Attached files
file | filename |
---|---|
8-K - WHOLE FOODS MARKET INC | v164817_8k.htm |
Exhibit
99.1
For
Immediate Release
|
|
Contact:
Cindy McCann
|
|
VP
of Investor Relations
|
|
512.542.0204
|
Whole
Foods Market Reports Fourth Quarter Results
Company
Produces $0.20 of Diluted EPS and Generates $113 Million
of
Operating Cash Flow and $51 Million of Free Cash Flow;
Company
Provides Outlook for Fiscal Year 2010
November
4, 2009. Whole Foods Market, Inc. (NASDAQ: WFMI) today reported
results for the 12-week fourth quarter and 52-week fiscal year ended September
27, 2009.
Sales for
the quarter increased 2.3% to $1.8 billion. Comparable store sales
decreased 0.9% versus a 0.4% increase in the prior year. Identical
store sales, excluding eight relocations and two major expansions, decreased
2.3% versus a 0.5% decrease in the prior year. Excluding the negative
impact of foreign currency translation, comparable store sales decreased 0.7%,
and identical store sales decreased 2.0%.
For the
fourth quarter, income available to common shareholders was $28.7 million, or
$0.20 per diluted share, compared to $1.5 million, or $0.01 per diluted share,
for the fourth quarter last year. Results in the current quarter
included a LIFO credit of $3.4 million, or $0.01 per diluted share.
Results
in the fourth quarter last year included: a LIFO charge of $4.7
million, or $0.02 per diluted share; non-cash asset impairment
charges related to two Wild Oats locations of $1.5 million, or $0.01 per diluted
share; FTC-related legal expenses of $2.5 million, or $0.01 per diluted share;
charges related to lease terminations of Whole Foods Market stores in
development and store closure reserve adjustments related to idle Wild Oats
properties of $20.2 million, or $0.07 per diluted share; and tax charges
resulting from the repatriation of $60 million in cash from the Company’s
Canadian subsidiary of $6.1 million, or $0.04 per diluted share.
"We
believe our sales have stabilized and officially turned the corner. Our
comparable store and identical store sales trends improved for the second
quarter in a row and, after five quarters of year-over-year declines, so far in
the first quarter are up 1.6% and 0.4%, respectively," said John Mackey,
chairman, chief executive officer, and co-founder of Whole Foods
Market. "We are very pleased with the $273 million of free cash flow
we generated this year along with the significant year-over-year improvements we
produced in our balance sheet. Our total cash increased $470 million
to $501 million, and total debt decreased $190 million to $739
million. From where we stand today, we believe we are well positioned
to meet our long-term debt maturities in
2012."
Adjusted
earnings before interest, taxes, depreciation and amortization (“Adjusted
EBITDA”) increased 46% to $133.5 million, and earnings before interest, taxes,
depreciation and other non-cash expenses (“EBITANCE”) increased 34% to $142.8
million. Approximately $74.0 million relating to depreciation and
amortization, asset impairments, LIFO, share-based payments, and deferred rent
was expensed for accounting purposes but was non-cash in the current
quarter.
During
the quarter, the Company produced $113.0 million in cash flow from operations
and invested $62.5 million in capital expenditures, of which $51.1 million
related to new stores. This resulted in free cash flow of $50.5
million. Cash and cash equivalents, including restricted cash,
increased to $501.2 million, and the Company had $335.2 million
available on its credit line, net of $14.8 million in outstanding letters of
credit. The Company’s total debt was $739.2
million.
Whole
Foods Market, Inc. 550 Bowie
St. Austin, Texas 78703
512.477.5566 fax
512.482.7204
http://www.wholefoodsmarket.com
For the
52-week period ended September 27, 2009, sales increased 1.0% to $8.0
billion. Comparable store sales decreased 3.1% versus a 4.9% increase
in the prior year, and identical store sales, excluding 12 relocations and three
major expansions, decreased 4.3% versus a 3.6% increase in the prior
year. Excluding the negative impact of foreign currency translation,
comparable store sales decreased 2.6%, and identical store sales decreased
3.7%.
For the
fiscal year, the tax rate was 41.5%, income available to common shareholders was
$118.8 million, and diluted earnings per share were $0.85. These
results included:
·
|
a
LIFO credit of $5.6 million, or $0.02 per diluted
share;
|
·
|
non-cash
asset impairment charges related to operating stores of $14.8 million, or
$0.06 per diluted share;
|
·
|
FTC-related
legal costs of $14.7 million, and non-cash impairment charges related to
the FTC settlement agreement of $4.8 million, or $0.08 per diluted share;
and
|
·
|
store
closure reserve adjustments primarily related to changes in certain
sub-tenant income estimates driven by the outlook for the commercial real
estate market of $12.9 million, or $0.05 per diluted
share.
|
For the
fiscal year, adjusted EBITDA increased 16% to $575.6 million, and EBITANCE
increased 12% to $619.8 million. The Company produced $587.7 million
in cash flow from operations and invested $314.6 million in capital
expenditures, of which $248.0 million related to new stores. This
resulted in free cash flow of $273.1 million. In addition, the
Company paid cash dividends to preferred stockholders of $19.8 million during
the fiscal year.
