Sprouts Farmers Market 2014 Annual Report Download - page 104

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Capital and Financing Lease Commitments
The Company is committed under certain capital and financing leases for rental of buildings and
equipment. These leases expire or become subject to renewal clauses at various dates from 2015 to 2032.
As of December 28, 2014, future minimum lease payments required by all capital and financing leases
during the initial lease term are as follows:
Fiscal Year
Capital
Leases
Financing
Leases
2015 .......................................... $ 1,452 $ 13,700
2016 .......................................... 1,451 13,882
2017 .......................................... 1,451 13,952
2018 .......................................... 1,451 14,084
2019 .......................................... 1,294 13,591
Thereafter ..................................... 10,097 65,956
Total ...................................... 17,196 135,165
Plus balloon payment (financing leases) ............. — 67,998
Less amount representing interest ................. (6,000) (88,688)
Net present value of capital and financing lease
obligations ............................... 11,196 114,475
Less current portion ............................. (662) (3,447)
Total long-term ................................. $10,534 $111,028
(1) At December 28, 2014 the Company has also recorded a current financing lease obligation and
related construction in progress totaling $25.0 million for one of its administrative facilities as it was
deemed the owner during the construction period under lease accounting guidance. However, the
Company expects that there will be no continuing involvement provisions in effect at the end of the
construction period and therefore will be able to remove the asset and corresponding financing lease
obligation at the end of the construction period in the first quarter of fiscal 2015 and therefore has not
included the lease obligation in the future lease payment schedule above.
The final payment under the financing lease obligations is a noncash payment which represents the
conveyance of the property to the buyer-lessor at the end of the lease term, described as balloon payment
in the table above.
In connection with the acquisition of Sunflower, the Company recorded a purchase price allocation of
$22.6 million for financing lease obligations. The Company has recorded these liabilities at their estimated
fair values at date of acquisition.
Other Commitments and Contingencies
The Company is exposed to claims and litigation matters arising in the ordinary course of business
and uses various methods to resolve these matters that are believed to best serve the interests of the
Company’s stakeholders. The Company’s primary contingencies are associated with insurance and self-
insurance obligations. Estimation of insurance and self-insurance liabilities require significant judgments,
and actual claim settlements and associated expenses may differ from the Company’s current provisions
for loss. See Note 15, “Self-Insurance Programs” for more information.
During 2012, the Company settled a trademark dispute for $2.7 million.
In addition to our lease obligations, the Company maintains certain purchase commitments with
various vendors to ensure its operational needs are fulfilled. As of December 28, 2014, such future
purchase commitments consisted of $377.1 million.
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