UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 7, 2013
Whole Foods Market, Inc.
(Exact name of registrant as specified in its charter)
| Texas | 000-19797 | 74-1989366 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 550 Bowie Street Austin, Texas |
78703 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (512) 477-4455
________________________________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On May 7, 2013, the Company issued a press release announcing its results of operations for its second fiscal quarter ended April 14, 2013. A copy of the press release is furnished herewith as Exhibit 99.1.
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides information regarding Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), Adjusted EBITDA, Free Cash Flow and Return on Invested Capital ("ROIC") 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 a component of incentive compensation. The Company defines Adjusted EBITDA as EBITDA plus non-cash share-based payment expense and deferred rent. The Company defines Free Cash Flow as net cash provided by operating activities less capital expenditures. The Company defines ROIC as annualized adjusted earnings divided by average invested capital. Earnings are annualized on a 52-week basis. Invested capital reflects an average of the trailing four quarters. The press release includes a tabular reconciliation of these non-GAAP financial measures to GAAP net income, which the Company believes to be the most directly comparable GAAP financial measure.
The information contained in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Furthermore, the information contained in this Item 2.02 or Exhibit 99.1 shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 7.01. Regulation FD Disclosure.
On May 7, 2013 the Company issued a press release announcing that its Board of Directors approved a two-for-one stock split in the form of a stock dividend that will be distributed on May 29, 2013 to shareholders of record at the close of business on May 17, 2013. A copy of the press release is furnished herewith as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Press release dated May 7, 2013, regarding second fiscal quarter results of operations and two-for-one stock split.
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 hereunto duly authorized.
| Whole Foods Market, Inc.
(Registrant) |
||
| May 7, 2013
(Date) |
/s/ GLENDA FLANAGAN
Glenda Flanagan Executive Vice President and Chief Financial Officer |
EXHIBIT 99.1
AUSTIN, Texas, May 7, 2013 (GLOBE NEWSWIRE) -- Whole Foods Market, Inc. (Nasdaq:WFM) today reported results for the 12-week second quarter ended April 14, 2013. Sales increased 13% to $3.0 billion. Comparable store sales increased 6.9%, and identical store sales, excluding four relocations and one expansion, increased 6.6%. Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 18% from the prior year to $305 million or 10.1% of sales, net income increased 21% to $142 million, and diluted earnings per share increased 19% to $0.76.
"We delivered another quarter of strong sales and earnings growth, reporting record results on many levels," said John Mackey, co-founder and co-chief executive officer of Whole Foods Market. "The demand for fresh, healthy foods continues to grow, and we are leading the way as America's healthiest grocery store with close to seven million customers visiting our stores each week. We believe we will continue to gain market share as we accelerate our new store openings, improve our relative value proposition while maintaining our high quality standards, and further differentiate our shopping experience."
The following table shows the Company's sales results for the last five quarters and for the first three weeks of the third quarter through May 5, 2013. Comparable and identical sales growth is adjusted to exclude the impact of the Easter shift in Q2 and Q3 of fiscal year 2012, and sales growth in Q4 is presented on a 12-week to 12-week basis.
| 2Q12 | 3Q12 | 4Q12 | 1Q13 | 2Q13 | QTD 3Q13* | |
| Sales growth | 13.6% | 13.6% | 14.1% | 13.7% | 13.3% | |
| Comparable store sales growth | 8.9% | 8.9% | 8.5% | 7.2% | 6.9% | 9.4% |
| Two-year comps | 17.3% | 16.6% | 17.3% | 15.9% | 15.9% | 17.9% |
| Identical store sales growth | 8.5% | 8.6% | 8.3% | 7.1% | 6.6% | 9.0% |
| Two-year idents | 16.8% | 16.1% | 16.7% | 15.3% | 15.0% | 17.1% |
| *Comparable and identical store sales growth reflects an estimated 200 basis point positive impact from Team Member Appreciation Double Discount Day. | ||||||
For the quarter, gross profit increased five basis points to 36.4% of sales driven by an improvement in occupancy costs as a percentage of sales. Cost of goods sold was flat as a percentage of sales. Direct store expenses improved 14 basis points to 25.4% of sales due primarily to leverage in wages, healthcare costs and depreciation. As a result, store contribution improved 19 basis points to 11.0% of sales.
