8-K

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

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 19, 2007

P.F. Chang’s China Bistro, Inc.
(Exact name of registrant as specified in its charter)

Delaware	0-25123	86-0815086
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

7676 E. Pinnacle Peak Road, Scottsdale, Arizona	85255
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (480) 888-3000

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Item 2.02.	Results of Operations and Financial Condition.
Item 5.03.	Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Item 8.01.	Other Events.
Item 9.01.	Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
Exhibit 99.1
Exhibit 99.2
Exhibit 3(ii)

Section 2 – Financial Information.

Item 2.02 Results of Operations and Financial Condition.

On October 24, 2007, P.F. Chang’s China Bistro, Inc. (the “Company”) issued a press release describing selected financial results of the Company for the quarter ended September 30, 2007. Also on October 24, 2007, the Company held its third quarter Earnings Conference Call. The press release and transcript of the third quarter Earnings Conference Call are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and, in addition to this Report on Form 8-K and pursuant to General Instruction B.2 of Form 8-K, are being furnished, not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Section 5 — Corporate Governance and Management.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On October 19, 2007, the Board of Directors of the Company (the “Board”), pursuant to the Delaware General Corporations Code and the Bylaws of the Company, approved an amendment and restatement of the Company’s Bylaws to explicitly allow that the Board may by resolution(s) provide that all or a portion of any class or series of the Company’s stock may be uncertificated shares, in order to comply with the listing standards of the Nasdaq Stock Market.  The Company’s Amended and Restated Bylaws are attached to this Form 8-K as Exhibit 3(ii).

Section 8 – Other Events.

Item 8.01. Other Events.

On October 19, 2007, the Board increased the amount of the Company’s current share repurchase program authorization from $50.0 million to $100.0 million.  Under this program, the Company may repurchase outstanding shares of its common stock from time to time in the open market or in private during the two-year period ending October 19, 2009, at prevailing market prices.  The Company intends to use cash on hand and available credit lines to repurchase shares under the program.

Section 9 — Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	October 24, 2007 Press Release by P.F. Chang’s China Bistro, Inc.
99.2	Transcript of Earnings Conference Call held October 24, 2007
3(ii)	Amended and Restated Bylaws.

SIGNATURES

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

P.F. Chang’s China Bistro, Inc.

Date: October 25, 2007

/s/ Mark D. Mumford                          
Mark D. Mumford
Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	October 24, 2007 Press Release by P.F. Chang’s China Bistro, Inc.
99.2	Transcript of Earnings Conference Call held October 24, 2007
3(ii)	Amended and Restated Bylaws.

EX-99.1

Exhibit 99.1

P.F. CHANG’S CHINA BISTRO, INC.

P.F. CHANG’S EARNS $0.20 PER SHARE
FOURTH QUARTER EARNINGS EXPECTATIONS LOWERED

SCOTTSDALE, ARIZONA (October 24, 2007) P.F. Chang’s China Bistro, Inc. (NASDAQ: PFCB) today reported earnings of $5.3 million for the third quarter ended September 30, 2007 compared to $6.6 million for the third quarter of the prior year. Earnings per diluted share for the third quarter were $0.20 as compared to $0.25 for the third quarter of the prior year.

(000 except per share data)	3Q07		3Q06
Revenues	$	270,880	$	231,024
Net Income	$	5,275	$	6,586
Diluted Earnings Per Share	$	0.20	$	0.25
Shares used in diluted EPS calculation		26,105		26,558

Bistro Results

Revenues for the Company’s Bistro concept increased 12.8% to $208.5 million for the third quarter of 2007 compared to $184.9 million in the third quarter of 2006. Bistro revenues were $1.1 million below the Company’s forecast primarily due to reduced guest traffic. Comparable store sales for the Bistro declined 1.6% compared to a forecasted decline of 1.3%.

Pei Wei Results

Revenues for the Company’s Pei Wei concept increased 33.9% to $61.7 million for the third quarter of 2007 compared to $46.1 million in the third quarter of 2006. Pei Wei revenues were $1.0 million below the Company’s forecast primarily due to lower than expected sales at new stores opened during 2007 as well as existing locations. Comparable store sales decreased 1.0% compared to a forecasted increase of 0.8%.

2007 Expectations

The Company has revised its full year 2007 forecasted earnings per share from $1.34 to $1.19 reflecting expectations of lower revenue growth due to anticipated comparable store sales declines at both concepts, lower than expected sales at 2007 new Pei Wei store openings and continuing current year trends of rising restaurant operating costs at both concepts.

Bistro Expectations

The Company plans to open 20 new Bistro restaurants during 2007, 10 of which were open by the end of the third quarter. Fiscal year 2007 revenues are expected to increase 11.4% over prior year to $842.7 million compared to the Company’s previous forecast of $847.2 million. The Company expects Bistro full-year comparable store sales to decline 2.1%, compared to the Company’s previous forecast of a 1.6% decline, reflecting reductions in anticipated guest traffic based on recent trends.

Page 1 of 10

Pei Wei Expectations

The Company plans to open 37 new Pei Wei restaurants during 2007, 30 of which were open by the end of the third quarter. Fiscal year 2007 revenues are expected to increase 34.8% over prior year to $243.0 million compared to the Company’s previous forecast of $247.6 million. The Company reduced Pei Wei full-year comparable store sales growth expectations from its previous forecast of 0.8% to 0.0% reflecting reductions in anticipated guest traffic based on recent trends.

2008 Development

In fiscal 2008, the Company expects sales weeks for Bistro and Pei Wei to increase approximately 13% and 26%, respectively, through the development of 18 new Bistro restaurants and 25 new Pei Wei restaurants scheduled to open during 2008.

Authorization of Increase to Share Repurchase Program

On October 19, 2007, the Company’s Board of Directors increased the amount of the Company’s current share repurchase program authorization from $50.0 million to $100.0 million. Under this program, the Company may repurchase outstanding shares of its common stock from time to time in the open market or in private during the two-year period ending October 19, 2009, at prevailing market prices. The Company intends to use cash on hand and available credit lines to repurchase shares under the program.

The Company is hosting a conference call today at 1:00 pm ET in which management will provide further details on these items. A webcast of the call can be accessed through the company’s website at http://www.pfcb.com.

Page 2 of 10

P.F. Chang’s China Bistro, Inc. owns and operates three restaurant concepts in the Asian niche. P.F. Chang’s China Bistro features a blend of high-quality, traditional Chinese cuisine and American hospitality in a sophisticated, contemporary bistro setting. Pei Wei Asian Diner offers a modest menu of freshly prepared Asian cuisine in a relaxed, warm environment offering attentive counter service and take-out flexibility. Taneko Japanese Tavern features natural, organic and seasonal ingredients highlighting the diverse cooking styles of Japan.

Note with respect to non-GAAP financial measures contained within Supplemental Financial Information

In addition to using GAAP results in evaluating the Company’s business, management measures restaurant operating income to assess the performance of its existing restaurant concepts. Restaurant operating income includes all ongoing costs related to operating the Company’s restaurants but excludes preopening expenses and partner investment expense. Because these costs are solely related to expansion of the Company’s business, they make an accurate assessment of the health of its ongoing operations more difficult and are therefore excluded. As the Company’s expansion is funded entirely from its ongoing restaurant operations, restaurant operating income is a primary consideration when determining whether and when to open additional restaurants. The non-GAAP financial information presented herein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Please see the non-GAAP to GAAP reconciliation at the bottom of pages six through ten of this press release for a reconciliation of restaurant operating income to the most directly comparable GAAP measure, income from operations.

Note with respect to forward looking statements

The statements contained in this press release that are not purely historical, including the Company’s estimates of its revenues, earnings and comparable store sales, are forward-looking statements. The accuracy of these forward-looking statements may be affected by certain risks and uncertainties, including, but not limited to, the Company’s ability to locate acceptable restaurant sites; open new restaurants and operate its restaurants profitably; the Company’s ability to hire, train and retain skilled management and other personnel; the Company’s ability to access sufficient financing on acceptable terms; changes in consumer tastes and trends; customer acceptance of new concepts; national, regional and local economic and weather conditions; changes in costs related to food, utilities and labor, changes in immigration laws; and other risks described in the Company’s recent SEC filings.

Contact: P.F. Chang’s China Bistro, Inc.			(480) 888-3000
	Media:	Laura Cherry	laura.cherry@pfcb.com
	Investor:	Mark Mumford	mark.mumford@pfcb.com

Page 3 of 10

P.F. Chang’s China Bistro, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

	13 Weeks Ended
	September 30,			October 1,
	2007			2006
Revenues	$	270,880		$	231,024
Costs and expenses:
Cost of sales		74,092			62,954
Labor		92,127			76,209
Operating		43,999			36,382
Occupancy		16,025			13,371
General & administrative		17,375			14,641
Depreciation & amortization		14,855			11,584
Preopening expense		4,939			3,792
Partner investment expense		(71	)		1,487
Total costs and expenses		263,341			220,420
Income from operations		7,539			10,604
Interest and other income (expense), net		(10	)		344
Minority interest		(808	)		(1,948	)
Income before provision for income taxes		6,721			9,000
Provision for income taxes		(1,446	)		(2,414	)
Net income	$	5,275		$	6,586
Basic net income per share	$	0.20		$	0.25
Diluted net income per share	$	0.20		$	0.25
Shares used in calculation of basic EPS		25,773			26,000
Shares used in calculation of diluted EPS		26,105			26,558

	Percentage of Revenues
	September 30,			October 1,
	2007			2006
Revenues		100.0	%		100.0	%
Costs and expenses:
Cost of sales		27.4	%		27.2	%
Labor		34.0	%		33.0	%
Operating		16.2	%		15.7	%
Occupancy		5.9	%		5.8	%
General & administrative		6.4	%		6.3	%
Depreciation & amortization		5.5	%		5.0	%
Preopening expense		1.8	%		1.6	%
Partner investment expense		0.0	%		0.6	%
Total costs and expenses		97.2	%		95.4	%
Income from operations		2.8	%		4.6	%
Interest and other income (expense), net		0.0	%		0.1	%
Minority interest		(0.3	%)		(0.8	%)
Income before provision for income taxes		2.5	%		3.9	%
Provision for income taxes		(0.5	%)		(1.0	%)
Net income		1.9	%		2.9	%

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

Page 4 of 10

P.F. Chang’s China Bistro, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

	39 Weeks Ended
	September 30,			October 1,
	2007			2006
Revenues	$	802,695		$	685,618
Costs and expenses:
Cost of sales		220,018			187,679
Labor		272,026			228,526
Operating		127,629			107,433
Occupancy		46,548			38,589
General & administrative		49,903			41,930
Depreciation & amortization		41,140			32,504
Preopening expense		10,775			8,303
Partner investment expense		(1,940	)		2,612
Total costs and expenses		766,099			647,576
Income from operations		36,596			38,042
Interest and other income (expense), net		512			1,404
Minority interest		(3,576	)		(6,003	)
Income before provision for income taxes		33,532			33,443
Provision for income taxes		(8,515	)		(8,955	)
Net income	$	25,017		$	24,488
Basic net income per share	$	0.98		$	0.93
Diluted net income per share	$	0.96		$	0.91
Shares used in calculation of basic EPS		25,656			26,344
Shares used in calculation of diluted EPS		26,093			27,019

	Percentage of Revenues
	September 30,			October 1,
	2007			2006
Revenues		100.0	%		100.0	%
Costs and expenses:
Cost of sales		27.4	%		27.4	%
Labor		33.9	%		33.3	%
Operating		15.9	%		15.7	%
Occupancy		5.8	%		5.6	%
General & administrative		6.2	%		6.1	%
Depreciation & amortization		5.1	%		4.7	%
Preopening expense		1.3	%		1.2	%
Partner investment expense		(0.2	%)		0.4	%
Total costs and expenses		95.4	%		94.5	%
Income from operations		4.6	%		5.5	%
Interest and other income (expense), net		0.1	%		0.2	%
Minority interest		(0.4	%)		(0.9	%)
Income before provision for income taxes		4.2	%		4.9	%
Provision for income taxes		(1.1	%)		(1.3	%)
Net income		3.1	%		3.6	%

