the second quarter of 2008, as well as a lower number of scheduled new restaurant openings for the remainder of fiscal 2009 compared to fiscal 2008.

Partner Investment Expense

Partner investment expense represents the difference between the imputed fair value of noncontrolling interests at the time our partners invest in our restaurants and our partners’ cash contributions for those ownership interests. Additionally, for those interests that are bought out prior to the restaurant reaching maturity (typically after five years of operation), partner investment expense includes a reversal of previously recognized expense for the difference between the fair value of the noncontrolling interest at inception date and the fair value at the date of repurchase, to the extent that the former is greater. Each segment contributed as follows:

Bistro: All partner investment expense activity for the Bistro is related to early buyouts of noncontrolling interests. The change in partner investment expense resulted from fewer early buyouts of noncontrolling interests during the second quarter of 2009 as compared to the second quarter of 2008.

Pei Wei: Partner investment expense decreased primarily due to the impact of opening fewer new restaurants during the second quarter of 2009 compared to the second quarter of 2008, as well as the impact of expense reversals related to noncontrolling interest buyouts.

Interest and Other Income (Expense), Net

Interest expense recognized primarily consists of interest costs in excess of amounts capitalized related to our outstanding credit line and other borrowings, as well as accretion expense related to our conditional asset retirement obligations. Interest income earned primarily relates to interest-bearing overnight deposits. Realized and unrealized holding gains (losses) related to investments in the 401(k) Restoration Plan are included within other income (expense), with a corresponding offset in general and administrative expense.

The change in consolidated interest and other income (expense), net was primarily due to an increase in the unrealized holding gains associated with investments in the 401(k) Restoration Plan. Lower interest expense resulting primarily from the repayment of $40.0 million of outstanding credit line borrowings and lower interest income also contributed to the change. We expect to continue to recognize net interest expense until such time as we further lower our outstanding debt levels or increase our development.

Provision for Income Taxes

Our effective tax rate from continuing operations, including discrete items, was 29.7% for the second quarter of 2009 compared to 26.9% for the second quarter of 2008. The current quarter includes additional tax expense as a result of increasing our forecasted effective tax rate to 28.5% for the full year. The income tax rate for both the second quarter of fiscal 2009 and the second quarter of fiscal 2008 differed from the expected provision for income taxes, which is derived by applying the statutory income tax rate, primarily as a result of FICA tip credits.

Management has evaluated all positive and negative evidence concerning the realizability of deferred tax assets and has determined that, with the exception of a small amount of state net operating losses, we will recognize sufficient future taxable income to realize the benefit of our deferred tax assets.

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1

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests represents the portion of our net income which is attributable to the collective ownership interests of our noncontrolling partners. In many of our restaurants, we employ a partnership management structure whereby we have entered into a series of partnership agreements with our regional managers, certain of our general managers, and certain of our executive chefs. Each segment contributed as follows:

Bistro: Net income attributable to noncontrolling interests as a percentage of revenues decreased due to the impact of noncontrolling interest buyouts occurring since the beginning of fiscal 2008. These buyouts reduced the number of noncontrolling interests from 133 at the beginning of fiscal 2008 to 29 as of June 28, 2009.

Pei Wei: Net income attributable to noncontrolling interests as a percentage of revenues was consistent with prior year primarily due to the impact of 112 noncontrolling interest buyouts occurring since the beginning of fiscal 2008, offset by the impact of higher restaurant net income.

Results for the six months ended June 28, 2009 and June 29, 2008

Our consolidated operating results were as follows (dollars in thousands):

	Six Months Ended
	June 28,			% of			June 29,			% of
	2009			Revenues			2008			Revenues			Change			% Change
Revenues	$	611,197			100.0	%	$	607,450			100.0	%	$	3,747			0.6	%
Costs and expenses:
Cost of sales		162,729			26.6	%		165,662			27.3	%		(2,933	)		(1.8	%)
Labor		198,818			32.5	%		203,352			33.5	%		(4,534	)		(2.2	%)
Operating		99,500			16.3	%		97,427			16.0	%		2,073			2.1	%
Occupancy		34,781			5.7	%		35,137			5.8	%		(356	)		(1.0	%)
General and administrative		40,337			6.6	%		37,649			6.2	%		2,688			7.1	%
Depreciation and amortization		37,071			6.1	%		33,520			5.5	%		3,551			10.6	%
Preopening expense		949			0.2	%		4,627			0.8	%		(3,678	)		(79.5	%)
Partner investment expense		(555	)		(0.1	%)		(89	)		0.0	%		(466	)		—
Total costs and expenses		573,630			93.9	%		577,285			95.0	%		(3,655	)		(0.6	%)
Income from operations		37,567			6.1	%		30,165			5.0	%		7,402			24.5	%
Interest and other income (expense), net		(1,377	)		(0.2	%)		(1,883	)		(0.3	%)		506			(26.9	%)
Income from continuing operations before taxes		36,190			5.9	%		28,282			4.7	%		7,908			28.0	%
Provision for income taxes		(10,061	)		(1.6	%)		(7,217	)		(1.2	%)		(2,844	)		39.4	%
Income from continuing operations, net of tax		26,129			4.3	%		21,065			3.5	%		5,064			24.0	%
Loss from discontinued operations, net of tax		(517	)		(0.1	%)		(854	)		(0.1	%)		337			(39.5	%)
Net income		25,612			4.2	%		20,211			3.3	%		5,401			26.7	%
Less: Net income attributable to noncontrolling interests		658			0.1	%		1,192			0.2	%		(534	)		(44.8	%)
Net income attributable to PFCB	$	24,954			4.1	%	$	19,019			3.1	%	$	5,935			31.2	%

Certain percentage amounts may not sum to total due to rounding. Percentages over 100% are not displayed.

Selected operating statistics for the Bistro were as follows (dollars in thousands):

	Six Months Ended
	June 28,			% of			June 29,			% of
	2009			Revenues			2008			Revenues			Change			% Change
Revenues	$	462,285			100.0	%	$	468,061			100.0	%	$	(5,776	)		(1.2	%)
Costs and expenses:
Cost of sales		122,712			26.5	%		127,409			27.2	%		(4,697	)		(3.7	%)
Labor		149,337			32.3	%		155,471			33.2	%		(6,134	)		(3.9	%)
Operating		73,346			15.9	%		72,927			15.6	%		419			0.6	%
Occupancy		24,853			5.4	%		25,711			5.5	%		(858	)		(3.3	%)
Depreciation and amortization		27,374			5.9	%		25,059			5.4	%		2,315			9.2	%
Preopening expense		574			0.1	%		3,000			0.6	%		(2,426	)		(80.9	%)
Partner investment expense		(168	)		0.0	%		(745	)		(0.2	%)		577			(77.4	%)
Net income attributable to noncontrolling interests		324			0.1	%		867			0.2	%		(543	)		(62.6	%)

Certain percentage amounts may not sum to total due to rounding.

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Selected operating statistics for Pei Wei were as follows (dollars in thousands):

	Six Months Ended
	June 28,			% of			June 29,		% of
	2009			Revenues			2008		Revenues			Change			% Change
Revenues	$	148,912			100.0	%	$	139,389		100.0	%	$	9,523			6.8	%
Costs and expenses:
Cost of sales		40,017			26.9	%		38,253		27.4	%		1,764			4.6	%
Labor		49,481			33.2	%		47,881		34.4	%		1,600			3.3	%
Operating		26,154			17.6	%		24,500		17.6	%		1,654			6.8	%
Occupancy		9,928			6.7	%		9,426		6.8	%		502			5.3	%
Depreciation and amortization		8,790			5.9	%		7,769		5.6	%		1,021			13.1	%
Preopening expense		375			0.3	%		1,627		1.2	%		(1,252	)		(77.0	%)
Partner investment expense		(387	)		(0.3	%)		656		0.5	%		(1,043	)		—
Net income attributable to noncontrolling interests		334			0.2	%		325		0.2	%		9			2.8	%

Certain percentage amounts may not sum to total due to rounding. Percentages over 100% are not displayed.

