What changed in this filing

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Item 1. Financial Statements

2023-08-07 compared with 2023-05-10 · 79 added, 73 removed, 331 unchanged (31% of the section changed)

27 unchanged sentences

Preferred stock, $ .01 par value, 5,000,000 shares authorized;

none issued and outstanding

Common stock, $ .01 par value, 250,000,000 shares authorized;

106,951,249 and 106,323,117 shares issued at April 4, 2023 and January 3, 2023, respectively

107,042,941 shares issued and 51,271,545 shares outstanding at July 4, 2023 and 106,323,117 shares issued and 51,173,597 shares outstanding at January 3, 2023

Additional paid-in capital

Retained earnings

Treasury stock, 55,490,995 and 55,149,520 shares at cost at April 4, 2023 and January 3, 2023, respectively

Treasury stock inclusive of excise tax, 55,771,396 and 55,149,520 shares at cost at July 4, 2023 and January 3, 2023, respectively

( 1,787,419 )

7 unchanged sentences

(In thousands, except per share data)

April 4, 2023

March 29, 2022

June 28, 2022

Costs and expenses:

4 unchanged sentences

Depreciation and amortization expenses

Impairment of assets and lease termination expenses

Impairment of assets and lease termination (income)/expenses

Acquisition-related contingent consideration, compensation and amortization expenses

12 unchanged sentences

(In thousands)

April 4, 2023

March 29, 2022

Other comprehensive gain:

June 28, 2022

Other comprehensive gain/(loss):

Foreign currency translation adjustment

Other comprehensive gain

Other comprehensive gain/(loss)

Total comprehensive income

3 unchanged sentences

(In thousands)

For the thirteen weeks ended April 4, 2023:

For the twenty-six weeks ended July 4, 2023:

Comprehensive

8 unchanged sentences

( 1,778,017 )

For the thirteen weeks ended March 29, 2022:

Foreign currency translation adjustment

Cash dividends declared common stock, net of forfeitures, $ 0.27 per share

Stock-based compensation

Treasury stock purchases, inclusive of excise tax

Balance, July 4, 2023

( 1,787,419 )

For the twenty-six weeks ended June 28, 2022:

Comprehensive

(Loss)/Income

Balance, December 28, 2021

7 unchanged sentences

( 1,706,447 )

Foreign currency translation adjustment

Cash dividends declared common stock, net of forfeitures, $ 0.27 per share

Stock-based compensation

Common stock issued under stock-based compensation plans

Treasury stock purchases

Balance, June 28, 2022

( 1,717,326 )

See the accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

April 4, 2023

March 29, 2022

June 28, 2022

Cash flows from operating activities:

1 unchanged sentence

Depreciation and amortization expenses

Impairment of assets and lease termination expense

Impairment of assets and lease termination (income)/expense

Deferred income taxes

48 unchanged sentences

Along with the COVID-19 pandemic, our operating results were impacted by geopolitical and macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation.

Some of these factors continued to impact our operating results in fiscal 2023, contributing to significantly increased commodity and other costs.

Some of these factors have continued to impact our operating results in fiscal 2023, contributing to significantly increased commodity and other costs.

We have also encountered delays in opening new restaurants due to supply chain challenges and delays in permitting, construction, landlord readiness, and equipment availability.

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, disruptions in the supply chain and delay in new restaurant openings.

The ongoing impact of 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, disruptions in the supply chain and delay in new restaurant openings.

For more information regarding the risks to our business relating to the COVID-19 pandemic and other geopolitical and macroeconomic events, see “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 3, 2023.

7 unchanged sentences

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):

April 4, 2023

Assets/(Liabilities)

10 unchanged sentences

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):

April 4, 2023

March 29, 2022

June 28, 2022

Beginning balance

2 unchanged sentences

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 April 4, 2023 was $ 0 to $ 276.0 million.

Results could change materially if different estimates and assumptions were used.

During the first quarter of fiscal 2022, we made a payment of $ 7.2 million per the Fox Restaurant Concept LLC (“FRC”) acquisition agreement.

Our corresponding fiscal 2023 payment of $ 13.0 million was made early in the second quarter.

During the first six months of fiscal 2023 and fiscal 2022, we made payments of $ 13.0 million and $ 7.2 million, respectively, 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 due to their short duration.

As of April 4, 2023, 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 April 4, 2023 was approximately $ 286.4 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.

As of July 4, 2023, 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 July 4, 2023 was approximately $ 290.5 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 the Notes.

1 unchanged sentence

Inventories consisted of (in thousands):

April 4, 2023

January 3, 2023

3 unchanged sentences

The following tables present information related to gift cards (in thousands):

April 4, 2023

March 29, 2022

June 28, 2022

Gift card liabilities:

2 unchanged sentences

Ending balance

April 4, 2023

March 29, 2022

June 28, 2022

Gift card contract assets:

10 unchanged sentences

On October 6, 2022, we repaid the outstanding balance under the then-existing credit agreement and borrowed the same amount on the Revolver Facility.