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

Page 5 of 10

P.F. Chang’s China Bistro, Inc.
Supplemental Financial Information — Forecast

				53 weeks																														Forecast
	2003			2004			2005			1Q06			2Q06			3Q06			4Q06			2006			1Q07A			2Q07A			3Q07A			4Q07			2007
Units		130			168			208			214			225			239			260			260			270			284			300			317			317
Sales weeks		5,749			7,931			9,497			2,751			2,840			3,003			3,267			11,861			3,438			3,601			3,789			4,072			14,900
AWS		93,915			89,136			85,201			83,102			79,571			76,931			77,131			79,049			76,907			74,260			71,491			70,130			73,038
Revenues		539,917			706,941			809,153			228,613			225,981			231,024			251,988			937,606			264,406			267,409			270,880			285,569			1,088,264
per FDS	$	20.57		$	26.60		$	29.97		$	8.39		$	8.29		$	8.70		$	9.73		$	35.07		$	10.15		$	10.23		$	10.38		$	10.90		$	41.66
Operating costs
Cost of sales		152,788			200,736			224,634			63,440			61,285			62,954			68,903			256,582			72,915			73,011			74,092			78,141			298,159
Labor		175,256			231,930			266,243			76,937			75,380			76,209			81,587			310,113			89,234			90,665			92,127			97,271			369,297
Operating		73,403			99,231			122,247			34,841			36,210			36,382			38,976			146,409			41,194			42,436			43,999			46,498			174,127
Occupancy		28,914			37,693			42,793			12,493			12,725			13,371			13,868			52,457			14,908			15,615			16,025			16,888			63,436
Minority interest		7,887			10,078			8,227			2,022			2,033			1,948			2,113			8,116			1,647			1,121			808			900			4,476
General and administrative		30,166			36,369			41,117			13,252			14,037			14,641			14,981			56,911			16,722			15,806			17,375			18,515			68,418
Depreciation & amortization		21,817			29,155			36,950			10,355			10,565			11,584			12,359			44,863			12,679			13,606			14,855			15,361			56,501
Restaurant operating income		49,686			61,749			66,942			15,273			13,746			13,935			19,201			62,155			15,107			15,149			11,599			11,995			53,850
Development costs
Preopening expenses		8,745			7,980			9,245			1,694			2,817			3,792			4,410			12,713			2,540			3,296			4,939			3,493			14,268
Partner investment expense		4,196			17,671			4,800			200			925			1,487			1,759			4,371			(1,401	)		(468	)		(71	)		396			(1,544	)
Other expenses
Interest and other (income) expense, net		(466	)		(612	)		(1,841	)		(492	)		(568	)		(344	)		89			(1,315	)		(343	)		(179	)		10			—			(512	)
Provision for income taxes		12,424			10,656			16,942			4,058			2,483			2,414			4,178			13,133			3,846			3,223			1,446			2,128			10,643
Net income		24,787			26,054			37,796			9,813			8,089			6,586			8,765			33,253			10,465			9,277			5,275			5,978			30,995
per FDS	$	0.94		$	0.98		$	1.40		$	0.36		$	0.30		$	0.25		$	0.34		$	1.24		$	0.40		$	0.36		$	0.20		$	0.23		$	1.19
Fully diluted shares (FDS)		26,250			26,575			27,000			27,239			27,258			26,558			25,893			26,737			26,046			26,129			26,105			26,200			26,120
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		28.3	%		28.4	%		27.8	%		27.7	%		27.1	%		27.2	%		27.3	%		27.4	%		27.6	%		27.3	%		27.4	%		27.4	%		27.4	%
Labor		32.5	%		32.8	%		32.9	%		33.7	%		33.4	%		33.0	%		32.4	%		33.1	%		33.7	%		33.9	%		34.0	%		34.1	%		33.9	%
Operating		13.6	%		14.0	%		15.1	%		15.2	%		16.0	%		15.7	%		15.5	%		15.6	%		15.6	%		15.9	%		16.2	%		16.3	%		16.0	%
Occupancy		5.4	%		5.3	%		5.3	%		5.5	%		5.6	%		5.8	%		5.5	%		5.6	%		5.6	%		5.8	%		5.9	%		5.9	%		5.8	%
Minority interest		1.5	%		1.4	%		1.0	%		0.9	%		0.9	%		0.8	%		0.8	%		0.9	%		0.6	%		0.4	%		0.3	%		0.3	%		0.4	%
General and administrative		5.6	%		5.1	%		5.1	%		5.8	%		6.2	%		6.3	%		5.9	%		6.1	%		6.3	%		5.9	%		6.4	%		6.5	%		6.3	%
Depreciation & amortization		4.0	%		4.1	%		4.6	%		4.5	%		4.7	%		5.0	%		4.9	%		4.8	%		4.8	%		5.1	%		5.5	%		5.4	%		5.2	%
Restaurant operating income		9.2	%		8.7	%		8.3	%		6.7	%		6.1	%		6.0	%		7.6	%		6.6	%		5.7	%		5.7	%		4.3	%		4.2	%		4.9	%
Preopening expenses		1.6	%		1.1	%		1.1	%		0.7	%		1.2	%		1.6	%		1.8	%		1.4	%		1.0	%		1.2	%		1.8	%		1.2	%		1.3	%
Partner investment expense		0.8	%		2.5	%		0.6	%		0.1	%		0.4	%		0.6	%		0.7	%		0.5	%		-0.5	%		-0.2	%		0.0	%		0.1	%		-0.1	%
Interest and other (income) expense, net		-0.1	%		-0.1	%		-0.2	%		-0.2	%		-0.3	%		-0.1	%		0.0	%		-0.1	%		-0.1	%		-0.1	%		0.0	%		0.0	%		0.0	%
Provision for income taxes		2.3	%		1.5	%		2.1	%		1.8	%		1.1	%		1.0	%		1.7	%		1.4	%		1.5	%		1.2	%		0.5	%		0.7	%		1.0	%
Net income		4.6	%		3.7	%		4.7	%		4.3	%		3.6	%		2.9	%		3.5	%		3.5	%		4.0	%		3.5	%		1.9	%		2.1	%		2.8	%
Reconciliation of Non-GAAP Financial Information to GAAP measures:
Restaurant operating income		49,686			61,749			66,942			15,273			13,746			13,935			19,201			62,155			15,107			15,149			11,599			11,995			53,850
Add: Minority interest		7,887			10,078			8,227			2,022			2,033			1,948			2,113			8,116			1,647			1,121			808			900			4,476
Less: Preopening expenses		(8,745	)		(7,980	)		(9,245	)		(1,694	)		(2,817	)		(3,792	)		(4,410	)		(12,713	)		(2,540	)		(3,296	)		(4,939	)		(3,493	)		(14,268	)
Less: Partner investment expense		(4,196	)		(17,671	)		(4,800	)		(200	)		(925	)		(1,487	)		(1,759	)		(4,371	)		1,401			468			71			(396	)		1,544
Income from operations		44,632			46,176			61,124			15,401			12,037			10,604			15,145			53,187			15,615			13,442			7,539			9,006			45,602

Page 6 of 10

Shared Services
Supplemental Financial Information — Forecast

																												Forecast
	2005			1Q06			2Q06			3Q06			4Q06			2006			1Q07A			2Q07A			3Q07A			4Q07			2007
Units
Sales weeks
AWS
Comp sales change
Revenues
per FDS
Operating costs
Cost of sales
Labor
Operating
Occupancy
Minority interest
General and administrative		18,698			5,619			6,016			7,330			7,174			26,139			7,537			6,899			7,854			9,059			31,349
Depreciation & amortization		880			280			281			299			277			1,137			272			282			471			300			1,325
Restaurant operating income		(19,578	)		(5,899	)		(6,297	)		(7,629	)		(7,451	)		(27,276	)		(7,809	)		(7,181	)		(8,325	)		(9,359	)		(32,674	)
Development costs
Preopening expenses
Partner investment expense
Other expenses
Interest and other (income) expense, net		(1,575	)		(489	)		(535	)		(391	)		(170	)		(1,585	)		(298	)		(137	)		(52	)		—			(487	)
Provision for income taxes		(5,572	)		(1,677	)		(1,355	)		(1,941	)		(2,188	)		(7,161	)		(2,018	)		(1,816	)		(1,781	)		(2,457	)		(8,072	)
Net income		(12,431	)		(3,733	)		(4,407	)		(5,297	)		(5,093	)		(18,530	)		(5,493	)		(5,228	)		(6,492	)		(6,902	)		(24,115	)
per FDS	$	(0.46	)	$	(0.14	)	$	(0.16	)	$	(0.20	)	$	(0.20	)	$	(0.69	)	$	(0.21	)	$	(0.20	)	$	(0.25	)	$	(0.26	)	$	(0.92	)
Fully diluted shares (FDS)		27,000			27,239			27,258			26,558			25,893			26,737			26,046			26,129			26,105			26,200			26,120
Reconciliation of Non-GAAP Financial Information to GAAP measures:
Restaurant operating income		(19,578	)		(5,899	)		(6,297	)		(7,629	)		(7,451	)		(27,276	)		(7,809	)		(7,181	)		(8,325	)		(9,359	)		(32,674	)
Add: Minority interest		—			—			—			—			—			—			—			—			—			—			—
Less: Preopening expenses		—			—			—			—			—			—			—			—			—			—			—
Less: Partner investment expense		—			—			—			—			—			—			—			—			—			—			—
Income from operations		(19,578	)		(5,899	)		(6,297	)		(7,629	)		(7,451	)		(27,276	)		(7,809	)		(7,181	)		(8,325	)		(9,359	)		(32,674	)

Page 7 of 10

Concept: P.F. Chang’s China Bistro
Supplemental Financial Information — Forecast

				53 weeks																														Forecast
	2003			2004			2005			1Q06			2Q06			3Q06			4Q06			2006			1Q07A			2Q07A			3Q07A			4Q07			2007
Units		97			115			131			133			137			142			152			152			153			157			162			172			172
Sales weeks		4,494			5,613			6,266			1,720			1,751			1,796			1,920			7,187			1,979			2,028			2,078			2,202			8,287
AWS		108,280			108,938			107,757			108,677			104,914			102,930			104,713			105,265			104,592			102,615			100,325			99,455			101,695
Comp sales change		5.1	%		3.0	%		1.2	%		1.3	%		-1.0	%		-0.5	%		-0.9	%		-0.3	%		-2.5	%		-1.3	%		-1.6	%		-2.9	%		-2.1	%
Revenues		486,609			611,468			675,204			186,924			183,705			184,914			201,091			756,634			207,028			208,174			208,544			219,000			842,746
per FDS	$	18.54		$	23.01		$	25.01		$	6.86		$	6.74		$	6.96		$	7.77		$	28.30		$	7.95		$	7.97		$	7.99		$	8.36		$	32.26
Operating costs
Cost of sales		136,983			173,128			187,073			51,771			49,810			50,131			54,855			206,567			56,781			56,696			56,943			59,787			230,207
Labor		157,414			200,157			221,126			62,652			60,753			59,959			63,733			247,097			69,312			69,827			69,946			73,584			282,669
Operating		65,792			84,781			100,199			27,897			28,653			28,306			30,609			115,465			31,684			32,194			32,981			34,602			131,461
Occupancy		25,533			31,896			34,700			9,859			9,928			10,307			10,589			40,683			11,217			11,598			11,739			12,264			46,818
Minority interest		7,360			9,177			7,118			1,733			1,753			1,717			1,790			6,993			1,333			837			599			504			3,273
General and administrative		26,147			30,051			15,512			5,117			5,319			4,773			5,294			20,503			5,927			5,907			5,990			6,023			23,847
Depreciation & amortization		19,414			24,778			30,093			8,096			8,220			8,831			9,304			34,451			9,483			10,054			10,861			11,279			41,677
Restaurant operating income		47,966			57,500			79,383			19,799			19,269			20,890			24,917			84,875			21,291			21,061			19,485			20,957			82,794
Development costs
Preopening expenses		6,981			5,843			6,028			1,066			1,575			2,355			3,008			8,004			1,256			1,790			2,974			2,260			8,280
Partner investment expense		3,941			15,075			3,526			426			570			956			1,523			3,475			(1,926	)		(753	)		(433	)		—			(3,112	)
Other expenses Interest and other (income) expense, net		(461	)		(612	)		(251	)		—			—			51			204			255			(51	)		(20	)		40			—			(31	)
Provision for income taxes		12,522			10,796			21,690			5,432			4,024			4,701			6,321			20,478			5,915			5,168			3,639			4,908			19,630
Net income		24,983			26,398			48,390			12,875			13,100			12,827			13,861			52,663			16,097			14,876			13,265			13,789			58,027
per FDS	$	0.95		$	0.99		$	1.79		$	0.47		$	0.48		$	0.48		$	0.54		$	1.97		$	0.62		$	0.57		$	0.51		$	0.53		$	2.22
Fully diluted shares (FDS)		26,250			26,575			27,000			27,239			27,258			26,558			25,893			26,737			26,046			26,129			26,105			26,200			26,120
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		28.2	%		28.3	%		27.7	%		27.7	%		27.1	%		27.1	%		27.3	%		27.3	%		27.4	%		27.2	%		27.3	%		27.3	%		27.3	%
Labor		32.3	%		32.7	%		32.7	%		33.5	%		33.1	%		32.4	%		31.7	%		32.7	%		33.5	%		33.5	%		33.5	%		33.6	%		33.5	%
Operating		13.5	%		13.9	%		14.8	%		14.9	%		15.6	%		15.3	%		15.2	%		15.3	%		15.3	%		15.5	%		15.8	%		15.8	%		15.6	%
Occupancy		5.2	%		5.2	%		5.1	%		5.3	%		5.4	%		5.6	%		5.3	%		5.4	%		5.4	%		5.6	%		5.6	%		5.6	%		5.6	%
Minority interest		1.5	%		1.5	%		1.1	%		0.9	%		1.0	%		0.9	%		0.9	%		0.9	%		0.6	%		0.4	%		0.3	%		0.2	%		0.4	%
General and administrative		5.4	%		4.9	%		2.3	%		2.7	%		2.9	%		2.6	%		2.6	%		2.7	%		2.9	%		2.8	%		2.9	%		2.8	%		2.8	%
Depreciation & amortization		4.0	%		4.1	%		4.5	%		4.3	%		4.5	%		4.8	%		4.6	%		4.6	%		4.6	%		4.8	%		5.2	%		5.2	%		4.9	%
Restaurant operating income		9.9	%		9.4	%		11.8	%		10.6	%		10.5	%		11.3	%		12.4	%		11.2	%		10.3	%		10.1	%		9.3	%		9.6	%		9.8	%
Preopening expenses		1.4	%		1.0	%		0.9	%		0.6	%		0.9	%		1.3	%		1.5	%		1.1	%		0.6	%		0.9	%		1.4	%		1.0	%		1.0	%
Partner investment expense		0.8	%		2.5	%		0.5	%		0.2	%		0.3	%		0.5	%		0.8	%		0.5	%		-0.9	%		-0.4	%		-0.2	%		0.0	%		-0.4	%
Interest and other (income) expense, net		-0.1	%		-0.1	%		0.0	%		0.0	%		0.0	%		0.0	%		0.1	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Provision for income taxes		2.6	%		1.8	%		3.2	%		2.9	%		2.2	%		2.5	%		3.1	%		2.7	%		2.9	%		2.5	%		1.7	%		2.2	%		2.3	%
Net income		5.1	%		4.3	%		7.2	%		6.9	%		7.1	%		6.9	%		6.9	%		7.0	%		7.8	%		7.1	%		6.4	%		6.3	%		6.9	%
Reconciliation of Non-GAAP Financial Information to GAAP measures:
Restaurant operating income		47,966			57,500			79,383			19,799			19,269			20,890			24,917			84,875			21,291			21,061			19,485			20,957			82,794
Add: Minority interest		7,360			9,177			7,118			1,733			1,753			1,717			1,790			6,993			1,333			837			599			504			3,273
Less: Preopening expenses		(6,981	)		(5,843	)		(6,028	)		(1,066	)		(1,575	)		(2,355	)		(3,008	)		(8,004	)		(1,256	)		(1,790	)		(2,974	)		(2,260	)		(8,280	)
Less: Partner investment expense		(3,941	)		(15,075	)		(3,526	)		(426	)		(570	)		(956	)		(1,523	)		(3,475	)		1,926			753			433			—			3,112
Income from operations		44,404			45,759			76,947			20,040			18,877			19,296			22,176			80,389			23,294			20,861			17,543			19,201			80,899

