Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 02, 2019 | Jul. 29, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jul. 2, 2019 | |
Entity File Number | 0-20574 | |
Entity Registrant Name | THE CHEESECAKE FACTORY INCORPORATED | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 51-0340466 | |
Entity Address, Address Line One | 26901 Malibu Hills Road | |
Entity Address, City or Town | Calabasas Hills | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 91301 | |
City Area Code | 818 | |
Local Phone Number | 871-3000 | |
Title of 12(b) Security | Common Stock, par value $.01 per share | |
Trading Symbol | CAKE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 44,631,522 | |
Entity Central Index Key | 0000887596 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 02, 2019 | Jan. 01, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 22,604 | $ 26,578 |
Accounts receivable | 16,874 | 20,928 |
Income taxes receivable | 2,382 | |
Other receivables | 30,797 | 68,193 |
Inventories | 46,011 | 38,886 |
Prepaid expenses | 39,524 | 40,645 |
Total current assets | 158,192 | 195,230 |
Property and equipment, net | 758,496 | 913,275 |
Other assets: | ||
Intangible assets, net | 20,157 | 26,209 |
Prepaid rent | 34,961 | |
Operating lease assets | 963,724 | |
Investments in unconsolidated affiliates | 79,674 | 79,767 |
Other | 93,547 | 64,691 |
Total other assets | 1,157,102 | 205,628 |
Total assets | 2,073,790 | 1,314,133 |
Current liabilities: | ||
Accounts payable | 35,960 | 49,071 |
Income taxes payable | 712 | |
Gift card liabilities | 142,361 | 172,336 |
Operating lease liabilities | 85,669 | |
Other accrued expenses | 172,973 | 194,381 |
Total current liabilities | 436,963 | 416,500 |
Deferred income taxes | 38,902 | 52,123 |
Deferred rent liabilities | 79,697 | |
Deemed landlord financing liabilities | 113,095 | |
Long-term debt | 35,000 | 10,000 |
Operating lease liabilities | 942,586 | |
Other noncurrent liabilities | 80,060 | 71,659 |
Commitments and contingencies (Note 7) | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued | ||
Common stock, $.01 par value, 250,000,000 shares authorized; 97,480,423 and 96,621,990 issued at July 2, 2019 and January 1, 2019, respectively | 975 | 967 |
Additional paid-in capital | 845,461 | 828,676 |
Retained earnings | 1,375,671 | 1,384,494 |
Treasury stock, 52,643,252 and 51,791,941 shares at cost at July 2, 2019 and January 1, 2019, respectively | (1,681,304) | (1,642,140) |
Accumulated other comprehensive loss | (524) | (938) |
Total stockholders' equity | 540,279 | 571,059 |
Total liabilities and stockholders' equity | $ 2,073,790 | $ 1,314,133 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jul. 02, 2019 | Jan. 01, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 97,480,423 | 96,621,990 |
Treasury stock, shares | 52,643,252 | 51,791,941 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2019 | Jul. 03, 2018 | Jul. 02, 2019 | Jul. 03, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
Revenues | $ 602,645 | $ 587,319 | $ 1,202,126 | $ 1,172,016 |
Costs and expenses: | ||||
Cost of sales | 134,438 | 131,671 | 270,625 | 265,891 |
Labor expenses | 217,921 | 211,408 | 435,231 | 420,983 |
Other operating costs and expenses | 149,106 | 140,515 | 302,327 | 285,491 |
General and administrative expenses | 37,247 | 41,423 | 76,370 | 80,697 |
Depreciation and amortization expenses | 21,659 | 23,727 | 43,021 | 47,729 |
Impairment of assets and lease terminations | 2,583 | 2,583 | ||
Preopening costs | 2,175 | 1,449 | 4,305 | 2,548 |
Total costs and expenses | 562,546 | 552,776 | 1,131,879 | 1,105,922 |
Income from operations | 40,099 | 34,543 | 70,247 | 66,094 |
Loss on investment in unconsolidated affiliates | (1,644) | (1,039) | (3,094) | (1,128) |
Interest and other expense, net | (25) | (1,869) | (23) | (3,286) |
Income before income taxes | 38,430 | 31,635 | 67,130 | 61,680 |
Income tax provision | 2,920 | 3,282 | 4,636 | 7,298 |
Net income | $ 35,510 | $ 28,353 | $ 62,494 | $ 54,382 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.80 | $ 0.62 | $ 1.41 | $ 1.20 |
Diluted (in dollars per share) | $ 0.79 | $ 0.61 | $ 1.39 | $ 1.17 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 44,165 | 45,383 | 44,210 | 45,467 |
Diluted (in shares) | 44,786 | 46,426 | 44,871 | 46,469 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2019 | Jul. 03, 2018 | Jul. 02, 2019 | Jul. 03, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 35,510 | $ 28,353 | $ 62,494 | $ 54,382 |
Other comprehensive gain/(loss): | ||||
Foreign currency translation adjustment | 175 | (249) | 414 | (495) |
Other comprehensive gain/(loss) | 175 | (249) | 414 | (495) |
Total comprehensive income | $ 35,685 | $ 28,104 | $ 62,908 | $ 53,887 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total |
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect of adopting the pronouncement related to revenue recognition, net of tax | Accounting Standards Update 2014-09 | $ (3,560) | $ (3,560) | ||||
Balance (as adjusted) | $ 954 | $ 799,862 | 1,342,106 | $ (1,532,864) | $ (88) | 609,970 |
Balance at Jan. 02, 2018 | $ 954 | 799,862 | 1,345,666 | (1,532,864) | (88) | 613,530 |
Balance (in shares) at Jan. 02, 2018 | 95,412 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 26,029 | 26,029 | ||||
Foreign currency translation adjustment | (246) | (246) | ||||
Cash dividends declared Common stock | (13,280) | (13,280) | ||||
Stock-based compensation | $ 4 | 6,079 | 6,083 | |||
Stock-based compensation (in shares) | 334 | |||||
Common stock issued under stock-based compensation plans | $ 2 | 538 | 540 | |||
Common stock issued under stock-based compensation plans (in shares) | 211 | |||||
Treasury stock purchases | (34,903) | (34,903) | ||||
Balance at Apr. 03, 2018 | $ 960 | 806,479 | 1,354,855 | (1,567,767) | (334) | 594,193 |
Balance (in shares) at Apr. 03, 2018 | 95,957 | |||||
Balance at Jan. 02, 2018 | $ 954 | 799,862 | 1,345,666 | (1,532,864) | (88) | 613,530 |
Balance (in shares) at Jan. 02, 2018 | 95,412 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 54,382 | |||||
Foreign currency translation adjustment | (495) | |||||
Balance at Jul. 03, 2018 | $ 962 | 817,384 | 1,369,912 | (1,574,893) | (583) | 612,782 |
Balance (in shares) at Jul. 03, 2018 | 96,229 | |||||
Balance at Apr. 03, 2018 | $ 960 | 806,479 | 1,354,855 | (1,567,767) | (334) | 594,193 |
Balance (in shares) at Apr. 03, 2018 | 95,957 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 28,353 | 28,353 | ||||
Foreign currency translation adjustment | (249) | (249) | ||||
Cash dividends declared Common stock | (13,296) | (13,296) | ||||
Stock-based compensation | 5,130 | 5,130 | ||||
Stock-based compensation (in shares) | 45 | |||||
Common stock issued under stock-based compensation plans | $ 2 | 5,775 | 5,777 | |||
Common stock issued under stock-based compensation plans (in shares) | 227 | |||||
Treasury stock purchases | (7,126) | (7,126) | ||||
Balance at Jul. 03, 2018 | $ 962 | 817,384 | 1,369,912 | (1,574,893) | (583) | 612,782 |
Balance (in shares) at Jul. 03, 2018 | 96,229 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect of adopting the pronouncement related to revenue recognition, net of tax | ASU 2016-02 | (41,466) | (41,466) | ||||
Balance (as adjusted) | $ 967 | 828,676 | 1,343,028 | (1,642,140) | (938) | 529,593 |
Balance at Jan. 01, 2019 | $ 967 | 828,676 | 1,384,494 | (1,642,140) | (938) | 571,059 |
Balance (in shares) at Jan. 01, 2019 | 96,622 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 26,984 | 26,984 | ||||
Foreign currency translation adjustment | 239 | 239 | ||||
Cash dividends declared Common stock | (14,952) | (14,952) | ||||
Stock-based compensation | $ 3 | 5,907 | 5,910 | |||
Stock-based compensation (in shares) | 350 | |||||
Common stock issued under stock-based compensation plans | $ 4 | 5,537 | 5,541 | |||
Common stock issued under stock-based compensation plans (in shares) | 412 | |||||
Treasury stock purchases | (11,071) | (11,071) | ||||
Balance at Apr. 02, 2019 | $ 974 | 840,120 | 1,355,060 | (1,653,211) | (699) | 542,244 |
Balance (in shares) at Apr. 02, 2019 | 97,384 | |||||
Balance at Jan. 01, 2019 | $ 967 | 828,676 | 1,384,494 | (1,642,140) | (938) | 571,059 |
Balance (in shares) at Jan. 01, 2019 | 96,622 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 62,494 | |||||
Foreign currency translation adjustment | 414 | |||||
Balance at Jul. 02, 2019 | $ 975 | 845,461 | 1,375,671 | (1,681,304) | (524) | 540,279 |
Balance (in shares) at Jul. 02, 2019 | 97,480 | |||||
Balance at Apr. 02, 2019 | $ 974 | 840,120 | 1,355,060 | (1,653,211) | (699) | 542,244 |
Balance (in shares) at Apr. 02, 2019 | 97,384 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 35,510 | 35,510 | ||||
Foreign currency translation adjustment | 175 | 175 | ||||
Cash dividends declared Common stock | (14,899) | (14,899) | ||||
Stock-based compensation | $ 1 | 4,691 | 4,692 | |||
Stock-based compensation (in shares) | 47 | |||||
Common stock issued under stock-based compensation plans | $ 0 | 650 | 650 | |||
Common stock issued under stock-based compensation plans (in shares) | 49 | |||||
Treasury stock purchases | (28,093) | (28,093) | ||||
Balance at Jul. 02, 2019 | $ 975 | $ 845,461 | $ 1,375,671 | $ (1,681,304) | $ (524) | $ 540,279 |
Balance (in shares) at Jul. 02, 2019 | 97,480 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | Jul. 25, 2019 | Apr. 25, 2019 | Jul. 02, 2019 | Apr. 02, 2019 | Jul. 03, 2018 | Apr. 03, 2018 |
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | ||||||
Cash dividends declared per common share (in dollars per share) | $ 0.36 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.29 | $ 0.29 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 02, 2019 | Jul. 03, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 62,494 | $ 54,382 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization expenses | 43,021 | 47,729 |
