FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the period ended April 11, 1999; or
[ ] 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.)
601 N. Lamar
Suite 300
Austin, Texas 78703
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code:
512-477-4455
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
The number of shares of the registrant's common stock, no par value,
outstanding as of April 11, 1999 was 26,138,270 shares.
<PAGE>
<TABLE>
<CAPTION>
Part 1. Financial Information
Item 1. Financial Statements
Whole Foods Market, Inc. And Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) (In thousands)
April 11, 1999 and September 27, 1998
1999 1998
----------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 17,133 36,674
Marketable securities 8,768 27,019
Merchandise inventories 89,516 85,628
Accounts receivable and other 39,606 34,772
----------------------
Total current assets 155,023 184,093
----------------------
Net property and equipment 335,483 291,478
Excess of cost over net assets acquired, net 35,169 35,802
Other assets 39,361 33,435
----------------------
$ 565,036 544,808
======================
Liabilities And Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ 271 343
Trade accounts payable 34,002 34,137
Accrued payroll, bonus and employee benefits 25,139 26,670
Accrued expenses and other 39,837 29,879
----------------------
Total current liabilities 99,249 91,029
Long-term debt, less current installments 161,815 158,673
Other long-term liabilities 17,803 17,833
----------------------
Total liabilities 278,867 267,535
----------------------
Shareholders' equity:
Common stock, no par value, 100,000 shares authorized;
26,746 and 26,500 shares issued; 26,138 and 26,500
shares outstanding 222,648 219,189
Common stock in treasury, at cost (18,939) -
Accumulated other comprehensive income (loss) (15) 211
Retained earnings 82,475 57,873
----------------------
Total shareholders' equity 286,169 277,273
----------------------
$ 565,036 544,808
======================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 2 of 12
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<TABLE>
<CAPTION>
Whole Foods Market, Inc. And Subsidiaries
Condensed Consolidated Income Statements (Unaudited) (In thousands, except per share data)
Twelve weeks ended Twenty-eight weeks ended
April 11 April 12 April 11 April 12
1999 1998 1999 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Sales $ 358,872 324,811 $ 815,111 732,599
Cost of goods sold and occupancy costs 234,748 213,872 537,661 485,908
----------------------------- -----------------------------
Gross profit 124,124 110,939 277,450 246,691
Selling, general and administrative expenses 101,368 90,620 231,789 202,524
Pre-opening and relocation costs 2,243 1,462 2,243 2,527
Merger expenses - - - 1,699
----------------------------- -----------------------------
Income from operations 20,513 18,857 43,418 39,941
Interest expense (1,923) (1,534) (4,603) (3,532)
Investment and other income 504 334 1,517 340
----------------------------- -----------------------------
Income before income taxes 19,094 17,657 40,332 36,749
Income taxes 7,447 6,533 15,730 13,597
----------------------------- -----------------------------
Net income $ 11,647 11,124 $ 24,602 23,152
============================= =============================
Basic earnings per share $ 0.44 0.43 $ 0.93 0.89
============================= =============================
Diluted earnings per share $ 0.43 0.40 $ 0.90 0.84
============================= =============================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3 of 12
<PAGE>
<TABLE>
<CAPTION>
Whole Foods Market, Inc. And Subsidiaries
Condensed Consolidated Statements Of Cash Flows (Unaudited) (In thousands)
Twenty-eight weeks ended
April 11 April 12
1999 1998
------------------------------
<S> <C> <C>
Net cash flow from operating activities $ 48,702 36,681
Cash flow from investing activities:
Acquisition of property and equipment (67,037) (48,901)
Acquisition of leasehold rights (3,592) (2,555)
Proceeds from marketable securities available for sale 18,500 -
Purchase of marketable securities available for sale (475) (25,935)
------------------------------
Net cash flow used in investing activities (52,604) (77,391)
------------------------------
Cash flow from financing activities:
Net proceeds from bank borrowings - 11,000
Net proceeds from the sale of convertible debentures - 111,749
Payments on long-term debt (157) (73,019)
Proceeds from issuance of common stock 3,457 13,365
Purchase of treasury stock (18,939) -
Cash acquired in pooling-of-interests - 54
------------------------------
Net cash flow from (used in) financing activities (15,639) 63,149
------------------------------
Net increase (decrease) in cash and cash equivalents (19,541) 22,439
Cash and cash equivalents at beginning of period 36,674 13,395
==============================
Cash and cash equivalents at end of period $ 17,133 35,834
==============================
Supplemental disclosure of cash flow information:
Interest and income taxes paid:
Interest $ 1,244 3,457
==============================
Federal and state income taxes $ 6,066 14,556
==============================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 4 of 12
<PAGE>
Whole Foods Market, Inc. And Subsidiaries
Notes To Condensed Consolidated Financial Statements (Unaudited)
April 11, 1999
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Whole
Foods Market, Inc. and subsidiaries ("Company") have been prepared in accordance
with generally accepted accounting principles for interim financial statements
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the
opinion of management, all adjustments, consisting of normal recurring accruals,
considered necessary for a fair presentation have been included. Certain
information and footnote disclosure normally included in annual financial
statements prepared in conformity with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10K for the fiscal year ended September 27,
1998.
