SECURITIES AND EXCHANGE COMMISSION FORM 10-Q QUARTERLY REPORT |
Delaware (State or other jurisdiction of incorporation or organization) 26950 Agoura Road Calabasas Hills, California (Address of principal executive offices) | 51-0340466 (IRS Employer Identification No.) 91301 (Zip Code) |
Registrant’s telephone number, including area code: (818) 871-3000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| As of July 25, 2001, 48,281,923 shares of the registrant’s Common Stock, $.01 par value, were outstanding. |
THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIESINDEX |
PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsTHE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES |
July 3, 2001 | January 2, 2001 | ||||
---|---|---|---|---|---|
(unaudited) | |||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ 18,460 | $ 34,284 | |||
Investments and marketable securities | 15,498 | 16,822 | |||
Accounts receivable | 4,051 | 4,877 | |||
Other receivables | 10,829 | 15,112 | |||
Inventories | 11,442 | 9,328 | |||
Prepaid expenses | 1,071 | 1,411 | |||
Deferred income taxes | 915 | 773 | |||
Total current assets | 62,266 | 82,607 | |||
Property and equipment, net | 195,085 | 161,223 | |||
Other assets: | |||||
Marketable securities | 44,108 | 34,208 | |||
Other receivables | 5,463 | 5,276 | |||
Trademarks | 1,943 | 1,905 | |||
Other | 3,526 | 3,173 | |||
Total other assets | 55,040 | 44,562 | |||
Total assets | $ 312,391 | $ 288,392 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $ 15,175 | $ 17,712 | |||
Income taxes payable | 7,672 | 993 | |||
Other accrued expenses | 24,900 | 24,422 | |||
Total current liabilities | 47,747 | 43,127 | |||
Deferred income taxes | 4,429 | 4,429 | |||
Stockholders’ equity: | |||||
Preferred stock, $.01 par value, 5,000,000 shares authorized; none | |||||
issued and outstanding | — | — | |||
Junior participating cumulative preferred stock, $.01 par value, | |||||
150,000 shares authorized; none issued and outstanding | — | — | |||
Common stock, $.01 par value, 150,000,000 shares authorized; 48,280,923 | |||||
and 47,887,211 issued at July 3, 2001 and January 2, 2001, | |||||
respectively | 482 | 319 | |||
Additional paid-in capital | 150,909 | 147,694 | |||
Retained earnings | 117,980 | 99,581 | |||
Unrealized gain on available-for-sale securities | 165 | 365 | |||
Treasury stock, 850,500 and 756,000 shares at cost at July 3, 2001 and | |||||
January 2, 2001, respectively | (9,321 | ) | (7,123 | ) | |
Total stockholders’ equity | 260,215 | 240,836 | |||
Total liabilities and stockholders’ equity | $ 312,391 | $ 288,392 | |||
The accompanying notes are an integral part of these consolidated financial statements. 1 |
THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES |
Thirteen Weeks Ended July 3, 2001 | Thirteen Weeks Ended June 27, 2000 | Twenty-six Weeks Ended July 3, 2001 | Twenty-six Weeks Ended June 27, 2000 | ||||||
---|---|---|---|---|---|---|---|---|---|
Revenues: | |||||||||
Restaurant sales | $124,231 | $ 98,599 | $236,590 | $ 188,064 | |||||
Bakery sales to other foodservice | |||||||||
operators, retailers and distributors | 8,004 | 6,617 | 16,166 | 13,263 | |||||
Total revenues | 132,235 | 105,216 | 252,756 | 201,327 | |||||
Costs and expenses: | |||||||||
Restaurant cost of sales | 31,709 | 24,766 | 60,475 | 47,325 | |||||
Bakery cost of sales | 3,986 | 3,235 | 7,913 | 6,023 | |||||
Labor expenses | 40,494 | 32,227 | 77,791 | 61,921 | |||||
Other operating costs and expenses | 29,131 | 23,006 | 56,766 | 44,450 | |||||
General and administrative expenses | 6,980 | 6,042 | 13,308 | 12,852 | |||||
Depreciation and amortization expenses | 4,093 | 3,051 | 7,974 | 6,154 | |||||
Preopening costs | 1,420 | 826 | 2,848 | 1,931 | |||||
Total costs and expenses | 117,813 | 93,153 | 227,075 | 180,656 | |||||
Income from operations | 14,422 | 12,063 | 25,681 | 20,671 | |||||
Interest income, net | 1,090 | 1,138 | 2,438 | 2,048 | |||||
Other income (expense), net | 454 | (96 | ) | 925 | (28 | ) | |||
Income before income taxes | 15,966 | 13,105 | 29,044 | 22,691 | |||||
