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| 8-K - FORM 8-K FILING DOCUMENT - WHOLE FOODS MARKET INC | document.htm |
EXHIBIT 99.1
Whole Foods Market Reports Fourth Quarter Results
Comparable Store Sales Increase 8.7%; Company Produces 5.0% Operating Margin and $0.42 in Earnings Per Share, Raises Quarterly Dividend 40% to $0.14 Per Share, and Announces $200 Million Share Repurchase Authorization
AUSTIN, Texas, Nov. 2, 2011 (GLOBE NEWSWIRE) -- Whole Foods Market, Inc. (Nasdaq:WFM) today reported results for the 12-week fourth quarter ended September 25, 2011. Sales for the quarter increased 12% to $2.4 billion. Comparable store sales increased 8.7%, or 17.4% on a two-year stacked basis. Identical store sales, excluding six relocations and one expansion, increased 8.4%, or 17.1% on a two-year stacked basis. Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 12% from the prior year to $185.3 million, net income increased 31% to $75.5 million, and diluted earnings per share increased 26% to $0.42. Results included a LIFO charge of $3.8 million versus a credit of $1.2 million in the prior year; pre-opening expenses of $10.9 million versus $4.9 million in the prior year; net interest income of $1.4 million versus net interest expense of $5.7 million in the prior year; and an effective tax rate of 36.4% versus 39.6% in the prior year.
"We are pleased to end the fiscal year on a high note, crossing $10 billion in sales and reporting our eighth consecutive quarter of accelerating two-year identical store sales growth," said John Mackey, co-founder and co-chief executive officer of Whole Foods Market. "Our outlook for fiscal year 2012 reflects consistent identical store sales growth, a record number of new store openings, EBITDA of close to $1 billion, and significant operating margin improvement. We are continuing to produce quality results and expect the lessons we learned during the recession will drive even higher levels of operating performance and returns on invested capital over time."
The following table shows the Company's comparable and identical store sales results for the last five quarters and for the first five weeks of the first quarter through October 30, 2011.
| QTD | ||||||
| 4Q10 | 1Q11 | 2Q11* | 3Q11* | 4Q11 | 1Q12 | |
| Sales growth | 14.7% | 13.8% | 11.6% | 10.9% | 12.2% | 13.0% |
| Comparable store sales growth | 8.7% | 9.1% | 7.8% | 8.4% | 8.7% | 8.7% |
| Two-year comps | 7.7% | 12.6% | 16.5% | 17.2% | 17.4% | 17.6% |
| Identical store sales growth | 8.7% | 9.1% | 7.8% | 8.1% | 8.4% | 8.2% |
| Two-year idents | 6.4% | 11.6% | 15.5% | 16.5% | 17.1% | 17.1% |
| Sequential basis point change | 178 | 518 | 392** | 106** | 53 | |
| *Comparable and identical store sales growth includes a negative 50 basis point impact in 2Q11 and a positive 60 basis point impact in 3Q11 from the Easter shift. | ||||||
| **Excluding the Easter shift in both quarters, two-year idents on a sequential basis increased 440 basis points to 16.0% in 2Q11 and declined five basis points to 15.9% in 3Q11. | ||||||
For the quarter, the LIFO charge was $3.8 million versus a credit of $1.2 million in the prior year, a negative impact of 21 basis points. Excluding LIFO, gross profit increased 11 basis points to 34.7% of sales driven by an improvement in occupancy costs as a percentage of sales. Direct store expenses improved 54 basis points to 25.9% of sales due primarily to leverage in wages, depreciation, and healthcare as a percentage of sales. As a result, store contribution, excluding LIFO, improved 65 basis points to 8.8% of sales.
For stores in the identical store base, gross profit improved 14 basis points to 34.8% of sales, direct store expenses improved 71 basis points to 25.8% of sales, and store contribution improved 85 basis points to 9.0% of sales.
G&A expenses were flat at 3.1% of sales.
Pre-opening expenses were $10.9 million versus $4.9 million in the prior year, with five new store openings in the fourth quarter this year compared to one in the fourth quarter last year. Relocation, store closure and lease termination costs were $1.8 million versus $0.8 million in the prior year.
Net interest income was $1.4 million versus net interest expense of $5.7 million in the prior year. This change was due mainly to a decrease in total debt from the prior year.
The effective tax rate was 36.4% versus 39.6% in the prior year due to savings realized by the Company as a result of certain initiatives and investments.
