Sprouts Farmers Market 2013 Annual Report Download - page 55

Table of Contents
Corporate Conversion
In connection with our IPO, on July 29, 2013, Sprouts Farmers Markets, LLC, a Delaware limited liability company, converted
into Sprouts Farmers Market, Inc., a Delaware corporation. As part of the corporate conversion, holders of membership interests of
Sprouts Farmers Markets, LLC in the form of Class A and Class B units received 11 shares of our common stock for each unit held
immediately prior to the corporate conversion, and options to purchase units became options to purchase 11 shares of our common
stock for each unit underlying options outstanding immediately prior to the corporate conversion, at the same aggregate exercise
price in effect prior to the corporate conversion. For the convenience of the reader, except where the context otherwise requires,
information in this Annual Report on Form 10-K has been presented giving effect to the corporate conversion. The corporate
conversion has not had a material impact on the comparability of our results of operations, since we were treated as a corporation
for income tax purposes prior to the conversion.
IPO
On August 6, 2013, we completed our initial public offering of 21,275,000 shares of common stock of Sprouts Farmers Market,
Inc., including 2,775,000 shares of common stock issued as a result of the exercise in full of the underwriters’ option to purchase
additional shares, at a price of $18.00 per share. We sold 20,477,215 shares of common stock, including the additional shares, and
certain stockholders sold the remaining 797,785 shares.
We received net proceeds from our IPO of approximately $344.1 million, after deducting underwriting discounts and offering
expenses. We used the net proceeds to repay $340.0 million of outstanding indebtedness under the Term Loan and for general
corporate purposes. We recorded a loss on extinguishment of debt related to the repayment.
Results of Operations for Fiscal 2013, 2012 and 2011
The following tables set forth our results of operations, unaudited supplemental pro forma information and other operating data
for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of financial results to be
achieved in future periods.
50
Fiscal 2013
Fiscal 2012
Fiscal 2011
(in thousands)
Consolidated Statement of Operations Data:
Net sales
$
2,437,911
$
1,794,823
$
1,105,879
Cost of sales, buying and occupancy
1,712,644
1,264,514
794,905
Gross profit
725,267
530,309
310,974
Direct store expenses
496,183
368,323
238,245
Selling, general and administrative expenses
81,795
86,364
58,528
Amortization of Henry’s trade names and capitalized
software
—
—
32,202
Store pre-opening costs
5,734
2,782
1,338
Store closure and exit costs
2,051
2,155
6,382
Income (loss) from operations
139,504
70,685
(25,721
)
Interest expense
(37,203
)
(35,488
)
(19,813
)
Other income
487
562
358
Loss on extinguishment of debt
(18,721
)
(992
)
—
Income (loss) before income taxes
84,067
34,767
(45,176
)
Income tax (provision) benefit
(32,741
)
(15,267
)
17,731
Net income (loss)
$
51,326
$
19,500
$
(27,445
)