CHEESECAKE FACTORY INC 10-Q

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 ​ 1 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. ​ 2 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 ​ 3 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 ​ ​ 4 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 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 238 ) ​ ​ ( 238 ) Cash dividends declared common stock, net of forfeitures ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 135 ​ ​ — ​ ​ — ​ ​ 135 Stock-based compensation ​ — ​ ​ — ​ ​ 59 ​ ​ 1 ​ ​ 5,441 ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,442 Common stock issued under stock-based compensation plans ​ — ​ ​ — ​ ​ 38 ​ ​ 0 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Treasury stock purchases ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 681 ) ​ ​ — ​ ​ ( 681 ) Balance, September 28, 2021 ​ — ​ $ — ​ ​ 105,293 ​ $ 1,053 ​ $ 856,042 ​ $ 1,167,001 ​ $ ( 1,701,984 ) ​ $ ( 166 ) ​ $ 321,946 ​ See the accompanying notes to the condensed consolidated financial statements. ​ 5 Table of Contents THE CHEESECAKE FACTORY INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ Thirty-Nine ​ Thirty-Nine ​ Weeks Ended ​ Weeks Ended ​ September 27, 2022 September 28, 2021 Cash flows from operating activities: ​ ​ ​ ​ ​ Net income $ 46,421 ​ $ 70,263 Adjustments to reconcile net income to cash provided by operating activities: ​ ​ ​ ​ ​ Depreciation and amortization expenses ​ 66,764 ​ ​ 66,805 Impairment of assets and lease termination expense 250 ​ 394 Deferred income taxes ​ ( 2,633 ) ​ ​ ( 5,227 ) Stock-based compensation 17,220 ​ 16,329 Changes in assets and liabilities: ​ ​ ​ ​ ​ Accounts and other receivables ​ 23,835 ​ ​ 8,121 Income taxes receivable/payable 12,481 ​ ( 3,749 ) Inventories ( 19,442 ) ​ ( 3,907 ) Prepaid expenses 5,487 ​ 5,596 Operating lease assets/liabilities ( 13,758 ) ​ ( 4,386 ) Other assets ​ 18,447 ​ ​ ( 5,682 ) Accounts payable 11,177 ​ ( 3,771 ) Gift card liabilities ( 36,448 ) ​ ( 23,143 ) Other accrued expenses ​ ( 30,904 ) ​ ​ 1,517 Cash provided by operating activities 98,897 ​ 119,160 Cash flows from investing activities: ​ ​ ​ ​ ​ Additions to property and equipment ( 78,053 ) ​ ( 49,158 ) Additions to intangible assets ( 489 ) ​ ( 482 ) Other ​ 485 ​ ​ ( 1,283 ) Cash used in investing activities ( 78,057 ) ​ ( 50,923 ) Cash flows from financing activities: ​ ​ ​ ​ ​ Acquisition-related deferred consideration and compensation ​ ( 7,187 ) ​ ​ — Repayment on credit facility ​ — ​ ​ ( 150,000 ) Convertible debt issuance ​ — ​ ​ 345,000 Convertible debt direct and incremental costs ​ — ​ ​ ( 10,074 ) Series A preferred stock cash-settled conversion ​ — ​ ​ ( 443,751 ) Series A preferred stock conversion direct and incremental costs ​ — ​ ​ ( 74 ) Series A preferred stock dividends paid ​ — ​ ​ ( 18,661 ) Common stock issuance ​ — ​ ​ 175,000 Common stock issuance direct and incremental costs — ​ ( 7,950 ) Proceeds from exercise of stock options ​ 84 ​ ​ 24,785 Common stock dividends paid ( 28,350 ) ​ ( 337 ) Treasury stock purchases ( 41,496 ) ​ ( 5,241 ) Cash used in financing activities ( 76,949 ) ​ ( 91,303 ) Foreign currency translation adjustment ( 361 ) ​ 11 Net change in cash and cash equivalents ​ ( 56,470 ) ​ ​ ( 23,055 ) Cash and cash equivalents at beginning of period 189,627 ​ 154,085 Cash and cash equivalents at end of period $ 133,157 ​ $ 131,030 ​ ​ ​ ​ ​ ​ Supplemental disclosures: ​ ​ ​ ​ ​ Interest paid $ 4,706 ​ $ 7,749 Income taxes paid $ 13,603 ​ $ 9,128 Construction payable $ 10,545 ​ $ 3,236 ​ See the accompanying notes to the condensed consolidated financial statements. ​ ​ ​ 6 Table of Contents THE CHEESECAKE FACTORY INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ 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 December 28, 2021 filed with the SEC on February 22, 2022. ​ We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal year 2022 consists of 53 weeks and will end on January 3, 2023. Fiscal year 2021, which ended on December 28, 2021, was a 52 -week year. ​ 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. ​ COVID-19 Pandemic and Other Impacts to our Operating Environment ​ We have experienced significant disruptions to our business as federal, state and local restrictions have fluctuated over time to mitigate the spread of the COVID-19 virus. While most of our restaurants operated with no restrictions on indoor dining during the 2021 fiscal year and 2022 fiscal year to date, our operations were notably impacted during periods of accelerating case counts which led to restaurant staff quarantines and a shift in consumer behavior towards sheltering-in-place and social distancing. We have incurred and may continue to incur additional costs to address government regulations and the safety of our staff members and customers. During fiscal year 2022 to date, along with COVID-19, our operating results have been impacted by geopolitical and other macroeconomic factors, leading to increased commodity and wage inflation and other increased costs. ​ The ongoing effects of COVID-19 and its variants, along with other geopolitical and macroeconomic events, could lead to further government mandates, including but not limited to capacity restrictions, shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation and disruptions in the supply chain. If these factors significantly impact our cash flow in the future, we may again implement mitigation actions such as suspending share repurchases and dividends, increasing borrowings on our credit facility or modifying our operating strategies. Some of these