Income tax provision | 5,748 | 4,947 | 10,456 | 8,566 | |||||
Net income | $ 10,218 | $ 8,158 | $ 18,588 | $ 14,125 | |||||
Net income per share: | |||||||||
Basic | $ 0.22 | $ 0.18 | $ 0.39 | $ 0.31 | |||||
Diluted | $ 0.21 | $ 0.16 | $ 0.37 | $ 0.29 | |||||
Weighted average shares outstanding: | |||||||||
Basic | 47,382 | 46,037 | 47,327 | 45,723 | |||||
Diluted | 49,631 | 49,769 | 49,677 | 49,134 |
The accompanying notes are an integral part of these consolidated financial statements. 2 |
THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES |
Twenty-six Weeks Ended July 3, 2001 | Twenty-six Weeks Ended June 27, 2000 | ||||
---|---|---|---|---|---|
Cash flows from operating activities: | |||||
Net income | $ 18,588 | $ 14,125 | |||
Adjustments to reconcile net income to cash provided by operating | |||||
activities: | |||||
Depreciation and amortization | 7,974 | 6,154 | |||
Deferred income taxes | (27 | ) | (5 | ) | |
Gain on available-for-sale securities | (978 | ) | (19 | ) | |
Loss on asset sale | — | 3 | |||
Changes in assets and liabilities: | |||||
Accounts receivable | 826 | 2,035 | |||
Other receivables | 4,096 | 3,539 | |||
Inventories | (2,114 | ) | 154 | ||
Prepaid expenses | 340 | 1,323 | |||
Trademarks | (80 | ) | (99 | ) | |
Other | (407 | ) | (354 | ) | |
Accounts payable | (2,537 | ) | 901 | ||
Income taxes payable | 6,679 | 4,605 | |||
Other accrued expenses | 478 | 940 | |||
Net cash provided by operating activities | 32,838 | 33,302 | |||
Cash flows from investing activities: | |||||
Additions to property and equipment | (41,740 | ) | (22,074 | ) | |
Investments in available-for-sale securities | (70,555 | ) | (37,494 | ) | |
Sales of available-for-sale securities | 62,642 | 10,257 | |||
Net cash used in investing activities | (49,653 | ) | (49,311 | ) | |
Cash flows from financing activities: | |||||
Common stock issued | 2 | 7 | |||
Dividends paid for fractional shares | (28 | ) | (30 | ) | |
Proceeds from exercise of employee stock options | 3,215 | 8,164 | |||
Purchase of treasury stock | (2,198 | ) | (1,186 | ) | |
Net cash provided by financing activities | 991 | 6,955 | |||
Net change in cash and cash equivalents | (15,824 | ) | (9,054 | ) | |
Cash and cash equivalents at beginning of period | 34,284 | 24,026 | |||
Cash and cash equivalents at end of period | $ 18,460 | $ 14,972 | |||
Supplemental disclosures: | |||||
Interest paid | $ — | $ 10 | |||
Income taxes paid | $ 3,775 | $ 5,338 | |||
The accompanying notes are an integral part of these consolidated financial statements. 3 |
Classification | Cost | Fair Value | Unrealized Gain/(Loss) | Balance Sheet Amount | Maturity | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Current assets: | |||||||||||
Available-for-sale securities: | |||||||||||
Corporate debt securities | $15,396 | $15,498 | $102 | $15,498 | October 2001 to May 2002 | ||||||
Other assets: | |||||||||||
Available-for-sale securities: | |||||||||||
Corporate debt securities | $38,903 | $39,031 | $128 | $39,031 | August 2002 to July 2004 | ||||||
U.S. Treasury securities | 5,076 | 5,077 | 1 | 5,077 | July 2002 to February 2003 | ||||||
Total | $43,979 | $44,108 | $129 | $44,108 | |||||||
4 |
THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES |
The Company utilizes a 52/53 week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal 2001 will consist of 52 weeks and will end on Tuesday, January 1, 2002. Results of OperationsThe following table sets forth, for the periods indicated, the Consolidated Statements of Operations of the Company expressed as percentages of total revenues. The results of operations for the thirteen weeks and twenty-six weeks ended July 3, 2001 are not necessarily indicative of the results to be expected for the full fiscal year. |
Thirteen Weeks Ended July 3, 2001 | Thirteen Weeks Ended June 27, 2000 | Twenty-six Weeks Ended July 3, 2001 | Twenty-six Weeks Ended June 27, 2000 | ||||||
---|---|---|---|---|---|---|---|---|---|
% | % | % | % | ||||||
Revenues: | |||||||||
Restaurant sales | 93.9 | 93.7 | 93.6 | 93.4 | |||||
