David Overton Founder, Chairman and Chief Executive Officer

TO OUR STOCKHOLDERS The Cheesecake Factory completed another incredibly successful year in 2004. We increased our restaurant revenues by 25% and our bakery revenues by 24%. We also achieved very solid net income and net income per share increases of 16% and 15%, respectively, despite a very difficult cost environment.

     In looking back at our 1994 letter to stockholders, we celebrated the fact that we sold over 1 million cheesecakes, operated 10 restaurants and were closing in on $100 million of annual revenues. Ten short years later, we’re selling over 7 million cheesecakes per year, preparing to open our 100th Cheesecake Factory restaurant and closing in on the $1 billion annual revenue mark. As we move forward into fiscal 2005, we remain as enthusiastic as ever about our ability to continue the profitable growth of our concepts and brands throughout America, building upon our reputation for excellence in food, service, ambiance and overall value in casual dining.

     We accomplished quite a bit in fiscal 2004. We achieved our stated goal of opening 16 new restaurants, including two Grand Lux Cafes.