GROWTH STRATEGIES Even amidst the challenges of scal 2021. we added 58 net new system-wide Shacks and reached 369 Shacks worldwide. Going forward, we believe we are well-positioned to continue signicant, sustainable nancial growth. We plan to execute our growth strategies while remembering to Stand For Something Good in everything we do. ' Opening New Domestic Company-Operated Shacks We believe a key opportunity for growth lies in opening new. Company-operated Shaoks. We waited nearly ve years to open our second Shack, and a little over a decade since then. we are still in the early chapters of our story. We see a tremendous whitespace opportunity to expand in both new and existing U.S. markets, and we will continue to invest in infrastructure with an eye toward growing rapidly, but with discipline. In the long-term, we believe we have the potential to grow our current domestic Company-operated Shack footprint to at least 450 Shacks; for comparison, we have only opened 48% of that number through the end of scal 2021. 01 course, the rate of future Shack growth in any particular period is inherently uncertain and is subject to numerous factors beyond our control. As a result, we do not currently have an anticipated timetrame for such expansion. With the gradual and sequential recovery of sales throughout the year, we increased our new Shack development during the second half of 2021. Domestically, we expanded our Company-operated footprint by opening 35 net new shacks in 2021 a 19% increase in our domestic Company operated Shack count from the prior scal year. In the rst quarter of 2021. we announced that our Penn Station Shack closed as the landlord is remodeling the tenninai. As of December 29. 2021, we had 218 domestic Company-operated shacks. We believe we have a versatile real estate model built for growth; our disciplined expansion strategy is designed to leverage our business model's strength and our brand awareness. As we look to 2022, we intend to ramp up the development and we are Shake Shack Inc. Form 10-K i 10 SHAKE SHACK INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Fiscal Year Ended December 29 December 30 December 25 2021 2020 2019 OPERATING ACTIVITIES Net income (loss) (including amounts attributable to non-controlling interests) (10,111) (45,534) $ 24,128 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization expense 58.991 48.801 40,392 Amortization of debt issuance costs 867 Amortization of cloud computing asset 1,245 1.444 312 Non-cash operating lease cost 50.888 44.910 40,068 Equity-based compensation 8,703 5,560 7,505 Deferred income taxes 10,379) (1,356) (6,064) Non-cash interest expense 353 66 170 (Gain) loss on sale of marketable securities (79) (22) Impairment and loss on disposal of assets 1.632 10, 151 1,352 Other non-cash expense (income) (4 ) 1.937 (338) Unrealized (gain) loss on equity securities 277 59 (194) Changes in operating assets and liabilities: Accounts receivable (4,193) 1.006 10,726 nventories (962 ) (667) (472) Prepaid expenses and other current assets 4,913 (5,197) 134 Other assets (2,722) (2,940 (8,245 Accounts payable (6,450) 4.626 4,248 Accrued expenses 7,175 2,170 9,856 Accrued wages and related liabilities 4,200 (1,010) 799 Other current liabilities (1,166) 1,752 1,438 Long-term operating lease liabilities 43,417) 33,724) 37,308 Other long-term liabilities (1,443) 5,375 1,372 NET CASH PROVIDED BY OPERATING ACTIVITIES 58,402 37,350 89,857 INVESTING ACTIVITIES Purchases of property and equipment (101,495) (69,038) (106,507) Purchases of marketable securities (47,399) (20,359) (1,179) Sales of marketable securities 4,004 20,000 27,000 NET CASH USED IN INVESTING ACTIVITIES (144,890) (69,397) (80,686) FINANCING ACTIVITIES Proceeds from issuance of convertible notes, net of discount 243,750 Proceeds from Revolving Credit Facility 50,000 Payments on Revolving Credit Facility (50,000) Deferred financing costs (169) (64) (286) Proceeds from issuance of Class A common stock sold in equity offerings, net of underwriting discounts, commissions and offering costs 44,997 Payments on principal of finance leases (2,694) 2.206) (1,926) Distributions paid to non-controlling interest holders (968) (478) (1,708 Debt issuance costs 1,075) Payments under tax receivable agreement (6,643) (707) Net proceeds from stock option exercises 6,731 8.033 9,201 Employee withholding taxes related to net settled equity awards (3,554) (1,818) 1,396 NET CASH PROVIDED BY FINANCING ACTIVITIES 242,021 141,821 3,178 INCREASE IN CASH AND CASH EQUIVALENTS 155,53 109,77 12,349 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 146,873 37,099 24,750 CASH AND CASH EQUIVALENTS AT END OF PERIOD 302,406 146,873 $ 37,099 Supplemental cash flow information and non-cash investing and financing activities are further described in the accompanying notes. See accompanying Notes to Consolidated Financial Statements