The Company's fiscal year ends 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.
(2) 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 common stock equivalents
consisting of common shares deemed outstanding from the assumed exercise of
stock options. A reconciliation of the denominators of the basic and diluted
earnings per share calculations follows (in thousands):
<TABLE>
Twelve weeks ended Twenty-eight weeks ended
April 11 April 12 April 11 April 12
1999 1998 1999 1998
-------------------------- ----------------------------
<S> <C> <C> <C> <C>
Denominator for basic earnings per
share: weighted average shares 26,339 26,094 26,461 25,990
Additional shares deemed
outstanding from the assumed
exercise of stock options 817 1,730 1,003 1,662
-------------------------- ----------------------------
Denominator for diluted earnings
per share: adjusted weighted average
shares and assumed conversions 27,156 27,824 27,464 27,652
========================== ============================
</TABLE>
The computation of diluted earnings per share for the twelve and twenty-eight
week periods ended April 11, 1999 and April 12, 1998 does not include 1,643,000
shares of common stock related to the zero coupon convertible subordinated
debentures because to do so would be antidilutive. The computation of diluted
earnings per share for the twelve and twenty-eight week periods ended April 11,
1999 does not include options to purchase 1,577,000 and 1,551,000 shares of
common stock because to do so would be antidilutive. The computation of diluted
earnings per share for the twelve and twenty-eight week periods ended April 12,
1998 does not include options to purchase 192,000 and 95,000 shares of common
stock because to do so would be antidilutive.
Page 5 of 12
<PAGE>
(3) Business Combinations
Subsequent to the end of the second quarter, the Company acquired the
outstanding stock of Nature's Heartland, Inc., which operated four natural foods
supermarkets in the greater Boston metropolitan area, in exchange for
approximately $25 million in cash. This transaction will be accounted for using
the purchase method and, accordingly, the purchase price will be allocated to
net assets acquired based on their estimated fair values. Total costs in excess
of net assets acquired will be amortized on a straight-line basis over 40 years.
Pro forma results of operations are not presented due to the immaterial effect
of the acquired company's results on consolidated results of operations.
(4) Segments
Effective the beginning of the first quarter of fiscal 1999, the Company adopted
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information." This statement establishes standards
for reporting information about operating segments in interim and annual
financial statements. The Company identifies its segments based on management
responsibility and the nature of products and services. The natural foods
supermarkets segment includes the Company's stores and supporting operations.
The direct marketing segment consists of Amrion. The "Other" category consists
of Allegro Coffee Company and operations, including start-up costs, of the
Company's internet commerce subsidiary, WholeFoods.com.
