UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction | (I.R.S. Employer | |
of incorporation or organization) | Identification No.) | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol |
| Name of each exchange on which registered |
The Nasdaq Stock Market LLC ( |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company ," and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Accelerated filer ☐ | |
Non-accelerated filer ☐ | Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the second fiscal quarter, July 2, 2019, was $
As of June 15, 2020,
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates by reference information from the registrant’s proxy statement for the annual meeting of stockholders held on May 28, 2020.
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (this “Amendment”) amends the Annual Report on Form 10-K of The Cheesecake Factory Incorporated (the “Company”) for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission (“SEC”) on March 12, 2020 (the “Form 10-K”). In the Form 10-K, the Company inadvertently omitted the “Report of Independent Registered Public Accounting Firm” (the “Audit Report”) of its prior auditors (PricewaterhouseCoopers LLP) for the fiscal year ended January 2, 2018. The Audit Report was signed by PricewaterhouseCoopers LLP and delivered to the Company prior to the original filing of the Form 10-K, but the Audit Report was inadvertently omitted from the Form 10-K.
This Form 10-K/A is being filed solely to include the inadvertently omitted Audit Report for PricewaterhouseCoopers LLP relating to the Company’s consolidated financial statements. No other changes were made to the Audit Report or to the Form 10-K. The consolidated financial statements and notes to consolidated financial statements have remained the same as that previously filed in the Form 10-K.
This Amendment reflects information as of the filing date of the Form 10-K, does not reflect events occurring after that date and does not modify or update in any way disclosures made in the Form 10-K, except as specifically noted above.
In accordance with Rule 12b-15 of the Securities Exchange Act of 1934, as amended, this Amendment includes new certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, dated as of the filing date of this Amendment.
1
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements required to be filed hereunder are set forth in Part IV, Item 15 of this report.
PART IV
ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following documents are filed as a part of this Report:
(a) 1. Financial statements:
The consolidated financial statements required to be filed hereunder are listed in the Index to Consolidated Financial Statements on page 3 of this report.
2. Financial statement schedules:
All schedules have been omitted because they are not applicable, not required or the information has been otherwise supplied in the financial statements or notes to the financial statements.
3. Exhibits:
The Exhibits required to be filed hereunder are listed in the exhibit index included herein at page 36.
2
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
The Cheesecake Factory Incorporated:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of The Cheesecake Factory Incorporated and subsidiaries (the Company) as of December 31, 2019 and January 1, 2019, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and January 1, 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
The Company acquired North Italia and the remaining business of Fox Restaurant Concepts LLC (FRC) during 2019, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019, North Italia’s and FRC’s internal control over financial reporting associated with 28.3% of total assets and 3.7% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2019. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of North Italia and FRC.
Change in Accounting Principles
As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for revenue from contracts with customers as of January 3, 2018 due to the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, and has changed its method of accounting for leases as of January 2, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
4
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Assessment of carrying value of property and equipment
As discussed in Notes 1 and 6 to the consolidated financial statements, the property and equipment, net, and impairment of assets and lease termination balances as of and for the year ended December 31, 2019 were $832 million and $18 million, respectively. The Company assesses the potential impairment of long-lived assets, which includes property and equipment, net, on an annual basis or whenever events or changes in circumstances indicate the carrying value of the asset or asset group may not be recoverable.
We identified the assessment of the carrying value of property and equipment, net, as a critical audit matter. For some restaurant asset groups, the estimated undiscounted cash flow of the asset groups were less than their carrying values, which indicated potential impairment. This required the Company to estimate the fair value of the asset groups in order to measure the amount of impairment expense. The estimates of undiscounted cash flow and fair value resulted in the application of greater auditor judgment. In particular, the revenue growth rate and the operating margin assumptions used to estimate both the undiscounted cash flow and the fair value of the restaurant asset groups were challenging to evaluate as minor changes to those assumptions had a potential significant effect on the Company’s assessment of the carrying value of the restaurant asset groups, and the amount of the related impairment expense.
The primary procedures we performed to address the critical audit matter included the following. We tested certain internal controls over the Company’s long-lived asset impairment assessment process. This included controls related to the determination of the undiscounted cash flow and fair value of the restaurant asset groups, and the related revenue growth rate and operating margin assumptions. We performed sensitivity analyses over the revenue growth rate and operating margin assumptions to assess their impact on the Company’s determination of the undiscounted cash flow and fair value of the restaurant assets groups. We evaluated the Company’s forecasted revenue growth rate and operating margin assumptions for the restaurant asset groups by comparing the assumptions to the restaurant asset groups’ historical and peer group performance. We compared the Company’s revenue growth rate and operating margin forecasts to actual results to assess the Company’s ability to accurately forecast.
5
Evaluation of the acquisition-date fair values of trade names and trademarks and remeasurement of previously held equity interests
As discussed in Notes 1, 2 and 7 to the consolidated financial statements, on October 2, 2019, the Company acquired North Italia and the remaining business of Fox Restaurant Concepts LLC (FRC). As a result of the transaction, the Company acquired trade names and trademarks representing the names of the restaurant concepts acquired. The acquisition-date fair value for the trade names and trademark assets are included in intangibles acquired of $337 million. The Company also remeasured previously held equity interests in North Italia and Flower Child immediately before the acquisition to acquisition-date fair value of $122 million and recognized a gain of $53 million which is included in gain on investments in unconsolidated affiliates in the consolidated statements of operations.
We identified the evaluation of the acquisition-date fair value of the North Italia, Flower Child and other FRC trade names and trademark assets and the remeasurement of previously held equity interests in North Italia and Flower Child as a critical audit matter. A high degree of subjective auditor judgment was involved in evaluating certain inputs to the relief from royalty model used to determine the fair value of the trade names and trademarks, and the discounted cash flow model used to determine the enterprise value of North Italia and Flower Child. The key inputs used in the relief from royalty model included royalty rates, discount rates, and revenue growth rates. The key inputs used in the discounted cash flow model included revenue growth rates, EBITDA as a percentage of revenue, and discount rates. There was limited observable market information and the calculated fair value of such assets was sensitive to possible changes in these key inputs.
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s acquisition-date valuation process, including controls over the key inputs listed above. In connection with our assessment of the inputs used in the valuation, we compared forecasted revenue growth rates and EBITDA as a percentage of revenue to historical actual results and performing sensitivity analyses to assess the impact of changes to the forecasted revenue growth rates. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:
Evaluation of the acquisition-date fair value of contingent consideration
As discussed in Notes 1, 2 and 13 to the consolidated financial statements, on October 2, 2019, the Company acquired North Italia and the remaining business of Fox Restaurant Concepts LLC. The acquisition agreement included a contingent consideration provision, a portion of which was considered part of the acquisition consideration, and the remainder of which was considered future compensation expense. The acquisition-date fair values for the acquisition consideration and future compensation expense were $13 million and $7 million, respectively.
We identified the evaluation of the acquisition-date fair value of the contingent consideration as a critical audit matter. A high degree of subjective auditor judgment was required in evaluating certain inputs to the Monte Carlo model used to determine the fair value of the contingent consideration. Specifically, the key inputs included forecasted revenue growth rates, EBITDA as a percentage of revenue and volatility rate. There was limited observable market information, and the calculated fair value of the contingent consideration was sensitive to possible changes to these key inputs.
6
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s acquisition-date valuation process, including controls over the key inputs listed above. In connection with our assessment of the revenue and EBITDA forecasts used in the valuation, we compared forecasted revenue growth rates and EBITDA as a percentage of revenue to historical actual results. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:
/s/ KPMG LLP | |
We have served as the Company’s auditor since 2018. | |
Los Angeles, California | |
March 11, 2020 |
7
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of The Cheesecake Factory Incorporated
Opinion on the Financial Statements
We have audited the consolidated statement of income, comprehensive income, stockholders’ equity and cash flows of The Cheesecake Factory Incorporated (the “Company”) for the year ended January 2, 2018, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended January 2, 2018 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP | |
Los Angeles, California | |
February 28, 2018 |
We served as the Company’s auditor from at least 1992 to 2018. We have not been able to determine the specific year we began serving as auditor of the Company.
