Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Jun. 15, 2020 | Jul. 02, 2019 | |
Document and Entity Information | |||
Entity Registrant Name | THE CHEESECAKE FACTORY INCORPORATED | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 0-20574 | ||
Title of 12(b) Security | Common Stock, par value $.01 per share | ||
Trading Symbol | CAKE | ||
Entity Address, Postal Zip Code | 91301 | ||
Entity Address, Address Line One | 26901 Malibu Hills Road | ||
Entity Address, City or Town | Calabasas Hills | ||
Entity Address, State or Province | CA | ||
Security Exchange Name | NASDAQ | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 51-0340466 | ||
Entity Central Index Key | 0000887596 | ||
Document Type | 10-K/A | ||
Document Period End Date | Dec. 31, 2019 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,787,355,740 | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 45,462,133 | ||
Local Phone Number | 871-3000 | ||
City Area Code | 818 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Amendment Flag | true | ||
Amendment Description | This Amendment No. 1 on Form 10-K/A (this "Amendment") amends the Annual Report on Form 10-K of The Cheesecake Factory Incorporated (the "Company") for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission ("SEC") on March 12, 2020 (the "Form 10-K"). In the Form 10-K, the Company inadvertently omitted the "Report of Independent Registered Public Accounting Firm" (the "Audit Report") of its prior auditors (PricewaterhouseCoopers LLP) for the fiscal year ended January 2, 2018. The Audit Report was signed by PricewaterhouseCoopers LLP and delivered to the Company prior to the original filing of the Form 10-K, but the Audit Report was inadvertently omitted from the Form 10-K.This Form 10-K/A is being filed solely to include the inadvertently omitted Audit Report for PricewaterhouseCoopers LLP relating to the Company's consolidated financial statements. No other changes were made to the Audit Report or to the Form 10-K. The consolidated financial statements and notes to consolidated financial statements have remained the same as that previously filed in the Form 10-K.This Amendment reflects information as of the filing date of the Form 10-K, does not reflect events occurring after that date and does not modify or update in any way disclosures made in the Form 10-K, except as specifically noted above.In accordance with Rule 12b-15 of the Securities Exchange Act of 1934, as amended, this Amendment includes new certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, dated as of the filing date of this Amendment. |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 58,416 | $ 26,578 |
Accounts receivable | 25,619 | 20,928 |
Income taxes receivable | 4,626 | |
Other receivables | 64,683 | 68,193 |
Inventories | 47,225 | 38,886 |
Prepaid expenses | 43,946 | 40,645 |
Total current assets | 244,515 | 195,230 |
Property and equipment, net | 831,599 | 913,275 |
Other assets: | ||
Intangible assets, net | 437,207 | 26,209 |
Prepaid rent | 34,961 | |
Operating lease assets | 1,240,976 | |
Investments in unconsolidated affiliates | 79,767 | |
Other | 86,296 | 64,691 |
Total other assets | 1,764,479 | 205,628 |
Total assets | 2,840,593 | 1,314,133 |
Current liabilities: | ||
Accounts payable | 61,946 | 49,071 |
Income taxes payable | 712 | |
Gift card liabilities | 187,978 | 172,336 |
Operating lease liabilities | 128,081 | |
Other accrued expenses | 236,582 | 194,381 |
Total current liabilities | 614,587 | 416,500 |
Deferred income taxes | 33,847 | 52,123 |
Deferred rent liabilities | 79,697 | |
Deemed landlord financing liabilities | 113,095 | |
Long-term debt | 290,000 | 10,000 |
Operating lease liabilities | 1,189,869 | |
Other noncurrent liabilities | 140,548 | 71,659 |
Stockholders' equity: | ||
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued | ||
Common stock, $.01 par value, 250,000,000 shares authorized; 97,685,178 and 96,621,990 shares issued at December 31, 2019 and January 1, 2019, respectively | 977 | 967 |
Additional paid-in capital | 855,989 | 828,676 |
Retained earnings | 1,408,333 | 1,384,494 |
Treasury stock, 52,916,434 and 51,791,941 shares at cost at December 31, 2019 and January 1, 2019, respectively | (1,693,122) | (1,642,140) |
Accumulated other comprehensive loss | (435) | (938) |
Total stockholders' equity | 571,742 | 571,059 |
Total liabilities and stockholders' equity | $ 2,840,593 | $ 1,314,133 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Jan. 01, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
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 |
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 | 97,685,178 | 96,621,990 |
Treasury stock, shares | 52,916,434 | 51,791,941 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||
Revenues | $ 2,482,692 | $ 2,332,331 | $ 2,260,502 |
Costs and expenses: | |||
Cost of sales | 561,783 | 532,880 | 519,388 |
Labor expenses | 899,667 | 834,134 | 777,595 |
Other operating costs and expenses | 631,613 | 566,825 | 552,791 |
General and administrative expenses | 160,199 | 154,770 | 141,533 |
Depreciation and amortization expenses | 88,133 | 95,976 | 92,729 |
Impairment of assets and lease terminations | 18,247 | 17,861 | 10,343 |
Acquisition-related costs | 5,270 | ||
Acquisition-related contingent consideration, compensation and amortization expenses | 1,033 | ||
Preopening costs | 13,149 | 10,937 | 13,278 |
Total costs and expenses | 2,379,094 | 2,213,383 | 2,107,657 |
Income from operations | 103,598 | 118,948 | 152,845 |
Gain/(loss) on investments in unconsolidated affiliates | 39,233 | (4,754) | (479) |
Interest and other expense, net | (2,497) | (6,783) | (5,900) |
Income before income taxes | 140,334 | 107,411 | 146,466 |
Income tax provision/(benefit) | 13,041 | 8,376 | (10,926) |
Net income | $ 127,293 | $ 99,035 | $ 157,392 |
Net income per share: | |||
Basic (in dollars per share) | $ 2.90 | $ 2.19 | $ 3.35 |
Diluted (in dollars per share) | $ 2.86 | $ 2.14 | $ 3.27 |
Weighted average shares outstanding: | |||
Basic (in shares) | 43,949 | 45,263 | 46,930 |
Diluted (in shares) | 44,545 | 46,215 | 48,152 |
Cash dividends declared per common share (in dollars per share) | $ 1.38 | $ 1.24 | $ 1.06 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 127,293 | $ 99,035 | $ 157,392 |
Other comprehensive gain/(loss): | |||
Foreign currency translation adjustment | 503 | (850) | (88) |
Other comprehensive gain/(loss) | 503 | (850) | (88) |
Total comprehensive income | $ 127,796 | $ 98,185 | $ 157,304 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total |
Balance at Jan. 03, 2017 | $ 947 | $ 774,137 | $ 1,238,012 | $ (1,409,889) | $ 603,207 | |
Balance (in shares) at Jan. 03, 2017 | 94,672 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 157,392 | 157,392 | ||||
Foreign currency translation adjustment | $ (88) | (88) | ||||
Cash dividends declared | (49,738) | (49,738) | ||||
Stock-based compensation | 16,696 | 16,696 | ||||
Common stock issued under stock-based compensation plans | $ 7 | 9,029 | 9,036 | |||
Common stock issued under stock-based compensation plans (in shares) | 740 | |||||
Treasury stock purchases | (122,975) | (122,975) | ||||
Balance at Jan. 02, 2018 | $ 954 | 799,862 | 1,345,666 | (1,532,864) | (88) | 613,530 |
Balance (in shares) at Jan. 02, 2018 | 95,412 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect of adopting the pronouncement related to revenue recognition, net of tax | (3,560) | (3,560) | ||||
Balance (as adjusted) | $ 954 | 799,862 | 1,342,106 | (1,532,864) | (88) | 609,970 |
Net income | 99,035 | 99,035 | ||||
Foreign currency translation adjustment | (850) | (850) | ||||
Cash dividends declared | (56,647) | (56,647) | ||||
Stock-based compensation | $ 6 | 20,245 | 20,251 | |||
Stock-based compensation (in shares) | 554 | |||||
Common stock issued under stock-based compensation plans | $ 7 | 8,569 | 8,576 | |||
Common stock issued under stock-based compensation plans (in shares) | 656 | |||||
Treasury stock purchases | (109,276) | (109,276) | ||||
Balance at Jan. 01, 2019 | $ 967 | 828,676 | 1,384,494 | (1,642,140) | (938) | 571,059 |
Balance (in shares) at Jan. 01, 2019 | 96,622 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect of adopting the pronouncement related to revenue recognition, net of tax | (41,466) | (41,466) | ||||
Balance (as adjusted) | $ 967 | 828,676 | 1,343,028 | (1,642,140) | (938) | 529,593 |
Net income | 127,293 | 127,293 | ||||
Foreign currency translation adjustment | 503 | 503 | ||||
Cash dividends declared | (61,988) | (61,988) | ||||
Stock-based compensation | $ 4 | 19,595 | 19,599 | |||
Stock-based compensation (in shares) | 476 | |||||
Common stock issued under stock-based compensation plans | $ 6 | 7,718 | 7,724 | |||
Common stock issued under stock-based compensation plans (in shares) | 587 | |||||
Treasury stock purchases | (50,982) | (50,982) | ||||
Balance at Dec. 31, 2019 | $ 977 | $ 855,989 | $ 1,408,333 | $ (1,693,122) | $ (435) | $ 571,742 |
Balance (in shares) at Dec. 31, 2019 | 97,685,000 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | Feb. 18, 2020 | Dec. 31, 2019 | Oct. 01, 2019 | Jul. 02, 2019 | Apr. 02, 2019 | Jan. 01, 2019 | Oct. 02, 2018 | Jul. 03, 2018 | Apr. 03, 2018 | Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | Jan. 03, 2017 |
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | |||||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.36 | $ 0.36 | $ 0.36 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.29 | $ 0.29 | $ 1.38 | $ 1.24 | $ 1.06 | $ 1.06 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Cash flows from operating activities: | |||
Net income | $ 127,293 | $ 99,035 | $ 157,392 |
Adjustments to reconcile net income to cash provided by operating activities: | |||
Depreciation and amortization expenses | 88,133 | 95,976 | 92,729 |
Deferred income taxes | (2,197) | (5,510) | (25,180) |
Impairment of assets and lease terminations | 16,223 | 16,411 | 10,586 |
Stock-based compensation | 19,373 | 19,988 | 16,457 |
Gain/(loss) from investments in unconsolidated affiliates | (39,233) | 4,754 | 479 |
Changes in assets and liabilities, net of acquired amounts | |||
Accounts and other receivables | 3,777 | 3,680 | (7,188) |
Income taxes receivable/payable | (5,338) | 15,729 | (17,315) |
Inventories | (5,766) | 3,667 | (7,634) |
Prepaid expenses | (4,133) | 6,262 | (5,227) |
Operating lease assets/liabilities | 5,019 | ||
Other assets | (11,989) | 7,406 | (9,034) |
Accounts payable | 2,326 | 5,601 | 3,771 |
Gift Card Liabilities | 9,695 | 8,395 | 10,200 |
Other accrued expenses | 15,578 | 9,921 | 18,760 |
Cash provided by operating activities | 218,761 | 291,315 | 238,796 |
Cash flows from investing activities: | |||
Additions to property and equipment | (73,765) | (102,909) | (120,779) |
Additions to intangible assets | (2,100) | (3,020) | (1,654) |
Acquisition, net of cash acquired | (261,695) | ||
Investments in unconsolidated affiliates | (3,000) | (25,000) | (18,000) |
loans made to unconsolidated Affiliates | (22,500) | ||
Proceeds from variable life insurance contract | 540 | ||
Cash used in investing activities | (363,060) | (130,389) | (140,433) |
Cash flows from financing activities: | |||
Deemed landlord financing proceeds | 21,788 | 12,128 | |
Deemed landlord financing payments | (5,128) | (4,391) | |
Borrowings on credit facility | 335,000 | 70,000 | 85,000 |
Repayments on credit facility | (55,000) | (70,000) | (75,000) |
Proceeds from exercise of stock options | 7,724 | 8,576 | 9,036 |
Cash dividends paid | (60,722) | (56,251) | (49,889) |
Treasury stock purchases | (50,982) | (109,276) | (122,975) |
Cash provided/(used) in financing activities | 176,020 | (140,291) | (146,091) |
Foreign currency translation adjustment | 117 | (65) | (103) |
Net change in cash and cash equivalents | 31,838 | 20,570 | (47,831) |
Cash and cash equivalents at beginning of period | 26,578 | 6,008 | 53,839 |
Cash and cash equivalents at end of period | 58,416 | 26,578 | 6,008 |
Supplemental disclosures: | |||
Interest paid | 1,646 | 8,156 | 7,128 |
Income taxes paid | 20,778 | 10,149 | 31,582 |
Construction payable | 6,504 | 4,585 | $ 12,145 |
Non-cash operating: | |||
Settlement of sale-leaseback accounting | 11,863 | ||
Non-cash investing: | |||
Settlement of landlord sale-leaseback accounting | 6,824 | ||
Acquisition-related deferred consideration and compensation | (66,257) | ||
Fair value of previously held equity investments | 122,000 | ||
Loans repaid by unconsolidated affiliates as a reduction of acquisition cash | 12,500 | ||
Loan to unconsolidated affiliate assumed in acquisition | $ 10,000 | ||
Non-cash financing: | |||
Settlement of landlord financing obligation for sale-leaseback leases | (18,687) | ||
Deemed landlord financing proceeds | $ 13,748 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Description of Business The Cheesecake Factory Incorporated is a leader in experiential dining. We are culinary forward and relentlessly focused on hospitality. We currently own and operate 294 restaurants throughout the United States and Canada under brands including The Cheesecake Factory ® ® ® Basis of Presentation The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and its wholly owned subsidiaries (referred to herein collectively as the “Company,” “we,” “us” and “our”) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions for the periods presented have been eliminated in consolidation. On October 2, 2019, we completed the acquistion of North Italia and the remaining business of FRC, including Flower Child and all other FRC brands. The results of operations, financial position and cash flows of the acquired businesses are included in our consolidated financial statements as of the acquisition date. See Note 2 for further discussion of the Acquisition. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal years 2019, 2018 and 2017 each consisted of 52 weeks. Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. Business Combination On October 2, 2019, we completed the acquisition of North Italia and the remaining business of FRC. Since the Acquisition represents a business combination achieved in stages, we remeasured our previously-held equity interests in North Italia and Flower Child immediately before the acquisition to acquisition-date fair value and recognized a resulting gain. In accordance with the acquisition method of accounting for business combinations, we allocated the purchase price of acquired businesses to the tangible and intangible assets acquired and liabilities assumed based on preliminary estimated fair values. We estimated the fair value of assets and liabilities based upon widely-accepted valuation techniques, including discounted cash flow, relief from royalty and Monte Carlo methods, depending on the nature of the assets acquired or liabilities assumed. We expect minor adjustments to our purchase accounting in the first quarter of fiscal 2020 as we finalize our valuation of the acquired intangible assets. (See Note 2 for further discussion of the Acquisition.) Cash and Cash Equivalents Amounts receivable from credit card processors, totaling $21.2 million and $17.3 million at December 31, 2019 and January 1, 2019, 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. Our cash management system provides for the funding of all major bank disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks are in excess of the cash balances at certain banks, which creates book overdrafts. Book overdrafts are presented as a current liability in other accrued expenses on our consolidated balance sheet. Accounts and Other Receivables Our accounts receivable principally result from credit sales to bakery customers. Other receivables consist primarily of amounts due from our gift card distributors and landlords. Concentration of Credit Risk Financial instruments that potentially subject us to a concentration of credit risk are cash and cash equivalents and receivables. We maintain our day-to-day operating cash balances in non-interest-bearing transaction accounts, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $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 bakery customers. Concentration of credit risk related to other receivables is limited as this balance is comprised primarily of amounts due from our gift card distributors and landlords. Fair Value Measurements Fair value measurements are estimated based on valuation techniques and inputs categorized as follows: ● Level 1: Quoted prices in active markets for identical assets or liabilities. ● Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities ● Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the Company to develop its own assumptions The following tables present the components and classification of our assets and liabilities that are measured at fair value on a recurring basis (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Assets (Liabilities) Non-qualified deferred compensation assets $ 77,228 $ — $ — Non-qualified deferred compensation liabilities (76,255) — — Acquisition-related deferred consideration — (53,933) — Acquisition-related contingent consideration and compensation liabilities — — (13,218) January 1, 2019 Level 1 Level 2 Level 3 Assets (Liabilities) Non-qualified deferred compensation assets $ 57,606 $ — $ — Non-qualified deferred compensation liabilities (57,551) — — Deemed landlord financing liabilities — (118,600) — Changes in the fair value of non-qualified deferred compensation assets and liabilities and deemed landlord financing liabilities are recognized in interest and other expense, net in our consolidated statements of income. Changes in the fair value of the acquisition-related deferred and contingent consideration and compensation liabilities are recognized in acquisition-related contingent consideration, compensation and amortization expenses in our consolidated statements of income. The fair value of the acquisition-related contingent consideration and compensation liabilities was determined utilizing a Monte Carlo model based on estimated future revenues, margins and volatility factors, among other variables and estimates and has no minimum or maximum payment. The undiscounted range of outcomes per the Monte Carlo model was $0 to $69.2 million. Results could change materially if different estimates and assumptions were used. The following table presents a reconciliation of the beginning and ending amounts of the fair value of the acquisition-related contingent consideration and compensation liabilities, categorized as Level 3 (in thousands): Balance, January 1, 2019 $ — Acquisition-date fair value 12,786 Change in fair value 432 Balance, December 31, 2019 $ 13,218 The fair values of our cash and cash equivalents, accounts receivable, income taxes receivable, other receivables, prepaid expenses, accounts payable, income taxes payable and other accrued expenses approximate their carrying amounts due to their short duration. Inventories Inventories consist of restaurant food and other supplies, bakery raw materials and bakery finished goods and are stated at the lower of cost or net realizable value on an average cost basis at the restaurants and on a first-in, first-out basis at the bakeries. Property and Equipment We record property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation and amortization are calculated using the straight-line method over the estimated useful life of the assets or the lease term, whichever is shorter. Leasehold improvements include the cost of our internal development and construction department. Depreciation and amortization periods are as follows: Buildings and land improvements 25 Leasehold improvements 10 Furnishings, fixtures and equipment 3 Computer software and equipment 5 years Gains and losses related to property and equipment disposals are recorded in depreciation and amortization expenses. Intangible Assets Our intangible assets consist primarily of goodwill, indefinite-lived trade names, trademarks and transferable alcoholic beverage licenses and definite-lived licensing agreements and non-transferable alcoholic beverage licenses. Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows. If impaired, the asset or asset group is written down to fair value based on discounted future cash flows. Amortization is recorded in acquisition-related contingent consideration, compensation and amortization expenses in our consolidated statements of income. Goodwill and other indefinite-lived intangible assets are not amortized but are instead tested for impairment annually as of the first day of our fiscal fourth quarter or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. First, we determine if, based on qualitative factors, it is more likely than not that an impairment exists. Factors considered include, but are not limited to historical financial performance, a significant decline in expected future cash flows, unanticipated competition, changes in management or key personnel, macroeconomic and industry conditions and the legal and regulatory environment. If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. The quantitative assessment requires an analysis of several best estimates and assumptions, including future sales and operating results and other factors that could affect fair value or otherwise indicate potential impairment. We also consider our reporting units’ projected ability to generate income from operations and positive cash flow in future periods. We evaluate the useful lives of our intangible assets, other than goodwill, at each reporting period to determine if they are definite or indefinite-lived. A determination on useful life requires judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment and expected changes in distribution channels), the level of required maintenance expenditures and the expected lives of other related groups of assets. Impairment of Long-Lived Assets and Lease Terminations We assess the potential impairment of our long-lived assets on an annual basis or whenever events or changes in circumstances indicate the carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to, negative cash flow, significant underperformance relative to historical or projected future operating results, significant changes in the manner in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previously estimated useful life and significant negative industry or economic trends. At any given time, we may be monitoring a small number of locations, and future impairment charges could be required if individual restaurant performance does not improve or we make the decision to close or relocate a restaurant. We have determined that our asset group for impairment testing is comprised of the assets and liabilities of each of our individual restaurants, as this is the lowest level of identifiable cash flows. We have identified leasehold improvements as the primary asset because it is the most significant component of our restaurant assets, it is the principal asset from which our restaurants derive their cash flow generating capacity and it has the longest remaining useful life. The recoverability is assessed by comparing the carrying value of the assets to the undiscounted cash flows expected to be generated by these assets. Impairment losses are measured as the amount by which the carrying values of the assets exceed their fair value, which is determined based on discounted future net cash flows expected to be generated by the assets. In fiscal 2019, we recorded $18.2 million of impairment of assets and lease termination expense related to the impairment of two The Cheesecake Factory restaurants, one Grand Lux Cafe and Social Monk Asian Kitchen and the closure of one Grand Lux Cafe and one RockSugar Southeast Asian Kitchen. In fiscal 2018, we recorded $17.9 million of impairment of assets and lease termination expense related to the impairment of one The Cheesecake Factory restaurant, one Grand Lux Cafe and one RockSugar Southeast Asian Kitchen and the closure of two The Cheesecake Factory restaurants. In fiscal 2017, we recorded $10.3 million of impairment of assets and lease termination expense related to three The Cheesecake Factory restaurants, including one relocation and one lease expiration, and one Grand Lux Cafe. These amounts are recorded in impairment of assets and lease terminations on the consolidated statements of income. Investments in Unconsolidated Affiliates During fiscal years 2018, 2017 and until the Acquisition on October 2, 2019, we made minority equity investments in two restaurant concepts, North Italia and Flower Child, bringing our percentage of ownership to 49% in both concepts immediately prior to the Acquisition. Since we held a number of rights with regard to participation in policy-making processes, but did not control these entities prior to the Acquisition, we accounted for these investments under the equity method. Accordingly, we recognized our proportionate share of the reported earnings or losses of these entities on the consolidated statements of income and as an adjustment to our investments on the consolidated balance sheets. Prior to the Acquisition, we assessed the potential impairment of our equity investments whenever events or changes in circumstances indicated that a decrease in value of the investment had occurred that was other than temporary, in which case we would recognize the decrease even though it is in excess of what would otherwise be recognized by application of the equity method. No impairment losses were recorded for these assets during fiscal years 2019, 2018 and 2017. Revenue Recognition Our revenues consist of sales at our Company-owned restaurants, sales from our bakery operations to our licensees and other third-party customers, royalties from our licensees’ restaurant sales and from consumer packaged goods sales, and licensee development and site fees. Revenues are presented net of sales taxes. Sales tax collected is included in other accrued expenses until the taxes are remitted to the appropriate taxing authorities. Revenues from restaurant sales are recognized when payment is tendered at the point of sale. Revenues from bakery sales are recognized upon transfer of title and risk to customers. Royalty revenues are recognized in the period the related sales occur, utilizing the sale-based royalty exception available under current accounting guidance. Our consumer packaged goods minimum guarantees do not require distinct performance obligations. Therefore, related revenue is recognized on a straight-line basis over the life of the applicable agreements, ranging from one eight In fiscal 2019, we deferred revenue of $0.2 million for new minimum guarantees for consumer packaged goods and recognized minimum guarantee revenue of $0.5 million. In fiscal 2019, we deferred revenue of $0.3 million for new site and development agreements and recognized revenue of $0.5 million. In fiscal 2018, we deferred revenue of $0.9 million for new minimum guarantees for consumer packaged goods and recognized minimum guarantee revenue of $0.8 million. In fiscal 2018, we deferred revenue of $0.2 million for new site and development agreements and recognized revenue of $0.4 million. Prior to the adoption of the new revenue recognition standard in 2018, we recognized revenue for development fees upon execution of new development agreements and for site fees upon our approval of new restaurant sites. 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 $8.0 million, $8.0 million and $7.9 million of gift card breakage in fiscal years 2019, 2018 and 2017, 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. There were no changes to our accounting for gift card revenue and related costs upon adoption of the new revenue recognition standard. Certain of our promotional programs include multiple element arrangements that incorporate various performance obligations. We allocate revenue using the relative selling price of each performance obligation considering the likelihood of redemption and recognize revenue upon satisfaction of each performance obligation. During fiscal 2019, we deferred revenue of $7.9 million related to promotional programs and recognized $7.3 million of previously deferred revenue related to promotional programs. During fiscal 2018, we deferred revenue of $7.0 million related to promotional programs and recognized $5.9 million of previously deferred revenue related to promotional programs. (See Recent Accounting Pronouncements Leases We currently lease all of our restaurant locations, generally with initial terms of 10 In addition to leases for our restaurant locations, we also lease automobiles and certain equipment that is used in the restaurants, bakeries and corporate office. The automobile leases are the only non-real estate leases included in our operating lease assets and liabilities. All other leases are immaterial or qualify for the short-term lease exclusion. The assessment of whether a contract is or contains a lease is performed at contract inception. A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all the economic benefits from the use of the asset and to direct how and for what purpose the asset is used. At lease commencement, we evaluate each lease to determine its appropriate classification as an operating or finance lease. All of our restaurant and automobile leases are classified as operating leases. For restaurant leases existing at transition, we will continue to apply our historical practice of excluding executory costs, and only minimum base rent will be factored into the initial operating lease liability and corresponding lease asset. For restaurant leases beginning after adoption of ASC 842, we have elected the single lease component practical expedient. Operating lease assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term. The difference between the amounts we expend for structural costs and the construction contributions received from our landlords is recorded as an adjustment to the operating lease asset. Lease terms include the build-out period for our leases where no rent payments are typically due under the terms of the lease, as well as options to renew when we deem we have significant economic incentive to exercise the extension. When determining if we have a significant economic incentive, we consider relevant factors, such as contractual, asset, entity and market-based considerations. Option periods are included in the lease term for the majority of our leases. Termination rights have not been factored into the lease terms since based on our probability assessment we are reasonably certain we will not terminate our leases. We cannot determine the interest rate implicit in our leases because we do not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, we use our incremental borrowing rate as the discount rate for our leases. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because we do not generally borrow on a collateralized basis, we derive an appropriate incremental borrowing rate using the interest rate we pay on our non-collateralized borrowings, adjusted for the amount of the lease payments, the lease term and the effect of designating specific collateral with a value equal to the unpaid lease payments for that lease. We apply the incremental borrowing rate on a portfolio basis given the impact of applying it on a lease by lease basis would be immaterial. We monitor for events or changes in circumstances that require reassessment of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the operating lease asset. We also assess the potential impairment of our operating lease assets under long-lived asset impairment guidance in ASC 360, Property, Plant, and Equipment: Impairment or disposal on long-lived assets. Rent expense included in our operating lease assets is recognized on a straight-line basis. Contingent rent expense is recorded as incurred to the extent it exceeds minimum base rent per the lease agreement. Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance cost and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized as incurred. The reasonably certain lease term and the incremental borrowing rate for each restaurant location require judgment by management and can impact the classification and accounting for a lease as operating or finance, as well as the value of the operating lease asset and liability. These judgments may produce materially different amounts of rent expense than would be reported if different assumptions were used. Rent expense is included in other operating costs and expenses in the consolidated statements of income. Self-Insurance Liabilities We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date and are recorded in other accrued expenses. Our estimated liabilities, which are not discounted, are based on information provided by our insurance brokers and insurers, combined with our judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices. Stock-Based Compensation We maintain stock-based incentive plans under which equity awards may be granted to staff members and consultants. We account for the awards based on fair value measurement guidance and amortize to expense over the vesting period using a straight-line or graded-vesting schedule, as applicable. (See Note 16 for further discussion of our stock-based compensation.) Advertising Costs We expense advertising production costs at the time the advertising first takes place. All other advertising costs are expensed as incurred. Most of our advertising costs are included in other operating costs and expenses and were $10.6 million, $6.1 million and $6.1 million in fiscal 2019, 2018 and 2017, respectively. Preopening Costs Preopening costs include all costs to relocate and compensate restaurant management staff members during the preopening period, costs to recruit and train hourly restaurant staff members, and wages, travel and lodging costs for our opening training team and other support staff members. Also included are expenses for maintaining a roster of trained managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs, and corporate travel and support activities. We expense preopening costs as incurred. Income Taxes We provide for federal, state and foreign income taxes currently payable and for deferred taxes that result from differences between financial accounting rules and tax laws governing the timing of recognition of various income and expense items. We recognize deferred income tax assets and liabilities for the future tax effects of such temporary differences based on the difference between the financial statement and tax bases of existing assets and liabilities using the statutory rates expected in the years in which the differences are expected to reverse. The effect on deferred taxes of any enacted change in tax rates is recognized in income in the period that includes the enactment date. Income tax credits are recorded as a reduction of tax expense. Uncertain tax positions taken or expected to be taken in a tax return are recognized (or derecognized) in the financial statements when it is more likely than not (i.e., a likelihood of more than 50%) that the position would be sustained on its technical merits upon examination by tax authorities, taking into account available administrative remedies and litigation. A recognized tax position is then measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution. We recognize interest related to uncertain tax positions in income tax expense. Penalties related to uncertain tax positions are recorded in general and administrative expenses. Net Income per Share Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, reduced by unvested restricted stock awards. At December 31, 2019, January 1, 2019 and January 2, 2018, 1.8 million shares, 1.7 million shares and 1.7 million shares, respectively, of restricted stock issued to staff members 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. Shares of common stock equivalents of 2.3 million, 1.5 million and 1.6 million for fiscal 2019, 2018 and 2017, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. Fiscal Year 2019 2018 2017 (In thousands, except per share data) Net income $ 127,293 $ 99,035 $ 157,392 Basic weighted average shares outstanding 43,949 45,263 46,930 Dilutive effect of equity awards 596 952 1,222 Diluted weighted average shares outstanding 44,545 46,215 48,152 Basic net income per share $ 2.90 $ 2.19 $ 3.35 Diluted net income per share $ 2.86 $ 2.14 $ 3.27 Comprehensive Income Comprehensive income includes all changes in equity during a period except those resulting from investment by and distribution to owners. Our comprehensive income consists of net income and translation gains and losses related to our Canadian restaurant operations. Foreign Currency The Canadian dollar is the functional currency for our Canadian restaurant operations. Revenue and expense accounts are translated into U.S. dollars using the average exchange rates during the reporting period. Assets and liabilities are translated using the exchange rates in effect at the reporting period end date. Equity accounts are translated at historical rates, except for the change in retained earnings which is the result of the income statement translation process. Translation gains and losses are reported as a separate component in our consolidated statements of comprehensive income and would only be realized upon the sale or upon complete or substantially complete liquidation of the business. Gains and losses from foreign currency transactions are recognized in our consolidated statements of income in interest and other expense, net. Recent Accounting Pronouncements Recently Adopted Accounting Standards We adopted FASB Accounting Standards Codification (“ASC”) Topic 842, Leases, as of January 2, 2019, using the alternative transition method and recorded a cumulative effect adjustment to beginning retained earnings without restating prior periods. We elected the package of practical expedients which allowed us to carry forward our historical lease classification, our assessment of whether a contract is or contains a lease and our initial direct costs for any leases that existed prior to adoption of the new standard. In addition, we elected the short-term lease exclusion and the hindsight practical expedient, which lengthened the lease term for certain of our leases to include renewal options. Adoption of the new standard resulted in the recognition of operating lease assets and liabilities of $975.1 million and $1,045.4 million, respectively, and a reduction to retained earnings of $41.5 million, net of tax. All prior lease-related balances of $39.2 million of prepaid rent, $140.2 million in property and equipment, net, $6.2 million of intangible assets, net, $82.1 million of deferred rent liabilities and $118.7 million of deemed landlord financing were reclassified into operating lease assets or eliminated upon ASC 842 adoption. We adopted ASC Topic 606, Revenue from Contracts with Customers, as of January 3, 2018. This accounting guidance provides a comprehensive new revenue recognition model that supersedes most of the existing revenue recognition requirements and requires entities to recognize revenue at an amount that reflects the consideration to which a company expects to be entitled in exchange for transferring goods or services to a customer. Utilizing the cumulative-effect method of adoption, we recorded a $4.8 million increase to deferred revenue and a corresponding reduction of $3.6 million, net of tax, to retained earnings to reverse a portion of the previously-recognized development and site fees from our international licensees. Whereas previously we recognized income and received payment upon execution of the agreements and approval of new restaurant sites, respectively, future revenue for these items will be recorded on a straight-line basis over the life of the applicable license agreements as the agreements do not contain distinct performance obligations. Comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The impact of adopting this standard as compared to the previous revenue recognition guidance was not material to our consolidated balance sheet and consolidated statements of income and comprehensive income. Recently Issued Accounting Standards In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2019 | |
Acquisition | |
