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Whole Foods Market Reports Second Quarter 2009 Results
Date:5/13/2009

Company Reports Diluted EPS of $0.19, Operating Cash Flow of $173 Million, and Generates $98 Million of Free Cash Flow; Company Updates 2009 Outlook to Reflect Year-to-Date Sales Results, Maintains Bottom-Line Guidance

AUSTIN, Texas, May 13 /PRNewswire-FirstCall/ -- Whole Foods Market, Inc. (Nasdaq: WFMI) today reported results for the 12-week second quarter ended April 12, 2009. Sales for the quarter were $1.9 billion, in line with the prior year. Comparable store sales decreased 4.8% versus a 6.7% increase in the prior year. Identical store sales, excluding seven relocations and two major expansions, decreased 5.8% versus a 5.1% increase in the prior year. Excluding the negative impact of foreign currency translation, comparable store sales decreased 4.1%, and identical store sales decreased 5.1%.

"We are very pleased with our second quarter results, including free cash flow of $98 million. Despite flat sales year over year, we exhibited strong expense control leading to a 10% increase in income from operations excluding non-cash asset impairment charges," said John Mackey, chairman, chief executive officer, and co-founder of Whole Foods Market. "Based on our strong year-to-date results, we are maintaining our prior fiscal year ranges for estimated EBITDA, EBITANCE and diluted earnings per share, excluding asset impairment charges and assuming just under $8.0 billion in sales."

For the second quarter, the Company's effective tax rate was 42.5%, income available to common shareholders was $27.3 million, and diluted earnings per share were $0.19. These results included non-cash asset impairment charges of approximately $13 million, or $0.05 per diluted share.

Excluding the non-cash asset impairment charges, income from operations increased 10% to $82.7 million; adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") increased 9% to $143.8 million; and earnings before interest, taxes, depreciation and other non-cash expenses ("EBITANCE") increased 8% to $154.8 million. Approximately $85.1 million relating to depreciation and amortization, asset impairments, share-based payments, and deferred rent was expensed for accounting purposes but was non-cash.

During the quarter, the Company produced $173.0 million in cash flow from operations and invested $74.9 million in capital expenditures, of which $60.4 million related to new stores. This resulted in free cash flow of $98.1 million. In addition, the Company paid a cash dividend to preferred stockholders of $8.5 million. Cash and cash equivalents, including restricted cash, increased to $362.8 million, and total debt was $743.5 million. Currently, the Company has approximately $260.9 million available on its credit line, net of $89.1 million in outstanding letters of credit. The Company continues to be in compliance with all applicable covenants in its credit agreements.

For the 28-week period ended April 12, 2009, sales were $4.3 billion, in line with the prior year. Comparable store sales decreased 4.4% versus an 8.2% increase in the prior year, and identical store sales (excluding nine relocations and three major expansions) decreased 5.3% versus a 6.2% increase in the prior year. Excluding the negative impact of foreign currency translation, comparable store sales decreased 3.6%, and identical store sales decreased 4.6%. The tax rate was 42.0%, income available to common shareholders was $55.1 million, and diluted earnings per share were $0.39. These results included $13.9 million, or $0.06 per diluted share, of legal costs related to the Federal Trade Commission ("FTC") lawsuit and approximately $15 million, or $0.06 per diluted share, of non-cash asset impairment charges. Excluding asset impairment charges, adjusted EBITDA was $293.9 million, and EBITANCE was $323.1 million.

Year to date, the Company has produced $315.1 million in cash flow from operations and invested $185.2 million in capital expenditures, of which $142.5 million related to new stores. This resulted in free cash flow of $129.9 million. In addition, the Company has paid cash dividends to preferred stockholders of $11.3 million.

The Company's average results for the last five fiscal years and quarterly results for the last five fiscal quarters are shown in the following table. Where applicable, percentages have been adjusted to exclude asset impairment charges, FTC-related legal costs, Hurricane Katrina charges and credits, and share-based payments expense related to the Company's September 2005 accelerated vesting of stock options.

