0001104659-07-013392.txt : 20070223 0001104659-07-013392.hdr.sgml : 20070223 20070223132916 ACCESSION NUMBER: 0001104659-07-013392 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20070114 FILED AS OF DATE: 20070223 DATE AS OF CHANGE: 20070223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WHOLE FOODS MARKET INC CENTRAL INDEX KEY: 0000865436 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 741989366 STATE OF INCORPORATION: TX FISCAL YEAR END: 0929 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19797 FILM NUMBER: 07644887 BUSINESS ADDRESS: STREET 1: 550 BOWIE STREET CITY: AUSTIN STATE: TX ZIP: 78703 BUSINESS PHONE: 5124774455 MAIL ADDRESS: STREET 1: 550 BOWIE STREET CITY: AUSTIN STATE: TX ZIP: 78703 10-Q 1 a07-5082_110q.htm QUARTERLY REPORT PURSUANT TO SECTIONS 13 OR 15(D)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the period ended January 14, 2007; or

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to .

Commission File Number: 0-19797

WHOLE FOODS MARKET, INC.

(Exact name of registrant as specified in its charter)

Texas		74-1989366
(State of		(IRS employer
incorporation)		identification no.)

550 Bowie St.

Austin, Texas 78703

(Address of principal executive offices)

512-477-4455

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer x Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes o No x

The number of shares of the registrant’s common stock, no par value, outstanding as of January 14, 2007 was 140,579,996 shares.

Whole Foods Market, Inc.

Form 10-Q

Table of Contents

		Page
		Number

Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets, January 14, 2007 (unaudited) and September 24, 2006		3

Consolidated Statements of Operations (unaudited), for the sixteen weeks ended January 14, 2007 and January 15, 2006		4

Consolidated Statements of Shareholders’ Equity and Comprehensive Income, for the sixteen weeks ended January 14, 2007 (unaudited) and fiscal year ended September 24, 2006		5

Consolidated Statements of Cash Flows (unaudited), for the sixteen weeks ended January 14, 2007 and January 15, 2006		6

Notes to Consolidated Financial Statements (unaudited)		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11

Item 3. Quantitative and Qualitative Disclosures About Market Risk		18

Item 4. Controls and Procedures		18

Part II. Other Information

Item 1. Legal Proceedings		19

Item 6. Exhibits		19

Signature		20

Part I. Financial Information

Item 1. Financial Statements

Whole Foods Market, Inc.

Consolidated Balance Sheets

January 14, 2007 (unaudited) and September 24, 2006

(In thousands)

Assets	2007		2006
Current assets:
Cash and cash equivalents	$	43,585	$	2,252
Short-term investments — available-for-sale securities	104,393		193,847
Restricted cash	74,485		60,065
Trade accounts receivable	77,680		82,137
Merchandise inventories	239,943		203,727
Deferred income taxes	50,368		48,149
Prepaid expenses and other current assets	41,183		33,804
Total current assets	631,637		623,981
Property and equipment, net of accumulated depreciation and amortization	1,323,876		1,236,133
Goodwill	113,494		113,494
Intangible assets, net of accumulated amortization	40,167		34,767
Deferred income taxes	33,754		29,412
Other assets	5,833		5,209
Total assets	$	2,148,761	$	2,042,996

Liabilities and Shareholders’ Equity	2007			2006
Current liabilities:
Current installments of long-term debt and capital lease obligations	$	78		$	49
Trade accounts payable	140,347			121,857
Accrued payroll, bonus and other benefits due team members	159,876			153,014
Dividends payable	25,370			—
Other current liabilities	240,794			234,850
Total current liabilities	566,465			509,770
Long-term debt and capital lease obligations, less current installments	2,852			8,606
Deferred rent liability	125,547			120,421
Other long-term liabilities	—			56
Total liabilities	694,864			638,853
Shareholders’ equity:
Common stock, no par value, 300,000 shares authorized, 142,950 and 142,198 shares issued, 140,580 and 139,607 shares outstanding in 2007 and 2006, respectively	1,191,708			1,147,872
Common stock in treasury, at cost	(99,964		)	(99,964		)
Accumulated other comprehensive income	5,413			6,975
Retained earnings	356,740			349,260
Total shareholders’ equity	1,453,897			1,404,143
Commitments and contingencies
Total liabilities and shareholders’ equity	$	2,148,761		$	2,042,996

The accompanying notes are an integral part of these consolidated financial statements.

Whole Foods Market, Inc.

Consolidated Statements of Operations (unaudited)

(In thousands, except per share amounts)

	Sixteen weeks ended
	January 14,		January 15,
	2007		2006
Sales	$	1,870,731	$	1,666,953
Cost of goods sold and occupancy costs	1,229,972		1,092,018
Gross profit	640,759		574,935
Direct store expenses	482,797		424,438
General and administrative expenses	56,132		50,889
Pre-opening and relocation costs	16,284		8,491
Operating income	85,546		91,117
Investment and other income, net	4,045		6,079
Income before income taxes	89,591		97,196
Provision for income taxes	35,836		38,878
Net income	$	53,755	$	58,318

Basic earnings per share	$	0.38	$	0.42
Weighted average shares outstanding	140,267		137,532

Diluted earnings per share	$	0.38	$	0.40
Weighted average shares outstanding, diluted basis	142,918		145,317

Dividends per share	$	0.33	$	2.15

The accompanying notes are an integral part of these consolidated financial statements.

Whole Foods Market, Inc.

Consolidated Statements of Shareholders’ Equity and Comprehensive Income

Sixteen weeks ended January 14, 2007 (unaudited) and fiscal year ended September 24, 2006

(In thousands)

								Accumulated
					Common			Other						Total
	Shares		Common		Stock in			Comprehensive			Retained			Shareholders’
	Outstanding		Stock		Treasury			Income (Loss)			Earnings			Equity
Balances at September 25, 2005	135,908		$	874,972	$	—		$	4,405		$	486,299		$	1,365,676
Net income	—		—		—			—			203,828			203,828
Foreign currency translation adjustments	—		—		—			2,494			—			2,494
Change in unrealized gain (loss) on investments, net of income taxes	—		—		—			76			—			76
Comprehensive income	—		—		—			2,570			203,828			206,398
Dividends ($2.45 per share)	—		—		—			—			(340,867		)	(340,867		)
Issuance of common stock pursuant to team member stock plans	5,510		199,450		—			—			—			199,450
Purchase of treasury stock	(2,005	)	—		(99,964		)	—			—			(99,964		)
Excess tax benefit related to exercise of team member stock options	—		59,096		—			—			—			59,096
Share-based compensation	—		9,432		—			—			—			9,432
Conversion of subordinated debentures	194		4,922		—			—			—			4,922
Balances at September 24, 2006	139,607		1,147,872		(99,964		)	6,975			349,260			1,404,143
Net income	—		—		—			—			53,755			53,755
Foreign currency translation adjustments	—		—		—			(1,501		)	—			(1,501		)
Change in unrealized gain (loss) on investments, net of income taxes	—		—		—			(61		)	—			(61		)
Comprehensive income	—		—		—			(1,562		)	53,755			52,193
Dividends ($0.33 per share)	—		—		—			—			(46,275		)	(46,275		)
Issuance of common stock pursuant to team member stock plans	759		27,166		—			—			—			27,166
Excess tax benefit related to exercise of team member stock options	—		6,211		—			—			—			6,211
Share-based compensation	—		4,773		—			—			—			4,773
Conversion of subordinated debentures	214		5,686		—			—			—			5,686
Balances at January 14, 2007	140,580		$	1,191,708	$	(99,964	)	$	5,413		$	356,740		$	1,453,897

The accompanying notes are an integral part of these consolidated financial statements.

Whole Foods Market, Inc.

