Press Release
Whole Foods Market Reports Fourth Quarter Results
Sales Increase 20%; Comparable Store Sales Increase 13.4%; As Previously Announced, Earnings Results Include Hurricane Katrina and Stock Option Charges; Company Raises Guidance for 2006 Sales Growth and Increases 2010 Sales Goal to $12 Billion
November 9, 2005. Whole Foods Market, Inc. (NASDAQ: WFMI) today reported sales and earnings for the 12-week quarter and 52-week fiscal year ended September 25, 2005. For the fourth quarter, sales increased 20% to $1.1 billion driven by 12% weighted average square footage growth and comparable store sales growth of 13.4%. The Company estimates the negative sales impact from Hurricane Katrina was in line with its previously announced estimate of $5 million to $6 million. Sales in identical stores (excluding three relocated stores) increased 11.9% for the quarter. For the fiscal year, sales increased 22% to $4.7 billion driven by 13% weighted average square footage growth and comparable store sales growth of 12.8%. Sales in identical stores (excluding four relocated stores and two major store expansions) increased 11.5% for the fiscal year. Comparable and identical store sales exclude the Company's two stores in New Orleans and Metairie for the last five weeks of the fourth quarter, as they were closed due to Hurricane Katrina.
"In fiscal 2005, we produced very strong operating results that exceeded our own expectations and our initial guidance, and returned over $55 million to our shareholders. We are confident in our growth potential and our ability to execute on that growth potential, and as such we have increased our sales growth guidance for next fiscal year to 18% to 21% and our 2010 sales goal from $10 billion to $12 billion," said John Mackey, chairman, chief executive officer, and co-founder of Whole Foods Market. "We believe we will continue to produce strong cash flow from operations and stock option exercises in excess of our capital expenditure needs. As an EVA® company that believes in maximizing returns on invested capital to our shareholders, we are very pleased to announce today a 20% increase in our quarterly dividend to $0.30 per share, a special dividend of $4.00 per share, and a $200 million four-year stock buyback program, along with a two-for-one stock split."
Income before income taxes was $25.0 million for the quarter and $237.1 million for the fiscal year. These results include pre-tax charges of approximately $36.4 million for the quarter and $45.3 million for the fiscal year as follows:
| Pre-tax Charges | 4Q05 | FY05 |
| Share-based compensation primarily related to stock option vesting acceleration | $18.2 million | $19.9 million |
| Natural disaster costs | 16.5 million | 16.5 million |
| Adjustment to reflect early adoption of lease accounting rule change | 1.7 million | 8.9 million |
| Total pre-tax charges | $36.4 million | $45.3 million |
For the quarter, the Company's effective tax rate was approximately 64%, net income was $9.1 million, diluted earnings per share were $0.13, and Economic Value Added (EVA) declined $2.5 million to negative $1.8 million. The tax rate was significantly higher than the Company's four-year average effective tax rate of 40% primarily due to the non-deductible portion of the stock option acceleration charge; however, in fiscal year 2006, the Company expects a return to its historical annualized 40% tax rate. The decline in EVA was due to the impact of Hurricane Katrina. For the fiscal year, the Company's effective tax rate was approximately 43%, net income was $136.4 million, diluted earnings per share were $1.98, and EVA improved $8.2 million to $25.8 million.
Fourth Quarter Results
In the fourth quarter, gross profit increased 68 basis points to 35.3% of sales, and direct store expenses were basically flat at 26.0% of sales, resulting in a 69 basis point increase in store contribution to 9.3% of sales. For the 163 stores in the comparable store base, gross profit improved 90 basis points to 35.5% of sales, and direct store expenses decreased 30 basis points to 25.6% of sales, resulting in a 119 basis point increase in store contribution to 9.9% of sales. General and administrative (G&A) expenses increased 27 basis points to 3.3% of sales.
