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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended July 2, 2002
Commission File Number 0-20574

THE CHEESECAKE FACTORY INCORPORATED
(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

26950 Agoura Road
Calabasas Hills, California
(Address of principal executive offices)		 51-0340466
(IRS Employer Identification No.)


91301
(Zip Code)

Registrant’s telephone number, including area code: (818) 871-3000

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X|     No  |_|

    As of July 22, 2002, 50,632,620 shares of the registrant’s Common Stock, $.01 par value, were outstanding


THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES

INDEX
        Page
Number

PART I.   FINANCIAL INFORMATION    
  Item 1.   Financial Statements:    
      Consolidated Balance Sheets - July 2, 2002 and January 1, 2002   1  
      Consolidated Statements of Operations - Thirteen and twenty-six weeks ended July 2, 2002 and July 3, 2001   2  
      Consolidated Statement of Stockholders’ Equity - Twenty-six weeks ended July 2, 2002   3  
      Consolidated Statements of Cash Flows - Twenty-six weeks ended
July 2, 2002 and July 3, 2001		   4  
      Notes to Consolidated Financial Statements - July 2, 2002   5  
  Item 2.
 		   Management’s Discussion and Analysis of Financial Condition and Results of Operations   7  
  Item 3.   Quantitative and Qualitative Disclosures about Market Risk   14  

PART II.   OTHER INFORMATION    
  Item 4.   Submission of Matters to a Vote of Stockholders   15  
  Item 6.   Exhibits and Reports on Form 8-K   15  
  Signatures   16  

 


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

  July 2,
2002
    January 1,
2002
 
  (unaudited)            
ASSETS                
Current assets:                
   Cash and cash equivalents   $ 22,329     $ 14,025  
   Investments and marketable securities     9,753       8,960  
   Accounts receivable     5,379       5,745  
   Other receivables     7,295       13,266  
   Inventories     13,059       10,771  
   Prepaid expenses     2,357       3,074  
   Deferred income taxes     2,148       2,212  
 
   
 
      Total current assets     62,320       58,053  
 
   
 
Property and equipment, net     245,049       218,284  
 
   
 
Other assets:
   Marketable securities     83,965       69,299  
   Other receivables     5,562       5,509  
   Trademarks     1,988       1,965  
   Other     4,229       3,817  
 
   
 
      Total other assets     95,744       80,590  
 
   
          
        Total assets   $ 403,113     $ 356,927  
 
   
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
   Accounts payable   $ 12,116     $ 18,885  
   Income taxes payable     3,510       2,837  
   Other accrued expenses     39,808       35,385  
 
   
 
      Total current liabilities     55,434       57,107  
 
   
 
   Deferred income taxes     10,349       10,349  
 
   
 
Stockholders’ equity:
   Preferred stock, $.01 par value, 5,000,000 shares authorized; none                
      issued and outstanding     —       —  
   Junior participating cumulative preferred stock, $.01 par value,                
      150,000 shares authorized; none issued and outstanding     —       —  
   Common stock, $.01 par value, 150,000,000 shares authorized;  
               
      50,632,620 and  48,610,303 issued at July 2, 2002 and January 1, 2002,                
      respectively     506       486  
   Additional paid-in capital     190,036       159,075  
   Retained earnings     162,515       138,701  
   Unrealized gain on available-for-sale securities     653       530  
   Treasury stock, 1,047,300 and 850,500 shares at cost at July 2, 2002 and
      January 2, 2001, respectively     (16,380 )     (9,321 )
 
   
 
      Total stockholders’ equity     337,330       289,471  
 
   
 
        Total liabilities and stockholders’ equity   $ 403,113     $ 356,927  
 
   
 

The accompanying notes are an integral part of these consolidated financial statements.

