Chipotle 2012 Annual Report Download - page 57

8. 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 shares of
common stock underlying stock options, SOSARs and non-vested stock awards. 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. SOSARs to purchase 360, 240 and 340 shares of
common stock were excluded from the calculation of 2012, 2011 and 2010 diluted EPS, respectively, because
they were anti-dilutive. In addition, 449, 224 and 60 stock awards subject to performance conditions were
excluded from the 2012, 2011 and 2010 calculations of diluted EPS. The following table sets forth the
computations of basic and dilutive earnings per share:
Year ended December 31
2012 2011 2010
Net income ............................................ $ 278,000 $ 214,945 $ 178,981
Shares:
Weighted average number of common shares outstanding ....... 31,513 31,217 31,234
Dilutive stock options and SOSARs ........................ 254 497 422
Dilutive non-vested stock awards .......................... 16 61 79
Diluted weighted average number of common shares outstanding . . . 31,783 31,775 31,735
Basic earnings per share ................................. $ 8.82 $ 6.89 $ 5.73
Diluted earnings per share ................................ $ 8.75 $ 6.76 $ 5.64
9. 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, orders submitted for
equipment for restaurants under construction, commitment for food purchases, and corporate sponsorships. As of
December 31, 2012, total purchase obligations were $126,218.
Litigation
California ADA Cases
In 2006, Maurizio Antoninetti filed suit against the Company in the U.S. District Court for the Southern
District of California, primarily claiming that the height of the serving line wall in the Company’s restaurants
violated the Americans with Disabilities Act, or ADA, as well as California disability laws. On December 6,
2006, Mr. Antoninetti filed an additional lawsuit in the same court making the same allegations on a class action
basis, on behalf of himself and a purported class of disabled individuals, and a similar class action was filed by
James Perkins in U.S. District Court for the Central District of California on May 7, 2008.
In the individual Antoninetti action, the district court entered a ruling in which it found that although the
Company’s counter height violated the ADA, the Company provided the plaintiff with an equivalent facilitation,
and awarded attorney’s fees and minimal damages to the plaintiff. The Company and the plaintiff appealed the
district court’s ruling to the U.S. Court of Appeals for the Ninth Circuit, and on July 26, 2010, the appeals court
entered a ruling finding that the Company violated the ADA and did not provide the plaintiff with an equivalent
facilitation, and remanded the case to the district court. On March 21, 2012, the district court reaffirmed its
original award of minimal damages to the plaintiff and denied further injunctive relief. On July 18, 2012, the
district court ordered a final judgment awarding the plaintiff a portion of the attorney’s fees and costs originally
sought, and on December 26, 2012, the court of appeals awarded the plaintiff additional attorney’s fees and costs
for the appellate portion of the case.
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Annual Report