Sprouts Farmers Market 2013 Annual Report Download - page 60

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Table of Contents
Interest expense
Interest expense increased to $37.2 million for 2013 from $35.5 million for 2012, primarily as a result of increased interest
expense related to capital and financing leases. These were partially offset by a reduction in the interest rates related to the April
2013 Refinancing, the August 2013 pay down on the Term Loan, and the May 2013 payoff of the Senior Subordinated Notes. See
Note 7 “Long-Term Debt” to our unaudited consolidated financial statements.
Comparing 2013 to pro forma 2012, interest expense decreased to $37.2 million for 2013 from $40.3 million for 2012, primarily
due to the factors noted above.
Income tax provision
Income tax provision increased to $32.7 million for 2013 from $15.3 million for 2012, primarily related to an increase in income
before income taxes. Our effective income tax rate decreased to 38.9% in 2013 from 43.9% in 2012 related to increased tax credits
and charitable contributions for 2013 and the non-deductible transaction costs incurred in 2012 related to the Sunflower
Transaction.
Comparing 2013 to pro forma 2012, income tax provision was $32.7 million for 2013 compared to income tax provision of
$19.9 million for 2012, primarily related to an increase in income before income taxes. Our effective income tax rate decreased to
38.9% in 2013 from 44.8% in 2012 related to increased tax credits and charitable contributions for 2013 and the non-deductible
transaction costs incurred in 2012 related to the Sunflower Transaction.
Net income
Net income growth was attributable to strong business performance driven by comparable store sales and resulting operating
leverage, strong performance of new stores opened, and reduced interest expense.
Unaudited Supplemental Fiscal 2012 Pro Forma Information
The comparability of our results of operations is affected for the periods presented in this “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” by the Transactions. To supplement the discussion of our historical
results of operations for fiscal 2013 and fiscal 2012, we have included unaudited supplemental pro forma condensed consolidated
statement of operations information for fiscal 2012.
The following unaudited pro forma condensed consolidated financial information presents the unaudited pro forma condensed
consolidated statement of operations for fiscal 2012 after giving effect to the Transactions and adjustments as described in the
accompanying notes.
55
Fiscal 2013
Fiscal 2012
Change
% Change
(dollars in thousands)
As reported:
Net income
$
51,326
$
19,500
$
31,826
163
%
Percentage of sales
2.1
%
1.1
%
1.0
%
Pro forma:
Net income
$
51,326
$
24,526
$
26,800
109
%
Percentage of sales
2.1
%
1.2
%
0.9
%