Cheesecake Factory Inc 10-Q for FY2021 Q3

Cheesecake Factory Inc (CAKE)

10-Q 2021-11-04 For: 2021-09-28

Added on April 05, 2026

About this 10-Q

Cheesecake Factory Inc filed this 10-Q on November 4, 2021, covering the quarter ended September 28, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 28, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $754.47M; up 45.7% from $517.72M a year earlier
Net income: $32.68M; compared with a net loss of $28.35M a year earlier
Diluted EPS: $0.64; compared with -$0.76 a year earlier

Exhibit No.	Item	Form	File Number	Incorporated by Reference from Exhibit Number	Filed with SEC

3.1	Restated Certificate of Incorporation of The Cheesecake Factory Incorporated	10-Q	000-20574	3.2	8/6/18
3.2	Certificate of Designations of The Cheesecake Factory Incorporated, dated April 20, 2020	8-K	000-20574	3.1	4/20/20
3.3	Bylaws of The Cheesecake Factory Incorporated (Amended and Restated on May 20, 2009)	8-K	000-20574	3.8	5/27/09
4.1	Indenture, dated as of June 15, 2021, between The Cheesecake Factory Incorporated and U.S. Bank National Association, as trustee	8-K	000-20574	4.1	6/15/21
4.2	First Supplemental Indenture, dated as of June 15, 2021, between The Cheesecake Factory Incorporated and U.S. Bank National Association, as trustee	8-K	000-20574	4.2	6/15/21
4.3	Form of certificate representing the 0.375% Convertible Senior Notes due 2026 (included as Exhibit A to Exhibit 4.2)	8-K	000-20574	4.3	6/15/21
31.1	Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer	—	—	—	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer	—	—	—	Filed herewith
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer	—	—	—	Filed herewith
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer	—	—	—	Filed herewith
101.1	The following materials from The Cheesecake Factory Incorporated’s Quarterly Report on Form 10-Q for the quarter ended September 28, 2021, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of income, (iii) condensed consolidated statements of comprehensive income, (iv) condensed consolidated statement of stockholders’ equity, (v) condensed consolidated statements of cash flows, and (vi) the notes to the condensed consolidated financial statements	—	—	—	Filed herewith
104.1	The cover page of The Cheesecake Factory Incorporated’s Quarterly Report on Form 10-Q for the quarter ended September 28, 2021, formatted in iXBRL (included with Exhibit 101.1)	—	—	—	Filed herewith

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

26901 Malibu Hills Road
Calabasas Hills, California		91301
52		(Zip Code)


Title of Each Class	Trading Symbol	Name of Each Exchange on which Registered
Common Stock, par value $.01 per share	CAKE	The Nasdaq Stock Market LLC


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

			Page Number

PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements:
		Condensed Consolidated Balance Sheets (Unaudited)	1
		Condensed Consolidated Statements of Income/(Loss) (Unaudited)	2
		Condensed Consolidated Statements of Comprehensive Income/(Loss) (Unaudited)	3
		Condensed Consolidated Statements of Stockholders’ Equity and Series A Convertible Preferred Stock (Unaudited)	4
		Condensed Consolidated Statements of Cash Flows (Unaudited)	6
		Notes to Condensed Consolidated Financial Statements (Unaudited)	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
	Item 4.	Controls and Procedures	33

PART II	OTHER INFORMATION		33
	Item 1.	Legal Proceedings	33
	Item 1A.	Risk Factors	33
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
	Item 6.	Exhibits	37

Signatures			38


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


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


	September 28,		December 29,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	131,030	$	154,085
Accounts and other receivable		66,663		75,787
Income taxes receivable		39,510		36,889
Inventories		43,270		39,288
Prepaid expenses		29,714		35,310
Total current assets		310,187		341,359
Property and equipment, net		755,640		774,137

Other assets:
Intangible assets, net		253,154		253,160
Operating lease assets		1,258,851		1,251,027
Other		139,886		127,371
Total other assets		1,651,891		1,631,558
Total assets	$	2,717,718	$	2,747,054