During the quarter, the Company produced $159.6 million in cash flow from operations and invested $93.4 million in capital expenditures, of which $47.4 million related to new stores. This resulted in free cash flow of $66.3 million. In addition, the Company paid $17.7 million in dividends to shareholders and received $85.8 million in proceeds from the exercise of team member stock options.
The Company finished the year with total cash and cash equivalents, restricted cash, and investments of $799.1 million, and total debt (capital lease obligations) of $17.9 million.
The Company today announced that its Board of Directors declared a 40% increase in the Company's quarterly dividend to $0.14 per share from $0.10 per share. The next dividend is payable on January 24, 2012 to shareholders of record as of January 13, 2012.
In addition, the Company's Board of Directors authorized a new share repurchase program in the amount of $200 million through November 1, 2013. Under the program, purchases can be made from time to time using a variety of methods, which may include open market purchases or purchases through a Rule 10b5-1 trading plan, all in accordance with Securities and Exchange Commission and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company's discretion.
"With today's dividend increase and share repurchase announcements, our board of directors has shown a clear vote of confidence in our ability to consistently execute and generate strong free cash flow," said Walter Robb, co-chief executive officer of Whole Foods Market. "We are well positioned to internally fund our accelerated new store growth, maintain a healthy cash reserve, increase our dividend, and seek additional value creation for our shareholders through selective stock repurchases."
Additional information on the quarter for comparable stores and all stores is provided in the following table.
| NOPAT | # of | Average | Total | ||
| Comparable Stores | Comps | ROIC* | Stores | Size | Square Feet |
| Over 15 years old (18.9 years old, s.f. weighted) | 5.7% | 105% | 62 | 26,700 | 1,656,600 |
| Between 11 and 15 years old | 7.5% | 74% | 67 | 31,700 | 2,123,500 |
| Between eight and 11 years old | 7.0% | 63% | 42 | 33,800 | 1,419,700 |
| Between five and eight years old | 8.3% | 51% | 50 | 44,100 | 2,204,500 |
| Between two and five years old | 11.5% | 14% | 56 | 54,200 | 3,037,000 |
| Less than two years old (including six relocations) | 18.3% | 7% | 21 | 42,100 | 884,300 |
| All comparable stores (8.6 years old, s.f. weighted) | 8.7% | 39% | 298 | 38,000 | 11,325,700 |
| All stores (8.3 years old, s.f. weighted) | 36% | 311 | 38,000 | 11,832,300 | |
| *Reflects store-level capital and net operating profit after taxes ("NOPAT"), including pre-opening expense | |||||
Fiscal Year Results
For the 52 weeks ended September 25, 2011, sales increased 12% to $10.1 billion. Comparable store sales increased 8.5%, or 15.7% on a two-year stacked basis. Identical store sales, excluding six relocations and one expansion, increased 8.4%, or 14.9% on a two-year stacked basis. EBITDA increased 17% to $834.7 million, income available to common shareholders increased 43% to $342.6 million, and diluted earnings per share increased 35% to $1.93. Fiscal-year results included a LIFO charge of $10.3 million versus a credit of $7.7 million in the prior year; store closure reserve adjustments of $1.6 million versus $6.9 million in the prior year; a gain of $3.2 million in the prior year from the sale of a non-operating property; net interest income of $4.1 million versus net interest expense of $26.2 million in the prior year; and an effective tax rate of 37.9% versus 40.3% in the prior year.
For the fiscal year, the Company produced $754.8 million in cash flow from operations and invested $365.0 million in capital expenditures, of which $203.5 million related to new stores. This resulted in free cash flow of $389.9 million. In addition, the Company repaid the $490 million balance on its term loan, made three dividend payments to shareholders totaling $52.6 million, and received $296.7 million in proceeds from the exercise of team member stock options.
