SCHEDULE I: CONDENSED FINANCIAL INFORMATION OF REGISTRANT

12 Months Ended

Dec. 29, 2021

Condensed Financial Information Disclosure [Abstract]

SCHEDULE I: CONDENSED FINANCIAL INFORMATION OF REGISTRANT

SHAKE SHACK INC.

CONDENSED BALANCE SHEETS

(PARENT COMPANY ONLY)

(in thousands, except share and per share amounts)

		December 29 2021		December 30 2020
ASSETS
Current assets:
	Cash	$	7,821	$	9,469
	Prepaid expenses	64		45
	Total current assets	7,885		9,514
Due from SSE Holdings		2,035		2,103
Deferred income taxes, net		304,442		285,577
Investment in SSE Holdings		350,794		356,497
Note receivable from SSE Holdings		201,080		—
Note receivable - conversion option		16,000		—
TOTAL ASSETS		$	882,236	$	653,691
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable	9		3
	Accrued expenses	222		125
	Due to SSE Holdings	14,109		13,288
	Total current liabilities	14,340		13,416
Long-term debt		243,542		—
Liabilities under tax receivable agreement, net of current portion		234,045		232,954
Total liabilities		491,927		246,370
Commitments and contingencies
Stockholders' equity:
	Preferred stock, no par value—10,000,000 shares authorized; none issued and outstanding as of December 29, 2021 and December 30, 2020.	—		—
	Class A common stock, $0.001 par value—200,000,000 shares authorized; 39,142,397 and 38,717,790 shares issued and outstanding as of December 29, 2021 and December 30, 2020, respectively.	39		39
	Class B common stock, $0.001 par value—35,000,000 shares authorized; 2,921,587 and 2,951,188 shares issued and outstanding as of December 29, 2021 and December 30, 2020, respectively.	3		3
	Additional paid-in capital	405,940		395,067
	Retained earnings (accumulated deficit)	(15,674)		12,209
	Accumulated other comprehensive income	1		3
Total stockholders' equity		390,309		407,321
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	882,236	$	653,691

See accompanying Notes to Condensed Financial Statements.

SHAKE SHACK INC.

CONDENSED STATEMENTS OF INCOME (LOSS)

(PARENT COMPANY ONLY)

(in thousands)

	Fiscal Year Ended
	December 29 2021		December 30 2020		December 25 2019
Intercompany revenue	$	2,878	$	1,560	$	2,018
TOTAL REVENUE	2,878		1,560		2,018
General and administrative expenses	2,491		2,179		1,683
TOTAL EXPENSES	2,491		2,179		1,683
INCOME (LOSS) FROM OPERATIONS	387		(619)		335
Equity in net income (loss) from SSE Holdings	(19,393)		(41,152)		19,831
Other income (expense), net	(25,593)		(1,147)		808
Interest expense	(867)		—		(150)
INCOME (LOSS) BEFORE INCOME TAXES	(45,466)		(42,918)		20,824
Income tax expense (benefit)	(17,583)		(760)		997
NET INCOME (LOSS)	$	(27,883)	$	(42,158)	$	19,827

See accompanying Notes to Condensed Financial Statements.

SHAKE SHACK INC.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(PARENT COMPANY ONLY)

(in thousands)

			Fiscal Year Ended
			December 29 2021		December 30 2020		December 25 2019
Net income (loss)			$	(27,883)	$	(42,158)	$	19,827
Other comprehensive income, net of tax(1):
	Change in foreign currency translation adjustment		(2)		1		—
		Change in net unrealized holding gains	—		—		—
		Net change	(2)		1		—
OTHER COMPREHENSIVE INCOME (LOSS)			(2)		1		—
COMPREHENSIVE INCOME (LOSS)			$	(27,885)	$	(42,157)	$	19,827

(1)Net of tax benefit of $0 for fiscal years ended December 29, 2021, December 30, 2020 and December 25, 2019.

See accompanying Notes to Condensed Financial Statements.

SHAKE SHACK INC.

