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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
AUSTIN, Texas, Nov. 4 /PRNewswire-FirstCall/ -- 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. 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:
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
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 ROIC(1) 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
(1) Reflects 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.
Stores Stores Current Current
Opened Opened Leases Leases
New Store Information FY08 FY09 Tendered Signed(1)
--------------------- ------ ------ -------- ---------
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. 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.
Average Ending
Square Ending Square
Total Feet per Square Footage
Openings Relocations Store Footage(1) 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
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.
Consolidated Statements of Operations (unaudited)
(In thousands, except per share amounts)
Twelve weeks ended Fifty-two weeks ended
September 27, September 28, September 27, September 28,
2009 2008 2009 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.
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.
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
Fifty-two weeks ended
September 27, September 28,
2009 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.
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
September 27, September 28, September 27, September 28,
EVA 2009 2008 2009 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 September 27, September 28, September 27, September 28,
EBITANCE 2009 2008 2009 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 September 27, September 28, September 27, September 28,
Flow 2009 2008 2009 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)
----------- ------- -------- -------- ---------
Contact: Cindy McCann
VP of Investor Relations
512.542.0204
SOURCE Whole Foods Market  |
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