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Whole Foods Market Reports Fourth Quarter ResultsSales Increase 25%; Comparable Store Sales Increase 8%;
AUSTIN, Texas, Nov. 20 /PRNewswire-FirstCall/ -- Whole Foods Market, Inc. (NASDAQ: WFMI) today reported sales and earnings for the 13-week fourth quarter and 53-week fiscal year ended September 30, 2007. All percentage increases for the current quarter and year have been adjusted to exclude the extra week. In addition, results include Wild Oats Markets, Inc. for the last five weeks of the quarter due to Whole Foods Market's majority purchase of the company on August 28, 2007. For the quarter, sales increased 24.7% to approximately $1.7 billion, including approximately $82 million in sales from the acquired Wild Oats and Capers stores and $40 million in sales from the Henry's and Sun Harvest stores (which were sold on September 30, 2007). Comparable store sales increased 8.2% on top of an 8.6% increase in the prior year. Identical store sales, excluding six relocated stores and two major expansions, increased 6.0% on top of an 8.4% increase in the prior year. Sales at the Wild Oats stores open longer than one year (excluding the divested and closed stores) increased 3.9% during the last five weeks of the quarter. For the quarter, store contribution was approximately $149 million or 8.5% of sales, and G&A expenses totaled approximately $67 million or 3.9% of sales. The higher-than-average G&A expenses were due to approximately $13 million, or $0.06 per diluted share, in costs related to legal matters, integration efforts and the addition of Wild Oats' G&A expenses. Share-based compensation expense was approximately $2.5 million in the quarter compared to $4.9 million in the prior year. Pre-opening and relocation costs were approximately $23 million, or $0.10 per diluted share, compared to $14 million, or $0.06 per diluted share, in the prior year. Approximately $9 million, or $0.04 per diluted share, relating to share-based compensation, pre-opening rent and accelerated depreciation was expensed for accounting purposes but was non- cash, compared to approximately $12 million, or $0.05 per diluted share, in the prior year. Net income was approximately $34 million, diluted earnings per share were $0.24, and operating cash flow per share was $0.69. The Company estimates the acquisition was slightly dilutive to earnings per share in the quarter. "On top of completing the merger with Wild Oats, we opened a record eight new stores and produced an 8% increase in comparable stores sales in the fourth quarter. We are very excited about the progress of our integration of Wild Oats and the healthy increase in sales growth we are seeing at the Wild Oats stores from 3.9% in Q4 to 6.6% quarter to date. We expect these stores, along with our new stores, to drive strong sales this year and strong comparable store sales growth in fiscal year 2009 and beyond," said John Mackey, chairman, chief executive officer, and co-founder of Whole Foods Market. "In addition, we are pleased to announce today an 11% increase in our quarterly dividend to $0.20 per share." During the quarter, the Company produced approximately $97 million in cash flow from operations and received approximately $7 million in proceeds from the exercise of stock options. Capital expenditures in the quarter were approximately $147 million of which $116 million was for new stores. In addition, the Company paid approximately $25 million in cash dividends to shareholders in the quarter. For the fiscal year, sales increased 15.3% to approximately $6.6 billion. Comparable store sales increased 7.1% on top of an 11.0% increase in the prior year. Sales in identical stores, excluding seven relocated stores and four major expansions, increased 5.8% on top of a 10.3% increase in the prior year. Store contribution was approximately $585 million or 8.9% of sales, and G&A expenses totaled approximately $218 million or 3.3% of sales. Share-based compensation expense was approximately $13.2 million in the fiscal year compared to $9.4 million last year. Pre-opening and relocation costs were approximately $70 million, or $0.30 per diluted share, compared to $37 million, or $0.15 per diluted share, in the prior year. Approximately $34 million, or $0.15 per diluted share, relating to share-based compensation, pre-opening rent and accelerated depreciation was expensed for accounting purposes but was non-cash, compared to $26 million, or $0.11 per diluted share, in the prior year. Net income was approximately $183 million, diluted earnings per share were $1.29, and operating cash flow per share was $2.81. For the fiscal year, the Company produced approximately $399 million in cash flow from operations and received approximately $54 million in proceeds from the exercise of stock options. Capital expenditures for the year totaled approximately $530 million of which $389 million was for new stores. The Company also paid out approximately $596 