Revenues

Each segment contributed as follows:

Bistro: The decrease in revenues was attributable to a $31.8 million decline in revenues for stores that opened prior to 2008, due to a significant reduction in overall guest traffic combined with a very slight decline in the average check. The decrease was partially offset by incremental new store revenues of $26.0 million, comprised of a full six months of revenues for the 17 new stores that opened during 2008 and revenues generated by the one new Bistro restaurant that opened during 2009.

Pei Wei: The increase in revenues was attributable to incremental new store revenues of $11.0 million, comprised of a full six months of revenues for the 25 new stores that opened during 2008 combined with the two new Pei Wei restaurant that opened during 2009. Revenues for stores that opened prior to 2008 decreased $1.5 million primarily due to a decline in the average check.

Costs and Expenses

Cost of Sales

Cost of sales as a percentage of revenues decreased at both Bistro and Pei Wei due to the net impact of favorable product mix shifts combined with operational efficiencies. We negotiate annual pricing agreements for many of our key commodities and such contracts provide for consistent beef and seafood costs as well as unfavorable wok oil and poultry costs for fiscal 2009 compared to fiscal 2008.

Labor

Each segment contributed as follows:

Bistro: Labor expenses as a percentage of revenues decreased primarily due to improved labor efficiencies in culinary and hospitality positions, partially offset by the impact of decreased leverage on lower average weekly sales on the portion of labor expenses that is fixed in nature and higher management incentive accruals.

Pei Wei: Labor expenses as a percentage of revenues decreased primarily due to improved labor efficiencies in culinary and hospitality positions and, to a lesser extent, lower manager salaries resulting from reduced management headcount. This decrease was partially offset by higher expenses associated with the utilization of additional key hourly employees and higher management incentive accruals.

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Operating

Each segment contributed as follows:

Bistro: Operating expenses as a percentage of revenues increased primarily due to the impact of decreased leverage on lower average weekly sales on the portion of operating costs that is fixed in nature and higher marketing spend, partially offset by lower net utilities costs resulting from favorable rates and lower usage.

Pei Wei: Operating expenses as a percentage of revenues were consistent with prior year primarily due to lower net utilities costs resulting from favorable rates partially offset by increased usage, and, to a lesser extent, decreased menu printing costs. These declines were offset by the impact of decreased leverage on lower average weekly sales on the portion of operating costs that is fixed in nature combined with higher repairs and maintenance costs.

Occupancy

Each segment contributed as follows:

Bistro: Occupancy costs as a percentage of revenues decreased primarily due to decreased general liability insurance expense and lower contingent rent expense, partially offset by the impact of decreased leverage on lower average weekly sales.

Pei Wei: Occupancy costs as a percentage of revenues decreased primarily due to lower property tax expense, partially offset by the impact of decreased leverage on lower average weekly sales.

General and Administrative

Consolidated general and administrative costs increased primarily due to higher management incentive accruals and higher share-based compensation expense primarily driven by the performance unit award grants issued to our co-CEOs during the first quarter of 2009 and, to a lesser extent, higher franchise tax expense, legal fees and additional compensation expense resulting from unrealized holding gains associated with investments in the 401(k) Restoration Plan. These increases were partially offset by lower consulting fees expense.

Depreciation and Amortization

Depreciation and amortization increased at both Bistro and Pei Wei primarily due to additional depreciation on restaurants that opened during the last half of fiscal 2008 and the first half of fiscal 2009. As a percentage of revenues, depreciation and amortization increased at both Bistro and Pei Wei primarily due to the impact of decreased leverage resulting from lower average weekly sales.

Preopening Expense

Each segment contributed as follows:

Bistro: Preopening expense decreased primarily due to the impact of opening one new restaurant during the first half of 2009 compared to opening 10 new restaurants during the first half of 2008, partially offset by the timing of expenses for new restaurant openings scheduled for the remainder of fiscal 2009 compared to fiscal 2008.

Pei Wei: Preopening expense decreased primarily due to the impact of opening two new restaurants during the first half of 2009 compared to opening 15 new restaurants during the first half of 2008, as well as a lower number of scheduled new restaurant openings for the remainder of fiscal 2009 compared to fiscal 2008.

Partner Investment Expense

Each segment contributed as follows:

Bistro: All partner investment expense activity for the Bistro is related to early buyouts of noncontrolling interests. The change in partner investment expense resulted from fewer early buyouts of noncontrolling interests during the first half of 2009 compared to the first half of 2008.

Pei Wei: Partner investment expense decreased primarily due to the impact of opening fewer new restaurants during the first half of 2009 compared to the first half of 2008 as well as the impact of expense reversals related to noncontrolling interest buyouts.

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Interest and Other Income (Expense), Net

The change in consolidated interest and other income (expense), net was due to an increase in the unrealized holding gains associated with investments in the 401(k) Restoration Plan. Additionally, interest expense decreased due to the net impact of repayment of $40.0 million of our outstanding credit line borrowings, a lower average interest rate primarily due to the impact of an interest rate swap on a portion of our outstanding credit line borrowings, and lower capitalized interest. Lower interest income also contributed to the change. We expect to continue to recognize net interest expense until such time as we further lower our outstanding debt levels or increase our development.

Provision for Income Taxes

Our effective tax rate from continuing operations, including discrete items, was 28.3% for the first half of 2009 compared to 26.6% for the first half of 2008. The income tax rate for both fiscal 2009 and fiscal 2008 differed from the expected provision for income taxes, which is derived by applying the statutory income tax rate, primarily as a result of FICA tip credits.

Management has evaluated all positive and negative evidence concerning the realizability of deferred tax assets and has determined that, with the exception of a small amount of state net operating losses, we will recognize sufficient future taxable income to realize the benefit of our deferred tax assets.

Net Income Attributable to Noncontrolling Interests

Each segment contributed as follows:

Bistro: Net income attributable to noncontrolling interests as a percentage of revenues decreased due to the impact of noncontrolling interest buyouts occurring since the beginning of fiscal 2008. These buyouts reduced the number of noncontrolling interests from 133 at the beginning of fiscal 2008 to 29 as of June 28, 2009.

Pei Wei: Net income attributable to noncontrolling interests as a percentage of revenues was consistent with prior year primarily due to the impact of 112 noncontrolling interest buyouts occurring since the beginning of fiscal 2008 offset by the impact of higher restaurant net income.

Liquidity and Capital Resources

Cash Flow

Our primary sources of liquidity are cash provided by operations and borrowings under our Credit Facility. Historically, our need for capital resources has primarily resulted from our construction of new restaurants. More recently, our need for capital resources has also been driven by repayments of long-term debt, repurchases of our common stock and purchases of noncontrolling interests.

The following table presents a summary of our cash flows for the six months ended June 28, 2009 and June 29, 2008 (in thousands):

	June 28,			June 29,
	2009			2008
Net cash provided by operating activities	$	78,865		$	69,726
Net cash used in investing activities		(20,870	)		(46,229	)
Net cash used in financing activities		(67,484	)		(27,406	)
Net decrease in cash and cash equivalents	$	(9,489	)	$	(3,909	)

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Operating Activities

We have funded our capital requirements since inception through sales of equity securities, debt financing and cash flows from operations. Net cash provided by operating activities exceeded net income for the periods shown due principally to the effect of depreciation and amortization, a net increase in operating liabilities, share-based compensation and non-cash lease termination charges. The change in other current assets is primarily due to collection of receivables from third-party gift card sales and, to a lesser extent, collection of tenant incentives due from landlords and rebates.

Investing Activities

We have historically used cash primarily to fund the development and construction of new restaurants. Investment activities were primarily related to capital expenditures of $20.8 million and $45.8 million during the first half of fiscal years 2009 and 2008, respectively. Capital expenditures declined significantly compared to the prior year primarily due to the impact of opening one new Bistro and two new Pei Wei restaurants in the first half of 2009 compared to 10 new Bistro and 15 new Pei Wei restaurants in the first half of 2008.

We intend to open eight new Bistro restaurants and seven new Pei Wei restaurants in fiscal year 2009. We expect that our planned future Bistro restaurants will require, on average, a total cash investment per restaurant of approximately $2.8 million to $3.0 million. We expect to spend approximately $350,000 to $400,000 per restaurant for preopening costs. Total cash investment per each Pei Wei restaurant is expected to average $800,000 to $900,000 and we expect to spend $140,000 to $160,000 per restaurant for preopening costs. The anticipated total cash investment per restaurant is based on recent historical averages. We expect total gross capital expenditures for fiscal 2009 to approximate $45.0 million to $55.0 million ($40.0 million to $50.0 million, net of landlord reimbursements).

