UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549  

FORM 8-K  

CURRENT REPORTPursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934 

Date of report (Date of earliest event reported): April 23, 2018 

 

THE CHEESECAKE FACTORY INCORPORATED(Exact Name of Registrant as Specified in Charter)

   

Delaware 

0-20574 

51-0340466(State or Other Jurisdiction 

of Incorporation) 

(Commission File Number)

 

(I.R.S. Employer Identification No.)

 26901 Malibu Hills Road

Calabasas Hills, California 91301(Address of Principal Executive Offices)

 Registrant’s Telephone Number, Including Area Code (818) 871-3000

 Not Applicable

(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 followingprovisions ( see General Instruction A.2. below): 

o      Written communication 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 communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 

o      Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))  Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) orRule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 

 ITEM 2.02        RESULTS OF OPERATIONS AND FINANCIAL CONDITION. 

The following information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.”This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before orafter the date of this report, regardless of any general incorporation language in the filing. 

In  a  press  release  dated  April  25,  2018,  a  copy  of  which  is  furnished  as  Exhibit  99.1  to  this  report,  The  Cheesecake  FactoryIncorporated (the “Company”) reported financial results for the first quarter of fiscal 2018. 

Total revenues were $590.7 million in the first quarter of fiscal 2018 as compared to $563.4 million in the first quarter of fiscal 2017.Net income and diluted net income per share were $26.0 million and $0.56, respectively, in the first quarter of fiscal 2018. 

Comparable restaurant sales at The Cheesecake Factory restaurants increased 2.1% in the first quarter of fiscal 2018. ITEM 8.01         OTHER EVENTS. 

On April 23, 2018, the Board of Directors (the “Board”) of the Company declared a quarterly cash dividend of $0.29 per share whichwill be paid on May 22, 2018 to the stockholders of record of each share of the Company’s common stock at the close of business on May 10,2018. Future dividends, if any, will be subject to Board approval. 

On  April  25,  2018,  the  Company  posted  an  updated  Investor  Presentation  on  the  Company’s  Investor  Relations  website  atinvestors.thecheesecakefactory.com. A copy of the presentation is attached hereto as Exhibit 99.2 and is incorporated by reference herein. ITEM 9.01     FINANCIAL STATEMENTS AND EXHIBITS. 

(d)         Exhibits 

99.1 

Press release dated April 25, 2018 entitled, “The Cheesecake Factory Reports Results for First Quarter of Fiscal 2018”    

99.2 

The Cheesecake Factory Investor Presentation dated April 2018 

 EXHIBIT INDEX

 Exhibit

 

Description99.1

 

Press release dated April 25, 2018 entitled, “The Cheesecake Factory Reports Results for First Quarter of Fiscal 2018”     

99.2 

The Cheesecake Factory Investor Presentation dated April 2018 

 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.  

Date:  April 25, 2018 THE CHEESECAKE FACTORY INCORPORATED                    

By: /s/ Matthew E. Clark 

Matthew E. Clark 

Executive Vice President and Chief Financial Officer 

EXHIBIT 99.1

PRESS RELEASE FOR IMMEDIATE RELEASE Contact: Stacy Feit

(818) 871-3000

investorrelations@thecheesecakefactory.com

THE CHEESECAKE FACTORY REPORTS RESULTS FORFIRST QUARTER OF FISCAL 2018

The Cheesecake Factory restaurants post positive comparable sales as anticipated

CALABASASHILLS,Calif.,–April25,2018– The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported

financial results for the first quarter of fiscal 2018, which ended on April 3, 2018.

Total revenues were $590.7 million in the first quarter of fiscal 2018 as compared to $563.4 million in the first quarter offiscal 2017. Net income and diluted net income per share were $26.0 million and $0.56, respectively, in the first quarter of fiscal2018.

Comparable restaurant sales at The Cheesecake Factory restaurants increased 2.1% in the first quarter of fiscal 2018.

“Comparable sales at The Cheesecake Factory were very strong during the first quarter and meaningfully outperformedthe casual dining industry,” said David Overton, Chairman and Chief Executive Officer . “However, increased labor costs tosupport the better guest traffic levels, as well as higher than expected insurance costs, impacted our bottom line results thisquarter.”