CONDENSED STATEMENTS OF CASH FLOWS

(PARENT COMPANY ONLY)

(in thousands)

			Fiscal Year Ended
			December 29 2021		December 30 2020		December 25 2019
OPERATING ACTIVITIES
Net income (loss)			$	(27,883)	$	(42,158)	$	19,827
Adjustments to reconcile net income (loss) to net cash used in operating activities:
	Equity in net (income) loss from SSE Holdings		19,393		41,152		(19,831)
	Amortization of debt issuance costs		867		—		—
	Equity-based compensation		526		555		279
	Deferred income taxes		(17,583)		(721)		(5,317)
	Non-cash interest expense		—		—		151
	Unrealized loss on Note receivable - conversion option		32,200		—		—
	Other non-cash (income) expense		(6,609)		1,147		(808)
	Changes in operating assets and liabilities:
		Accounts receivable	—		1		(1)
		Prepaid expenses and other current assets	(19)		161		(71)
		Due to SSE Holdings	(8,229)		(1,254)		(5,190)
		Accounts payable	6		2		1
		Accrued expenses	118		(29)		6,003
NET CASH USED IN OPERATING ACTIVITIES			(7,213)		(1,144)		(4,957)
INVESTING ACTIVITIES
Purchases of LLC Interests from SSE Holdings			(41,875)		(171,180)		(29,481)
Loan to SSE Holdings			(243,750)		—		—
NET CASH USED IN INVESTING ACTIVITIES			(285,625)		(171,180)		(29,481)
FINANCING ACTIVITIES
Proceeds from issuance of convertible notes, net of discount			243,750		—		—
Debt issuance costs			(1,075)		—		—
Proceeds from issuance of Class A common stock sold in equity offerings, net of underwriting discounts, commissions and offering costs			—		144,861		—
Proceeds from issuance of Class A common stock to SSE Holdings upon settlement of equity awards			41,875		26,319		29,481
Proceeds from stock option exercises			6,640		8,033		9,201
Payments under tax receivable agreement			—		(6,643)		(707)
NET CASH PROVIDED BY FINANCING ACTIVITIES			291,190		172,570		37,975
INCREASE (DECREASE) IN CASH			(1,648)		246		3,537
CASH AT BEGINNING OF PERIOD			9,469		9,223		5,686
CASH AT END OF PERIOD			$	7,821	$	9,469	$	9,223

See accompanying Notes to Condensed Financial Statements.

NOTE 1: ORGANIZATION

Shake Shack Inc. (the "Parent Company") was formed on September 23, 2014 as a Delaware corporation and is a holding company with no direct operations. The Parent Company's assets consist primarily of its equity interest in SSE Holdings, LLC ("SSE Holdings") and certain deferred tax assets.

The Parent Company's cash inflows are primarily from cash dividends or distributions and other transfers from SSE Holdings. The amounts available to the Parent Company to fulfill cash commitments and pay cash dividends on its common stock are subject to certain restrictions in SSE Holdings' Revolving Credit Facility. Refer to Note 8, Debt, in the accompanying Consolidated Financial Statements, for additional information.

NOTE 2: BASIS OF PRESENTATION

These Condensed Parent Company financial statements should be read in conjunction with the Consolidated Financial Statements of Shake Shack Inc. and the accompanying notes thereto, included in this Annual Report on Form 10-K. For purposes of these condensed financial statements, the Parent Company's interest in SSE Holdings is recorded based upon its proportionate share of SSE Holdings' net assets (similar to presenting them on the equity method).

The Parent Company is the sole managing member of SSE Holdings, and pursuant to the Third Amended and Restated LLC Agreement of SSE Holdings (the “SSE Holdings LLC Agreement”), receives compensation in the form of reimbursements for all costs associated with being a public company and maintaining its existence. Intercompany revenue consists of these reimbursement payments and is recognized when the corresponding expense to which it relates is recognized. Certain intercompany balances presented in these Condensed Parent Company financial statements are eliminated in the Company's Consolidated Financial Statements.

The following table presents amounts in the Parent Company's Condensed Balance Sheets that were eliminated in consolidation as of December 29, 2021 and December 30, 2020:

	December 29 2021		December 30 2020
Due from SSE Holdings	$	2,035	$	2,103
Deferred income taxes, net	7,234		—
Note receivable from SSE Holdings	201,080		—
Note receivable - conversion option	16,000		—
Due to SSE Holdings	14,109		13,288

Related party amounts that were not eliminated in the Company's Consolidated Financial Statements include the Parent Company's liabilities under the tax receivable agreement, which totaled $234,045 and $232,954 as of December 29, 2021 and December 30, 2020, respectively.