Financing Activities

Financing activities during the first half of fiscal 2009 and 2008 were primarily comprised of $44.9 million and $10.8 million, respectively, in debt repayments and $19.6 million and $10.0 million, respectively, in repurchases of common stock. Financing activities also included purchases of noncontrolling interests, proceeds from stock options exercised and employee stock purchases, distributions to noncontrolling interest partners, and the tax benefit from disqualifying stock option dispositions.

Credit Facility

On August 31, 2007, we entered into a senior credit facility (“Credit Facility”) with several commercial financial institutions, which allows for borrowings of up to $150.0 million. The Credit Facility is guaranteed by our material existing and future domestic subsidiaries. The Credit Facility expires on August 30, 2013 and contains customary representations, warranties, and negative and affirmative covenants, including a requirement to maintain a maximum leverage ratio, as defined, of 2.5:1 and a minimum fixed charge coverage ratio, as defined, of 1.25:1, as well as customary events of default and certain default provisions that could result in acceleration of the Credit Facility. We were in compliance with these restrictions and conditions as of June 28, 2009 as our leverage ratio was 1.26:1 and the fixed charge coverage ratio was 2.17:1.

As of June 28, 2009, we had borrowings outstanding under the Credit Facility totaling $40.0 million as well as $11.2 million committed for the issuance of letters of credit, which is required by insurance companies for our workers’ compensation and general liability insurance programs. Available borrowings under the Credit Facility were $98.8 million at June 28, 2009. See Item 3 below for a discussion of interest rates and our interest rate swap.

Share Repurchase Program

Under share repurchase programs authorized by our Board of Directors, we have repurchased a total of 4.5 million shares of our common stock for $125.9 million at an average price of $28.23 since July 2006. Included in this total is 0.8 million shares of our common stock repurchased during the first half of 2009 for $19.6 million at an average price of $23.67. At June 28, 2009, there remains $20.5 million available under our current share repurchase authorization of $100.0 million, which expires in December 2009.

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Purchases of Noncontrolling Interests

As of June 28, 2009, there were 43 partners representing 161 noncontrolling interests. During the first half of fiscal 2009, we had the opportunity to purchase 15 noncontrolling interests which had reached the five-year threshold period during the year, as well as 53 additional noncontrolling interests which (i) had reached the end of their initial five-year term in prior years (ii) related to partners who left the Company prior to the initial five-year term or (iii) related to partners who requested an early buyout of their interest. We purchased 67 of these noncontrolling interests in their entirety for a total of approximately $3.3 million, all of which was paid in cash.

During the remainder of fiscal 2009, we will have the opportunity to purchase three additional noncontrolling interests which will reach their five-year anniversary. If all of these interests are purchased, the total purchase price will approximate $0.1 million to $0.2 million based upon the estimated fair value of the respective interests at June 28, 2009.

New Accounting Standards

See Recent Accounting Pronouncements section of Note 1 to our consolidated financial statements for a summary of new accounting standards.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk primarily from fluctuations in interest rates on our Credit Facility and other borrowings as well as from changes in commodities prices.

Interest Rates

We have exposure to interest rate risk related to our variable rate borrowings. Our Credit Facility allows for borrowings of up to $150.0 million with outstanding amounts bearing interest at variable rates equal to LIBOR plus an applicable margin which is subject to change based on our leverage ratio. At June 28, 2009, we had borrowings of $40.0 million outstanding under our Credit Facility as well as unsecured promissory notes totaling $2.1 million.

During the second quarter of fiscal 2008, we entered into an interest rate swap with a notional amount of $40.0 million to hedge a portion of the cash flows of our variable rate borrowings. We have designated the interest rate swap as a cash flow hedge of our exposure to variability in future cash flows attributable to interest payments on a $40.0 million tranche of floating rate debt borrowed under our Credit Facility. Under the terms of the swap, we pay a fixed rate of 3.32% on the $40.0 million notional amount and receive payments from the counterparty based on the 1-month LIBOR rate for a term ending on May 20, 2010, effectively resulting in a fixed rate on the LIBOR component of the $40.0 million notional amount. The effective interest rate on the total borrowings outstanding under our Credit Facility, including the impact of the interest rate swap agreement, was 4.1% as of June 28, 2009.

Additionally, by using a derivative instrument to hedge exposures to changes in interest rates, we expose ourselves to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. We seek to minimize the credit risk by entering into transactions with high-quality counterparties whose credit rating is evaluated on a quarterly basis.

As of June 28, 2009, based on current interest rates and total borrowings outstanding, including the impact of our interest rate swap, a hypothetical 100 basis point increase in interest rates would have an insignificant pre-tax impact on our results of operations.

Commodities Prices

We purchase certain commodities such as beef, pork, poultry, seafood and produce. These commodities are generally purchased based upon market prices established with vendors. These purchase arrangements may contain contractual features that fix the price paid for certain commodities. Historically, we have not used financial instruments to hedge commodity prices because these purchase arrangements help control the ultimate cost paid and any commodity price aberrations have historically been somewhat short-term in nature.

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Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our principal executive officers and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. There have not been any changes in the Company’s internal control over financial reporting during the quarter ended June 28, 2009, which have materially affected, or are reasonable likely to materially affect, the Company’s internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

Risks that could have a negative impact on our business, revenues and performance results include risks associated with the following: failure of our existing or new restaurants to achieve expected results; changes in general economic and political conditions that affect consumer spending; changes in food costs; the financial performance of restaurants concentrated in certain geographic areas; litigation; our inability to retain key personnel; potential labor shortages that may delay planned openings; changes in government legislation that may increase labor costs; intense competition in the restaurant industry; tax returns may be subjected to audits that could have material adverse impact; rising insurance costs; the inability to develop and construct our restaurants within projected budgets and time periods; failure to comply with governmental regulations; changes in how we account for certain aspects of our partnership program; and our ability to successfully expand our operations. A more detailed description of each of these risk factors can be found under the caption “Risk Factors” in our most recent Form 10-K, filed on February 11, 2009.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Under share repurchase programs authorized by our Board of Directors, we have repurchased a total of 4.5 million shares of our common stock for $125.9 million at an average price of $28.23 since July 2006. Included in this total is 0.8 million shares of our common stock repurchased during the first half of 2009 for $19.6 million at an average price of $23.67. At June 28, 2009, there remains $20.5 million available under our current share repurchase authorization of $100.0 million, which expires in December 2009.

The following table sets forth our share repurchases of common stock during each period in the second quarter of fiscal 2009:

					Total Number of		Maximum Dollar Value of
	Total Number		Average		Shares Purchased as		Shares that May Yet Be
	of Shares		Price Paid		Part of Publicly		Purchased Under the
Period	Purchased		per Share		Announced Programs		Programs
March 30, 2009 – May 3, 2009		137,145	$	26.62		137,145	$	26,993,939
May 4, 2009 – May 31, 2009		97,850	$	30.15		97,850	$	24,043,761
June 1, 2009 – June 28, 2009		111,600	$	32.13		111,600	$	20,458,053
Total		346,595				346,595	$	20,458,053

Item 3. Defaults Upon Senior Securities

None

29

Item 4. Submission of Matters to a Vote of Security Holders

Our Annual Meeting of Stockholders was held on April 28, 2009. There were three proposals up for approval. The results of voting were as follows:

1) The election of the Board of Directors:

			Total
	Total Votes		Votes
	For		Against		Abstain		Total Votes cast
Richard L. Federico		22,064,921		514,392		21,910		22,601,223
Robert T. Vivian		22,162,704		416,593		21,926		22,601,223
F. Lane Cardwell, Jr.		22,238,038		340,490		22,695		22,601,223
Lesley H. Howe		22,240,905		337,942		22,376		22,601,223
M. Ann Rhoades		22,238,402		340,751		22,070		22,601,223
James G. Shennan, Jr.		22,183,575		394,873		22,775		22,601,223
R. Michael Welborn		22,155,714		417,956		27,553		22,601,223
Kenneth J. Wessels		22,218,132		360,738		22,353		22,601,223
Kenneth A. May		22,232,955		346,484		21,784		22,601,223