8
THE CHEESECAKE FACTORY INCORPORATED
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| December 31, 2019 |
| January 1, 2019 | |||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Accounts receivable |
| |
| | ||
Income taxes receivable |
| |
| — | ||
Other receivables |
| |
| | ||
Inventories |
| |
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Prepaid expenses |
| |
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Total current assets |
| |
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Property and equipment, net |
| |
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Other assets: | ||||||
Intangible assets, net |
| |
| | ||
Prepaid rent |
| — |
| | ||
Operating lease assets | | — | ||||
Investments in unconsolidated affiliates | — | | ||||
Other |
| |
| | ||
Total other assets |
| |
| | ||
Total assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | | $ | | ||
Income taxes payable | — | | ||||
Gift card liabilities | | | ||||
Operating lease liabilities | | — | ||||
Other accrued expenses |
| |
| | ||
Total current liabilities |
| |
| | ||
Deferred income taxes |
| |
| | ||
Deferred rent liabilities |
| — |
| | ||
Deemed landlord financing liabilities |
| — |
| | ||
Long-term debt | | | ||||
Operating lease liabilities | | — | ||||
Other noncurrent liabilities |
| |
| | ||
Commitments and contingencies (Note 14) | ||||||
Stockholders’ equity: | ||||||
Preferred stock, $ |
|
| ||||
Common stock, $ |
| |
| | ||
Additional paid-in capital |
| |
| | ||
Retained earnings |
| |
| | ||
Treasury stock, |
| ( |
| ( | ||
Accumulated other comprehensive loss | ( | ( | ||||
Total stockholders’ equity |
| |
| | ||
Total liabilities and stockholders’ equity | $ | $ | | |||
See the accompanying notes to the consolidated financial statements.
9
THE CHEESECAKE FACTORY INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Fiscal Year | |||||||||
| 2019 |
| 2018 |
| 2017 | ||||
Revenues | $ | | $ | | $ | | |||
Costs and expenses: | |||||||||
Cost of sales |
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Labor expenses |
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Other operating costs and expenses |
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General and administrative expenses |
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Depreciation and amortization expenses |
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| |
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Impairment of assets and lease terminations |
| |
| |
| | |||
Acquisition-related costs | | — | — | ||||||
Acquisition-related contingent consideration, compensation and amortization expenses | | — | — | ||||||
Preopening costs |
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| |
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Total costs and expenses |
| |
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Income from operations |
| |
| |
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Gain/(loss) on investments in unconsolidated affiliates | | ( | ( | ||||||
Interest and other expense, net |
| ( |
| ( |
| ( | |||
Income before income taxes |
| |
| |
| | |||
Income tax provision/(benefit) |
| |
| |
| ( | |||
Net income | $ | | $ | | $ | | |||
Net income per share: | |||||||||
Basic | $ | | $ | | $ | | |||
Diluted | $ | | $ | | $ | | |||
Weighted average shares outstanding: | |||||||||
Basic |
| |
| |
| | |||
Diluted |
| |
| |
| | |||
See the accompanying notes to the consolidated financial statements.
10
THE CHEESECAKE FACTORY INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Fiscal Year | |||||||||
| 2019 |
| 2018 |
| 2017 | ||||
Net income | $ | | $ | | $ | | |||
Other comprehensive gain/(loss): |
|
|
|
| |||||
Foreign currency translation adjustment |
| |
| ( |
| ( | |||
Other comprehensive gain/(loss) |
| |
| ( |
| ( | |||
Total comprehensive income | $ | | $ | | $ | | |||
See the accompanying notes to the consolidated financial statements.
11
THE CHEESECAKE FACTORY INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
Accumulated | ||||||||||||||||||||
Shares of | Additional | Other | ||||||||||||||||||
Common | Common | Paid-in | Retained | Treasury | Comprehensive | |||||||||||||||
| Stock |
| Stock |
| Capital |
| Earnings |
| Stock |
| Loss |
| Total | |||||||
Balance, January 3, 2017 | | $ | | $ | | $ | | $ | ( | $ | — | $ | | |||||||
Net income | — |
| — |
| — |
| | — |
| — |
| | ||||||||
Foreign currency translation adjustment | — | — | — | — | — | ( | ( | |||||||||||||
Cash dividends declared Common stock, $ | — |
| — |
| — |
| ( | — |
| — |
| ( | ||||||||
Stock-based compensation | — |
| — |
| |
| — | — |
| — |
| | ||||||||
Common stock issued under stock-based compensation plans | |
| |
| |
| — | — |
| — |
| | ||||||||
Treasury stock purchases | — |
| — |
| — |
| — | ( |
| — |
| ( | ||||||||
Balance, January 2, 2018 | | | | | ( | ( | | |||||||||||||
Cumulative effect of adopting the pronouncement related to revenue recognition, net of tax | — | — | — | ( | — | — | ( | |||||||||||||
Balance, January 2, 2018, as adjusted | | | | | ( | ( | | |||||||||||||
Net income | — | — | — | | — | — | | |||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | ( | ( | |||||||||||||
Cash dividends declared Common stock, $ | — | — | — | ( | — | — | ( | |||||||||||||
Stock-based compensation | | | | — | — | — | ||||||||||||||
Common stock issued under stock-based compensation plans | | | | — | — | — | ||||||||||||||
Treasury stock purchases | — | — | — | — | ( | — | ( | |||||||||||||
Balance, January 1, 2019 | | | | | ( | ( | | |||||||||||||
Cumulative effect of adopting the pronouncement related to lease accounting, net of tax | — | — | — | ( | — | — | ( | |||||||||||||
Balance, January 1, 2019, as adjusted | | | | | ( | ( | | |||||||||||||
Net income | — | — | — | | — | — | | |||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | | | |||||||||||||
Cash dividends declared Common stock, $ | — | — | — | ( | — | — | ( | |||||||||||||
Stock-based compensation | | | | — | — | — | | |||||||||||||
Common stock issued under stock-based compensation plans | | | | — | — | — | | |||||||||||||
Treasury stock purchases | — | — | — | — | ( | — | ( | |||||||||||||
Balance, December 31, 2019 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
See the accompanying notes to the consolidated financial statements.
12
THE CHEESECAKE FACTORY INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Fiscal Year | |||||||||
| 2019 |
| 2018 |
| 2017 | ||||
Cash flows from operating activities: | |||||||||
Net income | $ | | $ | | $ | | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||
Depreciation and amortization expenses |
| |
| |
| | |||
Deferred income taxes |
| ( |
| ( |
| ( | |||
Impairment of assets and lease terminations |
| |
| |
| | |||
Stock-based compensation |
| |
| |
| | |||
(Gain)/loss from investments in unconsolidated affiliates | ( | | | ||||||
Changes in assets and liabilities, net of acquired amounts: | |||||||||
Accounts and other receivables |
| |
| |
| ( | |||
Income taxes receivable/payable |
| ( |
| |
| ( | |||
Inventories |
| ( |
| |
| ( | |||
Prepaid expenses |
| ( |
| |
| ( | |||
Operating lease assets/liabilities | | — | — | ||||||
Other assets |
| ( |
| |
| ( | |||
Accounts payable |
| |
| |
| | |||
Gift card liabilities | | | | ||||||
Other accrued expenses |
| |
| |
| | |||
Cash provided by operating activities |
| |
| |
| | |||
Cash flows from investing activities: | |||||||||
Additions to property and equipment |
| ( |
| ( |
| ( | |||
Additions to intangible assets |
| ( |
| ( |
| ( | |||
Acquisition, net of cash acquired | ( | — | — | ||||||
Investments in unconsolidated affiliates | ( | ( | ( | ||||||
Loans made to unconsolidated affiliates | ( | — | — | ||||||
Proceeds from variable life insurance contract | — | | — | ||||||
Cash used in investing activities |
| ( |
| ( |
| ( | |||
Cash flows from financing activities: | |||||||||
Deemed landlord financing proceeds |
| — |
| |
| | |||
Deemed landlord financing payments |
| — |
| ( |
| ( | |||
Borrowings on credit facility | | | | ||||||
Repayments on credit facility | ( | ( | ( | ||||||
Proceeds from exercise of stock options |
| |
| |
| | |||
Cash dividends paid |
| ( |
| ( |
| ( | |||
Treasury stock purchases |
| ( |
| ( |
| ( | |||
Cash provided by/(used in) financing activities |
| |
| ( |
| ( | |||
Foreign currency translation adjustment | | ( | ( | ||||||
Net change in cash and cash equivalents |
| |
| |
| ( | |||
Cash and cash equivalents at beginning of period |
| |
| |
| | |||
Cash and cash equivalents at end of period | $ | | $ | | $ | | |||
Supplemental disclosures: | |||||||||
Interest paid | $ | | $ | | $ | | |||
Income taxes paid | $ | | $ | | $ | | |||
Construction payable | $ | | $ | | $ | | |||
Non-cash operating: | |||||||||
Settlement of sale-leaseback accounting | $ | — | $ | | $ | — | |||
Non-cash investing: | |||||||||
Settlement of landlord sale-leaseback accounting | $ | — | $ | | $ | — | |||
Acquisition-related deferred consideration and compensation | $ | ( | $ | — | $ | — | |||
Fair value of previously-held equity investments | $ | ( | $ | — | $ | — | |||
Loans repaid by unconsolidated affiliates as a reduction of acquisition cash | $ | | $ | — | $ | — | |||
Loan to unconsolidated affiliate assumed in acquisition | $ | | $ | — | $ | — | |||
Non-cash financing: | |||||||||
Settlement of landlord financing obligation for sale-leaseback leases | $ | — | $ | ( | $ | — | |||
Deemed landlord financing proceeds | $ | — | $ | | $ | — | |||
See the accompanying notes to the consolidated financial statements.
