8-K
Cheesecake Factory Inc (CAKE)
UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) ofThe Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 18, 2020
THE CHEESECAKE FACTORY INCORPORATED
(Exact name of registrant as specified in its charter)
| Delaware | 0-20574 | 51-0340466 |
|---|---|---|
| (State or other jurisdiction | (Commission | (IRS Employer |
| of incorporation) | File Number) | Identification No.) |
| 26901 Malibu Hills Road<br>Calabasas Hills, California | 91301 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
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 following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: |
|---|---|---|
| Common Stock, par value $.01 per share | CAKE | Nasdaq Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
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 or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Thefollowing information under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition” and Item 7.01 “RegulationFD Disclosure” is intended to be furnished. This information shall not be deemed “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filingunder the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this report, regardlessof any general incorporation language in the filing.
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
In a press release dated February 19, 2020, a copy of which is furnished as Exhibit 99.1 to this report, The Cheesecake Factory Incorporated (the “Company”) reported financial results for the fourth quarter of fiscal 2019.
ITEM
5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
On February 18, 2020, the Board of Directors (the “Board”) of the Company appointed Janice L. Meyer as a director of the Company and also appointed her to the Audit Committee of the Board effective as of February 18, 2020. Ms. Meyer will also stand for election at the 2020 Annual Meeting of Stockholders.
As a non-employee director, for her service on the Board, Ms. Meyer will receive a $90,000 annual cash retainer, and an annual cash payment in lieu of equity of $115,000, each pro-rated for the remainder of 2020. Upon her election by stockholders, she will also receive her choice of an annual cash payment in lieu of equity in the amount of $115,000 or an annual award of equity valued at $115,000 as of the date of the 2020 Annual Meeting of Stockholders.
Ms. Meyer is eligible to participate in the Company’s Executive Savings Plan (the “Plan”), a nonqualified deferred compensation plan, by contributing all or a portion of her director fees and equity awards to this plan, subject to the terms of the Plan.
Ms. Meyer also entered into an indemnification agreement with the Company in the same form its other directors have entered into, the form of which was filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 14, 2007.
ITEM 7.01. REGULATION FD DISCLOSURE
A copy of the Company’s press release, dated February 19, 2020, announcing the appointment of Ms. Meyer to the Board and Audit Committee, is furnished as Exhibit 99.2 hereto and is incorporated by reference herein.
On February 19, 2020, the Company posted an updated Investor Presentation on the Company’s Investor Relations website at investors.thecheesecakefactory.com. A copy of the presentation is furnished as Exhibit 99.3 hereto and is incorporated by reference herein.
ITEM 8.01 OTHER EVENTS
On February 18, 2020, the Board increased the number of directors from seven to eight, effective February 18, 2020 in accordance with the Company’s Bylaws.
Also on February 18, 2020, the Board declared a quarterly cash dividend of $0.36 per share which will be paid on March 20, 2020 to the stockholders of record of each share of the Company’s common stock at the close of business on March 9, 2020. Future dividends, if any, will be subject to Board approval.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
**(**d) Exhibits
| Exhibit | Description |
|---|---|
| 99.1 | Press release dated February 19, 2020 entitled “The Cheesecake Factory Reports Results for Fourth Quarter of Fiscal 2019.” |
| 99.2 | Press release dated February 19, 2020 entitled “The Cheesecake Factory Appoints Janice Meyer to Board of Directors.” |
| 99.3 | The Cheesecake Factory Investor Presentation dated February 2020 |
| 104.1 | Cover Page Interactive Data File (embedded within the inline XBRL document) |
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: February 19, 2020 | THE CHEESECAKE FACTORY INCORPORATED | |
|---|---|---|
| By: | /s/ Matthew E. Clark | |
| Matthew E. Clark | ||
| Executive Vice President and Chief Financial Officer |
Exhibit 99.1
| FOR IMMEDIATE RELEASE | Contact: Stacy Feit |
|---|---|
| (818) 871-3000 | |
| investorrelations@thecheesecakefactory.com |
THE CHEESECAKE FACTORY REPORTSRESULTS FOR
FOURTH QUARTER OF FISCAL 2019
CALABASASHILLS, Calif., – February 19, 2020 – The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the fourth quarter of fiscal 2019, which ended on December 31, 2019.
Total revenues were $694.0 million in the fourth quarter of fiscal 2019 compared to $585.2 million in the fourth quarter of fiscal 2018. Net income and diluted net income per share were $48.7 million and $1.10, respectively, in the fourth quarter of fiscal 2019. The results in this press release include the acquisition of North Italia and the remaining business of Fox Restaurant Concepts LLC (“FRC”) on October 2, 2019.
Bottom line results of the core business were within the Company’s guidance range and the impact from the acquisition to fourth quarter results was also within the range provided. Fourth quarter 2019 net income and diluted net income per share also reflect a gain on investment in unconsolidated affiliates as well as an impairment and lease termination charge. Excluding these and certain other items, adjusted net income and adjusted diluted net income per share for the fourth quarter of fiscal 2019 were $25.5 million and $0.58, respectively. Please see the Company’s reconciliation of non-GAAP financial measures at the end of this press release.
Comparable restaurant sales at The Cheesecake Factory restaurants increased 0.6% in the fourth quarter of fiscal 2019.