Overton continued, “Consistent with our long-term approach, we are making investments to maintain our high level offood quality, service and hospitality, which we believe will continue to differentiate us in the industry. In fact, The CheesecakeFactory was again named brand of the year in the casual dining category of the Harris Poll EquiTrend study, underscoring thecontinued relevance of the brand and our strong guest affinity. We were pleased to see these attributes reflected in our salestrend during the first quarter and believe we can continue to take share in 2018, which will better position us to manage throughthe cost pressures.” Development

The Company continues to expect to open as many as four to six restaurants in fiscal 2018, including one Grand LuxCafe, as well as the first location of a fast casual concept the Company is developing internally. The first restaurant opening isexpected in the third quarter of fiscal 2018.

In addition, the Company now expects as many as four restaurants to open internationally under licensing agreements infiscal 2018. This includes the first location in Beijing, which opened in January, and the second location in Saudi Arabia, which isscheduled to open soon.

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

®

Capital Allocation

The Company’s Board of Directors declared a quarterly cash dividend of $0.29 per share on the Company’s commonstock. The dividend is payable on May 22, 2018 to shareholders of record at the close of business on May 10, 2018.

During the first quarter of fiscal 2018, the Company repurchased approximately 0.7 million shares of its common stock ata cost of $34.9 million. Conference Call and Webcast

The Company will hold a conference call to review its results for the first quarter of fiscal 2018 today at 2:00 p.m. PacificTime. The conference call will be webcast live on the Company’s website at investors.thecheesecakefactory.com and a replay ofthe webcast will be available through May 25, 2018. About The Cheesecake Factory Incorporated

The Cheesecake Factory Incorporated created the upscale casual dining segment in 1978 with the introduction of itsnamesake concept. The Company, through its subsidiaries, owns and operates 214 full-service, casual dining restaurantsthroughout the U.S.A., including Puerto Rico, and Canada, comprised of 199 restaurants under The Cheesecake Factory mark; 13 restaurants under the Grand Lux Cafe mark; and two restaurants under the RockSugar Southeast Asian Kitchen mark (formerly known as Rock Sugar Pan Asian Kitchen ). Internationally, 20 The Cheesecake Factory restaurants operateunder licensing agreements. The Company’s bakery division operates two bakery production facilities, in Calabasas Hills, CAand Rocky Mount, NC, that produce quality cheesecakes and other baked products for its restaurants, international licenseesand third-party bakery customers. In 2018, the Company was named to the FORTUNE Magazine “100 Best Companies to WorkFor ” list for the fifth consecutive year. To learn more about the Company, visit www.thecheesecakefactory.com . FORTUNE and FORTUNE 100 Best Companies to Work For® are registered trademarks of Time Inc. and are used under license. From FORTUNE Magazine, March 1, 2018 ©2018 Time Inc. Used under license.FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, The Cheesecake Factory Incorporated.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Actof 1995. These 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 achievementsexpressed or implied by forward-looking statements, including uncertainties related to the Company’s ability to: delivercomparable sales growth; provide a differentiated experience to guests; outperform the casual dining industry and increase itsmarket share; leverage sales increases and manage flow through; manage through industry cost pressures and stabilizemargins; grow earnings; remain relevant to consumers; attract and retain qualified management and other staff; increaseshareholder value; profitably expand its concepts domestically and in Canada, and work with its licensees to expand its conceptinternationally; support the growth of North Italia and Flower Child restaurants; develop a fast casual concept; expand consumerpackaged goods licensing revenue; utilize its capital effectively and continue to increase cash dividends and repurchase itsshares; and factors outside of the Company’s control including: economic and political conditions that impact consumerconfidence and spending; impact of recently enacted tax reform; acceptance and success of The Cheesecake Factory ininternational markets; the risks of doing business abroad through Company-owned restaurants and/or licensees; foreignexchange rates and potential changes in NAFTA and cross border taxation; changes in unemployment rates; the economichealth of the Company’s landlords and other tenants in retail centers in which its restaurants are located; the economic health ofsuppliers, licensees, vendors and other third parties providing goods or services to the Company; adverse weather conditions inregions in which the Company’s restaurants are located; factors that are under the control of government agencies, landlordsand other third parties; and other risks and uncertainties detailed from time to time in the Company’s filings with the Securities

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

®

® ®

® ®

®

and Exchange Commission (“SEC”). Investors are cautioned that forward-looking statements are not guarantees of futureperformance and that undue reliance should not be placed on such statements. Forward-looking statements speak only as of thedates on which they are made and the Company undertakes no obligation to publicly update or revise any forward-lookingstatements 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 securities laws. Investors are referred to the full discussion of risks and uncertainties associated withforward-looking statements and the discussion of risk factors contained in the Company’s latest Annual Report on Form 10-K,Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the SEC, which are available at www.sec.gov.

