Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 29, 2015 | Feb. 16, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | CHEESECAKE FACTORY INC | ||
Entity Central Index Key | 887,596 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 29, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-29 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 2,482,053,715 | ||
Entity Common Stock, Shares Outstanding | 48,485,571 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 29, 2015 | Dec. 30, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 43,854 | $ 58,018 |
Accounts receivable | 14,159 | 15,170 |
Income tax receivable | 18,739 | 17,383 |
Other receivables | 72,658 | 62,327 |
Inventories | 34,010 | 33,255 |
Prepaid expenses | 41,976 | 38,233 |
Total current assets | 225,396 | 224,386 |
Property and equipment, net | 892,191 | 828,305 |
Other assets: | ||
Intangible assets, net | 21,972 | 20,781 |
Prepaid rent | 46,881 | 46,212 |
Other | 46,906 | 41,692 |
Total other assets | 115,759 | 108,685 |
Total assets | 1,233,346 | 1,161,376 |
Current liabilities: | ||
Accounts payable | 47,770 | 57,325 |
Other accrued expenses | 302,456 | 264,686 |
Total current liabilities | 350,226 | 322,011 |
Deferred income taxes | 82,524 | 81,433 |
Deferred rent | 72,911 | 73,857 |
Deemed landlord financing liability | 87,841 | 77,165 |
Other noncurrent liabilities | $ 51,305 | $ 50,400 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $.01 par value, 250,000,000 shares authorized; 93,126,667 and 91,790,499 shares issued at December 29, 2015 and December 30, 2014, respectively | $ 931 | $ 918 |
Additional paid-in capital | 710,242 | 654,033 |
Retained earnings | 1,140,788 | 1,060,211 |
Treasury stock 44,064,322 and 41,919,312 shares at cost at December 29, 2015 and December 30, 2014, respectively | (1,263,422) | (1,158,652) |
Total stockholders' equity | 588,539 | 556,510 |
Total liabilities and stockholders' equity | $ 1,233,346 | $ 1,161,376 |
Preferred stock | ||
Stockholders' equity: | ||
Preferred stock |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 29, 2015 | Dec. 30, 2014 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 93,126,667 | 91,790,499 |
Treasury stock, shares | 44,064,322 | 41,919,312 |
Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | |
CONSOLIDATED STATEMENTS OF INCOME | |||
Revenues | $ 2,100,609 | $ 1,976,624 | $ 1,877,910 |
Costs and expenses: | |||
Cost of sales | 504,031 | 490,306 | 455,685 |
Labor expenses | 684,818 | 646,102 | 603,069 |
Other operating costs and expenses | 500,640 | 478,504 | 452,571 |
General and administrative expenses | 137,402 | 119,094 | 114,728 |
Depreciation and amortization expenses | 85,563 | 82,835 | 78,558 |
Impairment of assets and lease terminations | 6,011 | 696 | (561) |
Preopening costs | 16,898 | 14,356 | 12,906 |
Total costs and expenses | 1,935,363 | 1,831,893 | 1,716,956 |
Income from operations | 165,246 | 144,731 | 160,954 |
Interest and other expense, net | (5,894) | (6,187) | (4,504) |
Income before income taxes | 159,352 | 138,544 | 156,450 |
Income tax provision | 42,829 | 37,268 | 42,094 |
Net income | $ 116,523 | $ 101,276 | $ 114,356 |
Net income per share: | |||
Basic (in dollars per share) | $ 2.39 | $ 2.04 | $ 2.19 |
Diluted (in dollars per share) | $ 2.30 | $ 1.96 | $ 2.10 |
Weighted average shares outstanding: | |||
Basic (in shares) | 48,833 | 49,567 | 52,229 |
Diluted (in shares) | 50,605 | 51,584 | 54,377 |
Cash dividends declared per common share (in dollars per share) | $ 0.73 | $ 0.61 | $ 0.52 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Total |
Balance at Jan. 01, 2013 | $ 878 | $ 508,130 | $ 902,532 | $ (831,814) | $ 579,726 |
Balance (in shares) at Jan. 01, 2013 | 87,812 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 114,356 | 114,356 | |||
Cash dividends declared | (27,437) | (27,437) | |||
Tax impact of stock options exercised, net of cancellations | 7,159 | 7,159 | |||
Stock-based compensation | 14,312 | 14,312 | |||
Common stock issued under stock based compensation plans | $ 28 | 72,868 | 72,896 | ||
Common stock issued under stock based compensation plans (in shares) | 2,820 | ||||
Treasury stock purchases | (183,659) | (183,659) | |||
Balance at Dec. 31, 2013 | $ 906 | 602,469 | 989,451 | (1,015,473) | 577,353 |
Balance (in shares) at Dec. 31, 2013 | 90,632 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 101,276 | 101,276 | |||
Cash dividends declared | (30,516) | (30,516) | |||
Tax impact of stock options exercised, net of cancellations | 8,906 | 8,906 | |||
Stock-based compensation | 17,033 | 17,033 | |||
Common stock issued under stock based compensation plans | $ 12 | 22,929 | 22,941 | ||
Common stock issued under stock based compensation plans (in shares) | 1,158 | ||||
Treasury stock purchases | 2,696 | (143,179) | (140,483) | ||
Balance at Dec. 30, 2014 | $ 918 | 654,033 | 1,060,211 | (1,158,652) | 556,510 |
Balance (in shares) at Dec. 30, 2014 | 91,790 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 116,523 | 116,523 | |||
Cash dividends declared | (35,946) | (35,946) | |||
Tax impact of stock options exercised, net of cancellations | 12,501 | 12,501 | |||
Stock-based compensation | 20,325 | 20,325 | |||
Common stock issued under stock based compensation plans | $ 13 | 27,984 | 27,997 | ||
Common stock issued under stock based compensation plans (in shares) | 1,337 | ||||
Treasury stock purchases | (4,601) | (104,770) | (109,371) | ||
Balance at Dec. 29, 2015 | $ 931 | $ 710,242 | $ 1,140,788 | $ (1,263,422) | $ 588,539 |
Balance (in shares) at Dec. 29, 2015 | 93,127 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | |||
Net income | $ 116,523 | $ 101,276 | $ 114,356 |
Adjustments to reconcile net income to cash provided by operating activities: | |||
Depreciation and amortization | 85,563 | 82,835 | 78,558 |
Deferred income taxes | 1,184 | 204 | 4,633 |
Impairment of assets and lease terminations | 6,011 | 245 | 3,294 |
Stock-based compensation | 20,053 | 16,817 | 14,135 |
Tax impact of stock options exercised, net of cancellations | 12,501 | 8,906 | 7,159 |
Excess tax benefit related to stock options exercised | (12,309) | (8,861) | (7,765) |
Other | 2,615 | 2,059 | (464) |
Changes in assets and liabilities: | |||
Accounts receivable | 1,011 | (5,079) | 4,477 |
Other receivables | (10,331) | (6,867) | (6,486) |
Inventories | (755) | 2,223 | (6,642) |
Prepaid expenses | (3,743) | 4,362 | (2,708) |
Other assets | (5,799) | (3,645) | (3,997) |
Accounts payable | (12,931) | 18,180 | (11,580) |
Income taxes receivable/payable | (1,356) | (12,854) | (5,742) |
Other accrued expenses | 37,186 | 39,848 | 23,557 |
Cash provided by operating activities | 235,423 | 239,649 | 204,785 |
Cash flows from investing activities: | |||
Additions to property and equipment | (153,941) | (113,982) | (106,289) |
Additions to intangible assets | (1,760) | (1,879) | (1,654) |
Cash used in investing activities | (155,701) | (115,861) | (107,943) |
Cash flows from financing activities: | |||
Deemed landlord financing proceeds | 14,266 | 14,143 | 13,672 |
Deemed landlord financing payments | (3,118) | (2,650) | (2,143) |
Borrowings on credit facility | 60,000 | 25,000 | |
Repayments on credit facility | (60,000) | (25,000) | |
Proceeds from exercise of stock options | 27,997 | 22,940 | 72,896 |
Excess tax benefit related to stock options exercised | 12,309 | 8,861 | 7,765 |
Cash dividends paid | (35,969) | (30,332) | (27,191) |
Treasury stock purchases | (109,371) | (140,483) | (183,659) |
Cash used in financing activities | (93,886) | (127,521) | (118,660) |
Net change in cash and cash equivalents | (14,164) | (3,733) | (21,818) |
Cash and cash equivalents at beginning of period | 58,018 | 61,751 | 83,569 |
Cash and cash equivalents at end of period | 43,854 | 58,018 | 61,751 |
Supplemental disclosures: | |||
Interest paid | 6,057 | 5,430 | 4,602 |
Income taxes paid | 30,410 | 41,074 | 37,259 |
Construction payable | $ 13,500 | $ 10,124 | $ 6,397 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 29, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Description of Business As of February 25, 2016, The Cheesecake Factory Incorporated (referred to herein as the “Company,” “we,” “us” and “our”) operated 201 Company-owned upscale casual dining restaurants under The Cheesecake Factory ® , Grand Lux Cafe ® and RockSugar Pan Asian Kitchen ® marks. Internationally, 11 The Cheesecake Factory branded restaurants operated under licensing agreements. We also operated two bakery production facilities that produce desserts for our restaurants, international licensees and third-party bakery customers. Basis of Presentation The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and its wholly owned subsidiaries 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. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal years 2015, 2014 and 2013 each consisted of 52 weeks. Fiscal year 2016 will consist of 53 weeks. To conform to the current year presentation, we reclassified prior year deferred income taxes from current to noncurrent. See Recent Accounting Pronouncements for further discussion. 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 those estimates. Cash and Cash Equivalents Amounts receivable from credit card processors, totaling $10.3 million and $9.9 million at December 29, 2015 and December 30, 2014, respectively, are considered cash equivalents because they are both short-term and highly liquid in nature and are typically converted to cash within three days of the sales transaction. Checks issued, but not yet presented for payment to our bank, are reflected as a reduction of cash and cash equivalents. Accounts and Other Receivables Our accounts receivable principally result from credit sales to bakery customers. Other receivables consist of various amounts due from our gift card resellers, insurance providers, landlords and others in the ordinary course of business. 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 $250,000. We invest our excess cash in a money market deposit account, which is insured by the FDIC up to $250,000. Although we maintain balances that exceed the federally insured limit, we have not experienced any losses related to this balance, and we believe credit risk to be minimal. 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 outside 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 resellers, insurance providers and landlords for the reimbursement of tenant improvements. Fair Value of Financial Instruments For cash and cash equivalents, the carrying amount approximates fair value because of the short maturity of these instruments. The fair value of deemed landlord financing liabilities is determined using current applicable rates for similar instruments as of the balance sheet date in accordance with Level 2 of a three level hierarchy established by accounting standards. Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities. At December 29, 2015, the fair value of our deemed landlord financing liabilities is $90.2 million versus a carrying value of $91.3 million. 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 market 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 25 to 30 years Leasehold improvements 10 to 30 years Furnishings, fixtures and equipment 3 to 15 years Computer software and equipment 3 to 5 years Gains and losses related to property and equipment disposals are recorded in interest and other expenses, net. Indefinite-Lived Assets Our trademarks and transferable alcoholic beverage licenses have indefinite lives and, therefore, are not subject to amortization. At December 29, 2015 and December 30, 2014, the amounts included in intangibles, net for these items were $13.8 million and $12.9 million, respectively. We test these assets for impairment at least annually by comparing the fair value of each asset with its carrying amount. Impairment of Long-Lived Assets and Lease Terminations We assess the potential impairment of our long-lived assets 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, 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. We regularly review restaurants that are cash flow negative for the previous four quarters and those that are being considered for closure or relocation to determine if impairment testing is warranted. 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. 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 in most cases 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 values. During fiscal 2015, we incurred $6.0 million of impairment expense against the carrying value of our RockSugar Pan Asian Kitchen restaurant assets. In fiscal 2014, we incurred $0.7 million of accelerated depreciation, future rent and other closing costs related to the relocation of one The Cheesecake Factory restaurant. In fiscal 2013, we incurred expenses of $0.6 million for future rent and other closing costs associated with the closure of three Grand Lux Cafe restaurants and $3.7 million of impairment, accelerated depreciation and closing costs related to the relocation of four The Cheesecake Factory restaurants. In fiscal 2013, we also recorded $4.9 million in income from a landlord in connection with the early termination of one of these leases and for waiving our right to exercise renewal options. These amounts were recorded in impairment of assets and lease terminations. Revenue Recognition Our revenues consist of sales from our restaurant operations, sales from our bakery operations to our licensees and other third-party customers, and royalties on our licensees’ restaurant sales. 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. Royalties from international licensees are accrued as revenue when earned. 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. 