2) To ratify the appointment of KPMG LLP as the Company’s independent auditors for the fiscal year ending January 3, 2010:

			Total
	Total Votes		Votes
	For		Against		Abstain		Total Votes cast
Ratify KPMG		22,551,784		42,482		6,957		22,601,223

3) To approve any adjournments of the meeting to another time or place, if necessary in the judgment of proxy holders, for the   purpose of soliciting additional proxies in favor of any of the foregoing proposals:

			Total
	Total Votes		Votes
	For		Against		Abstain		Total Votes cast
Adjournment		14,273,895		8,292,985		34,343		22,601,223

Item 5. Other Information

None

30

Item 6. Exhibits

Exhibit
Number			Description Document
	3(i	)(1)	Amended and Restated Certificate of Incorporation.
	3(ii	)(2)	Amended and Restated Bylaws.
	4.1	(3)	Specimen Common Stock Certificate.
	4.2	(3)	Amended and Restated Registration Rights Agreement dated May 1, 1997.
	†10.28	(4)	First Amendment to Amended and Restated Employment Agreement between the Company and Richard L. Federico, as amended, dated February 18, 2009.
	†10.29	(4)	First Amendment to Amended and Restated Employment Agreement between the Company and Robert T. Vivian, as amended, dated February 18, 2009.
	†10.33		Amended and Restated Non-Employee Director Compensation Plan, effective April 28, 2009.
	10.35		First Amendment to 2007 Credit Agreement dated December 31, 2008.
	10.36		Second Amendment to 2007 Credit Agreement dated June 23, 2009.
	31.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Richard L. Federico.
	31.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Robert T. Vivian.
	31.3		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Mark D. Mumford.
	32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Richard L. Federico.
	32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Robert T. Vivian.
	32.3		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Mark D. Mumford.

†	Management Contract or Compensatory Plan.
(1)	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on April 25, 2002.
(2)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on February 11, 2009.
(3)	Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-59749).
(4)	Incorporated by reference to the Registrant’s Form 8-K filed on February 20, 2009.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

P.F. CHANG’S CHINA BISTRO, INC.
By:	/s/ RICHARD L. FEDERICO
	Richard L. Federico
	Chairman and Co-Chief Executive Officer Principal Executive Officer
By:	/s/ ROBERT T. VIVIAN
	Robert T. Vivian
	Co-Chief Executive Officer Principal Executive Officer
By:	/s/ MARK D. MUMFORD
	Mark D. Mumford
	Chief Financial Officer Principal Financial and Accounting Officer

Date: July 22, 2009

32

INDEX TO EXHIBITS

Exhibit
Number			Description Document
	3(i	)(1)	Amended and Restated Certificate of Incorporation.
	3(ii	)(2)	Amended and Restated Bylaws.
	4.1	(3)	Specimen Common Stock Certificate.
	4.2	(3)	Amended and Restated Registration Rights Agreement dated May 1, 1997.
	†10.28	(4)	First Amendment to Amended and Restated Employment Agreement between the Company and Richard L. Federico, as amended, dated February 18, 2009.
	†10.29	(4)	First Amendment to Amended and Restated Employment Agreement between the Company and Robert T. Vivian, as amended, dated February 18, 2009.
	†10.33		Amended and Restated Non-Employee Director Compensation Plan, effective April 28, 2009.
	10.35		First Amendment to 2007 Credit Agreement dated December 31, 2008.
	10.36		Second Amendment to 2007 Credit Agreement dated June 23, 2009.
	31.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Richard L. Federico.
	31.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Robert T. Vivian.
	31.3		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Mark D. Mumford.
	32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Richard L. Federico.
	32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Robert T. Vivian.
	32.3		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Mark D. Mumford.

†	Management Contract or Compensatory Plan.
(1)	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on April 25, 2002.
(2)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on February 11, 2009.
(3)	Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-59749).
(4)	Incorporated by reference to the Registrant’s Form 8-K filed on February 20, 2009.

33

EX-10.33

Exhibit 10.33

AMENDED AND RESTATED
P.F. CHANG’S CHINA BISTRO, INC.
NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

1. Establishment and Objectives of the Plan

P.F. Chang’s China Bistro, Inc., a Delaware corporation (the “Company”), by action of its Board of Directors (the “Board”), adopted this P.F. Chang’s China Bistro, Inc. Non-Employee Director Compensation Plan (the “Plan”) for the benefit of Non-Employee Directors of the Company, effective April 17, 2008 and amended and restated the Plan effective April 28, 2009 (the “Effective Date”). The Plan is a deferred compensation plan intended to advance the interests of the Company by providing the Company an advantage in attracting and retaining Non-Employee Directors and by providing Non-Employee Directors with additional incentive to serve the Company by increasing their proprietary interest in the success of the Company. All equity-based awards under this Plan shall be made pursuant to an Equity Plan.

2. Definitions

As used in the Plan, the following definitions apply to the terms indicated below.

(a) “Account” means a bookkeeping reserve account to which Restricted Stock Units and Stock-Based Awards shall be credited on behalf of Non-Employee Directors.

(b) “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, the Company (including, but not limited to, joint ventures, limited liability companies and partnerships), as determined by the Board.

(c) “Annual Meeting” means the annual meeting of stockholders of the Company held on the relevant Annual Meeting Date.

(d) “Annual Meeting Date” means the date of the Company’s Annual Meeting for the relevant Plan Year.

(e) “Annual Retainer” means the retainer fee established by the Board in accordance with Section 4.1 and payable to a Non-Employee Director for services performed as a member of the Board of Directors.

(f) “Appointment Date” means the date that a New Director first joins the Board as a Non-Employee Director, provided such date is not an Annual Meeting Date.

(g) “Award” means a Cash-Settled Stock Appreciation Right or Stock-Based Award, as applicable, granted under the Equity Plan as provided in this Plan, and an Option or Restricted Stock Unit granted under the Equity Plan as provided in this Plan prior to its amendment and restatement as set forth herein.

(h) “Board” or “Board of Directors” means the Board of Directors of the Company.

(i) “Cash-Settled Stock Appreciation Right” means a Stock Appreciation Right as defined under the Equity Plan that is settled and paid in cash.

(j) “Change in Control” means the occurrence of any of the following:

(1) an Ownership Change Event or a series of related Ownership Change Events (collectively, a “Transaction”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting securities of the Company or, in the case of an Ownership Change Event, the entity to which the assets of the Company were transferred (the “Transferee”) as the case may be; or

(2) the liquidation of the Company.

For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Board shall have the right to determine whether multiple sales or exchanges of the voting securities of the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive.

(k) “Change in Control Event” shall have the meaning ascribed thereto under Code Section 409A(a)(2)(A)(v) with respect to a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company.

(l) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder.

(m) “Common Stock” means the Company’s common stock, par value $0.001 per share.

(n) “Company” means P.F. Chang’s China Bistro, Inc., a Delaware corporation.

(o) “Disability” or “Disabled” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that is expected to result in death or last for a continuous period of not less than twelve months, as determined in accordance with Code Section 409A.

(p) “Effective Date” means April 28, 2009.

(q) “Elected Payment Date” means the date (if any) elected by a Non-Employee Director pursuant to Section 5 of this Plan for the payment of vested Restricted Stock Units or Stock-Based Awards.

(r) “Election Form” means the form approved by the Board for use by a Non-Employee Director to select the form of payment of the Annual Retainer and an Elected Payment Date, if applicable.

(s) “Election” mean a Non-Employee Director’s election as to the method of payment of the Annual Retainer and Payment Election, if applicable.

(t) “Equity Plan” means any equity compensation plan that has been approved by the Company’s stockholders, from time to time, provided that such equity compensation plan provides for the applicable Award.

(u) “Fair Market Value” means the closing price of a share of Common Stock as quoted on such national or regional securities exchange or market system constituting the primary market for the Common Stock on the last trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Company deems reliable.

(v) “New Director” means a Non-Employee Director of the Company who first becomes a member of the Board of Directors on a date that is not an Annual Meeting Date.

