CHEESECAKE FACTORY INC [CAKE] Filings

10-Q 1 cake-20220927x10q.htm FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 27, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-20574

THE CHEESECAKE FACTORY INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware		51-0340466
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

26901 Malibu Hills Road
Calabasas Hills, California		91301
(Address of principal executive offices)		(Zip Code)

(818) 871-3000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of Each Class	Trading Symbol	Name of Each Exchange on which Registered
Common Stock, par value $.01 per share	CAKE	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 24, 2022, 51,420,136 shares of the registrant’s Common Stock, $.01 par value per share, were outstanding.

Table of Contents

THE CHEESECAKE FACTORY INCORPORATED

INDEX

			Page Number

PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements:
		Condensed Consolidated Balance Sheets (Unaudited)	1
		Condensed Consolidated Statements of (Loss)/Income (Unaudited)	2
		Condensed Consolidated Statements of Comprehensive (Loss)/Income (Unaudited)	3
		Condensed Consolidated Statements of Stockholders’ Equity and Series A Convertible Preferred Stock (Unaudited)	4
		Condensed Consolidated Statements of Cash Flows (Unaudited)	6
		Notes to Condensed Consolidated Financial Statements (Unaudited)	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
	Item 4.	Controls and Procedures	34

PART II	OTHER INFORMATION		35
	Item 1.	Legal Proceedings	35
	Item 1A.	Risk Factors	35
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
	Item 6.	Exhibits	36

Signatures			37

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

THE CHEESECAKE FACTORY INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	September 27,		December 28,
	2022		2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	133,157	$	189,627
Accounts and other receivables		67,661		100,504
Income taxes receivable		23,692		36,173
Inventories		62,275		42,839
Prepaid expenses		30,953		36,446
Total current assets		317,738		405,589
Property and equipment, net		755,524		741,746
Other assets:
Intangible assets, net		251,639		251,701
Operating lease assets		1,267,241		1,241,237
Other		141,932		157,852
Total other assets		1,660,812		1,650,790
Total assets	$	2,734,074	$	2,798,125

LIABILITIES, SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	59,030	$	54,086
Gift card liabilities		174,725		211,182
Operating lease liabilities		147,413		131,818
Other accrued expenses		225,000		239,187
Total current liabilities		606,168		636,273

Long-term debt		467,528		466,017
Operating lease liabilities		1,215,009		1,218,269
Other noncurrent liabilities		121,873		147,400
Commitments and contingencies (Note 8)
Series A convertible preferred stock, $.01 par value, 200,000 shares authorized; none issued		—		—
Stockholders’ equity:
Preferred stock, $.01 par value, other than Series A convertible preferred stock, 4,800,000 shares authorized; none issued		—		—
Common stock, $.01 par value, 250,000,000 shares authorized; 106,156,302 and 105,365,678 shares issued at September 27, 2022 and December 28, 2021, respectively		1,062		1,054
Additional paid-in capital		880,215		862,758
Retained earnings		1,187,280		1,169,150
Treasury stock, 54,485,868 and 53,139,172 shares at cost at September 27, 2022 and December 28, 2021, respectively		(1,744,005)		(1,702,509)
Accumulated other comprehensive loss		(1,056)		(287)
Total stockholders’ equity		323,496		330,166
Total liabilities, Series A convertible preferred stock and stockholders’ equity	$	2,734,074	$	2,798,125

See the accompanying notes to the condensed consolidated financial statements

Table of Contents

THE CHEESECAKE FACTORY INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS)/INCOME

(In thousands, except per share data)

(Unaudited)


	Thirteen		Thirteen		Thirty-Nine		Thirty-Nine
	Weeks Ended		Weeks Ended		Weeks Ended		Weeks Ended
	September 27, 2022		September 28, 2021		September 27, 2022		September 28, 2021

Revenues	$	784,001	$	754,474	$	2,410,354	$	2,150,847

Costs and expenses:
Cost of sales		197,774		169,418		590,457		474,237
Labor expenses		293,040		279,957		893,322		784,501
Other operating costs and expenses		217,009		201,490		643,844		582,518
General and administrative expenses		50,324		45,802		149,638		138,457
Depreciation and amortization expenses		22,651		22,576		66,764		66,805
Impairment of assets and lease termination expenses		—		—		313		594
Acquisition-related contingent consideration, compensation and amortization expenses		1,081		685		2,920		12,592
Preopening costs		4,327		3,169		9,038		9,804
Total costs and expenses		786,206		723,097		2,356,296		2,069,508
(Loss)/income from operations		(2,205)		31,377		54,058		81,339
Interest and other expense, net		(1,315)		(1,794)		(3,906)		(9,194)
(Loss)/income before income taxes		(3,520)		29,583		50,152		72,145
Income tax (benefit)/provision		(1,122)		(3,097)		3,731		1,882
Net (loss)/income		(2,398)		32,680		46,421		70,263
Dividends on Series A preferred stock		—		—		—		(18,661)
Undistributed earnings allocated to Series A preferred stock		—		—		—		(5,804)
Net (loss)/income available to common stockholders	$	(2,398)	$	32,680	$	46,421	$	45,798