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

	Sixteen weeks ended
	January 14,			January 15,
	2007			2006
Cash flows from operating activities:
Net income	$	53,755		$	58,318
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	52,731			46,399
Loss on disposal of fixed assets	1,030			494
Share-based compensation	4,773			1,131
Deferred income tax benefit	(6,561		)	(6,656		)
Excess tax benefit related to exercise of team member stock options	(5,286		)	(31,411		)
Deferred rent	4,735			3,101
Other	506			162
Net change in current assets and liabilities:
Trade accounts receivable	4,457			(8,232		)
Merchandise inventories	(37,216		)	(22,921		)
Prepaid expense and other current assets	(10,454		)	(3,352		)
Trade accounts payable	18,490			4,869
Accrued payroll, bonus and other benefits due team members	6,862			13,471
Other accrued expenses	24,607			32,871
Net cash provided by operating activities	112,429			88,244
Cash flows from investing activities:
Development costs of new store locations	(100,942		)	(35,330		)
Other property and equipment expenditures	(52,083		)	(33,737		)
Acquisition of intangible assets	(6,246		)	(884		)
Purchase of available-for-sale securities	(145,268		)	—
Sale of available-for-sale securities	234,777			—
Increase in restricted cash	(14,420		)	(12,111		)
Net cash used in investing activities	(84,182		)	(82,062		)
Cash flows from financing activities:
Dividends paid	(20,971		)	(17,063		)
Payments on long-term debt and capital lease obligations	(35		)	(56		)
Issuance of common stock	28,806			129,556
Excess tax benefit related to exercise of team member stock options	5,286			31,411
Net cash provided by financing activities	13,086			143,848

Net change in cash and cash equivalents	41,333			150,030
Cash and cash equivalents at beginning of period	2,252			308,524
Cash and cash equivalents at end of period	$	43,585		$	458,554

Supplemental disclosures of cash flow information:
Interest paid	$	124		$	248
Federal and state income taxes paid	$	22,294		$	5,262
Non-cash transactions:
Conversion of convertible debentures into common stock, net of fees	$	5,686		$	3,656

The accompanying notes are an integral part of these consolidated financial statements.

Whole Foods Market, Inc.

Notes to Consolidated Financial Statements (unaudited)

January 14, 2007

(1) Basis of Presentation

The accompanying unaudited consolidated financial statements of Whole Foods Market, Inc. (“Whole Foods Market,” “Company,” or “We”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis, the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 24, 2006. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation. Interim results are not necessarily indicative of results for any other interim period or for a full fiscal year. The Company reports its results of operations on a fifty-two or fifty-three week fiscal year ending on the last Sunday in September. The first fiscal quarter is sixteen weeks, the second and third quarters each are twelve weeks and the fourth quarter is twelve or thirteen weeks. Fiscal year 2007 is a fifty-three week fiscal year and 2006 was a fifty-two week fiscal year. We operate in one reportable segment, natural and organic food supermarkets. Where appropriate, we have reclassified prior year financial statements to conform to current year presentation.

(2) Goodwill and Other Intangible Assets

Goodwill and indefinite-lived intangible assets are reviewed for impairment annually or more frequently if impairment indicators arise. We allocate goodwill to one reporting unit for goodwill impairment testing. There were no impairments of goodwill or indefinite-lived intangible assets during the sixteen week period ended January 14, 2007.

Definite-lived intangible assets are amortized over the useful life of the related agreement. We acquired definite-lived intangible assets totaling approximately $6.2 million, consisting primarily of acquired leasehold rights, during the sixteen week period ended January 14, 2007. During the first quarter of fiscal year 2007 and fiscal year 2006, we reclassified approximately $0.1 million of contract-based intangible assets to common stock as the result of bondholders voluntarily converting approximately 3% and 2%, respectively, of our zero coupon convertible debentures. Amortization associated with intangible assets totaled approximately $0.5 million and $1.0 million for the sixteen weeks ended January 14, 2007 and January 15, 2006, respectively. The components of intangible assets were as follows (in thousands):

	January 14, 2007					September 24, 2006
	Gross carrying		Accumulated			Gross carrying		Accumulated
	amount		amortization			amount		amortization
Indefinite-lived contract-based	$	774	$	—		$	774	$	—
Definite-lived contract-based	51,674		(12,481		)	45,579		(11,833		)
Definite-lived marketing-related and other	1,941		(1,741		)	2,242		(1,995		)
	$	54,389	$	(14,222	)	$	48,595	$	(13,828	)

Amortization associated with the net carrying amount of intangible assets at January 14, 2007 is estimated to be $1.9 million for the remainder of fiscal year 2007, $2.6 million in fiscal year 2008, $2.6 million in fiscal year 2009, $2.6 million in fiscal year 2010, $2.5 million in fiscal year 2011, $2.5 million in fiscal year 2012.

(3) Long-Term Debt

During the first quarter of fiscal years 2007 and 2006, approximately 10,000 and 7,000 of the Company’s zero coupon convertible subordinated debentures, respectively, were converted at the option of the holders to approximately 215,000 and 145,000 shares, respectively, of Company common stock. The zero coupon convertible subordinated debentures had a carrying amount of approximately $2.6 million and $8.3 million at January 14, 2007 and September 24, 2006, respectively.

(4) Comprehensive Income

Our comprehensive income was comprised of net income, unrealized gains and losses on marketable securities, and foreign currency translation adjustments, net of income taxes. Comprehensive income, net of related tax effects, was as follows (in thousands):

	Sixteen weeks ended
	January 14,			January 15,
	2007			2006
Net income	$	53,755		$	58,318
Unrealized gains (losses), net	(61		)	382
Foreign currency translation adjustment, net	(1,501		)	251
Comprehensive income	$	52,193		$	58,951

(5) Investments

We had short-term cash equivalent investments totaling approximately $11.1 million and $10.1 million at January 14, 2007 and September 24, 2006, respectively.

As of January 14, 2007 and September 24, 2006 we also had short-term available-for-sale securities, generally consisting of state and local government obligations totaling approximately $104.4 million and $193.8 million, respectively. Gross unrealized gains on the securities totaled approximately $16,000 and $76,000 as of January 14, 2007 and September 24, 2006, respectively.

(6) Earnings per Share

The computation of basic earnings per share is based on the number of weighted average common shares outstanding during the period. The computation of diluted earnings per share includes the dilutive effect of equity share options or other equity instruments, consisting of common shares deemed outstanding from the assumed exercise of stock options and the assumed conversion of zero coupon convertible subordinated debentures. A reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations follows (in thousands):

	Sixteen weeks ended
	January 14,		January 15,
	2007		2006
Net income (numerator for basic earnings per share)	$	53,755	$	58,318
Interest on 5% zero coupon convertible subordinated debentures, net of income taxes	40		102
Adjusted net income (numerator for diluted earnings per share)	$	53,795	$	58,420
Weighted average common shares outstanding (denominator for basic earnings per share)	140,267		137,532
Potential common shares outstanding:
Assumed conversion of 5% zero coupon convertible subordinated debentures	160		428
Assumed exercise of stock options	2,491		7,357
Weighted average common shares outstanding and potential additional common shares outstanding (denominator for diluted earnings per share)	142,918		145,317

Basic earnings per share	$	0.38	$	0.42

Diluted earnings per share	$	0.38	$	0.40

The computations of diluted earnings per share for sixteen week periods ended January 14, 2007 and January 15, 2006 does not include options to purchase approximately 10.9 million shares and 9,100 shares of common stock, respectively, due to their antidilutive effect.

(7) Dividends

On September 27, 2006, the Company’s Board of Directors approved a quarterly dividend of $0.15 per share, totaling approximately $21 million that was paid on October 23, 2006 to shareholders of record on October 13, 2006. On November 2, 2006, the Company’s Board of Directors approved a 20% increase in the Company’s quarterly dividend to $0.18 per share, totaling approximately $25.3 million that was paid subsequent to the end of the first quarter on January 22, 2007 to shareholders of record on January 12, 2007. During the first quarter of fiscal year 2006, the Company announced a 20% increase in the Company’s quarterly dividend to $0.15 per share and a special dividend of $2.00 per share. The quarterly dividend and special dividend, totaling approximately $298.8 million, were paid on January 23, 2006 to shareholders of record on January 13, 2006. The Company will pay future dividends at the discretion of our Board of Directors. The continuation of these payments and the amount of such dividends depend on many factors, including the results of operations and the financial condition of the Company. Subject to such factors and a determination that cash dividends continue to be in the best interest of our shareholders, the current intention of our Board of Directors is to pay a quarterly dividend on an ongoing basis.

