The Cheesecake Factory Incorporated and Subsidiaries
Notes to Consolidated Financial Statements

8. Income Taxes:

The provision for income taxes consisted of the following (in thousands):
	Fiscal			Fiscal			Fiscal
	2004			2003			2002
				(restated)			(restated)
Income before income taxes	$	102,081		$	88,195		$	75,847
Income tax provision:
Current:
Federal	$	15,467		$	16,064		$	13,385
State		3,408			3,344			2,502
Total current		18,875			19,408			15,887
Deferred		16,668			11,557			11,189
Total	$	35,543		$	30,965		$	27,076
The following is a reconciliation between the U.S. federal statutory rate and the effective tax rate:
	Fiscal			Fiscal			Fiscal
	2004			2003			2002
				(restated)			(restated)
Tax at U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State and district income taxes, net of federal income tax benefit		4.2			3.5			3.7
FICA tip credit and other credits		(4.5	)		(3.7	)		(3.4	)
Deferred compensation, dividends received deduction and other		0.1			0.3			0.4
Effective tax rate		34.8	%		35.1	%		35.7	%
The temporary differences which give rise to deferred income tax assets and liabilities are as follows (in thousands):
				December 28,			December 30,
				2004			2003
							(restated)
Current deferred tax assets/(liabilities):
Employee benefits				$	5,575		$	4,055
Insurance					5,113			4,803
Inventory					(4,165	)		(3,112	)
Other, net					(1,155	)		(1,021	)
Total				$	5,368		$	4,725
Noncurrent deferred tax assets/(liabilities):
Property and equipment				$	(60,334	)	$	(39,987	)
Tax credit carryforwards					5,237			3,271
Other, net					3,107			1,642
Total				$	(51,990	)	$	(35,074	)

The Company’s tax credit carryforwards, representing primarily FICA tip credits, begin to expire in 2023. We have not recorded a valuation allowance against these credits as we believe it is more likely than not that future taxable income will be sufficient to fully realize the benefit of these credits.