Chipotle 2008 Annual Report Download - page 55

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9. 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
shares of common stock outstanding during each period. Potentially dilutive securities include potential common
shares related to stock options, SARs and non-vested stock. Diluted EPS considers the impact of potentially
dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares
would have an anti-dilutive effect. Options to purchase 586 shares of common stock were excluded from the
calculation of 2008 diluted EPS because they were anti-dilutive. In addition, 226 stock awards subject to
performance conditions were excluded from the 2008 calculation of diluted EPS.
The following table sets forth the computations of basic and dilutive earnings per share:
Year ended December 31,
2008 2007 2006
Net income ........................................................ $78,202 $70,563 $41,423
Shares:
Weighted average number of common shares outstanding ................... 32,766 32,672 32,051
Dilutive stock options ................................................ 341 397 319
Dilutive non-vested stock ............................................. 39 77 95
Diluted weighted average number of common shares outstanding ............. 33,146 33,146 32,465
Basic earnings per share .............................................. $ 2.39 $ 2.16 $ 1.29
Diluted earnings per share ............................................ $ 2.36 $ 2.13 $ 1.28
10. Commitments and Contingencies
Purchase Obligations
The Company enters into various purchase obligations in the ordinary course of business. Those that are
binding primarily relate to amounts owed under contractor and subcontractor agreements and orders submitted
for equipment for restaurants under construction.
Letters of Credit
As of December 31, 2008, two letters of credit were issued for an aggregate amount of $6,312 which expire
in November 2009.
Litigation
A lawsuit has been filed against the Company in California alleging violations of state laws regarding
employee record-keeping, meal and rest breaks, payment of overtime and related practices with respect to its
employees. The case seeks damages, penalties and attorney’s fees on behalf of a purported class of the
Company’s present and former employees. The Company is currently investigating these claims, and although it
has various defenses it is not possible at this time to reasonably estimate the outcome of or any potential liability
from this case.
In the normal course of business, the Company is subject to other proceedings, lawsuits and claims. Such
matters are subject to many uncertainties, and outcomes are not predictable with assurance. Consequently, the
Company is unable to ascertain the ultimate aggregate amount of monetary liability or financial impact with
respect to these matters as of December 31, 2008. These matters could affect the operating results of any one
quarter when resolved in future periods. Management does not believe that any monetary liability or financial
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Annual Report