<TABLE>
<CAPTION>
Sales by segment were as follows (in thousands):
Twelve weeks ended Twenty-eight weeks ended
April 11 April 12 April 11 April 12
1999 1998 1999 1998
---------------------------- ------------------------------
<S> <C> <C> <C> <C>
Natural foods supermarkets $ 339,770 302,036 $ 769,928 683,954
Direct marketing 18,300 20,528 43,287 43,314
Other 3,123 3,337 8,036 3,337
---------------------------- ------------------------------
361,193 325,901 820,401 735,304
Intersegment sales (2,321) (1,090) (5,290) (2,705)
---------------------------- ------------------------------
Total sales $ 358,872 324,811 $ 815,111 732,599
============================ ==============================
Income from operations and reconciliation to income before income taxes are as
follows (in thousands):
Twelve weeks ended Twenty-eight weeks ended
April 11 April 12 April 11 April 12
1999 1998 1999 1998
---------------------------- ------------------------------
Natural foods supermarkets $ 19,297 15,913 $ 40,363 34,069
Direct marketing 1,911 2,901 4,106 5,563
Other (695) 43 (1,051) 309
---------------------------- ------------------------------
Income from operations 20,513 18,857 43,418 39,941
Interest expense (1,923) (1,534) (4,603) (3,532)
Investment and other income 504 334 1,517 340
---------------------------- ------------------------------
Income before income taxes $ 19,094 17,657 $ 40,332 36,749
============================ ==============================
</TABLE>
Page 6 of 12
<PAGE>
(5) Comprehensive Income
Effective the beginning of the first quarter of fiscal 1999, the Company adopted
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income", which establishes standards for reporting comprehensive income and its
components in financial statements. Accumulated other comprehensive income
reported on the Company's consolidated balance sheets consists of unrealized
gains and losses, net of tax, on available-for-sale securities. Comprehensive
income, net of related tax effects, is as follows (in thousands):
<TABLE>
Twelve weeks ended Twenty-eight weeks ended
April 11 April 12 April 11 April 12
1999 1998 1999 1998
---------------------------- ------------------------------
<S> <C> <C> <C> <C>
Net income $ 11,647 11,124 $ 24,602 23,152
Unrealized gain (loss), net (24) (4) (138) 74
---------------------------- ------------------------------
Comprehensive income $ 11,623 11,120 $ 24,464 23,226
============================ ==============================
</TABLE>
(6) Recent Pronouncements
The American Institute of Certified Public Accountants (AICPA) issued Statement
of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use" in March 1998. SOP 98-1 is effective for fiscal
years beginning after December 15, 1998 and establishes criteria for
capitalizing certain internal use software costs. The Company plans to adopt SOP
98-1 in fiscal year 2000. The adoption of SOP 98-1 will not have a material
impact on the Company's financial statements.
The AICPA issued SOP 98-5, "Reporting on the Costs of Start-up Activities" in
April 1998. SOP 98-5 requires costs of start-up activities and organization
costs to be expensed as incurred and is effective for financial statements for
fiscal years beginning after December 15, 1998. The Company plans to adopt SOP
98-5 in fiscal year 2000, with the initial application recognized as the
cumulative effect of a change in accounting principle. The Company currently
capitalizes pre-opening costs and expenses such amounts in the quarter of the
location opening. Capitalized pre-opening costs at April 11, 1999 and April 12,
1998 totaled approximately $212,000 and $126,000, respectively. The Company does
not expect the adoption of SOP 98-5 to have a material effect on the Company's
consolidated financial statements; however, the ultimate effect of adoption will
depend upon the level of capitalized pre-opening costs at such date.
Page 7 of 12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations - Twelve and twenty-eight weeks ended April 11, 1999
compared to the same periods of the prior year.
General
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. The following table sets forth the
Company's results of operations data expressed as a percentage of sales:
<TABLE>
Twelve weeks ended Twenty-eight weeks ended
April 11 April 12 April 11 April 12
1999 1998 1999 1998
---------------------------- ------------------------------
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold
and occupancy costs 65.4 65.9 66.0 66.3
---------------------------- ------------------------------
Gross profit 34.6 34.2 34.0 33.7
Selling, general and
administrative expenses 28.3 27.9 28.4 27.6
Pre-opening and relocation costs 0.6 0.5 0.3 0.3
Merger and reorganization expenses 0.0 0.0 0.0 0.2
---------------------------- ------------------------------
Income from operations 5.7 5.8 5.3 5.5
Interest expense (0.5) (0.5) (0.6) (0.5)
Investment and other income 0.1 0.1 0.2 0.1
---------------------------- ------------------------------
Income before income taxes 5.3 5.4 5.0 5.0
Income taxes 2.1 2.0 1.9 1.9
---------------------------- ------------------------------
Net income 3.3% 3.4% 3.0% 3.2%
============================ ==============================
</TABLE>
Figures may not add due to rounding.