(8) Share-Based Compensation

Our Company maintains several stock based incentive plans. We grant options to purchase common stock under our 1992 Stock Option Plans, as amended. Under these plans, options are granted at an option price equal to the market value of the stock at the grant date and are generally exercisable ratably over a four-year period beginning one year from grant date and have a five-year term. The market value of the stock is determined as the closing stock price at the grant date. At January 14, 2007 and September 24, 2006 there were approximately 6.8 million and 6.5 million shares, respectively, of our common stock available for future stock option grants.

Total unrecognized stock-based compensation expense related to nonvested stock options was approximately $22.7 million as of the end of the first quarter of fiscal year 2007, related to approximately 1.6 million shares with a per share weighted average fair value of $13.78. We anticipate this expense to be recognized over a weighted average period of approximately two years.

Share-based compensation expense recognized during the sixteen week periods ended January 14, 2007 and January 15, 2006 totaled approximately $4.8 million and $1.1 million, respectively and consisted of stock option expense of approximately $4.7 million and $1.0 million, respectively and team member stock purchase plan discounts of approximately $0.1 million. Included in total share-based compensation expense for the first quarter of fiscal year 2007 is a $2.4 million charge related to the acceleration of stock options in September 2005, to adjust for actual experience. Share-based compensation was included in the following line items on the Consolidated Statements of Operations for the periods indicated (in thousands):

	Sixteen weeks ended
	January 14,		January 15,
	2007		2006
Cost of goods sold and occupancy costs	$	193	$	5
Direct store expenses	2,571		94
General and administrative expenses	2,009		1,032
Share-based compensation before income taxes	4,773		1,131
Income tax benefit	1,332		302
Net share-based compensation expense	$	3,441	$	829

(9) Recent Accounting Pronouncements

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No.108 (“SAB No. 108”), “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements.” SAB No. 108 addresses how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in current-year financial statements. SAB No. 108 requires an entity to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. The requirements of SAB No. 108 are effective for fiscal years ending after November 15, 2006. We do not expect the adoption of SAB No. 108 will have a significant effect on our future consolidated financial statements.

measurements that are similar to, but not intended to be, fair value and does not change existing guidance as to whether or not an instrument is carried at fair value. The provisions of SFAS No. 157 are effective for the specified fair value measures for financial statements issued for fiscal years beginning after November 15, 2007. We are currently evaluating the impact, if any, that the adoption of SFAS No. 157 will have on our consolidated financial statements.

In July 2006, the FASB issued Interpretation 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes,” an interpretation of SFAS No. 109, “Accounting for Income Taxes.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109. The interpretation applies to all tax positions accounted for in accordance with Statement 109 and requires a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in an income tax return. Subsequent recognition, derecognition, and measurement is based on management’s best judgment given the facts, circumstances and information available at the reporting date. FIN 48 is effective for fiscal years beginning after December 15, 2006. Early adoption is permitted as of the beginning of an enterprise’s fiscal year, provided the enterprise has not yet issued financial statements, including financial statements for any interim period, for that fiscal year. We are currently evaluating the effect, if any, that the adoption of FIN 48 will have on our consolidated financial statements.

In March 2006, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (that is, Gross versus Net Presentation).” Taxes within the scope of EITF Issue No. 06-3 include any taxes assessed by a governmental authority that are directly imposed on a revenue-producing transaction between a seller and a customer and may include, but are not limited to, sales taxes, use taxes, value-added taxes, and some excise taxes. The EITF concluded that the presentation of these taxes on either a gross (included in revenues and costs) or a net (excluded from revenues) basis is an accounting policy decision that should be disclosed. For any such taxes that are reported on a gross basis, a company should disclose the amounts of those taxes in interim and annual financial statements. The Company’s policy is to exclude all such taxes from revenue. EITF 06-3 is effective for interim and annual reporting periods beginning after December 15, 2006. The adoption of EITF 06-3 will not have any effect on our consolidated financial statements.

(10) Subsequent Event

On February 21, 2007, the Company and Wild Oats Markets announced they signed a definitive merger agreement under which the Company will acquire Wild Oats Markets’ outstanding common stock in a cash tender offer at a price of $18.50 per share, or approximately $565 million based on fully diluted shares. The Company will also assume Wild Oats Markets’ existing net debt, which totaled approximately $106 million on September 30, 2006. The Company expects to fund the transaction at closing using $700 million in new senior term loan facilities. Additionally, in conjunction with the transaction, the Company intends to expand its existing long-term senior revolving credit facility to $250 million. The Company has agreed in the merger agreement to commence a tender offer on February 27, 2007 for all of Wild Oats Markets’ outstanding common stock. The tender offer is conditioned upon at least a majority of the outstanding Wild Oats Markets’ shares being tendered, as well as customary regulatory and other closing conditions. Wild Oats Markets’ board of directors has unanimously recommended that Wild Oats Markets’ stockholders tender their shares in the offer. The Yucaipa Companies, Wild Oats Markets’ largest shareholder with approximately 18% ownership, has committed to tendering its shares. Approval of the transaction by Whole Foods Market shareholders is not required. The tender offer will expire within 30 days, subject to extension and to the receipt of customary regulatory approvals. The Company currently expects to close the transaction in April 2007.

Wild Oats Markets is one of the leading natural and organic foods retailers in North America with annual sales of approximately $1.2 billion. Wild Oats Markets was founded in Boulder, Colorado in 1987 and listed on the NASDAQ National Market in 1996. Wild Oats Markets currently operates 110 stores in 24 states and British Columbia, Canada under four banners: Wild Oats Marketplace (nationwide), Henry’s Farmers Market (Southern California), Sun Harvest (Texas), and Capers Community Market (British Columbia).

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Whole Foods Market, Inc. owns and operates the largest chain of natural and organic foods supermarkets. Our Company mission is to promote vitality and well-being for all individuals by supplying the highest quality, most wholesome foods available. Through our growth, we have had a large and positive impact on the natural and organic foods movement throughout the United States, helping lead the industry to nationwide acceptance. We opened our first store in Texas in 1980 and, as of January 14, 2007, have expanded our operations both by opening new stores and acquiring existing stores from third parties to 189 stores: 180 stores in 31 U.S. states and the District of Columbia; three stores in Canada; and six stores in the United Kingdom. We operate in one reportable segment, natural and organic foods supermarkets.

Our results of operations have been and may continue to be materially affected by the timing and number of new store openings. Stores typically open within 12 to 24 months after entering the store development pipeline. New stores generally become profitable during their first year of operation, although some new stores may incur operating losses for the first several years of operation.

The Company reports its results of operations on a fifty-two or fifty-three week fiscal year ending on the last Sunday in September. The first fiscal quarter is sixteen weeks, the second and third quarters each are twelve weeks, and the fourth quarter is twelve or thirteen weeks. Fiscal year 2007 is a fifty-three week year and fiscal year 2006 was a fifty-two week fiscal year.

Subsequent to the end of the Company’s first fiscal quarter, on February 21, 2007, the Company and Wild Oats Markets announced they signed a definitive merger agreement under which the Company will acquire Wild Oats Markets’ outstanding common stock in a cash tender offer at a price of $18.50 per share. The Company has agreed in the merger agreement to commence a tender offer on February 27, 2007 for all of Wild Oats Markets’ outstanding common stock. The tender offer is conditioned upon at least a majority of the outstanding Wild Oats Markets’ shares being tendered, as well as customary regulatory and other closing conditions. This transaction is discussed further in Note 10 to the consolidated financial statements, “Subsequent Event” in “Item 1. Financial Statements.” Management’s Discussion and Analysis and the accompanying financial statements exclude any impact from the pending merger with Wild Oats Markets as the transaction has not closed.

