Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 29, 2022 | Apr. 25, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 29, 2022 | |
Entity File Number | 0-20574 | |
Entity Registrant Name | THE CHEESECAKE FACTORY INCORPORATED | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 51-0340466 | |
Entity Address, Address Line One | 26901 Malibu Hills Road | |
Entity Address, City or Town | Calabasas Hills | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 91301 | |
City Area Code | 818 | |
Local Phone Number | 871-3000 | |
Title of 12(b) Security | Common Stock, par value $.01 per share | |
Trading Symbol | CAKE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 52,786,422 | |
Entity Central Index Key | 0000887596 | |
Current Fiscal Year End Date | --12-28 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 29, 2022 | Dec. 28, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 183,556 | $ 189,627 |
Accounts and other receivable | 66,451 | 100,504 |
Income taxes receivable | 36,893 | 36,173 |
Inventories | 46,680 | 42,839 |
Prepaid expenses | 33,741 | 36,446 |
Total current assets | 367,321 | 405,589 |
Property and equipment, net | 744,751 | 741,746 |
Other assets: | ||
Intangible assets, net | 251,655 | 251,701 |
Operating lease assets | 1,240,552 | 1,241,237 |
Other | 149,462 | 157,852 |
Total other assets | 1,641,669 | 1,650,790 |
Total assets | 2,753,741 | 2,798,125 |
Current liabilities: | ||
Accounts payable | 61,741 | 54,086 |
Gift card liabilities | 185,512 | 211,182 |
Operating lease liabilities | 144,966 | 131,818 |
Other accrued expenses | 202,217 | 239,187 |
Total current liabilities | 594,436 | 636,273 |
Long-term debt | 466,521 | 466,017 |
Operating lease liabilities | 1,201,550 | 1,218,269 |
Other noncurrent liabilities | 135,908 | 147,400 |
Commitments and contingencies (Note 16) | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value, other than Series A convertible preferred stock, 4,800,000 shares authorized; none issued | ||
Common stock, $.01 par value, 250,000,000 shares authorized; 106,028,803 and 105,365,678 shares issued at March 29, 2022 and December 28, 2021, respectively | 1,060 | 1,054 |
Additional paid-in capital | 868,410 | 862,758 |
Retained earnings | 1,192,335 | 1,169,150 |
Treasury stock, 53,236,854 and 53,139,172 shares at cost at March 29, 2022 and December 28, 2021, respectively | (1,706,447) | (1,702,509) |
Accumulated other comprehensive loss | (32) | (287) |
Total stockholders' equity | 355,326 | 330,166 |
Total liabilities, Series A convertible preferred stock and stockholders' equity | $ 2,753,741 | $ 2,798,125 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 29, 2022 | Dec. 28, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Series A convertible preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Series A convertible preferred stock, shares authorized (in shares) | 200,000 | 200,000 |
Series A convertible preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 4,800,000 | 4,800,000 |
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 | 106,028,803 | 105,365,678 |
Treasury stock, shares | 53,236,854 | 53,139,172 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 29, 2022 | Mar. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||
Revenues | $ 793,710 | $ 627,417 |
Costs and expenses: | ||
Cost of sales | 188,501 | 135,875 |
Labor expenses | 295,763 | 229,732 |
Other operating costs and expenses | 207,635 | 181,533 |
General and administrative expenses | 49,123 | 44,427 |
Depreciation and amortization expenses | 21,505 | 22,006 |
Impairment of assets and lease termination expenses | 207 | 594 |
Acquisition-related contingent consideration, compensation and amortization expenses | 891 | 550 |
Preopening costs | 1,764 | 3,856 |
Total costs and expenses | 765,389 | 618,573 |
Income from operations | 28,321 | 8,844 |
Interest and other expense, net | (1,461) | (2,694) |
Income before income taxes | 26,860 | 6,150 |
Income tax provision | 3,697 | 2,282 |
Net income | 23,163 | 3,868 |
Dividends on Series A preferred stock | (5,070) | |
Net income/(loss) available to common stockholders | $ 23,163 | $ (1,202) |
Net income/(loss) per common share: | ||
Basic (in dollars per share) | $ 0.46 | $ (0.03) |
Diluted (in dollars per share) | $ 0.45 | $ (0.03) |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 50,333 | 44,189 |
Diluted (in shares) | 51,013 | 44,189 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2022 | Mar. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 23,163 | $ 3,868 |
Other comprehensive gain: | ||
Foreign currency translation adjustment | 255 | 174 |
Unrealized gain on derivative, net of tax | 1,738 | |
Other comprehensive gain | 255 | 1,912 |
Total comprehensive income | 23,418 | 5,780 |
Comprehensive income attributable to Series A preferred stockholders | (5,070) | |
Total comprehensive income available to common stockholders | $ 23,418 | $ 710 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND SERIES A CONVERTIBLE PREFERRED STOCK - USD ($) $ in Thousands | Preferred stockCumulative effect of adopting ASU 2020-06Series A Convertible Preferred stock | Preferred stockCumulative effect of adopting ASU 2020-06, adjusted balanceSeries A Convertible Preferred stock | Preferred stockSeries A Convertible Preferred stock | Common StockCumulative effect of adopting ASU 2020-06, adjusted balance | Common Stock | Additional Paid-in CapitalCumulative effect of adopting ASU 2020-06, adjusted balance | Additional Paid-in Capital | Retained EarningsCumulative effect of adopting ASU 2020-06 | Retained EarningsCumulative effect of adopting ASU 2020-06, adjusted balance | Retained Earnings | Treasury StockCumulative effect of adopting ASU 2020-06, adjusted balance | Treasury Stock | Accumulated Other Comprehensive LossCumulative effect of adopting ASU 2020-06, adjusted balance | Accumulated Other Comprehensive Loss | Cumulative effect of adopting ASU 2020-06 | Cumulative effect of adopting ASU 2020-06, adjusted balance | Total |
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||
Cumulative effect of adopting ASU 2020-06 | $ (4,763) | $ 213,485 | $ 218,248 | $ 986 | $ 986 | $ 878,148 | $ 878,148 | $ 4,763 | $ 1,114,850 | $ 1,110,087 | $ (1,696,743) | $ (1,696,743) | $ (3,785) | $ (3,785) | $ 4,763 | $ 293,456 | $ 288,693 |
Balance (as adjusted) (in shares) | 200 | 200 | 98,645 | 98,645 | |||||||||||||
Beginning balance at Dec. 29, 2020 | (4,763) | $ 213,485 | $ 218,248 | $ 986 | $ 986 | 878,148 | 878,148 | 4,763 | 1,114,850 | 1,110,087 | (1,696,743) | (1,696,743) | (3,785) | (3,785) | 4,763 | 293,456 | 288,693 |
Beginning balance (in shares) at Dec. 29, 2020 | 200 | 200 | 98,645 | 98,645 | |||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||
Foreign currency translation adjustment | 174 | 174 | |||||||||||||||
Net income | 3,868 | 3,868 | |||||||||||||||
Change in derivative, net of tax | 1,738 | 1,738 | |||||||||||||||
Cash dividends declared common stock, net of forfeitures | 399 | 399 | |||||||||||||||
Stock-based compensation | $ 3 | 5,480 | 5,483 | ||||||||||||||
Stock-based compensation (in shares) | 293 | ||||||||||||||||
Common stock issued under stock-based compensation plans | $ 6 | 20,417 | 20,423 | ||||||||||||||
Common stock issued under stock-based compensation plans (in shares) | 570 | ||||||||||||||||
Treasury stock purchases | (3,957) | (3,957) | |||||||||||||||
Cash dividend declared Series A preferred stock, $25.35 per share | (5,070) | (5,070) | |||||||||||||||
Ending balance at Mar. 30, 2021 | $ 213,485 | $ 995 | 904,045 | 1,114,047 | (1,700,700) | (1,873) | 316,514 | ||||||||||
Ending balance (in shares) at Mar. 30, 2021 | 200 | 99,508 | |||||||||||||||
Beginning balance at Dec. 29, 2020 | $ (4,763) | $ 213,485 | $ 218,248 | $ 986 | $ 986 | $ 878,148 | 878,148 | $ 4,763 | $ 1,114,850 | 1,110,087 | $ (1,696,743) | (1,696,743) | $ (3,785) | (3,785) | $ 4,763 | $ 293,456 | 288,693 |
Beginning balance (in shares) at Dec. 29, 2020 | 200 | 200 | 98,645 | 98,645 | |||||||||||||
Ending balance at Dec. 28, 2021 | $ 1,054 | 862,758 | 1,169,150 | (1,702,509) | (287) | 330,166 | |||||||||||
Ending balance (in shares) at Dec. 28, 2021 | 105,366 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||
Cumulative effect of adopting ASU 2020-06 | $ 213,485 | $ 995 | 904,045 | 1,114,047 | (1,700,700) | (1,873) | 316,514 | ||||||||||
Balance (as adjusted) (in shares) | 200 | 99,508 | |||||||||||||||
Cumulative effect of adopting ASU 2020-06 | $ 1,054 | 862,758 | 1,169,150 | (1,702,509) | (287) | 330,166 | |||||||||||
Balance (as adjusted) (in shares) | 105,366 | ||||||||||||||||
Foreign currency translation adjustment | 255 | 255 | |||||||||||||||
Net income | 23,163 | 23,163 | |||||||||||||||
Cash dividends declared common stock, net of forfeitures | 22 | 22 | |||||||||||||||
Stock-based compensation | $ 6 | 5,569 | 5,575 | ||||||||||||||
Stock-based compensation (in shares) | 608 | ||||||||||||||||
Common stock issued under stock-based compensation plans | $ 0 | 83 | 83 | ||||||||||||||
Common stock issued under stock-based compensation plans (in shares) | 55 | ||||||||||||||||