(w) “Non-Employee Director” means a member of the Board who, at the time of his or her service, is not an employee of the Company or any Affiliate.

(x) “Option” means a nonstatutory stock option to purchase one share of Common Stock granted pursuant to the Equity Plan and the Plan prior to the amendment and restatement of the Plan as set forth herein.

(y) “Ownership Change Event” means any of the following which occurs with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than 50% of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange or transfer of all or substantially all, as determined by the Board in its discretion, of the assets of the Company.

(z) “Payment Date” means the date on which the first of the events set forth in Section 4.3(c)(iii) shall occur.

(aa) “Payment Election” means a written election made in accordance with the provisions of Section 5 to select an Elected Payment Date with regard to an award of Restricted Stock Units or Stock-Based Awards.

(bb) “Plan” means this Amended and Restated P.F. Chang’s China Bistro, Inc. Non-Employee Director Compensation Plan.

(cc) “Plan Year” means the twelve-month period coinciding with the calendar year.

(dd) “Prorated Amount” means, with respect to a New Director, an amount equal to: (1) the Annual Retainer reduced by the product of (x) the quotient determined by dividing (i) the Annual Retainer by (ii) 365 days, multiplied by (y) the number of days between the Appointment Date and the Annual Meeting Date immediately preceding the New Director’s Appointment Date (excluding the Annual Meeting Date itself).

(ee) “Restricted Stock Unit” means a unit established on the Company’s books equivalent to one share of Common Stock, which unit was granted pursuant to the Equity Plan and the Plan prior to the amendment and restatement of the Plan as set forth herein.

(ff) “Stock-Based Award” means a Stock-Based Award as defined under the Equity Plan; for purposes of this Plan, each Stock-Based Award shall represent a unit on the Company’s books which is equivalent to the Fair Market Value of one share of Common Stock and shall be settled and paid in cash as provided for under the Plan.

(gg) “Termination Date” means the date on which the Non-Employee Director ceases to be a member of the Board of Directors of the Company.

(hh) “Vesting Date” means, with respect to each Award, the applicable date upon which such Award vests pursuant to Section 5.

3. Administration of the Plan

Except as otherwise provided herein, the Plan shall be administered by the Board. The Board shall have full authority to administer the Plan, including authority to interpret and construe any provision of the Plan and the terms of any Award granted under it and to adopt such rules and regulations for administering the Plan as it may deem necessary. Decisions of the Board shall be final and binding on all parties.

4. Annual Retainer

4.1 Amount of Annual Retainer. Until changed by resolution of the Board, the amount of the Annual Retainer will be $175,000 for each Non-Employee Director, plus $20,000 for the Lead Director, $20,000 for the Chair of the Audit Committee, and $10,000 for each of the Chairs of the Compensation and Executive Development Committee and the Nominating and Corporate Governance Committee.

4.2 Entitlement to Annual Retainer.

(a) Each Non-Employee Director who is duly elected and qualified as such at the Annual Meeting or who is otherwise serving as a Non-Employee Director immediately following the Annual Meeting, shall receive an Annual Retainer, a portion of which shall be paid in cash and a portion of which shall be paid in Cash-Settled Stock Appreciation Rights and/or Stock-Based Awards, as provided in Section 4.3.

(b) Each New Director shall receive an Annual Retainer equal to the Prorated Amount on his or her Appointment Date, a portion of which shall be paid in cash and a portion of which shall be paid in Cash-Settled Stock Appreciation Rights and/or Stock-Based Awards, as provided in Section 4.3.

4.3 Payment of Annual Retainer in Cash, Cash-Settled Stock Appreciation Rights and/or Stock-Based Awards. Each Non-Employee Director shall be permitted, in accordance with the election provisions set forth in Section 5, to make an Election to receive not less than 50%, nor more than 75%, of the Annual Retainer in the form of (a) Cash-Settled Stock Appreciation Rights; (b) Stock-Based Awards; or (c) 50% Cash-Settled Stock Appreciation Rights and 50% Stock-Based Awards. Any Non-Employee Director who fails to make an Election in accordance with the provisions set forth in Section 5 shall receive the Annual Retainer paid 50% in cash and 50% paid in Cash-Settled Stock Appreciation Rights.

(a) The portion of the Annual Retainer that is paid in cash shall be paid in accordance with the Company’s policies for payment of cash retainers.

(b) The portion of the Annual Retainer payable in Cash-Settled Stock Appreciation Rights shall consist of the number of Cash-Settled Stock Appreciation Rights (rounded down to the nearest whole number) determined in good faith by the Company using the valuation model and assumptions thereunder set forth in the financial statements of the Company most recently filed with the Securities and Exchange Commission. Such Cash-Settled Stock Appreciation Rights shall (i) be granted on the first date following the Annual Meeting Date or the Appointment Date, as applicable, on which sales of Common Stock may be made by officers and directors subject to the Company’s then current Insider Trading Policy; (ii) expire, to the extent not sooner exercised, terminated or forfeited, on the tenth anniversary of the grant date; (iii) have an exercise price per share equal to the Fair Market Value of one share of Common Stock on the grant date; (iv) become vested and exercisable on the earliest of (I) the first anniversary of the grant date, (II) the Non-Employee Director’s death or Disability or (III) a Change in Control; and (v) be subject to such additional terms and conditions as the Board shall specify in an Award agreement and the terms and conditions of the applicable Equity Plan under which the Cash-Settled Stock Appreciation Rights are granted.

(c) The portion of the Annual Retainer payable in Stock-Based Awards shall be equal to a number of Stock-Based Awards (rounded down to the nearest whole number) equal to one-third the number of Cash-Settled Stock Appreciation Rights that would be granted pursuant to Section 4.3(b) if such portion of the Annual Retainer were payable in Cash-Settled Stock Appreciation Rights. Such Stock-Based Awards shall (i) be granted and credited to the Non-Employee Director’s Account (in addition to Restricted Stock Units previously granted and credited to the Non-Employee Director’s Account) on the first date following the Annual Meeting Date or the Appointment Date, as applicable, on which sales of Common Stock may be made by officers and directors subject to the Company’s then current Insider Trading Policy; (ii) vest on the earliest of (I) the first anniversary of the grant date, (II) the Non-Employee Director’s death or Disability or (III) a Change in Control; (iii) be paid in cash in an amount equivalent to the Fair Market Value of one share of Common Stock for each vested Stock-Based Award no later than 30 days following the earliest of (I) the Non-Employee Director’s Termination Date, (II) the effective date of a Change in Control Event and (III) the applicable Elected Payment Date (if any); (iv) be credited with dividend equivalents payable in cash on the same basis as provided for with respect to Restricted Stock Units under the applicable Equity Plan; and (v) be subject to the terms and conditions of the applicable Equity Plan under which the Stock-Based Awards are granted.

5. Elections

5.1 Election Rules. Elections shall be made by filing an Election Form with the Secretary of the Company in accordance with the following rules.

(a) Elections must be made by December 31^st of the Plan Year immediately preceding the Plan Year for which such Election is effective, provided, however, that (i) in the initial Plan Year commencing in 2008, a Non-Employee Director may make an Election on or before the Effective Date, and (ii) Elections by a New Director may be made prior to the Appointment Date.

(b) Elections may not be revoked or modified with respect to the Annual Retainer payable during any Plan Year for which the Elections are effective, except to the extent permitted under Section 409A of the Code. Elections will remain in effect from Plan Year to Plan Year unless modified prospectively by the Non-Employee Director for a subsequent Plan Year. Modifications to a Non-Employee Director’s current Elections for any subsequent Plan Year may be made by filing a new Election Form by December 31^st of the Plan Year preceding the Plan Year for which the modified Elections are to become effective.

5.2 Change of Elected Payment Date. An Elected Payment Date with regard to an Award of Stock-Based Awards may be changed only if the following is satisfied: (i) the subsequent election shall not take effect until at least 12 months after the date on which the subsequent election is made; (ii) the Elected Payment Date under the subsequent Payment Election must be at least five years after the Elected Payment Date of the current Payment Election; and (iii) the subsequent Payment Election is made at least 12 months prior to the Elected Payment Date under the current Payment Election.

