10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended July 3, 2012

or

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

Commission File Number: 0-20574

THE CHEESECAKE FACTORY INCORPORATED

(Exact name of registrant as specified in its charter)

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

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

(818) 871-3000

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

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

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

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

As of July 25, 2012, 53,687,108 shares of the registrant’s Common Stock, $.01 par value, were outstanding.

THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES

INDEX

			Page Number
PART I.	FINANCIAL INFORMATION
	Item 1.	Unaudited Financial Statements:
		Consolidated Balance Sheets	3
		Consolidated Statements of Comprehensive Income	4
		Consolidated Statement of Stockholders’ Equity	5
		Consolidated Statements of Cash Flows	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
	Item 4.	Controls and Procedures	20
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	22
	Item 1A.	Risk Factors	22
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
	Item 6.	Exhibits	23
Signatures			24

2

PART I.         FINANCIAL INFORMATION

Item 1.            Financial Statements

THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	July 3, 2012			January 3, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	48,416		$	48,211
Accounts receivable	10,248			11,334
Income tax receivable	3,943			5,472
Other receivables	25,221			32,096
Inventories	31,476			28,210
Prepaid expenses	35,580			36,498
Deferred income taxes	10,312			14,574
Total current assets	165,196			176,395
Property and equipment, net	756,065			758,503
Other assets:
Intangible assets, net	15,721			14,674
Prepaid rent	49,682			49,490
Other	26,088			23,508
Total other assets	91,491			87,672
Total assets	$	1,012,752		$	1,022,570
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	22,137		$	36,159
Other accrued expenses	163,853			187,081
Total current liabilities	185,990			223,240
Deferred income taxes	105,301			103,927
Deferred rent	74,988			69,742
Deemed landlord financing liability	54,301			55,086
Other noncurrent liabilities	31,413			27,822
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued	¾			¾
Junior participating cumulative preferred stock, $.01 par value, 150,000 shares authorized; none issued	¾			¾
Common stock, $.01 par value, 250,000,000 shares authorized; 86,949,039 and 85,863,313 issued at July 3, 2012 and January 3, 2012, respectively	869			859
Additional paid-in capital	481,755			455,339
Retained earnings	866,098			816,977
Treasury stock, 33,095,777 and 31,196,128 shares at cost at July 3, 2012 and January 3, 2012, respectively	(787,963		)	(730,422		)
Total stockholders’ equity	560,759			542,753
Total liabilities and stockholders’ equity	$	1,012,752		$	1,022,570

See the accompanying notes to the consolidated financial statements.

3

THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

	Thirteen Weeks Ended July 3, 2012			Thirteen Weeks Ended June 28, 2011			Twenty-Six Weeks Ended July 3, 2012			Twenty-Six Weeks Ended June 28, 2011
Revenues	$	454,749		$	430,746		$	890,503		$	849,511
Costs and expenses:
Cost of sales	111,019			109,924			218,617			214,588
Labor expenses	146,086			139,469			289,066			276,967
Other operating costs and expenses	108,870			103,392			214,758			206,666
General and administrative expenses	26,278			24,208			54,943			48,473
Depreciation and amortization expenses	18,509			17,483			36,807			34,936
Preopening costs	3,017			1,108			5,123			2,868
Total costs and expenses	413,779			395,584			819,314			784,498
Income from operations	40,970			35,162			71,189			65,013
Interest and other (expense)/income, net	(838		)	(1,094		)	(1,986		)	(2,496		)
Income before income taxes	40,132			34,068			69,203			62,517
Income tax provision	11,733			9,320			20,082			17,313
Net income	28,399			24,748			49,121			45,204
Other comprehensive income, net	¾			¾			¾			¾
Comprehensive income	$	28,399		$	24,748		$	49,121		$	45,204
Net income per share:
Basic	$	0.53		$	0.44		$	0.92		$	0.79
Diluted	$	0.52		$	0.42		$	0.89		$	0.76
Weighted average shares outstanding:
Basic	53,155			56,554			53,417			57,517
Diluted	55,091			58,595			55,376			59,543

See the accompanying notes to the consolidated financial statements.

4

THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Shares of Common Stock	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock			Total
Balance, January 3, 2012	85,863	$	859	$	455,339	$	816,977	$	(730,422	)	$	542,753
Net income	—	—		—		49,121		—			49,121
Issuance of common stock from stock options exercised	833	8		17,899		—		—			17,907
Tax impact of stock options exercised, net of cancellations	—	—		2,095		—		—			2,095
Stock-based compensation	—	—		6,422		—		—			6,422
Issuance of restricted stock, net of forfeitures	253	2		—		—		—			2
Purchase of treasury stock	—	—		—		—		(57,541		)	(57,541		)
Balance, July 3, 2012	86,949	$	869	$	481,755	$	866,098	$	(787,963	)	$	560,759

See the accompanying notes to the consolidated financial statements.

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THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Twenty-Six Weeks Ended July 3, 2012			Twenty-Six Weeks Ended June 28, 2011
Cash flows from operating activities:
Net income	$	49,121		$	45,204
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	36,807			34,936
Deferred income taxes	5,637			3,316
Stock-based compensation	6,274			5,946
Tax impact of stock options exercised, net of cancellations	2,095			600
Excess tax benefit related to stock options exercised	(2,008		)	(497		)
Other	391			412
Changes in assets and liabilities:
Accounts receivable	1,086			10,383
Other receivables	6,875			7,323
Inventories	(3,266		)	(9,212		)
Prepaid expenses	918			3,121
Other assets	(2,727		)	(1,764		)
Accounts payable	(14,022		)	6,051
Income taxes receivable/payable	1,528			2,091
Other accrued expenses	(14,450		)	(13,796		)
Cash provided by operating activities	74,259			94,114
Cash flows from investing activities:
Additions to property and equipment	(34,419		)	(30,176		)
Additions to intangible assets	(1,285		)	(358		)
Cash used in investing activities	(35,704		)	(30,534		)
Cash flows from financing activities:
Deemed landlord financing proceeds	201			1,612
Deemed landlord financing payments	(925		)	(820		)
Proceeds from exercise of stock options	17,907			7,475
Excess tax benefit related to stock options exercised	2,008			497
Purchase of treasury stock	(57,541		)	(95,030		)
Cash used in financing activities	(38,350		)	(86,266		)
Net change in cash and cash equivalents	205			(22,686		)
Cash and cash equivalents at beginning of period	48,211			81,619
Cash and cash equivalents at end of period	$	48,416		$	58,933
Supplemental disclosures:
Interest paid	$	2,245		$	2,065
Income taxes paid	$	12,669		$	11,248

See the accompanying notes to the consolidated financial statements.

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THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.  Basis of Presentation and Significant Accounting Policies

The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated (referred to herein as the “Company,” “we,” “us” and “our”) and its wholly owned subsidiaries prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  The financial statements presented herein have not been audited by an independent registered public accounting firm, but 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 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2012 filed with the SEC on February 29, 2012.

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.

We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31st for financial reporting purposes.  Fiscal 2012 consists of 52 weeks and will end on January 1, 2013.  Fiscal 2011, which ended on January 3, 2012, was a 53-week year, with an additional week in the fourth quarter.

Certain reclassifications have been made to prior year amounts to conform to current year presentation.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued guidance that eliminated the previous option to report other comprehensive income and its components in the statement of changes in equity.  Companies can elect to present items of net income and other comprehensive income in one continuous statement or in two separate but consecutive statements.  There are no changes to the accounting for items within comprehensive income.  This standard impacts presentation only and became effective for us in the first quarter of fiscal 2012.

2.  Inventories

Inventories consisted of (in thousands):

	July 3, 2012		January 3, 2012
Restaurant food and supplies	$	12,870	$	12,717
Bakery finished goods and work in progress	13,546		9,991
Bakery raw materials and supplies	5,060		5,502
Total	$	31,476	$	28,210

3.  Long-Term Debt

In December 2010, we entered into a five-year credit agreement (“Facility”) that provides us with revolving loan commitments totaling $200 million, including letter of credit subfacility commitments that total $35 million.  The Facility contains a commitment increase feature that could provide for an additional $50 million in available credit upon our request and the satisfaction of certain conditions.  In conjunction with our entry into the Facility, we terminated our prior credit facility dated April 2007, as amended March 2008 and January 2009.  We had no outstanding borrowings under the Facility at July 3, 2012 or January 3, 2012.

Borrowings under the Facility bear interest at a floating rate based on LIBOR, plus a spread ranging from 1.75% to 2.25%, depending on our ratio of debt plus eight times rent (“Adjusted Debt”) to trailing 12-month earnings before interest, taxes, depreciation, amortization, rent and noncash stock option expense (“EBITDAR”), as defined in the agreement.  In addition, we pay a commitment fee ranging from 0.3% to 0.4%, also depending on our ratio of Adjusted Debt to EBITDAR, calculated on the average unused portion of the Facility.

7

We are obligated to maintain certain financial covenants, which include a maximum Adjusted Debt to trailing 12-month EBITDAR ratio (“Adjusted Debt Ratio”) of 4.0, as well as a trailing 12-month minimum EBITDAR to interest and rental expense ratio (“EBITDAR Ratio”) of 1.9.  At July 3, 2012, our Adjusted Debt and EBITDAR Ratios were 2.7 and 2.9, respectively.  Therefore, we were in compliance with the financial covenants in effect under the Facility at that date.

Availability under the Facility is reduced by outstanding standby letters of credit, which are used to support our self-insurance programs.  As of July 3, 2012, we had net availability for borrowings of $176 million, based upon a zero outstanding debt balance and $24 million in standby letters of credit.  Our Facility limits cash distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined leverage ratio.

4. Commitments and Contingencies

Within the ordinary course of our business, we are subject to private lawsuits, government audits, administrative proceedings and other claims.  These matters typically involve claims from guests, staff members and others related to operational 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.  We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether these allegations are valid or whether we are legally determined to be liable. At this time, we believe that the final disposition of any pending lawsuits, audits, proceedings and claims will not have a material adverse effect individually or in the aggregate on our financial position, results of operations or liquidity.  It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, audits, proceedings or claims.

5.  Stock-Based Compensation

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

	Thirteen Weeks Ended July 3, 2012		Thirteen Weeks Ended June 28, 2011		Twenty-Six Weeks Ended July 3, 2012		Twenty-Six Weeks Ended June 28, 2011
Labor expenses	$	940	$	1,111	$	1,833	$	2,079
Other operating costs and expenses	48		44		95		91
General and administrative expenses	1,922		1,810		4,346		3,776
Total stock-based compensation	2,910		2,965		6,274		5,946
Income tax benefit	1,113		1,134		2,400		2,274
Total stock-based compensation, net of taxes	$	1,797	$	1,831	$	3,874	$	3,672
Capitalized stock-based compensation (1)	62		57		150		130

(1)It is our policy to capitalize the portion of stock-based compensation costs for our internal development and construction, legal, and facilities departments that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations, lease, intellectual property and liquor license acquisition activities and equipment installation.  Capitalized stock-based compensation is included in property and equipment, net and other assets on the consolidated balance sheets.

Stock Options

The weighted average fair value at the grant date for options issued during the second quarter of fiscal 2012 and 2011 was $12.34 and $12.11 per option, respectively.  The fair value of options at the grant date was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the second quarter of fiscal 2012 and 2011, respectively: (a) an expected option term of 6.1 and 6.0 years, (b) expected stock price volatility of 39.8% and 39.0%, (c) a risk-free interest rate of 1.1% and 2.0%, and (d) no dividend yield on our stock.

8

Stock option activity during the twenty-six weeks ended July 3, 2012 was as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In thousands)		(Per share)		(In years)	(In thousands)
Outstanding at January 3, 2012	8,827		$	23.51	4.8	$	58,857
Granted	482		$	29.30
Exercised	(833	)	$	21.51
Forfeited or cancelled	(109	)	$	23.22
Outstanding at July 3, 2012	8,367		$	24.05	4.6	$	70,559
Exercisable at July 3, 2012	4,430		$	27.30	3.6	$	24,010

The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended July 3, 2012 was $3.7 million and $8.1 million, respectively.  The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended June 28, 2011 was $2.3 million and $3.7 million, respectively.  As of July 3, 2012, the total unrecognized stock-based compensation expense related to unvested stock options was $18.8 million, which we expect to recognize over a weighted average period of approximately 2.4 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the twenty-six weeks ended July 3, 2012 was as follows:

	Shares		Weighted Average Fair Value
	(In thousands)		(Per share)
Outstanding at January 3, 2012	826		$	20.40
Granted	420		29.88
Vested	(175	)	13.98
Forfeited	(7	)	19.59
Outstanding at July 3, 2012	1,064		$	25.20

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 at the grant date for restricted shares and restricted share units issued during the second quarter of fiscal 2012 and fiscal 2011 was $31.08 and $29.86, respectively.  The fair value of shares that vested during the thirteen and twenty-six weeks ended July 3, 2012 was $1.2 million and $2.4 million, respectively.  The fair value of shares that vested during the thirteen and twenty-six weeks ended June 28, 2011 was $0.8 million and $0.9 million, respectively.  As of July 3, 2012, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $19.9 million, which we expect to recognize over a weighted average period of approximately 3.8 years.

6.  Net Income Per Share

At July 3, 2012 and June 28, 2011, 1.1 million and 0.7 million shares, respectively, of restricted stock issued to employees were unvested, and therefore excluded from the calculation of basic earnings per share for the fiscal quarters ended on those dates. Diluted net income per share includes the dilutive effect of outstanding equity awards, calculated using the treasury stock method.  Assumed proceeds from in-the-money options include windfall tax benefits, net of shortfalls, calculated under the “as-if” method as prescribed by FASB Accounting Standards Codification (“ASC”) 718, “Compensation — Stock Option Compensation.”