Capital expenditures in the quarter were $89 million of which $55 million was for new store development. The Company produced cash flow from operations of $77 million during the quarter and paid approximately $17 million to shareholders in cash dividends. For the fiscal year, cash and cash equivalents, including restricted cash, increased $124 million to approximately $345 million, and total long-term debt decreased $152 million to approximately $19 million.
| Store Returns for the Quarter | Average Size | Average Comps | NOPAT ROIC | # of Comp Stores |
| Stores over 11 years old | 29,200 | 8.6% | 70% | 38 |
| Stores between eight and 11 years old | 28,600 | 11.8% | 71% | 33 |
| Stores between five and eight years old | 32,200 | 12.7% | 53% | 38 |
| Stores between two and five years old | 33,400 | 13.2% | 26% | 38 |
| Stores less than two years old (including relocations) | 44,400 | 33.6% | 8% | 16 |
| Stores in comparable store base | 32,200 | 13.4% | 40% | 163 |
| Stores open at the end of the fourth quarter | 33,200 | 33% | 173 | |
Share-Based Compensation
In December 2004, the Financial Accounting Standards Board ("FASB") finalized Statement 123R, "Share-Based Payment," which requires all companies to expense share-based payments, including stock options, at fair value. As such, the Company will begin expensing options in the first quarter of fiscal year 2006. Though not retroactive, the charge to earnings resulting from this rule includes the impact of stock options granted in prior years, since the expense is recognized over the vesting period of the options, which for the Company has been four years. Even if the Company never granted another option after today, it would still have stock option expense until all past option grants were fully vested. Therefore, as previously announced, in order to prevent this "overhang" from past option grants impacting future results, the Company accelerated the vesting of all outstanding stock options on September 22, 2005. The Company incurred an $18.0 million share-based compensation charge in the fourth quarter, primarily a non-cash charge related to this accelerated vesting of options. In addition, the Company's effective tax rate for the quarter was significantly higher than its historical rate primarily due to the non-deductible portion of the stock option acceleration charge. The share-based compensation expense related to the accelerated vesting of options was higher than the Company's $10 million to $15 million previous estimate primarily due to the higher-than-expected closing stock price on the date of acceleration.
Natural Disaster Costs
As previously announced, the Company has two stores in the New Orleans area which were damaged by and closed due to Hurricane Katrina, and accordingly the Company recorded a charge in the fourth quarter for related estimated net losses. The main components of the $16.5 million charge were estimated impaired assets of approximately $12.2 million, estimated inventory losses of approximately $2.2 million, salaries and relocation allowances for displaced Team Members and other costs of approximately $3.7 million, plus a $1 million special donation to the American Red Cross, less accrued insurance proceeds of approximately $2.6 million.
Adjustment for Early Adoption of Lease Accounting Rule Change
The FASB recently finalized its Staff Position on accounting for rental costs incurred during the construction period which requires construction-period rentals to be recognized as expense for reporting periods beginning after September 15, 2005. The rule permits retrospective application of this requirement to previously reported periods and allows early adoption for financial statements not yet issued. As previously announced, the Company has elected to early adopt this rule, allowing current-year financial statements to be reported on the same basis as will be required in the future, and will retrospectively apply this rule to its 2005 Form 10-K results so that all year-over-year amounts are comparable. The following table shows the impact of the lease accounting rule change on our fiscal year 2005 results, and included with this press release are adjusted quarters for fiscal years 2004 and 2005.
| Impact of Lease Accounting Change | 1Q05 | 2Q05 | 3Q05 | 4Q05 | FY05 |
| Pre-opening and relocation expense | $3,466,000 | $2,684,000 | $2,755,000 | $2,291,000 | $11,196,000 |
| Direct store expenses (depreciation) | (664,000) | (521,000) | (539,000) | (594,000) | (2,318,000) |
| Net pre-tax impact | $2,802,000 | $2,163,000 | $2,216,000 | $1,697,000 | $8,878,000 |
New Store Development
In the fourth quarter, the Company opened five new stores in Baton Rouge, LA; Columbus, OH; Denver, CO; Boston, MA; and Omaha NE, ending the quarter with 175 stores (including two Louisiana stores which were temporarily closed) totaling approximately 5.8 million square feet. So far in the first quarter of fiscal year 2006, the Company has opened four new stores in Atlanta, GA; Jericho, NY; Palm Beach Gardens, FL; and West Hartford CT, and plans to open one additional store in Denver, CO.
The Company is also pleased to announce that its Metairie, LA store near New Orleans, which was closed following Hurricane Katrina, has recently reopened for business on a limited basis. While the store will require a complete re-building, the Company has opened an 11,000 square foot "store within a store" in order to provide food to the community while simultaneously rebuilding the perimeter of the store, which the Company hopes to complete over the next three to six months. Also, the Company is now offering pick-up service at its urban New Orleans store and hopes to re-open that store within the next three to six months as well.