The
Company’s results for the last five fiscal quarters and comparable and identical
store sales results for the current quarter to date are shown in the following
table. Where applicable, percentages have been adjusted to exclude
asset impairment charges and FTC-related legal
costs.
QTD
|
||||||||||||||||||||||||
4Q08 | 1Q09 | 2Q09 | 3Q09 | 4Q09 |
1Q10
|
|||||||||||||||||||
Sales
growth
|
15.5 | % | 0.4 | % | -0.5 | % | 2.0 | % | 2.3 | % | 5.4 | % | ||||||||||||
Comparable
store sales growth
|
0.4 | % | -4.0 | % | -4.8 | % | -2.5 | % | -0.9 | % | 1.6 | % | ||||||||||||
Excluding
foreign currency
|
0.4 | % | -3.4 | % | -4.1 | % | -2.0 | % | -0.7 | % | 1.4 | % | ||||||||||||
Two-year
comps (sum of two years)
|
8.6 | % | 5.3 | % | 1.9 | % | 0.1 | % | -0.6 | % | -0.5 | % | ||||||||||||
Excluding
foreign currency
|
8.4 | % | 5.6 | % | 2.5 | % | 0.5 | % | -0.2 | % | 0.0 | % | ||||||||||||
Identical
store sales growth
|
-0.5 | % | -4.9 | % | -5.8 | % | -3.8 | % | -2.3 | % | 0.4 | % | ||||||||||||
Excluding
foreign currency
|
-0.4 | % | -4.2 | % | -5.1 | % | -3.3 | % | -2.0 | % | 0.3 | % | ||||||||||||
Two-year
idents (sum of two years)
|
5.6 | % | 2.2 | % | -0.7 | % | -1.9 | % | -2.8 | % | -2.9 | % | ||||||||||||
Excluding
foreign currency
|
5.5 | % | 2.6 | % | -0.1 | % | -1.5 | % | -2.4 | % | -2.4 | % | ||||||||||||
Gross
profit
|
33.3 | % | 33.4 | % | 34.7 | % | 35.2 | % | 34.2 | % | ||||||||||||||
Gross
profit excluding LIFO
|
33.6 | % | 33.5 | % | 34.7 | % | 34.8 | % | 34.0 | % | ||||||||||||||
Direct
store expenses
|
26.6 | % | 26.4 | % | 26.2 | %1 | 26.6 | % | 26.9 | % | ||||||||||||||
Store
contribution
|
6.8 | % | 6.9 | % | 8.5 | % | 8.5 | % | 7.3 | % | ||||||||||||||
Store
contribution excluding LIFO
|
7.0 | % | 7.1 | % | 8.5 | % | 8.2 | % | 7.2 | % | ||||||||||||||
G&A
expenses
|
2.9 | % | 2.9 | % | 2.9 | % | 2.8 | % | 2.8 | % |
1
Unusually low number of workers’ compensation claims and average cost per
claim in the quarter
Whole
Foods Market, Inc. 550 Bowie
St. Austin, Texas 78703
512.477.5566 fax
512.482.7204
http://www.wholefoodsmarket.com
-2-
For the
quarter, gross profit, excluding LIFO, increased 46 basis points to 34.0% of
sales, with an improvement in cost of goods sold more than offsetting higher
occupancy costs as a percentage of sales. The LIFO adjustment was a
$3.4 million credit versus a $4.7 million charge last year, a positive impact of
45 basis points. Excluding asset impairment charges of $1.5 million
last year, direct store expenses increased 32 basis points to 26.9% of sales
driven by increases in health care and depreciation which were partially offset
by an improvement in workers’ compensation expense as a percentage of
sales. As a result, store contribution, excluding LIFO and asset
impairment charges, improved 13 basis points to 7.2% of sales.
For
stores in the identical store base, gross profit, excluding LIFO, improved 47
basis points to 34.1% of sales, direct store expenses improved 11 basis points
to 26.5% of sales, and store contribution improved 58 basis points to 7.6% of
sales.
G&A
expenses, excluding FTC-related legal costs, improved 12 basis points to 2.8% of
sales. FTC-related legal costs totaled $0.5 million in the fourth
quarter versus $2.5 million in the prior year.