“Comparable sales at The Cheesecake Factory restaurants again outperformed the casual dining industry and bottom-line results of the core business were within our expectations for the fourth quarter,” said David Overton, Chairman and Chief Executive Officer. “Our operators executed very well, with particular strength in labor management, which contributed to solid restaurant-level profitability during the quarter.”
Overton continued, “We believe we have the best teams in the industry, which enable us to deliver delicious, memorable experiences to our guests every day. We are honored to be recognized as one of the ‘100 Best Companies to Work For^®^’ by FORTUNE magazine for the seventh consecutive year, underscoring our position as a best-in-class employer.”
Overton concluded, “We accomplished so much in 2019, including closing on the acquisitions of North Italia and Fox Restaurant Concepts, reinforcing our leadership position in experiential dining. We continue to believe the combination of our companies will drive long-term value for our shareholders, guests and staff members.”
26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
Development
The Company opened the following Company-owned restaurants during the fourth quarter, meeting its fiscal 2019 development objectives:
| Concept | Number of Units |
|---|---|
| The Cheesecake Factory | 3 |
| North Italia | 1 |
| Fox Restaurant Concepts | |
| Flower Child | 2 |
In addition, three restaurants opened internationally under licensing agreements during the fourth quarter, including the first location in Macau, the fifth location in Mexico and the fourth location in Saudi Arabia, for a total of six locations opened under licensing agreements during fiscal 2019, as expected.
Capital Allocation
The Company’s Board of Directors declared a quarterly cash dividend of $0.36 per share of the Company’s common stock. The dividend is payable on March 20, 2020 to shareholders of record at the close of business on March 9, 2020.
During the fourth quarter of fiscal 2019, the Company repurchased approximately 10,000 shares of its common stock at an aggregate cost of $0.4 million. In fiscal 2019, the Company repurchased approximately 1.1 million shares of its common stock at a cost of approximately $51.0 million.
Conference Call and Webcast
The Company will hold a conference call to review its results for the fourth quarter of fiscal 2019 today at 2:00 p.m. Pacific Time. The conference call will be webcast live on the Company’s website at investors.thecheesecakefactory.com and a replay of the webcast will be available through March 20, 2020.
About The Cheesecake Factory Incorporated
The Cheesecake Factory Incorporated is a leader in experiential dining. We are culinary forward and relentlessly focused on hospitality. Delicious, memorable experiences created by passionate people – this defines who we are and where we are going. We currently own and operate 294 restaurants throughout the United States and Canada under brands including The Cheesecake Factory^®^, North Italia^®^and a collection within the Fox Restaurant Concepts subsidiary. Internationally, 26 The Cheesecake Factory^®^ restaurants operate under licensing agreements. Our bakery division operates two facilities that produce quality cheesecakes and other baked products for our restaurants, international licensees and third-party bakery customers. In 2020, we were named to the FORTUNE Magazine “100 Best Companies to Work For^®^” list for the seventh consecutive year. To learn more, visit www.thecheesecakefactory.com, www.northitaliarestaurant.com and www.foxrc.com.
From FORTUNE. ©2020 Fortune Media IP Limited. FORTUNE 100 Best Companies to Work For is a trademark of Fortune Media IP Limited and is used under license. FORTUNE and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, Licensee.
26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
Safe Harbor Statement
This press release contains 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. These statements include, without limitation, statements regarding the Company’s teams, its position as a best-in-class employer in the restaurant industry, the acquisitions of North Italia and FRC, reinforcing the Company’s leadership position in experiential dining and the ability of the combined company to drive long-term value for the Company’s shareholders, guests and staff members. Such forward-looking statements include 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 current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in such 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. These forward-looking statements may be affected by various factors