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SEC Filings

10-K
CHIPOTLE MEXICAN GRILL INC filed this Form 10-K on 02/08/2018
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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 shares of common stock underlying SOSARs and non-vested stock awards (collectively “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. Stock awards are excluded from the calculation of diluted EPS in the event they are subject to performance conditions or antidilutive. The following stock awards were excluded from the calculation of diluted EPS:





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



Year ended December 31,



2017

 

2016

 

2015

Stock awards subject to performance conditions

 

217 

 

 

263 

 

 

266 

Stock awards that were antidilutive

 

1,695 

 

 

1,316 

 

 

289 

Total stock awards excluded from diluted earnings per share

 

1,912 

 

 

1,579 

 

 

555 



The following table sets forth the computations of basic and diluted earnings per share:  







 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



Year ended December 31,



2017

 

2016

 

2015

Net income

$

176,253 

 

$

22,938 

 

$

475,602 

Shares:

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

28,491 

 

 

29,265 

 

 

31,092 

Dilutive stock awards

 

70 

 

 

505 

 

 

402 

Diluted weighted average number of common shares outstanding

 

28,561 

 

 

29,770 

 

 

31,494 

Basic earnings per share

$

6.19 

 

$

0.78 

 

$

15.30 

Diluted earnings per share

$

6.17 

 

$

0.77 

 

$

15.10 

 

10. Commitments and Contingencies

Purchase Obligations

We enter into various purchase obligations in the ordinary course of business, generally of a short term nature. Those that are binding primarily relate to commitments for food purchases and supplies, amounts owed under contractor and subcontractor agreements, orders submitted for equipment for restaurants under construction, and marketing initiatives and corporate sponsorships.

Litigation

Data Security Incident 

In April 2017, our information security team detected unauthorized activity on the network that supports payment processing for our restaurants, and immediately began an investigation with the help of leading computer security firms. We also self-reported the issue to payment card processors and law enforcement. Our investigation detected malware designed to access payment card data from cards used at point-of-sale devices at most Chipotle restaurants, primarily in the period from March 24, 2017 through April 18, 2017. The malware searched for track data, which may include cardholder name, card number, expiration date, and internal verification codes; however, no other customer information was affected. We have removed the malware from our systems and continue to evaluate ways to enhance our security measures. We expect that substantially all of our investigation costs will be covered by insurance; however, we may incur legal expenses in excess of our insurance coverage limits associated with the data security incident in future periods. We will recognize these expenses as services are received.  



 During the year ended December 31, 2017, we recorded an expense of $30,000 ($18,234 after tax), or $0.64 per diluted earnings per share, as an estimate of potential liabilities associated with anticipated claims and assessments by payment card networks in connection with the data security incident. We may ultimately be subject to liabilities greater than or less than the amount accrued. The expense is recorded in general and administrative expenses in our consolidated statement of income and a corresponding liability in accrued liabilities on our consolidated balance sheet.

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