Page 8 of 10

Concept: Pei Wei Asian Diner
Supplemental Financial Information — Forecast

				53 weeks																														Forecast
	2003			2004			2005			1Q06			2Q06			3Q06			4Q06			2006			1Q07A			2Q07A			3Q07A			4Q07			2007
Units		33			53			77			81			88			97			107			107			116			126			137			144			144
Sales weeks		1,255			2,318			3,231			1,031			1,089			1,207			1,334			4,661			1,446			1,560			1,698			1,857			6,561
AWS		42,476			41,188			41,457			40,435			38,822			38,201			37,598			38,668			39,177			37,592			36,359			35,498			37,031
Comp sales change		0.3	%		2.0	%		4.0	%		-2.0	%		-3.9	%		-1.5	%		-0.7	%		-2.0	%		0.5	%		1.0	%		-1.0	%		-0.4	%		0.0	%
Revenues		53,308			95,473			133,949			41,689			42,276			46,110			50,155			180,230			56,656			58,649			61,738			65,919			242,962
per FDS	$	2.03		$	3.59		$	4.96		$	1.53		$	1.55		$	1.74		$	1.94		$	6.74		$	2.18		$	2.24		$	2.37		$	2.52		$	9.30
Operating costs
Cost of sales		15,805			27,608			37,561			11,669			11,475			12,823			13,725			49,692			15,851			16,070			16,922			18,081			66,924
Labor		17,842			31,773			45,117			14,285			14,627			16,250			17,515			62,677			19,551			20,480			21,843			23,362			85,236
Operating		7,611			14,450			22,048			6,944			7,557			8,076			8,205			30,782			9,382			10,004			10,835			11,701			41,922
Occupancy		3,381			5,797			8,093			2,634			2,797			3,064			3,230			11,725			3,636			3,963			4,231			4,575			16,405
Minority interest		527			901			1,109			289			280			231			323			1,123			314			284			209			396			1,203
General and administrative		4,019			6,318			6,907			2,299			2,485			2,276			2,327			9,387			3,030			2,878			3,342			3,238			12,488
Depreciation & amortization		2,403			4,377			5,977			1,979			2,064			2,454			2,708			9,205			2,823			3,164			3,417			3,691			13,095
Restaurant operating income		1,720			4,249			7,137			1,590			991			936			2,122			5,639			2,069			1,806			939			875			5,689
Development costs
Preopening expenses		1,764			2,137			3,217			603			1,126			1,204			1,350			4,283			1,283			1,506			1,965			1,233			5,987
Partner investment expense		255			2,596			1,274			(226	)		355			531			236			896			525			285			362			396			1,568
Other expenses Interest and other (income) expense, net		(5	)		—			(15	)		(3	)		(33	)		(4	)		55			15			6			(22	)		22			—			6
Provision for income taxes		(98	)		(141	)		824			377			(107	)		(213	)		178			235			69			10			(304	)		(198	)		(423	)
Net income		(196	)		(343	)		1,837			839			(350	)		(582	)		303			210			186			27			(1,106	)		(556	)		(1,449	)
per FDS	$	(0.01	)	$	(0.01	)	$	0.07		$	0.03		$	(0.01	)	$	(0.02	)	$	0.01		$	0.01		$	0.01		$	—		$	(0.04	)	$	(0.02	)	$	(0.06	)
Fully diluted shares (FDS)		26,250			26,575			27,000 2			7,239			27,258			26,558 2			5,893			26,737 2			6,046 2			6,129			26,105			26,200			26,120
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		29.6	%		28.9	%		28.0	%		28.0	%		27.1	%		27.8	%		27.4	%		27.6	%		28.0	%		27.4	%		27.4	%		27.4	%		27.5	%
Labor		33.5	%		33.3	%		33.7	%		34.3	%		34.6	%		35.2	%		34.9	%		34.8	%		34.5	%		34.9	%		35.4	%		35.4	%		35.1	%
Operating		14.3	%		15.1	%		16.5	%		16.7	%		17.9	%		17.5	%		16.4	%		17.1	%		16.6	%		17.1	%		17.5	%		17.8	%		17.3	%
Occupancy		6.3	%		6.1	%		6.0	%		6.3	%		6.6	%		6.6	%		6.4	%		6.5	%		6.4	%		6.8	%		6.9	%		6.9	%		6.8	%
Minority interest		1.0	%		0.9	%		0.8	%		0.7	%		0.7	%		0.5	%		0.6	%		0.6	%		0.6	%		0.5	%		0.3	%		0.6	%		0.5	%
General and administrative		7.5	%		6.6	%		5.2	%		5.5	%		5.9	%		4.9	%		4.6	%		5.2	%		5.3	%		4.9	%		5.4	%		4.9	%		5.1	%
Depreciation & amortization		4.5	%		4.6	%		4.5	%		4.7	%		4.9	%		5.3	%		5.4	%		5.1	%		5.0	%		5.4	%		5.5	%		5.6	%		5.4	%
Restaurant operating income		3.2	%		4.5	%		5.3	%		3.8	%		2.3	%		2.0	%		4.2	%		3.1	%		3.7	%		3.1	%		1.5	%		1.3	%		2.3	%
Preopening expenses		3.3	%		2.2	%		2.4	%		1.4	%		2.7	%		2.6	%		2.7	%		2.4	%		2.3	%		2.6	%		3.2	%		1.9	%		2.5	%
Partner investment expense		0.5	%		2.7	%		1.0	%		-0.5	%		0.8	%		1.2	%		0.5	%		0.5	%		0.9	%		0.5	%		0.6	%		0.6	%		0.6	%
Interest and other (income) expense, net		0.0	%		0.0	%		0.0	%		0.0	%		-0.1	%		0.0	%		0.1	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Provision for income taxes		-0.2	%		-0.1	%		0.6	%		0.9	%		-0.3	%		-0.5	%		0.4	%		0.1	%		0.1	%		0.0	%		-0.5	%		-0.3	%		-0.2	%
Net income		-0.4	%		-0.4	%		1.4	%		2.0	%		-0.8	%		-1.3	%		0.6	%		0.1	%		0.3	%		0.0	%		-1.8	%		-0.8	%		-0.6	%
Reconciliation of Non-GAAP Financial Information to GAAP measures:
Restaurant operating income		1,720			4,249			7,137			1,590			991			936			2,122			5,639			2,069			1,806			939			875			5,689
Add: Minority interest		527			901			1,109			289			280			231			323			1,123			314			284			209			396			1,203
Less: Preopening expenses		(1,764	)		(2,137	)		(3,217	)		(603	)		(1,126	)		(1,204	)		(1,350	)		(4,283	)		(1,283	)		(1,506	)		(1,965	)		(1,233	)		(5,987	)
Less: Partner investment expense		(255	)		(2,596	)		(1,274	)		226			(355	)		(531	)		(236	)		(896	)		(525	)		(285	)		(362	)		(396	)		(1,568	)
Income from operations		228			417			3,755			1,502			(210	)		(568	)		859			1,583			575			299			(1,179	)		(358	)		(663	)

Page 9 of 10

Concept: Taneko Japanese Tavern
Supplemental Financial Information — Forecast

																									Forecast
	1Q06			2Q06			3Q06			4Q06			2006			1Q07A			2Q07A			3Q07A			4Q07			2007
Units											1			1			1			1			1			1			1
Sales weeks											13			13			13			13			13			13			52
AWS											57,077			57,077			55,538			45,077			46,000			50,000			49,154
Comp sales change Revenues											742			742			722			586			598			650			2,556
per FDS										$	0.03		$	0.03		$	0.03		$	0.02		$	0.02		$	0.02		$	0.10
Operating costs
Cost of sales		—			—			—			323			323			283			245			227			273			1,028
Labor		—			—			—			339			339			371			358			338			325			1,392
Operating		—			—			—			162			162			128			238			183			195			744
Occupancy		—			—			—			49			49			55			54			55			49			213
Minority interest		—			—			—			—			—			—			—			—			—			—
General and administrative		217			217			262			186			882			228			122			189			195			734
Depreciation & amortization		—			—			—			70			70			101			106			106			91			404
Restaurant operating income		(217	)		(217	)		(262	)		(387	)		(1,083	)		(444	)		(537	)		(500	)		(478	)		(1,959	)
Development costs
Preopening expenses		25			116			233			52			426			1			—			—			—			1
Partner investment expense		—			—			—			—			—			—			—			—			—			—
Other expenses
Interest and other (income) expense, net		—			—			—			—			—			—			—			—			—			—
Provision for income taxes		(74	)		(78	)		(133	)		(133	)		(418	)		(120	)		(139	)		(108	)		(125	)		(492	)
Net income		(168	)		(255	)		(362	)		(306	)		(1,091	)		(325	)		(398	)		(392	)		(353	)		(1,468	)
per FDS	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.01	)	$	(0.02	)	$	(0.02	)	$	(0.01	)	$	(0.06	)
Fully diluted shares (FDS)		27,239			27,258			26,558			25,893			26,737			26,046			26,129			26,105			26,200			26,120
Revenues											100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales											43.5	%		43.5	%		39.2	%		41.8	%		38.0	%		42.0	%		40.2	%
Labor											45.7	%		45.7	%		51.4	%		61.1	%		56.5	%		50.0	%		54.5	%
Operating											21.8	%		21.8	%		17.7	%		40.6	%		30.6	%		30.0	%		29.1	%
Occupancy											6.6	%		6.6	%		7.6	%		9.2	%		9.2	%		7.5	%		8.3	%
Minority interest											0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
General and administrative											25.1	%		118.9	%		31.6	%		20.8	%		31.6	%		30.0	%		28.7	%
Depreciation & amortization											9.4	%		9.4	%		14.0	%		18.1	%		17.7	%		14.0	%		15.8	%
Restaurant operating income											-52.2	%		-146.0	%		-61.5	%		-91.6	%		-83.6	%		-73.5	%		-76.6	%
Preopening expenses											7.0	%		57.4	%		0.1	%		0.0	%		0.0	%		0.0	%		0.0	%
Partner investment expense											0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Interest and other (income) expense, net											0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Provision for income taxes											-17.9	%		-56.3	%		-16.6	%		-23.7	%		-18.1	%		-19.2	%		-19.2	%
Net income											-41.2	%		-147.0	%		-45.0	%		-67.9	%		-65.6	%		-54.3	%		-57.4	%
Reconciliation of Non-GAAP Financial Information to GAAP measures:
Restaurant operating income		(217	)		(217	)		(262	)		(387	)		(1,083	)		(444	)		(537	)		(500	)		(478	)		(1,959	)
Add: Minority interest		—			—			—			—			—			—			—			—			—			—
Less: Preopening expenses		(25	)		(116	)		(233	)		(52	)		(426	)		(1	)		—			—			—			(1	)
Less: Partner investment expense		—			—			—			—			—			—			—			—			—			—
Income from operations		(242	)		(333	)		(495	)		(439	)		(1,509	)		(445	)		(537	)		(500	)		(478	)		(1,960	)

Page 10 of 10

EX-99.2

Exhibit 99.2

CORPORATE PARTICIPANTS

Mark Mumford
P.F. Chang’s China Bistro, Inc. — CFO

Rick Federico
P.F. Chang’s China Bistro, Inc. — CEO

Russell Owens
P.F. Chang’s China Bistro, Inc. — EVP, President — Pei Wei

Bert Vivian
P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

CONFERENCE CALL PARTICIPANTS

Ashley Woodruff
FBR — Analyst

John Glass
CIBC World Markets — Analyst

David Tarantino
Robert W Baird — Analyst

Sharon Zackfia
William Blair — Analyst

Destin Tompkins
Morgan Keegan — Analyst

Joe Buckley
Bear Stearns — Analyst

Nicole Miller
Piper Jaffray — Analyst

Bryan Elliott
Raymond James — Analyst

Matt DiFrisco
Thomas Weisel Partners — Analyst

Paul Westra
Cowen & Co — Analyst

Larry Miller
RBC — Analyst

PRESENTATION

Operator

Good afternoon and welcome to P.F. Chang’s China Bistro third quarter 2007 earnings release conference call. Your lines have been placed on listen only until the question and answer session of the conference. (OPERATOR INSTRUCTIONS). Today’s call is being recorded. If you have any objections, you may disconnect at this time. I would now like it turn the call over to Mr. Mark Mumford, Chief Financial Officer of P.F. Chang’s China Bistro. Please go ahead, sir.

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

Hello, everyone. Welcome to P.F. Chang’s third quarter 2007 conference call. Before we get started, I just want to remind you we expect to file our form 10-Q later this week, and as described in that document, the industry we operate in is full of risks and uncertainties. Throughout this call, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results could differ materially from those stated or implied in forward-looking statements as a result of the factors detailed in today’s press release and in our filings with the SEC. With that, I will turn the call to our CEO, Rick Federico, to begin.

