Cheesecake Factory: Amendment to revolving credit facility

Calabas Hills / CA. (cf) The Cheesecake Factory Incorporated announced that the company entered into an amendment to its revolving credit facility, taking a proactive step to increase its financial flexibility in light of the uncertain economic environment.

The five-year facility, due in 2012, provides for a maximum available commitment of 300 million USD. Both the maximum available commitment and maturity date remain unchanged. As of December 30, 2008, the company´s fiscal 2008 year-end, the company had an outstanding balance of 275 million USD under the facility, standby letters of credit of approximately 16 million USD and net availability for borrowings of approximately 9,0 million USD. The company is currently in the process of completing its fiscal year-end close and anticipates that it will be in compliance with the covenants required under the facility as of December 30, 2008. Effective January 05, 2009, terms of the facility were amended to include the following:

Financial covenants reset. The leverage ratio (defined as funded debt to trailing 12-month earnings before interest, taxes, depreciation, amortization and non-cash stock option compensation expense, or EBITDA) has been reset from a maximum of 2,25 USD to a maximum of 1,75 USD through the end of the company´s first quarter of fiscal 2009, and a maximum of 1,50 USD thereafter.

The fixed charge coverage ratio (defined as trailing twelve-month EBITDA plus rental expense, or EBITDAR, to interest plus rental expense) has been reset from a minimum of 2,25 USD to a minimum of 1,90 USD through the end of the company´s third quarter of fiscal 2010, and a minimum of 2,00 USD thereafter. The definition of EBITDAR also provides for the adding back of non-cash stock option compensation expense.

Pricing grid changed. Under the amendment, the company will pay interest on drawn balances at a rate equal to LIBOR plus a maximum of 2,75 percent, depending on the company´s leverage ratio. In addition, the company will pay a commitment fee on undrawn balances of a maximum of 0,45 percent, also depending on its leverage ratio.

Previously, the company paid interest rates equal to LIBOR plus a maximum of 1,00 percent on drawn balances and commitment fees on undrawn balances of a maximum of 0,20 percent, both tied to its leverage ratio.

Requirements regarding repurchases of common stock. Share repurchases will be permitted only if the company has a minimum liquidity level, based on cash and available capacity on its Facility, of 125 million USD and its leverage ratio is less than 1,25.

«We continue to believe that maintaining financial flexibility is both prudent and appropriate given the state of the economy and its uncertain outlook», said David Overton, Chairman and CEO. «In an effort to further strengthen our financial position, we took the precautionary step of amending our credit facility. Given our reduced development plans for fiscal 2009, as well as a healthy level of cash flow that we anticipate our restaurants will generate next year, we should be well positioned to increase the amount of cash on our balance sheet and/or reduce our debt level, both of which we view as favorable options».

About: The Cheesecake Factory Incorporated created the upscale casual dining segment in 1978 with the introduction of its namesake concept and continues to define it today with the two highest productivity concepts in the industry. The company operates 145 restaurants throughout the U.S. under The Cheesecake Factory® name with an extensive menu of more than 200 items and fiscal 2007 average annual unit sales of approximately 10,4 million USD. Grand Lux Cafe®, the company´s second concept, has 13 units in operation across the U.S. offering a broad menu of more than 150 items and average annual unit sales of approximately 12,7 million USD in fiscal 2007. The company also operates one unit of its newest concept, RockSugar Pan Asian Kitchen™, and two bakery production facilities in Calabasas Hills, CA and Rocky Mount, NC that produce over 60 varieties of quality cheesecakes and other baked products. Additionally, the company licenses two bakery cafe outlets to another foodservice operator under The Cheesecake Factory Bakery Cafe® mark.