EX-99.1 2 a07-27377_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

PRESS RELEASE

 

THE CHEESECAKE FACTORY REPORTS RESULTS FOR

THIRD QUARTER OF FISCAL 2007

Company Announces Fiscal 2008 Growth Plan

 

FOR IMMEDIATE RELEASE

CONTACT:  JILL PETERS

 

(818) 871-3000

 

Calabasas Hills, CA — October 23, 2007 — The Cheesecake Factory Incorporated (Nasdaq: CAKE) today reported financial results for the third quarter of fiscal 2007, which ended on October 2, 2007.

 

Total revenues increased 15.4% to $375.5 million from $325.3 million in the third quarter of fiscal 2006.  Net income and diluted net income per share were $18.5 million and $0.26, respectively.

 

Operating Results

 

Comparable restaurant sales increased 1.2% in the third quarter of fiscal 2007.  By concept, comparable restaurant sales increased approximately 1.0% at The Cheesecake Factory and increased 4.8% at Grand Lux Cafe in the third quarter of fiscal 2007.

 

“Our comparable sales performance in the third quarter remained relatively consistent with the trends we experienced during the first half of this year.  We attained positive comparable sales again this quarter with only a modest level of menu price increases and our operators did a particularly good job in managing labor costs.  We continue to believe that we are performing at a competitively strong level and have effectively managed to maintain an excellent value proposition for our guests while protecting our margins against the cost pressures facing all restaurant operators,” said David Overton, Chairman and CEO.  “In addition, Grand Lux Cafe once again delivered solid performance, especially in light of lapping a very strong 6.7% comparable sales growth in the third quarter of last year.”

 

New Restaurant Openings

 

The Company opened six Cheesecake Factory restaurants and one Grand Lux Cafe during the third quarter, and remains on track to open eight Cheesecake Factory restaurants and three Grand Lux Cafes during the fourth quarter of fiscal 2007.  In total, the Company expects to open 21 new restaurants in fiscal 2007, in-line with its stated guidance.

 

 

 

 

The Cheesecake Factory Incorporated

26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100

 

 

 


 

“Our fourth quarter openings are well underway with new Cheesecake Factory restaurants in both Peabody and Natick, Massachusetts already opened.  Over the next two weeks, we plan to open Cheesecake Factory restaurants in Tukwila, Washington, a suburb of Seattle; Salt Lake City, Utah, our first location in Utah; and West Hartford, Connecticut, another new state for us.

 

“As we noted at the start of the year, a large number of our targeted openings in 2007 are located in the Northeast.  As expected, the locations opened to date in this region have delivered strong performance.  As a group, our new restaurants in the Northeast have experienced average weekly sales in excess of $250,000 since opening,” continued Overton.

 

Fiscal 2008 Growth Plan

 

The Company also announced its preliminary growth plan for fiscal 2008, which is aimed at continued expansion of its concepts in high-quality locations, returning cash to stockholders through share repurchases and managing its business to drive improvement in the Company’s operating income margin.

 

The Company plans to open as many as 17 new restaurants in fiscal 2008 consisting of as many as 12 to 13 Cheesecake Factory restaurants, three to four Grand Lux Cafes and one Rock Sugar Pan Asian Kitchen, the Company’s newest concept.

 

As a result of this plan, the Company’s goal is to achieve the following key objectives:

 

•                  Capitalizing on a full pipeline of premier locations to achieve its development target in fiscal 2008 while simultaneously positioning the Company to smooth out its new restaurant opening schedule in fiscal 2009 and beyond. This is intended to reduce the heavy concentration of openings in the second half of the year;

•                  Reducing total cash capital expenditures in fiscal 2008 by approximately 20% to an estimated range of $160 million to $170 million.  The reduction will come from building fewer new restaurants and also from building more efficient, less capital intensive Grand Lux Cafes. The Company believes this will enable it to generate free cash flow of approximately $60 million to $70 million, which it expects to employ in support of share repurchases under its existing 4.7 million-share repurchase authorization; and

•                  Improvement in the Company’s operating income margin of approximately 30 to 50 basis points in fiscal 2008 as a result of lower preopening costs and increased leverage of general and administrative (G&A) expenses.