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 three-year period in proportion to historical redemption trends and is classified as revenues in our consolidated statements of income. We recognized $6.6 million, $5.4 million and $4.4 million of gift card breakage in fiscal years 2015, 2014 and 2013, respectively. Incremental direct costs related to gift card sales, including commissions and credit card fees, are deferred and recognized in earnings in the same pattern as the related gift card revenue. Certain of our promotional programs include multiple element arrangements that incorporate both delivered and undelivered components. We allocate revenue using the relative selling price of each deliverable and recognize it upon delivery of each component. Leases We currently lease all of our restaurant locations. We evaluate each lease to determine its appropriate classification as an operating or capital lease for financial reporting purposes. All of our restaurant leases are classified as operating leases. Minimum base rent, which generally escalates over the term of the lease, is recorded on a straight-line basis over the lease term. The initial lease term includes the build-out, or rent holiday, period for our leases, where no rent payments are typically due under the terms of the lease. Contingent rent expense, which is based on a percentage of revenue, is recorded to the extent it exceeds minimum base rent per the lease agreement. We expend cash for leasehold improvements furnishings, fixtures and equipment to build out and equip our leased premises. We may also expend cash for structural additions that we make to leased premises. Generally a portion of the leasehold improvements and building costs are reimbursed to us by our landlords as construction contributions. If obtained, landlord construction contributions usually take the form of up-front cash, full or partial credits against our future minimum or percentage rents, or a combination thereof. Depending on the specifics of the leased space and the lease agreement, amounts paid for structural components are recorded during the construction period as either prepaid rent or property and equipment and the landlord construction contributions are recorded as either an offset to prepaid rent or as a deemed landlord financing liability. For those leases for which we are deemed the owner of the property during construction, upon completion, we perform an analysis on the leases to determine if they qualify for sale-leaseback treatment. For those qualifying leases, the deemed landlord financing liability and the associated property and equipment are removed and the difference is reclassified to either prepaid or deferred rent and amortized over the lease term as an increase or decrease to rent expense. If the lease does not qualify for sale-leaseback treatment, the deemed landlord financing liability is amortized over the lease term based on the rent payments designated in the lease agreement. 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, employee health benefits, employment practices and other insurable risks. The accrued liabilities associated with our self-insured 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 are not discounted and 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. We maintain stop-loss coverage with third-party insurers to limit our individual claim exposure for many of our programs. The estimated amounts receivable from our third-party insurers under this coverage are recorded in other receivables. Stock-Based Compensation We maintain stock-based incentive plans under which equity awards may be granted to employees and consultants. We account for the awards based on fair value measurement guidance and amortize to expense over the vesting period. We reclassify the excess tax benefit resulting from the exercise of stock options out of cash flows from operating activities and into cash flows from financing activities on the consolidated statements of cash flows. See Note 11 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 $5.0 million, $6.2 million and $5.9 million in fiscal 2015, 2014 and 2013, respectively. Preopening Costs Preopening costs include all costs to relocate and compensate restaurant management employees during the preopening period, costs to recruit and train hourly restaurant employees, and wages, travel and lodging costs for our opening training team and other support staff members. Also included in preopening costs are expenses for maintaining a roster of trained managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs, and corporate travel and support activities. 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. We account for uncertain tax positions under Financial Accounting Standards Board guidance, which requires that a position taken or expected to be taken in a tax return be 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. At December 29, 2015, December 30, 2014 and December 31, 2013, 1.9 million, 1.8 million and 1.7 million shares, respectively, of restricted stock issued to employees were unvested and, therefore, excluded from the calculation of basic earnings per share for the fiscal years ended on those dates. Diluted net income per share includes the dilutive effect of outstanding equity awards, calculated using the treasury stock method. Assumed proceeds from the in-the-money options include the windfall tax benefits, net of shortfalls, calculated under the “as-if” method as prescribed by FASB Accounting Standards Codification 718, “Compensation — Stock Option Compensation.” Fiscal Year 2015 2014 2013 (In thousands, except per share data) Net income $ $ $ Basic weighted average shares outstanding Dilutive effect of equity awards Diluted weighted average shares outstanding Basic net income per share $ $ $ Diluted net income per share $ $ $ Shares of common stock equivalents of 1.3 million, 1.0 million and 1.2 million for fiscal 2015, 2014 and 2013, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. Certain of our restricted stock awards are considered participating securities as these awards include non-forfeitable rights to dividends with respect to unvested shares. As such, they must be included in the computation of earnings per share pursuant to the two-class method. Under the two-class method, a portion of net income is allocated to participating securities and, therefore, is excluded from the calculation of earnings per share allocated to common shares. The calculation of basic and diluted earnings per share pursuant to the two-class method results in an immaterial difference from the amounts displayed in the consolidated statements of income. Comprehensive Income Comprehensive income includes all changes in equity during a period except those resulting from investment by and distribution to owners. For fiscal years 2015, 2014 and 2013, our comprehensive income consisted solely of net income. Recent Accounting Pronouncements In November 2015, the Financial Accounting Standards Board (“FASB”) issued guidance which requires all deferred taxes to be classified as noncurrent assets and liabilities on the balance sheet to simplify presentation. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. During the fourth quarter of 2015, we implemented this change retrospectively which resulted in current deferred taxes of $15.1 million at December 30, 2014 being reclassified to long-term deferred taxes. In July 2015, the FASB issued guidance which requires inventory within the scope of the standard to be measured at the lower of cost and net realizable value. Previous guidance required inventory to be measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin). The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. We expect the adoption of this guidance to have no material impact on our consolidated financial statements. In April 2015, the FASB issued guidance regarding a customer’s accounting for fees paid in a cloud computing arrangement. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. We are evaluating the potential impact of this adoption on our consolidated financial statements. In April 2015, the FASB issued updated guidance intended to simplify, and provide consistency to, the presentation of debt issuance costs. The new standard requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. In August 2015, the FASB provided additional guidance for presentation of debt issuance costs related to line-of-credit arrangements. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We expect the adoption of this guidance to have no material impact on our consolidated financial statements. In February 2015, the FASB issued updated guidance which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We expect the adoption of this guidance to have no material impact on our consolidated financial statements. In June 2014, the FASB issued updated guidance intended to eliminate the diversity in practice regarding share-based payment awards that include terms which provide for a performance target that affects vesting being achieved after the requisite service period. The new standard requires that a performance target which affects vesting and could be achieved after the requisite service period be treated as a performance condition that affects vesting and should not be reflected in estimating the grant-date fair value. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We expect the adoption of this guidance to have no material impact on our consolidated financial statements. In May 2014, the FASB issued accounting guidance that provides a comprehensive new revenue recognition model. This will supersede most of the existing revenue recognition requirements and will require 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. In August 2015, the FASB deferred the effective date of this standard by one year with early adoption permitted no earlier than the original effective date. The guidance is now effective for us beginning in the first quarter of fiscal 2018 and is not expected to have a material impact on our consolidated financial statements. |
Other Receivables
Other Receivables | 12 Months Ended |
Dec. 29, 2015 | |
Other Receivables | |
Other Receivables | 2. Other Receivables Other receivables consisted of (in thousands): December 29, 2015 December 30, 2014 Receivable from gift card resellers $ $ Landlord construction contributions Other Total $ $ |
Inventories
Inventories | 12 Months Ended |
Dec. 29, 2015 | |
Inventories | |
Inventories | 3. Inventories Inventories consisted of (in thousands): December 29, 2015 December 30, 2014 Restaurant food and supplies $ $ Bakery finished goods and work in progress Bakery raw materials and supplies Total $ $ |
Prepaid Expenses
Prepaid Expenses | 12 Months Ended |
Dec. 29, 2015 | |
Prepaid Expenses | |
Prepaid Expenses | 4. Prepaid Expenses Prepaid expenses consisted of (in thousands): December 29, 2015 December 30, 2014 Gift card costs $ $ Rent Other Total $ $ |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 29, 2015 | |
Property and Equipment | |
Property and Equipment | 5. Property and Equipment Property and equipment consisted of (in thousands): December 29, 2015 December 30, 2014 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 2015, 2014 and 2013 were $85.6 million, $82.4 million and $78.1 million, respectively. Repair and maintenance expenses for fiscal 2015, 2014 and 2013 were $44.9 million, $42.7 million and $40.8 million, respectively. Net expense on property and equipment disposals of $2.1 million, $2.0 million and $1.5 million in fiscal 2015, 2014 and 2013, respectively, is recorded in interest and other expense, net in our consolidated statements of income. |
Other Accrued Expenses
Other Accrued Expenses | 12 Months Ended |
Dec. 29, 2015 | |
Other Accrued Expenses | |
Other Accrued Expenses | 6. Other Accrued Expenses Other accrued expenses consisted of (in thousands): December 29, 2015 December 30, 2014 Gift cards $ $ Self-insurance Salaries and wages Employee benefits Payroll and sales taxes Other Total $ $ |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 29, 2015 | |
Long-Term Debt | |
Long-Term Debt | 7. Long-Term Debt On December 22, 2015, we entered into a new loan agreement (“Facility”) which amended and restated in its entirety our prior loan agreement dated October 16, 2013. This Facility, which matures on December 22, 2020, provides us with revolving loan commitments totaling $200 million, of which $50 million may be used for issuances of letters of credit. Availability under the Facility is reduced by outstanding letters of credit, which are used to support our self-insurance programs. The Facility contains a commitment increase feature that could provide for an additional $100 million in available credit upon our request and subject to the lenders electing to increase their commitments or by means of the addition of new lenders. At December 29, 2015, we had net availability for borrowings of $180.0 million, based on a zero outstanding debt balance and $20.0 million in standby letters of credit. We borrowed on these credit facilities during both fiscal 2015 and 2014 to fund a portion of our stock repurchases and repaid the respective balances within each fiscal year. We are subject to certain financial covenants under the Facility requiring us to maintain (i) a maximum “Net Adjusted Leverage Ratio” of 4.0, comprised of debt plus eight times rent minus unrestricted cash and cash equivalents in excess of $25 million divided by “EBITDAR” (trailing 12-month earnings before interest, taxes, depreciation, amortization, noncash stock option expense, rent and permitted acquisition costs) and (ii) a trailing 12-month minimum EBITDAR to interest and rental expense ratio (“EBITDAR Ratio”) of 1.9. Our Net Adjusted Leverage and EBITDAR Ratios were 2.5 and 3.0, respectively, at December 29, 2015, and we were in compliance with the financial covenants in effect at that date. The Facility also limits cash distributions with respect to our equity interests, such as cash dividends and share repurchases, based on the Net Adjusted Leverage Ratio. Borrowings under the Facility bear interest, at our option, at a rate equal to either (i) the Adjusted LIBO Rate plus a margin ranging from 1.00% to 1.75% based on our Net Adjusted Leverage Ratio or (ii) the sum of (a) the highest of (1) the rate of interest publicly announced by JP Morgan Chase Bank as its prime rate in effect, (2) the greater of the Federal Funds Effective Rate or the Overnight Bank Funding Rate, in either case plus 0.5%, and (3) the one-month Adjusted LIBO Rate plus 1.0%, plus (b) a margin ranging from 0.00% to 0.75% based on our Net Adjusted Leverage Ratio. Under the Facility, we paid certain customary loan origination fees and will pay a fee on the unused portion of the Facility ranging from 0.125% to 0.25% also based on our Net Adjusted Leverage Ratio. We capitalized interest expense related to new restaurant openings and major remodels totaling $1.6 million, $0.8 million and $0.7 million in fiscal years 2015, 2014 and 2013, respectively. |
