Sprouts Farmers Market 2013 Annual Report Download - page 69

Table of Contents
Net income (loss)
We reported net income of $19.5 million during fiscal 2012 compared to a net loss of $27.4 million in fiscal 2011. This
improvement in net income was primarily due to (i) a $219.3 million increase in gross profit attributable to the increased sales
volumes following the Transactions, new store openings and comparable store sales growth, as well as produce cost deflation in
the first half of fiscal 2012, as described above, (ii) $32.2 million of accelerated amortization of Henry’
s trade names and capitalized
software recorded in fiscal 2011, which did not recur in fiscal 2012, and (iii) synergies achieved in the Transactions. These factors
were partially offset by (i) a $130.1 million increase in direct store expenses, primarily as a result of the increase in our store base,
(ii) a $27.8 million increase in selling, general and administrative expenses, primarily due to acquisition and integration costs, (iii) a
$15.7 million increase in interest expense and (iv) a $33.0 million increase in income tax (provision) benefit.
On a pro forma basis, net income increased to $24.5 million during fiscal 2012 compared to a net loss of $30.9 million in fiscal
2011. This improvement in net income was primarily due to (i) a $99.3 million increase in pro forma gross profit attributable to the
increased sales volumes resulting from new store openings and pro forma comparable store sales growth, as well as produce cost
deflation in the first half of fiscal 2012, as described above and (ii) $32.2 million of accelerated amortization of Henry’s trade names
and capitalized software recorded in fiscal 2011, which did not recur in fiscal 2012. These factors were partially offset by (i) a $43.3
million increase in pro forma direct store expenses due to new store openings, (ii) a $28.1 million increase in pro forma income tax
(provision) benefit, and (iii) an $8.5 million increase in pro forma selling, general and administrative expenses, primarily due to
acquisition integration costs, as described above.
Unaudited Supplemental Fiscal 2011 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 2012 and fiscal 2011, we have included unaudited supplemental pro forma condensed consolidated
statement of operations information for fiscal 2011. The unaudited supplemental pro forma condensed consolidated statement of
operations for fiscal 2011 includes our historical results of operations and the results of operations of Sprouts Arizona and
Sunflower, after giving pro forma effect to the Transactions and the related financing obtained for the Transactions as if they had
been consummated on the first day of fiscal 2011.
The historical financial information has been adjusted to give pro forma effect to events that are directly attributable to the
Transactions, have an ongoing effect on our results of operations and are factually supportable. The supplemental pro forma
information and explanatory notes for fiscal 2011 present how our financial statements may have appeared had the businesses
actually been combined as of the date noted above. The supplemental pro forma information for fiscal 2011 shows the impact on
the combined statement of operations of the acquisition method of accounting under Financial
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Fiscal 2012
Fiscal 2011
Change
% Change
(dollars in thousands)
As reported:
Net income (loss)
$
19,500
$
(27,445
)
$
46,945
171
%
Percentage of sales
1.1
%
(2.5
)%
3.6
%
Pro forma:
Net income (loss)
$
24,526
$
(30,875
)
$
55,401
179
%
Percentage of sales
1.2
%
(1.8
)%
3.0
%