<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 29, 1997
OR
(_) TRANSITION REPORT PURSUANT TO SECTION 13 OR SECTION 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________
Commission file number 0-21577
WILD OATS MARKETS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1100630
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
1645 BROADWAY
BOULDER, COLORADO 80302
(Address of principal executive offices, including zip code)
(303) 440-5220
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No (_)
As of May 5, 1997, there were 6,963,101 shares outstanding of the Registrant's
Common Stock (par value $0.001 per share).
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C> <C>
Consolidated Balance Sheet
March 29, 1997 (Unaudited) and December 28, 1996 3
Consolidated Statement of Operations (Unaudited)
Three Months Ended March 29, 1997 and March 30, 1996 4
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 29, 1997 and March 30, 1996 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
PART II. OTHER INFORMATION
Item 2. Changes in Securities 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 10
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WILD OATS MARKETS, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 28,
1997 1996
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 11,443 $ 16,404
Accounts receivable (less allowance
for doubtful accounts of $306 and
$299, respectively) 594 558
Inventories 17,627 15,464
Income tax receivable 202 800
Prepaid expenses and other current assets 528 319
Deferred income taxes 2,037 2,056
-------- --------
Total current assets 32,431 35,601
-------- --------
Property and equipment, net 38,263 35,736
Intangible assets, net 42,722 35,150
Deposits and other assets 429 416
Deferred income taxes 154 154
-------- --------
$113,999 $107,057
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 19,594 $ 16,845
Accrued liabilities 12,329 8,664
Notes payable 50
Current portion of long-term debt 38 110
-------- --------
Total current liabilities 31,961 25,669
Long-term debt 971
Deferred income taxes 1,134 1,157
Other liabilities 1,481 1,477
-------- --------
34,576 29,274
-------- --------
Stockholders' equity:
Common stock: $.001 par value; 20,000,000
shares authorized; 6,888,079 and
6,875,514 issued and outstanding 7 7
Additional paid-in capital 86,574 86,471
Accumulated deficit (7,052) (8,610)
Foreign currency translation adjustment (106) (85)
-------- --------
Total stockholders' equity 79,423 77,783
-------- --------
$113,999 $107,057
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
WILD OATS MARKETS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 29, MARCH 30,
1997 1996
<S> <C> <C>
Sales $69,729 $32,237
Cost of goods sold and occupancy costs 47,785 22,177
------- -------
Gross profit 21,944 10,060
Operating expenses:
Direct store expenses 16,025 7,777
Selling, general and administrative expenses 3,211 1,342
Pre-opening expenses 183 254
------- -------
Income from operations 2,525 687
Interest income (expense), net 155 (275)
------- -------
Income before income taxes 2,680 412
Income tax expense 1,123 166
------- -------
Net income $ 1,557 $ 246
======= =======
Net income per common share $ 0.22
=======
Pro forma net income per common share $ 0.06
=======
Weighted average number
of common shares outstanding 6,983
=======
Pro forma weighted average number
of common shares outstanding 3,871
=======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
WILD OATS MARKETS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 29, MARCH 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,557 $ 246
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 1,884 1,105
Loss on disposal of equipment 40 27
Deferred tax benefit (2) (4)
Change in assets and liabilities:
Inventories (56) (591)
Receivables and other assets 390 (543)
Accounts payable 1,869 (1,498)
Accrued liabilities 1,516 1,616
-------- -------
Net cash provided by operating activities 7,198 358
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (2,261) (2,536)
Payment for purchase of acquired
entities, net of cash acquired (8,892)
-------- -------
Net cash used by investing activities (11,153) (2,536)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 1,939
Payments on long-term debt (1,067)
Principal payments under capitalized lease obligations (22) (14)
Proceeds from issuance of common stock 104
-------- -------
Net cash provided (used) by financing activities (985) 1,925
-------- -------
Effect of exchange rate changes on cash (21)
-------- -------
Net decrease in cash and cash equivalents (4,961) (253)
Cash and cash equivalents at beginning of period 16,404 1,151
-------- -------
Cash and cash equivalents at end of period $ 11,443 $ 898
======== =======
Supplemental disclosure of cash flow information:
Cash paid for interest $ 25 $ 259
-------- -------
Cash paid for income taxes $ 109 $ --
-------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
WILD OATS MARKETS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING POLICIES
The consolidated balance sheet as of March 29, 1997, the consolidated
statement of operations for the three months ended March 29, 1997 and March
30, 1996, as well as the consolidated statement of cash flows for the three
months ended March 29, 1997 and March 30, 1996 have been prepared without an
audit. In the opinion of management, all adjustments, consisting only of
normal, recurring adjustments necessary for a fair presentation thereof,
have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction with financial
statements and notes thereto included in the Company's 1996 Annual Report to
Stockholders. The results of operations for interim periods presented are
not necessarily indicative of the operating results for the full year.