13
THE CHEESECAKE FACTORY INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Description of Business
The Cheesecake Factory Incorporated is a leader in experiential dining. We are culinary forward and relentlessly focused on hospitality. We currently own and operate
Basis of Presentation
The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and its wholly owned subsidiaries (referred to herein collectively as the “Company,” “we,” “us” and “our”) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions for the periods presented have been eliminated in consolidation.
On October 2, 2019, we completed the acquistion of North Italia and the remaining business of FRC, including Flower Child and all other FRC brands. The results of operations, financial position and cash flows of the acquired businesses are included in our consolidated financial statements as of the acquisition date. See Note 2 for further discussion of the Acquisition.
We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal years 2019, 2018 and 2017 each consisted of
Use of Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates.
Business Combination
On October 2, 2019, we completed the acquisition of North Italia and the remaining business of FRC. Since the Acquisition represents a business combination achieved in stages, we remeasured our previously-held equity interests in North Italia and Flower Child immediately before the acquisition to acquisition-date fair value and recognized a resulting gain. In accordance with the acquisition method of accounting for business combinations, we allocated the purchase price of acquired businesses to the tangible and intangible assets acquired and liabilities assumed based on preliminary estimated fair values. We estimated the fair value of assets and liabilities based upon widely-accepted valuation techniques, including discounted cash flow, relief from royalty and Monte Carlo methods, depending on the nature of the assets acquired or liabilities assumed. We expect minor adjustments to our purchase accounting in the first quarter of fiscal 2020 as we finalize our valuation of the acquired intangible assets. (See Note 2 for further discussion of the Acquisition.)
Cash and Cash Equivalents
Amounts receivable from credit card processors, totaling $
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Accounts and Other Receivables
Our accounts receivable principally result from credit sales to bakery customers. Other receivables consist primarily of amounts due from our gift card distributors and landlords.
Concentration of Credit Risk
Financial instruments that potentially subject us to a concentration of credit risk are cash and cash equivalents and receivables. We maintain our day-to-day operating cash balances in non-interest-bearing transaction accounts, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $
We consider the concentration of credit risk for accounts receivable to be minimal due to the payment histories and general financial condition of our larger bakery customers. Concentration of credit risk related to other receivables is limited as this balance is comprised primarily of amounts due from our gift card distributors and landlords.
Fair Value Measurements
Fair value measurements are estimated based on valuation techniques and inputs categorized as follows:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities |
| ● | Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the Company to develop its own assumptions |
The following tables present the components and classification of our assets and liabilities that are measured at fair value on a recurring basis (in thousands):
December 31, 2019 | |||||||||
| Level 1 |
| Level 2 |
| Level 3 | ||||
Assets (Liabilities) |
| ||||||||
Non-qualified deferred compensation assets | $ | | $ | — | $ | — | |||
Non-qualified deferred compensation liabilities | ( | — | — | ||||||
Acquisition-related deferred consideration | — | ( | — | ||||||
Acquisition-related contingent consideration and compensation liabilities | — | — | ( | ||||||
January 1, 2019 | |||||||||
| Level 1 |
| Level 2 |
| Level 3 | ||||
Assets (Liabilities) | |||||||||
Non-qualified deferred compensation assets | $ | | $ | — | $ | — | |||
Non-qualified deferred compensation liabilities | ( | — |
| — | |||||
Deemed landlord financing liabilities | — | ( | — | ||||||
Changes in the fair value of non-qualified deferred compensation assets and liabilities and deemed landlord financing liabilities are recognized in interest and other expense, net in our consolidated statements of income. Changes in the fair value of the acquisition-related deferred and contingent consideration and compensation liabilities are recognized in acquisition-related contingent consideration, compensation and amortization expenses in our consolidated statements of income.
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The fair value of the acquisition-related contingent consideration and compensation liabilities was determined utilizing a Monte Carlo model based on estimated future revenues, margins and volatility factors, among other variables and estimates and has no minimum or maximum payment. The undiscounted range of outcomes per the Monte Carlo model was $
Balance, January 1, 2019 | $ | — | |
Acquisition-date fair value |
| | |
Change in fair value |
| | |
Balance, December 31, 2019 | $ | |
The fair values of our cash and cash equivalents, accounts receivable, income taxes receivable, other receivables, prepaid expenses, accounts payable, income taxes payable and other accrued expenses approximate their carrying amounts due to their short duration.
Inventories
Inventories consist of restaurant food and other supplies, bakery raw materials and bakery finished goods and are stated at the lower of cost or net realizable value on an average cost basis at the restaurants and on a first-in, first-out basis at the bakeries.
Property and Equipment
We record property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation and amortization are calculated using the straight-line method over the estimated useful life of the assets or the lease term, whichever is shorter. Leasehold improvements include the cost of our internal development and construction department. Depreciation and amortization periods are as follows:
Buildings and land improvements |
| to |
Leasehold improvements |
| to |
Furnishings, fixtures and equipment |
| to |
Computer software and equipment |
|
Gains and losses related to property and equipment disposals are recorded in depreciation and amortization expenses.
Intangible Assets
Our intangible assets consist primarily of goodwill, indefinite-lived trade names, trademarks and transferable alcoholic beverage licenses and definite-lived licensing agreements and non-transferable alcoholic beverage licenses. Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows. If impaired, the asset or asset group is written down to fair value based on discounted future cash flows. Amortization is recorded in acquisition-related contingent consideration, compensation and amortization expenses in our consolidated statements of income.
Goodwill and other indefinite-lived intangible assets are not amortized but are instead tested for impairment annually as of the first day of our fiscal fourth quarter or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. First, we determine if, based on qualitative factors, it is more likely than not that an impairment exists. Factors considered include, but are not limited to historical financial performance, a significant decline in expected future cash flows, unanticipated competition, changes in management or key personnel, macroeconomic and industry conditions and the legal and regulatory environment. If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. The quantitative assessment requires an analysis of several best estimates and assumptions, including future sales and operating results and other factors that could affect fair value or otherwise indicate potential impairment. We also consider our reporting units’ projected ability to generate income from operations and positive cash flow in future periods.
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We evaluate the useful lives of our intangible assets, other than goodwill, at each reporting period to determine if they are definite or indefinite-lived. A determination on useful life requires judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment and expected changes in distribution channels), the level of required maintenance expenditures and the expected lives of other related groups of assets.
Impairment of Long-Lived Assets and Lease Terminations
We assess the potential impairment of our long-lived assets on an annual basis or whenever events or changes in circumstances indicate the carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to, negative cash flow, significant underperformance relative to historical or projected future operating results, significant changes in the manner in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previously estimated useful life and significant negative industry or economic trends. At any given time, we may be monitoring a small number of locations, and future impairment charges could be required if individual restaurant performance does not improve or we make the decision to close or relocate a restaurant.
We have determined that our asset group for impairment testing is comprised of the assets and liabilities of each of our individual restaurants, as this is the lowest level of identifiable cash flows. We have identified leasehold improvements as the primary asset because it is the most significant component of our restaurant assets, it is the principal asset from which our restaurants derive their cash flow generating capacity and it has the longest remaining useful life. The recoverability is assessed by comparing the carrying value of the assets to the undiscounted cash flows expected to be generated by these assets. Impairment losses are measured as the amount by which the carrying values of the assets exceed their fair value, which is determined based on discounted future net cash flows expected to be generated by the assets.