Pre-opening
expenses were $10.6 million versus $15.2 million in the prior year.
Relocation,
store closure and lease termination costs were $3.2 million versus $27.2 million
last year. Results in the prior year included $5.5 million in charges
related to lease terminations of Whole Foods Market stores in development and
$14.7 million in store closure adjustments related to idle Wild Oats
properties.
Additional
information on the quarter for comparable stores and all stores is provided in
the following table.
NOPAT
|
#
of
|
Average
|
Total
|
|||||||||||||||||
Comparable Stores
|
Comps
|
ROIC1
|
|
Stores
|
Size
|
Square Feet
|
||||||||||||||
Over
11 years old (15.6 years old, s.f. weighted)
|
-2.1 | % | 68 | % | 97 | 26,900 | 2,612,800 | |||||||||||||
Between
eight and 11 years old
|
-2.2 | % | 43 | % | 56 | 32,000 | 1,792,800 | |||||||||||||
Between
five and eight years old
|
-4.5 | % | 41 | % | 43 | 37,300 | 1,603,700 | |||||||||||||
Between
two and five years old
|
-0.1 | % | 9 | % | 53 | 50,800 | 2,694,000 | |||||||||||||
Less than two years old (including eight
relocations)
|
13.8 | % | -2 | % | 25 | 54,100 | 1,352,300 | |||||||||||||
All
comparable stores (7.8 years old, s.f. weighted)
|
-0.9 | % | 24 | % | 274 | 36,700 | 10,055,600 | |||||||||||||
All
stores (7.4 years old, s.f. weighted)
|
21 | % | 284 | 37,200 | 10,565,800 |
1Reflects
store-level capital and net operating profit after taxes (“NOPAT”), including
pre-opening expense
Growth
and Development
The
Company opened three stores in the fourth quarter. So far in the
first quarter of fiscal year 2010, the Company has opened three stores in San
Francisco, CA; Santa Barbara, CA; and Seattle, WA and closed one former Wild
Oats store in Littleton, CO. The Company currently has 286 stores
totaling 10.6 million square feet. Two additional stores are expected
to open in the first quarter.
Since the
Company’s third quarter earnings release, the Company has reduced the size of
two stores in development by an average of 16,200 square feet
each. The Company also recently signed three new leases in Huntington
Beach, CA; Columbus, OH; and Pittsburgh, PA averaging 33,000 square feet in
size, all currently scheduled to open after fiscal year 2010.
The
following table provides additional information about the Company’s store
openings in fiscal years 2008 and 2009, leases currently tendered but not
opened, and total development pipeline for stores scheduled to open through
fiscal year 2013. For accounting purposes, a store is considered
tendered on the date the Company takes possession of the space for construction
and other purposes, which is typically when the shell of the store is complete
or nearing completion. The average tender period, or length of time between
tender date and opening date, will vary depending on several factors, one of
which is the number of acquired leases, ground leases and owned properties
in development, all of which generally have longer tender periods than standard
operating leases.
Whole
Foods Market, Inc. 550 Bowie
St. Austin, Texas 78703
512.477.5566 fax
512.482.7204
http://www.wholefoodsmarket.com
-3-
Stores
|
Stores
|
Current
|
Current
|
|||||||||||||
Opened
|
Opened
|
Leases
|
Leases
|
|||||||||||||
New Store Information
|
FY08
|
FY09
|
Tendered
|
Signed1
|
||||||||||||
Number
of stores (including relocations)
|
20 | 15 | 18 | 53 | ||||||||||||
Number
of relocations
|
6 | 6 | 1 | 8 | ||||||||||||
Number
of lease acquisitions,
|
||||||||||||||||
ground
leases and owned properties
|
4 | 4 | 4 | 4 | ||||||||||||
New
markets
|
3 | 1 | 4 | 7 | ||||||||||||
Average
store size (gross square feet)
|
53,000 | 53,500 | 43,500 | 44,800 | ||||||||||||
Total
square footage
|
1,060,700 | 801,800 | 783,800 | 2,409,700 | ||||||||||||
Average
tender period in months
|
9.7 | 12.6 | ||||||||||||||
Average
pre-opening expense per store (incl. rent)
|
$ | 2.5 mil | $ | 3.0 mil | ||||||||||||
Average
pre-opening rent per store
|
$ | 1.1 mil | $ | 1.3 mil |
1 Includes
leases tendered
FTC
Update
As
previously announced on June 1, 2009, the FTC approved a settlement
agreement resolving its antitrust challenge to the Company’s acquisition of Wild
Oats Markets, Inc. Under the terms of the agreement, a third-party
divestiture trustee was appointed to market for sale until September 8,
2009: leases and related assets for 19 non-operating former Wild Oats
stores; leases and related fixed assets (excluding inventory) for 12 operating
acquired Wild Oats stores and one operating Whole Foods Market store; and Wild
Oats® trademarks and other intellectual property associated with the Wild Oats
stores.
