N SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) December 20 2013 December 2018 c 5 0554 85.314 15 713 275.979 10.833 387.839 741 508 1,028.438 27 328 333.841 786.429 185.395 368.078 11,727 2.722.983 194 803 368.078 12.463 1.675,614 5 5 261,326 48,579 253,969 48.603 7.428 ASSETS Current assets Cash and cash equivalents Accounts receivable, net Inventories Prepaid expenses and other current assets Total current assets Property and equipment, not of accumulated depreciation Operating lease assets, net Intangible assets, net of accumulated amortization Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities Accrued salaries and benefits Current portion of capital and financing lease obligations Current portion of operating lease liabilities Current portion of finance lease liabilities Total current liabilities Long-term capital and financing lease obligations Long-term operating lease liabilities Long-term debt and finance lease liabilities Other long-term liabilities Deferred income tax liability Total liabilities Commitments and contingencies (Note 19) Stockholders' equity Undesignated preferred stock: $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding Common stock. $0.001 par value: 200,000,000 shares authorized, 117,543,668 shares issued and outstanding, December 29, 2019, 124.975,691 shares issued and outstanding, December 30, 2018 Additional pald-in capital Accumulated other comprehensive income (los) Accumulated deficit Total stockholders' equity Total liabilities and stockholders' equity 105,153 754 416,812 310,000 119.642 1.078.927 549,419 41,517 54.356 2.141,031 453,000 153,377 50 399 1.086,418 117 670,966 (4,682) (84.449) 581,952 2,722 983 124 657.140 1,134 (69.202 589, 196 1.575.614 $ $ The accompanying notes are an integral part of these consolidated financial statements. Accounting Principles II - ACC 112 Financial Statement Analysis Project To successfully operate in the world of business, the ability to comprehend a company's annual report and analyze the financial condition of a company is extremely important. This assignment will help you gain some experience interacting with an annual report, and it will allow you to apply some of what you have learned so far in accounting to a "real world" company. For this assignment, you are to examine the 2019 financial statements of Sprouts Farmers Market, Inc., and use that report to answer the questions that follow. Each answer should be numbered, and each question should be answered in complete sentences. For full credit, show all calculations. 1. (3 points) As of 12/29/2019, How many shares of common stock are: a. Authorized 200,000,000 Shares Authorized 1 b. Issued? 117.543,668 Shares issued, December 29, 2019 c. Outstanding? 117,543,668 Shares outstanding, December 29, 2019 1 Found in the Balance sheet 2. (1 point) What is the par value of the common stock? Common stock 80.001 par value Found in Balance sheet 3. (1 point) Did the company pay a cash dividend in the most recent year? If so, how much? 4. (1 point) If a company does not pay dividends, what might the reason be? 5. (1 point) Why would people invest in a company that did not pay dividends? 6. (2 points) Did the company repurchase treasury stock during the most recent year? If so, how many shares? 7.(2 points) What is the company's current, Basic EPS? Did EPS vary more than 10% from prior year? 8. (9 points) Calculate the following liquidity ratios for the current year and give a one sentence description of each result. (Assume that all sales are on credit.) (For example: Current Ratio $1.020.000 current assets 344.500 current liabilities -2.96: 1 For every dollar in current liabilities, the company owns $2.96 in current assets to pay for them.) a. Current Ratio b. Accounts Receivables Turnover Ratio c. Inventory Turnover 9.(9 points) Calculate the following profitability ratios for the current year and give a one sentence description of each result. a. Profit Margin Ratio b. Rate of return on Total Assets c. Return on Common Stockholders' Equity (ROE) 10. (6 points) Calculate the following solvency ratios for the current year and give a one sentence description of each result. a. Debt to assets ratio b. Debt to Equity ratio - (total liabilities/total equity) b. Times Interest Earned Ratio 11. (2 points) Calculate the free cash flow of the company for the most current year (Hint: use the formula given in the book on page 17-17) FOR QUESTIONS 13 - 15: LOOK AT THE NOTES TO THE FINANCIAL STATEMENTS (beginning on page 6) 13. (1 Point) In what state did Sprouts Farmers Market, Inc. incorporate? 