CALABASAS HILLS, Calif.--(BUSINESS WIRE)--July 24, 2008--The
Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported
financial results for the second quarter of fiscal 2008, which ended
on July 1, 2008.
Total revenues increased 9% to $407.1 million in the second
quarter of fiscal 2008 from $373.2 million in the prior year second
quarter. Net income and diluted net income per share were $19.1
million and $0.29, respectively.
Second quarter fiscal 2008 net income and diluted net income per
share include the following items: (1) A reduction in after-tax
stock-based compensation expense of $1.6 million reflecting an
increase in the Company's estimated rate of forfeited stock options;
(2) An increase in income tax expense of $2.2 million in taxes and
interest relating to the potential disallowance of the deductibility
of certain executive compensation under the provisions of Internal
Revenue Code Section 162(m); and (3) A decrease in income tax expense
of $2.4 million relating to Internal Revenue Service approval of the
Company's application for a change in accounting for construction
allowances.
Operating Results
Comparable restaurant sales decreased approximately 4.1% in the
second quarter of fiscal 2008 from the prior year second quarter.
By concept, comparable restaurant sales decreased an estimated
4.1% and 4.5% at The Cheesecake Factory and Grand Lux Cafe,
respectively, in the second quarter of fiscal 2008 from the prior year
second quarter.
"We remain focused on executing against our business plan and
controlling our costs, as well as strengthening our infrastructure by
adding to our talented management team," said David Overton, Chairman
and CEO. "Similar to most other casual dining operators, we continue
to face headwinds from the current macroeconomic environment and are
taking action to mitigate the impact of these conditions.
"Furthermore, during the second quarter we made a number of
enhancements to our senior management team with appointments to newly
created leadership positions in restaurant operations, kitchen
operations and marketing. Our management depth in these areas will
further support our commitment to guest satisfaction and assist our
efforts to continue building our brand in high-quality ways. In
addition, we were again active in returning capital to shareholders
through our ongoing share repurchase program," added Overton.
Stock Repurchases
The Company repurchased approximately 2.4 million shares of its
common stock during the second quarter of fiscal 2008 at a total cost
of approximately $52 million as part of its previously announced
fiscal 2008 business plan, which includes estimated share repurchases
of between $150 million and $200 million. In the first half of fiscal
2008, the Company repurchased shares totaling approximately $97
million and has 12.9 million shares remaining under its 31 million
share authorization.
Targeted New Restaurant Openings
As planned, the Company opened four Cheesecake Factory restaurants
and the initial unit of its newest concept, RockSugar Pan Asian
Kitchen, during the second quarter of fiscal 2008. The Company
anticipates opening two Cheesecake Factory restaurants in the fourth
quarter of fiscal 2008, for a total of seven new restaurants this
year, in-line with its expectations.
"We had a few particularly strong openings during the second
quarter," continued Overton. "The two Cheesecake Factory restaurants
that opened in California, in Glendale and Roseville, have delivered
combined average weekly sales in excess of $250,000 since opening.
These are strong numbers by any account, but are especially noteworthy
in the current consumer environment, highlighting the strength of our
brand. In addition, the response to RockSugar Pan Asian Kitchen has
been excellent with average weekly sales in excess of $205,000 since
opening, which is a very solid performance for a new concept and for a
restaurant that is relatively smaller in size at approximately 7,600
square feet," concluded Overton.
Conference Call and Webcast
A conference call to review the results for the second quarter of
fiscal 2008 will be held on Thursday, July 24, 2008 at 10:00 a.m.
Pacific Time. The conference call will be broadcast live over the
Internet and a replay will be available shortly after the call and
continue through August 23, 2008. To listen to the conference call,
please go to the Company's website at thecheesecakefactory.com at
least 15 minutes prior to the start of the call to register and
download any necessary audio software. Click on the "Investors" link
on the home page, and select the link at the top of the page.