including: the ability to achieve projected financial results; economic and political conditions that impact consumer confidence and spending; acceptance and success of The Cheesecake Factory in international markets; acceptance and success of North Italia and the FRC concepts; the risks of doing business abroad through Company-owned restaurants and/or licensees; foreign exchange rates, tariffs and cross border taxation; changes in unemployment rates; changes in laws impacting the Company’s business, including increases in minimum wages and benefit costs; the economic health of the Company’s landlords and other tenants in retail centers in which its restaurants are located; the economic health of suppliers, licensees, vendors and other third parties providing goods or services to the Company; adverse weather conditions in regions in which the Company’s restaurants are located; factors that are under the control of government agencies, landlords and other third parties; the risk, costs and uncertainties associated with opening new restaurants; and other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”). Forward-looking statements speak only as of the dates on which they are made and 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 law. 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 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 FinancialStatements
(unaudited; in thousands, exceptper share and statistical data)
| Consolidated Statements of | 13 Weeks Ended | 13 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income | December 31, 2019^(1)^ | January 1, 2019 | December 31, 2019^(1)^ | January 1, 2019 | ||||||||||||||||||||
| Amount | Percent of <br> Revenues | Amount | Percent of <br> Revenues | Amount | Percent of <br> Revenues | Amount | Percent of <br> Revenues | |||||||||||||||||
| Revenues | $ | 694,030 | 100.0 | % | $ | 585,155 | 100.0 | % | $ | 2,482,692 | 100.0 | % | $ | 2,332,331 | 100.0 | % | ||||||||
| Costs and expenses: | ||||||||||||||||||||||||
| Cost of sales | 158,217 | 22.8 | % | 134,821 | 23.0 | % | 561,783 | 22.6 | % | 532,880 | 22.8 | % | ||||||||||||
| Labor expenses | 250,836 | 36.2 | % | 209,702 | 35.8 | % | 899,667 | 36.3 | % | 834,134 | 35.8 | % | ||||||||||||
| Other operating costs and expenses | 179,889 | 26.0 | % | 140,359 | 24.0 | % | 631,613 | 25.5 | % | 566,825 | 24.3 | % | ||||||||||||
| General and administrative expenses | 47,273 | 6.8 | % | 36,604 | 6.3 | % | 160,199 | 6.5 | % | 154,770 | 6.6 | % | ||||||||||||
| Depreciation and amortization expenses | 23,770 | 3.4 | % | 24,157 | 4.1 | % | 88,133 | 3.5 | % | 95,976 | 4.1 | % | ||||||||||||
| Impairment of assets and lease terminations | 18,247 | 2.6 | % | 15,015 | 2.6 | % | 18,247 | 0.7 | % | 17,861 | 0.8 | % | ||||||||||||
| Acquisition-related costs | 2,080 | 0.3 | % | - | 0.0 | % | 5,270 | 0.2 | % | - | 0.0 | % | ||||||||||||
| Acquisition-related contingent consideration, compensation and amortization expenses | 1,033 | 0.1 | % | - | 0.0 | % | 1,033 | 0.0 | % | - | 0.0 | % | ||||||||||||
| Preopening costs | 6,298 | 0.9 | % | 5,138 | 0.9 | % | 13,149 | 0.5 | % | 10,937 | 0.5 | % | ||||||||||||
| Total costs and expenses | 687,643 | 99.1 | % | 565,796 | 96.7 | % | 2,379,094 | 95.8 | % | 2,213,383 | 94.9 | % | ||||||||||||
| Income from operations | 6,387 | 0.9 | % | 19,359 | 3.3 | % | 103,598 | 4.2 | % | 118,948 | 5.1 | % | ||||||||||||
| Gain/(Loss) on investment in unconsolidated affiliates | 52,672 | 7.6 | % | (2,068 | ) | (0.3 | )% | 39,233 | 1.6 | % | (4,754 | ) | (0.3 | )% | ||||||||||
| Interest and other expense, net | (2,480 | ) | (0.3 | )% | (1,765 | ) | (0.3 | )% | (2,497 | ) | (0.1 | )% | (6,783 | ) | (0.2 | )% | ||||||||
| Income before income taxes | 56,579 | 8.2 | % | 15,526 | 2.7 | % | 140,334 | 5.7 | % | 107,411 | 4.6 | % | ||||||||||||
| Income tax provision/(benefit) | 7,870 | 1.2 | % | (652 | ) | (0.1 | )% | 13,041 | 0.5 | % | 8,376 | 0.4 | % | |||||||||||
| Net income | $ | 48,709 | 7.0 | % | $ | 16,178 | 2.8 | % | $ | 127,923 | 5.2 | % | $ | 99,035 | 4.2 | % | ||||||||
| Basic net income per share | $ | 1.11 | $ | 0.36 | $ | 2.90 | $ | 2.19 | ||||||||||||||||
| Basic weighted average shares outstanding | 43,694 | 44,796 | 43,949 | 45,263 | ||||||||||||||||||||
| Diluted net income per share | $ | 1.10 | $ | 0.35 | $ | 2.86 | $ | 2.14 | ||||||||||||||||
| Diluted weighted average shares outstanding | 44,249 | 45,669 | 44,545 | 46,215 |
(1) The Company completed the acquisition of North Italia and the remaining business of FRC on October 2, 2019. The Company’s consolidated financial statements include the results of the acquired businesses as of the date of acquisition.