In fiscal 2019, we recorded $
Investments in Unconsolidated Affiliates
During fiscal years 2018, 2017 and until the Acquisition on October 2, 2019, we made minority equity investments in
Prior to the Acquisition, we assessed the potential impairment of our equity investments whenever events or changes in circumstances indicated that a decrease in value of the investment had occurred that was other than temporary, in which case we would recognize the decrease even though it is in excess of what would otherwise be recognized by application of the equity method.
Revenue Recognition
Our revenues consist of sales at our Company-owned restaurants, sales from our bakery operations to our licensees and other third-party customers, royalties from our licensees’ restaurant sales and from consumer packaged goods sales, and licensee development and site fees. Revenues are presented net of sales taxes. Sales tax collected is included in other accrued expenses until the taxes are remitted to the appropriate taxing authorities.
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Revenues from restaurant sales are recognized when payment is tendered at the point of sale. Revenues from bakery sales are recognized upon transfer of title and risk to customers. Royalty revenues are recognized in the period the related sales occur, utilizing the sale-based royalty exception available under current accounting guidance. Our consumer packaged goods minimum guarantees do not require distinct performance obligations. Therefore, related revenue is recognized on a straight-line basis over the life of the applicable agreements, ranging from to
In fiscal 2019, we deferred revenue of $
We recognize a liability upon the sale of our gift cards and recognize revenue when these gift cards are redeemed in our restaurants. Based on our historical redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote, which is referred to as “breakage.” Breakage is recognized over a
Certain of our promotional programs include multiple element arrangements that incorporate various performance obligations. We allocate revenue using the relative selling price of each performance obligation considering the likelihood of redemption and recognize revenue upon satisfaction of each performance obligation. During fiscal 2019, we deferred revenue of $
(See Recent Accounting Pronouncements for further discussion of our adoption of the new revenue recognition accounting guidance.)
Leases
We currently lease all of our restaurant locations, generally with initial terms of to
In addition to leases for our restaurant locations, we also lease automobiles and certain equipment that is used in the restaurants, bakeries and corporate office. The automobile leases are the only non-real estate leases included in our operating lease assets and liabilities. All other leases are immaterial or qualify for the short-term lease exclusion.
The assessment of whether a contract is or contains a lease is performed at contract inception. A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all the economic benefits from the use of the asset and to direct how and for what purpose the asset is used.
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At lease commencement, we evaluate each lease to determine its appropriate classification as an operating or finance lease. All of our restaurant and automobile leases are classified as operating leases. For restaurant leases existing at transition, we will continue to apply our historical practice of excluding executory costs, and only minimum base rent will be factored into the initial operating lease liability and corresponding lease asset. For restaurant leases beginning after adoption of ASC 842, we have elected the single lease component practical expedient. Operating lease assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term. The difference between the amounts we expend for structural costs and the construction contributions received from our landlords is recorded as an adjustment to the operating lease asset. Lease terms include the build-out period for our leases where no rent payments are typically due under the terms of the lease, as well as options to renew when we deem we have significant economic incentive to exercise the extension. When determining if we have a significant economic incentive, we consider relevant factors, such as contractual, asset, entity and market-based considerations. Option periods are included in the lease term for the majority of our leases. Termination rights have not been factored into the lease terms since based on our probability assessment we are reasonably certain we will not terminate our leases.
We cannot determine the interest rate implicit in our leases because we do not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, we use our incremental borrowing rate as the discount rate for our leases. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because we do not generally borrow on a collateralized basis, we derive an appropriate incremental borrowing rate using the interest rate we pay on our non-collateralized borrowings, adjusted for the amount of the lease payments, the lease term and the effect of designating specific collateral with a value equal to the unpaid lease payments for that lease. We apply the incremental borrowing rate on a portfolio basis given the impact of applying it on a lease by lease basis would be immaterial.
We monitor for events or changes in circumstances that require reassessment of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the operating lease asset. We also assess the potential impairment of our operating lease assets under long-lived asset impairment guidance in ASC 360, Property, Plant, and Equipment: Impairment or disposal on long-lived assets.
Rent expense included in our operating lease assets is recognized on a straight-line basis. Contingent rent expense is recorded as incurred to the extent it exceeds minimum base rent per the lease agreement. Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance cost and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized as incurred. The reasonably certain lease term and the incremental borrowing rate for each restaurant location require judgment by management and can impact the classification and accounting for a lease as operating or finance, as well as the value of the operating lease asset and liability. These judgments may produce materially different amounts of rent expense than would be reported if different assumptions were used. Rent expense is included in other operating costs and expenses in the consolidated statements of income.
Self-Insurance Liabilities
We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date and are recorded in other accrued expenses. Our estimated liabilities, which are not discounted, are based on information provided by our insurance brokers and insurers, combined with our judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices.
Stock-Based Compensation
We maintain stock-based incentive plans under which equity awards may be granted to staff members and consultants. We account for the awards based on fair value measurement guidance and amortize to expense over the vesting period using a straight-line or graded-vesting schedule, as applicable. (See Note 16 for further discussion of our stock-based compensation.)
Advertising Costs
We expense advertising production costs at the time the advertising first takes place. All other advertising costs are expensed as incurred. Most of our advertising costs are included in other operating costs and expenses and were $
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Preopening Costs
Preopening costs include all costs to relocate and compensate restaurant management staff members during the preopening period, costs to recruit and train hourly restaurant staff members, and wages, travel and lodging costs for our opening training team and other support staff members. Also included 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. We expense preopening costs as incurred.
Income Taxes
We provide for federal, state and foreign income taxes currently payable and for deferred taxes that result from differences between financial accounting rules and tax laws governing the timing of recognition of various income and expense items. We recognize deferred income tax assets and liabilities for the future tax effects of such temporary differences based on the difference between the financial statement and tax bases of existing assets and liabilities using the statutory rates expected in the years in which the differences are expected to reverse. The effect on deferred taxes of any enacted change in tax rates is recognized in income in the period that includes the enactment date. Income tax credits are recorded as a reduction of tax expense.
Uncertain tax positions taken or expected to be taken in a tax return are recognized (or derecognized) in the financial statements when it is more likely than not (i.e., a likelihood of more than 50%) that the position would be sustained on its technical merits upon examination by tax authorities, taking into account available administrative remedies and litigation. A recognized tax position is then measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution. We recognize interest related to uncertain tax positions in income tax expense. Penalties related to uncertain tax positions are recorded in general and administrative expenses.
Net Income per Share
Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, reduced by unvested restricted stock awards. At December 31, 2019, January 1, 2019 and January 2, 2018,
Fiscal Year | |||||||||
| 2019 |
| 2018 |
| 2017 | ||||
(In thousands, except per share data) | |||||||||
Net income | $ | | $ | | $ | | |||
Basic weighted average shares outstanding |
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Dilutive effect of equity awards |
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| |
| | |||
Diluted weighted average shares outstanding |
| |
| |
| | |||
Basic net income per share | $ | | $ | | $ | | |||
Diluted net income per share | $ | | $ | | $ | | |||
Comprehensive Income
Comprehensive income includes all changes in equity during a period except those resulting from investment by and distribution to owners. Our comprehensive income consists of net income and translation gains and losses related to our Canadian restaurant operations.
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Foreign Currency
The Canadian dollar is the functional currency for our Canadian restaurant operations. Revenue and expense accounts are translated into U.S. dollars using the average exchange rates during the reporting period. Assets and liabilities are translated using the exchange rates in effect at the reporting period end date. Equity accounts are translated at historical rates, except for the change in retained earnings which is the result of the income statement translation process. Translation gains and losses are reported as a separate component in our consolidated statements of comprehensive income and would only be realized upon the sale or upon complete or substantially complete liquidation of the business. Gains and losses from foreign currency transactions are recognized in our consolidated statements of income in interest and other expense, net.