The following table shows the Company's results for the fiscal year for certain line items compared to its historical five-year ranges and averages.
| FY06-FY10 Range | FY06-FY10 | |||
| Low | High | Average | FY11 | |
| Sales growth | 1.0% | 23.6% | 14.2% | 12.2% |
| Comparable store sales growth | -3.1% | 11.0% | 5.4% | 8.5% |
| Identical store sales growth | -4.3% | 10.3% | 4.4% | 8.4% |
| Ending square footage growth | 6% | 46% | 15% | 5% |
| Percent of sales from new & relocated stores | 7% | 9% | 7% | 4% |
| Gross profit | 34.0% | 34.9% | 34.6% | 35.0% |
| Direct store expenses | 25.4% | 26.7% | 26.3% | 26.0% |
| Store contribution | 7.5% | 9.6% | 8.3% | 9.0% |
| G&A expenses | 3.0% | 3.4% | 3.2% | 3.1% |
Growth and Development
The Company opened five stores, including two relocations, in the fourth quarter and has opened five stores so far in the first quarter. The Company expects to open one additional store in the first quarter. The Company currently has 316 stores totaling approximately 12 million square feet.
The Company recently signed nine new leases averaging 32,100 square feet in size in Phoenix, AZ; Tucson, AZ; Davis, CA; Littleton, CO; Tallahassee, FL; Tulsa, OK; Addison, TX; Katy, TX; and London, England. These stores currently are scheduled to open in fiscal year 2012 and beyond.
The following table provides additional information about the Company's store openings in fiscal years 2010, 2011, and 2012 year to date; leases currently tendered but unopened; and total development pipeline (including leases currently tendered) for stores scheduled to open through fiscal year 2015.
| Stores | Stores | Stores | Current | Current | |
| Opened | Opened | Opened | Leases | Leases | |
| New Store Information | FY10 | FY11 | FY12 YTD | Tendered | Signed |
| Number of stores (including relocations) | 16 | 18 | 5 | 16 | 62 |
| Number of relocations | 0 | 6 | 0 | 2 | 7 |
| New markets | 4 | 0 | 1 | 4 | 19 |
| Average store size (gross square feet) | 42,600 | 39,400 | 35,900 | 35,200 | 35,300 |
| Total square footage | 682,200 | 708,700 | 179,700 | 562,700 | 2,192,000 |
| Average tender period in months | 10.9 | 12.5 | |||
| Average pre-opening expense per store (incl. rent) | $2.6 mil | $2.5 mil | |||
| Average pre-opening rent per store | $1.2 mil | $1.2 mil | |||
| Average development cost (excl. pre-opening)* | $11.1 mil | $9.8 mil | |||
| Average development cost per square foot* | $261 | $248 | |||
| *Costs will vary depending on the size of the store, geographic location, degree of work performed by the landlord and complexity of site development issues. To a significant degree, they also depend on how the project is structured, including costs for elements that often increase or decrease rent, e.g., lease acquisition costs, shell and/or garage costs, and landlord allowances. For stores opened in FY11, development costs are estimated for projects not yet final. | |||||
Outlook for Fiscal Year 2012
The Company is maintaining its previously issued guidance for fiscal year 2012. The Company notes that fiscal year 2012 will be a 53-week year, with the extra week falling in the fourth quarter, making it a 13-week quarter. The following table provides information on the Company's estimated and actual fiscal year 2011 results, along with expectations for fiscal year 2012 on a 53-week basis.
| FY12 | |||
| FY11(E) | FY11(A) | 53-Week Outlook* | |
| Sales growth | 12.2% - 12.4% | 12.2% | 13% - 15% |
| Comparable store sales growth | 8.5% - 8.7% | 8.5% | 6.8% - 8.8% |
| Two-year comps | 15.6% - 15.8% | 15.7% | 15.3% - 17.3% |
| Identical store sales growth | 8.3% - 8.6% | 8.4% | 6.5% - 8.5% |
| Two-year idents | 14.8% - 15.1% | 14.9% | 14.9% - 16.9% |
| Number of new stores | 18 | 18 | 24 - 27 |
| % of sales from new stores | 4% | 4% | 5% |
| Ending square footage growth | 5% | 5% | 7% - 8% |
| LIFO charge | $10.0 - $11.0 mil | $10.3 mil | $5 - $8 mil |
| G&A expenses | 3.1% | 3.1% | 3.0% |
| Pre-opening and relocation costs | $48.5 - $50.0 mil | $49.2 mil | $51 - $56 mil |
| Operating margin | 5.4% | 5.4% | 5.7% - 5.8% |
| EBITDA | $833 - $836 mil | $834.7 mil | $960 - $980 mil |
| Net interest income | $3.6 - $4.1 mil | $4.1 mil | $6 - $8 mil |
| Tax rate | 38.3% | 37.9% | 38.5% - 39.0% |
| Diluted shares outstanding | 177 mil | 177 mil | 183 mil |
| Diluted EPS | $1.91 - $1.92 | $1.93 | $2.21 - $2.26 |
| YOY % change | 34% | 35% | 15% - 17% |
| Capital expenditures | $375 - $385 mil | $365 mil | $410 - $460 mil |
| *The Company estimates the impact on earnings from the extra week to be $0.06 per share. On a 52-week to 52-week basis, excluding the impact of the extra week in the fourth quarter, the Company expects total sales growth of 11% to 13% and earnings per share growth of 12% to 14%. | |||
The Company is committed to producing positive free cash flow on an annual basis, including sufficient cash flow to fund the 62 stores in its current development pipeline. The following table provides information about the Company's estimated store openings for the next two fiscal years.