Treasury stock purchases | (3,938) | (3,938) | |||||||||||||||
Ending balance at Mar. 29, 2022 | $ 1,060 | 868,410 | 1,192,335 | (1,706,447) | (32) | 355,326 | |||||||||||
Ending balance (in shares) at Mar. 29, 2022 | 106,029 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||
Cumulative effect of adopting ASU 2020-06 | $ 1,060 | $ 868,410 | $ 1,192,335 | $ (1,706,447) | $ (32) | $ 355,326 | |||||||||||
Balance (as adjusted) (in shares) | 106,029 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND SERIES A CONVERTIBLE PREFERRED STOCK (Parenthetical) | 3 Months Ended |
Mar. 30, 2021$ / shares | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |
Cash dividend per share of preferred stock | $ 25.35 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2022 | Mar. 30, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 23,163 | $ 3,868 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization expenses | 21,505 | 22,006 |
Impairment of assets and lease termination expense | 149 | 431 |
Deferred income taxes | 3,869 | (1,508) |
Stock-based compensation | 5,518 | 5,444 |
Changes in assets and liabilities: | ||
Accounts and other receivables | 34,287 | 15,517 |
Income taxes receivable/payable | (720) | 1,916 |
Inventories | (3,839) | 408 |
Prepaid expenses | 2,707 | 4,584 |
Operating lease assets/liabilities | (2,852) | (2,684) |
Other assets | 4,049 | (2,113) |
Accounts payable | 12,106 | (1,588) |
Gift card liabilities | (25,674) | (18,480) |
Other accrued expenses | (40,756) | (6,159) |
Cash provided by operating activities | 33,512 | 21,642 |
Cash flows from investing activities: | ||
Additions to property and equipment | (29,093) | (7,227) |
Additions to intangible assets | (139) | (480) |
Other | 600 | (1,000) |
Cash used in investing activities | (28,632) | (8,707) |
Cash flows from financing activities: | ||
Acquisition-related deferred consideration and compensation | (7,187) | |
Proceeds from exercise of stock options | 83 | 20,423 |
Common stock dividends paid | (2,179) | |
Treasury stock purchases | (3,938) | (3,957) |
Cash (used in)/provided by financing activities | (11,042) | 14,287 |
Foreign currency translation adjustment | 91 | 38 |
Net change in cash and cash equivalents | (6,071) | 27,260 |
Cash and cash equivalents at beginning of period | 189,627 | 154,085 |
Cash and cash equivalents at end of period | 183,556 | 181,345 |
Supplemental disclosures: | ||
Interest paid | 1,136 | 1,742 |
Income taxes paid | 465 | 327 |
Construction payable | $ 8,806 | $ 4,206 |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 29, 2022 | |
Significant Accounting Policies | |
Significant Accounting Policies | 1. Significant Accounting Policies Basis of Presentation The accompanying condensed 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. The unaudited financial statements presented herein include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for the fair statement of the financial condition, results of operations and cash flows for the period. However, these results are not necessarily indicative of results that may be achieved for any other interim period or for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2021 filed with the SEC on February 22, 2022. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal year 2022 consists of 53 weeks and will end on January 3, 2023. Fiscal year 2021, which ended on December 28, 2021, was a 52 -week year. 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. COVID-19 Pandemic Beginning in March 2020, COVID-19 and measures to prevent its spread led to temporary closures, shifts to an off-premise only operating model or reduced dining room capacity across our portfolio. While restrictions on the type of permitted operating model and occupancy capacity may continue to change, currently all of our restaurants are operating with no capacity restrictions. The ongoing effects of COVID-19 and its variants, including, but not limited to, consumer behavior, capacity restrictions, mask and vaccination mandates, wage inflation, our ability to continue to staff our restaurants and disruptions in the supply chain, will determine the impact to our operating results and financial position. The impact to our operations has been most notable during the periods of greatest accelerating COVID-19 case counts. We have incurred and will continue to incur additional costs to address government regulations and the safety of our staff members and customers. Recent Accounting Pronouncements In August 2020, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is intended to simplify the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. This pronouncement is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. The guidance allows for either full retrospective adoption or modified retrospective adoption. We adopted this guidance in the first quarter of fiscal 2021 utilizing the modified retrospective method and, accordingly, recorded a $4.8 million cumulative adjustment to retained earnings to reverse previously recorded beneficial conversion features. As further discussed in Note 5, we issued certain convertible senior notes due 2026 (“Notes”) during the second quarter of fiscal 2021, and the accounting for these instruments was based on the guidance in ASU 2020-06. Additionally, the impact on diluted earnings per share of the Notes was calculated based on the if-converted method, as further described in Note 11. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 29, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | 2. 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; and ● 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): March 29, 2022 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 88,010 $ — $ — Non-qualified deferred compensation liabilities (87,052) — — Acquisition-related deferred consideration — (21,721) — Acquisition-related contingent consideration and compensation liabilities — — (17,193) December 28, 2021 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 92,588 $ — $ — Non-qualified deferred compensation liabilities (92,012) — — Acquisition-related deferred consideration — (21,642) — Acquisition-related contingent consideration and compensation liabilities — — (23,894) 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): Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Beginning balance $ 23,894 $ 7,465 Payment (7,187) — Change in fair value 486 241 Ending balance $ 17,193 $ 7,706 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 utilized to determine the fair value of the acquisition-related contingent consideration and compensation liabilities at March 29, 2022 was $0 to $204.0 million. Results could change materially if different estimates and assumptions were used. The significant decrease in the fair value of the contingent consideration and compensation liabilities during the first quarter of fiscal 2022 primarily related to the payment of $7.2 million per the Fox Restaurant Concept LLC (“FRC”) acquisition agreement. The fair values of our cash and cash equivalents, accounts and other receivable, income taxes receivable, prepaid expenses, accounts payable, income taxes payable and other accrued liabilities approximate their carrying amounts. As of March 29, 2022, we had $345.0 million aggregate principal amount of Notes outstanding. The estimated fair value of the Notes based on a market approach as of March 29, 2022 was approximately $308.4 million and determined based on the estimated or actual bids and offers of the Notes in an over-the-counter market on the last business day of the reporting period. See Note 5 for further discussion of the Notes. |
Inventories
Inventories | 3 Months Ended |
Mar. 29, 2022 | |
Inventories | |
Inventories | 3. Inventories Inventories consisted of (in thousands): March 29, 2022 December 28, 2021 Restaurant food and supplies $ 26,628 $ 27,877 Bakery finished goods and work in progress 11,905 7,951 Bakery raw materials and supplies 8,147 7,011 Total $ 46,680 $ 42,839 |
Gift Cards
Gift Cards | 3 Months Ended |
Mar. 29, 2022 | |
Gift Cards | |
Gift Cards | 4. Gift Cards The following tables present information related to gift cards (in thousands): Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Gift card liabilities: Beginning balance $ 211,182 $ 184,655 Activations 20,590 16,465 Redemptions and breakage (46,260) (34,942) Ending balance $ 185,512 $ 166,178 Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Gift card contract assets: Beginning balance $ 18,468 $ 17,955 Deferrals 2,702 2,295 Amortization (3,629) (3,995) Ending balance $ 17,541 $ 16,255 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 29, 2022 | |
Long-Term Debt | |
