Whole Foods 2010 Annual Report Download - page 27

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Share-Based Payments
Share-based payment expense before income taxes recognized during fiscal years 2010, 2009 and 2008 was approximately
$22.9 million, $12.8 million and $10.5 million, respectively. Share-based payment expense was included in the following
line items on the Consolidated Statements of Operations for the periods indicated (in thousands):
2010 2009 2008
Cost of goods sold and occupancy costs $ 862 $ 439 $ 233
Direct store expenses 10,140 7,152 5,300
General and administrative expenses 11,892 5,204 4,972
Share-based payment expense before income taxes 22,894 12,795 10,505
Income tax benefit (9,170) (5,222) (4,815)
Net share-based payment expense $ 13,724 $ 7,573 $ 5,690
The Company intends to keep its stock incentive program in place, but also intends to limit the number of shares granted in
any one year so that annual earnings per share dilution from share-based payment expense will not exceed 10%. The
Company believes this strategy is best aligned with its stakeholder philosophy because it limits future earnings per share
dilution from options and at the same time retains the broad-based stock option plan, which the Company believes is
important to team member morale, its unique corporate culture and its success.
Liquidity and Capital Resources
The following table summarizes the Company’s cash and short-term investments for the fiscal years indicated (in thousands):
2010 2009
Cash and cash equivalents $ 131,996 $ 430,130
Short-term investments – available-for-sale securities 329,738 -
Restricted cash 86,802 71,023
Total $ 548,536 $ 501,153
We generated cash flows from operating activities of approximately $585.3 million, $587.7 million and $335.0 million in
fiscal years 2010, 2009 and 2008, respectively. Cash flows from operating activities resulted primarily from our net income
plus non-cash expenses and changes in operating working capital.
Net cash used in investing activities totaled approximately $715.4 million, $386.3 million and $372.7 million for fiscal years
2010, 2009 and 2008, respectively. Approximately $425.6 million of the net cash used in investing activities for fiscal year
2010 resulted from our investment of a portion of our available cash balances in available-for-sale securities. At September
26, 2010, we had short-term investments in available-for-sale securities totaling approximately $329.7 million and long-term
investments in available-for-sale securities totaling approximately $96.1 million. During fiscal year 2008, net cash used in
investing activities was partially offset by approximately $163.9 million received from the sale of 35 operating locations
under the Henry’s Farmers Market and Sun Harvest banners. Our principal historical capital requirements have been the
funding of the development or acquisition of new stores and acquisition of property and equipment for existing stores. The
required cash investment for new stores varies depending on the size of the new store, geographic location, degree of work
performed by the landlord and complexity of site development issues. Capital expenditures for fiscal years 2010, 2009 and
2008 totaled approximately $256.8 million, $314.6 million and $529.5 million, respectively, of which approximately $171.4
million, $248.0 million and $357.5 million, respectively, was for new store development and approximately $85.4 million,
$66.6 million and $172.0 million, respectively, was for remodels and other property and equipment expenditures.