Acquisition | 2. Acquisition On October 2, 2019 (the “Closing Date” or “Closing”), we completed the acquisition of North Italia and the remaining business of Fox Restaurant Concepts LLC, including Flower Child and all other FRC brands. North Italia is a restaurant company that operated 21 locations across ten states and Washington D.C. as of the Closing Date. FRC is a multi-concept restaurant company that operated 10 concepts with 47 locations across eight states and Washington D.C. as of the Closing Date. The results of operations, financial position and cash flows of the acquired businesses are included in our consolidated financial statements as of the acquisition date. We have concluded that the Acquisition represents a single business combination of related businesses under common control within the scope of ASC Topic 805, Business Combinations. The acquisition date was determined to be the Closing Date, which was the date we obtained control by legally transferring the consideration for the remaining ownership interests, acquiring the assets and assuming the liabilities of North Italia and the remaining FRC business. The Acquisition, which we expect will accelerate and diversify our revenue growth, was completed for consideration consisting of the following components: $288.1 million in cash at Closing, which was primarily funded by drawing on the New Facility; assumption of $10.0 million in debt previously owed by FRC to us; a $12.0 million indemnity escrow amount specifically related to North Italia due ratably over the next two years; and $45.0 million of deferred consideration due ratably over the next four years (including a $13.0 million indemnity escrow amount specifically related to the remaining FRC businesses). The acquisition agreement also included a contingent consideration provision, a portion of which was considered part of the acquisition consideration, and the remainder of which was considered future compensation expense. The acquisition-date fair values for the acquisition consideration and future compensation expense were $12.8 million and $7.3 million, respectively. The contingent consideration is payable on the fifth anniversary of the Closing Date and is based on achievement of revenue and profitability targets for the FRC brands other than North Italia and Flower Child with considerations made in the event we undergo a change in control or divest any FRC brand (other than North Italia and Flower Child) during the five years after Closing. We are also required to provide financing to FRC in an amount sufficient to support achievement of these targets during the five years after Closing. The fair value of the contingent consideration and compensation liabilities was determined utilizing a Monte Carlo model based on estimated future revenues and volatility factors, among other variables and estimates, and has no maximum payment. The undiscounted range of outcomes per the Monte Carlo model was $0 to $69.2 million. The fair value will be evaluated each reporting period and the contingent consideration will be adjusted accordingly. The assumption of debt previously owed by North Italia to us represents the effective settlement of a preexisting relationship. Since we determined the loans were at market terms, the debt assumed was treated as purchase consideration, and no gain or loss was recorded. Since the Acquisition represents a business combination achieved in stages, we remeasured our previously-held equity interests in North Italia and Flower Child immediately before the acquisition to acquisition-date fair value of $122.0 million and recognized a resulting gain of $52.7 million which is included in gain/(loss) on investments in unconsolidated affiliates in our consolidated statements of operations. The fair value of the previously-held interests was determined using a discounted cash flow model based on estimated future revenues, margins and discount rates, among other variables and estimates. The following table summarizes the preliminary calculation of goodwill based on the excess of consideration transferred and the fair value of the previously held equity interests over the fair value of the assets acquired and liabilities assumed (in thousands). December 31, 2019 Purchase consideration: Cash at closing $ 288,089 Assumption of debt previously owed by FRC 10,000 Deferred payments 53,471 Contingent consideration 12,786 Consideration transferred 364,346 Fair value of previously-held equity interests 122,000 Total 486,346 Less net assets acquired: Current assets 23,682 Property and equipment 84,360 Intangible assets 338,782 Operating lease assets 223,455 Other assets 5,842 Current liabilities (64,814) Operating lease liabilities (202,433) Other noncurrent liabilities (883) Total net assets acquired 407,991 Goodwill $ 78,355 Goodwill is related to the benefits expected as result of the Acquisition, including acceleration and diversification of our revenue growth, and of the $78.4 million recorded as preliminary goodwill, $73.1 million is expected to be deductible for tax purposes. $29.2 million of the goodwill recorded relates to North Italia. Property and equipment will be depreciated over useful lives of 3 years to 30 years. The fair value of acquired property and equipment was determined under a trended original cost approach utilizing variables and estimates such as useful lives, hold factors and economic obsolescence. Intangible assets acquired primarily consist of trade names and trademarks that were assigned indefinite lives based on the expected use of the assets and the regulatory and economic environment within which they are being used. The fair value of the acquired intangible assets was determined utilizing the relief from royalty method based on estimated future revenues, royalty rates and discount rates, among other variables and estimates. We expect minor adjustments to our purchase accounting in the first quarter of fiscal 2020 as we finalize our valuation of the acquired intangible assets. Operating lease assets include values associated with favorable and unfavorable market leases that will amortize over a weighted-average period of 15.2 years. The fair value of the operating lease assets was derived using an income approach based on market transaction data and estimated discount rates, among other variables and estimates. During fiscal 2019, we incurred $5.3 million of costs to effect and integrate the Acquisition, which were expensed in accordance with ASC 805 and are included in acquisition-related costs in our consolidated statements of operations. In addition, we incurred $1.0 million related to changes in the fair value of the deferred and contingent consideration and compensation liabilities, as well as amortization of acquired definite-lived licensing agreements, which are included in acquisition-related contingent consideration, compensation and amortization expenses in our consolidated statements of operations. Pro Forma Results of Operations (unaudited) The following pro forma results of operations for fiscal 2019 and 2018 give effect to the Acquisition as if it had occurred on January 2, 2018 (in thousands): Fiscal Year 2019 2018 Revenues $ 2,732,901 $ 2,579,019 Net income 74,949 80,800 Net income per share: Basic 1.71 1.79 Diluted $ 1.68 $ 1.75 The above pro forma information includes combined North Italia and FRC actual revenues and net loss of $92.0 million and $1.5 million, respectively, contributed post acquisition in fiscal 2019. The most significant adjustments included in the pro forma financial information are the elimination of the gain/(loss) on our previously-held equity interests in North Italia and Flower Child, elimination of transaction costs, increased interest expense associated with debt incurred to fund the Acquisition, elimination of historical FRC interest expense and corresponding income tax effects. In the opinion of the Company’s management, the unaudited pro forma financial information includes all significant necessary adjustments that can be factually supported to reflect the effects of the Acquisition and related transactions. The unaudited pro forma financial information is provided for informational purposes only and are not necessarily indicative of what our actual results of operations would have been had the Acquisition and related transactions been completed as of January 2, 2018 or that may be achieved in the future. |
Other Receivables
Other Receivables | 12 Months Ended |
Dec. 31, 2019 | |
Other Receivables | |
Other Receivables | 3. Other Receivables Other receivables consisted of (in thousands): December 31, 2019 January 1, 2019 Gift card distributors $ 38,947 $ 41,996 Insurance providers 9,646 9,020 Landlord construction contributions 3,501 4,976 Other 12,589 12,201 Total $ 64,683 $ 68,193 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventories | |
Inventories | 4. Inventories Inventories consisted of (in thousands): December 31, 2019 January 1, 2019 Restaurant food and supplies $ 25,057 $ 18,362 Bakery finished goods and work in progress 16,000 13,845 Bakery raw materials and supplies 6,168 6,679 Total $ 47,225 $ 38,886 |
Prepaid Expenses
Prepaid Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Prepaid Expenses | |
Prepaid Expenses | 5. Prepaid Expenses Prepaid expenses consisted of (in thousands): December 31, 2019 January 1, 2019 Gift card contract assets $ 23,172 $ 23,388 Other 20,774 17,257 Total $ 43,946 $ 40,645 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Property and Equipment | 6. Property and Equipment Property and equipment consisted of (in thousands): December 31, 2019 January 1, 2019 Land and related improvements $ 15,852 $ 15,852 Buildings 44,049 44,036 Leasehold improvements 1,158,467 1,283,233 Furnishings, fixtures and equipment 548,075 467,051 Computer software and equipment 55,614 55,434 Restaurant smallwares 34,653 30,268 Construction in progress 23,732 27,975 Property and equipment, total 1,880,442 1,923,849 Less: Accumulated depreciation (1,048,843) (1,010,574) Property and equipment, net $ 831,599 $ 913,275 Depreciation expenses related to property and equipment for fiscal 2019, 2018 and 2017 were $88.0 million, $93.3 million and $89.6 million, respectively. Repair and maintenance expenses for fiscal 2019, 2018 and 2017 were $56.3 million, $55.2 million and $54.1 million, respectively. Net expense for property and equipment disposals was $0.9 million, $2.1 million and $2.5 million, in fiscal 2019, 2018 and 2017, respectively. |
Intangible Assets, net
Intangible Assets, net | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets, net | |
Intangible Assets, net | 7. Intangible Assets, net The following table presents components of intangible assets, net (in thousands): December 31, 2019 January 1, 2019 Indefinite-lived intangible assets: Goodwill $ 78,355 — Trade names and trademarks 337,027 $ 9,922 Transferable alcoholic beverage licenses 8,575 7,164 Total indefinite-lived intangible assets 423,957 17,086 Definite-lived intangible assets, net: Licensing agreements 10,060 — Non-transferable alcoholic beverage licenses 3,190 2,951 Leasehold acquisition assets — 6,172 Total definite-lived intangible assets 13,250 9,123 Total intangible assets, net $ 437,207 $ 26,209 Amortization expenses related to our definite-lived intangible assets was $0.3 million, $0.6 million and $0.6 million for fiscal 2019, 2018 and 2017, respectively. Definite-lived intangible assets will be amortized over one |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Leases | 8. Leases Components of lease expense were as follows (in thousands): Fiscal Year 2019 Operating $ 112,048 Variable 66,689 Short-term 368 Total $ 179,105 Rent expense on all operating leases (under ASC 840) was as follows (in thousands): Fiscal Year 2018 2017 Straight-lined minimum base rent $ 83,999 $ 83,387 Contingent rent 20,147 19,559 Common area maintenance and taxes 39,961 38,103 Total $ 144,107 $ 141,049 Supplemental information related to leases (in thousands, except percentages): Fiscal Year 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 103,210 Right-of-use assets obtained in exchange for new operating lease liabilities 262,421 (1) Weighted-average remaining lease term — operating leases (in years) 16.6 Weighted-average discount rate — operating leases 5.2 % (1) Includes $223.5 million in right-of-use assets related to the Acquisition. (See Note 2 for further discussion of the Acquisition.) As of December 31, 2019, the maturities of our operating lease liabilities are as follows (in thousands): 2020 $ 122,250 2021 124,383 2022 125,427 2023 121,855 2024 120,772 Thereafter 1,415,777 Total future lease payments 2,030,464 Less: Interest (712,514) Present value of lease liabilities $ 1,317,950 Operating lease liabilities include $867.2 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $136.2 million of legally binding minimum lease payments for leases signed but not yet commenced. As of January 1, 2019, the aggregate minimum annual lease payments under operating leases (under ASC 840), including amounts characterized as deemed landlord financing payments, were as follows (in thousands): 2019 $ 93,792 2020 91,808 2021 88,829 2022 86,925 2023 81,929 Thereafter 495,091 Total $ 938,374 |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2019 | |
Other Assets | |
Other Assets | 9. Other Assets Other assets consisted of (in thousands): December 31, 2019 January 1, 2019 Non-qualified deferred compensation assets $ 77,228 $ 57,605 Deposits 5,693 5,489 Deferred income taxes 3,375 1,597 Total $ 86,296 $ 64,691 |
Gift Cards
Gift Cards | 12 Months Ended |
Dec. 31, 2019 | |
Gift Cards | |
Gift Cards | 10. Gift Cards The following tables present information related to gift cards (in thousands): December 31, 2019 January 1, 2019 Gift card liabilities: Beginning balance $ 172,336 $ 163,951 Activations 158,099 151,084 Redemptions and breakage (142,457) (142,699) Ending balance $ 187,978 $ 172,336 December 31, 2019 January 1, 2019 Gift card contract assets (1) Beginning balance $ 23,388 $ 23,814 Deferrals 18,378 18,669 Amortization (18,594) (19,095) Ending balance $ 23,172 $ 23,388 (1) Included in prepaid expenses on the consolidated balance sheets. |
Other Accrued Expenses
Other Accrued Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Other Accrued Expenses | |
Other Accrued Expenses | 11. Other Accrued Expenses Other accrued expenses consisted of (in thousands): December 31, 2019 January 1, 2019 Self-insurance $ 68,881 $ 72,631 Salaries and wages 56,774 39,102 Staff member benefits 25,044 22,946 Payroll and sales taxes 22,822 15,684 Deferred consideration 16,740 — Other 46,321 44,018 Total $ 236,582 $ 194,381 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2019 | |
Long-Term Debt | |
Long-Term Debt | 12. Long-Term Debt On July 30, 2019, we entered into a Third Amended and Restated Loan Agreement (the “New Facility”), which amends and restates in its entirety our prior Second Amended and Restated Loan Agreement dated as of December 22, 2015. The New Facility, which terminates on July 30, 2024, provides us with revolving loan commitments that total $400 million (of which $40 million may be used for issuances of letters of credit). The New Facility contains a commitment increase feature that could provide for an additional $200 million in available credit upon our request and subject to the participating lenders electing to increase their commitments or new lenders being added to the New Facility. At December 31, 2019, we had net availability for borrowings of $90.6 million, based on an outstanding debt balance of $290.0 million and $19.4 million in standby letters of credit. During fiscal 2019, we utilized the New Facility to fund the Acquisition (see Note 2 for further discussion of the Acquisition). During fiscal years 2019, 2018 and 2017, we utilized our previous credit facility to fund a portion of our stock repurchases. We are subject to certain financial covenants under the New Facility requiring us to maintain (i) a maximum “Net Adjusted Leverage Ratio” of 4.75 and (ii) a minimum EBITDAR to interest and rent expense ratio (“EBITDAR Ratio”) of 1.9, as well as customary events of default that, if triggered, could results in acceleration of the maturity of the New Facility. The New Facility also limits cash distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined ratio, and also sets forth negative covenants that restrict indebtedness, liens, investments, sales of assets, fundamental changes and other matters. Borrowings under the New Facility bear interest, at our option, at a rate equal to either (i) the adjusted LIBO Rate (as customarily defined) (the “Adjusted LIBO Rate”) plus a margin that is based on our net adjusted leverage ratio, or (ii) the sum of (a) the highest of (1) the rate of interest last quoted by The Wall Street Journal as the prime rate in effect in the United States, (2) the greater of the rate calculated by the Federal Reserve Bank of New York as the effective federal funds rate or the rate that is published by the Federal Reserve Bank of New York as an 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 that is based on our net adjusted leverage ratio. Letters of credit issued under the New Facility bear fees that are equivalent to the interest rate margin that is applicable to revolving loans that bear interest at the adjusted LIBO Rate plus other customary fees charged by the issuing bank. Under the New Facility, we paid certain customary loan origination fees and will pay an unused fee on the unused portion of the New Facility that is also based on our Net Adjusted Leverage Ratio. Our Net Adjusted Leverage and EBITDAR Ratios were 3.8 and 2.5, respectively, at December 31, 2019, and we were in compliance with all covenants in effect at that date. Our obligations under the New Facility are unsecured. Certain of our material subsidiaries have guaranteed our obligations under the New Facility. The New Facility will be used for our general corporate purposes, including for the issuance of standby letters of credit to support our self-insurance programs, and to fund dividends, stock repurchases and permitted acquisitions. We capitalized interest expense related to new restaurant openings and major remodels totaling $0.6 million, $0.4 million and $0.7 million in fiscal 2019, 2018 and 2017, respectively. |
Other Noncurrent Liabilities
Other Noncurrent Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Other Noncurrent Liabilities | |
Other Noncurrent Liabilities | 13. Other Noncurrent Liabilities Other noncurrent liabilities consisted of (in thousands): December 31, 2019 January 1, 2019 Non-qualified deferred compensation liabilities $ 76,255 $ 57,551 Deferred consideration 37,193 — Contingent consideration and compensation liabilities 13,218 — Other 13,882 14,108 Total $ 140,548 $ 71,659 (See Note 17 for further discussion of our non-qualified deferred compensation plan.) |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14. Commitments and Contingencies Purchase obligations, which include inventory purchases, equipment purchases, information technology and other miscellaneous commitments, were $118.2 million and $149.8 million at December 31, 2019 and January 1, 2019, respectively. These purchase obligations are primarily due within three years and recorded as liabilities when goods are received or services rendered. Real estate obligations, which include construction commitments, net of up-front landlord construction contributions, and legally binding minimum lease payments for leases signed but not yet commenced, were $176.1 million and $12.6 million at December 31, 2019 and January 1, 2019, respectively. The purchase price of the Acquisition includes a $12 million indemnity escrow amount specifically related to North Italia due ratably over the next two years ; and $45 million of deferred consideration due ratably over the next four years (including a $13 million indemnity escrow amount specifically related to the remaining FRC businesses). The acquisition agreement also included a contingent consideration provision which is payable on the fifth anniversary of the Closing Date and is based on achievement of revenue and profitability targets for the FRC brands other than North Italia and Flower Child with considerations made in the event we undergo a change in control or divest any FRC brand (other than North Italia and Flower Child) during the five years after Closing. We are also required to provide financing to FRC in an amount sufficient to support achievement of these targets during the five years after Closing. (See Note 2 for further discussion of the Acquisition.) As credit guarantees to insurers, we had $19.4 million and $20.7 million at December 31, 2019 and January 1, 2019, respectively, 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, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date. The total accrued liability for our self-insured plans was $67.7 million and $72.2 million at December 31, 2019 and January 1, 2019, respectively. On June 7, 2018, the California Department of Industrial Relations issued a $4.2 million wage citation jointly against the Company and our vendor that provides janitorial services to eight of our Southern California restaurants, alleging that the janitorial vendor or its subcontractor failed to comply with various provisions of the California Labor Code (Wage Citation Case No. 35-CM-188798-16). The wage citation seeks to recover penalties and other monetary payments on behalf of the employees that worked for this vendor or its subcontractor. On June 28, 2018, we filed an appeal of the wage citation. The Company’s appeal of the wage citation is tentatively scheduled for hearing in July 2020. We intend to vigorously defend this action. However, it is not possible at this time to reasonably estimate the outcome of or any potential liability from this matter and, accordingly, we have not reserved for any potential future payments. On June 22, 2018, the Internal Revenue Service issued a Notice of Deficiency in which they disallowed $8.0 million of our §199 Domestic Production Activities Deduction for tax years 2010, 2011 and 2012. On September 11, 2018 we petitioned the United States Tax Court for a redetermination of the deficiency. The tax court has assigned docket number 18150-18 to our case. We intend to vigorously defend our position in litigation and based on our analysis of the law, regulations and relevant facts, 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 amount of reasonably possible losses resulting from final disposition of any pending lawsuits, audits, proceedings and claims will not have a material adverse effect individually or in the aggregate on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, audits, proceedings or claims. Legal costs related to such claims are expensed as incurred. We have employment agreements with certain of our executive officers that provide for payments to those officers in the event of an actual or constructive termination of their employment, including in the event of a termination without cause, an acquirer failure to assume or continue equity awards following a change in control of the Company or, otherwise, in the event of death or disability as defined in those agreements. Aggregate payments totaling approximately $2.3 million, excluding accrued potential bonuses of $2.7 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 31, 2019. In addition, the employment agreement with our Chief Executive Officer specifies an annual founder’s retirement benefit of $650,000 for ten years , commencing six months after termination of his full-time employment. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity | |
Stockholders' Equity | 15. Stockholders’ Equity Cash dividends of $1.38, $1.24 and $1.06 were declared during fiscal 2019, 2018 and 2017, respectively. Future decisions to pay or to increase or decrease dividends are at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of the New Facility and applicable law, and such other factors that the Board considers relevant. (See Note 12 for further discussion of our long-term debt.) Under authorization by our Board to repurchase up to 56.0 million shares of our common stock, we have cumulatively repurchased 52.9 million shares at a total cost of $1,693.1 million through December 31, 2019. During fiscal 2019, 2018 and 2017, we repurchased 1.1 million, 2.3 million and 2.6 million shares of our common stock at a cost of $51.0 million, $109.3 million and $123.0 million, respectively. Repurchased common stock is reflected as a reduction of stockholders’ equity in treasury stock. Our share repurchase authorization does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time. Shares may be repurchased in the open market or through privately negotiated transactions at times and prices considered appropriate by us. We make the determination to repurchase shares based on several factors, including current and forecasted operating cash flows, capital needs associated with new restaurant development and maintenance of existing locations, dividend payments, debt levels and cost of borrowing, obligations associated with the Acquisition, our share price and current market conditions. (See Note 2 for further discussion of the Acquisition.) The timing and number of shares repurchased are also subject to legal constraints and financial covenants under the New Facility that limit share repurchases based on a defined ratio. (See Note 12 for further discussion of our long-term debt.) Our objectives regarding share repurchases are to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our earnings per share growth. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | 16. Stock-Based Compensation We maintain stock-based incentive plans under which incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units may be granted to staff members, consultants and non-employee directors. Our current practice is to issue new shares, rather than treasury shares, upon stock option exercises, for restricted share grants and upon vesting of restricted share units. To date, we have only granted non-qualified stock options, restricted shares and restricted share units of common stock under these plans. No grants have been made to non-employee directors under these plans. On April 5, 2017, our Board approved an amendment to our 2010 Stock Incentive Plan to increase the number of shares of common stock reserved for grant under the plan to 12.7 million shares from 9.2 million shares. This amendment was approved by our stockholders at our annual meeting held on June 8, 2017. On April 4, 2019, our Board adopted The Cheesecake Factory Incorporated Stock Incentive Plan. This plan was approved by our stockholders at our annual meeting held on May 30, 2019. The maximum number of shares of common stock available for grant under this plan is 4.8 million shares plus 1.8 million shares, which, as of May 30, 2019, were available for issuance under our 2010 Stock Incentive Plan, plus 1.9 million shares which may become available for issuance under The Cheesecake Factory Incorporated Stock Incentive Plan due to forfeiture or lapse of awards under our 2010 Stock Incentive Plan following May 30, 2019. Approximately 6.5 million of these shares were available for grant as of December 31, 2019. Stock options generally vest at 20% per year and expire eight 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. Certain restricted share units granted to executive officers contain performance-based vesting conditions. Performance goals are determined by the Board of Directors. The quantity of units that will vest ranges from 0% to 150 % based on the level of achievement of the performance conditions. 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. Compensation expense is recognized only for those options, restricted shares and restricted share units expected to vest, with forfeitures estimated based on our historical experience and future expectations. The following table presents information related to stock-based compensation, net of forfeitures (in thousands): Fiscal Year 2019 2018 2017 (2) Labor expenses $ 6,233 $ 5,681 $ 5,236 Other operating costs and expenses 274 287 243 General and administrative expenses 12,866 14,020 10,978 Total stock-based compensation 19,373 19,988 16,457 Income tax benefit 4,760 4,987 6,295 Total stock-based compensation, net of taxes $ 14,613 $ 15,001 $ 10,162 Capitalized stock-based compensation (1) $ 226 $ 262 $ 239 (1) It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net on the consolidated balance sheets. (2) Fiscal 2017 stock-based compensation expense includes a $3.9 million benefit for an out-of-period adjustment related to a correction in stock-based compensation valuation and forfeitures. Stock Options The weighted-average fair value at the grant date for options issued during fiscal 2019, 2018 and 2017 was $9.84, $11.62 and $14.83 per share, respectively. The fair value of options was estimated utilizing the Black-Scholes valuation model with the following weighted-average assumptions for fiscal 2019, 2018 and 2017, respectively: (a) an expected option term of 6.9 years in all fiscal years presented, (b) expected stock price volatility of 26.3%, 27.8% and 24.4%, (c) a risk-free interest rate of 2.6%, 2.8% and 2.3%, and (d) a dividend yield on our stock of 2.9%, 2.5% and 1.6%. The expected option term represents the estimated period of time until exercise and is based on historical experience of similar options, giving consideration to the contractual terms, vesting schedules and expectations of future staff member behavior. Expected stock price volatility is based on a combination of the historical volatility of our stock and the implied volatility of actively traded options on our common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with an equivalent remaining term. The dividend yield is based on anticipated cash dividend payouts. Stock option activity during fiscal 2019 was as follows: Weighted Average Weighted Remaining Aggregate Average Contractual Intrinsic Shares Exercise Price Term Value (1) (In thousands) (Per share) (In years) (In thousands) Outstanding at beginning of year 1,799 $ 45.03 4.1 $ 5,606 Granted 307 $ 45.90 Exercised (260) $ 29.72 Forfeited or cancelled (17) $ 48.38 Outstanding at end of year 1,829 $ 47.32 4.3 $ 844 Exercisable at end of year 986 $ 46.04 2.8 $ 844 (1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal year-end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal year -end date. The total intrinsic value of options exercised during fiscal 2019, 2018 and 2017 was $4.3 million, $6.2 million and $11.2 million, respectively. As of December 31, 2019, total unrecognized stock-based compensation expense related to unvested stock options was $7.0 million, which we expect to recognize over a weighted-average period of approximately 3.0 years. Restricted Shares and Restricted Share Units Restricted share and restricted share unit activity during fiscal 2019 was as follows: Weighted Average Fair Shares Value (In thousands) (Per share) Outstanding at beginning of year 1,702 $ 48.08 Granted 541 $ 45.02 Vested (349) $ 45.26 Forfeited (130) $ 47.19 Outstanding at end of year 1,764 $ 47.76 Fair value of our restricted shares and restricted share units is based on our closing stock price on the date of grant. The weighted-average fair value for restricted shares and restricted share units issued during fiscal 2019, 2018 and 2017 was $45.02, $48.22 and $54.29 , respectively. The fair value of shares that vested during fiscal 2019, 2018 and 2017 was $15.8 million, $17.8 million and $18.4 million, respectively. As of December 31, 2019, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $36.4 million, which we expect to recognize over a weighted-average period of approximately 2.9 years. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefit Plans | |
Employee Benefit Plans | 17. Employee Benefit Plans We have defined contribution benefit plans in accordance with section 401(k) of the Internal Revenue Code (“401(k) Plans”) that are open to our staff members who meet certain compensation and eligibility requirements. Participation in the 401(k) Plans is currently open to staff members from our restaurant concepts, bakery facilities, corporate office and FRC headquarters. The 401(k) Plans allow participating staff members to defer the receipt of a portion of their compensation and contribute such amount to 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) Plans. We currently match in cash a certain percentage of the staff member contributions to the 401(k) Plans and also pay a portion of the administrative costs. Expense recognized in fiscal 2019, 2018 and 2017 was $1.2 million, $1.0 million and $1.0 million, respectively. We have also established non-qualified deferred compensation plans (“Non-Qualified Plans”) for our executive officers and a select group of management and/or highly compensated staff members. The Non-Qualified Plans allow participating staff members to defer the receipt of a portion of their base compensation and bonuses. Non-employee directors may also participate in the Non-Qualified Plans and defer the receipt of their earned director fees. We currently match in cash a certain percentage of the staff member contributions to the Non-Qualified Plans and also pay for the administrative costs. We do not match any contributions made by non-employee directors. Expense recognized in fiscal 2019, 2018 and 2017 was $1.2 million, $1.3 million and $1.0 million, respectively. While we are under no obligation to fund Non-Qualified Plan liabilities (in whole or in part), our current practice is to maintain company-owned life insurance contracts and other investments that are specifically designed to informally fund savings plans of this nature. These contracts are recorded at their cash surrender value as determined by the insurance carrier. Our consolidated balance sheets reflect investments in other assets and our obligation to participants in the Non-Qualified Plans in other noncurrent liabilities. All gains and losses related to our non-qualified deferred compensation assets and liabilities are reflected in interest and other expense, net in our consolidated statements of income. We maintain self-insured medical and dental benefit plans for our staff members. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims as well as claims incurred but not yet reported to us as of the balance sheet date. The accrued liability for our self-insured benefit plans, which is included in other accrued expenses, was $10.8 million and $10.4 million as of December 31, 2019 and January 1, 2019, respectively. (See Note 1 for further discussion of accounting for our self-insurance liabilities.) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | 18. Income Taxes The provision for income taxes consisted of the following (in thousands): Fiscal Year 2019 2018 2017 (1) Income before income taxes $ 140,334 $ 107,411 $ 146,466 Income tax (benefit)/provision: Current: Federal $ 8,211 $ 5,082 $ 7,148 State 7,027 8,804 7,106 Total current 15,238 13,886 14,254 Deferred: Federal (3,695) (4,549) (24,570) State 1,498 (961) (610) Total deferred (2,197) (5,510) (25,180) Total (benefit)/provision $ 13,041 $ 8,376 $ (10,926) (1) The Tax Act, which was enacted on December 22, 2017, made significant changes to how corporations are taxed in the U.S., the most prominent of which affecting us was to lower the U.S. corporate tax rate from 35% to 21%. In addition to the benefit of a lower rate in future years, the enactment of the Tax Act caused us to revalue our deferred tax assets and liabilities to reflect the new rate, resulting in a benefit to our fiscal 2017 income tax provision of $38.5 million. The following reconciles the U.S. federal statutory rate to the effective tax rate: Fiscal Year 2019 2018 2017 U.S. federal statutory rate 21.0 % 21.0 % 35.0 % State and district income taxes, net of federal benefit 4.9 6.1 3.3 Credit for FICA taxes paid on tips (12.8) (16.5) (9.4) Other credits and incentives (1.4) (2.5) (1.9) Manufacturing deduction — — (2.3) Deferred compensation (1.7) 0.8 (1.5) Equity compensation (0.2) (1.5) (4.5) Impact of statutory rate change on deferred taxes — — (26.3) Other (0.5) 0.4 0.1 Effective tax rate 9.3 % 7.8 % (7.5) % Following are the temporary differences that created our deferred tax assets and liabilities (in thousands): December 31, 2019 January 1, 2019 Deferred tax assets: Staff member benefits $ 27,059 $ 22,925 Insurance reserves 14,157 15,165 Accrued rent 27,582 10,870 Deferred income 22,725 17,288 Stock-based compensation 8,794 8,628 Tax credit carryforwards 15,754 1,880 Other 1,958 1,265 Subtotal 118,029 78,021 Less: Valuation allowance (713) (792) Total $ 117,316 $ 77,229 Deferred tax liabilities: Property and equipment $ (131,120) $ (107,513) Prepaid expenses (8,819) (7,929) Inventory (7,713) (6,893) Other (136) (5,420) Total $ (147,788) $ (127,755) Net deferred tax liability $ (30,472) $ (50,526) At December 31, 2019 and January 1, 2019, we had $1.9 million and $2.4 million, respectively, of state tax credit carryforwards, consisting of hiring and investment credits, which began to expire in 2013, and $0.8 million and $0.7 million, respectively, of foreign net operating losses and $14.3 million and $3.3 million, respectively, of federal credit carryforwards which begin to expire in 2038. We assess 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 of $0.7 million and $0.8 million at December 31, 2019 and January 1, 2019, respectively, to reflect the amount that we will likely not realize. 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 31, 2019, we had a reserve of $0.7 million for uncertain tax positions. If recognized, this amount would impact our effective income tax rate. A reconciliation of the beginning and ending amount of our uncertain tax positions is as follows (in thousands): Fiscal Year 2019 2018 2017 Balance at beginning of year $ 830 $ 843 $ 829 Additions related to current period tax positions 13 104 168 Reductions related to settlements with taxing authorities and lapses of statutes of limitations (139) (117) (154) Balance at end of year $ 704 $ 830 $ 843 At both December 31, 2019 and January 1, 2019, we had $0.2 million of accrued interest and penalties related to uncertain tax positions. None of the balance of uncertain tax positions at December 31, 2019 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. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Information | |
Segment Information | 19. Segment Information Our operating segments are comprised of The Cheesecake Factory, North Italia, Flower Child, the other FRC brands, our bakery division and Grand Lux Cafe, the businesses for which our management reviews discrete financial information for decision-making purposes. Based on quantitative thresholds set forth in ASC 280, “Segment Reporting,” The Cheesecake Factory, North Italia and the other FRC brands are the only businesses that meet the criteria of a reportable operating segment. The remaining operating segments, including Flower Child, along with our businesses that don’t qualify as operating segments are combined in Other. Unallocated corporate expenses, capital expenditures and assets, which were previously classified in a separate Corporate line, are also combined in Other. In addition, gift card costs, which were previously classified in The Cheesecake Factory restaurants reportable segment, are combined in Other. Corresponding prior year balances were reclassified to conform to the current year presentation. Segment information is presented below (in thousands): Fiscal Year 2019 (1) 2018 2017 Revenues: The Cheesecake Factory restaurants $ 2,180,882 $ 2,127,347 $ 2,057,816 North Italia 35,268 — — Other FRC 39,335 — — Other 227,207 204,984 202,686 Total $ 2,482,692 $ 2,332,331 $ 2,260,502 Income/(loss) from operations: The Cheesecake Factory restaurants (2) $ 258,374 $ 270,829 $ 281,715 North Italia 1,608 — — Other FRC 5,309 — — Other (3) (161,693) (151,881) (128,870) Total $ 103,598 $ 118,948 $ 152,845 Depreciation and amortization: The Cheesecake Factory restaurants $ 70,971 $ 80,646 $ 76,186 North Italia 829 — — Other FRC 1,037 — — Other 15,296 15,330 16,543 Total $ 88,133 $ 95,976 $ 92,729 Preopening costs: The Cheesecake Factory restaurants $ 9,967 $ 9,247 $ 10,891 North Italia 1,297 — — Other FRC 49 — — Other 1,836 1,690 2,387 Total $ 13,149 $ 10,937 $ 13,278 Capital expenditures: The Cheesecake Factory restaurants $ 59,045 $ 71,880 $ 101,142 North Italia 2,318 — — Other FRC 5,072 — — Other 7,330 31,029 19,637 Total $ 73,765 $ 102,909 $ 120,779 Total assets: The Cheesecake Factory restaurants $ 1,701,418 $ 928,345 $ 937,512 North Italia 297,840 — — Other FRC 310,414 — — Other 530,921 385,788 395,548 Total $ 2,840,593 $ 1,314,133 $ 1,333,060 (1) We completed the acquisition of North Italia and the remaining business of FRC on October 2, 2019. The results of the acquired businesses are included in our consolidated financial statements as of the acquisition date. (See Note 2 for further discussion of the Acquisition.) (2) Fiscal years 2019, 2018 and 2017 include impairment of assets and lease terminations expense of $8.9 million, $6.6 million and $2.5 million, respectively. (See Note 1 for further discussion of these charges.) (3) Fiscal years 2019, 2018 and 2017 include impairment of assets and lease terminations expense of $9.3 million, $11.3 million and $7.8 million, respectively. (See Note 1 for further discussion of these charges.) Fiscal 2019 included $6.3 million of acquisition-related costs and acquisition-related contingent consideration, compensation and amortization expense. (See Note 2 for further discussion of the Acquisition.) |
Quarterly Financial Data (unaud
Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Data (unaudited) | |
Quarterly Financial Data (unaudited) | 20. Quarterly Financial Data (unaudited) Summarized unaudited quarterly financial data for fiscal 2019 and 2018 is as follows (in thousands, except per share data): Quarter Ended: April 2, 2019 July 2, 2019 October 1, 2019 December 31, 2019 Revenues (1) $ 599,481 $ 602,645 $ 586,536 $ 694,030 Income from operations (1)(2) $ 30,148 $ 40,099 $ 26,964 $ 6,387 Net income (1)(2) $ 26,984 $ 35,510 $ 16,090 $ 48,709 Basic net income per share (4) $ 0.61 $ 0.80 $ 0.37 $ 1.11 Diluted net income per share (4) $ 0.60 $ 0.79 $ 0.36 $ 1.10 Cash dividends declared per common share $ 0.33 $ 0.33 $ 0.36 $ 0.36 Quarter Ended: April 3, 2018 July 3, 2018 October 2, 2018 January 1, 2019 Revenues $ 584,697 $ 587,319 $ 575,160 $ 585,155 Income from operations (3) $ 31,551 $ 34,543 $ 33,495 $ 19,359 Net income (3) $ 26,029 $ 28,353 $ 28,475 $ 16,178 Basic net income per share (4) $ 0.57 $ 0.62 $ 0.63 $ 0.36 Diluted net income per share (4) $ 0.56 $ 0.61 $ 0.61 $ 0.35 Cash dividends declared per common share $ 0.29 $ 0.29 $ 0.33 $ 0.33 (1) The fourth quarter of fiscal 2019 includes revenues, loss from operations and net loss of $92.0 million, $2.1 million, and $1.5 million, respectively related to the acquired businesses. In addition, income from operations included $3.2 million and $3.1 million of acquisition-related expense in the third and fourth quarters of fiscal 2019, respectively, with a corresponding impact to net income of $2.4 million and $2.3 million, respectively. These amounts were recorded in acquisition-related costs and acquisition-related contingent consideration, compensation and amortization expense in the consolidated statements of income. (See Note 2 for further discussion of the Acquisition.) (2) In the fourth quarter of fiscal 2019, income from operations included impairment of assets and lease terminations expense of $18.2 million, with an corresponding impact to net income of $13.5 million. (See Note 1 for further discussion of these charges.) (3) In fiscal 2018, income from operations included $2.6 million, $0.3 million and $15.0 million of impairment of assets and lease terminations expense in the second, third and fourth quarters, respectively, with an corresponding impact to net income of $1.9 million, $0.2 million and $11.1 million, respectively. (See Note 1 for further discussion of these charges.) (4) Net income per share calculations for each quarter are based on the weighted average diluted shares outstanding for that quarter and may not total to the full year amount. While seasonal fluctuations generally do not have a material impact on our quarterly results, the year-over-year comparison of our quarterly results can be significantly impacted by the number and timing of new restaurant openings and associated preopening costs, the calendar days of the week on which holidays occur, the impact from inclement weather and other climatic conditions and other variations in revenues and expenses. As a result of these factors, our financial results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events | |