| Estimated | Average Square | Ending Square | ||
| Openings | Relocations | Feet per Store | Footage Growth | |
| Fiscal year 2012 | 24 - 27 | 1 - 2 | 35,000 | 7% - 8% |
| Fiscal year 2013 | 28 - 32 | 2 - 3 | 35,000 | 7% - 8% |
Over the long term, the Company considers 1,000 stores to be a reasonable indication of its market opportunity in the United States as the Whole Foods Market brand continues to strengthen, consumer demand for natural and organic products continues to increase, and the Company's flexibility on new store size opens up additional market opportunities. The Company believes Canada and the United Kingdom hold great promise as well.
About Whole Foods Market
Founded in 1980 in Austin, Texas, Whole Foods Market (www.wholefoodsmarket.com) is the leading retailer of natural and organic foods and America's first national "Certified Organic" grocer. In fiscal year 2011, the Company had sales of approximately $10 billion and currently has 316 stores in the United States, Canada, and the United Kingdom. Whole Foods Market employs approximately 64,000 Team Members and has been ranked for 14 consecutive years as one of the "100 Best Companies to Work For" in America by Fortune magazine.
The Whole Foods Market, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6063
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 general business conditions, changes in overall economic conditions that impact consumer spending, including fuel prices and housing market trends, the impact of competition 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-Q for the third fiscal quarter ended July 3, 2011. 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 (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. | ||||
| Consolidated Statements of Operations (unaudited) | ||||
| (In thousands, except per share amounts) | ||||
| Twelve weeks ended | Fifty-two weeks ended | |||
| September 25, 2011 | September 26, 2010 | September 25, 2011 | September 26, 2010 | |
| Sales | $ 2,353,833 | $ 2,097,394 | $ 10,107,787 | $ 9,005,794 |
| Cost of goods sold and occupancy costs | 1,540,783 | 1,370,768 | 6,571,238 | 5,869,519 |
| Gross profit | 813,050 | 726,626 | 3,536,549 | 3,136,275 |
| Direct store expenses | 609,356 | 554,218 | 2,628,811 | 2,376,590 |
| Store contribution | 203,694 | 172,408 | 907,738 | 759,685 |
| General and administrative expenses | 73,675 | 65,820 | 310,920 | 272,449 |
| Operating income before pre-opening and store closure | 130,019 | 106,588 | 596,818 | 487,236 |
| Pre-opening expenses | 10,885 | 4,907 | 40,852 | 38,044 |
| Relocation, store closure and lease termination costs | 1,826 | 765 | 8,346 | 11,217 |
| Operating income | 117,308 | 100,916 | 547,620 | 437,975 |
| Interest expense | -- | (7,291) | (3,882) | (33,048) |
| Investment and other income | 1,443 | 1,618 | 7,974 | 6,854 |
| Income before income taxes | 118,751 | 95,243 | 551,712 | 411,781 |
| Provision for income taxes | 43,276 | 37,745 | 209,100 | 165,948 |
| Net income | 75,475 | 57,498 | 342,612 | 245,833 |
| Preferred stock dividends | -- | -- | -- | 5,478 |
| Income available to common shareholders | $ 75,475 | $ 57,498 | $ 342,612 | $ 240,355 |
| Basic earnings per share | $ 0.42 | $ 0.33 | $ 1.96 | $ 1.45 |
| Weighted average shares outstanding | 177,767 | 171,961 | 175,221 | 166,244 |
| Diluted earnings per share | $ 0.42 | $ 0.33 | $ 1.93 | $ 1.43 |
| Weighted average shares outstanding, diluted basis | 179,832 | 172,761 | 177,279 | 171,710 |
| Dividends declared per common share | $ 0.10 | $ -- | $ 0.40 | $ -- |
| A reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations follows: | ||||
| Twelve weeks ended | Fifty-two weeks ended | |||
| September 25, 2011 | September 26, 2010 | September 25, 2011 | September 26, 2010 | |
