Whole Foods 2012 Annual Report Download - page 24

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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 and 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 30, 2012, we had approximately $23.6 million in short-term investments classified as cash and cash equivalents
and approximately $1.35 billion 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, which, if they materialize,
could have a negative impact on our results of operations.
Effective tax rate changes and results of examinations by taxing authorities could materially impact our results of operations.
Our future effective tax rates could be adversely affected by the earnings mix being lower than historical results in states or
countries where we have lower statutory rates and higher-than-historical results in states or countries where we have higher
statutory rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws or interpretations
thereof. In addition, we are subject to periodic audits and examinations by the Internal Revenue Service (“IRS”) and other state
and local taxing authorities. Our results could be materially impacted by the determinations and expenses related to proceedings
by the IRS and other state and local taxing authorities. See Note 10 to the consolidated financial statements, “Income Taxes,”
in Part II, “Item 8. Financial Statements and Supplementary Data,” of this Report on Form 10-K.
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.
Responding to such organization attempts is distracting to management and team members and may have a negative financial
impact on a store, facility or the Company as a whole.
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, 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.
Unfavorable changes in governmental regulation could harm our business.
The Company is subject to various federal, state, local and international laws, regulations and administrative practices affecting
our business, and we must comply with provisions regulating health and sanitation standards, food labeling, equal employment,
minimum wages, and licensing for the sale of food and, in some stores, alcoholic beverages. Our new store openings could be
delayed or prevented or our existing stores could be impacted by difficulties or failures in our ability to obtain or maintain
required approvals or licenses. Changes in existing laws or implementation of new laws, regulations and practices (e.g., healthcare
legislation and/or “card check” legislation) could have a significant impact on our business.
The USDA’s Organic Rule facilitates interstate commerce and the marketing of organically produced food, and provides assurance
to our customers that such products meet consistent, uniform standards. Compliance with this rule could pose a significant
burden on some of our suppliers, which may cause a disruption in some of our product offerings.