Bakery sales to other foodservice | |||||||||
operators, retailers and distributors | 6.1 | 6.3 | 6.4 | 6.6 | |||||
Total revenues | 100.0 | 100.0 | 100.0 | 100.0 | |||||
Costs and expenses: | |||||||||
Restaurant cost of sales | 24.0 | 23.5 | 23.9 | 23.5 | |||||
Bakery cost of sales | 3.0 | 3.1 | 3.1 | 3.0 | |||||
Labor expenses | 30.6 | 30.6 | 30.8 | 30.7 | |||||
Other operating costs and expenses | 22.0 | 21.9 | 22.4 | 22.1 | |||||
General and administrative expenses | 5.3 | 5.7 | 5.3 | 6.4 | |||||
Depreciation and amortization expenses | 3.1 | 2.9 | 3.2 | 3.0 | |||||
Preopening costs | 1.1 | 0.8 | 1.1 | 1.0 | |||||
Total costs and expenses | 89.1 | 88.5 | 89.8 | 89.7 | |||||
Income from operations | 10.9 | 11.5 | 10.2 | 10.3 | |||||
Interest income, net | 0.8 | 1.1 | 1.0 | 1.0 | |||||
Other income, net | 0.3 | (0.1 | ) | 0.3 | — | ||||
Income before income taxes | 12.0 | 12.5 | 11.5 | 11.3 | |||||
Income tax provision | 4.3 | 4.7 | 4.1 | 4.3 | |||||
Net income | 7.7 | 7.8 | 7.4 | 7.0 | |||||
Thirteen Weeks Ended July 3, 2001 Compared to Thirteen Weeks Ended June 27, 2000Revenues For the thirteen weeks ended July 3, 2001, the Company’s total revenues increased 25.7% to $132.2 million compared to $105.2 million for the thirteen weeks ended June 27, 2000. Restaurant sales increased 26.0% to $124.2 million compared to $98.6 million for the same period of the prior year. The $25.6 million increase in restaurant sales consisted of a $2.4 million or 2.4% increase in comparable restaurant sales and a $23.2 million increase from the openings of new restaurants. Sales in comparable restaurants benefited, in part, from the impact of an effective menu price increase of approximately 1% which was taken in January 2001. Bakery sales increased 21.2% to $8.0 million for the thirteen weeks ended July 3, 2001 compared to $6.6 million for the same period of the prior year. The increase was principally attributable to higher sales volumes to foodservice operators and distributors. For the thirteen weeks ended July 3, 2001, sales to warehouse clubs comprised approximately 47% of total bakery sales compared to approximately 57% for the same period of the prior year. 7 |
Restaurant Cost of Sales During the thirteen weeks ended July 3, 2001, restaurant cost of sales increased 27.8% to $31.7 million compared to $24.8 million for the comparable period last year. The related increase of $6.9 million was primarily attributable to new restaurant openings. As a percentage of restaurant sales, these costs increased slightly to 25.5% versus 25.1% for the same period of the prior year, principally as a result of slightly higher produce and other commodity costs that were offset, in part, by menu price increases and volume purchase discounts. The menu at our restaurants is one of the most diversified in the industry and, accordingly, is not overly dependent on a single commodity. The principal commodity categories for our restaurants include produce, chicken, meat, fish and seafood, cheese, other dairy products, bread and general grocery items. While we have taken steps to qualify multiple suppliers and enter into longer-term supply agreements for some of the key commodities used in our restaurant operations, there can be no assurance that future supplies and costs for commodities used in our restaurant operations will not fluctuate due to weather and other market conditions outside of our control. For new restaurants, cost of sales will typically be higher than normal during the first 90-120 days of operations until our management team at each new restaurant becomes more accustomed to optimally predicting, managing and servicing the high sales volumes typically experienced by our restaurants. Bakery Cost of Sales Bakery cost of sales, which includes ingredient, packaging and production supply costs, were $4.0 million for the thirteen weeks ended July 3, 2001 compared to $3.2 million for the same period of the prior year. As a percentage of third-party bakery sales, bakery cost of sales for the thirteen weeks ended July 3, 2001 increased