million for Wild Oats Markets, Inc., including $34 million in direct transaction costs. In addition, the Company paid approximately $97 million in cash dividends to shareholders and repurchased approximately 2.5 million shares, or approximately $100 million, of common stock on the open market. At the end of the year, the Company had $2 million in restricted cash and total debt of approximately $761 million. This included a $700 million term loan used to finance the Wild Oats acquisition, approximately $22 million in Wild Oats and $3 million in Whole Foods Market convertible debentures, approximately $19 million in capital lease obligations, and $17 million in borrowings on the Company's credit line. Subsequent to the close of the year, the Company received approximately $165 million in proceeds from the sale of the Henry's and Sun Harvest stores and paid off the $22 million in remaining Wild Oats convertible debentures and the $17 million credit line balance. Currently, the Company has approximately $162 million available on its $250 million credit line, net of outstanding letters of credit. The Company today announced that its Board of Directors declared an 11% increase in the Company's dividend to $0.20 per share, payable on January 22, 2008 to shareholders of record as of January 11, 2008. This is the Company's fifth dividend increase since the first cash dividend of $0.075 per share (split-adjusted) was declared in November 2003. Results Excluding Acquired Wild Oats Stores The following information related to the quarter and fiscal year excludes the results of acquired operations. Sales increased 15.9% to approximately $1.6 billion in the fourth quarter. For the fiscal year, sales increased 13.2% to approximately $6.5 billion. The following table shows the Company's growth in sales, comparable store sales, and ending square footage, excluding the acquired Wild Oats stores, for the fiscal year compared to its historical five-year ranges and average. For fiscal year 2007, excluding the Wild Oats acquisition, the Company guided to sales growth of 13% to 17%, comparable store sales growth of 6% to 8%, and ending square footage growth of 16%.
FY02-FY06 Range FY02-FY06
Low High Average 4Q07 FY07
Sales growth 17.0% 22.8% 20.3% 15.9% 13.2%
Comparable store sales growth 8.6% 14.9% 11.5% 8.2% 7.1%
Two-year comps (sum of two years) 18.6% 27.8% 22.7% 16.8% 18.1%
Ending square footage growth 10% 14% 12% 18% 18%
Additional information on the quarter for comparable stores and all
stores, excluding the acquired Wild Oats stores, is provided in the following
table.
NOPAT #of Average Total
Comparable Stores Comps ROIC Stores Size Square Feet
Over 11 years old 4.1% 78% 60 27,800 1,666,400
Between eight and 11 years old 4.2% 60% 27 33,100 892,900
Between five and eight years old 6.8% 42% 41 33,900 1,389,800
Between two and five years old 10.0% 26% 41 43,200 1,769,600
Less than two years old
(includes six relocations) 35.4% -2% 17 55,800 948,400
All comparable stores
(7.4 years old, s.f. weighted) 8.2% 35% 186 35,800 6,667,100
All stores excl. acquired stores
(6.7 years old, s.f. weighted) 27% 202 37,200 7,508,400
Gross profit consists of sales less cost of goods sold and occupancy costs plus the contribution from non-retail distribution and food preparation operations. Historically, the Company's average weekly sales and gross margins have been highest in the second and third quarters. For the fourth quarter excluding the acquired Wild Oats stores, gross profit increased eight basis points to 34.9% of sales from 34.8% of sales last year. For stores in the comparable store base, gross profit improved 27 basis points to 35.2% of sales. The LIFO charge was approximately $2.6 million in the quarter compared to a credit of approximately $0.6 million last year, a negative impact of 20 basis points. For the quarter, direct store expenses, excluding the acquired Wild Oats stores, increased 65 basis points to 26.3% of sales from 25.7% of sales last year. For stores in the comparable store base, direct store expenses increased 23 basis points to 25.9% of sales due primarily to an increase in health care costs as a percentage of sales, which was partially offset by leverage in share-based compensation and wages at identical stores. Store contribution, excluding the acquired Wild Oats stores, decreased 57 basis points to 8.6% of sales from 9.1% of sales last year. For stores in the comparable store base, store contribution increased four basis points to 9.3% of sales. The following table shows the Company's fourth quarter and fiscal year results, excluding the acquired Wild Oats stores, for certain line items as a percentage of sales compared to its historical five-year ranges and averages. Where applicable, historical percentages have been adjusted to exclude Hurricane Katrina charges and credits, as well as share-based compensation expense incurred in fiscal year 2005 related to the Company's September 2005 accelerated vesting of stock options.