Deferred income taxes | (2,289) | 805 |
Impairment of assets and lease terminations | 2,493 | |
Stock-based compensation | 10,488 | 11,075 |
Loss on investments in unconsolidated affiliates | 3,094 | 1,128 |
Changes in assets and liabilities: | ||
Accounts and other receivable | 43,123 | 37,750 |
Income taxes receivable/payable | (3,095) | 12,583 |
Inventories | (7,122) | 7,865 |
Prepaid expenses | (3,372) | 4,717 |
Operating lease assets/liabilities | (5,504) | |
Other assets | (7,984) | 1,089 |
Accounts payable | (13,417) | (4,839) |
Gift Card Liabilities | (29,980) | (30,328) |
Other accrued expenses | (5,688) | (5,901) |
Cash provided by operating activities | 83,769 | 140,548 |
Cash flows from investing activities: | ||
Additions to property and equipment | (29,371) | (51,870) |
Additions to intangible assets | (198) | (735) |
Investments in unconsolidated affiliates | (3,000) | (14,000) |
loans made to unconsolidated Affiliates | (18,000) | |
Proceeds from variable life insurance contract | 540 | |
Cash used in investing activities | (50,569) | (66,065) |
Cash flows from financing activities: | ||
Deemed landlord financing proceeds | 3,631 | |
Deemed landlord financing payments | (2,509) | |
Borrowings on credit facility | 35,000 | 30,000 |
Repayments on credit facility | (10,000) | (20,000) |
Proceeds from exercise of stock options | 6,191 | 6,317 |
Cash dividends paid | (29,287) | (26,521) |
Treasury stock purchases | (39,164) | (42,029) |
Cash used in financing activities | (37,260) | (51,111) |
Foreign currency translation adjustment | 86 | (11) |
Net change in cash and cash equivalents | (3,974) | 23,361 |
Cash and cash equivalents at beginning of period | 26,578 | 6,008 |
Cash and cash equivalents at end of period | 22,604 | 29,369 |
Supplemental disclosures: | ||
Interest paid | 636 | 4,145 |
Income taxes paid | 9,939 | 5,291 |
Construction payable | $ 4,023 | 4,250 |
Non-cash operating: | ||
Settlement of sale-leaseback accounting | 471 | |
Non-cash investing: | ||
Settlement of landlord sale-leaseback accounting | (4,056) | |
Non-cash financing: | ||
Settlement of landlord financing obligation for sale-leaseback leases | 3,585 | |
Deemed landlord financing proceeds | $ 3,756 |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jul. 02, 2019 | |
Significant Accounting Policies | |
Significant Accounting Policies | 1. Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and its wholly owned subsidiaries (referred to herein collectively as the “Company,” “we,” “us” and “our”) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions for the periods presented have been eliminated in consolidation. The unaudited financial statements presented herein include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for the fair statement of the financial condition, results of operations and cash flows for the period. However, these results are not necessarily indicative of results that may be achieved for any other interim period or for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2019 filed with the SEC on March 4, 2019 (“fiscal 2018 10-K”). We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal 2019 consists of 52 weeks and will end on December 31, 2019. Fiscal 2018, which ended on January 1, 2019, was also a 52-week year. Beginning with our fiscal 2018 10-K, we separately disclosed our investments in unconsolidated affiliates on the consolidated balance sheet and our related share of losses on the consolidated statement of income and statement of cash flow. Corresponding balances for the thirteen and twenty-six weeks ended July 2, 2018 were reclassified to conform to the current presentation. Beginning with our fiscal 2018 10-K, we corrected an error in our consolidated statements of income by reclassifying complimentary meals out of revenue and other operating expenses. We also reclassified the associated cost of complimentary meals from other operating expenses to cost of sales and labor. The reclassifications had no impact on previously reported income from operations or net income. Corresponding balances for the first two fiscal quarters of 2018 were reclassified to conform to the current presentation. Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. Recent Accounting Pronouncements We adopted FASB Accounting Standards Codification (“ASC”) Topic 842, “Leases,” as of January 2, 2019, using the alternative transition method and recorded a cumulative effect adjustment to beginning retained earnings without restating prior periods. We elected the package of practical expedients which allowed us to carry forward our historical lease classification, our assessment of whether a contract is or contains a lease and our initial direct costs for any leases that existed prior to adoption of the new standard. In addition, we elected the hindsight practical expedient, which lengthened the lease term for certain of our leases to include renewal options, and the short-term lease exclusion. Adoption of the new standard resulted in the recognition of operating lease assets and liabilities of $975.1 million and $1,045.4 million, respectively, and a reduction to retained earnings of $41.5 million, net of tax. All prior lease-related balances of $39.2 million of prepaid rent, $140.2 million in property and equipment, net, $6.2 million of intangible assets, net, $82.1 million of deferred rent liabilities and $118.7 million of deemed landlord financing have been reclassified into operating lease assets or eliminated upon ASC 842 adoption. Leases We currently lease all our restaurant locations, generally with initial terms of 20 years plus two five-year renewal options. Our leases typically require contingent rent above the minimum base rent payments based on a percentage of revenues, have escalating minimum rent requirements over the term of the lease and require payment for various expenses incidental to the use of the property. A majority of our leases provide for a reduced level of overall rent obligation should specified co-tenancy requirements not be satisfied. We expend cash for leasehold improvements and furniture, fixtures, and equipment to build out and equip our leased premises. We may also expend cash for structural additions that we make to leased premises. Generally, a portion of the leasehold improvements and building costs are reimbursed to us by our landlords as construction contributions. If obtained, landlord construction contributions usually take the form of up-front cash, full or partial credits against our future minimum or percentage rents, or a combination thereof. We do not meet any of the accounting criteria for being the owner of the asset under construction. Many of our leases provide early termination rights permitting us to terminate the lease prior to expiration in the event our revenues are below a stated level for a period of time, generally conditioned upon repayment of the unamortized landlord contributions. In addition to leases for our restaurant locations, we also lease automobiles and certain equipment that is used in the restaurants, bakeries and corporate office. The automobile leases are the only non-real estate leases included in our operating lease assets and liabilities. All other leases are immaterial or qualify for the short-term lease exclusion. The assessment of whether a contract is or contains a lease is performed at contract inception. A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all the economic benefits from the use of the asset and to direct how and for what purpose the asset is used. At lease commencement, we evaluate each lease to determine its appropriate classification as an operating or finance lease. All our restaurant and automobile leases are classified as operating leases. For restaurant leases existing at transition, we will continue to apply our historical practice of excluding executory costs, and only minimum base rent will be factored into the initial operating lease liability and corresponding lease asset. For restaurant leases beginning after adoption of ASC 842, we have elected the single lease component practical expedient. Operating lease assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term. The difference between the amounts we expend for structural costs and the construction contributions received from our landlords is recorded as an adjustment to the operating lease asset. Lease terms include the build-out period for our leases where no rent payments are typically due under the terms of the lease, as well as options to renew when we deem we have significant economic incentive to exercise the extension. When determining if we have a significant economic incentive, we consider relevant factors, such as contractual, asset, entity and market-based considerations. Option periods are included in the lease term for the majority of our leases. Termination rights have not been factored into the lease terms since based on our probability assessment we are reasonably certain we will not terminate our leases. We cannot determine the interest rate implicit in our leases because we do not have access to the lessor's estimated residual value or the amount of the lessor's deferred initial direct costs. Therefore, we use our incremental borrowing rate as the discount rate for our leases. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because we do not generally borrow on a collateralized basis, we derive an appropriate incremental borrowing rate using the interest rate we pay on our non-collateralized borrowings, adjusted for the amount of the lease payments, the lease term and the effect of designating specific collateral with a value equal to the unpaid lease payments for that lease. We apply the incremental borrowing rate on a portfolio basis given the impact of applying it on a lease by lease basis would be immaterial . We monitor for events or changes in circumstances that require reassessment of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the operating lease asset. We also assess the potential impairment of our operating lease assets under long-lived asset impairment guidance in ASC 360. Rent expense included in our operating lease assets is recognized on a straight-line basis. Contingent rent expense is recorded as incurred to the extent it exceeds minimum base rent per the lease agreement. Other variable rent expense is recognized as incurred. The reasonably certain lease term and the incremental borrowing rate for each restaurant location require judgment by management and can impact the classification and accounting for a lease as operating or finance, as well as the value of the operating lease asset and liability. These judgments may produce materially different amounts of rent expense than would be reported if different assumptions were used. |