| Income available to common shareholders (numerator for basic earnings per share) | $ 75,475 | $ 57,498 | $ 342,612 | $ 240,355 |
| Preferred stock dividends | -- | -- | -- | 5,478 |
| Adjusted income available to common shareholders (numerator for diluted earnings per share) | $ 75,475 | $ 57,498 | $ 342,612 | $ 245,833 |
| Weighted average common shares outstanding (denominator for basic earnings per share) | 177,767 | 171,961 | 175,221 | 166,244 |
| Potential common shares outstanding: | ||||
| Assumed conversion of preferred shares | -- | -- | -- | 4,751 |
| Incremental shares from assumed exercise of stock options | 2,065 | 800 | 2,058 | 715 |
| Weighted average common shares outstanding and potential additional common shares outstanding (denominator for diluted earnings per share) | 179,832 | 172,761 | 177,279 | 171,710 |
| Basic earnings per share | $ 0.42 | $ 0.33 | $ 1.96 | $ 1.45 |
| Diluted earnings per share | $ 0.42 | $ 0.33 | $ 1.93 | $ 1.43 |
| Whole Foods Market, Inc. | ||
| Consolidated Balance Sheets (unaudited) | ||
| September 25, 2011 and September 26, 2010 | ||
| (In thousands) | ||
| Assets | 2011 | 2010 |
| Current assets: | ||
| Cash and cash equivalents | $ 212,004 | $ 131,996 |
| Short-term investments - available-for-sale securities | 442,320 | 329,738 |
| Restricted cash | 91,956 | 86,802 |
| Accounts receivable | 175,310 | 133,346 |
| Merchandise inventories | 336,799 | 323,487 |
| Prepaid expenses and other current assets | 73,579 | 54,686 |
| Deferred income taxes | 121,176 | 101,464 |
| Total current assets | 1,453,144 | 1,161,519 |
| Property and equipment, net of accumulated depreciation and amortization | 1,997,212 | 1,886,130 |
| Long-term investments - available-for-sale securities | 52,815 | 96,146 |
| Goodwill | 662,938 | 665,224 |
| Intangible assets, net of accumulated amortization | 67,234 | 69,064 |
| Deferred income taxes | 50,148 | 99,156 |
| Other assets | 8,584 | 9,301 |
| Total assets | $ 4,292,075 | $ 3,986,540 |
| Liabilities And Shareholders' Equity | ||
| Current liabilities: | ||
| Current installments of long-term debt and capital lease obligations | $ 466 | $ 410 |
| Accounts payable | 236,913 | 213,212 |
| Accrued payroll, bonus and other benefits due team members | 281,587 | 244,427 |
| Dividends payable | 17,827 | -- |
| Other current liabilities | 342,568 | 289,823 |
| Total current liabilities | 879,361 | 747,872 |
| Long-term debt and capital lease obligations, less current installments | 17,439 | 508,288 |
| Deferred lease liabilities | 353,776 | 294,291 |
| Other long-term liabilities | 50,194 | 62,831 |
| Total liabilities | 1,300,770 | 1,613,282 |
| Shareholders' equity: | ||
| Common stock, no par value, 300,000 shares authorized; 178,886 and 172,033 shares issued and outstanding in 2011 and 2010, respectively | 2,120,972 | 1,773,897 |
| Accumulated other comprehensive income (loss) | (164) | 791 |
| Retained earnings | 870,497 | 598,570 |
| Total shareholders' equity | 2,991,305 | 2,373,258 |
| Commitments and contingencies | ||
| Total liabilities and shareholders' equity | $ 4,292,075 | $ 3,986,540 |
| Whole Foods Market, Inc. | ||
| Consolidated Statements of Cash Flows (unaudited) | ||
| September 25, 2011 and September 26, 2010 | ||
| (In thousands) | ||
| Fifty-two weeks ended | ||
| September 25, 2011 | September 26, 2010 | |
| Cash flows from operating activities | ||
| Net income | $ 342,612 | $ 245,833 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 287,109 | 275,589 |
| Loss (gain) on disposition of fixed assets | 2,228 | (170) |
| Impairment of long-lived assets | 1,317 | 2,237 |
| Share-based payment expense | 27,259 | 22,894 |
| LIFO expense (benefit) | 10,250 | (7,670) |
| Deferred income tax expense (benefit) | 19,540 | (33,534) |
| Excess tax benefit related to exercise of team member stock options | (22,741) | (2,982) |
