Business Context and Reporting Period
Company: Shake Shack Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: February 24, 2024
Subject: Non-reliance on previously issued financial statements and announcement of restatements for prior interim periods.
Key Financial Metrics and Impacts
This filing does not report current period revenue, profit, or cash flow. Instead, it details the financial impact of accounting errors discovered in prior periods:
- Income Statement Impact: No change to the unaudited condensed consolidated statements of income.
- Balance Sheet Impact (2023 Periods): $17 million increase to deferred tax assets and retained earnings/(accumulated deficit) for periods ended March 29, June 28, and September 27, 2023.
- Balance Sheet Impact (2022 Periods): $14 million increase to deferred tax assets and retained earnings/(accumulated deficit) for periods ended March 30, June 29, and September 28, 2022.
- Additional Paid-in Capital: De minimis increase at each period-end.
Material Changes and Restatement Details
The Audit Committee concluded that the Prior Interim Financial Statements (Q1-Q3 2022 and Q1-Q3 2023) should no longer be relied upon due to previously disclosed errors. These errors resulted in understatements of additional paid-in capital, retained earnings, and deferred income tax assets. The company intends to include restatements of these interim periods in its 2023 Form 10-K.
Guidance, Outlook, and Risks
Outlook and Filing Timeline: The company intends to file its 2023 Form 10-K within 15 calendar days following the original due date, utilizing Rule 12b-25(b) under the Securities Exchange Act of 1934.
Risks and Contingencies: The filing highlights risks related to the material weakness in internal controls over financial reporting identified in connection with the restatement. Other standard forward-looking risks include the impact of the COVID-19 pandemic, supply chain interruptions, labor costs, inflation, and the ability to open new locations.
Investor Verification Checklist
- Verify the specific nature of the accounting errors leading to the understatement of deferred tax assets and retained earnings.
- Monitor the filing of the 2023 Form 10-K for the full restated financial statements.
- Review the company's remediation plan for the material weakness in internal controls over financial reporting.
- Confirm the exact filing date of the 2023 Form 10-K to ensure compliance with the Rule 12b-25(b) extension.