Whole Foods 2012 Annual Report Download - page 37

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approximately $413.1 million, net of approximately $11.9 million in closing and issuance costs. On November 26, 2009, the
holders converted all 425,000 outstanding shares of Series A Preferred Stock into approximately 29.7 million shares of common
stock of the Company. During fiscal year 2010, the Company paid cash dividends on the Series A Preferred Stock totaling $8.5
million.
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 through
2054. The following table shows payments due by period on contractual obligations as of September 30, 2012 (in thousands):
Total Less than 1
year
1-3
years
3-5
years
More than 5
years
Capital lease obligations (including interest) $ 44,590 $ 2,967 $ 5,560 $ 5,341 $ 30,722
Operating lease obligations (1) 6,774,839 309,058 749,870 793,088 4,922,823
Total $ 6,819,429 $ 312,025 $ 755,430 $ 798,429 $ 4,953,545
(1) Amounts exclude taxes, insurance and other related expense
Gross unrecognized tax benefits and related interest and penalties at September 30, 2012 were approximately $6.1 million.
Although a reasonably reliable estimate of the period of cash settlement with respective taxing authorities cannot be determined
due to the high degree of uncertainty regarding the timing of future cash outflows associated with the Company’s unrecognized
tax benefits, as of September 30, 2012, the Company does not expect tax audit resolution will reduce its unrecognized tax benefits
in the next 12 months.
We periodically make other commitments and become subject to other contractual obligations that we believe to be routine in
nature and incidental to the operation of the business. Management believes that such routine commitments and contractual
obligations do not have a material impact on our business, financial condition or results of operations.
The effect of exchange rate changes on cash included in the Consolidated Statements of Cash Flows resulted in increases in
cash and cash equivalents totaling approximately $1.5 million and $0.9 million for fiscal years 2012 and 2010, respectively, and
a decrease in cash and cash equivalents totaling approximately $0.6 million for fiscal year 2011, reflecting the relative
strengthening and weakening of the Canadian dollar and pound sterling compared to the U.S. dollar during these periods.
Our principal historical sources of liquidity have included cash generated by operations, available cash and cash equivalents,
and short-term investments. Absent any significant change in market condition, we expect planned expansion and other
anticipated working capital and capital expenditure requirements for the next 12 months will be funded by these sources. There
can be no assurance, however, that the Company will continue to generate cash flows at or above current levels or that other
sources of capital will be available to us in the future.
Off-Balance Sheet Arrangements
Our off-balance sheet arrangements at September 30, 2012 consist of operating leases disclosed in the above contractual
obligations table. We have no other off-balance sheet arrangements that have had, or are reasonably likely to have, a material
current or future effect on our consolidated financial statements or financial condition.
Critical Accounting Policies
The preparation of our financial statements in conformity with generally accepted accounting principles requires us to make
estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of
contingent assets and liabilities. Actual amounts may differ from these estimates. We base our estimates on historical experience
and on various other assumptions and factors that we believe to be reasonable under the circumstances. On an ongoing basis,
we evaluate the continued appropriateness of our accounting policies and resulting estimates to make adjustments we consider
appropriate under the facts and circumstances.
We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and
financial position, and we apply those accounting policies in a consistent manner. Our significant accounting policies are
summarized in Note 2 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data.” We
believe that the following accounting policies are the most critical in the preparation of our financial statements because they
involve the most difficult, subjective or complex judgments about the effect of matters that are inherently uncertain.
Inventory Valuation
We value our inventories at the lower of cost or market. Cost was determined using the dollar value retail last-in, first-out
(“LIFO”) method for approximately 92.1% and 92.3% of inventories at September 30, 2012 and September 25, 2011,