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

The Cheesecake Factory Incorporated

Condensed Consolidated Financial Statements(unaudited; in thousands, except per share and statistical data)

  

 

13 Weeks Ended

13 Weeks EndedConsolidated Statements of Income

 

April 3, 2018

April 4, 2017 

Amount 

Percent of Revenues

 

Amount 

Percent of Revenues

Revenues 

$ 590,691 

100.0% 

$ 563,426 

100.0%Costs and expenses:

               

Cost of sales 

135,719 

23.0% 

129,139 

22.9%Labor expenses

 

210,714 

35.7% 

193,835 

34.4%Other operating costs and expenses

 

148,332 

25.1% 

135,650 

24.1%General and administrative expenses

 

39,274 

6.6% 

36,287 

6.4%Depreciation and amortization expenses

 

24,002 

4.1% 

23,196 

4.1%Impairment of assets and lease terminations

 

- 

0.0% 

786 

0.1%Preopening costs

 

1,099 

0.2% 

970 

0.3%Total costs and expenses

 

559,140 

94.7% 

519,863 

92.3%Income from operations

 

31,551 

5.3% 

43,563 

7.7%Interest and other expense, net

 

(1,506) 

(0.2)% 

(1,256) 

(0.2)%Income before income taxes

 

30,045 

5.1% 

42,307 

7.5%Income tax provision

 

4,016 

0.7% 

7,264 

1.3%Net income

 

$ 26,029 

4.4% 

$ 35,043 

6.2%                Basic net income per share

 

$ 0.57    

$ 0.74   

Basic weighted average shares outstanding 

45,552    

47,634   

                Diluted net income per share

 

$ 0.56    

$ 0.71   

Diluted weighted average shares outstanding 

46,574    

49,210   

                Selected Segment Information

              

Revenues:              

The Cheesecake Factory restaurants 

$ 540,773    

$ 515,234   

Other 

49,918    

48,192   

Total 

$ 590,691    

$ 563,426   

                Income/(loss) from operations:

              

The Cheesecake Factory restaurants  

$ 62,117    

$ 70,543   

Other 

5,747    

6,638   

Corporate 

(36,313)    

(33,618)   

Total 

$ 31,551    

$ 43,563   

 (1) Includes $0.8 million of accelerated depreciation expense related to the planned relocation of one The Cheesecake Factory restaurant in the thirteen weeksended April 4, 2017. This amount was recorded in impairment of assets and lease terminations in the condensed consolidated statements of income. Selected Consolidated Balance Sheet Information

 

April 3, 2018 

January 2, 2018 

Cash and cash equivalents 

$ 24,801 

$ 6,008 

Total assets 

1,287,343 

1,333,060 

Total liabilities 

691,610 

719,530 

Stockholders’ equity 

595,733 

613,530 

  

13 Weeks Ended 

13 Weeks Ended 

The Cheesecake Factory Supplemental Information 

April 3, 2018 

April 4, 2017 

Comparable restaurant sales 

2.1% 

0.3% 

Restaurants opened during period 

- 

- 

Restaurants open at period-end 

199 

194 

Restaurant operating weeks 

2,587 

2,522 

   

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

(1)

 Reconciliation of Non-GAAP Results to GAAP Results 

In addition to the results provided in accordance with Generally Accepted Accounting Principles (“GAAP”) in this pressrelease, the Company is providing non-GAAP measurements which present net income and diluted net income per shareexcluding the impact of certain items. The non-GAAP measurements are intended to supplement the presentation of theCompany’s financial results in accordance with GAAP. The Company believes that the presentation of these items providesadditional information to facilitate the comparison of past and present financial results.

The Cheesecake Factory IncorporatedReconciliation of Non-GAAP Financial Measures

(unaudited; in thousands, except per share data)

   

13 Weeks Ended 

13 Weeks Ended   

April 3, 2018 

April 4, 2017         Net Income (GAAP)

 

$ 26,029 

$ 35,043After-tax impact from:

       

- Impairment of assets and lease terminations  

- 

472Adjusted net income (non-GAAP)

 

$ 26,029 

$ 35,515         Diluted net income per share (GAAP)

 

$ 0.56 

$ 0.71After-tax impact from:

       

- Impairment of assets and lease terminations 

- 

0.01Adjusted diluted net income per share (non-GAAP)

 

$ 0.56 

$ 0.72         (1) The pre-tax amount associated with the item in fiscal 2017 was $0.8 million and was recorded in impairment of assets and leaseterminations.