Sales
Sales increased 10% for the second fiscal quarter and 11% for the twenty-eight
weeks compared to the same periods of the prior fiscal year due to new stores
opened and acquired since last year and comparable store sales increases of
approximately 8.2% and 7.0% respectively. These increases were partially offset
by a net sales decrease at Amrion that resulted from a decline in international
market sales and increased competition in the supplement category. Comparable
store sales increases generally result from an increase in the number of
customer transactions and slightly higher average transaction amounts,
reflecting an increase in market share as the stores mature in a particular
market.
Gross Profit
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 consolidated gross profit as a percentage of sales was 34.6% and 34.0%
for the twelve and twenty-eight weeks ended April 11, 1999 compared to 34.2% and
33.7%, respectively, for the same periods of the prior year. These increases
reflect increased national buying and private label initiatives which continue
to lower the cost of product purchased on a national basis, and continued
improvement by new stores with respect to product procurement, merchandising and
controlling spoilage. Gross profit was also positively affected by reductions in
product cost as a percentage of sales at Amrion.
Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percentage of sales for the
twelve and twenty-eight weeks ended April 11, 1999 were 28.3% and 28.4% compared
to 27.9% and 27.6% respectively, for the same periods of the prior year. These
increases reflect increased store labor costs, an increase in the number of
administrative and support personnel at the regional and national levels to
Page 8 of 12
<PAGE>
support current and planned growth and the implementation of new management
information systems, costs incurred to address the Company's Year 2000 issues,
and start-up costs associated with WholeFoods.com. Additionally, selling,
general and administrative expenses as a percentage of sales at Amrion increased
as a result of higher market development costs and a decline in international
market sales.
Pre-Opening and Relocation Costs
Pre-opening costs include hiring and training personnel, supplies, and certain
occupancy and miscellaneous costs related to new store and facility openings and
are expensed in the quarter of the opening. Relocation costs consist of losses
on dispositions of fixed assets and inventories, remaining lease payments, other
costs of holding replaced facilities and other related expenses. Pre-opening and
relocation costs for the twelve and twenty-eight weeks ended April 11, 1999
totaled $2.2 million for the opening of one new store and the relocation of one
store in the second quarter. In the prior year, pre-opening and relocation costs
for the twelve and twenty-eight weeks totaling $1.5 million and $2.5 million,
respectively, were associated with the opening of one new store and the
relocation of two stores during the first quarter and the opening of two new
stores in the second quarter.
Interest Expense
Interest expense consists of costs related to the convertible subordinated
debentures and senior notes payable, net of capitalized interest associated with
new store development. Net interest expense for the twelve and twenty-eight
weeks ended April 11, 1999 was approximately $1.9 million and $4.6 million
compared to approximately $1.5 million and $3.5 million for the same periods of
the prior year.
Investment and Other Income
Investment and other income consists primarily of interest income earned on a
short-term corporate bond portfolio and a prime money market portfolio.
Investment and other income for the second quarter of fiscal 1999 was
approximately $504,000 as compared to approximately $334,000 for the same period
of the prior year. Subsequent to the end of the second quarter, the Company
liquidated its remaining investment portfolios to help finance the Nature's
Heartland acquisition.
Liquidity and Capital Resources and Changes in Financial Condition
During the first fiscal quarter, the Company purchased a 381,000 square foot
manufacturing, distribution, warehousing and administrative facility in
Thornton, Colorado for approximately $15 million. The Company expects to spend
an additional $15 million on improvements and equipment for the facility. During
the second fiscal quarter, the Company's Board of Directors authorized a plan to
repurchase up to $25 million in outstanding shares of Company common stock. The
Company has repurchased 608,000 shares of Company common stock for approximately
$18.9 million. Subsequent to the end of the second quarter, the Company acquired
the outstanding stock of Nature's Heartland Inc., in exchange for approximately
$25 million in cash.