Subsequent Events | 21. Subsequent Events On February 18, 2020, our Board of Directors approved a quarterly cash dividend of $0.36 per share to be paid on March 20, 2020 to the stockholders of record on March 9, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
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 (referred to herein collectively as the “Company,” “we,” “us” and “our”) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions for the periods presented have been eliminated in consolidation. On October 2, 2019, we completed the acquistion of North Italia and the remaining business of FRC, including Flower Child and all other FRC brands. The results of operations, financial position and cash flows of the acquired businesses are included in our consolidated financial statements as of the acquisition date. See Note 2 for further discussion of the Acquisition. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal years 2019, 2018 and 2017 each consisted of 52 weeks. |
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 these estimates. |
Business Combination | Business Combination On October 2, 2019, we completed the acquisition of North Italia and the remaining business of FRC. Since the Acquisition represents a business combination achieved in stages, we remeasured our previously-held equity interests in North Italia and Flower Child immediately before the acquisition to acquisition-date fair value and recognized a resulting gain. In accordance with the acquisition method of accounting for business combinations, we allocated the purchase price of acquired businesses to the tangible and intangible assets acquired and liabilities assumed based on preliminary estimated fair values. We estimated the fair value of assets and liabilities based upon widely-accepted valuation techniques, including discounted cash flow, relief from royalty and Monte Carlo methods, depending on the nature of the assets acquired or liabilities assumed. We expect minor adjustments to our purchase accounting in the first quarter of fiscal 2020 as we finalize our valuation of the acquired intangible assets. (See Note 2 for further discussion of the Acquisition.) |
Cash and Cash Equivalents | Cash and Cash Equivalents Amounts receivable from credit card processors, totaling $21.2 million and $17.3 million at December 31, 2019 and January 1, 2019, 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. Our cash management system provides for the funding of all major bank disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks are in excess of the cash balances at certain banks, which creates book overdrafts. Book overdrafts are presented as a current liability in other accrued expenses on our consolidated balance sheet. |
Accounts and Other Receivables | Accounts and Other Receivables Our accounts receivable principally result from credit sales to bakery customers. Other receivables consist primarily of amounts due from our gift card distributors and landlords. |
Concentration of Credit Risk | 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 bakery customers. Concentration of credit risk related to other receivables is limited as this balance is comprised primarily of amounts due from our gift card distributors and landlords. |
Fair Value Measurements | Fair Value Measurements Fair value measurements are estimated based on valuation techniques and inputs categorized as follows: ● Level 1: Quoted prices in active markets for identical assets or liabilities. ● Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities ● Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the Company to develop its own assumptions The following tables present the components and classification of our assets and liabilities that are measured at fair value on a recurring basis (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Assets (Liabilities) Non-qualified deferred compensation assets $ 77,228 $ — $ — Non-qualified deferred compensation liabilities (76,255) — — Acquisition-related deferred consideration — (53,933) — Acquisition-related contingent consideration and compensation liabilities — — (13,218) January 1, 2019 Level 1 Level 2 Level 3 Assets (Liabilities) Non-qualified deferred compensation assets $ 57,606 $ — $ — Non-qualified deferred compensation liabilities (57,551) — — Deemed landlord financing liabilities — (118,600) — Changes in the fair value of non-qualified deferred compensation assets and liabilities and deemed landlord financing liabilities are recognized in interest and other expense, net in our consolidated statements of income. Changes in the fair value of the acquisition-related deferred and contingent consideration and compensation liabilities are recognized in acquisition-related contingent consideration, compensation and amortization expenses in our consolidated statements of income. The fair value of the acquisition-related contingent consideration and compensation liabilities was determined utilizing a Monte Carlo model based on estimated future revenues, margins and volatility factors, among other variables and estimates and has no minimum or maximum payment. The undiscounted range of outcomes per the Monte Carlo model was $0 to $69.2 million. Results could change materially if different estimates and assumptions were used. The following table presents a reconciliation of the beginning and ending amounts of the fair value of the acquisition-related contingent consideration and compensation liabilities, categorized as Level 3 (in thousands): Balance, January 1, 2019 $ — Acquisition-date fair value 12,786 Change in fair value 432 Balance, December 31, 2019 $ 13,218 The fair values of our cash and cash equivalents, accounts receivable, income taxes receivable, other receivables, prepaid expenses, accounts payable, income taxes payable and other accrued expenses approximate their carrying amounts due to their short duration. |
Inventories | Inventories Inventories consist of restaurant food and other supplies, bakery raw materials and bakery finished goods and are stated at the lower of cost or net realizable value on an average cost basis at the restaurants and on a first-in, first-out basis at the bakeries. |
Property and Equipment | 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 Leasehold improvements 10 Furnishings, fixtures and equipment 3 Computer software and equipment 5 years Gains and losses related to property and equipment disposals are recorded in depreciation and amortization expenses. |
Intangible Assets | Intangible Assets Our intangible assets consist primarily of goodwill, indefinite-lived trade names, trademarks and transferable alcoholic beverage licenses and definite-lived licensing agreements and non-transferable alcoholic beverage licenses. Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows. If impaired, the asset or asset group is written down to fair value based on discounted future cash flows. Amortization is recorded in acquisition-related contingent consideration, compensation and amortization expenses in our consolidated statements of income. Goodwill and other indefinite-lived intangible assets are not amortized but are instead tested for impairment annually as of the first day of our fiscal fourth quarter or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. First, we determine if, based on qualitative factors, it is more likely than not that an impairment exists. Factors considered include, but are not limited to historical financial performance, a significant decline in expected future cash flows, unanticipated competition, changes in management or key personnel, macroeconomic and industry conditions and the legal and regulatory environment. If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. The quantitative assessment requires an analysis of several best estimates and assumptions, including future sales and operating results and other factors that could affect fair value or otherwise indicate potential impairment. We also consider our reporting units’ projected ability to generate income from operations and positive cash flow in future periods. We evaluate the useful lives of our intangible assets, other than goodwill, at each reporting period to determine if they are definite or indefinite-lived. A determination on useful life requires judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment and expected changes in distribution channels), the level of required maintenance expenditures and the expected lives of other related groups of assets. |
Impairment of Long-Lived Assets and Lease Terminations | Impairment of Long-Lived Assets and Lease Terminations We assess the potential impairment of our long-lived assets on an annual basis or whenever events or changes in circumstances indicate the carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to, negative cash flow, significant underperformance relative to historical or projected future operating results, significant changes in the manner in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previously estimated useful life and significant negative industry or economic trends. At any given time, we may be monitoring a small number of locations, and future impairment charges could be required if individual restaurant performance does not improve or we make the decision to close or relocate a restaurant. We have determined that our asset group for impairment testing is comprised of the assets and liabilities of each of our individual restaurants, as this is the lowest level of identifiable cash flows. We have identified leasehold improvements as the primary asset because it is the most significant component of our restaurant assets, it is the principal asset from which our restaurants derive their cash flow generating capacity and it has the longest remaining useful life. The recoverability is assessed by comparing the carrying value of the assets to the undiscounted cash flows expected to be generated by these assets. Impairment losses are measured as the amount by which the carrying values of the assets exceed their fair value, which is determined based on discounted future net cash flows expected to be generated by the assets. In fiscal 2019, we recorded $18.2 million of impairment of assets and lease termination expense related to the impairment of two The Cheesecake Factory restaurants, one Grand Lux Cafe and Social Monk Asian Kitchen and the closure of one Grand Lux Cafe and one RockSugar Southeast Asian Kitchen. In fiscal 2018, we recorded $17.9 million of impairment of assets and lease termination expense related to the impairment of one The Cheesecake Factory restaurant, one Grand Lux Cafe and one RockSugar Southeast Asian Kitchen and the closure of two The Cheesecake Factory restaurants. In fiscal 2017, we recorded $10.3 million of impairment of assets and lease termination expense related to three The Cheesecake Factory restaurants, including one relocation and one lease expiration, and one Grand Lux Cafe. These amounts are recorded in impairment of assets and lease terminations on the consolidated statements of income. |
Investments in Unconsolidated Affiliates | Investments in Unconsolidated Affiliates During fiscal years 2018, 2017 and until the Acquisition on October 2, 2019, we made minority equity investments in two restaurant concepts, North Italia and Flower Child, bringing our percentage of ownership to 49% in both concepts immediately prior to the Acquisition. Since we held a number of rights with regard to participation in policy-making processes, but did not control these entities prior to the Acquisition, we accounted for these investments under the equity method. Accordingly, we recognized our proportionate share of the reported earnings or losses of these entities on the consolidated statements of income and as an adjustment to our investments on the consolidated balance sheets. Prior to the Acquisition, we assessed the potential impairment of our equity investments whenever events or changes in circumstances indicated that a decrease in value of the investment had occurred that was other than temporary, in which case we would recognize the decrease even though it is in excess of what would otherwise be recognized by application of the equity method. No impairment losses were recorded for these assets during fiscal years 2019, 2018 and 2017. |
Revenue Recognition | Revenue Recognition Our revenues consist of sales at our Company-owned restaurants, sales from our bakery operations to our licensees and other third-party customers, royalties from our licensees’ restaurant sales and from consumer packaged goods sales, and licensee development and site fees. Revenues are presented net of sales taxes. Sales tax collected is included in other accrued expenses until the taxes are remitted to the appropriate taxing authorities. Revenues from restaurant sales are recognized when payment is tendered at the point of sale. Revenues from bakery sales are recognized upon transfer of title and risk to customers. Royalty revenues are recognized in the period the related sales occur, utilizing the sale-based royalty exception available under current accounting guidance. Our consumer packaged goods minimum guarantees do not require distinct performance obligations. Therefore, related revenue is recognized on a straight-line basis over the life of the applicable agreements, ranging from one eight In fiscal 2019, we deferred revenue of $0.2 million for new minimum guarantees for consumer packaged goods and recognized minimum guarantee revenue of $0.5 million. In fiscal 2019, we deferred revenue of $0.3 million for new site and development agreements and recognized revenue of $0.5 million. In fiscal 2018, we deferred revenue of $0.9 million for new minimum guarantees for consumer packaged goods and recognized minimum guarantee revenue of $0.8 million. In fiscal 2018, we deferred revenue of $0.2 million for new site and development agreements and recognized revenue of $0.4 million. Prior to the adoption of the new revenue recognition standard in 2018, we recognized revenue for development fees upon execution of new development agreements and for site fees upon our approval of new restaurant sites. 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 $8.0 million, $8.0 million and $7.9 million of gift card breakage in fiscal years 2019, 2018 and 2017, 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. There were no changes to our accounting for gift card revenue and related costs upon adoption of the new revenue recognition standard. Certain of our promotional programs include multiple element arrangements that incorporate various performance obligations. We allocate revenue using the relative selling price of each performance obligation considering the likelihood of redemption and recognize revenue upon satisfaction of each performance obligation. During fiscal 2019, we deferred revenue of $7.9 million related to promotional programs and recognized $7.3 million of previously deferred revenue related to promotional programs. During fiscal 2018, we deferred revenue of $7.0 million related to promotional programs and recognized $5.9 million of previously deferred revenue related to promotional programs. (See Recent Accounting Pronouncements |
Leases | Leases We currently lease all of our restaurant locations, generally with initial terms of 10 In addition to leases for our restaurant locations, we also lease automobiles and certain equipment that is used in the restaurants, bakeries and corporate office. The automobile leases are the only non-real estate leases included in our operating lease assets and liabilities. All other leases are immaterial or qualify for the short-term lease exclusion. The assessment of whether a contract is or contains a lease is performed at contract inception. A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all the economic benefits from the use of the asset and to direct how and for what purpose the asset is used. At lease commencement, we evaluate each lease to determine its appropriate classification as an operating or finance lease. All of our restaurant and automobile leases are classified as operating leases. For restaurant leases existing at transition, we will continue to apply our historical practice of excluding executory costs, and only minimum base rent will be factored into the initial operating lease liability and corresponding lease asset. For restaurant leases beginning after adoption of ASC 842, we have elected the single lease component practical expedient. Operating lease assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term. The difference between the amounts we expend for structural costs and the construction contributions received from our landlords is recorded as an adjustment to the operating lease asset. Lease terms include the build-out period for our leases where no rent payments are typically due under the terms of the lease, as well as options to renew when we deem we have significant economic incentive to exercise the extension. When determining if we have a significant economic incentive, we consider relevant factors, such as contractual, asset, entity and market-based considerations. Option periods are included in the lease term for the majority of our leases. Termination rights have not been factored into the lease terms since based on our probability assessment we are reasonably certain we will not terminate our leases. We cannot determine the interest rate implicit in our leases because we do not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, we use our incremental borrowing rate as the discount rate for our leases. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because we do not generally borrow on a collateralized basis, we derive an appropriate incremental borrowing rate using the interest rate we pay on our non-collateralized borrowings, adjusted for the amount of the lease payments, the lease term and the effect of designating specific collateral with a value equal to the unpaid lease payments for that lease. We apply the incremental borrowing rate on a portfolio basis given the impact of applying it on a lease by lease basis would be immaterial. We monitor for events or changes in circumstances that require reassessment of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the operating lease asset. We also assess the potential impairment of our operating lease assets under long-lived asset impairment guidance in ASC 360, Property, Plant, and Equipment: Impairment or disposal on long-lived assets. Rent expense included in our operating lease assets is recognized on a straight-line basis. Contingent rent expense is recorded as incurred to the extent it exceeds minimum base rent per the lease agreement. Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance cost and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized as incurred. The reasonably certain lease term and the incremental borrowing rate for each restaurant location require judgment by management and can impact the classification and accounting for a lease as operating or finance, as well as the value of the operating lease asset and liability. These judgments may produce materially different amounts of rent expense than would be reported if different assumptions were used. Rent expense is included in other operating costs and expenses in the consolidated statements of income. |
Self-Insurance Liabilities | Self-Insurance Liabilities We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date and are recorded in other accrued expenses. Our estimated liabilities, which are not discounted, are based on information provided by our insurance brokers and insurers, combined with our judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices. |
Stock-Based Compensation | Stock-Based Compensation We maintain stock-based incentive plans under which equity awards may be granted to staff members and consultants. We account for the awards based on fair value measurement guidance and amortize to expense over the vesting period using a straight-line or graded-vesting schedule, as applicable. (See Note 16 for further discussion of our stock-based compensation.) |