Recent Accounting Pronouncements
Recently Adopted Accounting Standards
We adopted FASB Accounting Standards Codification (“ASC”) Topic 842, Leases, as of January 2, 2019, using the alternative transition method and recorded a cumulative effect adjustment to beginning retained earnings without restating prior periods. We elected the
We adopted ASC Topic 606, Revenue from Contracts with Customers, as of January 3, 2018. This accounting guidance provides a comprehensive new revenue recognition model that supersedes most of the existing revenue recognition requirements and requires entities to recognize revenue at an amount that reflects the consideration to which a company expects to be entitled in exchange for transferring goods or services to a customer. Utilizing the cumulative-effect method of adoption, we recorded a $
Recently Issued Accounting Standards
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The update eliminates, adds and modifies certain disclosure requirements for fair value measurements. The new standard is effective for us on January 1, 2020. We have substantially completed our assessment of the new standard and do not expect its adoption to have a significant impact on our consolidated financial statement disclosures.
2. Acquisition
On October 2, 2019 (the “Closing Date” or “Closing”), we completed the acquisition of North Italia and the remaining business of Fox Restaurant Concepts LLC, including Flower Child and all other FRC brands. North Italia is a restaurant company that operated
We have concluded that the Acquisition represents a single business combination of related businesses under common control within the scope of ASC Topic 805, Business Combinations. The acquisition date was determined to be the Closing Date, which was the date we obtained control by legally transferring the consideration for the remaining ownership interests, acquiring the assets and assuming the liabilities of North Italia and the remaining FRC business.
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The Acquisition, which we expect will accelerate and diversify our revenue growth, was completed for consideration consisting of the following components: $
The acquisition agreement also included a contingent consideration provision, a portion of which was considered part of the acquisition consideration, and the remainder of which was considered future compensation expense. The acquisition-date fair values for the acquisition consideration and future compensation expense were $
Since the Acquisition represents a business combination achieved in stages, we remeasured our previously-held equity interests in North Italia and Flower Child immediately before the acquisition to acquisition-date fair value of $
The following table summarizes the preliminary calculation of goodwill based on the excess of consideration transferred and the fair value of the previously held equity interests over the fair value of the assets acquired and liabilities assumed (in thousands).
| December 31, 2019 | ||
Purchase consideration: | |||
Cash at closing | $ | | |
Assumption of debt previously owed by FRC |
| | |
Deferred payments |
| | |
Contingent consideration |
| | |
Consideration transferred |
| | |
Fair value of previously-held equity interests |
| | |
Total |
| | |
Less net assets acquired: |
| ||
Current assets | | ||
Property and equipment |
| | |
Intangible assets |
| | |
Operating lease assets |
| | |
Other assets |
| | |
Current liabilities |
| ( | |
Operating lease liabilities |
| ( | |
Other noncurrent liabilities |
| ( | |
Total net assets acquired |
| | |
Goodwill | $ | | |
Goodwill is related to the benefits expected as result of the Acquisition, including acceleration and diversification of our revenue growth, and of the $
Property and equipment will be depreciated over useful lives of
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Intangible assets acquired primarily consist of trade names and trademarks that were assigned indefinite lives based on the expected use of the assets and the regulatory and economic environment within which they are being used. The fair value of the acquired intangible assets was determined utilizing the relief from royalty method based on estimated future revenues, royalty rates and discount rates, among other variables and estimates. We expect minor adjustments to our purchase accounting in the first quarter of fiscal 2020 as we finalize our valuation of the acquired intangible assets.
Operating lease assets include values associated with favorable and unfavorable market leases that will amortize over a weighted-average period of
During fiscal 2019, we incurred $
Pro Forma Results of Operations (unaudited)
The following pro forma results of operations for fiscal 2019 and 2018 give effect to the Acquisition as if it had occurred on January 2, 2018 (in thousands):
| Fiscal Year | |||||
| 2019 |
| 2018 | |||
Revenues |
| $ | |
| $ | |
Net income |
| |
| | ||
Net income per share: |
|
|
| |||
Basic | |
| | |||
Diluted | $ | | $ | | ||
The above pro forma information includes combined North Italia and FRC actual revenues and net loss of $
In the opinion of the Company’s management, the unaudited pro forma financial information includes all significant necessary adjustments that can be factually supported to reflect the effects of the Acquisition and related transactions. The unaudited pro forma financial information is provided for informational purposes only and are not necessarily indicative of what our actual results of operations would have been had the Acquisition and related transactions been completed as of January 2, 2018 or that may be achieved in the future.
3. Other Receivables
Other receivables consisted of (in thousands):
| December 31, 2019 |
| January 1, 2019 | |||
Gift card distributors | $ | | $ | | ||
Insurance providers | | | ||||
Landlord construction contributions | | | ||||
Other |
| |
| | ||
Total | $ | | $ | | ||
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4. Inventories
Inventories consisted of (in thousands):
| December 31, 2019 |
| January 1, 2019 | |||
Restaurant food and supplies | $ | | $ | | ||
Bakery finished goods and work in progress |
| |
| | ||
Bakery raw materials and supplies |
| |
| | ||
Total | $ | | $ | | ||
5. Prepaid Expenses
Prepaid expenses consisted of (in thousands):
| December 31, 2019 |
| January 1, 2019 | |||
Gift card contract assets | $ | | $ | | ||
Other |
| |
| | ||
Total | $ | | $ | | ||
6. Property and Equipment
Property and equipment consisted of (in thousands):
| December 31, 2019 |
| January 1, 2019 | |||
Land and related improvements | $ | | $ | | ||
Buildings |
| |
| | ||
Leasehold improvements |
| |
| | ||
Furnishings, fixtures and equipment |
| |
| | ||
Computer software and equipment |
| |
| | ||
Restaurant smallwares |
| |
| | ||
Construction in progress |
| |
| | ||
Property and equipment, total |
| |
| | ||
Less: Accumulated depreciation |
| ( |
| ( | ||
Property and equipment, net | $ | | $ | | ||
Depreciation expenses related to property and equipment for fiscal 2019, 2018 and 2017 were $
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7. Intangible Assets, net
The following table presents components of intangible assets, net (in thousands):
December 31, 2019 |
| January 1, 2019 | ||||
Indefinite-lived intangible assets: |
|
| ||||
Goodwill | $ | | — | |||
Trade names and trademarks | | $ | | |||
Transferable alcoholic beverage licenses |
| |
| | ||
Total indefinite-lived intangible assets |
| |
| | ||
Definite-lived intangible assets, net: |
|
| ||||
Licensing agreements |
| |
| — | ||
Non-transferable alcoholic beverage licenses |
| |
| | ||
Leasehold acquisition assets |
| — |
| | ||
Total definite-lived intangible assets |
| |
| | ||
Total intangible assets, net | $ | | $ | | ||
Amortization expenses related to our definite-lived intangible assets was $
8. Leases
Components of lease expense were as follows (in thousands):
Fiscal Year | |||
| 2019 | ||
Operating | $ | | |
Variable |
| | |
Short-term |
| | |
Total | $ | | |
Rent expense on all operating leases (under ASC 840) was as follows (in thousands):
Fiscal Year | ||||||
| 2018 |
| 2017 | |||
Straight-lined minimum base rent |
| $ | | $ | | |
Contingent rent |
| |
| | ||
Common area maintenance and taxes |
| |
| | ||
Total | $ | | $ | | ||
Supplemental information related to leases (in thousands, except percentages):
| Fiscal Year | |||
| 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ | | ||
Right-of-use assets obtained in exchange for new operating lease liabilities |
| | (1) | |
Weighted-average remaining lease term — operating leases (in years) |
| |||
Weighted-average discount rate — operating leases | | % | ||
| (1) | Includes $ |
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As of December 31, 2019, the maturities of our operating lease liabilities are as follows (in thousands):
2020 | $ | | |
2021 |
| | |
2022 |
| | |
2023 |
| | |
2024 | | ||
Thereafter |
| | |
Total future lease payments | | ||
Less: Interest | ( | ||
Present value of lease liabilities | $ | |
Operating lease liabilities include $
As of January 1, 2019, the aggregate minimum annual lease payments under operating leases (under ASC 840), including amounts characterized as deemed landlord financing payments, were as follows (in thousands):
2019 | $ | | |
2020 |
| | |
2021 |
| | |
2022 |
| | |
2023 |
| | |
Thereafter |
| | |
Total | $ | |
9. Other Assets
Other assets consisted of (in thousands):
|
| December 31, 2019 |
| January 1, 2019 | ||
Non-qualified deferred compensation assets | $ | | $ | | ||
Deposits |
| |
| | ||
Deferred income taxes | | | ||||
Total | $ | | $ | | ||
10. Gift Cards
The following tables present information related to gift cards (in thousands):
| December 31, 2019 |
| January 1, 2019 | |||
Gift card liabilities: | ||||||
Beginning balance |
| $ | |
| $ | |
Activations |
| |
| | ||
Redemptions and breakage |
| ( |
| ( | ||
Ending balance |
| $ | |
| $ | |
| December 31, 2019 |
| January 1, 2019 | |||
Gift card contract assets (1): | ||||||
Beginning balance |
| $ | |
| $ | |
Deferrals |
| |
| | ||
Amortization |
| ( |
| ( | ||
Ending balance |
| $ | |
| $ | |
| (1) | Included in prepaid expenses on the consolidated balance sheets. |
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11. Other Accrued Expenses
Other accrued expenses consisted of (in thousands):
| December 31, 2019 |
| January 1, 2019 | |||
Self-insurance | $ | | $ | | ||
Salaries and wages |
| |
| | ||
Staff member benefits |
| |
| | ||
Payroll and sales taxes |
| |
| | ||
Deferred consideration | | — | ||||
Other |
| |
| | ||
Total | $ | | $ | | ||
12. Long-Term Debt
On July 30, 2019, we entered into a Third Amended and Restated Loan Agreement (the “New Facility”), which amends and restates in its entirety our prior Second Amended and Restated Loan Agreement dated as of December 22, 2015. The New Facility, which terminates on July 30, 2024, provides us with revolving loan commitments that total $
We are subject to certain financial covenants under the New Facility requiring us to maintain (i) a maximum “Net Adjusted Leverage Ratio” of
Borrowings under the New Facility bear interest, at our option, at a rate equal to either (i) the adjusted LIBO Rate (as customarily defined) (the “Adjusted LIBO Rate”) plus a margin that is based on our net adjusted leverage ratio, or (ii) the sum of (a) the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in effect in the United States, (2) the greater of the rate calculated by the Federal Reserve Bank of New York as the effective
Our obligations under the New Facility are unsecured. Certain of our material subsidiaries have guaranteed our obligations under the New Facility. The New Facility will be used for our general corporate purposes, including for the issuance of standby letters of credit to support our self-insurance programs, and to fund dividends, stock repurchases and permitted acquisitions.