For stores in the identical store base, gross profit improved 16 basis points to 36.4% of sales, direct store expenses improved 47 basis points to 25.1% of sales, and store contribution improved 63 basis points to 11.3% of sales.
G&A expenses improved 24 basis points to 3.0% of sales due primarily to leverage in wages at the Company's regional and global offices.
During the quarter, the Company produced $287 million in cash flow from operations and invested $109 million in capital expenditures, of which $61 million related to new stores. This resulted in free cash flow of $178 million. In addition, the Company paid $37 million in quarterly dividends to shareholders and repurchased $37 million of its common stock.
Additional information on the quarter for comparable stores and all stores is provided in the following table.
| Comparable Stores | Comps | ROIC* |
# of Stores |
Average Size |
Total Square Feet |
| Over 15 years old (19 years old, s.f. weighted) | 5.0% | 135% | 79 | 28,400 | 2,240,400 |
| Between 11 and 15 years old | 6.7% | 101% | 70 | 32,200 | 2,251,000 |
| Between eight and 11 years old | 4.6% | 101% | 47 | 37,800 | 1,778,000 |
| Between five and eight years old | 7.2% | 51% | 51 | 53,500 | 2,728,400 |
| Between two and five years old | 8.4% | 31% | 50 | 47,800 | 2,392,300 |
| Less than two years old (including four relocations) | 18.7% | 19% | 23 | 38,300 | 881,900 |
| All comparable stores (9.5 years old, s.f. weighted) | 6.9% | 64% | 320 | 38,400 | 12,272,000 |
| All stores (8.8 years old, s.f. weighted) | 55% | 348 | 38,000 | 13,240,900 | |
| *Defined as annualized store-level income after taxes divided by average invested capital; does not reflect any as-if effect of capitalizing operating leases. | |||||
The Company's Board of Directors announced today that it approved a two-for-one stock split of the Company's outstanding common stock to be effected through a stock dividend. Shareholders of record as of the close of business on May 17, 2013 will be entitled to a stock dividend on May 29, 2013 of one additional share of common stock for each share of common stock they own. Based on the total number of shares of common stock outstanding as of April 14, 2013, the stock split will increase the total number of shares of common stock outstanding from approximately 185 million to 370 million, out of the 600 million shares of common stock currently authorized.
The Company's transfer agent, Securities Transfer Corporation, has been instructed to mail a separate stock certificate on May 29, 2013 for the additional shares to shareholders that have physical possession of their stock certificates. Shareholders who hold their stock in a brokerage account should receive their new shares through their broker dealer on or about the same date. The Company's stock will begin trading at the post-split price on May 30, 2013. Any shares purchased after May 17, 2013 through May 29, 2013 should come with a "due-bill" entitling the buyer to one additional share for each share purchased.
Fiscal Year Results
For the 28-week period ended April 14, 2013, sales increased 14% to $6.9 billion. Comparable store sales increased 7.1%, and identical store sales, excluding four relocations and three expansions, increased 6.8%. EBITDA increased 19% to $642 million or 9.3% of sales, net income increased 22% to $288 million, and diluted earnings per share increased 19% to $1.54.
Year to date, the Company has produced $590 million in cash flow from operations and invested $264 million in capital expenditures, of which $157 million related to new stores. This resulted in free cash flow of $326 million. In addition, the Company has paid $434 million in quarterly and special dividends to shareholders and repurchased $63 million of common stock.