                                 FY04-FY08
                                   Average   2Q08   3Q08   4Q08   1Q09   2Q09
    -------------------------------------------------------------------------

    Sales growth                     20.5%  27.6%  21.6%  15.5%   0.4%  -0.5%
    Comparable store sales growth    10.2%   6.7%   2.6%   0.4%  -4.0%  -4.8%
    Identical store sales growth      9.1%   5.1%   1.9%  -0.5%  -4.9%  -5.8%

    Gross profit                     34.7%  34.9%  34.4%  33.3%  33.4%  34.7%
    Direct store expenses            25.9%  26.6%  26.6%  26.6%  26.4%  26.2%
    Store contribution                8.8%   8.3%   7.7%   6.8%   6.9%   8.5%
    G&A expenses                      3.3%   3.6%   3.3%   2.9%   2.9%   2.9%

For the quarter, gross profit decreased 16 basis points to 34.7% of sales. The LIFO charge was zero versus $2.7 million last year, a positive impact of 14 basis points. An improvement in cost of goods sold, excluding the positive impact of LIFO, was more than offset by an increase in occupancy costs as a percentage of sales. Direct store expenses improved 38 basis points to 26.2% of sales. This included a 30 basis point improvement in workers' compensation costs as a percentage of sales driven by an unusually low number of claims and average cost per claim in the quarter. In addition, for the second consecutive quarter, the Company generated an improvement in wages as a percentage of sales. This improvement partially offset increases in health care and depreciation as a percentage of sales. As a result, store contribution improved 22 basis points to 8.5% of sales, excluding the asset impairment charge.

For stores in the identical store base, gross profit improved 16 basis points to 35.0% of sales, and direct store expenses improved 69 basis points to 25.9% of sales. As a result, store contribution improved 85 basis points to 9.1% of sales.

G&A expenses improved 57 basis points to 3.1% of sales due to the elimination of G&A expenses at the former Wild Oats home office in Boulder, along with the cost-containment measures implemented at the Company's global and regional offices. Results in the current quarter included $2.8 million, or $0.01 per diluted share, of FTC-related legal costs. Excluding these costs, G&A expenses were 2.9% of sales.

Additional information on the quarter for comparable stores and all stores is provided in the following table.

                                     NOPAT        # of  Average          Total
    Comparable Stores       Comps    ROIC(1)    Stores     Size    Square Feet
    --------------------------------------------------------------------------

    Over 11 years old
     (15.6 years old,
     s.f. weighted)         -5.6%     79%           90   27,200      2,448,100
    Between eight and
     11 years old           -3.4%     48%           58   30,800      1,784,800
    Between five and
     eight years old(2)     -8.5%     43%           39   35,200      1,374,600
    Between two and five
     years old              -5.3%     17%           54   47,000      2,536,300
    Less than two years
     old (including
     seven relocations)      3.3%     -1%(3)        26   55,500      1,442,800

    All comparable stores
     (7.8 years old, s.f.
     weighted)              -4.8%     30%          267   35,900      9,586,600
    All stores (7.3 years
     old, s.f. weighted)              25%          280   36,700     10,264,200


    (1)  Reflects only store-level capital and NOPAT, including pre-opening
         expense.
    (2)  This age category was impacted by a higher percentage of cannibalized
         stores.
    (3)  Excluding the Kensington store in London, NOPAT ROIC was 1%.

Growth and Development

The Company opened three stores in the second quarter, including one relocation. So far in the third quarter, the Company has relocated stores in Vancouver, B.C. and Annapolis, MD and currently has 280 stores totaling 10.3 million square feet. Two additional stores, including one relocation, are expected to open in the third quarter, and three stores are expected to open in the fourth quarter.

Since the Company's first quarter earnings release, the Company has terminated three leases totaling approximately 155,000 square feet for stores previously scheduled to open in fiscal years 2011 through 2013. The Company also has downsized three leases in development by an average of 10,500 square feet each.