FY02-FY06 Range FY02-FY06
Low High Average 4Q07 FY07
Gross profit 34.2% 35.1% 34.8% 34.9% 34.9%
Direct store expenses 25.2% 25.5% 25.4% 26.3% 26.0%
Store contribution 9.0% 9.6% 9.4% 8.6% 8.9%
Growth and Development In the fourth quarter, the Company opened a record eight new stores in Chicago, IL (two stores); Cupertino, CA (a relocation); Northbrook, IL; Tustin, CA (a relocation); San Francisco, CA; Oakland, CA and Coral Gables, FL. The Company also acquired 74 stores net of divested locations, ending the quarter with 276 stores totaling 9.3 million square feet. The following table provides additional information about the Company's store locations by region for the fiscal year.
Beginning of Relocated/ End of
Fiscal Year Opened Acquired Divested Closed Fiscal Year
Florida 8 1 5 - - 14
Mid-Atlantic 28 2 6 - - 36
Midwest 21 4 6 - - 31
North Atlantic 27 2 5 - (2) 32
Northeast 13 2 1 - - 16
Northern California 20 4 1 - (1) 24
Pacific Northwest 5 2 11 - - 18
Rocky Mountain 10 - 23 - - 33
South 14 1 3 - - 18
Southern Pacific 24 2 38 (27) (1) 36
Southwest 16 1 10 (8) (1) 18
Total 186 21 109 (35) (5) 276*
* Subsequent to the end of the fiscal year, the Company opened four new stores, permanently closed nine Wild Oats stores and temporarily closed two Wild Oats stores for major renovations. The Company has recently signed five new store leases averaging 47,000 square feet in size in Del Mar, CA; Encinitas, CA; Stamford, CT; Concordville, PA; and Austin, TX (a replacement lease). The following table provides additional information about the Company's store openings in fiscal year 2007 and thus far in fiscal year 2008, leases currently tendered but not opened, and total development pipeline for stores scheduled to open through fiscal year 2010. For accounting purposes, a store is considered tendered on the date the Company takes possession of the space for construction and other purposes, which is typically when the shell of the store is complete or nearing completion. The average tender period, or length of time between tender date and opening date, will vary depending on several factors, one of which is the number of acquired leases, ground leases and owned properties in development, all of which generally have longer tender periods than standard operating leases.
Stores Stores Stores Current Current
Opened Opened Opened Leases Leases
New Store Information FY06 FY07 FY08 YTD Tendered Signed(1)
Number of stores
(including relocations) 13 21 4 20 87
Number of relocations 2 5 2 4 22
Number of lease acquisitions,
ground leases and owned
properties 1 4 1 9 13
New markets 4 3 0 1 14
Average store size
(gross square feet) 50,200 56,500 57,100 45,800 51,200
As a percentage of
existing store average
size 147% 167% 166% 133% 148%
Total square footage 653,000 1,185,800 228,400 915,900 4,485,200
As a percentage of
existing square footage 10% 13% 2% 10% 48%
Average tender period in
months 7.8 8.8
Average pre-opening
expense per store
(incl. rent) $2.0 mil $2.6 mil(2)
Average pre-opening rent
per store $0.7 mil $0.9 mil(2)
Average development cost
(excl. pre-opening) $13.0 mil $15.3 mil(2)
Average development cost
per square foot $258 $2822
(1) Includes leases tendered
(2) Pre-opening and development costs exclude Kensington. Development
costs include estimated costs for projects not yet final; excluding
owned properties and lease acquisitions, the average development cost
for stores that opened in fiscal year 2007 was $14.7 million, or $267
per square foot, compared to $13.0 million, or $258 per square foot,
for stores that opened in fiscal year 2006.
