Sprouts Farmers Market 2014 Annual Report Download - page 71

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historical claims experience, demographic factors, security factors and other actuarial assumptions. We
believe our assumptions are reasonable, but the estimated reserves for these liabilities could be affected
materially by future events or claims experiences that differ from historical trends and assumptions.
Closed Store Reserve
We recognize a reserve for future operating lease payments associated with facilities that are no
longer being utilized in our current operations. The reserve is recorded based on the present value of the
remaining noncancelable lease payments after the cease use date less an estimate of subtenant income. If
subtenant income is expected to be higher than the lease payments, no accrual is recorded. Lease
payments included in the closed store reserve are expected to be paid over the remaining terms of the
respective leases. Our assumptions about subtenant income are based on our experience and knowledge
of the area in which the closed property is located, guidance received from local brokers and agents and
existing economic conditions. Adjustments to the closed store reserve relate primarily to changes in actual
or estimated subtenant income and changes in actual lease payments from original estimates. Adjustments
are made for changes in estimate in the period in which the change becomes known, considering timing of
new information regarding market, subleases or other lease updates. Adjustments in the closed store
reserves are recorded in store closure and exit costs in the consolidated statements of operations.
Recently Issued Accounting Pronouncements
See Note 3 to our accompanying audited consolidated financial statements contained elsewhere in
this Annual Report on Form 10-K.
We have determined that all other recently issued accounting standards will not have a material
impact on our financial statements, or do not apply to our operations.
68