Rick Federico - P.F. Chang’s China Bistro, Inc. — CEO

Thanks, Mark, and welcome. Joining me today are Bert Vivian, President of P.F. Chang’s, Russell Owens, President of Pei Wei Asian Diner, Mike Walburn, our Chief Administrative Officer, and Mark Mumford, our CFO. This morning, I will have some brief opening remarks, followed by Russell’s update on Pei Wei, Bert’s on the Bistro, and we’ll close with Mark’s financial review.

From a macroeconomic perspective, things did not improve and if anything it happens like these challenges will be with us longer than we originally thought. Our current trends are not as good as we had forecasted, forcing us to adjust accordingly. Looking at our third quarter, both brands were on plan through the first two periods. However, September was dramatically different, and the majority of our sales short fall came in that period. The September sales softness has extended into October, and our revised forecast for the next quarter reflects a continuation of that trend. The continued pressure on the consumer, coupled with rising costs for labor and products is causing us to rethink our strategies and our outlook for upcoming quarter and for 2008. Mark will provide the financial implications for our fourth quarter in a minute, but given some of the current uncertainties, we are still working through our thoughts for 2008.

Let me take a minute to address some of our broader strategic thoughts. As you know, we continue to believe there is an opportunity for the Company to develop or acquire a Japanese restaurant that would provide us future growth. We have invested time and dollars simultaneously exploring both paths. First, we developed Taneko, and we have been negotiating with the founders of a complimentary Japanese business attempting to perform a mutually beneficial partnership. We did not reach an agreement, and at this time we do not intend to pursue this further. Additionally, our time payable for the decision on our Taneko business has not changed, and we expect a decision by the end of the year.

This is not the right time for us to dilute our attention away from our core businesses and my efforts are best spent in two areas: First, focusing with Russell and KC on improving pa weigh operating results, and secondly ensuring the long-term brand relevance of our Bistro business. Our Pei Wei business is blessed with high sales and very very solid guest acceptance. Sales per square foot, sales to investment ratios and average unit volumes are all very positive. Additionally, Pei Wei runs very attractive cost of sales; however, those high volumes are required to produce a reasonable return, and with a small miss on the sales line, the returns not as attractive. Simply put, we need to continue to drive activities that support top line growth but we must improve margins at the same time.

Within Pei Wei there are two operational areas of focus. First, we need to improve the expertise and operational maturity level of our management team. If we do not achieve our first goal, it will be very difficult to hit the second, which is, we need to redefine our labor models and improve both hourly level and managerial productivity at the unit levels. Pei Wei’s operational leadership is crafting and testing initiatives to make a difference in both of these areas, and I expect to see incremental improvements over the next several quarters. Additionally, we intend to support our Pei Wei margins with an approximate 2% price increase in 2008.

Given the challenge of improving margins at Pei Wei, we believe trimming back new unit growth will help us achieve our objectives and improve the concept’s profitability in 2008 and beyond. In 2008, we will open 25 new Pei Wei rather than the 37 we discussed on last quarter’s call. Our belief is the best long-term strategy for Pei Wei is to take care of the short-term. These 25 restaurants represent our current signed leases plus a couple of strategic stores that help enhance our market penetration. With one exception, these restaurants will be opened in markets where we already operate other Pei Wei restaurants. This will allow us to further develop our brand presence, leverage our marketing spend, and reduce our preopening costs on a per-unit basis. This reduction also allows us to focus on the priority of improving our operating results to better develop and season our operations team and still be positioned for future growth.

As you recall from prior conversations around the Bistro, our approach has been to implement sales building initiatives knowing when the current cycle ran its course we would be well-positioned in the marketplace. Tactics like expanding our menu offering through the Grill, improving product presentations with New China, redefining our service strategy, driving incremental sales through our many desserts, testing strategic marketing, and increasing operational focus through the addition of our Chief Operating Officer, all carried incremental expenses in 2007 that we expect to produce reasonable returns in the future. These continue to be the right things to do for the Bistro, and each initiative is reaching a level of completion and should be fully functional early in 2008. On a positive note, our early marketing tests at both concepts have produced positive results. We look forward to expanding these efforts over the next couple of quarters in support of our Grill rollout and other initiatives, and Bert and Russell will provide updates in their specific comments.

Finally, we are faced with a challenged operating environment. We’re facing rising costs of doing business, and while at the same time, are revising operational strategies to improve margins in our business. There are no quick fix solutions, but I am confident our leadership is focused and is executing the appropriate plans designed to strengthen our results. As you know, we recently completed our $150 million credit facility. In 2008, overall CapEx will be approximately $20 million less than this year, and we expect our businesses to generate between 15 and $20 million in free cash. In spite of the current headwinds, we believe in the long-term prospects of our business, and we have increased our authorization to buy back P.F. Chang’s stock from $50 million to $100 million. We plan to execute our repurchase as opportunities present themselves.

I will pass it to Russell for his update.

Russell Owens - P.F. Chang’s China Bistro, Inc. — EVP, President — Pei Wei

Thanks, Rick. I want to first review some key points regarding the third quarter results, followed by our current thoughts around the fourth quarter and finally a quick snapshot into our 2008 development targets. Our third quarter revenues increased by 34% to $61.7 million, $1 million below our forecast for the quarter, the shortfall driven by new unit opening rates and lower than expected comp sales gains. Same-store sales were forecasted to be a positive 0.8% and came in at negative 1%. Comp sales for July and August were trending on forecast. September’s results of negative 1.4% were disappointing, and our worst comp sales month of 2007.

Looking at a layer beneath the negative 1% performance for the quarter shows two stories with a very different theme. In the markets of California, Arizona, Nevada and Dallas where there has been much discussion and speculation as the impact of the weak housing market, we are down 5.2% in total. Those markets make up 52% of our comp restaurant base. In the remaining 48% of our comp restaurants, representing 14 markets across the country, our comp sales for the quarter were positive 4.8%. While having half of your restaurants down is never a good thing, there are some positive trends in many of our markets.

In the area of new unit opening rates there is also a story within a story. Overall average weekly sales for the quarter were $33,300, below our forecasted expectations. Within the 30 openings this year, 11 units opened in what we consider mature or adequately penetrated markets, averaged $41,700 per week. The eight units in older but less penetrated markets averaged $31,000 per week and the 11 locations in our new markets averaged just under $27,000 per week. Although this trend is not new news, it continues to support our belief that better unit penetration in markets will meaningfully help results and gives us confidence that our current development strategy and focus is on target as we gain presence in a market our new stores consistently open at increasingly higher average weekly sales rates.

Regarding the balance of the results for the quarter, our restaurant operating income margin of 1.5% was better than our forecasted 1%. Cost of sales were better than anticipated, labor costs a little worse due to continued wage pressure and sales deleverage, but most of the variance was due to marketing timing. As rollout time frames got close to Labor Day, we chose to delay their implementation until after the holidays. Thus many tactics began September 10th or later, some not even until October, since our plan was to layer different mediums in a building fashion over several weeks or months. Over $600,000 of spend forecasted for September will not hit our financials until the fourth quarter resulting in operating expenses being significantly below our expectations in the third quarter. Just remember that fact when we talk about the upcoming quarter. Bottom line, we expected to lose $1.2 million, our net loss is $1.1 million, lower sales offset by less marketing spend.

Looking at the fourth quarter of 2007, we made the following changes in our outlook. We expect to open seven new restaurants this quarter resulting in 37 new openings for the year. In fact, five of the seven restaurants are already open. We only have two remaining. Given the challenging consumer environment that continues and the trends we’ve seen in September and thus far in October, we have lowered our same-store sales expectations from positive 0.8 in the fourth quarter to a negative 0.4. Again, October results to date in our weakest markets of California, Arizona and Nevada have not improved versus September. In fact, they’ve actually gotten a bit worse. We’ve adjusted as usual our 2007 new unit sales to reflect actual run rates for all the restaurants open thus far.

A summary of our marketing initiatives that are active this quarter are as follows: we will spend $220,000 dollars in billboards. We will spend $100,000 testing drive time radio. We’ll spend $100,000 in online advertising. We’ll spend $300,000 in direct mail, and we’ll spend $140,000 in outdoor PR and other various tactics. This $860,000 will be used either in market-wide or targeted unit tactics in Minneapolis, Detroit, Dallas, Phoenix, Houston, and Philadelphia in a variety of combinations. These programs began in some markets on September the 10th, while other markets have yet to begin.

It is too early to see any completed results and draw conclusions, but as Rick said, we’re encouraged by the initial responses to our first tests in Minneapolis, Houston, and Detroit. Dallas and Phoenix have just hold rolled out this week, and Philadelphia begins in November in conjunction with our second opening in that market. Most other cost categories are similar to previous expectations with minor adjustments. In summary, all of these adjustments adjustments result in Pei Wei lowering our revenue expectation for the fourth quarter by $3.6 million our earnings by $0.05, $0.03 due to lower sales projections and $0.02 due to the shift in the marketing costs.

Now let’s discuss our 2008 development targets. As Rick mentioned, we have revised our opening goals from 35 to 38 down to 25 for next year. As we’ve consistently stated, we will monitor and adjust our pace of growth to protect and ensure that we do not outstrip our ability to higher develop and staff our restaurants. Also ensuring we adequately support our rapid growth. Operationally, we have two primary objectives currently, season and continue to develop our management team, and find operational efficiencies and improvements that enable us to deliver our return targets at average weekly sales volumes below our current results. It is always hard to do both, grow aggressively and improve efficiencies. Given the current macro environment as well as our internal challenges caused by our rapid growth, we believe slowing down is the right thing to do at this time. It will significantly increase our chances of finding meaningful improvements in how we run the brand. Specific actions are currently being developed and details will be provided as we evaluate results and determine the timing.

What I can tell you in broad strokes is that our goal is to get the concept economics back to where it was a couple of years ago, where we can comfortably hit our return hurdles at 36 to $37,000 per week in sales versus the reality of today’s pressures on both the top line and margins where we need to be doing closer to $40,000 per week. While our mature restaurants opened prior to 2005 are doing quite well and hitting all of our goals, the classes of ‘05, ‘06, and ‘07 to date are not, and they represent a significant portion of our system. We need to evolve the way we fundamentally operate these restaurants in order for them to perform better at lower sales volumes. We will also continue to do all we can to grow the top line, and we will not change anything near term that will inhibit our ability to grow sales over the long-term.

The 25 locations we intend to open will be focused on improving penetration levels in our new and underpenetrated markets. 19 of those 25 restaurants for next year are located in these types of markets, newer, under penetrated markets. The remaining six will be in existing well-penetrated markets selectively chosen and not intend to do cannibalize any existing restaurants. We’ll be providing more detail when we announce our 2008 plan. With that, I will turn it over to Bert.

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

Good morning, everyone. Thank you for joining us today. At the the Bistro, at least to a certain degree, the third quarter was a continuation of the second quarter. The soft demand for our product, coupled with rising costs produced results less than our expectations. I will hit the third quarter low lights in broad strokes, explain our thinking as it relates to the fourth quarter and finish up with a look into next year.

The Bistro third quarter revenues were less than our forecast by roughly 0.5% or $1.1 million. Sales weeks were four weeks shy of our forecast, consequently, about 35% of our revenue short fall was due to delays in our development pipeline. Comp store sales declined 160 basis points versus our forecasted decline of about 130 basis points. As we mentioned before, our Bistro business has struggled in the western portion of the country, particularly in the states of California, Nevada, and Arizona. In the third quarter, our comp sales in these three states were down 6%, 6%, and 5% respectively.

At the end of the third quarter, we operated in 36 states. 19 of those states had positive year-over-year sales trends with 17 on the flip side. Other than our weakness in the western states, the softest section of the country runs north and south along the Mississippi River. The eastern seaboard remains strong as well as the great state of Texas. Sequentially through the quarter, we are right on track through July and August. Traffic patterns showed modest improvement to the first nine weeks of the quarter, and then reversed course during September. The last two to three weeks of September were our softest traffic trends of the quarter.

As many of you know, we began rolling out a new Grill menu in the second quarter. Our original plan was to try and complete the Grill installation in roughly half of our system this year, with the remaining restaurants being outfitted next year. Well, we’ve accelerated the process just a bit. Currently we have 115 Grills in place, and expect another 25 or so to be installed by year-end, which remits about 80% of our system. We changed our thoughts for two reasons.

First and foremost, the Grill has proven to be positive for our business. The second reason is unfortunately a reflection of the challenges we have faced this year. Implementing the grill requires a number of procedural and equipment changes, both of which are disruptive and inefficient in the short-term. We originally planned to spread this pain over a two-year period in the hope that we could finesse our way around some of the inherent cost pressures. With sales remaining stubbornly soft, we have lost our ability to manage our way through this.

Consequently, we have decided to step on the gas and take the bulk of our medicine in the third and fourth quarter of this year, which will only leave a teaspoon or two of unpleasantness for next year. This decision causes pressure in two areas, our labor line and in D&A. Our labor line is impacted through inefficient labor scheduling associated with our cook line procedural changes and additional training hours relating to the Grill. D&A has been impacted as we have prematurely removed some equipment from operation. In the third quarter, we wrote off about $150,000 or so in equipment and you will probably see a similar number to that in the fourth quarter.

Now, if that wasn’t enough, we also had wage rate issues. Coming into the quarter we were expecting wage rate pressure of about 4 to 5%. What came to pass was just shy of a 9% increase over last year. Coupled with our scheduling in-efficiencies around the grill, we absorbed about $1 million of unexpected hourly labor costs during the quarter. Throw in a fire at our national location which probably cost us another $150,000 to $200,000 and a heavier than expected R&M schedule, and the quarter was officially one to forget.

