Whole Foods 2007 Annual Report Download - page 27

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Effective Tax Rate Changes and Results of Examinations by Taxing Authorities Could Materially Impact Our Results
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 these and other proceedings by the IRS and other state and local taxing authorities.
The Company May Discontinue Paying Dividends in the Future
Dividends are paid at the discretion of the Company’s Board of Directors. The continuation of these payments, the amount of
such dividends, and the form in which the dividends are paid (cash or stock) depend on many factors, including the results of
operations and the financial condition of the Company. There is no guarantee that the Company will pay dividends in the
future.
Failure of our Internal Control Over Financial Reporting Could Materially Impact our Business and Results
The Company's management is responsible for establishing and maintaining adequate internal control over financial
reporting. An internal control system, no matter how well designed and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent
limitations in all internal control systems, internal control over financial reporting may not prevent or detect misstatements.
Any failure to maintain an effective system of internal control over financial reporting could limit our ability to report our
financial results accurately and timely or to detect and prevent fraud, and could expose us to litigation or adversely affect the
market price of our common stock.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
As of September 30, 2007, we operated 276 stores: 263 stores in 37 U.S. states and the District of Columbia; seven stores in
Canada; and six stores in the United Kingdom. This includes 74 stores (net of divested locations) acquired from Wild Oats
Markets, Inc. on August 28, 2007: 70 stores in 22 U.S. states and four stores in Canada. We own seven stores, two
distribution facilities and land for one store, including the adjacent property, and one distribution center in development. We
also own a store and a building on leased land, which is leased to third parties, and have eight stores in development on
leased land. All other stores, distribution centers, bakehouses and administrative facilities are leased, with expiration dates
ranging from one to 35 years. We have options to renew most of our leases in five-year increments with renewal periods
ranging from five to 50 years. The following table shows the number of our stores by state, the District of Columbia, Canada
and the United Kingdom as of September 30, 2007:
Number Number Number
Location of Stores Location of Stores Location of Stores
Alabama 1 Louisiana 3 Oklahoma 1
Arkansas 1 Maine 2 Oregon 8
Arizona 6 Maryland 7 Pennsylvania 7
California 49 Massachusetts 20 Rhode Island 2
Colorado 19 Michigan 4 South Carolina 2
Canada 7 Minnesota 2 Tennessee 3
Connecticut 4 Missouri 3 Texas 13
District of Columbia 3 Nebraska 2 United Kingdom 6
Florida 14 Nevada 5 Utah 4
Georgia 7 New Jersey 9 Virginia 8
Illinois 15 New Mexico 6 Washington 5
Indiana 2 New York 7 Wisconsin 2
Kansas 3 North Carolina 5
Kentucky 3 Ohio 6