Whole Foods Market's principal historical capital requirements have been the
funding of the development or acquisition of new stores, expansions and
improvements in existing stores and increases in overall working capital
requirements. The Company estimates that cash requirements to open a new store
will range from $5 million to $12 million (after giving effect to any landlord
construction allowance). This excludes new store inventory of approximately
$750,000, a substantial portion of which is financed by the vendors of Whole
Foods Market. Subsequent to the end of the second quarter the Company has opened
two new stores. Five new store openings are scheduled for the remainder of the
current fiscal year. The Company has thirty-two stores currently under
development that are expected to open during the next three fiscal years. The
Company intends to replace its current line of credit facility with a new
revolving line of credit facility to increase the amount available for borrowing
and delete or modify certain restrictive covenants. The Company expects that
cash generated from operations and cash available under its line of credit
agreement will be sufficient to finance planned expansion and other anticipated
working capital and capital expenditure requirements.
Year 2000 Issues
During fiscal 1998, the Company established a project team to coordinate
existing Year 2000 activities and address remaining Year 2000 issues. The team's
efforts are focused in three areas: (1) information systems (IS) software and
hardware; (2) facilities and non-IS equipment with embedded systems; and (3)
third-party relationships.
Page 9 of 12
<PAGE>
The Company has adopted a Year 2000 plan consisting of five phases as follows:
Phase I - inventory and ranking of the Company's systems and components,
equipment, and suppliers that may be vulnerable to Year 2000 problems; Phase II
- - assessment of items identified in Phase I; Phase III - remediation or
replacement of non-compliant systems and components and determination of
solutions or alternatives for non-compliant suppliers; Phase IV testing and
implementation of systems for which remediation or replacement is complete; and
Phase V - development of contingency plans to mitigate the potential adverse
effects on the Company's operations that have been determined to be most
reasonably likely based upon the results of Phases I through IV. The Company has
completed Phases I and II. Phases III and IV are currently in process and are
planned to be completed for all critical systems by June 30, 1999. Phase V is
planned to be completed by July 31, 1999.
Subsequent to the end of the second quarter, the Company acquired Nature's
Heartland, Inc. The Company has completed an inventory and assessment of
Nature's Heartland's systems and equipment, and will replace or remediate those
that are non-compliant. The Company expects that Year 2000 efforts will be
completed for Nature's Heartland in accordance with the Year 2000 plan dates
indicated above.
Information Systems Software and Hardware. The Company has assessed its primary
information systems and remediation, testing and implementation are in process
or has been completed for those systems requiring remediation. Remediation,
testing and implementation of the Company's primary accounting and distribution
information systems has been completed. The Company plans to complete all
remediation, testing, and implementation of its individual information systems
by June 30, 1999.
Facilities and Non-IS Equipment with Embedded Systems. The Company has completed
an inventory and assessment of all equipment with non-IS embedded systems.
Certain devices such as time clocks, scales, fax machines, and HVAC controls
will be upgraded or replaced as part of the plan to address Year 2000 issues for
embedded systems. The Company plans to complete remediation, testing and
implementation for all non-IS embedded systems by June 30, 1999.
Third-party Relationships. The Company has identified significant third parties
upon which it relies and has communicated with these third parties through
questionnaires and interviews or otherwise obtained information to determine, to
the extent practical, their Year 2000 readiness. The Company understands that
majority of these third parties are still addressing Year 2000 issues, and
therefore will continue to monitor their progress and review their contingency
plans as necessary.
Costs to Address the Company's Year 2000 Issues. The Company estimates that the
expense associated with the Year 2000 Plan will be approximately $2 million, of
which approximately $400,000 has been incurred to date. Additionally, the
Company estimates that hardware and software purchases totaling approximately $2
million will be capitalized pursuant to the Year 2000 Plan, of which
approximately $600,000 has been capitalized to date.
Risks and Contingency Plans. The aforementioned costs and completion dates are
based on plans for work to be performed and management's best estimates, which
have been derived from assumptions about future events including the
availability of certain resources and other factors, and may be updated as
additional information becomes available. The Company believes that the Year
2000 Plan will address its Year 2000 concerns and mitigate the risk of a
material adverse impact on the Company's results of operations. Should the
Company or significant third parties upon which it relies have a Year 2000
systems failure, the Company believes that the most significant impact would
likely be the inability of one or more stores to electronically process customer
sales, to conduct operations due to a power failure or to receive products from
certain vendors. The Company plans to develop contingency plans by July 31, 1999
to address these or other risks that have been determined to be most reasonably
likely based upon the results of Phases I through IV of the Year 2000 Plan.