Advertising Costs | 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 $10.6 million, $6.1 million and $6.1 million in fiscal 2019, 2018 and 2017, respectively. |
Preopening Costs | Preopening Costs Preopening costs include all costs to relocate and compensate restaurant management staff members during the preopening period, costs to recruit and train hourly restaurant staff members, and wages, travel and lodging costs for our opening training team and other support staff members. Also included are expenses for maintaining a roster of trained managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs, and corporate travel and support activities. We expense preopening costs as incurred. |
Income Taxes | Income Taxes We provide for federal, state and foreign income taxes currently payable and for deferred taxes that result from differences between financial accounting rules and tax laws governing the timing of recognition of various income and expense items. We recognize deferred income tax assets and liabilities for the future tax effects of such temporary differences based on the difference between the financial statement and tax bases of existing assets and liabilities using the statutory rates expected in the years in which the differences are expected to reverse. The effect on deferred taxes of any enacted change in tax rates is recognized in income in the period that includes the enactment date. Income tax credits are recorded as a reduction of tax expense. Uncertain tax positions taken or expected to be taken in a tax return are recognized (or derecognized) in the financial statements when it is more likely than not (i.e., a likelihood of more than 50%) that the position would be sustained on its technical merits upon examination by tax authorities, taking into account available administrative remedies and litigation. A recognized tax position is then measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution. We recognize interest related to uncertain tax positions in income tax expense. Penalties related to uncertain tax positions are recorded in general and administrative expenses. |
Net Income per Share | Net Income per Share Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, reduced by unvested restricted stock awards. At December 31, 2019, January 1, 2019 and January 2, 2018, 1.8 million shares, 1.7 million shares and 1.7 million shares, respectively, of restricted stock issued to staff members 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. Shares of common stock equivalents of 2.3 million, 1.5 million and 1.6 million for fiscal 2019, 2018 and 2017, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. Fiscal Year 2019 2018 2017 (In thousands, except per share data) Net income $ 127,293 $ 99,035 $ 157,392 Basic weighted average shares outstanding 43,949 45,263 46,930 Dilutive effect of equity awards 596 952 1,222 Diluted weighted average shares outstanding 44,545 46,215 48,152 Basic net income per share $ 2.90 $ 2.19 $ 3.35 Diluted net income per share $ 2.86 $ 2.14 $ 3.27 |
Comprehensive Income | Comprehensive Income Comprehensive income includes all changes in equity during a period except those resulting from investment by and distribution to owners. Our comprehensive income consists of net income and translation gains and losses related to our Canadian restaurant operations. |
Foreign Currency | Foreign Currency The Canadian dollar is the functional currency for our Canadian restaurant operations. Revenue and expense accounts are translated into U.S. dollars using the average exchange rates during the reporting period. Assets and liabilities are translated using the exchange rates in effect at the reporting period end date. Equity accounts are translated at historical rates, except for the change in retained earnings which is the result of the income statement translation process. Translation gains and losses are reported as a separate component in our consolidated statements of comprehensive income and would only be realized upon the sale or upon complete or substantially complete liquidation of the business. Gains and losses from foreign currency transactions are recognized in our consolidated statements of income in interest and other expense, net. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Standards We adopted FASB Accounting Standards Codification (“ASC”) Topic 842, Leases, as of January 2, 2019, using the alternative transition method and recorded a cumulative effect adjustment to beginning retained earnings without restating prior periods. We elected the package of practical expedients which allowed us to carry forward our historical lease classification, our assessment of whether a contract is or contains a lease and our initial direct costs for any leases that existed prior to adoption of the new standard. In addition, we elected the short-term lease exclusion and the hindsight practical expedient, which lengthened the lease term for certain of our leases to include renewal options. Adoption of the new standard resulted in the recognition of operating lease assets and liabilities of $975.1 million and $1,045.4 million, respectively, and a reduction to retained earnings of $41.5 million, net of tax. All prior lease-related balances of $39.2 million of prepaid rent, $140.2 million in property and equipment, net, $6.2 million of intangible assets, net, $82.1 million of deferred rent liabilities and $118.7 million of deemed landlord financing were reclassified into operating lease assets or eliminated upon ASC 842 adoption. We adopted ASC Topic 606, Revenue from Contracts with Customers, as of January 3, 2018. This accounting guidance provides a comprehensive new revenue recognition model that supersedes most of the existing revenue recognition requirements and requires entities to recognize revenue at an amount that reflects the consideration to which a company expects to be entitled in exchange for transferring goods or services to a customer. Utilizing the cumulative-effect method of adoption, we recorded a $4.8 million increase to deferred revenue and a corresponding reduction of $3.6 million, net of tax, to retained earnings to reverse a portion of the previously-recognized development and site fees from our international licensees. Whereas previously we recognized income and received payment upon execution of the agreements and approval of new restaurant sites, respectively, future revenue for these items will be recorded on a straight-line basis over the life of the applicable license agreements as the agreements do not contain distinct performance obligations. Comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The impact of adopting this standard as compared to the previous revenue recognition guidance was not material to our consolidated balance sheet and consolidated statements of income and comprehensive income. Recently Issued Accounting Standards In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The update eliminates, adds and modifies certain disclosure requirements for fair value measurements. The new standard is effective for us on January 1, 2020. We have substantially completed our assessment of the new standard and do not expect its adoption to have a significant impact on our consolidated financial statement disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of the components and classification of our assets and liabilities that are measured at fair value on a recurring basis | The following tables present the components and classification of our assets and liabilities that are measured at fair value on a recurring basis (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Assets (Liabilities) Non-qualified deferred compensation assets $ 77,228 $ — $ — Non-qualified deferred compensation liabilities (76,255) — — Acquisition-related deferred consideration — (53,933) — Acquisition-related contingent consideration and compensation liabilities — — (13,218) January 1, 2019 Level 1 Level 2 Level 3 Assets (Liabilities) Non-qualified deferred compensation assets $ 57,606 $ — $ — Non-qualified deferred compensation liabilities (57,551) — — Deemed landlord financing liabilities — (118,600) — |
Schedule of reconciliation of the fair value of the contingent consideration and compensation related to the acquisition categorized as Level 3 | Balance, January 1, 2019 $ — Acquisition-date fair value 12,786 Change in fair value 432 Balance, December 31, 2019 $ 13,218 |
Schedule of depreciation and amortization periods | Buildings and land improvements 25 Leasehold improvements 10 Furnishings, fixtures and equipment 3 Computer software and equipment 5 years |
Schedule of basic and diluted net income per share | Fiscal Year 2019 2018 2017 (In thousands, except per share data) Net income $ 127,293 $ 99,035 $ 157,392 Basic weighted average shares outstanding 43,949 45,263 46,930 Dilutive effect of equity awards 596 952 1,222 Diluted weighted average shares outstanding 44,545 46,215 48,152 Basic net income per share $ 2.90 $ 2.19 $ 3.35 Diluted net income per share $ 2.86 $ 2.14 $ 3.27 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Acquisition | |
Summary of preliminary calculation of goodwill based on the excess of consideration transferred and the fair value of the previously held equity interests over the fair value of the assets acquired and liabilities assumed | The following table summarizes the preliminary calculation of goodwill based on the excess of consideration transferred and the fair value of the previously held equity interests over the fair value of the assets acquired and liabilities assumed (in thousands). December 31, 2019 Purchase consideration: Cash at closing $ 288,089 Assumption of debt previously owed by FRC 10,000 Deferred payments 53,471 Contingent consideration 12,786 Consideration transferred 364,346 Fair value of previously-held equity interests 122,000 Total 486,346 Less net assets acquired: Current assets 23,682 Property and equipment 84,360 Intangible assets 338,782 Operating lease assets 223,455 Other assets 5,842 Current liabilities (64,814) Operating lease liabilities (202,433) Other noncurrent liabilities (883) Total net assets acquired 407,991 Goodwill $ 78,355 |
Schedule of Pro Forma Results of Operations (unaudited) | The following pro forma results of operations for fiscal 2019 and 2018 give effect to the Acquisition as if it had occurred on January 2, 2018 (in thousands): Fiscal Year 2019 2018 Revenues $ 2,732,901 $ 2,579,019 Net income 74,949 80,800 Net income per share: Basic 1.71 1.79 Diluted $ 1.68 $ 1.75 |
Other Receivables (Tables)
Other Receivables (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Receivables | |
Schedule of other receivables | Other receivables consisted of (in thousands): December 31, 2019 January 1, 2019 Gift card distributors $ 38,947 $ 41,996 Insurance providers 9,646 9,020 Landlord construction contributions 3,501 4,976 Other 12,589 12,201 Total $ 64,683 $ 68,193 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventories | |
Schedule of inventories | Inventories consisted of (in thousands): December 31, 2019 January 1, 2019 Restaurant food and supplies $ 25,057 $ 18,362 Bakery finished goods and work in progress 16,000 13,845 Bakery raw materials and supplies 6,168 6,679 Total $ 47,225 $ 38,886 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Prepaid Expenses | |
Schedule of prepaid expenses | Prepaid expenses consisted of (in thousands): December 31, 2019 January 1, 2019 Gift card contract assets $ 23,172 $ 23,388 Other 20,774 17,257 Total $ 43,946 $ 40,645 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Schedule of property and equipment | Property and equipment consisted of (in thousands): December 31, 2019 January 1, 2019 Land and related improvements $ 15,852 $ 15,852 Buildings 44,049 44,036 Leasehold improvements 1,158,467 1,283,233 Furnishings, fixtures and equipment 548,075 467,051 Computer software and equipment 55,614 55,434 Restaurant smallwares 34,653 30,268 Construction in progress 23,732 27,975 Property and equipment, total 1,880,442 1,923,849 Less: Accumulated depreciation (1,048,843) (1,010,574) Property and equipment, net $ 831,599 $ 913,275 |
Intangible Assets, net (Tables)
Intangible Assets, net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets, net | |
Schedule of components of intangible assets, net | The following table presents components of intangible assets, net (in thousands): December 31, 2019 January 1, 2019 Indefinite-lived intangible assets: Goodwill $ 78,355 — Trade names and trademarks 337,027 $ 9,922 Transferable alcoholic beverage licenses 8,575 7,164 Total indefinite-lived intangible assets 423,957 17,086 Definite-lived intangible assets, net: Licensing agreements 10,060 — Non-transferable alcoholic beverage licenses 3,190 2,951 Leasehold acquisition assets — 6,172 Total definite-lived intangible assets 13,250 9,123 Total intangible assets, net $ 437,207 $ 26,209 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Components for lease expense | Components of lease expense were as follows (in thousands): Fiscal Year 2019 Operating $ 112,048 Variable 66,689 Short-term 368 Total $ 179,105 Rent expense on all operating leases (under ASC 840) was as follows (in thousands): Fiscal Year 2018 2017 Straight-lined minimum base rent $ 83,999 $ 83,387 Contingent rent 20,147 19,559 Common area maintenance and taxes 39,961 38,103 Total $ 144,107 $ 141,049 |
Supplemental cash flow information related to leases | Supplemental information related to leases (in thousands, except percentages): Fiscal Year 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 103,210 Right-of-use assets obtained in exchange for new operating lease liabilities 262,421 (1) Weighted-average remaining lease term — operating leases (in years) 16.6 Weighted-average discount rate — operating leases 5.2 % (1) Includes $223.5 million in right-of-use assets related to the Acquisition. (See Note 2 for further discussion of the Acquisition.) |
Maturity of operating lease liabilities | As of December 31, 2019, the maturities of our operating lease liabilities are as follows (in thousands): 2020 $ 122,250 2021 124,383 2022 125,427 2023 121,855 2024 120,772 Thereafter 1,415,777 Total future lease payments 2,030,464 Less: Interest (712,514) Present value of lease liabilities $ 1,317,950 Operating lease liabilities include $867.2 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $136.2 million of legally binding minimum lease payments for leases signed but not yet commenced. As of January 1, 2019, the aggregate minimum annual lease payments under operating leases (under ASC 840), including amounts characterized as deemed landlord financing payments, were as follows (in thousands): 2019 $ 93,792 2020 91,808 2021 88,829 2022 86,925 2023 81,929 Thereafter 495,091 Total $ 938,374 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Assets | |
Schedule of other assets | Other assets consisted of (in thousands): December 31, 2019 January 1, 2019 Non-qualified deferred compensation assets $ 77,228 $ 57,605 Deposits 5,693 5,489 Deferred income taxes 3,375 1,597 Total $ 86,296 $ 64,691 |
Gift Cards (Tables)
Gift Cards (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Gift Cards | |
Schedule of gift card liabilities | The following tables present information related to gift cards (in thousands): December 31, 2019 January 1, 2019 Gift card liabilities: Beginning balance $ 172,336 $ 163,951 Activations 158,099 151,084 Redemptions and breakage (142,457) (142,699) Ending balance $ 187,978 $ 172,336 |
Schedule of gift card contract assets | The following tables present information related to gift cards (in thousands): December 31, 2019 January 1, 2019 Gift card contract assets (1) Beginning balance $ 23,388 $ 23,814 Deferrals 18,378 18,669 Amortization (18,594) (19,095) Ending balance $ 23,172 $ 23,388 |
Other Accrued Expenses (Tables)
Other Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Accrued Expenses | |
Schedule of other accrued expenses | Other accrued expenses consisted of (in thousands): December 31, 2019 January 1, 2019 Self-insurance $ 68,881 $ 72,631 Salaries and wages 56,774 39,102 Staff member benefits 25,044 22,946 Payroll and sales taxes 22,822 15,684 Deferred consideration 16,740 — Other 46,321 44,018 Total $ 236,582 $ 194,381 |
Other Noncurrent Liabilities (T
Other Noncurrent Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Noncurrent Liabilities | |
Schedule of other noncurrent liabilities | Other noncurrent liabilities consisted of (in thousands): December 31, 2019 January 1, 2019 Non-qualified deferred compensation liabilities $ 76,255 $ 57,551 Deferred consideration 37,193 — Contingent consideration and compensation liabilities 13,218 — Other 13,882 14,108 Total $ 140,548 $ 71,659 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock-Based Compensation | |
Schedule of information related to stock-based compensation, net of forfeitures | The following table presents information related to stock-based compensation, net of forfeitures (in thousands): Fiscal Year 2019 2018 2017 (2) Labor expenses $ 6,233 $ 5,681 $ 5,236 Other operating costs and expenses 274 287 243 General and administrative expenses 12,866 14,020 10,978 Total stock-based compensation 19,373 19,988 16,457 Income tax benefit 4,760 4,987 6,295 Total stock-based compensation, net of taxes $ 14,613 $ 15,001 $ 10,162 Capitalized stock-based compensation (1) $ 226 $ 262 $ 239 (1) It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net on the consolidated balance sheets. (2) Fiscal 2017 stock-based compensation expense includes a $3.9 million benefit for an out-of-period adjustment related to a correction in stock-based compensation valuation and forfeitures. |
Schedule of stock option activity | Weighted Average Weighted Remaining Aggregate Average Contractual Intrinsic Shares Exercise Price Term Value (1) (In thousands) (Per share) (In years) (In thousands) Outstanding at beginning of year 1,799 $ 45.03 4.1 $ 5,606 Granted 307 $ 45.90 Exercised (260) $ 29.72 Forfeited or cancelled (17) $ 48.38 Outstanding at end of year 1,829 $ 47.32 4.3 $ 844 Exercisable at end of year 986 $ 46.04 2.8 $ 844 (1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal year-end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal year -end date. |
Schedule of restricted share and restricted share unit activity | Restricted share and restricted share unit activity during fiscal 2019 was as follows: Weighted Average Fair Shares Value (In thousands) (Per share) Outstanding at beginning of year 1,702 $ 48.08 Granted 541 $ 45.02 Vested (349) $ 45.26 Forfeited (130) $ 47.19 Outstanding at end of year 1,764 $ 47.76 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of provision for income taxes | The provision for income taxes consisted of the following (in thousands): Fiscal Year 2019 2018 2017 (1) Income before income taxes $ 140,334 $ 107,411 $ 146,466 Income tax (benefit)/provision: Current: Federal $ 8,211 $ 5,082 $ 7,148 State 7,027 8,804 7,106 Total current 15,238 13,886 14,254 Deferred: Federal (3,695) (4,549) (24,570) State 1,498 (961) (610) Total deferred (2,197) (5,510) (25,180) Total (benefit)/provision $ 13,041 $ 8,376 $ (10,926) (1) The Tax Act, which was enacted on December 22, 2017, made significant changes to how corporations are taxed in the U.S., the most prominent of which affecting us was to lower the U.S. corporate tax rate from 35% to 21%. In addition to the benefit of a lower rate in future years, the enactment of the Tax Act caused us to revalue our deferred tax assets and liabilities to reflect the new rate, resulting in a benefit to our fiscal 2017 income tax provision of $38.5 million. |
Schedule of reconciliation between U.S. federal statutory rate and effective tax rate | Fiscal Year 2019 2018 2017 U.S. federal statutory rate 21.0 % 21.0 % 35.0 % State and district income taxes, net of federal benefit 4.9 6.1 3.3 Credit for FICA taxes paid on tips (12.8) (16.5) (9.4) Other credits and incentives (1.4) (2.5) (1.9) Manufacturing deduction — — (2.3) Deferred compensation (1.7) 0.8 (1.5) Equity compensation (0.2) (1.5) (4.5) Impact of statutory rate change on deferred taxes — — (26.3) Other (0.5) 0.4 0.1 Effective tax rate 9.3 % 7.8 % (7.5) % |
Schedule of deferred tax assets and liabilities | Following are the temporary differences that created our deferred tax assets and liabilities (in thousands): December 31, 2019 January 1, 2019 Deferred tax assets: Staff member benefits $ 27,059 $ 22,925 Insurance reserves 14,157 15,165 Accrued rent 27,582 10,870 Deferred income 22,725 17,288 Stock-based compensation 8,794 8,628 Tax credit carryforwards 15,754 1,880 Other 1,958 1,265 Subtotal 118,029 78,021 Less: Valuation allowance (713) (792) Total $ 117,316 $ 77,229 Deferred tax liabilities: Property and equipment $ (131,120) $ (107,513) Prepaid expenses (8,819) (7,929) Inventory (7,713) (6,893) Other (136) (5,420) Total $ (147,788) $ (127,755) Net deferred tax liability $ (30,472) $ (50,526) |