26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
| 13 Weeks Ended | 13 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Segment Information^(2)^ | December 31, 2019^(1)^ | January 1, 2019 | December 31, 2019^(1)^ | January 1, 2019 | ||||||||
| Revenues: | ||||||||||||
| The Cheesecake Factory restaurants | $ | 544,629 | $ | 530,786 | $ | 2,180,882 | $ | 2,127,347 | ||||
| North Italia restaurants | 35,268 | - | 35,268 | - | ||||||||
| Other | 114,133 | 54,369 | 266,542 | 204,984 | ||||||||
| Total | $ | 694,030 | $ | 585,155 | $ | 2,482,692 | $ | 2,332,331 | ||||
| Income/(loss) from operations: | ||||||||||||
| The Cheesecake Factory restaurants^(3)^ | $ | 54,571 | $ | 63,212 | $ | 258,374 | $ | 270,829 | ||||
| North Italia restaurants | 1,608 | - | 1,608 | - | ||||||||
| Other^(4)^ | (49,792 | ) | (43,853 | ) | (156,384 | ) | (151,881 | ) | ||||
| Total | $ | 6,387 | $ | 19,359 | $ | 103,598 | $ | 118,948 | ||||
| Preopening costs: | ||||||||||||
| The Cheesecake Factory restaurants | $ | 4,093 | $ | 4,901 | $ | 9,967 | $ | 9,247 | ||||
| North Italia restaurants | 1,297 | - | 1,297 | - | ||||||||
| Other | 908 | 237 | 1,885 | 1,690 | ||||||||
| Total | $ | 6,298 | $ | 5,138 | $ | 13,149 | $ | 10,937 | ||||
| Depreciation and amortization: | ||||||||||||
| The Cheesecake Factory restaurants | $ | 17,631 | $ | 20,194 | $ | 70,971 | $ | 80,646 | ||||
| North Italia restaurants | 829 | - | 829 | - | ||||||||
| Other | 5,310 | 3,963 | 16,333 | 15,330 | ||||||||
| Total | $ | 23,770 | $ | 24,157 | $ | 88,133 | $ | 95,976 | ||||
| The Cheesecake Factory restaurants operating information: | ||||||||||||
| Comparable restaurant sales | 0.6 | % | 1.9 | % | 0.8 | % | 1.7 | % | ||||
| Restaurants opened during period | 3 | 3 | 5 | 4 | ||||||||
| Restaurants open at period-end | 206 | 201 | 206 | 201 | ||||||||
| Restaurant operating weeks | 2,655 | 2,595 | 10,520 | 10,344 | ||||||||
| North Italia restaurants operating information: | ||||||||||||
| Comparable restaurant sales | 4 | % | - | - | - | |||||||
| Restaurants opened during period | 1 | - | - | - | ||||||||
| Restaurants open at period-end | 22 | - | - | - | ||||||||
| Restaurant operating weeks | 280 | - | - | - | ||||||||
| Fox Restaurant Concepts (FRC) operating information: | ||||||||||||
| Restaurants opened during period | 2 | - | - | - | ||||||||
| Restaurants open at period-end | 49 | - | - | - | ||||||||
| Number of company-owned restaurants: | ||||||||||||
| The Cheesecake Factory | 206 | |||||||||||
| North Italia | 22 | |||||||||||
| Fox Restaurant Concepts (FRC) | 49 | |||||||||||
| Other | 15 | |||||||||||
| Total | 292 | |||||||||||
| Number of international-licensed restaurants: | ||||||||||||
| The Cheesecake Factory | 26 | |||||||||||
| Selected Consolidated Balance Sheet<br><br> Information | December31, 2019 | January 1, 2019 | ||||||||||
| Cash and cash equivalents | $ | 65,416 | $ | 26,578 | ||||||||
| Long-term debt | 290,000 | 10,000 |
(1) The Company completed the acquisition of North Italia and the remaining business of FRC on October 2, 2019. The Company’s consolidated financial statements include the results of the acquired businesses as of the date of acquisition.
(2) The Cheesecake Factory restaurants and North Italia are the only businesses that meet the criteria of a reportable operating segment. The remaining operating segments along with the businesses that don’t qualify as operating segments are combined in Other. Unallocated corporate expenses, which were previously classified in a separate Corporate line, are also combined in Other. In addition, gift card costs, which were previously classified in The Cheesecake Factory restaurants reportable segment, are combined in Other. Corresponding balances for the first three fiscal quarters of 2019 and the prior year were reclassified to conform to the current segment presentation. Acquisition-related costs and contingent consideration and amortization are classified in Other.
(3) Includes the following recorded in impairment of assets and lease terminations in the consolidated statements of income: $8.9 million in the thirteen and fifty-two weeks ended December 31, 2019 related to the impairment of two The Cheesecake Factory restaurants, and $3.7 million in the thirteen weeks ended January 1, 2019 and $6.6 million in the fifty-two weeks ended January 1, 2019 related to three The Cheesecake Factory restaurants, including two closures.
(4) Includes the following recorded in impairment of assets and lease terminations in the consolidated statements of income: $9.3 million in the thirteen and fifty-two weeks ended December 31, 2019 related to the impairment of one Grand Lux Cafe and Social Monk Asian Kitchen and the closure of one Grand Lux Cafe and one RockSugar Southeast Asian Kitchen, and $11.3 million in the thirteen and fifty-two weeks ended January 1, 2019 related to the impairment of one Grand Lux Cafe and one RockSugar Southeast Asian Kitchen.
26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
Reconciliation of Non-GAAP Results to GAAP Results
In addition to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in this press release, the Company is providing non-GAAP measurements which present net income and diluted net income per share excluding the impact of certain items. The non-GAAP measurements are intended to supplement the presentation of the Company’s financial results in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Reconciliations of the Company’s anticipated adjusted diluted net income per share ranges to their corresponding GAAP measures have not been provided as the Company cannot determine the probable significance or timing of certain reconciling items which are outside of the Company’s control and therefore cannot be reasonably predicted.
