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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended April 1, 2003


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

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) 		51-0340466
(IRS Employer Identification No.)

26950 Agoura Road
Calabasas Hills, California
(Address of principal executive offices) 		91301
(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
Preferred Stock Purchase Rights

        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 |_|

        Indicate by check mark whether the Registrant is an accelerated filer (as determined by Exchange Act Rule 12b-2). Yes |X|   No |_|

        As of April 23, 2003, 51,232,735 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 – April 1, 2003 and December 31, 2002 1 
    Consolidated Statements of Operations – Thirteen weeks ended April 1, 2003
   and April 2, 2002 		2 
    Consolidated Statements of Cash Flows – Thirteen weeks ended April 1, 2003
   and April 2, 2002 		3 
    Notes to Consolidated Financial Statements – April 1, 2003 4 
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of
    Operations 7 
  Item 3. Quantitative and Qualitative Disclosures about Market Risk 13 
  Item 4. Controls and Procedures 13 

PART II 		OTHER INFORMATION
  Item 1. Legal Proceedings 15 
  Item 6. Exhibits and Reports on Form 8-K 15 

Signatures 		  16 
Certifications   17 
Index to Exhibits   19 




PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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


April 1,
2003
December 31,
2002
(unaudited)
ASSETS            
Current assets:    
   Cash and cash equivalents     $ 7,297   $ 11,033  
   Investments and marketable securities       14,190     11,819  
   Accounts receivable       3,857     5,490  
   Other receivables       17,140     17,751  
   Inventories       22,677     17,985  
   Prepaid expenses       4,558     7,050  
   Deferred income taxes       2,338     2,160  
      Total current assets       72,057     73,288  
Property and equipment, net       288,186     282,213  
Other assets:    
   Marketable securities       102,816     91,634  
   Other receivables       6,132     5,868  
   Trademarks       1,965     1,940  
   Other       9,966     8,899  
      Total other assets       120,879     108,341  
        Total assets     $ 481,122   $ 463,842  

LIABILITIES AND STOCKHOLDERS’ EQUITY 		   
Current liabilities:    
   Accounts payable     $ 11,192   $ 14,839  
   Income taxes payable       6,902     —  
   Other accrued expenses       47,479     47,154  
      Total current liabilities       65,573     61,993  
Deferred income taxes       22,285     22,285  
Commitments and contingencies    
Stockholders’ equity:    
   Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued       —     —  
   Junior participating cumulative preferred stock, $.01 par value, 150,000    
      shares authorized; none issued       —     —  
   Common stock, $.01 par value, 150,000,000 shares authorized; 51,232,735 and    
      50,995,890 issued at April 1, 2003 and December 31, 2002, respectively       512     510  
   Additional paid-in capital       208,220     205,994  
   Retained earnings       200,415     187,776  
   Unrealized gain on available-for-sale securities       1,344     1,664  
   Treasury stock, 1,077,300 and 1,047,300 shares at cost at April 1, 2003    
      and December 31, 2002, respectively       (17,227 )   (16,380 )
      Total stockholders’ equity       393,264     379,564  
        Total liabilities and stockholders’ equity     $ 481,122   $ 463,842  

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 per share data)
(Unaudited)


Thirteen Weeks
Ended
April 1, 2003
Thirteen Weeks
Ended
April 2, 2002
Revenues:            
   Restaurant sales     $ 165,176   $ 137,637  
   Bakery sales to other foodservice operators, retailers and distributors       7,684     12,597  
      Total revenues       172,860     150,234  
Costs and expenses:    
   Restaurant cost of sales       38,845     33,420  
   Bakery cost of sales       3,638     6,081  
   Labor expenses       55,844     46,262  
   Other operating costs and expenses       39,777     34,025  
   General and administrative expenses       8,686     7,559  
   Depreciation and amortization expenses       6,546     5,179  
   Preopening costs       1,518     2,686  
      Total costs and expenses       154,854     135,212  
Income from operations       18,006     15,022  
Interest income, net       857     996  
Other income, net       794     411  
Income before income taxes       19,657     16,429  
Income tax provision       7,018     5,865  
Net income     $ 12,639   $ 10,564  

Net income per share: 		   
   Basic     $ 0.25   $ 0.22  
   Diluted     $ 0.25   $ 0.21  