Net (loss)/income per common share:
Basic	$	(0.05)	$	0.65	$	0.93	$	0.98
Diluted (Note 11)	$	(0.05)	$	0.64	$	0.92	$	0.96

Weighted-average common shares outstanding:
Basic		49,653		50,212		50,124		46,624
Diluted		49,653		51,113		50,708		47,675

See the accompanying notes to the condensed consolidated financial statements.

Table of Contents

THE CHEESECAKE FACTORY INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME

(In thousands)

(Unaudited)


	Thirteen		Thirteen		Thirty-Nine		Thirty-Nine
	Weeks Ended		Weeks Ended		Weeks Ended		Weeks Ended
	September 27, 2022		September 28, 2021		September 27, 2022		September 28, 2021

Net (loss)/income	$	(2,398)	$	32,680	$	46,421	$	70,263
Other comprehensive (loss)/gain:
Foreign currency translation adjustment		(724)		(238)		(769)		155
Unrealized gain on derivative, net of tax		—		—		—		3,464
Other comprehensive (loss)/gain		(724)		(238)		(769)		3,619
Total comprehensive (loss)/income		(3,122)		32,442		45,652		73,882
Comprehensive income attributable to Series A preferred stockholders		—		—		—		(24,872)
Total comprehensive (loss)/income available to common stockholders	$	(3,122)	$	32,442	$	45,652	$	49,010

See the accompanying notes to the condensed consolidated financial statements

Table of Contents

THE CHEESECAKE FACTORY INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND SERIES A CONVERTIBLE PREFERRED STOCK

(In thousands)

(Unaudited)

For the thirty-nine weeks ended September 27, 2022:


													Accumulated
	Series A Convertible						Additional						Other
	Preferred Stock			Common Stock			Paid-in		Retained		Treasury		Comprehensive
	Shares	Amount		Shares	Amount		Capital		Earnings		Stock		Loss		Total
Balance, December 28, 2021	—	$	—	105,366	$	1,054	$	862,758	$	1,169,150	$	(1,702,509)	$	(287)	$	330,166
Net income	—		—	—		—		—		23,163		—		—		23,163
Foreign currency translation adjustment	—		—	—		—		—		—		—		255		255
Cash dividends declared common stock, net of forfeitures	—		—	—		—		—		22		—		—		22
Stock-based compensation	—		—	608		6		5,569		—		—		—		5,575
Common stock issued under stock-based compensation plans	—		—	55		0		83		—		—		—		83
Treasury stock purchases	—		—	—		—		—		—		(3,938)		—		(3,938)
Balance, March 29, 2022	—	$	—	106,029	$	1,060	$	868,410	$	1,192,335	$	(1,706,447)	$	(32)	$	355,326
Net income	—		—	—		—		—		25,656		—		—		25,656
Foreign currency translation adjustment	—		—	—		—		—		—		—		(300)		(300)
Cash dividends declared common stock, net of forfeitures, $0.27 per share	—		—	—		—		—		(14,260)		—		—		(14,260)
Stock-based compensation	—		—	(40)		0		6,141		—		—		—		6,141
Common stock issued under stock-based compensation plans	—		—	41		0		0		—		—		—		0
Treasury stock purchases	—		—	—		—		—		—		(10,879)		—		(10,879)
Balance, June 28, 2022	—	$	—	106,030	$	1,060	$	874,551	$	1,203,731	$	(1,717,326)	$	(332)	$	361,684
Net loss	—		—	—		—		—		(2,398)		—		—		(2,398)
Foreign currency translation adjustment	—		—	—		—		—		—		—		(724)		(724)
Cash dividends declared common stock, net of forfeitures, $0.27 per share	—		—	—		—		—		(14,053)		—		—		(14,053)
Stock-based compensation	—		—	32		1		5,664		—		—		—		5,665
Common stock issued under stock-based compensation plans	—		—	94		1		0		—		—		—		1
Treasury stock purchases	—		—	—		—		—		—		(26,679)		—		(26,679)
Balance, September 27, 2022	—	$	—	106,156	$	1,062	$	880,215	$	1,187,280	$	(1,744,005)	$	(1,056)	$	323,496