Other Noncurrent Liabilities
Other Noncurrent Liabilities | 12 Months Ended |
Dec. 29, 2015 | |
Other Noncurrent Liabilities | |
Other Noncurrent Liabilities | 8. Other Noncurrent Liabilities Other noncurrent liabilities consisted of (in thousands): December 29, 2015 December 30, 2014 Executive Savings Plan $ $ Other Total $ $ See Note 12 for further discussion of our Executive Savings Plan. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 29, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. Commitments and Contingencies We currently lease all of our restaurant locations under operating leases, with remaining terms ranging from less than one year to 20 years, excluding unexercised renewal options. The restaurant leases typically include land and building shells, require contingent rent above the minimum base rent payments based on a percentage of sales ranging from 3% to 10%, have escalating minimum rent requirements over the term of the lease and require various expenses incidental to the use of the property. A majority of our leases provide for a reduced level of overall rent obligation should specified co-tenancy requirements not be satisfied. Most leases have renewal options. Many of our leases also provide early termination rights permitting us to terminate the lease prior to expiration in the event our sales are below a stated level for a period of time, generally conditioned upon repayment of the unamortized allowances contributed by landlords to the build-out of the leased premises. We also lease automobiles and certain equipment under operating lease agreements. Rent expense is included in other operating costs and expenses in the consolidated statements of income. As of December 29, 2015, the aggregate minimum annual lease payments under operating leases, including amounts characterized as deemed landlord financing payments are as follows (in thousands): 2016 $ 2017 2018 2019 2020 Thereafter Total $ Rent expense on all operating leases was as follows (in thousands): Fiscal Year 2015 2014 2013 Straight-lined minimum base rent $ $ $ Contingent rent Common area maintenance and taxes Total $ $ $ We enter into various obligations for the purchase of goods and for the construction of restaurants. At December 29, 2015, our purchase obligations approximated $151.0 million, $90.0 million of which is due in fiscal 2016. (See Contractual Obligations and Commercial Commitments in Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information on our purchase obligations.) As credit guarantees to insurers, we have $20.0 million in standby letters of credit related to our self-insurance liabilities. All standby letters of credit are renewable annually. We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, employee 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. Our estimated liabilities are not discounted and 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. We maintain stop-loss coverage with third-party insurers to limit our individual claim exposure for many of our programs. Significant judgment is required to estimate IBNR amounts as parties have yet to assert such claims. If actual claims trends, including the severity or frequency of claims, differ from our estimates, our financial results could be impacted. At December 29, 2015, the total accrued liability for our self-insured plans was $60.0 million. On April 11, 2013, a former restaurant hourly employee filed a class action lawsuit in the California Superior Court, Placer County, alleging that the Company violated the California Labor Code and California Business and Professions Code, by requiring employees to purchase uniforms for work (Sikora v. The Cheesecake Factory Restaurants, Inc., et al; Case No SCV0032820). A similar lawsuit covering a different time period was also filed in Placer County (Reed v. The Cheesecake Factory Restaurants, Inc. et al; Case No. SCV27073). By stipulation the parties agreed to transfer the Reed and Sikora cases to Los Angeles County. Both cases (Case Nos. SCV0032820 and SCV27073) were subsequently coordinated together in Los Angeles County by order of the Judicial Council. On November 15, 2013, the Company filed a motion to enforce judgment and to preclude the prosecution of certain claims under the California Private Attorney General Act and California Business and Professions Code Section 17200. On March 11, 2015, the Court granted the Company’s motion in Case No. SCV0032820. The parties participated in voluntary mediation on June 25, 2015 and have executed a memorandum of understanding with respect to the terms of settlement, which is subject to Court approval and is intended to be a full and final resolution of the actions. On January 29, 2016, the court granted the parties’ Motion for Preliminary Approval of Class Action Settlement. The final approval hearing is scheduled for June 3, 2016. Based on the current status of this matter, we have reserved an immaterial amount in anticipation of settlement. On November 26, 2014, a former restaurant hourly employee filed a class action lawsuit in the San Diego County Superior Court, alleging that the Company violated the California Labor Code and California Business and Professions Code, by failing to pay overtime, to permit required rest breaks and to provide accurate wage statements, among other claims. (Masters v. The Cheesecake Factory Restaurants, Inc., et al; Case No 37-2014-00040278). By stipulation, the parties agreed to transfer Case No. 37-2014-00040278 to the Orange County Superior Court. On March 2, 2015, Case No. 37-2014-00040278 was officially transferred and assigned a new Case No. 30-2015-00775529 in the Orange County Superior Court. The lawsuit seeks unspecified amounts of fees, penalties and other monetary payments on behalf of the Plaintiff and other purported class members. We intend to vigorously defend this action. Based on the current status of this matter, we have not reserved for any potential future payments. On January 14, 2015, a former restaurant hourly employee filed a class action lawsuit in the San Diego County Superior Court, alleging that the Company violated the California Labor Code and California Business and Professions Code, by failing to permit required meal and rest breaks, and to provide accurate wage statements, among other claims. (Garcia v. The Cheesecake Factory Incorporated, et al; Case No 37-2015-00001408). On February 19, 2015, the Company filed an ex parte application to stay the litigation pending a hearing on the Company’s motion to compel arbitration. The Court granted the Company’s application, stayed the litigation, and held a hearing on the motion to compel arbitration in July 2015. On August 12, 2015, the Court granted the Company’s motion to compel individual arbitration. On October 9, 2015, the Plaintiff filed a Petition for a Writ of Mandamus with the California Court of Appeal seeking a review and stay of the Court’s decision to compel arbitration on an individual basis. On October 15, 2015 the Court of Appeal denied the Plaintiff’s Petition. We intend to vigorously defend this action. On February 4, 2016, the parties reached a tentative settlement agreement for an immaterial amount. On May 28, 2015, a group of current and former restaurant hourly employees filed a class action lawsuit in the U.S. District Court for the Eastern District of New York, alleging that the Company violated the Fair Labor Standards Act and New York Labor Code, by requiring employees to purchase uniforms for work and violated the State of New York’s minimum wage and overtime provisions. (Guglielmo v. The Cheesecake Factory Restaurants, Inc., et al; Case No 2:15-CV-03117). On September 8, 2015, the Company filed its response to the Complaint, requesting the Court to compel arbitration against opt-in Plaintiffs with valid arbitration agreements. The Plaintiffs are seeking unspecified amounts of penalties and other monetary payments. We intend to vigorously defend this action. Based upon the current status of this matter, we have not reserved for any potential future payments. On November 10, 2015, a current restaurant hourly employee filed a class action lawsuit in the Marin County Superior Court alleging that the Company failed to provide complete and accurate wage statements as set forth in the California Labor Code. On January 26, 2016, the Plaintiff filed a First Amended Complaint. The lawsuit seeks unspecified penalties under the California Private Attorneys General Act in addition to other monetary payments. (Brown v. The Cheesecake Factory Restaurants, Inc.; Case No. CIV1504091). We intend to vigorously defend against this action. Based upon the current status of this matter, we have not reserved for any potential future payments. On December 10, 2015 a former restaurant management employee filed a class action lawsuit in the Los Angeles County Superior Court alleging that the Company improperly classified its managerial employees, failed to pay overtime, and failed to provide accurate wage statements, in addition to other claims. The lawsuit seeks unspecified penalties under the California Private Attorneys General Act in addition to other monetary payments. (Tagalogon v. The Cheesecake Factory Restaurants, Inc., Case No. BC603620). We intend to vigorously defend against this action. Based upon the current status of this matter, we have not reserved for any potential future payments. 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 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. 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 $2.2 million, excluding accrued potential bonuses of $2.6 million, which are subject to approval by the Compensation Committee, would have been required by those agreements had all such officers terminated their employment for reasons requiring such payments as of December 29, 2015. In addition, the employment agreement with our Chief Executive Officer, which is in effect through April 1, 2017, specifies an annual founder’s retirement benefit of $650,000 for ten years after termination of his full time employment. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 29, 2015 | |
Stockholders' Equity | |
Stockholders' Equity | 10. Stockholders’ Equity Cash dividends of $0.73 and $0.61 were declared during fiscal years 2015 and 2014, respectively. Future decisions to pay, increase or decrease dividends are at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements and other such factors that the Board considers relevant. In July 2013, our Board increased the authorization to repurchase our common stock by 7.5 million shares to 48.5 million shares. Under this and all previous authorizations, we have cumulatively repurchased 44.1 million shares at a total cost of $1,263.4 million through December 29, 2015. During fiscal 2015, 2014 and 2013, we repurchased 2.1 million, 3.1 million and 4.5 million shares of our common stock at a cost of $104.8 million, $143.2 million and $183.7 million, respectively. Repurchased common stock is reflected as a reduction of stockholders’ equity. Our share repurchases have included repurchases under Rule 10b5-1 plans adopted from time to time by our Board in furtherance of its repurchase authorization, and the most recent Rule 10b5-1 plan, adopted by our Board on November 3, 2015, is effective from January 4, 2016 through June 30, 2016. 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. Purchases in the open market are made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934 (the “Act”). We make the determination to repurchase shares based on several factors, including an evaluation of current and future capital needs associated with new restaurant development, current and forecasted cash flows, including dividend payments, a review of our capital structure and cost of capital, our share price and current market conditions. The timing and number of shares repurchased are also subject to legal constraints and financial covenants under our Facility that limit share repurchases based on a defined ratio. (See Note 7 for further discussion of our long-term debt.) Our objectives with regard to 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. On February 27, 2015, we entered into an accelerated stock repurchase (“ASR”) program with a financial institution to repurchase $75 million of our common stock. The minimum number of shares to be repurchased, 1.5 million, was delivered during March 2015. The program concluded on July 27, 2015 with no additional shares delivered. On February 27, 2014, we entered into an ASR agreement with a financial institution to repurchase $75 million of our common stock. The minimum number of shares to be repurchased, 1.4 million, was delivered in March 2014. Upon settlement of the 2014 ASR program, we received an additional 0.2 million shares on July 21, 2014. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 29, 2015 | |
