Whole Foods 2010 Annual Report Download - page 48

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Foreign Currency Translation
The Company’s Canadian and United Kingdom operations use their local currency as their functional currency. Beginning in
fiscal year 2009, foreign currency transaction gains and losses related to Canadian intercompany operations are charged to
net income in the period incurred. The Company recognized foreign currency expense totaling approximately $0.2 million
and $0.9 million in fiscal years 2010 and 2009, respectively. Intercompany transaction gains and losses associated with our
United Kingdom operations are excluded from the determination of net income since these transactions are considered long-
term investments in nature. Assets and liabilities are translated at exchange rates in effect at the balance sheet date. Income
and expense accounts are translated at the average exchange rates during the year. Resulting translation adjustments are
recorded as a separate component of accumulated other comprehensive income.
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.
(3) Business Combinations
Greenlife Grocery
On May 24, 2010, the Company completed the acquisition of certain assets of Greenlife Grocery, LLC (“Greenlife”) in
exchange for approximately $14.5 million in cash plus the assumption of certain liabilities. The assets acquired are all assets
related to two natural foods supermarkets in Chattanooga, Tennessee, and Asheville, North Carolina. Assets acquired
included, but were not limited to, inventory, fixed assets, and the Greenlife trade name. The purchase price has been
allocated to tangible and identifiable intangible assets totaling approximately $5.4 million based on their estimated fair values
at the date of acquisition. Total costs in excess of tangible and identifiable intangible assets acquired of approximately $9.5
million have been recorded as goodwill. Results of these acquired operations are included in our Consolidated Statements of
Operations for the period beginning May 25, 2010 through September 26, 2010.
Wild Oats Markets
Effective August 28, 2007, the Company completed the acquisition of Wild Oats Markets, Inc. (“Wild Oats”) in a cash
tender offer totaling approximately $565 million plus the assumption of debt. At the date of acquisition, Wild Oats had 109
stores in 23 states and British Columbia, Canada, operating under four banners: Wild Oats Marketplace nationwide, Henry’s
Farmers Market (“Henry’s”) in Southern California, Sun Harvest in Texas, and Capers Community Market in British
Columbia. In connection with the acquisition of Wild Oats, the Company separately entered into an agreement to sell certain
assets and liabilities, consisting primarily of fixed assets, inventories and operating leases, related to all 35 Henry’s and Sun
Harvest stores and a related distribution center in Riverside, California, to a wholly owned subsidiary of Smart & Final, Inc.,
a Los Angeles-based food retailer, for a final purchase price of approximately $163.9 million. This sale was completed
effective September 30, 2007. Regarding the other 74 Wild Oats and Capers banner stores the Company acquired in the Wild
Oats Markets transaction, the Company has closed 22 stores, divested 2 stores as part of the settlement agreement with the
Federal Trade Commission (“FTC”), and currently intends to relocate 2 additional stores in fiscal year 2011.
During fiscal year 2010, the Company recorded goodwill adjustments of approximately $2.6 million that related primarily to
certain restructuring reserves.
(4) FTC Settlement Agreement
The FTC challenged the Company’s August 28, 2007 acquisition of Wild Oats Markets, Inc. The Company reached a
settlement agreement with the FTC and received final approval of the settlement agreement by the FTC Commissioners on
June 1, 2009, after a 30-day public comment period. Under the terms of the agreement, a third-party divestiture trustee was
appointed to market for sale until September 8, 2009: leases and related assets for 19 non-operating former Wild Oats stores;
leases and related fixed assets (excluding inventory) for 12 operating acquired Wild Oats stores and one operating Whole
Foods Market store; and Wild Oats trademarks and other intellectual property associated with the Wild Oats stores.
Pursuant to the settlement agreement, the divestiture period was extended by the FTC until March 8, 2010 to allow for good
faith offers that were not finalized for six operating and two non-operating former Wild Oats stores as well as Wild Oats
trademarks and other intellectual property associated with the Wild Oats stores. At the conclusion of the divestiture period,
the divestiture trustee submitted buyers awaiting FTC approval for a total of two operating and one non-operating former
Wild Oats stores, as well as the Wild Oats trademarks and intellectual property. The FTC approved the sale of those
properties and related intangible assets on June 18, 2010. These transactions were completed during the third quarter of fiscal