Long-Term Debt | 5. Long-Term Debt Revolving Credit Facility On March 30, 2021, we entered into a Second Amendment (the “Second Amendment”) to our existing Third Amended and Restated Loan Agreement, dated July 30, 2019 (as amended by that certain First Amendment, dated as of May 1, 2020 and by the Second Amendment, collectively, the “Amended Credit Agreement”). The Amended Credit Agreement, which terminates on July 30, 2024, consists of a $400 million revolving loan facility (the “Revolving Facility”), including a $40 million sublimit for letters of credit.The Amended Credit Agreement also provides the ability to increase the Revolving Facility in an amount not to exceed (a) during the Covenant Relief Period (as defined below), $125 million and (b) thereafter, $200 million. The funding of any such increases are subject to receipt of lender commitments and satisfaction of customary conditions precedent. Certain of our material subsidiaries have guaranteed our obligations under the Amended Credit Agreement. The Second Amendment, among other things, (i) extended the prior covenant relief period during which the testing of the net adjusted debt to EBITDAR ratio covenant (the “Net Adjusted Leverage Ratio”) and the EBITDAR to interest and rent expense ratio covenant (the “EBITDAR Ratio”) was suspended until the quarter ending December 28, 2021 (the “Covenant Relief Period”), (ii) continued to impose a monthly Liquidity covenant of $100 million (with “Liquidity” being the sum of (a) unrestricted cash and cash equivalents and (b) the unused portion of the Revolving Facility) until the Company demonstrated compliance with the financial covenants as of the quarter ending December 28, 2021, (iii) provided that the obligations thereunder be secured by a first priority security interest in substantially all of our and any guarantor’s property, with such property to be released upon (a) the termination of the Covenant Relief Period, (b) the Company’s compliance with the Net Adjusted Leverage Ratio and the EBITDAR Ratio as of the quarter ending on March 29, 2022, (c) neither the Company nor any of the guarantors having incurred unsecured debt using certain debt baskets under the Revolving Facility unless such debt is convertible debt or subordinated on customary debt subordination terms reasonably acceptable to the administrative agent and (d) no default or event of default having occurred or continuing, (iv) amended certain negative covenants during the Covenant Relief Period, including certain restrictions on capital expenditures, restricted payments, investments and indebtedness, and (v) permitted the payment of cash dividends with respect to our Series A Convertible Preferred Stock, par value $0.01 per share (“Series A preferred stock”) for each fiscal quarter of 2021 in an amount not to exceed $5.25 million per quarter. Subsequent to the Covenant Relief Period, we are required to maintain (i) a maximum Net Adjusted Leverage Ratio of 4.75 and (ii) a minimum EBITDAR Ratio of 1.9 . Our Net Adjusted Leverage and EBITDAR Ratios were 3.9 and 2.3 , respectively, at March 29, 2022, and we were in compliance with all covenants in effect at that date. Concurrently with our delivery of the compliance certificate demonstrating our compliance with the financial covenants in the Amended Credit Agreement as of December 28, 2021, the Covenant Relief Period was terminated. Borrowings under the Amended Credit Agreement during the Covenant Relief Period bore interest, at our option, at a rate equal to either: (i) the adjusted LIBO Rate (as customarily defined, the “Adjusted LIBO Rate”) plus 2.5%, 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) 1.5%. During the Covenant Relief Period, we also incurred a fee of 0.4% on the daily amount of unused commitments. Subsequent to the Covenant Relief Period, borrowings under the Amended Credit Agreement bear interest, at our option, at a rate equal to either: (i) 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. Subsequent to the Covenant Relief Period, we will also incur a fee of 0.1% to 0.2% on the daily amount of unused commitments. Letters of credit 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. We paid certain customary loan origination fees in conjunction with the Amended Credit Agreement. At March 29, 2022, we had net availability for borrowings of $240.1 million, based on a $130.0 million outstanding debt balance and $29.9 million in standby letters of credit. The Amended Credit Agreement contains customary affirmative and negative covenants, including limits on cash dividends and share repurchases with respect to our equity interests, and restrictions on indebtedness, liens, investments, sales of assets, fundamental changes and other matters. The Amended Credit Agreement also contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgements, cross defaults to material indebtedness and events constituting a change of control. The occurrence of an event of default could result in the termination of commitments under the Revolving Facility, the declaration that all outstanding loans are immediately due and payable in whole or in part and the requirement of cash collateral deposits in respect of outstanding letters of credit. Convertible Senior Notes On June 15, 2021, we issued $345.0 million aggregate principal amount of convertible senior notes due 2026 (“Notes”). The net proceeds from the sale of the Notes were approximately $334.9 million after deducting issuance costs related to the Notes. The Notes are senior, unsecured obligations and are (i) equal in right of payment with our existing and future senior, unsecured indebtedness; (ii) senior in right of payment to our existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. The Notes were issued pursuant to, and are governed by, an indenture (the “Base Indenture”) between us and a trustee (“Trustee”), dated as of June 15, 2021, as supplemented by a first supplemental indenture (the “Supplemental Indenture,” and the Base Indenture, as supplemented by the Supplemental Indenture, the “Indenture”), dated as of June 15, 2021, between the Company and the Trustee. The Notes accrue interest at a rate of 0.375% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021. The Notes will mature on June 15, 2026, unless earlier repurchased, redeemed or converted. Before February 17, 2026, noteholders will have the right to convert their Notes only upon the occurrence of certain events. From and after February 17, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will have the right to elect to settle conversions either entirely in cash or in a combination of cash and shares of our common stock. However, upon conversion of any Notes, the conversion value, which will be determined over an “Observation Period” (as defined in the Indenture) consisting of 30 trading days, will be paid in cash up to at least the principal amount of the Notes being converted. The initial conversion rate is 12.7551 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $78.40 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. As of March 29, 2022, no conditions were met that would have impacted the initial conversion rate or conversion price. In connection with the cash dividend that was declared by our Board on April 21, 2022, on May 12, 2022 we will adjust the conversion rate (which is expected to increase) and the conversion price (which is expected to decrease) of the Notes in accordance with the terms. The Notes are redeemable, in whole or in part (subject to certain limitations described below), at our option at any time, and from time to time, on or after June 20, 2024 and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. However, we may not redeem less than all of the outstanding Notes unless at least $150.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time we send the related redemption notice. In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption. If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require us to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving us and certain de-listing events with respect to our common stock. The Notes will have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment defaults on the Notes (which, in the case of a default in the payment of interest on the Notes, will be subject to a 30-day cure period); (ii) our failure to send certain notices under the Indenture within specified periods of time; (iii) our failure to comply with certain covenants in the Indenture relating to our ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of our assets and our subsidiaries, taken as a whole, to another person; (iv) a default by us in our other obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture; (v) certain defaults by us or any of our significant subsidiaries with respect to indebtedness for borrowed money of at least $20,000,000; (vi) the rendering of certain judgments against us or any of our significant subsidiaries for the payment of at least $25,000,000, where such judgments are not discharged or stayed within 60 days after the date on which the right to appeal has expired or on which all rights to appeal have been extinguished; and (vii) certain events of bankruptcy, insolvency and reorganization involving us or any of our significant subsidiaries. If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to us (and not solely with respect to a significant subsidiary of ours) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to us, or noteholders of at least 25% of the aggregate principal amount of Notes then outstanding, by notice to us and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, we may elect, at our option, that the sole remedy for an Event of Default relating to certain failures by us to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Notes. As of March 29, 2022, the Notes had a gross principal balance of $345.0 million and a balance of $336.5 million, net of unamortized issuance costs of $8.5 million. Total amortization expense was $0.5 million during the first quarter fiscal 2022. The effective interest rate for the Notes was 0.96% as of March 29, 2022. |