LIABILITIES, SERIES A CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	52,890	$	58,432
Gift card liabilities		161,513		184,655
Operating lease liabilities		132,550		132,519
Other accrued expenses		210,155		210,461
Total current liabilities		557,108		586,067

Long-term debt		465,514		280,000
Operating lease liabilities		1,227,705		1,224,321
Other noncurrent liabilities		145,445		149,725
Commitments and contingencies (Note 8)
Series A convertible preferred stock, $.01 par value, 200,000 shares authorized; no and 200,000 shares issued at September 28, 2021 and December 29, 2020, respectively		—		218,248
Stockholders’ equity:
Preferred stock, $.01 par value, other than Series A convertible preferred stock, 4,800,000 shares authorized; none issued		—		—
Common stock, $.01 par value, 250,000,000 shares authorized; 105,292,620 and 98,645,147 shares issued at September 28, 2021 and December 29, 2020, respectively		1,053		986
Additional paid-in capital		856,042		878,148
Retained earnings		1,167,001		1,110,087
Treasury stock, 53,126,074 and 53,026,409 shares at cost at September 28, 2021 and December 29, 2020, respectively		(1,701,984)		(1,696,743)
Accumulated other comprehensive loss		(166)		(3,785)
Total stockholders’ equity		321,946		288,693

Total liabilities, Series A convertible preferred stock and stockholders’ equity	$	2,717,718	$	2,747,054


	Thirteen		Thirteen		Thirty-Nine		Thirty-Nine
	Weeks Ended		Weeks Ended		Weeks Ended		Weeks Ended
	September 28, 2021		September 29, 2020		September 28, 2021		September 29, 2020
Revenues	$	754,474	$	517,716	$	2,150,847	$	1,428,673

Costs and expenses:
Cost of sales		169,418		118,093		474,237		331,137
Labor expenses		279,957		200,666		784,501		560,460
Other operating costs and expenses		201,490		159,095		582,518		448,740
General and administrative expenses		45,802		37,795		138,457		117,467
Depreciation and amortization expenses		22,576		22,651		66,805		68,803
Impairment of assets and lease terminations		—		10,402		594		204,731
Acquisition-related costs		—		39		—		2,343
Acquisition-related contingent consideration, compensation and amortization expenses/(benefit)		685		1,439		12,592		(3,992)
Preopening costs		3,169		2,394		9,804		7,610
Total costs and expenses		723,097		552,574		2,069,508		1,737,299
Income/(loss) from operations		31,377		(34,858)		81,339		(308,626)
Interest and other expense, net		(1,794)		(2,935)		(9,194)		(7,019)
Income/(loss) before income taxes		29,583		(37,793)		72,145		(315,645)
Income tax (benefit)/ provision		(3,097)		(9,447)		1,882		(94,597)
Net income/(loss)		32,680		(28,346)		70,263		(221,048)
Dividends on Series A preferred stock		—		(4,838)		(18,661)		(8,532)
Direct and incremental Series A preferred stock issuance cost		—		—		—		(10,257)
Undistributed earnings allocated to Series A preferred stock		—		—		(5,804)		—
Net income/(loss) available to common stockholders	$	32,680	$	(33,184)	$	45,798	$	(239,837)

Net income/(loss) per common share:
Basic	$	0.65	$	(0.76)	$	0.98	$	(5.47)
Diluted (Note 11)	$	0.64	$	(0.76)	$	0.96	$	(5.47)

Weighted-average common shares outstanding:
Basic		50,212		43,900		46,624		43,849
Diluted		51,113		43,900		47,675		43,849