As of April 4, 2023, 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 Revolver Facility.

As of July 4, 2023, 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 Revolver Facility.

Under the Revolver Facility, we are subject to the following financial covenants as of the last day of each fiscal quarter:

1 unchanged sentence

The Amended Net Adjusted Leverage Ratio includes a rental expense multiplier of six .

As of April 4, 2023, we were in compliance with all the foregoing covenants in effect at that date.

As of July 4, 2023, we were in compliance with all the foregoing covenants in effect at that date.

Borrowings under the Loan Agreement bear interest, at the Company’s election, at a rate equal to either:

22 unchanged sentences

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 April 4, 2023, the conversion rate for the Notes was 13.1638 shares of common stock per $ 1,000 principal amount of the Notes, which represents a conversion price of approximately $ 75.97 per share of common stock.

In connection with the cash dividend that was declared by our Board on May 10, 2023, on May 23, 2023 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 the terms.

As of July 4, 2023, the conversion rate for the Notes was 13.2717 shares of common stock per $ 1,000 principal amount of the Notes, which represents a conversion price of approximately $ 75.35 per share of common stock.

In connection with the cash dividend that was declared by our Board on July 27, 2023, on August 15, 2023 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 the 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;

15 unchanged sentences

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 April 4, 2023, the Notes had a gross principal balance of $ 345.0 million and a balance of $ 338.5 million, net of unamortized issuance costs of $ 6.5 million.

Total amortization expense was $ 0.5 million during both the first quarter of fiscal 2023 and fiscal 2022.

The effective interest rate for the Notes was 0.96 % as of April 4, 2023.

As of July 4, 2023, the Notes had a gross principal balance of $ 345.0 million and a balance of $ 339.0 million, net of unamortized issuance costs of $ 6.0 million.

Total amortization expense was $ 0.5 million and $ 1.0 million during thirteen and twenty-six weeks ended July 4, 2023, respectively.

Total amortization expense was $ 0.5 million and $ 1.0 million during thirteen and twenty-six weeks ended June 28, 2022, respectively.

The effective interest rate for the Notes was 0.96 % as of July 4, 2023.

Components of lease expense were as follows (in thousands):

April 4, 2023

March 29, 2022

June 28, 2022

Supplemental information related to leases (in thousands):

April 4, 2023

March 29, 2022

June 28, 2022

Cash paid for amounts included in the measurement of lease liabilities:

16 unchanged sentences

1:23-cv-00472-JMC).

The plaintiffs in Case Nos.

3:23-cv-00272 and 1:23-cv-00472 are seeking unspecified amounts of penalties and other monetary payments.

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 May 10, 2023, the plaintiffs in Case Nos.

3:23-cv-00272 and 1:23-cv-00472 voluntarily dismissed their complaints against the Company without prejudice.

Within the ordinary course of our business, we are subject to private lawsuits, government audits and investigations, administrative proceedings and other claims.

8 unchanged sentences

Common Stock – Dividends and Share Repurchases

On February 16, 2023, our Board declared a quarterly cash dividend of $ 0.27 per share that was paid on March 21, 2023 to the stockholders of record of each share of our common stock at the close of business on March 8, 2023.

On May 10, 2023, our Board declared a quarterly cash dividend of $ 0.27 per share that was paid on June 6, 2023 to the stockholders of record of each share of our common stock at the close of business on May 24, 2023.

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 Loan Agreement and applicable law, and such other factors that the Board considers relevant.

(See Notes 5 and 12 for further discussion of our long-term debt and dividends declared subsequent to April 4, 2023, respectively.)

Under authorization by our Board to repurchase up to 61.0 million shares of our common stock, we have cumulatively repurchased 55.5 million shares at a total cost of $ 1,778.0 million through April 4, 2023, with 0.3 million shares repurchased at a cost of $ 12.4 million during the thirteen weeks ended April 4, 2023.

(See Notes 5 and 12 for further discussion of our long-term debt and dividends declared subsequent to July 4, 2023, respectively.)

Under authorization by our Board to repurchase up to 61.0 million shares of our common stock, we have cumulatively repurchased 55.8 million shares at a total cost of $ 1,787.3 million, excluding excise tax, through July 4, 2023, with 0.3 million shares and 0.6 million shares repurchased at a cost of $ 9.3 million and $ 21.7 million, excluding excise tax during the thirteen and twenty-six weeks ended July 4, 2023, 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.

7 unchanged sentences

The following table presents information related to stock-based compensation, net of forfeitures (in thousands):

April 4, 2023

March 29, 2022

June 28, 2022

Labor expenses

8 unchanged sentences

Stock Options

The weighted-average fair value at the grant date for options issued during the first quarter of fiscal 2023 was $ 15.76 per share.

