Whole Foods 2010 Annual Report Download - page 59

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Company determined the use of implied volatility versus historical volatility represents a more accurate calculation of option
fair value. Expected life is calculated in two tranches based on weighted average percentage of unexpired options and
exercise-after-vesting information over the last five or seven years. Unvested options are included in the term calculation
using the “mid-point scenario” which assumes that unvested options will be exercised half-way between vest and expiration
date. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect
market conditions and experience. In addition to the above valuation assumptions, the Company estimates an annual
forfeiture rate for unvested options and adjusts fair value expense accordingly. The Company monitors actual forfeiture
experience and adjusts the rate from time to time as necessary.
Restricted Stock
During fiscal year 2010 the Company awarded approximately 109,000 shares of restricted common stock pursuant to the
Whole Foods Market 2009 Stock Incentive Plan. Fair value of the restricted share issuances on grant date totaled
approximately $4.4 million. The stock fully vested and all restrictions lapsed, except for 11,000 shares which remain
restricted through November 23, 2010. The Company recorded approximately $4.2 million of share-based payment expense
related to this transaction during fiscal year 2010, included in the “General and administrative expenses” line item on the
Consolidated Statements of Operations.
Team Member Stock Purchase Plan
Under the Team Member Stock Purchase Plan, we issued approximately 94,000, 194,000 and 68,000 shares in fiscal years
2010, 2009 and 2008, respectively. At September 26, 2010, September 27, 2009 and September 28, 2008, approximately
430,000, 502,000 and 218,000 shares of our common stock, respectively, were available for future issuance.
(18) Team Member 401(k) Plan
The Company offers a team member 401(k) plan to all team members with a minimum of 1,000 services hours in one year.
In fiscal years 2010, 2009 and 2008, the Company made a cash contribution to the plan of approximately $4.2 million, $3.7
million and $3.0 million, respectively.
(19) Quarterly Results (unaudited)
The Company’s first quarter consists of 16 weeks, the second and third quarters each are 12 weeks, and the fourth quarter is
12 or 13 weeks. Fiscal years 2010 and 2009 are 52-week years with twelve weeks in the fourth quarter. Because the first
quarter is longer than the remaining quarters, it typically represents a larger share of our annual sales from existing stores.
Quarter to quarter comparisons of results of operations have been and may be materially impacted by the timing of new store
openings. The Company believes that the following information reflects all normal recurring adjustments necessary for a fair
presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative
of results for any future period.
The Company recorded store closure reserve adjustments totaling approximately $10.1 million and $9.7 million during the
first quarter of fiscal year 2010 and the third quarter of fiscal year 2009, respectively, related to changes in certain subtenant
income estimates driven by the outlook for the commercial real estate market, which was included in the “Relocation, store
closure and lease termination costs” line item on the Consolidated Statements of Operations. Additionally, included in that
line item during the third quarter of fiscal year 2010, the Company recorded a gain of approximately $3.2 million related to
the sale of a non-operating property.