measures may have an adverse impact on our business. ​ 7 Table of Contents Recent Accounting Pronouncements ​ In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is intended to simplify the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. This pronouncement is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. The guidance allows for either full retrospective adoption or modified retrospective adoption. We adopted this guidance in the first quarter of fiscal 2021 utilizing the modified retrospective method and, accordingly, recorded a $ 4.8 million cumulative adjustment to retained earnings to reverse previously recorded beneficial conversion features. ​ As further discussed in Note 5, we issued certain convertible senior notes due 2026 (“Notes”) during the second quarter of fiscal 2021, and the accounting for these instruments was based on the guidance in ASU 2020-06. Additionally, the impact on diluted earnings per share of the Notes was calculated based on the if-converted method, as further described in Note 11. ​ ​ ​ ​ 2. Fair Value Measurements Fair value measurements are estimated based on valuation techniques and inputs categorized as follows: ​ ● Level 1: Quoted prices in active markets for identical assets or liabilities; ● Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities; and ● Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the Company to develop its own assumptions. ​ The following tables present the components and classification of our assets and liabilities that are measured at fair value on a recurring basis (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 27, 2022 ​ Level 1 Level 2 Level 3 Assets/(Liabilities) ​ ​ ​ ​ ​ ​ ​ ​ Non-qualified deferred compensation assets ​ $ 73,721 ​ $ — ​ $ — Non-qualified deferred compensation liabilities ​ ​ ( 73,462 ) ​ ​ — ​ ​ — Acquisition-related deferred consideration ​ ​ — ​ ​ ( 21,898 ) ​ ​ — Acquisition-related contingent consideration and compensation liabilities ​ ​ — ​ ​ — ​ ​ ( 18,414 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 28, 2021 ​ Level 1 Level 2 Level 3 Assets/(Liabilities) ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-qualified deferred compensation assets ​ $ 92,588 ​ $ — ​ $ — Non-qualified deferred compensation liabilities ​ ​ ( 92,012 ) ​ ​ — ​ ​ — Acquisition-related deferred consideration ​ ​ — ​ ​ ( 21,642 ) ​ ​ — Acquisition-related contingent consideration and compensation liabilities ​ ​ — ​ ​ — ​ ​ ( 23,894 ) ​ The following table presents a reconciliation of the beginning and ending amounts of the fair value of the acquisition-related contingent consideration and compensation liabilities categorized as Level 3 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirty-Nine Thirty-Nine ​ ​ Weeks Ended ​ Weeks Ended ​ September 27, 2022 September 28, 2021 ​ ​ ​ ​ ​ ​ ​ Beginning balance ​ $ 23,894 ​ $ 7,465 Payment ​ ​ ( 7,187 ) ​ ​ — Change in fair value ​ 1,707 ​ 11,555 Ending balance ​ $ 18,414 ​ $ 19,020 ​ 8 Table of Contents The fair value of the acquisition-related contingent consideration and compensation liabilities was determined utilizing a Monte Carlo model based on estimated future revenues, margins and volatility factors, among other variables and estimates and has no minimum or maximum payment. The undiscounted range of outcomes per the Monte Carlo model utilized to determine the fair value of the acquisition-related contingent consideration and compensation liabilities at September 27, 2022 was $ 0 to $ 204.0 million. Results could change materially if different estimates and assumptions were used. The significant decrease in the fair value of the contingent consideration and compensation liabilities during the first three quarters of fiscal 2022 primarily related to the payment of $ 7.2 million per the Fox Restaurant Concept LLC (“FRC”) acquisition agreement. ​ The fair values of our cash and cash equivalents, accounts and other receivables, income taxes receivable, prepaid expenses, accounts payable, income taxes payable and other accrued liabilities approximate their carrying amounts. ​ As of September 27, 2022, we had $ 345.0 million aggregate principal amount of Notes outstanding. The estimated fair value of the Notes based on a market approach as of September 27, 2022 was approximately $ 269.1 million and was determined based on the estimated or actual bids and offers of the Notes in an over-the-counter market on the last business day of the reporting period. The decrease in the fair value of the Notes was primarily due to a decline in our stock price from the date of the issuance of Notes. See Note 5 for further discussion of the Notes. ​ ​ 3. Inventories ​ Inventories consisted of (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ September 27, 2022 December 28, 2021 Restaurant food and supplies ​ $ 29,255 ​ $ 27,877 Bakery finished goods and work in progress (1) ​ 25,140 ​ 7,951 Bakery raw materials and supplies ​ 7,880 ​ 7,011 Total ​ $ 62,275 ​ $ 42,839 (1) The increase in bakery finished goods and work in progress inventory primarily relates to lower than typical levels at December 28, 2021 due to challenges ramping back up after the initial COVID-19 shutdown, as well as higher valuations at September 27, 2022 due to the significant cost inflation experienced during fiscal 2022. ​ ​ 4. Gift Cards ​ The following tables present information related to gift cards (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 Gift card liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning balance $ 182,295 $ 169,098 ​ $ 211,182 $ 184,655 Activations ​ 20,650 ​ 18,364 ​ 69,847 ​ 67,316 Redemptions and