9

	Thirteen Weeks Ended July 3, 2012		Thirteen Weeks Ended June 28, 2011		Twenty-Six Weeks Ended July 3, 2012		Twenty-Six Weeks Ended June 28, 2011
	(In thousands, except per share data)
Net income	$	28,399	$	24,748	$	49,121	$	45,204
Basic weighted average shares outstanding	53,155		56,554		53,417		57,517
Dilutive effect of equity awards	1,936		2,041		1,959		2,026
Diluted weighted average shares outstanding	55,091		58,595		55,376		59,543
Basic net income per share	$	0.53	$	0.44	$	0.92	$	0.79
Diluted net income per share	$	0.52	$	0.42	$	0.89	$	0.76

Shares of common stock equivalents of 2.7 million and 2.9 million for the thirteen and twenty-six weeks ended July 3, 2012 and 2.4 million and 2.6 million for the thirteen and twenty-six weeks ended June 28, 2011, respectively, were excluded from the diluted calculation due to their anti-dilutive effect.

7.  Segment Information

Our management reviews discrete financial information for The Cheesecake Factory, Grand Lux Cafe, RockSugar Pan Asian Kitchen and the bakery for decision-making purposes.  However, based on quantitative thresholds set forth in ASC 280, “Segment Reporting”, The Cheesecake Factory is our only business that meets the criteria of a reportable operating segment.  Although not required, we present segment information for the bakery separately from our restaurant concepts because the bakery is a distinctively different business, and we believe information regarding this segment is useful to readers.  The bakery segment produces baked desserts and other products for our restaurants and for other foodservice operators, retailers and distributors.  Bakery sales to our restaurants are recorded at prices similar to third-party national accounts.  Unallocated corporate expenses, assets and capital expenditures are presented below as reconciling items to the amounts presented in the consolidated financial statements.

Segment information is presented below (in thousands):

	Thirteen Weeks Ended July 3, 2012			Thirteen Weeks Ended June 28, 2011			Twenty-Six Weeks Ended July 3, 2012			Twenty-Six Weeks Ended June 28, 2011
Revenue:
Restaurants	$	442,919		$	416,549		$	867,921		$	823,452
Bakery	30,154			28,110			56,327			53,947
Intercompany bakery sales	(18,324		)	(13,913		)	(33,745		)	(27,888		)
Total	$	454,749		$	430,746		$	890,503		$	849,511
Income from operations:
Restaurants	$	64,396		$	56,621		$	119,920		$	108,518
Bakery	1,986			1,885			3,796			2,885
Corporate	(25,412		)	(23,344		)	(52,527		)	(46,390		)
Total	$	40,970		$	35,162		$	71,189		$	65,013
Depreciation and amortization:
Restaurants	$	16,819		$	15,819		$	33,427		$	31,597
Bakery	629			640			1,274			1,291
Corporate	1,061			1,024			2,106			2,048
Total	$	18,509		$	17,483		$	36,807		$	34,936
Capital expenditures:
Restaurants	$	14,435		$	18,523		$	26,025		$	26,947
Bakery	1,784			512			4,892			633
Corporate	1,851			636			3,502			2,596
Total	$	18,070		$	19,671		$	34,419		$	30,176

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	July 3, 2012		January 3, 2012
Total assets:
Restaurants	$	814,946	$	835,393
Bakery	66,818		61,382
Corporate	130,988		125,795
Total	$	1,012,752	$	1,022,570

8.  Subsequent Events

Cash Dividends

On July 23, 2012, our Board of Directors approved the initiation of a cash dividend to our stockholders.  A quarterly dividend of $0.12 per share will be paid on August 21, 2012 to the stockholders of record on August 8, 2012 of each share of our common stock.  Future dividends will be subject to Board approval.  Based on shares outstanding at July 25, 2012, the total dividend payment will be approximately $6.4 million.

Other

Our lease for The Cheesecake Factory restaurant located in Brentwood, California expires on October 4, 2012, in accordance with its terms, and we elected not to renew it.  Costs related to this expiration are expected to be minimal, and we do not expect it to impact our comparable sales and earnings per share assumptions for fiscal 2012 or future years.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain information included in this Form 10-Q and other materials filed or to be filed by us with the SEC, as well as information included in oral or written statements made by us or on our behalf, may contain forward-looking statements about our current and expected performance trends, growth plans, business goals and other matters.  These statements may be contained in our filings with the SEC, in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers.  Words or phrases such as “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,” “project,” “may,” “could,” “would,” “should,” and similar expressions are intended to identify forward-looking statements.  These statements, and any other statements that are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Acts”).

In connection with the “safe harbor” provisions of the Acts, we have identified and are disclosing important factors, risks and uncertainties that could cause our actual results to differ materially from those contained in forward-looking statements made by us, or on our behalf (see Part II, Item 1A of this report, “Risk Factors,” and Part I, Item 1A, “Risk Factors,” included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2012).  These cautionary statements are to be used as a reference in connection with any forward-looking statements.  The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of our subsequent filings with the SEC.  Because of these factors, risks and uncertainties, we caution against placing undue reliance on forward-looking statements.  Although we believe that the assumptions underlying forward-looking statements are reasonable, any of the assumptions could be incorrect, and there can be no assurance that forward-looking statements will prove to be accurate.  Forward-looking statements speak only as of the date on which they are made.  Except as may be required by law, we do not undertake any obligation to modify or revise any forward-looking statement to take into account or otherwise reflect subsequent events or circumstances arising after the date that the forward-looking statement was made.

General

This discussion and analysis should be read in conjunction with our interim unaudited consolidated financial statements and related notes included in this Form 10-Q in Part I, Item 1, and with the following items included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2012: the audited consolidated financial statements and related notes in Part IV, Item 15, the “Risk Factors” included in Part I, Item 1A and the cautionary statements included throughout the report.  The inclusion of supplementary analytical and related information herein may require us to make estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expectations with respect to our results of operations and financial position taken as a whole.

As of August 10, 2012, we operated 173 upscale, casual, full-service dining restaurants: 158 under The Cheesecake Factory® mark, 14 under the Grand Lux Cafe® mark and one under the RockSugar Pan Asian Kitchen® mark.  We also operated two bakery production facilities.

The Cheesecake Factory is an upscale, casual dining concept that offers more than 200 menu items including appetizers, pizza, seafood, steaks, chicken, burgers, pasta, specialty items, salads, sandwiches, omelettes and desserts, including approximately 40 varieties of cheesecake and other baked desserts.  Grand Lux Cafe and RockSugar Pan Asian Kitchen are also upscale, casual dining concepts offering approximately 200 and 80 menu items, respectively.  In contrast to many chain restaurant operations, substantially all of our menu items (except certain desserts manufactured at our bakery production facilities) are prepared on the restaurant premises using high quality, fresh ingredients based on innovative and proprietary recipes.  We believe our restaurants are recognized by consumers for offering value with generous food portions at moderate prices.  Our restaurants’ distinctive, contemporary design and decor create a high-energy ambiance in a casual setting.  Our restaurants typically range in size from 7,000 to 15,000 interior square feet, provide full liquor service and are generally open seven days a week for lunch and dinner, as well as Sunday brunch.

In January 2011, we announced our initial expansion plans outside of the United States. We entered into an exclusive licensing agreement with a Kuwait-based company to build and operate The Cheesecake Factory restaurants in the Middle East. The agreement provides for the development of 22 restaurants over five years in the United Arab Emirates, Kuwait, Bahrain, Qatar and the Kingdom of Saudi Arabia, with the opportunity to expand the agreement to include other markets in the Middle East and North Africa, Central and Eastern Europe, Russia and Turkey. This licensing agreement includes an initial development fee, site and design fees and ongoing royalties on our licensee’s restaurant sales. The transaction also includes an agreement to supply bakery products branded under The Cheesecake Factory trademark to such restaurants.  We expect to open as many as three locations in the Middle East in fiscal 2012, but do not expect these openings to have a material impact on our financial results in fiscal 2012.

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Overview

In addition to being highly competitive, the restaurant industry is affected by changes in consumer tastes and discretionary spending; changes in general economic conditions; public safety conditions; demographic trends; weather conditions; the cost and availability of food products, labor and energy; and government regulations.  Accordingly, as part of our strategy we must constantly evolve and refine the critical elements of our restaurant concepts to protect our competitiveness and to maintain and enhance the strength of our brands.

Our strategy is driven by our commitment to guest satisfaction and is focused primarily on menu innovation and operational execution to continue to differentiate ourselves from other restaurant concepts, as well as drive competitively strong performance that is sustainable.  Financially, we are focused on prudently managing expenses at our restaurants, bakery facilities and corporate support center.  We are also committed to allocating capital in a manner that will maximize profitability and returns.  Investing in new restaurant development that meets our return on investment criteria is our top capital allocation priority with a focus on opening our restaurant concepts in premier locations within both existing and new markets.

In evaluating and assessing the performance of our business, we believe the following are key performance indicators that should be taken into consideration:

·Comparable Restaurant Sales and Overall Revenue Growth.  Changes in comparable restaurant sales come from variations in guest traffic, as well as in check average (as a result of menu price increases and/or changes in menu mix).  Our strategy is to grow guest traffic by continuing to offer innovative, high quality menu items that offer guests a wide range of options in terms of flavor, price and value.  In addition, we focus on service and hospitality with the goal of delivering an exceptional guest experience.

Our philosophy with regard to menu pricing is to use price increases to help offset key operating costs in a manner that balances protecting both our margins and guest traffic levels.  With regard to our menu mix, it has been influenced by a couple of factors, including a slight reduction in the number of guests ordering non-alcoholic beverages.  Additionally, with our menu continually evolving, we experience some shifting of menu preferences as our guests try new items.  This shifting can also have an impact on menu mix, and, therefore, on our check average.  Over time, and as the economy strengthens, we expect menu mix to stabilize, allowing us to capture more of the menu price increases we implement.

Comparable restaurant sales growth, in addition to revenue from new restaurant openings and increases in third-party bakery sales, drive our overall revenue growth.  In the future, we expect royalties from international locations also to contribute to our revenue growth.

·Income from Operations Expressed as a Percentage of Revenues (“Operating Margins”).  Operating margins are subject to fluctuations in commodity costs, labor, restaurant-level occupancy expenses, general and administrative expenses (“G&A”), and preopening expenses.  Our objective is to gradually increase our operating margins by capturing fixed cost leverage from comparable restaurant sales increases, maximizing our purchasing power as our business grows, and operating our restaurants as productively as possible by retaining the efficiencies we gained through the implementation of cost management initiatives.

By efficiently scaling our restaurant and bakery support infrastructure and improving our internal processes, we work toward growing G&A expenses at a slower rate than revenue growth over the long-term, which should also contribute to operating margin expansion.  However, G&A as a percentage of revenues may vary from quarter to quarter.

·Return on Investment.  Return on investment measures our ability to make the best decisions regarding our allocation of capital.  Returns are affected by the cost to build restaurants, the level of revenues that each restaurant can deliver and our ability to maximize the profitability of restaurants through operational execution and disciplined cost management.  Our objective is to deploy capital in a manner that will maximize our return on investment.

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Results of Operations

The following table sets forth, for the periods indicated, information from our consolidated statements of comprehensive income expressed as percentages of revenues.  The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any other interim period or for the full fiscal year.

	Thirteen Weeks Ended July 3, 2012		Thirteen Weeks Ended June 28, 2011		Twenty-Six Weeks Ended July 3, 2012		Twenty-Six Weeks Ended June 28, 2011
Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Costs and expenses:
Cost of sales	24.4		25.5		24.5		25.3
Labor expenses	32.1		32.4		32.5		32.6
Other operating costs and expenses	23.9		24.0		24.1		24.3
General and administrative expenses	5.8		5.6		6.2		5.7
Depreciation and amortization expenses	4.1		4.1		4.1		4.1
Preopening costs	0.7		0.2		0.6		0.3
Total costs and expenses	91.0		91.8		92.0		92.3
Income from operations	9.0		8.2		8.0		7.7
Interest and other (expense)/income, net	(0.2	)	(0.3	)	(0.2	)	(0.3	)
Income before income taxes	8.8		7.9		7.8		7.4
Income tax provision	2.6		2.2		2.3		2.1
Net income	6.2	%	5.7	%	5.5	%	5.3	%

Thirteen Weeks Ended July 3, 2012 Compared to Thirteen Weeks Ended June 28, 2011

Revenues

Revenues increased 5.6% to $454.7 million for the thirteen weeks ended July 3, 2012 compared to $430.7 million for the thirteen weeks ended June 28, 2011.

Restaurant sales increased 6.3% to $442.9 million compared to $416.5 million in the prior year second quarter.  Comparable sales at The Cheesecake Factory and Grand Lux Cafe restaurants increased by 1.7%, or $7.0 million, from the second quarter of fiscal 2011, driven primarily by average check growth, as well as an increase in guest traffic of 0.5%. The Cheesecake Factory and Grand Lux Cafe restaurants become eligible to enter our comparable sales calculations in their 19th month of operation.  At July 3, 2012, there were eight The Cheesecake Factory restaurants not yet in our comparable sales base.

Comparable sales at The Cheesecake Factory restaurants increased 2.1% from the prior year second quarter driven primarily by an increase in average check, as well as improved guest traffic.  We implemented effective menu price increases of approximately 1.0% and 1.3% during the first quarter of fiscal 2012 and third quarter of fiscal 2011, respectively.  On a weighted average basis, based on the timing of our menu roll outs within each quarter, The Cheesecake Factory menu included a 2.3% increase in pricing for the thirteen weeks ended July 3, 2012.  This increase in menu pricing was partially offset by changes in menu mix due to check management by our guests, as well as some shifting of menu preferences as our guests try new items.

