PROSPECTUS SUPPLEMENT DATED SEPTEMBER 30, 1996
(to prospectus dated January 13, 1994)
10,672 Shares
WHOLE FOODS MARKET, INC.
COMMON STOCK
Up to a maximum of 10,672 shares of common stock, no par value (the
"Common Stock"), of Whole Foods Market, Inc., a Texas corporation (the "Company"
or "WFM"), are being offered from time to time by certain of the Company's
shareholders (the "Selling Shareholders"). See "Selling Shareholders." The
Company will not receive any of the proceeds from the sale of the shares of
Common Stock by the Selling Shareholders.
The Common Stock may be offered by the Selling Shareholders from time to
time in open market transactions (which may include block transactions), through
underwriting syndicates represented by one or more managing underwriters or in
private transactions, or a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices relating to prevailing market prices
or at negotiated prices.
The costs, expenses and fees incurred in connection with the
registration of the Common Stock, excluding any selling commissions and
brokerage fees incurred by the Company and the Selling Shareholders), will be
paid by the Company, which has also agreed to indemnify the Selling Shareholders
against certain liabilities, including liabilities under the Securities Act of
1933 (the "Act").
The Common Stock offered hereby involves a high degree of risk. See
"Certain Considerations."
The last reported sale price of the Common Stock on the Nasdaq National
Stock Market on September 26, 1996 was $27.25 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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RECENT DEVELOPMENTS
On August 30, 1996, WFM completed a merger with Fresh Fields Markets,
Inc. ("Fresh Fields"), as a result of which Fresh Fields became a wholly-owned
subsidiary of WFM. Fresh Fields, based in Rockville, Maryland, owned and
operated 22 natural foods supermarkets and related facilities in Connecticut,
Illinois, Maryland, New Jersey, New York, Pennsylvania, Virginia and the
District of Columbia. At the time of the merger, WFM owned and operated 48
stores in 12 states and the District of Columbia. The merger has been accounted
for as a pooling of interests. In connection with the merger, holders of Fresh
Fields' capital stock and certain securities convertible into Fresh Fields'
capital stock received, or will receive upon conversion, an aggregate of
5,158,011 shares of Common Stock of the Company.
At a special meeting of shareholders held on August 30, 1996, the
shareholders of WFM also approved an amendment to its Articles of Incorporation
to increase the authorized number of shares of common stock of WFM from 30
million to 50 million shares.
The following sections of the Prospectus dated January 13, 1994 have been
restated in their entirety as follows:
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission under
the Exchange Act are incorporated by reference in this Prospectus:
1. Annual Report on Form 10-K for the fiscal year ended September 25, 1995.
2. Quarterly Reports on Form 10-Q for the quarterly fiscal periods ending
January 14, 1996, April 7, 1996 and June 30, 1996.
3. Report on Form 8-K dated September 13, 1996.
4. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed with the Commission on
January 14, 1992.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the termination of the
offering of the shares of Common Stock hereunder shall be deemed to be
incorporated herein by reference and shall be a part hereof from the date of the
filing of such documents.
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Any statements contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or replaced for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or replaces such statement. Any such statement so
modified or replaced shall not be deemed, except as so modified or replaced, to
constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of the documents incorporated by reference
herein, other than exhibits to such documents not specifically incorporated by
reference. Such requests should be directed to Whole Foods Market, Inc., 601 N.
Lamar Blvd., #300, Austin, Texas 78703, Attention: Shareholder Services
(telephone 512/477-4455, ext. 143).
CERTAIN CONSIDERATIONS
In addition to the other information contained in this Prospectus, the
factors set forth below should be carefully considered in evaluating the Company
and its business before purchasing shares of the Common Stock offered hereby.
These factors, among others, could cause the actual results of WFM to differ
materially from those indicated by forward-looking statements made from time to
time in 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 the Company.
EXPANSION STRATEGY. WFM's strategy is to expand through a combination of
new store openings and acquisitions of existing stores. Successful
implementation of this strategy is contingent on numerous conditions, some of
which are described below, and there can be no assurance that the Company's
expansion strategy can be successfully executed.