Growth Goals for Fiscal Year 2008 and Beyond For fiscal year 2008, on a 52-week to 52-week basis, the Company expects sales growth of 25% to 30%, of which approximately 10% is expected to come from the Wild Oats stores, and comparable store sales growth of 7.5% to 9.5%. For the first seven weeks of the first quarter, comparable store sales growth was 9.5% on top of a 6.5% increase in the prior year, and identical store sales growth was 7.2% on top of a 5.9% increase in the prior year. Sales at the acquired Wild Oats locations open longer than one year, excluding closures, increased 6.6% on top of a 1.0% increase in the prior year. Acquired stores will enter the comparable store sales base in the fifty-third full week following the date of the merger. The Company expects to open a comparable number of new stores in fiscal year 2008 as in fiscal year 2007. So far this fiscal year, the Company has opened four new stores in Cranston, RI; Chandler, AZ; Nashville, TN; and Pasadena, CA. In addition, the Company has permanently closed nine acquired stores and temporarily closed two acquired stores for major renovations. The Company expects to close one additional acquired store and open two additional stores in Napa, CA and Sugar Land, TX in the first quarter. Of the Company's 20 currently tendered stores representing approximately 916,000 square feet, 14 are expected to open this fiscal year. The Company also expects to announce additional stores tendered for openings in fiscal year 2008 with its first quarter earnings release in February. The Company does not expect to produce operating leverage in fiscal year 2008 due primarily to a decrease in store contribution as a percentage of sales driven by a higher percentage of sales from new and acquired stores, which have a lower contribution than our existing stores, investments in labor and benefits at the acquired Wild Oats stores, and continued, though more moderate, increases in health care costs as a percentage of sales. In addition, the Company expects G&A as a percentage of sales to be in line with the 3.3% reported in fiscal year 2007 due mainly to the temporary costs associated with integrating the Wild Oats acquisition, along with the cost of fully staffing the Company's three smallest regions which gained the greatest number of stores in the merger. The Company expects G&A as a percentage of sales to improve sequentially from the first half to the second half of the year. The Company expects total pre-opening and relocation costs for fiscal year 2008 to be in the range of $80 million to $90 million. Approximately $40 million to $45 million relates to stores expected to open in fiscal year 2008. These ranges are based on estimated tender dates which are subject to change. The Company expects average pre-opening and relocation expense for stores opening in fiscal year 2008 to be in line with the average for stores that opened in fiscal year 2007, excluding the Kensington store in London. On an average weekly basis, the Company expects quarterly pre-opening and relocation expense to ramp up throughout each quarter of the year. The Company expects interest expense, net of investment and other income, in the range of $35 million to $40 million in fiscal year 2008. The Company expects share-based compensation of approximately $2 million to $3 million per quarter in the first half of the year and $4 million to $5 million per quarter in the second half of the year following the Company's annual grant date early in the third quarter, when the majority of options are granted. The Company has entered into a support agreement to provide certain products and services for the divested Henry's and Sun Harvest stores for up to two years. The Company anticipates the revenue associated with this agreement will be approximately equal to its incremental cost of providing the support. Capital expenditures for the fiscal year are expected to be in the range of $575 million to $625 million. Of this amount, approximately 65% to 70% relates to new stores opening in fiscal year 2008 and beyond and approximately 7% to 8% relates to remodels of acquired Wild Oats stores. The Company currently operates 269 stores totaling 9.3 million square