Whole Foods 2009 Annual Report Download - page 25

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Future Events Could Result in Impairment of Our Long-Lived Assets
Our total assets included long-lived assets totaling approximately $1.9 billion at September 27, 2009. Long-lived assets are
evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Our impairment evaluations require use of financial estimates of future cash flows. Application of alternative
assumptions could produce significantly different results. We may be required to recognize impairments of long-lived assets
based on future economic factors such as unfavorable changes in estimated future undiscounted cash flows of an asset group.
Long-lived asset impairments could result in material charges that would adversely affect our results of operations and
capitalization.
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.
We Have Significant Lease Obligations
The majority of our stores, distribution centers, bakehouses and administrative facilities are leased, with expiration dates
ranging from one to 35 years. We are subject to risks associated with our current and future real estate leases. Our costs
could increase because of changes in the real estate markets and supply or demand for real estate sites. We generally cannot
cancel our leases, so if we decide to close a location, we may nonetheless be committed to perform our obligations under the
applicable lease including paying the base rent for the remaining lease term. As each lease expires, we may fail to negotiate
renewals, either on commercially acceptable terms or at all. As of September 27, 2009, we had 29 leased properties that are
not being utilized in current operations with expiration dates ranging from three to 15 years
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 team
member 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.
Perishable Foods Product Losses Could Materially Impact Our Results
We believe our stores more heavily emphasize perishable products than other supermarket stores. Perishable products
accounted for approximately 66% of total sales at Whole Foods Market locations in fiscal year 2009. The Company’s
emphasis on perishable products may result in significant product inventory losses in the event of extended power outages,
natural disasters or other catastrophic occurrences.
Legal Proceedings Could Materially Impact Our Results
From time to time, we are party to legal proceedings, including matters involving personnel and employment issues, personal
injury, intellectual property, acquisitions, and other proceedings arising in the ordinary course of business. Our results could
be materially impacted by the decisions and expenses related to pending or future proceedings.
The Loss of Key Management Could Negatively Affect Our Business
We are dependent upon a number of key management and other team members. If we were to lose the services of a
significant number of key team members within a short period of time, this could have a material adverse effect on our
operations. We do not maintain key person insurance on any team member. Our continued success also is dependent upon
our ability to attract and retain qualified team members to meet our future growth needs. We face intense competition for
qualified team members, many of whom are subject to offers from competing employers. We may not be able to attract and
retain necessary team members to operate our business.
A Widespread Health Epidemic Could Materially Impact Our Business
The Company’s business could be severely impacted by a widespread regional, national or global health epidemic. Our
stores are a place where customers come together, interact and learn while at the same time discovering the many joys of