1


THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except net income per share data)
(Unaudited)

  Thirteen
Weeks Ended
July 2, 2002 		    Thirteen
Weeks Ended
July 3, 2001		     Twenty-six
Weeks Ended
July 2, 2002		   Twenty-six
Weeks Ended
July 3, 2001
 
 
 
 
Revenues:                                        
   Restaurant sales    $ 151,203        $ 124,231        $ 288,840         $ 236,590  
   Bakery sales to other foodservice
      operators, retailers and distributors		     14,157         8,004         26,754         16,166  
   
     
     
     
 
      Total revenues     165,360         132,235         315,594         252,756  
   
     
     
     
 
Costs and expenses:                                      
   Restaurant cost of sales     35,991         31,709         69,411         60,475  
   Bakery cost of sales     6,725         3,986         12,806         7,913  
   Labor expenses     50,681         40,494         96,943         77,791  
   Other operating costs and expenses     36,683         29,131         70,708         56,766  
   General and administrative expenses     8,314         6,980         15,873         13,308  
   Depreciation and amortization expenses     5,532         4,093         10,711         7,974  
   Preopening costs     2,247         1,420         4,931         2,848  
   
     
     
     
 
      Total costs and expenses     146,173         117,813         281,383         227,075  
   
     
     
     
 
Income from operations     19,187         14,422         34,211         25,681  
Interest income, net     994         1,090         1,990         2,438  
Other income, net     423         454         834         925  
   
     
     
     
 
Income before income taxes     20,604         15,966         37,035         29,044  
Income tax provision     7,356         5,748         13,221         10,456  
   
     
     
     
 
Net income   $ 13,248       $ 10,218       $ 23,814       $ 18,588  
   
     
     
     
 
Net income per share:                                      
   Basic   $ 0.27       $ 0.22       $ 0.49       $ 0.39  
   
     
     
     
 
   Diluted   $ 0.26       $ 0.21       $ 0.47       $ 0.37  
   
     
     
     
 
Weighted average shares outstanding:                                      
   Basic     48,898         47,382         48,832         47,327  
   Diluted     50,915         49,631         51,069         49,677  
 

The accompanying notes are an integral part of these consolidated financial statements.

2


THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)

    Common
Stock 		  Additional
Paid-in
Capital		   Retained
Earnings		   Gain (Loss) on
Available-for-Sale
Securities		   Treasury
Stock		     Total  
   
 
 
 
 
   
 
Balance, January 1, 2002      $486       $159,075       $138,701       $530        $  (9,321 )    $289,471  
Comprehensive income:                            
   Net income   —   —   23,814   —    —        
   Net unrealized gain   —   —   —   123    —        
     Total comprehensive income                         23,937  
Issuance of common stock pursuant to
  stock option plan		   20   17,740   —   —   —     17,760  
Tax benefit related to stock option
  plan		   —   13,221   —   —   —     13,221  
Purchase of treasury stock   —   —   —   —   (7,059 )   (7,059 )
   
 
 
 
 
   
 
Balance, July 2, 2002   $506   $190,036   $162,515   $653   $(16,380 )   $337,330  
   
 
 
 
 
   
 

The accompanying notes are an integral part of these consolidated financial statements.

3


THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

  Twenty-six
Weeks Ended
July 2, 2002 		    Twenty-six
Weeks Ended
July 3, 2001 		 
 
     
 
Cash flows from operating activities:                  
   Net income   $ 23,814         $ 18,588  
Adjustments to reconcile net income to cash provided by operating activities:                  
   Depreciation and amortization     10,711         7,974  
   Gain on available-for-sale securities     (670 )       (978 )
   Deferred income taxes     (4 )       (27 )
Changes in assets and liabilities:                  
   Accounts receivable     366         826  
   Other receivables     5,918         4,096  
   Inventories     (2,288 )       (2,114 )
   Prepaid expenses     717         340  
   Trademarks     (68 )       (80 )
   Other     (472 )       (407 )
   Accounts payable     (6,769 )       (2,537 )
   Income taxes payable     13,894         6,679  
   Other accrued expenses     4,423         478  
 
     
 
      Net cash provided by operating activities     49,572         32,838