The following table provides additional information about the Company's store openings in fiscal year 2008 and year-to-date in fiscal year 2009, leases currently tendered but not opened, and total development pipeline for stores scheduled to open through fiscal year 2013. 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     Current      Current
                                   Opened      Opened      Leases       Leases
    New Store Information            FY08    FY09 YTD    Tendered    Signed(1)
    --------------------------------------------------------------------------

    Number of stores
     (including relocations)           20          10          21           60
    Number of relocations               6           5           2            9
    Number of lease acquisitions,
     ground leases and owned
     properties                         4           3           6            7
    New markets                         3           1           4            8
    Average store size
     (gross square feet)           53,000      52,700      43,400       46,500
      As a percentage of
       existing store
       average size                  146%        145%        119%         128%
    Total square footage        1,060,700     527,100     911,200    2,826,200
      As a percentage of
       existing square footage        11%          5%          9%          27%
    Average tender period in
     months                           9.7        13.1
    Average pre-opening
     expense per store
     (incl. rent)                $2.5 mil
    Average pre-opening
     rent per store              $1.1 mil
    Average development
     cost (excl. pre-opening)   $15.8 mil
    Average development cost
     per square foot                 $297


    (1)  Includes leases tendered

FTC Update

As previously announced, the Company is awaiting final approval of the settlement agreement reached with the FTC resolving its antitrust challenge to the Company's acquisition of Wild Oats Markets, Inc. Under the terms of the agreement, a third-party divestiture trustee has been appointed to market for sale: leases and related assets for 19 non-operating former Wild Oats stores, 10 of which were closed by Wild Oats prior to the merger and nine of which were closed by Whole Foods Market; leases and related fixed assets (excluding inventory) for 12 operating acquired Wild Oats stores and one operating Whole Foods Market store; and Wild Oats(R) trademarks and other intellectual property associated with the Wild Oats stores. The 13 operating stores had combined sales of approximately $24.6 million in the second quarter of fiscal year 2009, or approximately 1.3% of the Company's total sales of $1.9 billion.

The divestiture trustee has six months to market the assets to be divested. For any good faith offers that are not finalized by September 6, 2009, an extension of up to six months may be granted. This twelve-month period may be extended further to allow the FTC to approve any purchase agreements submitted within that time period. The only other obligations imposed on the Company by the settlement agreement are in support of the divestiture trustee process.

After receiving final approval by the FTC, the Company expects to record a non-cash charge of up to $5.5 million to adjust certain long-lived assets to fair value relating to the potential sale of the 13 operating stores. This is lower than the Company's original estimate primarily due to non-cash asset impairment charges recorded during the second quarter to adjust four of the 13 operating stores to fair value, which is determined based on long-term discounted cash flow projections.

The Company also will incur some cash expenses relating to legal and trustee fees which are not expected to be material. No material additional charges are expected related to the 19 non-operating properties, for which a lease liability reserve is already recorded, or related to the trademarks which have been fully amortized.

Assumptions for Fiscal Year 2009

For the first four weeks of the third quarter ended May 10, 2009, comparable store sales decreased 3.9%, and identical store sales decreased 5.0%. Excluding the negative impact of foreign currency translation, comparable store sales decreased 3.3%, and identical store sales decreased 4.4%. These results are slightly better than the Company's second quarter results; however, the uncertain economic environment makes it highly difficult to forecast future results. If the Company's comparable and identical store sales in the second half of the year are consistent with its year-to-date results, total sales in fiscal year 2009 would be just under $8.0 billion, including the opening of seven new stores in the second half of the year, three of which are relocations.

Year to date, sales have averaged approximately $154 million per week, a level at which the Company has demonstrated strong discipline around gross margin, direct store expenses and G&A, a discipline the Company hopes to maintain for the remainder of the year. However, the Company expects new store sales to increase as a percentage of total sales and may choose to increase its value offerings to drive sales, both of which could negatively impact store contribution as a percentage of sales. In addition, the Company historically has experienced lower average weekly sales beginning in the summer months through September which typically results in lower gross profit and higher direct store expenses as a percentage of sales, particularly in the fourth quarter. For these reasons, the Company expects store contribution as a percentage of sales in the second half of the year to be approximately in line with the 6.9% the Company produced in the first quarter.