The fair value of options issued was estimated utilizing the Black-Scholes valuation model with the following weighted-average assumptions:

(a) an expected option term of 6.7 years, (b) expected stock price volatility of 45.2 %, (c) a risk-free interest rate of 4.0 % and (d) a dividend yield on our stock of 2.7 %.

We did not issue any stock options during the first quarter of fiscal 2022.

Stock option activity during the thirteen weeks ended April 4, 2023 was as follows:

We did not issue any stock options during the second quarters of fiscal 2023 and fiscal 2022.

Stock option activity during the twenty-six weeks ended July 4, 2023 was as follows:

Exercise Price

4 unchanged sentences

Forfeited or cancelled

Outstanding at April 4, 2023

Exercisable at April 4, 2023

Outstanding at July 4, 2023

Exercisable at July 4, 2023

(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.

There were no options exercised during the first quarter of fiscal 2023.

The total intrinsic value of options exercised during thirteen weeks ended March 29, 2022 was $ 4.9 million.

As of April 4, 2023, total unrecognized stock-based compensation expense related to unvested stock options was $ 2.7 million, which we expect to recognize over a weighted-average period of approximately 2.0 years.

There were no options exercised during the thirteen and twenty-six weeks ended July 4, 2023.

There were no options exercised during the second quarter of fiscal 2022.

The total intrinsic value of options exercised during the twenty-six weeks ended June 28, 2022 was $ 4.9 million.

As of July 4, 2023, total unrecognized stock-based compensation expense related to unvested stock options was $ 2.3 million, which we expect to recognize over a weighted-average period of approximately 1.8 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the thirteen weeks ended April 4, 2023 was as follows:

Restricted share and restricted share unit activity during the twenty-six weeks ended July 4, 2023 was as follows:

(In thousands)

Outstanding at January 3, 2023

Outstanding at April 4, 2023

Outstanding at July 4, 2023

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 first quarter of fiscal 2023 and 2022 was $ 39.94 and $ 39.59 , respectively.

The fair value of shares that vested during the thirteen weeks ended April 4, 2023 and March 29, 2022 was $ 15.2 million and $ 12.4 million, respectively.

As of April 4, 2023, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $ 65.7 million, which we expect to recognize over a weighted-average period of approximately 3.3 years.

The weighted average fair value for restricted shares and restricted share units issued during the second quarter of fiscal 2023 and 2022 was $ 33.84 and $ 30.49 , respectively.

The fair value of shares that vested during the thirteen and twenty-six weeks ended July 4, 2023 was $ 1.4 million and $ 16.6 million, respectively.

The fair value of shares that vested during the thirteen and twenty-six weeks ended June 28, 2022 was $ 2.1 million and $ 14.5 million, respectively.

As of July 4, 2023, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $ 63.6 million, which we expect to recognize over a weighted-average period of approximately 3.2 years.

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period, reduced by unvested restricted stock awards.

As of April 4, 2023 and March 29, 2022, 2.8 million and 2.5 million shares, respectively, of restricted stock and restricted stock units issued were unvested and, therefore, excluded from the calculation of basic earnings per share for the fiscal periods ended on those dates.

As of July 4, 2023 and June 28, 2022, 2.8 million and 2.4 million shares, respectively, of restricted stock and restricted stock units issued 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 is computed by dividing net income 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.

April 4, 2023

March 29, 2022

June 28, 2022

(In thousands, except per share data)

4 unchanged sentences

Diluted net income per share

(1) Shares of common stock equivalents related to outstanding stock options, restricted stock and restricted stock units of 1.9 million and 2.9 million for April 4, 2023 and March 29, 2022, respectively, were excluded from the diluted calculation due to their anti-dilutive effect.

(1) Shares of common stock equivalents related to outstanding stock options, restricted stock and restricted stock units of 2.6 million and 3.1 million for July 4, 2023 and June 28, 2022, 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.

5 unchanged sentences

Segment information is presented below (in thousands):

April 4, 2023

March 29, 2022

June 28, 2022

The Cheesecake Factory restaurants

3 unchanged sentences

The Cheesecake Factory restaurants

Impairment of assets and lease termination expenses:

Impairment of assets and lease termination (income)/expenses:

The Cheesecake Factory restaurants

3 unchanged sentences

The Cheesecake Factory restaurants

April 4, 2023

January 3, 2023

2 unchanged sentences

Subsequent Events

On May 10, 2023, our Board declared a quarterly cash dividend of $ 0.27 per share to be paid on June 6, 2023 to the stockholders of record of each share of our common stock at the close of business on May 24, 2023.

On July 27, 2023, our Board declared a quarterly cash dividend of $ 0.27 per share to be paid on August 29, 2023 to the stockholders of record of each share of our common stock at the close of business on August 16, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements