18.00
21275000
149856857
160000000
60000000
700000000
700000
65628000
149743668
149743668
200000000
0
2000000
0.001
10000000
0.001
0
9000000
7635000
4134000
0
226899000
119130000
7058000
149000
159267000
98381000
5837000
611650000
70754000
33552000
302495000
1330928000
513120000
690000
719278000
23146000
5097000
700000
308332000
7763000
184273000
5300000
368078000
399328000
11283000
2523000
14349000
4800000
1330928000
8038000
134655000
194821000
13580000
340772000
1200000
5300000
0.0350
0.0250
100000
3700000
1
1
300000
7153000
1095000
200000
2835000
5000000
98381000
149743668
149000
513120000
7400000
60000000
52600000
308332000
0.0100
10089072
12100000
5243000
386755000
67211000
-8851000
125956721
126000
395480000
147616560
147616560
200000000
0
2700000
0.001
10000000
0.001
0
10900000
6634000
4713000
0
175621000
116177000
8393000
147000
111159000
34497000
5822000
513771000
61417000
32958000
305418000
1172404000
479127000
356000
658633000
22287000
3395000
311240000
6904000
77652000
368078000
348830000
9524000
8049000
15267000
1172404000
18146000
118256000
195467000
13135000
231627000
1200000
5800000
0
300000
5183000
2218000
1089000
1034000
34497000
147616560
147000
479127000
311240000
20477215
344100000
797785
368600000
24500000
340000000
1200000
19550000
2174
28.50
37047
8.07
28.50
282000000
13900000
108980
39.01
320041
10.66
39.01
1600000
17250000
0.24
0.396
3475000
96549000
129438000
0.24
125963000
405100000
970000
360947000
1196061000
1066000
-922000
-163000
10761000
50637000
-8000
80124000
35000000
243000
113000
1192000
244000
24353000
-881000
1370000
51676000
30585000
792000
-8175000
19000
15216000
2665000
14070000
37452000
4402000
6503000
21556000
172000
-1583000
20052000
4017000
71000
22639000
-46630000
2000
1479000
-4939000
-51502000
75000
4000000
1599000
1200000
688127000
28383000
237646000
2665000
1708000
835114000
-2404000
4400000
295921000
1398000
11069000
7976000
900000
2800000
317000
2290000
58000
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>10. Commitments and Contingencies</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The Company is exposed to claims and litigation matters arising in
the ordinary course of business and uses various methods to resolve
these matters that are believed to best serve the interests of the
Company’s stakeholders. The Company’s primary
contingencies are associated with self-insurance obligations.
Self-insurance liabilities require significant judgment and actual
claim settlements and associated expenses may differ from the
Company’s current provisions for loss.</p>
</div>
0.42
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>12. Net Income Per Share</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The computation of net income per share is based on the number of
weighted average shares outstanding during the period. The
computation of diluted net income per share includes the dilutive
effect of share equivalents consisting of incremental shares deemed
outstanding from the assumed exercise of options and assumed
vesting of restricted stock units (“RSUs”).</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
A reconciliation of the numerators and denominators of the basic
and diluted net income per share calculations is as follows
(in thousands, except per share amounts):</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="92%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="64%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center" style="border-bottom:1.00pt solid #000000"><b>Thirteen Weeks
Ended</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center" style="border-bottom:1.00pt solid #000000"><b>Twenty-Six Weeks
Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 30,<br />
2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 30,<br />
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Basic net income per share:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Net income</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,151</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,468</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,884</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,585</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Weighted average shares outstanding</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">149,681</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">125,958</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">148,720</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">125,963</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:5.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Basic net income per share</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.20</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.10</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.43</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.24</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Diluted net income per share:</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Net income</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,151</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,468</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,884</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,585</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Weighted average shares outstanding</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">149,681</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">125,958</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">148,720</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">125,963</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Dilutive effect of equity-based awards:</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Assumed exercise of options to purchase shares</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,358</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,758</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,950</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,475</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:5.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Weighted average shares and equivalent shares outstanding</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">154,039</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">129,716</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">153,670</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">129,438</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:5.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Diluted net income per share</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.20</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.10</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.42</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.24</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
For the thirteen weeks ended June 29, 2014 the computation of
diluted net income per share does not include 1.0 million
options as those options would have been antidilutive or were
unvested performance-based options and does not include
0.1 million RSUs as those RSUs would have been antidilutive.
For the thirteen weeks ended June 30, 2013, the computation of
diluted net income per share does not include 2.8 million
options, as those options would have been antidilutive or were
unvested performance-based options.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
For the twenty-six weeks ended June 29, 2014 the computation
of diluted net income per share does not include 1.0 million
options as those options would have been antidilutive or were
unvested performance-based options and does not include
0.1 million RSUs as those RSUs would have been antidilutive.
For the twenty-six weeks ended June 30, 2013, the computation
of diluted net income per share does not include 2.8 million
options, as those options would have been antidilutive or were
unvested performance-based options.</p>
</div>
10-Q
SPROUTS FARMERS MARKET, INC.
SFM
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Excess tax benefits
associated with stock option exercises are credited to
stockholders’ equity. The Company uses the tax law ordering
approach of intraperiod allocation to allocate the benefit of
windfall tax benefits based on provisions in the tax law that
identify the sequence in which those amounts are utilized for tax
purposes. The income tax benefits resulting from stock awards that
were credited to stockholders’ equity were $26.2 million for
the twenty-six weeks ended June 29, 2014, which included $0.9
million of income tax benefits related to stock award activity in
2013. The income tax benefits resulting from antidilution payments
that were credited to stockholders’ equity were $4.4 million
for the twenty-six weeks ended June 30, 2013. The excess tax
benefits are not credited to stockholders’ equity until the
deduction reduces income taxes payable.</font></p>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b>2. Recently Issued Accounting Pronouncements</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
In February 2013, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) No. 2013-04, “Obligations Resulting
from Joint and Several Liability Arrangements for Which the Total
Amount of the Obligation Is Fixed at the Reporting Date (a
consensus of the FASB Emerging Issues Task Force),” which
amends Accounting Standards Codification (“ASC”) 405,
“Liabilities.” The amendments provide guidance on the
recognition, measurement, and disclosure of obligations resulting
from joint and several liability arrangements, including debt
arrangements, other contractual obligations, and settled litigation
and judicial rulings, for which the total amount of the obligation
is fixed at the reporting date. The amendments are effective for
fiscal years, and interim periods within those years, beginning
after December 15, 2013 and should be applied retrospectively.
The provisions were effective for the Company’s first quarter
of 2014. The adoption of this guidance did not have a material
effect on the Company’s consolidated financial
statements.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
In July 2013, the FASB issued ASU No. 2013-11,
“Presentation of an Unrecognized Tax Benefit When a Net
Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit
Carryforward Exists,” which amends ASC 740, “Income
Taxes.” ASU No. 2013-11 requires that unrecognized tax
benefits be classified as an offset to deferred tax assets to the
extent of any net operating loss carryforwards, similar tax loss
carryforwards, or tax credit carryforwards are available at the
reporting date in the applicable tax jurisdiction to settle any
additional income taxes that would result from the disallowance of
a tax position. An exception would apply if the tax law of the tax
jurisdiction does not require the Company to use, and it does not
intend to use, the deferred tax asset for such purpose. This
guidance is effective for reporting periods beginning after
December 15, 2013. The provisions were effective for the
Company’s first quarter of 2014. The adoption of this
guidance did not have a material effect on the Company’s
consolidated financial statements.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
In April 2014, the FASB issued ASU No. 2014-08,
“Presentation of Financial Statements (Topic 205) and
Property, Plant and Equipment (Topic 360): Reporting Discontinued
Operations and Disclosures of Disposals of Components of an
Entity.” ASU No. 2014-08 amends previous guidance
related to the criteria for reporting a disposal as a discontinued
operation by elevating the threshold for qualification for
discontinued operations treatment to a disposal that represents a
strategic shift that has a major effect on an organization’s
operations or financials results. This guidance also requires
expanded disclosures for transactions that qualify as a
discontinued operation and requires disclosure of individually
significant components that are disposed of or held for sale but do
not qualify for discontinued operations reporting. This guidance is
effective prospectively for all disposals or components initially
classified as held for sale in periods beginning on or after
December 15, 2014, with early adoption permitted. The Company
does not expect the adoption of this guidance to have a material
effect on its consolidated financial statements.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
In May 2014, the FASB issued ASU No. 2014-09, “Revenue
from Contracts with Customers.” ASU No. 2014-09 provides
guidance for revenue recognition. The standard’s core
principle is that a company will recognize revenue when it
transfers promised goods or services to customers in an amount that
reflects the consideration to which the company expects to be
entitled in exchange for those goods or services. In doing so,
companies will need to use more judgment and make more estimates
than under current guidance. These may include identifying
performance obligations in the contract, and estimating the amount
of variable consideration to include in the transaction price
attributable to each separate performance obligation. This guidance
will be effective for the Company for its fiscal year ended
December 31, 2017. The Company does not expect the adoption of
this guidance to have a material effect on its consolidated
financial statements.</p>
</div>
The Services Agreement provides for successive one-year terms unless either party provides six months' termination notice.
<div>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The following is a summary of closed store reserve activity during
the twenty-six weeks ended June 29, 2014 and fiscal year ended
December 29, 2013:</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="76%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>December 29,<br />
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Beginning balance</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,713</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,243</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Additions</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">688</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">363</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Usage</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(870</td>
<td nowrap="nowrap" valign="bottom">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,728</td>
<td nowrap="nowrap" valign="bottom">) </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Adjustments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(397</td>
<td nowrap="nowrap" valign="bottom">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">835</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Ending balance</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,134</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,713</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
Non-accelerated Filer
0.388
P1Y1M6D
4950000
137889000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><b>9. Related-Party
Transactions</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Two stockholders,
including a member of the Company’s board of directors, are
investors in a company that is a supplier of coffee to the Company.
During the thirteen weeks ended June 29, 2014 and
June 30, 2013, purchases from this company were $1.8 million
and $2.0 million, respectively. During the twenty-six weeks ended
June 29, 2014 and June 30, 2013, purchases from this
company were $3.8 million and $4.0 million, respectively. At both
June 29, 2014 and June 30, 2013, the Company had recorded
accounts payable due to this vendor of $0.7 million.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company is party to a
services agreement (the “Services Agreement”) with an
outsourced service provider who is a stockholder of the Company, to
perform certain of the Company’s bookkeeping services
including general ledger maintenance, accounts payable processing
and cash management. The Services Agreement provides for successive
one-year terms unless either party provides six months’
termination notice. During the thirteen weeks ended June 29,
2014 and June 30, 2013, fees and other expenses paid to the
service provider under the terms of the Services Agreement were
$0.3 million and $0.6 million, respectively. During the twenty-six
weeks ended June 29, 2014 and June 30, 2013, fees and
other expenses paid to the service provider under the terms of the
Services Agreement were $1.0 million and $1.2 million,
respectively. The Company has given notice to the service provider
that it intends not to renew the Services Agreement when its
current term expires on September 1, 2014. During 2013, the
scope of services provided by the outsourced service provider was
reduced and in 2014 was reduced further.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Equity-based compensation expense was reflected in the consolidated
statements of operations as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="68%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center">
<b>Thirteen Weeks Ended</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b><font style="WHITE-SPACE: nowrap">Twenty-Six Weeks Ended</font></b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>June 30,<br />
2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>June 30,<br />
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Cost of sales, buying and occupancy</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">196</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">186</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">393</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">317</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Direct store expenses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">229</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">35</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">365</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">58</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Selling, general and administrative expenses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,163</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,395</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,237</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,290</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Equity-based compensation expense before income taxes</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,588</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,616</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,995</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,665</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Income tax benefit</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(635</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(646</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,198</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,066</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Net equity-based compensation expense</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">953</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">970</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,797</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,599</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>5. Accrued Salaries and Benefits</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
A summary of accrued salaries and benefits is as follows:</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="76%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center" style="border-bottom:1.00pt solid #000000"><b>As Of</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>December 29,<br />
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Accrued payroll</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,763</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,904</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Vacation</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,635</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,634</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Bonuses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,058</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">8,393</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Other</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">690</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">356</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Total</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,146</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">22,287</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
A summary of accrued salaries and benefits is as follows:</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="76%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center" style="border-bottom:1.00pt solid #000000"><b>As Of</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>December 29,<br />
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Accrued payroll</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,763</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">6,904</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Vacation</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,635</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,634</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Bonuses</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,058</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">8,393</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Other</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">690</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">356</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Total</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">23,146</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">22,287</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
2014-06-29
1
2014-09-01
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
A summary of accounts receivable is as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="77%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>As Of</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December 29,<br />
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Vendor</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,153</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,183</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Receivables from landlords</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,835</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,034</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Medical insurance receivables</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">200</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,089</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Other</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,095</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,218</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,283</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,524</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">A summary of long-term
debt is as follows:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 12px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<!-- Begin Table Head -->
<tr>
<td width="57%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" rowspan="2" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>Maturity</b></font></td>
<td valign="bottom" rowspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" rowspan="2" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>Interest Rate</b></font></td>
<td valign="bottom" rowspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>As Of</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap">
<p style="BORDER-BOTTOM: rgb(0,0,0) 1px solid; WIDTH: 27pt">
<font style="FONT-FAMILY: Arial" size="1"><b>Facility</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>June 29,<br />
2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>December 29,<br />
2013</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<!-- End Table Head --><!-- Begin Table Body -->
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2"><b>Senior Secured</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">Term Loan, net of original issue
discount</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">April 2020</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">Variable</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">308,332</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">311,240</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">$60.0 million Revolving Credit
Facility</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">April 2018</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">Variable</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: Arial" size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: Arial" size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2"><b>Total debt</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">308,332</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">311,240</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">Less current portion</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">(5,837</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">(5,822</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2"><b>Long-term debt, net of current