feet and has 87 stores in development totaling 4.5 million square feet. Longer term, the Company's goal is to reach $12 billion in sales in fiscal year 2010. About Whole Foods Market Founded in 1980 in Austin, Texas, Whole Foods Market (http://www.wholefoodsmarket.com) is the world's leading natural and organic foods supermarket and America's first national certified organic grocer. In fiscal year 2007, the Company had sales of $6.6 billion and currently has 269 stores in the United States, Canada, and the United Kingdom. Whole Foods Market employs more than 50,000 Team Members and has been ranked for ten consecutive years as one of the "100 Best Companies to Work For" in America by FORTUNE magazine. Forward-looking statements The following constitutes a "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties, which could cause our actual results to differ materially from those described in the forward-looking statements. These risks include but are not limited to general business conditions, the timely development and opening of new stores, the impact of competition, and other risks detailed from time to time in the SEC reports of Whole Foods Market, including Whole Foods Market's report on Form 10-K for the fiscal year ended September 24, 2006. Whole Foods Market undertakes no obligation to update forward-looking statements. The Company will host a conference call today to discuss this earnings announcement at 4:00 p.m. CT. The dial-in number is 1-800-862-9098, and the conference ID is "Whole Foods." A simultaneous audio webcast will be available at http://www.wholefoodsmarket.com.
Contact: Cindy McCann
VP of Investor Relations
512.542.0204
Whole Foods Market, Inc.
Consolidated Statements of Operations (unaudited)
(In thousands, except per share amounts)
Thirteen Twelve Fifty-three Fifty-two
weeks ended weeks ended weeks ended weeks ended
September 30, September 24, September 30, September 24,
2007 2006 2007 2006
Sales $1,743,412 $1,291,017 $6,591,773 $5,607,376
Cost of goods
sold and
occupancy costs 1,140,330 841,436 4,295,170 3,647,734
Gross profit 603,082 449,581 2,296,603 1,959,642
Direct store expenses 454,424 331,505 1,711,229 1,421,968
Store contribution 148,658 118,076 585,374 537,674
General and
administrative
expenses 67,152 42,979 217,743 181,244
Operating income before
pre-opening and
relocation 81,506 75,097 367,631 356,430
Pre-opening expenses 18,601 11,935 59,319 32,058
Relocation costs 4,666 1,811 10,861 5,363
Operating income 58,239 61,351 297,451 319,009
Interest expense (4,177) (21) (4,208) (32)
Investment and other
income 2,487 5,005 11,324 20,736
Income before income
taxes 56,549 66,335 304,567 339,713
Provision for income
taxes 22,620 26,534 121,827 135,885
Net income $33,929 $39,801 $182,740 $203,828
Basic earnings
per share $0.24 $0.28 $1.30 $1.46
Weighted average
shares outstanding 139,095 140,215 140,088 139,328
Diluted earnings per
share $0.24 $0.28 $1.29 $1.41
Weighted average
shares outstanding,
diluted basis 140,154 143,462 141,836 145,082
Dividends per
share $0.18 $- $0.87 $2.45
A reconciliation of the numerators and denominators of the basic and
diluted earnings per share calculations follows (in thousands):
Thirteen Twelve Fifty-three Fifty-two
weeks ended weeks ended weeks ended weeks ended
September 30, September 24, September 30, September 24,
2007 2006 2007 2006
Net income
(numerator for
basic earnings
per share) $33,929 $39,801 $182,740 $203,828
Interest on 5% zero
coupon convertible
subordinated
debentures, net of
income taxes 20 58 98 283
Adjusted net income
(numerator for
diluted earnings
per share) 33,949 $39,859 $182,838 $204,111
Weighted average
common shares
outstanding
(denominator for
basic earnings
per share) 139,095 140,215 140,088 139,328
Potential common
shares
outstanding:
Assumed conversion
of 5% zero coupon
convertible
subordinated
debentures 97 311 116 363
Assumed exercise
of stock options 962 2,936 1,632 5,391
Weighted average
common shares
outstanding and
potential additional
common shares
outstanding
(denominator for
diluted earnings
per share) 140,154 143,462 141,836 145,082
Basic earnings
per share $0.24 $0.28 $1.30 $1.46
Diluted earnings
per share $0.24 $0.28 $1.29 $1.41
Whole Foods Market, Inc.
