What changed in this filing

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Item 1. Financial Statements

2024-11-04 compared with 2024-08-05 · 94 added, 41 removed, 342 unchanged (28% of the section changed)

29 unchanged sentences

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

107,916,784 shares issued and 50,902,796 shares outstanding at July 2, 2024 and 107,195,287 shares issued and 50,652,129 shares outstanding at January 2, 2024

107,983,084 shares issued and 50,939,646 shares outstanding at October 1, 2024 and 107,195,287 shares issued and 50,652,129 shares outstanding at January 2, 2024

Additional paid-in capital

Retained earnings

Treasury stock inclusive of excise tax, 57,013,988 and 56,543,158 shares at cost at July 2, 2024 and January 2, 2024, respectively

Treasury stock inclusive of excise tax, 57,043,438 and 56,543,158 shares at cost at October 1, 2024 and January 2, 2024, respectively

( 1,829,462 )

7 unchanged sentences

(In thousands, except per share data)

October 1, 2024

October 3, 2023

October 1, 2024

October 3, 2023

Costs and expenses:

11 unchanged sentences

Income before income taxes

Income tax provision

Income tax provision/(benefit)

Net income per share:

5 unchanged sentences

(In thousands)

Other comprehensive (loss)/gain:

October 1, 2024

October 3, 2023

October 1, 2024

October 3, 2023

Other comprehensive gain/(loss):

Foreign currency translation adjustment

Other comprehensive (loss)/gain

Other comprehensive gain/(loss)

Total comprehensive income

3 unchanged sentences

(In thousands, except per share data)

For the twenty-six weeks ended July 2, 2024:

For the thirty-nine weeks ended October 1, 2024:

Comprehensive

14 unchanged sentences

( 1,828,382 )

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

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, October 1, 2024

( 1,829,462 )

For the thirty-nine weeks ended October 3, 2023:

Comprehensive

14 unchanged sentences

( 1,787,419 )

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, October 3, 2023

( 1,802,090 )

See the accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

October 1, 2024

October 3, 2023

Cash flows from operating activities:

1 unchanged sentence

Depreciation and amortization expenses

Impairment of assets and lease termination (income)/expense

Impairment of assets and lease termination income

Deferred income taxes

58 unchanged sentences

The amendment should be applied retrospectively to all prior periods presented in the financial statements.

Management is currently evaluating this ASU to determine its impact on our disclosures.

Management does not expect this ASU to have a material impact on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

10 unchanged sentences

Observable inputs other than quoted prices in active markets for identical assets and liabilities

Unobservable inputs in which little or no market activity exists, therefore requiring the us to develop our own assumptions

Unobservable inputs in which little or no market activity exists, therefore requiring us to develop our 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):

October 1, 2024

Assets/(Liabilities)

8 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):

October 1, 2024

October 3, 2023

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 July 2, 2024 was $ 2.6 million to $ 235.4 million.

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

During the first six months of fiscal 2024 and fiscal 2023, we made payments of $ 6.5 million and $ 13.0 million, respectively, per the Fox Restaurant Concept LLC (“FRC”) acquisition agreement.

During the first nine months of fiscal 2024 and fiscal 2023, we made payments of $ 6.5 million and $ 13.0 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 July 2, 2024, 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 2, 2024 was approximately $ 311.2 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 October 1, 2024, 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 October 1, 2024 was approximately $ 325.7 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):

October 1, 2024

January 2, 2024

4 unchanged sentences

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

October 1, 2024

October 3, 2023

October 1, 2024

October 3, 2023

Gift card liabilities:

2 unchanged sentences

Ending balance

October 1, 2024

October 3, 2023

October 1, 2024

October 3, 2023

Gift card contract assets:

9 unchanged sentences

Certain of our material subsidiaries have guaranteed our obligations under the Revolver Facility.

As of July 2, 2024, we had net availability for borrowings of $ 236.5 million, based on a $ 130.0 million outstanding debt balance and $ 33.5 million in standby letters of credit under the Revolver Facility.

As of October 1, 2024, we had net availability for borrowings of $ 236.5 million, based on a $ 130.0 million outstanding debt balance and $ 33.5 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 July 2, 2024, we were in compliance with all the foregoing covenants in effect at that date.

As of October 1, 2024, 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 July 2, 2024, the conversion rate for the Notes was 13.6938 shares of common stock per $ 1,000 principal amount of the Notes, which represents a conversion price of approximately $ 73.03 per share of common stock.

In connection with the cash dividend that was declared by our Board on July 25, 2024, on August 13, 2024 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 October 1, 2024, the conversion rate for the Notes was 13.7961 shares of common stock per $ 1,000 principal amount of the Notes, which represents a conversion price of approximately $ 72.48 per share of common stock.

In connection with the cash dividend that was declared by our Board on October 23, 2024, on November 13, 2024 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 July 2, 2024, the Notes had a gross principal balance of $ 345.0 million and a balance of $ 341.1 million, net of unamortized issuance costs of $ 3.9 million.

Total amortization expense was $ 0.5 million and $ 1.0 million during the thirteen and twenty-six weeks ended July 2, 2024, respectively.

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

The effective interest rate for the Notes was 0.96 % as of July 2, 2024.

As of October 1, 2024, the Notes had a gross principal balance of $ 345.0 million and a balance of $ 341.6 million, net of unamortized issuance costs of $ 3.4 million.

Total amortization expense was $ 0.5 million and $ 1.5 million during the thirteen and thirty-nine weeks ended October 1, 2024, respectively.

