Sprouts Farmers Market 2013 Annual Report Download - page 54

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Table of Contents
Factors Affecting Comparability of Results of Operations
Henry’s Transaction
Apollo held a controlling interest in Henry’s former parent prior to the Henry’s Transaction and continued to hold a controlling
interest in the Company afterwards. Due to Apollo’s continued controlling interest, the Henry’s Transaction resulted in Henry’s
financial statements becoming the financial statements of the Company, followed immediately by the acquisition by the Company of
the Sprouts Farmers Market business. As a result, the Company was determined to be the accounting acquirer, effective April 18,
2011. Accordingly, the results of operations for fiscal 2010 and for the period from January 3, 2011 through April 18, 2011 reflect
the sales and expenses directly attributable to Henry’s operations and allocations of direct expenses from Henry’s previous parent
company. These expenses were allocated to Henry’s on the basis that was considered to reflect fairly or reasonably the utilization
of the services provided to, or the benefit obtained by, Henry’s. Historical financial statements for Henry’s prior to April 18, 2011 do
not reflect the interest expense Henry’s might have incurred if it had been a stand-alone entity. Additionally, we would have
expected to incur other expenses, not reflected in our historical financial statements prior to April 18, 2011, if Henry’s were to
operate as a stand-alone entity. Commencing on April 18, 2011, our consolidated financial statements also include the financial
position, results of operations and cash flows of Sprouts Arizona.
Sunflower Transaction
In May 2012, we acquired Sunflower in the Sunflower Transaction. Commencing on May 29, 2012, our consolidated financial
statements also include the financial position, results of operations and cash flows of Sunflower.
Pro Forma Information
The effects of the Transactions have a material effect on the comparability of our results of operations. Consequently, we have
supplemented the comparative discussion of our results of operations for fiscal 2013 and fiscal 2012 and for fiscal 2011 with a
comparative discussion of our historical results of operations on a pro forma basis for fiscal 2012 and fiscal 2011. In this discussion,
pro forma statement of operations information for fiscal 2011 gives pro forma effect to the Transactions as if they were
consummated on the first day of fiscal 2011, as set out in “—Unaudited Supplemental Fiscal 2011 Pro Forma Information” below.
The unaudited supplemental pro forma information for fiscal 2011 was prepared in a manner comparable to the requirements of
Article 11 of Regulation S-X, but does not comply with Article 11 in that Rule 11-02(c) of Article 11 does not allow for the
presentation of pro forma condensed statements of operations prior to the most recent year. The unaudited supplemental pro forma
information for fiscal 2011 reflects the impact of the Transactions using the assumptions set forth in the notes to the unaudited
supplemental pro forma information for fiscal 2011. Pro forma statement of operations information for fiscal 2012 gives effect to the
Sunflower Transaction as if it was consummated on the first day of fiscal 2012 as set out under “Pro Forma for the Sunflower
Transaction” in “Unaudited Supplemental Fiscal 2012 Pro Forma Information.” This fiscal 2012 pro forma information presented in
this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” does not include the impact of the
April 2013 Refinancing, described below in “- Liquidity and Capital Resources”, or the IPO.
April 2013 Refinancing
In April 2013, we completed a transaction in which we refinanced our debt (the “April 2013 Refinancing”) and made a
distribution to our equity and option holders, as further discussed in “—Liquidity and Capital Resources” below. The April 2013
Refinancing resulted in an increase in borrowings, a reduction in interest rate and the recording of a loss on extinguishment of debt.
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