The following table shows the Company's results for the fiscal year for certain line items compared to its historical three-year ranges and averages. Sales growth for fiscal year 2012 is adjusted to be on a 52-to-52 week basis.
| FY10-FY12 Results | ||||
| Low | High | Average |
FY13 YTD |
|
| Sales growth | 12.1% | 13.5% | 12.6% | 13.6% |
| Comparable store sales growth | 7.1% | 8.7% | 8.1% | 7.1% |
| Identical store sales growth | 6.5% | 8.4% | 7.8% | 6.8% |
| Ending square footage growth | 5.3% | 7.6% | 6.4% | 8.8% |
| Percent of sales from new & relocated stores | 4.2% | 5.8% | 5.1% | 5.7% |
| Gross profit | 34.8% | 35.5% | 35.1% | 35.6% |
| Direct store expenses | 25.5% | 26.4% | 25.9% | 25.4% |
| Store contribution | 8.4% | 10.0% | 9.2% | 10.2% |
| G&A expenses | 3.0% | 3.2% | 3.1% | 3.0% |
Growth and Development
The Company opened six stores in the second quarter and has opened one store so far in the third quarter. The Company expects to open three additional stores in the third quarter and 12 stores in the fourth quarter. The Company currently has 349 stores open totaling approximately 13.3 million square feet.
The Company recently signed 10 new leases averaging 35,700 square feet in size in Mobile, AL; Burbank, CA; Los Angeles, CA; Longmont, CO; Westminster, CO; Olathe, KS; Portland, OR; Draper, UT; Arlington, VA; and Ashburn, VA. These stores currently are scheduled to open in fiscal year 2014 and beyond.
The following table provides additional information about the Company's store openings in fiscal years 2012 and 2013 year to date; leases currently tendered but unopened; and total development pipeline (including leases currently tendered) for stores scheduled to open through fiscal year 2017.
| New Store Information |
Stores Opened FY12 |
Stores Opened FY13 YTD |
Current Leases Tendered |
Current Leases Signed |
| Number of stores (including relocations) | 25 | 17 | 23 | 89 |
| Number of relocations | 1 | 3 | 3 | 8 |
| Number of lease acquisitions, ground leases, & owned properties | 0 | 1 | 7 | 8 |
| New markets | 8 | 6 | 7 | 22 |
| Average store size (gross square feet) | 35,500 | 34,500 | 37,200 | 37,200 |
| Total square footage | 887,400 | 586,600 | 855,700 | 3,326,600 |
| Average tender period in months | 7.9 | 9.3 | ||
| Average pre-opening expense per store (incl. rent) | $1.7 mil | |||
| Average pre-opening rent per store | $0.6 mil |
Outlook for Fiscal Year 2013
The following table provides information on the Company's updated outlook for fiscal year 2013, a 52-week year, as compared to fiscal year 2012, a 53-week year. Based on its year-to-date results and updated assumptions, the Company is narrowing its comparable and identical store sales growth ranges for the fiscal year, and raising its EPS range to $2.86 to $2.89. On a 52-week to 52-week basis, the Company now expects sales growth of 12% to 14% and diluted earnings per share growth of 15% to 17%.
The Company continues to expect a significant year-over-over increase in pre-opening and relocation expense in the fourth quarter based on the opening of 12 new stores along with a high number of openings in the first quarter of 2014.
The Company's outlook for EPS and diluted shares outstanding does not reflect the announced two-for-one stock split.
