Whole Foods 2010 Annual Report Download - page 52

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A summary of applicable interest rates as of the end of fiscal years 2010 and 2009 follows:
2010 2009
Term loan agreement:
Variable interest rate, excluding applicable margin on non-swap portion of loan 0.533% 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:
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%
Commitment fee on undrawn amount 0.325% 0.375%
The Company is committed under certain capital leases for rental of certain equipment, buildings and land. These leases
expire or become subject to renewal clauses at various dates through 2029. Lease agreements are discussed further in Note
12 to the consolidated financial statements, “Leases.”
(11) Derivatives
During fiscal year 2008, the Company entered into a three-year interest rate swap agreement with a notional amount of $490
million to effectively fix the interest rate on $490 million of the term loan at 4.718%, excluding the applicable margin and
associated fees, to help manage cash flow exposure related to interest rate fluctuations. The interest rate swap was designated
as a cash flow hedge. Hedge ineffectiveness was not material during fiscal year 2010 or 2009.
The interest rate swap agreement does not contain a credit-risk-related contingent feature. The carrying amount of the
Company’s interest rate swap totaled approximately $0.4 million and $20.6 million at September 26, 2010 and September
27, 2009, respectively, and is included on the “Long-term debt and capital lease obligations, less current installments” line
item on the Consolidated Balance Sheets. These losses are being recognized as an adjustment to interest expense over the
same period in which the interest costs on the related debt are recognized. During fiscal years 2010 and 2009, the Company
reclassified approximately $21.7 million and $14.4 million, respectively, from accumulated other comprehensive income
related to ongoing interest payments that was included in the “Interest expense” line item on the Consolidated Statements of
Operations.
Subsequent to year end, the swap agreement expired and the carrying amount was paid. The interest rate on the Company’s
term loan is now determined based on the agreement described in Note 10 to the consolidated financial statements, “Long-
Term Debt.”
(12) Leases
The Company is committed under certain capital leases for rental of equipment, buildings, and land and certain operating
leases for rental of facilities and equipment. These leases expire or become subject to renewal clauses at various dates from
2011 to 2054. Amortization of equipment under capital lease is included with depreciation expense.
Rental expense charged to operations under operating leases for fiscal years 2010, 2009 and 2008 totaled approximately
$303.5 million, $281.9 million and $257.5 million, respectively.
Minimum rental commitments and sublease rental income required by all noncancelable leases are approximately as follows
(in thousands):
Capital Operating Sublease
Fiscal year 2011 $ 2,061 $ 294,985 $ 6,999
Fiscal year 2012 2,059 317,357 6,402
Fiscal year 2013 2,110 328,350 5,742
Fiscal year 2014 2,097 336,972 4,900
Fiscal year 2015 2,165 338,840 3,909
Future fiscal years 26,650 4,389,988 11,825
37,142 $ 6,006,492 $ 39,777
Less amounts representing interest 18,843
Net present value of capital lease obligations 18,299
Less current installments 410
Long-term capital lease obligations, less current installments $ 17,889