The Company continues to add to its store development pipeline with the recent signing of nine new store leases representing a total of approximately 549,000 square feet which are as follows: Chandler, AZ (60,000 s.f.); Orlando, FL (50,000 s.f.); Eugene, OR (52,000 s.f.); Tarzana (Los Angeles suburb), CA (56,000 s.f.); Plymouth Meeting (Philadelphia suburb), PA (65,000 s.f.); Dallas, TX (80,000 s.f.); Reading (Boston suburb), MA (61,000 s.f.); London, U.K. (75,000 s.f.); and Connecticut (50,000 s.f.). The following table provides additional information about the Company's current store development pipeline.
| Store Development Pipeline | 11/9/05 | 11/10/04 | % Change |
| Number of stores in development | 64 | 53 | 23% |
| Average size (gross square feet) | 55,000 | 49,000 | 13% |
| As a percentage of existing store average size | 164% | 155% | - |
| Total square footage under development | 3,600,000 | 2,600,000 | 40% |
| As a percentage of existing square footage | 60% | 50% | - |
Growth Goals for Fiscal Year 2006 and Beyond
As shown in the table below, for the last five years, the Company has produced average sales growth, comparable store sales growth, and weighted average square footage growth of 21%, 11% and 14%, respectively. Based on the Company's strong sales trends over the last few years and its 3.6 million square feet under development, the Company expects to continue to produce similar results on average over the next five years and is therefore raising its 2010 sales goal from $10 billion to $12 billion.
| Historical Performance | FY01 | FY02 | FY03 | FY04 | FY05 | Five-Year Average |
| Sales growth | 23.6% | 18.4% | 17.0% | 22.8% | 21.6% | 20.7% |
| Comparable store sales growth | 9.2% | 10.0% | 8.6% | 14.9% | 12.8% | 11.1% |
| Two-year comps (sum of two years) | 17.8% | 19.2% | 18.6% | 23.5% | 27.8% | 21.4% |
| Weighted average square footage growth | 17% | 17% | 11% | 9% | 13% | 14% |
For fiscal year 2006, the Company is raising its guidance for sales growth to 18% to 21% from a previously stated range of 15% to 20%. The Company expects comparable store sales growth of 8% to 11% and weighted average square footage growth in line with its 14% average.
The Company has produced very consistent results as a percentage of sales over time for the line items shown below. The Company continues to believe that it will produce earnings growth through sales growth rather than through significant operating margin leverage and that these historical results are the best indicator of future results; however, due to fluctuations in the number of new store openings each year and quarter over quarter, there could be some negative impact on store contribution, as new stores generally have lower gross margins and higher direct store expenses than more mature stores.
| Historical Performance | FY01 | FY02 | FY03 | FY04 | FY05 | Five-Year Average |
| Gross profit | 34.7% | 34.6% | 34.2% | 34.7% | 35.1% | 34.7% |
| Direct store expenses | 25.3% | 25.2% | 25.2% | 25.5% | 25.5% | 25.4% |
| G&A | 3.6% | 3.6% | 3.2% | 3.1% | 3.2% | 3.3% |
The Company expects pre-opening and relocation costs for fiscal year 2006 to be slightly higher than the amount incurred in fiscal year 2005. For fiscal year 2006, this includes approximately $6 million to $7 million in accelerated depreciation and closure costs related primarily to stores and facilities scheduled for relocation in fiscal year 2007 and approximately $18 million in pre-opening rent, of which more than half is related to new stores expected to open in fiscal year 2007. Pre-opening rent expensed during the development period is primarily non-cash since the majority of our leases require minimal, if any, rent to be paid until opening of the store. The Company expects average pre-opening costs per new store in the range of $1.7 million to $2.0 million. The Company's restated average pre-opening costs per store have increased over the past several years and are expected to continue to increase in the future due mainly to increases in the average store size and number of prepared foods venues, and to an increase in our internal capitalization thresholds resulting in the expensing of smallwares that were previously capitalized. On a quarterly basis, the Company expects pre-opening and relocation expense to be fairly even throughout the first three quarters of fiscal year 2006 and then ramp up in the fourth quarter due to an anticipated higher number of new store openings in fiscal year 2007.
Capital expenditures are expected to be in the range of $340 million to $360 million of which approximately 60% is related to new stores.