What does all this mean for the fourth quarter? From where we sit today I would not expect our sales or cost trends to change directions over the next few months. The weakness in our western states shows no sign of abating. Moreover, we’re now seeing the first cracks in what has been a very strong Florida market. Coupled with the calendar loss of New Year’s Eve, we are forecasting a year-over-year comp decline of approximately 3%. Soft sales and rising costs do not generally bode well for the quarter, and our forecast reflects those somber realities.

We are currently testing a number of new products, menu pricing initiatives and marketing that will ultimately set the table for next year. We have completed a single market grill advertising test with positive results. In 2008 we will increase our overall marketing spend at the Bistro to approximately $10 million or slightly more than 1% of sales. With regards to pricing, while we continue not to believe that pushing price — we continue to believe that pushing price in a soft consumer environment is generally not a recipe for success, we are also cognizant of the long-term upward slope of our labor line. Thus we will look to take a modest price increase early next year.

So is our little Chinese food world coming to an end? We just don’t think so. While we’re undoubtedly facing strong sales headwinds in various geographies, it is unlikely these trends will persist forever. Our unit level economics can withstand the near term turbulence that we’re experiencing. We will continue to build new restaurants so long as those investments make economic sense. While there are pockets of the country that that do not warrant additional capital dollars, there continues to be many areas that do. Consequently we intend to develop 18 new Bistro restaurants in 2008, which should drive about a 13% increase in store weeks versus this year. Ultimately our business comes down to food, service and ambience. We will maintain our focus on the basics and strive to provide a quality dining experience to each and every guest that walks through our doors. With that, I will turn it over to Mark.

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

Thanks, Bert. Given the level of detail that Bert and Russell gave you on the third quarter forecast variances, I will spare you the rehash of that data. If there are any questions we can help you with, please ask. There are a couple of items for the quarter, however, I do want to touch upon.

The first is why our tax rate is so low, and it may be helpful to review why our tax rate has historically been relatively low. Like many restaurant companies, we participate in a tip credit program whereby we get a dollar for dollar federal tax tip credit equal to our portion of FICA taxes for all reported tip wages, as long as our aggregate tip reporting remains above a certain threshold. Since these tip credits are not tied directly to income, shifts in our forecasted income may have a significant impact on our effective tax rate. Our reduction of projected pre-tax income for this fiscal year reduced our effective tax rate expectations from 27.5% to 26.25% as tip credits have a greater impact. The Q3 rate includes a cumulative impact of adjusting Q1 and Q2 rates from 27.5% to 26.25%, giving us an effective tax rate of 21.5% for the quarter.

Second, we saw about a $0.02 benefit in the quarter from partner investment expense, due to buyouts at Pei Wei and Bistro partners continuing to switch to the new incentive compensation program. In total, we bought out 47 partner interests during the quarter, leaving us with 92 partners at the Bistro and 33 at Pei Wei. Switching gears to our forecast, for the remainder of 2007, we’re currently projecting full year 2007 results of $1.19, which means we have brought down our guidance for the fourth quarter by $0.11, which is split pretty evenly between the two concepts. Let me take a moment now to summarize the major changes to our forecast. We took fourth quarter revenue down by $3.4 million at the Bistro and $3.6 million at Pei Wei, reflecting our expectations of continuing challenges in the economic environment, and the trends that we saw in September.

Bistro restaurant operating margin is coming down 70 basis points, primarily related to recent unfavorable trends in labor rate, and operating expenses as well as some sales deleverage. Pei Wei is reducing operating profit margins by 270 basis points, primarily as a result of shifting marketing spend to the fourth quarter, as well as the impact of deleverage. As Russell mentioned, about $600,000 in marketing spend that was forecasted to be spent in Q3 has now been pushed into Q4. Also, we have adjusted our effective tax rate to 26.25% from 27.5% as previously noted.

If you are comparing our Q4 forecast to the prior year, you will see we expect to be $0.11 below Q4 2006. Please keep in mind that we had a number of quarterly adjustments in 2006 that helped us deliver $0.34 against the forecast of $0.26. These items included favorable equity compensation of $0.04, favorable partner investment expense of $0.03, and favorable workers comp and group medical of around $0.06. These items were partially offset by higher professional and legal fees, as well as higher income tax expense. The net of these amounts was a $0.08 favorable variance to our original Q4 2006 forecast of $0.26. So the apples-to-apples comparison is $0.26 last year, versus our projected $0.23 this year, which is pretty much in line with how we trended in Q3, $0.20 this year versus prior year of $0.25.

Now let’s take a quick look at the balance sheet and cash flow for the third quarter. We ended the quarter with $4.6 million in cash and generated a total of $27 million in cash flow from operations during the quarter, which was consistent with the prior year. We spent $51.6 million in CapEx this quarter, which exceeded our operating cash flow by $24.5 million. As a result, we borrowed an additional $20 million on our credit line this quarter to help finance our new store growth. This brings our total borrowings at the end of the quarter to $30 million. Additionally, due to our increased partnership buyout activity, intangible assets are up from $12.6 million at year end to $21.8 million at the end of the third quarter and minority interest decreased from $33.3 million at year end to $18.2 million at the end of the quarter.

We estimate our CapEx spend for 2007 to be between 125 and $130 million net of TI allowances. This is an increase from our previous forecast of 120 to $125 million, primarily due to timing of new store openings in early fiscal 2008, combined with the acceleration of the grill rollout. We expect to open four new Bistros in Q1 2008 versus only one Bistro in Q1 of this year, and some of these costs will be incurred during the fourth quarter of 2007. Switching gears to summarize the 2008 development, we expect to open 18 new Bistros, which should drive a 13% increase in sales weeks in fiscal 2008. At Pei Wei, we plan to open 25 new locations which should translate into about a 26% increase in sales weeks. Of these 25 new Pei Wei restaurants, 19 will be located in markets we have recently entered and in underpenetrated markets while the remaining six will be in existing mature markets.

When we talk to you again in February, we will give you our EPS guidance for fiscal year 2008. Given the uncertainties in our top line and operating expenses as well as what to expect from our marketing and other initiatives that we described during this call, we frankly need more time to consider the overall impact. As Rick mentioned earlier, our Board of Directors has authorized an additional $50 million share buyback, which brings our total authorization to $100 million over the next two years. As previously mentioned, we were in talks with a potential acquisition partner during the quarter and thus felt that we were in possession of material nonpublic information that precluded us from trading in our shares. With that in the past, we will repurchase shares on an opportunistic basis. Obviously we’re not at liberty to share the specifics of what our buyback triggers are but our opportunistic philosophy remains in place.

With the decrease in Pei Wei development coupled with the moderation of the Bistro development we expect our CapEx for 2008 to be down by about 20 to $25 million compared to fiscal 2008. These funds along with $150 million credit facilities will be available to support our share buyback plan. Before we open the call to questions, let me provide you with our Q4 revenue and earnings release dates. We’ll release revenue on January 3rd and earnings on February 13th. With that, let’s open the call up for questions. Operator?

QUESTION AND ANSWER

Operator

(OPERATOR INSTRUCTIONS). Our first question is from Ashley Woodruff. You may ask your question, and please state your company name.

Ashley Woodruff - FBR — Analyst

FBR. A couple of questions. I guess first for Bert, can you talk a little bit more about your decision not to slow the unit growth at the Bistro further? I think given obviously what we’ve seen recently, as you said you still have some room to have decent economics given the recent same-store trends, but I guess if things continue to slow down over the next year or so, I guess I am curious why not take the opportunity just to slow the Bistro growth a little bit more?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

Hi, Ashley. I think you raise a great point. We don’t necessarily feel like the current environment is going to continue forever. There are some great opportunities out there for us. We have some great partners with respect to real estate all across the country. We feel pretty confident that we can drive great returns on the 18 new restaurants we’re going to build next year. To your point, I will tell that you we are cautious in several areas of the country right now. When it comes to 2009 and 2010 development, we tend to look at our current operating performance in somewhat real time when it comes to making our real estate decisions, and there is no question that the softness that we’ve had over the last few quarters has impacted our ability to approve a number of sites. This will work its way into the system, but I also believe that the sun will shine on us again at some point in time in the future, and we can’t necessarily get too morose about the environment we’re currently sitting in.

Ashley Woodruff - FBR — Analyst

Okay. And I guess a similar question for Russell. Would the stores that you’ll open in 2008, will you wait to see how those perform before you start really focusing on the 2009 pipeline and will we expect to see a bit of a delay or are you kind of going ahead into 2009 right now kind of assuming 2008 performances you expect?

Russell Owens - P.F. Chang’s China Bistro, Inc. — EVP, President — Pei Wei

We are in 2009 in terms of our pipeline now. We will continue down the same strategic path of filling out our under penetrated markets and being real opportunistic in our penetrated markets. We will not engage any site work or looking for new markets until we see how our marketing and performance in these newer markets plays out through the balance of this year and into 2008. We’re not — we haven’t shut down the pipeline. We don’t want to get caught in a scenario where we have new markets that we’re sort of halfway in and go ahead and reach minimum penetration levels, and we’ll evaluate that point. We have some time before we need to make those kind of decisions with the time frame of development cycle at Pei Wei.

Ashley Woodruff - FBR — Analyst

Thank you.

Operator

Our next question comes from John Glass. You may ask your question. Please state your company name.

John Glass - CIBC World Markets — Analyst

Thanks. It is CIBC. Can you talk about what the total impact has been for the Bistro this year, Bert, from the Grill, China, some of the things at least we can get basis for what costs you may avoid next year?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

Hey, John, this is Bert. The new China is roughly going to cost us about 750 to $1 million this year. The grill rollout as I mentioned, in terms of impacts on the P&L, we had a direct write off on some equipment that we replaced in the restaurant. That totaled about $150,000. As I mentioned, we’ll probably see a like amount in the fourth quarter, and a little drip and drab of that into the first quarter of next year.

John Glass - CIBC World Markets — Analyst

So a $1.3 million essentially that ran — up to $1.3 million that ran through the P&L this year through the Bistro that doesn’t have to be repeated next year, correct?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

I certainly hope we don’t have to repeat that again next year, no.

John Glass - CIBC World Markets — Analyst

Got you. Russell, on the Pei Wei labor model, are you talking about just a quick subtle refinement or are you rethinking maybe even the labor format entirely, removing some of the table service? How pro found a change do you think you need to make to labor model?

Russell Owens - P.F. Chang’s China Bistro, Inc. — EVP, President — Pei Wei

We’re thinking about everything. We’re looking at fine tuning all the way to sort of redefining how we staff and execute the restaurants. It is more than just a little fine tuning necessary to hit our goals.

John Glass - CIBC World Markets — Analyst

Okay. This is embarrassing, but twice you said the word buyout and both times I must have been spacing out. I don’t know what buyout you were talking about. You were negotiating for what?

Russell Owens - P.F. Chang’s China Bistro, Inc. — EVP, President — Pei Wei

I am not sure I understand.

John Glass - CIBC World Markets — Analyst

The term you used the term — not you. Somebody used the term buyout that you were negotiating. That’s the reason you couldn’t buy stock back during a period.

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

We were in conversation with a potential strategic partner to bring a Japanese business into the Company, and while we were in conversation we felt like we had material information that was not public, so we chose not to work against our $50 million authorization in buying back stock.

John Glass - CIBC World Markets — Analyst

Okay. Thank you.

Operator

This question comes from David Tarantino. Please state your company name.

David Tarantino - Robert W Baird — Analyst

It is Robert W Baird. Mark, just a question on the broader margin outlook, I know it is early for ‘08, but given all the costs pressures and the spending that you’re planning on the marketing side, what type of comps might you need to see break even point on margins next year?

Rick Federico - P.F. Chang’s China Bistro, Inc. — CEO

You’re absolutely right. There are a lot of moving parts that we’re still trying to pull together. We believe 2008 is going to be challenging from an operating margin perspective since we haven’t given you all that guidance, difficult to give you a whole lot of color, but one thing that we are certain about is next year we’re going to continue to see pressure on multiple lines at both concepts. The cost of sales lines the majority of our proteins are annually contracted, and that represents roughly over 50% of our total cost of sales, and we completed substantially all of the contracts for fiscal 2008, and as you might expect the well publicized pressure on corn and soybeans has led to an increase in those contract prices and in addition, we expect to see an increase in wok cooking oil also derived from soybeans.

We also expect with all of the noise around minimum wages, a lot of the states have indexes associated with that, and a lot of states are contemplating new initiatives on the ballots. We’ll continue to see a lot of pressure there. I think you heard Rick talk about Pei Wei taking a 200 basis point price in 2008. We believe the majority of that price is going to go against absorbing these inflationary-type issues, both from cost of sales and labor and other types of inflationary aspects on our P P&L line.

David Tarantino - Robert W Baird — Analyst

And then in terms of the level of comps or traffic you might need to possibly hold margins flat, any thought on that?

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

I think there is a lot of initiatives that are currently going under way that should help us take out some of those expenses. You heard Russell talk about some of the initiatives. You heard Bert talk about some of the initiatives. I think when you look at the overall expense environment and couple it with the initiatives that are going on, we believe that the price that we’re going to take should cover all those expenses.

David Tarantino - Robert W Baird — Analyst

Okay. That’s helpful, and then, Bert, on the Bistro Grill menu and the tests of the marketing, can you give any color on what you saw in the single market tests related to maybe the traffic lift that you’re seeing and when might you start more aggressive advertising?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

David, this is Bert. I prefer not to get into that too much, simply to say that it was positive. I wouldn’t want people to begin extrapolating results from a single market across our system that might be a little dangerous. I think that given our results there and the confidence that our team has with those results, you will see us beginning to spend a little money in the first quarter of next year, and we will probably attack one of our weakest markets first, which will be California.

David Tarantino - Robert W Baird — Analyst

That’s helpful. Thanks.

Operator

Thank you our next question is from Sharon Zackfia. You may ask your question. Please stated your company name.