Continued growth of WFM will depend to a significant degree upon its
ability to open or acquire new stores in existing and new markets and to operate
these stores on a successful basis. Further, the Company's expansion strategy is
dependent on finding suitable locations, and the Company faces intense
competition with other retailers for such sites. There can be no assurance that
the Company will be able to open or acquire new stores in a timely manner and to
operate them on a successful basis. In addition, there can be no assurance that
the Company can successfully hire and train new employees and integrate such
employees into the programs and policies of the Company or adapt its
distribution, management information and other operating systems to the extent
necessary to operate new or acquired stores in a successful and
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profitable manner and adequately supply natural foods products to these stores
at competitive prices.
There can be no assurance that WFM will continue to grow through
acquisitions. To the extent the Company further expands by acquiring existing
stores, there can be no assurance that WFM can successfully integrate such
stores into its operations and support systems, and that the operations of
acquired stores will not be adversely affected as the Company's decentralized
approach to store operations is introduced to such stores.
The acquisition of existing stores and the opening of new stores
requires significant amounts of capital. In the past, the Company's growth has
been funded primarily through proceeds from public offerings, bank debt, private
placements of debt, and internally generated cash flow. These and other sources
of capital may not be available to the Company in the future.
QUARTERLY FLUCTUATIONS. The Company's quarterly results of operations
may fluctuate significantly as the result of the timing of new store openings
and the range of operating results which may be generated from newly opened
stores. It is WFM's policy to expense the pre-opening costs associated with a
new store opening during the quarter in which the store is opened. Accordingly,
quarter to quarter comparisons of results of operations have been and will be
materially impacted by the timing of new store openings. In addition, the
Company's quarterly operating results could be adversely affected by losses from
new stores, variations in the mix of product sales, price changes in response to
competitive factors, increases in merchandise costs and possible supply
shortages, as well as by the factors listed below in "Operating Results".
COMPETITION. WFM's competitors currently include other natural foods
stores, large and small traditional and specialty supermarkets and grocery
stores. These stores compete with the Company in one or more product categories.
In addition, traditional and specialty supermarkets are expanding more
aggressively in marketing a broad range of natural foods and thereby competing
directly with the Company for products, customers and locations. Some of these
potential competitors have been in business longer or have greater financial or
marketing resources than WFM and may be able to devote greater resources to the
sourcing, promotion and sale of their products. Increased competition may have
an adverse effect on profitability as the result of lower sales, lower gross
profits, and/or greater operating costs such as marketing.
PERSONNEL MATTERS. WFM is dependent upon a number of key management and
other personnel. The loss of the services of a significant number of key
personnel within a short period of time could have a material adverse effect
upon the Company.
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WFM's continued success is also dependent upon its ability to attract and retain
qualified employees to meet the Company's future needs. The Company faces
intense competition for qualified personnel, many of whom are subject to offers
from competing employers, and there can be no assurance that WFM will be able to
attract and retain such personnel. WFM does not currently maintain key person
insurance on any employee.
INTEGRATION OF FRESH FIELDS' OPERATIONS. WFM anticipates reducing Fresh
Fields' overhead expenses by adopting WFM's decentralized approach to store
management. WFM will also seek to improve the operating profitability of the
Fresh Fields stores through enhanced purchasing power, improved utilization of
distribution facilities and other economies of scale resulting from the merger
with Fresh Fields. There can be no assurance that WFM will be able to achieve
the economies of scale and other operating enhancements it seeks in the Fresh
Fields operations, or that these economies of scale can be achieved in a period
of time currently anticipated by management.
The August 30, 1996 acquisition of Fresh Fields has materially increased
the scope of the Company's operations from 48 to 69 stores, after giving effect
to the anticipated closing of the Fresh Fields' Chicago, Illinois store. The
integration of the Fresh Fields operations into the WFM organization is a
significant undertaking. While WFM has experience in acquiring and integrating
other businesses into WFM's operations, Fresh Fields has a larger number of
stores and employees and substantially greater revenues than any of the
companies previously acquired by WFM. There can be no assurance that the
operations of Fresh Fields' stores will not be adversely affected by the
introduction of the Company's team approach to store operations or the response
of customers to the changes in operations and merchandising mix made by the
Company. The integration of Fresh Fields into the Company will require the
dedication of management resources which may temporarily detract from attention
to the day-to-day business of the Company.