Leases
Leases | 3 Months Ended |
Mar. 29, 2022 | |
Leases | |
Leases | 6. Leases Components of lease expense were as follows (in thousands): Thirteen Weeks Ended Thirteen Weeks Ended March 29, 2022 March 30, 2021 Operating $ 32,876 $ 32,394 Variable 19,654 16,481 Short-term 26 70 Total $ 52,556 $ 48,945 Supplemental information related to leases (in thousands): Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 34,351 $ 33,926 Right-of-use assets obtained in exchange for new operating lease liabilities — 7,372 |
Derivative
Derivative | 3 Months Ended |
Mar. 29, 2022 | |
Derivative | |
Derivative | 7. Derivative We terminated our interest rate swap agreement in the second quarter of fiscal 2021. This interest rate swap, which would have matured on April 1, 2025, was established to manage our exposure to interest rate movements on our Revolving Facility. The interest rate swap entitled us to receive a variable rate of interest based on the one-month LIBO rate in exchange for the payment of a fixed interest rate of 0.802%. The notional amount of the swap agreement was $280.0 million through March 31, 2023 and $140.0 million from April 1, 2023 through April 1, 2025. The differences between the variable LIBO rate and the interest rate swap rate were settled monthly. Prior to termination, the interest rate swap was determined to be an effective hedging agreement. Our only derivative was the aforementioned interest rate swap, which is designated as a cash flow hedge. No gains or losses representing amounts excluded from the assessment of effectiveness were recognized in earnings in the first three quarters of fiscal 2021. The following table summarizes the changes related to the interest rate swap in accumulated other comprehensive income (“AOCI”), net of tax, during the thirteen weeks ended March 30, 2021 (in thousands): Beginning balance $ (3,464) Other comprehensive loss before reclassifications 1,270 Amounts reclassified from AOCI 468 Other comprehensive loss, net of tax 1,738 Ending balance $ (1,726) We classified this interest rate swap within Level 2 of the valuation hierarchy described in Note 2. Our counterparty under this arrangement provided monthly statements of the market values of this instrument based on significant inputs that were observable or could be derived principally from, or corroborated by, observable market data for substantially the full term of the asset or liability. The impact on the derivative liability for our and the counterparty’s non-performance risk to the derivative trade was considered when measuring the fair value of derivative liability. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 29, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies 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. On June 11, 2020, the DLSE postponed the hearing on the Company’s appeal due to safety concerns related to the COVID-19 pandemic. 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. On June 30, 2021, the judge issued a ruling on certain procedural motions filed by the parties and set a timeline to conclude discovery and determine if the matter will proceed to trial. On April 29, 2022, the parties filed a Settlement Stipulation and a Proposed Stipulated Decision (the “Decision”) with the tax court stipulating to the amount of income tax deficiency and the tax court’s entry of the Decision. We have reserved an immaterial amount in connection with the Decision. Within the ordinary course of our business, we are subject to private lawsuits, government audits and investigations, 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, investigations, 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. |
Stockholders' Equity and Series
Stockholders' Equity and Series A Convertible Preferred Stock | 3 Months Ended |
Mar. 29, 2022 | |
Stockholders' Equity and Series A Convertible Preferred Stock | |
Stockholders' Equity and Series A Convertible Preferred Stock | 9. Stockholders’ Equity and Series A Convertible Preferred Stock Common Stock Issuance On June 15, 2021, we issued 3.125 million shares of our common stock for $175.0 million. In connection with the issuance, we incurred direct and incremental costs of $8.0 million. Common Stock – Dividends and Share Repurchases To preserve liquidity during the COVID-19 pandemic and in conjunction with the terms of the Amended Credit Agreement, in March 2020, our Board of Directors (“Board”) suspended declaring dividends on our common stock as well as our share repurchase programs. In April 2022, our Board declared a quarterly dividend and reinstated our share repurchase programs. (See Note 13 for further information on the approved dividend.) 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 Amended Credit Agreement and applicable law, and such other factors that the Board considers relevant. (See Note 5 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 53.2 million shares at a total cost of $1,706.4 million through March 29, 2022, with 97,682 shares repurchased at a cost of $3.9 million during the thirteen weeks ended March 29, 2022 to satisfy tax withholding obligations on vested restricted share awards. Our objectives with regard to share repurchases have been to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our earnings per share growth. Our share repurchase program 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. Share repurchases may be made from time to time in open market purchases, privately negotiated transactions, accelerated share repurchase programs, issuer self-tender offers or otherwise. Future decisions to repurchase shares are at the discretion of the Board and are 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 FRC acquisition agreement, our share price and current market conditions. The timing and number of shares repurchased are also subject to legal constraints and covenants under the Amended Credit Agreement that limit share repurchases based on a defined ratio. (See Note 5 for further discussion of our long-term debt.) Series A Convertible Preferred Stock On April 20, 2020, we issued 200,000 shares of Series A Convertible Preferred Stock, par value $0.01 per share for an aggregate purchase price of $200 million, or $1,000 per share. In connection with the issuance, we incurred direct and incremental costs of $10.3 million, including financial advisory fees, closing costs, legal expenses, a commitment fee and other offering-related expenses. These direct and incremental costs reduced the Series A preferred stock balance at the issuance date and were recognized through retained earnings on June 30, 2020, the first measurement date. Upon adoption of ASU 2020-06 in the first quarter of fiscal 2021, we recorded a $4.8 million cumulative adjustment to retained earnings to reverse beneficial conversion features recorded during fiscal 2020. On June 15, 2021, we paid $443.8 million in connection with the cash-settled conversion of 150,000 shares of our outstanding Series A preferred stock (effected through a repurchase agreement), which was recognized through additional paid in capital. We also share-settled the conversion of the remaining 50,000 shares of our outstanding Series A convertible preferred stock into 2,400,864 shares of our common stock. These are both based on the then current Liquidation Preference per share of $1,067.42 and conversion price of $22.23. During the first quarter of fiscal 2021, we declared a cash dividend of $5.1 million, or $25.35 per share, on the Series A preferred stock. During the second quarter of fiscal 2021, $13.6 million in payments were made in connection with the conversion of the preferred stock, consisting of $3.9 million, or $19.72 per share of accrued dividends and $9.7 million of an inducement, which is also deemed to be a dividend. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 29, 2022 | |
Stock-Based Compensation | |