Inventories
Inventories | 6 Months Ended |
Jul. 02, 2019 | |
Inventories | |
Inventories | 2. Inventories Inventories consisted of (in thousands): July 2, 2019 January 1, 2019 Restaurant food and supplies $ 19,881 $ 18,362 Bakery finished goods and work in progress 20,125 13,845 Bakery raw materials and supplies 6,005 6,679 Total $ 46,011 $ 38,886 |
Gift Cards
Gift Cards | 6 Months Ended |
Jul. 02, 2019 | |
Gift Cards | |
Gift Cards | 3. Gift Cards The following tables present information related to gift cards (in thousands): Gift card liabilities: Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 2, 2019 July 3, 2018 July 2, 2019 July 3, 2018 Beginning balance $ 145,745 $ 138,134 $ 172,336 $ 163,951 Activations 28,999 28,451 49,372 50,195 Redemptions and breakage (32,383) (32,968) (79,347) (80,529) Ending balance $ 142,361 $ 133,617 $ 142,361 $ 133,617 Gift card contract assets: (1) Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 2, 2019 July 3, 2018 July 2, 2019 July 3, 2018 Beginning balance $ 21,273 $ 21,718 $ 23,388 $ 23,814 Deferrals 3,468 3,680 6,064 6,402 Amortization (4,649) (4,779) (9,360) (9,597) Ending balance $ 20,092 $ 20,619 $ 20,092 $ 20,619 (1) Included in prepaid expenses on the condensed consolidated balance sheets. |
Other Assets
Other Assets | 6 Months Ended |
Jul. 02, 2019 | |
Other Assets | |
Other Assets | 4. Other Assets Other assets consisted of (in thousands): July 2, 2019 January 1, 2019 Executive Savings Plan trust assets $ 65,885 $ 57,605 Loans receivable from unconsolidated affiliates 18,000 — Deposits 5,466 5,489 Deferred income taxes 4,196 1,597 Total $ 93,547 $ 64,691 |
Leases
Leases | 6 Months Ended |
Jul. 02, 2019 | |
Leases | |
Leases | 5. Leases Components of lease expense were as follows (in thousands): Thirteen Twenty-Six July 2, 2019 July 2, 2019 Operating $ 25,842 $ 51,604 Variable 16,426 32,761 Short-term 76 153 Total $ 42,344 $ 84,518 Rent expense on all operating leases (under ASC 840) was as follows (in thousands): Thirteen Twenty-Six July 3, 2018 July 3, 2018 Straight-lined minimum base rent $ 20,514 $ 41,261 Contingent rent 5,113 10,207 Common area maintenance and taxes 9,909 19,838 Total $ 35,536 $ 71,306 Supplemental cash flow information related to leases (in thousands, except percentages): Twenty-Six July 2, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 48,634 Right-of-use assets obtained in exchange for new operating lease liabilities 8,580 Weighted-average remaining lease term — operating leases (in years) 17.1 Weighted-average discount rate — operating leases 5.2 % As of July 2, 2019, the maturities of our operating lease liabilities are as follows (in thousands): 2019 $ 42,258 2020 97,994 2021 95,964 2022 94,896 2023 93,815 Thereafter 1,182,989 Total future lease payments $ 1,607,916 Less: Interest 579,661 Present value of lease liabilities $ 1,028,255 As of January 1, 2019, the aggregate minimum annual lease payments under operating leases (under ASC 840), including amounts characterized as deemed landlord financing payments, were as follows (in thousands): 2019 $ 93,792 2020 91,808 2021 88,829 2022 86,925 2023 81,929 Thereafter 495,091 Total $ 938,374 During the first two quarters of fiscal 2019, four leases were executed; three have initial terms of 20 years plus two five-year renewal options and one has an initial term of 10 years and four five-year renewal options. All but one include allowances for tenant improvements. The leases are expected to commence in the fourth quarter of fiscal 2019. The undiscounted fixed payments over the initial terms are $30.5 million. We will assess the reasonably certain lease term at lease commencement date. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jul. 02, 2019 | |
Long-Term Debt | |
Long-Term Debt | 6. Long-Term Debt As of July 2, 2019, we maintained a $200 million unsecured revolving credit facility (the “Facility”), $50 million of which could be used for issuances of letters of credit. Availability under the Facility was reduced by outstanding letters of credit, which are used to support our self-insurance programs. The Facility, which was scheduled to mature on December 22, 2020, contained a commitment increase feature that could provide for an additional $100 million in available credit upon our request and subject to the participating lenders electing to increase their commitments or new lenders being added to the Facility. Certain of our significant subsidiaries guaranteed our obligations under the Facility. During the second quarter of fiscal 2019, we utilized the Facility to fund a portion of our stock repurchases. At July 2, 2019, we had net availability for borrowings of $145.6 million, based on a $35.0 million outstanding debt balance and $19.4 million in standby letters of credit. We were subject to certain financial covenants under the Facility requiring us to maintain (i) a maximum “Net Adjusted Leverage Ratio” of 4.0 and (ii) a minimum EBITDAR (earnings before interest, taxes, depreciation and amortization, and rent) to interest and rental expense ratio (“EBITDAR Ratio”) of 1.9, with each of the capitalized terms in this Note 6 having the same meaning as defined in the Facility. The Facility limited cash distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined ratio, and also set forth negative covenants that restrict indebtedness, liens, investments, sales of assets, fundamental changes and other matters. Our Net Adjusted Leverage and EBITDAR Ratios were 3.2 and 2.5, respectively, at July 2, 2019, and we were in compliance with all covenants in effect at that date. Borrowings under the Facility bore interest, at our option, at a rate per annum equal to either (i) the Adjusted LIBO Rate plus a margin ranging from 1.00% to 1.75% based on our Net Adjusted Leverage Ratio or (ii) the sum of (a) the highest of (1) the rate of interest publicly announced by JPMorgan Chase Bank as its prime rate in effect, (2) the greater of the Federal Funds Effective Rate or the Overnight Bank Funding Rate, in either case plus 0.5%, and (3) the one-month Adjusted LIBO Rate plus 1.0%, plus (b) a margin ranging from 0.00% to 0.75% based on our Net Adjusted Leverage Ratio. We also paid customary fees on the unused portion of the Facility and on our outstanding letters of credit. (See Note 12 for discussion of our New Facility.) |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 02, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 7. Commitments and Contingencies On December 10, 2015, a former restaurant management employee filed a class action lawsuit in the Los Angeles County Superior Court, alleging that the Company improperly classified its managerial employees, failed to pay overtime, and failed to provide accurate wage statements, in addition to other claims. The lawsuit seeks unspecified penalties under the California Labor Code Private Attorney General Act in addition to other monetary payments (Tagalogon v. The Cheesecake Factory Restaurants, Inc.; Case No. BC603620). On July 29, 2016, we filed a response to the complaint. On March 7, 2019, the parties participated in voluntary mediation, which concluded without the parties reaching a resolution. On June 4, 2019, the parties notified the Court that they reached a tentative agreement to settle this case. The settlement agreement is subject to documentation and court approval. Based on the current status of this matter, we have reserved an immaterial amount in anticipation of settlement. On June 7, 2018, the California Department of Industrial Relations issued a $4.2 million wage citation jointly against the Company and our vendor that provides janitorial services to eight of our Southern California restaurants, alleging that the janitorial vendor or its subcontractor failed to comply with various provisions of the California Labor Code (Wage Citation Case No. 35-CM-188798-16). The wage citation seeks to recover penalties and other monetary payments on behalf of the employees that worked for this vendor or its subcontractor. On June 28, 2018, we filed an appeal of the wage citation. We intend to vigorously defend this action. However, it is not possible at this time to reasonably estimate the outcome of or any potential liability from this matter and, accordingly, we have not reserved for any potential future payments. On June 22, 2018, the Internal Revenue Service issued a Notice of Deficiency in which they disallowed $8.0 million of our §199 Domestic Production Activities Deduction for tax years 2010, 2011 and 2012. On September 11, 2018 we petitioned the United States Tax Court for a redetermination of the deficiency. The tax court has assigned docket number 18150-18 to our case. We intend to vigorously defend our position in litigation and based on our analysis of the law, regulations and relevant facts, we have not reserved for any potential future payments. Within the ordinary course of our business, we are subject to private lawsuits, government audits, administrative proceedings and other claims. These matters typically involve claims from customers, staff members and others related to operational and employment issues common to the foodservice industry. A number of these claims may exist at any given time, and some of the claims may be pled as class actions. From time to time, we are also involved in lawsuits with respect to infringements of, or challenges to, our registered trademarks and other intellectual property, both domestically and abroad. We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether they are valid or whether we are legally determined to be liable. At this time, we believe that the amount of reasonably possible losses resulting from final disposition of any pending lawsuits, audits, proceedings and claims will not have a material adverse effect individually or in the aggregate on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, audits, proceedings or claims. Legal costs related to such claims are expensed as incurred. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jul. 02, 2019 | |