Consolidated Balance Sheets (unaudited)
September 30, 2007 and September 24, 2006
(In thousands)
Assets
2007 2006
Current assets:
Cash and cash equivalents $- $2,252
Short-term investments -
available-for-sale securities - 193,847
Restricted cash 2,310 60,065
Accounts receivable 105,209 87,387
Proceeds receivable for divestiture 165,054 -
Merchandise inventories 288,112 203,727
Deferred income taxes 66,899 48,149
Prepaid expenses and other current
assets 40,402 28,554
Total current assets 667,986 623,981
Property and equipment, net of
accumulated depreciation and
amortization 1,666,559 1,236,133
Goodwill 668,850 113,494
Intangible assets, net of accumulated
amortization 97,683 34,767
Deferred income taxes 104,877 29,412
Other assets 7,173 5,209
Total assets $3,213,128 $2,042,996
Liabilities And Shareholders' Equity
2007 2006
Current liabilities:
Current installments of long-term
debt and capital lease obligations $24,781 $49
Accounts payable 225,728 126,264
Accrued payroll, bonus and other
benefits due team members 181,290 153,014
Dividends payable 25,060 -
Other current liabilities 327,657 230,443
Total current liabilities 784,516 509,770
Long-term debt and capital lease
obligations, less current installments 736,087 8,606
Deferred lease liabilities 152,552 120,421
Other long-term liabilities 81,169 56
Total liabilities 1,754,324 638,853
Shareholders' equity:
Common stock, no par value, 300,000
shares authorized;
143,787 and 142,198 shares issued;
139,240 and 139,607 shares outstanding
in 2007 and 2006, respectively 1,232,845 1,147,872
Common stock in treasury, at cost (199,961) (99,964)
Accumulated other comprehensive
income 15,722 6,975
Retained earnings 410,198 349,260
Total shareholders' equity 1,458,804 1,404,143
Commitments and contingencies
Total liabilities and shareholders'
equity $3,213,128 $2,042,996
Whole Foods Market, Inc.
Consolidated Statements of Cash Flows (unaudited)
September 30, 2007 and September 24, 2006
(In thousands)
Fifty-three Fifty-two
weeks ended weeks ended
September 30, September 24,
2007 2006
Cash flows from operating activities
Net Income $182,740 $203,828
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization 186,390 156,223
Loss on disposition of assets 5,654 6,291
Share-based compensation 13,175 9,432
Deferred income tax benefit (27,203) (15,521)
Excess tax benefit related to
exercise of employee stock options (12,839) (52,008)
Interest accretion 1,255 460
Deferred rent 27,681 26,607
Other 9,837 693
Net change in current assets and
liabilities:
Accounts receivable (5,179) (17,720)
Merchandise inventories (51,055) (32,200)
Prepaid expense and other current
assets 1,345 (7,849)
Accounts payable 42,064 18,509
Accrued payroll, bonus and other
benefits due team members 1,845 26,033
Other current liabilities 22,893 129,886
Net cash provided by operating
activities 398,603 452,664
Cash flows from investing activities
Development costs of new store
locations (389,349) (208,588)
Other property and equipment
expenditures (140,333) (131,614)
Proceeds from hurricane insurance - 3,308
Acquisition of intangible assets (25,160) (16,332)
Purchase of available-for-sale
securities (277,283) (555,095)
Sale of available-for-sale
securities 475,625 362,209
Decrease (increase) in restricted
cash 57,755 (23,143)
Payment for purchase of acquired
entities, net of cash (596,236) -
Net cash used in investing
activities (894,981) (569,255)
Cash flows from financing activities
Dividends paid (96,742) (358,075)
Issuance of common stock 54,383 222,030
Purchase of treasury stock (99,997) (99,964)
Excess tax benefit related to
exercise of employee stock options 12,839 52,008
Proceeds from long-term borrowings 717,000 -
Payments on long-term debt and
capital lease obligations (93,357) (5,680)
Net cash provided by (used in)
financing activities 494,126 (189,681)
Net change in cash and cash
equivalents (2,252) (306,272)
Cash and cash equivalents at
beginning of period 2,252 308,524
Cash and cash equivalents at end of
period $- $2,252
Supplemental disclosure of cash flow
information:
Interest paid $4,561 $607
Federal and state income taxes paid $152,626 $70,200
Non-cash transactions:
Increase in proceeds receivable for
divestiture $165,054 $-
Conversion of convertible
debentures into common stock $5,686 $4,922
Whole Foods Market, Inc.