2. BUSINESS COMBINATIONS
In February and March 1997, in three separate transactions, the Company
acquired the assets and assumed certain liabilities of six operating natural
foods supermarkets: two in south Florida, two in Eugene, Oregon and two in
Memphis, Tennessee. The purchase price for these acquisitions aggregated
$9.9 million and consisted of $8.9 million in cash and 61,195 shares of the
Company's common stock valued at approximately $979,000. The common stock
was issued subsequent to March 29, 1997, and therefore, the $979,000 is
classified as an accrued liability as of March 29, 1997. The acquisitions
were accounted for using the purchase method, and the excess of cost over
the fair value of the assets acquired of $7.8 million was allocated to
goodwill, which is being amortized on a straight-line basis over 40 years.
The fair values of the acquired assets and liabilities of these acquisitions
are as follows (in thousands):
<TABLE>
<S> <C>
Current assets............................................. $ 2,133
Equipment.................................................. 1,952
Liabilities................................................ (2,042)
Goodwill................................................... 7,836
-------
$ 9,879
=======
</TABLE>
3. PRO FORMA NET INCOME PER SHARE
Pro forma net income per common share is computed based on the weighted
average number of common shares outstanding during the three months ended
March 30, 1996 and gives effect to the reverse merger with Alfalfa's, Inc.
as of January 1, 1996 and to certain adjustments described below. Common
equivalent shares are not included in the per-share calculation where the
effect of their inclusion would be antidilutive (i.e., in a loss period),
except that, in conformity with SEC requirements, common shares and common
share equivalents issued during the 12-month period prior to the filing of
the Company's initial public offering have been included in the calculation
as if they were outstanding for all periods using the treasury stock method.
Additionally, all outstanding shares of convertible preferred stock are
assumed to have been converted to common stock at the time of their
issuance. The Company's historical capital structure is not indicative of
its structure following the closing of its October 1996 initial public
offering, due to the automatic conversion of convertible preferred stock
into common stock. Accordingly, net income per common share has been
presented on a pro forma basis only for the three months ended March 30,
1996.
4. NET INCOME PER SHARE
Net income per share of common stock is computed using the weighted average
number of shares of common stock and common stock equivalents, consisting of
stock options and warrants, outstanding during each period. The dilutive
effect of such common stock equivalents is computed using the treasury stock
method.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share ("FAS 128"),
which is required to be adopted by the Company at the end of 1997. At that
time, the Company will be required to change the method currently used to
compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. If the provisions of FAS 128 were adopted
for the three months ended March 29, 1997, then the Company's pro forma
basic earnings per share would have been $0.23.
5. SUBSEQUENT EVENTS
On April 15, 1997, the Company increased its revolving line of credit to $40
million from $20 million. The facility has a seven-year term and bears
interest, at the Company's option, at the prime rate or LIBOR plus 1.25%.
The line of credit agreement includes certain financial and other covenants,
as well as restrictions on payments of dividends. As of May 8, 1997, there
were no borrowings outstanding under this facility.