Stockholders' Equity | |
Stockholders' Equity | 8. Stockholders’ Equity On April 25, 2019, our Board of Directors (“Board”) approved a quarterly cash dividend of $0.33 per share that was paid on May 29, 2019 to the stockholders of record at the close of business on May 16, 2019. Future decisions to pay or to increase or decrease dividends are at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of the Facility and applicable law, and such other factors that our Board considers relevant. (See Note 6 for further discussion of the Facility.) Under authorization by our Board to repurchase up to 56.0 million shares of our common stock, we have cumulatively repurchased 52.6 million shares at a total cost of $1,681.3 million through July 2, 2019, including 0.6 million shares at a cost of $28.1 million repurchased during the second quarter of fiscal 2019. Repurchased common stock is reflected as a reduction of stockholders’ equity in treasury stock. Our share repurchase authorization does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time. Shares may be repurchased in the open market or through privately negotiated transactions at times and prices considered appropriate by us. We make the determination to repurchase shares based on several factors, including an evaluation of current and future capital needs associated with new restaurant development, current and forecasted cash flows, including dividend payments, growth capital contributions to North Italia ® ® |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jul. 02, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | 9. Stock-Based Compensation On April 5, 2017, our Board approved an amendment to our 2010 Stock Incentive Plan to increase the number of shares of common stock available for grant under the plan to 12.7 million shares from 9.2 million shares. This amendment was approved by our stockholders at our annual meeting held on June 8, 2017. On April 4, 2019, our Board adopted The Cheesecake Factory Incorporated Stock Incentive Plan. This plan was approved by our stockholders at our annual meeting held on May 30, 2019. The maximum number of shares of common stock available for grant under this plan is 4.8 million shares plus 1.8 million shares, which, as of May 30, 2019, were available for issuance under our 2010 Stock Incentive Plan plus 1.9 million shares which may become available for issuance under The Cheesecake Factory Incorporated Stock Incentive Plan due to forfeiture or lapse of awards under our 2010 Stock Incentive Plan following May 30, 2019. The following table presents information related to stock-based compensation, net of forfeitures (in thousands): Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 2, 2019 July 3, 2018 July 2, 2019 July 3, 2018 Labor expenses $ 1,721 $ 2,576 $ 3,442 $ 4,175 Other operating costs and expenses 68 46 136 110 General and administrative expenses 2,852 2,440 6,910 6,790 Total stock-based compensation 4,641 5,062 10,488 11,075 Income tax benefit 1,140 1,263 2,578 2,763 Total stock-based compensation, net of taxes $ 3,501 $ 3,799 $ 7,910 $ 8,312 Capitalized stock-based compensation (1) $ 51 $ 68 $ 114 $ 138 (1) It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net and other assets on the condensed consolidated balance sheets. Stock Options We did not issue any stock options during the second quarter of fiscal 2019. The weighted average fair value at the grant date for options issued during the second quarter of fiscal 2018 was $12.81 per share. The fair value of options was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the second quarter of fiscal 2018: (a) an expected option term of 6.9 , (b) expected stock price volatility of 26.4%, (c) a risk-free interest rate of 2.8% and (d) a dividend yield on our stock of 2.2%. Stock option activity during the twenty-six weeks ended July 2, 2019 was as follows: Weighted Average Weighted Remaining Average Contractual Aggregate Shares Exercise Price Term Intrinsic Value (1) (In thousands) (Per share) (In years) (In thousands) Outstanding at January 1, 2019 1,799 $ 45.03 4.1 $ 5,606 Granted 300 46.03 Exercised (208) 29.83 Forfeited or cancelled — — Outstanding at July 2, 2019 1,891 $ 46.86 4.6 $ 2,599 Exercisable at July 2, 2019 1,055 $ 45.24 3.1 $ 2,599 (1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal period end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal period end date. The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended July 2, 2019 was $0.2 million and $3.6 million, respectively. The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended July 3, 2018 was $4.3 million and $4.7 million, respectively. As of July 2, 2019, total unrecognized stock-based compensation expense related to unvested stock options was $8.4 million, which we expect to recognize over a weighted average period of approximately 4.5 years. Restricted Shares and Restricted Share Units Restricted share and restricted share unit activity during the twenty-six weeks ended July 2, 2019 was as follows: Weighted Average Shares Fair Value (In thousands) (Per share) Outstanding at January 1, 2019 1,702 $ 48.08 Granted 427 45.89 Vested (272) 45.70 Forfeited (54) 48.76 Outstanding at July 2, 2019 1,803 $ 47.89 Fair value of our restricted shares and restricted share units is based on our closing stock price on the date of grant. The weighted average fair value for restricted shares and restricted share units issued during the second quarter of fiscal 2019 and fiscal 2018 was $45.15 and $51.88, respectively. The fair value of shares that vested during |
Net Income Per Share
Net Income Per Share | 6 Months Ended |
Jul. 02, 2019 | |
Net Income Per Share | |
Net Income Per Share | 10. Net Income Per Share Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, reduced by unvested restricted stock awards. As of July 2, 2019 and July 3, 2018, 1.8 million shares and 1.7 million shares, respectively, of restricted stock issued to staff members were unvested and, therefore, excluded from the calculation of basic earnings per share for the fiscal periods ended on those dates. Diluted net income per share includes the dilutive effect of outstanding equity awards, calculated using the treasury stock method. Shares of common stock equivalents of 2.0 million and 1.7 million for July 2, 2019 and July 3, 2018, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 2, 2019 July 3, 2018 July 2, 2019 July 3, 2018 (In thousands, except per share data) Net income $ 35,510 $ 28,353 $ 62,494 $ 54,382 Basic weighted average shares outstanding 44,165 45,383 44,210 45,467 Dilutive effect of equity awards 621 1,043 661 1,002 Diluted weighted average shares outstanding 44,786 46,426 44,871 46,469 Basic net income per share $ 0.80 $ 0.62 $ 1.41 $ 1.20 Diluted net income per share $ 0.79 $ 0.61 $ 1.39 $ 1.17 |
Segment Information
Segment Information | 6 Months Ended |
Jul. 02, 2019 | |
Segment Information | |
Segment Information | 11. Segment Information For decision-making purposes, our management reviews discrete financial information for The Cheesecake Factory, Grand Lux Cafe, RockSugar Southeast Asian Kitchen and Social Monk Asian Kitchen restaurants, our bakery division, consumer packaged goods and international licensing operations. Based on quantitative thresholds set forth in ASC 280, “Segment Reporting,” The Cheesecake Factory is our only business that meets the criteria of a reportable operating segment. The other segments noted above are combined in “Other.” Unallocated corporate expenses, assets and capital expenditures are presented below as reconciling items to the amounts presented in the condensed consolidated financial statements. Segment information is presented below (in thousands): Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 2, 2019 July 3, 2018 July 2, 2019 July 3, 2018 Revenues: The Cheesecake Factory restaurants $ 551,519 $ 536,593 $ 1,100,152 $ 1,071,715 Other 51,126 50,726 101,974 100,301 Total $ 602,645 $ 587,319 $ 1,202,126 $ 1,172,016 Income/(loss) from operations: The Cheesecake Factory restaurants (1) $ 68,988 $ 69,376 $ 130,232 $ 130,942 Other 5,703 4,496 11,028 10,858 Corporate (34,592) (39,329) (71,013) (75,706) Total $ 40,099 $ 34,543 $ 70,247 $ 66,094 Depreciation and amortization: The Cheesecake Factory restaurants $ 18,004 $ 20,146 $ 35,611 $ 40,336 Other 2,458 2,320 4,860 4,868 Corporate 1,197 1,261 2,550 2,525 Total $ 21,659 $ 23,727 $ 43,021 $ 47,729 Capital expenditures: The Cheesecake Factory restaurants $ 14,839 $ 10,696 $ 26,731 $ 30,162 Other (2) 860 9,372 1,543 19,950 Corporate 321 1,114 1,097 1,758 Total $ 16,020 $ 21,182 $ 29,371 $ 51,870 July 2, 2019 January 1, 2019 Total assets: The Cheesecake Factory restaurants $ 1,581,005 $ 928,345 Other 227,464 164,972 Corporate 265,321 220,816 Total $ 2,073,790 $ 1,314,133 (1) The thirteen and twenty-six weeks ended July 3, 2018 include $2.6 million of lease termination costs related to the closure of one The Cheesecake Factory restaurant. (2) The thirteen and twenty-six weeks ended July 3, 2018 include costs related to an infrastructure modernization of our California bakery facility. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jul. 02, 2019 | |
