Whole Foods 2010 Annual Report Download - page 34

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28
The Company also holds available-for-sale securities that are classified as short-term and long-term investments generally
consisting of state and local government obligations. We had short-term investments totaling approximately $329.7 million
and long-term investments totaling approximately $96.1 million at September 26, 2010. The Company had no available-for-
sale securities at September 27, 2009. These investments are recorded at fair value and are generally short-term in nature,
and therefore changes in interest rates would not have a material impact on the valuation of these investments. During fiscal
year 2010, a hypothetical 10% increase or decrease in interest rates would have resulted in an increase or decrease in interest
income earned on these investments of approximately $0.2 million.
We have outstanding a five-year term loan agreement that bears interest at our option of the alternative base rate (“ABR”)
plus an applicable margin or LIBOR plus an applicable margin, based on the Company’s Moody’s and S&P ratings. We had
$490 million and $700 million outstanding on the term loan at September 26, 2010 and September 27, 2009, respectively. At
September 26, 2010 and September 27, 2009 the loan bore interest based on LIBOR. We believe our term loans do not give
rise to significant fair value risk because they are variable interest rate loans with revolving maturities which reflect market
changes to interest rates and contain variable risk premiums based on the Company’s corporate ratings. The Company
entered into a three-year interest rate swap agreement with a notional amount of $490 million to fix the interest rate at
4.718%, excluding applicable margin and associated fees, to help manage our exposure to interest rate fluctuations. The
swap agreement expired on October 1, 2010.
We also have outstanding a $350 million revolving line of credit that extends to 2012. All outstanding amounts under this
agreement bear interest at our option of the ABR plus an applicable margin or LIBOR plus an applicable margin, based on
the Company’s Moody’s and S&P ratings. At September 26, 2010 and September 27, 2009 no amounts were drawn. We
believe our line of credit borrowings do not give rise to significant fair value risk because these borrowings have revolving
maturities and contain variable risk premiums based on the Company’s corporate credit ratings.
Additional term loan and line of credit information for September 26, 2010 and September 27, 2009 are as follows (in
thousands):
2010 2009
Term loan agreement:
Outstanding loan balance $ 490,000 $ 700,000
Fair value of swap agreement liability $ 399 $ 20,588
Variable interest rate, excluding applicable margin on non-swap portion of loan 0.553% 0.253%
Interest rate swap fixed interest rate, excluding applicable margin 4.718% 4.718%
Applicable margin – LIBOR, based on Moody’s and S&P ratings 1.500% 1.750%
Applicable margin – ABR, based on Moody’s and S&P ratings 0.500% 0.750%
Line of credit agreement:
Outstanding line of credit balance $ - $ -
Variable interest rate, excluding applicable margin n/a n/a
Applicable margin – LIBOR, based on Moody’s and S&P ratings 1.625% 1.875%
Applicable margin – ABR, based on Moody’s and S&P ratings 0.625% 0.875%
Foreign Currency Risk
The Company is exposed to foreign currency exchange risk. We own and operate six stores in Canada and five stores in the
United Kingdom. Sales made from the Canadian and United Kingdom stores are made in exchange for Canadian dollars and
Great Britain pounds, respectively. The Company does not currently hedge against the risk of exchange rate fluctuations.
At September 26, 2010, a hypothetical 10% change in value of the U.S. dollar relative to the Canadian dollar or Great Britain
pound would have resulted in an immaterial change to our consolidated financial statements.