On May 2, 1997, S.M. Hassan, the former president of the Company,
voluntarily terminated his employment. Pursuant to an employment agreement
with the Company dated July 12, 1996, Mr. Hassan will receive severance of
approximately $500,000 payable over the next three years. The Company will
accrue the full amount of this severance obligation in the second quarter of
1997.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Form 10-Q contains forward-looking statements within the context of Section
21E of the Securities Exchange Act of 1934, as amended. Each and every forward-
looking statement involves a number of risks and uncertainties, including the
Risk Factors specifically delineated and described in the Company's 1996 Annual
Report to Stockholders and those Risk Factors that have been specifically
expanded or modified below. The actual results that the Company achieves may
differ materially from any forward-looking statements due to such risks and
uncertainties. Words such as "believes", "anticipates", "expects", "intends",
and similar expressions are intended to identify forward-looking statements, but
are not the exclusive means of identifying such statements. The Company
undertakes no obligation to update any forward-looking statements in order to
reflect events or circumstances that may arise after the date of this report.
Certain of the Risk Factors are hereby restated, modified and expanded in
accordance with the following section references that correlate to the
corresponding sections of the Company's 1996 Annual Report to Stockholders:
UNCERTAIN ABILITY TO EXECUTE GROWTH STRATEGY (AMENDED)
The Company's business has grown considerably in size and geographic scope,
increasing from six stores located primarily in Colorado in 1991, to its current
size of 47 stores (as of the date of this report on Form 10-Q) in ten states and
Canada. The Company acquired six stores and opened one store during the three
months ended March 29, 1997. During 1996, the Company opened seven stores,
including one store originally scheduled to open in 1997, and acquired 13
stores. The Company anticipates opening as many as four additional new stores
during 1997. The Company also anticipates that it may acquire one or more
operating natural foods grocery stores during the remainder of 1997. The
Company's ability to implement its growth strategy depends to a significant
degree upon its ability to open or acquire stores in existing and new markets
and to integrate and operate those stores profitably. While the Company plans
to expand primarily through the opening of new stores, it will continue to
pursue acquisitions of natural foods retailers where attractive opportunities
exist. The Company's growth strategy is dependent upon a number of factors,
including its ability to: (i)access adequate capital resources; (ii)expand into
regions where it has no operating experience; (iii)identify markets that meet
its site selection criteria; (iv)locate suitable store sites and negotiate
acceptable lease terms; (v)locate acquisition targets and negotiate acceptable
acquisition terms; (vi)hire, train and integrate management and store employees;
and (vii)expand its distribution and other operating systems. In addition, the
Company pursues a strategy of clustering stores in each of its markets to
increase overall sales, achieve operating efficiencies and further penetrate
markets. In the past, when the Company has opened a store in a market where it
had an existing presence, the Company has experienced a decline in the sales and
operating results at certain of its existing stores in these markets. The
Company intends to continue to pursue its store clustering strategy and expects
the sales and operating result trends for other stores in an expanded market to
continue to experience temporary declines related to the clustering of stores.
Further, acquisitions involve a number of additional risks, such as short-term
negative effects on the Company's reported operating results, diversion of
management's attention, unanticipated problems or legal liabilities, and the
integration of potentially dissimilar operations, some or all of which could
have a material adverse effect on the Company's business, results of operations
and financial condition. There can be no assurance that the Company will achieve
its planned expansion in existing markets, enter new markets, or operate or
integrate its existing, newly-opened or newly-acquired stores profitably. If
the Company fails to do so, the Company's business, results of operations and
financial condition will be materially and adversely affected. In addition, the
Company's ability to execute its growth strategy is partially dependent upon the
demographic trends and market conditions in the natural foods industry and any
change in those trends and conditions could adversely effect the Company's
future growth rate.