The
divestiture period has been extended by the FTC until March 8, 2010 for six
operating and two non-operating former Wild Oats stores as well as Wild Oats®
trademarks and other intellectual property associated with the Wild Oats
stores. The divestiture period for those eight stores may be
extended further only to allow the FTC to approve any previously submitted
purchase agreements. The seven remaining operating stores have been
retained by the Company without further obligation to attempt to
divest.
Pursuant
to the FTC’s approval of the final consent order in the third quarter, the
Company recorded non-cash impairment charges to adjust the carrying value of
leases and fixed assets to fair value relating to the potential sales of certain
operating stores. Cash expenses relating to legal and trustee fees
are not expected to be material. No additional material charges are
expected related to the potential sale of the six operating stores, the two
non-operating properties for which a lease liability reserve is already
recorded, or the trademarks which have been fully amortized.
Redemption
of Series A Preferred Stock
On
October 23, 2009, the Company announced that it exercised its right to redeem
the $425 million of Series A Preferred Stock issued to Leonard Green &
Partners last year. Under the terms of the agreement, the Company has the
option to redeem the preferred stock upon 30 days written notice if its common
stock closes at or above $28.50 for 20 consecutive trading days. Also
under the terms of the agreement, Leonard Green & Partners has the right to
convert its preferred stock into common stock prior to
redemption.
Based on
the conversion rate and the current trading price of its common stock, the
Company anticipates that Leonard Green & Partners will choose to convert the
preferred stock into common stock prior to the November 27, 2009 redemption
date. The conversion of the preferred stock will save the Company
approximately $34 million in preferred cash dividends per year. If the
preferred stock is converted as expected, the Company’s common stock outstanding
will increase by approximately 29.7 million shares. The net impact on
future diluted earnings per share should not be material.
Whole
Foods Market, Inc. 550 Bowie
St. Austin, Texas 78703
512.477.5566 fax
512.482.7204
http://www.wholefoodsmarket.com
-4-
Assumptions
for Fiscal Year 2010
For the
first five weeks of the first quarter of fiscal year 2010, total sales increased
5%. Comparable store sales increased 1.6% versus a 2.1% decrease in
the prior year, and identical store sales increased 0.4% versus a 3.3% decrease
in the prior year.
The
Company is pleased with its sales trends quarter to date;
however, increased price investments could negatively impact our sales
going forward, and with no anticipated positive change in the economy over the
short term, the Company believes it is reasonable to expect sales results for
the fiscal year in line with or slightly better than these quarter-to-date
results. For the fiscal year, the Company expects sales growth of 5%
to 8%, comparable store sales growth of 1% to 4%, and identical store sales
growth of 0% to 3%. The Company expects to open 16 new stores, 10 of
which are expected to open in the first half of the year.
While
sales comparisons will be easier in the first half of the year, the Company will
have difficult expense comparisons due to the cost savings realized in fiscal
year 2009. In addition, with 0% to 3% identical store sales growth,
the Company does not expect to realize the same year-over-year operating margin
improvement in its younger stores as has been produced in the
past. For these reasons, and given the likelihood of continued
selective, strategic price investments, the Company expects operating margin to
be in line with the 4.1% produced in fiscal year 2009 excluding non-cash asset
impairment charges, FTC-related legal and settlement costs, and store closure
reserve adjustments.
The
Company expects total pre-opening and relocation costs in the range of $55
million to $60 million.
The
Company expects net interest expense of $28 million to $32 million.
The
Company expects an annualized effective tax rate in the range of 41% to
42%.
Based on
these assumptions, the Company estimates EBITDA in the range of $625 million to
$650 million and EBITANCE in the range of $675 million to $700
million.
The
Company estimates diluted earnings per share, based on approximately 170 million
weighted average shares outstanding, in the range of $1.05 to
$1.10.
Capital
expenditures for the fiscal year are expected to be in the range of $350 million
to $400 million. Of this amount, approximately 60% to 65% relates to new
stores opening in fiscal year 2010 and beyond.
The
following table provides information about the Company’s estimated store
openings in fiscal years 2010 through 2013 based on the current development
pipeline. These openings reflect estimated tender dates, which are
subject to change, and do not incorporate any potential new leases, terminations
or square footage reductions.
The
Company is committed to producing positive free cash flow on an annual basis and
is confident it will produce operating cash flow in excess of the capital
expenditures needed to open the stores in its current development
pipeline.