Executive Summary

Sales for the first quarter of fiscal year 2007 increased approximately 12% to approximately $1.9 billion over approximately $1.7 billion in the prior year, driven by 9% square footage growth and comparable store sales growth of 7.0%. Identical store sales, which exclude three relocated stores and three major expansions, increased 6.2% for the quarter.

Net income for the first quarter totaled approximately $53.8 million and diluted earnings per share was $0.38.

Cash flows from operating activities for the first quarter totaled approximately $112.4 million compared to $88.2 million in the prior year. Our capital expenditures for the quarter totaled $153.0 million, of which approximately $100.9 million was for new store development. During the first quarter, we opened three new stores in West Orange, NJ, Tigard, OR and Seattle, WA and relocated a store in Dallas, TX, ending the quarter with 189 stores.

Cash and cash equivalents, including restricted cash, totaled approximately $118.1 million at the end of the first quarter of fiscal year 2007, and short-term investments totaled approximately $104.4 million. Total long-term debt was approximately $2.9 million at the end of the first quarter of fiscal year 2007.

On November 6, 2006, the Company’s Board of Directors approved a $100 million increase in the Company’s stock repurchase program, bringing the total remaining authorization to approximately $200 million over the next three years.

Results of Operations

The following table sets forth the Company’s statements of operations data expressed as a percentage of sales:

	Sixteen weeks ended
	January 14,		January 15,
	2007		2006
Sales	100.0	%	100.0	%
Cost of goods sold and occupancy costs	65.7		65.5
Gross profit	34.3		34.5
Direct store expenses	25.8		25.5
General and administrative expenses	3.0		3.1
Pre-opening and relocation costs	0.9		0.5
Operating income	4.6		5.5
Investment and other income, net	0.2		0.4
Income before income taxes	4.8		5.8
Provision for income taxes	1.9		2.3
Net income	2.9	%	3.5	%

Figures may not add due to rounding.

Sales increased approximately 12.2% for the sixteen weeks ended January 14, 2007 over the same period of the prior fiscal year. This increase was driven by comparable store sales growth of approximately 7.0% and year-over-year square footage growth of approximately 9% for the sixteen weeks ended January 14, 2007. Sales of a store are deemed to be comparable commencing in the fifty-third full week after the store was opened or acquired. Sales in identical stores, which exclude relocated stores and major store expansions, increased approximately 6.2% for the sixteen weeks ended January 14, 2007 over the same period of the prior fiscal year. The Company believes its comparable store sales growth and the ability to open successful stores in diverse markets are due to the broad appeal of our stores, natural and organic products entering the mainstream consciousness, improvements in overall store execution and the growing awareness of our brand.

Gross profit consists of sales less cost of goods sold and occupancy costs plus contribution from non-retail distribution and food preparation operations. The Company’s gross profit as a percentage of sales for the sixteen weeks ended January 14, 2007 was approximately 34.3% compared to approximately 34.5% for the same period of the prior fiscal year. Our gross profit may increase or decrease slightly depending on the mix of sales from new stores, seasonality, the impact of weather or a host of other factors, including inflation. Due to seasonality, the Company’s gross profit margin is typically lower in the first quarter than the remaining three quarters of the fiscal year. Gross profit margins tend to be lower for new stores and increase as stores mature, reflecting lower shrink as volumes increase, as well as increasing experience levels and operational efficiencies of the store teams. We continue to find many opportunities to lower our cost of goods sold, and we selectively pass on those savings to our customers through lower prices. While our customers are not primarily focused on price, our value image is important in terms of appealing to a broader customer base, especially as select natural and organic products are becoming more available through various retail formats. Our strategy is to be competitively priced on a market-by-market basis on commodity-type products and on identical product brands in grocery and Whole Body; however, our perishables may be priced at a premium to reflect the higher quality, broader selection, and better customer service available in our produce, meat, seafood, bakery, specialty and prepared foods departments. One way we have improved our value to customers is through our private label products, which give us an opportunity to lower our prices through our scale and buying practices. We are committing additional resources to our private label team and expect private label to grow to a much higher percentage of our sales over time.

Direct store expenses as a percentage of sales were approximately 25.8% for the sixteen weeks ended January 14, 2007 compared to approximately 25.5% for the same period of the prior fiscal year. Direct store expenses as a percentage of sales tend to be higher for new stores and decrease as stores mature, reflecting increasing operational productivity of the store teams.

General and administrative expenses as a percentage of sales were approximately 3.0% for the sixteen weeks ended January 14, 2007 compared to approximately 3.1% for the same period of the prior fiscal year.

Pre-opening costs include rent expense incurred during construction of new stores and other costs related to new store openings, which include costs associated with hiring and training personnel, supplies and other miscellaneous costs. Rent expense is generally incurred for six to 12 months prior to a store’s opening date. Other pre-opening costs are incurred primarily in the 30 days prior to a new store opening. Relocation costs consist of moving costs, remaining lease payments,

accelerated depreciation costs and other costs associated with replaced stores or facilities. Pre-opening and relocation costs as a percentage of sales were approximately 0.9% for the sixteen weeks ended January 14, 2007 compared to approximately 0.5% for the same period of the prior fiscal year due primarily to the increased number of leases tendered. This significant year-over-year increase is due primarily to the anticipated acceleration in leases tendered and square footage opening in fiscal years 2007 and 2008, including the opening of 18 to 20 new stores in fiscal year 2007.

The numbers of stores opened and relocated were as follows:

	Sixteen weeks ended
	January 14,	January 15,
	2007	2006
New stores	3	5
Relocated stores	1	—

The Company began recognizing share-based compensation expense in the first quarter of fiscal year 2006. During the fourth quarter of fiscal year 2005, the Company accelerated the vesting of all outstanding stock options, except options held by the members of the executive team and certain options held by team members in the United Kingdom, in order to prevent past option grants from having an impact on future results. Share-based compensation expense recognized during the sixteen week periods ended January 14, 2007 and January 15, 2006 totaled approximately $4.8 million and $1.1 million, respectively and consisted of stock option expense of approximately $4.7 million and $1.0 million, respectively and team member stock purchase plan discounts of approximately $0.1 million. Included in total share-based compensation expense for the first quarter of fiscal year 2007 is a $2.4 million charge related to the acceleration of stock options in September 2005, to adjust for actual experience. Share-based compensation was included in the following line items on the Consolidated Statements of Operations for the periods indicated (in thousands):

	Sixteen weeks ended
	January 14,		January 15,
	2007		2006
Cost of goods sold and occupancy costs	$	193	$	5
Direct store expenses	2,571		94
General and administrative expenses	2,009		1,032
Share-based compensation before income taxes	4,773		1,131
Income tax benefit	1,332		302
Net share-based compensation expense	$	3,441	$	829

The Company expects share-based compensation of approximately $2 million to $3 million in the second quarter and $3 million to $4 million per quarter in the second half of the year following the Company’s annual grant date early in the third quarter, when the majority of options are granted.

The Company’s current intention is to keep its broad-based stock option program in place but, going forward, limit the number of shares granted in any one year so that annual earnings per share dilution from share-based compensation expense will ramp up but not exceed 10% over time. The Company believes this strategy is best aligned with its stakeholder philosophy because it limits future earnings per share dilution from options and at the same time retains the broad-based stock option plan, which the Company believes is important to team member morale, its unique corporate culture and its success.

Net investment and other income for the sixteen weeks ended January 14, 2007 totaled approximately $4.0 million compared to approximately $6.1 million, respectively, for the same period of the prior fiscal year due primarily to lower interest income earned based on lower average short-term investment balances.