portion</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">302,495</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">305,418</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>11. Stockholders’ Equity</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Secondary Offerings</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
On December 2, 2013, certain of the Company’s
stockholders completed a secondary public offering of 19,550,000
shares of common stock, which included 1.2 million options
exercised and sold by certain of the Company’s option holders
(the “December Secondary Offering”). On April 2,
2014, certain of the Company’s stockholders completed a
secondary public offering of 17,250,000 shares of common stock,
which included 1.6 million options exercised and sold by
certain of the Company’s option holders (the “April
Secondary Offering”). See Note 13, “Equity-Based
Compensation” for more details on the option exercises in the
April Secondary Offering. The Company did not sell any shares in
the December Secondary Offering or the April Secondary
Offering.</p>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Initial Public Offering</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
On August 6, 2013, the Company completed its IPO of 21,275,000
shares of common stock at a price of $18.00 per share. The Company
sold 20,477,215 shares of common stock, and certain stockholders
sold the remaining 797,785 shares. The Company received gross
proceeds from the IPO of approximately $368.6 million, or $344.1
million after deducting underwriting discounts and offering
expenses of $24.5 million. The Company did not receive any proceeds
from the sale of shares by the selling stockholders. On
August 6, 2013, the Company used $340.0 million of the net
proceeds from its IPO to make a partial repayment of the Term
Loan.</p>
<p style="font-size:1px;margin-top:18px;margin-bottom:0px">
 </p>
<p style="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b><i>Distribution to Stockholders</i></b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
On April 24, 2013, the Company paid a total distribution of
$282.0 million to stockholders. Additionally, pursuant to the
anti-dilution provisions of the 2011 Option Plan (as defined in
Note 13 “Equity-Based Compensation” below), the Company
paid $13.9 million to certain vested option holders and reduced the
exercise price of unvested and certain vested options.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The payment was made first from retained earnings to date as of the
payment date, and payment in excess of retained earnings was made
from additional paid-in capital.</p>
</div>
false
--12-28
2014
153670000
0.43
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><b>8. Income Taxes</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company’s
effective tax rate for the thirteen weeks ended June 29, 2014
and June 30, 2013 was 38.7% and 39.5%, respectively. The
decrease in the effective tax rate was primarily the result of an
increase in tax credits and charitable contributions.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company’s
effective tax rate for the twenty-six weeks ended June 29,
2014 and June 30, 2013 was 38.8% and 39.6%, respectively. The
decrease in the effective tax rate was primarily the result of an
increase in tax credits and charitable contributions.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">In September 2013 the
Internal Revenue Service issued final regulations related to
tangible property, which govern when a taxpayer must capitalize or
deduct expenses for acquiring, maintaining, repairing and replacing
tangible property. The regulations are effective for tax years
beginning January 1, 2014, however early adoption is
permitted. The Company has analyzed the impacts of the tangible
property regulations, and has determined it is in compliance with
the regulations. The adoption of the regulations has not had a
significant effect on the Company’s consolidated financial
statements.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Excess tax benefits
associated with stock option exercises are credited to
stockholders’ equity. The Company uses the tax law ordering
approach of intraperiod allocation to allocate the benefit of
windfall tax benefits based on provisions in the tax law that
identify the sequence in which those amounts are utilized for tax
purposes. The income tax benefits resulting from stock awards that
were credited to stockholders’ equity were $26.2 million for
the twenty-six weeks ended June 29, 2014, which included $0.9
million of income tax benefits related to stock award activity in
2013. The income tax benefits resulting from antidilution payments
that were credited to stockholders’ equity were $4.4 million
for the twenty-six weeks ended June 30, 2013. The excess tax
benefits are not credited to stockholders’ equity until the
deduction reduces income taxes payable.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><b>6. Long-Term Debt</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">A summary of long-term
debt is as follows:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 12px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<!-- Begin Table Head -->
<tr>
<td width="57%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" rowspan="2" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>Maturity</b></font></td>
<td valign="bottom" rowspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" rowspan="2" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>Interest Rate</b></font></td>
<td valign="bottom" rowspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>As Of</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom" nowrap="nowrap">
<p style="BORDER-BOTTOM: rgb(0,0,0) 1px solid; WIDTH: 27pt">
<font style="FONT-FAMILY: Arial" size="1"><b>Facility</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>June 29,<br />
2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>December 29,<br />
2013</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<!-- End Table Head --><!-- Begin Table Body -->
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2"><b>Senior Secured</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">Term Loan, net of original issue
discount</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">April 2020</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">Variable</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">308,332</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">311,240</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">$60.0 million Revolving Credit
Facility</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">April 2018</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">Variable</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: Arial" size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" nowrap="nowrap" align="right"><font style="FONT-FAMILY: Arial" size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2"><b>Total debt</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">308,332</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">311,240</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">Less current portion</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">(5,837</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">(5,822</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2"><b>Long-term debt, net of current
portion</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">302,495</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">305,418</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
<!-- End Table Body --></table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Current portion of
long-term debt is presented net of issue discount of $1.2 million
at both June 29, 2014 and December 29, 2013. The
noncurrent portion of long-term debt is presented net of issue
discount of $5.3 million and $5.8 million as of June 29, 2014
and December 29, 2013, respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><b><i>Senior Secured Credit
Facilities</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px"><font style="FONT-FAMILY: Arial" size="2"><i>April 2013
Refinancing</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">On April 23, 2013,
the Company’s subsidiary, Sprouts Farmers Markets Holdings,
LLC (“Intermediate Holdings”), as borrower, refinanced
(the “April 2013 Refinancing”) the Former Revolving
Credit Facility and the Former Term Loan (each, as defined below),
by entering into a new credit facility (the “Credit
Facility”). The Credit Facility provides for a $700.0 million
term loan (the “Term Loan”) and a $60.0 million senior
secured revolving credit facility (the “Revolving Credit
Facility”).</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The terms of the Credit
Facility allow the Company, subject to certain conditions, to
increase the amount of the term loans and revolving commitments
thereunder by an aggregate incremental amount of up to $160.0
million, plus an additional amount, so long as after giving effect
to such increase, (i) in the case of incremental loans that
rank pari passu with the initial term loans, the net first lien
leverage ratio does not exceed 4.00 to 1.00, and (ii) in the
case of incremental loans that rank junior to the initial Term
Loan, the total leverage ratio does not exceed 5.25 to
1.00.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><i>Guarantees</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Obligations under the
Credit Facility are guaranteed by the Company and all of its
current and future wholly owned material domestic subsidiaries.
Borrowings under the Credit Facility are secured by (i) a
pledge by Sprouts of its equity interests in Intermediate Holdings
and (ii) first-priority liens on substantially all assets of
Intermediate Holdings and the subsidiary guarantors, in each case,