to 49.8% compared to 48.9% for the comparable period last year. This increase was primarily attributable to a shift in the mix of sales to products with slightly higher cost of sales as a percentage of their associated price (but with slightly lower selling expenses, which are included in the “other operating costs and expenses��� category) and a slight increase in the cost for certain dairy-related commodities. While we have taken steps to qualify multiple suppliers and enter into longer-term supply agreements for some of the key commodities used in our bakery operations, there can be no assurance that future supplies and costs for commodities used in our bakery or restaurant operations will not fluctuate due to weather and other market conditions beyond our control. Labor Expenses Labor expenses, which include restaurant-level labor costs and bakery direct production labor costs (including associated fringe benefits) increased 25.8% to $40.5 million for the thirteen weeks ended July 3, 2001 compared to $32.2 million for the same period of the prior year. This increase of $8.3 million was principally due to the impact of new restaurant openings. As a percentage of total revenues, labor expenses were 30.6% for both periods as the California minimum wage increase of $0.50 per hour effective January 2001 and other wage increases were effectively offset by improved operational efficiencies and the sales increases that better leveraged the fixed cost component of our labor expenses. For new restaurants, labor expenses will typically be higher than normal during the first 90-120 days of operations until our management team at each new restaurant becomes more accustomed to optimally predicting, managing and servicing the high sales volumes typically experienced by our restaurants. Other Operating Costs and Expenses Other operating costs and expenses consist of restaurant-level occupancy expenses (rent, insurance, licenses, taxes and utilities), other operating expenses (excluding food costs and labor expenses reported separately) and bakery production overhead, selling and distribution expenses. Other operating costs and expenses increased 26.5% to $29.1 million for the thirteen weeks ended July 3, 2001 compared to $23.0 million for the same period of the prior year. This increase was principally attributable to new restaurant openings. As a percentage of total revenues, occupancy and other expenses increased slightly to 22.0% for the thirteen weeks ended July 3, 2001 versus 21.9% for the same period of fiscal 2000. This slight increase was primarily attributable to the impact of increased costs for electric and natural gas services to our restaurants, effectively offset by the sales increases that better leveraged the fixed cost component of our operating expenses. Electric and natural gas costs increased to 1.6% of total revenues for the thirteen weeks ended July 3, 2001 compared to 1.0% for the same period of the prior year. 8 |
The cost for electric and natural gas services to our restaurants was 1.3% of restaurant sales for both fiscal 2000 and 1999. As of July 25, 2001, twelve of our 45 full-service restaurants and our bakery production facility were located in the state of California, where both the general availability and cost of energy have recently become more volatile. As a result, the impact of electric and natural gas services on our operations in California, and possibly in other states where we operate, will likely continue to be less predictable during fiscal 2001 compared to prior fiscal years. General and Administrative Expenses General and administrative (“G&A”) expenses consist of restaurant support expenses (field supervision, manager recruitment and training, relocation and other related expenses), bakery administrative expenses, and corporate support and governance expenses. G&A expenses increased 16.7% to $7.0 million for the thirteen weeks ended July 3, 2001 compared to $6.0 million for the same period of fiscal 2000. As a percentage of total revenues, G&A expenses decreased to 5.3% for