Whole Foods 2014 Annual Report Download - page 27

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The Company defines ROIC as annualized adjusted earnings divided by average invested capital. Earnings are annualized on
a 52-week basis. Adjustments to earnings are defined in the following tabular reconciliation. Invested capital reflects an average
of the trailing four quarters. ROIC for the fiscal years indicated was as follows (in millions):
2014 2013 2012
Net income $ 579 $ 551 $ 466
Total rent expense, net of tax (1) 241 222 211
Estimated depreciation on capitalized operating leases, net of tax (2) (161)(148)(141)
Adjusted earnings, including interest related to operating leases 659 625 536
Annualized adjusted earnings $ 579 $ 551 $ 457
Annualized adjusted earnings, including interest related to operating
leases $ 659 $ 625 $ 526
Average working capital, excluding current portion of long-term debt $ 707 $ 886 $ 956
Average property and equipment, net 2,731 2,308 2,090
Average other assets 1,103 1,066 955
Average other liabilities (580)(524)(460)
Average invested capital $ 3,961 $ 3,736 $ 3,541
Average estimated asset base of capitalized operating leases (3) 3,169 2,891 2,740
Average invested capital, adjusted for capitalization of operating leases $ 7,130 $ 6,627 $ 6,281
ROIC 14.6% 14.7% 12.9%
ROIC, adjusted for capitalization of operating leases 9.2% 9.4% 8.4%
(1) Total rent includes minimum base rent of all tendered leases
(2) Estimated depreciation equals two-thirds of total rent expense
(3) Estimated asset base equals eight times total annualized rent expense
Liquidity and Capital Resources and Changes in Financial Condition
The following table summarizes the Company’s cash and short-term investments as of the dates indicated (in millions):
September 28,
2014 September 29, 2013
Cash and cash equivalents $ 190 $ 290
Short-term investments - available-for-sale securities 553 733
Total $ 743 $ 1,023
Additionally, the Company held long-term investments in available-for-sale securities totaling approximately $120 million and
$302 million at September 28, 2014 and September 29, 2013, respectively.
We generated cash flows from operating activities totaling approximately $1.1 billion, $1.0 billion and $920 million in fiscal
years 2014, 2013 and 2012, respectively. Cash flows from operating activities resulted primarily from our net income plus non-
cash expenses and changes in operating working capital.
Net cash used in investing activities totaled approximately $484 million, $289 million and $1.3 billion for fiscal years 2014,
2013 and 2012, respectively. Net sales and maturities of available-for-sale securities totaled approximately $334 million and
$282 million in fiscal years 2014 and 2013 compared to net purchases totaling approximately $871 million in fiscal year 2012.
Our principal historical capital requirements have been the funding of the development or acquisition of new stores and acquisition
of property and equipment for existing stores. Net payments for the purchase of acquired entities totaled approximately $73
million in fiscal year 2014 related to the acquisition of certain land and buildings, which have cash flows from existing tenants,
and four retail locations. During fiscal year 2013, net payments for the purchase of acquired entities totaled approximately $22
million primarily related to the acquisition of six retail locations. The required cash investment for new stores varies depending
on the size of the new store, geographic location, degree of work performed by the landlord and complexity of site development
issues. Capital expenditures for fiscal years 2014, 2013 and 2012 totaled approximately $710 million, $537 million and $456
million, respectively, of which approximately $447 million, $339 million and $262 million, respectively, was for new store