breakage ​ ( 28,220 ) ​ ( 25,949 ) ​ ( 106,304 ) ​ ( 90,458 ) Ending balance $ 174,725 $ 161,513 ​ $ 174,725 $ 161,513 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 Gift card contract assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning balance $ 17,061 $ 15,811 ​ $ 18,468 $ 17,955 Deferrals ​ 2,268 ​ 2,273 ​ 8,159 ​ 7,980 Amortization ​ ( 3,674 ) ​ ( 3,814 ) ​ ( 10,972 ) ​ ( 11,665 ) Ending balance $ 15,655 $ 14,270 ​ $ 15,655 $ 14,270 ​ ​ 9 Table of Contents 5. Long-Term Debt ​ Revolving Credit Facility ​ On March 30, 2021, we entered into a Second Amendment (the “Second Amendment”) to our existing Third Amended and Restated Loan Agreement, dated July 30, 2019 (as amended by that certain First Amendment, dated as of May 1, 2020 and by the Second Amendment, collectively, the “Amended Credit Agreement”). The Amended Credit Agreement, which terminates on July 30, 2024, consists of a $ 400 million revolving loan facility (the “Revolving Facility”), including a $ 40 million sublimit for letters of credit. The Amended Credit Agreement also provides the ability to increase the Revolving Facility in an amount not to exceed (a) during the Covenant Relief Period (as defined below), $ 125 million and (b) thereafter, $ 200 million. The funding of any such increases are subject to receipt of lender commitments and satisfaction of customary conditions precedent. Certain of our material subsidiaries have guaranteed our obligations under the Amended Credit Agreement. ​ The Second Amendment, among other things, (i) extended the prior covenant relief period during which the testing of the net adjusted debt to EBITDAR ratio covenant (the “Net Adjusted Leverage Ratio”) and the EBITDAR to interest and rent expense ratio covenant (the “EBITDAR Ratio”) was suspended until the quarter ending December 28, 2021 (the “Covenant Relief Period”), (ii) continued to impose a monthly Liquidity covenant of $ 100 million (with “Liquidity” being the sum of (a) unrestricted cash and cash equivalents and (b) the unused portion of the Revolving Facility) until the Company demonstrated compliance with the financial covenants as of the quarter ending December 28, 2021, (iii) provided that the obligations thereunder be secured by a first priority security interest in substantially all of our and any guarantor’s property, with such property to be released upon (a) the termination of the Covenant Relief Period, (b) the Company’s compliance with the Net Adjusted Leverage Ratio and the EBITDAR Ratio as of the quarter ending on March 29, 2022, (c) neither the Company nor any of the guarantors having incurred unsecured debt using certain debt baskets under the Revolving Facility unless such debt is convertible debt or subordinated on customary debt subordination terms reasonably acceptable to the administrative agent and (d) no default or event of default having occurred or continuing, (iv) amended certain negative covenants during the Covenant Relief Period, including certain restrictions on capital expenditures, restricted payments, investments and indebtedness, and (v) permitted the payment of cash dividends with respect to our Series A Convertible Preferred Stock, par value $ 0.01 per share (“Series A preferred stock”) for each fiscal quarter of 2021 in an amount not to exceed $ 5.25 million per quarter. Subsequent to the Covenant Relief Period, we are required to maintain (i) a maximum Net Adjusted Leverage Ratio of 4.75 and (ii) a minimum EBITDAR Ratio of 1.9 . Our Net Adjusted Leverage and EBITDAR Ratios were 3.7 and 2.1 , respectively, at September 27, 2022. Our compliance with the financial covenants set forth in the Revolving Facility as of September 27, 2022 was measured under the Fourth Revolving Facility (as defined in Note 13 below), and as of such date we were in compliance. Concurrently with our delivery of the compliance certificate demonstrating our compliance with the financial covenants in the Amended Credit Agreement as of December 28, 2021, the Covenant Relief Period was terminated. ​ Borrowings under the Amended Credit Agreement during the Covenant Relief Period bore interest, at our option, at a rate equal to either: (i) the adjusted LIBO Rate (as customarily defined, the “Adjusted LIBO Rate”) plus 2.5 % , 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) 1.5 % . During the Covenant Relief Period, we also incurred a fee of 0.4 % on the daily amount of unused commitments. ​ Subsequent to the Covenant Relief Period, borrowings under the Amended Credit Agreement bear interest, at our option, at a rate equal to either: (i) 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 our net adjusted leverage ratio. Subsequent to the Covenant Relief Period, we will also incur a fee of 0.1 % to 0.2 % on the daily amount of unused commitments. ​ Letters of credit 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. We paid certain customary loan origination fees in conjunction with the Amended Credit Agreement. At September 27, 2022, we had net availability for borrowings of $ 238.5 million, based on a $ 130.0 million outstanding debt balance and $ 31.5 million in standby letters of credit. ​ 10 Table of Contents The Amended Credit Agreement contains customary affirmative and negative covenants, including limits on cash dividends and share repurchases with respect to our equity interests, and restrictions on indebtedness, liens, investments, sales of assets, fundamental changes and other matters. The Amended Credit Agreement also contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgements, cross defaults to material indebtedness and events constituting a change