LEGAL MATTERS. From time to time WFM is the subject of various lawsuits
arising in the ordinary course of business. Although not currently anticipated
by management, there is potential for the Company's results to be materially
impacted by legal and settlement expenses related to such lawsuits.
WFM is a non-subscriber to Worker's Compensation Insurance in the State
of Texas. There is some potential for the Company's results to be materially
impacted by medical, lost time and other costs associated with on-the-job
injuries.
The Company provides partially self-insured, voluntary employee benefits
plans which provide health care and other benefits to participating employees.
The plans are designed to provide specified levels of coverage, with excess
insurance coverage
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provided by a commercial insurer. There is some potential for WFM's results to
be materially impacted by claims made in excess of reserves therefore.
OPERATING RESULTS. The Company's ability to meet expected results for
any period may be negatively impacted by many factors, as described above and
including, but not limited to, the following: (i) reductions in sales caused by
competitive issues, product availability, weather and other factors; (ii) losses
generated by new stores or higher than expected pre-opening costs; (iii) higher
than expected costs and expenses at store, regional and national levels; (iv)
lower than expected gross margins resulting from the impact of competition or
other factors; (v) higher than expected interest expense due to higher than
expected interest rates or borrowings outstanding; and (vi) delays in new store
openings.
WFM's ability to increase same store sales during any period will be
directly impacted by competition, availability of product and other factors
which are often beyond the control of the Company.
SELLING SHAREHOLDERS
The table below sets forth the beneficial ownership of the Company's
Common Stock by the Selling Shareholders at the date of this Prospectus. The
shareholders indicated acquired the shares of Common Stock owned by them
pursuant to the purchase, on September 23, 1996, by a subsidiary of WFM of
certain assets from Scott Hawkins Associates, Inc. ("SHAI") and related
transactions. Each of the Selling Shareholders is a shareholder of SHAI. Each of
the persons named below has sole voting and investment power with respect to the
shares of Common Stock beneficially owned by him.
<TABLE>
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Shares Owned Before Shares Owned After
Name and the Offering Shares Being the Offering
Address Number Percent Offered(1) Number Percent(1)
Scott Hawkins 1,914 (2) 1,914 -- --
Scott Hawkins
Associates, Inc. 8,758 (2) 8,758 -- --
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(1) Because the Selling Shareholders may offer all or some of the shares
which they hold pursuant to this Prospectus and because there are
currently no agreements, arrangements or understandings with respect to
the sale of any shares, the amount of shares that will be held by the
Selling Shareholders after completion of any offering
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hereunder is unknown. However, for the purposes of the above table, it
is assumed that all of the shares of Common Stock offered hereby are to
be sold.
(2) Less than 1.0%.
The Company is registering the shares of the Selling Shareholders
pursuant to registration rights granted to them under agreements relating to the
acquisition of their shares.
EXPERTS
The consolidated financial statements and schedules of the Company as of
September 24, 1995 and September 25, 1994, and for each of the fiscal years in
the three-year period ended September 24, 1995, incorporated by reference herein
have been incorporated by reference herein in reliance upon the report of KPMG
Peat Marwick, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
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Crouch & Hallett
A REGISTERED LIMITED LIABILITY PARTNERSHIP
ATTORNEYS AND COUNSELORS
717 N. HARWOOD
SUITE 1400
DALLAS, TEXAS 75201
WRITER'S DIRECT DIAL NUMBER (214) 953-0053
TELECOPY - (214) 953-3154
(214) 922-4120
September 30, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: 1933 Act Filing Desk
Re: Whole Foods Market, Inc.
Registration Statement on Form S-3; File No. 33-68362
Gentlemen:
On behalf of the subject registrant and pursuant to Rule 424(b)(3), we
have filed by EDGAR a copy of a prospectus supplement to Post-Effective
Amendment No. 2 to the subject registration statement. If you should have any
questions, please do not hesitate to call me at 214-922-4120 or fax at
214-953-0576.
Very truly yours,
Bruce H. Hallett
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