subject to permitted liens and certain exceptions.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 18px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: Arial" size="2"><i>Interest and Applicable
Margin</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">All amounts outstanding
under the Credit Facility will bear interest, at the
Company’s option, at a rate per annum equal to LIBOR (with a
1.00% floor with respect to Eurodollar borrowings under the Term
Loan), adjusted for statutory reserves, plus a margin equal to
3.00%, or an alternate base rate, plus a margin equal to 2.00%, as
set forth in the Credit Facility. These interest margins were
reduced to their current levels (from 3.50% and 2.50%,
respectively) effective August 2, 2013, as a result of
(i) the consummation of the Company’s IPO, and
(ii) the Company achieving a reduction in the net first lien
leverage ratio to less than or equal to 2.75 to 1.00.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><i>Payments and
Prepayments</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Term Loan will mature
in April 2020 and will amortize at a rate per annum, in four equal
quarterly installments, in an aggregate amount equal to 1.00% of
the original principal balance, with the balance due on the
maturity date.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Subject to exceptions set
forth therein, the Credit Facility requires mandatory prepayments
in amounts equal to (i) 50% (reduced to 25% if net first lien
leverage is less than 3.00 to 1.00 but greater than 2.50 to 1.00
and 0% if net first lien leverage is less than 2.50 to 1.00) of
excess cash flow (as defined in the Credit Facility) at the end of
each fiscal year, (ii) 100% of the net cash proceeds from
certain non-ordinary course asset sales by the Company or any
subsidiary guarantor (subject to certain exceptions and
reinvestment provisions) and (iii) 100% of the net cash
proceeds from the issuance or incurrence of debt by the Company or
any of its subsidiaries not permitted under the Credit
Facility.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Voluntary prepayments of
borrowings under the Credit Facility are permitted at any time, in
agreed-upon minimum principal amounts. Prepayments will not be
subject to premium or penalty (except LIBOR breakage costs, if
applicable).</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><i>Revolving Credit
Facility</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Credit Facility
includes a $60.0 million Revolving Credit Facility which matures in
April 2018. The Revolving Credit Facility includes letter of credit
and $5.0 million swingline loan subfacilities. Letters of credit
issued under the facility reduce the borrowing capacity on the
total facility. There are no amounts outstanding on the Revolving
Credit Facility at June 29, 2014. Letters of credit totaling
$7.4 million have been issued as of June 29, 2014 primarily to
support the Company’s insurance programs. Amounts available
under the Revolving Credit Facility at June 29, 2014 totaled
$52.6 million.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Interest terms on the
Revolving Credit Facility are the same as the Term Loan.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company capitalized
debt issuance costs of $1.1 million related to the Revolving Credit
Facility, which are being amortized to interest expense over the
term of the Revolving Credit Facility.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Under the terms of the
Credit Facility, the Company is obligated to pay a commitment fee
on the available unused amount of the Revolving Credit Facility
commitments equal to 0.50% per annum.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><i>Covenants</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Credit Facility
contains financial, affirmative and negative covenants. The
negative covenants include, among other things, limitations on the
Company’s ability to:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="9%"><font size="1"> </font></td>
<td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Arial" size="2">incur
additional indebtedness;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="9%"><font size="1"> </font></td>
<td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Arial" size="2">grant
additional liens;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="9%"><font size="1"> </font></td>
<td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Arial" size="2">enter
into sale-leaseback transactions;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="9%"><font size="1"> </font></td>
<td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Arial" size="2">make
loans or investments;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="9%"><font size="1"> </font></td>
<td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Arial" size="2">merge,
consolidate or enter into acquisitions;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="9%"><font size="1"> </font></td>
<td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Arial" size="2">pay
dividends or distributions;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="9%"><font size="1"> </font></td>
<td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Arial" size="2">enter
into transactions with affiliates;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="9%"><font size="1"> </font></td>
<td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Arial" size="2">enter
into new lines of business;</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 6px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="9%"><font size="1"> </font></td>
<td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Arial" size="2">modify
the terms of subordinated debt or other material agreements;
and</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="9%"><font size="1"> </font></td>
<td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Arial" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Arial" size="2">change
its fiscal year</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Each of these covenants
is subject to customary or agreed-upon exceptions, baskets and
thresholds.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">In addition, if the
Company has any amounts outstanding under the Revolving Credit
Facility as of the last day of any fiscal quarter, the Revolving
Credit Facility requires the borrower to maintain a ratio of
Revolving Facility Credit exposure to consolidated trailing
12-month EBITDA (as defined in the Credit Facility) of no more than
0.75 to 1.00 as of the end of each such fiscal quarter.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company was in
compliance with all applicable covenants under the Credit Facility
as of June 29, 2014.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><b>1. Basis of
Presentation</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Sprouts Farmers Market,
Inc., a Delaware corporation, through its subsidiaries, operates as
a healthy grocery store that offers fresh, natural and organic food
that includes fresh produce, bulk foods, vitamins and supplements,
grocery, meat and seafood, bakery, dairy, frozen foods, body care
and natural household items catering to consumers’ growing
interest in eating and living healthier. The “Company”
is used to refer collectively to Sprouts Farmers Market, Inc. and
its subsidiaries.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The accompanying
unaudited consolidated financial statements include the accounts of
the Company in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) for
interim financial statements and are in the form prescribed by the
Securities and Exchange Commission in instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. In the opinion of management, the
accompanying consolidated financial statements reflect all
adjustments, consisting of normal recurring adjustments, considered
necessary for a fair statement of the Company’s financial
position, results of operations and cash flows for the periods
indicated. All material intercompany accounts and transactions have
been eliminated in consolidation. Interim results are not
necessarily indicative of results for any other interim period or
for a full fiscal year. The information included in these
consolidated financial statements and notes thereto should be read
in conjunction with Management’s Discussion and Analysis of
Financial Condition and Results of Operations included herein and
Management’s Discussion and Analysis of Financial Condition
and Results of Operations and the consolidated financial statements
and notes thereto for the fiscal year ended December 29, 2013
included in the Company’s Annual Report on Form 10-K, filed
on February 27, 2014.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The year-end balance
sheet data was derived from audited financial statements, but does
not include all disclosures required by GAAP.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company reports its
results of operations on a 52- or 53-week fiscal calendar ending on
the Sunday closest to December 31. Fiscal years 2014 and 2013
are 52-week years. The Company reports its results of operations on
a <font style="WHITE-SPACE: nowrap">13-week</font> quarter, except
for 53-week fiscal years.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company has revised
its Statement of Cash Flows for the twenty-six weeks ended
June 30, 2013, to present cash inflows related to excess tax
benefits from antidilution payments made to optionholders as cash
flows from financing activities. This revision did not have a
material impact on previously reported consolidated cash flows.
Additionally, commencing the twenty-six weeks ended June 29, 2014,
and for the comparative period, the Company has offset the changes
in balance sheet line items related to excess tax benefit with the
excess tax benefit.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">On August 6, 2013,
the Company completed its initial public offering
(“IPO”) of 21,275,000 shares of common stock at a price
of $18.00 per share. The Company sold 20,477,215 shares of common
stock, and certain stockholders sold the remaining 797,785 shares.