Stock-Based Compensation | |
Stock-Based Compensation | 11. Stock-Based Compensation We maintain stock-based incentive plans under which stock options, non-qualified stock options, stock appreciation rights, restricted shares, restricted share units and deferred shares may be granted to employees and consultants. Our current practice is to issue new shares, rather than treasury shares, upon stock option exercises and for restricted share grants. To date, we have only granted non-qualified stock options, restricted shares and restricted share units of common stock under these plans. Non-employee directors have received only non-qualified stock options under a non-employee director equity plan, which expired in May 2007. Currently, we do not have a plan under which non-employee directors may be granted stock options or other equity interests in the Company. On April 2, 2015, our Board approved an amendment to our 2010 Stock Incentive Plan to increase the number of shares of common stock available for grant under the plan to 9.2 million shares from 6.8 million shares. This amendment was approved by our stockholders at our annual meeting held on May 28, 2015. This is our only active stock-based incentive plan, and approximately 2.4 million of these shares were available for grant as of December 29, 2015. Stock options generally vest at 20% per year and expire eight to ten years from the date of grant. Restricted shares and restricted share units generally vest between three to five years from the date of grant and require that the staff member remains employed in good standing with the Company as of the vesting date. Equity awards for certain executive officers may vest earlier in the event of a change of control in which the acquirer fails to assume or continue such awards, as defined in the plan, or under certain circumstances described in such executive officers’ respective employment agreements. Since restricted shares and restricted share units provide strong retention power through economic value to our staff members even when our stock price remains flat or declines, and they also reduce our total share usage, we have generally increased the proportion of restricted shares and restricted share units versus stock option grants over the past several years. The following table presents information related to stock-based compensation (in thousands): Fiscal Year 2015 2014 2013 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 and construction, legal, and facilities departments that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations, lease, intellectual property and liquor license acquisition activities and equipment installation. Capitalized stock-based compensation is included in property and equipment, net and other assets on the consolidated balance sheets. Stock Options The weighted average fair value at the grant date for options issued during fiscal 2015, 2014 and 2013 was $14.17, $15.48 and $10.83 per option, respectively. The fair value of options at the grant date was estimated utilizing the Black-Scholes valuation model with the following weighted average assumptions for fiscal 2015, 2014 and 2013, respectively: (a) an expected option term of 6.6 years, 6.5 years and 6.4 years, (b) expected stock price volatility of 31.3%, 32.9% and 33.5% , (c) a risk-free interest rate of 1.9%, 2.2% and 1.4%, and (d) a dividend yield on our stock of 1.4%, 1.2% and 1.3%. 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 employee 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. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated based on our historical experience and future expectations. Stock option activity during fiscal 2015 was as follows: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic 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 pretax 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 2015, 2014 and 2013 was $37.0 million, $28.2 million and $40.1 million, respectively. As of December 29, 2015, total unrecognized stock-based compensation expense related to nonvested stock options was $10.0 million, which we expect to recognize over a weighted average period of approximately 2.3 years. Restricted Shares and Restricted Share Units Restricted share and restricted share unit activity during fiscal 2015 was as follows: Shares Weighted Average Fair 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 at the grant date for restricted shares and restricted share units issued during fiscal 2015, 2014 and 2013 was $49.70, $47.16 and $39.42, respectively. The fair value of shares that vested during fiscal 2015, 2014 and 2013 was $7.5 million, $4.5 million and $2.6 million, respectively. As of December 29, 2015, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $44.6 million, which we expect to recognize over a weighted average period of approximately 2.8 years. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 29, 2015 | |
Employee Benefit Plans | |
Employee Benefit Plans | 12. Employee Benefit Plans We have a defined contribution benefit plan in accordance with section 401(k) of the Internal Revenue Code (“401(k) Plan”) that is open to our staff members who meet certain compensation and eligibility requirements. Participation in the 401(k) Plan is currently open to staff members from our three restaurant concepts, our bakery facilities and our corporate offices. The 401(k) Plan allows participating staff members to defer the receipt of a portion of their compensation and contribute such amount to one or more investment options. Our executive officers and a select group of management and/or highly compensated staff members are not eligible to participate in the 401(k) Plan. We currently match in cash a certain percentage of the employee contributions to the 401(k) Plan and also pay a portion of the administrative costs. Expense recognized in fiscal 2015, 2014 and 2013 was $0.7 million, $0.6 million and $0.6 million, respectively. We have also established The Cheesecake Factory Incorporated Executive Savings Plan (“ESP”), a non-qualified deferred compensation plan for our executive officers and a select group of management and/or highly compensated staff members as defined in the plan document. The ESP allows participating staff members to defer the receipt of a portion of their base compensation and up to 100% of their eligible bonuses. Non-employee directors may also participate in the ESP and defer the receipt of their earned director fees. We currently match in cash a certain percentage of the base compensation and bonus deferred by participating staff members and also pay for the ESP administrative costs. We do not match any contributions made by non-employee directors. Expense recognized in fiscal 2015, 2014 and 2013 was $0.9 million, $0.8 million and $0.7 million, respectively. ESP deferrals and matching funds are deposited into a rabbi trust, and are generally invested in individual variable life insurance contracts owned by us that are specifically designed to informally fund savings plans of this nature. Our consolidated balance sheets reflect our investment in variable life insurance contracts in other assets and our obligation to participants in the ESP in other noncurrent liabilities. All income and expenses related to the rabbi trust are reflected in our consolidated statements of income. We maintain a self-insured medical and dental benefit plan for our staff members and utilize stop-loss coverage to limit our financial exposure from any individual medical claim. 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 medical benefit plan, which is included in other accrued expenses, as of December 29, 2015 and December 30, 2014, was $7.3 million and $7.7 million, respectively. See Note 1 for further discussion of accounting for our self-insurance liabilities. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 29, 2015 | |
Income Taxes | |
Income Taxes | 13. Income Taxes The provision for income taxes consisted of the following (in thousands): Fiscal Year 2015 2014 2013 Income before income taxes $ $ $ Income tax provision/(benefit): Current: Federal $ $ $ State Total current Deferred: Federal State ) ) ) Total deferred Total provision $ $ $ The following reconciles the U.S. federal statutory rate to the effective tax rate: Fiscal Year 2015 2014 2013 U.S. federal statutory rate % % % State and district income taxes, net of federal benefit FICA tip credit ) ) ) Other credits and incentives ) ) ) Manufacturing deduction ) ) ) Deferred compensation ) ) Other ) Effective tax rate % % % Following are the temporary differences that created our deferred tax assets and liabilities (in thousands): December 29, 2015 December 30, 2014 Deferred tax assets: Employee benefits $ $ Insurance reserves Accrued rent Stock-based compensation Deferred income Tax credit carryforwards Other Subtotal Less: Valuation allowance ) ) Total $ $ Deferred tax liabilities: Property and equipment $ ) $ ) Inventory ) ) Prepaid expenses ) ) Total $ ) $ ) Net deferred tax liability $ ) $ ) At December 29, 2015 and December 30, 2014, we had $4.1 million and $3.0 million, respectively, of state tax credit carryforwards. These credits began to expire in 2013. Management assesses the available evidence to estimate if sufficient future taxable income will be generated to use these carryforwards. Based on this evaluation, we recorded a valuation allowance relating to hiring and investment tax credits in North Carolina and California to reflect the amount that more likely than not will not be realized. The valuation allowance amounted to $0.6 million at both December 29, 2015 and December 30, 2014. We believe it is more likely than not that all other state tax credit carryforwards will be realized. However, this assessment could change if estimates of future taxable income during the carryforward period are revised. The earliest tax year still subject to examination by a significant taxing jurisdiction is 2010. At December 29, 2015, we had $1.1 million of unrecognized tax benefits. If recognized, this amount would affect our effective income tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): Fiscal Year 2015 2014 2013 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 29, 2015 and December 30, 2014, we had approximately $0.1 million of accrued interest and penalties related to uncertain tax positions. None of the balance of unrecognized tax benefits at December 29, 2015 relates to tax positions for which it is reasonably possible that the total amount could decrease during the next twelve months based on the lapses of statutes of limitations. |
Stockholder Rights Plan
Stockholder Rights Plan | 12 Months Ended |
Dec. 29, 2015 | |
Stockholder Rights Plan | |
Stockholder Rights Plan | 14. Stockholder Rights Plan We have a stockholder rights plan that provides for the distribution to stockholders of one right to purchase a unit equal to 1/100 th of a share of junior participating cumulative preferred stock. The rights are evidenced by our common stock certificates and automatically trade with our common stock. The rights are not exercisable unless a person or group acquires (or commences a tender or exchange offer or announces an intention to acquire) 15% or more of our common stock (or 20% or more if such person or group was beneficial owner of 10% or more of our common stock on August 4, 1998) without the approval of our Board. When declared exercisable, holders of the rights (other than the acquiring person or group) would have the right to purchase units of junior participating cumulative preferred stock having a market value equal to two times the exercise price of each right, which is $110. Additionally, if we are thereafter merged into another entity, or if more than 50% of our consolidated assets or earnings power is sold or transferred, holders of the rights will be entitled to buy common stock of the acquiring person or group equal to two times the exercise price of each right. These rights expire on August 4, 2018, unless redeemed earlier by us. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 29, 2015 | |
Segment Information | |
Segment Information | 15. Segment Information For decision-making purposes, our management reviews discrete financial information for The Cheesecake Factory, Grand Lux Cafe and RockSugar Pan Asian Kitchen restaurants, our bakery division and our international licensing operations. Based on quantitative thresholds set forth in ASC 280, “Segment Reporting,” The Cheesecake Factory is our only business that meets the criteria of a reportable operating segment. Grand Lux Cafe, RockSugar Pan Asian Kitchen, bakery and international licensing are combined in Other. Unallocated corporate expenses, assets and capital expenditures are presented below as reconciling items to the amounts presented in the consolidated financial statements. Segment information is presented below (in thousands): Fiscal Year 2015 2014 2013 Revenue: The Cheesecake Factory restaurants $ $ $ Other $ $ $ Income/(loss) from operations: The Cheesecake Factory restaurants (1) $ $ $ Other (2) Corporate ) ) ) $ $ $ Total assets: The Cheesecake Factory restaurants $ $ $ Other Corporate $ $ $ Capital expenditures: The Cheesecake Factory restaurants $ $ $ Other Corporate $ $ $ Depreciation and amortization: The Cheesecake Factory restaurants $ $ $ Other Corporate $ $ $ (1) Includes impairment and lease termination expenses/(income) related to four The Cheesecake Factory restaurants. The pre-tax amounts associated with these items were $0.7 million and ($1.2) million in fiscal 2014 and 2013, respectively. These amounts were recorded in impairment of assets and lease terminations in the consolidated statements of income. (See Note 1 for further discussion of these charges.) (2) Includes impairment and lease termination expenses related to our RockSugar Pan Asian Kitchen restaurant and four Grand Lux Cafe restaurants. The pre-tax amounts associated with these items were $6.0 million and $0.6 million in fiscal years 2015 and 2013, respectively in the consolidated statements of income. These amounts were recorded in impairment of assets and lease terminations. (See Note 1 for further discussion of these charges.) |
