Chipotle 2012 Annual Report Download - page 36

mild or warm weather (the spring, summer and fall months). Other factors also have a seasonal effect on our
results. For example, restaurants located near colleges and universities generally do more business during the
academic year. The number of trading days in a quarter can also affect our results. Overall, on an annual basis,
changes in trading dates do not have a significant impact on our results.
Our quarterly results are also affected by other factors such as the number of new restaurants opened in a
quarter and unanticipated events. New restaurants typically have lower margins following opening as a result of
the expenses associated with opening new restaurants and their operating inefficiencies in the months
immediately following opening. In addition, unanticipated events also impact our results. Accordingly, results for
a particular quarter are not necessarily indicative of results to be expected for any other quarter or for any year.
Liquidity and Capital Resources
Our primary liquidity and capital requirements are for new restaurant construction, working capital and general
corporate needs. We have a cash and short-term investment balance of $472.9 million that we expect to utilize,
along with cash flow from operations, to provide capital to support the growth of our business (primarily through
opening restaurants), to repurchase additional shares of our common stock subject to market conditions (including
up to $100.2 million in repurchases under programs authorized as of December 31, 2012), to maintain our existing
restaurants and for general corporate purposes. We also have a long term investments balance of $190.9 million,
which consists of U.S. treasury notes and certificate of deposit products with maturities of 13 months to
approximately 2 years. We believe that cash from operations, together with our cash balance, will be enough to
meet ongoing capital expenditures, working capital requirements and other cash needs for the foreseeable future.
We haven’t required significant working capital because customers generally pay using cash or credit and
debit cards and because our operations do not require significant receivables, nor do they require significant
inventories due, in part, to our use of various fresh ingredients. In addition, we generally have the right to pay for
the purchase of food, beverage and supplies some time after the receipt of those items, generally within ten days,
thereby reducing the need for incremental working capital to support our growth.
While operations continue to provide cash, our primary use of cash is in new restaurant development. Our
total capital expenditures for 2012 were $197.0 million, and we expect to incur capital expenditures of about
$210 million in 2013, of which $160 million relates to our construction of new restaurants before any reductions
for landlord reimbursements, and the remainder primarily relates to restaurant reinvestments. In 2012, for
Chipotle restaurants in the U.S., we spent on average about $800,000 in development and construction costs per
restaurant, net of landlord reimbursements, and about $820,000, net of landlord reimbursements, for all
restaurants including international locations. For new restaurants to be opened in 2013, we anticipate average
development costs will be similar to 2012.
Contractual Obligations
Our contractual obligations as of December 31, 2012 were as follows:
2012
Total 1 year 2-3 years 4-5 years
After
5 years
(in thousands)
Operating leases ................... $ 2,466,303 $ 158,981 $ 323,013 $ 325,962 $ 1,658,347
Deemed landlord financing .......... $ 5,505 $ 394 $ 795 $ 844 $ 3,472
Other contractual obligations(1) ....... $ 126,218 $ 125,106 $ 1,082 $ 30 $ —
Total contractual cash obligations ..... $ 2,598,026 $ 284,481 $ 324,890 $ 326,836 $ 1,661,819
(1) We enter into various purchase obligations in the ordinary course of business. Those that are binding
primarily relate to amounts owed under construction contractor and subcontractor agreements, orders related
to produce and other ingredients, orders submitted for equipment for restaurants under construction, and
marketing initiatives and corporate sponsorships.
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Annual Report