Sharon Zackfia - William Blair — Analyst

William Blair. I think you Bert, mentioned you’re increasing the marketing budget at Bistro to $10 million next year. Can you remind us what it was this year?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

We will be somewhere I will say in the 3 to $4 million this year.

Sharon Zackfia - William Blair — Analyst

And then separately, on the labor wage increase that you saw at the Bistro, is there any — obviously I know there was a minimum wage increase and so on, but sounds like it was above and beyond what you expected. What helps contribute to that?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

I think an overall tight labor market, Sharon, helped to contribute to that. I don’t think that should be a surprise to anybody, so coupled with some of the increases we saw at mid-year, I think that helped push that number a little higher than we were expecting.

Sharon Zackfia - William Blair — Analyst

I think last year you did some labor arbitrage with the servers and the bussers. Is there any opportunity to kind of refine the Bistro’s model a little bit more to help on that labor line?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

Sharon, I think the term labor arbitrage is one that people outside the Company use. It is certainly not something we meant to do internally, and the fact of the matter is we are doing everything we can to provide great service to our guests which is generally not a function of reducing the number of head count. We didn’t reduce our head count last year nor do we expect to do it this year or next.

Sharon Zackfia - William Blair — Analyst

Thanks.

Operator

Thank you. Next question is from Destin Tompkins. You may ask your question and please state your company name.

Destin Tompkins - Morgan Keegan — Analyst

Morgan Keegan. Thanks. Bert, I had a question on the — you guys had talked about a dessert program at the Bistro. Can you give us some color on what the rollout schedule might look like there?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

Well, we haven’t completed that test yet. We have it in about, oh, maybe seven or eight restaurants currently. We’re going to be a little bit more aggressive with it in the fourth quarter than we had originally planned. We’ll probably infiltrate the state of California with our desserts in the fourth quarter, so I would say that as we move into next year within the first oh, three or four months of the year, my guess is that most of the restaurants in our system will see a new dessert offering. Thus far our guests have responded very positively to it, and I think it is a great offering to help round out the meal here at the Bistro.

Destin Tompkins - Morgan Keegan — Analyst

That’s helpful. And on the grill menu on some of the early restaurants that implemented, is there enough data there that you can maybe just give us some more color on what those — what the trends have been? Have they been able to sustain better trends or was it an initial pop? Is there anything you can give us on maybe the restaurants that have a little bit more data under their belt?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

I will give you just a little nibble. The trends in all of our earlier restaurants we’ve seen the percentage of the grill item that is our guests have enjoying have increased across the board, so as stores mature and as our guests get to understand, recognize and understand the grill, we’ve seen a pickup in the activity. Again, other than one single market we haven’t put any type of awareness behind it, so we feel very positive about the early direction of the grill which obviously went a long way towards our thought process in terms of accelerating that roll I couldn’t tell.

Destin Tompkins - Morgan Keegan — Analyst

One quick one for Mark. You mentioned the tax rate being a little lower. Is there any reason we should expect the tax rate would go back up in 2008 or what should we expect there?

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

We certainly hope it would. That means we would be making more money, so as we talk about the tax tip credit is really a — has a larger impact the less money you make, so when we look at 2008 you probably would expect it to go up somewhat of 26.25, probably more in line with what we forecast this year at the 27.5 range.

Destin Tompkins - Morgan Keegan — Analyst

Great. Thank you.

Operator

Thank you next question is from Joe Buckley. You may ask your question and please state your company name.

Joe Buckley - Bear Stearns — Analyst

Bear Stearns. First a couple of follow-ups. Bert, is there a program you’re talking about, is that the mini desserts that you made reference to.

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

Yes, it is, Jim.

Joe Buckley - Bear Stearns — Analyst

And you mentioned that the food contracts for most of your proteins are done. Could you share with us what that cost looks like year-over-year on a percentage basis?

Rick Federico - P.F. Chang’s China Bistro, Inc. — CEO

Our cost of sales tends to trend within a certain band, and we expect to trend probably probably at the higher end of the band you’ve seen over the last few years.

Joe Buckley - Bear Stearns — Analyst

Okay. And that’s factoring in the price increases you’re plan as well for ‘08?

Rick Federico - P.F. Chang’s China Bistro, Inc. — CEO

No. That would be just the overall basis point impact.

Joe Buckley - Bear Stearns — Analyst

I think you’re losing me. Say that again. You’re expecting food costs as a result of these contracts to be at the upper end of what we’ve seen historically?

Rick Federico - P.F. Chang’s China Bistro, Inc. — CEO

Yes. If you go back to 2003, 2004, and look at those rates that were 28%-ish, it is probably going to be somewhere in there even with the price increases probably be somewhere in that range.

Joe Buckley - Bear Stearns — Analyst

Okay. And, Bert, another question on the grill, maybe you shared this with us in the past. I don’t recall. What are the investment costs involved?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

It depends on the restaurant, Joe. Some restaurants are easier to slip this grill in than others. Generally speaking per restaurant, we’re talking in the 35 to $40,000 range.

Joe Buckley - Bear Stearns — Analyst

Okay.

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

That’s all inclusive of all the equipment we’re putting in which actually goes beyond the grill.

Joe Buckley - Bear Stearns — Analyst

Okay. Those are all my questions. Thank you.

Operator

Thank you. Next question is from Nicole Miller. You may ask your question and please state your company name.

Nicole Miller - Piper Jaffray — Analyst

Piper Jaffray. Thank you. In terms of the Grill, was the number, Bert, you’re in 115 stores with Grills?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

I think we’re in about 115 or so currently with another 25 or so coming in the fourth quarter from today. We already put some in at the beginning of the quarter.

Nicole Miller - Piper Jaffray — Analyst

When would we start seeing that impact come?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

Well, I would like to tell you you’re seeing a little now, but it’s a battle of the pygmies out there. We’re seeing a slight lift in those restaurants that have grills versus those that don’t. Unfortunately with the environment that we’re in right now, we’re pushing on a string a little bit, but I think that as we continue to introduce our guests to again a little bit new and different product at the Bistro, we have seen success on a measured basis, and I think that as we move into ‘08, we expect to see that success continue.

Nicole Miller - Piper Jaffray — Analyst

Looking into Bistro next year, you made a lot of adjustments whether it is plates or menus, grills, et cetera. First of all, what will you do next year and in a perfect world what would you like to do? Is there anything coming that’s a bit — not revolutionary but evolutionary in terms of even decor outside the whole package or anything of that nature?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

I hope we’re picking up the fruit from all of our efforts over the last year or so, that would be in a perfect world what we would be doing. I will tell you that as we look into 2008, in terms of the velocity of change, I think that will slow down. The introduction of the grill, we mentioned the potential introduction of our new dessert offering is plenty for us to chew on and absorb over the next year. We will introduce perhaps a couple of new menu products, but there won’t be any sweeping changes with respect to our menu in 2008. We hope that the environment improves a little bit. We fully intend to continue to execute at a high level. If those things happen, I think we’ll have a much better year in ‘08 than ‘07.

Nicole Miller - Piper Jaffray — Analyst

I don’t know if I am even asking the right question here, and if I am not, you can redirect me, but in terms of increasing frequency, is it more important for you to get a new customer that will try a grill item or somebody that would increase frequency because of, for example, like a dessert? What does it mean to mix shift or margins, et cetera?

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

Nicole, frankly I will take any guests, whether they’re new or old at this point. We like to make sure that we’re offering our guests the full menu range, so if you and I go to our restaurant tonight, I would love for us to be able to experience the entire menu, which would include obviously a cocktail or two before, some great appetizers and entrees, and finish it off with a nice little dessert and maybe an espresso, so to the extent that we have existing guests coming into our restaurant, I would certainly love to be able to avail them to all of our offerings to the extent they bring friends with them who maybe haven’t been to the Bistro, I would love to be able to offer them some of our new grill offerings. We are somewhat agnostic at this point in terms of what type of guest it is. We clearly love to get more frequency out of our existing guests. We certainly won’t discriminate against new guests that happen to come into our restaurant.

Nicole Miller - Piper Jaffray — Analyst

I can’t promise, but I will at least try to do takeout tonight.

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

You need to spend more money with us tonight.

Nicole Miller - Piper Jaffray — Analyst

One more final question, Russell. I know it is early to talk about the marketing that just started in September and October but can you share with us in the test phase of marketing what the results were and how do customers perceive Pei Wei at this point?

Russell Owens - P.F. Chang’s China Bistro, Inc. — EVP, President — Pei Wei

Sure. Again, it is very early. What I can tell you is the direct mail drops that we have done in Minneapolis and Detroit have seen redemption rates at twice our historical average in about a third of the time, so we feel good that we’re getting people’s attention, we’re getting them into the restaurants and anecdotally a large number, large percentage of those are first-time guests which is what we’re hopeful would happen, and we’ve seen a lift in sales in those restaurants and those markets beyond their trends prior to the introduction of the marketing or compared to other restaurants that don’t have the marketing, but I will caution that with direct mail only pays off if the long-term run rate post the offering period is a higher level than it was pre-, and we haven’t gotten to that point yet, so I can’t speak to that.

Nicole Miller - Piper Jaffray — Analyst

Just more quantitatively, is the feedback they’re giving you, does that merit what you think — what you guys as a team think Pei Wei is? Are those two things the same or do you have to start all over and educate them on the brand? I realize some of them are new, but how —

Russell Owens - P.F. Chang’s China Bistro, Inc. — EVP, President — Pei Wei

A couple things. The marketing piece is different. It is designed to educate them on the brand. It was also designed with the previous research in hand that told us what our existing core customers loved about the brand, and again anecdotally what they’re saying when they come in and tell our manager sincerely they love everything our existing customers have loved about the brand. Is that kind of what you’re asking?

Nicole Miller - Piper Jaffray — Analyst

Thanks so much, guys.

Russell Owens - P.F. Chang’s China Bistro, Inc. — EVP, President — Pei Wei

You bet.

Operator

Our next question is from Bryan Elliott. You may ask your question and please state your company name.

Bryan Elliott - Raymond James — Analyst

Raymond James. Good afternoon. Just wondered, refresh my memory on something. Do I recall correctly, and I didn’t get a chance to look it up, in the past you have had some accretion with respect to stock repurchase decisions? Have you had an accretion requirement to pull in the trigger or is there any parameters that surround the repurchase decisions going forward?

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

In Q3 we did talk about Q2 at the end of Q2 call we talked about having an accretion model set up to facilitate the buyback. Our view on it prospectively is we are going to look at it opportunistically. It doesn’t necessarily have to be accretive in the current year for us to pull that trigger.

Bryan Elliott - Raymond James — Analyst

Okay. That is a change. Thank you.

Operator

Thank you. Next question is from Matt DiFrisco. You may ask your question and please state your company name.

Matt DiFrisco - Thomas Weisel Partners — Analyst

Thomas Weisel Partners. I guess, Russell, first question I have is with respect to Pei Wei, it has been a couple of years of struggles with new markets and stores and not only just the current macro environment, but seems like there were other brands in quick casual that are doing relatively robust same-store sales trends amidst strong square footage growth even in the downturn here they slowed but haven’t slowed at much. Do you think it is being identified as a quick casual and do you think there is a problem there maybe with ongoing with the real estate that maybe we thought was solved earlier in the year and was part of the plan for ‘07’s turn around?

Russell Owens - P.F. Chang’s China Bistro, Inc. — EVP, President — Pei Wei

I don’t think there is a problem with the real estate in our current development. We’re just now starting to realize the change in strategy from a couple of years ago or eighteen months ago on the development strategy. For Detroit, for example, we opened three restaurants in a relatively short period of time. We’ll have two more early next year, and we are just now turning on some marketing support because we can effectively do that and our performance in Detroit is a lot better than it was in Minneapolis and other markets that we’ve opened historically the old way. It is still early to make that call.

In terms of where the guests put us, our research will tell you they definitely put us in the upper end of quick casual, different shall be say a Chipotle on the lower end of casual, would be on the lower end of quick casual, not that one’s better than the other, but we’re positioned differently, and that might have some impact. Our site model — our trade area valuation and our site model and where we look to put our restaurants is basically the casual dining consumer. To the extent that the casual dining consumer is being affected by the macro issues, it is having a similar impact on us.

Matt DiFrisco - Thomas Weisel Partners — Analyst

Right. That’s what I am trying to figure out is why is there a divergence now for some time between this brand’s trends and other brands, whether it is a Chipotle or a Panera. Mark, speaking about the ‘08 outlook, we’ve heard a lot about headwinds of cost pressures for ‘08 but you’re doing a pretty meaningful slowdown on growth on a brand that’s been dilutive to the business as far as not an earnings contributor. What type of margin contribution should we see as an improvement from not only plain just less preopening but also the drop-off in twelve or so stores from year-over-year that are opening the last couple years in low single-digit operating margins and then also at a follow-up on, is there any opportunity for getting the Pei Wei guys to switch over to what you’ve done with the Bistro as far as switching over to a cash compensation rather than the partnership model that was previously employed?

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

When we — one of the reason that is we are slowing down Pei Wei is to get a handle around how do we increase the profitability in that concept, and as Russell talked about, with the headwinds of operating margin line items in labor and cost of sales and so forth, it becomes even more difficult, so by slowing it down it does give us an opportunity to go in and put the initiatives in place that will help bring into line especially on the labor component the rates that we need to drive the return that is we’re looking for even in a challenging top line environment, so if we’re currently running between the 35 and $37,000 a week, we need to have a model that will be able to deliver those results. You can figure the math out just as easily as anyone. We are going to have savings in the preopening line, roughly $150,000 a store. We are going to have savings in the partner investment expense line, and we are anticipating as we go into more of the existing markets on the 25 stores that we open that we will have higher operating margins from the get-go, and on those openings, so we do expect Pei Wei — the changes to have a significant impact on our 2008 EPS performance.

