Sprouts Farmers Market 2013 Annual Report Download - page 67

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Table of Contents
primarily as a result of comparable store sales growth, new store openings and synergies achieved from integration of the
Transactions. These factors were partially offset by the $10.1 million increase in acquisition integration costs and the $2.7 million
legal settlement in fiscal 2012.
On a pro forma basis, selling, general and administrative expenses increased during fiscal 2012 primarily due to (i) a $12.5
million increase in acquisition integration costs to $17.1 million, (ii) a $2.7 million legal settlement in fiscal 2012 and (iii) a $0.6
million loss on disposal of assets related to the disposal of equipment purchased in the Sunflower Transaction, partially offset by
synergies achieved from integration of the Transactions and a $1.2 million write-off of capitalized software that was recorded in
fiscal 2011. Pro forma selling, general and administrative expenses decreased as a percentage of pro forma net sales during fiscal
2012 primarily due to improved leverage of fixed selling, general and administrative expenses as a result of pro forma comparable
store sales growth and synergies achieved from integration of the Transactions. These factors were partially offset by the $12.5
million increase in acquisition integration costs and the $2.7 million legal settlement in fiscal 2012.
Amortization of Henry’s trade names and capitalized software
In connection with the Henry’s Transaction and planned re-branding of Henry’s stores, the estimated useful lives of the
Henry’s trade names and certain capitalized software were re-evaluated and amortization was accelerated. Amortization of Henry’s
trade names and capitalized software totaled $32.2 million in fiscal 2011 and the assets were fully amortized by January 1, 2012.
Store pre-opening costs
Store pre-opening costs increased to $2.8 million during fiscal 2012 from $1.3 million during fiscal 2011. We opened nine
stores in fiscal 2012 compared to seven stores in fiscal 2011, resulting in average store pre-opening costs of approximately
$309,000 per store in fiscal 2012 compared to $191,000 per store in fiscal 2011. Average store pre-opening costs increased in
fiscal 2012 primarily because a portion of fiscal 2011 store pre-opening costs were incurred by Sprouts Arizona prior to the Henry’s
Transaction.
On a pro forma basis, store pre-
opening costs increased to $5.2 million, or $474,000 per opening, during fiscal 2012 from $5.0
million, or $385,000 per opening, during fiscal 2011. Pro forma store pre-opening costs for fiscal 2011 and fiscal 2012 reflect the
higher store pre-opening rent incurred by Sunflower prior to the Sunflower Transaction due to early commencement dates for pre-
combination Sunflower leases.
62
Fiscal 2012
Fiscal 2011
Change
% Change
(dollars in thousands)
As reported:
Store pre-opening costs
$
2,782
$
1,338
$
1,444
108
%
Number of openings
9
7
Avg. pre-opening cost per store opened
$
309
$
191
Pro forma:
Store pre-opening costs
$
5,218
$
5,009
$
209
4.2
%
Number of openings, as reported
9
7
Pre-combination openings
2
6
Pro forma openings
11
13
Avg. pre
-
opening cost per store opened
$
474
$
385