Sprouts Farmers Market 2014 Annual Report Download - page 89

Target Could be Achieved after the Requisite Service Period.” The standard requires that a performance
target that affects vesting, and that could be achieved after the requisite service period, be treated as a
performance condition. As such, the performance target should not be reflected in estimating the grant date
fair value of the award. This update further clarifies that compensation cost should be recognized in the
period in which it becomes probable that the performance target will be achieved and should represent the
compensation cost attributable to the period(s) for which the requisite service has already been rendered.
This guidance will be effective for the Company for its fiscal year 2017. The Company does not expect the
adoption of this guidance will have a material impact on its consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15, “Disclosure of Uncertainties about an Entity’s
Ability to Continue as a Going Concern.” ASU No. 2014-15 requires management to evaluate whether
there is substantial doubt about an entity’s ability to continue as a going concern and to provide related
footnote disclosures in certain circumstances. This guidance will be effective for the Company for its fiscal
year 2016, with early adoption permitted. The Company does not expect the adoption of this guidance to
have a material effect on its consolidated financial statements.
4. Business Combinations
As discussed in Note 1, “Organization and Description of Business” the Company completed the
Sunflower Transaction in May 2012. This transaction was accounted for as a business combination. The
primary reason for this transaction was to build a larger portfolio of stores under the Sprouts Farmers
Market banner and to derive synergies from the combined operations of the companies.
In a business combination, the purchase price is allocated to assets acquired and liabilities assumed
based on their fair values, with any excess of purchase price over fair value recognized as goodwill. In
addition to reviews of acquired company balance sheets, the Company reviews supply contracts, leases,
financial instruments, employment agreements and other significant agreements to identify potential assets
or liabilities that require recognition in connection with the application of acquisition accounting under ASC
805. Intangible assets are recognized apart from goodwill when the asset arises from contractual or other
legal rights, or is separable from the acquired entity such that it may be sold, transferred, licensed, rented
or exchanged either on a standalone basis or in combination with a related contract, asset or liability.
Sunflower Transaction
As described in Note 1, “Organization and Description of Business,” effective May 29, 2012 the
Company acquired all of the outstanding common and preferred stock of Sunflower in a transaction
financed through issuance of debt by Intermediate Holdings (see Note 13, “Long-Term Debt), and the
issuance of 14,898,136 shares. Consideration transferred was determined as follows:
Fair Value of
Consideration
Transferred
Cash paid to Sunflower .......................... $108,517
Fair value of Company’s shares issued ............. 89,605
Cash paid to extinguish Sunflower’s debt, net of cash
acquired .................................... 21,358
Total purchase price ............................ $219,480
The fair value of our shares issued in connection with the Sunflower Transaction was determined to be
$6.01 per share, the fair value as determined as of the acquisition measurement date, which is the date the
Sunflower Transaction closed.
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