Comparable sales at our Grand Lux Cafe restaurants decreased 2.9% from the prior year second quarter driven by lower guest traffic, partially offset by an increase in average check.  During the second quarter of fiscal 2012, we implemented an effective menu price increase of approximately 1.2%.  On a weighted average basis, based on the timing of our menu roll outs within each quarter, the Grand Lux Cafe menu included a 1.2% increase in pricing for the thirteen weeks ended July 3, 2012.  This increase in menu pricing was offset by changes in menu mix due to check management by our guests, as well as some shifting of menu preferences as our guests try new items.

We generally update and reprint our menus twice a year.  As part of these menu updates, we evaluate the need for price increases based on those operating cost and expense increases of which we are aware or that we can reasonably expect.  While menu price increases can contribute to higher comparable restaurant sales in addition to offsetting margin pressure, we carefully consider all potential price increases in light of the extent to which we believe they will be accepted by our restaurant guests.

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Additionally, other factors outside of our control, such as general economic conditions, inclement weather, timing of holidays, and competitive and other factors, including those referenced in Part I, Item lA, “Risk Factors,” of our Annual Report on Form 10-K for the year ended January 3, 2012, can impact comparable sales.

Total restaurant operating weeks increased 4.4% to 2,225 for the thirteen weeks ended July 3, 2012 due to the opening of eight new restaurants during the trailing 15-month period.  Average sales per restaurant operating week increased approximately 1.9% to $199,100 in the second quarter of fiscal 2012 compared to the second quarter of fiscal 2011.

Bakery sales to other foodservice operators, retailers and distributors (“Bakery sales”) decreased 16.9% to $11.8 million for the thirteen weeks ended July 3, 2012 compared to $14.2 million for the comparable period of last year due primarily to a decline in sales to our warehouse club accounts.  We strive to develop and maintain long-term, growing relationships with our bakery customers, based largely on our 39-year reputation for producing high quality and creative baked desserts.  However, it is difficult to predict the timing of bakery product shipments and contribution margins on a quarterly basis, as the purchasing plans of our large-account customers, who constitute a majority of our bakery sales, may fluctuate.

Cost of Sales

Cost of sales consists of food, beverage, retail and bakery production supply costs incurred in conjunction with our restaurant and bakery revenues, and excludes depreciation, which is captured separately in depreciation and amortization expenses.

As a percentage of revenues, cost of sales decreased to 24.4% in the second quarter of fiscal 2012 compared to 25.5% in the comparable period of last year.  This improvement was primarily due to lower costs for dairy, produce and fish.

Our restaurant menus are among the most diversified in the foodservice industry and, accordingly, are not overly dependent on a few select commodities.  Changes in costs for one commodity can sometimes be counterbalanced by cost changes in other commodity categories.  The principal commodity categories for our restaurants include produce, poultry, meat, fish and seafood, dairy, bread and general grocery items.

We attempt to negotiate short-term and long-term agreements for our principal commodity, supply and equipment requirements, depending on market conditions and expected demand.  However, we are currently unable to contract for extended periods of time for some of our commodities such as many dairy and certain fish and grocery items (excluding cream cheese used in our bakery operations).  Consequently, these commodities can be subject to unforeseen supply and cost fluctuations.  Cream cheese is the most significant commodity used in our bakery products.  We have contracted for a substantial portion of our fiscal 2012 cream cheese requirements and plan to purchase cream cheese on the spot market as necessary to supplement our contracted amounts.

As has been our past practice, we will carefully consider opportunities to introduce new menu items and implement selected menu price increases to help offset any expected cost increases for key commodities and other goods and services utilized by our operations.

We have taken steps to qualify multiple suppliers and enter into agreements for some of the key commodities used in our restaurant and bakery operations.  However, there can be no assurance that future supplies and costs for these commodities will not fluctuate due to weather and other market conditions outside of our control.  For new restaurants, cost of sales will typically be higher during the first three to four months of operations until our management team becomes accustomed to optimally predicting, managing and servicing the sales volumes at the new restaurant.

Labor Expenses

As a percentage of revenues, labor expenses, which include restaurant-level labor costs and bakery direct production labor, including associated fringe benefits, decreased to 32.1% in the second quarter of fiscal 2012 compared to 32.4% in the second quarter of fiscal 2011.  Lower group medical insurance costs were partially offset by higher payroll taxes and other labor-related costs.

Other Operating Costs and Expenses

Other operating costs and expenses consist of restaurant-level occupancy expenses (rent, common area expenses, insurance, licenses, taxes and utilities), other operating expenses (excluding food costs and labor expenses, which are reported separately) and bakery production overhead, selling and distribution expenses.  As a percentage of revenues, other operating costs and expenses decreased to 23.9% for the thirteen weeks ended July 3, 2012 from 24.0% for the thirteen weeks ended June 28, 2011. This reduction was primarily due to lower debit card transaction fees.

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General and Administrative Expenses

General and administrative (“G&A”) expenses consist of the restaurant management recruiting and training program, as well as the restaurant field supervision, bakery administrative, and corporate support organizations.  As a percentage of revenues, G&A expenses increased to 5.8% for the thirteen weeks ended July 3, 2012 versus 5.6% for the comparable period of fiscal 2011 due primarily to a higher fiscal 2012 accrual for corporate performance bonuses.

Depreciation and Amortization Expenses

As a percentage of revenues, depreciation and amortization expenses were 4.1% for both the thirteen weeks ended July 3, 2012 and the comparable period of last year.

Preopening Costs

Preopening costs were $3.0 million for the thirteen weeks ended July 3, 2012 compared to $1.1 million in the comparable period of the prior year.  We incurred preopening costs to open one The Cheesecake Factory restaurant in the second quarter of fiscal 2012.  No restaurants were opened in the second quarter of fiscal 2011.

Preopening costs include all costs to relocate and compensate restaurant management employees during the preopening period; costs to recruit and train hourly restaurant employees; wages, travel and lodging costs for our opening training team and other support employees; and straight-line minimum base rent during the build-out and in-restaurant training periods.  Also included in preopening costs are expenses for maintaining a roster of trained managers for pending openings; the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs; and corporate travel and support activities.  Preopening costs can fluctuate significantly from period to period, based on the number and timing of restaurant openings and the specific preopening costs incurred for each restaurant.

Interest and Other (Expense)/Income, Net

Interest and other expense, net decreased to $0.8 million for the second quarter of fiscal 2012 compared to $1.1 million for the comparable period last year.  This decrease was primarily due to $0.4 million in proceeds we received from a variable life insurance contract used to support our Executive Savings Plan (“ESP”), a non-qualified deferred compensation plan.  Interest expense included $0.8 million in the second quarter of fiscal 2012 compared to $0.9 million for the second quarter of fiscal 2011 associated with landlord construction allowances deemed to be financing in accordance with accounting guidance.

Income Tax Provision

Our effective income tax rate was 29.2% for the second quarter of fiscal 2012 compared to 27.4% for the comparable prior year period.  This increase was attributable to a lower proportion of employment credits in relation to pretax income primarily due to the expiration of the Hiring Incentives to Restore Employment (“HIRE”) Act retention credit at the end of fiscal 2011 and increased state taxes in relation to pretax income.

Twenty-Six Weeks Ended July 3, 2012 Compared to Twenty-Six Weeks Ended June 28, 2011

Revenues

Revenues increased 4.8% to $890.5 million for the twenty-six weeks ended July 3, 2012 compared to $849.5 million for the twenty-six weeks ended June 28, 2011.

Restaurant sales increased 5.4% to $867.9 million compared to $823.5 million for the same period of the prior year.  Comparable sales at The Cheesecake Factory and Grand Lux Cafe restaurants increased by 2.0%, or $16.4 million, from the first half of fiscal 2011, driven primarily by an increase in guest traffic of 1.2%.

Comparable sales at The Cheesecake Factory restaurants increased 2.3% from the first half of fiscal 2011 driven primarily by improved guest traffic, as well as average check growth.  On a weighted average basis, based on the timing of our menu roll outs within each quarter, The Cheesecake Factory menu included a 2.0% increase in pricing for the twenty-six weeks ended July 3, 2012.  This increase in menu pricing was partially offset by changes in menu mix due to check management by our guests, as well as some shifting of menu preferences as our guests try newer items.

Comparable sales at our Grand Lux Cafe restaurants decreased 1.3% from the first half of fiscal 2011 driven by lower guest traffic, partially offset by an increase in average check.  On a weighted average basis, based on the timing of our menu roll outs within each quarter, the Grand Lux Cafe menu included a 1.3% increase in pricing for the twenty-six weeks ended July 3, 2012. This increase in menu pricing was partially offset by changes in menu mix due to check management by our guests, as well as some shifting of menu preferences as our guests try newer items.

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Total restaurant operating weeks increased 4.2% to 4,437 for the twenty-six weeks ended July 3, 2012.  Average sales per restaurant operating week increased approximately 1.2% to $195,600 compared to the same period of fiscal 2011.  A busy holiday week that usually falls in the first fiscal quarter was captured as the 53rd week of fiscal 2011, thereby shifting a high-volume sales week out of the first quarter of fiscal 2012 and replacing it with an average sales week.  This negatively impacted our average weekly sales in the first half of fiscal 2012 by approximately 0.9% and was partially offset by strong performance at our newer restaurants not yet in our comparable sales base.

Bakery sales decreased 13.4% to $22.6 million for the twenty-six weeks ended July 3, 2012 compared to $26.1 million for the comparable period of last year due primarily to a decline in sales to our warehouse club accounts.

Cost of Sales

As a percentage of revenues, cost of sales decreased to 24.5% in the twenty-six weeks ended July 3, 2012 compared to 25.3% in the comparable period of last year.  This improvement was primarily due to lower costs for dairy, produce and fish.

Labor Expenses

As a percentage of revenues, labor expenses for the twenty-six weeks ended July 3, 2012 decreased to 32.5% compared to 32.6% in the comparable period of last year.  Lower group medical insurance costs were partially offset by higher payroll taxes and deleveraging from the high-volume sales week shift to fiscal 2011 discussed in the Revenues section above.

Other Operating Costs and Expenses

As a percentage of revenues, other operating costs and expenses decreased to 24.1% for the twenty-six weeks ended July 3, 2012 from 24.3% for the twenty-six weeks ended June 28, 2011. This decrease was primarily due to lower comparative debit card transaction fees.

General and Administrative Expenses

As a percentage of revenues, G&A expenses increased to 6.2% for the twenty-six weeks ended July 3, 2012 versus 5.7% for the comparable period of fiscal 2011 due primarily to a higher fiscal 2012 accrual for corporate performance bonuses and an increase in the valuation of our Chief Executive Officer’s retirement benefit in connection with the extension of his employment agreement.

Depreciation and Amortization Expenses

As a percentage of revenues, depreciation and amortization expenses were 4.1% for both the twenty-six weeks ended July 3, 2012 and the comparable period of last year.

Preopening Costs

Preopening costs were $5.1 million for the twenty-six weeks ended July 3, 2012 compared to $2.9 million in the comparable period of the prior year.  We incurred preopening costs to open two The Cheesecake Factory restaurants in the first half of fiscal 2012 compared to one The Cheesecake Factory restaurant in the first half of fiscal 2011.

Interest and Other (Expense)/Income, Net

Interest and other expense, net decreased to $2.0 million for the first half of fiscal 2012 compared to $2.5 million for the comparable period last year.  This decrease was primarily due to $0.4 million in proceeds we received from a variable life insurance contract used to support our ESP.  Interest expense included $1.7 million for the first half of 2012 compared to $1.9 million for the first half of fiscal 2011 associated with landlord construction allowances deemed to be financing in accordance with accounting guidance.

Income Tax Provision

Our effective income tax rate was 29.0% for the first half of fiscal 2012 compared to 27.7% for the comparable prior year period.  This increase was attributable to a lower proportion of employment credits in relation to pretax income primarily due to the expiration of the HIRE Act retention credit at the end of fiscal 2011 and increased state taxes in relation to pretax income.

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Non-GAAP Measures

Adjusted net income and adjusted diluted net income per share are supplemental measures of our performance that are not required by or presented in accordance with GAAP.  These non-GAAP measures may not be comparable to similarly-titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

We calculate these non-GAAP measures by eliminating from net income and diluted net income per share the impact of items we do not consider indicative of our ongoing operations.  We believe these adjusted measures provide additional information to facilitate the comparison of our past and present financial results.  We utilize results that both include and exclude the identified items in evaluating business performance.  However, our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items.  In the future, we may incur expenses or generate income similar to the adjusted items.

Following is a reconciliation from net income and diluted net income per share to the corresponding adjusted measures (in thousands, except per share data):

	Thirteen Weeks Ended July 3, 2012			Thirteen Weeks Ended June 28, 2011		Twenty-Six Weeks Ended July 3, 2012			Thirty-Nine Weeks Ended June 28, 2011
Net income	$	28,399		$	24,748	$	49,121		$	45,204
After-tax impact from:
Proceeds from variable life insurance contract (1)	(419		)	—		(419		)	—
Adjusted net income	$	27,980		$	24,748	$	48,702		$	45,204
Diluted net income per share	$	0.52		$	0.42	$	0.89		$	0.76
After-tax impact from:
Proceeds from variable life insurance contract (1)	(0.01		)	—		(0.01		)	—
Adjusted net income per share	$	0.51		$	0.42	$	0.88		$	0.76

(1)Represents the realization of proceeds from one of our variable life insurance contracts used to support our ESP.  This item is non-taxable and was recorded in interest and other (expense)/income.

