Sprouts Farmers Market 2014 Annual Report Download - page 63

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breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and
material monetary judgments. During the continuation of a payment default, we will be required to pay
interest at a default rate unless waived.
Debt Repayment in Connection with IPO. On August 6, 2013, we used $340.0 million of the net
proceeds from our IPO to make a partial repayment of the Term Loan. Such repayment resulted in $9.0
million of loss on extinguishment of debt due to the write-off of deferred financing costs and original issue
discount for the portion of the debt repaid. This loss on extinguishment of debt is reflected in our statement
of operations for 2013. As a result of our IPO and the concurrent repayment of a portion of the Term Loan,
under the terms of the Credit Facility, the interest rate margins were reduced by 50 basis points to 3.00% in
the case of LIBOR borrowings and 2.00% in the case of alternate base rate borrowings, effective August 2,
2013.
Voluntary Principal Payments On August 14, 2014, we made an additional principal payment of $50.0
million on the Term Loan. Such repayment resulted in $1.1 million of loss on extinguishment of debt due to
the write-off of deferred financing costs and original issue discount for the portion of the debt repaid. This
loss on extinguishment of debt is reflected in our statement of operations for 2014. On December 27, 2013,
we made an additional principal payment of $40.0 million on the Term Loan. Such repayment resulted in
$1.0 million of loss on extinguishment of debt due to the write-off of deferred financing costs and original
issue discount for the portion of the debt repaid. This loss on extinguishment of debt is reflected in our
statement of operations for 2013.
Contractual Obligations
The following table summarizes our contractual obligations as of December 28, 2014, and the effect
such obligations are expected to have on our liquidity and cash flow in future periods:
Payments Due by Period
Total
Less Than
1 Year 1-3 Years 4-5 Years
More Than
5 Years
(in thousands)
Term Loan, including current portion(1) ........................ $ 261,250 $ 8,750 $ 14,000 $ 12,250 $226,250
Interest payments on long-term debt(2) ........................ 51,624 10,588 19,926 18,790 2,320
Capital and financing lease obligations(3) ...................... 152,360 15,151 30,736 30,419 76,054
Operating lease obligations(3) ............................... 1,149,344 87,137 204,511 201,916 655,780
Purchase commitments(4) .................................. 377,110 109,282 266,931 897 —
Totals(5) ............................................. $1,991,688 $230,908 $536,104 $264,272 $960,404
(1) Term Loan will mature in April 2020 and will amortize at a rate of 1.0% per annum of the original amount of the Term
Loan, in four equal installments, with the balance due on the maturity date. We made a partial repayment of the Term
Loan in August 2013 using $340.0 million in proceeds from shares sold in our IPO. We also made additional principal
payments of $40.0 million and $50.0 million in December 2013 and August 2014, respectively. These payments are
reflected as a reduction to the Term Loan, including current portion, in the “More Than 5 Years” column. See Note 13
“Long-Term Debt” to our audited consolidated financial statements contained elsewhere in this Annual Report on
Form 10-K.
(2) Represents estimated interest payments on our Term Loan based on principal amounts outstanding as of December 28,
2014, repayment terms and contractual interest rates expected to apply through maturity. We estimated LIBOR based on
LIBOR in effect at December 28, 2014 to derive the contractual interest rate expected to apply to our Term Loan.
(3) Represents estimated payments for capital and financing and operating lease obligations as of December 28, 2014.
Capital and financing lease obligations and operating lease obligations are presented gross without offset for subtenant
rentals. We have subtenant agreements under which we will receive $1.4 million for the period of less than one year,
$2.7 million for years one to three, $1.7 million for years four to five, and $1.9 million for the period beyond five years.
Amounts do not include $25.0 million of financing lease obligations related to an administrative facility and classified as
current at December 28, 2014. This financing lease obligation and the related asset are expected to be removed from the
balance sheet in the first quarter of fiscal 2015 as there will be no continuing involvement provisions at the end of the
construction period.
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