of control. The occurrence of an event of default could result in the termination of commitments under the Revolving Facility, the declaration that all outstanding loans are immediately due and payable in whole or in part and the requirement of cash collateral deposits in respect of outstanding letters of credit. ​ Convertible Senior Notes ​ On June 15, 2021, we issued $ 345.0 million aggregate principal amount of convertible senior notes due 2026 (“Notes”). The net proceeds from the sale of the Notes were approximately $ 334.9 million after deducting issuance costs related to the Notes. ​ The Notes are senior, unsecured obligations and are (i) equal in right of payment with our existing and future senior, unsecured indebtedness; (ii) senior in right of payment to our existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. The Notes were issued pursuant to, and are governed by, an indenture (the “Base Indenture”) between us and a trustee (“Trustee”), dated as of June 15, 2021, as supplemented by a first supplemental indenture (the “Supplemental Indenture,” and the Base Indenture, as supplemented by the Supplemental Indenture, the “Indenture”), dated as of June 15, 2021, between the Company and the Trustee. ​ The Notes accrue interest at a rate of 0.375 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021. The Notes will mature on June 15, 2026, unless earlier repurchased, redeemed or converted. Before February 17, 2026, noteholders will have the right to convert their Notes only upon the occurrence of certain events. From and after February 17, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will have the right to elect to settle conversions either entirely in cash or in a combination of cash and shares of our common stock. However, upon conversion of any Notes, the conversion value, which will be determined over an “Observation Period” (as defined in the Indenture) consisting of 30 trading days, will be paid in cash up to at least the principal amount of the Notes being converted. The initial conversion rate is 12.7551 shares of common stock per $ 1,000 principal amount of Notes, which represents an initial conversion price of approximately $ 78.40 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. As of September 27, 2022, the conversion rate is 12.9717 shares of common stock per $ 1,000 principal amount of the Notes, which represents a conversion price of approximately $ 77.09 per share of common stock. In connection with the cash dividend that was declared by our Board on October 26, 2022, on November 14, 2022 we will adjust the conversion rate (which is expected to increase) and the conversion price (which is expected to decrease) of the Notes in accordance with their terms. ​ The Notes are redeemable, in whole or in part (subject to certain limitations described below), at our option at any time, and from time to time, on or after June 20, 2024 and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of our common stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. However, we may not redeem less than all of the outstanding Notes unless at least $ 150.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time we send the related redemption notice. In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption. ​ 11 Table of Contents If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require us to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving us and certain de-listing events with respect to our common stock. ​ The Notes contain customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment defaults on the Notes (which, in the case of a default in the payment of interest on the Notes, will be subject to a 30-day cure period); (ii) our failure to send certain notices under the Indenture within specified periods of time; (iii) our failure to comply with certain covenants in the Indenture relating to our ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of our assets and our subsidiaries, taken as a whole, to another person; (iv) a default by us in our other obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture; (v) certain defaults by us or any of our significant subsidiaries with respect to indebtedness for borrowed money of at least $ 20,000,000 ; (vi) the rendering of certain judgments against us or any of our significant subsidiaries for the payment of at least $ 25,000,000 , where such judgments are not discharged or stayed within 60 days after the date on which the right to appeal has expired or on which all rights to appeal have been extinguished; and (vii) certain events of bankruptcy, insolvency and reorganization involving us or any of our significant subsidiaries. ​ If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to us (and not solely with respect to a significant subsidiary of ours) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to us, or noteholders of at least 25 % of the aggregate principal amount of Notes then outstanding, by notice to us and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, we may elect, at our option, that the sole remedy for an Event of Default relating to certain failures by us to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 180 days at a specified rate per annum not exceeding 0.50 % on the principal amount of the Notes. ​ As of September 27, 2022, the Notes had a gross principal balance of $ 345.0 million and a balance of $ 337.5 million, net of unamortized issuance costs. Total amortization expense was $ 0.5 million and $ 1.5 million during the thirteen and thirty-nine weeks ended September 27, 2022, respectively. The effective interest rate for the