Fiscal 2012 Outlook

In fiscal 2012, we plan to open as many as seven to eight new restaurants.  On a year-to-date basis as of August 10, 2012, we have opened two The Cheesecake Factory locations and one Grand Lux Cafe.  In addition to these domestic locations, our licensee plans to open as many as three The Cheesecake Factory restaurants in the Middle East during the second half of this year.  We estimate diluted earnings per share for fiscal 2012 will be between $1.87 and $1.93 based on the assumption that comparable restaurant sales will increase in a range of between 1.5% and 2.5%.  We currently expect food cost inflation of between flat and 1.0% and a corporate tax rate of between 28.5% and 29.5%.

We expect cash capital expenditures in fiscal 2012 to range between $95 million and $105 million.  We also plan to repurchase up to $100 million of our common stock, depending on Company performance and market conditions.  On July 23, 2012, our Board of Directors approved the initiation of a cash dividend to our stockholders.  A quarterly cash dividend of $0.12 per share will be paid on August 21, 2012 to the stockholders of record on August 8, 2012 of each share of our common stock.  Future dividends will be subject to Board approval.  On an annualized basis, this dividend payment equates to a payout of approximately 25% of our estimated full year net income.  Based on shares outstanding at July 25, 2012, the quarterly dividend payment will be approximately $6.4 million.

For the third quarter of fiscal 2012, we estimate diluted earnings per share will be between $0.47 and $0.49 based on the assumption that comparable restaurant sales will increase in a range between 1.5% and 2.5%.

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Liquidity and Capital Resources

The following table presents, for the periods indicated, a summary of our key cash flows from operating, investing and financing activities (in millions):

	Twenty-Six Weeks Ended July 3, 2012			Twenty-Six Weeks Ended June 28, 2011
Cash provided by operating activities	$	74.3		$	94.1
Capital expenditures	$	(34.4	)	$	(30.2	)
Proceeds from exercise of stock options	$	17.9		$	7.5
Purchase of treasury stock	$	(57.5	)	$	(95.0	)

During the twenty-six weeks ended July 3, 2012, our cash and cash equivalents increased by $0.2 million to $48.4 million.  This increase was primarily attributable to cash provided by operating activities and proceeds from exercises of stock options, partially offset by treasury stock purchases and capital expenditures.

For fiscal 2012, we currently estimate our cash outlays for capital expenditures to range between $95 million and $105 million, net of agreed-upon up-front cash landlord construction contributions and excluding $11 million of expected noncapitalizable preopening costs for new restaurants.  The amount reflected as additions to property and equipment in the consolidated statements of cash flows may vary from this estimate based on the accounting treatment of each lease.  Our estimate for capital expenditures for fiscal 2012 contemplates a net outlay of $52 million to $58 million for as many as seven to eight restaurants expected to be opened during fiscal 2012 and estimated construction-in-progress disbursements for anticipated fiscal 2013 openings.  These amounts are net of estimated collections of up-front cash landlord construction contributions.  Expected capital expenditures for fiscal 2012 also include $25 million to $26 million for maintenance and capacity additions to our existing restaurants and $18 million to $21 million for bakery and corporate capacity and infrastructure investments.

At July 3, 2012, we had no borrowings outstanding under our $200 million revolving credit facility (“Facility”).  Availability under the Facility is reduced by outstanding standby letters of credit, which are used to support our self-insurance programs.  As of July 3, 2012, we had net availability for borrowings of $176 million, based upon a zero outstanding debt balance and $24 million in standby letters of credit.  In addition, our Facility limits our cash distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined leverage ratio.  (See Note 3 of Notes to Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our long-term debt.)

On October 17, 2011, our Board of Directors increased the authorization to repurchase our common stock by 10.0 million shares to 41.0 million shares.  Under this and previous authorizations, we have cumulatively repurchased a total of 33.1 million shares at a total cost of $788.0 million through July 3, 2012, including 0.5 million shares of our common stock at a cost of $16.7 million during the second quarter of 2012.  Our share repurchase authorization does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time.  Repurchased common stock is reflected as a reduction of stockholder’s equity.

On November 1, 2011, our Board of Directors approved the adoption of a trading plan under Rule 10b5-1 (“10b5-1 Plan”) of the Securities Exchange Act of 1934 (the “Act”), which was effective from December 5, 2011 through July 3, 2012.  This 10b5-1 Plan terminated on July 3, 2012, in accordance with its terms.  On May 30, 2012, our Board of Directors approved the adoption of a new 10b5-1 Plan effective from July 5, 2012 through December 31, 2012.

On March 1, 2012, our Board of Directors approved the terms of a share repurchase plan (“10b-18 Plan”) under which we were authorized to repurchase shares of our common stock in open market transactions in accordance with Rule 10b-18 of the Act, effective from March 6, 2012 through March 9, 2012. This 10b-18 Plan terminated on March 9, 2012, in accordance with its terms.

The timing and number of shares repurchased pursuant to the share repurchase authorization are subject to a number of factors, including legal constraints and financial covenants under our Facility that limit share repurchases based on a defined leverage ratio.  (See Note 3 of Notes to Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our long-term debt.)  Shares may be repurchased in the open market or through privately negotiated transactions at times and prices considered appropriate by us.  Purchases in the open market are made in compliance with Rule 10b-18 of the Act.  We make the determination to repurchase shares based on several factors, including an evaluation of current and future capital needs associated with new restaurant development, current and forecasted cash flows, including dividend payments, a review of our capital structure and cost of capital, our share price and current market conditions.  Our objectives with regard to share repurchases are to offset the dilution to our shares outstanding that results from equity compensation and to supplement our earnings per share growth.

On July 23, 2012, our Board of Directors approved the initiation of a cash dividend to our stockholders.  A quarterly dividend of $0.12 per share will be paid on August 21, 2012 to all stockholders of record on August 8, 2012 of each of our common stock.  Future dividends will be subject to Board approval.  Based on shares outstanding at July 25, 2012, the total dividend payment will be approximately $6.4 million.

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Based on our current expansion objectives, we believe that during the upcoming 12 months our cash and cash equivalents, combined with expected cash flows provided by operations, available borrowings under our credit facility and expected landlord construction contributions should be sufficient in the aggregate to finance our capital allocation strategy, including capital expenditures, share repurchases and cash dividends, and allow us to consider additional possible capital allocation strategies, such as the acquisition of other growth vehicles.

As of July 3, 2012, we had no financing transactions, arrangements or other relationships with any unconsolidated entities or related parties.  Additionally, we had no financing arrangements involving synthetic leases or trading activities involving commodity contracts.

Recent Accounting Pronouncements

See Note 1 of Notes to Consolidated Financial Statements in Part I, Item 1 of this report for a summary of new accounting standards.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following discussion of market risks contains forward-looking statements.  Actual results may differ materially from the following discussion based on general conditions in the financial and commodity markets.

We are exposed to market risk from interest rate changes on our funded debt.  This exposure relates to the component of the interest rate on our $200 million Facility that is indexed to three-month LIBOR.  As of July 3, 2012, we had no debt outstanding under the Facility.  Therefore, we had no exposure to interest rate fluctuations on funded debt at that date.  (See Note 3 of Notes to Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our long-term debt.)

We are also subject to market risk related to our investments in variable life insurance contracts used to support our ESP to the extent these investments are not equivalent to the related liability.  In addition, because changes in these investments are not taxable, the full impact of gains or losses affects net income.  Based on balances at July 3, 2012 and January 3, 2012, a hypothetical 10% decline in the market value of our deferred compensation asset and related liability would not have impacted income before income taxes.  However, net income would have declined by $1.0 million and $0.9 million, respectively.

We purchase food and other commodities for use in our operations, based on market prices established with our suppliers.  Many of the commodities purchased by us can be subject to volatility due to market supply and demand factors outside of our control.  We attempt to negotiate short-term and long-term agreements for our principal commodity, supply and equipment requirements, depending on market conditions and expected demand.  However, we are currently unable to contract for extended periods of time for some of our commodities such as many dairy and certain fish and grocery items (excluding cream cheese used in our bakery operations).  Consequently, these commodities can be subject to unforeseen supply and cost fluctuations.  Substantially all of our food and supplies are available from multiple qualified suppliers, which helps to diversify our overall commodity cost risk.  In addition, we may have the ability to increase menu prices, or vary menu items, in response to food commodity price increases.  We do not use financial instruments to hedge commodity prices, since our purchase arrangements with suppliers, to the extent that we can enter into such arrangements, help control the ultimate cost that we pay.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures that are designed to ensure that material information relating to the Company and our subsidiaries required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only a reasonable assurance of achieving the desired control objectives, and management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  We carried out an evaluation under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of July 3, 2012.

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Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the fiscal quarter ended July 3, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

See Note 4 of Notes to Consolidated Financial Statements in Part I, Item 1 of this report.

Item 1A.  Risk Factors

A description of the risk factors associated with our business is contained in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended January 3, 2012 (“Annual Report”), and there have been no material changes thereto since the filing of our Annual Report.  These cautionary statements are to be used as a reference in connection with any forward-looking statements.  The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of our subsequent filings with the SEC.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

The following provides information regarding our purchases of our common stock during the thirteen weeks ended July 3, 2012 (in thousands, except per share amounts):

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
April 4 — May 8, 2012	285	$	30.11	262	8,159
May 9 — June 5, 2012	123	31.89		119	8,036
June 6 — July 3, 2012	136	30.90		135	7,900
Total	544			516

(1)The total number of shares purchased includes shares withheld upon vesting of restricted share awards to satisfy tax withholding obligations.

(2)On October 17, 2011, our Board of Directors increased the authorization to repurchase our common stock by 10.0 million shares to a total of 41.0 million shares.  Under this and previous authorizations, we have cumulatively repurchased a total of 33.1 million shares at a total cost of $788.0 million through July 3, 2012, including 0.5 million shares at a total cost of $16.7 million during the second quarter of fiscal 2012.  Our current stock purchase authorization does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time.

See “Liquidity and Capital Resources” in Part I, Item 2 of this report for further discussion of our share repurchases.

Our Facility limits our cash distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined leverage ratio.  See Note 3 of Notes to Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our long-term debt.

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Item 6.  Exhibits

Exhibit No.	Item	Form	File Number	Incorporated by Reference from Exhibit Number	Filed with SEC
2.1	Form of Reorganization Agreement	Amend. No. 1 to Form S-1	33-479336	2.1	8/17/92
3.1	Restated Certificate of Incorporation including Certificate of Designation of Series A Junior Participating Cumulative Preferred Stock	10-K	000-20574	3.1	2/23/11
3.2	Amended and Restated Bylaws as of May 20, 2009	8-K	000-20574	3.8	5/27/09
3.3	Rights Agreement dated as of August 4, 1998 between The Cheesecake Factory Incorporated and U.S. Stock Transfer Corporation	8-A	000-20574	1	8/18/98
3.4	Amendment No. 1 to Rights Agreement dated as of November 4, 2003 between The Cheesecake Factory Incorporated and U.S. Stock Transfer Corporation	Amend. No. 1 to Form 8-A	000-20574	2	11/13/03
3.5	Amendment No. 2 to Rights Agreement dated as of August 1, 2008 between The Cheesecake Factory Incorporated and Computershare Trust Company	Amend. No 2 to Form 8-A	000-20574	3	8/1/08
10.1*	Form of Grant Agreement for Execitive Officers under the 2010 Stock Incentive Plan, for equity grants made after August 2, 2012*	—	—	—	Filed herewith
31.1	Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer	—	—	—	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer	—	—	—	Filed herewith
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Principal Executive Officer	—	—	—	Filed herewith
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Principal Financial Officer	—	—	—	Filed herewith
Exhibit 101	XBRL (Extensible Business Reporting Language) The following materials from The Cheesecake Factory Incorporated’s Quarterly Report on Form 10-Q for the quarter ended July 3, 2012, formatted in Extensive Business Reporting Language (XBRL), (i) consolidated balance sheets, (ii) consolidated statements of comprehensive income, (iii) consolidated statement of stockholders’ equity, (iv) consolidated statements of cash flows, and (v) the notes to the consolidated financial statements.	—	—	—	Filed herewith

*Management contract of compensatory plan of arrangement required to be filed as an exhibit.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 10, 2012	THE CHEESECAKE FACTORY INCORPORATED
		By:	/s/ DAVID OVERTON
			David Overton
			Chairman of the Board and Chief Executive Officer
			(Principal Executive Officer)
		By:	/s/ W. DOUGLAS BENN
			W. Douglas Benn
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)
		By:	/s/ CHERYL M. SLOMANN
			Cheryl M. Slomann
			Vice President, Controller and Chief Accounting Officer
			(Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

Executive Officer

The Cheesecake Factory Incorporated

2010 Stock Incentive Plan

NOTICE OF GRANT AND STOCK OPTION AGREEMENT

AND/OR RESTRICTED STOCK GRANT AGREEMENT

Notice is hereby given of the following Option Grant to purchase Shares and/or Award of Restricted Shares of The Cheesecake Factory Incorporated, a Delaware corporation (“Company”), pursuant to the 2010 Stock Incentive Plan (“Plan”).  In consideration of the promises and of the mutual agreements contained in this Notice of Grant and Stock Option Agreement and/or Restricted Stock Grant Agreement (“Agreement”), the parties hereto agree as follows:

Section 1.  Definitions.  Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in the Plan.  Otherwise, as used in this Agreement, the following terms shall have the following respective meanings:

Award	The Options to purchase stock and/or Restricted Shares granted in accordance with this Agreement
Code	The Internal Revenue Code of 1986, as amended.
Company	The Cheesecake Factory Incorporated, a Delaware corporation.
Grant Date	[date]
Participant	[name]
No. of Restricted Shares Awarded	[            ] shares
No. of Non-Statutory Option Shares Granted	[            ] shares
Option	The option to purchase shares of the Company’s Common Stock granted to Participant pursuant to the Plan and this Agreement. The Option is not intended to constitute an “incentive stock option” as that term is used in Code section 422.
Option Exercise Price	$[      ] per share
Option Expiration Date	[date]
QDRO	A domestic relations order as defined in Code section 414(p)(1)(B).
Restricted Shares	The shares of the Company’s Common Stock awarded to Participant pursuant to the Plan and this Agreement.
Option Vesting Date	[date] as to [number] Option Shares
	[date] as to [number] Option Shares
	[date] as to [number] Option Shares
	[date] as to [number] Option Shares
	[date] as to [number] Option Shares
Restricted Shares	[date] as to [number] Restricted Shares
Vesting Date	[date] as to [number] Restricted Shares
	[date] as to [number] Restricted Shares

Section 2. Designation of Award.  Subject to the terms and conditions of the Plan and this Agreement, the Company grants to Participant the Option to purchase the number of Option Shares shown above and/or grants to Participant the number of Restricted Shares shown above.