Schedule of reconciliation of our uncertain tax positions | A reconciliation of the beginning and ending amount of our uncertain tax positions is as follows (in thousands): Fiscal Year 2019 2018 2017 Balance at beginning of year $ 830 $ 843 $ 829 Additions related to current period tax positions 13 104 168 Reductions related to settlements with taxing authorities and lapses of statutes of limitations (139) (117) (154) Balance at end of year $ 704 $ 830 $ 843 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Information | |
Schedule of segment information | Segment information is presented below (in thousands): Fiscal Year 2019 (1) 2018 2017 Revenues: The Cheesecake Factory restaurants $ 2,180,882 $ 2,127,347 $ 2,057,816 North Italia 35,268 — — Other FRC 39,335 — — Other 227,207 204,984 202,686 Total $ 2,482,692 $ 2,332,331 $ 2,260,502 Income/(loss) from operations: The Cheesecake Factory restaurants (2) $ 258,374 $ 270,829 $ 281,715 North Italia 1,608 — — Other FRC 5,309 — — Other (3) (161,693) (151,881) (128,870) Total $ 103,598 $ 118,948 $ 152,845 Depreciation and amortization: The Cheesecake Factory restaurants $ 70,971 $ 80,646 $ 76,186 North Italia 829 — — Other FRC 1,037 — — Other 15,296 15,330 16,543 Total $ 88,133 $ 95,976 $ 92,729 Preopening costs: The Cheesecake Factory restaurants $ 9,967 $ 9,247 $ 10,891 North Italia 1,297 — — Other FRC 49 — — Other 1,836 1,690 2,387 Total $ 13,149 $ 10,937 $ 13,278 Capital expenditures: The Cheesecake Factory restaurants $ 59,045 $ 71,880 $ 101,142 North Italia 2,318 — — Other FRC 5,072 — — Other 7,330 31,029 19,637 Total $ 73,765 $ 102,909 $ 120,779 Total assets: The Cheesecake Factory restaurants $ 1,701,418 $ 928,345 $ 937,512 North Italia 297,840 — — Other FRC 310,414 — — Other 530,921 385,788 395,548 Total $ 2,840,593 $ 1,314,133 $ 1,333,060 (1) We completed the acquisition of North Italia and the remaining business of FRC on October 2, 2019. The results of the acquired businesses are included in our consolidated financial statements as of the acquisition date. (See Note 2 for further discussion of the Acquisition.) (2) Fiscal years 2019, 2018 and 2017 include impairment of assets and lease terminations expense of $8.9 million, $6.6 million and $2.5 million, respectively. (See Note 1 for further discussion of these charges.) (3) Fiscal years 2019, 2018 and 2017 include impairment of assets and lease terminations expense of $9.3 million, $11.3 million and $7.8 million, respectively. (See Note 1 for further discussion of these charges.) Fiscal 2019 included $6.3 million of acquisition-related costs and acquisition-related contingent consideration, compensation and amortization expense. (See Note 2 for further discussion of the Acquisition.) |
Quarterly Financial Data (una_2
Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Data (unaudited) | |
Summary of quarterly financial data | Summarized unaudited quarterly financial data for fiscal 2019 and 2018 is as follows (in thousands, except per share data): Quarter Ended: April 2, 2019 July 2, 2019 October 1, 2019 December 31, 2019 Revenues (1) $ 599,481 $ 602,645 $ 586,536 $ 694,030 Income from operations (1)(2) $ 30,148 $ 40,099 $ 26,964 $ 6,387 Net income (1)(2) $ 26,984 $ 35,510 $ 16,090 $ 48,709 Basic net income per share (4) $ 0.61 $ 0.80 $ 0.37 $ 1.11 Diluted net income per share (4) $ 0.60 $ 0.79 $ 0.36 $ 1.10 Cash dividends declared per common share $ 0.33 $ 0.33 $ 0.36 $ 0.36 Quarter Ended: April 3, 2018 July 3, 2018 October 2, 2018 January 1, 2019 Revenues $ 584,697 $ 587,319 $ 575,160 $ 585,155 Income from operations (3) $ 31,551 $ 34,543 $ 33,495 $ 19,359 Net income (3) $ 26,029 $ 28,353 $ 28,475 $ 16,178 Basic net income per share (4) $ 0.57 $ 0.62 $ 0.63 $ 0.36 Diluted net income per share (4) $ 0.56 $ 0.61 $ 0.61 $ 0.35 Cash dividends declared per common share $ 0.29 $ 0.29 $ 0.33 $ 0.33 (1) The fourth quarter of fiscal 2019 includes revenues, loss from operations and net loss of $92.0 million, $2.1 million, and $1.5 million, respectively related to the acquired businesses. In addition, income from operations included $3.2 million and $3.1 million of acquisition-related expense in the third and fourth quarters of fiscal 2019, respectively, with a corresponding impact to net income of $2.4 million and $2.3 million, respectively. These amounts were recorded in acquisition-related costs and acquisition-related contingent consideration, compensation and amortization expense in the consolidated statements of income. (See Note 2 for further discussion of the Acquisition.) (2) In the fourth quarter of fiscal 2019, income from operations included impairment of assets and lease terminations expense of $18.2 million, with an corresponding impact to net income of $13.5 million. (See Note 1 for further discussion of these charges.) (3) In fiscal 2018, income from operations included $2.6 million, $0.3 million and $15.0 million of impairment of assets and lease terminations expense in the second, third and fourth quarters, respectively, with an corresponding impact to net income of $1.9 million, $0.2 million and $11.1 million, respectively. (See Note 1 for further discussion of these charges.) (4) Net income per share calculations for each quarter are based on the weighted average diluted shares outstanding for that quarter and may not total to the full year amount. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended | ||
Dec. 31, 2019USD ($)restaurant | Jan. 01, 2019USD ($) | Jan. 02, 2018 | |
Description of Business | |||
Number of company-owned upscale, casual, full-service dining restaurants | 294 | ||
Number of International locations operating under licensing agreements | 26 | ||
Number of bakery production facilities | 2 | ||
Basis of Presentation | |||
Length of fiscal year | 364 days | 364 days | 364 days |
Cash and Cash Equivalents | |||
Amounts receivable from credit card processors | $ | $ 21,200,000 | $ 17,300,000 | |
Conversion period, credit card sales | 3 days | 3 days | |
Concentration of Credit Risk | |||
Maximum amount of money market deposit insured by FDIC | $ | $ 250,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Fair Value Measurements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Jan. 01, 2019 | |
Assets (Liabilities) at fair value | ||
Non-qualified deferred compensation liabilities | $ (76,255) | $ (57,551) |
Deferred consideration related to Acquisition | (37,193) | |
Contingent consideration and compensation liabilities | ||
Fair value of the contingent consideration and compensation related to the Acquisition | ||
Acquisition-date fair value | 12,786 | |
Change in fair value | 432 | |
Ending balance | 13,218 | |
Level 1 | ||
Assets (Liabilities) at fair value | ||
Non-qualified deferred compensation assets | 77,228 | 57,606 |
Non-qualified deferred compensation liabilities | (76,255) | (57,551) |
Level 2 | ||
Assets (Liabilities) at fair value | ||
Deferred consideration related to Acquisition | (53,933) | |
Deemed landlord financing liabilities | $ (118,600) | |
Level 3 | ||
Assets (Liabilities) at fair value | ||
Acquisition-related contingent consideration and compensation liabilities | (13,218) | |
Minimum | ||
Assets (Liabilities) at fair value | ||
Undiscounted range of outcomes per the Monte Carlo model | 0 | |
Maximum | ||
Assets (Liabilities) at fair value | ||
Undiscounted range of outcomes per the Monte Carlo model | $ 69,200 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Impairment of Long-Lived Assets and Lease Terminations (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) | Oct. 02, 2018USD ($) | Jul. 03, 2018USD ($) | Dec. 31, 2019USD ($)restaurant | Jan. 01, 2019USD ($)restaurant | Jan. 02, 2018USD ($)restaurant | |
Impairment of long-lived assets and lease terminations | |||||||
Impairment of assets and lease terminations | $ | $ 18,247 | $ 17,861 | $ 10,343 | ||||
Number of restaurants for which impairment and lease termination expenses were recorded | 3 | ||||||
The Cheesecake Factory restaurants | |||||||
Impairment of long-lived assets and lease terminations | |||||||
Impairment of assets and lease terminations | $ | $ 18,200 | $ 15,000 | $ 300 | $ 2,600 | $ 8,900 | 6,600 | $ 2,500 |
Number of restaurants for which impairment and lease termination expenses were recorded | 2 | ||||||
Three, The Cheesecake Factory restaurants | |||||||
Impairment of long-lived assets and lease terminations | |||||||
Impairment of assets and lease terminations | $ | $ 18,200 | $ 17,900 | $ 10,300 | ||||
Grand Lux Cafe | |||||||
Impairment of long-lived assets and lease terminations | |||||||
Number of restaurants for which impairment and lease termination expenses were recorded | 1 | ||||||
RockSugar Southeast Asian Kitchen | |||||||
Impairment of long-lived assets and lease terminations | |||||||
Number of restaurants for which impairment and lease termination expenses were recorded | 1 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2019 | |
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 | |
Property and equipment | |
Useful life | 5 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Investments in Unconsolidated Affiliates (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($)restaurant | Jan. 02, 2018USD ($)restaurant | Oct. 01, 2019 | |
Investments in unconsolidated affiliates | ||||
Equity investments in number of restaurants | restaurant | 2 | 2 | ||
Impairment of assets | $ | $ 0 | $ 0 | $ 0 | |
North Italia and Flower Child | ||||
Investments in unconsolidated affiliates | ||||
Ownership percentage | 49.00% |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Revenue Recognition | |||
Revenue recognized | $ 8 | $ 8 | $ 7.9 |
Gift card breakage period | 3 years | ||
Consumer packaged goods | |||
Revenue Recognition | |||
Deferred revenue | $ 0.2 | 0.9 | |
Revenue recognized | 0.5 | 0.8 | |
Development and site fee | |||
Revenue Recognition | |||
Deferred revenue | 0.3 | 0.2 | |
Revenue recognized | 0.5 | 0.4 | |
Promotional programs | |||
Revenue Recognition | |||
Deferred revenue | 7.9 | 7 | |
Revenue recognized | $ 7.3 | $ 5.9 | |
Minimum | |||
Revenue Recognition | |||
Revenue recognition agreement term | 1 year | ||
Revenue recognition for development and site fees over the life of the applicable licensee agreements (in years) | 8 years | ||
Maximum | |||
Revenue Recognition | |||
Revenue recognition agreement term | 3 years | ||
Revenue recognition for development and site fees over the life of the applicable licensee agreements (in years) | 30 years |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Leases (Details) | 12 Months Ended |
Dec. 31, 2019lease | |
Number of leases that have been executed but have not yet commenced | 2 |
Renewal term of leases, Restaurant locations | 5 years |
Minimum | |
Initial term of leases, Restaurant locations | 10 years |
Percentage of revenue | 2.00% |
Maximum | |
Initial term of leases, Restaurant locations | 20 years |
Percentage of revenue | 10.00% |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Advertising Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Advertising Costs | |||
Advertising costs | $ 10.6 | $ 6.1 | $ 6.1 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Net income per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Oct. 01, 2019 | Jul. 02, 2019 | Apr. 02, 2019 | Jan. 01, 2019 | Oct. 02, 2018 | Jul. 03, 2018 | Apr. 03, 2018 | Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Net income per share, basic and diluted | |||||||||||
Net income | $ 48,709 | $ 16,090 | $ 35,510 | $ 26,984 | $ 16,178 | $ 28,475 | $ 28,353 | $ 26,029 | $ 127,293 | $ 99,035 | $ 157,392 |
Basic weighted average shares outstanding (in shares) | 43,949 | 45,263 | 46,930 | ||||||||
Dilutive effect of equity awards (in shares) | 596 | 952 | 1,222 | ||||||||
Diluted weighted average shares outstanding (in shares) | 44,545 | 46,215 | 48,152 | ||||||||
Basic net income per share (in dollars per share) | $ 1.11 | $ 0.37 | $ 0.80 | $ 0.61 | $ 0.36 | $ 0.63 | $ 0.62 | $ 0.57 | $ 2.90 | $ 2.19 | $ 3.35 |
Diluted net income per share (in dollars per share) | $ 1.10 | $ 0.36 | $ 0.79 | $ 0.60 | $ 0.35 | $ 0.61 | $ 0.61 | $ 0.56 | $ 2.86 | $ 2.14 | $ 3.27 |
Common Stock | |||||||||||
Net income per share, basic and diluted | |||||||||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 2,300 | 1,500 | 1,600 | ||||||||
Restricted Shares and Restricted Share Units | |||||||||||
Net income per share, basic and diluted | |||||||||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 1,800 | 1,700 | 1,700 |
Significant Accounting Policies
Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Jan. 01, 2019 | |
Recent Accounting Pronouncements | ||
Lease, Practical Expedients, Package [true false] | true | |
Lease, Practical Expedient, Use of Hindsight [true false] | true | |
Operating lease assets | $ 1,240,976 | |
Operating lease liabilities | 1,317,950 | |
Prepaid rent | $ 34,961 | |
Property and equipment, net | 831,599 | 913,275 |
Intangible assets, net | 437,207 | 26,209 |
Deferred rent liabilities | 79,697 | |
Deemed landlord financing liabilities | 113,095 | |
ASU 2016-02 | ||
Recent Accounting Pronouncements | ||
Operating lease assets | 975,100 | |
Operating lease liabilities | 1,045,400 | |
Reduction to retained earnings due to adoption of new accounting standards | 41,500 | |
Prepaid rent | 39,200 | |
Property and equipment, net | 140,200 | |
Intangible assets, net | 6,200 | |
Deferred rent liabilities | 82,100 | |
Deemed landlord financing liabilities | $ 118,700 | |
Accounting Standards Update 2014-09 | ||
Recent Accounting Pronouncements | ||
Reduction to retained earnings due to adoption of new accounting standards | 3,600 | |
Increase to deferred revenue | $ 4,800 |
Acquisition - FRC Agreements (D
Acquisition - FRC Agreements (Details) $ in Millions | Oct. 02, 2019USD ($)itemstatelocation | Dec. 31, 2019USD ($) |
Minimum | ||
FRC Agreements | ||
Undiscounted range of outcomes per the Monte Carlo model | $ 0 | |
Maximum | ||
FRC Agreements | ||
Undiscounted range of outcomes per the Monte Carlo model | $ 69.2 | |
FRC Acquisition | ||
FRC Agreements | ||
Number of locations | location | 47 | |
Number of states | state | 8 | |
Number of concept | item | 10 | |
Gross consideration payable in cash | $ 288.1 | |
Amount owed by the acquiree | 10 | |
Amount in escrow account | $ 13 | |
Period of amount deferred | 4 years | |
Deferred consideration | $ 45 | |
Acquisition date fair value | 12.8 | |
Future compensation expense | $ 7.3 | |
Number of years for providing finance to achieve the targets | 5 years | |
North Italia Acquisition | ||
FRC Agreements | ||
Number of locations | location | 21 | |
Number of states | state | 10 | |
Amount in escrow account | $ 12 | |
Period of amount deferred | 2 years | |
Remeasured value of the equity interest | $ 122 | |
Gain or loss on revaluation of equity interest | $ 52.7 |
Acquisition - Fair value of the
Acquisition - Fair value of the assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Oct. 02, 2019 | Dec. 31, 2019 |
Less net assets acquired: | |||
Goodwill | $ 78,355 | $ 78,355 | |
Acquisition-related costs | 5,270 | ||
Acquisition | |||
Purchase consideration: | |||
Cash at closing | 288,089 | ||
Assumption of debt previously owed by FRC | 10,000 | ||
Deferred payments | 53,471 | ||
Contingent consideration | 12,786 | ||
Consideration transferred | 364,346 | ||
Fair value of previously-held equity interests | 122,000 | ||
Total | 486,346 | ||
Less net assets acquired: | |||
Current assets | 23,682 | 23,682 | |
Property and equipment | 84,360 | 84,360 | |
Intangible assets | 338,782 | 338,782 | |
Operating lease assets | 223,455 | 223,455 | |
Other assets | 5,842 | 5,842 | |
Current liabilities | (64,814) | (64,814) | |
Operating lease liabilities | (202,433) | (202,433) | |
Other noncurrent liabilities | (883) | (883) | |
Total net assets acquired | 407,991 | 407,991 | |
Goodwill | 78,355 | 78,355 | |
Goodwill deductible for tax purpose | 73,100 | $ 73,100 | |
Operating lease assets, weighted-average amortization period | 15 years 2 months 12 days | ||
Changes in the fair value of the deferred and contingent consideration and compensation expense | $ 1,000 | ||
Acquisition | Minimum | |||
Less net assets acquired: | |||
Property and equipment, useful lives | 3 years | ||
Acquisition | Maximum | |||
Less net assets acquired: | |||
Property and equipment, useful lives | 30 years | ||
North Italia Acquisition | |||
Purchase consideration: | |||
Fair value of previously-held equity interests | $ 122,000 | ||
Less net assets acquired: | |||
Goodwill | $ 29,200 | $ 29,200 |
Acquisition - Pro Forma Results
Acquisition - Pro Forma Results of Operations (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Jan. 01, 2019 | |
Business Acquisition [Line Items] | ||
Revenues | $ 2,732,901 | $ 2,579,019 |
Net income | $ 74,949 | $ 80,800 |
Basic (in dollars per share) | $ 1.71 | $ 1.79 |
Diluted (in dollars per share) | $ 1.68 | $ 1.75 |
FRC Acquisition | ||
Business Acquisition [Line Items] | ||
Net income | $ 1,500 | |
North Italia Acquisition | ||
Business Acquisition [Line Items] | ||
Net income | $ 92,000 |
Other Receivables (Details)
Other Receivables (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
Other Receivables | ||
Gift card distributors | $ 38,947 | $ 41,996 |
Insurance providers | 9,646 | 9,020 |
Landlord construction contributions | 3,501 | 4,976 |
Other | 12,589 | 12,201 |
Total | $ 64,683 | $ 68,193 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
Inventories | ||
Restaurant food and supplies | $ 25,057 | $ 18,362 |
Bakery finished goods and work in progress | 16,000 | 13,845 |
Bakery raw materials and supplies | 6,168 | 6,679 |
Total | $ 47,225 | $ 38,886 |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
Prepaid Expenses | ||
Gift card contract assets | $ 23,172 | $ 23,388 |
Other | 20,774 | 17,257 |
Total | $ 43,946 | $ 40,645 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Property and equipment | |||
Property and equipment, total | $ 1,880,442 | $ 1,923,849 | |
Less: Accumulated depreciation | (1,048,843) | (1,010,574) | |
Property and equipment, net | 831,599 | 913,275 | |
Depreciation expenses | 88,000 | 93,300 | $ 89,600 |
Repair and maintenance expenses | 56,300 | 55,200 | 54,100 |
Net expense on property and equipment disposals | 900 | 2,100 | $ 2,500 |
Land and related improvements | |||
Property and equipment | |||
Property and equipment, total | 15,852 | 15,852 | |
Buildings | |||
Property and equipment | |||
Property and equipment, total | 44,049 | 44,036 | |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, total | 1,158,467 | 1,283,233 | |
Furnishings, fixtures and equipment | |||
Property and equipment | |||
Property and equipment, total | 548,075 | 467,051 | |
Computer software and equipment | |||
Property and equipment | |||
Property and equipment, total | 55,614 | 55,434 | |
Restaurant smallwares | |||
Property and equipment | |||
Property and equipment, total | 34,653 | 30,268 | |
Construction in progress | |||
Property and equipment | |||
Property and equipment, total | $ 23,732 | $ 27,975 |
Intangible Assets, net (Details
Intangible Assets, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Goodwill and Other Intangible Assets | |||
Goodwill | $ 78,355 | ||
Other intangible assets | |||
Total indefinite-lived intangible assets | 423,957 | $ 17,086 | |
Net definite-lived intangible assets | 13,250 | 9,123 | |
Total | 437,207 | 26,209 | |
Amortization expenses related to our definite-lived intangible assets | $ 300 | 600 | $ 600 |
Minimum | |||
Other intangible assets | |||
Definite-lived intangible assets, amortization period | 1 year | ||
Maximum | |||
Other intangible assets | |||
Definite-lived intangible assets, amortization period | 56 years | ||
Licensing agreements | |||
Other intangible assets | |||
Total gross carrying amount | $ 10,060 | ||
Non-transferable alcoholic beverage licenses | |||
Other intangible assets | |||
Total gross carrying amount | 3,190 | 2,951 | |
Leasehold acquisition assets | |||
Other intangible assets | |||
Total gross carrying amount | 6,172 | ||
Trade names and trademarks | |||
Other intangible assets | |||
Total indefinite-lived intangible assets | 337,027 | 9,922 | |
Transferable alcoholic beverage licenses | |||
Other intangible assets | |||
Total indefinite-lived intangible assets | $ 8,575 | $ 7,164 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Leases | |||
Operating | $ 112,048 | ||
Variable | 66,689 | ||
Short-term | 368 | ||
Total | 179,105 | ||
Rent expense | |||
Straight-lined minimum base rent | $ 83,999 | $ 83,387 | |
Contingent rent | 20,147 | 19,559 | |
Common area maintenance and taxes | 39,961 | 38,103 | |
Total | $ 144,107 | $ 141,049 | |
Lessee Operating Lease Description | |||
Cash paid for amounts included in the measurement of lease liabilities-Operating cash flows from operating leases | 103,210 | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 262,421 | ||
Weighted-average remaining lease term - operating leases (in years) | 16 years 7 months 6 days | ||