													Accumulated
	Series A Convertible						Additional						Other
	Preferred Stock			Common Stock			Paid-in		Retained		Treasury		Comprehensive
	Shares	Amount		Shares	Amount		Capital		Earnings		Stock		Loss		Total
Balance, December 29, 2020	200	$	218,248	98,645	$	986	$	878,148	$	1,110,087	$	(1,696,743)	$	(3,785)	$	288,693
Cumulative effect of adopting ASU 2020-06	—		(4,763)	—		—		—		4,763		—		—		4,763
Balance, December 29, 2020, as adjusted	200		213,485	98,645		986		878,148		1,114,850		(1,696,743)		(3,785)		293,456
Net income	—		—	—		—		—		3,868		—		—		3,868
Foreign currency translation adjustment	—		—	—		—		—		—		—		174		174
Change in derivative, net of tax	—		—	—		—		—		—		—		1,738		1,738
Cash dividends declared common stock, net of forfeitures	—		—	—		—		—		399		—		—		399
Stock-based compensation	—		—	293		3		5,480		—		—		—		5,483
Common stock issued under stock-based compensation plans	—		—	570		6		20,417		—		—		—		20,423
Treasury stock purchases	—		—	—		—		—		—		(3,957)		—		(3,957)
Cash dividends declared Series A preferred stock, $25.35 per share	—		—	—		—		—		(5,070)		—		—		(5,070)
Balance, March 30, 2021	200	$	213,485	99,508	$	995	$	904,045	$	1,114,047	$	(1,700,700)	$	(1,873)	$	316,514
Net income	—		—	—		—		—		33,715		—		—		33,715
Foreign currency translation adjustment	—		—	—		—		—		—		—		219		219
Change in derivative, net of tax	—		—	—		—		—		—		—		1,726		1,726
Cash dividends declared common stock, net of forfeitures	—		—	—		—		—		15		—		—		15
Stock-based compensation	—		—	44		1		5,540		—		—		—		5,541
Common stock issued under stock-based compensation plans	—		—	118		1		4,361		—		—		—		4,362
Common stock issuance	—		—	3,125		31		167,019		—		—		—		167,050
Treasury stock purchases	—		—	—		—		—		—		(603)		—		(603)
Series A preferred stock cash-settled conversion	(150)		(160,114)	—		—		(283,637)		—		—		—		(283,637)
Series A preferred stock conversion to common stock	(50)		(53,371)	2,401		24		53,273		—		—		—		53,297
Deemed dividends on Series A preferred stock	—		—	—		—		—		(13,591)		—		—		(13,591)
Balance, June 29, 2021	—	$	—	105,196	$	1,052	$	850,601	$	1,134,186	$	(1,701,303)	$	72	$	284,608
Net income	—		—	—		—		—		32,680		—		—		32,680
Foreign currency translation adjustment	—		—	—		—		—		—		—		(238)		(238)
Cash dividends declared common stock, net of forfeitures	—		—	—		—		—		135		—		—		135
Stock-based compensation	—		—	59		1		5,441		—		—		—		5,442
Common stock issued under stock-based compensation plans	—		—	38		0		—		—		—		—		—
Treasury stock purchases	—		—	—		—		—		—		(681)		—		(681)
Balance, September 28, 2021	—	$	—	105,293	$	1,053	$	856,042	$	1,167,001	$	(1,701,984)	$	(166)	$	321,946


	September 28, 2021
	Level 1		Level 2		Level 3
Assets/(Liabilities)
Non-qualified deferred compensation assets	$	89,047	$	—	$	—
Non-qualified deferred compensation liabilities		(88,126)		—		—
Acquisition-related deferred consideration		—		(38,599)		—
Acquisition-related contingent consideration and compensation liabilities		—		—		(19,020)


	December 29, 2020
	Level 1		Level 2		Level 3
Assets/(Liabilities)
Non-qualified deferred compensation assets	$	83,485	$	—	$	—
Non-qualified deferred compensation liabilities		(83,702)		—		—
Interest rate swap		—		(4,591)		—
Acquisition-related deferred consideration		—		(38,119)		—
Acquisition-related contingent consideration and compensation liabilities		—		—		(7,465)


	September 28, 2021		December 29, 2020
Restaurant food and supplies	$	25,813	$	24,282
Bakery finished goods and work in progress		10,484		7,861
Bakery raw materials and supplies		6,973		7,145
Total	$	43,270	$	39,288


	Thirteen Weeks Ended		Thirteen Weeks Ended		Thirty-Nine Weeks Ended		Thirty-Nine Weeks Ended
	September 28, 2021		September 29, 2020		September 28, 2021		September 29, 2020
Operating	$	33,034	$	31,267	$	97,889	$	97,222
Variable		18,972		15,304		54,664		42,292
Short-term		71		93		212		346
Total	$	52,077	$	46,664	$	152,765	$	139,860