Section 3. Interpretation.  The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety.  Participant hereby agrees to be bound by the terms of the Plan and this Agreement and acknowledges that the Option is, and/or Restricted Shares are, granted subject to and in accordance with the Plan and this Agreement.  In the event of a conflict between any provision of this Agreement and the Plan, the provisions of the Plan shall control.  By execution below, Participant acknowledges receipt of a copy of the 2010 Stock Incentive Plan Summary and Prospectus. A copy of the Plan is available, without charge, upon request to the Company’s Stock Plan Administrator.

Section 4.  Exercise of Option; Sale of Shares. (a) This Option is exercisable during its term in accordance with the Option vesting dates set out in this Agreement and the applicable provisions of the Plan and this Agreement. This Option is exercisable in a manner and pursuant to such procedures as the Committee may determine. No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies with applicable laws.  Assuming such compliance, for income tax purposes, the Shares shall be considered transferred to the Participant on the date the Option is exercised with respect to such Shares.    Notwithstanding anything to the contrary in this Agreement or anywhere else, the Option shall not be exercisable after the Option Expiration Date.

(b)           Payment of the aggregate Exercise Price and any applicable tax withholding obligation shall be by any of the following, or a combination thereof, at the election of the Participant:  (i) cash; or (ii) check; or (iii) consideration received by the Company using a Cashless Exercise; or (iv) with the Committee’s consent, consideration received by the Company through a Net Exercise; or (v) with the Committee’s consent, surrender of other Shares, provided that such Shares in the case of Shares acquired from the Company, have been vested and owned by the Participant for more than six (6) months on the date of surrender.  Utilization of the methods described in clauses (iii), (iv) and (v) shall in all cases be subject to the Company’s Special Trading Policy and Procedures and the Addendum thereto.

(c)           The sale of Shares received from the exercise of the Option may at the Company’s discretion be delayed in order to restrict sale of the Shares received from the exercise of an Option during any period in which trading in the Company’s securities is restricted under the Company’s Special Trading Policy and Procedures or otherwise as required under applicable securities’ laws.

(d)           The sale of Shares received from the exercise of an Option may at the Company’s discretion be delayed if in the Company’s judgment trading market conditions would be adversely impacted by the exercise and sale of such Shares.  The Company may also at its discretion place any reasonable restrictions or conditions on the sale of Shares received upon exercise of the Option as it believes would be in the best interests of the trading market for the Company’s securities.

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Section 5.  Termination of Option.  (a) The term of the Option shall commence on the Date of Grant and expire on the earlier of (i) the Option Expiration Date set forth above, (ii) the eight (8) year anniversary of the Date of Grant; or (iii) if Participant’s Service is terminated, and such termination of Service occurs by reason of (A) death or Disability, twelve (12) months from the death or Disability Termination Date; (B) Retirement, twelve (12) months from the Retirement Termination Date, provided, however, that such twelve (12) month period shall instead be thirty-six (36) months if the Participant has completed at least twenty (20) continuous years of Service as of the Termination Date; or (C) other than for Retirement, death or Disability, or Cause, three (3) months from the Termination Date. Notwithstanding the above, if Participant’s termination of Service occurs by reason of Cause, neither the Participant nor the Participant’s estate nor such other person who may then hold the Option shall be entitled to exercise such Option on or after the Termination Date.

(b) In accordance with Plan section 4(g), to the extent that during the entire last two (2) weeks prior to the termination of a vested, in-the-money Option due to the Participant’s termination of Service for any reason other than by the Company for Cause, a sale of Shares underlying such Option would violate Section 16(b) of the Exchange Act or would otherwise be prohibited by Company policy or applicable law or regulations, then such Options shall instead remain exercisable for two (2) weeks after the first business day that all such prohibitions to sale are no longer applicable (subject in all cases to the term of the Option as set forth in Section 5 above).

(c)           Notwithstanding anything to the contrary in this Agreement or anywhere else, the Option shall not be exercisable after the Option Expiration Date.

Section 6.  Restricted Shares and Forfeiture.  The unvested portion of the Restricted Shares is subject to forfeiture.  Except as provided in this Agreement, in order to vest in and not forfeit the Restricted Shares, the Participant must remain in Service until the applicable Restricted Shares Vesting Date (as such date may be accelerated pursuant to Section 7 below) and until the Restricted Shares Vesting Date the Participant may not transfer (within the meaning described in Section 8) any unvested Restricted Shares (“Restrictions”).

Section 7.  Vesting Date; Lapse of Restrictions.

Except as otherwise provided in the Plan or this Agreement, the Option Vesting Date and/or the Restricted Shares Vesting Date shall occur as follows:

(a)           The Option, or portion thereof, shall be exercisable on an applicable Option Vesting Date (as such date may be accelerated pursuant to this Section 7 below) provided the Participant is in Service and in good standing on the applicable Vesting Date.  Notwithstanding the foregoing, in the event of Participant’s death or Disability, the portion of the Option that would have otherwise vested during the period beginning on the date of such death or the Termination Date due to such Disability and ending on the date that is twenty-four (24) months thereafter shall vest as of the date of the Participant’s death or the Termination Date due to such Disability.

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(b)           The Restrictions on the Restricted Shares shall lapse on the Restricted Shares Vesting Date; provided, however, that except as provided in this Section 7 below (or Plan Sections 3(b)(iv) or 12)) in no event shall the Restrictions on Restricted Shares lapse prior to one (1) year from the Date of Grant.  Notwithstanding the foregoing, and in accordance with Plan Section 3(b)(iv), in the event of Participant’s death or Disability, the Restrictions that would have otherwise lapsed during the period beginning on the date of such death or Termination Date due to such Disability and ending on the date that is twenty-four (24) months thereafter shall lapse as of the date of the Participant’s death or the Termination Date due to such Disability.

(c)           In the event that a Change in Control occurs and there is no assumption or continuation of some or all outstanding Awards pursuant to Plan Section 12(a), then as to those Awards that are not assumed or continued under Plan Section 12(a), the Option shall fully vested and become exercisable with respect to all Option Shares issued hereunder and the Restrictions on the Restricted Shares awarded hereunder shall lapse and the Restricted Shares shall become fully vested, as of immediately before such Change in Control. Pursuant to Plan Section 12(b), Participant shall be given written notice at least thirty (30) days prior to the consummation of such Change in Control that the Awards that are not assumed or continued under Plan Section 12(a) will be canceled as of the Change in Control. In the event a Change in Control occurs and (i) the acquiring entity assumes or continues some or all outstanding Awards pursuant to Plan Section 12(a), (ii) within eighteen (18) months thereafter an event occurs which constitutes a “Constructive Termination” (as defined under Participant’s written employment agreement with the Company, if any), and (iii) Participant’s terminates from Service, then with respect to the Awards issued hereunder that are so assumed or continued, the Option shall fully vest and become exercisable, and the Restrictions on the Restricted Shares shall lapse and the Restricted Shares shall become fully vested, only as to those Awards that would have otherwise vested during the period beginning on the Termination Date and ending on the date that is twenty-four (24) months thereafter had such termination from Service not occurred.

(d)           The provisions of this Section 7 are subject to the specific terms of any written employment agreement between the Participant and the Company, which agreement may provide for the acceleration of the Vesting Date of Options or the removal of Restrictions and acceleration of the Restricted Shares Vesting Date upon the occurrence of specified events.  If the conditions under such employment agreement occur for the acceleration of the Vesting Date of Options or the removal of Restrictions and acceleration of the Restricted Shares Vesting Date, then notwithstanding anything to the contrary in this Agreement, the Option shall become exercisable and fully vested with respect to all Option Shares granted hereunder and the Restrictions on the Restricted Shares awarded hereunder shall lapse and the Restricted Shares shall become fully vested as of the date required under such employment agreement, except in no event shall acceleration of any Restricted Shares result in the lapse of the Restrictions prior to one (1) year from the Date of Grant (except as permitted under Plan sections 3(b)(iv) or 12)).

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Section 8.  Restrictions on Transfer.

(a)           The Option may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, alienated or encumbered (collectively, a “Transfer”) in any way by Participant, either voluntarily or involuntarily, and may be exercised during the lifetime of Participant only by Participant, or in the event of Participant’s legal incapacity, by Participant’s guardian or legal representative acting in a fiduciary capacity on behalf of Participant under state law.  If Participant dies, the Option shall thereafter be exercisable as provided above and in the Plan.  The Option shall not be subject to execution, attachment or similar process other than pursuant to a QDRO.

(b)           Prior to the time that the Restrictions have lapsed with respect to Restricted Shares, neither the Restricted Shares, nor any interest therein, or amount payable in respect thereof may be Transferred in any way, either voluntarily or involuntarily.  The Transfer restrictions in the preceding sentence shall not apply to: (i) transfers to the Company; (ii) transfers by will or the laws of descent and distribution; or (iii) transfers pursuant to a QDRO.  Upon and after the time any Restrictions shall have lapsed, Participant shall be permitted to transfer the Shares as to which the Restrictions have lapsed subject to applicable securities law requirements, the Company’s Special Trading Policy and Procedures, and any other applicable laws or regulations.

(c)           Any attempted Transfer of the Option or Restricted Shares contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Option or Restricted Shares, except pursuant to a QDRO, shall be null and void and without effect.

Section 9.              Award Subject to Clawback Policy.  In accordance with Section 13(d) of the Plan, the Company may (i) cause the cancellation of all or any portion of this Award, (ii) require reimbursement of all or any portion of this Award by the Participant and (iii) effect any other right of recoupment of equity or other compensation provided under the Plan or otherwise in accordance with Company policies and/or applicable law (each, a “Clawback Policy”) in effect as of the Date of Grant of this Award.

Section 10.  Designation of Beneficiary.  Participant may designate one or more beneficiaries with respect to this Award or any Awards made under the Plan by timely filing the prescribed beneficiary designation form with the Company.  A beneficiary designation may be changed by filing the prescribed form with the Company at any time prior to the Participant’s death.  If no beneficiary was designated or if no designated beneficiary survives the Participant, then after a Participant’s death any vested portion of the Award shall be transferred or distributed to the Participant’s estate.

Section 11. Stock Certificates For Restricted Shares.

(a)           If Restricted Shares are awarded under this Agreement, the Company shall issue such Restricted Shares subject to this grant either: (i) in certificate form as provided below; or (ii) in book entry form, registered in the name of Participant with notations regarding the applicable restrictions on transfer imposed under this Agreement.

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Any certificates representing Restricted Shares that may be delivered to Participant by the Company prior to the lapse of the Restrictions shall be promptly redelivered to the Company to be held by the Company until the Restrictions on such Shares shall have lapsed and the Shares shall thereby have become transferable or the Shares represented thereby have been forfeited hereunder.  Such certificates shall bear the following legend:

“The ownership of this certificate and the shares of stock evidenced hereby and any interest therein is subject to substantial restrictions on transfer under an Agreement entered into between the registered owner and The Cheesecake Factory Incorporated.  A copy of such Agreement is on file in the office of the Secretary of The Cheesecake Factory Incorporated.”

(b)           After the lapse of the Restrictions with respect to any of the Restricted Shares, the Company shall, as applicable, either remove the notations on any of the Restricted Shares issued in book entry form as to which the Restrictions have lapsed or deliver to Participant a certificate or certificates evidencing the number of Restricted Shares as to which the Restrictions have lapsed.  Participant (or the beneficiary or personal representative of Participant in the event of Participant’s death or Disability, as the case may be) shall deliver to the Company any representations or other documents or assurances required in accordance with the Plan.  The Shares so delivered shall no longer be Restricted Shares.

(c)           If Restricted Shares are awarded under this Agreement, concurrently with the execution and delivery of this Agreement, Participant shall deliver to the Company an executed Stock Power and Assignment Separate from Certificate in the form attached hereto as Exhibit A, in blank, with respect to such Shares.  Participant, by acceptance of the grant of Restricted Shares, shall be deemed to appoint, and does so appoint by execution of this Agreement, the Company and each of its authorized representatives as Participant’s attorney(s) in fact to effect any transfer of forfeited Shares (or Shares otherwise reacquired or withheld by the Company hereunder) to the Company as may be required pursuant to the Plan or this Agreement and to execute such documents as the Company or such representatives deem necessary or advisable in connection with any such transfer.