The Company expects to return to its historical annualized 40% tax rate in fiscal year 2006. Excluding the $16.5 million in costs relating to Hurricane Katrina in fiscal year 2005 and share-based compensation expense in fiscal years 2005 and 2006, and using a 40% tax rate in both years, the Company expects diluted earnings per share growth to be slightly less than the Company's increased guidance for sales growth of 18% to 21%. This is due to an expected increase in diluted shares outstanding resulting from an anticipated increase in stock option exercises from the accelerated vesting. The expected fully or partially offsetting impact of higher investment income on the increased cash balance will not be realized because of the Company's announced intent to pay approximately $363 million in cash dividends to shareholders in fiscal year 2006.
The Company will begin expensing share-based compensation in the first quarter of fiscal year 2006; however, the impact on diluted earnings per share is expected to be immaterial in the first and second quarters, as the Company's annual grant date at which the majority of options are granted is not until May. The Company is not forecasting the expense for the second half of the year as it will largely depend on the Company's stock price at the grant date; however, the Company has stated its 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 quarterly net income dilution from share-based compensation expense does not exceed 10%. The Company believes this strategy is best aligned with its stakeholder philosophy because it limits future earnings dilution from options while at the same time retains the broad-based stock option plan which it believes is important to team member morale, its unique corporate culture and its success.
About Whole Foods Market
Founded in 1980 in Austin, Texas, Whole Foods Market® is a Fortune 500 company and the largest natural and organic foods retailer. The Company had sales of $4.7 billion in fiscal year 2005 and currently has 179 stores in the United States, Canada and the United Kingdom.
The following constitutes a "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties, which could cause our actual results to differ materially from those described in the forward looking statements. These risks include but are not limited to general business conditions, the timely development and opening of new stores, the impact of competition, and other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-K/A Amendment No. 2 for the fiscal year ended September 26, 2004. The Company does not undertake any obligation to update forward-looking statements.
Whole Foods Market, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
| Twelve weeks ended | Fifty-two weeks ended | |||||||
| September 25, 2005 | September 26, 2004 | September 25, 2005 | September 26, 2004 | |||||
| Sales | $ | 1,115,067 | $ | 927,306 | $ | 4,701,289 | $ | 3,864,950 |
| Cost of goods sold and occupancy costs | 721,767 | 606,537 | 3,048,870 | 2,523,816 | ||||
| Gross profit | 393,300 | 320,769 | 1,652,419 | 1,341,134 | ||||
| Direct store expenses | 289,485 | 240,800 | 1,199,870 | 986,040 | ||||
| Store contribution | 103,815 | 79,969 | 452,549 | 355,094 | ||||
| General and administrative expenses | 36,202 | 27,597 | 149,364 | 119,800 | ||||
| Share-based compensation | 18,154 | - | 19,896 | - | ||||
| Pre-opening and relocation costs | 11,394 | 5,569 | 37,035 | 18,648 | ||||
| Natural disaster costs | 16,521 | - | 16,521 | - | ||||
| Operating income | 21,544 | 46,803 | 229,733 | 216,646 | ||||
| Other income (expense): Interest expense |
(10) | (1,593) | (2,223) | (7,249) | ||||
| Investment and other income | 3,448 | 1,707 | 9,623 | 6,456 | ||||
| Income before income taxes | 24,982 | 46,917 | 237,133 | 215,853 | ||||
| Provision for income taxes | 15,922 | 18,767 | 100,782 | 86,341 | ||||