|
FY13 Prior Outlook |
FY13 Current Outlook |
Q2 YTD Actuals |
Q3-Q4 Implied Outlook |
|
| Sales growth | 10% - 11%* | 10% - 11%* | 14% | 7% - 9%* |
| Comparable store sales growth | 6.6% - 8.0% | 6.7% - 7.5% | 7.1% | 6.3% - 8.0% |
| Two-year comps | 15.3% - 16.7% | 15.5% - 16.2% | 15.9% | 15.0% - 16.6% |
| Identical store sales growth | 6.3% - 7.7% | 6.5% - 7.2% | 6.8% | 6.0% - 7.6% |
| Two-year idents | 14.7% - 16.1% | 14.8% - 15.6% | 15.2% | 14.5% - 16.1% |
| Three-year idents | 23.0% - 24.5% | 23.2% - 23.9% | 23.9% | 22.6% - 24.2% |
| Number of new stores | 32 - 34 | 32 | 16 | 16 |
| % of sales from new stores | 6% | 6% | 6% | 6% |
| Ending square footage growth | 8% | 8% | 9% | 8% |
| G&A expenses | 3.1% | 3.1% | 3.0% | 3.2% |
| Pre-opening and relocation costs | $68 - $73 mil | $69 - $72 mil | $31 mil | $38 - $41 mil |
| Operating margin | 6.6% - 6.7% | 6.7% | 6.7% | 6.6% |
| EBITDA | $1.18 - $1.20 bil | $1.19 - $1.20 bil | $642 mil | $545 - $560 mil |
| Tax rate | 38.6% - 39.0% | 38.5% | 38.6% | 38.5% |
| Diluted shares outstanding | 188 mil | 187.5 mil | 187 mil | 188 mil |
| Diluted EPS | $2.83 - $2.87 | $2.86 - $2.89 | $1.54 | $1.32 - $1.35 |
| YOY % change | 12% - 14%* | 13% - 15%* | 19% | 7% - 10%* |
| Capital expenditures | $565 - $615 mil | $565 - $615 mil | $264 mil | $301 - $351 mil |
| *On a 52-week to 52-week basis: | ||||
| Sales growth | 12% - 14% | 12% - 14% | 14% | 11% - 13% |
| Diluted EPS growth | 14% - 16% | 15% - 17% | 19% | 11% - 13% |
The following table provides information about the Company's estimated store openings through fiscal year 2014.
| Estimated Openings | Relocations |
Average Square Feet per Store |
Ending Square Footage Growth |
|
| Fiscal year 2013 | 32 | 5 | 35,000 | 8% |
| Fiscal year 2014 | 33 - 38 | 2 - 3 | 38,000 | 8% - 9% |
Over the long term, the Company considers 1,000 stores to be a reasonable indication of its market opportunity in the United States as the Whole Foods Market brand continues to strengthen, consumer demand for natural and organic products continues to increase, and the Company's flexibility on new store size opens up additional market opportunities. The Company believes Canada and the United Kingdom hold great promise as well.
About Whole Foods Market
Founded in 1980 in Austin, Texas, Whole Foods Market (www.wholefoodsmarket.com) is the leading retailer of natural and organic foods and America's first national "Certified Organic" grocer. In fiscal year 2012, the Company had sales of approximately $12 billion and currently has 349 stores in the United States, Canada, and the United Kingdom. Whole Foods Market employs approximately 74,000 team members and has been ranked for 16 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 general business conditions, changes in overall economic conditions that impact consumer spending, including fuel prices and housing market trends, the impact of competition and other risks detailed from time to time in the SEC reports of Whole Foods Market, including Whole Foods Market's report on Form 10-K for the fiscal year ended September 30, 2012. 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 (866) 952-1906, 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 millions, except per share amounts) | ||||
| 12 weeks ended | 28 weeks ended | |||
| April 14, 2013 | April 8, 2012 | April 14, 2013 | April 8, 2012 | |
| Sales | $ 3,027 | $ 2,670 | $ 6,883 | $ 6,061 |
| Cost of goods sold and occupancy costs | 1,926 | 1,700 | 4,434 | 3,913 |
| Gross profit | 1,101 | 970 | 2,449 | 2,148 |
| Direct store expenses | 769 | 682 | 1,748 | 1,553 |
| Store contribution | 332 | 288 | 701 | 595 |