Liquidity and Capital Resources and Changes in Financial Condition

We generated cash flows from operating activities of approximately $112.4 million during the sixteen weeks ended January 14, 2007 compared to approximately $88.2 million during the same period of the prior fiscal year. Cash flows from operating activities resulted primarily from our net income plus non-cash expenses and changes in operating working capital.

Net cash used in investing activities was approximately $84.2 million for the sixteen weeks ended January 14, 2007 compared to approximately $82.1 million for the same period of the prior fiscal year. Our principal historical capital requirements have been the funding of the development or acquisition of new stores and acquisition of property and equipment for existing stores. The required cash investment for new stores varies depending on the size of the new store, geographic location, degree

of work performed by the landlord and complexity of site development issues. Capital expenditures for the sixteen weeks ended January 14, 2007 totaled approximately $153.0 million, of which approximately $100.9 million was for new store development and approximately $52.1 million was for remodels and other additions. Capital expenditures for the sixteen weeks ended January 15, 2006 totaled approximately $69.1 million, of which approximately $35.3 million was for new store development and approximately $33.7 million was for remodels and other additions.

Capital expenditures are expected to be in range of $525 million to $575 million. Of this amount, approximately 70% to 75% is related to new stores opening in fiscal year 2007 and beyond.

The following table provides additional information about the Company’s store openings in fiscal year 2006 and fiscal year-to-date through February 21, 2007, leases currently tendered but not opened, and total leases signed for stores scheduled to open through fiscal year 2010:

	Stores			Stores		Leases		Total Leases
	Opened			Opened		Tendered		Signed
	During			Through		as of		as of
	Fiscal Year			February 21,		February 21,		February 21,
	2006			2007		2007		2007
Number of stores (including relocations)	13			7		16		88
Number of relocations	2			2		2		16
New markets	4			—		2		21
Average store size (gross square feet)	50,000			54,000		54,000		56,000
As a percentage of existing store average size	147		%	153	%	154	%	159	%
Total square footage	653,000			378,000		870,000		4,972,000
As a percentage of existing square footage	10		%	6	%	13	%	74	%
Average pre-opening expense per store (incl. rent)	$	1.9 million
Average pre-opening rent per store	$	0.7 million
Average tender period	7.8 months

The Company expects total pre-opening and relocation costs for fiscal year 2007 to be in the range of $68 million to $74 million, compared to a total of approximately $37.4 million for fiscal year 2006. Approximately $18 million to $24 million of the estimated total relates to stores expected to open in fiscal year 2008. These ranges are based on estimated tender dates which are subject to change. The Company expects significantly higher-than-average pre-opening expense in fiscal year 2007 of approximately $7 million related to its first Whole Foods Market store in London. Excluding this store, the Company expects total pre-opening and relocation expense for stores opening in fiscal year 2007 to average approximately $2.4 million per store, above the Company’s average for stores opened in fiscal year 2006 due primarily to higher accelerated depreciation related to relocations.

The Company expects its materially higher pre-opening and relocation costs resulting primarily from the anticipated acceleration in leases tendered and square footage opening in fiscal years 2007 and 2008 to significantly impact fiscal year 2007 diluted earnings per share growth.

At January 14, 2007, the Company had short-term investments in available-for-sale securities totaling approximately $104.4 million. These investments are generally tax-free municipal obligations with effective maturities of less than 90 days.

Net cash provided by financing activities was approximately $13.1 million for the sixteen weeks ended January 14, 2007 compared to approximately $143.8 million for the same period of the prior fiscal year. Net proceeds to the Company from the exercise of team members’ stock options for the sixteen weeks ended January 14, 2007 totaled approximately $28.8 million compared to approximately $129.6 million for the same period of the prior fiscal year.

We have a $100 million revolving line of credit available through October 1, 2009. At January 14, 2007 and September 24, 2006, no amounts were drawn under the agreement.

We expect to fund our pending merger transaction with Wild Oats Markets at closing using $700 million in new senior term loan facilities. Additionally, in conjunction with the transaction, the Company intends to expand its existing long-term senior revolving credit facility to $250 million.

We have outstanding zero coupon convertible subordinated debentures which had a carrying amount of approximately $2.6 million and $8.3 million at January 14, 2007 and September 24, 2006, respectively. During the sixteen week period ended January 14, 2007, approximately 10,000 of the Company’s zero coupon convertible debentures were converted at the option of the holders into approximately 215,000 shares of Company common stock.

The following table shows payments due by period on contractual obligations as of January 14, 2007 (in thousands):

			Less than 1		1-3		3-5		More than 5
	Total		Year		Years		Years		Years
Convertible debt	$	2,630	$	—	$	2,630	$	—	$	—
Capital lease obligations (including interest)	336		94		182		56		4
Operating lease obligations	4,886,089		170,036		471,492		503,492		3,741,069

Although the timing of any potential redemption is uncertain, the above table reflects the assumption that convertible debentures will be redeemed at the option of the holder on March 2, 2008. The following table shows expirations per period on commercial commitments as of January 14, 2007 (in thousands):

			Less than 1		1-3		3-5		More than 5
	Total		Year		Years		Years		Years
Credit facilities	$	100,000	$	—	$	100,000	$	—	$	—

We periodically make other commitments and become subject to other contractual obligations that we believe to be routine in nature and incidental to the operation of the business. Management believes that such routine commitments and contractual obligations do not have a material impact on our business, financial condition or results of operations.

On September 27, 2006, the Company’s Board of Directors approved a quarterly dividend of $0.15 per share, totaling approximately $21 million that was paid on October 23, 2006 to shareholders of record on October 13, 2006. On November 2, 2006, the Company’s Board of Directors approved a 20% increase in the Company’s quarterly dividend to $0.18 per share, totaling approximately $25.3 million that was paid subsequent to the end of the first quarter on January 22, 2007 to shareholders of record on January 12, 2007. During the first quarter of fiscal year 2006, the Company announced a 20% increase in the Company’s quarterly dividend to $0.15 per share and a special dividend of $2.00 per share. The quarterly dividend and special dividend, totaling approximately $298.8 million, were paid on January 23, 2006 to shareholders of record on January 13, 2006. The Company will pay future dividends at the discretion of the Board of Directors. The continuation of these payments, the amount of such dividends, and the form in which the dividends are paid (cash or stock) depend on many factors, including the results of operations and the financial condition of the Company. Subject to these qualifications, the Company currently expects to pay dividends on a quarterly basis.

On November 8, 2005, the Company’s Board of Directors approved a stock repurchase program of up to $200 million. During the fourth quarter of fiscal year 2006, the Company repurchased on the open market approximately 2.0 million shares of Company common stock that were held in treasury at January 14, 2007 and September 24, 2006 for a total of approximately $100 million. On November 6, 2006, the Company’s Board of Directors approved a $100 million increase in the Company’s stock repurchase program, bringing the total remaining authorization to $200 million over the next three years. The specific timing and repurchase amounts will vary based on market conditions, securities law limitations and other factors and will be made using the Company’s available cash resources. The repurchase program may be suspended or discontinued at any time without prior notice.

Our principal historical sources of liquidity have been cash generated by operations, available unrestricted cash and cash equivalents, and short-term investments. Absent the pending merger transaction with Wild Oats Markets, any other significant cash acquisition or a significant change in market condition, we expect planned expansion and other anticipated working capital and capital expenditure requirements for the next twelve months will be funded by cash generated from the expected results of operations, available unrestricted cash and cash equivalents, and short-term investments. Our revolving line of credit also is available should additional working capital be required. There can be no assurance, however, that we will continue to generate cash flows at or above current levels or that our revolving line of credit or other sources of capital will be available to us in the future. We continually evaluate the need to establish other sources of working capital and will seek those considered appropriate based upon the Company’s needs and market conditions.