The Company received net proceeds from the IPO of $344.1 million,
after deducting underwriting discounts and offering expenses. See
Note 11, “Stockholders’ Equity” for more
information.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 12px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company has one
reportable and one operating segment.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company’s
business is subject to modest seasonality. Average weekly sales
fluctuate throughout the year and are typically highest in the
first half of the fiscal year. Produce, which contributed 26% of
the Company’s net sales for the twenty-six weeks ended
June 29, 2014, is generally more available in the first six
months of the fiscal year due to the timing of peak growing
seasons.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">All dollar amounts are in
thousands, unless otherwise noted.</font></p>
</div>
<div>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
A reconciliation of the numerators and denominators of the basic
and diluted net income per share calculations is as follows
(in thousands, except per share amounts):</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="92%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="64%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center" style="border-bottom:1.00pt solid #000000"><b>Thirteen Weeks
Ended</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center" style="border-bottom:1.00pt solid #000000"><b>Twenty-Six Weeks
Ended</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 30,<br />
2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 30,<br />
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Basic net income per share:</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Net income</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,151</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,468</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,884</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,585</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Weighted average shares outstanding</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">149,681</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">125,958</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">148,720</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">125,963</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:5.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Basic net income per share</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.20</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.10</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.43</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.24</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Diluted net income per share:</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Net income</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,151</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">12,468</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">63,884</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">30,585</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Weighted average shares outstanding</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">149,681</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">125,958</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">148,720</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">125,963</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Dilutive effect of equity-based awards:</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:3.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Assumed exercise of options to purchase shares</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,358</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,758</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4,950</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,475</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:5.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Weighted average shares and equivalent shares outstanding</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">154,039</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">129,716</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">153,670</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">129,438</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:5.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Diluted net income per share</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.20</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.10</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.42</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">0.24</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><b>14. Subsequent
Events</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Subsequent to
June 29, 2014, the Company deposited $4.8 million for
collateral related to its liability insurance.</font></p>
</div>
0001575515
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: Arial" size="2"><b>13. Equity-Based
Compensation</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px"><font style="FONT-FAMILY: Arial" size="2"><b><i>2013 Incentive
Plan</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company’s board
of directors adopted, and its equity holders approved, the Sprouts
Farmers Market, Inc. 2013 Incentive Plan (the “2013 Incentive
Plan”). The 2013 Incentive Plan became effective
July 31, 2013 in connection with the Company’s IPO and
replaced the Sprouts Farmers Markets, LLC Option Plan (the
“2011 Option Plan”) (except with respect to outstanding
options to acquire shares under the 2011 Option Plan). The 2013
Incentive Plan and 2011 Option Plan are collectively referred to as
the “Option Plans”. The 2013 Incentive Plan serves as
the umbrella plan for the Company’s stock-based and
cash-based incentive compensation programs for its directors,
officers and other team members.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">On March 4, 2014,
under the 2013 Incentive Plan, the Company granted to certain
officers and team members time-based options to purchase an
aggregate of 320,041 shares of common stock at an exercise price of
$39.01 per share, with a grant date fair value of $10.66 per share.
The Company also granted an aggregate of 108,980 RSUs with a grant
date fair value of $39.01.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">On May 19, 2014,
under the 2013 Incentive Plan, the Company granted to a team member
and to independent members of the Company’s board of
directors time-based options to purchase an aggregate of 37,047
shares of common stock at an exercise price of $28.50 per share,
with a grant date fair value of $8.07. The Company also granted to
this team member 2,174 RSUs with a grant date fair value of $28.50
per share.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The aggregate number of
shares of common stock that may be issued to team members and
directors under the 2013 Incentive Plan may not exceed 10,089,072.
Shares subject to awards granted under the 2013 Incentive Plan
which are subsequently forfeited, expire unexercised or are
otherwise not issued will not be treated as having been issued for
purposes of the share limitation.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><b><i>2011 Option
Plan</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">In May 2011, the
Company adopted the 2011 Option Plan to provide team members or
directors of the Company with options to acquire shares of the
Company (“options”). The Company had authorized
12,100,000 shares for issuance under the 2011 Option Plan. Options
may no longer be issued under the 2011 Option Plan.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><b><i>Options</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The Company uses the
Black-Scholes option pricing model to estimate the fair value of
options at grant date. Options vest in accordance with the terms
set forth in the grant letter and vary depending on if they are
time-based or performance-based.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Time-based options
generally vest ratably over a period of 12 quarters (three years)
and performance-based options vest over a period of three years
based on financial performance targets set for each
year.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Arial" size="2"><b><i>RSUs</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">The fair value of RSUs is
based on the closing price of the Company’s common stock on
the grant date. RSUs generally vest annually over a period of two
or three years.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 18px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: Arial" size="2"><b><i>Equity-based Compensation
Expense</i></b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">Equity-based compensation
expense was reflected in the consolidated statements of operations
as follows:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 12px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<!-- Begin Table Head -->
<tr>
<td width="64%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>Thirteen Weeks Ended</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Arial" size="1"><b><font style="WHITE-SPACE: nowrap">Twenty-Six Weeks Ended</font></b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>June 29,<br />
2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>June 30,<br />
2013</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>June 29,<br />
2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Arial" size="1"><b>June 30,<br />
2013</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<!-- End Table Head --><!-- Begin Table Body -->
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">Cost of sales, buying and