Weighted-average discount rate - operating leases | 5.20% | ||
Right-of-use assets related to the Acquisition | $ 223,500 |
Leases - Maturity of operating
Leases - Maturity of operating lease liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Jan. 01, 2019 | |
Operating Leases | ||
2020 | $ 122,250 | |
2021 | 124,383 | |
2022 | 125,427 | |
2023 | 121,855 | |
2024 | 120,772 | |
Thereafter | 1,415,777 | |
Total future lease payments | 2,030,464 | |
Less: Interest | (712,514) | |
Present value of lease liabilities | 1,317,950 | |
Operating lease liabilities related to options extend | $ 867,200 | |
Options to extend lease terms | True | |
Minimum lease payment for leases | $ 136,200 | |
Aggregate minimum annual lease payments under operating leases | ||
2019 | $ 93,792 | |
2020 | 91,808 | |
2021 | 88,829 | |
2022 | 86,925 | |
2023 | 81,929 | |
Thereafter | 495,091 | |
Total | $ 938,374 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
Other Assets | ||
Non-qualified deferred compensation assets | $ 77,228 | $ 57,605 |
Deposits | 5,693 | 5,489 |
Deferred income taxes | 3,375 | 1,597 |
Total | $ 86,296 | $ 64,691 |
Gift Cards (Details)
Gift Cards (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Jan. 01, 2019 | |
Gift card liabilities: | ||
Beginning balance | $ 172,336 | $ 163,951 |
Activations | 158,099 | 151,084 |
Redemptions and breakage | (142,457) | (142,699) |
Ending balance | 187,978 | 172,336 |
Gift card contract assets (1): | ||
Beginning balance | 23,388 | 23,814 |
Deferrals | 18,378 | 18,669 |
Amortization | (18,594) | (19,095) |
Ending balance | $ 23,172 | $ 23,388 |
Other Accrued Expenses (Details
Other Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
Other Accrued Expenses | ||
Self-insurance | $ 68,881 | $ 72,631 |
Salaries and wages | 56,774 | 39,102 |
Staff member benefits | 25,044 | 22,946 |
Payroll and sales taxes | 22,822 | 15,684 |
Deferred consideration | 16,740 | |
Other | 46,321 | 44,018 |
Total | $ 236,582 | $ 194,381 |
Long-Term Debt (Details)
Long-Term Debt (Details) $ in Millions | Jul. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) | Jan. 02, 2018USD ($) |
Long-Term Debt | ||||
Outstanding borrowings | $ 290 | |||
Outstanding letters of credit | $ 19.4 | $ 20.7 | ||
Net Adjusted Leverage Ratio | 3.8 | |||
EBITDAR Ratio | 2.5 | |||
Capitalized interest expense | $ 0.6 | $ 0.4 | $ 0.7 | |
Net availability for borrowings | $ 90.6 | |||
New Facility | ||||
Long-Term Debt | ||||
Maximum commitments | $ 400 | |||
Maximum commitments, letter of credit sub-facility | 40 | |||
Additional available credit | $ 200 | |||
New Facility | Minimum | ||||
Long-Term Debt | ||||
Financial covenant, EBITDAR Ratio | 1.9 | |||
New Facility | Maximum | ||||
Long-Term Debt | ||||
Financial covenant, Net Adjusted Leverage Ratio | 4.75 | |||
Federal Funds Effective Rate | New Facility | ||||
Long-Term Debt | ||||
Credit facility, floating interest rate basis | federal funds rate | |||
Credit facility, basis spread on variable rate, (as a percent) | 0.50% | |||
One-month Adjusted LIBO Rate | New Facility | ||||
Long-Term Debt | ||||
Credit facility, floating interest rate basis | one-month Adjusted LIBO Rate | |||
Credit facility, basis spread on variable rate, (as a percent) | 1.00% |
Other Noncurrent Liabilities (D
Other Noncurrent Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
Other Noncurrent Liabilities | ||
Non-qualified deferred compensation liabilities | $ 76,255 | $ 57,551 |
Deferred consideration | 37,193 | |
Contingent consideration and compensation liabilities | 13,218 | |
Other | 13,882 | 14,108 |
Total | $ 140,548 | $ 71,659 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Oct. 02, 2019USD ($) | Jun. 22, 2018USD ($) | Jun. 07, 2018USD ($)item | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) |
Commitments and Contingencies | |||||
Purchase obligations | $ 118,200,000 | $ 149,800,000 | |||
Purchase obligations due within terms recorded | 3 years | ||||
Minimum payments for real estate and leases | $ 176,100,000 | 12,600,000 | |||
Outstanding standby letters of credit | 19,400,000 | 20,700,000 | |||
Total accrued liability for self-insured plans | 67,700,000 | $ 72,200,000 | |||
Wage citation | $ 4,200,000 | ||||
Number of restaurants receiving janitorial services | item | 8 | ||||
Payments required under event of an actual or constructive termination of employment | 2,300,000 | ||||
Accrued potential bonuses | 2,700,000 | ||||
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 | ||||
Number of months annual founder's retirement benefit after termination of full time employment | 6 months | ||||
Internal Revenue Service | |||||
Commitments and Contingencies | |||||
Tax disallowance | $ 8,000,000 | ||||
North Italia Acquisition | |||||
Commitments and Contingencies | |||||
Amount in escrow account | $ 12,000,000 | ||||
Period of amount deferred | 2 years | ||||
FRC Acquisition | |||||
Commitments and Contingencies | |||||
Amount in escrow account | $ 13,000,000 | ||||
Deferred consideration | $ 45,000,000 | ||||
Period of amount deferred | 4 years | ||||
Number of years for providing finance to achieve the targets | 5 years |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 18, 2020 | Dec. 31, 2019 | Oct. 01, 2019 | Jul. 02, 2019 | Apr. 02, 2019 | Jan. 01, 2019 | Oct. 02, 2018 | Jul. 03, 2018 | Apr. 03, 2018 | Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | Jan. 03, 2017 |
Stockholders Equity | |||||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.36 | $ 0.36 | $ 0.36 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.29 | $ 0.29 | $ 1.38 | $ 1.24 | $ 1.06 | $ 1.06 |
Repurchased shares since program inception | 52,916,434 | 51,791,941 | 52,916,434 | 51,791,941 | |||||||||
Value of shares repurchased since program inception | $ 1,693,122 | $ 1,642,140 | $ 1,693,122 | $ 1,642,140 | |||||||||
Treasury stock repurchased during period | $ 50,982 | $ 109,276 | $ 122,975 | ||||||||||
Treasury Stock | |||||||||||||
Stockholders Equity | |||||||||||||
Number of shares authorized to be repurchased | 56,000,000 | 56,000,000 | |||||||||||
Repurchased shares since program inception | 52,900,000 | 52,900,000 | |||||||||||
Value of shares repurchased since program inception | $ 1,693,100 | $ 1,693,100 | |||||||||||
Shares repurchased during period | 1,100,000 | 2,300,000 | 2,600,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - shares shares in Millions | 12 Months Ended | |||
Dec. 31, 2019 | May 30, 2019 | Apr. 05, 2017 | Apr. 04, 2017 | |
Stock-Based Compensation | ||||
Shares authorized for issuance under share-based compensation plan | 1.8 | 12.7 | 9.2 | |
Shares available for grant | 6.5 | 1.9 | ||
Maximum | ||||
Stock-Based Compensation | ||||
Shares authorized for issuance under share-based compensation plan | 4.8 | |||
Stock Options | ||||
Stock-Based Compensation | ||||
Annual vesting rights (as a percent) | 20.00% | |||
Stock Options | Minimum | ||||
Stock-Based Compensation | ||||
Option expiration period (in years) | 8 years | |||
Restricted Shares and Restricted Share Units | Minimum | ||||
Stock-Based Compensation | ||||
Annual vesting rights (as a percent) | 0.00% | |||
Vesting period (in years) | 3 years | |||
Restricted Shares and Restricted Share Units | Maximum | ||||
Stock-Based Compensation | ||||
Annual vesting rights (as a percent) | 150.00% | |||
Vesting period (in years) | 5 years |
Stock-Based Compensation - Net
Stock-Based Compensation - Net of Tax (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Stock-Based Compensation | |||
Total stock-based compensation | $ 19,373 | $ 19,988 | $ 16,457 |
Income tax benefit | 4,760 | 4,987 | 6,295 |
Total stock-based compensation, net of taxes | 14,613 | 15,001 | 10,162 |
Capitalized stock-based compensation | 226 | 262 | 239 |
Benefit in share-based compensation expense, out-of-period adjustment related to correction in stock-based compensation valuation and forfeitures | 3,900 | ||
Labor expenses | |||
Stock-Based Compensation | |||
Total stock-based compensation | 6,233 | 5,681 | 5,236 |
Other operating costs and expenses | |||
Stock-Based Compensation | |||
Total stock-based compensation | 274 | 287 | 243 |
General and administrative expenses | |||
Stock-Based Compensation | |||
Total stock-based compensation | $ 12,866 | $ 14,020 | $ 10,978 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted Average Fair Value (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Stock Options | |||
Stock-Based Compensation | |||
Weighted-average fair value at the grant date for options issued (in dollars per share) | $ 9.84 | $ 11.62 | $ 14.83 |
Weighted average assumptions under Black-Scholes valuation model | |||
Expected option term | 6 years 10 months 24 days | 6 years 10 months 24 days | 6 years 10 months 24 days |
Expected stock price volatility (as a percent) | 26.30% | 27.80% | 24.40% |
Risk-free interest rate (as a percent) | 2.60% | 2.80% | 2.30% |
Dividend yield (as a percent) | 2.90% | 2.50% | 1.60% |
Stock option activity, Shares | |||
Outstanding at beginning of year (in shares) | 1,799 | ||
Granted (in shares) | 307 | ||
Exercised (in shares) | (260) | ||
Forfeited or cancelled (in shares) | (17) | ||
Outstanding at end of year (in shares) | 1,829 | 1,799 | |
Exercisable at end of year (in shares) | 986 | ||
Weighted Average Exercise Price | |||
Outstanding at beginning of year (in dollars per share) | $ 45.03 | ||
Granted (in dollars per share) | 45.90 | ||
Exercised (in dollars per share) | 29.72 | ||
Forfeited or cancelled (in dollars per share) | 48.38 | ||
Outstanding at end of year (in dollars per share) | 47.32 | $ 45.03 | |
Exercisable at end of year (in dollars per share) | $ 46.04 | ||
Weighted Average Remaining Contractual Term (In years) | |||
Weighted Average Remaining Contractual Term (In years) | 4 years 3 months 18 days | 4 years 1 month 6 days | |
Exercisable at end of year (In years) | 2 years 9 months 18 days | ||
Aggregate Intrinsic Value | |||
Outstanding at beginning of year | $ 5,606 | ||
Outstanding at end of year | 844 | $ 5,606 | |
Exercisable at end of year | 844 | ||
Total intrinsic value of options exercised | 4,300 | $ 6,200 | $ 11,200 |
Unrecognized Stock-based Compensation Expense | |||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 7,000 | ||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 3 years | ||
Restricted Shares and Restricted Share Units | |||
Restricted Shares and Restricted Share Units, Shares | |||
Outstanding at beginning of year (in shares) | 1,702 | ||
Granted (in shares) | 541 | ||
Vested (in shares) | (349) | ||
Forfeited (in shares) | (130) | ||
Outstanding at end of year (in shares) | 1,764 | 1,702 | |
Fair value of shares vested | $ 15,800 | $ 17,800 | $ 18,400 |
Weighted Average Fair Value | |||
Outstanding at beginning of year (in dollars per share) | $ 48.08 | ||
Granted (in dollars per share) | 45.02 | $ 48.22 | $ 54.29 |
Vested (in dollars per share) | 45.26 | ||
Forfeited (in dollars per share) | 47.19 | ||
Outstanding at end of year (in dollars per share) | $ 47.76 | $ 48.08 | |
Unrecognized Stock-based Compensation Expense | |||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 36,400 | ||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 2 years 10 months 24 days |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)item | Jan. 01, 2019USD ($) | Jan. 02, 2018USD ($) | |
Employee Benefit Plans | |||
Minimum number of investment options available to participating plan members | item | 1 | ||
Accrued liability for self-insured benefit plans | $ 10.8 | $ 10.4 | |
401(k) Plan | |||
Employee Benefit Plans | |||
Expense recognized | 1.2 | 1 | $ 1 |
ESP | |||
Employee Benefit Plans | |||
Expense recognized | $ 1.2 | $ 1.3 | $ 1 |
Income Taxes - Provision & Reco
Income Taxes - Provision & Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Income Taxes | |||
Income before income taxes | $ 140,334 | $ 107,411 | $ 146,466 |
Current: | |||
Federal | 8,211 | 5,082 | 7,148 |
State | 7,027 | 8,804 | 7,106 |
Total current | 15,238 | 13,886 | 14,254 |
Deferred: | |||
Federal | (3,695) | (4,549) | (24,570) |
State | 1,498 | (961) | (610) |
Total deferred | (2,197) | (5,510) | (25,180) |
Total (benefit)/provision | $ 13,041 | $ 8,376 | $ (10,926) |
U.S. statutory corporate tax rate (as a percent) | 21.00% | 21.00% | 35.00% |
Income tax benefit due to revalue of deferred tax assets and liabilities | $ 38,500 | ||
Income Taxes Rate Reconciliation | |||
U.S. federal statutory rate (as a percent) | 21.00% | 21.00% | 35.00% |
State and district income taxes, net of federal benefit (as a percent) | 4.90% | 6.10% | 3.30% |
Credit for FICA taxes paid on tips (as a percent) | (12.80%) | (16.50%) | (9.40%) |
Other credits and incentives (as a percent) | (1.40%) | (2.50%) | (1.90%) |
Manufacturing deduction (as a percent) | (2.30%) | ||
Deferred compensation (as a percent) | (1.70%) | 0.80% | (1.50%) |
Equity compensation (as a percent) | (0.20%) | (1.50%) | (4.50%) |
Impact of statutory rate change on deferred taxes (as a percent) | (26.30%) | ||
Other (as a percent) | (0.50%) | 0.40% | 0.10% |
Effective tax rate (as a percent) | 9.30% | 7.80% | (7.50%) |
Income Taxes - Temporary Differ
Income Taxes - Temporary Differences (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Deferred tax assets: | |||
Staff member benefits | $ 27,059 | $ 22,925 | |
Insurance reserves | 14,157 | 15,165 | |
Accrued rent | 27,582 | 10,870 | |
Deferred income | 22,725 | 17,288 | |
Stock-based compensation | 8,794 | 8,628 | |
Tax credit carryforwards | 15,754 | 1,880 | |
Other | 1,958 | 1,265 | |
Subtotal | 118,029 | 78,021 | |
Less: Valuation allowance | (713) | (792) | |
Total | 117,316 | 77,229 | |
Deferred tax liabilities: | |||
Property and equipment | (131,120) | (107,513) | |
Prepaid expenses | (8,819) | (7,929) | |
Inventory | (7,713) | (6,893) | |
Other | (136) | (5,420) | |
Total | (147,788) | (127,755) | |
Net deferred tax liability | (30,472) | (50,526) | |
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Balance at beginning of year | 830 | 843 | $ 829 |
Additions related to current period tax positions | 13 | 104 | 168 |
Reductions related to settlements with taxing authorities and lapses of statutes of limitations | (139) | (117) | (154) |
Balance at end of year | 704 | 830 | $ 843 |
Accrued interest and penalties related with uncertain tax positions | 200 | 200 | |
Decrease in uncertain tax positions during the next twelve months based on the lapses of statutes of limitations for certain jurisdictions | 0 | ||
State | |||
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Tax credit carryforwards | 1,900 | 2,400 | |
Tax credit carryforward valuation allowance | 700 | 800 | |
Foreign | |||
Deferred tax assets: | |||
Tax credit carryforwards | 800 | ||
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Tax credit carryforwards | 700 | ||
Federal | |||
Deferred tax assets: | |||
Tax credit carryforwards | $ 14,300 | $ 3,300 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Oct. 01, 2019 | Jul. 02, 2019 | Apr. 02, 2019 | Jan. 01, 2019 | Oct. 02, 2018 | Jul. 03, 2018 | Apr. 03, 2018 | Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Segment Information | |||||||||||
Revenues | $ 694,030 | $ 586,536 | $ 602,645 | $ 599,481 | $ 585,155 | $ 575,160 | $ 587,319 | $ 584,697 | $ 2,482,692 | $ 2,332,331 | $ 2,260,502 |
Income/(loss) from operations | 6,387 | $ 26,964 | $ 40,099 | $ 30,148 | 19,359 | 33,495 | 34,543 | $ 31,551 | 103,598 | 118,948 | 152,845 |
Depreciation and amortization | 88,133 | 95,976 | 92,729 | ||||||||
Preopening costs | 13,149 | 10,937 | 13,278 | ||||||||
Capital expenditures | 73,765 | 102,909 | 120,779 | ||||||||
Total assets | 2,840,593 | 1,314,133 | 2,840,593 | 1,314,133 | 1,333,060 | ||||||
Impairment of assets and lease terminations | 18,247 | 17,861 | 10,343 | ||||||||
Acquisition-related contingent consideration, compensation and amortization expenses | 1,033 | ||||||||||
The Cheesecake Factory restaurants | |||||||||||
Segment Information | |||||||||||
Revenues | 2,180,882 | 2,127,347 | 2,057,816 | ||||||||
Income/(loss) from operations | 258,374 | 270,829 | 281,715 | ||||||||
Depreciation and amortization | 70,971 | 80,646 | 76,186 | ||||||||
Preopening costs | 9,967 | 9,247 | 10,891 | ||||||||
Capital expenditures | 59,045 | 71,880 | 101,142 | ||||||||
Total assets | 1,701,418 | 928,345 | 1,701,418 | 928,345 | 937,512 | ||||||
Impairment of assets and lease terminations | 18,200 | 15,000 | $ 300 | $ 2,600 | 8,900 | 6,600 | 2,500 | ||||
North Italia | |||||||||||
Segment Information | |||||||||||
Revenues | 35,268 | ||||||||||
Income/(loss) from operations | 1,608 | ||||||||||
Depreciation and amortization | 829 | ||||||||||
Preopening costs | 1,297 | ||||||||||
Capital expenditures | 2,318 | ||||||||||
Total assets | 297,840 | 297,840 | |||||||||
Other FRC | |||||||||||
Segment Information | |||||||||||
Revenues | 39,335 | ||||||||||
Income/(loss) from operations | 5,309 | ||||||||||
Depreciation and amortization | 1,037 | ||||||||||
Preopening costs | 49 | ||||||||||
Capital expenditures | 5,072 | ||||||||||
Total assets | 310,414 | 310,414 | |||||||||
Other | |||||||||||
Segment Information | |||||||||||
Revenues | 227,207 | 204,984 | 202,686 | ||||||||
Income/(loss) from operations | (161,693) | (151,881) | (128,870) | ||||||||
Depreciation and amortization | 15,296 | 15,330 | 16,543 | ||||||||
Preopening costs | 1,836 | 1,690 | 2,387 | ||||||||
Capital expenditures | 7,330 | 31,029 | 19,637 | ||||||||
Total assets | $ 530,921 | $ 385,788 | 530,921 | 385,788 | 395,548 | ||||||
Impairment of assets and lease terminations | 9,300 | $ 11,300 | $ 7,800 | ||||||||
Acquisition-related contingent consideration, compensation and amortization expenses | $ 6,300 |
Quarterly Financial Data (una_3
Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 18, 2020 | Dec. 31, 2019 | Oct. 01, 2019 | Jul. 02, 2019 | Apr. 02, 2019 | Jan. 01, 2019 | Oct. 02, 2018 | Jul. 03, 2018 | Apr. 03, 2018 | Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | Jan. 03, 2017 |
Quarterly Financial Data (unaudited) | |||||||||||||
Revenues | $ 694,030 | $ 586,536 | $ 602,645 | $ 599,481 | $ 585,155 | $ 575,160 | $ 587,319 | $ 584,697 | $ 2,482,692 | $ 2,332,331 | $ 2,260,502 | ||
Income from operations | 6,387 | 26,964 | 40,099 | 30,148 | 19,359 | 33,495 | 34,543 | 31,551 | 103,598 | 118,948 | 152,845 | ||
Net income | $ 48,709 | $ 16,090 | $ 35,510 | $ 26,984 | $ 16,178 | $ 28,475 | $ 28,353 | $ 26,029 | $ 127,293 | $ 99,035 | $ 157,392 | ||
Basic net income per share (in dollars per share) | $ 1.11 | $ 0.37 | $ 0.80 | $ 0.61 | $ 0.36 | $ 0.63 | $ 0.62 | $ 0.57 | $ 2.90 | $ 2.19 | $ 3.35 | ||
Diluted net income per share (in dollars per share) | 1.10 | 0.36 | 0.79 | 0.60 | 0.35 | 0.61 | 0.61 | 0.56 | 2.86 | 2.14 | 3.27 | ||
Cash dividends declared per common share (in dollars per share) | $ 0.36 | $ 0.36 | $ 0.36 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.29 | $ 0.29 | $ 1.38 | $ 1.24 | $ 1.06 | $ 1.06 |
Quarterly Financial Data - Asse
Quarterly Financial Data - Asset impairment (unaudited) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Oct. 01, 2019 | Jul. 02, 2019 | Apr. 02, 2019 | Jan. 01, 2019 | Oct. 02, 2018 | Jul. 03, 2018 | Apr. 03, 2018 | Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | |
Asset impairment | |||||||||||
Revenues | $ 694,030 | $ 586,536 | $ 602,645 | $ 599,481 | $ 585,155 | $ 575,160 | $ 587,319 | $ 584,697 | $ 2,482,692 | $ 2,332,331 | $ 2,260,502 |
Income/(loss) from operations | 6,387 | 26,964 | 40,099 | 30,148 | 19,359 | 33,495 | 34,543 | 31,551 | 103,598 | 118,948 | 152,845 |
Net income/(loss) | 48,709 | 16,090 | $ 35,510 | $ 26,984 | 16,178 | 28,475 | 28,353 | $ 26,029 | 127,293 | 99,035 | 157,392 |
Acquisition-related costs | 5,270 | ||||||||||
Impairment of assets and lease terminations | 18,247 | 17,861 | 10,343 | ||||||||
The Cheesecake Factory restaurants | |||||||||||
Asset impairment | |||||||||||
Revenues | 2,180,882 | 2,127,347 | 2,057,816 | ||||||||
Income/(loss) from operations | 258,374 | 270,829 | 281,715 | ||||||||
Impairment of assets and lease terminations | 18,200 | 15,000 | 300 | 2,600 | $ 8,900 | $ 6,600 | $ 2,500 | ||||
Impact of impairment and lease termination expenses on net income | 13,500 | $ 11,100 | $ 200 | $ 1,900 | |||||||
Acquisition | The Cheesecake Factory restaurants | |||||||||||
Asset impairment | |||||||||||
Revenues | 92,000 | ||||||||||
Income/(loss) from operations | (2,100) | ||||||||||
Net income/(loss) | (1,500) | ||||||||||
Acquisition-related costs | 3,100 | 3,200 | |||||||||
Acquisition related cost impact on net income loss | $ 2,300 | $ 2,400 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Feb. 18, 2020 | Dec. 31, 2019 | Oct. 01, 2019 | Jul. 02, 2019 | Apr. 02, 2019 | Jan. 01, 2019 | Oct. 02, 2018 | Jul. 03, 2018 | Apr. 03, 2018 | Dec. 31, 2019 | Jan. 01, 2019 | Jan. 02, 2018 | Jan. 03, 2017 |
Subsequent Events | |||||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.36 | $ 0.36 | $ 0.36 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.33 | $ 0.29 | $ 0.29 | $ 1.38 | $ 1.24 | $ 1.06 | $ 1.06 |