We capitalized interest expense related to new restaurant openings and major remodels totaling $
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13. Other Noncurrent Liabilities
Other noncurrent liabilities consisted of (in thousands):
| December 31, 2019 |
| January 1, 2019 | |||
Non-qualified deferred compensation liabilities | $ | | $ | | ||
Deferred consideration | | — | ||||
Contingent consideration and compensation liabilities | | — | ||||
Other |
| |
| | ||
Total | $ | | $ | | ||
(See Note 17 for further discussion of our non-qualified deferred compensation plan.)
14. Commitments and Contingencies
Purchase obligations, which include inventory purchases, equipment purchases, information technology and other miscellaneous commitments, were $
The purchase price of the Acquisition includes a $
As credit guarantees to insurers, we had $
We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date. The total accrued liability for our self-insured plans was $
On June 7, 2018, the California Department of Industrial Relations issued a $
On June 22, 2018, the Internal Revenue Service issued a Notice of Deficiency in which they disallowed $
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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 customers, staff members and others related to operational and employment issues common to the foodservice industry. A number of these claims may exist at any given time, and some of the claims may be pled as class actions. From time to time, we are also involved in lawsuits with respect to infringements of, or challenges to, our registered trademarks and other intellectual property, both domestically and abroad. We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether they are valid or whether we are legally determined to be liable.
At this time, we believe that the amount of reasonably possible losses resulting from 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. Legal costs related to such claims are expensed as incurred.
We have employment agreements with certain of our executive officers that provide for payments to those officers in the event of an actual or constructive termination of their employment, including in the event of a termination without cause, an acquirer failure to assume or continue equity awards following a change in control of the Company or, otherwise, in the event of death or disability as defined in those agreements. Aggregate payments totaling approximately $
15. Stockholders’ Equity
Cash dividends of $
Under authorization by our Board to repurchase up to
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. Shares may be repurchased in the open market or through privately negotiated transactions at times and prices considered appropriate by us. We make the determination to repurchase shares based on several factors, including current and forecasted operating cash flows, capital needs associated with new restaurant development and maintenance of existing locations, dividend payments, debt levels and cost of borrowing, obligations associated with the Acquisition, our share price and current market conditions. (See Note 2 for further discussion of the Acquisition.) The timing and number of shares repurchased are also subject to legal constraints and financial covenants under the New Facility that limit share repurchases based on a defined ratio. (See Note 12 for further discussion of our long-term debt.) Our objectives regarding share repurchases are to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our earnings per share growth.
16. Stock-Based Compensation
We maintain stock-based incentive plans under which incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units may be granted to staff members, consultants and non-employee directors. Our current practice is to issue new shares, rather than treasury shares, upon stock option exercises, for restricted share grants and upon vesting of restricted share units. To date, we have only granted non-qualified stock options, restricted shares and restricted share units of common stock under these plans. No grants have been made to non-employee directors under these plans.
29
On April 5, 2017, our Board approved an amendment to our 2010 Stock Incentive Plan to increase the number of shares of common stock reserved for grant under the plan to
Stock options generally vest at
The following table presents information related to stock-based compensation, net of forfeitures (in thousands):
Fiscal Year | |||||||||
| 2019 |
| 2018 |
| 2017(2) | ||||
Labor expenses | $ | | $ | | $ | | |||
Other operating costs and expenses |
| |
| |
| | |||
General and administrative expenses |
| |
| |
| | |||
Total stock-based compensation |
| |
| |
| | |||
Income tax benefit |
| |
| |
| | |||
Total stock-based compensation, net of taxes | $ | | $ | | $ | | |||
Capitalized stock-based compensation (1) | $ | | $ | | $ | | |||
| (1) | It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net on the consolidated balance sheets. |
| (2) | Fiscal 2017 stock-based compensation expense includes a $ |
Stock Options
The weighted-average fair value at the grant date for options issued during fiscal 2019, 2018 and 2017 was $
The expected option term represents the estimated period of time until exercise and is based on historical experience of similar options, giving consideration to the contractual terms, vesting schedules and expectations of future staff member behavior. Expected stock price volatility is based on a combination of the historical volatility of our stock and the implied volatility of actively traded options on our common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with an equivalent remaining term. The dividend yield is based on anticipated cash dividend payouts.
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Stock option activity during fiscal 2019 was as follows:
Weighted | ||||||||||
Average | ||||||||||
Weighted | Remaining | Aggregate | ||||||||
Average | Contractual | Intrinsic | ||||||||
| Shares |
| Exercise Price |
| Term |
| Value(1) | |||
(In thousands) | (Per share) | (In years) | (In thousands) | |||||||
Outstanding at beginning of year |
| | $ | | $ | | ||||
Granted |
| | $ | | ||||||
Exercised |
| ( | $ | | ||||||
Forfeited or cancelled |
| ( | $ | | ||||||
Outstanding at end of year |
| | $ | | $ | | ||||
Exercisable at end of year |
| | $ | | $ | | ||||
| (1) | Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal year-end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal year -end date. |
The total intrinsic value of options exercised during fiscal 2019, 2018 and 2017 was $
Restricted Shares and Restricted Share Units
Restricted share and restricted share unit activity during fiscal 2019 was as follows:
Weighted | |||||
Average | |||||
Fair | |||||
| Shares |
| Value | ||
(In thousands) | (Per share) | ||||
Outstanding at beginning of year |
| | $ | | |
Granted |
| | $ | | |
Vested |
| ( | $ | | |
Forfeited |
| ( | $ | | |
Outstanding at end of year |
| | $ | | |
Fair value of our restricted shares and restricted share units is based on our closing stock price on the date of grant. The weighted-average fair value for restricted shares and restricted share units issued during fiscal 2019, 2018 and 2017 was $
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17. Employee Benefit Plans
We have defined contribution benefit plans in accordance with section 401(k) of the Internal Revenue Code (“401(k) Plans”) that are open to our staff members who meet certain compensation and eligibility requirements. Participation in the 401(k) Plans is currently open to staff members from our restaurant concepts, bakery facilities, corporate office and FRC headquarters. The 401(k) Plans allow participating staff members to defer the receipt of a portion of their compensation and contribute such amount to
We have also established non-qualified deferred compensation plans (“Non-Qualified Plans”) for our executive officers and a select group of management and/or highly compensated staff members. The Non-Qualified Plans allow participating staff members to defer the receipt of a portion of their base compensation and bonuses. Non-employee directors may also participate in the Non-Qualified Plans and defer the receipt of their earned director fees. We currently match in cash a certain percentage of the staff member contributions to the Non-Qualified Plans and also pay for the administrative costs. We do not match any contributions made by non-employee directors. Expense recognized in fiscal 2019, 2018 and 2017 was $
While we are under no obligation to fund Non-Qualified Plan liabilities (in whole or in part), our current practice is to maintain company-owned life insurance contracts and other investments that are specifically designed to informally fund savings plans of this nature. These contracts are recorded at their cash surrender value as determined by the insurance carrier. Our consolidated balance sheets reflect investments in other assets and our obligation to participants in the Non-Qualified Plans in other noncurrent liabilities. All gains and losses related to our non-qualified deferred compensation assets and liabilities are reflected in interest and other expense, net in our consolidated statements of income.