14. (1 Point) For 2019, what percentage of the company's sales were from "Perishables"? 15. (1 Point) What does the company estimate for the useful life of its buildings for depreciation purposes? 16. (10 points) Prepare a horizontal analysis of the Income Statement for the most current year. (See the bottom of page 18-11 for the proper format - illustration 18.10) - Note you MUST USE EXCEL to create the horizontal analysis. An excel file MUST BE TURNED IN with the project to earn points for this question. SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) December 29 2015 $ 5,634.835 3.740 017 1,395,818 1,549,707 120.491 7260 217,360 21.192 Net sales Cost of sales Gross proft Selling general and administrative expenses Depreciation and amortization (exclusive of depreciation included in cost of sales) Store closure and other costs Income from operations Interest expense, net Other income Income before income was Income tax provision Not income Not income per share Bas Diluted Weighted average shares outstanding Basic Diuted Year Ended December 30, 2018 55.207 338 3459.861 1.747475 1.404 443 105.045 12 078 222.911 27.435 320 195 796 37 260 $ 158,536 December 31 2017 $4564 512 3097 502 1557.030 1.245 540 94.194 1.126 220.070 21.177 525 205 818 47 078 5 158 440 196,168 46,539 149,629 $ S 1.25 1.23 125 $ $ $ $ 1.17 1.15 122 119.368 119.742 128.827 129,778 135 169 137 884 The accompanying notes are an integral part of these consolidated financial statements, 59 SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS) December 29, 2019 5 149,829 Year Ended December 30, 2010 $ 158,536 December 31 2017 S 158,440 Not income 1,918 1.918 (5816) 5816 (784 784 Other comprehensive income (loss net of tax Unrealized gain (losses) on cash flow hedging activities, net of income tax of ($2.012) 5663, and ($275) Total other comprehensive income (los) 157 656 143,813 160454 Comprehensive income SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE AMOUNTS) wind Share 200 140.0022425 75.500 1540 - 2 2.144560 Balances at January 1 2017 Net Income Der comprensive income os Issuance of shares understock plan Repurchase and retirement of common stock Share and compensation Balances at December 31 2017 Notice Orcorrente come 03.01 16220 600.019) (10) 7415 COS 130 3055 12 132.450.002 ST 2013 3 2140 3.227.000 (2553071 54512 111.090 5051 (11) 14512 Isange of shares her to Repurchase and run como Share-based compensation Balance of December 30, 2010 Netcome Other com 50.19 1.1345 657.5405 9.2005 159 1945.1805 05.016) 5.816 4575 concerto 1 122.500 (176310 (1703021 harto 18) 7.950.05) B19 11425 11426 Sharebonecompensation po to ASC 52 Balances at December 29 2011 584 952 (4.602) 5 5 117 (34.440) 5 670.96 $ 11751B $ The accompanying notes are an integral part of these consolidated financial statements 61 SPROUTS FARMERS MARKETING AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS IN THOUSANDS) Decem December December 30, 2011 1 1 Cashews from ting activiti Are come to the best Depreciation and anotationerne Opening Showe under Share on Deferred to as cash Change in operating us and the Account 21 2.00 motores Care 114 25 29 12.754 IN 24734 To Me (177.00 Protheum Ano anco Access and tents Operating web Other long- Cashflows from eating actives Cash flows from investing activities Picoperty Proceeds from we of property and at Cash flow desting the Cash flow from financing activities Procesorevolg credit Pamorevolving credits Payments and translations Payments and be Pays of dangos Cash from undiord Plated to a francing lase clition Repurchase of common stock Proces from a stock option 265.405 (100405 2000 OD 753.000 80000) 13 (176.310) 4 TO 2003 58.2011 21.10 300 (1030 7014 5451 2241 75 1154990 172313 1949 224 Chishows en francing active Dechanted cash Cash Cash and chat beginning of the period Cash Cash and the period Supplementations of cash flow information Cashpad for Prest Cash poor con Supplemental disclosure of non-cash investing and financing activities Property and continua parte Pretrought from $ 5 5 20.750 20.254 46637 27.066 15527 15515 5 5 17.500 12.001 0.000 The accompanying notes are an integral part of these consolidated financial statements 62 N SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) December 20 2013 December 2018 c 5 0554 85.314 15 713 275.979 10.833 387.839 741 508 1,028.438 27 328 333.841 786.429 185.395 368.078 11,727 2.722.983 194 803 368.078 12.463 1.675,614 5 5 261,326 48,579 253,969 48.603 7.428 ASSETS Current assets Cash and cash equivalents Accounts receivable, net Inventories Prepaid expenses and other current assets Total current assets Property and equipment, not of accumulated depreciation Operating lease assets, net Intangible assets, net of accumulated amortization Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities Accrued salaries and benefits Current portion of capital and financing lease obligations Current portion of operating lease liabilities Current portion of finance lease liabilities Total current liabilities Long-term capital and financing lease obligations Long-term operating lease liabilities Long-term debt and finance lease liabilities Other long-term liabilities Deferred income tax liability Total liabilities Commitments and contingencies (Note 19) Stockholders' equity Undesignated preferred stock: $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding Common stock. $0.001 par value: 200,000,000 shares authorized, 117,543,668 shares issued and outstanding, December 29, 2019, 124.975,691 shares issued and outstanding, December 30, 2018 Additional pald-in capital Accumulated other comprehensive income (los) Accumulated deficit Total stockholders' equity Total liabilities and stockholders' equity 105,153 754 416,812 310,000 119.642 1.078.927 549,419 41,517 54.356 2.141,031 453,000 153,377 50 399 1.086,418 117 670,966 (4,682) (84.449) 581,952 2,722 983 124 657.140 1,134 (69.202 589, 196 1.575.614 $ $ The accompanying notes are an integral part of these consolidated financial statements. Accounting Principles II - ACC 112 Financial Statement Analysis Project To successfully operate in the world of business, the ability to comprehend a company's annual report and analyze the financial condition of a company is extremely important. This assignment will help you gain some experience interacting with an annual report, and it will allow you to apply some of what you have learned so far in accounting to a "real world" company. For this assignment, you are to examine the 2019 financial statements of Sprouts Farmers Market, Inc., and use that report to answer the questions that follow. Each answer should be numbered, and each question should be answered in complete sentences. For full credit, show all calculations. 1. (3 points) As of 12/29/2019, How many shares of common stock are: a. Authorized 200,000,000 Shares Authorized 1 b. Issued? 117.543,668 Shares issued, December 29, 2019 c. Outstanding? 117,543,668 Shares outstanding, December 29, 2019 1 Found in the Balance sheet 2. (1 point) What is the par value of the common stock? Common stock 80.001 par value Found in Balance sheet 3. (1 point) Did the company pay a cash dividend in the most recent year? If so, how much? 4. (1 point) If a company does not pay dividends, what might the reason be? 5. (1 point) Why would people invest in a company that did not pay dividends? 6. (2 points) Did the company repurchase treasury stock during the most recent year? If so, how many shares? 7.(2 points) What is the company's current, Basic EPS? Did EPS vary more than 10% from prior year? 8. (9 points) Calculate the following liquidity ratios for the current year and give a one sentence description of each result. (Assume that all sales are on credit.) (For example: Current Ratio $1.020.000 current assets 344.500 current liabilities -2.96: 1 For every dollar in current liabilities, the company owns $2.96 in current assets to pay for them.) a. Current Ratio b. Accounts Receivables Turnover Ratio c. Inventory Turnover 9.(9 points) Calculate the following profitability ratios for the current year and give a one sentence description of each result. a. Profit Margin Ratio b. Rate of return on Total Assets c. Return on Common Stockholders' Equity (ROE) 10. (6 points) Calculate the following solvency ratios for the current year and give a one sentence description of each result. a. Debt to assets ratio b. Debt to Equity ratio - (total liabilities/total equity) b. Times Interest Earned Ratio 11. (2 points) Calculate the free cash flow of the company for the most current year (Hint: use the formula given in the book on page 17-17) FOR QUESTIONS 13 - 15: LOOK AT THE NOTES TO THE FINANCIAL STATEMENTS (beginning on page 6) 13. (1 Point) In what state did Sprouts Farmers Market, Inc. incorporate? 