Whole Foods 2007 Annual Report Download - page 56

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Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and revenues and expenses during the period reported. Actual amounts
could differ from those estimates.
Reclassifications
Where appropriate, we have reclassified prior years' financial statements to conform to current year presentation.
Recent Accounting Pronouncements
In July 2006, the FASB issued Financial Interpretation 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes,” an
interpretation of SFAS No. 109, “Accounting for Income Taxes.” FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109. The interpretation applies to all
tax positions accounted for in accordance with Statement 109 and requires a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in an income tax
return. Subsequent recognition, derecognition, and measurement is based on management’s best judgment given the facts,
circumstances and information available at the reporting date. FIN 48 is effective for fiscal years beginning after December
15, 2006. Early adoption is permitted as of the beginning of an enterprise’s fiscal year, provided the enterprise has not yet
issued financial statements, including financial statements for any interim period, for that fiscal year. FIN 48 becomes
effective for the Company’s first quarter of fiscal year 2008. Although the Company will continue to evaluate the application
of FIN 48, the Company does not expect the cumulative impact of the adoption to have a material effect on our consolidated
financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin No.108 (“SAB No. 108”), “Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements.” SAB No. 108 addresses
how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in current-
year financial statements. SAB No. 108 requires an entity to quantify misstatements using a balance sheet and income
statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant
quantitative and qualitative factors. The requirements of SAB No. 108 are effective for fiscal years ending after November
15, 2006. SAB 108 was effective for the Company’s fiscal year ending September 30, 2007 and had no impact on the
Company’s consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value,
establishes a framework for measuring fair value, and requires additional disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements that are already required or permitted by other accounting standards, except for
measurements of share-based payments and measurements that are similar to, but not intended to be, fair value and does not
change existing guidance as to whether or not an instrument is carried at fair value. The provisions of SFAS No. 157 are
effective for the specified fair value measures for financial statements issued for fiscal years beginning after November 15,
2007. SFAS No. 157 is effective for the Company’s fiscal year ending September 27, 2009, with early adoption permitted.
We are currently evaluating the impact, if any, that the adoption of SFAS No. 157 will have on our consolidated financial
statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.”
SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS
No. 159 applies to all entities that elect the fair value option. However, the amendment to SFAS No. 115 “Accounting for
Certain Investments in Debt and Equity Securities” applies to all entities with available-for-sale and trading securities. The
provisions of SFAS No. 159 are effective for fiscal years beginning after November 15, 2007. SFAS No. 159 is effective for
the Company’s fiscal year ending September 27, 2009. We are currently evaluating the impact, if any, that the adoption of
SFAS No. 159 will have on our consolidated financial statements.
In May 2007, the FASB issued Staff Position (“FSP”) No. FIN 48-1, “Definition of Settlement in FASB Interpretation No.
48”. The FSP amends FIN 48 to provide guidance on how an enterprise should determine whether a tax position is
effectively settled for the purpose of recognizing previously unrecognized tax benefits. FSP No. FIN 48-1 should be applied
upon the initial adoption of FIN 48, which is effective for fiscal years beginning after December 15, 2006. FSP No. FIN 48-1
becomes effective for the Company’s first quarter of fiscal year 2008. Although the Company will continue to evaluate the
application of FSP No. FIN 48-1, the adoption will not have a material impact on the Company’s consolidated financial
statements.