Notes was 0.96 % as of September 27, 2022. ​ ​ ​ 6. Leases ​ Components of lease expense were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended Thirteen Weeks Ended ​ Thirty-Nine Weeks Ended ​ Thirty-Nine Weeks Ended ​ September 27, 2022 September 28, 2021 September 27, 2022 September 28, 2021 Operating ​ $ 34,629 ​ $ 33,034 ​ $ 102,282 ​ $ 97,889 Variable ​ 19,723 ​ 18,972 ​ ​ 60,073 ​ ​ 54,664 Short-term ​ 27 ​ 71 ​ ​ 80 ​ ​ 212 Total ​ $ 54,379 ​ $ 52,077 ​ $ 162,435 ​ $ 152,765 ​ Supplemental information related to leases (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirty-Nine ​ Thirty-Nine ​ ​ Weeks Ended ​ Weeks Ended ​ September 27, 2022 September 28, 2021 Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ Operating cash flows for operating leases ​ $ 102,675 ​ $ 103,318 Right-of-use assets obtained in exchange for new operating lease liabilities ​ ​ 51,436 ​ ​ 50,953 ​ ​ ​ 12 Table of Contents 7. Derivative ​ We terminated our interest rate swap agreement, which was designated as a cash flow hedge, in the second quarter of fiscal 2021. This interest rate swap, which would have matured on April 1, 2025, was established to manage our exposure to interest rate movements on our credit facility. The interest rate swap entitled us to receive a variable rate of interest based on the one-month LIBO rate in exchange for the payment of a fixed interest rate of 0.802 % . The notional amount of the swap agreement was $ 280.0 million through March 31, 2023 and $ 140.0 million from April 1, 2023 through April 1, 2025. The differences between the variable LIBO rate and the interest rate swap rate were settled monthly. Prior to termination, the interest rate swap was determined to be an effective hedging agreement. No gains or losses representing amounts excluded from the assessment of effectiveness were recognized in earnings in the first two quarters of fiscal 2021. ​ The following table summarizes the changes related to the interest rate swap in accumulated other comprehensive income (“AOCI”), net of tax, during the thirty-nine weeks ended September 28, 2021 (in thousands): ​ ​ ​ ​ ​ Beginning balance ​ $ ( 3,464 ) Other comprehensive loss before reclassifications ​ 2,514 Amounts reclassified from AOCI ​ 950 Other comprehensive loss, net of tax ​ 3,464 Ending balance ​ $ — ​ We classified this interest rate swap within Level 2 of the valuation hierarchy described in Note 2. Our counterparty under this arrangement provided monthly statements of the market values of this instrument based on significant inputs that were observable or could be derived principally from, or corroborated by, observable market data for substantially the full term of the asset or liability. The impact on the derivative liability for our and the counterparty’s non-performance risk to the derivative trade was considered when measuring the fair value of derivative liability. ​ ​ 8. Commitments and Contingencies ​ 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. On July 7, 2022, the parties participated in voluntary mediation and reached a tentative settlement on the wage citation. The settlement is subject to documentation and final agency approval. We have reserved an immaterial amount for settlement purposes. ​ On June 22, 2018, the Internal Revenue Service issued a Notice of Deficiency in which they disallowed a portion 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 assigned docket number 18150-18 to our case. On April 29, 2022, the parties filed a Settlement Stipulation and a Proposed Stipulated Decision (the “Decision”) with the tax court stipulating to the amount of income tax deficiency. On May 11, 2022, the court entered the Decision in accordance with the stipulation of the parties. We have recorded an immaterial amount in connection with the Decision. ​ Within the ordinary course of our business, we are subject to private lawsuits, government audits and investigations, 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. ​ 13 Table of Contents At this time, we believe that the amount of reasonably possible losses resulting from final disposition of any pending lawsuits, audits, investigations, 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. ​ 9. Stockholders’ Equity and Series A Convertible Preferred Stock Common Stock Issuance ​ On June 15, 2021, we issued 3.125 million shares of our common stock for $ 175.0 million. In connection with the issuance, we incurred direct and incremental costs of $ 8.0 million. ​ Common Stock – Dividends and Share Repurchases ​ On July 21, 2022, our Board declared a quarterly cash dividend of $ 0.27 per share that was paid on August 23, 2022 to the stockholders of record of each share of our common stock at the close of business on August 10, 2022. 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 Fourth Amended Credit Agreement (as defined in Note 13 below) and applicable law, and such other factors that the Board considers relevant. (See Notes 5 and 13 for further discussion of our long-term debt and dividends declared subsequent to September 27, 2022, respectively.) ​ Under authorization by our Board to repurchase up to 56.0 million shares of our common stock, we have cumulatively repurchased 54.5 million shares at a total cost of $ 1,744.0 million through September 27, 2022, with 889,309 shares and 1,346,696 shares repurchased at a cost of $ 26.7 million and $ 41.5 million during the thirteen and thirty-nine weeks ended September 27, 2022, respectively. Our objectives with regard to share repurchases have been to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our earnings per share growth. ​ Our