Weighted average shares outstanding: 		   
   Basic       50,032     48,249  
   Diluted       51,412     50,699  


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



2



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


Thirteen Weeks
Ended
April 1, 2003
Thirteen Weeks
Ended
April 2, 2002
Cash flows from operating activities:            
   Net income     $ 12,639   $ 10,564  
   Adjustments to reconcile net income to cash provided    
      by operating activities:    
      Depreciation and amortization       6,546     5,179  
      Gain on sale of available-for-sale securities       (659 )   (328 )
      Deferred income taxes       —     (6 )
   Changes in assets and liabilities:    
      Accounts receivable       1,633     966  
      Other receivables       347     5,459  
      Inventories       (4,692 )   (1,621 )
      Prepaid expenses       2,492     132  
      Trademarks       (25 )   (38 )
      Other       (1,104 )   (295 )
      Accounts payable       (3,647 )   (4,466 )
      Income taxes payable       6,902     6,624  
      Other accrued expenses       325     598  
        Cash provided by operating activities       20,757     22,768  
Cash flows from investing activities:    
   Additions to property and equipment       (12,482 )   (21,632 )
   Investments in available-for-sale securities       (46,031 )   (37,812 )
   Sales of available-for-sale securities       32,639     31,585  
        Cash used in investing activities       (25,874 )   (27,859 )
Cash flows from financing activities:    
   Issuance of common stock       2     10  
   Proceeds from exercise of employee stock options       2,226     9,769  
   Purchase of treasury stock       (847 )   (3,346 )
        Cash provided by financing activities       1,381     6,433  
Net change in cash and cash equivalents       (3,736 )   1,342  
Cash and cash equivalents at beginning of period       11,033     14,025  
Cash and cash equivalents at end of period     $ 7,297   $ 15,367  

Supplemental disclosures: 		   
   Interest paid       —     —  
   Income taxes paid     $ 115   $ 67  


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



3



THE CHEESECAKE FACTORY INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 1, 2003
(Unaudited)

NOTE A–BASIS OF PRESENTATION

        The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated (referred to herein as the “Company” or in the first person notations “we”, “us” and “our”) and its wholly owned subsidiaries (The Cheesecake Factory Restaurants, Inc.; The Cheesecake Factory Bakery Incorporated; The Cheesecake Factory Assets Co. LLC; C.F.I. Promotions Co. LLC; C.F.R.I Assets Holding Co. LLC; C.F.R.I. Texas Restaurants LP; The Houston Cheesecake Factory Corporation; TCF Stonebriar Club Incorporated, Cheesecake Factory Restaurants of Kansas LLC and Grand Lux Cafe LLC) for the thirteen weeks ended April 1, 2003 prepared in accordance with generally accepted accounting principles and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The financial statements presented herein have not been audited by independent public accountants, but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the Company’s financial condition, results of operations and cash flows for the period. However, these results are not necessarily indicative of results for any other interim period or for the full fiscal year. The consolidated balance sheet data presented herein for December 31, 2002 was derived from our audited consolidated financial statements for the fiscal year then ended, but does not include all disclosures required by generally accepted accounting principles. The preparation of financial statements in accordance with generally accepted accounting principles requires us to make certain 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. Actual amounts could differ from these estimates.

        Certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to requirements of the Securities and Exchange Commission. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the fiscal year ended December 31, 2002.

NOTE B–INVESTMENTS AND MARKETABLE SECURITIES

        Investments and marketable securities, all classified as available-for-sale, consisted of the following as of April 1, 2003 (in thousands):


Classification
  		Cost
  Fair Value
  Unrealized
Gain
  Balance
Sheet Amount
  Maturity
Current Assets:                          
Available-for-sale securities:    
                              April 2003 to    
   U.S. Treasury securities     $ 7,758   $ 7,804   $ 46   $ 7,804   February 2004    
                              June 2003 to    
   Corporate debt securities       6,321     6,386     65     6,386   December 2003    
        Total     $ 14,079   $ 14,190   $ 111   $ 14,190  

Other Assets: 		   
Available-for-sale securities:    
                              April 2004 to    
   U.S. Treasury securities     $ 73,123   $ 74,104   $ 981   $ 74,104   February 2008    
                              April 2004 to    
   Corporate debt securities       27,715     28,712     997     28,712   October 2007    
        Total     $ 100,838   $ 102,816   $ 1,978   $ 102,816