Stock-Based Compensation | 10. 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. The following table presents information related to stock-based compensation, net of forfeitures (in thousands): Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Labor expenses $ 2,190 $ 2,043 Other operating costs and expenses 76 74 General and administrative expenses 3,252 3,327 Total stock-based compensation 5,518 5,444 Income tax benefit 1,355 1,337 Total stock-based compensation, net of taxes $ 4,163 $ 4,107 Capitalized stock-based compensation (1) $ 57 $ 39 (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 condensed consolidated balance sheets. Stock Options We did not issue any stock options during the first quarter of fiscal 2022 or fiscal 2021. Stock option activity during the thirteen weeks ended March 29, 2022 was as follows: Weighted- Average Weighted- Remaining Average Contractual Aggregate Shares Exercise Price Term Intrinsic Value (1) (In thousands) (Per share) (In years) (In thousands) Outstanding at December 28, 2021 1,716 $ 46.14 5.1 $ 0 Granted — — Exercised (2) 40.16 Forfeited or cancelled (29) 48.19 Outstanding at March 29, 2022 1,685 $ 46.11 4.9 $ 0 Exercisable at March 29, 2022 1,114 $ 48.09 4.0 $ 0 (1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal period 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 period end date. The total intrinsic value of options exercised during thirteen weeks ended March 29, 2022 and March 30, 2021 was $4.9 million and $5.7 million, respectively. As of March 29, 2022, total unrecognized stock-based compensation expense related to unvested stock options was $4.1 million, which we expect to recognize over a weighted-average period of approximately 2.4 years. Restricted Shares and Restricted Share Units Restricted share and restricted share unit activity during the thirteen weeks ended March 29, 2022 was as follows: Weighted- Average Shares Fair Value (In thousands) (Per share) Outstanding at December 28, 2021 2,123 $ 44.82 Granted 642 39.59 Vested (258) 48.16 Forfeited (34) 43.13 Outstanding at March 29, 2022 2,473 $ 43.13 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 the first quarter of fiscal 2022 and 2021 was $39.59 and $48.38, respectively. The fair value of shares that vested during the thirteen weeks ended March 29, 2022 and March 30, 2021 was $12.4 million and $9.5 million, respectively. As of March 29, 2022, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $61.7 million, which we expect to recognize over a weighted-average period of approximately 3.3 years. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 3 Months Ended |
Mar. 29, 2022 | |
Net Income/(Loss) Per Share | |
Net Income/(Loss) Per Share | 11. Net Income/(Loss) Per Share Basic net income/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted-average number of common shares outstanding during the period, reduced by unvested restricted stock awards. At March 29, 2022 and March 30, 2021, 2.5 million and 2.1 million shares, respectively, of restricted stock issued were unvested and, therefore, excluded from the calculation of basic earnings per share for the fiscal periods ended on those dates. Diluted net income/(loss) per share is computed by dividing net income/(loss) available to common stockholders by the weighted-average number of common stock equivalents outstanding for the period. Common stock equivalents for the Notes are determined by application of the if-converted method, and common stock equivalents for outstanding stock options and restricted stock are determined by the application of the treasury stock method. Holders of our Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A preferred stock”) participated in dividends on an as-converted basis when declared on common stock. As a result, our Series A preferred stock met the definition of a participating security which required us to apply the two-class method to compute both basic and diluted net income per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. In addition, as our Series A preferred stock was a participating security, we were required to calculate diluted net income per share under the if-converted method in addition to the two-class method and utilize the most dilutive result. In periods where there was a net loss, no allocation of undistributed net loss to preferred stockholders was performed as the holders of our Series A preferred stock were not contractually obligated to participate in our losses. Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 (In thousands, except per share data) Basic net income/(loss) per common share: Net income $ 23,163 $ 3,868 Dividends on Series A preferred stock — (5,070) Net income/(loss) available to common stockholders 23,163 (1,202) Basic weighted-average shares outstanding 50,333 44,189 Basic net income/(loss) per common share $ 0.46 $ (0.03) Diluted net income/(loss) per common share: Net income/(loss) available to common stockholders $ 23,163 $ (1,202) Reallocation of undistributed earnings to Series A preferred stock — — Net income/(loss) available to common stockholders for diluted EPS 23,163 (1,202) Basic weighted-average shares outstanding 50,333 44,189 Dilutive effect of equity awards (1) 680 — Diluted weighted-average shares outstanding 51,013 44,189 Diluted net income/(loss) per common share $ 0.45 $ (0.03) (1) Shares of common stock equivalents related to outstanding stock options and restricted stock of 2.9 million and 1.5 million as of March 29, 2022 and March 30, 2021, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. No shares of common stock equivalents related to the Notes were included in the diluted calculation due to their anti-dilutive effect. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 29, 2022 | |
Segment Information | |
Segment Information | 12. Segment Information Our operating segments, the businesses for which our management reviews discrete financial information for decision-making purposes, are comprised of The Cheesecake Factory, North Italia, Flower Child, the other FRC brands, our bakery division and Grand Lux Cafe. Based on quantitative thresholds set forth in Accounting Standards Codification (“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 (Flower Child, our bakery division and Grand Lux Cafe) along with our businesses that do not qualify as operating segments are combined in Other. Unallocated corporate expenses, capital expenditures and assets are also combined in Other. Segment information is presented below (in thousands): Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Revenues: The Cheesecake Factory restaurants $ 609,816 $ 499,389 North Italia 52,757 32,823 Other FRC 58,832 36,194 Other 72,305 59,011 Total $ 793,710 $ 627,417 Income from operations: The Cheesecake Factory restaurants $ 63,444 $ 44,481 North Italia 3,678 332 Other FRC 7,329 3,880 Other (46,130) (39,849) Total $ 28,321 $ 8,844 Depreciation and amortization expenses: The Cheesecake Factory restaurants $ 15,587 $ 16,320 North Italia 1,298 844 Other FRC 1,581 1,177 Other 3,039 3,665 Total $ 21,505 $ 22,006 Impairment of assets and lease termination expenses: The Cheesecake Factory restaurants $ (165) $ — North Italia — — Other FRC — — Other 372 594 Total $ 207 $ 594 Preopening costs: The Cheesecake Factory restaurants $ 1,034 $ 2,063 North Italia 410 1,217 Other FRC (11) 463 Other 331 113 Total $ 1,764 $ 3,856 Capital expenditures: The Cheesecake Factory restaurants $ 20,597 $ 4,080 North Italia 3,004 1,212 Other FRC 3,856 719 Other 1,636 1,216 Total $ 29,093 $ 7,227 March 29, 2022 December 28, 2021 Total assets: The Cheesecake Factory restaurants $ 1,608,027 $ 1,653,161 North Italia 272,594 270,029 Other FRC 276,943 276,369 Other 596,177 598,566 Total $ 2,753,741 $ 2,798,125 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 29, 2022 | |
Subsequent Events | |
Subsequent Events | 13. Subsequent Events On April 21, 2022, our Board declared a quarterly cash dividend of $0.27 per share to be paid on May 24, 2022 to the stockholders of record of each share of our common stock at the close of business on May 11, 2022. Also on April 21, 2022, our Board reinstated our share repurchase program. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 29, 2022 | |
Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying condensed 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. The unaudited financial statements presented herein include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for the fair statement of the financial condition, results of operations and cash flows for the period. However, these results are not necessarily indicative of results that may be achieved for any other interim period or for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2021 filed with the SEC on February 22, 2022. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal year 2022 consists of 53 weeks and will end on January 3, 2023. Fiscal year 2021, which ended on December 28, 2021, was a 52 -week year. |
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. |