(d)

Section 12.  Dividend and Voting Rights For Restricted Shares.  After the Date of Grant, Participant shall be entitled to voting rights with respect to the Restricted Shares even though the Restrictions have not lapsed, provided that such rights shall terminate immediately as to any Restricted Shares that are forfeited pursuant to this Agreement.  If any dividends are declared and paid on Shares, then such dividends (whether in the form of cash or Shares) shall be subject to the same vesting conditions and restrictions as the Restricted Shares with respect to which the dividends were paid and Participant shall not be entitled to receive any such dividends until the Restrictions have lapsed.  If the Board makes any adjustment pursuant to Section 11 of the Plan and the Restrictions have not lapsed as to the Restricted Shares prior to such adjustment, the Restrictions and forfeiture provisions of this Agreement shall be applicable to any additional Shares resulting from such adjustment to the same extent as the Restrictions and forfeiture provisions of this Agreement and forfeiture provisions of this Agreement applicable to the Restricted Shares to which the additional Shares relate.

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Section 13.  No Tax or Other Advice from Company.  The Company has not provided any tax, legal or financial advice to Participant, and the Company has not made any recommendations regarding Participant’s participation in the Plan or Participant’s acquisition or sale of the underlying Shares.  Participant is hereby advised to consult with Participant’s own personal tax, legal and financial advisors regarding Participant’s participation in the Plan before taking any action related to the Plan or this Agreement.

Section 14. Tax Withholding.  The Company in its discretion shall be entitled to require a cash payment by or on behalf of Participant and/or deduct from other compensation payable to Participant any sums required by federal, state, local or foreign tax law or regulation to be withheld with respect to the lapsing of any Restrictions.  If Participant makes the election permitted by Section 83(b) of the Code to include in such Participant’s gross income in the year of transfer the amounts specified in Section 83(b) of the Code, then Participant shall notify the Company of such election within 10 days after filing the notice of the election with the Internal Revenue Service.  PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(B), EVEN IF PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON PARTICIPANT’S BEHALF.  MOREOVER, PARTICIPANT IS RELYING SOLELY ON PARTICIPANT’S OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE A CODE SECTION 83(B) ELECTION.

Section 15.  Notices.  All notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

(a)           if to the Company:

The Cheesecake Factory Incorporated

26901 Malibu Hills Road

Calabasas Hills, California  91301

Attention:  General Counsel

If to the Company, to exercise an Option:

The Cheesecake Factory Incorporated

26901 Malibu Hills Road

Calabasas Hills, California  91301

Attn: Stock Plan Administrator

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(b)           if to Participant:

The last address set forth in the Company’s records

or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.  Any such notice or communication shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (ii) in the case of nationally recognized overnight courier, on the next business day after the date sent, (iii) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (iv) in the case of mailing, on the third business day following that date on which the piece of mail containing such communication is posted.

Section 16.  Waiver of Breach.  The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 17.  Participant’s Undertaking.  Participant hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or affect one or more of the obligations or restrictions imposed on Participant pursuant to the express provisions of this Agreement and the Plan.

Section 18.  Modification of Rights.  The rights of Participant are subject to modification and termination in certain events as provided in this Agreement and the Plan.

Section 19.  Governing Law.  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED.  IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

Section 20.  Resolution of Disputes.

(a)           Arbitration. Any dispute, controversy or claim arising out of or relating to this Agreement or the Plan shall be settled by binding arbitration held in Los Angeles, California, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect, except as specifically otherwise provided in this Section 20.  This Section 20 shall be construed and enforced in accordance with the Federal Arbitration Act, notwithstanding any other choice of law provision in this Agreement.  Notwithstanding the foregoing:

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Any party hereto may, in its discretion, apply to a court of competent jurisdiction for equitable relief.  Such an application shall not be deemed a waiver of the right to compel arbitration pursuant to this Section.

(b)           Arbitrators. The panel to be appointed shall consist of three neutral arbitrators:  one selected by the Company, one selected by the Participant, and one selected by the designees of the Company and Participant.

(c)           Procedures.  The arbitrator(s) shall allow such discovery as the arbitrator(s) determine appropriate under the circumstances and shall resolve the dispute as expeditiously as practicable, and if reasonably practicable, within one hundred twenty (120) days after the selection of the arbitrator(s).  The arbitrator(s) shall give the parties written notice of the decision, with the reasons therefor set out, and shall have thirty (30) days thereafter to reconsider and modify such decision if any party so requests within ten (10) days after the decision.

(d)           Authority.  The arbitrator(s) shall have authority to award relief under legal or equitable principles, including interim or preliminary relief, and to allocate responsibility for the costs of the arbitration and to award recovery of attorneys’ fees and expenses in such manner as is determined to be appropriate by the arbitrator(s).

(e)           Entry of Judgment.  Judgment upon the award rendered by the arbitrator(s) may be entered in any court having in personam and subject matter jurisdiction.  Company and Participant hereby submit to the in personam jurisdiction of the Federal and State courts in Los Angeles, California, for the purpose of confirming any such award and entering judgment thereon.

(f)            Confidentiality.  All proceedings under this Section 20, and all evidence given or discovered pursuant hereto, shall be maintained in confidence by all parties and by the arbitrators.

(g)           Continued Performance.  The fact that the dispute resolution procedures specified in this Section 20 shall have been or may be invoked shall not excuse any party from performing its obligations under this Agreement and during the pendency of any such procedure all parties shall continue to perform their respective obligations in good faith.

(h)           Tolling.  All applicable statutes of limitation shall be tolled while the procedures specified in this Section 20 are pending.  The parties will take such action, if any, required to effectuate such tolling.

(i)            Confidentiality.  All proceedings under this Section, and all evidence given or discovered pursuant hereto, shall be maintained in confidence by all parties and by the arbitrators.

Section 21.  No Employment Commitment by Company; No Effect on Employment Agreements.  Nothing in this Agreement or the Plan constitutes an employment commitment by the Company, affects Participant’s status under any employment agreement between the Company and Participant, confers upon Participant any right to remain employed by the Company or any subsidiary, interferes in any way with the right of the Company or any subsidiary at any time to terminate such employment, or affects the right of the Company or any subsidiary to increase or decrease Participant’s compensation or other benefits.  The preceding sentence is subject, however, to the terms of any written employment agreement between Participant and the Company (which may not be modified by any oral agreement). Notwithstanding anything to the contrary in this Agreement, in the event of a conflict between this Agreement and any written employment agreement between Participant and the Company, the written employment agreement shall control provided, however, that if this Agreement provides for earlier vesting schedules, or for the earlier acceleration of vesting of any Option or lapse of Restrictions with respect to Restricted Shares upon the occurrence of specified events, than this Agreement shall control as to such earlier vesting schedule or earlier acceleration of vesting or lapse of Restrictions upon the occurrence such specified events.

9

Section 22.  Counterparts.  This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.

Section 23.  Entire Agreement.  This Agreement and the Plan (and the other writings referred to herein) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.

Section 24.  Severability.  If any provision of this Agreement is found to be invalid or unenforceable, the invalidity or unenforceability shall not affect the validity of the remaining provisions hereof.  Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

10

Section 25.  Compliance with Section 409A of the Code.  The Option and/or the Restricted Shares awarded under this Agreement, as the case may be, are intended in all respects not to subject the Participant to taxation under Section 409A of the Code.  To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation, any such regulations or guidance that may be issued after the Date of Grant so that neither the Option nor any Restricted Shares will be subject to Code Section 409A.  In the event that the Company determines that any amounts will be taxable to Participant under Section 409A of the Code and related Department of Treasury guidance, the Company may, in its sole and absolute discretion, adopt such amendments to this Agreement (having prospective or retroactive effect), and/or take such other actions, as the Company determines to be necessary or appropriate to avoid the application of Section 409A of the Code to such Option or Restricted Shares.  No such amendment or other action shall be adopted or taken that will cause the Option and/or the Restricted Shares to be subject to Section 409A.

THE CHEESECAKE FACTORY INCORPORATED,

a Delaware corporation

By:

Name and title:

Its Authorized Officer

11

BY EXECUTION BELOW I ACCEPT ALL TERMS AND CONDITIONS OF THE NOTICE OF GRANT AND THE OTHER DOCUMENTS REFERENCED HEREIN

PARTICIPANT:

(Signature)

(Print Name)

Address for Notice:

(Please execute and return this Notice of Grant to the Company’s Stock Plan Administrator
at the address above; keep a copy for your records)

Attachments:

·Exhibit A — Stock Power (Attached only if Restricted Shares are awarded)

·2010 Stock Incentive Plan Summary and Prospectus

·Special Trading Policy and Procedures

·Addendum To Special Trading Policy and Procedures for Section 16 Persons

·SEC Filing List (prospectus supplement)

·Designation of Beneficiary(ies) Form

12

EXHIBIT A

STOCK POWER AND

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                                                                                                                             (                      ) shares of the Common Stock, $0.01 par value per share, of The Cheesecake Factory Incorporated, a Delaware corporation (the “Company”), standing in the name of                                        on the books of the Company represented by Certificate No.              herewith and does hereby irrevocably constitute and appoint                                                                                            attorney to transfer the said stock on the books of the Company with full power of substitution in the premises.

Dated
	Printed Name

13

EX-31.1

EXHIBIT 31.1

THE CHEESECAKE FACTORY INCORPORATED

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, David Overton, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of The Cheesecake Factory Incorporated;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 10, 2012	/s/ DAVID OVERTON
	David Overton
	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

THE CHEESECAKE FACTORY INCORPORATED

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, W. Douglas Benn, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of The Cheesecake Factory Incorporated;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 10, 2012	/s/ W. DOUGLAS BENN
	W. Douglas Benn
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

THE CHEESECAKE FACTORY INCORPORATED

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Cheesecake Factory Incorporated (the “Company”) on Form 10-Q for the period ended July 3, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David Overton, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 10, 2012	/s/ DAVID OVERTON
	David Overton
	Chairman of the Board and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

THE CHEESECAKE FACTORY INCORPORATED

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Cheesecake Factory Incorporated (the “Company”) on Form 10-Q for the period ended July 3, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, W. Douglas Benn, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 10, 2012	/s/ W. DOUGLAS BENN
	W. Douglas Benn
	Executive Vice President and Chief Financial Officer

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Subsequent Events (Details) (Cash Dividends, USD $) In Millions, except Per Share data, unless otherwise specified	1 Months Ended
	Aug. 31, 2012
Cash Dividends
Subsequent Events
Cash dividend paid (in dollars per share)	$ 0.12
Aggregate dividend payment	$ 6.4

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Long-Term Debt

6 Months Ended

Jul. 03, 2012

Long-Term Debt

Long-Term Debt

3.  Long-Term Debt

In December 2010, we entered into a five-year credit agreement (“Facility”) that provides us with revolving loan commitments totaling $200 million, including letter of credit subfacility commitments that total $35 million.  The Facility contains a commitment increase feature that could provide for an additional $50 million in available credit upon our request and the satisfaction of certain conditions.  In conjunction with our entry into the Facility, we terminated our prior credit facility dated April 2007, as amended March 2008 and January 2009.  We had no outstanding borrowings under the Facility at July 3, 2012 or January 3, 2012.

Borrowings under the Facility bear interest at a floating rate based on LIBOR, plus a spread ranging from 1.75% to 2.25%, depending on our ratio of debt plus eight times rent (“Adjusted Debt”) to trailing 12-month earnings before interest, taxes, depreciation, amortization, rent and noncash stock option expense (“EBITDAR”), as defined in the agreement.  In addition, we pay a commitment fee ranging from 0.3% to 0.4%, also depending on our ratio of Adjusted Debt to EBITDAR, calculated on the average unused portion of the Facility.

We are obligated to maintain certain financial covenants, which include a maximum Adjusted Debt to trailing 12-month EBITDAR ratio (“Adjusted Debt Ratio”) of 4.0, as well as a trailing 12-month minimum EBITDAR to interest and rental expense ratio (“EBITDAR Ratio”) of 1.9.  At July 3, 2012, our Adjusted Debt and EBITDAR Ratios were 2.7 and 2.9, respectively.  Therefore, we were in compliance with the financial covenants in effect under the Facility at that date.

Availability under the Facility is reduced by outstanding standby letters of credit, which are used to support our self-insurance programs.  As of July 3, 2012, we had net availability for borrowings of $176 million, based upon a zero outstanding debt balance and $24 million in standby letters of credit.  Our Facility limits cash distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined leverage ratio.