Total amortization expense was $ 0.5 million and $ 1.5 million during thirteen and thirty-nine weeks ended October 3, 2023, respectively.

The effective interest rate for the Notes was 0.96 % as of October 1, 2024.

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

October 1, 2024

October 3, 2023

October 1, 2024

October 3, 2023

Supplemental information related to leases (in thousands):

October 1, 2024

October 3, 2023

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

12 unchanged sentences

Common Stock – Dividends and Share Repurchases

On May 7, 2024 , our Board declared a quarterly cash dividend of $ 0.27 per share that was paid on June 4, 2024 to the stockholders of record of each share of our common stock at the close of business on May 22, 2024 .

On July 25, 2024 , our Board declared a quarterly cash dividend of $ 0.27 per share, which was paid on August 27, 2024 to the stockholders of record of each share of our common stock at the close of business on August 14, 2024 .

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 July 2, 2024, respectively.)

Under authorization by our Board to repurchase up to 61.0 million shares of our common stock, we have cumulatively repurchased 57.0 million shares at a total cost of $ 1,828.1 million, excluding excise tax, through July 2, 2024, with 0.1 million and 0.5 million shares repurchased at a cost of $ 3.9 million and $ 16.4 million, excluding excise tax, during the thirteen and twenty-six weeks ended July 2, 2024, respectively.

(See Notes 5 and 12 for further discussion of our long-term debt and dividends declared subsequent to October 1, 2024, respectively.)

Under authorization by our Board to repurchase up to 61.0 million shares of our common stock, we have cumulatively repurchased 57.0 million shares at a total cost of $ 1,829.2 million, excluding excise tax, through October 1, 2024, with 29,450 and 0.5 million shares repurchased at a cost of $ 1.1 million and $ 17.5 million, excluding excise tax, during the thirteen and thirty-nine weeks ended October 1, 2024, 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):

October 1, 2024

October 3, 2023

October 1, 2024

October 3, 2023

Labor expenses

8 unchanged sentences

Stock Options

We did not issue any stock options during the second quarters of fiscal 2024 and fiscal 2023.

Stock option activity during twenty-six weeks ended July 2, 2024 was as follows:

We did not issue any stock options during the third quarters of fiscal 2024 and fiscal 2023.

Stock option activity during the thirty-nine weeks ended October 1, 2024 was as follows:

Exercise Price

4 unchanged sentences

Forfeited or cancelled

Outstanding at July 2, 2024

Exercisable at July 2, 2024

Outstanding at October 1, 2024

Exercisable at October 1, 2024

(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 thirteen and twenty-six weeks ended July 2, 2024.

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

As of July 2, 2024, total unrecognized stock-based compensation expense related to unvested stock options was $ 1.9 million, which we expect to recognize over a weighted-average period of approximately 2.4 years.

There were no options exercised during the thirteen and thirty-nine weeks ended October 1, 2024.

There were no options exercised during the thirteen and thirty-nine weeks ended October 3, 2023.

As of October 1, 2024, total unrecognized stock-based compensation expense related to unvested stock options was $ 1.6 million, which we expect to recognize over a weighted-average period of approximately 2.1 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the twenty-six weeks ended July 2, 2024 was as follows:

Restricted share and restricted share unit activity during the thirty-nine weeks ended October 1, 2024 was as follows:

(In thousands)

Outstanding at January 2, 2024

Outstanding at July 2, 2024

Outstanding at October 1, 2024

Fair value of our restricted shares and restricted share units is based on our closing stock price on the date of grant.

The weighted average fair value for restricted shares and restricted share units issued during the second quarter of fiscal 2024 and 2023 was $ 37.25 and $ 33.84 , respectively.

The fair value of shares that vested during the thirteen and twenty-six weeks ended July 2, 2024 was $ 4.7 million and $ 22.5 million, 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.

As of July 2, 2024, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $ 65.0 million, which we expect to recognize over a weighted-average period of approximately 3.0 years.

The weighted average fair value for restricted shares and restricted share units issued during the third quarter of fiscal 2024 and 2023 was $ 36.69 and $ 36.81 , respectively.

The fair value of shares that vested during the thirteen and thirty-nine weeks ended October 1, 2024 was $ 1.9 million and $ 24.4 million, respectively.

The fair value of shares that vested during the thirteen and thirty-nine weeks ended October 3, 2023 was $ 3.3 million and $ 19.9 million, respectively.

As of October 1, 2024, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $ 61.7 million, which we expect to recognize over a weighted-average period of approximately 3.0 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 July 2, 2024 and July 4, 2023, 3.1 million and 2.8 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 October 1, 2024 and October 3, 2023, 3.2 million and 2.8 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.

October 1, 2024

October 3, 2023

October 1, 2024

October 3, 2023

(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 2.6 million for both July 2, 2024 and July 4, 2023, 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 2.7 million and 2.8 million for October 1, 2024 and October 3, 2023, 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):

October 1, 2024

October 3, 2023

October 1, 2024

October 3, 2023

The Cheesecake Factory restaurants

9 unchanged sentences

The Cheesecake Factory restaurants

October 1, 2024

January 2, 2024

2 unchanged sentences

Subsequent Events

On July 25, 2024 , our Board declared a quarterly cash dividend of $ 0.27 per share to be paid on August 27, 2024 to the stockholders of record of each share of our common stock at the close of business on August 14, 2024 .

On October 23, 2024 , our Board declared a quarterly cash dividend of $ 0.27 per share to be paid on November 26, 2024 to the stockholders of record of each share of our common stock at the close of business on November 13, 2024 .

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