the thirteen weeks ended July 3, 2001 compared to 5.7% for the same period of the prior year. This decrease was principally attributable to the leveraging of the fixed component of these costs with higher sales volumes. We intend to continue strengthening our operational support infrastructure during the remainder of fiscal 2001, which will likely generate a higher absolute amount of general and administrative expenses for the fiscal year. Depreciation and Amortization Expenses Depreciation and amortization expenses were $4.1 million for the thirteen weeks ended July 3, 2001 compared to $3.1 million for the thirteen weeks ended June 27, 2000. As a percentage of total revenues, depreciation and amortization expenses increased slightly to 3.1% for the thirteen weeks ended July 3, 2001 compared to 2.9% for the same period last year. The increase of $1.0 million for the thirteen weeks ended July 3, 2001 primarily consisted of higher restaurant depreciation expenses which was principally due to the openings of new restaurants. Preopening Costs Preopening costs were $1.4 million for the thirteen weeks ended July 3, 2001 compared to $0.8 million for the same period of the prior year. We incurred preopening costs to open one Cheesecake Factory restaurant during the thirteen weeks ended July 3, 2001 and another on July 11, 2001 compared to one opening for the same period of the prior year. In addition, we incurred preopening costs in both periods for other restaurant openings in progress. Preopening costs include incremental, out-of-pocket costs which are not otherwise capitalizable that are directly incurred to open new restaurants. The principal components of preopening costs include the cost of recruiting and training the hourly staff for each new restaurant; the cost to relocate and pay the management staff assigned to each new restaurant approximately 45 days prior to opening; the cost to send training and support staff to each opening; and the cost of practice cooking and service activities. As a result of the highly customized and operationally complex nature of our upscale casual dining restaurants, the restaurant preopening process is significantly more extensive and costly relative to that of other chain restaurant operations. Preopening costs will vary from location to location depending on a number of factors including (but not limited to) the proximity of our other established restaurants; the size and physical layout of each location; the cost of travel and lodging in different metropolitan areas; and the relative difficulty of the restaurant staffing and training process. Additionally, new concepts such as Grand Lux Cafe are expected to incur initial preopening costs that could be significantly higher than preopening costs for our more established restaurant concepts. Preopening costs will fluctuate from period to period based on the number and timing of restaurant openings and the specific preopening costs incurred for each restaurant, and the fluctuations could be significant. We expense preopening costs as they are incurred. Based on our current growth objectives for fiscal 2001 and 2002, preopening costs for each of those years will likely exceed the respective amount of preopening costs for the applicable prior year. Twenty-six Weeks Ended July 3, 2001 Compared to Twenty-six Weeks Ended June 27, 2000Revenues For the twenty-six weeks ended July 3, 2001, the Company’s total revenues increased 25.6% to $252.8 million compared to $201.3 million for the twenty-six weeks ended June 27, 2000. Restaurant sales increased 25.8% to $236.6 million compared to $188.1 million for the same period of the prior year. The $48.5 million increase in restaurant sales consisted of a $4.4 million or 2.4% increase in comparable restaurant sales and a $44.1 million increase from the openings of new restaurants. Sales in comparable restaurants benefited, in part, from the impact of an effective menu price increase of approximately 1% which was taken in January 2001. 9 |