| General and administrative expenses | 91 | 86 | 207 | 190 |
| Operating income before pre-opening and store closure | 241 | 202 | 494 | 405 |
| Pre-opening expenses | 10 | 11 | 24 | 21 |
| Relocation, store closure and lease termination costs | 3 | 1 | 7 | 4 |
| Operating income | 228 | 190 | 463 | 380 |
| Investment and other income, net of interest expense | 3 | 2 | 6 | 4 |
| Income before income taxes | 231 | 192 | 469 | 384 |
| Provision for income taxes | 89 | 74 | 181 | 148 |
| Net income | $ 142 | $ 118 | $ 288 | $ 236 |
| Basic earnings per share | $ 0.77 | $ 0.65 | $ 1.55 | $ 1.31 |
| Weighted average shares outstanding | 185.3 | 182.2 | 185.3 | 180.6 |
| Diluted earnings per share | $ 0.76 | $ 0.64 | $ 1.54 | $ 1.29 |
| Weighted average shares outstanding, diluted basis | 186.9 | 184.6 | 187.0 | 182.8 |
| Dividends declared per common share | $ 0.20 | $ 0.14 | $ 2.40 | $ 0.28 |
| A reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations follows: | ||||
| 12 weeks ended | 28 weeks ended | |||
| April 14, 2013 | April 8, 2012 | April 14, 2013 | April 8, 2012 | |
| Net income (numerator for basic and diluted earnings per share) | $ 142 | $ 118 | $ 288 | $ 236 |
| Weighted average common shares outstanding (denominator for basic earnings per share) | 185.3 | 182.2 | 185.3 | 180.6 |
| Potential common shares outstanding: | ||||
| Incremental shares from assumed exercise of stock options | 1.6 | 2.4 | 1.7 | 2.2 |
| Weighted average common shares outstanding and potential additional common shares outstanding (denominator for diluted earnings per share) | 186.9 | 184.6 | 187.0 | 182.8 |
| Basic earnings per share | $ 0.77 | $ 0.65 | $ 1.55 | $ 1.31 |
| Diluted earnings per share | $ 0.76 | $ 0.64 | $ 1.54 | $ 1.29 |
| Whole Foods Market, Inc. | ||||
| Consolidated Statements of Comprehensive Income (unaudited) | ||||
| (In millions) | ||||
| 12 weeks ended | 28 weeks ended | |||
| April 14, 2013 | April 8, 2012 | April 14, 2013 | April 8, 2012 | |
| Net income | $ 142 | $ 118 | $ 288 | $ 236 |
| Other comprehensive income (loss), net of tax: | ||||
| Foreign currency translation adjustments | (3) | 2 | (5) | 3 |
| Other comprehensive income (loss), net of tax | (3) | 2 | (5) | 3 |
| Comprehensive income | $ 139 | $ 120 | $ 283 | $ 239 |
| Whole Foods Market, Inc. | ||
| Consolidated Balance Sheets (unaudited) | ||
| (In millions) | ||
| Assets | April 14, 2013 | September 30, 2012 |
| Current assets: | ||
| Cash and cash equivalents | $ 202 | $ 89 |
| Short-term investments - available-for-sale securities | 876 | 1,131 |
| Restricted cash | 110 | 103 |
| Accounts receivable | 193 | 197 |
| Merchandise inventories | 380 | 374 |
| Prepaid expenses and other current assets | 67 | 77 |
| Deferred income taxes | 135 | 132 |
| Total current assets | 1,963 | 2,103 |
| Property and equipment, net of accumulated depreciation and amortization | 2,253 | 2,193 |
| Long-term investments - available-for-sale securities | 162 | 221 |
| Goodwill | 679 | 663 |
| Intangible assets, net of accumulated amortization | 66 | 62 |
| Deferred income taxes | 42 | 43 |
| Other assets | 16 | 9 |
| Total assets | $ 5,181 | $ 5,294 |
| Liabilities and Shareholders' Equity | ||
| Current liabilities: | ||
| Current installments of capital lease obligations | $ 1 | $ 1 |
| Accounts payable | 230 | 247 |
| Accrued payroll, bonus and other benefits due team members | 334 | 307 |
| Dividends payable | 37 | 26 |
| Other current liabilities | 407 | 396 |
| Total current liabilities | 1,009 | 977 |
| Long-term capital lease obligations, less current installments | 26 | 23 |
| Deferred lease liabilities | 467 | 441 |
