Whole Foods 2007 Annual Report Download - page 61

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The components of intangible assets were as follows (in thousands):
2007
2006
Gross carrying Accumulated Gross carrying Accumulated
amount amortization amount amortization
Indefinite-lived contract-based $ 1,943 $ - $ 774 $ -
Definite-lived contract-based 110,239 (14,650) 45,579 (11,833)
Definite-lived marketing-related and other 1,941 (1,790) 2,242 (1,995)
$ 114,123 $ (16,440) $ 48,595 $ (13,828)
Amortization associated with the net carrying amount of intangible assets is estimated to be approximately $13.8 million in
fiscal year 2008, $7.1 million in fiscal year 2009, $6.9 million in fiscal year 2010, $6.9 million in fiscal year 2011 and $6.8
million in fiscal year 2012.
(8) Long-Term Debt
We have long-term debt and obligations under capital leases as follows (in thousands):
2007 2006
Obligations under capital lease agreements,
due in monthly installments through 2029 $ 19,384 $ 335
Convertible debentures, including accreted interest 24,484 8,320
Revolving line of credit 17,000 -
Senior unsecured notes 700,000 -
Total long-term debt 760,868 8,655
Less current installments 24,781 49
Long-term debt, less current installments $ 736,087 $ 8,606
On August 28, 2007, the Company entered into a $700 million, five-year term loan agreement to finance the acquisition of
Wild Oats Markets. The loan, which is secured by a pledge of substantially all of the stock of our subsidiaries, bears interest
at our option of the alternative base rate or the LIBOR plus an applicable margin, 1% as of September 30, 2007, based on the
Company’s Moody’s and S&P rating. At September 30, 2007, the applicable interest rate based on one-month LIBOR was
6.13%. The term loan agreement contains certain affirmative covenants including maintenance of certain financial ratios and
certain negative covenants including limitations on additional indebtedness and payments as defined in the agreement. At
September 30, 2007, we were in compliance with the applicable debt covenants. Associated with the term loan, the Company
also recorded approximately $3.4 million related to debt origination fees, which are being amortized on a straight-line basis
over the life of the loan. Subsequent to the end of fiscal year 2007, the Company entered into a three-year interest rate swap
agreement with a notional amount of $490 million to fix the interest rate at 5.718%, inclusive of the applicable margin and
associated fees, to help manage our exposure to interest rate fluctuations.
On August 28, 2007, we also replaced our previous revolving credit facility with a new $250 million revolving line of credit
that extends to 2012. The credit agreement contains an accordion feature under which the Company can increase the
revolving credit facility to $350 million. The credit agreement contains certain affirmative covenants including maintenance
of certain financial ratios and certain negative covenants including limitations on additional indebtedness and payments as
defined in the agreement. At September 30, 2007 and September 24, 2006, we were in compliance with the applicable debt
covenants. All outstanding amounts borrowed under this agreement bear interest at our option of the alternative base rate or
the LIBOR plus an applicable margin, 1% at September 30, 2007, based on the Company’s Moody’s and S&P rating. At
September 30, 2007, the applicable interest rate based on the alternative base rate was 7.75%. Commitment fees of 0.2% at
September 30, 2007 of the undrawn amount, reduced by outstanding letters of credit, are payable under this agreement. At
September 30, 2007, we had $17 million drawn under this agreement, which was paid off subsequent to year-end. No
amounts were drawn under the previous agreement at September 24, 2006. The amount available to the Company under the
agreement was effectively reduced to $145.1 million by outstanding letters of credit totaling approximately $87.9 million and
current borrowings at September 30, 2007.
We have outstanding zero coupon convertible subordinated debentures which had a carrying amount of approximately $24.5
million and $8.3 million at September 30, 2007 and September 24, 2006, respectively. The Company assumed convertible
debentures totaling approximately $115.0 million in the Wild Oats acquisition, of which approximately $94.2 million was
paid off during fiscal year 2007 and approximately $21.8 million, which included a related conversion premium totaling
approximately $0.9 million, was paid off subsequent to year-end. The remaining Whole Foods Market debentures have an
effective yield to maturity of 5% and a scheduled maturity date of March 2, 2018. The debentures are convertible at the