Bakery sales increased 21.8% to $16.2 million for the twenty-six weeks ended July 3, 2001 compared to $13.3 million for the same period of the prior year. The increase was principally attributable to higher sales volumes to foodservice operators and distributors. Restaurant Cost of Sales During the twenty-six weeks ended July 3, 2001, restaurant cost of sales increased 27.9% to $60.5 million compared to $47.3 million for the comparable period last year. The related increase of $13.2 million was primarily attributable to new restaurant openings. As a percentage of restaurant sales, this cost increased slightly to 25.6% versus 25.2% for the same period of the prior year, principally as a result of slightly higher produce and other commodity costs that were offset, in part, by menu price increases and volume purchase discounts. Bakery Cost of Sales Bakery cost of sales were $7.9 million for the twenty-six weeks ended July 3, 2001 compared to $6.0 million for the same period of the prior year. As a percentage of bakery sales, bakery cost of sales for the twenty-six weeks ended July 3, 2001 increased to 48.9% compared to 45.4% for the comparable period last year. This percentage increase was primarily due to a shift in the mix of sales to products with slightly higher cost of sales as a percentage of their associated sales (but with slightly lower selling expenses, which are reported in the “other operating costs and expenses” category) and a slight increase in the cost for certain dairy-related commodities. Labor Expenses Labor expenses were $77.8 million for the twenty-six weeks ended July 3, 2001 compared to $61.9 million for the same period of the prior year. The related increase of $15.9 million was principally due to the impact of new restaurant openings. As a percentage of total revenues, labor expenses for the twenty-six weeks ended Other Operating Costs and Expenses Other operating costs and expenses increased 27.6% to $56.8 million for the twenty-six weeks ended July 3, 2001 compared to $44.5 million for the same period of the prior year. The related increase of $12.3 million was principally attributable to new restaurant openings. As a percentage of total revenues, occupancy and other expenses increased slightly to 22.4% for the twenty-six weeks ended July 3, 2001 versus 22.1% for the same period of fiscal 2000. This slight percentage increase was primarily attributable to the impact of increased costs for electric and natural gas services to our restaurants, partially offset by sales increases which better leveraged the fixed cost component of our operating expenses. General and Administrative Expenses General and administrative expenses increased to $13.3 million for the twenty-six weeks ended July 3, 2001 compared to $12.9 million for the same period of fiscal 2000, an increase of $0.4 million or 3.1%. As a percentage of total revenues, general and administrative expenses decreased to 5.3% for the twenty-six weeks ended July 3, 2001 compared to 6.4% for the same period of the prior year. This decrease was principally attributable to the leveraging of the fixed component of these costs with higher sales volumes. 10 |
Depreciation and Amortization Expenses Depreciation and amortization expenses were $8.0 million for the twenty-six weeks ended July 3, 2001 compared to $6.2 million for the same period of the prior year. The related increase of $1.8 million was principally attributable to new restaurant openings. As a percentage of total revenues, depreciation and amortization expenses were 3.2% for the twenty-six weeks ended July 3, 2000 compared to 3.0% for the same period last year. Preopening Costs Incurred preopening costs were $2.8 million for the twenty-six weeks ended July 3, 2001 compared to $1.9 million for the same period of the prior year. We incurred preopening costs to open three Cheesecake Factory restaurants during the twenty-six weeks ended July 3, 2001 and another on July 11, 2001 compared to two restaurants during the same period of the prior year. In addition, we incurred preopening costs in both periods for other restaurant openings in progress. Liquidity and Capital ResourcesThe following table sets forth a summary of the Company’s key liquidity measurements at July 3, 2001 and January 2, 2001. |