| Net income | $ | 9,060 | $ | 28,150 | $ | 136,351 | $ | 129,512 |
| Basic earnings per share | $ | 0.13 | $ | 0.45 | $ | 2.10 | $ | 2.11 |
| Weighted average shares outstanding | 67,486 | 62,339 | 65,045 | 61,324 | ||||
| Diluted earnings per share | $ | 0.13 | $ | 0.43 | $ | 1.98 | $ | 1.98 |
| Weighted average shares outstanding, diluted basis | 71,035 | 68,613 | 69,975 | 67,727 | ||||
| Dividends per share | $ | 0.25 | $ | 0.15 | $ | 0.94 | $ | 0.60 |
| A reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations follows (in thousands): | ||||||||
| Twelve weeks ended | Fifty-two weeks ended | |||||||
| September 25, 2005 | September 26, 2004 | September 25, 2005 | September 26, 2004 | |||||
| Net income (numerator for basic earnings per share) | $ | 9,060 | $ | 28,150 | $ | 136,351 | $ | 129,512 |
| Interest on 5% zero coupon convertible subordinated debentures, net of income taxes | - | 1,099 | 2,539 | 4,697 | ||||
| Adjusted net income (numerator for diluted earnings per share) | $ | 9,060 | $ | 29,249 | $ | 138,890 | $ | 134,209 |
| Weighted average common shares outstanding (denominator for basic earnings per share) | 67,486 | 62,339 | 65,045 | 61,324 | ||||
| Potential common shares outstanding: Assumed conversion of 5% zero coupon convertible subordinated debentures |
- | 3,280 | 1,707 | 3,281 | ||||
| Assumed exercise of stock options | 3,549 | 2,994 | 3,223 | 3,122 | ||||
| Weighted average common shares outstanding and potential additional common shares outstanding (denominator for diluted earnings per share) |
71,035 | 68,613 | 69,975 | 67,727 | ||||
| Basic earnings per share | $ | 0.13 | $ | 0.45 | $ | 2.10 | $ | 2.11 |
| Diluted earnings per share | $ | 0.13 | $ | 0.43 | $ | 1.98 | $ | 1.98 |
Whole Foods Market, Inc.
Consolidated Balance Sheets
September 25, 2005 and September 26, 2004
(In thousands)
| Assets | 2005 | 2004 | ||||||
| Current assets: Cash and cash equivalents |
$ | 308,524 | $ | 194,747 | ||||
| Restricted cash | 36,922 | 26,790 | ||||||
| Trade accounts receivable | 66,682 | 64,972 | ||||||
| Merchandise inventories | 174,848 | 152,912 | ||||||
| Deferred income taxes | 39,588 | 29,974 | ||||||
| Prepaid expenses and other current assets | 45,965 | 16,702 | ||||||
| Total current assets | 672,529 | 486,097 | ||||||
| Property and equipment, net of accumulated depreciation and amortization | 1,054,605 | 873,397 | ||||||
| Goodwill | 112,476 | 112,186 | ||||||
| Intangible assets, net of accumulated amortization | 21,990 | 24,831 | ||||||
| Deferred income taxes | 22,452 | 4,193 | ||||||
| Other assets | 5,244 | 20,302 | ||||||
| Total assets | 1,889,296 | 1,521,006 | ||||||
| Liabilities And Shareholders' Equity | 2005 | 2004 | ||||||
| Current liabilities: Current installments of long-term debt and capital lease obligations |
$ | 5,932 | $ | 5,973 | ||||
| Trade accounts payable | 103,348 | 90,751 | ||||||
| Accrued payroll, bonus and other benefits due team members | 126,981 | 100,536 | ||||||
| Dividends payable | 17,208 | 9,361 | ||||||
| Other current liabilities | 164,914 | 128,329 | ||||||
| Total current liabilities | 418,383 | 334,950 | ||||||
| Long-term debt and capital lease obligations, less current installments | 12,932 | 164,770 | ||||||
| Deferred rent liability | 91,775 | 70,067 | ||||||
| Other long-term liabilities | 530 | 1,581 | ||||||
| Total liabilities | 523,620 | 571,368 | ||||||
| Shareholders' equity: Common stock, no par value, 300,000 and 150,000 shares authorized; 68,009 and 62,771 shares issued; 67,954 and 62,407 shares outstanding in 2005 and 2004, respectively |
874,972 | 535,107 | ||||||
| Accumulated other comprehensive income | 4,405 | 2,053 | ||||||
| Retained earnings | 486,299 | 412,478 | ||||||
| Total shareholders' equity | 1,365,676 | 949,638 | ||||||
| Commitments and contingencies | ||||||||
| Total liabilities and shareholders' equity | $ | 1,889,296 | $ | 1,521,006 | ||||
Whole Foods Market, Inc.