Table of Contents

For the thirty-nine weeks ended September 28, 2021:


													Accumulated
	Series A Convertible						Additional						Other
	Preferred Stock			Common Stock			Paid-in		Retained		Treasury		Comprehensive
	Shares	Amount		Shares	Amount		Capital		Earnings		Stock		Loss		Total
Balance, December 29, 2020	200	$	218,248	98,645	$	986	$	878,148	$	1,110,087	$	(1,696,743)	$	(3,785)	$	288,693
Cumulative effect of adopting ASU 2020-06	—		(4,763)	—		—		—		4,763		—		—		4,763
Balance, December 29, 2020, as adjusted	200		213,485	98,645		986		878,148		1,114,850		(1,696,743)		(3,785)		293,456
Net income	—		—	—		—		—		3,868		—		—		3,868
Foreign currency translation adjustment	—		—	—		—		—		—		—		174		174
Change in derivative, net of tax	—		—	—		—		—		—		—		1,738		1,738
Cash dividends declared common stock, net of forfeitures	—		—	—		—		—		399		—		—		399
Stock-based compensation	—		—	293		3		5,480		—		—		—		5,483
Common stock issued under stock-based compensation plans	—		—	570		6		20,417		—		—		—		20,423
Treasury stock purchases	—		—	—		—		—		—		(3,957)		—		(3,957)
Cash dividends declared Series A preferred stock, $25.35 per share	—		—	—		—		—		(5,070)		—		—		(5,070)
Balance, March 30, 2021	200	$	213,485	99,508	$	995	$	904,045	$	1,114,047	$	(1,700,700)	$	(1,873)	$	316,514
Net income	—		—	—		—		—		33,715		—		—		33,715
Foreign currency translation adjustment	—		—	—		—		—		—		—		219		219
Change in derivative, net of tax	—		—	—		—		—		—		—		1,726		1,726
Cash dividends declared common stock, net of forfeitures	—		—	—		—		—		15		—		—		15
Stock-based compensation	—		—	44		1		5,540		—		—		—		5,541
Common stock issued under stock-based compensation plans	—		—	118		1		4,361		—		—		—		4,362
Common stock issuance	—		—	3,125		31		167,019		—		—		—		167,050
Treasury stock purchases	—		—	—		—		—		—		(603)		—		(603)
Series A preferred stock cash-settled conversion	(150)		(160,114)	—		—		(283,637)		—		—		—		(283,637)
Series A preferred stock conversion to common stock	(50)		(53,371)	2,401		24		53,273		—		—		—		53,297
Deemed dividends on Series A preferred stock	—		—	—		—		—		(13,591)		—		—		(13,591)
Balance, June 29, 2021	—	$	—	105,196	$	1,052	$	850,601	$	1,134,186	$	(1,701,303)	$	72	$	284,608
Net income	—		—	—		—		—		32,680		—		—		32,680
Foreign currency translation adjustment	—		—

CHEESECAKE FACTORY INC [CAKE] Filings
10-Q	[2022-11-02]
10-Q	[2022-08-01]
10-Q	[2022-05-02]
10-K	[2022-02-22]
10-Q	[2021-11-04]
10-Q	[2021-08-04]
10-Q	[2021-05-03]
10-K	[2021-02-24]
10-Q	[2020-11-06]
10-Q	[2020-08-03]
10-Q	[2020-06-22]
10-K	[2020-03-12]
10-Q	[2019-11-08]
10-Q	[2019-08-05]
10-Q	[2019-05-06]
10-K	[2019-03-04]
10-Q	[2018-11-09]
10-Q	[2018-08-06]
10-Q	[2018-05-11]
10-K	[2018-02-28]
10-Q	[2017-11-08]
10-Q	[2017-08-09]
10-Q	[2017-05-11]
10-K	[2017-03-02]
10-Q	[2016-11-03]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-K	[2016-02-25]
10-Q	[2015-11-05]
10-Q	[2015-08-06]
10-Q	[2015-05-08]
10-K	[2015-03-02]
10-Q	[2014-11-07]
10-Q	[2014-08-08]
10-Q	[2014-05-09]
10-K	[2014-02-27]
10-Q	[2013-11-08]
10-Q	[2013-08-09]
10-Q	[2013-05-10]
10-K	[2013-02-28]
10-Q	[2012-11-09]
10-Q	[2012-08-10]
10-Q	[2012-05-11]
10-K	[2012-02-29]