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Cheesecake to restate results

The restaurant chain's probe of option grants finds other accounting errors going back to '03.

December 09, 2006|From Bloomberg News

Casual dining chain Cheesecake Factory Inc. said Friday that it would restate financial results after a probe of its stock option grants uncovered accounting errors in other areas going back to 2003.

The restatements, related to gift card sales, bonuses paid to restaurant operators and amortizing liquor-license costs, added $2.8 million to expenses for 2003 and 2004 and increased net income by $400,000 for 2005, the company said in a regulatory filing.

The adjustment follows an announcement last month that the company would record $5.5 million in compensation expenses, a number it lowered to $5.4 million on Friday.

The chain is among at least 186 companies that have disclosed internal or federal investigations into the practice of backdating stock options to inflate an executive's compensation.

The restatements will cut net income by $1.2 million in 2004 and $1.6 million in 2003, and add $6,000 to profit in the first quarter of 2006. The adjustments had no effect on net cash flow, the company said.

Cheesecake Factory's external audit firm, approved by shareholder vote at the company's annual meeting in May, reviewed the restated filings that were submitted to the Securities and Exchange Commission on Friday, spokeswoman Jill Peters said.

The earlier restatements stemmed from the company's using incorrect dates for option grants made to executives, employees and outside directors.

The company delayed second- and third-quarter earnings during the internal review of option grants, which concluded Nov. 20. It reported results for those periods Nov. 30.

Shares of the Calabasas Hills-based company rose 12 cents to $26.70 on Friday.

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