 

“Our plan for fiscal 2008 contains both operational and financial advantages that are intended to benefit the Company and our stockholders for the next several years,” continued Overton.  “We will continue our growth next year through the addition of 17 new restaurants and also establish the foundation to open new restaurants at a more even pace throughout the year, beginning in fiscal 2009.  This effort further reinforces the strong growth plan we have in place for The Cheesecake Factory, anchored by the previously identified 60 to 70 high-quality locations of the size and scope we are building today.

 

 “We are meeting a number of objectives that we established for ourselves with this plan, including lowering our capital investment costs for Grand Lux Cafe, continuing to actively repurchase shares and improving our operating margins,” concluded Overton.

 

 

 

 

The Cheesecake Factory Incorporated

26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100

 

 

 


 

Conference Call and Webcast

 

A conference call to review the Company’s results for the third quarter of fiscal 2007 and discuss its growth plan for fiscal 2008 will be held on Tuesday, October 23, 2007 at 2:00 p.m. Pacific Time.  The conference call will be broadcast live over the Internet and an archived replay will be available shortly after the call and continue through November 22, 2007.  To listen to the conference call, please go to the Company’s website at thecheesecakefactory.com at least 15 minutes prior to the call to register and download any necessary audio software.  Click on the “Investors” link on the home page, and select the link for the “Q3 2007 The Cheesecake Factory Earnings Conference Call” 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 133 restaurants throughout the U.S. under The Cheesecake Factoryâ name with an extensive menu of more than 200 items and average annual unit sales of approximately $10.6 million.  Grand Lux Cafeâ, the Company’s second concept, has ten units in operation across the U.S. offering a broad menu of more than 150 items and average annual unit sales of approximately $12.6 million.  The Company also operates two bakery production facilities in Calabasas Hills, CA and Rocky Mount, NC that produce over 50 varieties of quality cheesecakes and other baked products.  Additionally, the Company operates one self-service, limited menu express foodservice operation and licenses two bakery cafe outlets to another foodservice operator.  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.  Forward-looking statements regarding the Company’s plans to reduce cash capital expenditures are also subject to risks and uncertainties due to factors outside the Company’s control, including its ability to achieve its plans to build less capital intensive Grand Lux Cafes.  Approximately 4.7 million shares of the Company’s common stock may be purchased under the Company’s previously announced 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 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

 

 

 

 

The Cheesecake Factory Incorporated

26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100

 

 

 

 


 

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

26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100

 

 

 

 

 

 


 

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
October 2, 2007

 

13 Weeks Ended
October 3, 2006

 

39 Weeks Ended
October 2, 2007

 

39 Weeks Ended
October 3, 2006

 

 

Amounts

 

Percent of Revenue

 

Amounts

 

Percent of
Revenue

 

Amounts

 

Percent of Revenue

 

Amounts

 

Percent of Revenue

Revenues

 

$

375,536

 

100.0

%

$

325,337

 

100.0

%

$

1,105,286

 

100.0

%

$

954,629

 

100.0

%

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

92,849

 

24.7

%

81,420

 

25.0

%

274,692

 

24.9

%

238,742

 

25.0

%

Labor expenses

 

120,798

 

32.2

%

104,931

 

32.3

%

360,334

 

32.6

%

306,594

 

32.1

%

Other operating costs and expenses

 

89,551

 

23.9

%

77,072

 

23.7

%

259,544

 

23.5

%

223,411

 

23.4

%

General and administrative expenses

 

19,993

 

5.3

%

18,418

 

5.7

%

59,702

 

5.4

%

50,924

 

5.3

%

Depreciation and amortization expenses

 

15,844

 

4.2

%

13,465

 

4.1

%

46,867

 

4.2

%

38,859

 

