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SEC Filings

CHIPOTLE MEXICAN GRILL INC filed this Form S-1/A on 12/23/2005
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of deconsolidation, we'll reduce the receivable recorded in equity and not recognize any benefit in the consolidated statement of operations. See "Certain Relationships and Related Party Transactions—Tax Allocation Agreement."

Other Factors Affecting Our Results

    Equity Compensation Expenses

        Effective January 1, 2005, we adopted the fair value recognition provisions of Statement of Financial Accounting Standards ("SFAS") No. 123R, Share-Based Payment ("SFAS 123R"), before its required date of adoption, using the modified-prospective transition method. Under this transition method, our 2005 equity compensation costs of $0.3 million related to our stock option plan includes the portion vesting in the period for (i) all share-based payments granted prior to, but not vested as of January 1, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123; and (ii) all share-based payments granted after January 1, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. The following table illustrates the effect on net income (loss) as if the fair-value-based method had been applied to all outstanding and unvested awards in each period.

  Year Ended December 31,
  (in millions)

Net income (loss), as reported   $ (17.3 ) $ (7.7 ) $ 6.1  
Stock-based employee compensation expense     (0.2 )   (0.4 )   (0.5 )
Pro forma net income (loss)   $ (17.5 ) $ (8.1 ) $ 5.6  

        We also have other equity compensation expenses. During the first nine months of 2005, we granted 153,333 shares of our common stock, which vest in equal annual installments over three years, and recognized $0.9 million of related compensation expense. In 2004, we adopted a stock appreciation rights plan and granted stock appreciation rights in respect of 167,100 shares of common stock, which vest three years from the date of grant and expire after five years and six months. The common stock had a fair value of $22.35 per share on the date of grant. Our compensation expense related to these grants of stock appreciation rights was $0.2 million for 2004 and $0.3 million for the first nine months of 2005. In connection with this offering, we intend to convert these stock appreciation rights, which we have accounted for as a liability, into options to purchase our class A common stock. We'll compare the fair value of the stock appreciation rights immediately before that conversion to the fair value of the options, and recognize any incremental compensation cost. Once converted, we'll account for the options as an equity award. In 2001, McDonald's issued options for its common stock to certain of our employees under its stock ownership option plan, all of which were fully vested by the end of 2005, expire ten years from the date of grant and have an exercise price of $29.43 per share of McDonald's common stock. The McDonald's options were granted with an exercise price equal to the fair market value of McDonald's common stock on the date of grant and therefore had no intrinsic value on that date. Accordingly, we did not reflect the fair value of the expenses related to this grant in our financial statements. We paid McDonald's $2.4 million for our cost of participating in its plan, which we expensed equally over the four-year vesting period.

    Claims for Fraudulent Credit Card Transactions

        In August 2004, the acquiring bank that processes our credit and debit card transactions informed us that we may have been the victim of a possible theft of credit and debit card data. To date, we have received claims through the acquiring bank with respect to fewer than 2,000 purportedly fraudulent credit and debit card charges allegedly arising out of this matter in an aggregate amount of about $1.2 million. We've also incurred $1.3 million of expense in connection with fines imposed by the Visa and MasterCard


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