14. (1 Point) For 2019, what percentage of the company's sales were from "Perishables"? 15. (1 Point) What does the company estimate for the useful life of its buildings for depreciation purposes? 16. (10 points) Prepare a horizontal analysis of the Income Statement for the most current year. (See the bottom of page 18-11 for the proper format - illustration 18.10) - Note you MUST USE EXCEL to create the horizontal analysis. An excel file MUST BE TURNED IN with the project to earn points for this question. SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) December 29 2015 $ 5,634.835 3.740 017 1,395,818 1,549,707 120.491 7260 217,360 21.192 Net sales Cost of sales Gross proft Selling general and administrative expenses Depreciation and amortization (exclusive of depreciation included in cost of sales) Store closure and other costs Income from operations Interest expense, net Other income Income before income was Income tax provision Not income Not income per share Bas Diluted Weighted average shares outstanding Basic Diuted Year Ended December 30, 2018 55.207 338 3459.861 1.747475 1.404 443 105.045 12 078 222.911 27.435 320 195 796 37 260 $ 158,536 December 31 2017 $4564 512 3097 502 1557.030 1.245 540 94.194 1.126 220.070 21.177 525 205 818 47 078 5 158 440 196,168 46,539 149,629 $ S 1.25 1.23 125 $ $ $ $ 1.17 1.15 122 119.368 119.742 128.827 129,778 135 169 137 884 The accompanying notes are an integral part of these consolidated financial statements, 59 SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS) December 29, 2019 5 149,829 Year Ended December 30, 2010 $ 158,536 December 31 2017 S 158,440 Not income 1,918 1.918 (5816) 5816 (784 784 Other comprehensive income (loss net of tax Unrealized gain (losses) on cash flow hedging activities, net of income tax of ($2.012) 5663, and ($275) Total other comprehensive income (los) 157 656 143,813 160454 Comprehensive income SPROUTS FARMERS MARKET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE AMOUNTS) wind Share 200 140.0022425 75.500 1540 - 2 2.144560 Balances at January 1 2017 Net Income Der comprensive income os Issuance of shares understock plan Repurchase and retirement of common stock Share and compensation Balances at December 31 2017 Notice Orcorrente come 03.01 16220 600.019) (10) 7415 COS 130 3055 12 132.450.002 ST 2013 3 2140 3.227.000 (2553071 54512 111.090 5051 (11) 14512 Isange of shares her to Repurchase and run como Share-based compensation Balance of December 30, 2010 Netcome Other com 50.19 1.1345 657.5405 9.2005 159 1945.1805 05.016) 5.816 4575 concerto 1 122.500 (176310 (1703021 harto 18) 7.950.05) B19 11425 11426 Sharebonecompensation po to ASC 52 Balances at December 29 2011 584 952 (4.602) 5 5 117 (34.440) 5 670.96 $ 11751B $ The accompanying notes are an integral part of these consolidated financial statements 61 SPROUTS FARMERS MARKETING AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS IN THOUSANDS) Decem December December 30, 2011 1 1 Cashews from ting activiti Are come to the best Depreciation and anotationerne Opening Showe under Share on Deferred to as cash Change in operating us and the Account 21 2.00 motores Care 114 25 29 12.754 IN 24734 To Me (177.00 Protheum Ano anco Access and tents Operating web Other long- Cashflows from eating actives Cash flows from investing activities Picoperty Proceeds from we of property and at Cash flow desting the Cash flow from financing activities Procesorevolg credit Pamorevolving credits Payments and translations Payments and be Pays of dangos Cash from undiord Plated to a francing lase clition Repurchase of common stock Proces from a stock option 265.405 (100405 2000 OD 753.000 80000) 13 (176.310) 4 TO 2003 58.2011 21.10 300 (1030 7014 5451 2241 75 1154990 172313 1949 224 Chishows en francing active Dechanted cash Cash Cash and chat beginning of the period Cash Cash and the period Supplementations of cash flow information Cashpad for Prest Cash poor con Supplemental disclosure of non-cash investing and financing activities Property and continua parte Pretrought from $ 5 5 20.750 20.254 46637 27.066 15527 15515 5 5 17.500 12.001 0.000 The accompanying notes are an integral part of these consolidated financial statements 62