Chipotle 2005 Annual Report Download - page 57

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Chipotle Mexican Grill, Inc.
Notes to Financial Statements (Continued)
(in thousands, except per share data)
3. Leasehold Improvements, Property and Equipment
Leasehold improvements, property and equipment were as follows:
December 31
2005 2004
Land .......................................... $ 6,557 $ 6,298
Leasehold improvements and buildings .................. 320,941 262,332
Furniture and fixtures .............................. 36,266 29,814
Equipment ...................................... 63,356 51,907
427,120 350,351
Accumulated depreciation ........................... (86,426) (60,478)
$340,694 $289,873
4. Income Taxes
Prior to the Company’s initial public offering, it was not a separate taxable entity for federal and
certain state income tax purposes. The Company’s results of operations were included in the
consolidated federal and state income tax returns of McDonald’s and its affiliates. The Company will
continue to be included in some state tax returns of McDonald’s until McDonald’s ownership
percentage decreases below 50%. The provision for income taxes is calculated on a separate return
basis.
The components of the benefit for income taxes are as follows:
Years ended December 31
2005 2004 2003
Current tax benefit (provision):
Federal ................................ $(13,426) $ 7,487 $ 9,205
State .................................. (2,115) 1,386 1,705
(15,541) 8,873 10,910
Deferred tax benefit (provision):
Federal ................................ 3,429 (9,647) (6,825)
State .................................. (775) (1,838) (1,143)
2,654 (11,485) (7,968)
Valuation allowance ........................ 20,343 2,612 (2,942)
Total benefit for income taxes ................. $ 7,456 $ — $ —
During the year ended December 31, 2005, deferred taxes included an adjustment to the provision
based on the actual tax returns filed, which resulted in an additional expense of $389. This true-up
process also resulted in the receivable from McDonald’s being reduced by $3,352 in the same period.
Lastly, the Company recorded adjustments to deferred tax assets and liabilities for enacted changes in
state tax laws, which resulted in an additional $240 expense for the year ended December 31, 2005.
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