Whole Foods 2010 Annual Report Download - page 51

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(9) Reserves for Closed Properties
Following is a summary of store closure reserve activity during the fiscal years ended indicated (in thousands):
2010 2009
Beginning balance $ 69,228 $ 69,269
Additions 5,236 8,276
Usage (19,431) (17,841)
Adjustments 4,265 9,524
Ending Balance $ 59,298 $ 69,228
Additions to store closure reserves relate to the accretion of interest on existing reserves and new closures. There were no
additions to the store closure reserve related to new closures in fiscal year 2010. During fiscal year 2009, the Company
recorded reserves totaling approximately $2.7 million related to five new closures. Usage included approximately $6.6
million and $4.2 million in termination fees related to certain idle properties, and approximately $12.8 million and $13.7
million in ongoing cash rental payments during fiscal years 2010 and 2009, respectively. During fiscal years 2010 and 2009,
the Company recognized charges of approximately $6.9 million and $12.9 million, respectively, related to increases in
reserves primarily due to changes in certain subtenant income estimates related to the continued depression in the
commercial real estate market, which are included on the accompanying Consolidated Statements of Operations under the
caption “Relocation, store closure and lease termination costs.” Additionally, the Company recorded goodwill adjustments of
approximately $2.6 million during fiscal years 2010 and 2009.
(10) Long-Term Debt
We have long-term debt and obligations under capital leases as follows (in thousands):
2010 2009
Obligations under capital lease agreements,
due in monthly installments through 2029 $ 18,299 $ 18,649
Cash flow hedge instrument 399 20,588
Term loan 490,000 700,000
Total long-term debt and capital lease obligations 508,698 739,237
Less current installments 410 389
Long-term debt and capital lease obligations, less current installments $ 508,288 $ 738,848
During fiscal year 2007, the Company entered into a $700 million, five-year term loan agreement to finance the acquisition
of Wild Oats Markets. During the third quarter of fiscal year 2010, the Company repaid the $210 million portion of the term
loan that was not subject to an interest rate swap agreement. At September 26, 2010, the Company had outstanding $490
million under this agreement. Subsequent to year-end, the Company repaid an additional $100 million on the term loan,
bringing the current outstanding to $390 million. The loan, which is secured by a pledge of substantially all of the stock in
our subsidiaries, bears interest at our option of the alternative base rate (“ABR”) plus an applicable margin, currently 0.5%,
or LIBOR plus an applicable margin, currently 1.5%, based on the Company’s Moody’s and S&P rating. The interest period
on LIBOR borrowings may range from one to six months at our option. The participating banks obtained security interests in
certain of the Company’s assets to collateralize amounts outstanding under the term loan in the first quarter of fiscal year
2009. The term loan agreement contains certain affirmative covenants including maintenance of certain financial ratios and
certain negative covenants including limitations on additional indebtedness and payments as defined in the agreement. At
September 26, 2010, we were in compliance with all applicable debt covenants.
The Company also has outstanding a $350 million revolving line of credit, which is secured by a pledge of substantially all
of the stock in our subsidiaries, that extends to 2012. The credit agreement contains certain affirmative covenants including
maintenance of certain financial ratios and certain negative covenants including limitations on additional indebtedness and
payments as defined in the agreement. At September 26, 2010, we were in compliance with all applicable debt covenants. All
outstanding amounts borrowed under this agreement bear interest at our option of the ABR plus an applicable margin,
currently 0.625%, or LIBOR plus an applicable margin, currently 1.625%, based on the Company’s Moody’s and S&P
rating. The participating banks obtained security interests in certain of the Company’s assets to collateralize amounts
outstanding under the revolving credit facility in the first quarter of fiscal year 2009. Commitment fees on the undrawn
amount, reduced by outstanding letters of credit, are payable under this agreement. No amounts were drawn under this
agreement at September 26, 2010 and September 27, 2009. The amount available to the Company under the agreement was
effectively reduced to $342.9 million and $335.2 million by outstanding letters of credit totaling approximately $7.1 million
and $14.8 million at September 26, 2010 and September 27, 2009, respectively.