Quarterly Financial Data (unaud
Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 29, 2015 | |
Quarterly Financial Data (unaudited) | |
Quarterly Financial Data (unaudited) | 16. Quarterly Financial Data (unaudited) Summarized unaudited quarterly financial data for fiscal 2015 and 2014, is as follows (in thousands, except per share data): Quarter Ended: March 31, 2015 June 30, 2015 September 29, 2015(2) December 29, 2015 Revenues $ $ $ $ Income from operations $ $ $ $ Net income $ $ $ $ Basic net income per share (1) $ $ $ $ Diluted net income per share (1) $ $ $ $ Cash dividends declared per common share $ $ $ $ Quarter Ended: April 1, 2014(2) July 1, 2014(2) September 30, 2014 December 30, 2014 Revenues $ $ $ $ Income from operations $ $ $ $ Net income $ $ $ $ Basic net income per share (1) $ $ $ $ Diluted net income per share (1) $ $ $ $ Cash dividends declared per common share $ $ $ $ (1) 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. (2) Income from operations included impairment and lease termination expenses of $6.0 million in the third quarter of fiscal 2015 related to our RockSugar Pan Asian Kitchen restaurant and $0.2 million and $0.5 million in the first and second quarters of fiscal 2014, respectively, related to one The Cheesecake Factory restaurant. The impact of these amounts on net income was $3.6 million in the third quarter of fiscal 2015 and $0.1 million and $0.3 million in the first and second quarters of fiscal 2014, respectively. (See Note 1 for further discussion of impairment of assets and lease terminations.) 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 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. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 29, 2015 | |
Subsequent Event | |
Subsequent Event | 17. Subsequent Event Dividends On February 11, 2016, our Board of Directors approved a quarterly cash dividend of $0.20 per share to be paid on March 14, 2016 to the stockholders of record on March 1, 2016. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 29, 2015 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and its wholly owned subsidiaries 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. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal years 2015, 2014 and 2013 each consisted of 52 weeks. Fiscal year 2016 will consist of 53 weeks. To conform to the current year presentation, we reclassified prior year deferred income taxes from current to noncurrent. See Recent Accounting Pronouncements for further discussion. |
Use of Estimates | 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 those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Amounts receivable from credit card processors, totaling $10.3 million and $9.9 million at December 29, 2015 and December 30, 2014, respectively, are considered cash equivalents because they are both short-term and highly liquid in nature and are typically converted to cash within three days of the sales transaction. Checks issued, but not yet presented for payment to our bank, are reflected as a reduction of cash and cash equivalents. |
Accounts and Other Receivables | Accounts and Other Receivables Our accounts receivable principally result from credit sales to bakery customers. Other receivables consist of various amounts due from our gift card resellers, insurance providers, landlords and others in the ordinary course of business. |
Concentration of Credit Risk | 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 $250,000. We invest our excess cash in a money market deposit account, which is insured by the FDIC up to $250,000. Although we maintain balances that exceed the federally insured limit, we have not experienced any losses related to this balance, and we believe credit risk to be minimal. 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 outside 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 resellers, insurance providers and landlords for the reimbursement of tenant improvements. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For cash and cash equivalents, the carrying amount approximates fair value because of the short maturity of these instruments. The fair value of deemed landlord financing liabilities is determined using current applicable rates for similar instruments as of the balance sheet date in accordance with Level 2 of a three level hierarchy established by accounting standards. Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities. At December 29, 2015, the fair value of our deemed landlord financing liabilities is $90.2 million versus a carrying value of $91.3 million. |
Inventories | 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 market on an average cost basis at the restaurants and on a first-in, first-out basis at the bakeries. |
Property and Equipment | 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 25 to 30 years Leasehold improvements 10 to 30 years Furnishings, fixtures and equipment 3 to 15 years Computer software and equipment 3 to 5 years Gains and losses related to property and equipment disposals are recorded in interest and other expenses, net. |
Indefinite-Lived Assets | Indefinite-Lived Assets Our trademarks and transferable alcoholic beverage licenses have indefinite lives and, therefore, are not subject to amortization. At December 29, 2015 and December 30, 2014, the amounts included in intangibles, net for these items were $13.8 million and $12.9 million, respectively. We test these assets for impairment at least annually by comparing the fair value of each asset with its carrying amount. |
Impairment of Long-Lived Assets and Lease Terminations | Impairment of Long-Lived Assets and Lease Terminations We assess the potential impairment of our long-lived assets 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, 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. We regularly review restaurants that are cash flow negative for the previous four quarters and those that are being considered for closure or relocation to determine if impairment testing is warranted. 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. 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 in most cases 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 values. During fiscal 2015, we incurred $6.0 million of impairment expense against the carrying value of our RockSugar Pan Asian Kitchen restaurant assets. In fiscal 2014, we incurred $0.7 million of accelerated depreciation, future rent and other closing costs related to the relocation of one The Cheesecake Factory restaurant. In fiscal 2013, we incurred expenses of $0.6 million for future rent and other closing costs associated with the closure of three Grand Lux Cafe restaurants and $3.7 million of impairment, accelerated depreciation and closing costs related to the relocation of four The Cheesecake Factory restaurants. In fiscal 2013, we also recorded $4.9 million in income from a landlord in connection with the early termination of one of these leases and for waiving our right to exercise renewal options. These amounts were recorded in impairment of assets and lease terminations. |
Revenue Recognition | Revenue Recognition Our revenues consist of sales from our restaurant operations, sales from our bakery operations to our licensees and other third-party customers, and royalties on our licensees’ restaurant sales. 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. Royalties from international licensees are accrued as revenue when earned. 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. 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 three-year period in proportion to historical redemption trends and is classified as revenues in our consolidated statements of income. We recognized $6.6 million, $5.4 million and $4.4 million of gift card breakage in fiscal years 2015, 2014 and 2013, respectively. Incremental direct costs related to gift card sales, including commissions and credit card fees, are deferred and recognized in earnings in the same pattern as the related gift card revenue. Certain of our promotional programs include multiple element arrangements that incorporate both delivered and undelivered components. We allocate revenue using the relative selling price of each deliverable and recognize it upon delivery of each component. |
Leases | Leases We currently lease all of our restaurant locations. We evaluate each lease to determine its appropriate classification as an operating or capital lease for financial reporting purposes. All of our restaurant leases are classified as operating leases. Minimum base rent, which generally escalates over the term of the lease, is recorded on a straight-line basis over the lease term. The initial lease term includes the build-out, or rent holiday, period for our leases, where no rent payments are typically due under the terms of the lease. Contingent rent expense, which is based on a percentage of revenue, is recorded to the extent it exceeds minimum base rent per the lease agreement. We expend cash for leasehold improvements furnishings, fixtures and equipment to build out and equip our leased premises. We may also expend cash for structural additions that we make to leased premises. Generally a portion of the leasehold improvements and building costs are reimbursed to us by our landlords as construction contributions. If obtained, landlord construction contributions usually take the form of up-front cash, full or partial credits against our future minimum or percentage rents, or a combination thereof. Depending on the specifics of the leased space and the lease agreement, amounts paid for structural components are recorded during the construction period as either prepaid rent or property and equipment and the landlord construction contributions are recorded as either an offset to prepaid rent or as a deemed landlord financing liability. For those leases for which we are deemed the owner of the property during construction, upon completion, we perform an analysis on the leases to determine if they qualify for sale-leaseback treatment. For those qualifying leases, the deemed landlord financing liability and the associated property and equipment are removed and the difference is reclassified to either prepaid or deferred rent and amortized over the lease term as an increase or decrease to rent expense. If the lease does not qualify for sale-leaseback treatment, the deemed landlord financing liability is amortized over the lease term based on the rent payments designated in the lease agreement. |
Self-Insurance Liabilities | 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, employee health benefits, employment practices and other insurable risks. The accrued liabilities associated with our self-insured 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 are not discounted and 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. We maintain stop-loss coverage with third-party insurers to limit our individual claim exposure for many of our programs. The estimated amounts receivable from our third-party insurers under this coverage are recorded in other receivables. |
Stock-Based Compensation | Stock-Based Compensation We maintain stock-based incentive plans under which equity awards may be granted to employees and consultants. We account for the awards based on fair value measurement guidance and amortize to expense over the vesting period. We reclassify the excess tax benefit resulting from the exercise of stock options out of cash flows from operating activities and into cash flows from financing activities on the consolidated statements of cash flows. See Note 11 for further discussion of our stock-based compensation. |
Advertising Costs | 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 $5.0 million, $6.2 million and $5.9 million in fiscal 2015, 2014 and 2013, respectively. |
Preopening Costs | Preopening Costs Preopening costs include all costs to relocate and compensate restaurant management employees during the preopening period, costs to recruit and train hourly restaurant employees, and wages, travel and lodging costs for our opening training team and other support staff members. Also included in preopening costs are expenses for maintaining a roster of trained managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs, and corporate travel and support activities. We expense preopening costs as incurred. |