About The Cheesecake Factory Incorporated
The Cheesecake Factory Incorporated created the upscale casual
dining segment in 1978 with the introduction of its namesake concept
and continues to define it today with the two highest productivity
concepts in the industry. The Company operates 143 restaurants
throughout the U.S. under The Cheesecake Factory(R) name with an
extensive menu of more than 200 items and fiscal 2007 average annual
unit sales of approximately $10.4 million. Grand Lux Cafe(R), the
Company's second concept, has 13 units in operation across the U.S.
offering a broad menu of more than 150 items and average annual unit
sales of approximately $12.7 million in fiscal 2007. The Company also
operates one unit of its newest concept, RockSugar Pan Asian
Kitchen(TM), and two bakery production facilities in Calabasas Hills,
CA and Rocky Mount, NC that produce over 60 varieties of quality
cheesecakes and other baked products. Additionally, the Company
licenses two bakery cafe outlets to another foodservice operator under
The Cheesecake Factory Bakery Cafe(R) mark. For more information,
please visit thecheesecakefactory.com.
Safe Harbor Statement
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements in this release are generally identified by
words, such as "believes," "anticipates," "plans," "expects," "will,"
and "would," and similar expressions that are intended to identify
forward-looking statements. Forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by forward-looking statements.
Investors are cautioned that forward-looking statements are not
guarantees of future performance and that undue reliance should not be
placed on such statements. In particular, forward-looking statements
regarding the Company's restaurant sales trends are subject to risks
and uncertainties due to national and regional economic and public
safety conditions that impact consumer confidence and spending, as
well as weather and other factors outside of the Company's control.
Forward-looking statements regarding the number and timing of the
Company's planned new restaurant openings are subject to risks and
uncertainties due to factors outside of the Company's control,
including factors that are under the control of government agencies,
landlords and others. Approximately 12.9 million shares of the
Company's common stock may be purchased under the Company's share
repurchase authorization. This authorization does not require the
Company to purchase a specific number of shares and it may be
modified, suspended or terminated at any time. The timing and number
of shares repurchased, if any, pursuant to the share repurchase
authorization will be subject to a number of factors, including
current market conditions, legal constraints and available cash or
other sources of funding. Forward-looking statements speak only as of
the dates on which they were made. The Company undertakes no
obligation to publicly update or revise any forward-looking statements
or to make any other forward-looking statements, whether as a result
of new information, future events or otherwise unless required to do
so by the securities laws. Investors are referred to the full
discussion of risks and uncertainties associated with forward-looking
statements and the discussion of risk factors contained in the
Company's filings with the Securities and Exchange Commission. These
filings are available on a website maintained by the Securities and
Exchange Commission at www.sec.gov.
The Cheesecake Factory Incorporated and Subsidiaries
Consolidated Financial Statements
(unaudited; in thousands, except per share and statistical data)
Consolidated Statements of
Operations 13 Weeks Ended 13 Weeks Ended
July 1, 2008 July 3, 2007
-------------------------------------------------- ------------------
Percent Percent
of of
Amounts Revenue Amounts Revenue
--------- -------- --------- --------
Revenues $407,134 100.0% $373,167 100.0%
Costs and expenses:
Cost of sales 104,540 25.7% 92,283 24.7%
Labor expenses 133,192 32.7% 120,696 32.3%
Other operating costs and
expenses 96,243 23.6% 85,199 22.9%
General and administrative
expenses 20,211 5.0% 20,237 5.4%
Depreciation and