COVID-19 Pandemic | COVID-19 Pandemic Beginning in March 2020, COVID-19 and measures to prevent its spread led to temporary closures, shifts to an off-premise only operating model or reduced dining room capacity across our portfolio. While restrictions on the type of permitted operating model and occupancy capacity may continue to change, currently all of our restaurants are operating with no capacity restrictions. The ongoing effects of COVID-19 and its variants, including, but not limited to, consumer behavior, capacity restrictions, mask and vaccination mandates, wage inflation, our ability to continue to staff our restaurants and disruptions in the supply chain, will determine the impact to our operating results and financial position. The impact to our operations has been most notable during the periods of greatest accelerating COVID-19 case counts. We have incurred and will continue to incur additional costs to address government regulations and the safety of our staff members and customers. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is intended to simplify the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. This pronouncement is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. The guidance allows for either full retrospective adoption or modified retrospective adoption. We adopted this guidance in the first quarter of fiscal 2021 utilizing the modified retrospective method and, accordingly, recorded a $4.8 million cumulative adjustment to retained earnings to reverse previously recorded beneficial conversion features. As further discussed in Note 5, we issued certain convertible senior notes due 2026 (“Notes”) during the second quarter of fiscal 2021, and the accounting for these instruments was based on the guidance in ASU 2020-06. Additionally, the impact on diluted earnings per share of the Notes was calculated based on the if-converted method, as further described in Note 11. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 29, 2022 | |
Fair Value Measurements | |
Schedule of fair value of assets and liabilities measured on 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): March 29, 2022 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 88,010 $ — $ — Non-qualified deferred compensation liabilities (87,052) — — Acquisition-related deferred consideration — (21,721) — Acquisition-related contingent consideration and compensation liabilities — — (17,193) December 28, 2021 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 92,588 $ — $ — Non-qualified deferred compensation liabilities (92,012) — — Acquisition-related deferred consideration — (21,642) — Acquisition-related contingent consideration and compensation liabilities — — (23,894) |
Schedule of fair value of the acquisition-related contingent consideration | 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): Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Beginning balance $ 23,894 $ 7,465 Payment (7,187) — Change in fair value 486 241 Ending balance $ 17,193 $ 7,706 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 29, 2022 | |
Inventories | |
Schedule of inventories | Inventories consisted of (in thousands): March 29, 2022 December 28, 2021 Restaurant food and supplies $ 26,628 $ 27,877 Bakery finished goods and work in progress 11,905 7,951 Bakery raw materials and supplies 8,147 7,011 Total $ 46,680 $ 42,839 |
Gift Cards (Tables)
Gift Cards (Tables) | 3 Months Ended |
Mar. 29, 2022 | |
Gift Cards | |
Schedule of gift card liabilities | The following tables present information related to gift cards (in thousands): Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Gift card liabilities: Beginning balance $ 211,182 $ 184,655 Activations 20,590 16,465 Redemptions and breakage (46,260) (34,942) Ending balance $ 185,512 $ 166,178 |
Schedule of gift card contract assets | Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Gift card contract assets: Beginning balance $ 18,468 $ 17,955 Deferrals 2,702 2,295 Amortization (3,629) (3,995) Ending balance $ 17,541 $ 16,255 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 29, 2022 | |
Leases | |
Schedule of components for lease expense | Components of lease expense were as follows (in thousands): Thirteen Weeks Ended Thirteen Weeks Ended March 29, 2022 March 30, 2021 Operating $ 32,876 $ 32,394 Variable 19,654 16,481 Short-term 26 70 Total $ 52,556 $ 48,945 |
Schedule of supplemental cash flow information related to leases | Supplemental information related to leases (in thousands): Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 34,351 $ 33,926 Right-of-use assets obtained in exchange for new operating lease liabilities — 7,372 |
Derivative (Tables)
Derivative (Tables) | 3 Months Ended |
Mar. 29, 2022 | |
Derivative | |
Schedule of changes in AOCI, net of tax, related to the interest rate swap | The following table summarizes the changes related to the interest rate swap in accumulated other comprehensive income (“AOCI”), net of tax, during the thirteen weeks ended March 30, 2021 (in thousands): Beginning balance $ (3,464) Other comprehensive loss before reclassifications 1,270 Amounts reclassified from AOCI 468 Other comprehensive loss, net of tax 1,738 Ending balance $ (1,726) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 29, 2022 | |
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): Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Labor expenses $ 2,190 $ 2,043 Other operating costs and expenses 76 74 General and administrative expenses 3,252 3,327 Total stock-based compensation 5,518 5,444 Income tax benefit 1,355 1,337 Total stock-based compensation, net of taxes $ 4,163 $ 4,107 Capitalized stock-based compensation (1) $ 57 $ 39 (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 condensed consolidated balance sheets. |
Schedule of stock option activity | We did not issue any stock options during the first quarter of fiscal 2022 or fiscal 2021. Stock option activity during the thirteen weeks ended March 29, 2022 was as follows: Weighted- Average Weighted- Remaining Average Contractual Aggregate Shares Exercise Price Term Intrinsic Value (1) (In thousands) (Per share) (In years) (In thousands) Outstanding at December 28, 2021 1,716 $ 46.14 5.1 $ 0 Granted — — Exercised (2) 40.16 Forfeited or cancelled (29) 48.19 Outstanding at March 29, 2022 1,685 $ 46.11 4.9 $ 0 Exercisable at March 29, 2022 1,114 $ 48.09 4.0 $ 0 (1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal period 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 period end date. |
Schedule of restricted share and restricted share unit activity | Weighted- Average Shares Fair Value (In thousands) (Per share) Outstanding at December 28, 2021 2,123 $ 44.82 Granted 642 39.59 Vested (258) 48.16 Forfeited (34) 43.13 Outstanding at March 29, 2022 2,473 $ 43.13 |
Net Income_(Loss) Per Share (Ta
Net Income/(Loss) Per Share (Tables) | 3 Months Ended |
Mar. 29, 2022 | |
Net Income/(Loss) Per Share | |
Schedule of basic and diluted net income per share | Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 (In thousands, except per share data) Basic net income/(loss) per common share: Net income $ 23,163 $ 3,868 Dividends on Series A preferred stock — (5,070) Net income/(loss) available to common stockholders 23,163 (1,202) Basic weighted-average shares outstanding 50,333 44,189 Basic net income/(loss) per common share $ 0.46 $ (0.03) Diluted net income/(loss) per common share: Net income/(loss) available to common stockholders $ 23,163 $ (1,202) Reallocation of undistributed earnings to Series A preferred stock — — Net income/(loss) available to common stockholders for diluted EPS 23,163 (1,202) Basic weighted-average shares outstanding 50,333 44,189 Dilutive effect of equity awards (1) 680 — Diluted weighted-average shares outstanding 51,013 44,189 Diluted net income/(loss) per common share $ 0.45 $ (0.03) (1) Shares of common stock equivalents related to outstanding stock options and restricted stock of 2.9 million and 1.5 million as of March 29, 2022 and March 30, 2021, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. No shares of common stock equivalents related to the Notes were included in the diluted calculation due to their anti-dilutive effect. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 29, 2022 | |
Segment Information | |
Schedule of segment information | Segment information is presented below (in thousands): Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Revenues: The Cheesecake Factory restaurants $ 609,816 $ 499,389 North Italia 52,757 32,823 Other FRC 58,832 36,194 Other 72,305 59,011 Total $ 793,710 $ 627,417 Income from operations: The Cheesecake Factory restaurants $ 63,444 $ 44,481 North Italia 3,678 332 Other FRC 7,329 3,880 Other (46,130) (39,849) Total $ 28,321 $ 8,844 Depreciation and amortization expenses: The Cheesecake Factory restaurants $ 15,587 $ 16,320 North Italia 1,298 844 Other FRC 1,581 1,177 Other 3,039 3,665 Total $ 21,505 $ 22,006 Impairment of assets and lease termination expenses: The Cheesecake Factory restaurants $ (165) $ — North Italia — — Other FRC — — Other 372 594 Total $ 207 $ 594 Preopening costs: The Cheesecake Factory restaurants $ 1,034 $ 2,063 North Italia 410 1,217 Other FRC (11) 463 Other 331 113 Total $ 1,764 $ 3,856 Capital expenditures: The Cheesecake Factory restaurants $ 20,597 $ 4,080 North Italia 3,004 1,212 Other FRC 3,856 719 Other 1,636 1,216 Total $ 29,093 $ 7,227 March 29, 2022 December 28, 2021 Total assets: The Cheesecake Factory restaurants $ 1,608,027 $ 1,653,161 North Italia 272,594 270,029 Other FRC 276,943 276,369 Other 596,177 598,566 Total $ 2,753,741 $ 2,798,125 |
