Whole Foods 2008 Annual Report Download - page 27

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regulatory approvals. There can be no assurance that these approvals will be received. We cannot assure that we could raise
any additional capital on similar terms, or at all, which could have a material adverse effect on our business, financial
condition and results of operations.
We Have Significant Indebtedness
We have significant debt and may incur additional debt in the future. A significant portion of our future cash flow from
operating activities may be dedicated to the payment of interest and the repayment of principal on our indebtedness. We may
not be able to refinance our debt in the future on terms acceptable to us, or at all. Our indebtedness could limit our ability to
obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions or other
purposes in the future. There is no guarantee that we will be able to meet our debt service obligations. If we are unable to
generate sufficient cash flow to meet our debt service obligations, we may be required to take measures such as seeking
additional financing in the debt or equity markets, refinancing or restructuring all of a portion of our indebtedness, selling
selected assets or reducing or delaying planned capital or operating expenditures. If we fail to comply with our debt
covenants we will be in default, in which case there can be no assurance that we would be able to cure the default, receive
waivers from our lenders, amend the loan agreements or refinance the debt.
The Capital Markets are Currently Experiencing a Period of Dislocation and Instability
We believe that the dramatic deflation of asset valuations due in large part to the collapse of the subprime lending market has
caused a general disruption in the U.S. capital markets. This collapse is evidenced by a lack of liquidity in the debt capital
markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit
market and the failure of certain major financial institutions. Despite actions of the U.S. federal government, these events
have contributed to worsening general economic conditions that are materially and adversely impacting the broader financial
and credit markets and reducing the availability of debt and equity capital for the market as a whole. Reflecting the concern
about the stability of the financial markets generally and the strength of counterparties, many lenders and institutional
investors have reduced, and in some cases ceased to provide, funding to borrowers. The resulting lack of available credit,
lack of confidence in the financial sector, increased volatility in the financial markets and reduced business activity could
materially and adversely affect our business, financial condition, results of operations and our ability to obtain and manage
our liquidity.
We May Not Be Able to Adequately Protect Our Intellectual Property Rights
We rely on a combination of trademark, trade secret and copyright law and internal procedures and nondisclosure
agreements to protect our intellectual property. There can be no assurance that our intellectual property rights can be
successfully asserted in the future or will not be invalidated, circumvented or challenged. In addition, the laws of certain
foreign countries in which our products may be produced or sold do not protect our intellectual property rights to the same
extent as the laws of the United States. Failure to protect our proprietary information could have a material adverse effect on
our business, results of operations and financial condition.
Self-Insurance Plan Claims Could Materially Impact Our Results
The Company uses a combination of insurance and self-insurance plans to provide for the potential liabilities for workers’
compensation, general liability, property insurance, director and officers’ liability insurance, vehicle liability and employee
health care benefits. Liabilities associated with the risks that are retained by the Company are estimated, in part, by
considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. Our results
could be materially impacted by claims and other expenses related to such plans if future occurrences and claims differ from
these assumptions and historical trends.
Changes in Accounting Standards Could Materially Impact Our Results
Generally accepted accounting principles and related accounting pronouncements, implementation guidelines, and
interpretations for many aspects of our business, such as accounting for insurance and self-insurance, inventories, goodwill
and intangible assets, store closures, leases, income taxes and share-based payments, are highly complex and involve
subjective judgments. Changes in these rules or their interpretation could significantly change or add significant volatility to
our reported earnings without a comparable underlying change in cash flow from operations.
Effective Tax Rate Changes and Results of Examinations by Taxing Authorities Could Materially Impact Our Results
Our future effective tax rates could be adversely affected by the earnings mix being lower than historical results in states or
countries where we have lower statutory rates and higher than historical results in states or countries where we have higher
statutory rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws or
interpretations thereof. In addition, we are subject to periodic audits and examinations by the Internal Revenue Service
(“IRS”) and other state and local taxing authorities. Our results could be materially impacted by the determinations and
expenses related to these and other proceedings by the IRS and other state and local taxing authorities.