| Other long-term liabilities | 47 | 51 |
| Total liabilities | 1,549 | 1,492 |
| Commitments and contingencies | ||
| Shareholders' equity: | ||
| Common stock, no par value, 600.0 shares authorized; 186.3 and 185.8 shares issued; and 185.2 and 185.4 shares outstanding at 2013 and 2012, respectively | 2,646 | 2,592 |
| Common stock in treasury, at cost, 1.1 and 0.4 shares at 2013 and 2012, respectively | (91) | (28) |
| Accumulated other comprehensive income | -- | 5 |
| Retained earnings | 1,077 | 1,233 |
| Total shareholders' equity | 3,632 | 3,802 |
| Total liabilities and shareholders' equity | $ 5,181 | $ 5,294 |
| Whole Foods Market, Inc. | ||
| Consolidated Statements of Cash Flows (unaudited) | ||
| (In millions) | ||
| 28 weeks ended | ||
| April 14, 2013 | April 8, 2012 | |
| Cash flows from operating activities | ||
| Net income | $ 288 | $ 236 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 179 | 162 |
| Share-based payment expense | 30 | 20 |
| LIFO expense | 2 | 1 |
| Deferred income tax (benefit) expense | (2) | 6 |
| Excess tax benefit related to exercise of team member stock options | (8) | (15) |
| Accretion of premium/discount on marketable securities | 16 | 5 |
| Deferred lease liabilities | 22 | 37 |
| Other | 6 | 1 |
| Net change in current assets and liabilities: | ||
| Accounts receivable | 6 | (19) |
| Merchandise inventories | (9) | (29) |
| Prepaid expenses and other current assets | 8 | 14 |
| Accounts payable | (17) | 6 |
| Accrued payroll, bonus and other benefits due team members | 27 | 19 |
| Other current liabilities | 45 | 71 |
| Net change in other long-term liabilities | (3) | 2 |
| Net cash provided by operating activities | 590 | 517 |
| Cash flows from investing activities | ||
| Development costs of new locations | (157) | (115) |
| Other property and equipment expenditures | (107) | (99) |
| Purchases of available-for-sale securities | (528) | (1,321) |
| Sales and maturities of available-for-sale securities | 825 | 789 |
| Increase in restricted cash | (7) | (13) |
| Payment for purchase of acquired entities | (22) | -- |
| Other investing activities | (7) | (1) |
| Net cash used in investing activities | (3) | (760) |
| Cash flows from financing activities | ||
| Common stock dividends paid | (434) | (43) |
| Issuance of common stock | 16 | 237 |
| Purchase of treasury stock | (63) | (4) |
| Excess tax benefit related to exercise of team member stock options | 8 | 15 |
| Net cash (used in) provided by financing activities | (473) | 205 |
| Effect of exchange rate changes on cash and cash equivalents | (1) | 1 |
| Net change in cash and cash equivalents | 113 | (37) |
| Cash and cash equivalents at beginning of period | 89 | 212 |
| Cash and cash equivalents at end of period | $ 202 | $ 175 |
| Supplemental disclosure of cash flow information: | ||
| Federal and state income taxes paid | $ 178 | $ 91 |
| Whole Foods Market, Inc. | ||||
| Non-GAAP Financial Measures (unaudited) | ||||
| (In millions) | ||||
| In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides information regarding Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), Adjusted EBITDA and Free Cash Flow 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 a component of incentive compensation. | ||||
| The Company defines Adjusted EBITDA as EBITDA plus non-cash share-based payment expense and deferred rent. The following is a tabular reconciliation of the non-GAAP financial measure Adjusted EBITDA to GAAP net income, which the Company believes to be the most directly comparable GAAP financial measure. | ||||
| 12 weeks ended | 28 weeks ended | |||
