Chipotle 2006 Annual Report Download - page 59

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Chipotle Mexican Grill, Inc.
Notes to Consolidated Financial Statements—(Continued)
(dollar and share amounts in thousands, unless otherwise specified)
Future minimum lease payments required under existing operating leases as of December 31, 2006 are as
follows:
2007 ................................................................... $ 61,641
2008 ................................................................... 61,999
2009 ................................................................... 62,491
2010 ................................................................... 62,001
2011 ................................................................... 61,615
Thereafter .............................................................. 776,477
Total minimum lease payments ............................................. $1,086,224
Minimum lease payments have not been reduced by minimum sublease rentals of $4,116 due in the future
under non-cancelable subleases.
Rental expense consists of the following:
For the years ended
December 31,
2006 2005 2004
Minimum rentals ........................................ $50,880 $42,506 $33,201
Contingent rentals ....................................... $ 955 $ 431 $ 284
Sublease rental income .................................... $(3,365) $ (2,070) $ (1,632)
During the years ended December 31, 2006 and 2005, the Company entered into one and five sales and
leaseback transactions, respectively. These transactions do not qualify for sales leaseback accounting because of
the Company’s deemed continuing involvement with the buyer-lessor due to fixed price renewal options, which
results in the transaction being recorded under the financing method. Under the financing method, the assets
remain on the consolidated balance sheet and the proceeds from the transactions are recorded as a financing
liability. A portion of lease payments are applied as payments of deemed principal and imputed interest. The
deemed landlord financing liability was $4,107 as of December 31, 2006. The future minimum lease payments
for each of the next five years and thereafter for deemed landlord financing obligations are as follows
2007 ...................................................................... $ 371
2008 ...................................................................... 371
2009 ...................................................................... 371
2010 ...................................................................... 379
2011 ...................................................................... 396
Thereafter ................................................................. 5,868
Total minimum lease payments ................................................ 7,756
Less: Interest implicit in lease ................................................. (3,649)
Total deemed landlord financing ............................................... $4,107
12. Earnings Per Share
Basic earnings per share is calculated by dividing income available to common shareholders by the
weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share
(“Diluted EPS”) is calculated using income available to common shareholders divided by diluted weighted-average
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