The Cheesecake Factory Incorporated
Reconciliation of Non-GAAPFinancial Measures
(unaudited; in thousands,except per share data)
| 13 Weeks Ended | 13 Weeks Ended | 52 Weeks Ended | 52 Weeks Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2019^(1)^ | January 1, 2019 | December 31, 2019^(1)^ | January 1, 2019 | |||||||||
| Net income (GAAP) | $ | 48,709 | $ | 16,178 | $ | 127,293 | $ | 99,035 | ||||
| Impairment of assets and lease terminations | 18,247 | 15,015 | 18,247 | 17,861 | ||||||||
| Loss on investment in unconsolidated affiliates^(2)^ | - | 2,068 | 13,439 | 4,754 | ||||||||
| Gain on investment in unconsolidated affiliates^(3)^ | (52,672 | ) | - | (52,672 | ) | - | ||||||
| Acquisition-related costs^(4)^ | 2,080 | - | 5,270 | - | ||||||||
| Acquisition-related contingent consideration, compensation and amortization expenses^(5)^ | 1,033 | - | 1,033 | - | ||||||||
| Tax effect of adjustments^(6)^ | 8,141 | (4,442 | ) | 3,818 | (5,880 | ) | ||||||
| Adjusted net income (non-GAAP) | $ | 25,538 | $ | 28,819 | $ | 116,428 | $ | 16,735 | ||||
| Diluted net income per share (GAAP) | $ | 1.10 | $ | 0.35 | $ | 2.86 | $ | 2.14 | ||||
| Impairment of assets and lease terminations | 0.41 | 0.33 | 0.41 | 0.39 | ||||||||
| Loss on investment in unconsolidated affiliates | - | 0.05 | 0.30 | 0.10 | ||||||||
| Gain on investment in unconsolidated affiliates | (1.19 | ) | - | (1.18 | ) | - | ||||||
| Acquisition-related costs | 0.05 | - | 0.12 | - | ||||||||
| Acquisition-related contingent consideration, compensation and amortization expenses | 0.02 | - | 0.02 | - | ||||||||
| Tax effect of adjustments | 0.18 | (0.10 | ) | 0.09 | (0.13 | ) | ||||||
| Adjusted diluted net income per share (non-GAAP)^(7)^ | $ | 0.58 | $ | 0.63 | $ | 2.61 | $ | 2.51 |
(1) The Company completed the acquisition of North Italia and the remaining business of FRC on October 2, 2019. The Company’s consolidated financial statements include the results of the acquired businesses as of the date of acquisition.
(2) Represents the Company's share of pre-acquisition losses incurred by North Italia and Flower Child.
(3) Represents gain related to the acquisition of the remaining equity interests in North Italia and Flower Child.
(4) Represents costs incurred to effect and integrate the North and FRC acquisition.
(5) Represents changes in the fair value of the deferred consideration and contingent consideration and compensation liabilities related to the North and FRC acquisition, as well as amortization of acquired definite-lived licensing agreements.
(6) Based on the federal statutory rate and an estimated blended state tax rate, the tax effect on all adjustments assumes a 26% tax rate for fiscal 2019 and 2018.
(7) Adjusted diluted net income per share may not add due to rounding.
26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
Exhibit 99.2
| ****<br><br> <br>FOR IMMEDIATE<br> RELEASE | ****<br><br> <br>Contact:<br> Stacy Feit |
|---|---|
| (818)<br> 871-3000 | |
| investorrelations@thecheesecakefactory.com |
THE CHEESECAKE FACTORYAPPOINTS JANICE MEYER TO BOARD OF DIRECTORS
CALABASASHILLS, Calif., – February 19, 2020 – The Cheesecake Factory Incorporated (NASDAQ: CAKE) today announced the expansion of its Board of Directors from seven to eight members and appointed Janice L. Meyer to the Company’s Board of Directors as an independent member. Ms. Meyer will also serve on the Audit Committee of the Board and will stand for election at the 2020 Annual Meeting of Stockholders.
“Janice brings unique perspective having covered the restaurant industry as an analyst for most of her career,” said David Overton, Chairman and Chief Executive Officer of The Cheesecake Factory Incorporated. “Her experience will complement our other Board members as we continue to execute on our growth strategy.”
Following a 20-year career in sell-side research and investment banking covering the restaurant industry at Credit Suisse AG, Donaldson, Lufkin & Jenrette and Morgan Stanley, Ms. Meyer co-founded Rellevant Partners, a private equity firm that focuses on lower middle-market restaurant and food & beverage companies. As a Managing Partner of the firm, Ms. Meyer is responsible for overseeing all aspects of the investment process, including analyzing, advising and monitoring portfolio companies. She also serves on the Board of Directors of Tillster, Inc., a restaurant industry-focused technology company, is a Trustee of The Windward School and a former board member of Chop’t Creative Salad Company.
About The Cheesecake Factory Incorporated
The Cheesecake Factory Incorporated is a leader in experiential dining. We are culinary forward and relentlessly focused on hospitality. Delicious, memorable experiences created by passionate people – this defines who we are and where we are going. We currently own and operate 294 restaurants throughout the United States and Canada under brands including The Cheesecake Factory®, North Italia® and a collection within the Fox Restaurant Concepts subsidiary. Internationally, 26 The Cheesecake Factory® restaurants operate under licensing agreements. Our bakery division operates two facilities that produce quality cheesecakes and other baked products for our restaurants, international licensees and third-party bakery customers. In 2020, we were named to the FORTUNE Magazine “100 Best Companies to Work For®” list for the seventh consecutive year. To learn more, visit www.thecheesecakefactory.com, www.northitaliarestaurant.com and www.foxrc.com.
From FORTUNE. ©2020 Fortune Media IP Limited. FORTUNE 100 Best Companies to Work For is a trademark of Fortune Media IP Limited and is used under license. FORTUNE and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, Licensee.