Total
|
Average Square
|
Ending Square
|
Ending Square
|
|||||||||||||||||
Openings
|
Relocations
|
Feet per Store
|
Footage1
|
Footage Growth
|
||||||||||||||||
FY10
remaining stores in development
|
13 | 0 | 44,600 | 11,216,100 | 6.2 | % | ||||||||||||||
FY11
stores in development
|
17 | 4 | 39,600 | 11,772,300 | 5.0 | % | ||||||||||||||
FY12
stores in development
|
15 | 2 | 46,900 | 12,426,600 | 5.6 | % | ||||||||||||||
FY13
stores in development
|
8 | 2 | 52,300 | 12,781,200 | ||||||||||||||||
Total
|
53 | 8 | 44,800 |
1 Reflects
year-to-date openings/closures in fiscal year 2010 and one expansion in
development in fiscal year 2011
Whole
Foods Market, Inc. 550 Bowie
St. Austin, Texas 78703
512.477.5566 fax
512.482.7204
http://www.wholefoodsmarket.com
-5-
About
Whole Foods Market
Founded
in 1980 in Austin, Texas, Whole Foods Market (www.wholefoodsmarket.com) is the
leading natural and organic foods supermarket, America’s first national
certified organic grocer, and was named “America’s Healthiest Grocery Store” in
2008 by Health
magazine. In fiscal year
2008, the Company had sales of approximately $8 billion and currently has 286
stores in the United States, Canada, and the United Kingdom. Whole
Foods Market employs more than 52,000 Team Members and has been ranked for 12
consecutive years as one of the “100 Best Companies to Work For” in America by
Fortune
magazine.
Forward-looking
statements
The
following constitutes a "Safe Harbor" statement under the Private Securities
Litigation Reform Act of 1995. Except for the historical information
contained herein, the matters discussed in this press release are
forward-looking statements that involve risks and uncertainties, which could
cause our actual results to differ materially from those described in the
forward-looking statements. These risks include but are not limited to
general business conditions, the successful integration of acquired businesses
into our operations, changes in overall economic conditions that impact consumer
spending, including fuel prices and housing market trends, the impact of
competition, changes in the Company’s access to available capital, and other
risks detailed from time to time in the SEC reports of Whole Foods Market,
including Whole Foods Market’s report on Form 10-K for the fiscal year ended
September 28, 2008. Whole Foods Market undertakes no obligation to update
forward-looking statements.
The
Company will host a conference call today to discuss this earnings announcement
at 4:00 p.m. CT. The dial-in number is 1-800-862-9098, and the conference
ID is “Whole Foods.” A simultaneous audio webcast will be available at
www.wholefoodsmarket.com.
Whole
Foods Market, Inc. 550 Bowie
St. Austin, Texas 78703
512.477.5566 fax
512.482.7204
http://www.wholefoodsmarket.com
-6-
Whole
Foods Market, Inc.
Consolidated
Statements of Operations (unaudited)
(In
thousands, except per share amounts)
Twelve
weeks ended
|
Fifty-two
weeks ended
|
|||||||||||||||
September
27, 2009
|
September
28, 2008
|
September
27, 2009
|
September
28, 2008
|
|||||||||||||
Sales
|
$ | 1,829,229 | $ | 1,788,919 | $ | 8,031,620 | $ | 7,953,912 | ||||||||
Cost
of goods sold and occupancy costs
|
1,203,263 | 1,192,917 | 5,277,310 | 5,247,207 | ||||||||||||
Gross
profit
|
625,966 | 596,002 | 2,754,310 | 2,706,705 | ||||||||||||
Direct
store expenses
|
491,593 | 474,983 | 2,130,982 | 2,106,449 | ||||||||||||
Asset
impairments from continuing locations
|
20 | 1,491 | 14,827 | 1,491 | ||||||||||||
Store
contribution
|
134,353 | 119,528 | 608,501 | 598,765 | ||||||||||||
General
and administrative expenses
|