Critical Accounting Policies

The preparation of our financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities. Actual results may differ from these estimates. We base our estimates on historical experience and on various other assumptions and factors that we believe to be reasonable under the circumstances. On an ongoing basis, we evaluate the continued appropriateness of our accounting policies and resulting estimates to make adjustments we consider appropriate under the facts and circumstances.

We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner. As discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the fiscal year ended September 24, 2006, we consider our policies on accounting for insurance and self-insurance reserves, inventory valuation, goodwill and intangible assets, income taxes and share-based compensation to be the most critical in the preparation of our consolidated financial statements because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently uncertain.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measures.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements that are already required or permitted by other accounting standards, except for measurements of share-based payments and measurements that are similar to, but not intended to be, fair value and does not change existing guidance as to whether or not an instrument is carried at fair value. The provisions of SFAS No. 157 are effective for the specified fair value measures for financial statements issued for fiscal years beginning after November 15, 2007. We are currently evaluating the impact, if any, that the adoption of SFAS No. 157 will have on our consolidated financial statements.

Risk Factors

We wish to caution you that there are risks and uncertainties that could cause our actual results to be materially different from those indicated by forward-looking statements that we make from time to time in filings with the Securities and Exchange Commission, news releases, reports, proxy statements, registration statements and other written communications, as well as oral forward-looking statements made from time to time by representatives of our Company. These risks and uncertainties include, but are not limited to, those listed in the Company’s Annual Report on Form 10-K for the year ended September 24, 2006. These risks and uncertainties and additional risks and uncertainties not presently known to us or that we currently deem immaterial may cause our business, financial condition, operating results and cash flows to be materially adversely affected. Except for the historical information contained herein, the matters discussed in this analysis are forward looking statements that involve risks and uncertainties, including but not limited to general business conditions, the timely development and opening of new stores, the impact of competition, and other factors which are often beyond the control of the Company. The Company does not undertake any obligation to update forward-looking statements except as required by law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the Company’s market risk exposures from those reported in our Annual Report on Form 10-K for the year ended September 24, 2006.

Item 4. Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

The Company is subject to various legal proceedings and claims arising in the ordinary course of business. The Company’s management does not expect that the outcome in the current proceedings, individually or collectively, will have a material adverse effect on the Company’s financial condition, operating results or cash flows.

Item 6. Exhibits

Exhibit	10.1	Second Amendment, dated December 15, 2006, to the Third Amended and Restated Credit Agreement, dated October 1, 2004, by and among Registrant, the subsidiaries of the Registrant, JPMorgan Chase Bank; Wells Fargo Bank National Association; Wachovia Bank, National Association; and Fleet National Bank
Exhibit	31.1	Certification of Chief Executive Officer Pursuant to 17 CFR 240.13a - 14(a)
Exhibit	31.2	Certification of Chief Financial Officer Pursuant to 17 CFR 240.13a - 14(a)
Exhibit	32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
Exhibit	32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		WHOLE FOODS MARKET, INC.

Date:	February 23, 2007	By:	/s/ Glenda Chamberlain
		Glenda Chamberlain
		Executive Vice President and
		Chief Financial Officer
		(Duly authorized officer and principal financial officer)

EX-10.1 2 a07-5082_1ex10d1.htm SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT

Exhibit 10.1

SECOND AMENDMENT TO THIRD AMENDED AND
RESTATED CREDIT AGREEMENT

THIS SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (“Amendment”), dated effective as of December 15, 2006, is made and entered into by and among WHOLE FOODS MARKET, INC. (the “Company”), a Texas corporation, the banking institutions from time to time a party to the Credit Agreement (as hereinafter defined), as amended by this Amendment (each, together with its successors and assigns, a “Bank” and collectively, the “Banks”), and JPMORGAN CHASE BANK, N.A., a national banking association formerly known as JPMorgan Chase Bank, as agent for the Banks (in such capacity, together with its successors in such capacity, the “Agent”).

RECITALS:

WHEREAS, the Company, the Agent and certain Banks are parties to a Third Amended and Restated Credit Agreement dated as of October 1, 2004, as previously amended pursuant to the terms of that certain First Amendment of Third Amend and Restated Credit Agreement dated November 7, 2005, executed by and among the Company, the Agent and the Banks (hereinafter referred to as the “Credit Agreement”); and

WHEREAS, in connection with the Company’s request to increase the aggregate permitted amount of Letters of Credit under the Credit Agreement and to add additional negative covenant exceptions to the Credit Agreement for cash secured letters of credit issued for worker’s compensation insurance coverage, the Company, the Agent and the Banks have agreed, on the terms and conditions herein set forth, that the Credit Agreement be further amended in certain respects.

AGREEMENTS:

NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations and warranties herein set forth, and for other good and valuable consideration, the receipt and sufficiency which are hereby acknowledged and confessed, the Company, the Agent and the Banks do hereby agree as follows:

General Definitions. Capitalized terms used herein which are defined in the Credit Agreement shall have the same meanings when used herein.

Increase of Letter of Credit Limit. The Letter of Credit sublimit amount set forth in Section 2.4(a)(i) of the Credit Agreement is hereby increased as of the from $50,000,000 to $100,000,000.

Additional Negative Covenant Exceptions for Worker’s Compensation Obligations.

(a) A new Section 6.1(o) is hereby added to the Credit Agreement to hereafter be and read in its entirety as follows:

any obligation under or in respect of outstanding letters of credit (excluding the Letters of Credit) or other worker’s compensation coverage payment or reimbursement obligations secured by cash or cash equivalents created for the account of the Company or any of its Subsidiaries as fiscal security for, or otherwise in connection with, worker’s compensation coverage secured for the Company and/or any of its Subsidiaries (it being agreed that any letters of credit or other such payment or reimbursement obligations issued in accordance with the provisions of this Section 6.1(o) shall not be included within letters of credit for purposes of determining compliance with Section 6.1(k) hereof or included within Contingent Obligations for purposes of determining compliance with Section 6.3 hereof).

(b) A new Section 6.2(h) is hereby added to the Credit Agreement to hereafter be and read in its entirety as follows:

Liens against cash or cash equivalents of the Company and/or any of its Subsidiaries securing the obligations of, under or in respect of outstanding letters of credit or other worker’s compensation coverage payment or reimbursement obligations otherwise permitted pursuant to Sections 6.1(o) hereof.

Representations and Warranties. The Company represents and warrants to the Agent and the Banks that the representations and warranties contained in Section 4 of the Credit Agreement and in all of the other Loan Documents are true and correct in all material respects on and as of the effective date hereof as though made on and as of such effective date. The Company hereby certifies that, after giving effect to the execution and delivery of this Amendment, no event has occurred and is continuing which constitutes a Default or an Event of Default under the Credit Agreement or which, upon the giving of notice or the lapse of time, or both, would constitute a Default or an Event of Default. Additionally, the Company hereby represents and warrants to the Agent and the Banks that the resolutions or authorizations of the Board of Directors (or other governing parties) of the Company and its Subsidiaries which are set out in the following described Secretary’s Certificates or Authorizations remain in full force and effect as of the effective date hereof and have not been modified, amended, superseded or revoked:

That certain Secretary’s Certificate dated June 25, 1999, executed and delivered to the Agent by the Secretary of Whole Foods Market, Inc.;

That certain Secretary’s Certificate dated June 25, 1999, executed and delivered to the Agent by the Assistant Secretary of Mrs. Gooch’s Natural Foods Market, Inc., The Sourdough: A European Bakery, Inc., WFM Beverage Corp., Whole Food Company, Inc., Whole Foods Market California, Inc., Whole Foods Market Services, Inc., Whole Foods Market Distribution, Inc., Whole Foods Market Southwest I, Inc. (now known as Whole Foods Market Rocky Mountain/Southwest I, Inc.), Allegro Coffee Company, Whole Foods Market Group, Inc., Nature’s Heartland, Inc. and Whole Foods Market Southwest Investments, Inc.;

That certain Authorization dated June 28, 1999, executed and delivered to the Agent by the Members of Whole Foods Market Brand 365, LLC;