Subsequent Events | |
Subsequent Events | 12. Subsequent Events Dividend On July 25, 2019, our Board declared a quarterly cash dividend of $0.36 per share to be paid on August 27, 2019 to the stockholders of record at the close of business on August 14, 2019. Fox Restaurant Concepts LLC (“FRC”) Agreements On July 30, 2019, we amended the previous agreements relating to our investment in North Italia and exercised our option to acquire North Italia (the “North Italia Acquisition”). In addition, we entered into a separate Membership Interest Purchase Agreement to acquire the remainder of FRC, including Flower Child and all other FRC brands (the “FRC Acquisition” and, together with the North Italia Acquisition, the “Acquisitions”). The Acquisitions will be completed for $308 million in cash at closing. An additional $45 million will be due ratably over the next four years. Including $88 million previously invested in North Italia and Flower Child, total consideration is approximately $440 million. The cash due at closing will be funded by drawing on our New Facility, as described below, and cash on hand. Additionally, the FRC Acquisition includes a provision for contingent consideration based on achievement of revenue and profitability targets for the FRC brands other than North Italia and Flower Child with considerations made in the event we undergo a change in control or divest any FRC brand (other than North Italia and Flower Child). We will also be required to provide financing to FRC in an amount sufficient to support achievement of these targets during the five years after closing. Our Board has unanimously approved the Acquisitions, which are expected to close around the end of the third quarter of fiscal 2019, subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“Hart-Scott-Rodino Act”) and the satisfaction of the other closing conditions set forth in the applicable purchase agreement. The Acquisitions do not require approval by the Company’s shareholders . New Facility On July 30, 2019, we entered into a Third Amended and Restated Loan Agreement (the “New Credit Agreement”), which amends and restates in its entirety our prior Second Amended and Restated Loan Agreement dated as of December 22, 2015, which had established the Facility. Among other things, the new credit agreement provides us with revolving loan commitments that total $400 million (of which $40 million may be used for the issuances of letters of credit) and which terminate on July 30, 2024 (the “New Facility”). The New Facility contains a commitment increase feature that could provide for an additional $200 million in available credit upon our request and the satisfaction of certain conditions. The New Credit Agreement includes customary representations, warranties, negative and affirmative covenants (including two financial covenants: relating to maintenance of a maximum ratio of net adjusted debt to EBITDAR of 4.75 to 1.00 and a minimum ratio of EBITDAR to interest and rent expense of 1.90 to 1.00), as well as customary events of default that, if triggered, could result in acceleration of the maturity of the New Facility. Borrowings under the New Facility bear interest, at our option, at a rate equal to either: (i) the adjusted LIBO Rate (as customarily defined) (the “Adjusted LIBO Rate”) plus a margin that is based on our net adjusted leverage ratio, or (ii) the sum of (a) the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in effect in the United States, (2) the greater of the rate calculated by the Federal Reserve Bank of New York as the effective federal funds rate or the rate that is published by the Federal Reserve Bank of New York as an overnight bank funding rate, in either case plus 0.5%, and (3) the one-month Adjusted LIBO Rate plus 1.0% , plus (b) a margin that is based on the Company’s net adjusted leverage ratio. Letters of credit issued under the New Facility bear fees that are equivalent to the interest rate margin that is applicable to revolving loans that bear interest at the adjusted LIBO Rate plus other customary fees charged by the issuing bank. Under the New Facility, the Company paid certain customary loan origination fees and will pay an unused fee on the unused portion of the New Facility that is also based on the Company’s net adjusted leverage ratio. Our obligations under the New Facility continue to be unsecured. Certain of our material subsidiaries have guaranteed our obligations under the New Facility. The New Facility will be used for our general corporate purposes, including for the issuance of standby letters of credit to support our self-insurance programs, and to fund stock dividends and repurchases and the purchase price of permitted acquisitions. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 02, 2019 | |
Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and its wholly owned subsidiaries (referred to herein collectively as the “Company,” “we,” “us” and “our”) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions for the periods presented have been eliminated in consolidation. The unaudited financial statements presented herein include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for the fair statement of the financial condition, results of operations and cash flows for the period. However, these results are not necessarily indicative of results that may be achieved for any other interim period or for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2019 filed with the SEC on March 4, 2019 (“fiscal 2018 10-K”). We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal 2019 consists of 52 weeks and will end on December 31, 2019. Fiscal 2018, which ended on January 1, 2019, was also a 52-week year. Beginning with our fiscal 2018 10-K, we separately disclosed our investments in unconsolidated affiliates on the consolidated balance sheet and our related share of losses on the consolidated statement of income and statement of cash flow. Corresponding balances for the thirteen and twenty-six weeks ended July 2, 2018 were reclassified to conform to the current presentation. Beginning with our fiscal 2018 10-K, we corrected an error in our consolidated statements of income by reclassifying complimentary meals out of revenue and other operating expenses. We also reclassified the associated cost of complimentary meals from other operating expenses to cost of sales and labor. The reclassifications had no impact on previously reported income from operations or net income. Corresponding balances for the first two fiscal quarters of 2018 were reclassified to conform to the current presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements We adopted FASB Accounting Standards Codification (“ASC”) Topic 842, “Leases,” as of January 2, 2019, using the alternative transition method and recorded a cumulative effect adjustment to beginning retained earnings without restating prior periods. We elected the package of practical expedients which allowed us to carry forward our historical lease classification, our assessment of whether a contract is or contains a lease and our initial direct costs for any leases that existed prior to adoption of the new standard. In addition, we elected the hindsight practical expedient, which lengthened the lease term for certain of our leases to include renewal options, and the short-term lease exclusion. Adoption of the new standard resulted in the recognition of operating lease assets and liabilities of $975.1 million and $1,045.4 million, respectively, and a reduction to retained earnings of $41.5 million, net of tax. All prior lease-related balances of $39.2 million of prepaid rent, $140.2 million in property and equipment, net, $6.2 million of intangible assets, net, $82.1 million of deferred rent liabilities and $118.7 million of deemed landlord financing have been reclassified into operating lease assets or eliminated upon ASC 842 adoption. |