4.1

%

Preopening costs

 

8,668

 

2.3

%

5,369

 

1.6

%

15,476

 

1.4

%

12,916

 

1.4

%

Total costs and expenses

 

347,703

 

92.6

%

300,675

 

92.4

%

1,016,615

 

92.0

%

871,446

 

91.3

%

Income from operations

 

27,833

 

7.4

%

24,662

 

7.6

%

88,671

 

8.0

%

83,183

 

8.7

%

Interest (expense)/
income, net

 

(1,837

)

(0.5

)%

1,044

 

0.3

%

(2,912

)

(0.3

)%

3,545

 

0.4

%

Other income, net

 

277

 

0.1

%

168

 

0.1

%

816

 

0.1

%

1,969

 

0.2

%

Income before income taxes

 

26,273

 

7.0

%

25,874

 

8.0

%

86,575

 

7.8

%

88,697

 

9.3

%

Income tax provision

 

7,749

 

2.1

%

7,747

 

2.4

%

25,937

 

2.3

%

27,851

 

2.9

%

Net income

 

$

18,524

 

4.9

%

$

18,127

 

5.6

%

$

60,638

 

5.5

%

$

60,846

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

 

$

0.26

 

 

 

$

0.23

 

 

 

$

0.83

 

 

 

$

0.78

 

 

 

Basic weighted average shares outstanding

 

71,395

 

 

 

77,757

 

 

 

73,401

 

 

 

78,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per share

 

$

0.26

 

 

 

$

0.23

 

 

 

$

0.81

 

 

 

$

0.76

 

 

 

Diluted weighted average shares outstanding

 

72,336

 

 

 

78,695

 

 

 

74,483

 

 

 

$

79,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Segment Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurants

 

$

362,435

 

 

 

$

311,627

 

 

 

 

$

1,064,797

 

 

 

 

$

913,633

 

 

 

Bakery

 

26,096

 

 

 

24,495

 

 

 

76,536

 

 

 

71,198

 

 

 

Intercompany bakery sales

 

(12,995

)

 

 

(10,785

) 

 

 

(36,047

)

 

 

(30,202

)

 

 

 

 

$

375,536

 

 

 

$

325,337

 

 

 

 

$

1,105,286

 

 

 

 

$

954,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurants

 

$

45,105

 

 

 

$

40,731

 

 

 

 

$

140,464

 

 

 

 

$

127,796

 

 

 

Bakery

 

3,897

 

 

 

3,936

 

 

 

11,700

 

 

 

10,779

 

 

 

Corporate

 

(21,169

)

 

 

(20,005

) 

 

 

(63,493

) 

 

 

(55,392

) 

 

 

 

 

$

27,833

 

 

 

$

24,662

 

 

 

 

$

88,671

 

 

 

 

$

83,183

 

 

 

 

Selected Consolidated Balance Sheet Information

 

October 2, 2007

 

January 2, 2007

Cash and cash equivalents

 

$

22,417

 

$

44,790

Investments and marketable securities

 

37,786

 

89,524

Total assets

 

1,085,813

 

1,039,731

Total liabilities

 

491,295

 

328,189

Stockholders' equity

 

594,518

 

711,542

 

 

 

13 Weeks Ended

 

13 Weeks Ended

 

39 Weeks Ended

 

39 Weeks Ended

 

Supplemental Information

 

October 2, 2007

 

October 3, 2006

 

October 2, 2007

 

October 3, 2006

 

Comparable restaurant sales percentage change (1)

 

1.2

%

(1.6

)%

0.9

%

(1.2

)%

Restaurants opened during period

 

7

 

4

 

10

 

8

 

Restaurants open at period-end

 

142

 

119

 

142

 

119

 

Restaurant operating weeks

 

1,780

 

1,509

 

5,240

 

4,429

 

(1) Includes Cheesecake Factory restaurants and Grand Lux Cafes 

 

###

 

 

The Cheesecake Factory Incorporated

26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100