26901 Malibu Hills Road, Calabasas Hills, CA 91301 · Telephone (818) 871-3000 · Fax (818) 871-3100
Exhibit 99.3
Investor Presentation February 2020
Safe Harbor Statement
This presentation contains 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. This includes, without limitation, f inancial guidance and projections and statements with respect to expectations
of our future financial condition, results of operations, cash flows, plans, targets, goals, obj ectives, performance, growth
potential, competitive position and business; investment opportunity in the Company; the opportunity for additional domestic and
foreign locations a nd licensees and territories; target returns for new restaurant openings; performance of international licensed
locations; the acquisitions of North Italia and FRC, including anticipated run-rate revenues and other metrics at the time of
closing of the transactions, FRC as an incubation engine, steady-state restaurant level margins and anticipated unit growth roadmap;
and the Company’s long-term financial objectives and returns to shareholders. Such forward-looking statements include all
other statements that are not historical facts, as well as statements that are prece ded 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.
These forward-looking statements also may be affected by factors outside of our control including: the amount of fee s and expenses
related to the acquisitions; the failure to realize the anticipated benefits of the acquisitions; economic and political conditions
that impact consumer confi dence and spending; impact of recently enacted tax reform; acceptance and success of The Cheesecake
Factory in international markets; acceptance and success of the North Italia and FRC concepts; the risks of doing business abroad
through Company-owned restaurants and/or licensees; foreign exchange rates, tariffs and cross border taxation; changes in unemployment
rates; changes in laws impacting our business; including increases in minimum wages and benefit costs the economic health of our
landlords and other tenants in retail centers in which our restaurants are located; the economic health of suppliers, licensees,
vendors and other third parties providing goods or services to us; adverse weather conditions in regions in which our restaurants
are located; factors that are under the control of government agencies, landlords and other third parties; the ri sk, costs and
uncertainties associated with opening new restaurants; and other risks and uncertainties detailed from time to time in the Company's
filings with the Securities and Exchange Commission (“SEC”). Forward-looking statements speak only as of the dates
on which they are made and the Company undertakes no obligation to publicly update or r evise 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 law. 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 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. 2
A Compelling Investment Opportunity Highly differentiated concepts delivering a unique guest experience
Accelerated and diversified growth
drivers Sustained track record of consistent financial performance • • • • Robust cash flow to support growth
and maximize shareholder value 3
The Cheesecake
Factory - Global Footprint High quality, high profile locations worldwide Arabia Macau 4 International – Licensed: 26 y
Mexico Toronto Company-Owned: 206 Monterre Guadalajara City (3) Beijing Shanghai Hong Kong Kuwait (3) Bahrain (1) Qatar Saudi(3)
(4) UAE (6)
The Cheesecake Factory - A
Highly Differentiated Concept Service and 5 Ambiance, Hospitality Integrated Bakery Best-in-Class Operational Execution Breadth
of Menu & Innovation
Breadth of Menu & Innovation are Key Competitive Advantages 250 Menu Items - Made Fresh, From Scratch
6
Dining With Us Is an Experience Ambiance, Service and Hospitality Drive Sales 7
Integrated Bakery – The “Cheesecake” Magic • Produces over 70
cheesecakes and other baked desserts Enables creativity, quality control Industry-Leading Dessert Sales 16% • and supply
chain efficiencies 8
Cult Status & Strong Consumer Engagement A division
of Vice Media LLC 5M+ fans 850K followers 370K followers Millions of Viewers 9
Broad Consumer Demographic and Appeal #2 Top Large Chain With a Moderate Average Check Highest Unit
Volumes ($ in millions) $32 $10.7 $29 $27 $23 $23 $23 $22 $19 $17 $5.5 $5.2 $5.0 $3.6 $3.6 $3.0 $2.9 Maggianos Yard House BJ's
Texas Olive Outback LongHorn Bonefish Carrabbas Yard House Maggianos Bonefish Carrabbas Outback LongHorn Olive TexasBJ's Roadhouse
Garden Garden Roadhouse Source: Latest SEC filings and company presentations 10 $8.3$8.1 $16 CONSUMER PICKS #1 Food Quality #1
Ambiance
Leveraging This Differentiation in the
Off-Premise Channel To Go Sales (% of Total Revenue) 16% 14% 12% ~$1.7 million per restaurant 9% 2013 2017 2018 2019 New Takeout
Packaging 11
Further Leaning in to Convenience
Thu 1/30/2020 S:« AM The Cheesecake Factory ' Order Online for The Big Game and Get a Free Slice! ffi Menu 0 Locations Order
Onlll'lf!i Ship a Cheesecake Gift: Cards The Cheesecake Factory DDDC' ·. o Reviev;< $$ Desserts, American :Traditional)
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'" rflukll HLommercs liJ AriciPh:lto 0 COIMI_,I RESER'/ATIOf\S A The Cheesecake Factory • 0 - @::hc ccnkc Tab e f•Jr
2, Thu, Jan 23at 7:00 prn v I'HH*'ii!IIM+ •w•• Selfi;,s wel o'Tle,especial¥ when you'l be sniling about our
I mited reservations on @Yelp - Yes,yoL heard us.We offer limited reservations now.H .,...,. Bc·oked 6 tirre:: today POPULA=l
O:SHES •ChPr.kln
Increasing Unaided Awareness to Comparable Sales Growth Drive Attain Top of Mind Status 13
Capitalizing on the Power of the Brand The Cheesecake Factory At Home® 14
Best-in-Class Operational Execution Has Driven Our Success Guest Experience Efficiencies Cost Management Retention Labor Productivity Forecasting 15
Supported by Our Tenured Teams Who Execute Our Complex Concept Everyday Average Tenure by Position
31 years Senior VP of Operations Regional Vice Presidents 22 years “What we found is that food and beverage innovation is
Area Directors of Operations 19 years table stakes; you need to do it, but it’s not sustainable,” The ironclad correlation
with 18 years Area Kitchen Operations Managers success? “It was GM 13 years General Managers retention.” – Wally
Doolin, TDn2K 13 years Executive Kitchen Managers 16
Being A Great Place to Work FORTUNE
Place To . Best WorkplacesN BEST COMPANIES Best WorkplacesN TO WORK FOR. -for Women - ====== 2019 === FromFORTUNE.@2019 Fcxti¥>9Mede/P
ed. FORTUNE 100 BeslC«<J)ani?s toWork Fais a tradeff'l<lkof • 7 Foll!neMedia IP Lhilec1 and15 ussd lllCier fcenae.
