Sprouts Farmers Market 2013 Annual Report Download - page 96

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Table of Contents
Sunflower Transaction
In May 2012, the Company acquired Sunflower Farmers Markets, Inc., a Delaware corporation (the “Sunflower Transaction”)
that operated 37 Sunflower Farmers Market stores (referred to as “Sunflower”), which increased the Company’s total store count to
143 and extended the Company’s footprint into New Mexico, Nevada, Oklahoma and Utah. The Company’s consolidated financial
statements include the financial position, results of operations and cash flows of Sunflower commencing on May 29, 2012.
See Note 4, “Business Combinations,” for additional information about the Henry’s and Sunflower Transactions.
Corporate Conversion
On July 29, 2013, Sprouts Farmers Markets, LLC, a Delaware limited liability company, converted into Sprouts Farmers
Market, Inc., a Delaware corporation (the “Corporate Conversion”). As a result of the corporate conversion, the members holding
interests in Class A and Class B units of Sprouts Farmers Markets, LLC became holders of common stock of Sprouts Farmers
Market, Inc., and options to purchase Class B units of Sprouts Farmers Markets, LLC were converted to options to purchase shares
of common stock of Sprouts Farmers Market, Inc. The conversion of units and options to purchase units was on an 11 for 1 basis.
The Company refers to this transaction as the “Corporate Conversion.” All equity related disclosures, including share, per share,
and option disclosures, have been revised to reflect the effects of the Corporate Conversion, including the 11 for 1 exchange.
The purpose of the Corporate Conversion was to reorganize the corporate structure so that the top-tier entity in the corporate
structure, the entity that offered common stock to the public in the Company’s initial public offering (“IPO”), is a corporation rather
than a limited liability company and so that the existing investors would own the Company’s common stock rather than equity
interests in a limited liability company.
Initial Public Offering
On August 6, 2013, the Company completed its IPO of 21,275,000 shares of common stock at a price of $18.00 per share.
The Company sold 20,477,215 shares of common stock, and certain stockholders sold the remaining 797,785 shares. The
Company received net proceeds from the IPO of $344.1 million, after deducting underwriting discounts and offering expenses.
2. Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries in accordance
with accounting principles generally accepted in the United States of America (
“GAAP”). All material intercompany accounts and
transactions have been eliminated in consolidation.
The consolidated financial statements through April 17, 2011 include assets, liabilities, revenues and expenses directly
attributable to the Henry’s operations and allocations of certain corporate expenses from S&F. These expenses were allocated to
Henry’s on a 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 do not reflect the debt or interest expense Henry’s might have incurred if it had
been a stand-alone entity. As a result, the historical financial statements do not necessarily reflect what the financial position or
results of operations would have been if Henry’s had been operated as a stand-alone entity during the periods presented, and may
not be indicative of the Company’s future results of operations and financial position.
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