July 3, 2001 | January 2, 2001 | ||||||
---|---|---|---|---|---|---|---|
(dollar amounts in millions) | |||||||
Cash and marketable securities on hand | $78.1 | $85.3 | |||||
Adjusted net working capital, including all marketable securities | $58.6 | $73.7 | |||||
Adjusted current ratio, including all marketable securities | 2.2:1 | 2.7:1 | |||||
Long-term debt | — | — |
During the twenty-six weeks ended July 3, 2001, our balance of cash and marketable securities on hand decreased by $7.2 million to $78.1 million from the January 2, 2001 balance. This decrease was primarily attributable to the timing of certain working capital requirements and capital expenditures associated with new restaurant openings and restaurant-level technology upgrades. As of July 25, 2001, there were no borrowings outstanding under the Company’s $25 million revolving credit and term loan facility (the “Credit Facility”). Borrowings under the Credit Facility will bear interest at variable rates based, at our option, on either the prime rate of interest, the lending institution’s cost of funds rate plus 0.75% or the applicable LIBOR rate plus 0.75%. The Credit Facility expires on May 31, 2002. On that date, a maximum of $25 million of any borrowings outstanding under the Credit Facility automatically convert into a four-year term loan, payable in equal quarterly installments at interest rates of 0.5% higher than the applicable revolving credit rates. The Credit Facility is not collateralized and requires us to maintain certain financial ratios and to observe certain restrictive covenants with respect to the conduct of its operations, with which we are currently in compliance. During fiscal 2000, our capital expenditures were approximately $39.2 million, most of which were related to our restaurant operations. For fiscal 2001, we currently estimate our capital expenditure requirement to be approximately $55 million, net of agreed-upon landlord construction contributions and excluding $8-$9 million of expected noncapitalizable preopening costs for new restaurants. This estimate contemplates approximately $42 million for as many as 10 to 11 new restaurants to be opened during fiscal 2001, including an increase in estimated construction-in-progress disbursements for anticipated fiscal 2002 openings. Other estimated capital expenditures for fiscal 2001 include $4-$5 million for restaurant-level technology upgrades (new point-of-sale systems and automated front desk management systems); $3-$4 million for capacity additions to existing restaurants and the Company’s corporate center; and $3-$4 million for maintenance capital expenditures. We lease the land and building shells for substantially all of our restaurants for primary lease terms that usually range from 15 to 20 years for our new restaurants. We expend cash for leasehold improvements and furnishings, fixtures and equipment for our new restaurants. 11 |
1. | To reelect Thomas L. Gregory to the Board of Directors of the Company for a three-year term which will expire at the Annual Meeting of Stockholders to be held in the year 2004. The results of proxies voted for the reelection of Mr. Gregory were as follows: |
Votes For | Votes Withheld | |
24,307,140 | 112,164 |
2. | To approve the Company’s 2001 Stock Option Plan. The results of proxies voted were as follows: |
Votes For | Votes Against | Abstain |
20,626,471 | 3,766,041 | 26,792 |
Item 6. Exhibits and Reports on Form 8-K |
(a) | Exhibits. None. |
(b) | Reports on Form 8-K. None. |
13 |
SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. |
THE CHEESECAKE FACTORY INCORPORATED | ||
Date: July 25, 2001 | ||
By: | /s/ DAVID M. OVERTON —————————————————— David M. Overton Chairman of the Board, President and Chief Executive Officer | |
By: | /s/ GERALD W. DEITCHLE —————————————————— Gerald W. Deitchle Executive Vice President, Corporate Operations and Chief Financial Officer |
14 |