Significant Accounting Polici_3
Significant Accounting Policies - Basis of Presentation (Details) | 3 Months Ended | 12 Months Ended |
Mar. 29, 2022 | Dec. 28, 2021 | |
Significant Accounting Policies | ||
Length of fiscal year | 371 days | 364 days |
Significant Accounting Polici_4
Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Mar. 29, 2022 | Dec. 28, 2021 | Mar. 30, 2021 |
Recent Accounting Pronouncements | |||
Retained Earnings (Accumulated Deficit) | $ 1,192,335 | $ 1,169,150 | |
Cumulative effect of adopting ASU 2020-06 | |||
Recent Accounting Pronouncements | |||
Retained Earnings (Accumulated Deficit) | $ 4,800 | $ 4,800 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 29, 2022 | Mar. 30, 2021 | Dec. 28, 2021 | Jun. 15, 2021 | |
Assets (Liabilities) at fair value | ||||
Aggregate principal amount | $ 1,000 | |||
Fair value of the contingent consideration and compensation related to the Acquisition | ||||
Payment | 7,200 | |||
Convertible Senior Notes | ||||
Assets (Liabilities) at fair value | ||||
Aggregate principal amount | 345,000 | $ 345,000 | ||
Fair value of debt | 308,400 | |||
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 | 204,000 | |||
Level 1 | ||||
Assets (Liabilities) at fair value | ||||
Non-qualified deferred compensation assets | 88,010 | $ 92,588 | ||
Non-qualified deferred compensation liabilities | (87,052) | (92,012) | ||
Level 2 | ||||
Assets (Liabilities) at fair value | ||||
Acquisition-related deferred consideration | (21,721) | (21,642) | ||
Level 3 | ||||
Assets (Liabilities) at fair value | ||||
Acquisition-related contingent consideration and compensation liabilities | (17,193) | $ (23,894) | ||
Fair value of the contingent consideration and compensation related to the Acquisition | ||||
Beginning balance | 23,894 | $ 7,465 | ||
Payment | (7,187) | |||
Change in fair value | 486 | 241 | ||
Ending balance | $ 17,193 | $ 7,706 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 29, 2022 | Dec. 28, 2021 |
Inventories | ||
Restaurant food and supplies | $ 26,628 | $ 27,877 |
Bakery finished goods and work in progress | 11,905 | 7,951 |
Bakery raw materials and supplies | 8,147 | 7,011 |
Total | $ 46,680 | $ 42,839 |
Gift Cards (Details)
Gift Cards (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2022 | Mar. 30, 2021 | |
Gift card liabilities: | ||
Beginning balance | $ 211,182 | $ 184,655 |
Activations | 20,590 | 16,465 |
Redemptions and breakage | (46,260) | (34,942) |
Ending balance | 185,512 | 166,178 |
Gift card contract assets: | ||
Beginning balance | 18,468 | 17,955 |
Deferrals | 2,702 | 2,295 |
Amortization | (3,629) | (3,995) |
Ending balance | $ 17,541 | $ 16,255 |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facility (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 29, 2022USD ($)$ / shares | Dec. 28, 2021USD ($) | Mar. 30, 2021USD ($) | Dec. 28, 2021USD ($) | Apr. 20, 2020$ / shares | |
Long-Term Debt | |||||
Cash dividends | $ 5,070 | ||||
Net Adjusted Leverage Ratio | 130 | ||||
Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Outstanding letters of credit | $ 29,900 | ||||
Minimum Amount of Liquidity to be Maintained at the End of Each Calendar Month | $ 100,000 | ||||
Net availability for borrowings | $ 240,100 | ||||
Series A Convertible Preferred stock | |||||
Long-Term Debt | |||||
Shares Issued, Price Per Share | $ / shares | $ 0.01 | ||||
Series A Convertible Preferred stock | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Shares Issued, Price Per Share | $ / shares | $ 0.01 | ||||
EBITDAR Ratio | 2.3 | ||||
Net Adjusted Leverage Ratio | 3.9 | ||||
Maximum | Series A Convertible Preferred stock | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Cash dividends | $ 5,250 | ||||
Net Adjusted Leverage Ratio | 4.75 | ||||
Minimum | Series A Convertible Preferred stock | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
EBITDAR Ratio | 1.9 | ||||
Second Amendment | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Maximum commitments | 400,000 | ||||
Maximum commitments, letter of credit sub-facility | 40,000 | ||||
Second Amendment | Adjusted LIBO Rate | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Credit facility, basis spread on variable rate, (as a percent) | 2.50% | ||||
Commitment fee (as a percent) | 0.40% | ||||
Second Amendment | Federal Funds Effective Rate | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Credit facility, floating interest rate basis | federal funds rate | ||||
Credit facility, basis spread on variable rate, (as a percent) | 0.50% | ||||
Second Amendment | Base Rate Member | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Credit facility, basis spread on variable rate, (as a percent) | 1.50% | ||||
Second Amendment | One-month Adjusted LIBO Rate | Revolving Credit Facility [Member] | |||||
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% | ||||
Amended Credit Agreement [Member] | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Revolving facility | 200,000 | ||||
Amended Credit Agreement [Member] | Maximum | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Revolving facility | $ 125,000 | ||||
Commitment fee (as a percent) | 0.20% | ||||
Amended Credit Agreement [Member] | Minimum | Revolving Credit Facility [Member] | |||||
Long-Term Debt | |||||
Commitment fee (as a percent) | 0.10% |
Long-Term Debt - Convertible Se
Long-Term Debt - Convertible Senior Notes (Details) | Jun. 15, 2021USD ($) | Mar. 29, 2022USD ($)D$ / shares |
Debt Instrument [Line Items] | ||
Aggregate principal amount of debt issued | $ 1,000,000 | |
Maximum period of which noteholders to receive special interest as a remedy in case of default | 180 days | |
Convertible Senior Notes | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount of debt issued | $ 345,000,000 | $ 345,000,000 |
Net proceeds from the sale of the Notes | $ 334,900,000 | |
Interest rate | 0.375% | |
Conversion ratio | 12.7551 | |
Observation period | 30 days | |
Conversion price | $ / shares | $ 78.40 | |
Threshold percentage of stock price trigger | 130.00% | |
Number of threshold trading days | D | 20 | |
Number of consecutive threshold trading days | D | 30 | |
Minimum threshold aggregate principal amount of Notes outstanding and not called for redemption | $ 150,000,000 | |
Cure period in case of a default in the payment of interest | 30 days | |
Threshold cured period in case of default in other obligations | 60 days | |
Threshold limit of default with respect to indebtedness for borrowed money | $ 20,000,000 | |
Threshold limit for occurrence of default in case of rendering of certain judgments against to company or on its subsidiaries | $ 25,000,000 | |
Minimum percentage of notice holders can give notice in case of default | 25 | |
Special Interest Rate as a default remedy | 0.50 | |
Gross principal balance outstanding | $ 345,000,000 | |
Outstanding debt balance | 336,500,000 | |
unamortized debt issuance costs | 8,500,000 | |
Amortized debt issuance costs | $ 500,000 | |
Effective interest rate | 0.96% |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2022 | Mar. 30, 2021 | |
Leases | ||
Operating | $ 32,876 | $ 32,394 |
Variable | 19,654 | 16,481 |
Short-term | 26 | 70 |
Total | 52,556 | 48,945 |
Lessee Operating Lease Description | ||
Operating cash flows for operating leases | $ 34,351 | 33,926 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 7,372 |
Derivative (Details)
Derivative (Details) - Interest rate swap agreement - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 29, 2022 | Apr. 01, 2025 | Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Fixed interest rate | 0.802% | ||
Gain (Loss) on Components Excluded from Assessment of Interest Rate Fair Value Hedge Effectiveness | $ 0 | ||
Subsequent event | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional amount | $ 140,000 | $ 280,000 |
Derivative - Changes in AOCL, n
Derivative - Changes in AOCL, net of tax (Details) $ in Thousands | 3 Months Ended |
Mar. 29, 2022USD ($) | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | $ 330,166 |
Ending balance | 355,326 |
Accumulated Other Comprehensive Loss | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | (287) |
Ending balance | (32) |
Accumulated Other Comprehensive Loss | Interest rate swap agreement | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Beginning balance | (3,464) |
Other comprehensive loss before reclassifications | 1,270 |
Amounts reclassified from AOCI | 468 |
Other comprehensive loss, net of tax | 1,738 |
Ending balance | $ (1,726) |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jun. 22, 2018USD ($) | Jun. 07, 2018USD ($)restaurant |
Commitments and Contingencies | ||
Wage citation | $ 4.2 | |
Number of restaurants receiving janitorial services | restaurant | 8 | |
Internal Revenue Service | ||
Commitments and Contingencies | ||
Tax disallowance | $ 8 |
Stockholders' Equity and Seri_2
Stockholders' Equity and Series A Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 15, 2021 | Apr. 20, 2020 | Mar. 29, 2022 | Jun. 29, 2021 | Mar. 30, 2021 | Dec. 28, 2021 |
Stockholders Equity | ||||||
Common stock issuance (in shares) | 3,125,000 | |||||
Common stock issuance direct and incremental costs | $ 8,000 | |||||
Common stock issuance | 175,000 | |||||
Cash dividend per share of preferred stock | $ 25.35 | |||||
Repurchased shares since program inception | 53,236,854 | 53,139,172 | ||||
Treasury Stock, Value | $ 1,706,447 | $ 1,702,509 | ||||
Treasury stock repurchased during period | 3,938 | $ 3,957 | ||||
Reduction to retained earnings | 1,192,335 | $ 1,169,150 | ||||
Cash dividend declared Series A preferred stock, $25.35 per share | 5,070 | |||||
Cumulative effect of adopting ASU 2020-06 | ||||||
Stockholders Equity | ||||||
Reduction to retained earnings | $ 4,800 | $ 4,800 | ||||
Treasury Stock | ||||||
Stockholders Equity | ||||||
Number of shares authorized to be repurchased | 56,000,000 | |||||
Repurchased shares since program inception | 53,200,000 | |||||
Treasury Stock, Value | $ 1,706,400 | |||||
Shares repurchased during period | 97,682,000 | |||||
Treasury stock repurchased during period | $ 3,900 | |||||
Series A Redeemable Convertible Preferred Stock | ||||||
Stockholders Equity | ||||||
Series A preferred stock cash-settled conversion | $ 443,800 | |||||
Number of preferred stock shares repurchased | 150,000 | |||||
Number of preferred stock shares converted | 50,000 | |||||
Number of common shares issued upon conversion | 2,400,864 | |||||
Liquidation preference value per shares | $ 1,067.42 | |||||
Deemed dividend in connection with conversion and repurchase of the preferred stock | $ 13,600 | |||||
Accrued dividend | 3,900 | |||||
Dividend inducement | $ 9,700 | |||||
Cash dividend per share of preferred stock | $ 19.72 | $ 25.35 | ||||
Number of shares issued (in shares) | 200,000 | |||||
Value of shares issued | $ 200,000 | |||||
Price per share (in dollars per share) | $ 1,000 | |||||
Temporary Equity, Issuance Costs | $ 10,300 | |||||
Conversion price (in dollars per share) | $ 22.23 | |||||
Cash dividend declared Series A preferred stock, $25.35 per share | $ 5,100 | |||||
Series A Convertible Preferred stock | ||||||
Stockholders Equity | ||||||
Price per share (in dollars per share) | $ 0.01 |
Stock-Based Compensation - Net
Stock-Based Compensation - Net of Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 29, 2022 | Mar. 30, 2021 | |
Stock-Based Compensation | ||
Total stock-based compensation | $ 5,518 | $ 5,444 |
Income tax benefit | 1,355 | 1,337 |
Total stock-based compensation, net of taxes | 4,163 | 4,107 |
Capitalized stock-based compensation | 57 | 39 |
Labor expenses | ||
Stock-Based Compensation | ||
Total stock-based compensation | 2,190 | 2,043 |
General and administrative expenses | ||
Stock-Based Compensation | ||
Total stock-based compensation | 3,252 | 3,327 |
Other operating costs and expenses | ||
Stock-Based Compensation | ||
Total stock-based compensation | $ 76 | $ 74 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted Average Fair Value (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Mar. 29, 2022 | Mar. 29, 2022 | Dec. 28, 2021 | Mar. 30, 2021 |
Stock options | ||||
Stock option activity, Shares | ||||
Outstanding at beginning of year (in shares) | 1,716 | |||
Exercised (in shares) | (2) | |||
Forfeited or cancelled (in shares) | (29) | |||
Outstanding at end of the period (in shares) | 1,685 | 1,685 | 1,716 | |
Exercisable at end of the period (in shares) | 1,114 | 1,114 | ||
Weighted Average Exercise Price | ||||
Outstanding at beginning of year (in dollars per share) | $ 46.14 | |||
Exercised (in dollars per share) | 40.16 | |||
Forfeited or cancelled (in dollars per share) | 48.19 | |||
Outstanding at end of the period (in dollars per share) | $ 46.11 | 46.11 | $ 46.14 | |
Exercisable at end of the period (in dollars per share) | $ 48.09 | $ 48.09 | ||
Weighted Average Remaining Contractual Term (In years) | ||||
Weighted Average Remaining Contractual Term (In years) | 4 years 10 months 24 days | 5 years 1 month 6 days | ||
Exercisable at end of the period (In years) | 4 years | |||
Aggregate Intrinsic Value | ||||
Outstanding at beginning of year | $ 0 | |||
Outstanding at end of the period | $ 0 | 0 | $ 0 | |
Exercisable at end of the period | 0 | 0 | ||
Total intrinsic value of options exercised | 4,900 | $ 5,700 | ||
Unrecognized Stock-based Compensation Expense | ||||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 4,100 | $ 4,100 | ||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 2 years 4 months 24 days | |||
Restricted Shares and Restricted Share Units | ||||
Weighted Average Exercise Price | ||||
Granted (in dollars per share) | $ 39.59 | $ 48.38 | ||
Restricted Shares and Restricted Share Units, Shares | ||||
Outstanding at beginning of year (in shares) | 2,123 | |||
Granted (in shares) | 642 | |||
Vested (in shares) | (258) | |||
Forfeited (in shares) | (34) | |||
Outstanding at end of the period (in shares) | 2,473 | 2,473 | 2,123 | |
Fair value of shares vested | $ 12,400 | $ 9,500 | ||
Weighted Average Fair Value | ||||
Outstanding at beginning of year (in dollars per share) | $ 44.82 | |||
Granted (in dollars per share) | 39.59 | |||
Vested (in dollars per share) | 48.16 | |||
Forfeited (in dollars per share) | 43.13 | |||
Outstanding at end of the period (in dollars per share) | $ 43.13 | $ 43.13 | $ 44.82 | |
Unrecognized Stock-based Compensation Expense | ||||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 61,700 | $ 61,700 | ||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 3 years 3 months 18 days |
Net Income_(Loss) Per Share (De
Net Income/(Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 29, 2022 | Mar. 30, 2021 | |
Basic net income/(loss) per common share: | ||
Net income | $ 23,163 | $ 3,868 |
Dividends on Series A preferred stock | (5,070) | |
Net income/(loss) available to common stockholders | $ 23,163 | $ (1,202) |
Basic weighted-average shares outstanding | 50,333 | 44,189 |
Basic net income/(loss) per common share | $ 0.46 | $ (0.03) |
Diluted net income/(loss) per common share: | ||
Net income/(loss) available to common stockholders | $ 23,163 | $ (1,202) |
Net income/(loss) available to common stockholders for diluted EPS | $ 23,163 | $ (1,202) |
Basic weighted-average shares outstanding | 50,333 | 44,189 |
Dilutive effect of equity awards (1) | 680 | |
Diluted weighted-average shares outstanding | 51,013 | 44,189 |
Diluted net income/(loss) per common share (in dollars per share) | $ 0.45 | $ (0.03) |
Net Income_(Loss) Per Share - A
Net Income/(Loss) Per Share - Additional Information (Details) - $ / shares shares in Thousands | 3 Months Ended | ||
Mar. 29, 2022 | Mar. 30, 2021 | Dec. 28, 2021 | |
Net income per share, basic and diluted | |||
Dilutive effect of equity awards (in shares) | 680 | ||
Series A convertible preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Restricted Shares and Restricted Share Units | |||
Net Income Per Share | |||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 2,500 | 2,100 | |
Common Stock | |||
Net income per share, basic and diluted | |||
Dilutive effect of equity awards (in shares) | 2,900 | 1,500 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 29, 2022 | Mar. 30, 2021 | Dec. 28, 2021 | Dec. 29, 2020 | |
Segment Information | ||||
Revenues | $ 793,710 | $ 627,417 | ||
Income/(loss) from operations | 28,321 | 8,844 | ||
Depreciation and amortization expenses | 21,505 | 22,006 | ||
Impairment of assets and lease termination expenses | 207 | 594 | ||
Capital expenditures | 1,764 | 3,856 | ||
Preopening costs | 29,093 | 7,227 | ||
Total assets | 2,753,741 | $ 2,798,125 | $ 2,798,125 | |
The Cheesecake Factory restaurants | ||||
Segment Information | ||||
Revenues | 609,816 | 499,389 | ||
Income/(loss) from operations | 63,444 | 44,481 | ||
Depreciation and amortization expenses | 15,587 | 16,320 | ||
Impairment of assets and lease termination expenses | (165) | |||
Capital expenditures | 1,034 | 2,063 | ||
Preopening costs | 20,597 | 4,080 | ||
Total assets | 1,608,027 | 1,653,161 | ||
North Italia | ||||
Segment Information | ||||
Revenues | 52,757 | 32,823 | ||
Income/(loss) from operations | 3,678 | 332 | ||
Depreciation and amortization expenses | 1,298 | 844 | ||
Capital expenditures | 410 | 1,217 | ||
Preopening costs | 3,004 | 1,212 | ||
Total assets | 272,594 | 270,029 | ||
Other FRC | ||||
Segment Information | ||||
Revenues | 58,832 | 36,194 | ||
Income/(loss) from operations | 7,329 | 3,880 | ||
Depreciation and amortization expenses | 1,581 | 1,177 | ||
Capital expenditures | (11) | 463 | ||
Preopening costs | 3,856 | 719 | ||
Total assets | 276,943 | 276,369 | ||
Other | ||||
Segment Information | ||||
Revenues | 72,305 | 59,011 | ||
Income/(loss) from operations | (46,130) | (39,849) | ||
Depreciation and amortization expenses | 3,039 | 3,665 | ||
Impairment of assets and lease termination expenses | 372 | 594 | ||
Capital expenditures | 331 | 113 | ||
Preopening costs | 1,636 | $ 1,216 | ||
Total assets | $ 596,177 | $ 598,566 |
Subsequent Events (Details)
Subsequent Events (Details) | Apr. 21, 2022USD ($) |
Subsequent event | |
Subsequent Events | |
Cash dividend paid | $ 0.27 |