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SEC Filings

S-1/A
CHIPOTLE MEXICAN GRILL INC filed this Form S-1/A on 12/05/2005
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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.

Liquidity and Capital Resources

        Our primary liquidity and capital requirements are for new store construction, working capital and general corporate needs. We have financed these requirements primarily through equity sales to McDonald's and others as well as through cash flows from operations. At September 30, 2005, we had $2.0 million in cash and cash equivalents.

        McDonald's and, to a lesser extent, some of our minority shareholders have historically provided us with significant financing. We have also historically obtained short-term borrowings from McDonald's from time to time under documented lines of credit at an interest rate equal to the U.S. prime rate plus 100 basis points. We've repaid these loans using a portion of the proceeds of private placements of our equity securities. In March 2004, April 2003 and April 2002, we issued shares of common stock to McDonald's, certain directors, employees and other persons who were accredited investors (consisting of friends and family of our employees and persons having business relationships with us), in each case as identified in our shareholders' agreement, for an aggregate purchase price of $65.0 million, $38.0 million and $55.0 million, respectively.

        We haven't required significant working capital because customers pay using cash or credit 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 growth.

        Operating Activities.    Net cash provided by operating activities was $53.3 million for the nine months ended September 30, 2005 compared to $31.1 million for the comparable period in 2004. The $22.2 million increase was primarily attributable to a $12.8 million improvement in income before income taxes driven by increased average store sales and a $4.6 million increase in depreciation and amortization (a non-cash expense) due to significantly more stores in operation in the first nine months of 2005 compared to the comparable 2004 period. Net cash provided by operating activities was $39.7 million for 2004 compared to $22.1 million for 2003. The $17.6 million increase in 2004 was primarily attributable to a $13.8 million improvement in net income (loss) driven primarily by increased average store sales and a $6.7 million increase in depreciation and amortization (a non-cash expense) due to significantly more stores in operation in 2004 than in 2003. Net cash provided by operating activities for 2002 was $6.0 million. The $16.1 million increase from 2002 to 2003 was primarily the result of an $9.6 million improvement in our net loss driven by increased average store sales and a $6.4 million increase in accounts payable and cash overdraft due to the substantially greater number of store openings in late 2003 than in late 2002.

        Investing Activities.    Net cash used in investing activities was $53.3 million for the nine months ended September 30, 2005 compared to net cash used in investing activities of $72.2 million for the comparable period in 2004. The $18.9 million decrease related to lower capital expenditures in 2005 as we opened 52 stores in the nine months ended September 30, 2005, compared with 75 stores in the nine months ended September 30, 2004. Net cash used in investing activities was $95.6 million for 2004 compared to $86.1 million for 2003. The increase in cash used in investing activities was primarily as a result of higher capital expenditures as we opened 104 stores in 2004, compared to 76 in 2003. We used $48.6 million in cash for investing activities in 2002. The $37.5 million increase in cash used for investing activities from 2002 to 2003 was due to higher capital expenditures as we opened 76 stores in 2003 compared to 57 in 2002.

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