Sprouts Farmers Market 2013 Annual Report Download - page 38

Table of Contents
We may require additional capital to fund the expansion of our business, and our inability to obtain such capital could
harm our business.
To support our expanding business, we must have sufficient capital to continue to make significant investments in our new
and existing stores and advertising. We cannot assure you that cash generated by our operations will be sufficient to allow us to
fund such expansion. If cash flows from operations are not sufficient, we may need additional equity or debt financing to provide the
funds required to expand our business. If such financing is not available on satisfactory terms or at all, we may be unable to expand
our business or to develop new business at the rate desired and our operating results may suffer. Debt financing increases
expenses, may contain covenants that restrict the operation of our business, and must be repaid regardless of operating results.
Equity financing, or debt financing that is convertible into equity, could result in additional dilution to our existing stockholders.
Our inability to obtain adequate capital resources, whether in the form of equity or debt, to fund our business and growth
strategies may require us to delay, scale back or eliminate some or all of our operations or the expansion of our business, which
may have a material adverse effect on our business, operating results, financial condition or prospects.
We may be unable to generate sufficient cash flow to satisfy our debt service obligations, which could adversely impact
our business.
As of December 29, 2013, we had outstanding indebtedness of $318.3 million. We may incur additional indebtedness in the
future, including borrowings under our credit agreement (referred to as the “Credit Facility”). Our indebtedness, or any additional
indebtedness we may incur, could require us to divert funds identified for other purposes for debt service and impair our liquidity
position. If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose
of assets or issue equity to obtain necessary funds. We do not know whether we will be able to take any of such actions on a timely
basis, on terms satisfactory to us or at all.
The fact that a substantial portion of our cash flow from operations could be needed to make payments on this indebtedness
could have important consequences, including the following:
Our ability to obtain necessary funds through borrowing will depend on our ability to generate cash flow from operations. Our
ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are
beyond our control. If our business does not generate sufficient cash flow from operations or if future borrowings are not available
to us under our Credit Facility or otherwise in amounts sufficient to enable us to fund our liquidity needs, our operating results and
financial condition may be adversely affected. Our inability to make scheduled
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reducing our ability to execute our growth strategy, including new store development;
• impacting our ability to continue to execute our operational strategies in existing stores;
• increasing our vulnerability to general adverse economic and industry conditions;
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reducing the availability of our cash flow for other purposes;
• limiting our flexibility in planning for, or reacting to, changes in our business and the market in which we operate, which
would place us at a competitive disadvantage compared to our competitors that may have less debt;
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limiting our ability to borrow additional funds; and
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failing to comply with the covenants in our debt agreements could result in all of our indebtedness becoming immediately
due and payable.