Whole Foods 2010 Annual Report Download - page 29

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our subsidiaries, bears interest at our option of the alternative base rate (“ABR”) plus an applicable margin, currently 0.5%,
or LIBOR plus an applicable margin, currently 1.5%, based on the Company’s Moody’s and S&P rating. The interest period
on LIBOR borrowings may range from one to six months at our option. The participating banks obtained security interests in
certain of the Company’s assets to collateralize amounts outstanding under the term loan in the first quarter of fiscal year
2009. 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 26, 2010, we were in compliance with all applicable debt covenants.
The Company also has outstanding a $350 million revolving line of credit, which is secured by a pledge of substantially all
of the stock in our subsidiaries, that extends to 2012. 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 26, 2010, we were in compliance with all applicable debt covenants. All
outstanding amounts borrowed under this agreement bear interest at our option of the ABR plus an applicable margin,
currently 0.625%, or LIBOR plus an applicable margin, currently 1.625%, based on the Company’s Moody’s and S&P
rating. The participating banks obtained security interests in certain of the Company’s assets to collateralize amounts
outstanding under the revolving credit facility in the first quarter of fiscal year 2009. Commitment fees on the undrawn
amount, reduced by outstanding letters of credit, are payable under this agreement. No amounts were drawn under this
agreement at September 26, 2010 and September 27, 2009. The amount available to the Company under the agreement was
effectively reduced to $342.9 million and $335.2 million by outstanding letters of credit totaling approximately $7.1 million
and $14.8 million at September 26, 2010 and September 27, 2009, respectively.
The Company assumed convertible debentures totaling approximately $115.0 million in the Wild Oats acquisition, of which
approximately $21.8 million was paid off during fiscal year 2008. We had outstanding convertible subordinated debentures
which had a carrying amount of approximately $2.7 million at September 28, 2008. In fiscal year 2009, the Company
redeemed all remaining debentures at a redemption price equal to the issue price plus accrued original issue discount totaling
approximately $2.7 million.
On December 2, 2008, the Company issued 425,000 shares of Series A 8% Redeemable, Convertible Exchangeable
Participating Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”) to affiliates of Leonard Green &
Partners, L.P., for approximately $413.1 million, net of approximately $11.9 million in closing and issuance costs. On
October 23, 2009, the Company announced its intention to call all 425,000 outstanding shares of the Series A Preferred
Stock for redemption on November 27, 2009 in accordance with the terms governing such Series A Preferred Stock at a price
per share equal to $1,000 plus accrued and unpaid dividends. In accordance with the terms governing the Series A Preferred
Stock, at any time prior to the redemption date, the Series A Preferred Stock could be converted by the holders thereof. On
November 26, 2009, the holders converted all 425,000 outstanding shares of Series A Preferred Stock into approximately
29.7 million shares of common stock of the Company. The Company paid cash dividends on the Series A Preferred Stock
totaling $8.5 million and approximately $19.8 million during fiscal years 2010 and 2009, respectively.
The Company is committed under certain capital leases for rental of equipment, buildings, and land and certain operating
leases for rental of facilities and equipment. These leases expire or become subject to renewal clauses at various dates from
2011 to 2054.
The following table shows payments due by period on contractual obligations as of September 26, 2010 (in thousands):
Less than 1 1-3 3-5 More than 5
Total year years years years
Long term debt obligations $ 490,000 $ - $ 490,000 $ - $ -
Estimated interest on long term debt obligations 14,602 7,929 6,673 - -
Capital lease obligations (including interest) 37,142 2,061 4,169 4,262 26,650
Operating lease obligations1 6,006,492 294,985 645,707 675,812 4,389,988
Total $ 6,548,236 $ 304,975 $ 1,146,549 $ 680,074 $ 4,416,638
1Amounts exclude taxes, insurance and other related expenses.
At September 26, 2010, the Company had gross unrecognized tax benefits totaling approximately $14.9 million including
interest and penalties. Although a reasonably reliable estimate of the period of cash settlement with respective taxing
authorities cannot be determined due to the high degree of uncertainty regarding the timing of future cash outflows
associated with the Company’s unrecognized tax benefits, as of September 26, 2010, the Company believes it is reasonably
possible that tax audit resolutions could reduce its unrecognized tax benefits in the next 12 months by approximately $5.4
million.