The Cheesecake Factory and Grand Lux Cafe Q4 2011 Increased 2.7%

The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the fourth quarter of fiscal 2011, which ended on January 3, 2012.

“Continued focus on an exceptional guest experience will be a key to extending our market share, and we expect that 2012 will represent our third consecutive year of comparable sales and guest traffic growth.”

Total revenues were $477.7 million in the fourth quarter of fiscal 2011 as compared to $416.7 million in the prior year fourth quarter (14 weeks vs. 13 weeks). The additional week in the fourth quarter of fiscal 2011 contributed approximately $43 million of sales. Net income and diluted net income per share were $29.9 million and $0.54, respectively.

In compliance with accounting rules, the Company recorded a pre-tax, non-cash charge of $1.5 million related to the impairment of three restaurants during the fourth quarter of fiscal 2011. In addition, the Company recorded a pre-tax benefit of $0.7 million and a reduction to its income tax provision of $1.1 million, both related to a partial settlement with the Internal Revenue Service. On a combined basis, the items above increased diluted net income per share by approximately $0.01. Excluding these items, net income was $29.4 million and diluted net income per share was $0.53.

Operating Results

Comparable restaurant sales at The Cheesecake Factory and Grand Lux Cafe increased 2.7% in the fourth quarter of fiscal 2011 (14 weeks vs. 14 weeks). By concept, comparable restaurant sales grew 2.7% at The Cheesecake Factory and 1.9% at Grand Lux Cafe.

“We delivered our best comparable sales and highest guest traffic levels of the year, driving 36 percent earnings per share growth. The Cheesecake Factory offers the strongest, most consistent guest experience in the industry – and our numbers confirm it. We have always been an operating company, and over the past few years, our level of excellence in food, service and overall execution has become even better, further separating our concept from others in the industry. This places us in an extremely strong competitive position,” said David Overton, Chairman and CEO.

“Continued focus on an exceptional guest experience will be a key to extending our market share, and we expect that 2012 will represent our third consecutive year of comparable sales and guest traffic growth.

“This year also marks the beginning of our global expansion, which will be an important component to our future earnings potential, adding to our confidence that mid-teens earnings per share growth is a realistic and achievable goal going forward,” concluded Overton.

Development

The Company now expects it will open as many as seven to eight new restaurants in the U.S. in fiscal 2012. In addition, the Company expects that as many as three restaurants in the Middle East will open this year under a license agreement.

Capital Allocation

During the fourth quarter of fiscal 2011, the Company repurchased 973,243 shares of its common stock at a cost of approximately $27 million. For the full year of fiscal 2011, the Company repurchased 5,992,024 shares, returning approximately $172 million in cash to shareholders, exceeding its plan for the year.

Financial Reporting Dates for Fiscal 2012

The Company plans to announce quarterly financial results and hold conference calls to discuss its results for the first three quarters of fiscal 2012 as outlined below. The earnings press releases will be issued at approximately 1:15 p.m. Pacific Time and the conference calls will follow at 2:00 p.m. Pacific Time on the same day. Dates and times could be subject to change.

About The Cheesecake Factory Incorporated

The Cheesecake Factory Incorporated created the upscale casual dining segment in 1978 with the introduction of its namesake concept. The Company operates 170 full-service, casual dining restaurants throughout the U.S., including 156 restaurants under The Cheesecake Factory® mark; 13 restaurants under the Grand Lux Cafe® mark; and one restaurant under the RockSugar Pan Asian Kitchen® mark. The Company also operates two bakery production facilities in Calabasas Hills, CA and Rocky Mount, NC that produce over 70 varieties of quality cheesecakes and other baked products. 

Reconciliation of Non-GAAP Results to GAAP Results

In addition to the results provided in accordance with Generally Accepted Accounting Principles ("GAAP") in this press release, the Company is providing non-GAAP measurements which present the fourth quarter and full year fiscal 2011 and fiscal 2010 net income and diluted net income per share excluding the impact from certain items. Additional detail regarding the fourth quarter fiscal 2011 items can be found on the first page of this press release.

The non-GAAP measurements are intended to supplement the presentation of the Company’s financial results in accordance with GAAP. The Company believes that the presentation of these items provides additional information to facilitate the comparison of past and present financial results.

(1) The pre-tax amount associated with this item was $1,547 and was recorded in impairment of assets.

(2) The pre-tax amounts associated with this item were $719 and $1,075 and were recorded in interest income and income tax provision, respectively.

(3) The pre-tax amount associated with this item was $7,376 and was recorded in interest expense.

(4) Diluted net income per share may not add due to rounding.

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