                          

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

 

(1)

Ex - ..• .-.' .· Investor Presentation April 2018

 

Safe Harbor Statement This presentation contains forward-looking statements about our current and presently expected performance trends, growth plans, business goals and other matters. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Acts”). These forward-looking statements include without limitation, statements with respect to our ability to: provide a differentiated experience to guests; deliver comparable sales growth; outperform the casual dining industry; deliver consistent financial performance; profitably expand our Company-owned restaurants domestically and in Canada, and work with our licensees to expand our concept internationally; maintain our broad consumer appeal and remain relevant to guests; attract and retain qualified management and other staff; leverage technology to drive sales and manage costs; maintain our unit economics; manage costs to support profitability; achieve our financial objectives including our long-term objective of 13% - 14% total return to shareholders, on average; produce sufficient finished bakery product to supply our restaurants and our licensees; expand consumer packaged goods licensing revenue; support the growth of the Fox Restaurant concepts; develop a fast casual concept; utilize capital effectively; continue to repurchase our shares and pay and grow the dividend; and all other statements that are not historical facts, as well as statements that are preceded by, followed by or that include words or phrases such as “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,” “project,” “may,” “could,” “would,” “should” and similar expressions. These statements are based on our current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in such statements. Forward-looking statements are not guarantees of future performance, and undue reliance should not be placed on suchstatements. These statements are based on our current expectations and involve known and unknown risks and uncertainties that may cause our actual results or performance to differ materially from those expressed or implied by such statements. Although we believe that the assumptions underlying forward-looking statements are currently reasonable, any of the assumptions could be incorrect or incomplete, and there can be no assurance that forward-looking statements will prove to be accurate. Forward-looking statements speak only as of today’s date, and we undertake no obligation to publicly update or revise any forward-looking statements to take into account or otherwise reflect subsequent events, corrections in underlying assumptions, or changes in circumstances arising after the date that the forward-looking statement was made, unless required to do so by law. Please see the full discussion of risks and uncertainties contained in our filings with the Securities and Exchange Commission, including our latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available at www.sec.gov. The Private Securities Litigation Reform Act of 1995 provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this presentation are made pursuant to the Act. 2

 

 A Compelling Investment Opportunity •Highly differentiated concepts delivering a unique guest experience •Diversified growth drivers •Sustained track record of consistent financial performance •Robust cash flow to support growth and maximize shareholder value 3

 

 Company Overviewand KeyCompetitive Advantages4

 

 Our Global Footprint High quality, high profile locations worldwide Toronto Company-Owned: 214 Lebanon (1) Bahrai n (1) Kuwait (3) Qatar (3) Beijing Shanghai Saudi Arabia (1) UAE (5) Hong Kong Guadalajara Mexico City (2) Company-Owned 199 13 2 International - Licensed Middle East14 Mexico3 China, Including Hong Kong3 5

 

 International Licensed Presence Guadalajara Shanghai Dubai Festival CityAbu Dhabi 6

 

 The Cheesecake Factory - A Highly Differentiated Concept Leader in Menu Innovation Ambiance, Service and Hospitality Best-in-Class Operational Execution Integrated Bakery 7

 

 Industry Leader in Menu Innovation Breadth of Menu Is a Key Competitive Advantage Quality •250 menu items made fresh from scratch in-house Relevance •No veto vote – something for everyone across price points •Menu updated twice a year Performance •Drives sales •Continued market share gains Profit •Increases sales at full margin 8

 

 Dining With Us Is an Experience Ambiance, Service and Hospitality Drive Sales 9

 

 Leveraging Technology to Drive Sales Delivery Online Ordering New Guest Satisfaction Platform 10

 

 Integrated Bakery – The “Cheesecake” Magic Industry-Leading Dessert Sales 16% •Produces over 70 cheesecakes and other baked desserts •Enables creativity and quality control 11

 

Broad Consumer Appeal 2017 #1 Food Quality A division of Vice Media LLC $10.6 Highest Unit Volumes ($ in millions) With a Moderate Average Check $32 $8.3$8.1 $5.6 $5.0$4.7 $3.4$3.3$3.0$2.9 $28 $25 $22$22$21$21 $18$17 $15 Maggianos Yard BJ'sTexas Olive Outback LongHorn Bonefish Carrabbas Yard Maggianos Bonefish OutbackCarrabbas LongHorn Olive Texas BJ's House Roadhouse Garden House Garden Roadhouse Source: Latest SEC filings and company presentations12

