Chipotle 2005 Annual Report Download - page 39

Quarterly Financial Data/Seasonality
The following table presents consolidated statements of operations data for each of the eight
quarters in the period ended December 31, 2005. The operating results for any quarter are not
necessarily indicative of the results for any subsequent quarter.
2005 Quarters Ended
Mar. 31 June 30 Sept. 30 Dec. 31
(in millions, except percentages)
Revenue ........................................... $133.4 $156.3 $164.7 $173.3
Operating income .................................... 4.4 9.3 9.5 7.7
Net income ......................................... 2.6 25.7 5.1 4.3
Number of stores opened in quarter ....................... 18 17 17 28
Comp store sales growth ............................... 4.1% 9.6% 11.5% 14.3%
2004 Quarters Ended
Mar. 31 June 30 Sept. 30 Dec. 31
(in millions, except percentages)
Revenue ........................................... $101.4 $117.2 $124.6 $127.5
Operating income (loss) ................................ 0.7 4.9 4.2 (3.8)
Net income (loss) .................................... 0.5 5.0 4.3 (3.7)
Number of stores opened in quarter ....................... 29 26 21 28
Comp store sales growth ............................... 23.2% 13.2% 8.9% 10.4%
Seasonal factors cause our profitability to fluctuate from quarter to quarter. Historically, our
average store sales are lower in the first and fourth quarters due, in part, to the holiday season and
because fewer people eat out during periods of inclement weather (the winter months) than during
periods of mild or warm weather (the spring, summer and fall months). Other factors also have a
seasonal effect on our results. For example, stores located near colleges and universities generally do
more business during the academic year. The number of trading days can also affect our results. For
example, 2004 was a leap year, which contributed about 3 percentage points of the increase in our
restaurant sales in February of that year. Overall, on a year-to-year basis, changes in trading days do
not have a significant impact on our results.
Our quarterly results are also affected by other factors such as the number of new stores opened
in a quarter and unanticipated events. New stores have lower margins immediately following opening as
a result of the expenses associated with opening new stores and their operating inefficiencies in the
months immediately following opening. Because we tend to open more new stores later in the fiscal
year, our fourth quarter net income may be lower than in other quarters. In addition, unanticipated
events also impact our results. For example, in the second quarter of 2005, we determined that it was
more likely than not that we would realize our deferred tax assets and we reversed our valuation
allowance of $20.3 million, resulting in a net tax benefit of $16.7 million in that quarter. In the fourth
quarter of 2004, we recorded charges of $4.0 million to establish a reserve for claims seeking
reimbursement for purportedly fraudulent credit and debit card charges and for the cost of replacing
cards and monitoring expenses and fees, which reduced our operating income. Our loss on disposal of
assets in the first quarter of 2004 decreased compared to the same period in 2003 largely due to a
$2.0 million write-off associated with the closing of three stores in the first quarter of 2003.
Accordingly, results for a particular quarter are not necessarily indicative of results to be expected for
any other quarter or for any year.
33