FORTUNE arxi FottuneMedaIP areTid <If/Sedwth, and oo no/ erxiaseIJ'od.Jclsase ct. Licensee. USA 2019 Great Work Best Workplaces··
for Millennials
We Raise the Bar Drives Best-in-class training Culture of fun Industry-Leading
Retention • • • • • Recognition Commitment to our communities, charitable giving and a sustainable future
Industry-leading benefits 18 18
Looking Ahead - Diversified Growth Drivers 1199
An Experiential Dining Category Leader Culinary forward. First class hospitality. Concepts like no other. 20
The Cheesecake Factory – Returns-Focused Opportunity for 300 Domestic
& Growth 8 - 10 Canadian Locations Over Time * Illustrative example of target returns for new restaurant openings. 21 Philadelphia
Average Unit Economics* ($ millions) Sales $10.7 ~18% $8+ 20% - 25% Restaurant-Level Margin % Cash Capex Investment Cash-on-Cash
Return
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
• • Shanghai 22 $0 Capital Expenditure +1¢ Per Restaurant in EPS, on Average
Turning a Modern Lens on Italian Cooking in the Upscale Casual Segment
• Potential for 200 domestic locations over time - 23 locations in 11 states & Washington D.C. currently All dishes handmade
from scratch daily Serving lunch, dinner, weekend brunch & weekday happy hour • • • • Average check: $25
- $30 30%+ alcohol mix 23 FY19 Comp Sales: 6%
Fox Restaurant Concepts Will Serve as an Incubation Engine Innovating Concepts of the Future 24 Boutique
Brands Potential Growth Concepts
Attractive Unit Economics Drive Significant Accretive Growth Potential Note: Steady-state
restaurant-level margin typically reached by year three of operations. 25 Sales ~$7 million~$1,000/sq. ft. ~18% - 20%~16% - 18%
$3 - $3.5 million$500/sq. ft. 35%+25% - 30% 2:12:1 Restaurant-Level Margin % Cash Capex Investment Cash-on-Cash Return Sales/Investment
Ratio New Unit Targets
The Future CAKE 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 • • Anticipated Unit Growth Roadmap 26 Target Size (sq. ft.)
7,500 – 10,0005,000 - 6,5003,500 – 15,000 $10.7 million~$7 millionAvg. $5+ million Average Unit Volume Annual Unit
Growth ~3%~20%+~20% Top-Line Unit Growth Contribution ~3%~2%~2%
All Supports Our Long-Term Financial Objective 13% - 14% Total Return to Shareholders, on Average (EPS
- Dividend) Revenue Growth ~8% Capital Return ~5.5% Dividend Share Repurchases Debt Repayment 27 Targeted Total Return to Shareholders ~2.5% ~1.5% ~1.5%
Track Record of Consistent Financial Performance factory -------------
Continuing to Outperform the Industry Comparable Sales - Historical 2-year Stack 2011
2012 2013 2014 2015 2016 2017 2018 2019 4.2% 4.1% 4.0% 3.8% 3.3% 2.6% 2.5% 2.0% 1.4% 1.0% 0.9% 0.8% 0.5% 0.4% (0.4)% (0.9)% (1.6)%
(2.2)% Knapp-Track Index 29
Leveraged Sales and Managed Support Profitability Costs to Adjusted Earnings Per Share* $2.83 $1.88
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 *Please see Appendix for GAAP to non-GAAP reconciliations. 30 $2.37 $2.60$2.51$2.61
$2.10$1.97 $1.64 $1.42
Our Restaurants Generate Significant Cash Flow Free Cash Flow and
Strong Balance Sheet Provide Significant Financial ($ millions) Flexibility $163 $158 $128 $120 $112 $107 2010 2011 2012 2013
2014 2015 2016 2017 2018 2019 Free cash flow defined as cash flow from operations less capital expenditures and investment in
unconsolidated affiliates pri or to the acquisition of North Italia and Fox Restaurant Concepts. Please see Appendix for GAAP
to non-GAAP reconciliations and for an explanation regarding an accounting reclassification for prior years. 31 $127 $135 $100
$94
Effective Capital Allocation Supports Our Financial Objectives $1+ Billion in Share Repurchases Reducing
WASO 3% Per Year Committed
to Supporting ($ millions) the Dividend 60,446 44,545 $13 2010 2011 2012 2013 2014 2015 2016 2017 2018 WASO 2019 Capex / Investment
Share Repurchases Dividend 32 *2019 Capex/Investment does not include the acquisition of North Italia and Fox Restaurant Concepts