 

Strong Consumer Engagement Across Channels 5M+ fans It takes more than 30 minutes to prepare a small batch of our Sake Butter Sauce, and that’s just one of dozens of sauces that we prepare fresh in-house every day. 375K followers 640K followers Millions of Viewers 13

 

 Capitalizing on the Power of the Brand The Cheesecake Factory At HomeTM 14

 

 Best-in-Class Operational Execution Dual Management Structure Above 4-Walls Average Tenure by Position Industry-Leading Retention ---------Area Director of Operations GMGMGMGMGMGM ---------Area Kitchen Operations Manager EKMEKMEKMEKMEKMEKM Senior VP of Operations Regional Vice President Area Director of Operations Area Kitchen Operations Manager General Manager Executive Kitchen Manager 29 years 20 years 19 years 17 years 12 years 12 years FORTUNE and FORTUNE 100 Best Companies to Work For® are registered trademarks of Time Inc. and are used under license. From FORTUNE Magazine, March 1, 2018 ©2018 Time Inc. Used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or15 services of, The Cheesecake Factory Incorporated.

 

 Leveraging Technology to Manage Costs Market-Based Labor Analytics Kitchen Management System Automated Production Call Dashboards 16

 

 Diversified GrowthDrivers 17

 

 The Cheesecake Factory – Returns-Focused Growth Opportunity for 300 Domestic & 8 - 10 Canadian Locations Over Time Average Unit Economics* Sales $10.6 ~18% $8+ 20% - 25% EBITDA % Cash Capex Investment Cash-on-Cash Return •Focused on premier locations – high street, lifestyle centers and A malls •Infill and new markets •Target 7,500 – 10,000 sq. ft. * Illustrative example of target returns for new restaurant openings.18

 

The Cheesecake Factory – Expanding International Licensed Presence •Continued expansion within current geographies •Potential for additional geographies with current licensees •Opportunity to add licensees and territories +1¢ Per Restaurant in EPS, on Average $0 Capital Expenditure 19 Shanghai

 

 …CAKE 2022 •Multi-concept with segment, price point/occasion, real estate and labor model diversification •Leveraging brand power, operational excellence, scale, supply chain and real estate development expertise Illustrative Unit Growth Roadmap Potential Acq. 1* Incremental Growth Opportunities Potential Acq. 2* Internal fast casual Near-Term20192021 *Represent two of Fox Restaurant Concepts’ high-growth brands that the Company has made minority investments in. Long-Term Unit Growth Potential ~20 units per year 20

 

 CAKE 5-Year Plan Top-Line Growth Drivers Comparable Sales Growth~1% - 2% Unit Growth~5% Total Top-Line Growth6% - 7% 2022 Financial Targets Revenues~$3 billion Net Income Margin 6%+ EPS$4.50 ROIC15%+ 21

 

 Creating Value for Shareholders Long-Term Objective: 13% - 14% Total Return to Shareholders, on Average (EPS + Dividend) Total Return to Shareholders Company-Owned Restaurants~6% - 7% Comparable Sales Growth ~1% - 2% Unit Growth~5% International Licensed~2% Share Repurchases~3% Dividend~2% 22

 

 TrackRecordofConsistent FinancialPerformance 23

 

 Continuing to Outperform the Industry Comparable Sales - Historical 2-year Stack 20112012201320142015201620171Q18 4.0%4.2% 2.0% 3.3% 2.6% 4.1% 3.8% 2.4% 1.0% 0.8% 0.4% (0.9)% (0.4)% (0.8)% (1.6)% (2.2)% Knapp-Track Index 24

 

 Leveraged Sales and Managed Costs to Support Profitability Adjusted Earnings Per Share* $1.42 $1.64 $1.88 $2.10 $1.97 $2.37 $2.83 $2.60 20102011201220132014201520162017 *Please see Appendix for GAAP to non-GAAP reconciliations.25

 

Our Restaurants Generate Significant Cash Flow Free Cash Flow and Strong Balance Sheet Provide Significant Financial Flexibility ($ millions) $158 $128 $120 $112$107 $135 $94 $100 $44 201020112012201320142015201620171Q18 Free cash flow defined as cash flow from operations less capital expenditures/investments. Please see Appendix for GAAP to non-GAAP reconciliations and 26 for an explanation regarding an accounting reclassification for prior years.