Risk Factors
The Company wishes to caution readers that inherent risks and uncertainties
including those listed in the Company's Annual Report on Form 10-K for the year
ended September 27, 1998, among others, could cause the actual results of Whole
Foods Market to differ materially from those indicated by forward-looking
statements made in this Quarterly Report on Form 10-Q and other written
Page 10 of 12
<PAGE>
communications, as well as oral forward-looking statements made from time to
time by representatives of the Company. Except for historical information, the
matters discussed in such oral and written communications are forward looking
statements that involve risks and uncertainties, including but not limited to
general business conditions, the timely and successful development and opening
of new or relocated stores, the impact of competition and other factors which
are often beyond the control of the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from changes in interest rates, which may
affect its financial position, results of operations and cash flows. In seeking
to minimize the risks from interest rate fluctuations, the Company manages
exposures through its regular operating and financing activities. The Company
does not use financial instruments for trading or other speculative purposes.
The Company's exposure to interest rate risk currently consists of its
investment portfolio, senior notes and subordinated convertible debentures. The
Company's investment portfolio at April 11, 1999 totaled approximately $17.3
million and had an average interest rate of approximately 5.43% during the first
two quarters of fiscal 1999. Because of the short-term maturities of the
investment portfolio, the carrying value approximates fair market value.
Subsequent to the end of the second quarter, the Company liquidated its
remaining investment portfolio to help finance the Nature's Heartland
acquisition. At April 11, 1999, the Company had $40 million in senior notes
outstanding bearing interest at a fixed rate of 7.29%. At April 11, 1999, the
estimated fair value of the senior notes exceeded the carrying amount by
approximately $1.6 million. At April 11, 1999, the zero coupon subordinated
convertible debentures have an effective yield to maturity of 5% and a carrying
amount of approximately $121.6 million. At April 11, 1999, the estimated fair
value of the convertible debentures was approximately $104.6 million. Should
interest rates increase or decrease, the estimated fair values of the senior
notes and the zero coupon subordinated debentures would increase or decrease
accordingly.
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
On March 29, 1999, the Company held its annual meeting of shareholders to elect
the Class 1 directors to the Board of Directors of the Company. The Company's
Board of Directors is separated into three classes, and the directors in each
class are elected to serve three-year terms. Each of the Class 1 directors
nominated by the Company was elected, with voting results as follows:
For Against Abstaining
---------- ------- ----------
Linda A. Mason 23,121,579 18,523 116,093
Jirka Rysavy 23,120,752 19,350 116,093
Dr. Cristina G. Banks resigned from the Board prior to March 29, 1999, thereby
reducing the number of directors to eight.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed with this report
Exhibit 27 Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the fiscal quarter
ended April 11, 1999.
Page 11 of 12
<PAGE>
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.
------------------------
Registrant
Date: May 24, 1999 By: Glenda Flanagan
---------------
Glenda Flanagan
Vice President and
Chief Financial Officer
(Duly authorized officer and
principal financial officer)
Page 12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE WHOLE FOODS MARKET 1999 FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000865436
<NAME> Whole Foods Market, Inc.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-26-1999
<PERIOD-END> APR-11-1999
<EXCHANGE-RATE> 1
<CASH> 17,133
<SECURITIES> 8,768
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 89,516
<CURRENT-ASSETS> 155,023
<PP&E> 335,483
<DEPRECIATION> 0
<TOTAL-ASSETS> 565,036
<CURRENT-LIABILITIES> 99,249
<BONDS> 121,588
0
0
<COMMON> 203,709
<OTHER-SE> 82,460
<TOTAL-LIABILITY-AND-EQUITY> 565,036
<SALES> 815,111
<TOTAL-REVENUES> 815,111
<CGS> 537,661
<TOTAL-COSTS> 537,661
<OTHER-EXPENSES> 232,515
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,603
<INCOME-PRETAX> 40,332
<INCOME-TAX> 15,730
<INCOME-CONTINUING> 24,602
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,602
<EPS-BASIC> 0.93
<EPS-DILUTED> 0.90
</TABLE>
