Whole Foods 2011 Annual Report Download - page 51

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The Company had outstanding a $700 million, five-year term loan agreement due in 2012, with an outstanding balance of
$490 million at September 26, 2010. During fiscal year 2011, the Company repaid the balance of the term loan. The loan,
which was secured by a pledge of substantially all of the stock in our subsidiaries, bore an interest rate at our option of the
alternative base rate (“ABR”) plus an applicable margin or LIBOR plus an applicable margin.
The Company has outstanding a $350 million revolving line of credit that extends to August 2012. The Company’ s
obligations under the facility are secured by liens on certain of the Company’ s assets, including stock of our subsidiaries.
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
25, 2011, 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 or LIBOR plus an applicable margin based on the
Company’ s S&P rating. 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 25, 2011 and September 26, 2010. The
amount available to the Company under the agreement was effectively reduced to $348.6 million and $342.9 million by
outstanding letters of credit totaling approximately $1.4 million and $7.1 million at September 25, 2011 and September 26,
2010, respectively.
A summary of applicable interest rates as of the end of fiscal years 2011 and 2010 follows:
2011 2010
Term loan agreement:
Variable interest rate, excluding applicable margin on non-swap portion of loan - 0.533%
Interest rate swap fixed interest rate, excluding applicable margin - 4.718%
Applicable margin – LIBOR, based on Moody’ s and S&P ratings - 1.500%
Applicable margin – ABR, based on Moody’ s and S&P ratings - 0.500%
Line of credit agreement:
Variable interest rate, excluding applicable margin n/a n/a
Applicable margin – LIBOR, based on Moody’ s and/or S&P ratings 1.375% 1.625%
Applicable margin – ABR, based on Moody’ s and/or S&P ratings 0.375% 0.625%
Commitment fee on undrawn amount 0.250% 0.325%
During fiscal year 2008, the Company entered into an interest rate swap agreement, which expired in October 2010, 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 2011 or 2010. The
carrying amount of the Company’ s interest rate swap totaled approximately $0.4 million at September 26, 2010 and was
included in the “Long-term debt and capital lease obligations, less current installments” line item on the Consolidated
Balance Sheets. During fiscal years 2011 and 2010, the Company reclassified approximately $0.2 million and $21.7 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.
(9) Leases
The Company is committed under certain capital leases for rental of certain 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 2012 to 2054. Amortization of equipment under capital lease is included with depreciation expense.
Rental expense charged to operations under operating leases for fiscal years 2011, 2010 and 2009 totaled approximately
$321.6 million, $303.5 million and $281.9 million, respectively.