Leases | Leases We currently lease all our restaurant locations, generally with initial terms of 20 years plus two five-year renewal options. Our leases typically require contingent rent above the minimum base rent payments based on a percentage of revenues, have escalating minimum rent requirements over the term of the lease and require payment for various expenses incidental to the use of the property. A majority of our leases provide for a reduced level of overall rent obligation should specified co-tenancy requirements not be satisfied. We expend cash for leasehold improvements and furniture, fixtures, and equipment to build out and equip our leased premises. We may also expend cash for structural additions that we make to leased premises. Generally, a portion of the leasehold improvements and building costs are reimbursed to us by our landlords as construction contributions. If obtained, landlord construction contributions usually take the form of up-front cash, full or partial credits against our future minimum or percentage rents, or a combination thereof. We do not meet any of the accounting criteria for being the owner of the asset under construction. Many of our leases provide early termination rights permitting us to terminate the lease prior to expiration in the event our revenues are below a stated level for a period of time, generally conditioned upon repayment of the unamortized landlord contributions. In addition to leases for our restaurant locations, we also lease automobiles and certain equipment that is used in the restaurants, bakeries and corporate office. The automobile leases are the only non-real estate leases included in our operating lease assets and liabilities. All other leases are immaterial or qualify for the short-term lease exclusion. The assessment of whether a contract is or contains a lease is performed at contract inception. A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all the economic benefits from the use of the asset and to direct how and for what purpose the asset is used. At lease commencement, we evaluate each lease to determine its appropriate classification as an operating or finance lease. All our restaurant and automobile leases are classified as operating leases. For restaurant leases existing at transition, we will continue to apply our historical practice of excluding executory costs, and only minimum base rent will be factored into the initial operating lease liability and corresponding lease asset. For restaurant leases beginning after adoption of ASC 842, we have elected the single lease component practical expedient. Operating lease assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term. The difference between the amounts we expend for structural costs and the construction contributions received from our landlords is recorded as an adjustment to the operating lease asset. Lease terms include the build-out period for our leases where no rent payments are typically due under the terms of the lease, as well as options to renew when we deem we have significant economic incentive to exercise the extension. When determining if we have a significant economic incentive, we consider relevant factors, such as contractual, asset, entity and market-based considerations. Option periods are included in the lease term for the majority of our leases. Termination rights have not been factored into the lease terms since based on our probability assessment we are reasonably certain we will not terminate our leases. We cannot determine the interest rate implicit in our leases because we do not have access to the lessor's estimated residual value or the amount of the lessor's deferred initial direct costs. Therefore, we use our incremental borrowing rate as the discount rate for our leases. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because we do not generally borrow on a collateralized basis, we derive an appropriate incremental borrowing rate using the interest rate we pay on our non-collateralized borrowings, adjusted for the amount of the lease payments, the lease term and the effect of designating specific collateral with a value equal to the unpaid lease payments for that lease. We apply the incremental borrowing rate on a portfolio basis given the impact of applying it on a lease by lease basis would be immaterial . We monitor for events or changes in circumstances that require reassessment of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the operating lease asset. We also assess the potential impairment of our operating lease assets under long-lived asset impairment guidance in ASC 360. Rent expense included in our operating lease assets is recognized on a straight-line basis. Contingent rent expense is recorded as incurred to the extent it exceeds minimum base rent per the lease agreement. Other variable rent expense is recognized as incurred. The reasonably certain lease term and the incremental borrowing rate for each restaurant location require judgment by management and can impact the classification and accounting for a lease as operating or finance, as well as the value of the operating lease asset and liability. These judgments may produce materially different amounts of rent expense than would be reported if different assumptions were used. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 02, 2019 | |
Inventories | |
Schedule of inventories | Inventories consisted of (in thousands): July 2, 2019 January 1, 2019 Restaurant food and supplies $ 19,881 $ 18,362 Bakery finished goods and work in progress 20,125 13,845 Bakery raw materials and supplies 6,005 6,679 Total $ 46,011 $ 38,886 |
Gift Cards (Tables)
Gift Cards (Tables) | 6 Months Ended |
Jul. 02, 2019 | |
Gift Cards | |
Schedule of gift card liabilities | The following tables present information related to gift cards (in thousands): Gift card liabilities: Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 2, 2019 July 3, 2018 July 2, 2019 July 3, 2018 Beginning balance $ 145,745 $ 138,134 $ 172,336 $ 163,951 Activations 28,999 28,451 49,372 50,195 Redemptions and breakage (32,383) (32,968) (79,347) (80,529) Ending balance $ 142,361 $ 133,617 $ 142,361 $ 133,617 |
Schedule of gift card contract assets | The following tables present information related to gift cards (in thousands): Gift card contract assets: (1) Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 2, 2019 July 3, 2018 July 2, 2019 July 3, 2018 Beginning balance $ 21,273 $ 21,718 $ 23,388 $ 23,814 Deferrals 3,468 3,680 6,064 6,402 Amortization (4,649) (4,779) (9,360) (9,597) Ending balance $ 20,092 $ 20,619 $ 20,092 $ 20,619 (1) Included in prepaid expenses on the condensed consolidated balance sheets. |
Other Assets (Tables)
Other Assets (Tables) | 6 Months Ended |
Jul. 02, 2019 | |
Other Assets | |
Schedule of other assets | Other assets consisted of (in thousands): July 2, 2019 January 1, 2019 Executive Savings Plan trust assets $ 65,885 $ 57,605 Loans receivable from unconsolidated affiliates 18,000 — Deposits 5,466 5,489 Deferred income taxes 4,196 1,597 Total $ 93,547 $ 64,691 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jul. 02, 2019 | |
Leases | |
Components for lease expense | Components of lease expense were as follows (in thousands): Thirteen Twenty-Six July 2, 2019 July 2, 2019 Operating $ 25,842 $ 51,604 Variable 16,426 32,761 Short-term 76 153 Total $ 42,344 $ 84,518 Rent expense on all operating leases (under ASC 840) was as follows (in thousands): Thirteen Twenty-Six July 3, 2018 July 3, 2018 Straight-lined minimum base rent $ 20,514 $ 41,261 Contingent rent 5,113 10,207 Common area maintenance and taxes 9,909 19,838 Total $ 35,536 $ 71,306 |
Supplemental cash flow information related to leases | Supplemental cash flow information related to leases (in thousands, except percentages): Twenty-Six July 2, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 48,634 Right-of-use assets obtained in exchange for new operating lease liabilities 8,580 Weighted-average remaining lease term — operating leases (in years) 17.1 Weighted-average discount rate — operating leases 5.2 % |
Maturity of operating lease liabilities | As of July 2, 2019, the maturities of our operating lease liabilities are as follows (in thousands): 2019 $ 42,258 2020 97,994 2021 95,964 2022 94,896 2023 93,815 Thereafter 1,182,989 Total future lease payments $ 1,607,916 Less: Interest 579,661 Present value of lease liabilities $ 1,028,255 As of January 1, 2019, the aggregate minimum annual lease payments under operating leases (under ASC 840), including amounts characterized as deemed landlord financing payments, were as follows (in thousands): 2019 $ 93,792 2020 91,808 2021 88,829 2022 86,925 2023 81,929 Thereafter 495,091 Total $ 938,374 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jul. 02, 2019 | |
Stock-Based Compensation | |
Schedule of information related to stock-based compensation, net of forfeitures | The following table presents information related to stock-based compensation, net of forfeitures (in thousands): Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 2, 2019 July 3, 2018 July 2, 2019 July 3, 2018 Labor expenses $ 1,721 $ 2,576 $ 3,442 $ 4,175 Other operating costs and expenses 68 46 136 110 General and administrative expenses 2,852 2,440 6,910 6,790 Total stock-based compensation 4,641 5,062 10,488 11,075 Income tax benefit 1,140 1,263 2,578 2,763 Total stock-based compensation, net of taxes $ 3,501 $ 3,799 $ 7,910 $ 8,312 Capitalized stock-based compensation (1) $ 51 $ 68 $ 114 $ 138 (1) It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net and other assets on the condensed consolidated balance sheets. |
Schedule of stock option activity | Weighted Average Weighted Remaining Average Contractual Aggregate Shares Exercise Price Term Intrinsic Value (1) (In thousands) (Per share) (In years) (In thousands) Outstanding at January 1, 2019 1,799 $ 45.03 4.1 $ 5,606 Granted 300 46.03 Exercised (208) 29.83 Forfeited or cancelled — — Outstanding at July 2, 2019 1,891 $ 46.86 4.6 $ 2,599 Exercisable at July 2, 2019 1,055 $ 45.24 3.1 $ 2,599 (1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal period end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal period end date. |
Schedule of restricted share and restricted share unit activity | Weighted Average Shares Fair Value (In thousands) (Per share) Outstanding at January 1, 2019 1,702 $ 48.08 Granted 427 45.89 Vested (272) 45.70 Forfeited (54) 48.76 Outstanding at July 2, 2019 1,803 $ 47.89 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 6 Months Ended |
Jul. 02, 2019 | |
Net Income Per Share | |
Schedule of basic and diluted income per share | Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 2, 2019 July 3, 2018 July 2, 2019 July 3, 2018 (In thousands, except per share data) Net income $ 35,510 $ 28,353 $ 62,494 $ 54,382 Basic weighted average shares outstanding 44,165 45,383 44,210 45,467 Dilutive effect of equity awards 621 1,043 661 1,002 Diluted weighted average shares outstanding 44,786 46,426 44,871 46,469 Basic net income per share $ 0.80 $ 0.62 $ 1.41 $ 1.20 Diluted net income per share $ 0.79 $ 0.61 $ 1.39 $ 1.17 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jul. 02, 2019 | |