 

Effective Capital Allocation Supports Our Financial Objectives $1+ Billion in Share Repurchases Reducing WASO 3% Per Year Committed to Continuing to Grow Dividend 60,446 ($ millions) $172 $13 $101 $27 $184 $30$36 $109 $141 $42 $146 48,152 $50 $123 $52 $42 $77$86$106$114 $154$158$139 20102011201220132014201520162017 Capex / InvestmentShare RepurchasesDividendWASO 27

 

 Disciplined, Returns-Focused Growth Has Paid Off Return on Invested Capital (ROIC) 17% 13% 13% 14% 15% 14% 15% 15% 20102011201220132014201520162017 ROIC = NOPAT / Average invested capital NOPAT = Income from operations excluding non-recurring expenses (-) income tax provision Invested Capital = Property and equipment + long-term assets + net working capital (-) cash and cash equivalents28

 

 2018 Outlook 2018E Company-Owned Restaurant OpeningsAs many as 4 - 6 International Licensed Restaurant OpeningsAs many as 4 Comparable Sales1% – 2% Adjusted EPS$2.62 - $2.74 Free Cash Flow~$150 million 2018 guidance provided April 25, 2018.29

 

 A Compelling Investment Opportunity •Highly differentiated concepts delivering a unique guest experience •Diversified growth drivers •Sustained track record of consistent financial performance •Robust cash flow to support growth and maximize shareholder value 30

 

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 Non-GAAP Reconciliation In addition to the results provided in accordance with the Generally Accepted Accounting Principles (“GAAP”) in this presentation, the Company is providing non-GAAP measurements which present diluted net income per share excluding the impact of certain items and free cash flow. 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. 32

 

 Non-GAAP Reconciliation The Cheesecake Factory Incorporated Reconciliation of Non-GAAP Financial Measures ($ in thousands, except per share data) Fiscal Year - Partial IRS settlement (2) - (1,506) - - - - - - - Unwinding of interest rate collars (3) 4,425 - - - - - - - - Proceeds from variable life insurance contract (4) - - (419) - - - - - Adjusted net income (non-GAAP) $ 86,138 $ 95,142 $ 103,726 $ 114,019 $ 101,694 $ 120,130 $ 139,562 $ 125,073 Diluted net income per share (GAAP) After-tax impact from: $ 1.35 $ 1.64 $ 1.78 $ 2.10 $ 1.96 $ 2.30 $ 2.83 $ 3.27 - Impairment of assets and lease terminations - 0.02 0.11 (0.01) 0.01 0.07 0.00 0.13 - Partial IRS settlement - (0.03) - - - - - - - Unwinding of interest rate collars 0.07 - - - - - - - - Proceeds from variable life insurance contract - - (0.01) - - - - - - Deferred tax revaluation - - - - - - - (0.80) Adjusted diluted net income per share (non-GAAP) (6) $ 1.42 $ 1.64 $ 1.88 $ 2.10 $ 1.97 $ 2.37 $ 2.83 $ 2.60 (1) The pre-tax amounts associated with these items in fiscal 2011, 2012, 2013, 2014, 2015, 2016 and 2017 were $1,547, $9,536, $(561), $696, $6,011, $114 and $10,343, respectively, and were recorded in impairment of assets and lease terminations. (2) The pre-tax amounts associated with this item were $719 and $1,075 and were recorded in interest and other (expense)/income, net and income tax provision, respectively. (3) The pre-tax amount associated with this item was $7,376 and was recorded in interest expense. (4) This item is non-taxable and is recorded in interest and other (expense)/income, net. (5) Fiscal 2017 includes a $38.5 million benefit to the income tax provision related to tax reform enacted in December 2017.33 (6) Adjusted diluted net income per share may not add due to rounding.

 

 Non-GAAP Reconciliation The Cheesecake Factory Incorporated Reconciliation of Non-GAAP Financial Measures ($ in millions) Fiscal Year (1) The excess tax benefit related to stock options exercised is no longer reclassified from cash flows from operating activities to cash flows from financing activities in the consolidated statements of cash flows. The consolidated statements of cash flows for fiscal 2016, 2015, 2014, 2013, 2012, 2011 and 2010 have been adjusted to conform to the current year presentation. 34