That certain Secretary’s Certificate dated February 19, 2001, executed and delivered to the Agent by the Secretary of Whole Foods Market IP, Inc. (now known as Whole Foods Market IP, L.P.);

That certain Secretary’s Certificate dated February 19, 2001, executed and delivered to the Agent by the Secretary of Whole Foods Market Finance, Inc.;

That certain Secretary’s Certificate dated February 19, 2001, executed and delivered to the Agent by the Secretary of Whole Foods Market Purchasing, Inc. (now known as Whole Foods Market Procurement, Inc.);

That certain Secretary’s Certificate dated March 6, 2003, executed and delivered to the Agent by the Secretary of WFM IP Investments, Inc.;

That certain Secretary’s Certificate dated March 6, 2003, executed and delivered to the Agent by the Secretary of WFM Gift Card, Inc.;

That certain Secretary’s Certificate dated March 6, 2003, executed and delivered to the Agent by the Secretary of WFM IP Management, Inc.;

That certain LLC Authorization dated March 6, 2003, executed and delivered to the Agent by the Sole Member of WFM Cobb Property Investments, LLC;

That certain Officer’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of Whole Foods Market, Inc.;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Beverage Holding Company;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Nevada, Inc. (now known as WFM Southern Nevada, Inc.);

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Private Label, L.P.;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Assistant Secretary of WFM Procurement Investments, Inc.;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Assistant Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Purchasing, L.P.;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Purchasing Management, Inc.;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Select Fish, Inc.;

That certain Secretary’s Certificate dated April 11, 2005, executed and delivered to the Agent by the Secretary of Whole Foods Market Pacific Northwest, Inc.;

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of WFM Northern Nevada, Inc.;

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL]; and

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL].

Section 4. Limitations. The amendments set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to, or waiver or modification of, any other term or condition of the Credit Agreement or any of the other Loan Documents, or (b) except as expressly set forth herein, prejudice any right or rights which the Banks may now have or may have in the future under or in connection with the Credit Agreement, the Loan Documents or any of the other documents referred to therein. Except as expressly modified hereby or by express written amendments thereof, the terms and provisions of the Credit Agreement, the Notes and any other Loan Documents or any other documents or instruments executed in connection with any of the foregoing are and shall remain in full force and effect. In the event of a conflict between this Amendment and any of the foregoing documents, the terms of this Amendment shall be controlling.

Section 5. Payment of Expenses. The Company agrees, whether or not the transactions hereby contemplated shall be consummated, to reimburse and save the Agent and each of the Banks harmless from and against liability for the payment of all reasonable substantiated out-of-pocket costs and expenses arising in connection with the preparation, execution, delivery, amendment, modification, waiver and enforcement of, or the preservation of any rights under this Amendment, including, without limitation,

the reasonable fees and expenses of counsel for the Agent and other charges which may be payable in respect of, or in respect of any modification of, the Credit Agreement and the Loan Documents. The provisions of this Section shall survive the termination of the Credit Agreement and the repayment of the Loans.

Section 6. Descriptive Headings, etc. The descriptive headings of the several Sections of this Amendment are inserted for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

Section 7. Entire Agreement. This Amendment and the documents referred to herein represent the entire understanding of the parties hereto regarding the subject matter hereof and supersede all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof, including, without limitation, any commitment letters regarding the transactions contemplated by this Amendment.

Section 8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts and all of such counterparts shall together constitute one and the same instrument. Complete sets of counterparts shall be lodged with the Company and the Agent.

Section 9. References to Credit Agreement. As used in the Credit Agreement (including all Exhibits thereto) and all other Loan Documents, on and subsequent to the effective date hereof, the term “Agreement” shall mean the Credit Agreement, as amended by this Amendment.

[Remainder of page left intentionally blank]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized offices as of the date first above written.

NOTICE PURSUANT TO TEX. BUS. & COMM. CODE §26.02

THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE PARTIES BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF TOGETHER CONSTITUTE A WRITTEN CREDIT AGREEMENT AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

	WHOLE FOODS MARKET, INC.
	a Texas corporation

	By:
		Glenda Chamberlain
		Executive Vice President and Chief Financial Officer




	Addresses for Notices:

	Whole Foods Market, Inc.
	550 Bowie Street
	Austin, Texas 78703
	Attention: Ms. Glenda Chamberlain

	JPMORGAN CHASE BANK, N.A., individually
	and as Agent

	By:
	Name:
	Title:


	Address for Notices:

	JPMorgan Chase Bank, N.A.
	700 Lavaca, 2nd Floor
	Post Office Box 550
	Austin, Texas 78789
	Attention: Manager/Commercial Lending Group

	with copies to:

	JPMorgan Chase Bank, N.A.
	Loan and Agency Services
	111 Fannin, 10th Floor
	Houston, Texas 77002
	Attention: Rese Comley



	WELLS FARGO BANK,
	NATIONAL ASSOCIATION

	By:
	Name:
	Title:


	Address for Notices:

	Wells Fargo Bank, National Association
	111 Congress, Suite 300
	Austin, Texas 78701
	Attention: Ms. Susan Coulter

	WACHOVIA BANK, NATIONAL ASSOCIATION

	By:
	Name:
	Title:


	Address for Notices:

	Wachovia Bank, National Association
	1339 Chestnut Street, PA 48
	Philadelphia, Pennsylvania 19107
	Attention: Ms. Beth Rue




	BANK OF AMERICA, N.A. (FORMERLY KNOWN AS FLEET NATIONAL BANK)


	By:
	Name:
	Title:


	Address for Notices:

	Bank of America, N.A.
	901 Main Street, 64th Floor
	Dallas, Texas 75202
	Attention: Mr. Dan Killian

	LASALLE BANK NATIONAL ASSOCIATION (FORMERLY KNOWN AS STANDARD FEDERAL BANK, N.A.)


	By:
	Name:
	Title:


	Address for Notices:
	LaSalle Bank National Association
	40 Pearl Street NW
	P.O. Box 1707
	Grand Rapids, Michigan 49501
	Attention: Mr. Matthew R. Kline




	US BANK, NATIONAL ASSOCIATION



	By:
	Name:
	Title:



	Address for Notices:

	US Bank
	One US Bank Plaza
	Mail Code: SL-MO-T12M
	St. Louis, Missouri 63101
	Attention:		Mr. Gregory L. Dryden and
			Ms. Veronica Morrissette

The undersigned Guarantors (a) acknowledge and consent to the execution of the foregoing Amendment, (b) confirm that the Guaranties previously executed or joined in by each of the undersigned Guarantors apply and shall continue to apply to all Indebtedness evidenced by or arising pursuant to the Credit Agreement or any other Loan Documents, notwithstanding the execution and delivery of this Amendment by the Company, the Agent and each of the Banks, and (c) acknowledge that without this consent and confirmation, the Banks and the Agent would not agree to the modifications of the Credit Agreement which are evidenced by the foregoing Amendment.

