Sprouts Farmers Market 2015 Annual Report Download - page 92

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84
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
As Of
January 3,
2016
December 28,
2014
December 29,
2013
Beginning balance............................................... $626 $410 $150
A
dditions based on tax positions related to the
current year ...................................................... 114 216 260
Reductions for tax positions for prior years......... (3) — —
Net deferred tax asset......................................... $737 $626 $410
At January 3, 2016 and December 28, 2014, the Company had unrecognized tax benefits of $0.7
million and $0.6 million (tax effected) that would impact the effective tax rate if recognized.
The Company’s policy is to recognize accrued interest and penalties as a component of income tax
expense.
The Company anticipates an increase in the total amount of unrecognized tax benefits during the
next twelve months related to depreciation for transaction cost allocation in the amount of $0.1 million.
The Company files income tax returns with federal and state tax authorities within the United States.
The statute of limitations for income tax examinations remains open for federal tax returns for tax years
2012 through 2014 and state tax returns for the tax years 2011 through 2014. The statute of limitations
remains open for Sunflower’s pre-merger federal tax returns for 2012 and state tax returns for 2008
through 2012.
The Company early adopted the guidance under ASU No. 2015-17 during 2015. The guidance
requires that deferred tax assets and deferred tax liabilities be classified as noncurrent on the
consolidated balance sheets. The Company elected the prospective method of adoption, and therefore
did not reclassify deferred tax balances for prior years.
18. Related-Party Transactions
A member of the Company’s board of directors is an investor in a company that is a supplier of
coffee to the Company. During 2015, 2014 and 2013, purchases from this company were $9.7 million,
$8.3 million and $7.9 million, respectively. As of January 3, 2016, December 28, 2014 and December 29,
2013 the Company had no receivable recorded from this vendor. As of January 3, 2016, December 28,
2014 and December 29, 2013, the Company had recorded accounts payable due to this vendor of $0.7
million, $0.5 million and $0.7 million, respectively.
On November 3, 2015, the Company entered into an agreement to purchase an airplane from this
board member for $7.5 million. The transaction closed on December 17, 2015.
During 2013, in connection with our Former Credit Facility, we paid an arrangement fee of $0.8
million to an affiliate of Apollo Global Management, LLC (together with its subsidiaries and the investment
funds affiliated with, and co-investment vehicles managed by, Apollo Management VI, L.P. (“Apollo”), our
former principal stockholder. Apollo Global Securities, LLC, another affiliate of Apollo, was an underwriter
of our IPO and secondary offerings that closed on August 18, 2014, April 2, 2014, and December 2, 2013,
and received fees of approximately $0.9 million, $1.3 million, $0.8 million and $1.0 million, respectively.
Another member of the Company’s board of directors purchased stock in a technology supplier to
the Company in January 2015. During 2015, 2014 and 2013, purchases from this company were $5.9
million, $5.2 million and $3.6 million, respectively. As of January 3, 2016, December 28, 2014 and
December 29, 2013, the Company had no receivable recorded from this vendor. As of January 3, 2016,