Matt DiFrisco - Thomas Weisel Partners — Analyst

Okay. So it is safe to assume you’re going to — we would assume, then, earnings growth or EBIT growth would be faster than your guidance for implied guidance around 15% top line growth for ‘08?

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

Well, we haven’t given you that guidance on EPS yet, but we will give you that when we talk to you again in February.

Matt DiFrisco - Thomas Weisel Partners — Analyst

Okay. I am just trying to understand, though, it will be your preferences for margin expansion rather than reinvestment to try and correct or turn around the brand?

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

Yes. That would — we would hope that would be the case.

Matt DiFrisco - Thomas Weisel Partners — Analyst

Thank you.

Operator

Thank you. (OPERATOR INSTRUCTIONS). Our next question is from Paul Westra. You may ask your question and please state your company name.

Paul Westra - Cowen & Co — Analyst

Hi, thanks, it is Paul Westra at Cowen, a follow-up question or similar one anyway, to I guess a bunch of comments already made on ‘08 and I don’t even I don’t want to pin down too much on the outlook, but question is relating to pricing and obviously potential margins, and I guess philosophically, are you trying to take price sufficient to cover any margin degradation, call it a flat traffic outlook next year?

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

That would be — when we look at 2008 and we analyze all of the different cost pressures that we are seeing and experiencing and expect to continue to see in 2008, our thoughts around pricing has been — we are going to protect our restaurant operating margins historically and prospectively when we look at taking price and we’re very cautious when we take price. We take price on cost items that we believe to be permanent increases in our operating model. That historically has been labor. We expect that to continue to be the case going forward. Labor is an ever increasing line for us. On the cost of sales line, that kind of ebbs and flows if you go back and look at it. One year you experience higher cost of sales, and the next year you’ll be a beneficiary of lower, so we typically don’t take price against cost of sales, but when we look at the overall pressure that we’re seeing in 2008 coupled with all the initiatives that we have going on to try to drive some of the costs out, our intention is that we will try to do the best that we can to protect our operating margin.

Paul Westra - Cowen & Co — Analyst

When you mention Joe’s question like food costs, could be closer to 50 basis points higher, is that before you take any price? Is that what you’re referring to because I don’t know how you overcome a 50 basis points head wind on cost of goods sold after pricing?

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

I haven’t given you a number on cost of sales, but we do expect to see significant pressure on cost of sales line next year.

Bert Vivian - P.F. Chang’s China Bistro, Inc. — President — PF Chang’s

Paul, this is Bert. Part of that pressure at least at the Bistro will be a little change in product mix. Our grill items have a higher cost of sales component than some of our non-grill items, so part of that pressure will be from product mix.

Paul Westra - Cowen & Co — Analyst

Okay. That’s helpful. Thank you.

Operator

Our next question is from Larry Miller. You may ask your question and please state your company name.

Nicole Miller - Piper Jaffray — Analyst

It is Larry Miller with RBC. I apologize if you answer this had but I heard you were having issues with manager turnover. Is that the case and why is that the case in fact? Can you help me understand that? Thanks.

Russell Owens - P.F. Chang’s China Bistro, Inc. — EVP, President — Pei Wei

Manager turnover is always an issue in our sector of the business the industry we’re told it runs at 40% which is higher than the full service sector, and we would like to be under that number, and we’re not, and so we have both brands last year did management surveys to sort of figure out how we can make their lives better, and their tenure longer, and we’ve implemented some things to make improvements there. The rapid growth puts pressure and strain on the system and creates a system of very green managers, and we’re focused on improving their training and development and improving their tenure, so we can benefit from the training and development in the system and just again mitigate some of the pressure of growth in the system on the average tenure of our management, so it is an issue. I would love to see it lower. It is not a crisis, but it is an issue for us for sure.

Nicole Miller - Piper Jaffray — Analyst

Bert, has your experience been any different than Russell’s? Our turnover really hasn’t moved much, Larry. It has been fairly consistent. As a matter of fact, over the past two years across our management team it has actually declined. It has actually declined in our front of the house over the past year, so our experience there has been fairly good. Thanks, guys.

Operator

Thank you. At this time I am showing no further questions. I will turn the call back over to Mark Mumford for final remarks.

Mark Mumford - P.F. Chang’s China Bistro, Inc. — CFO

Great. Thanks for joining us today. Just remind you a few dates, we’ll release revenue on January 3rd and we’ll talk to you again on February 13th. Thanks again. Bye-bye.

Operator

This does conclude today’s conference. We thank you for your participation. At this time you may disconnect your lines.

EX-3.II

EXHIBIT 3(ii)

P.F. CHANG’S CHINA BISTRO, INC.

A DELAWARE CORPORATION

AMENDED AND RESTATED BYLAWS

ARTICLE I

STOCKHOLDERS

Section 1.1 Annual Meeting. An annual meeting of the stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, on such date, and at such time as the Board of Directors shall each year fix, which date shall be within thirteen months subsequent to the later of the date of incorporation or the last annual meeting of stockholders.

Section 1.2 Special Meetings. Special meetings of the stockholders, for any purpose or purposes prescribed in the notice of the meeting, may be called only by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exists any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption). Business transacted at special meetings shall be confined to the purpose or purposes stated in the notice.

Section 1.3 Notice of Meetings. Written notice of the place, date, and time of all meetings of the stockholders shall be given, not less than ten (10) nor more than sixty (60) days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by law (meaning, here and hereinafter, as required from time to time by the Delaware General Corporation Law or the Certificate of Incorporation of the Corporation).

When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than thirty (30) days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, date, and time of the adjourned meeting shall be given in conformity herewith. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.

Section 1.4 Quorum. At any meeting of the stockholders, the holders of a majority of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law.

If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, may adjourn the meeting to another place, date, or time.

If a notice of any adjourned special meeting of stockholders is sent to all stockholders entitled to vote thereat, stating that it will be held with those present constituting a quorum, then except as otherwise required by law, those present at such adjourned meeting shall constitute a quorum, and all matters shall be determined by a majority of the votes cast at such meeting.

Section 1.5 Conduct of the Stockholders’ Meeting. At every meeting of the stockholders, the Chairman, if there is such an officer, or if not, the President of the Corporation, or in his absence the Vice President designated by the President, or in the absence of such designation any Vice President, or in the absence of the President or any Vice President, a chairman chosen by the majority of the voting shares represented in person or by proxy, shall act as Chairman. The Secretary of the Corporation or a person designated by the Chairman shall act as Secretary of the meeting. Unless otherwise approved by the Chairman, attendance at the stockholders’ meeting is restricted to stockholders of record, persons authorized in accordance with Section 8 of these Bylaws to act by proxy, and officers of the Corporation.

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Section 1.6 Conduct of Business. The Chairman shall call the meeting to order, establish the agenda, and conduct the business of the meeting in accordance therewith or, at the Chairman’s discretion, it may be conducted otherwise in accordance with the wishes of the stockholders in attendance. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.

The Chairman shall also conduct the meeting in an orderly manner, rule on the precedence of and procedure on, motions and other procedural matters, and exercise discretion with respect to such procedural matters with fairness and good faith toward all those entitled to take part. The Chairman may impose reasonable limits on the amount of time taken up at the meeting on discussion in general or on remarks by any one stockholder. Should any person in attendance become unruly or obstruct the meeting proceedings, the Chairman shall have the power to have such person removed from participation. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at a meeting except in accordance with the procedures set forth in this Section 1.6 and Section 1.7, below. The Chairman of a meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 1.6 and Section 1.7, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

Section 1.7 Notice of Stockholder Business. At an annual or special meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) properly brought before the meeting by or at the direction of the Board of Directors, (c) properly brought before an annual meeting by a stockholder, or (d) properly brought before a special meeting by a stockholder, but if, and only if, the notice of a special meeting provides for business to be brought before the meeting by stockholders. For business to be properly brought before a meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder proposal to be presented at an annual meeting shall be received at the Corporation’s principal executive offices not less than 120 calendar days in advance of the date that the Corporation’s (or the Corporation’s predecessor’s) proxy statement was released to stockholders in connection with the previous year’s annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the date contemplated at the time of the previous year’s proxy statement, or in the event of a special meeting, notice by the stockholder to be timely must be received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual or special meeting (a) a brief description of the business desired to be brought before the annual or special meeting and the reasons for conducting such business at the special meeting, (b) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business.

Section 1.8 Proxies and Voting. At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. No stockholder may authorize more than one proxy for his shares.

Each stockholder shall have one vote for every share of stock entitled to vote which is registered in his or her name on the record date for the meeting, except as otherwise provided herein or required by law.

All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or his or her proxy, a stock vote shall be taken. Every stock vote shall be taken by ballots, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. Every vote taken by ballots shall be counted by an inspector or inspectors appointed by the chairman of the meeting.

Except as provided herein, all matters shall be determined by a majority of the votes cast. All elections of directors at which a quorum is present shall be determined by a majority of the votes cast, provided that if the number of nominees exceeds the number of directors to be elected, the directors shall be elected by the vote of a plurality of the votes cast. For purposes of this Section, a “majority of the votes cast” means that the number of shares voted “for” a director exceeds the number of the votes cast “against” a director. If a director is not elected, the director shall tender his or her resignation to the Board of Directors. The Nominating and Corporate Governance Committee will make a recommendation to the Board of Directors on whether to accept or reject such director’s resignation. The Board of Directors will act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within ninety (90) days from the date of the certification of the election results. The Nominating and Corporate Governance Committee in making its recommendation and the Board of Directors in making its decision may each consider any factors or other information that they consider appropriate and relevant. The director who tenders his or her resignation will not participate in the recommendation of the Nominating and Corporate Governance Committee or the Board of Directors’ decision with respect to his or her resignation.

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If a director’s resignation is accepted by the Board of Directors pursuant to this Bylaw, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors may fill the resulting vacancy pursuant to the provisions of Article II, Section 2.2, or may decrease the size of the Board of Directors pursuant to the provisions of Article II, Section 2.1.

Section 1.9 Stock List. A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in his or her name, shall be open to the examination of any such stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held.

The stock list shall also be kept at the place of the meeting during the whole time thereof and shall be open to the examination of any such stockholder who is present. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

Section 1.10 Action by Written Consent. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. This Section 1.10 shall cease to be effective at such time as the Corporation consummates a firm commitment underwritten public offering of its common stock pursuant to a registration statement pursuant to the Securities Act of 1933, as amended.

ARTICLE II

BOARD OF DIRECTORS

Section 2.1 Number of Term of Office. The number of directors shall be not less than five (5) and not more than eight (8). The initial number of directors shall be eight and, thereafter, shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption). A vacancy resulting from the removal of a director by the stockholders as provided in Article II, Section 2.3 below may be filled at a special meeting of the stockholders held for that purpose. All directors shall hold office until the expiration of the term for which elected and until their respective successors are elected, except in the case of the death, resignation or removal of any director.

Section 2.2 Vacancies and Newly Created Directorships. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification or other cause (other than removal from office by a vote of the stockholders) may be filled only by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

Section 2.3 Removal. Subject to the rights of holders of any series of Preferred Stock then outstanding, any directors, or the entire Board of Directors, may be removed from office at any time, with or without cause, but only by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66^2/3%) of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Vacancies in the Board of Directors resulting from such removal may be filled by a majority of the directors then in office, though less than a quorum, or by the stockholders as provided in Article II, Section 2.1 above. Directors so chosen shall hold office until the next annual meeting of stockholders.

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Section 2.4 Regular Meeting. Regular meetings of the Board of Directors shall be held at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required.

Section 2.5 Special Meetings. Special meetings of the Board of Directors may be called by one-third of the directors then in office (rounded up to the nearest whole number) or by the Chief Executive Officer and shall be held at such place, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given each director by whom it is not waived by mailing written notice not fewer than five (5) days before the meeting or by telegraphing or personally delivering the same not fewer than twenty-four (24) hours before the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.

Section 2.6 Quorum. At any meeting of the Board of Directors, a majority of the total number of authorized directors shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.

Section 2.7 Participation in Meetings by Conference Telephone. Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board of Directors or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting.

Section 2.8 Conduct of Business. At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board of Directors may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided herein or requited by law. Action may be taken by the Board of Directors without a meeting if all members thereof consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors.

Section 2.9 Powers. The Board of Directors may, except as otherwise required by law, exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, including, without limiting the generality of the foregoing, the unqualified power:

(a) To declare dividends from time to time in accordance with law;

(b) To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;

(c) To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;

(d) To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being;

(e) To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents;

(f) To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine;

(g) To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; and

(h) To adopt from time to time regulations, not inconsistent with these bylaws, for the management of the Corporation’s business and affairs.

Section 2.10 Compensation of Directors. Directors, as such, may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board of Directors.

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Section 2.11 Nomination of Director Candidates. Subject to the rights of holders of any class or series of Preferred Stock then outstanding, nominations for the election of Directors may be made by the Board of Directors or a proxy committee appointed by the Board of Directors or by any stockholder entitled to vote in the election of Directors generally. However, any stockholder entitled to vote in the election of Directors generally may nominate one or more persons for election as Directors at a meeting only if timely notice of such stockholder’s intent to make such nomination or nominations has been given in writing to the Secretary of the Corporation. To be timely, a stockholder nomination for a director to be elected at an annual meeting shall be received at the Corporation’s principal executive offices not less than 120 calendar days in advance of the date that the Corporation’s (or the Corporation’s predecessor’s) Proxy statement was released to stockholders in connection with the previous year’s annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the date contemplated at the time of the previous year’s proxy statement, or in the event of a nomination for director to be elected at a special meeting, notice by the stockholders to be timely must be received not later than the close of business on the tenth day following the day on which such notice of the date of the special meeting was mailed or such public disclosure was made. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote for the election of Directors on the date of such notice and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (e) the consent of each nominee to serve as a director of the Corporation if so elected.