51,725 | 54,669 | 243,749 | 270,428 | ||||||||||||
Operating
income before pre-opening and store closure
|
82,628 | 64,859 | 364,752 | 328,337 | ||||||||||||
Pre-opening
expenses
|
10,602 | 15,151 | 49,218 | 55,554 | ||||||||||||
Relocation,
store closure and lease termination costs
|
3,248 | 27,159 | 31,185 | 36,545 | ||||||||||||
Operating
income
|
68,778 | 22,549 | 284,349 | 236,238 | ||||||||||||
Interest
expense
|
(7,892 | ) | (8,303 | ) | (36,856 | ) | (36,416 | ) | ||||||||
Investment
and other income
|
921 | 1,267 | 3,449 | 6,697 | ||||||||||||
Income
before income taxes
|
61,807 | 15,513 | 250,942 | 206,519 | ||||||||||||
Provision
for income taxes
|
25,397 | 14,011 | 104,138 | 91,995 | ||||||||||||
Net
income
|
36,410 | 1,502 | 146,804 | 114,524 | ||||||||||||
Preferred
stock dividends
|
7,744 | - | 28,050 | - | ||||||||||||
Income
available to common shareholders
|
$ | 28,666 | $ | 1,502 | $ | 118,754 | $ | 114,524 | ||||||||
Basic
earnings per share
|
$ | 0.20 | $ | 0.01 | $ | 0.85 | $ | 0.82 | ||||||||
Weighted
average shares outstanding
|
140,510 | 140,286 | 140,414 | 139,886 | ||||||||||||
Diluted
earnings per share
|
$ | 0.20 | $ | 0.01 | $ | 0.85 | $ | 0.82 | ||||||||
Weighted
average shares outstanding, diluted basis
|
140,510 | 140,286 | 140,414 | 140,011 | ||||||||||||
Dividends
declared per common share
|
$ | - | $ | - | $ | - | $ | 0.60 |
Whole
Foods Market, Inc. 550 Bowie
St. Austin, TX 78703
512.477.4455 fax
512.482.7204
http://www.wholefoodsmarket.com
-7-
Whole
Foods Market, Inc.
Condensed
Consolidated Balance Sheets (unaudited)
September
27, 2009 and September 28, 2008
(In
thousands)
Assets
|
||||||||
2009
|
2008
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 430,130 | $ | 30,534 | ||||
Restricted
cash
|
71,023 | 617 | ||||||
Accounts
receivable
|
104,731 | 115,424 | ||||||
Merchandise
inventories
|
310,602 | 327,452 | ||||||
Prepaid
expenses and other current assets
|
51,137 | 68,150 | ||||||
Deferred
income taxes
|
87,757 | 80,429 | ||||||
Total
current assets
|
1,055,380 | 622,606 | ||||||
Property
and equipment, net of accumulated depreciation and
amortization
|
1,897,853 | 1,900,117 | ||||||
Goodwill
|
658,254 | 659,559 | ||||||
Intangible
assets, net of accumulated amortization
|
73,035 | 78,499 | ||||||
Deferred
income taxes
|
91,000 | 109,002 | ||||||
Other
assets
|
7,866 | 10,953 | ||||||
Total
assets
|
$ | 3,783,388 | $ | 3,380,736 |
Liabilities
and Shareholders' Equity
|
||||||||
2009
|
2008
|
|||||||
Current
liabilities:
|
||||||||
Current
installments of long-term debt and capital lease
obligations
|
$ | 389 | $ | 380 | ||||
Accounts
payable
|
189,597 | 183,134 | ||||||
Accrued
payroll, bonus and other benefits due team members
|
207,983 | 196,233 | ||||||
Dividends
payable
|
8,217 | - | ||||||
Other
current liabilities
|
277,838 | 286,430 | ||||||
Total
current liabilities
|
684,024 | 666,177 | ||||||
Long-term
debt and capital lease obligations, less current
installments
|
738,848 | 928,790 | ||||||
Deferred
lease liabilities
|
250,326 | 199,635 | ||||||
Other
long-term liabilities
|
69,262 | 80,110 | ||||||
Total
liabilities
|
1,742,460 | 1,874,712 | ||||||
Series
A redeemable preferred stock, $0.01 par value, 425 and no
shares authorized, issued and outstanding in 2009 and 2008,
respectively
|
413,052 | - | ||||||
Shareholders'
equity
|
1,627,876 | 1,506,024 | ||||||
Commitments
and contingencies
|
||||||||
Total
liabilities and shareholders' equity
|
$ | 3,783,388 | $ | 3,380,736 |
Whole
Foods Market, Inc. 550 Bowie
St. Austin, TX 78703
512.477.4455 fax
512.482.7204
http://www.wholefoodsmarket.com
-8-
Whole
Foods Market, Inc.