| Deferred lease liabilities | 53,381 | 39,636 |
| Other | 5,713 | (2,371) |
| Net change in current assets and liabilities: | ||
| Accounts receivable | (35,422) | (28,447) |
| Merchandise inventories | (23,267) | (3,048) |
| Prepaid expenses and other current assets | (18,987) | (1,640) |
| Accounts payable | 23,768 | 23,454 |
| Accrued payroll, bonus and other benefits due team members | 37,204 | 36,133 |
| Other current liabilities | 53,831 | 20,030 |
| Net change in other long-term liabilities | (8,950) | (659) |
| Net cash provided by operating activities | 754,845 | 585,285 |
| Cash flows from investing activities | ||
| Development costs of new locations | (203,457) | (171,379) |
| Other property and equipment expenditures | (161,507) | (85,414) |
| Purchase of available-for-sale securities | (1,228,920) | (1,072,243) |
| Sale of available-for-sale securities | 1,155,795 | 646,594 |
| Increase in restricted cash | (5,154) | (15,779) |
| Acquisition of intangible assets | (5,157) | (1,837) |
| Payment for purchase of acquired entities, net of cash acquired | (1,972) | (14,470) |
| Other investing activities | (352) | (878) |
| Net cash used in investing activities | (450,724) | (715,406) |
| Cash flows from financing activities | ||
| Common stock dividends paid | (52,620) | -- |
| Preferred stock dividends paid | -- | (8,500) |
| Issuance of common stock | 296,719 | 46,962 |
| Excess tax benefit related to exercise of team member stock options | 22,741 | 2,982 |
| Payments on long-term debt and capital lease obligations | (490,394) | (210,350) |
| Net cash used in financing activities | (223,554) | (168,906) |
| Effect of exchange rate changes on cash and cash equivalents | (559) | 893 |
| Net change in cash and cash equivalents | 80,008 | (298,134) |
| Cash and cash equivalents at beginning of period | 131,996 | 430,130 |
| Cash and cash equivalents at end of period | $ 212,004 | $ 131,996 |
| Supplemental disclosure of cash flow information: | ||
| Interest paid | $ 15,837 | $ 39,156 |
| Federal and state income taxes paid | $ 192,485 | $ 193,044 |
| Non-cash transaction: | ||
| Conversion of redeemable preferred stock into common stock | $ -- | $ 418,247 |
| 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 Earnings before interest, taxes, depreciation and amortization ("EBITDA"), Adjusted EBITDA and Free cash flow 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 a component of incentive compensation. 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 presentation of the non-GAAP financial measures, EBITDA and Adjusted EBITDA 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 Adjusted EBITDA | September 25, 2011 | September 26, 2010 | September 25, 2011 | September 26, 2010 |
| Net income | $ 75,475 | $ 57,498 | $ 342,612 | $ 245,833 |
| Provision for income taxes | 43,276 | 37,745 | 209,100 | 165,948 |
| Interest expense, net | (1,443) | 5,673 | (4,092) | 26,194 |
| Operating income | 117,308 | 100,916 | 547,620 | 437,975 |
| Depreciation and amortization | 68,027 | 64,516 | 287,109 | 275,589 |
| Earnings before interest, taxes, depreciation & amortization (EBITDA) | 185,335 | 165,432 | 834,729 | 713,564 |
| Impairment of assets | 629 | 217 | 1,317 | 2,237 |
| Adjusted EBITDA | $ 185,964 | $ 165,649 | $ 836,046 | $ 715,801 |
| 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 25, 2011 | September 26, 2010 | September 25, 2011 | September 26, 2010 |
| Net cash provided by operating activities | $ 159,642 | $ 124,355 | $ 754,845 | $ 585,285 |
| Development costs of new locations | (47,409) | (28,000) | (203,457) | (171,379) |
| Other property and equipment expenditures | (45,977) | (29,026) | (161,507) | (85,414) |
| Free cash flow | $ 66,256 | $ 67,329 | $ 389,881 | $ 328,492 |
CONTACT: Cindy McCann
VP of Investor Relations
512.542.0204