WHOLE FOODS MARKET SERVICES, INC.,
a Delaware corporation
WHOLE FOODS MARKET DISTRIBUTION, INC.,
a Delaware corporation
WFM GIFT CARD, INC.,
a Nevada corporation
WFM SELECT FISH, INC.,
a Delaware corporation
WHOLE FOODS MARKET FINANCE, INC.,
a Delaware corporation
WHOLE FOODS MARKET PROCUREMENT, INC.,
a Delaware corporation (formerly known as Whole Foods
Market Purchasing, Inc.)
[*CONFIDENTIAL*]

By:
	Glenda Chamberlain, President

THE SOURDOUGH: A EUROPEAN BAKERY, INC.
a Texas corporation
WFM IP MANAGEMENT, INC.,
a Delaware corporation
[*CONFIDENTIAL*]

By:
	Glenda Chamberlain, Vice President

WFM BEVERAGE HOLDING COMPANY, a Texas corporation
WFM BEVERAGE CORP., a Texas corporation
WHOLE FOODS MARKET GROUP, INC.,
a Delaware corporation
NATURE’S HEARTLAND, INC.,
a Massachusetts corporation
WHOLE FOODS MARKET ROCKY MOUNTAIN/SOUTHWEST I, INC.,
a Delaware corporation

By:
	Roberta Lang, President

WHOLE FOODS MARKET CALIFORNIA, INC.,
a California corporation
MRS. GOOCH’S NATURAL FOOD MARKETS, INC.,
a California corporation
WHOLE FOODS MARKET PACIFIC NORTHWEST, INC.,
a Delaware corporation
WFM NORTHERN NEVADA, INC. ,
a Delaware corporation
ALLEGRO COFFEE COMPANY, a Colorado corporation
WHOLE FOOD COMPANY, INC., a Louisiana corporation

By:
	Roberta Lang, Vice President

WHOLE FOODS MARKET SOUTHWEST INVESTMENTS, INC.,
a Delaware corporation
WFM IP INVESTMENTS, INC.,
a Delaware corporation
WFM PROCUREMENT INVESTMENTS, INC.,
a Delaware corporation
[*CONFIDENTIAL*]

By:
	Patrick Bradley, President

WFM SOUTHERN NEVADA, INC.
a Delaware corporation

By:
	Patrick Bradley, Vice President

WFM COBB PROPERTY INVESTMENTS, LLC,
a Delaware limited liability company

By:	Whole Foods Market Group, Inc.
	a Delaware corporation, its sole Member

	By:
		Roberta Lang, President

WHOLE FOODS MARKET BRAND 365, LLC,
a California limited liability company

By:	Whole Foods Market Services, Inc.,
	a Delaware corporation, its sole Member

	By:
		Glenda Chamberlain, President

WHOLE FOODS MARKET ROCKY MOUNTAIN/SOUTHWEST, L.P.,
a Texas limited partnership

By:	Whole Foods Market Rocky Mountain/Southwest I, Inc.,
	a Delaware corporation, its General Partner

	By:
		Roberta Lang, President

WHOLE FOODS MARKET IP, L.P.,
a Delaware limited partnership

By:	WFM IP Management, Inc.,
	a Delaware corporation, its General Partner

	By:
		Glenda Chamberlain, Vice President

WFM PRIVATE LABEL, L.P.,
a Delaware limited partnership

By:	WFM Private Label Management, Inc.,
	a Delaware corporation, its General Partner

	By:
		Glenda Chamberlain, President

[*CONFIDENTIAL*]

By:
	Glenda Chamberlain, President

WFM PURCHASING, L.P.,
a Delaware limited partnership

By:	WFM Purchasing Management, Inc.,
	a Delaware corporation, its General Partner

	By:
		Glenda Chamberlain, President

EX-31.1 3 a07-5082_1ex31d1.htm SECTION 302 CEO CERTIFICATION

Exhibit 31.1

Certification by Chief Executive Officer required by Rule 13a-14(a)

I, John P. Mackey, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Whole Foods Market, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial stateme nts, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosures controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosures controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 23, 2007	By:	/s/ John P. Mackey
			John P. Mackey
			Chief Executive Officer

EX-31.2 4 a07-5082_1ex31d2.htm SECTION 302 CFO CERTIFICATION

Exhibit 31.2

Certification by Chief Financial Officer required by Rule 13a-14(a)

I, Glenda Chamberlain, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Whole Foods Market, Inc.

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 23, 2007	By:	/s/ Glenda Chamberlain
			Glenda Chamberlain
			Chief Financial Officer

EX-32.1 5 a07-5082_1ex32d1.htm SECTION 906 CEO CERTIFICATION

Exhibit 32.1

Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002

In connection with the Quarterly Report of Whole Foods Market, Inc. (the “Company”) on Form 10-Q for the period ending January 14, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John P. Mackey, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ John P. Mackey
John P. Mackey
Chief Executive Officer
February 23, 2007

EX-32.2 6 a07-5082_1ex32d2.htm SECTION 906 CFO CERTIFICATION

Exhibit 32.2

Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002

In connection with the Quarterly Report of Whole Foods Market, Inc. (the “Company”) on Form 10-Q for the period ending January 14, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Glenda Chamberlain, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

	(1)		The Report fully complies with the requirements of section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

	(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Glenda Chamberlain
Glenda Chamberlain
Chief Financial Officer
February 23, 2007

The following table shows payments due by period on contractual obligations as of January 14, 2007 (in thousands):

Item 4. Controls and Procedures

Part II. Other Information

General Definitions. Capitalized terms used herein which are defined in the Credit Agreement shall have the same meanings when used herein.

Increase of Letter of Credit Limit. The Letter of Credit sublimit amount set forth in Section 2.4(a)(i) of the Credit Agreement is hereby increased as of the from $50,000,000 to $100,000,000.

Additional Negative Covenant Exceptions for Worker’s Compensation Obligations.

(a) A new Section 6.1(o) is hereby added to the Credit Agreement to hereafter be and read in its entirety as follows:

(b) A new Section 6.2(h) is hereby added to the Credit Agreement to hereafter be and read in its entirety as follows:

That certain Secretary’s Certificate dated June 25, 1999, executed and delivered to the Agent by the Secretary of Whole Foods Market, Inc.;

That certain Authorization dated June 28, 1999, executed and delivered to the Agent by the Members of Whole Foods Market Brand 365, LLC;

That certain Secretary’s Certificate dated February 19, 2001, executed and delivered to the Agent by the Secretary of Whole Foods Market IP, Inc. (now known as Whole Foods Market IP, L.P.);

That certain Secretary’s Certificate dated February 19, 2001, executed and delivered to the Agent by the Secretary of Whole Foods Market Finance, Inc.;

That certain Secretary’s Certificate dated February 19, 2001, executed and delivered to the Agent by the Secretary of Whole Foods Market Purchasing, Inc. (now known as Whole Foods Market Procurement, Inc.);

That certain Secretary’s Certificate dated March 6, 2003, executed and delivered to the Agent by the Secretary of WFM IP Investments, Inc.;

That certain Secretary’s Certificate dated March 6, 2003, executed and delivered to the Agent by the Secretary of WFM Gift Card, Inc.;

That certain Secretary’s Certificate dated March 6, 2003, executed and delivered to the Agent by the Secretary of WFM IP Management, Inc.;

That certain LLC Authorization dated March 6, 2003, executed and delivered to the Agent by the Sole Member of WFM Cobb Property Investments, LLC;

That certain Officer’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of Whole Foods Market, Inc.;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Beverage Holding Company;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Nevada, Inc. (now known as WFM Southern Nevada, Inc.);

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Private Label, L.P.;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Assistant Secretary of WFM Procurement Investments, Inc.;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Assistant Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Assistant Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Purchasing, L.P.;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Purchasing Management, Inc.;

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of WFM Select Fish, Inc.;

That certain Secretary’s Certificate dated April 11, 2005, executed and delivered to the Agent by the Secretary of Whole Foods Market Pacific Northwest, Inc.;

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of WFM Northern Nevada, Inc.;

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*]; and

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [*CONFIDENTIAL*].

Section 6. Descriptive Headings, etc. The descriptive headings of the several Sections of this Amendment are inserted for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

Section 8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts and all of such counterparts shall together constitute one and the same instrument. Complete sets of counterparts shall be lodged with the Company and the Agent.

Section 9. References to Credit Agreement. As used in the Credit Agreement (including all Exhibits thereto) and all other Loan Documents, on and subsequent to the effective date hereof, the term “Agreement” shall mean the Credit Agreement, as amended by this Amendment.

[Remainder of page left intentionally blank]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized offices as of the date first above written.

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Assistant Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Assistant Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated September 30, 2004, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated July 1, 2005, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL];

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL]; and

That certain Secretary’s Certificate dated April 10, 2006, executed and delivered to the Agent by the Secretary of [CONFIDENTIAL].