Segment Information | |
Schedule of segment information | 11. Segment Information For decision-making purposes, our management reviews discrete financial information for The Cheesecake Factory, Grand Lux Cafe, RockSugar Southeast Asian Kitchen and Social Monk Asian Kitchen restaurants, our bakery division, consumer packaged goods and international licensing operations. Based on quantitative thresholds set forth in ASC 280, “Segment Reporting,” The Cheesecake Factory is our only business that meets the criteria of a reportable operating segment. The other segments noted above are combined in “Other.” Unallocated corporate expenses, assets and capital expenditures are presented below as reconciling items to the amounts presented in the condensed consolidated financial statements. Segment information is presented below (in thousands): Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended July 2, 2019 July 3, 2018 July 2, 2019 July 3, 2018 Revenues: The Cheesecake Factory restaurants $ 551,519 $ 536,593 $ 1,100,152 $ 1,071,715 Other 51,126 50,726 101,974 100,301 Total $ 602,645 $ 587,319 $ 1,202,126 $ 1,172,016 Income/(loss) from operations: The Cheesecake Factory restaurants (1) $ 68,988 $ 69,376 $ 130,232 $ 130,942 Other 5,703 4,496 11,028 10,858 Corporate (34,592) (39,329) (71,013) (75,706) Total $ 40,099 $ 34,543 $ 70,247 $ 66,094 Depreciation and amortization: The Cheesecake Factory restaurants $ 18,004 $ 20,146 $ 35,611 $ 40,336 Other 2,458 2,320 4,860 4,868 Corporate 1,197 1,261 2,550 2,525 Total $ 21,659 $ 23,727 $ 43,021 $ 47,729 Capital expenditures: The Cheesecake Factory restaurants $ 14,839 $ 10,696 $ 26,731 $ 30,162 Other (2) 860 9,372 1,543 19,950 Corporate 321 1,114 1,097 1,758 Total $ 16,020 $ 21,182 $ 29,371 $ 51,870 July 2, 2019 January 1, 2019 Total assets: The Cheesecake Factory restaurants $ 1,581,005 $ 928,345 Other 227,464 164,972 Corporate 265,321 220,816 Total $ 2,073,790 $ 1,314,133 (1) The thirteen and twenty-six weeks ended July 3, 2018 include $2.6 million of lease termination costs related to the closure of one The Cheesecake Factory restaurant. (2) The thirteen and twenty-six weeks ended July 3, 2018 include costs related to an infrastructure modernization of our California bakery facility. |
Significant Accounting Polici_3
Significant Accounting Policies - Basis of Presentation (Details) | 6 Months Ended | 12 Months Ended |
Jul. 02, 2019 | Jan. 01, 2019 | |
Significant Accounting Policies | ||
Length of fiscal year | 364 days | 364 days |
Significant Accounting Polici_4
Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 02, 2019 | Jan. 01, 2019 | |
Recent Accounting Pronouncements | ||
Lease, Practical Expedients, Package [true false] | true | |
Lease, Practical Expedient, Use of Hindsight [true false] | true | |
Operating lease assets | $ 963,724 | |
Operating lease liabilities | 1,028,255 | |
Prepaid rent | $ 34,961 | |
Property and equipment, net | 758,496 | 913,275 |
Intangible assets, net | 20,157 | 26,209 |
Deferred rent liabilities | 79,697 | |
Deemed landlord financing liabilities | $ 113,095 | |
ASU 2016-02 | ||
Recent Accounting Pronouncements | ||
Operating lease assets | 975,100 | |
Operating lease liabilities | 1,045,400 | |
Reduction to retained earnings due to adoption of new accounting standards | 41,500 | |
Prepaid rent | (39,200) | |
Property and equipment, net | (140,200) | |
Intangible assets, net | (6,200) | |
Deferred rent liabilities | (82,100) | |
Deemed landlord financing liabilities | $ (118,700) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jul. 02, 2019 | Jan. 01, 2019 |
Inventories | ||
Restaurant food and supplies | $ 19,881 | $ 18,362 |
Bakery finished goods and work in progress | 20,125 | 13,845 |
Bakery raw materials and supplies | 6,005 | 6,679 |
Total | $ 46,011 | $ 38,886 |
Gift Cards (Details)
Gift Cards (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2019 | Jul. 03, 2018 | Jul. 02, 2019 | Jul. 03, 2018 | |
Gift card liabilities: | ||||
Beginning balance | $ 145,745 | $ 138,134 | $ 172,336 | $ 163,951 |
Activations | 28,999 | 28,451 | 49,372 | 50,195 |
Redemptions and breakage | (32,383) | (32,968) | (79,347) | (80,529) |
Ending balance | 142,361 | 133,617 | 142,361 | 133,617 |
Gift card contract assets: | ||||
Beginning balance | 21,273 | 21,718 | 23,388 | 23,814 |
Deferrals | 3,468 | 3,680 | 6,064 | 6,402 |
Amortization | (4,649) | (4,779) | (9,360) | (9,597) |
Ending balance | $ 20,092 | $ 20,619 | $ 20,092 | $ 20,619 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Jul. 02, 2019 | Jan. 01, 2019 |
Other Assets | ||
Executive Savings Plan trust assets | $ 65,885 | $ 57,605 |
Investments in unconsolidated affiliates | 18,000 | |
Deposits | 5,466 | 5,489 |
Deferred income taxes | 4,196 | 1,597 |
Total | $ 93,547 | $ 64,691 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2019 | Jul. 03, 2018 | Jul. 02, 2019 | Jul. 03, 2018 | |
Leases | ||||
Operating | $ 25,842 | $ 51,604 | ||
Variable | 16,426 | 32,761 | ||
Short-term | 76 | 153 | ||
Total | $ 42,344 | 84,518 | ||
Rent expense | ||||
Straight-lined minimum base rent | $ 20,514 | $ 41,261 | ||
Contingent rent | 5,113 | 10,207 | ||
Common area maintenance and taxes | 9,909 | 19,838 | ||
Total | $ 35,536 | $ 71,306 | ||
Lessee Operating Lease Description | ||||
Cash paid for amounts included in the measurement of lease liabilities-Operating cash flows from operating leases | 48,634 | |||
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 8,580 | |||
Weighted-average remaining lease term - operating leases (in years) | 17 years 1 month 6 days | 17 years 1 month 6 days | ||
Weighted-average discount rate - operating leases | 5.20% | 5.20% |
Leases - Maturity of operating
Leases - Maturity of operating lease liabilities (Details) - USD ($) $ in Thousands | Jul. 02, 2019 | Jan. 01, 2019 |
Operating Leases | ||
2019 | $ 42,258 | $ 93,792 |
2020 | 97,994 | 91,808 |
2021 | 95,964 | 88,829 |
2022 | 94,896 | 86,925 |
2023 | 93,815 | 81,929 |
Thereafter | 1,182,989 | 495,091 |
Total future lease payments | 1,607,916 | $ 938,374 |
Less: Interest | 579,661 | |
Present value of lease liabilities | $ 1,028,255 |
Leases - Operating lease option
Leases - Operating lease options (Details) $ in Thousands | 6 Months Ended | |
Jul. 02, 2019USD ($)lease | Jan. 01, 2019USD ($) | |
Operating Leases | ||
Initial term of leases, Restaurant locations | 20 years | |
Renewal term of leases, Restaurant locations | 5 years | |
Number of leases that have been executed but have not yet commenced | lease | 2 | |
Undiscounted fixed payments | $ | $ 1,607,916 | $ 938,374 |
Four Leases | ||
Operating Leases | ||
Number of leases that have been executed but have not yet commenced | lease | 4 | |
Undiscounted fixed payments | $ | $ 30,500 | |
Three Lease Options | ||
Operating Leases | ||
Initial term of leases, Restaurant locations | 20 years | |
One Lease Option | ||
Operating Leases | ||
Initial term of leases, Restaurant locations | 10 years |
Long-Term Debt (Details)
Long-Term Debt (Details) $ in Millions | 6 Months Ended |
Jul. 02, 2019USD ($) | |
Long-Term Debt | |
Maximum commitments | $ 200 |
Maximum commitments, letter of credit sub-facility | 50 |
Additional available credit | 100 |
Available borrowings | 145.6 |
Outstanding borrowings | 35 |
Outstanding letters of credit | $ 19.4 |
Net Adjusted Leverage Ratio | 3.2 |
EBITDAR Ratio | 2.5 |
Maximum | |
Long-Term Debt | |
Financial covenant, Net Adjusted Leverage Ratio | 4 |
Minimum | |
Long-Term Debt | |
Financial covenant, EBITDAR Ratio | 1.9 |
Adjusted LIBO Rate | |
Long-Term Debt | |
Credit facility, floating interest rate basis | Adjusted LIBO Rate |
Adjusted LIBO Rate | Maximum | |
Long-Term Debt | |
Credit facility, basis spread on variable rate, (as a percent) | 1.75% |
Adjusted LIBO Rate | Minimum | |
Long-Term Debt | |
Credit facility, basis spread on variable rate, (as a percent) | 1.00% |
Federal Funds Effective Rate | |
Long-Term Debt | |
Credit facility, floating interest rate basis | Federal Funds Effective Rate |
Credit facility, basis spread on variable rate, (as a percent) | 0.50% |
One-month Adjusted LIBO Rate | |
Long-Term Debt | |
Credit facility, floating interest rate basis | one-month Adjusted LIBO Rate |
Credit facility, basis spread on variable rate, (as a percent) | 1.00% |
One-month Adjusted LIBO Rate | Maximum | |
Long-Term Debt | |
Credit facility, basis spread on variable rate, (as a percent) | 0.75% |
One-month Adjusted LIBO Rate | Minimum | |
Long-Term Debt | |
Credit facility, basis spread on variable rate, (as a percent) | 0.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jul. 07, 2018item | Jun. 22, 2018USD ($) | Jun. 07, 2018USD ($) |
Commitments and Contingencies | |||
Number of restaurants receiving janitorial services | item | 8 | ||
Wage citation | $ 4.2 | ||
Internal Revenue Service | |||
Commitments and Contingencies | |||
Tax disallowance | $ 8 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 27, 2019 | Jul. 25, 2019 | May 29, 2019 | Apr. 25, 2019 | Jul. 02, 2019 | Apr. 02, 2019 | Jul. 03, 2018 | Apr. 03, 2018 | Jan. 01, 2019 |
Stockholders Equity | |||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.36 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.29 | $ 0.29 | |||
Cash dividends paid per common share (in dollars per share) | $ 0.36 | $ 0.33 | |||||||
Repurchased shares since program inception | 52,643,252 | 51,791,941 | |||||||
Value of shares repurchased since program inception | $ 1,681,304 | $ 1,642,140 | |||||||
Treasury stock repurchased during period | $ 28,093 | $ 11,071 | $ 7,126 | $ 34,903 | |||||
Treasury Stock | |||||||||
Stockholders Equity | |||||||||
Number of shares authorized to be repurchased | 56,000,000 | ||||||||