Income Taxes | 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. We account for uncertain tax positions under Financial Accounting Standards Board guidance, which requires that a position taken or expected to be taken in a tax return be 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 | 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. At December 29, 2015, December 30, 2014 and December 31, 2013, 1.9 million, 1.8 million and 1.7 million shares, respectively, of restricted stock issued to employees were unvested and, therefore, excluded from the calculation of basic earnings per share for the fiscal years ended on those dates. Diluted net income per share includes the dilutive effect of outstanding equity awards, calculated using the treasury stock method. Assumed proceeds from the in-the-money options include the windfall tax benefits, net of shortfalls, calculated under the “as-if” method as prescribed by FASB Accounting Standards Codification 718, “Compensation — Stock Option Compensation.” Fiscal Year 2015 2014 2013 (In thousands, except per share data) Net income $ $ $ Basic weighted average shares outstanding Dilutive effect of equity awards Diluted weighted average shares outstanding Basic net income per share $ $ $ Diluted net income per share $ $ $ Shares of common stock equivalents of 1.3 million, 1.0 million and 1.2 million for fiscal 2015, 2014 and 2013, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. Certain of our restricted stock awards are considered participating securities as these awards include non-forfeitable rights to dividends with respect to unvested shares. As such, they must be included in the computation of earnings per share pursuant to the two-class method. Under the two-class method, a portion of net income is allocated to participating securities and, therefore, is excluded from the calculation of earnings per share allocated to common shares. The calculation of basic and diluted earnings per share pursuant to the two-class method results in an immaterial difference from the amounts displayed in the consolidated statements of income. |
Comprehensive Income | Comprehensive Income Comprehensive income includes all changes in equity during a period except those resulting from investment by and distribution to owners. For fiscal years 2015, 2014 and 2013, our comprehensive income consisted solely of net income. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2015, the Financial Accounting Standards Board (“FASB”) issued guidance which requires all deferred taxes to be classified as noncurrent assets and liabilities on the balance sheet to simplify presentation. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. During the fourth quarter of 2015, we implemented this change retrospectively which resulted in current deferred taxes of $15.1 million at December 30, 2014 being reclassified to long-term deferred taxes. In July 2015, the FASB issued guidance which requires inventory within the scope of the standard to be measured at the lower of cost and net realizable value. Previous guidance required inventory to be measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin). The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. We expect the adoption of this guidance to have no material impact on our consolidated financial statements. In April 2015, the FASB issued guidance regarding a customer’s accounting for fees paid in a cloud computing arrangement. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. We are evaluating the potential impact of this adoption on our consolidated financial statements. In April 2015, the FASB issued updated guidance intended to simplify, and provide consistency to, the presentation of debt issuance costs. The new standard requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. In August 2015, the FASB provided additional guidance for presentation of debt issuance costs related to line-of-credit arrangements. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We expect the adoption of this guidance to have no material impact on our consolidated financial statements. In February 2015, the FASB issued updated guidance which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We expect the adoption of this guidance to have no material impact on our consolidated financial statements. In June 2014, the FASB issued updated guidance intended to eliminate the diversity in practice regarding share-based payment awards that include terms which provide for a performance target that affects vesting being achieved after the requisite service period. The new standard requires that a performance target which affects vesting and could be achieved after the requisite service period be treated as a performance condition that affects vesting and should not be reflected in estimating the grant-date fair value. The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We expect the adoption of this guidance to have no material impact on our consolidated financial statements. In May 2014, the FASB issued accounting guidance that provides a comprehensive new revenue recognition model. This will supersede most of the existing revenue recognition requirements and will require 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. In August 2015, the FASB deferred the effective date of this standard by one year with early adoption permitted no earlier than the original effective date. The guidance is now effective for us beginning in the first quarter of fiscal 2018 and is not expected to have a material impact on our consolidated financial statements. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Summary of Significant Accounting Policies | |
Schedule of depreciation and amortization periods | Buildings and land improvements 25 to 30 years Leasehold improvements 10 to 30 years Furnishings, fixtures and equipment 3 to 15 years Computer software and equipment 3 to 5 years |
Schedule of basic and diluted income (loss) per share | Fiscal Year 2015 2014 2013 (In thousands, except per share data) Net income $ $ $ Basic weighted average shares outstanding Dilutive effect of equity awards Diluted weighted average shares outstanding Basic net income per share $ $ $ Diluted net income per share $ $ $ |
Other Receivables (Tables)
Other Receivables (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Other Receivables | |
Schedule of other receivables | Other receivables consisted of (in thousands): December 29, 2015 December 30, 2014 Receivable from gift card resellers $ $ Landlord construction contributions Other Total $ $ |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Inventories | |
Schedule of inventories | Inventories consisted of (in thousands): December 29, 2015 December 30, 2014 Restaurant food and supplies $ $ Bakery finished goods and work in progress Bakery raw materials and supplies Total $ $ |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Prepaid Expenses | |
Schedule of prepaid expenses | Prepaid expenses consisted of (in thousands): December 29, 2015 December 30, 2014 Gift card costs $ $ Rent Other Total $ $ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Property and Equipment | |
Schedule of property and equipment | Property and equipment consisted of (in thousands): December 29, 2015 December 30, 2014 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 $ $ |
Other Accrued Expenses (Tables)
Other Accrued Expenses (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Other Accrued Expenses | |
Schedule of other accrued expenses | Other accrued expenses consisted of (in thousands): December 29, 2015 December 30, 2014 Gift cards $ $ Self-insurance Salaries and wages Employee benefits Payroll and sales taxes Other Total $ $ |
Other Noncurrent Liabilities (T
Other Noncurrent Liabilities (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Other Noncurrent Liabilities | |
Schedule of other noncurrent liabilities | Other noncurrent liabilities consisted of (in thousands): December 29, 2015 December 30, 2014 Executive Savings Plan $ $ Other Total $ $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Commitments and Contingencies | |
Schedule of aggregate minimum annual lease payments under operating leases | As of December 29, 2015, the aggregate minimum annual lease payments under operating leases, including amounts characterized as deemed landlord financing payments are as follows (in thousands): 2016 $ 2017 2018 2019 2020 Thereafter Total $ |
Schedule of rent expense on all operating leases | Rent expense on all operating leases was as follows (in thousands): Fiscal Year 2015 2014 2013 Straight-lined minimum base rent $ $ $ Contingent rent Common area maintenance and taxes Total $ $ $ |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Stock-Based Compensation | |
Schedule of information related to stock-based compensation | The following table presents information related to stock-based compensation (in thousands): Fiscal Year 2015 2014 2013 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 and construction, legal, and facilities departments that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations, lease, intellectual property and liquor license acquisition activities and equipment installation. Capitalized stock-based compensation is included in property and equipment, net and other assets on the consolidated balance sheets. |
Schedule of stock option activity | Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value(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 pretax amount that would have been received by the option holders, had they all exercised their options on the fiscal year end date. |
Schedule of restricted share and restricted share unit activity | Shares Weighted Average Fair Value (In thousands) (Per share) Outstanding at beginning of year $ Granted $ Vested ) $ Forfeited ) $ Outstanding at end of year $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Income Taxes | |
Schedule of provision for income taxes | The provision for income taxes consisted of the following (in thousands): Fiscal Year 2015 2014 2013 Income before income taxes $ $ $ Income tax provision/(benefit): Current: Federal $ $ $ State Total current Deferred: Federal State ) ) ) Total deferred Total provision $ $ $ |
Schedule of reconciliation between U.S. federal statutory rate and effective tax rate | Fiscal Year 2015 2014 2013 U.S. federal statutory rate % % % State and district income taxes, net of federal benefit FICA tip credit ) ) ) Other credits and incentives ) ) ) Manufacturing deduction ) ) ) Deferred compensation ) ) Other ) Effective tax rate % % % |
Schedule of deferred tax assets and liabilities | Following are the temporary differences that created our deferred tax assets and liabilities (in thousands): December 29, 2015 December 30, 2014 Deferred tax assets: Employee benefits $ $ Insurance reserves Accrued rent Stock-based compensation Deferred income Tax credit carryforwards Other Subtotal Less: Valuation allowance ) ) Total $ $ Deferred tax liabilities: Property and equipment $ ) $ ) Inventory ) ) Prepaid expenses ) ) Total $ ) $ ) Net deferred tax liability $ ) $ ) |
Schedule of reconciliation of unrecognized tax benefits | At December 29, 2015, we had $1.1 million of unrecognized tax benefits. If recognized, this amount would affect our effective income tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): Fiscal Year 2015 2014 2013 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 $ $ $ |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Segment Information | |
Schedule of segment information | Segment information is presented below (in thousands): Fiscal Year 2015 2014 2013 Revenue: The Cheesecake Factory restaurants $ $ $ Other $ $ $ Income/(loss) from operations: The Cheesecake Factory restaurants (1) $ $ $ Other (2) Corporate ) ) ) $ $ $ Total assets: The Cheesecake Factory restaurants $ $ $ Other Corporate $ $ $ Capital expenditures: The Cheesecake Factory restaurants $ $ $ Other Corporate $ $ $ Depreciation and amortization: The Cheesecake Factory restaurants $ $ $ Other Corporate $ $ $ (1) Includes impairment and lease termination expenses/(income) related to four The Cheesecake Factory restaurants. The pre-tax amounts associated with these items were $0.7 million and ($1.2) million in fiscal 2014 and 2013, respectively. These amounts were recorded in impairment of assets and lease terminations in the consolidated statements of income. (See Note 1 for further discussion of these charges.) (2) Includes impairment and lease termination expenses related to our RockSugar Pan Asian Kitchen restaurant and four Grand Lux Cafe restaurants. The pre-tax amounts associated with these items were $6.0 million and $0.6 million in fiscal years 2015 and 2013, respectively in the consolidated statements of income. These amounts were recorded in impairment of assets and lease terminations. (See Note 1 for further discussion of these charges.) |
Quarterly Financial Data (una36
Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 29, 2015 | |
Quarterly Financial Data (unaudited) | |
Summary of quarterly financial data | Summarized unaudited quarterly financial data for fiscal 2015 and 2014, is as follows (in thousands, except per share data): Quarter Ended: March 31, 2015 June 30, 2015 September 29, 2015(2) December 29, 2015 Revenues $ $ $ $ Income from operations $ $ $ $ Net income $ $ $ $ Basic net income per share (1) $ $ $ $ Diluted net income per share (1) $ $ $ $ Cash dividends declared per common share $ $ $ $ Quarter Ended: April 1, 2014(2) July 1, 2014(2) September 30, 2014 December 30, 2014 Revenues $ $ $ $ Income from operations $ $ $ $ Net income $ $ $ $ Basic net income per share (1) $ $ $ $ Diluted net income per share (1) $ $ $ $ Cash dividends declared per common share $ $ $ $ (1) 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. (2) Income from operations included impairment and lease termination expenses of $6.0 million in the third quarter of fiscal 2015 related to our RockSugar Pan Asian Kitchen restaurant and $0.2 million and $0.5 million in the first and second quarters of fiscal 2014, respectively, related to one The Cheesecake Factory restaurant. The impact of these amounts on net income was $3.6 million in the third quarter of fiscal 2015 and $0.1 million and $0.3 million in the first and second quarters of fiscal 2014, respectively. (See Note 1 for further discussion of impairment of assets and lease terminations.) |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Details) | Feb. 25, 2016item | Jan. 03, 2017 | Dec. 29, 2015USD ($) | Dec. 30, 2014USD ($) | Dec. 31, 2013 |
