Whole Foods 2007 Annual Report Download - page 60

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donation from the Company to the American Red Cross, net of accrued estimated insurance proceeds totaling approximately
$2.6 million. In fiscal year 2005, approximately $13.4 million of net natural disaster costs is included in “Direct store
expenses” in the Consolidated Statements of Operations, approximately $1.0 million is included in “General and
administrative expenses,” and approximately $2.1 million is included in “Cost of goods sold and occupancy costs.” In fiscal
year 2006, the Company recognized approximately $7.2 million in pre-tax credits for insurance proceeds and other
adjustments related to previously estimated Hurricane Katrina losses, of which approximately $4.2 million is included in
“Direct store expenses,” approximately $0.9 million is included in “Cost of goods sold and occupancy costs,” and
approximately $2.1 million is included in “Investment and other income.”
(5) Investments
At September 24, 2006, we had cash equivalent investments totaling approximately $10.1 million and short-term available-
for-sale securities, generally consisting of state and local government obligations totaling approximately $193.8 million.
Gross unrealized gains on the securities totaled approximately $77,000 as of September 24, 2006.
No cash equivalent investments or short-term available-for-sale securities were held as of September 30, 2007.
(6) Property and Equipment
Balances of major classes of property and equipment are as follows (in thousands):
2007 2006
Land $ 51,746 $ 39,993
Buildings and leasehold improvements 1,209,256 955,130
Capitalized real estate leases 24,874 -
Fixtures and equipment 1,022,719 779,050
Construction in progress and equipment not yet in service 174,755 168,105
2,483,350 1,942,278
Less accumulated depreciation and amortization (816,791) (706,145)
$ 1,666,559 $ 1,236,133
Depreciation and amortization expense related to property and equipment totaled approximately $181.9 million, $152.4
million and $129.8 million for fiscal years 2007, 2006 and 2005, respectively. Property and equipment included accumulated
accelerated depreciation and other asset impairments totaling approximately $10.5 million and $13.1 million at September
30, 2007 and September 24, 2006, respectively. Property and equipment includes approximately $0.9 million, $0.9 million
and $3.0 million of interest capitalized during fiscal years 2007, 2006 and 2005, respectively. Development costs of new
store locations totaled approximately $389.3 million, $208.6 million and $207.8 million in fiscal years 2007, 2006 and 2005,
respectively. The Company’s acquisition of Wild Oats Markets during fiscal year 2007 included approximately $77.1 million
of property, plant and equipment. As of November 20, 2007, we had signed leases for 87 stores under development.
(7) Goodwill and Other Intangible Assets
Goodwill and indefinite-lived intangible assets are reviewed for impairment annually, or more frequently if impairment
indicators arise. We allocate goodwill to one reporting unit for goodwill impairment testing. During fiscal year 2007, we
acquired goodwill totaling approximately $555.4 million in connection with the acquisition of Wild Oats. During fiscal year
2006, we acquired goodwill totaling approximately $1.1 million, primarily related to the acquisition of one small store in
Portland, Maine. We acquired indefinite-lived intangible assets totaling approximately $1.2 million and $50,000 during fiscal
years 2007 and 2006, respectively, consisting primarily of liquor licenses. There was no impairment of goodwill or
indefinite-lived intangible assets during fiscal years 2007, 2006, or 2005.
Definite-lived intangible assets are amortized over the useful life of the related agreement. We acquired definite-lived
intangible assets totaling approximately $64.8 million and $15.7 million during fiscal years 2007 and 2006, respectively,
consisting primarily of acquired leasehold rights. Of the definite-lived intangible assets acquired in fiscal year 2007,
approximately $42.8 million were associated with the acquisition of Wild Oats. This transaction is discussed further in Note
3 to the consolidated financial statements, “Business Combinations.” Amortization associated with intangible assets totaled
approximately $2.7 million, $2.5 million, and $2.8 million during fiscal years 2007, 2006 and 2005, respectively.