Repurchased shares since program inception | 52,600,000 | ||||||||
Value of shares repurchased since program inception | $ 1,681,300 | ||||||||
Shares repurchased during period | 600,000 | ||||||||
Treasury stock repurchased during period | $ 28,100 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - shares shares in Millions | May 30, 2019 | Apr. 05, 2017 | Apr. 04, 2017 |
Stock-Based Compensation | |||
Shares authorized for issuance under share-based compensation plan | 1.8 | 12.7 | 9.2 |
Shares available for grant | 1.9 | ||
Maximum | |||
Stock-Based Compensation | |||
Shares authorized for issuance under share-based compensation plan | 4.8 |
Stock-Based Compensation - Net
Stock-Based Compensation - Net of Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2019 | Jul. 03, 2018 | Jul. 02, 2019 | Jul. 03, 2018 | |
Stock-Based Compensation | ||||
Total stock-based compensation | $ 4,641 | $ 5,062 | $ 10,488 | $ 11,075 |
Income tax benefit | 1,140 | 1,263 | 2,578 | 2,763 |
Total stock-based compensation, net of taxes | 3,501 | 3,799 | 7,910 | 8,312 |
Capitalized stock-based compensation | 51 | 68 | 114 | 138 |
Labor expenses | ||||
Stock-Based Compensation | ||||
Total stock-based compensation | 1,721 | 2,576 | 3,442 | 4,175 |
Other operating costs and expenses | ||||
Stock-Based Compensation | ||||
Total stock-based compensation | 68 | 46 | 136 | 110 |
General and administrative expenses | ||||
Stock-Based Compensation | ||||
Total stock-based compensation | $ 2,852 | $ 2,440 | $ 6,910 | $ 6,790 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted Average Fair Value (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 02, 2019 | Jul. 03, 2018 | Jul. 02, 2019 | Jul. 03, 2018 | Jan. 01, 2019 | |
Stock Options | |||||
Stock-Based Compensation | |||||
Weighted average fair value at the grant date for options issued (in dollars per share) | $ 12.81 | ||||
Weighted average assumptions under Black-Scholes valuation model | |||||
Expected option term | 6 years 10 months 24 days | ||||
Expected stock price volatility (as a percent) | 26.40% | ||||
Risk-free interest rate (as a percent) | 2.80% | ||||
Dividend yield (as a percent) | 2.20% | 2.20% | |||
Stock option activity, Shares | |||||
Outstanding at beginning of year (in shares) | 1,799 | ||||
Granted (in shares) | 300 | ||||
Exercised (in shares) | (208) | ||||
Outstanding at end of year (in shares) | 1,891 | 1,891 | 1,799 | ||
Exercisable at end of year (in shares) | 1,055 | 1,055 | |||
Weighted Average Exercise Price | |||||
Outstanding at beginning of year (in dollars per share) | $ 45.03 | ||||
Granted (in dollars per share) | 46.03 | ||||
Exercised (in dollars per share) | 29.83 | ||||
Outstanding at end of year (in dollars per share) | $ 46.86 | 46.86 | $ 45.03 | ||
Exercisable at end of year (in dollars per share) | $ 45.24 | $ 45.24 | |||
Weighted Average Remaining Contractual Term (In years) | |||||
Weighted Average Remaining Contractual Term (In years) | 4 years 7 months 6 days | 4 years 1 month 6 days | |||
Exercisable at end of year (In years) | 3 years 1 month 6 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding at beginning of year | $ 5,606 | ||||
Outstanding at end of year | $ 2,599 | 2,599 | $ 5,606 | ||
Exercisable at end of year | 2,599 | 2,599 | |||
Total intrinsic value of options exercised | 200 | $ 4,300 | 3,600 | $ 4,700 | |
Unrecognized Stock-based Compensation Expense | |||||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 8,400 | $ 8,400 | |||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 4 years 6 months | ||||
Restricted Shares and Restricted Share Units | |||||
Restricted Shares and Restricted Share Units, Shares | |||||
Outstanding at beginning of year (in shares) | 1,702 | ||||
Granted (in shares) | 427 | ||||
Vested (in shares) | (272) | ||||
Forfeited (in shares) | (54) | ||||
Outstanding at end of year (in shares) | 1,803 | 1,803 | 1,702 | ||
Fair value of shares vested | $ 1,300 | $ 1,400 | $ 12,400 | $ 11,800 | |
Weighted Average Fair Value | |||||
Outstanding at beginning of year (in dollars per share) | $ 48.08 | ||||
Granted (in dollars per share) | $ 45.15 | $ 51.88 | 45.89 | ||
Vested (in dollars per share) | 45.70 | ||||
Forfeited (in dollars per share) | 48.76 | ||||
Outstanding at end of year (in dollars per share) | $ 47.89 | $ 47.89 | $ 48.08 | ||
Unrecognized Stock-based Compensation Expense | |||||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 43,700 | $ 43,700 | |||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 3 years 2 months 12 days |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 02, 2019 | Apr. 02, 2019 | Jul. 03, 2018 | Apr. 03, 2018 | Jul. 02, 2019 | Jul. 03, 2018 | |
Net Income Per Share | ||||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 2,000 | 1,700 | ||||
Net income per share, basic and diluted | ||||||
Net income | $ 35,510 | $ 26,984 | $ 28,353 | $ 26,029 | $ 62,494 | $ 54,382 |
Basic weighted average shares outstanding (in shares) | 44,165 | 45,383 | 44,210 | 45,467 | ||
Dilutive effect of equity awards (in shares) | 621 | 1,043 | 661 | 1,002 | ||
Diluted weighted average shares outstanding (in shares) | 44,786 | 46,426 | 44,871 | 46,469 | ||
Basic net income per share (in dollars per share) | $ 0.80 | $ 0.62 | $ 1.41 | $ 1.20 | ||
Diluted net income per share (in dollars per share) | $ 0.79 | $ 0.61 | $ 1.39 | $ 1.17 | ||
Restricted Shares and Restricted Share Units | ||||||
Net Income Per Share | ||||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 1,800 | 1,700 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2019 | Jul. 03, 2018 | Jul. 02, 2019 | Jul. 03, 2018 | Jan. 01, 2019 | |
Segment Information | |||||
Revenues | $ 602,645 | $ 587,319 | $ 1,202,126 | $ 1,172,016 | |
Income/(loss) from operations | 40,099 | 34,543 | 70,247 | 66,094 | |
Depreciation and amortization | 21,659 | 23,727 | 43,021 | 47,729 | |
Capital expenditures | 16,020 | 21,182 | 29,371 | 51,870 | |
Total assets | 2,073,790 | 2,073,790 | $ 1,314,133 | ||
Lease termination costs | 2,600 | 2,600 | |||
The Cheesecake Factory restaurants | |||||
Segment Information | |||||
Revenues | 551,519 | 536,593 | 1,100,152 | 1,071,715 | |
Income/(loss) from operations | 68,988 | 69,376 | 130,232 | 130,942 | |
Depreciation and amortization | 18,004 | 20,146 | 35,611 | 40,336 | |
Capital expenditures | 14,839 | 10,696 | 26,731 | 30,162 | |
Total assets | 1,581,005 | 1,581,005 | 928,345 | ||
Other | |||||
Segment Information | |||||
Revenues | 51,126 | 50,726 | 101,974 | 100,301 | |
Income/(loss) from operations | 5,703 | 4,496 | 11,028 | 10,858 | |
Depreciation and amortization | 2,458 | 2,320 | 4,860 | 4,868 | |
Capital expenditures | 860 | 9,372 | 1,543 | 19,950 | |
Total assets | 227,464 | 227,464 | 164,972 | ||
Corporate | |||||
Segment Information | |||||
Income/(loss) from operations | (34,592) | (39,329) | (71,013) | (75,706) | |
Depreciation and amortization | 1,197 | 1,261 | 2,550 | 2,525 | |
Capital expenditures | 321 | $ 1,114 | 1,097 | $ 1,758 | |
Total assets | $ 265,321 | $ 265,321 | $ 220,816 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Aug. 27, 2019 | Jul. 25, 2019 | May 29, 2019 | Apr. 25, 2019 | Jul. 02, 2019 | Apr. 02, 2019 | Jul. 03, 2018 | Apr. 03, 2018 |
Subsequent Events | ||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.36 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.29 | $ 0.29 | ||
Cash dividends paid per common share (in dollars per share) | $ 0.36 | $ 0.33 |
Subsequent Events - FRC Agreeme
Subsequent Events - FRC Agreements (Details) $ in Millions | Jul. 30, 2019USD ($)item | Jul. 02, 2019USD ($) |
FRC Agreements | ||
Maximum commitments | $ 200 | |
Maximum commitments, letter of credit sub-facility | 50 | |
Additional available credit | $ 100 | |
One-month Adjusted LIBO Rate | ||
FRC Agreements | ||
Credit facility, floating interest rate basis | one-month Adjusted LIBO Rate | |
Credit facility, basis spread on variable rate, (as a percent) | 1.00% | |
Maximum | ||
FRC Agreements | ||
Financial covenant, Net Adjusted Leverage Ratio | 4 | |
Maximum | One-month Adjusted LIBO Rate | ||
FRC Agreements | ||
Credit facility, basis spread on variable rate, (as a percent) | 0.75% | |
Minimum | ||
FRC Agreements | ||
Financial covenant, EBITDAR Ratio | 1.9 | |
Minimum | One-month Adjusted LIBO Rate | ||
FRC Agreements | ||
Credit facility, basis spread on variable rate, (as a percent) | 0.00% | |
New Credit Agreement | Subsequent Events | ||
FRC Agreements | ||
Maximum commitments | $ 400 | |
Maximum commitments, letter of credit sub-facility | 40 | |
Additional available credit | $ 200 | |
Number of financial covenants | item | 2 | |
New Credit Agreement | Federal Reserve Bank of New York Rate | Subsequent Events | ||
FRC Agreements | ||
Credit facility, floating interest rate basis | Federal Reserve Bank of New York Rate | |
Credit facility, basis spread on variable rate, (as a percent) | 0.50% | |
New Credit Agreement | One-month Adjusted LIBO Rate | Subsequent Events | ||
FRC Agreements | ||
Credit facility, floating interest rate basis | one-month Adjusted LIBO Rate | |
Credit facility, basis spread on variable rate, (as a percent) | 1.00% | |
New Credit Agreement | Maximum | Subsequent Events | ||
FRC Agreements | ||
Financial covenant, Net Adjusted Leverage Ratio | 4.75 | |
New Credit Agreement | Minimum | Subsequent Events | ||
FRC Agreements | ||
Financial covenant, EBITDAR Ratio | 1.90 | |
FRC Acquisition | Subsequent Events | ||
FRC Agreements | ||
Gross consideration payable in cash | $ 308 | |
Additional consideration to acquire businesses over a period | $ 45 | |
Number of years for additional consideration | 4 years | |
Number of years for providing finance to achieve the targets | 5 years | |
North Italia Acquisition | Subsequent Events | ||
FRC Agreements | ||
Gross consideration payable in cash | $ 88 | |
Total consideration | $ 440 |