Summary of Significant Accounting Policies | |||||
Length of fiscal year | 371 days | 364 days | 364 days | 364 days | |
Cash and Cash Equivalents | |||||
Amounts receivable from credit card processors | $ 10,300,000 | $ 9,900,000 | |||
Conversion period, credit card sales | 3 days | ||||
Concentration of Credit Risk | |||||
Maximum amount of money market deposit insured by FDIC | $ 250,000 | ||||
Fair Value of Financial Instruments | |||||
Fair value of deemed landlord financing liabilities | 90,200,000 | ||||
Carrying value of deemed landlord financing liabilities | $ 91,300,000 | ||||
Description of Business | |||||
Number of company-owned upscale, casual, full-service dining restaurants | item | 201 | ||||
Number of International locations operating under licensing agreements | item | 11 | ||||
Number of bakery production facilities | item | 2 | ||||
Buildings and land improvements | Minimum | |||||
Property and equipment | |||||
Useful life | 25 years | ||||
Buildings and land improvements | Maximum | |||||
Property and equipment | |||||
Useful life | 30 years | ||||
Leasehold improvements | Minimum | |||||
Property and equipment | |||||
Useful life | 10 years | ||||
Leasehold improvements | Maximum | |||||
Property and equipment | |||||
Useful life | 30 years | ||||
Furnishings, fixtures and equipment | Minimum | |||||
Property and equipment | |||||
Useful life | 3 years | ||||
Furnishings, fixtures and equipment | Maximum | |||||
Property and equipment | |||||
Useful life | 15 years | ||||
Computer software and equipment | Minimum | |||||
Property and equipment | |||||
Useful life | 3 years | ||||
Computer software and equipment | Maximum | |||||
Property and equipment | |||||
Useful life | 5 years |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Millions | Dec. 29, 2015 | Dec. 30, 2014 |
Trademarks | ||
Indefinite-Lived Assets | ||
Indefinite-lived intangible assets | $ 13.8 | |
Transferable alcoholic beverage licenses | ||
Indefinite-Lived Assets | ||
Indefinite-lived intangible assets | $ 12.9 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details 3) $ in Millions | 12 Months Ended | ||
Dec. 29, 2015USD ($) | Dec. 30, 2014USD ($)item | Dec. 31, 2013USD ($)item | |
Impairment of long-lived assets and lease terminations | |||
Period of time used to determine if impairment testing is warranted | 1 year | ||
Income from early termination of leases | $ 4.9 | ||
The Cheesecake Factory restaurants | |||
Impairment of long-lived assets and lease terminations | |||
Impairment and accelerated depreciation expense | $ 6 | $ 0.7 | $ 3.7 |
Number of restaurants related to planned relocation | item | 1 | 4 | |
Grand Lux Cafe | |||
Impairment of long-lived assets and lease terminations | |||
Number of restaurants discontinued | item | 3 | ||
Expected future rent and other closing costs | $ 0.6 |
Summary of Significant Accoun40
Summary of Significant Accounting Policies (Details 4) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 29, 2015 | Sep. 29, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 30, 2014 | Sep. 30, 2014 | Jul. 01, 2014 | Apr. 01, 2014 | Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | |
Revenue Recognition | |||||||||||
Gift card breakage period | 3 years | ||||||||||
Gift card breakage | $ 6,600 | $ 5,400 | $ 4,400 | ||||||||
Advertising Costs | |||||||||||
Advertising costs | $ 5,000 | $ 6,200 | $ 5,900 | ||||||||
Net income per share | |||||||||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 1,300 | 1,000 | 1,200 | ||||||||
Net income per share, basic and diluted | |||||||||||
Net income | $ 27,200 | $ 26,176 | $ 34,724 | $ 28,423 | $ 24,486 | $ 24,223 | $ 30,049 | $ 22,518 | $ 116,523 | $ 101,276 | $ 114,356 |
Basic weighted average shares outstanding (in shares) | 48,833 | 49,567 | 52,229 | ||||||||
Dilutive effect of equity awards (in shares) | 1,772 | 2,017 | 2,148 | ||||||||
Diluted weighted average shares outstanding (in shares) | 50,605 | 51,584 | 54,377 | ||||||||
Basic net income per share (in dollars per share) | $ 0.56 | $ 0.54 | $ 0.72 | $ 0.58 | $ 0.50 | $ 0.49 | $ 0.61 | $ 0.44 | $ 2.39 | $ 2.04 | $ 2.19 |
Diluted net income per share (in dollars per share) | $ 0.54 | $ 0.52 | $ 0.69 | $ 0.56 | $ 0.48 | $ 0.48 | $ 0.59 | $ 0.43 | $ 2.30 | $ 1.96 | $ 2.10 |
Restricted stock | |||||||||||
Net income per share | |||||||||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 1,900 | 1,800 | 1,700 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) | Dec. 29, 2015 | Dec. 30, 2014 |
Recent Accounting Pronouncements | ||
Long-term deferred taxes | $ 82,524,000 | $ 81,433,000 |
Retrospective early adoption | ||
Recent Accounting Pronouncements | ||
Current deferred taxes | (15,100,000) | |
Long-term deferred taxes | $ 15,100,000 |
Other Receivables (Details)
Other Receivables (Details) - USD ($) $ in Thousands | Dec. 29, 2015 | Dec. 30, 2014 |
Other Receivables | ||
Receivable from gift card resellers | $ 40,245 | $ 35,261 |
Landlord construction contributions | 13,619 | 8,538 |
Other | 18,794 | 18,528 |
Total | $ 72,658 | $ 62,327 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 29, 2015 | Dec. 30, 2014 |
Inventories | ||
Restaurant food and supplies | $ 16,127 | $ 14,936 |
Bakery finished goods and work in progress | 12,104 | 13,236 |
Bakery raw materials and supplies | 5,779 | 5,083 |
Total | $ 34,010 | $ 33,255 |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - USD ($) $ in Thousands | Dec. 29, 2015 | Dec. 30, 2014 |
Prepaid Expenses | ||
Gift card costs | $ 23,362 | $ 20,863 |
Rent | 5,236 | 5,030 |
Other | 13,378 | 12,340 |
Total | $ 41,976 | $ 38,233 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | |
Property and equipment | |||
Property and equipment, total | $ 1,676,782 | $ 1,535,214 | |
Less: accumulated depreciation | (784,591) | (706,909) | |
Property and equipment, net | 892,191 | 828,305 | |
Depreciation expenses | 85,600 | 82,400 | $ 78,100 |
Repair and maintenance expenses | 44,900 | 42,700 | 40,800 |
Net expense on property and equipment disposals | 2,100 | 2,000 | $ 1,500 |
Land and related improvements | |||
Property and equipment | |||
Property and equipment, total | 15,852 | 15,852 | |
Buildings | |||
Property and equipment | |||
Property and equipment, total | 20,610 | 20,610 | |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, total | 1,126,529 | 1,037,912 | |
Furnishings, fixtures and equipment | |||
Property and equipment | |||
Property and equipment, total | 387,779 | 360,063 | |
Computer software and equipment | |||
Property and equipment | |||
Property and equipment, total | 49,917 | 46,257 | |
Restaurant smallwares | |||
Property and equipment | |||
Property and equipment, total | 47,363 | 27,579 | |
Construction in progress | |||
Property and equipment | |||
Property and equipment, total | $ 28,732 | $ 26,941 |
Other Accrued Expenses (Details
Other Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 29, 2015 | Dec. 30, 2014 |
Other Accrued Expenses | ||
Gift cards | $ 144,194 | $ 123,619 |
Self-insurance | 60,033 | 55,156 |
Salaries and wages | 31,570 | 22,967 |
Employee benefits | 19,980 | 17,441 |
Payroll and sales taxes | 14,633 | 14,799 |
Other | 32,046 | 30,704 |
Total | $ 302,456 | $ 264,686 |
Long-Term Debt (Details)
Long-Term Debt (Details) $ in Millions | 12 Months Ended | |||
Dec. 29, 2015USD ($)item | Dec. 30, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 22, 2015USD ($) | |
Long-term debt | ||||
Maximum commitments | $ 200 | |||
Maximum commitments, letter of credit subfacility | 50 | |||
Additional available credit | $ 100 | |||
Available borrowings | $ 180 | |||
Outstanding borrowings | 0 | |||
Outstanding letters of credit | $ 20 | |||
Multiplier of rent used to compute Adjusted Debt | item | 8 | |||
Threshold amount of unrestricted cash and cash equivalents above which amounts are netted against debt for calculation of net adjusted leverage ratio | $ 25 | |||
Trailing period for which EBITDAR is computed | 12 months | |||
Net Adjusted Leverage Ratio | 2.5 | |||
EBITDAR Ratio | 3 | |||
Capitalized interest expense | $ 1.6 | $ 0.8 | $ 0.7 | |
Minimum | ||||
Long-term debt | ||||
Financial covenant, EBITDAR Ratio | 1.9 | |||
Commitment fee (as a percent) | 0.125% | |||
Maximum | ||||
Long-term debt | ||||
Financial covenant, Net Adjusted Leverage Ratio | 4 | |||
Commitment fee (as a percent) | 0.25% | |||
Adjusted LIBO Rate | ||||
Long-term debt | ||||
Credit facility, floating interest rate basis | Adjusted LIBO Rate | |||
Adjusted LIBO Rate | Minimum | ||||
Long-term debt | ||||
Credit facility, basis spread on variable rate, (as a percent) | 1.00% | |||
Adjusted LIBO Rate | Maximum | ||||
Long-term debt | ||||
Credit facility, basis spread on variable rate, (as a percent) | 1.75% | |||
Federal Funds Effective Rate | ||||
Long-term debt | ||||
Credit facility, floating interest rate basis | Federal Funds Effective Rate | |||
Credit facility, basis spread on variable rate, (as a percent) | 0.50% | |||
One-month Adjusted LIBO Rate | ||||
Long-term debt | ||||
Credit facility, floating interest rate basis | one-month Adjusted LIBO Rate | |||
Fixed percentage added to variable rate | 1.00% | |||
One-month Adjusted LIBO Rate | Minimum | ||||
Long-term debt | ||||
Credit facility, basis spread on variable rate, (as a percent) | 0.00% | |||
One-month Adjusted LIBO Rate | Maximum | ||||
Long-term debt | ||||
Credit facility, basis spread on variable rate, (as a percent) | 0.75% |
Other Noncurrent Liabilities (D
Other Noncurrent Liabilities (Details) - USD ($) $ in Thousands | Dec. 29, 2015 | Dec. 30, 2014 |
Other Noncurrent Liabilities | ||
Executive Savings Plan | $ 41,281 | $ 40,842 |
Other | 10,024 | 9,558 |
Total | $ 51,305 | $ 50,400 |
Commitments and Contingencies49
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | ||
Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | |
Aggregate minimum annual lease payments under operating leases | |||
2,016 | $ 81,890,000 | ||
2,017 | 83,836,000 | ||
2,018 | 83,797,000 | ||
2,019 | 84,002,000 | ||
2,020 | 81,762,000 | ||
Thereafter | 599,026,000 | ||
Total | 1,014,313,000 | ||
Rent expense | |||
Straight-lined minimum base rent | 74,981,000 | $ 71,828,000 | $ 69,427,000 |
Contingent rent | 21,160,000 | 19,895,000 | 20,698,000 |
Common area maintenance and taxes | 34,602,000 | 31,074,000 | 29,552,000 |
Total | 130,743,000 | $ 122,797,000 | $ 119,677,000 |
Purchase obligations | 151,000,000 | ||
Purchase obligations due in fiscal 2015 | 90,000,000 | ||
Outstanding standby letters of credit | 20,000,000 | ||
Total accrued liability for self-insured plans | 60,000,000 | ||
Payments required under event of an actual or constructive termination of employment | 2,200,000 | ||
Accrued potential bonuses | 2,600,000 | ||
Annual founder's retirement benefit for ten years after termination of full time employment | $ 650,000 | ||
Number of years annual founder's retirement benefit after termination of full time employment | 10 years | ||
Minimum | |||
Commitments and contingencies | |||
Operating lease remaining terms, excluding unexercised renewal options | 1 year | ||
Contingent rent as a percentage of sales | 3.00% | ||
Maximum | |||
Commitments and contingencies | |||
Operating lease remaining terms, excluding unexercised renewal options | 20 years | ||
Contingent rent as a percentage of sales | 10.00% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 29, 2015 | Sep. 29, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 30, 2014 | Sep. 30, 2014 | Jul. 01, 2014 | Apr. 01, 2014 | Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | Jan. 01, 2013 | Jul. 31, 2013 | |
Stockholders' Equity | |||||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.20 | $ 0.165 | $ 0.165 | $ 0.165 | $ 0.165 | $ 0.14 | $ 0.14 | $ 0.73 | $ 0.61 | $ 0.52 | ||
Stockholders Equity: | |||||||||||||
Repurchased shares since program inception | 44,064,322 | 41,919,312 | 44,064,322 | 41,919,312 | |||||||||
Value of shares repurchased since program inception | $ 1,263,422 | $ 1,158,652 | $ 1,263,422 | $ 1,158,652 | |||||||||
Treasury stock repurchased during period | $ 109,371 | $ 140,483 | $ 183,659 | ||||||||||
Treasury Stock | |||||||||||||
Stockholders Equity: | |||||||||||||
Additional number of shares authorized to repurchase | 7,500,000 | ||||||||||||
Number of shares authorized to be repurchased | 48,500,000 | ||||||||||||
Shares repurchased during period | 2,100,000 | 3,100,000 | 4,500,000 | 4,500,000 | |||||||||
Treasury stock repurchased during period | $ 104,800 | $ 143,200 | $ 183,700 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) - Collared Accelerated Repurchase Program - USD ($) shares in Millions, $ in Millions | Jul. 27, 2015 | Mar. 31, 2015 | Feb. 27, 2015 | Jul. 21, 2014 | Mar. 31, 2014 | Feb. 27, 2014 |
Share Repurchase Program | ||||||
Common stock repurchase authorized amount | $ 75 | $ 75 | ||||
Additional Shares Delivered Under Share Repurchase Program | 0 | 0.2 | ||||
Minimum | ||||||
Share Repurchase Program | ||||||
Number of shares authorized to be repurchased | 1.5 | 1.4 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details ) - shares shares in Millions | 12 Months Ended | |
Dec. 29, 2015 | Apr. 02, 2015 | |
Stock-Based Compensation | ||
Shares authorized for issuance under share-based compensation plan | 9.2 | |
Shares authorized for issuance under share-based compensation plan prior to amendment | 6.8 | |