occupancy</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">196</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">186</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">393</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">317</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">Direct store expenses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">229</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">35</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">365</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">58</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">Selling, general and administrative
expenses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">1,163</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">1,395</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">2,237</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">2,290</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">Equity-based compensation expense
before income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">1,588</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">1,616</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">2,995</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">2,665</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">Income tax benefit</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">(635</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">(646</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">(1,198</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">(1,066</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Arial" size="2">Net equity-based compensation
expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">953</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">970</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">1,797</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Arial" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Arial" size="2">1,599</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Arial" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
<!-- End Table Body --></table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">As of June 29, 2014
and December 29, 2013, there were approximately
9.0 million and 10.9 million options outstanding and
2.0 million and 2.7 million unvested options outstanding,
respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">As of June 29, 2014
and December 29, 2013, there were approximately
0.1 million and no unvested RSUs outstanding,
respectively.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">As of June 29, 2014,
total unrecognized compensation expense related to outstanding
options was $5.3 million which, if the service and performance
conditions are fully met, is expected to be recognized over the
next 1.1 years on a weighted-average basis.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">As of June 29, 2014,
total unrecognized compensation expense related to outstanding RSUs
was $3.7 million which, if the service conditions are fully met, is
expected to be recognized over the next 2.3 years on a
weighted-average basis.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Arial" size="2">During the twenty-six
weeks ended June 29, 2014, the Company received $4.8 million
in cash proceeds from the exercise of options, including a total of
1.6 million options exercised by team members who sold the
underlying shares in the April Secondary Offering.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt">
<b>3. Fair Value Measurements</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The Company records its financial assets and liabilities in
accordance with the framework for measuring fair value in
accordance with GAAP. This framework establishes a fair value
hierarchy that prioritizes the inputs used to measure fair
value:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Level 1: Quoted prices for identical instruments in active
markets.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Level 2: Quoted prices for similar instruments in active markets;
quoted prices for identical or similar instruments in markets that
are not active; and model-derived valuations in which all
significant inputs and significant value drivers are observable in
active markets.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Level 3: Valuations derived from valuation techniques in which one
or more significant inputs or significant value drivers are
unobservable.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Fair value measurements of nonfinancial assets and nonfinancial
liabilities are primarily used in the impairment analysis of
goodwill, intangible assets, long-lived assets and in the valuation
of store closure and exit costs.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The determination of fair values of certain tangible and intangible
assets for purposes of the Company’s goodwill impairment
evaluation as described above was based upon Level 3 inputs. Closed
store reserves are recorded at net present value to approximate
fair value which is classified as Level 3 in the hierarchy. The
estimated fair value of the closed store reserve is calculated
based on the present value of the remaining lease payments and
other charges using a weighted average cost of capital, reduced by
estimated sublease rentals. The weighted average cost of capital
was estimated using information from comparable companies and
management’s judgment related to the risk associated with the
operations of the stores.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Cash and cash equivalents, accounts receivable, prepaid expenses
and other current assets, accounts payable, accrued salaries and
benefits and other accrued liabilities approximate fair value
because of the short maturity of those instruments. Based on open
market transactions comparable to the Term Loan (as defined in Note
6, “Long-Term Debt”), the fair value of the long-term
debt, including current maturities, approximates carrying value as
of June 29, 2014 and December 29, 2013. The
Company’s estimates of the fair value of long-term debt
(including current maturities) were classified as Level 2 in the
fair value hierarchy.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b>4. Accounts Receivable</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
A summary of accounts receivable is as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="77%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>As Of</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December 29,<br />
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Vendor</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">7,153</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,183</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Receivables from landlords</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,835</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,034</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Medical insurance receivables</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">200</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,089</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Other</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,095</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,218</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">11,283</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">9,524</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Medical insurance receivables relate to amounts receivable from the
Company’s health insurance carrier for claims in excess of
stop-loss limits.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The Company had recorded allowances for certain vendor receivables
of $0.3 million at both June 29, 2014 and December 29,
2013.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt">
<b>2. Recently Issued Accounting Pronouncements</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
In February 2013, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) No. 2013-04, “Obligations Resulting
from Joint and Several Liability Arrangements for Which the Total
Amount of the Obligation Is Fixed at the Reporting Date (a
consensus of the FASB Emerging Issues Task Force),” which
amends Accounting Standards Codification (“ASC”) 405,
“Liabilities.” The amendments provide guidance on the
recognition, measurement, and disclosure of obligations resulting
from joint and several liability arrangements, including debt
arrangements, other contractual obligations, and settled litigation
and judicial rulings, for which the total amount of the obligation
is fixed at the reporting date. The amendments are effective for
fiscal years, and interim periods within those years, beginning
after December 15, 2013 and should be applied retrospectively.
The provisions were effective for the Company’s first quarter
of 2014. The adoption of this guidance did not have a material
effect on the Company’s consolidated financial
statements.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
In July 2013, the FASB issued ASU No. 2013-11,
“Presentation of an Unrecognized Tax Benefit When a Net
Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit
Carryforward Exists,” which amends ASC 740, “Income
Taxes.” ASU No. 2013-11 requires that unrecognized tax
benefits be classified as an offset to deferred tax assets to the
extent of any net operating loss carryforwards, similar tax loss
carryforwards, or tax credit carryforwards are available at the
reporting date in the applicable tax jurisdiction to settle any
additional income taxes that would result from the disallowance of
a tax position. An exception would apply if the tax law of the tax
jurisdiction does not require the Company to use, and it does not
intend to use, the deferred tax asset for such purpose. This
guidance is effective for reporting periods beginning after
December 15, 2013. The provisions were effective for the
Company’s first quarter of 2014. The adoption of this
guidance did not have a material effect on the Company’s
consolidated financial statements.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
In April 2014, the FASB issued ASU No. 2014-08,
“Presentation of Financial Statements (Topic 205) and
Property, Plant and Equipment (Topic 360): Reporting Discontinued
