Sprouts Farmers Market 2015 Annual Report Download - page 48

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Provision for income taxes
On July 29, 2013, Sprouts Farmers Markets, LLC, a Delaware limited liability company, converted
into Sprouts Farmers Market, Inc., a Delaware corporation. See “—Factors Affecting Comparability of
Result of Operations—Corporate Conversion.” The corporate conversion has not had a material impact
on our results of operations, financial position or cash flows since we were treated as a corporation for
income tax purposes prior to the conversion.
Factors Affecting Comparability of Results of Operations
Additional Week in 2015
Fiscal 2015 consists of 53 weeks. The 53rd week resulted in additional sales and expenses as
further discussed in “—Comparison of Fiscal 2015 to Fiscal 2014” below.
Adoption of Deferred Tax Asset Guidance
In Fiscal 2015, we adopted the guidance under Financial Accounting Standards Board (“FASB”)
Accounting Standards Update (“ASU”) No. 2015-17, “Income Taxes (Topic 740): Balance Sheet
Classification of Deferred Taxes”. ASU No. 2015-17 requires that deferred tax liabilities and assets be
classified as noncurrent in our consolidated balance sheet. We elected to early adopt the guidance
prospectively, and as such, did not restate prior periods to conform to the current presentation.
April 2015 Refinancing
In April 2015, we completed a transaction in which we refinanced our debt (referred to as the “April
2015 Refinancing”), as further discussed in “—Liquidity and Capital Resources” below. The April 2015
Refinancing resulted in an decrease in borrowings, a reduction in interest rate and the recording of a loss
on extinguishment of debt.
April 2013 Refinancing
In April 2013, we completed a transaction in which we refinanced our debt (the “April 2013
Refinancing”) and made a distribution to our equity and option holders, as further discussed in “—Liquidity
and Capital Resources” below. The April 2013 Refinancing resulted in an increase in borrowings, a
reduction in interest rate and the recording of a loss on extinguishment of debt.
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.