The following table presents amounts in the Parent Company's Condensed Statements of Income (Loss) that were eliminated in consolidation during fiscal 2021, fiscal 2020 and fiscal 2019:

	2021		2020		2019
Intercompany revenue	$	2,878	$	1,560	$	2,018
Equity in net income (loss) from SSE Holdings	(19,393)		(41,152)		19,831
Other income (expense), net	(25,595)		—		—
Income tax expense (benefit)	(7,234)		—		—

NOTE 3: NOTE RECEIVABLE FROM SSE HOLDINGS

In March 2021, contemporaneously with the issuance of the Convertible Notes described in Note 4, Debt, below, the Parent Company entered into a $250,000 intercompany note with SSE Holdings (the "Intercompany Note"). SSE Holdings promises to pay the Parent Company, for value received, the principal amount with interest of the Intercompany Note in March 2028. The Parent Company will exercise its right to convert the Intercompany Note to maintain at all times a one-to-one ratio between the number of common units, directly or indirectly, held by the Parent Company and the aggregate number of outstanding shares of Class A common stock.

The Parent Company's right to convert the Intercompany Note into common units of SSE Holdings (the "Conversion Option") is required to be bifurcated from the Intercompany Note and shown separately on the Parent Company's Condensed Balance Sheets. The Conversion Option is to be recorded at fair value and remeasured at each subsequent reporting date. On the date of issuance, the Conversion Option was determined to be an asset with a fair value of $48,200. As of December 29, 2021, the fair value of the Conversion Option was $16,000. The Parent Company recorded an unrealized loss of $32,200 in fiscal 2021 within Other income (expense), net due to the change in fair value of the Conversion Option during the year.

As of December 29, 2021, the balance of the Note receivable from SSE Holdings was $201,080, net of accretion. The Parent Company recognized interest income of $6,605 in fiscal 2021 within Other income (expense), net associated primarily with the accretion of the Conversion Option value at issuance.

NOTE 4: DEBT

In March 2021, the Parent Company issued $225,000 aggregate principal amount of 0% Convertible Senior Notes due 2028 (“Convertible Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The Parent Company granted an option to the initial purchasers to purchase up to an additional $25,000 aggregate principal amount of Convertible Notes to cover over-allotments, which was subsequently fully exercised during March 2021, resulting in a total issuance of $250,000 aggregate principal amount of Convertible Notes. The Convertible Notes will mature on March 1, 2028, unless earlier converted, redeemed or repurchased in certain circumstances. Upon conversion, the Company pays or delivers, as the case may be, cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at the Company's election. Refer to Note 8, Debt, in the accompanying Consolidated Financial Statements, for additional information relating to the Convertible Notes.

NOTE 5: COMMITMENTS AND CONTINGENCIES

On February 4, 2015, the Parent Company entered into a tax receivable agreement with the non-controlling interest holders that provides for payments to the non-controlling interest holders of 85% of the amount of any tax benefits that the Parent Company actually realizes, or in some cases is deemed to realize, as a result of certain transactions. Refer to Note 14, Income Taxes, to the Company's Consolidated Financial Statements for additional information relating to the Parent Company's Tax Receivable Agreement. As described in Note 17, Commitments and Contingencies, to the Company's Consolidated Financial Statements, amounts payable under the Tax Receivable Agreement are contingent upon, among other things, (i) generation of future taxable income of Shake Shack Inc. over the term of the Tax Receivable Agreement and (ii) future changes in tax laws. As of December 29, 2021 and December 30, 2020, liabilities under the tax receivable agreement totaled $234,045 and $232,954, respectively.

NOTE 6: SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth supplemental cash flow information for fiscal 2021, fiscal 2020 and fiscal 2019:

		2021		2020		2019
Cash paid for:
	Income taxes	$	19	$	124	$	233
Non-cash investing activities:
	Accrued contribution related to stock option exercises	6,731		8,094		9,227
	Class A common stock issued in connection with the acquisition of LLC Interests upon redemption by the non-controlling interest holders	33		1,723		11,934
	Class A common stock issued in connection with the GTC merger	—		—		19,218
	Non-cash contribution made in connection with equity awards granted to employees of SSE Holdings	11,468		5,193		4,402
Non-cash financing activities:
	Cancellation of Class B common stock in connection with the redemption of LLC Interests	—		—		(2)
	Cancellation of Class B common stock in connection with the GTC merger	—		—		(3)
	Establishment of liabilities under tax receivable agreement	1,093		4,024		32,065