COMPETITION
The Company believes its primary competitor in the natural foods grocery store
market is Whole Foods Market, Inc. ("Whole Foods"), a publicly traded company
based in Texas. Whole Foods recently announced that it has signed a lease for a
39,000-square-foot store in Boulder, Colorado, the location of the Company's
headquarters and three of its stores. Whole Foods' management also has
announced that it intends to seek additional store sites in other cities in
which the Company has stores. If Whole Foods is successful in opening stores in
locations in which the Company has or intends to open stores, the Company's
sales and operating results at such stores may be materially adversely affected.
FLUCTUATIONS IN OPERATING RESULTS
The Company's results of operations may fluctuate significantly from period-to-
period as the result of a variety of factors, including: (i)the number, timing
and mix of store openings, acquisitions or closings; (ii)the ratio of stores
opened to stores acquired; (iii)the opening of stores by the Company or its
competitors in markets where the Company has existing stores; (iv)comparable
store sales results; and (v)the ratio of urban format to supermarket format
stores. The Company incurs significant pre-opening expenses and new stores
typically experience an initial period of operating losses. As a result, the
opening of a significant number of stores in a single period will have an
adverse effect on the Company's results of operations. In addition, the
Company's store base is geographically concentrated, and shifts in economic or
demographic trends and consumer preferences in a particular market could have an
adverse effect on the Company's results of operations. Further, a variety of
factors affect the Company's comparable store sales results, including, among
others, the relative proportion of new stores to mature stores, the opening of
stores by the Company or its competitors in markets where the Company has
existing stores, the timing of promotional events, the Company's ability to
execute its operating strategy effectively, changes in consumer preferences for
natural foods and general economic conditions. Past increases in comparable
store sales may not be indicative of future operating performance. Due to the
foregoing factors, the Company believes that period-to-period comparisons of its
operating results are not necessarily meaningful and that such comparisons
cannot be relied upon as indicators of future financial performance.
7
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain selected
income statement data expressed as a percentage of sales:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 29, MARCH 30,
1997 1996
<S> <C> <C>
Sales 100.0% 100.0%
Cost of goods sold and occupancy costs 68.5 68.8
----- -----
Gross margin 31.5 31.2
Direct store expenses 23.0 24.1
Selling, general and administrative expenses 4.6 4.2
Pre-opening expenses 0.3 0.8
----- -----
Income from operations 3.6 2.1
Interest income (expense), net 0.2 (0.8)
----- -----
Income before income taxes 3.8 1.3
Income tax expense 1.6 0.5
----- -----
Net income 2.2% 0.8%
----- -----
</TABLE>
Store Openings and Acquisitions. In the first quarter of 1997, the Company
acquired six stores: two in south Florida, two in Eugene, Oregon, and two in
Memphis, Tennessee. The Company also opened a new store in Sacramento,
California. Additionally, the Company plans to open as many as four additional
stores in 1997 in Laguna Beach, California; Denver, Colorado; Phoenix, Arizona;
and Chicago, Illinois. The Company anticipates that it also may acquire one or
more operating natural foods grocery stores during the remainder of 1997. The
Company's results of operations have been and will continue to be affected by,
among other things, the number, timing and mix of store openings, acquisitions
or closings. New stores build their sales volumes and refine their merchandise
selection gradually and, as a result, generally have lower gross margins and
higher operating expenses as a percentage of sales than more mature stores. The
Company anticipates that the new store opened in the first quarter of 1997 and
new stores opened later in 1997 will experience operating losses for the first
six to twelve months of operation, in accordance with historic trends. The
Company will continue to evaluate the profitability of all its stores on an
ongoing basis and may, from time to time, make decisions regarding closures,
relocations or remodels in accordance with such evaluations.