6. Adjustments for Changes in Capital Structure, Etc.

The provisions of the Equity Plan governing changes in capital structure, etc., shall apply to Awards granted pursuant to the Equity Plan as provided under this Plan.

7. Modification and Termination

The Board may at any time and from time to time, alter, amend, modify or terminate the Plan in whole or in part.

8. Successors

All obligations of the Company under the Plan will be binding on any successor to the Company, whether the existence of the successor is the result of a direct or indirect purchase of all or substantially all of the business and/or assets of the Company, or a merger, consolidation, or otherwise.

9. Reservation of Rights

Nothing in this Plan or in any Award provided under this Plan will be construed to limit in any way the right of the Board or the stockholders to remove a Non-Employee Director from the Board of Directors.

10. Miscellaneous

10.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein will also include the feminine; the plural will include the singular and the singular will include the plural.

10.2 Requirements of Law. The issuance of payments under the Plan will be subject to all applicable laws, rules, and regulations.

10.3 Tax Law Compliance. To the extent any provision of the Plan or action by the Board or Plan Administrator would subject any Non-Employee Director to liability for interest or additional taxes under Code Section 409A, it will be deemed null and void, to the extent permitted by law and deemed advisable by the Board. It is intended that the Plan and all Awards granted thereunder will comply with Section 409A of the Code and any regulations and guidelines issued thereunder, and the Plan and all Award agreements shall be interpreted and construed on a basis consistent with such intent. The Plan and all Award agreements may be amended in any respect deemed necessary (including retroactively) by the Board in order to preserve compliance with Section 409A of the Code.

10.4 Unfunded Status of the Plan. The Plan is intended to constitute and at all times shall be interpreted and administered so as to qualify as an unfunded deferred compensation plan. To the extent that any Non-Employee Director or other person acquires a right to receive payments from the Company pursuant to the Plan or any Award made under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company.

10.5 Governing Law. The validity, construction and effect of the Plan, of Award agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Plan Administrator relating to the Plan or such Award agreements, and the rights of any and all persons having or claiming to have any interest herein or hereunder, shall be determined exclusively in accordance with applicable federal laws and the laws of the State of Delaware, without regard to its conflict of laws principles.

10.6 Nontransferability. A Non-Employee Director’s Account and Awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. All rights with respect to an Account and other Awards will be available during the Non-Employee Director’s lifetime only to the Non-Employee Director or the Non-Employee Director’s guardian or legal representative. The Board of Directors may, in its discretion, require a Non-Employee Director’s guardian or legal representative to supply it with evidence the Board of Directors deems necessary to establish the authority of the guardian or legal representative to act on behalf of the Non-Employee Director.

* * * * *

EX-10.35

Exhibit 10.35

FIRST AMENDMENT TO CREDIT AGREEMENT

BY THIS FIRST AMENDMENT TO CREDIT DOCUMENTS (this “Amendment”), dated as of December 31, 2008, P.F. CHANG’S CHINA BISTRO, INC., a Delaware corporation (“Borrower”), and JPMORGAN CHASE BANK, N.A., a national banking association, as Administrative Agent, BANK OF AMERICA, N.A., a national banking association, as Syndication Agent, and WELLS FARGO BANK, N.A., a national banking association, as Documentation Agent and the Lenders party hereto, agree that the Credit Agreement dated August 31, 2007 between Borrower, Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party thereto (the “Credit Agreement”) is supplemented, amended and modified as set forth herein. All terms capitalized but not otherwise defined herein shall have the meanings set forth in the Credit Agreement

1. Amendments to Section 2.06(b) of the Credit Agreement. Borrower, Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party hereto hereby agree that Section 2.06 (b) of the Credit Agreement is amended by replacing the language “the LC Exposure shall not exceed $50,000,000.00” with “the LC Exposure shall not exceed $30,000,000.00”.

2. Ratification. The Credit Documents are ratified and affirmed by Borrower and shall remain in full force and effect as modified herein. Any property or rights to or interests in property granted as security in the Credit Documents shall remain as security for the Loan and the obligations of Borrower in the Credit Documents, except as modified herein.

3. Representations and Warranties. Borrower represents and warrants to Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party hereto that: (a) there is no event which is, or with notice or lapse of time or both would be, a default under the Credit Agreement, (b) the representations and warranties in the Credit Agreement are true and correct as of the date of this Amendment as if made on the date of this Amendment, (c) this Amendment does not conflict with any law, agreement or obligation by which Borrower is bound, and (d) this Amendment is within Borrower’s power, has been duly authorized, and does not conflict with Borrower’s certificate of incorporation or bylaws.

4. Successors and Assigns; Counterparts. This Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their heirs, personal representatives, successors and assigns. This Amendment may be executed in counterparts.

5. Effect of Agreement. Except as provided in this Amendment, and any documents, agreements and/or instruments executed in connection with this Amendment, all of the terms and conditions of the Credit Documents shall remain in full force and effect.

6. FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY, (C) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D) THIS DOCUMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

7. Laws Applicable. To the maximum extent permitted by law, this Amendment shall be governed by and construed in accordance with the laws of the State of Arizona, without regard to its conflicts of law principles.

8. Scope of Agreement. The execution of this Amendment shall not release Borrower or Guarantors from liability of any kind. This Amendment does not attempt to settle, and will in no way affect, compromise, release, waive, settle, discharge or diminish any of the rights or remedies (i) of any individual or entity who is not a party to this Amendment, or (ii) involving any obligations, property, transactions or subject matter not included within this Amendment. It is the express intent and agreement of the Borrower and Guarantors that there are no third-party beneficiaries of this Amendment.

9. Ratification of Documents. The Borrower and Guarantors acknowledge that Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party hereto are entering into this Amendment in reliance on the truth and accuracy of the representations and warranties in this Amendment. Despite any past or future acceptance of late or partial installment payments, any prior reinstatement, any prior negotiations, or any other actual or implied forbearance of any nature by Administrative Agent, Syndication Agent, Documentation Agent and/or any of the Lenders party hereto, time remains of the essence of this Amendment and of the Credit Documents.

[Signature blocks appear on the following pages.]

-2-

DATED as of the date first set forth above.

P.F. CHANG’S CHINA BISTRO, INC., a Delaware corporation
By:	/s/ Mark Mumford
	Name:	Mark Mumford
	Title:	CFO
JPMORGAN CHASE BANK, N.A., a national banking association, as a Lender and as Administrative Agent
By:	/s/ Anna Ruiz
	Name:	Anna Ruiz
	Title:	Vice President

-3-

BANK OF AMERICA, N.A., a national banking association, as a Lender and as Syndication Agent
By:	/s/ Angelo Maragos
	Name:	Angelo Maragos
	Title:	Vice President

-4-

WELLS FARGO BANK, N.A., a national banking association, as a Lender and as Documentation Agent
By:	/s/ Darcy McLaren
	Name:	Darcy McLaren
	Title:	Vice President

-5-

U.S. BANK NATIONAL ASSOCIATION, a national banking association, as a Lender
By:	/s/ Blake Malia
	Name:	Blake Malia
	Title:	Assistant Vice President

-6-

FIFTH THIRD BANK, a national banking association, as a Lender
By:	/s/ Gary Losey
	Name:	Garey S. Losey
	Title:	Vice President

-7-

CONSENT AND AGREEMENT OF GUARANTORS

The undersigned Guarantors have each executed a Continuing Guarantee dated August 31, 2007 (each, a “Continuing Guaranty”)in favor of Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party thereto as such terms are defined in the foregoing First Amendment to Credit Documents (the “Amendment”). Guarantors hereby consent and agree to the modifications and all other matters contained in the Amendment. Each Continuing Guarantee is continued in full force and effect and shall remain unaffected and unchanged except as amended and modified by the Amendment. Each Continuing Guarantee is hereby ratified and reaffirmed, and Guarantor specifically acknowledges the validity and enforceability thereof.