Consolidated
Statements of Cash Flows (unaudited)
(In
thousands)
Fifty-two
weeks ended
|
||||||||
September
27, 2009
|
September
28, 2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 146,804 | $ | 114,524 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
266,695 | 249,213 | ||||||
Loss
on disposition of fixed assets
|
3,012 | 3,754 | ||||||
Impairment
of long-lived assets
|
24,508 | 9,195 | ||||||
Share-based
payments expense
|
12,795 | 10,505 | ||||||
LIFO
expense (benefit)
|
(5,598 | ) | 12,683 | |||||
Deferred
income tax expense (benefit)
|
14,076 | (9,993 | ) | |||||
Excess
tax benefit related to exercise of team member stock
options
|
(42 | ) | (5,686 | ) | ||||
Deferred
lease liabilities
|
48,029 | 44,167 | ||||||
Other
|
2,800 | (65 | ) | |||||
Net
change in current assets and liabilities:
|
||||||||
Accounts
receivable
|
10,408 | (10,468 | ) | |||||
Merchandise
inventories
|
21,732 | (52,630 | ) | |||||
Prepaid
expenses and other current assets
|
21,415 | (27,833 | ) | |||||
Accounts
payable
|
6,527 | (45,378 | ) | |||||
Accrued
payroll, bonus and other benefits due team members
|
11,985 | 14,413 | ||||||
Other
current liabilities
|
14,696 | 14,350 | ||||||
Net
change in other long-term liabilities
|
(12,121 | ) | 14,241 | |||||
Net
cash provided by operating activities
|
587,721 | 334,992 | ||||||
Cash
flows from investing activities:
|
||||||||
Development
costs of new locations
|
(247,999 | ) | (357,520 | ) | ||||
Other
property and equipment expenditures
|
(66,616 | ) | (171,952 | ) | ||||
Acquisition
of intangible assets
|
(1,604 | ) | (1,630 | ) | ||||
Purchase
of available-for-sale securities
|
- | (194,316 | ) | |||||
Sale
of available-for-sale securities
|
- | 194,316 | ||||||
Decrease
(increase) in restricted cash
|
(70,406 | ) | 1,693 | |||||
Payment
for purchase of acquired entities, net of cash acquired
|
- | (5,480 | ) | |||||
Proceeds
from divestiture, net
|
- | 163,913 | ||||||
Other
investing activities
|
342 | (1,745 | ) | |||||
Net
cash used in investing activities
|
(386,283 | ) | (372,721 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Common
stock dividends paid
|
- | (109,072 | ) | |||||
Preferred
stock dividends paid
|
(19,833 | ) | - | |||||
Issuance
of common stock
|
4,286 | 18,019 | ||||||
Excess
tax benefit related to exercise of team member stock
options
|
42 | 5,686 | ||||||
Proceeds
from issuance of redeemable preferred stock, net
|
413,052 | - | ||||||
Proceeds
from long-term borrowings
|
123,000 | 317,000 | ||||||
Payments
on long-term debt and capital lease obligations
|
(321,092 | ) | (161,151 | ) | ||||
Other
financing activities
|
- | (652 | ) | |||||
Net
cash provided by financing activities
|
199,455 | 69,830 | ||||||
Effect
of exchange rate changes on cash and cash equivalents
|
(1,297 | ) | (1,567 | ) | ||||
Net
change in cash and cash equivalents
|
399,596 | 30,534 | ||||||
Cash
and cash equivalents at beginning of period
|
30,534 | - | ||||||
Cash
and cash equivalents at end of period
|
$ | 430,130 | $ | 30,534 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Interest
paid
|
$ | 43,685 | $ | 36,155 | ||||
Federal
and state income taxes paid
|
$ | 69,701 | $ | 118,366 |
Whole
Foods Market, Inc. 550 Bowie
St. Austin, TX 78703
512.477.4455 fax
512.482.7204
http://www.wholefoodsmarket.com
-9-
Whole
Foods Market, Inc.
Non-GAAP
Financial Measures (unaudited)
(In
thousands)
In
addition to reporting financial results in accordance with generally accepted
accounting principles, or GAAP, the Company provides information regarding
Economic Value Added (“EVA”), Earnings before interest, taxes and non-cash
expenses ("EBITANCE"), Earnings before interest, taxes, depreciation
and amortization (“EBITDA”), Adjusted EBITDA and Free Cash Flow in the press
release as additional information about its operating results. These
measures are not in accordance with, or an alternative to, GAAP. The Company’s
management believes that these presentations provide useful information to
management, analysts and investors regarding certain additional financial and
business trends relating to its results of operations and financial condition.
In addition, management uses these measures for reviewing the financial results
of the Company as well as for incentive compensation and capital planning
purposes. Management believes EBITANCE is a useful non-GAAP measure of financial
performance, helping investors more meaningfully evaluate the Company’s cash
flow results by adjusting for certain non-cash expenses. These
expenses include depreciation, amortization, fixed asset impairment charges,
non-cash share-based payments expense, deferred rent, and LIFO charge. Similar
to EBITDA, this measure goes further by including other non-cash expenses,
primarily those which have arisen since the use of EBITDA became common practice
and because of accounting changes due to recent accounting pronouncements.