Operations and Disclosures of Disposals of Components of an
Entity.” ASU No. 2014-08 amends previous guidance
related to the criteria for reporting a disposal as a discontinued
operation by elevating the threshold for qualification for
discontinued operations treatment to a disposal that represents a
strategic shift that has a major effect on an organization’s
operations or financials results. This guidance also requires
expanded disclosures for transactions that qualify as a
discontinued operation and requires disclosure of individually
significant components that are disposed of or held for sale but do
not qualify for discontinued operations reporting. This guidance is
effective prospectively for all disposals or components initially
classified as held for sale in periods beginning on or after
December 15, 2014, with early adoption permitted. The Company
does not expect the adoption of this guidance to have a material
effect on its consolidated financial statements.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
In May 2014, the FASB issued ASU No. 2014-09, “Revenue
from Contracts with Customers.” ASU No. 2014-09 provides
guidance for revenue recognition. The standard’s core
principle is that a company will recognize revenue when it
transfers promised goods or services to customers in an amount that
reflects the consideration to which the company expects to be
entitled in exchange for those goods or services. In doing so,
companies will need to use more judgment and make more estimates
than under current guidance. These may include identifying
performance obligations in the contract, and estimating the amount
of variable consideration to include in the transaction price
attributable to each separate performance obligation. This guidance
will be effective for the Company for its fiscal year ended
December 31, 2017. The Company does not expect the adoption of
this guidance to have a material effect on its consolidated
financial statements.</p>
</div>
Q2
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The Company records its financial assets and liabilities in
accordance with the framework for measuring fair value in
accordance with GAAP. This framework establishes a fair value
hierarchy that prioritizes the inputs used to measure fair
value:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Level 1: Quoted prices for identical instruments in active
markets.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Level 2: Quoted prices for similar instruments in active markets;
quoted prices for identical or similar instruments in markets that
are not active; and model-derived valuations in which all
significant inputs and significant value drivers are observable in
active markets.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Level 3: Valuations derived from valuation techniques in which one
or more significant inputs or significant value drivers are
unobservable.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Fair value measurements of nonfinancial assets and nonfinancial
liabilities are primarily used in the impairment analysis of
goodwill, intangible assets, long-lived assets and in the valuation
of store closure and exit costs.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The determination of fair values of certain tangible and intangible
assets for purposes of the Company’s goodwill impairment
evaluation as described above was based upon Level 3 inputs. Closed
store reserves are recorded at net present value to approximate
fair value which is classified as Level 3 in the hierarchy. The
estimated fair value of the closed store reserve is calculated
based on the present value of the remaining lease payments and
other charges using a weighted average cost of capital, reduced by
estimated sublease rentals. The weighted average cost of capital
was estimated using information from comparable companies and
management’s judgment related to the risk associated with the
operations of the stores.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Cash and cash equivalents, accounts receivable, prepaid expenses
and other current assets, accounts payable, accrued salaries and
benefits and other accrued liabilities approximate fair value
because of the short maturity of those instruments. Based on open
market transactions comparable to the Term Loan (as defined in Note
6, “Long-Term Debt”), the fair value of the long-term
debt, including current maturities, approximates carrying value as
of June 29, 2014 and December 29, 2013. The
Company’s estimates of the fair value of long-term debt
(including current maturities) were classified as Level 2 in the
fair value hierarchy.</p>
</div>
1
<div>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<b>7. Closed Store Reserves</b></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The following is a summary of closed store reserve activity during
the twenty-six weeks ended June 29, 2014 and fiscal year ended
December 29, 2013:</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="76%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>June 29,<br />
2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000"><b>December 29,<br />
2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Beginning balance</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,713</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5,243</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Additions</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">688</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">363</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Usage</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(870</td>
<td nowrap="nowrap" valign="bottom">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,728</td>
<td nowrap="nowrap" valign="bottom">) </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Adjustments</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(397</td>
<td nowrap="nowrap" valign="bottom">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">835</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Ending balance</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,134</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,713</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Additions made during 2014 relate to the closure and relocation of
one store and to the closure and relocation of the Texas warehouse,
and usage during 2014 relates to lease payments made during the
period for closed stores. Adjustments made during 2014 include a
favorable reserve adjustment due to a sublease for the Sunflower
administrative office and the write-off of a liability related to
the Texas warehouse. Activity during 2013 includes charges related
to the closure of a former Sunflower warehouse, lease payments made
during the period for closed stores and adjustments to sublease
estimates for stores and facilities already closed.</p>
</div>
148720000
-397000
3500000
447907000
1466416000
1198000
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636000
16399000
104451000
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4786000
870000
117242000
244000
531000
196000
12183000
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57793000
63884000
1860000
2995000
21969000
26214000
2995000
11025000
45579000
26214000
9958000
12987000
688000
106621000
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3367000
83000
26071000
1600000
26410000
115000
785000
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1797000
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34012000
281386000
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333000
1018509000
859000
1423000
5746000
26200000
2
1000000
100000
P3Y
0.0275
P2Y
P2Y3M18D
393000
2237000
365000
63884000
2127108
2000
4784000
2995000
26214000
0.26
(i) in the case of incremental loans that rank pari passu with the initial term loans, the net first lien leverage ratio does not exceed 4.00 to 1.00, and (ii) in the case of incremental loans that rank junior to the initial Term Loan, the total leverage ratio does not exceed 5.25 to 1.00.
(i) 50% (reduced to 25% if net first lien leverage is less than 3.00 to 1.00 but greater than 2.50 to 1.00 and 0% if net first lien leverage is less than 2.50 to 1.00) of excess cash flow (as defined in the Credit Facility) at the end of each fiscal year, (ii) 100% of the net cash proceeds from certain non-ordinary course asset sales by the Company or any subsidiary guarantor (subject to certain exceptions and reinvestment provisions) and (iii) 100% of the net cash proceeds from the issuance or incurrence of debt by the Company or any of its subsidiaries not permitted under the Credit Facility.
At a rate per annum equal to LIBOR (with a 1.00% floor with respect to Eurodollar borrowings under the Term Loan), adjusted for statutory reserves, plus a margin equal to 3.00%, or an alternate base rate, plus a margin equal to 2.00%, as set forth in the Credit Facility. These interest margins were reduced to their current levels (from 3.50% and 2.50%, respectively) effective August 2, 2013, as a result of (i) the consummation of the Company’s IPO, and (ii) the Company achieving a reduction in the net first lien leverage ratio to less than or equal to 2.75 to 1.00.
0.0050
Variable
1100000
0.75
April 2018
Four equal quarterly installments
Variable
April 2020
0.0100
0.0200
0.0300
P3Y
P3Y
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344324000
835000
3821000
1728000
51326000
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13424000
282029000
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4402000
13892000
27000
51326000
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20477215
1194999
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1000
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3758000
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12468000
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970000
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2800000
186000
1395000
35000
0.20
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743810000
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