Consolidated Statements of Cash Flows
(In thousands)
| Fifty-two weeks ended | ||||
| September 25, 2005 | September 26, 2004 | |||
| Cash flows from operating activities Net income |
$ | 136,351 | $ | 129,512 |
| Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization |
133,759 | 115,157 | ||
| Loss on disposition of assets | 15,886 | 5,769 | ||
| Share-based compensation | 19,135 | - | ||
| Deferred income tax expense (benefit) | (27,873) | (682) | ||
| Tax benefit related to exercise of employee stock options | 62,643 | 35,583 | ||
| Interest accretion on long-term debt | 4,120 | 7,551 | ||
| Deferred rent | 16,080 | 11,109 | ||
| Other | 1,317 | (1,133) | ||
| Net change in current assets and liabilities: Trade accounts receivable |
(2,027) | (19,158) | ||
| Merchandise inventories | (21,486) | (27,868) | ||
| Prepaid expense and other current assets | (4,151) | (2,940) | ||
| Trade accounts payable | 12,597 | 12,515 | ||
| Accrued payroll, bonus and other benefits due team members | 26,445 | 29,646 | ||
| Other accrued expenses | 38,023 | 35,279 | ||
| Net cash provided by operating activities | 410,819 | 330,340 | ||
| Cash flows from investing activities Development costs of new store locations |
(207,792) | (156,728) | ||
| Other property, plant and equipment expenditures | (116,318) | (109,739) | ||
| Increase in restricted cash | (10,132) | (26,790) | ||
| Change in notes receivable | 13,500 | (13,500) | ||
| Payment for purchase of acquired entities, net of cash acquired | - | (18,873) | ||
| Other investing activities | (1,500) | 1,332 | ||
| Net cash used in investing activities | (322,242) | (324,298) | ||
| Cash flows from financing activities Dividends paid |
(54,683) | (27,728) | ||
| Issuance of common stock | 85,816 | 59,518 | ||
| Payments on long-term debt and capital lease obligations | (5,933) | (8,864) | ||
| Net cash provided by financing activities | 25,200 | 22,926 | ||
| Net increase in cash and cash equivalents | 113,777 | 28,968 | ||
| Cash and cash equivalents at beginning of period | 194,747 | 165,779 | ||
| Cash and cash equivalents at end of period | $ | 308,524 | $ | 194,747 |
| Supplemental disclosure of cash flow information: Interest paid |
$ | 1,063 | $ | 2,127 |
| Federal and state income taxes paid | $ | 74,706 | $ | 60,372 |
| Non-cash transactions: Common stock issued in connection with acquisition |
$ | - | $ | 16,375 |
| Conversion of convertible debentures into common stock | $ | 147,794 | $ | 293 |
Whole Foods Market, Inc.
Consolidated Quarterly Statements of Operations
(In thousands, except per share amounts)
| 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | |||||
| Fiscal Year 2005 | January 16, 2005 |
April 10, 2005 |
July 3, 2005 |
September 25, 2005 |
||||
| Sales | $ | 1,368,328 | $ | 1,085,158 | $ | 1,132,736 | $ | 1,115,067 |
| Cost of goods sold and occupancy costs | 895,486 | 697,686 | 733,931 | 721,767 | ||||
| Gross profit | 472,842 | 387,472 | 398,805 | 393,300 | ||||
| Direct store expenses | 348,380 | 276,291 | 285,714 | 289,485 | ||||
| Store contribution | 124,462 | 111,181 | 113,091 | 103,815 | ||||
| General and administrative expenses | 40,401 | 34,773 | 37,988 | 36,202 | ||||
| Share-based compensation | - | 22 | 1,720 | 18,154 | ||||
| Pre-opening and relocation costs | 6,599 | 10,265 | 8,777 | 11,394 | ||||
| Natural disaster costs | - | - | - | 16,521 | ||||
| Operating income | 77,462 | 66,121 | 64,606 | 21,544 | ||||
| Other income (expense): Interest expense |
(1,708) | (342) | (163) | (10) | ||||
| Investment and other income | 1,194 | 2,113 | 2,868 | 3,448 | ||||
| Income before income taxes | 76,948 | 67,892 | 67,311 | 24,982 | ||||
| Provision for income taxes | 30,778 | 27,158 | 26,924 | 15,922 | ||||
| Net income | $ | 46,170 | $ | 40,734 | $ | 40,387 | $ | 9,060 |
| Basic earnings per share | $ | 0.74 | $ | 0.63 | $ | 0.61 | $ | 0.13 |