SALES. Sales for the three months ended March 29, 1997 increased 116.3% to
$69.7 million from $32.2 million for the same period in 1996. The increase was
primarily due to the acquisition of six stores and the opening of one new store
in the first quarter of 1997, as well as the inclusion of the 13 stores acquired
and seven new stores opened in 1996. Comparable store sales increased 8% for
the first quarter of 1997, based on both new and acquired stores that have been
operating longer than 12 months. Comparable store sales increases were
positively affected by an expanded monthly product promotion program. While
this promotion program will continue through the second quarter of 1997,
comparable store sales increases in the second quarter are expected to be flat
as compared to the same quarter in 1996 due to significant sales increases in
the second quarter related to a strike at conventional grocery stores in
Colorado.
GROSS PROFIT. Gross profit for the three months ended March 29, 1997 increased
118.1% to $21.9 million from $10.1 million for the same period in 1996. The
increase in gross profit on a dollar basis is primarily attributable to the
acquisition of six stores and the opening of one new store during the first
quarter of 1997, as well as the inclusion of the 13 stores acquired and seven
new stores opened in 1996. Gross profit as a percentage of sales increased to
31.5% from 31.2% for the same period in 1996. The increase is attributable to
the matured performance of newer stores, offset by pricing discounts related to
the expanded product promotion program.
DIRECT STORE EXPENSES. Direct store expenses for the three months ended March
29, 1997 increased 106.1% to $16.0 million from $7.8 million for the same period
in 1996. The increase in direct store expenses is attributable to the increase
in the number of stores operated by the Company. As a percentage of sales,
direct store expenses decreased to 23.0% from 24.1% for the same period in 1996
due to the matured performance of the new stores opened in 1996, as well as
greater leverage of payroll and certain fixed costs over higher sales volumes.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended March 29, 1997 increased
139.3% to $3.2 million from $1.3 million for the same period in 1996. As a
percentage of sales, selling, general and administrative expenses increased to
4.6% from 4.2% for the same period in 1996. The increase is the result of
combining and then consolidating the overhead structure of Alfalfa's, Inc., as
well as adding incremental expenses related to the stores acquired during the
first quarter of 1997.
PRE-OPENING EXPENSES. Pre-opening expenses for the three months ended March
29, 1997 decreased 28.0% to $183,000 from $254,000. The decrease in pre-opening
expenses is attributable to a decrease in the amount spent on new stores opened
during the first quarter of 1997, as well as decreased costs for travel for pre-
opening arrangements and staff training for stores opened in existing or more
developed geographic regions.
NET INTEREST INCOME (EXPENSE). Net interest income for the three months ended
March 29, 1997 increased to $155,000 from $275,000 of net interest expense for
the same period in 1996. The change is attributable to the investment of the
net proceeds from the Company's initial public offering in October 1996 and to
the repayment of substantially all of the Company's long-term debt.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of capital have been cash flow from operations,
trade payables, bank indebtedness, and the sale of equity securities. Primary
uses of cash have been the financing of store openings and acquisitions.
Net cash provided by operating activities was $7.2 million during the three
months ended March 29, 1997 and $358,000 during the comparable period in 1996.
Cash provided by operating activities increased during this period primarily as
aresult of increases in net income before depreciation and amortization expense
and trade payables related to new store openings for which the Company typically
receives extended payment terms from vendors. The Company has not required
significant external financing to support inventory requirements at its existing
and new stores because it has been able to rely on vendor financing for most of
the inventory costs, and anticipates that vendor financing will continue to be
available for new store openings.
Net cash used by investing activities was $11.2 million during the three months
ended March 29, 1997 as compared to $2.5 million during the comparable period in
1996 due to the acquisition of six stores and opening of one new store during
the three months ended March 29, 1997.
Net cash used by financing activities was $985,000 during the three months ended
March 29, 1997 and net cash provided by financing activities was $1.9 million
during the comparable period in 1996 due to the repayment of debt during the
first quarter of 1997 and to increased borrowings under the Company's revolving
line of credit to fund new store openings during the first quarter of 1996.