$42 $27 $50 $36 $146 $184 $30 $56 $109 $123 $141 $172 $109 $61 $101 $158 $154 $51 $139 $128 $114 $106 $99 $52 $86 $77 $42
A Compelling Investment Opportunity Highly differentiated concepts delivering a unique guest experience Accelerated and diversified growth drivers Sustained track record of consistent financial performance • • • • Robust cash flow to support growth and maximize shareholder value 33
Appendix
Non-GAAP Reconciliations In addition to the results provided in accordance with the Generally Accepted
Accounting Principles (“GAAP”) in this presentation, the Company is providing non-GAAP measurements which present
diluted net income per share excluding the impact of certain items and free cash flow. The non-GAAP measurements are intended
to supplement the presentation of the company’s financial results in accordance with GAAP. The company believes that the
presentation of these items provides additional information facilitate the comparison of past and present financial results. to
35
Non-GAAP Reconciliation
T he Cheesecake Factory Incorporated Reconciliation of Non-GAAP Financial Measures ($ in thousands, except per share data) Fiscal
Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net Income (GAAP) After-tax impact from: - Impairment of assets and lease
terminations - Partial IRS settlement - Unwinding of interest rate collars - Proceeds from variable life insurance contract -
Loss on investment in unconsolidated affiliates - Gain on investment in unconsolidated affiliates - Acquisition-related costs
- Acquisition-related contingent consideration and amortization expense - Tax effect of adjustments (1) - One-time tax items (2) Adjusted net income (non-GAAP) $ 81,713 $ 95,720 $ 98,423 $ 114,356 $ 101,276 $ 116,523 $ 139,494 $ 157,392 $ 99,035 $ 127,293
-
- 7,376 - - - - 1,547 (1,794) - - - - - 9,536 - - (419) - - - (561) 696 6,011 - - - - - - 114 10,343 - - - 479 - - 17,861 -
-
- 4,754 - - 18,247 - - - 13,439 (52,672) 5,270 - - - - - - - - - - - - - - - - - - - (2,951) - - - (3,814) - - - - (2,404) -
-
- (4,329) (38,525) - (5,880) - 1,033 3,818 (331) 224 (278) (46) - - - - - $ 86,138 $ 95,142 $ 103,726 $ 114,019 $ 101,694 $ 120,130 $ 139,562 $ 125,360 $ 115,770 $ 116,428 Diluted net income per share (GAAP) After-tax impact from: - Impairment of assets and lease terminations - Partial IRS settlement - Unwinding of interest rate collars - Proceeds from variable life insurance contract
- Loss on investment in unconsolidated affiliates - Gain on investment in unconsolidated affiliates - Acquisition-related costs
- Acquisition-related contingent consideration and amortization expense -Tax effect of adjustments -One-time tax items Adjusted diluted net income per share (non-GAAP) (3) $ 1.35 $ 1.64 $ 1.78 $ 2.10 $ 1.96 $ 2.30 $ 2.83 $ 3.27 $ 2.14 $ 2.86 - - 0.03 (0.03)
-
-
-
-
- 0.17 (0.01) - - - - - - 0.01 0.12 0.00 0.21 0.39 0.41 - - (0.01) - - - - - - - - - - - - - - - - - - - - - - - - - -
-
-
-
-
-
-
- 0.12 - - - - 0.01 0.10 0.30 (1.18) 0.12 - - - - - (0.05) - - - - - (0.06) - - - - - - (0.05) - - - (0.09) (0.80) - (0.12)
-
-
- 0.02 0.09 0.01 0.00 - - - $ 1.42 $ 1.64 $ 1.88 $ 2.10 $ 1.97 $ 2.37 $ 2.83 $ 2.60 $ 2.51 $ 2.61 (1) The tax effect assumes a tax rate based on the federal statutory rate and an estimated blended state tax rate. (2) Fiscal 2017 includes a $38.5 million benefit to the income tax provision related to tax reform enacted in December 2017. (3) Adjusted diluted net income per share may not add due to rounding. 36
Non-GAAP Reconciliation The Cheesecake Factory Incorporated Reconciliation
of Non-GAAP Financial Measures ($ in millions) Fiscal Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cash flow from operations
(1) Capital expenditures / investments Free cash flow $ 170 42 $ 197 77 $ 198 86 $ 213 106 $ 249 114 $ 248 154 $ 316 158 $ 239
139 $ 291 128 $ 226 99 $ 128 $ 120 $ 112 $ 107 $ 135 $ 94 $ 158 $ 100 $ 163 $ 127 (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. 37