PEI WEI ASIAN DINER, INC., a Delaware corporation
By:	/s/ Richard Federico
	Name:	Richard Federico
	Title:	CEO
PFCCB ADMINISTRATION, INC., a Delaware corporation
By:	/s/ Richard Federico
	Name:	Richard Federico
	Title:	CEO
PFCCB SHARED CORPORATE SERVICES, INC., an Arizona corporation
By:	/s/ Richard Federico
	Name:	Richard Federico
	Title:	CEO
PFCCB GIFT CARD, INC., an Arizona corporation
By:	/s/ Richard Federico
	Name:	Richard Federico
	Title:	CEO

PFCCB PINNACLE PEAK LLC, an Arizona limited liability company
By:	/s/ Richard Federico
	Name:	Richard Federico
	Title:	CEO
PFCCB EQUIPMENT, LLC, a Delaware limited liability company
By:	/s/ Richard Federico
	Name:	Richard Federico
	Title:	CEO
PFCCB LICENSING, INC., a Delaware corporation
By:	/s/ Richard Federico
	Name:	Richard Federico
	Title:	CEO
PFCCB RETAIL, INC., a Delaware corporation
By:	/s/ Richard Federico
	Name:	Richard Federico
	Title:	CEO

EX-10.36

Exhibit 10.36

SECOND AMENDMENT TO CREDIT AGREEMENT

BY THIS SECOND AMENDMENT TO CREDIT DOCUMENTS (this “Amendment”), dated as of June 23, 2009, P.F. CHANG’S CHINA BISTRO, INC., a Delaware corporation (“Borrower”), and JPMORGAN CHASE BANK, N.A., a national banking association, as Administrative Agent, BANK OF AMERICA, N.A., a national banking association, as Syndication Agent, and WELLS FARGO BANK, N.A., a national banking association, as Documentation Agent and the Lenders party hereto, agree that the Credit Agreement dated August 31, 2007 between Borrower, Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party thereto (the “Original Credit Agreement”), as amended by that certain First Amendment to Credit Agreement dated as of December 31, 2008 (the Original Credit Agreement as amended by the First Amendment is referred to herein as the “Credit Agreement”) is supplemented, amended and modified as set forth herein. All terms capitalized but not otherwise defined herein shall have the meanings set forth in the Credit Agreement

1. Definition of “Permitted Entity Investment”. Borrower, Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party hereto hereby agree that a new definition of “Permitted Entity Investment” shall be added to Section 1.01 of the Original Credit Agreement as follows

“‘Permitted Entity Investment’ has the meaning set forth in Section 6.04(e).”

2. Amendment to Section 5.08 of the Original Credit Agreement. The first sentence of Section 5.08 of the Original Credit Agreement is hereby amended as follows:

“The proceeds of the Loans will be used to finance the working capital needs of the Borrower and for the Borrower’s general corporate purposes, including share repurchases and acquisitions or other investments permitted by this Agreement.

3. Amendments to Section 6.04 of the Original Credit Agreement. Borrower, Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party hereto hereby agree that Section 6.04 of the Original Credit Agreement is amended by adding the following Section 6.04(e) thereto:

“(e) Investments (which for purposes of this Section 6.04(e) only shall include purchasing, holding or acquiring any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, making or permitting to exist any loans or advances to, or making or permitting to exist any investment or any other interest in, any other Person, or purchasing or otherwise acquiring (in one transaction or a series of transactions) any assets of any other Person constituting a business unit) meeting the following requirements or otherwise approved by the Required Lenders (each such investment constituting a “Permitted Entity Investment”):

(i) as of the date of the consummation of such Permitted Entity Investment, no Default shall have occurred and be continuing or would result from such Permitted Entity Investment, and the representation and warranty contained in Section 5.08 shall be true both before and after giving effect to such Permitted Entity Investment;

(ii) such Permitted Entity Investment is consummated on a non-hostile basis pursuant to a negotiated agreement approved by the board of directors or other applicable governing body of the seller or entity to be acquired, and no material challenge to such Permitted Entity Investment shall be pending or threatened by any shareholder or director of the seller or entity to be acquired;

(iii) the business relating to such Permitted Entity Investment is similar or related to one or more of the lines of business in which the Borrower and its Subsidiaries are engaged on the Effective Date;

(iv) as of the date of the consummation of such Permitted Entity Investment, all material approvals required in connection therewith shall have been obtained; and

(v) that do not exceed in the aggregate $10,000,000.00 in cash and/or non-cash consideration during the term of this Agreement.”

4. Schedule 1 to Compliance Certificate. Borrower, Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party hereto hereby agree that Schedule 1 to the Compliance Certificate is hereby replaced with Schedule 1 to the Compliance Certificate attached hereto as Exhibit “A”.

5. Ratification. The Credit Documents are ratified and affirmed by Borrower and shall remain in full force and effect as modified herein. Any property or rights to or interests in property granted as security in the Credit Documents shall remain as security for the Loan and the obligations of Borrower in the Credit Documents, except as modified herein.

6. Representations and Warranties. Borrower represents and warrants to Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party hereto that: (a) there is no event which is, or with notice or lapse of time or both would be, a default under the Credit Agreement, (b) the representations and warranties in the Credit Agreement are true and correct as of the date of this Amendment as if made on the date of this Amendment, (c) this Amendment does not conflict with any law, agreement or obligation by which Borrower is bound, and (d) this Amendment is within Borrower’s power, has been duly authorized, and does not conflict with Borrower’s certificate of incorporation or bylaws.

-2-

7. Successors and Assigns; Counterparts. This Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their heirs, personal representatives, successors and assigns. This Amendment may be executed in counterparts.

8. Effect of Agreement. Except as provided in this Amendment, and any documents, agreements and/or instruments executed in connection with this Amendment, all of the terms and conditions of the Credit Documents shall remain in full force and effect.

9. FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY, (C) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D) THIS DOCUMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

10. Laws Applicable. To the maximum extent permitted by law, this Amendment shall be governed by and construed in accordance with the laws of the State of Arizona, without regard to its conflicts of law principles.

11. Scope of Agreement. The execution of this Amendment shall not release Borrower or Guarantors from liability of any kind. This Amendment does not attempt to settle, and will in no way affect, compromise, release, waive, settle, discharge or diminish any of the rights or remedies (i) of any individual or entity who is not a party to this Amendment, or (ii) involving any obligations, property, transactions or subject matter not included within this Amendment. It is the express intent and agreement of the Borrower and Guarantors that there are no third-party beneficiaries of this Amendment.

12. Ratification of Documents. The Borrower and Guarantors acknowledge that Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party hereto are entering into this Amendment in reliance on the truth and accuracy of the representations and warranties in this Amendment. Despite any past or future acceptance of late or partial installment payments, any prior reinstatement, any prior negotiations, or any other actual or implied forbearance of any nature by Administrative Agent, Syndication Agent, Documentation Agent and/or any of the Lenders party hereto, time remains of the essence of this Amendment and of the Credit Documents.

13. Modification Fee. The Borrower hereby agrees to pay to each of the Lenders, on or before the date of this Amendment, a modification fee equal to $2,500.00.

[Signature blocks appear on the following pages.]

-3-

DATED as of the date first set forth above.

P.F. CHANG’S CHINA BISTRO, INC., a Delaware corporation
By:	/s/ Richard Federico
	Richard Federico, Co-CEO
JPMORGAN CHASE BANK, N.A., a national banking association, as a Lender and as Administrative Agent
By:	/s/ Anna C. Ruiz
	Name:	Anna C. Ruiz
	Title:	Vice President

-4-

BANK OF AMERICA, N.A., a national banking association, as a Lender and as Syndication Agent
By:	/s/ Angelo Maragos
	Name:	Angelo Maragos
	Title:	Vice President

-5-

WELLS FARGO BANK, N.A., a national banking association, as a Lender and as Documentation Agent
By:	/s/ Darcy McLaren
	Name:	Darcy McLaren
	Title:	Vice President

-6-

U.S. BANK NATIONAL ASSOCIATION, a national banking association, as a Lender
By:	/s/ Blake Malia
	Name:	Blake Malia
	Title:	Assistant Vice President

-7-

FIFTH THIRD BANK, a national banking association, as a Lender
By:	/s/ Gary Losey
	Name:	Gary S. Losey
	Title:	Vice President

-8-

CONSENT AND AGREEMENT OF GUARANTORS

The undersigned Guarantors have each executed a Continuing Guarantee dated August 31, 2007 (each, a “Continuing Guaranty”)in favor of Administrative Agent, Syndication Agent, Documentation Agent and the Lenders party thereto as such terms are defined in the foregoing Second Amendment to Credit Documents (the “Amendment”). Guarantors hereby consent and agree to the modifications and all other matters contained in the Amendment. Each Continuing Guarantee is continued in full force and effect and shall remain unaffected and unchanged except as amended and modified by the Amendment. Each Continuing Guarantee is hereby ratified and reaffirmed, and Guarantor specifically acknowledges the validity and enforceability thereof.