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Inventories

6 Months Ended

Jul. 03, 2012

Inventories

Inventories

2.  Inventories

Inventories consisted of (in thousands):

	July 3, 2012		January 3, 2012
Restaurant food and supplies	$	12,870	$	12,717
Bakery finished goods and work in progress	13,546		9,991
Bakery raw materials and supplies	5,060		5,502
Total	$	31,476	$	28,210

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jul. 03, 2012	Jan. 03, 2012
Current assets:
Cash and cash equivalents	$ 48,416	$ 48,211
Accounts receivable	10,248	11,334
Income tax receivable	3,943	5,472
Other receivables	25,221	32,096
Inventories	31,476	28,210
Prepaid expenses	35,580	36,498
Deferred income taxes	10,312	14,574
Total current assets	165,196	176,395
Property and equipment, net	756,065	758,503
Other assets:
Intangible assets, net	15,721	14,674
Prepaid rent	49,682	49,490
Other	26,088	23,508
Total other assets	91,491	87,672
Total assets	1,012,752	1,022,570
Current liabilities:
Accounts payable	22,137	36,159
Other accrued expenses	163,853	187,081
Total current liabilities	185,990	223,240
Deferred income taxes	105,301	103,927
Deferred rent	74,988	69,742
Deemed landlord financing liability	54,301	55,086
Other noncurrent liabilities	31,413	27,822
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 250,000,000 shares authorized; 86,949,039 and 85,863,313 issued at July 3, 2012 and January 3, 2012, respectively	869	859
Additional paid-in capital	481,755	455,339
Retained earnings	866,098	816,977
Treasury stock, 33,095,777 and 31,196,128 shares at cost at July 3, 2012 and January 3, 2012, respectively	(787,963)	(730,422)
Total stockholders' equity	560,759	542,753
Total liabilities and stockholders' equity	1,012,752	1,022,570
Preferred stock
Stockholders' equity:
Preferred stock
Junior participating cumulative preferred stock
Stockholders' equity:
Preferred stock

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jul. 03, 2012	Jun. 28, 2011
Cash flows from operating activities:
Net income	$ 49,121	$ 45,204
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	36,807	34,936
Deferred income taxes	5,637	3,316
Stock-based compensation	6,274	5,946
Tax impact of stock options exercised, net of cancellations	2,095	600
Excess tax benefit related to stock options exercised	(2,008)	(497)
Other	391	412
Changes in assets and liabilities:
Accounts receivable	1,086	10,383
Other receivables	6,875	7,323
Inventories	(3,266)	(9,212)
Prepaid expenses	918	3,121
Other assets	(2,727)	(1,764)
Accounts payable	(14,022)	6,051
Income taxes receivable/payable	1,528	2,091
Other accrued expenses	(14,450)	(13,796)
Cash provided by operating activities	74,259	94,114
Cash flows from investing activities:
Additions to property and equipment	(34,419)	(30,176)
Additions to intangible assets	(1,285)	(358)
Cash used in investing activities	(35,704)	(30,534)
Cash flows from financing activities:
Deemed landlord financing proceeds	201	1,612
Deemed landlord financing payments	(925)	(820)
Proceeds from exercise of stock options	17,907	7,475
Excess tax benefit related to stock options exercised	2,008	497
Purchase of treasury stock	(57,541)	(95,030)
Cash used in financing activities	(38,350)	(86,266)
Net change in cash and cash equivalents	205	(22,686)
Cash and cash equivalents at beginning of period	48,211	81,619
Cash and cash equivalents at end of period	48,416	58,933
Supplemental disclosures:
Interest paid	2,245	2,065
Income taxes paid	$ 12,669	$ 11,248

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Stock-Based Compensation (Details 2) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 03, 2012 Y	Jun. 28, 2011 Y	Jul. 03, 2012 Y	Jun. 28, 2011
Restricted Shares and Restricted Share Units
Outstanding at the end of the period (in shares)	1,100	700	1,100	700
Stock options
Stock-Based Compensation
Weighted average fair value at the grant date for options issued (in dollars per share)	$ 12.34	$ 12.11
Weighted average assumptions under Black-Scholes valuation model
Expected stock price volatility (as a percent)	39.80%	39.00%
Risk free interest rate (as a percent)	1.10%	2.00%
Expected option term (in years)	6.1	6.0
Stock option activity, shares
Outstanding, at the beginning of the period (in shares)			8,827
Granted (in shares)			482
Exercised (in shares)			(833)
Forfeited or cancelled (in shares)			(109)
Outstanding at the end of the period (in shares)	8,367		8,367
Exercisable at the end of the period (in shares)	4,430		4,430
Weighted Average Exercise price
Outstanding at the beginning of the period (in dollars per share)			$ 23.51
Granted (in dollars per share)	$ 29.30		$ 29.30
Exercised (in dollars per share)	$ 21.51		$ 21.51
Forfeited or cancelled (in dollars per share)	$ 23.22		$ 23.22
Outstanding at the end of the period (in dollars per share)	$ 24.05		$ 24.05
Exercisable at the end of the period (in dollars per share)	$ 27.30		$ 27.30
Weighted Average Remaining Contractual Term
Outstanding at the beginning of the period (in years)			4.8
Outstanding at the end of the period (in years)	4.6		4.6
Exercisable at the end of the period (in years)			3.6
Aggregate Intrinsic Value
Outstanding at the beginning of the period			$ 58,857,000
Outstanding at the end of the period	70,559,000		70,559,000
Exercisable at the end of the period	24,010,000		24,010,000
Total intrinsic value of options exercised	3,700,000	2,300,000	8,100,000	3,700,000
Unrecognized Stock-based Compensation Expense
Total unrecognized stock-based compensation expenses related to unvested stock option	18,800,000		18,800,000
Expected weighted average period for recognition of compensation expense related to nonvested stock option (in years)			2.4
Restricted Shares and Restricted Share Units
Unrecognized Stock-based Compensation Expense
Total unrecognized stock-based compensation expenses related to unvested stock option	19,900,000		19,900,000
Expected weighted average period for recognition of compensation expense related to nonvested stock option (in years)			3.8
Restricted Shares and Restricted Share Units
Outstanding at the beginning of the period (in shares)			826
Granted (in shares)			420
Vested (in shares)			(175)
Forfeited (in shares)			(7)
Outstanding at the end of the period (in shares)	1,064		1,064
Fair value of shares vested	$ 1,200,000	$ 800,000	$ 2,400,000	$ 900,000
Weighted Average Fair Value
Outstanding at the beginning of the period (in dollars per share)			$ 20.40
Granted (in dollars per share)	$ 31.08	$ 29.86	$ 29.88
Vested (in dollars per share)			$ 13.98
Forfeited (in dollars per share)	$ 19.59		$ 19.59
Outstanding at the end of the period (in dollars per share)	$ 25.20		$ 25.20

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 03, 2012	Jun. 28, 2011	Jul. 03, 2012	Jun. 28, 2011	Jan. 03, 2012
Segment information
Revenues	$ 454,749	$ 430,746	$ 890,503	$ 849,511
Income from operations	40,970	35,162	71,189	65,013
Depreciation and amortization	18,509	17,483	36,807	34,936
Capital expenditures	18,070	19,671	34,419	30,176
Total assets	1,012,752		1,012,752		1,022,570
Restaurants
Segment information
Revenues	442,919	416,549	867,921	823,452
Income from operations	64,396	56,621	119,920	108,518
Depreciation and amortization	16,819	15,819	33,427	31,597
Capital expenditures	14,435	18,523	26,025	26,947
Total assets	814,946		814,946		835,393
Bakery
Segment information
Revenues	30,154	28,110	56,327	53,947
Income from operations	1,986	1,885	3,796	2,885
Depreciation and amortization	629	640	1,274	1,291
Capital expenditures	1,784	512	4,892	633
Total assets	66,818		66,818		61,382
Intercompany bakery sales
Segment information
Revenues	(18,324)	(13,913)	(33,745)	(27,888)
Corporate
Segment information
Income from operations	(25,412)	(23,344)	(52,527)	(46,390)
Depreciation and amortization	1,061	1,024	2,106	2,048
Capital expenditures	1,851	636	3,502	2,596
Total assets	$ 130,988		$ 130,988		$ 125,795

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Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jul. 03, 2012

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

1.  Basis of Presentation and Significant Accounting Policies

The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated (referred to herein as the “Company,” “we,” “us” and “our”) and its wholly owned subsidiaries prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  The financial statements presented herein have not been audited by an independent registered public accounting firm, but 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 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2012 filed with the SEC on February 29, 2012.

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.

We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31st for financial reporting purposes.  Fiscal 2012 consists of 52 weeks and will end on January 1, 2013.  Fiscal 2011, which ended on January 3, 2012, was a 53-week year, with an additional week in the fourth quarter.

Certain reclassifications have been made to prior year amounts to conform to current year presentation.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued guidance that eliminated the previous option to report other comprehensive income and its components in the statement of changes in equity.  Companies can elect to present items of net income and other comprehensive income in one continuous statement or in two separate but consecutive statements.  There are no changes to the accounting for items within comprehensive income.  This standard impacts presentation only and became effective for us in the first quarter of fiscal 2012.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jul. 03, 2012	Jan. 03, 2012
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	86,949,039	85,863,313
Treasury stock, shares	33,095,777	31,196,128
Preferred stock
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Junior participating cumulative preferred stock
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	150,000	150,000
Preferred stock, shares issued	0	0

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Net Income Per Share (Tables)

6 Months Ended

Jul. 03, 2012

Net Income Per Share

Schedule of basic and diluted income (loss) per share

	Thirteen Weeks Ended July 3, 2012		Thirteen Weeks Ended June 28, 2011		Twenty-Six Weeks Ended July 3, 2012		Twenty-Six Weeks Ended June 28, 2011
	(In thousands, except per share data)
Net income	$	28,399	$	24,748	$	49,121	$	45,204
Basic weighted average shares outstanding	53,155		56,554		53,417		57,517
Dilutive effect of equity awards	1,936		2,041		1,959		2,026
Diluted weighted average shares outstanding	55,091		58,595		55,376		59,543
Basic net income per share	$	0.53	$	0.44	$	0.92	$	0.79
Diluted net income per share	$	0.52	$	0.42	$	0.89	$	0.76

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Document and Entity Information	6 Months Ended
	Jul. 03, 2012	Jul. 25, 2012
Document and Entity Information
Entity Registrant Name	CHEESECAKE FACTORY INC
Entity Central Index Key	0000887596
Document Type	10-Q
Document Period End Date	Jul. 03, 2012
Amendment Flag	false
Current Fiscal Year End Date	--01-01
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		53,687,108
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

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Segment Information (Tables)

6 Months Ended

Jul. 03, 2012

Segment Information

Schedule of segment information

	Thirteen Weeks Ended July 3, 2012			Thirteen Weeks Ended June 28, 2011			Twenty-Six Weeks Ended July 3, 2012			Twenty-Six Weeks Ended June 28, 2011
Revenue:
Restaurants	$	442,919		$	416,549		$	867,921		$	823,452
Bakery	30,154			28,110			56,327			53,947
Intercompany bakery sales	(18,324		)	(13,913		)	(33,745		)	(27,888		)
Total	$	454,749		$	430,746		$	890,503		$	849,511
Income from operations:
Restaurants	$	64,396		$	56,621		$	119,920		$	108,518
Bakery	1,986			1,885			3,796			2,885
Corporate	(25,412		)	(23,344		)	(52,527		)	(46,390		)
Total	$	40,970		$	35,162		$	71,189		$	65,013
Depreciation and amortization:
Restaurants	$	16,819		$	15,819		$	33,427		$	31,597
Bakery	629			640			1,274			1,291
Corporate	1,061			1,024			2,106			2,048
Total	$	18,509		$	17,483		$	36,807		$	34,936
Capital expenditures:
Restaurants	$	14,435		$	18,523		$	26,025		$	26,947
Bakery	1,784			512			4,892			633
Corporate	1,851			636			3,502			2,596
Total	$	18,070		$	19,671		$	34,419		$	30,176

	July 3, 2012		January 3, 2012
Total assets:
Restaurants	$	814,946	$	835,393
Bakery	66,818		61,382
Corporate	130,988		125,795
Total	$	1,012,752	$	1,022,570

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 03, 2012	Jun. 28, 2011	Jul. 03, 2012	Jun. 28, 2011
Revenues	$ 454,749	$ 430,746	$ 890,503	$ 849,511
Costs and expenses:
Cost of sales	111,019	109,924	218,617	214,588
Labor expenses	146,086	139,469	289,066	276,967
Other operating costs and expenses	108,870	103,392	214,758	206,666
General and administrative expenses	26,278	24,208	54,943	48,473
Depreciation and amortization expenses	18,509	17,483	36,807	34,936
Preopening costs	3,017	1,108	5,123	2,868
Total costs and expenses	413,779	395,584	819,314	784,498
Income from operations	40,970	35,162	71,189	65,013
Interest and other (expense)/income, net	(838)	(1,094)	(1,986)	(2,496)
Income before income taxes	40,132	34,068	69,203	62,517
Income tax provision	11,733	9,320	20,082	17,313
Net income	28,399	24,748	49,121	45,204
Other comprehensive income, net	0		0
Comprehensive income	$ 28,399	$ 24,748	$ 49,121	$ 45,204
Net income per share:
Basic (in dollars per share)	$ 0.53	$ 0.44	$ 0.92	$ 0.79
Diluted (in dollars per share)	$ 0.52	$ 0.42	$ 0.89	$ 0.76
Weighted average shares outstanding:
Basic (in shares)	53,155	56,554	53,417	57,517
Diluted (in shares)	55,091	58,595	55,376	59,543

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Net Income Per Share

6 Months Ended

Jul. 03, 2012

Net Income Per Share

Net Income Per Share

6.  Net Income Per Share

At July 3, 2012 and June 28, 2011, 1.1 million and 0.7 million shares, respectively, of restricted stock issued to employees were unvested, and therefore excluded from the calculation of basic earnings per share for the fiscal quarters ended on those dates. Diluted net income per share includes the dilutive effect of outstanding equity awards, calculated using the treasury stock method.  Assumed proceeds from in-the-money options include windfall tax benefits, net of shortfalls, calculated under the “as-if” method as prescribed by FASB Accounting Standards Codification (“ASC”) 718, “Compensation — Stock Option Compensation.”

	Thirteen Weeks Ended July 3, 2012		Thirteen Weeks Ended June 28, 2011		Twenty-Six Weeks Ended July 3, 2012		Twenty-Six Weeks Ended June 28, 2011
	(In thousands, except per share data)
Net income	$	28,399	$	24,748	$	49,121	$	45,204
Basic weighted average shares outstanding	53,155		56,554		53,417		57,517
Dilutive effect of equity awards	1,936		2,041		1,959		2,026
Diluted weighted average shares outstanding	55,091		58,595		55,376		59,543
Basic net income per share	$	0.53	$	0.44	$	0.92	$	0.79
Diluted net income per share	$	0.52	$	0.42	$	0.89	$	0.76

Shares of common stock equivalents of 2.7 million and 2.9 million for the thirteen and twenty-six weeks ended July 3, 2012 and 2.4 million and 2.6 million for the thirteen and twenty-six weeks ended June 28, 2011, respectively, were excluded from the diluted calculation due to their anti-dilutive effect.

