Whole Foods 2007 Annual Report Download - page 25

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Legal Proceedings Could Materially Impact Our Results
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. In addition, the
FTC is currently pursing an administrative proceeding concerning our recent acquisition of Wild Oats Markets. Our results
could be materially impacted by the decisions and expenses related to pending or future proceedings.
We May Be Subject to Product Liability Claims if People Are Harmed By the Products We Sell
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 conventional supermarkets. The real or perceived sale of contaminated food products by
us could result in product liability claims, the settlement or outcome of which might have a material adverse effect on our
sales and 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 is also 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.
Unions May Attempt to Organize Our Team Members
Unions have from time to time 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.
Unfavorable Changes in Government Regulation Could Harm Our Business
Our stores are subject to various international, federal, state and local 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.
The manufacturing, processing, formulating, packaging, labeling and advertising of products are subject to regulation by
various federal agencies including the FDA, FTC, CPSC, USDA and EPA. The composition and labeling of nutritional
supplements are most actively regulated by the FDA under the provisions of the FFDC Act. The FFDC Act has been revised
in recent years with respect to dietary supplements by the Nutrition Labeling and Education Act and by the Dietary
Supplement Health and Education Act.
The USDA’s Organic Rule, implemented into federal law on October 21, 2002, 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.
We cannot predict the nature of future laws, regulations, interpretations or applications, or determine what effect either
additional government regulations or administrative orders, when and if promulgated, or disparate federal, state and local
regulatory schemes would have on our business in the future. They could, however, require the reformulation of certain
products to meet new standards, the recall or discontinuance of certain products not able to be reformulated, additional
record keeping, expanded documentation of the properties of certain products, expanded or different labeling and/or
scientific substantiation. Any or all of such requirements could have an adverse effect on our results of operations and
financial condition.
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 discovering 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.