Shares available for grant | 2.4 | |
Stock options | ||
Stock-Based Compensation | ||
Vesting rights (as a percent) | 20.00% | |
Stock options | Maximum | ||
Stock-Based Compensation | ||
Option expiration period | 10 years | |
Stock options | Minimum | ||
Stock-Based Compensation | ||
Option expiration period | 8 years | |
Restricted stock | Maximum | ||
Stock-Based Compensation | ||
Vesting period | 5 years | |
Restricted stock | Minimum | ||
Stock-Based Compensation | ||
Vesting period | 3 years |
Stock-Based Compensation (Det53
Stock-Based Compensation (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | |
Stock-based compensation | |||
Total stock-based compensation | $ 20,053 | $ 16,817 | $ 14,135 |
Income tax benefit | 7,670 | 6,433 | 5,407 |
Total stock-based compensation, net of taxes | 12,383 | 10,384 | 8,728 |
Capitalized stock-based compensation | 272 | 216 | 177 |
Labor expenses | |||
Stock-based compensation | |||
Total stock-based compensation | 5,748 | 5,245 | 4,478 |
Other operating costs and expenses | |||
Stock-based compensation | |||
Total stock-based compensation | 268 | 216 | 195 |
General and administrative expenses | |||
Stock-based compensation | |||
Total stock-based compensation | $ 14,037 | $ 11,356 | $ 9,462 |
Stock-Based Compensation (Det54
Stock-Based Compensation (Details 3) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | |
Stock options | |||
Stock-Based Compensation | |||
Weighted average fair value at the grant date for options issued (in dollars per share) | $ 14.17 | $ 15.48 | $ 10.83 |
Weighted average assumptions under Black-Scholes valuation model | |||
Expected option term | 6 years 7 months 6 days | 6 years 6 months | 6 years 4 months 24 days |
Expected stock price volatility (as a percent) | 31.30% | 32.90% | 33.50% |
Risk free interest rate (as a percent) | 1.90% | 2.20% | 1.40% |
Dividend yield (as a percent) | 1.40% | 1.20% | 1.30% |
Stock option activity, shares | |||
Outstanding, at the beginning of the period (in shares) | 4,023 | ||
Granted (in shares) | 311 | ||
Exercised (in shares) | (1,230) | ||
Forfeited or cancelled (in shares) | (38) | ||
Outstanding at the end of the period (in shares) | 3,066 | 4,023 | |
Exercisable at the end of the period (in shares) | 1,798 | ||
Weighted Average Exercise price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 26.34 | ||
Granted (in dollars per share) | 48.01 | ||
Exercised (in dollars per share) | 22.77 | ||
Forfeited or cancelled (in dollars per share) | 24.08 | ||
Outstanding at the end of the period (in dollars per share) | 30 | $ 26.34 | |
Exercisable at the end of the period (in dollars per share) | $ 23.91 | ||
Weighted Average Remaining Contractual Term | |||
Weighted Average Remaining Contractual Term | 3 years 7 months 6 days | 3 years 8 months 12 days | |
Exercisable at the end of the period | 2 years 6 months | ||
Aggregate Intrinsic Value | |||
Outstanding at the beginning of the period | $ 97,406 | ||
Outstanding at the end of the period | 52,416 | $ 97,406 | |
Exercisable at the end of the period | 41,311 | ||
Total intrinsic value of options exercised | 37,000 | $ 28,200 | $ 40,100 |
Unrecognized Stock-based Compensation Expense | |||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 10,000 | ||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 2 years 3 months 18 days | ||
Restricted stock | |||
Unrecognized Stock-based Compensation Expense | |||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 44,600 | ||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 2 years 9 months 18 days | ||
Restricted Shares and Restricted Share Units | |||
Outstanding at the beginning of the period (in shares) | 1,820 | ||
Granted (in shares) | 445 | ||
Vested (in shares) | (268) | ||
Forfeited (in shares) | (106) | ||
Outstanding at the end of the period (in shares) | 1,891 | 1,820 | |
Fair value of shares vested | $ 7,500 | $ 4,500 | $ 2,600 |
Weighted Average Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ 37.12 | ||
Granted (in dollars per share) | 49.70 | $ 47.16 | $ 39.42 |
Vested (in dollars per share) | 27.88 | ||
Forfeited (in dollars per share) | 38.45 | ||
Outstanding at the end of the period (in dollars per share) | $ 41.31 | $ 37.12 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2015USD ($)item | Dec. 30, 2014USD ($) | Dec. 31, 2013USD ($) | |
Number of restaurant concepts for which section 401(k) is open to participation by staff members | item | 3 | ||
Minimum number of investment options available to participating plan members | item | 1 | ||
Maximum amount of eligible bonuses that may be deferred by participating staff members under the ESP (as a percent) | 100.00% | ||
Accrued liability for self-insured medical benefit plan | $ 7,300 | $ 7,700 | |
Allocated Share-based Compensation Expense | 20,053 | 16,817 | $ 14,135 |
General and administrative expenses | |||
Allocated Share-based Compensation Expense | 14,037 | 11,356 | 9,462 |
Stock options | General and administrative expenses | |||
Allocated Share-based Compensation Expense | 700 | 600 | 600 |
Executive savings plan member | General and administrative expenses | |||
Allocated Share-based Compensation Expense | $ 900 | $ 800 | $ 700 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | |
Income Taxes | |||
Income before income taxes | $ 159,352 | $ 138,544 | $ 156,450 |
Current: | |||
Federal | 32,765 | 28,687 | 28,754 |
State | 8,880 | 8,377 | 8,707 |
Total current | 41,645 | 37,064 | 37,461 |
Deferred: | |||
Federal | 2,659 | 480 | 5,342 |
State | (1,475) | (276) | (709) |
Total deferred | 1,184 | 204 | 4,633 |
Total provision | $ 42,829 | $ 37,268 | $ 42,094 |
Income Taxes Rate Reconciliation | |||
Tax at U.S. federal statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
State and district income taxes, net of federal income tax benefit (as a percent) | 3.00% | 3.80% | 3.30% |
FICA tip credit (as a percent) | (8.00%) | (8.40%) | (7.00%) |
Other credits and incentives (as a percent) | (1.00%) | (0.70%) | (0.90%) |
Manufacturing deduction (as a percent) | (2.80%) | (2.90%) | (2.40%) |
Deferred compensation (as a percent) | 0.30% | (0.40%) | (1.00%) |
Other (as a percent) | 0.40% | 0.50% | (0.10%) |
Effective tax rate (as a percent) | 26.90% | 26.90% | 26.90% |
Deferred tax assets: | |||
Employee benefits | $ 28,856 | $ 24,476 | |
Insurance reserves | 19,399 | 18,012 | |
Accrued rent | 21,504 | 22,291 | |
Stock-based compensation | 16,100 | 15,350 | |
Deferred income | 11,406 | 9,273 | |
Tax credit carryforwards | 2,694 | 1,954 | |
Other | 794 | 1,259 | |
Subtotal | 100,753 | 92,615 | |
Less: Valuation allowance | (618) | (574) | |
Total | 100,135 | 92,041 | |
Deferred tax liabilities: | |||
Property and equipment | (160,764) | (153,362) | |
Inventory | (10,154) | (9,749) | |
Prepaid expenses | (11,741) | (10,363) | |
Total | (182,659) | (173,474) | |
Net deferred tax liability | (82,524) | (81,433) | |
Reconciliation of beginning and ending amount of unrecognized tax benefits | |||
Balance at beginning of year | 875 | 802 | $ 695 |
Additions based on tax positions taken during the current period | 192 | 233 | 254 |
Reductions related to settlements with taxing authorities and lapses of statutes of limitations | 0 | (160) | (147) |
Balance at end of year | 1,067 | 875 | $ 802 |
Accrued interest related with uncertain tax positions | 100 | 100 | |
Decrease in unrecognized tax benefits during the next twelve months based on the lapses of statutes of limitations for certain jurisdictions | 0 | ||
State | |||
Tax credit carryforwards | |||
Tax credit carryforwards | 4,100 | 3,000 | |
Tax credit carryforward valuation allowance | $ 600 | $ 600 |
Stockholder Rights Plan (Detail
Stockholder Rights Plan (Details) - Junior participating cumulative preferred stock rights | 12 Months Ended |
Dec. 29, 2015item$ / sharesshares | |
Stockholder rights plan | |
Number of rights per common share | 1 |
Number of shares of junior participating cumulative preferred stock callable by rights | shares | 0.01 |
Rights exercise trigger, minimum percentage of stock acquired or intended to be acquired by an individual or group | 15.00% |
Rights exercise trigger, minimum percentage of stock acquired or intended to be acquired by a beneficial owner | 20.00% |
Beneficial ownership interest defined (as a percent) | 10.00% |
Multiplier of the exercise price that the holder of the rights would receive in value of other than the acquiring company's junior participating cumulative preferred stock | 2 |
Exercise price of junior participating cumulative preferred stock (in dollars per right) | $ / shares | $ 110 |
Percentage of assets or earning power sold or transferred allowing the rights holder the right to receive common stock of acquiring company | 50.00% |
Multiplier of the exercise price that the rights holder has right to receive in value of acquiring company's common stock | 2 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 29, 2015USD ($) | Sep. 29, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 30, 2014USD ($) | Sep. 30, 2014USD ($) | Jul. 01, 2014USD ($) | Apr. 01, 2014USD ($) | Dec. 29, 2015USD ($)item | Dec. 30, 2014USD ($) | Dec. 31, 2013USD ($) | |
Segment information | |||||||||||
Revenues | $ 526,841 | $ 526,688 | $ 529,107 | $ 517,973 | $ 499,673 | $ 499,114 | $ 496,406 | $ 481,431 | $ 2,100,609 | $ 1,976,624 | $ 1,877,910 |
Income/(loss) from operations | 38,795 | 35,644 | $ 49,753 | $ 41,054 | 34,792 | $ 34,175 | 42,691 | 33,073 | 165,246 | 144,731 | 160,954 |
Total assets | 1,233,346 | 1,161,376 | 1,233,346 | 1,161,376 | 1,108,106 | ||||||
Capital expenditures | 153,941 | 113,982 | 106,289 | ||||||||
Depreciation and amortization | 85,563 | 82,835 | 78,558 | ||||||||
Impairment of assets and lease terminations | $ 6,000 | $ 500 | $ 200 | 6,011 | 696 | (561) | |||||
The Cheesecake Factory restaurants | |||||||||||
Segment information | |||||||||||
Revenues | 1,913,758 | 1,792,796 | 1,688,036 | ||||||||
Income/(loss) from operations | 275,686 | 240,774 | 250,230 | ||||||||
Total assets | 934,606 | 861,697 | 934,606 | 861,697 | 813,780 | ||||||
Capital expenditures | 122,358 | 104,525 | 98,660 | ||||||||
Depreciation and amortization | $ 71,821 | 68,504 | 63,549 | ||||||||
Number of restaurants for which impairment and lease termination expenses were recorded | item | 4 | ||||||||||
Impairment of assets and lease terminations | 700 | (1,200) | |||||||||
Other | |||||||||||
Segment information | |||||||||||
Revenues | $ 186,851 | 183,828 | 189,874 | ||||||||
Income/(loss) from operations | 18,047 | 14,983 | 19,985 | ||||||||
Total assets | 152,243 | 154,033 | 152,243 | 154,033 | 155,231 | ||||||
Capital expenditures | 13,644 | 3,713 | 3,621 | ||||||||
Depreciation and amortization | $ 9,690 | 10,337 | 10,514 | ||||||||
Other | Grand Lux Cafe | |||||||||||
Segment information | |||||||||||
Number of restaurants for which impairment and lease termination expenses were recorded | item | 4 | ||||||||||
Impairment of assets and lease terminations | $ 6,000 | 600 | |||||||||
Corporate Non Segment | |||||||||||
Segment information | |||||||||||
Income/(loss) from operations | (128,487) | (111,026) | (109,261) | ||||||||
Total assets | $ 146,497 | $ 145,646 | 146,497 | 145,646 | 139,095 | ||||||
Capital expenditures | 17,939 | 5,744 | 4,008 | ||||||||
Depreciation and amortization | $ 4,052 | $ 3,994 | $ 4,495 |
Quarterly Financial Data (una59
Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 29, 2015 | Sep. 29, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 30, 2014 | Sep. 30, 2014 | Jul. 01, 2014 | Apr. 01, 2014 | Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 | |
Quarterly Financial Data (unaudited) | |||||||||||
Revenues | $ 526,841 | $ 526,688 | $ 529,107 | $ 517,973 | $ 499,673 | $ 499,114 | $ 496,406 | $ 481,431 | $ 2,100,609 | $ 1,976,624 | $ 1,877,910 |
Income/(loss) from operations | 38,795 | 35,644 | 49,753 | 41,054 | 34,792 | 34,175 | 42,691 | 33,073 | 165,246 | 144,731 | 160,954 |
Net income | $ 27,200 | $ 26,176 | $ 34,724 | $ 28,423 | $ 24,486 | $ 24,223 | $ 30,049 | $ 22,518 | $ 116,523 | $ 101,276 | $ 114,356 |
Basic net income per share (in dollars per share) | $ 0.56 | $ 0.54 | $ 0.72 | $ 0.58 | $ 0.50 | $ 0.49 | $ 0.61 | $ 0.44 | $ 2.39 | $ 2.04 | $ 2.19 |
Diluted net income per share (in dollars per share) | 0.54 | 0.52 | 0.69 | 0.56 | 0.48 | 0.48 | 0.59 | 0.43 | 2.30 | 1.96 | 2.10 |
Cash dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.20 | $ 0.165 | $ 0.165 | $ 0.165 | $ 0.165 | $ 0.14 | $ 0.14 | $ 0.73 | $ 0.61 | $ 0.52 |
Quarterly Financial Data (una60
Quarterly Financial Data (unaudited) (Details 2) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Sep. 29, 2015USD ($) | Jul. 01, 2014USD ($) | Apr. 01, 2014USD ($) | Dec. 29, 2015USD ($)item | Dec. 30, 2014USD ($) | Dec. 31, 2013USD ($) | |
Asset impairment | ||||||
Impairment of assets and lease terminations | $ 6,000 | $ 500 | $ 200 | $ 6,011 | $ 696 | $ (561) |
Impact of impairment and lease termination expenses on net income | $ 3,600 | $ 300 | $ 100 | |||
The Cheesecake Factory restaurants | ||||||
Asset impairment | ||||||
Number of restaurants for which impairment and lease termination expenses/(income) were recorded | item | 1 |
Subsequent Event (Details)
Subsequent Event (Details) - $ / shares | Feb. 11, 2016 | Dec. 29, 2015 | Sep. 29, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 30, 2014 | Sep. 30, 2014 | Jul. 01, 2014 | Apr. 01, 2014 | Dec. 29, 2015 | Dec. 30, 2014 | Dec. 31, 2013 |
Subsequent events | ||||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.20 | $ 0.165 | $ 0.165 | $ 0.165 | $ 0.165 | $ 0.14 | $ 0.14 | $ 0.73 | $ 0.61 | $ 0.52 | |
Subsequent event | ||||||||||||
Subsequent events | ||||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.20 |