amortization expenses 18,361 4.5% 15,633 4.2%
Preopening costs 4,619 1.1% 3,724 1.0%
--------- -------- --------- --------
Total costs and expenses 377,166 92.6% 337,772 90.5%
--------- -------- --------- --------
Income from operations 29,968 7.4% 35,395 9.5%
Interest expense (4,080) (1.0)% (3,058) (0.8)%
Interest income 596 0.1% 1,398 0.3%
Other income, net 61 0.0% 272 0.1%
--------- -------- --------- --------
Income before income taxes 26,545 6.5% 34,007 9.1%
Income tax provision 7,444 1.8% 10,299 2.7%
--------- -------- --------- --------
Net income 19,101 4.7% 23,708 6.4%
========= ======== ========= ========
Basic net income per share $ 0.29 $ 0.33
========= =========
Basic weighted average shares
outstanding 65,474 71,786
========= =========
Diluted net income per share $ 0.29 $ 0.33
========= =========
Diluted weighted average
shares outstanding 65,916 72,818
========= =========
Selected Segment Information
-------------------------------
Revenues:
Restaurants 392,604 $359,281
Bakery 26,736 25,500
Intercompany bakery sales (12,206) (11,614)
--------- ---------
407,134 $373,167
========= =========
Income from operations:
Restaurants 46,510 $ 53,238
Bakery 2,963 3,696
Corporate (19,505) (21,539)
--------- ---------
29,968 $ 35,395
========= =========
Consolidated Statements of
Operations 26 Weeks Ended 26 Weeks Ended
July 1, 2008 July 3, 2007
--------------------------------------------------- ------------------
Percent Percent
of of
Amounts Revenue Amounts Revenue
--------- -------- --------- --------
Revenues $800,937 100.0% $729,750 100.0%
Costs and expenses:
Cost of sales 205,279 25.6% 181,843 24.9%
Labor expenses 265,715 33.2% 239,536 32.8%
Other operating costs and
expenses 192,141 24.0% 169,993 23.3%
General and administrative
expenses 40,554 5.1% 39,709 5.5%
Depreciation and amortization
expenses 36,454 4.5% 31,023 4.3%
Preopening costs 7,105 0.9% 6,808 0.9%
--------- -------- --------- --------
Total costs and expenses 747,248 93.3% 668,912 91.7%
--------- -------- --------- --------
Income from operations 53,689 6.7% 60,838 8.3%
Interest expense (7,619) (0.9)% (4,105) (0.5)%
Interest income 1,118 0.1% 3,030 0.4%
Other income, net (114) 0.0% 539 0.1%
--------- -------- --------- --------
Income before income taxes 47,074 5.9% 60,302 8.3%
Income tax provision 13,644 1.7% 18,188 2.5%
--------- -------- --------- --------
Net income 33,430 4.2% 42,114 5.8%
========= ======== ========= ========
Basic net income per share $ 0.50 $ 0.57
========= =========
Basic weighted average shares
outstanding 66,792 74,404
========= =========
Diluted net income per share $ 0.50 $ 0.56
========= =========
Diluted weighted average shares
outstanding 67,240 75,522
========= =========
Selected Segment Information
---------------------------------
Revenues:
Restaurants 771,288 $702,362
Bakery 53,819 50,440
Intercompany bakery sales (24,170) (23,052)
--------- ---------
800,937 $729,750
========= =========
Income from operations:
Restaurants 88,575 $ 95,359
Bakery 6,046 7,803
Corporate (40,932) (42,324)
--------- ---------
53,689 $ 60,838
========= =========
Selected Consolidated Balance Sheet July 1, 2008 January 1, 2008
Information
---------------------------------------------------- ---------------
Cash and cash equivalents $ 93,784 $ 36,867
Investments and marketable
securities 1,001 12,362
Total assets 1,143,630 1,145,753
Long-term debt 275,000 175,000
Total liabilities 633,998 582,827
Stockholders' equity 509,632 562,926
13 13 26 26
Weeks Weeks Weeks Weeks
Ended Ended Ended Ended
Supplemental Information July 1, July 3, July 1, July 3,
2008 2007 2008 2007
---------------------------------------------- ------- ------- -------
Comparable restaurant sales percentage
change (1) -4.1% 1.1% -3.1% 0.8%
Restaurants opened during period 5 2 5 3
Restaurants open at period-end (2) 157 135 157 135
Restaurant operating weeks (2) 2,005 1,740 3,993 3,460
(1) Includes The Cheesecake Factory and Grand Lux Cafe
(2) Includes The Cheesecake Factory, Grand Lux Cafe and RockSugar Pan
Asian Kitchen
CONTACT: The Cheesecake Factory Incorporated
Jill Peters, (818) 871-8342
jpeters@thecheesecakefactory.com
SOURCE: The Cheesecake Factory Incorporated