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Stock-Based Compensation

6 Months Ended

Jul. 03, 2012

Stock-Based Compensation

Stock-Based Compensation

5.  Stock-Based Compensation

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

	Thirteen Weeks Ended July 3, 2012		Thirteen Weeks Ended June 28, 2011		Twenty-Six Weeks Ended July 3, 2012		Twenty-Six Weeks Ended June 28, 2011
Labor expenses	$	940	$	1,111	$	1,833	$	2,079
Other operating costs and expenses	48		44		95		91
General and administrative expenses	1,922		1,810		4,346		3,776
Total stock-based compensation	2,910		2,965		6,274		5,946
Income tax benefit	1,113		1,134		2,400		2,274
Total stock-based compensation, net of taxes	$	1,797	$	1,831	$	3,874	$	3,672
Capitalized stock-based compensation (1)	62		57		150		130

(1)It is our policy to capitalize the portion of stock-based compensation costs for our internal development and construction, legal, and facilities departments that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations, lease, intellectual property and liquor license acquisition activities and equipment installation.  Capitalized stock-based compensation is included in property and equipment, net and other assets on the consolidated balance sheets.

Stock Options

The weighted average fair value at the grant date for options issued during the second quarter of fiscal 2012 and 2011 was $12.34 and $12.11 per option, respectively.  The fair value of options at the grant date was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for the second quarter of fiscal 2012 and 2011, respectively: (a) an expected option term of 6.1 and 6.0 years, (b) expected stock price volatility of 39.8% and 39.0%, (c) a risk-free interest rate of 1.1% and 2.0%, and (d) no dividend yield on our stock.

Stock option activity during the twenty-six weeks ended July 3, 2012 was as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In thousands)		(Per share)		(In years)	(In thousands)
Outstanding at January 3, 2012	8,827		$	23.51	4.8	$	58,857
Granted	482		$	29.30
Exercised	(833	)	$	21.51
Forfeited or cancelled	(109	)	$	23.22
Outstanding at July 3, 2012	8,367		$	24.05	4.6	$	70,559
Exercisable at July 3, 2012	4,430		$	27.30	3.6	$	24,010

The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended July 3, 2012 was $3.7 million and $8.1 million, respectively.  The total intrinsic value of options exercised during the thirteen and twenty-six weeks ended June 28, 2011 was $2.3 million and $3.7 million, respectively.  As of July 3, 2012, the total unrecognized stock-based compensation expense related to unvested stock options was $18.8 million, which we expect to recognize over a weighted average period of approximately 2.4 years.

Restricted Shares and Restricted Share Units

Restricted share and restricted share unit activity during the twenty-six weeks ended July 3, 2012 was as follows:

	Shares		Weighted Average Fair Value
	(In thousands)		(Per share)
Outstanding at January 3, 2012	826		$	20.40
Granted	420		29.88
Vested	(175	)	13.98
Forfeited	(7	)	19.59
Outstanding at July 3, 2012	1,064		$	25.20

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 at the grant date for restricted shares and restricted share units issued during the second quarter of fiscal 2012 and fiscal 2011 was $31.08 and $29.86, respectively.  The fair value of shares that vested during the thirteen and twenty-six weeks ended July 3, 2012 was $1.2 million and $2.4 million, respectively.  The fair value of shares that vested during the thirteen and twenty-six weeks ended June 28, 2011 was $0.8 million and $0.9 million, respectively.  As of July 3, 2012, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $19.9 million, which we expect to recognize over a weighted average period of approximately 3.8 years.

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Net Income Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 03, 2012	Jun. 28, 2011	Jul. 03, 2012	Jun. 28, 2011
Net Income Per Share
Shares of restricted stock issued to employees, unvested	1,100,000	700,000	1,100,000	700,000
Net income per share, basic and diluted
Net income	$ 28,399	$ 24,748	$ 49,121	$ 45,204
Basic weighted average shares outstanding	53,155,000	56,554,000	53,417,000	57,517,000
Dilutive effect of equity awards (in shares)	1,936,000	2,041,000	1,959,000	2,026,000
Diluted weighted average shares outstanding	55,091,000	58,595,000	55,376,000	59,543,000
Basic net income per share (in dollars per share)	$ 0.53	$ 0.44	$ 0.92	$ 0.79
Diluted net income per share (in dollars per share)	$ 0.52	$ 0.42	$ 0.89	$ 0.76
Shares of common stock not included in the diluted calculation due to their anti-dilutive effect	2,700,000	2,400,000	2,900,000	2,600,000

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jul. 03, 2012	Jan. 03, 2012
Inventories
Restaurant food and supplies	$ 12,870	$ 12,717
Bakery finished goods and work in progress	13,546	9,991
Bakery raw materials and supplies	5,060	5,502
Total inventories	$ 31,476	$ 28,210

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Inventories (Tables)

6 Months Ended

Jul. 03, 2012

Inventories

Schedule of inventories

	July 3, 2012		January 3, 2012
Restaurant food and supplies	$	12,870	$	12,717
Bakery finished goods and work in progress	13,546		9,991
Bakery raw materials and supplies	5,060		5,502
Total	$	31,476	$	28,210

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Segment Information

6 Months Ended

Jul. 03, 2012

Segment Information

Segment Information

7.  Segment Information

Our management reviews discrete financial information for The Cheesecake Factory, Grand Lux Cafe, RockSugar Pan Asian Kitchen and the bakery for decision-making purposes.  However, based on quantitative thresholds set forth in ASC 280, “Segment Reporting”, The Cheesecake Factory is our only business that meets the criteria of a reportable operating segment.  Although not required, we present segment information for the bakery separately from our restaurant concepts because the bakery is a distinctively different business, and we believe information regarding this segment is useful to readers.  The bakery segment produces baked desserts and other products for our restaurants and for other foodservice operators, retailers and distributors.  Bakery sales to our restaurants are recorded at prices similar to third-party national accounts.  Unallocated corporate expenses, assets and capital expenditures are presented below as reconciling items to the amounts presented in the consolidated financial statements.

Segment information is presented below (in thousands):

	Thirteen Weeks Ended July 3, 2012			Thirteen Weeks Ended June 28, 2011			Twenty-Six Weeks Ended July 3, 2012			Twenty-Six Weeks Ended June 28, 2011
Revenue:
Restaurants	$	442,919		$	416,549		$	867,921		$	823,452
Bakery	30,154			28,110			56,327			53,947
Intercompany bakery sales	(18,324		)	(13,913		)	(33,745		)	(27,888		)
Total	$	454,749		$	430,746		$	890,503		$	849,511
Income from operations:
Restaurants	$	64,396		$	56,621		$	119,920		$	108,518
Bakery	1,986			1,885			3,796			2,885
Corporate	(25,412		)	(23,344		)	(52,527		)	(46,390		)
Total	$	40,970		$	35,162		$	71,189		$	65,013
Depreciation and amortization:
Restaurants	$	16,819		$	15,819		$	33,427		$	31,597
Bakery	629			640			1,274			1,291
Corporate	1,061			1,024			2,106			2,048
Total	$	18,509		$	17,483		$	36,807		$	34,936
Capital expenditures:
Restaurants	$	14,435		$	18,523		$	26,025		$	26,947
Bakery	1,784			512			4,892			633
Corporate	1,851			636			3,502			2,596
Total	$	18,070		$	19,671		$	34,419		$	30,176

	July 3, 2012		January 3, 2012
Total assets:
Restaurants	$	814,946	$	835,393
Bakery	66,818		61,382
Corporate	130,988		125,795
Total	$	1,012,752	$	1,022,570

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Subsequent Events

6 Months Ended

Jul. 03, 2012

Subsequent Events

Subsequent Events

8.  Subsequent Events

Cash Dividends

On July 23, 2012, our Board of Directors approved the initiation of a cash dividend to our stockholders.  A quarterly dividend of $0.12 per share will be paid on August 21, 2012 to the stockholders of record on August 8, 2012 of each share of our common stock.  Future dividends will be subject to Board approval.  Based on shares outstanding at July 25, 2012, the total dividend payment will be approximately $6.4 million.

Other

Our lease for The Cheesecake Factory restaurant located in Brentwood, California expires on October 4, 2012, in accordance with its terms, and we elected not to renew it.  Costs related to this expiration are expected to be minimal, and we do not expect it to impact our comparable sales and earnings per share assumptions for fiscal 2012 or future years.

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Stock-Based Compensation (Tables)

6 Months Ended

Jul. 03, 2012

Stock-Based Compensation

Schedule of information related to stock-based compensation

	Thirteen Weeks Ended July 3, 2012		Thirteen Weeks Ended June 28, 2011		Twenty-Six Weeks Ended July 3, 2012		Twenty-Six Weeks Ended June 28, 2011
Labor expenses	$	940	$	1,111	$	1,833	$	2,079
Other operating costs and expenses	48		44		95		91
General and administrative expenses	1,922		1,810		4,346		3,776
Total stock-based compensation	2,910		2,965		6,274		5,946
Income tax benefit	1,113		1,134		2,400		2,274
Total stock-based compensation, net of taxes	$	1,797	$	1,831	$	3,874	$	3,672
Capitalized stock-based compensation (1)	62		57		150		130

(1)It is our policy to capitalize the portion of stock-based compensation costs for our internal development and construction, legal, and facilities departments that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations, lease, intellectual property and liquor license acquisition activities and equipment installation.  Capitalized stock-based compensation is included in property and equipment, net and other assets on the consolidated balance sheets.

Schedule of stock option activity

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In thousands)		(Per share)		(In years)	(In thousands)
Outstanding at January 3, 2012	8,827		$	23.51	4.8	$	58,857
Granted	482		$	29.30
Exercised	(833	)	$	21.51
Forfeited or cancelled	(109	)	$	23.22
Outstanding at July 3, 2012	8,367		$	24.05	4.6	$	70,559
Exercisable at July 3, 2012	4,430		$	27.30	3.6	$	24,010

Schedule of restricted share activity

	Shares		Weighted Average Fair Value
	(In thousands)		(Per share)
Outstanding at January 3, 2012	826		$	20.40
Granted	420		29.88
Vested	(175	)	13.98
Forfeited	(7	)	19.59
Outstanding at July 3, 2012	1,064		$	25.20

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Stock-Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jul. 03, 2012	Jun. 28, 2011	Jul. 03, 2012	Jun. 28, 2011
Stock-based compensation
Total stock-based compensation	$ 2,910	$ 2,965	$ 6,274	$ 5,946
Income tax benefit	1,113	1,134	2,400	2,274
Total stock-based compensation, net of taxes	1,797	1,831	3,874	3,672
Capitalized stock-based compensation	62	57	150	130
Labor expenses
Stock-based compensation
Total stock-based compensation	940	1,111	1,833	2,079
Other operating costs and expenses
Stock-based compensation
Total stock-based compensation	48	44	95	91
General and administrative expenses
Stock-based compensation
Total stock-based compensation	$ 1,922	$ 1,810	$ 4,346	$ 3,776

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock
Balance at Jan. 03, 2012	$ 542,753	$ 859	$ 455,339	$ 816,977	$ (730,422)
Balance (in shares) at Jan. 03, 2012		85,863
Increase (Decrease) in Stockholders' Equity
Net income	49,121			49,121
Issuance of common stock from stock options exercised	17,907	8	17,899
Issuance of common stock from stock options exercised (in shares)		833
Tax impact of stock options exercised, net of cancellations	2,095		2,095
Stock-based compensation	6,422		6,422
Issuance of restricted stock, net of forfeitures	2	2
Issuance of restricted stock, net of forfeitures (in shares)		253
Purchase of treasury stock	(57,541)				(57,541)
Balance at Jul. 03, 2012	$ 560,759	$ 869	$ 481,755	$ 866,098	$ (787,963)
Balance (in shares) at Jul. 03, 2012		86,949

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Commitments and Contingencies

6 Months Ended

Jul. 03, 2012

Commitments and Contingencies

Commitments and Contingencies

4. Commitments and Contingencies

Within the ordinary course of our business, we are subject to private lawsuits, government audits, administrative proceedings and other claims.  These matters typically involve claims from guests, staff members and others related to operational 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.  We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether these allegations are valid or whether we are legally determined to be liable. At this time, we believe that the final disposition of any pending lawsuits, audits, proceedings and claims will not have a material adverse effect individually or in the aggregate on our financial position, results of operations or liquidity.  It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, audits, proceedings or claims.

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Long-Term Debt (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	6 Months Ended
	Dec. 28, 2010 Y	Jul. 03, 2012 M rent
Long-Term Debt
Line of credit facility term (in years)	5
Maximum commitments	$ 200
Maximum commitments, letter of credit subfacility	35
Additional available credit	50
Credit facility, floating interest rate basis		LIBOR
Multiplier of rent used to compute Adjusted Debt		8
Trailing period for which EBITDAR is computed (in months)		12
Financial covenant, Adjusted Debt Ratio, maximum		4.0
Financial covenant, EBITDAR Ratio, minimum		1.9
Adjusted Debt Ratio		2.7
EBITDAR Ratio		2.9
Net availability for borrowings		176
Outstanding debt		0
Outstanding standby letters of credit		$ 24
Minimum
Long-term debt
Credit facility, basis spread on variable rate, (as a percent)		1.75%
Commitment fee (as a percent)		0.30%
Maximum
Long-term debt
Credit facility, basis spread on variable rate, (as a percent)		2.25%
Commitment fee (as a percent)		0.40%