| Weighted average shares outstanding | 62,794 | 64,751 | 65,899 | 67,486 | ||||
| Diluted earnings per share | $ | 0.69 | $ | 0.59 | $ | 0.58 | $ | 0.13 |
| Weighted average shares outstanding, diluted basis | 69,013 | 69,544 | 70,373 | 71,035 | ||||
| Dividends per share | $ | 0.19 | $ | 0.25 | $ | 0.25 | $ | 0.25 |
| 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | |||||
| Fiscal Year 2004 | January 18, 2004 |
April 11, 2004 |
July 4, 2004 |
September 26, 2004 |
||||
| Sales | $ | 1,118,148 | $ | 902,141 | $ | 917,355 | $ | 927,306 |
| Cost of goods sold and occupancy costs | 733,721 | 582,597 | 600,961 | 606,537 | ||||
| Gross profit | 384,427 | 319,544 | 316,394 | 320,769 | ||||
| Direct store expenses | 282,596 | 229,995 | 232,649 | 240,800 | ||||
| Store contribution | 101,831 | 89,549 | 83,745 | 79,969 | ||||
| General and administrative expenses | 35,869 | 28,783 | 27,551 | 27,597 | ||||
| Pre-opening and relocation costs | 4,073 | 4,040 | 4,966 | 5,569 | ||||
| Operating income | 61,889 | 56,726 | 51,228 | 46,803 | ||||
| Other income (expense): Interest expense |
(2,478) | (1,859) | (1,319) | (1,593) | ||||
| Investment and other income | 1,464 | 1,503 | 1,782 | 1,707 | ||||
| Income before income taxes | 60,875 | 56,370 | 51,691 | 46,917 | ||||
| Provision for income taxes | 24,350 | 22,548 | 20,676 | 18,767 | ||||
| Net income | $ | 36,525 | $ | 33,822 | $ | 31,015 | $ | 28,150 |
| Basic earnings per share | $ | 0.61 | $ | 0.55 | $ | 0.50 | $ | 0.45 |
| Weighted average shares outstanding | 60,309 | 61,035 | 61,951 | 62,339 | ||||
| Diluted earnings per share | $ | 0.57 | $ | 0.52 | $ | 0.47 | $ | 0.43 |
| Weighted average shares outstanding, diluted basis | 66,634 | 67,579 | 68,446 | 68,613 | ||||
| Dividends per share | $ | 0.15 | $ | 0.15 | $ | 0.15 | $ | 0.15 |
Whole Foods Market, Inc.
Non-GAAP Financial Measures (unaudited)
(In thousands)
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides information regarding Economic Value Added (“EVA”) in the press release 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 and for incentive compensation and capital planning purposes. The following is a tabular reconciliation of this non-GAAP financial measure to GAAP net income, which the Company believes to be the most directly comparable GAAP financial measure.
| Twelve weeks ended | Fifty-two weeks ended | |||||||
| EVA | September 25, 2005 | September 26, 2004 | September 25, 2005 | September 26, 2004 | ||||
| Net income | $ | 9,060 | $ | 28,150 | $ | 136,351 | $ | 129,512 |
| Provision for income taxes | 15,922 | 18,767 | 100,782 | 86,341 | ||||
| Interest expense and other | 29,424 | 3,186 | 38,832 | 11,954 | ||||
| NOPBT | 54,406 | 50,103 | 275,965 | 227,807 | ||||
| Income taxes (40%) | 21,762 | 20,041 | 110,386 | 91,123 | ||||
| NOPAT | 32,644 | 30,062 | 165,579 | 136,684 | ||||
| Capital Charge | 34,484 | 29,435 | 139,793 | 119,101 | ||||
| EVA | $ | (1,840) | $ | 627 | $ | 25,786 | $ | 17,583 |
— EVA® is a registered trademark of Stern Stewart & Co.
About Whole Foods Market
Founded in 1980 in Austin, Texas, Whole Foods Market® is a Fortune 500 company and the largest natural and organic foods retailer. The Company had sales of $5.6 billion in fiscal year 2006 and currently has 188 stores in the United States, Canada and the United Kingdom.
The following constitutes a "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties, which could cause our actual results to differ materially from those described in the forward looking statements. These risks include but are not limited to general business conditions, the timely development and opening of new stores, the impact of competition, and other risks detailed from time to time in the Company's SEC reports, including the reports on Form 10-K and 10-K/A Amendment No. 1 for the fiscal year ended September 25, 2005. The Company does not undertake any obligation to update forward-looking statements.