Non-GAAP Financial Measures (unaudited)
(In thousands)
In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, the Company provides information
regarding Economic Value Added ("EVA") and Operating Cash Flow per Share
in the press release as additional information about its operating
results. These measures are not in accordance with, or an alternative to,
GAAP. The Company's management believes that these presentations provide
useful information to management, analysts and investors regarding certain
additional financial and business trends relating to its results of
operations and financial condition. In addition, management uses these
measures for reviewing the financial results of the Company and EVA for
incentive compensation and capital planning purposes.
The following is a tabular reconciliation of the EVA non-GAAP financial
measure to GAAP net income, which the Company believes to be the most
directly comparable GAAP financial measure.
Thirteen Twelve Fifty-three Fifty-two
weeks ended weeks ended weeks ended weeks ended
September 30, September 24, September 30, September 24,
EVA 2007 2006 2007 2006
Net income $33,929 $39,801 $182,740 $203,828
Provision for
income taxes 22,620 26,534 121,827 135,885
Interest expense
and other 11,447 8,308 31,989 19,088
NOPBT 67,996 74,643 336,556 358,801
Income taxes (40%) 27,198 29,857 134,622 143,520
NOPAT 40,798 44,786 201,934 215,281
Capital Charge 43,549 36,458 166,480 150,871
EVA $(2,751) $8,328 $35,454 $64,410
The following is a tabular reconciliation of the numerator of the
Operating Cash Flow per Share non-GAAP financial measure to GAAP net
income, which the Company believes to be the most directly comparable GAAP
financial measure.
Thirteen Twelve Fifty-three Fifty-two
weeks ended weeks ended weeks ended weeks ended
September 30, September 24, September 30, September 24,
Operating Cash
Flow per Share 2007 2006 2007 2006
Net income $33,929 $39,801 $182,740 $203,828
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Depreciation and
amortization 48,747 37,575 186,390 156,223
Loss on
disposition
of assets 2,092 7,292 5,654 6,291
Share-based
compensation 2,488 5,049 13,175 9,432
Deferred income
tax benefit (13,650) 3,552 (27,203) (15,521)
Tax benefit
related to
exercise of
employee stock
options - 55,494 - -
Excess tax benefit
related to
exercise of
employee stock
options (1,230) (52,008) (12,839) (52,008)
Interest accretion 1,129 93 1,255 460
Deferred rent 17,731 13,060 27,681 26,607
Other 6,029 263 9,837 693
Net change in
current assets
and liabilities:
Accounts
receivable (8,245) (13,367) (5,179) (17,720)
Merchandise
inventories (8,777) 5,982 (51,055) (32,200)
Prepaid expense
and other
current assets (1,483) (2,100) 1,345 (7,849)
Accounts payable 25,936 1,147 42,064 18,509
Accrued payroll,
bonus and other
benefits due
team members (10,131) 2,396 1,845 26,033
Other current
liabilities 2,504 9,725 22,893 129,886
Net cash provided
by operating
activities $97,069 $113,954 $398,603 $452,664
Weighted average
shares outstanding,
diluted basis 140,154 143,462 141,836 145,082
Operating Cash
Flow per Share $0.69 $0.79 $2.81 $3.12
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