We maintain self-insured medical and dental benefit plans for our staff members. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims as well as claims incurred but not yet reported to us as of the balance sheet date. The accrued liability for our self-insured benefit plans, which is included in other accrued expenses, was $
18. Income Taxes
The provision for income taxes consisted of the following (in thousands):
Fiscal Year | |||||||||
| 2019 |
| 2018 |
| 2017(1) | ||||
Income before income taxes | $ | | $ | | $ | | |||
Income tax (benefit)/provision: | |||||||||
Current: | |||||||||
Federal | $ | | $ | | $ | | |||
State |
| |
| |
| | |||
Total current |
| |
| |
| | |||
Deferred: | |||||||||
Federal |
| ( |
| ( |
| ( | |||
State |
| |
| ( |
| ( | |||
Total deferred |
| ( |
| ( |
| ( | |||
Total (benefit)/provision | $ | | $ | | $ | ( | |||
| (1) | The Tax Act, which was enacted on December 22, 2017, made significant changes to how corporations are taxed in the U.S., the most prominent of which affecting us was to lower the U.S. corporate tax rate from |
32
The following reconciles the U.S. federal statutory rate to the effective tax rate:
Fiscal Year |
| ||||||
| 2019 |
| 2018 |
| 2017 |
| |
U.S. federal statutory rate |
| | % | | % | | % |
State and district income taxes, net of federal benefit |
| | | | |||
Credit for FICA taxes paid on tips |
| ( | ( | ( | |||
Other credits and incentives |
| ( | ( | ( | |||
Manufacturing deduction |
| — | — | ( | |||
Deferred compensation |
| ( | | ( | |||
Equity compensation | ( | ( | ( | ||||
Impact of statutory rate change on deferred taxes | — | — | ( | ||||
Other |
| ( | | | |||
Effective tax rate |
| | % | | % | ( | % |
Following are the temporary differences that created our deferred tax assets and liabilities (in thousands):
| December 31, 2019 |
| January 1, 2019 | |||
Deferred tax assets: | ||||||
Staff member benefits | $ | | $ | | ||
Insurance reserves |
| |
| | ||
Accrued rent |
| |
| | ||
Deferred income |
| |
| | ||
Stock-based compensation |
| |
| | ||
Tax credit carryforwards |
| |
| | ||
Other |
| |
| | ||
Subtotal |
| |
| | ||
Less: Valuation allowance |
| ( |
| ( | ||
Total | $ | | $ | | ||
Deferred tax liabilities: | ||||||
Property and equipment | $ | ( | $ | ( | ||
Prepaid expenses |
| ( |
| ( | ||
Inventory |
| ( |
| ( | ||
Other | ( | ( | ||||
Total | $ | ( | $ | ( | ||
Net deferred tax liability | $ | ( | $ | ( | ||
At December 31, 2019 and January 1, 2019, we had $
33
At December 31, 2019, we had a reserve of $0.7 million for uncertain tax positions. If recognized, this amount would impact our effective income tax rate.
Fiscal Year | |||||||||
| 2019 |
| 2018 |
| 2017 | ||||
Balance at beginning of year | $ | | $ | | $ | | |||
Additions related to current period tax positions |
| |
| |
| | |||
Reductions related to settlements with taxing authorities and lapses of statutes of limitations |
| ( |
| ( |
| ( | |||
Balance at end of year | $ | | $ | | $ | | |||
At both December 31, 2019 and January 1, 2019, we had $
19. Segment Information
Our operating segments are comprised of The Cheesecake Factory, North Italia, Flower Child, the other FRC brands, our bakery division and Grand Lux Cafe, the businesses for which our management reviews discrete financial information for decision-making purposes. Based on quantitative thresholds set forth in ASC 280, “Segment Reporting,” The Cheesecake Factory, North Italia and the other FRC brands are the only businesses that meet the criteria of a reportable operating segment. The remaining operating segments, including Flower Child, along with our businesses that don’t qualify as operating segments are combined in Other. Unallocated corporate expenses, capital expenditures and assets, which were previously classified in a separate Corporate line, are also combined in Other. In addition, gift card costs, which were previously classified in The Cheesecake Factory restaurants reportable segment, are combined in Other. Corresponding prior year balances were reclassified to conform to the current year presentation.
34
Segment information is presented below (in thousands):
Fiscal Year | |||||||||
| 2019 (1) |
| 2018 |
| 2017 | ||||
Revenues: | |||||||||
The Cheesecake Factory restaurants | $ | | $ | | $ | | |||
North Italia | | — | — | ||||||
Other FRC | | — | — | ||||||
Other |
| |
| |
| | |||
Total | $ | | $ | | $ | | |||
Income/(loss) from operations: | |||||||||
The Cheesecake Factory restaurants (2) | $ | | $ | | $ | | |||
North Italia | | — | — | ||||||
Other FRC | | — | — | ||||||
Other (3) |
| ( |
| ( |
| ( | |||
Total | $ | | $ | | $ | | |||
Depreciation and amortization: | |||||||||
The Cheesecake Factory restaurants | $ | | $ | | $ | | |||
North Italia | | — | — | ||||||
Other FRC | | — | — | ||||||
Other |
| |
| |
| | |||
Total | $ | | $ | | $ | | |||
Preopening costs: | |||||||||
The Cheesecake Factory restaurants | $ | | $ | | $ | | |||
North Italia | | — | — | ||||||
Other FRC | | — | — | ||||||
Other | | | | ||||||
Total | $ | | $ | | $ | | |||
Capital expenditures: | |||||||||
The Cheesecake Factory restaurants | $ | | $ | | $ | | |||
North Italia | | — | — | ||||||
Other FRC | | — | — | ||||||
Other |
| |
| |
| | |||
Total | $ | | $ | | $ | | |||
Total assets: | |||||||||
The Cheesecake Factory restaurants | $ | | $ | | $ | | |||
North Italia | | — | — | ||||||
Other FRC | | — | — | ||||||
Other |
| |
| |
| | |||
Total | $ | | $ | | $ | | |||
| (1) | We completed the acquisition of North Italia and the remaining business of FRC on October 2, 2019. The results of the acquired businesses are included in our consolidated financial statements as of the acquisition date. (See Note 2 for further discussion of the Acquisition.) |
| (2) | Fiscal years 2019, 2018 and 2017 include impairment of assets and lease terminations expense of $ |
| (3) | Fiscal years 2019, 2018 and 2017 include impairment of assets and lease terminations expense of $ |
35
20. Quarterly Financial Data (unaudited)
Summarized unaudited quarterly financial data for fiscal 2019 and 2018 is as follows (in thousands, except per share data):
Quarter Ended: |
| April 2, 2019 |
| July 2, 2019 |
| October 1, 2019 |
| December 31, 2019 | ||||
Revenues (1) | $ | | $ | | $ | | $ | | ||||
Income from operations (1)(2) | $ | | $ | | $ | | $ | | ||||
Net income (1)(2) | $ | | $ | | $ | | $ | | ||||
Basic net income per share (4) | $ | | $ | | $ | | $ | | ||||
Diluted net income per share (4) | $ | | $ | | $ | | $ | | ||||
Cash dividends declared per common share | $ | | $ | | $ | | $ | | ||||
Quarter Ended: |
| April 3, 2018 |
| July 3, 2018 |
| October 2, 2018 |
| January 1, 2019 | ||||
Revenues | $ | | $ | | $ | | $ | | ||||
Income from operations (3) | $ | | $ | | $ | | $ | | ||||
Net income (3) | $ | | $ | | $ | | $ | | ||||
Basic net income per share (4) | $ | | $ | | $ | | $ | | ||||
Diluted net income per share (4) | $ | | $ | | $ | | $ | | ||||
Cash dividends declared per common share | $ | | $ | | $ | | $ | | ||||
| (1) | The fourth quarter of fiscal 2019 includes revenues, loss from operations and net loss of $ |
| (2) | In the fourth quarter of fiscal 2019, income from operations included impairment of assets and lease terminations expense of $ |
| (3) | In fiscal 2018, income from operations included $ |
| (4) | Net income per share calculations for each quarter are based on the weighted average diluted shares outstanding for that quarter and may not total to the full year amount. |
While seasonal fluctuations generally do not have a material impact on our quarterly results, the year-over-year comparison of our quarterly results can be significantly impacted by the number and timing of new restaurant openings and associated preopening costs, the calendar days of the week on which holidays occur, the impact from inclement weather and other climatic conditions and other variations in revenues and expenses. As a result of these factors, our financial results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.