On April 15, 1997, the Company increased its revolving line of credit to $40
million from $20 million. The facility has a seven-year term and bears
interest, at the Company's option, at the prime rate or LIBOR plus 1.25%. The
line of credit agreement includes certain financial and other covenants, as well
as restrictions on payments of dividends. As of May 8, 1997, there were no
borrowings outstanding under this facility.
The Company anticipates that it will spend approximately $3.5 million during the
second quarter of 1997 for new store development, remodels and maintenance
capital expenditures. No new stores openings are planned for the second quarter
of 1997. The Company's average capital expenditures to open a store, including
leasehold improvements, equipment and fixtures, have ranged from approximately
$1.0 million to $2.0 million over the past 18 months, excluding inventory costs
and initial operating losses. The cost of initial inventory for a new store over
such period was approximately $500,000; however, the Company relies on vendor
financing for most of this cost. Pre-opening costs are approximately $250,000
per store and are expensed when the new store opens. The amounts and timing of
such expenditures will depend upon the availability of new store sites and other
factors, including the location of the store and whether it is in a new or
existing market for the Company, the size of the store, and the required build-
out at the site. Costs to acquire future stores, if any, are impossible to
predict and could vary materially from the cost to open new stores. There can be
no assurance that actual capital expenditures will not exceed anticipated
levels. As of May 8, 1997, the Company has approximately $3.0 million remaining
from the proceeds of its initial public offering. If the Company should
complete any additional acquisitions in exchange for cash during 1997, such
acquisitions will be funded with the remainder of the Company's invested cash
and with borrowings under its revolving line of credit.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On February 22, 1997, the Company acquired the operations and assets of two
natural foods grocery stores in south Florida. The purchase price consisted of
61,195 shares of the Company's common stock, $0.001 par value, and the
assumption of certain liabilities. The assets acquired consisted of equipment,
inventory, fixtures, leasehold improvements and leasehold interests in the two
stores.
The common stock was issued subsequent to March 29, 1997 in reliance on an
exemption under Rule 506 of Regulation D promulgated under the Securities Act of
1933, as amended. All information required by Rule 506 was provided to the
purchasers, and there were less than 35 purchasers of the common stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
3(i).1.(a) Amended and Restated Certificate of Incorporation of
Registrant.*
3(i).1.(b) Certificate of Correction to Amended and Restated
Certificate of Incorporation of the Registrant.*
3(ii).1 Amended and Restated Bylaws of Registrant.*
11.1 Statement Regarding Computation of Net Income Per Share
and Pro Forma Net Income Per Share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K. There were no reports on Form 8-K for the three-
month period ended March 29, 1997.
* Incorporated by reference from Registrant's Annual Report on Form 10-K filed
on March 27, 1997.
SIGNATURES
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, in the City of Boulder, County of
Boulder, State of Colorado, on the 8th day of May, 1997.
WILD OATS MARKETS, INC.
By /s/ Mary Beth Lewis
--------------------
Mary Beth Lewis
Executive Officer, Treasurer and Chief
Financial Officer (Principal Financial and
Accounting Officer)
10
<PAGE>
EXHIBIT 11.1
WILD OATS MARKETS, INC.
STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE AND PRO FORMA NET INCOME
PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 29, MARCH 30,
1997 1996
<S> <C> <C>
Weighted average number of common
shares outstanding 6,880,489 2,315,631
Weighted average number of shares of
preferred stock assumed converted to
common stock at the time of issuance 1,035,736
Common and common equivalent shares
issued during the twelve-month period
prior to the filing of the Company's
initial public offering calculated
using the treasury stock method 102,611 520,005
---------- ----------
Weighted average number of
common shares outstanding 6,983,100
Pro forma weighted average number of
common shares outstanding 3,871,372
Net income $1,557,000 $ 246,000
---------- ----------
Net income per share $ 0.22
----------
Pro forma net income per share $ 0.06
----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of March 29, 1997 and the consolidated statement
of operations for the three months ended March 29, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> MAR-29-1997
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0
0
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</TABLE>