| EBITDA and Adjusted EBITDA | April 14, 2013 | April 8, 2012 | April 14, 2013 | April 8, 2012 |
| Net income | $ 142 | $ 118 | $ 288 | $ 236 |
| Provision for income taxes | 89 | 74 | 181 | 148 |
| Investment and other income, net of interest expense | (3) | (2) | (6) | (4) |
| Operating income | 228 | 190 | 463 | 380 |
| Depreciation and amortization | 77 | 69 | 179 | 162 |
| EBITDA | 305 | 259 | 642 | 542 |
| Share-based payment expense | 13 | 9 | 30 | 20 |
| Deferred rent | 7 | 7 | 18 | 21 |
| Adjusted EBITDA | $ 325 | $ 275 | $ 690 | $ 583 |
| The Company defines Free Cash Flow as net cash provided by operating activities less capital expenditures. The following is a tabular reconciliation of the Free Cash Flow non-GAAP financial measure. | ||||
| 12 weeks ended | 28 weeks ended | |||
| Free Cash Flow | April 14, 2013 | April 8, 2012 | April 14, 2013 | April 8, 2012 |
| Net cash provided by operating activities | $ 287 | $ 256 | $ 590 | $ 517 |
| Development costs of new locations | (61) | (60) | (157) | (115) |
| Other property and equipment expenditures | (48) | (42) | (107) | (99) |
| Free Cash Flow | $ 178 | $ 154 | $ 326 | $ 303 |
| Whole Foods Market, Inc. | ||||
| Non-GAAP Financial Measures (unaudited) | ||||
| (In millions) | ||||
| In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides information regarding Return on Invested Capital ("ROIC") as additional information about its operating results. This measure is not in accordance with, or an alternative to, GAAP. The Company's management believes that this presentation provides 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 this measure for reviewing the financial results of the Company as well as a component of incentive compensation. The Company defines ROIC as annualized adjusted earnings divided by average invested capital. Earnings are annualized on a 52-week basis. Adjustments to earnings are defined in the following tabular reconciliation. Invested capital reflects an average of the trailing four quarters. | ||||
| 12 weeks ended | 28 weeks ended | |||
| ROIC | April 14, 2013 | April 8, 2012 | April 14, 2013 | April 8, 2012 |
| Net income | $ 142 | $ 118 | $ 288 | $ 236 |
| Interest expense, net of taxes | -- | -- | -- | -- |
| Adjusted earnings | 142 | 118 | 288 | 236 |
| Total rent expense, net of taxes1 | 51 | 47 | 117 | 109 |
| Estimated depreciation on capitalized operating leases, net of taxes2 | (34) | (32) | (78) | (73) |
| Adjusted earnings, including interest related to operating leases | 159 | 133 | 327 | 272 |
| Annualized adjusted earnings | $ 615 | $ 510 | $ 535 | $ 438 |
| Annualized adjusted earnings, including interest related to operating leases | $ 688 | $ 578 | $ 607 | $ 506 |
| Average working capital, excluding current portion of long-term debt | $ 975 | $ 691 | $ 975 | $ 691 |
| Average property and equipment, net | 2,196 | 2,005 | 2,196 | 2,005 |
| Average other assets | 1,004 | 860 | 1,004 | 860 |
| Average other liabilities | (496) | (419) | (496) | (419) |
| Average invested capital | $ 3,679 | $ 3,137 | $ 3,679 | $ 3,137 |
| Average estimated asset base of capitalized operating leases3 | 2,841 | 2,589 | 2,841 | 2,589 |
| Average invested capital, adjusted for capitalization of operating leases | $ 6,520 | $ 5,726 | $ 6,520 | $ 5,726 |
| ROIC | 16.7% | 16.3% | 14.5% | 14.0% |
| ROIC, adjusted for capitalization of operating leases | 10.6% | 10.1% | 9.3% | 8.8% |
| 1 Total rent includes minimum base rent of all tendered leases | ||||
| 2 Estimated depreciation equals two-thirds of total rent expense | ||||
| 3 Estimated asset base equals eight times total rent expense | ||||
CONTACT: Cindy McCann
VP of Investor Relations
512.542.0204