Whole Foods 2011 Annual Report Download - page 20

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Claims under our self-insurance program may differ from our estimates, which could materially impact our results of
operations.
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 of operations.
Our stores offer a significant number of perishable products, accounting for approximately 66.8% of our total sales in fiscal
year 2011. 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.
Actual or perceived food safety concerns may adversely affect our sales.
There is increasing governmental scrutiny of and public awareness regarding food safety. We believe that many customers
choose to shop our stores because of their interest in health, nutrition and food safety. We believe that our customers hold us
to a higher food safety standard than other supermarkets. The real or perceived sale of contaminated food products by us
could result in government enforcement action, private litigation, product recalls and other liabilities, the settlement or
outcome of which might have a material adverse effect on our operating results.
Pending or future legal proceedings could materially impact our results of operations.
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.
Changes in accounting standards and estimates could materially impact our results of operations.
Generally accepted accounting principles and related accounting pronouncements, implementation guidelines, and
interpretations for many aspects of our business, such as accounting for insurance and self-insurance, inventories, goodwill
and intangible assets, derivatives, store closures, leases, income taxes and share-based payments, are highly complex and
involve subjective judgments. Changes in these rules or their interpretation or changes in underlying estimates, assumptions
or judgments by our management could significantly change or add significant volatility to our reported earnings without a
comparable underlying change in cash flow from operations.
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 discover the many joys of eating
and sharing food. A widespread health epidemic may cause customers to avoid public gathering places or otherwise change
their shopping behaviors. Additionally, a widespread health epidemic could also adversely impact our business by disrupting
production and delivery of products to our stores and by impacting our ability to appropriately staff our stores.
Our investments in money market funds and certain other securities are subject to market risks, which may result in losses.
As of September 25, 2011, we had money market fund investments that are classified as short-term cash equivalent
investments and restricted cash investments totaling approximately $75.9 million and $92.0 million, respectively, and
approximately $495.1 million in available-for-sale marketable securities. We have invested these amounts primarily in state
and local municipal obligations, government agency securities, corporate commercial paper, and money market funds
meeting certain criteria. These investments are subject to general credit, liquidity, market and interest rate risks that could
have a negative impact on our results of operations.
Unions may attempt to organize our team members, which could harm our business.
All of our team members are non-union, and we consider our team member relations to be very strong. From time to time,
however, unions have attempted to organize all or part of our team member base at certain stores and non-retail facilities.