share repurchase program 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. Share repurchases may be made from time to time in open market purchases, privately negotiated transactions, accelerated share repurchase programs, issuer self-tender offers or otherwise. Future decisions to repurchase shares are at the discretion of the Board and are based on several factors, including current and forecasted operating cash flows, capital needs associated with new restaurant development and maintenance of existing locations, dividend payments, debt levels and cost of borrowing, obligations associated with the FRC acquisition agreement, our share price and current market conditions. The timing and number of shares repurchased are also subject to legal constraints and covenants under the Fourth Amended Credit Agreement that limit share repurchases based on a defined ratio. (See Notes 5 and 13 for further discussion of our long-term debt and increased authorized amount under our share repurchase program, respectively.) ​ Series A Convertible Preferred Stock ​ On April 20, 2020, we issued 200,000 shares of Series A Convertible Preferred Stock, par value $ 0.01 per share for an aggregate purchase price of $ 200 million, or $ 1,000 per share. In connection with the issuance, we incurred direct and incremental costs of $ 10.3 million, including financial advisory fees, closing costs, legal expenses, a commitment fee and other offering-related expenses. These direct and incremental costs reduced the Series A preferred stock balance at the issuance date and were recognized through retained earnings on June 30, 2020, the first measurement date. Upon adoption of ASU 2020-06 in the first quarter of fiscal 2021, we recorded a $ 4.8 million cumulative adjustment to retained earnings to reverse beneficial conversion features recorded during fiscal 2020. ​ On June 15, 2021, we paid $ 443.8 million in connection with the cash-settled conversion of 150,000 shares of our outstanding Series A preferred stock (effected through a repurchase agreement), which was recognized through additional paid in capital. We also share-settled the conversion of the remaining 50,000 shares of our outstanding Series A convertible preferred stock into 2,400,864 shares of our common stock. These are both based on the then current Liquidation Preference per share of $ 1,067.42 and conversion price of $ 22.23 . ​ 14 Table of Contents During the first quarter of fiscal 2021, we declared a cash dividend of $ 5.1 million, or $ 25.35 per share, on the Series A preferred stock. During the second quarter of fiscal 2021, $ 13.6 million in payments were made in connection with the conversion of the preferred stock, consisting of $ 3.9 million, or $ 19.72 per share of accrued dividends and $ 9.7 million of an inducement, which was also deemed to be a dividend. ​ 10. Stock-Based Compensation ​ We maintain stock-based incentive plans under which incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units may be granted to staff members, consultants and non-employee directors. On March 24, 2022, our Board approved an amendment to our The Cheesecake Factory Incorporated Stock Incentive Plan to increase the number of shares of common stock reserved for grant under the plan to 19.8 million shares from 17.5 million shares. This amendment was approved by our stockholders at our annual meeting held on May 23, 2022. The following table presents information related to stock-based compensation, net of forfeitures (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Labor expenses ​ $ 2,237 ​ $ 2,137 ​ $ 6,621 ​ $ 6,240 Other operating costs and expenses ​ 74 ​ 72 ​ 224 ​ 218 General and administrative expenses ​ 3,302 ​ 3,185 ​ 10,375 ​ 9,871 Total stock-based compensation ​ 5,613 ​ 5,394 ​ 17,220 ​ 16,329 Income tax benefit ​ 1,379 ​ 1,325 ​ 4,229 ​ 4,010 Total stock-based compensation, net of taxes ​ $ 4,234 ​ $ 4,069 ​ $ 12,991 ​ $ 12,319 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitalized stock-based compensation (1) ​ $ 52 ​ $ 48 ​ $ 161 ​ $ 137 (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 on the condensed consolidated balance sheets. ​ Stock Options We did not issue any stock options during the third quarter of fiscal 2022 or fiscal 2021. Stock option activity during the thirty-nine weeks ended September 27, 2022 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 December 28, 2021 ​ 1,716 ​ $ 46.14 ​ 5.1 ​ $ 0 Granted — ​ ​ — ​ ​ ​ ​ ​ Exercised ( 2 ) ​ ​ 40.16 ​ ​ ​ ​ ​ Forfeited or cancelled ( 29 ) ​ ​ 48.19 ​ ​ ​ ​ ​ Outstanding at September 27, 2022 ​ 1,685 ​ $ 46.11 ​ 4.4 ​ $ 0 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable at September 27, 2022 1,119 ​ $ 48.10 ​ 3.5 ​ $ 0 (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. 15 Table of Contents ​ There were no options exercised during the third quarters of fiscal 2022 or 2021. The total intrinsic value of options exercised during the first three quarters of fiscal 2022 and 2021 were $ 4.9 million and $ 7.1 million, respectively. As of September 27, 2022, total unrecognized stock-based compensation expense related to unvested stock options was $ 3.1 million, which we expect to recognize over a weighted-average period of approximately 1.9 years. Restricted Shares and Restricted Share Units ​ Restricted share and restricted share unit activity during the thirty-nine weeks ended September 27, 2022 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ Average ​ Shares Fair Value ​ ​ (In thousands) ​ (Per share) Outstanding at December 28, 2021 2,123 ​ $ 44.82 Granted 783 ​ ​ 37.64 Vested ( 356 ) ​ ​ 46.03 Forfeited ( 110 ) ​ ​ 41.91 Outstanding at September 27, 2022 2,440 ​ $ 42.47 ​ 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 third quarter of fiscal 2022 and 2021 was $ 28.59 and $ 51.95 , respectively. The fair value of shares that vested during the thirteen and thirty-nine weeks ended September 27, 2022 was $ 1.9 million and $ 16.4 million, respectively. The fair value of shares that vested during the thirteen weeks and thirty-nine weeks ended September 28, 2021 was $ 2.1 million and $ 13.3 million, respectively. As of September 27, 2022, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $ 53.3 million, which we expect to recognize over a weighted-average period of approximately 3.0 years. ​ ​ 11. Net (Loss)/Income Per Share ​ Basic net (loss)/income per share is computed by dividing net (loss)/income available to common stockholders by the weighted-average number of common shares outstanding during the period, reduced by unvested restricted stock awards. At September 27, 2022 and September 28, 2021, 2.4 million and 2.1 million shares, respectively, of restricted stock issued were unvested and, therefore, excluded from the calculation of basic earnings per share for the fiscal periods ended on those dates. Diluted net (loss)/income per share is computed by dividing net (loss)/income available to common stockholders by the weighted-average number of common stock equivalents outstanding for the period. Common stock equivalents for the Notes are determined by application of the if-converted method, and common stock equivalents for outstanding stock options, restricted stock and restricted stock units are determined by the application of the treasury stock method. ​ 16 Table of Contents Holders of our Series A Convertible Preferred Stock, par value $ 0.01 per share (the “Series A preferred stock”) participated in dividends on an as-converted basis when declared on common stock. As a result, our Series A preferred stock met the definition of a participating security which required us to apply the two-class method to compute both basic and diluted net (loss)/income per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. In addition, as our Series A preferred stock was a participating security, we were required to calculate diluted net (loss)/income per share under the if-converted method in addition to the two-class method and utilize the most dilutive result. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ (In thousands, except per share data) Basic net (loss)/income per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 Basic weighted-average shares outstanding ​ ​ 49,653 ​ ​ 50,212 ​ ​ 50,124 ​ ​ 46,624 Basic net (loss)/income per common share ​ $ ( 0.05 ) ​ $ 0.65 ​ $ 0.93 ​ $ 0.98 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted net (loss)/income per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (loss)/income available to common stockholders ​ ​ ( 2,398 ) ​ ​ 32,680 ​ ​ 46,421 ​ ​ 45,798 Reallocation of undistributed earnings to Series A preferred stock ​ ​ — ​ ​ — ​ ​ — ​ ​ 114 Net (loss)/income available to common stockholders for diluted earnings per share ​ ​ ( 2,398 ) ​ ​ 32,680 ​ ​ 46,421 ​ ​ 45,912 Basic weighted-average shares outstanding ​ ​ 49,653 ​ ​ 50,212 ​ ​ 50,124 ​ ​ 46,624 Dilutive effect of equity awards (1) ​ ​ — ​ ​ 901 ​ ​ 584 ​ ​ 1,051 Diluted weighted-average shares outstanding ​ ​ 49,653 ​ ​ 51,113 ​ ​ 50,708 ​ ​ 47,675 Diluted net (loss)/income per common share ​ $ ( 0.05 ) ​ $ 0.64 ​ $ 0.92 ​ $ 0.96 (1) Shares of common stock equivalents related to outstanding stock options, restricted stock and restricted stock units of 3.3 million and 3.8 million as of September 27, 2022 and September 28, 2021, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. No shares of common stock equivalents related to the Notes were included in the diluted calculation due to their anti-dilutive effect. ​ 12. Segment Information ​ Our operating segments, the businesses for which our management reviews discrete financial information for decision-making purposes, are comprised of The Cheesecake Factory, North Italia, Flower Child, the other FRC brands, our bakery division and Grand Lux Cafe. Based on quantitative thresholds set forth in Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” The Cheesecake Factory, North Italia and the other FRC brands are the only businesses that meet the criteria of a reportable operating segment. The remaining operating segments (Flower Child, our bakery division and Grand Lux Cafe) along with our businesses that do not qualify as operating segments are combined in Other. Unallocated corporate expenses, capital expenditures and assets are also combined in Other. ​ 17 Table of Contents Segment information is presented below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Cheesecake Factory restaurants ​ $ 602,902 ​ $ 592,555 ​ $ 1,853,576 ​ $ 1,698,635 North Italia ​ ​ 54,113 ​ ​ 44,357 ​ ​ 163,108 ​ ​ 120,747 Other FRC ​ ​ 52,193 ​ ​ 44,326 ​ ​ 171,045 ​ ​ 127,978 Other ​ 74,793 ​ 73,236 ​ 222,625 ​ 203,487 Total ​ $ 784,001 ​ $ 754,474 ​ $ 2,410,354 ​ $ 2,150,847 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Loss)/income from operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Cheesecake Factory restaurants ​ $ 42,122 ​ $ 66,791 ​ $ 169,893 ​ $ 194,470 North Italia ​ ​ 1,655 ​ ​ 1,962 ​ ​ 10,381 ​ ​ 5,320 Other FRC ​ ​ 4,109 ​ ​ 3,403 ​ ​ 18,231 ​ ​ 14,565 Other ​ ( 50,091 ) ​ ( 40,779 ) ​ ( 144,447 ) ​ ( 133,016 ) Total ​ $ ( 2,205 ) ​ $ 31,377 ​ $ 54,058 ​ $ 81,339 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Cheesecake Factory restaurants ​ $ 15,874 ​ $ 16,414 ​ $ 47,736 ​ $ 49,221 North Italia ​ ​ 1,556 ​ ​ 1,068 ​ ​ 4,076 ​ ​ 2,893 Other FRC ​ ​ 1,661 ​ ​ 1,208 ​ ​ 4,712 ​ ​ 3,423 Other ​ 3,560 ​ 3,886 ​ 10,240 ​ 11,268 Total ​ $ 22,651 ​ $ 22,576 ​ $ 66,764 ​ $ 66,805 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Impairment of assets and lease termination expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Cheesecake Factory restaurants ​ $ — ​ $ — ​ $ ( 59 ) ​ $ — North Italia ​ ​ — ​ ​ — ​ ​ — ​ ​ — Other FRC ​ ​ — ​ ​ — ​ ​ — ​ ​ — Other ​ ​ — ​ ​ — ​ ​ 372 ​ ​ 594 Total ​ $ — ​ $ — ​ $ 313 ​ $ 594 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital expenditures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Cheesecake Factory restaurants ​ $ 19,176 ​ $ 10,680 ​ $ 48,097 ​ $ 22,606 North Italia ​ ​ 3,281 ​ ​ 2,606 ​ ​ 11,110 ​ ​ 9,095 Other FRC ​ ​ 5,175 ​ ​ 3,614 ​ ​ 11,014 ​ ​ 10,979 Other ​ ​ 4,039 ​ ​ 1,356 ​ ​ 7,832 ​ ​ 6,478 Total ​ $ 31,671 ​ $ 18,256 ​ $ 78,053 ​ $ 49,158 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preopening costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Cheesecake Factory restaurants ​ $ 2,757 ​ $ 968 ​ $ 5,163 ​ $ 3,616 North Italia ​ ​ 1,341 ​ ​ 1,057 ​ ​ 2,755 ​ ​ 3,335 Other FRC ​ ​ 84 ​ ​ 849 ​ ​ 357 ​ ​ 1,948 Other ​ ​ 145 ​ ​ 295 ​ ​ 763 ​ ​ 905 Total ​ $ 4,327 ​ $ 3,169 ​ $ 9,038 ​ $ 9,804 ​ ​ ​ ​ ​ ​ ​ ​ ​ September 27, 2022 December 28, 2021 Total assets: ​ ​ ​ ​ ​ ​ The Cheesecake Factory restaurants ​ $ 1,564,945 ​ $ 1,653,161 North Italia ​ ​ 303,130 ​ ​ 270,029 Other FRC ​ 296,465 ​ 276,369 Other ​ 569,534 ​ 598,566 Total ​ $ 2,734,074 ​ $ 2,798,125 ​ ​ ​ 18 Table of Contents 13. Subsequent Events ​ On October 6, 2022, we entered into a Fourth Amended and Restated Loan Agreement (the “Fourth Amended Credit Agreement” and the revolving credit facility provided thereunder, the “Fourth Revolving Facility”). The Fourth Amended Credit Agreement amends and restates in its entirety our prior Amended Credit Agreement. The Fourth Revolving Facility, which terminates on October 6, 2027, provides us with revolving loan commitments that total $ 400 million, of which $ 50 million may be used for issuances of letters of credit. The Fourth Revolving Facility contains a commitment increase feature that, subject to certain conditions precedent, could provide for an additional $ 200 million in revolving loan commitments. Our obligations under the Fourth Revolving Facility are unsecured. Certain of our material subsidiaries have guaranteed our obligations under the Fourth Revolving Facility. On October 6, 2022 we repaid the outstanding balance under the Revolving Facility and borrowed the same amount on the Fourth Revolving Facility. As of the date of this report, we had net availability for borrowings of $ 238.5 million, based on a $ 130.0 million outstanding debt balance and $ 31.5 million in standby letters of credit under the Fourth Revolving Facility. ​ Under the Fourth Revolving Facility, we are subject to the following financial covenants as of the last day of each fiscal quarter: (i) a maximum ratio of net adjusted debt to EBITDAR (the “Amended Net Adjusted Leverage Ratio”) of 4.25 and (ii) a minimum ratio of EBITDAR to interest and rent expense of 1.90 . The Amended Net Adjusted Leverage Ratio includes a rental expense multiplier of six as compared to eight in the Amended Credit Agreement. ​ Borrowings under the Fourth Amended Credit Agreement bear interest, at the Company’s election, at a rate equal to either: (i) the sum of (A) adjusted term SOFR (as defined in the Fourth Amended Credit Agreement, the “Term SOFR Rate”) plus (B) a rate variable based on the Amended Net Adjusted Leverage Ratio, ranging from 1.00 % to 1.75 %, or (ii) the sum of (A) the highest of (x) the rate of interest last quoted by The Wall Street Journal as the prime rate in effect in the United States, (y) the greater of the rate calculated by the Federal Reserve Bank of New York as the federal funds effective rate or the rate that is published by the Federal Reserve Bank of New York as the overnight bank funding rate, in either case, plus 0.50 %, and (z) the one-month Term SOFR Rate plus 1.00 %, plus (B) a rate variable based on the Net Adjusted Leverage Ratio, ranging from 0.00 % to 0.75 %. The Company will also pay a fee variable based on the Net Adjusted Leverage Ratio, ranging from 0.125 % to 0.25 %, on the daily amount of unused commitments under the Fourth Amended Credit Agreement. ​ Letters of credit bear fees that are equivalent to the interest rate margin that is applicable to revolving loans that bear interest at the adjusted SOFR plus other customary fees charged by the issuing bank. We paid certain customary loan origination fees in conjunction with the Loan Agreement. ​ We are also subject to customary events of default that, if triggered, could result in acceleration of the maturity of the Fourth Revolving Facility. Subject to certain exceptions, the Fourth Revolving Facility also limits distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined ratio, and also sets forth negative covenants that restrict indebtedness, liens, investments, sales of assets, fundamental changes and other matters. ​ On October 26, 2022, our Board declared a quarterly cash dividend of $ 0.27 per share to be paid on November 28, 2022 to the stockholders of record of each share of our common stock at the close of business on November 15, 2022. ​ On October 26, 2022, our Board increased the authorization to repurchase our common stock by 5.0 million shares to 61.0 million shares. See Note 9 for further discussion on our repurchase authorization and methods. ​ ​ ​ 19 Table of Contents