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The Cheesecake Factory Reports Results for Fourth Quarter of Fiscal 2016

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The Cheesecake Factory Incorporated (NASDAQ:CAKE) today reported
financial results for the fourth quarter of fiscal 2016, which ended on
January 3, 2017.

Total revenues were $603.1 million in the fourth quarter of fiscal 2016
as compared to $526.8 million in the fourth quarter of fiscal 2015. The
fourth quarter of fiscal 2016 included 14 weeks compared to 13 weeks in
the fourth quarter of fiscal 2015; the additional week in fiscal 2016
contributed approximately $54.7 million of sales. Net income and diluted
net income per share were $32.4 million and $0.66, respectively, in the
fourth quarter of fiscal 2016.

The Company recorded a pre-tax, non-cash charge of $0.1 million during
the fourth quarter of fiscal 2016 related to the planned relocation of
one The Cheesecake Factory restaurant. Excluding this item, net income
and diluted net income per share were $32.4 million and $0.67,
respectively.

Comparable restaurant sales at The Cheesecake Factory restaurants
increased 1.1% in the fourth quarter of fiscal 2016 (14 weeks vs. 14
weeks).

"We delivered our 28th consecutive quarter of positive
comparable sales, marking seven years of strong financial performance
and meaningful shareholder value creation," said David Overton, Chairman
and Chief Executive Officer. "We significantly outperformed the casual
dining industry again during the fourth quarter as we continued to take
market share."

Overton concluded, "We delivered on all of our objectives in 2016,
including producing solid comparable sales performance, achieving our
domestic unit growth goal, expanding our international presence to a
total of 15 locations and increasing operating margins, all of which
contributed to approximately 20% earnings per share growth. By
maintaining our differentiated positioning and commitment to operational
excellence, we believe we will uphold our leadership position in the
casual dining industry in 2017 and beyond."

Development

The Company opened five The Cheesecake Factory restaurants and one Grand
Lux Cafe during the fourth quarter of fiscal 2016, meeting its objective
to open as many as eight Company-owned restaurants domestically in
fiscal 2016.

Internationally, two The Cheesecake Factory restaurants opened in the
fourth quarter of fiscal 2016, including the first location in Qatar and
the third location in Mexico, for a total of four locations opened under
licensing agreements during the year, as expected.

Capital Allocation

The Company's Board of Directors declared a quarterly cash dividend of
$0.24 per share on the Company's common stock. The dividend is payable
on March 21, 2017 to shareholders of record at the close of business on
March 8, 2017.

During the fourth quarter of fiscal 2016, the Company repurchased 0.5
million shares of its common stock at a cost of $27.5 million. The
Company repurchased a total of 2.9 million shares of its common stock at
a cost of $146.5 million during fiscal 2016.

The Company continues to expect that it will return its free cash flow
to shareholders in fiscal 2017 in the form of dividends and share
repurchases.

Conference Call and Webcast

The Company will hold a conference call to review its results for the
fourth quarter of fiscal 2016 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 24, 2017.

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, through its subsidiaries, owns and operates 208 full-service,
casual dining restaurants throughout the U.S.A. and Puerto Rico,
including 194 restaurants under The Cheesecake Factory® mark; 13
restaurants under the Grand Lux Cafe® mark; and one restaurant under the
Rock Sugar Pan Asian Kitchen® mark (rebranding to RockSugar Southeast
Asian Kitchen™). Internationally, 15 The Cheesecake Factory® restaurants
operate under licensing agreements. The Company's bakery division
operates two bakery production facilities, in Calabasas Hills, CA and
Rocky Mount, NC, that produce quality cheesecakes and other baked
products for its restaurants, international licensees and third-party
bakery customers. In 2016, the Company was named to the FORTUNE Magazine
"100 Best Companies to Work For®" list for the third consecutive year.
To learn more about the Company, visit www.thecheesecakefactory.com.

FORTUNE and 100 Best Companies to Work For® are registered trademarks of
Time Inc. and are used under license. From FORTUNE Magazine, March 3,
2016 ©2016 Time Inc. 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 Act of 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 achievements expressed or implied by forward-looking
statements, including uncertainties related to: the Company's ability to
deliver consistent and dependable comparable sales results over a
sustained period of time; the Company's ability to deliver increases in
guest traffic; the strength of the Company's brand; the Company's
ability to provide a differentiated experience to guests; the Company's
ability to outperform the casual dining industry and increase its market
share; the Company's ability to leverage sales increases and manage flow
through; the Company's ability to increase margins; the Company's
ability to grow earnings; the Company's ability to remain relevant to
consumers; the Company's ability to increase shareholder value; the
Company's ability to expand its concepts domestically and work with its
licensees to expand its concept internationally; the Company's ability
to support the growth of North Italia and Flower Child restaurants; the
Company's ability to develop a fast casual concept; the Company's
ability to utilize its capital effectively and continue to repurchase
its shares; factors outside of the Company's control that impact
consumer confidence and spending; current and future macroeconomic
conditions; acceptance and success of The Cheesecake Factory in
international markets; changes in unemployment rates; 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; and other risks
and uncertainties detailed from time to time in the Company's filings
with the Securities and Exchange Commission ("SEC"). Investors are
cautioned that forward-looking statements are not guarantees of future
performance and that undue reliance should not be placed on such
statements. 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 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 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.