Management uses EBITANCE as a supplement to cash flows from operations to assess
the cash generated from our business available for capital expenditures and the
servicing of other requirements including working capital. The Company defines
Adjusted EBITDA as EBITDA plus non-cash asset impairment charges. The Company
defines Free Cash Flow as net cash provided by operating activities less capital
expenditures.
The
following is a tabular reconciliation of the EVA non-GAAP financial measure to
GAAP net income, which the Company believes to be the most directly comparable
GAAP financial measure.
Twelve weeks ended
|
Fifty-two weeks ended
|
|||||||||||||||
EVA
|
September 27, 2009
|
September 28, 2008
|
September 27, 2009
|
September 28, 2008
|
||||||||||||
Net
income
|
$ | 36,410 | $ | 1,502 | $ | 146,804 | $ | 114,524 | ||||||||
Provision
for income taxes
|
25,397 | 14,011 | 104,138 | 91,995 | ||||||||||||
Interest
expense and other
|
15,397 | 22,336 | 58,528 | 64,276 | ||||||||||||
NOPBT
|
77,204 | 37,849 | 309,470 | 270,795 | ||||||||||||
Income
taxes (40%)
|
30,882 | 15,140 | 123,788 | 108,318 | ||||||||||||
NOPAT
|
46,322 | 22,709 | 185,682 | 162,477 | ||||||||||||
Capital
charge
|
64,324 | 55,249 | 265,869 | 231,049 | ||||||||||||
EVA
|
$ | (18,002 | ) | $ | (32,540 | ) | $ | (80,187 | ) | $ | (68,572 | ) |
The
following is a tabular presentation of the non-GAAP financial measures, EBITDA,
Adjusted EBITDA and EBITANCE including a reconciliation to GAAP net income,
which the Company believes to be the most directly comparable GAAP financial
measure.
Twelve
weeks ended
|
Fifty-two
weeks ended
|
|||||||||||||||
EBITDA and EBITANCE
|
September 27, 2009
|
September 28, 2008
|
September 27, 2009
|
September 28, 2008
|
||||||||||||
Net
income
|
$ | 36,410 | $ | 1,502 | $ | 146,804 | $ | 114,524 | ||||||||
Provision
for income taxes
|
25,397 | 14,011 | 104,138 | 91,995 | ||||||||||||
Interest
expense, net
|
6,971 | 7,036 | 33,407 | 29,719 | ||||||||||||
Operating
income
|
68,778 | 22,549 | 284,349 | 236,238 | ||||||||||||
Depreciation
and amortization
|
62,404 | 59,827 | 266,695 | 249,213 | ||||||||||||
Earnings
before interest, taxes, depreciation & amortization
(EBITDA)
|
131,182 | 82,376 | 551,044 | 485,451 | ||||||||||||
Impairment
of assets
|
2,344 | 9,096 | 24,508 | 9,195 | ||||||||||||
Adjusted
EBITDA
|
133,526 | 91,472 | 575,552 | 494,646 | ||||||||||||
Non-cash
expenses:
|
||||||||||||||||
Share-based
payments expense
|
3,966 | 2,906 | 12,795 | 10,505 | ||||||||||||
LIFO
expense (benefit)
|
(3,421 | ) | 4,651 | (5,598 | ) | 12,683 | ||||||||||
Deferred
rent
|
8,732 | 7,290 | 37,079 | 34,874 | ||||||||||||
Total
other non-cash expenses
|
9,277 | 14,847 | 44,276 | 58,062 | ||||||||||||
Earnings
before interest, taxes, and non-cash expenses (EBITANCE)
|
$ | 142,803 | $ | 106,319 | $ | 619,828 | $ | 552,708 |
The
following is a tabular reconciliation of the Free Cash Flow non-GAAP financial
measure.
Twelve
weeks ended
|
Fifty-two
weeks ended
|
|||||||||||||||
Free
Cash Flow
|
September 27, 2009
|
September 28, 2008
|
September 27, 2009
|
September 28, 2008
|
||||||||||||
Net
cash provided by operating activities
|
$ | 113,000 | $ | 63,613 | $ | 587,721 | $ | 334,992 | ||||||||
Development
costs of new locations
|
(51,050 | ) | (73,495 | ) | (247,999 | ) | (357,520 | ) | ||||||||
Other
property and equipment expenditures
|
(11,434 | ) | (61,139 | ) | (66,616 | ) | (171,952 | ) | ||||||||
Free
cash flow
|
$ | 50,516 | $ | (71,021 | ) | $ | 273,106 | $ | (194,480 | ) |
Whole
Foods Market, Inc. 550 Bowie
St. Austin, TX 78703
512.477.4455 fax
512.482.7204
http://www.wholefoodsmarket.com
-10-