PEI WEI ASIAN DINER, INC., a Delaware corporation
By:	/s/ Richard Federico
	Richard Federico, CEO

PFCCB ADMINISTRATION, INC., a Delaware corporation
By:	/s/ Richard Federico
	Richard Federico, CEO

PFCCB SHARED CORPORATE SERVICES, INC., an Arizona corporation
By:	/s/ Richard Federico
	Richard Federico, President

PFCCB GIFT CARD, INC., an Arizona corporation
By:	/s/ Richard Federico
	Richard Federico, President

PFCCB PINNACLE PEAK LLC, an Arizona limited liability company
By:	P.F. Chang’s China Bistro, Inc. its sole member

By:	/s/ Richard Federico
	Richard Federico, Co-CEO

PFCCB EQUIPMENT, LLC, a Delaware limited liability company
By:	P.F. Chang’s China Bistro, Inc.
	its sole member

By:	/s/ Richard Federico
	Richard Federico, Co-CEO

PFCCB LICENSING, INC., a Delaware corporation
By:	/s/ Richard Federico
	Richard Federico, Co-CEO

PFCCB RETAIL, INC., a Delaware corporation
By:	/s/ Mark Mumford
	Mark Mumford, CFO

Exhibit “A”

SCHEDULE I to Compliance Certificate
of P.F. Chang’s China Bistro, Inc.
as of                                          (Compliance Date)

I. FINANCIAL COVENANTS (Section 6.09 of the Credit Agreement).
A. LEVERAGE RATIO (Section 6.09(a) of the Credit Agreement).
(1) Total Indebtedness as of the Compliance Date:		(000’s	)
(a) obligations for borrowed money:	$
(b) obligations evidenced by bonds, debentures, notes or similar instruments:	$
(c) obligations upon which interest customarily paid:	$
(d) conditional sale/title retention agreements if liability per GAAP:	$
(e) deferred purchase price (excluding current accounts payable and other accrued liabilities and contingent payments) if liability per GAAP	$
(f) secured Indebtedness:	$
(g) Guarantees:	$
(h) Capital Lease Obligations and other Lease Obligations:	$
(i) obligations in respect of bankers’ acceptances:	$
(j) obligations as account party in respect of letters of credit and letters of guaranty:	$
(k) Net Mark-to-Market Exposure:	$
(l) Other:	$
(m) Indebtedness (Sum of (a) — (l)):	$
(2) EBITDA for the four fiscal quarters most recently ended:		($000’s	)
(a) Net Income for such period:	$

(b) amounts deducted in the computation thereof for (i) Interest Expense, (ii) Federal, state and local income taxes and (iii) depreciation and amortization:	+	$
(c) non-cash charges resulting from adoption of FASB 123 if required to be recorded as expense:	+	$
(d) other non-recurring expenses reducing Net Income which do not represent a cash item:	+	$
(e) Federal, state, local and foreign income tax credits	-	$
(f) all non-cash items increasing Net Income	-	$
(g) EBITDA (Sum of Line A(2)(a) through Line A(2)(f)):	=	$
(3) Leverage Ratio (Ratio of Line A(1)(m) to Line A(2)(g):		_____ to 1.00
(4) Maximum Total Leverage Ratio for any fiscal quarter:			2.50 to 1.00
B. MINIMUM FIXED CHARGE COVERAGE RATIO (Section 6.09.02 of the Credit Agreement).
(1) EBITDAR for the four fiscal quarters most recently ended:			($000’s	)
(a) EBITDA (Line A(2)(g):		$
(b) Maintenance Capital Expenditures:	-	$
(c) Rental Expense:	+	$
(d) minority interest expense:	+	$
(e) imputed partner bonus expense:	+	$
(f) EBITDAR (Sum of Line B(1)(a) through Line B(1)(e)):	=	$
(2) Fixed Charges for the four fiscal quarters most recently ended:			($000’s	)
(a) Interest Expense:	+	$
(b) Rental Expense (Line B(1)(c)):	+	$
(c) expense for taxes:	+	$

(d) required repayment of principal of Indebtedness:		$
(e) distributions to minority partners:	+	$
(f) Fixed Charges (Sum of Line B(2)(a) through Line B(2)(e)):	=	$
(3) Fixed Charge Coverage Ratio (Ratio of Line B(1)(f) to Line B(2)(f)):		____ to 1.00
(4) Minimum Fixed Charge Coverage Ratio for any fiscal quarter:			1.25 to 1.00
II. OTHER MISCELLANEOUS PROVISIONS.
A. INDEBTEDNESS (Section 6.01 of the Credit Agreement).
(1) Indebtedness to finance the acquisition of personal property (Maximum: $3,000,000):		$
(2) unsecured Indebtedness to finance the acquisition of partnership interests (Maximum: $20,000,000):		$
(3) other unsecured Indebtedness permitted by Section 6.01 (Maximum: $3,000,000):		$
B. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS. (Section 6.04 of the Credit Agreement).
(1) Permitted Entity Investments (Maximum: $10,000,000 cash and/or non-cash during the term of the Agreement):		$
(2) Permitted Acquisitions (Maximum: $50,000,000 cash and/or non-cash in 12 month period and $125,000,000 cash and $200,000,000 cash and/or non-cash during the term of the Agreement):		$
C. RESTRICTED PAYMENTS. (Section 6.06 of the Credit Agreement).
(1) Purchases of Equity Interests in the Borrower (Maximum: $100,000,000):		$

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Richard L. Federico, Co-Chief Executive Officer of P.F. Chang’s China Bistro Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of P.F. Chang’s China Bistro, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting;

/s/ RICHARD L. FEDERICO  

Chairman and Co-Chief Executive Officer 

Date: July 22, 2009

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Robert T. Vivian, Co-Chief Executive Officer of P.F. Chang’s China Bistro Inc., Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of P.F. Chang’s China Bistro, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting;

/s/ ROBERT T. VIVIAN  

Co-Chief Executive Officer 

Date: July 22, 2009

EX-31.3

Exhibit 31.3

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Mark D. Mumford, Chief Financial Officer of P.F. Chang’s China Bistro, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of P.F. Chang’s China Bistro, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting;

/s/ MARK D. MUMFORD  

Chief Financial Officer 

Date: July 22, 2009

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Richard L. Federico, Co-Chief Executive Officer of P.F. Chang’s China Bistro, Inc. (the “Registrant”), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

(1) the Quarterly Report on Form 10-Q of the Registrant, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Richard L. Federico Richard L. Federico

Chairman & Co-Chief Executive Officer

Dated: July 22, 2009

A signed original of this written statement required by Section 906, or other documented authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to P.F. Chang’s China Bistro and will be retained by P.F. Chang’s China Bistro and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Robert T. Vivian, Co-Chief Executive Officer of P.F. Chang’s China Bistro, Inc. (the “Registrant”), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

(1) the Quarterly Report on Form 10-Q of the Registrant, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Robert T. Vivian Robert T. Vivian

Co-Chief Executive Officer

Dated: July 22, 2009

A signed original of this written statement required by Section 906, or other documented authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to P.F. Chang’s China Bistro and will be retained by P.F. Chang’s China Bistro and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.3

EXHIBIT 32.3

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Mark D. Mumford, Chief Financial Officer of P.F. Chang’s China Bistro, Inc. (the “Registrant”), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

(1) the Quarterly Report on Form 10-Q of the Registrant, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

/s/ Mark D. Mumford Mark D. Mumford

Chief Financial Officer

Dated: July 22, 2009

A signed original of this written statement required by Section 906, or other documented authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to P.F. Chang’s China Bistro and will be retained by P.F. Chang’s China Bistro and furnished to the Securities and Exchange Commission or its staff upon request.