 
The Cheesecake Factory Incorporated and Subsidiaries
Condensed Consolidated Financial Statements
(unaudited; in thousands, except per share and statistical data)
               
 
14 Weeks Ended 13 Weeks Ended 53 Weeks Ended 52 Weeks Ended
Consolidated Statement of Operations January 3, 2017 December 29, 2015 January 3, 2017 December 29, 2015
Amount Percent of

Revenues

Amount Percent of

Revenues

Amount Percent of

Revenues

Amount Percent of

Revenues

Revenues $ 603,146 100.0 % $ 526,841 100.0 % $ 2,275,719 100.0 % $ 2,100,609 100.0 %
Costs and expenses:
Cost of sales 140,084 23.2 % 125,191 23.8 % 526,628 23.2 % 504,031 24.0 %
Labor expenses 202,562 33.6 % 173,053 32.8 % 759,998 33.4 % 684,818 32.6 %
Other operating costs and expenses 143,951 23.9 % 125,103 23.7 % 540,365 23.7 % 500,640 23.8 %
General and administrative expenses 38,863 6.4 % 35,705 6.8 % 146,042 6.4 % 137,402 6.5 %
Depreciation and amortization expenses 23,451 3.9 % 21,911 4.2 % 88,010 3.9 % 85,563 4.1 %
Impairment of assets and lease terminations 114 0.0 % - 0.0 % 114 0.0 % 6,011 0.3 %
Preopening costs   6,975     1.2 %   7,083     1.3 %   13,569   0.6 %   16,898   0.8 %
Total costs and expenses   556,000     92.2 %   488,046     92.6 %   2,074,726   91.2 %   1,935,363   92.1 %
Income from operations 47,146 7.8 % 38,795 7.4 % 200,993 8.8 % 165,246 7.9 %
Interest and other expense, net   (2,263 )   (0.4 )%   (1,845 )   (0.4 )%   (9,225 ) (0.4 )%   (5,894 ) (0.3 )%
Income before income taxes 44,883 7.4 % 36,950 7.0 % 191,768 8.4 % 159,352 7.6 %
Income tax provision   12,502     2.0 %   9,750     1.8 %   52,274   2.3 %   42,829   2.1 %
Net income $ 32,381     5.4 % $ 27,200     5.2 % $ 139,494   6.1 % $ 116,523   5.5 %
 
Basic net income per share $ 0.68   $ 0.56   $ 2.91   $ 2.39  
Basic weighted average shares outstanding   47,403     48,808     47,981     48,833  
 
Diluted net income per share $ 0.66   $ 0.54   $ 2.83   $ 2.30  
Diluted weighted average shares outstanding   48,795     50,470     49,372     50,605  
 
Selected Segment Information
Revenues:
The Cheesecake Factory restaurants $ 547,809 $ 476,580 $ 2,078,083 $ 1,913,758
Other   55,337     50,261     197,636     186,851  
$ 603,146   $ 526,841   $ 2,275,719   $ 2,100,609  
 
Income from operations:
The Cheesecake Factory restaurants $ 74,673 $ 64,220 $ 308,058 $ 275,686
Other (1) 8,189 7,446 27,623 18,047
Corporate   (35,716 )   (32,871 )   (134,688 )   (128,487 )
$ 47,146   $ 38,795   $ 200,993   $ 165,246  
 
(1) Includes $0.1 million of accelerated depreciation expense
related to the planned relocation of one The Cheesecake Factory
restaurant in the fourteen and fifty-three weeks ended January 3,
2017 and $6.0 million of impairment expense related to Rock Sugar
Pan Asian Kitchen in the fifty-two weeks ended December 29, 2015.
 
Selected Consolidated Balance Sheet Information January 3, 2017 December 29, 2015
Cash and cash equivalents $ 53,839 $ 43,854
Total assets 1,293,319 1,233,346
Total liabilities 690,112 644,807
Stockholders' equity 603,207 588,539
 
 
14 Weeks Ended 13 Weeks Ended 53 Weeks Ended 52 Weeks Ended
The Cheesecake Factory Supplemental Information January 3, 2017 December 29, 2015 January 3, 2017 December 29, 2015
Comparable restaurant sales 1.1 % 1.1 % 1.2 % 2.6 %
Restaurants opened during period 5 6 7 10
Restaurants open at period-end 194 187 194 187
Restaurant operating weeks 2,690 2,394 10,031 9,341
 

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 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
believes that the presentation of these items provides additional
information to facilitate the comparison of past and present financial
results.

 
The Cheesecake Factory Incorporated and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(unaudited; in thousands, except per share data)
               
 
14 Weeks Ended 13 Weeks Ended 53 Weeks Ended 52 Weeks Ended
January 3, 2017 December 29, 2015 January 3, 2017 December 29, 2015
 
Net Income (GAAP) $ 32,381 $ 27,200 $ 139,494 $ 116,523
After-tax impact from:
- Impairment of assets and lease terminations (1)     68     -     68     3,607
Net Income (non-GAAP)   $ 32,449   $ 27,200   $ 139,562   $ 120,130
 
Diluted net income per share (GAAP) $ 0.66 $ 0.54 $ 2.83 $ 2.30
After-tax impact from:
- Impairment of assets and lease terminations     0.00     -     0.00     0.07
Diluted net income per share (non-GAAP) (2)   $ 0.67   $ 0.54   $ 2.83   $ 2.37
 
(1) The pre-tax amount associated with these items in fiscal 2016
and 2015 were $114 and $6,011, and were recorded in impairment of
assets and lease terminations.
(2) Adjusted diluted net income per share may not add due to
rounding.

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