21. Subsequent Events
On February 18, 2020, our Board of Directors approved a quarterly cash dividend of $
36
EXHIBIT INDEX
Exhibit |
| Item |
| Form |
| File Number |
| Incorporated by |
| Filed with | |
|---|---|---|---|---|---|---|---|---|---|---|---|
2.1 | Form of Reorganization Agreement(P) | Amend. No. 1 | 33-479336 | 2.1 | 8/17/92 | ||||||
2.2 | 10-Q | 000-20574 | 2.1 | 11/8/19 | |||||||
2.3 | 10-Q | 000-20574 | 2.2 | 11/8/19 | |||||||
2.4 | 10-Q | 000-20574 | 2.3 | 11/8/19 | |||||||
2.5 | 10-Q | 000-20574 | 2.4 | 11/8/19 | |||||||
3.1 | Restated Certificate of Incorporation of The Cheesecake Factory Incorporated | 10-Q | 000-20574 | 3.2 | 8/6/18 | ||||||
3.2 | Bylaws of The Cheesecake Factory Incorporated (Amended and Restated on May 20, 2009) | 8-K | 000-20574 | 3.8 | 5/27/09 | ||||||
3.3 | 10-Q | 000-20574 | 3.1 | 8/6/18 | |||||||
4.1 | 10-K | 000-20574 | 4.1 | 3/12/20 | |||||||
10.1.1 | 8-K | 000-20574 | 99.2 | 2/22/17 | |||||||
10.1.2 | 8-K | 000-20574 | 99.2 | 2/21/18 | |||||||
37
Exhibit |
| Item |
| Form |
| File Number |
| Incorporated by |
| Filed with | |
|---|---|---|---|---|---|---|---|---|---|---|---|
10.2 | 10-K | 000-25074 | 10.6 | 3/2/17 | |||||||
10.3 | 10-K | 000-25074 | 10.7 | 3/2/17 | |||||||
10.4 | 10-K | 000-25074 | 10.8 | 3/2/17 | |||||||
10.5 | 10-K | 000-25074 | 10.9 | 3/2/17 | |||||||
10.6 | 8-K | 000-25074 | 99.1 | 6/13/17 | |||||||
10.7 | 10-Q | 000-25074 | 10.10 | 5/11/18 | |||||||
10.8 | 10-K | 000-20574 | 10.8 | 3/4/19 | |||||||
10.9.1 | Amended and Restated The Cheesecake Factory Incorporated Executive Savings Plan* | 10-K | 000-25074 | 10.20 | 3/2/17 | ||||||
10.9.2 | 10-K | 000-25074 | 10.11.1 | 2/28/18 | |||||||
10.10 | 8-K | 000-25074 | 99.1 | 12/14/07 | |||||||
10.11.1 | 8-K | 000-25074 | 99.3 | 8/2/05 | |||||||
10.11.2 | First Amendment to Inducement Agreement dated as of March 1, 2010 | 10-K | 000-25074 | 10.36 | 2/23/11 | ||||||
10.11.3 | Second Amendment to Inducement Agreement dated as of May 7, 2015 | 10-K | 000-25704 | 10.24 | 3/2/17 | ||||||
10.12.1 | The Cheesecake Factory Incorporated 2010 Stock Incentive Plan as amended April 7, 2011* | DEF 14A | 000-20574 | Appendix A | 4/21/11 | ||||||
10.12.2 | DEF 14A | 000-20574 | Appendix A | 04/19/13 | |||||||
10.12.3 | The Cheesecake Factory Incorporated 2010 Stock Incentive Plan as amended April 3, 2014* | DEF 14A | 000-20574 | Appendix A | 4/17/14 | ||||||
10.12.4 | The Cheesecake Factory Incorporated 2010 Stock Incentive Plan as amended May 28, 2015* | DEF 14A | 000-20574 | Appendix A | 4/17/15 | ||||||
38
Exhibit |
| Item |
| Form |
| File Number |
| Incorporated by |
| Filed with | |
|---|---|---|---|---|---|---|---|---|---|---|---|
10.12.5 | The Cheesecake Factory Incorporated 2010 Stock Incentive Plan as amended April 5, 2017* | DEF 14A | 000-20574 | Appendix A | 4/25/17 | ||||||
10.13 | Form of Grant Agreement for Executive Officers under 2010 Stock Incentive Plan* | 10-Q | 000-20574 | 10.1 | 11/4/10 | ||||||
10.14 | 10-Q | 000-20574 | 10.1 | 8/10/12 | |||||||
10.15 | 8-K | 000-20574 | 99.1 | 3/7/14 | |||||||
10.16 | 8-K | 000-20574 | 99.2 | 3/4/16 | |||||||
10.17.1 | 10-K | 000-25074 | 10.24.1 | 2/28/18 | |||||||
10.17.2 | 10-K | 000-25074 | 10.24.2 | 2/28/18 | |||||||
10.17.3 | 10-K | 000-25074 | 10.24.3 | 2/28/18 | |||||||
10.17.4 | 10-K | 000-25074 | 10.24.4 | 2/28/18 | |||||||
10.17.5 | 10-K | 000-25074 | 10.24.5 | 2/28/18 | |||||||
10.17.6 | 10-K | 000-25074 | 10.24.6 | 2/28/18 | |||||||
10.17.7 | 8-K | 000-20574 | 99.3 | 2/21/18 | |||||||
39
40
Exhibit |
| Item |
| Form |
| File Number |
| Incorporated by |
| Filed with | |
|---|---|---|---|---|---|---|---|---|---|---|---|
101.1 | The following materials from The Cheesecake Factory Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) consolidated balance sheets, (ii) consolidated statements of income, (iii) consolidated statements of comprehensive income, (iv) consolidated statement of stockholders’ equity, (v) consolidated statements of cash flows, and (vi) the notes to the consolidated financial statements | 10-K | 000-20574 | 101.1 | 3/12/20 | ||||||
101.2 | The following materials from The Cheesecake Factory Incorporated’s Amendment No. 1 to Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) consolidated balance sheets, (ii) consolidated statements of income, (iii) consolidated statements of comprehensive income, (iv) consolidated statement of stockholders’ equity, (v) consolidated statements of cash flows, and (vi) the notes to the consolidated financial statements | — | — | — | Filed herewith | ||||||
104.1 | The cover page of The Cheesecake Factory Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2019, formatted in iXBRL (included with Exhibit 101.1) | 10-K | 000-20574 | 104.1 | 3/12/20 | ||||||
104.2 | The cover page of The Cheesecake Factory Incorporated’s Amendment No. 1 to Annual Report on Form 10-K for the year ended December 31, 2019, formatted in iXBRL (included with Exhibit 101.2) | — | — | — | Filed herewith | ||||||
* Management contract or compensatory plan or arrangement required to be filed as an exhibit.
# The schedules (or similar attachments) to this exhibit have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish copies of any such schedules or similar attachments to the SEC upon request.
† Certain confidential information contained in this agreement has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed.
(P) This exhibit has been paper filed and is not subject to the hyperlinking requirements of Item 601 of Regulation S-K.
41
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on the 22nd day of June 2020.
THE CHEESECAKE FACTORY INCORPORATED | ||
/s/ DAVID OVERTON | ||
By: | David Overton | |
Chairman of the Board and Chief Executive Officer | ||
(Principal Executive Officer) | ||
/s/ MATTHEW E. CLARK | ||
By: | Matthew E. Clark | |
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) | ||
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