				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual	Aggregate
	Shares	Exercise Price		Term	Intrinsic Value⁽¹⁾
	(In thousands)	(Per share)		(In years)	(In thousands)
Outstanding at December 29, 2020	2,294	$	45.35	5.0	$	307
Granted	—		—
Exercised	(577)		42.97
Forfeited or cancelled	(1)		61.59
Outstanding at September 28, 2021	1,716	$	46.14	5.4	$	6,586

Exercisable at September 28, 2021	864	$	48.97	3.8	$	1,573


	Thirteen		Thirteen		Thirty-Nine		Thirty-Nine
	Weeks Ended		Weeks Ended		Weeks Ended		Weeks Ended
	September 28, 2021		September 29, 2020		September 28, 2021		September 29, 2020
Revenues:
The Cheesecake Factory restaurants	$	592,555	$	416,984	$	1,698,635	$	1,146,524
North Italia		44,357		27,990		120,747		72,262
Other FRC		44,326		20,273		127,978		68,063
Other		73,236		52,469		203,487		141,824
Total	$	754,474	$	517,716	$	2,150,847	$	1,428,673

Income/(loss) from operations: ⁽¹⁾
The Cheesecake Factory restaurants	$	66,791	$	18,836	$	194,470	$	31,208
North Italia		1,962		(831)		5,320		(77,321)
Other FRC		3,403		(1,901)		14,565		(77,077)
Other		(40,779)		(50,962)		(133,016)		(185,436)
Total	$	31,377	$	(34,858)	$	81,339	$	(308,626)

Depreciation and amortization:
The Cheesecake Factory restaurants	$	16,414	$	16,713	$	49,221	$	50,857
North Italia		1,068		901		2,893		2,767
Other FRC		1,208		987		3,423		3,002
Other		3,886		4,050		11,268		12,177
Total	$	22,576	$	22,651	$	66,805	$	68,803

Impairment of assets and lease termination expenses:
The Cheesecake Factory restaurants	$	—	$	(157)	$	—	$	2,784
North Italia		—		—		—		71,524
Other FRC		—		—		—		72,939
Other		—		10,559		594		57,484
Total	$	—	$	10,402	$	594	$	204,731

Capital expenditures:
The Cheesecake Factory restaurants	$	10,680	$	6,575	$	22,606	$	27,289
North Italia		2,606		(349)		9,095		2,645
Other FRC		3,614		2,123		10,979		3,914
Other		1,356		497		6,478		4,422
Total	$	18,256	$	8,846	$	49,158	$	38,270

Preopening costs:


		Weighted-
		Average
		Fair
	Shares	Value
	(In thousands)	(Per share)
Outstanding at December 29, 2020	2,008	$	43.70
Granted	580		50.75
Vested	(278)		47.76
Forfeited	(182)		43.78
Outstanding at September 28, 2021	2,128	$	45.08


	September 28, 2021		December 29, 2020
Total assets:
The Cheesecake Factory	$	1,572,956	$	1,671,733
North Italia		267,816		270,218
Other FRC		300,624		308,866
Other		576,322		496,237
Total	$	2,717,718	$	2,747,054


				Total Number of	Maximum Number
				Shares Purchased	of Shares that May
	Total Number			as Part of Publicly	Yet be Purchased
	of Shares	Average Price		Announced Plans	Under the Plans or
Period	Purchased ⁽¹⁾	Paid per Share		or Programs	Programs
June 30 — August 3, 2021	135	$	54.18	—	2,884,583
August 4 — August 31, 2021	8,380		46.62	—	2,876,203
September 1 — September 28, 2021	6,027		46.87	—	2,870,176
Total	14,542			—


Date: November 4, 2021	THE CHEESECAKE FACTORY INCORPORATED

	By:	/s/ DAVID OVERTON
		David Overton
		Chairman of the Board and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ MATTHEW E. CLARK
		Matthew E. Clark
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)