In the event that a person is validly designated as a nominee in accordance with this Section 2.11 and shall thereafter become unable or unwilling to stand for election to the Board of Directors, the Board of Directors or the stockholder who proposed such nominee, as the case may be, may designate a substitute nominee upon delivery, not fewer than five (5) days prior to the date of the meeting for the election of such nominee, of a written notice to the Secretary setting forth such information regarding such substitute nominee as would have been required to be delivered to the Secretary pursuant to this Section 2.11 had such substitute nominee been initially proposed as a nominee. Such notice shall include a signed consent to serve as a director of the Corporation, if elected, of each such substitute nominee.

If the chairman of the meeting for the election of Directors determines that a nomination of any candidate for election as a Director at such meeting was not made in accordance with the applicable provisions of this Section 2.11, such nomination shall be void; provided, however, that nothing in this Section 2.11 shall be deemed to limit any voting rights upon the occurrence of dividend arrearages provided to holders of Preferred Stock pursuant to the Preferred Stock designation for any series of Preferred Stock.

Section 2.12 Submission of Questionnaire, Representation and Agreement. Each nominee for election or reelection as a director of the Corporation must deliver to the Secretary at the principal executive offices of the Corporation at least five (5) days prior to the filing of the Corporation’s proxy statement in connection with the then current year’s annual meeting of stockholders a written questionnaire with respect to the background and qualification of such person (which questionnaire shall be provided by the Secretary) and a written representation and agreement (in the form provided by the Secretary) that (A) reflects the requirements of Article I, Section 1.8, and (B) such person has complied and will comply with all applicable corporate governance, conflicts, confidentiality, stock ownership and trading policies of the Corporation.

ARTICLE III

COMMITTEES

Section 3.1 Committees of the Board of Directors. The Board of Directors, by a vote of a majority of the whole Board of Directors, may from time to time designate committees of the Board of Directors, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board of Directors and shall, for those committees and any others provided for herein, elect a director or directors to serve as the member or members, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. Any committee so designated may exercise the power and authority of the Board of Directors to, including, without limitation, declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law if the resolution which designates the committee or a supplemental resolution of the Board of Directors shall so provide. In the absence or disqualification of any member of any committee and any alternate member in his place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member.

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Section 3.2 Conduct of Business. Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third of the authorized members shall constitute a quorum unless the committee shall consist of one (1) or two (2) members, in which event one (1) member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of such committee.

ARTICLE IV

OFFICERS

Section 4.1 Generally. The officers of the Corporation shall consist of a President, one or more Vice Presidents, a Secretary and a Treasurer. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board of Directors and such other officers as may from time to time be appointed by the Board of Directors. Officers shall be elected by the Board of Directors, which shall consider that subject at its first meeting after every annual meeting of stockholders. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. The Chairman of the Board of Directors, if there shall be such an officer, and the President shall each be members of the Board of Directors. Any number of offices may he held by the same person.

Section 4.2 Chairman of the Board of Directors. The Chairman of the Board of Directors, if there shall be such an officer, shall, if present, preside at all meetings of the Board of Directors, and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by these bylaws.

Section 4.3 Chief Executive Officer. The Chief Executive Officer of the Corporation shall, subject to the direction of the Board of Directors, have general supervision, direction and control of the business and the officers of the Corporation. He shall preside at all meetings of the stockholders and, in the absence or nonexistence of a Chairman of the Board of Directors, at all meetings of the Board of Directors, He shall have the general powers and duties of management usually vested in the chief executive officer of a corporation, including general supervision, direction and control of the business and supervision of other officers of the Corporation, and shall such other powers and duties as may be prescribed by the Board of Directors or these Bylaws.

Section 4.4 President. Subject to the direction of the Board of Directors and such supervisory powers as may be given by these Bylaws or the Board of Directors to the Chairman of the Board of Directors or the Chief Executive Officer, if such titles are helf by other officers, the President shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers which are delegated to him or her by the Board of Directors. He or she shall have power to sign all stock certificates, contracts and other instruments of the Corporation which are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the Corporation, other than the Chairman of the Board of Directors and the Chief Executive Officer. Unless otherwise designated by the Board of Directors, the President shall be the Chief Executive Officer of the Corporation.

Section 4.5 Vice President. Each Vice President shall have such powers and duties as may be delegated to him or her by the Board of Directors. One Vice President shall be designated by the Board of Directors to perform the duties and exercise the powers of the President in the event of the President’s absence or disability.

Section 4.6 Treasurer. Unless otherwise designated by the Board of Directors, the Chief Financial Officer of the Corporation shall be the Treasurer. The Treasurer shall have the responsibility for maintaining the financial records of the Corporation and shall have custody of all monies and securities of the Corporation. He or she shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions and of the financial condition of the Corporation. The Treasurer shall also perform such other duties as the Board of Directors may from time to time prescribe.

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Section 4.7 Secretary. The Secretary shall issue all authorized notices for, and shall keep, or cause to be kept, minutes of all meetings of the stockholders, the Board of Directors, and all committees of the Board of Directors. He or she shall have charge of the corporate books and shall perform such other duties as the Board of Directors may from time to time prescribe.

Section 4.8 Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

Section 4.9 Removal. Any officer of the Corporation may be removed at any time, with or without cause, by the Board of Directors.

Section 4.10 Action With Respect to Securities of Other Corporations. Unless otherwise directed by the Board of Directors, the President or any officer of the Corporation authorized by the President shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation.

ARTICLE V

STOCK

Section 5.1 Certificates of Stock. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution(s) that some or all of any class or series of its stock shall be uncertificated shares; provided, however, that no such resolution shall apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Each holder of stock represented by certificates shall be entitled to a certificate signed by, or in the name of the Corporation by, the President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, certifying the number of shares owned by him or her. Any of or all the signatures on the certificate may be facsimile.

Section 5.2 Transfers of Stock. Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article V of these bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor in the case of shares represented by a certificate, and in the case of uncertificated shares, upon the receipt of proper transfer instructions from the registered owner thereof.

Section 5.3 Record Date. The Board of Directors may fix a record date, which shall not be more than sixty (60) nor fewer than ten (10) days before the date of any meeting of stockholders, nor more than sixty (60) days prior to the time for the other action hereinafter described, as of which there shall be determined the stockholders who are entitled: to notice of or to vote at any meeting of stockholders or any adjournment thereof; to receive payment of any dividend or other distribution or allotment of any rights; or to exercise any rights with respect to any change, conversion or exchange of stock or with respect to any other lawful action.

Section 5.4 Lost, Stolen or Destroyed Certificates. In the event of the loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to such regulations as the Board of Directors may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity, or it may issue uncertificated shares if the shares represented by such certificate have been designated as uncertificated shares in accordance with Section 5.1.

Section 5.5 Regulations. The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.

ARTICLE VI

NOTICES

Section 6.1 Notices. Except as otherwise specifically provided herein or required by law, all notices required to be given to any stockholder, director, officer, employee or agent shall be in writing and may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage paid, or by sending such notice by prepaid telegram, mailgram, telecopy or commercial courier service. Any such notice shall be addressed to such stockholder, director, officer, employee or agent at his or her last known address as the same appears on the books of the Corporation. The time when such notice shall be deemed to be given shall be the time such notice is received by such stockholder, director, officer, employee or agent, or by any person accepting such notice on behalf of such person, if hand delivered, or the time such notice is dispatched, if delivered through the mails or be telegram or mailgram.

Section 6.2 Waivers. A written waiver of any notice, signed by a stockholder, director, officer, employee or agent, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such stockholder, director, officer, employee or agent. Neither the business nor the purpose of any meeting need be specified in such a waiver.

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ARTICLE VII

MISCELLANEOUS

Section 7.1 Facsimile Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

Section 7.2 Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.

Section 7.3 Reliance Upon Books, Reports and Records. Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation, including reports made to the Corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care.

Section 7.4 Fiscal Year. The fiscal year of the Corporation shall be as fixed by the Board of Directors.

Section 7.5 Time Periods. In applying any provision of these bylaws which require that an act be done or not done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.

ARTICLE VIII

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 8.1 Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (“proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative, is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer or employee of another corporation, or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer or employee or in any other capacity while serving as a director, officer or employee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by Delaware Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment) against all expenses, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties, amounts paid or to be paid in settlement and amounts expended in seeking indemnification granted to such person under applicable law, this bylaw or any agreement with the Corporation) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer or employee and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in Section 8.2 of this Article VIII, the Corporation shall indemnify any such person seeking indemnity in connection with an action, suit or proceeding (or part thereof) initiated by such person only if (a) such indemnification is expressly required to be made by law, (b) the action, suit or proceeding (or part thereof) was authorized by the Board of Directors of the Corporation, (c) such indemnification is provided by the Corporation, in its sole discretion, pursuant to the powers vested in the Corporation under the Delaware General Corporation Law, or (d) the action, suit or proceeding (or part thereof) is brought to establish or enforce a right to indemnification under an indemnity agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law. Such right shall be a contract right and shall include the right to be paid by the Corporation expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, unless the Delaware General Corporation Law then so prohibits, the payment of such expenses incurred by a director or officer of the Corporation in his or her capacity as a director or officer (and not in any other capacity in which service was or is tendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of such proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it should be determined ultimately that such director or officer is not entitled to be indemnified under this Section or otherwise.

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Section 8.2 Right of Claimant to Bring Suit. If a claim under Section 1 of this Article VIII is not paid in full by the Corporation within ninety (90) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if such suit is not frivolous or brought in bad faith, the claimant shall be entitled to be paid also the expense of prosecuting such claim. The burden of proving such claim shall be on the claimant. It shall be a defense to any such action (other then an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to this Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct.

Section 8.3 Non-Exclusivity of Rights. The rights conferred on any person in Sections 1 and 2 of this Article VIII shall not be exclusive of any other right which such persons may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

Section 8.4 Indemnification Contracts. The Board of Directors is authorized to enter into a contract with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing for indemnification rights equivalent to or, if the Board of Directors so determines, greater than, those provided for in this Article VIII.

Section 8.5 Insurance. The Corporation shall maintain insurance to the extent reasonably available, at its expense, to protect itself and any such director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

Section 8.6 Effect of Amendment. Any amendment, repeal or modification of any provision of this Article VIII by the stockholders and the directors of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such amendment, repeal or modification.

ARTICLE IX

AMENDMENTS

Section 9.1 Amendment of Bylaws. The Board of Directors is expressly empowered to adopt, amend or repeal Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment or repeal is presented to the Board of Directors). The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of By-Laws of the Corporation by the stockholders shall require, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

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CERTIFICATE OF SECRETARY

I hereby certify that I am the duly elected and acting Secretary of P.F. Chang’s China Bistro, Inc., a Delaware corporation (the “Corporation”), and that the foregoing Bylaws, comprising fourteen (14) pages, constitute the Bylaws of the Corporation as duly adopted by the Board of Directors of the Corporation on October 19, 2007.

IN WITNESS WHEREOF, I have hereunto subscribed my name on October 19, 2007.

/s/ Tracy Durchslag               
Tracy Durchslag, Secretary

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Table of Contents

	Page
ARTICLE I STOCKHOLDERS		1
Section 1.1 Annual Meeting		1
Section 1.2 Special Meetings		1
Section 1.3 Notice of Meetings		1
Section 1.4 Quorum		1
Section 1.5 Conduct of the Stockholders’ Meeting		1
Section 1.6 Conduct of Business		2
Section 1.7 Notice of Stockholder Business		2
Section 1.8 Proxies and Voting		2
Section 1.9 Stock List		3
Section 1.10 Action by Written Consent		3
ARTICLE II BOARD OF DIRECTORS		3
Section 2.1 Number of Term of Office		3
Section 2.2 Vacancies and Newly Created Directorships		3
Section 2.3 Removal		3
Section 2.4 Regular Meeting		4
Section 2.5 Special Meetings		4
Section 2.6 Quorum		4
Section 2.7 Participation in Meetings by Conference Telephone		4
Section 2.8 Conduct of Business		4
Section 2.9 Powers		4
Section 2.10 Compensation of Directors		4
Section 2.11 Nomination of Director Candidates		5
Section 2.12 Submission of Questionnaire, Representation and Agreement		5
ARTICLE III COMMITTEES		5
Section 3.1 Committees of the Board of Directors		5
Section 3.2 Conduct of Business		6
ARTICLE IV OFFICERS		6
Section 4.1 Generally		6
Section 4.2 Chairman of the Board of Directors		6
Section 4.3 Chief Executive Officer		6
Section 4.4 President		6
Section 4.5 Vice President		6
Section 4.6 Treasurer		6
Section 4.7 Secretary		7
Section 4.8 Delegation of Authority		7
Section 4.9 Removal		7
Section 4.10 Action With Respect to Securities of Other Corporations		7
ARTICLE V STOCK		7
Section 5.1 Certificates of Stock		7
Section 5.2 Transfers of Stock		7
Section 5.3 Record Date		7
Section 5.4 Lost, Stolen or Destroyed Certificates		7
Section 5.5 Regulations		7
ARTICLE VI NOTICES		7
Section 6.1 Notices		7
Section 6.2 Waivers		7
ARTICLE VII MISCELLANEOUS		8

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Table of Contents
(continued)

	Page
Section 7.1 Facsimile Signatures		8
Section 7.2 Corporate Seal		8
Section 7.3 Reliance Upon Books, Reports and Records		8
Section 7.4 Fiscal Year		8
Section 7.5 Time Periods		8
ARTICLE VIII INDEMNIFICATION OF DIRECTORS AND OFFICERS		8
Section 8.1 Right to Indemnification		8
Section 8.2 Right of Claimant to Bring Suit		9
Section 8.3 Non-Exclusivity of Rights		9
Section 8.4 Indemnification Contracts		9
Section 8.5 Insurance		9
Section 8.6 Effect of Amendment		9
ARTICLE IX AMENDMENTS		9
Section 9.1 Amendment of Bylaws		9

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