The Company is continuing to conduct periodic reviews for other asset impairments by evaluating changes in the results and/or economics of its stores. At this time, the Company does not see any further impairments on the horizon, unless the Company were to experience a further decline in sales and cash flow from current levels.

Based on the Company's strong year-to-date earnings results and assuming just under $8.0 billion in sales, the Company is maintaining its prior fiscal year ranges for estimated EBITDA, EBITANCE and diluted earnings per share, excluding asset impairment charges, in fiscal year 2009. The Company estimates EBITDA in the range of $525 million to $545 million, EBITANCE in the range of $580 million to $605 million, and diluted earnings per share in the range of $0.71 to $0.76, including approximately $0.06 to $0.08 in estimated dilution from FTC-related legal costs and approximately $0.17 in dilution from the Series A Preferred Stock.

The following table provides additional information about the Company's estimated store openings for the remainder of fiscal year 2009 through 2013 based on the Company's current development pipeline. These openings reflect estimated tender dates, which are subject to change, and do not incorporate any potential new leases, terminations or square footage reductions.

The Company is committed to producing positive free cash flow on an annual basis and is confident it will produce operating cash flow in excess of the capital expenditures needed to open the 60 stores in its development pipeline.

                     Total                         Total Square Average Square
                  Openings Relocations New Markets      Footage Feet per Store
    --------------------------------------------------------------------------

    FY09 remaining
     stores in
     development        5            1           0      274,600         54,900
    FY10 stores in
     development       16            0           4      662,000         41,400
    FY11 stores in
     development       16            2           0      695,700         43,500
    FY12 stores in
     development       14            4           1      700,400         50,000
    FY13 stores in
     development        9            2           3      459,200         51,000
    --------------------------------------------------------------------------
    Total(1)           60            9           8    2,791,900         46,500


    (1)  Total square footage excludes one expansion in development.

About Whole Foods Market

Founded in 1980 in Austin, Texas, Whole Foods Market (www.wholefoodsmarket.com) is the leading natural and organic foods supermarket, America's first national certified organic grocer, and was named "America's Healthiest Grocery Store" in 2008 by Health magazine. In fiscal year 2008, the Company had sales of approximately $8 billion and currently has 280 stores in the United States, Canada, and the United Kingdom. Whole Foods Market employs more than 53,000 Team Members and has been ranked for 12 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 successful integration of acquired businesses into our operations, changes in overall economic conditions that impact consumer spending, including fuel prices and housing market trends, the impact of competition, changes in the Company's access to available capital, the successful resolution of ongoing FTC matters, 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 28, 2008. 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 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)

                              Twelve weeks ended     Twenty-eight weeks ended
                              April 12,   April 13,    April 12,     April 13,
                                 2009        2008         2009         2008
                                 ----        ----         ----         ----
    Sales                    $1,857,550  $1,866,493   $4,324,053   $4,323,751
    Cost of goods sold
     and occupancy
     costs                    1,212,233   1,215,089    2,856,018    2,845,795
    ------------------        ---------   ---------    ---------    ---------
      Gross profit              645,317     651,404    1,468,035    1,477,956
    Direct store
     expenses                   487,383     496,903    1,139,684    1,141,278
    Asset impairments
     from continuing
     locations                   13,009           -       14,682            -
    -----------------            ------         ---       ------          ---
      Store
       contribution             144,925     154,501      313,669      336,678
    General and
     administrative
     expenses                    56,832      67,658      139,432      155,070
    ---------------              ------      ------      -------      -------
      Operating income
       before pre-
       opening and
       store closure             88,093      86,843      174,237      181,608
    Pre-opening
     expenses                    13,789      10,039       27,853       25,178
    Relocation, store
     closure and lease
     termination costs            4,651       1,818        9,728        6,830
    ------------------            -----       -----        -----        -----
      Operating income           69,653      74,986      136,656      149,600
    Interest expense             (7,696)     (8,438)     (21,276)     (20,019)
    Investment and
     other income
     (loss)                        (639)      1,181        1,202        3,935
    --------------                 ----       -----        -----        -----
      Income before
       income taxes              61,318      67,729      116,582      133,516
    Provision for
     income taxes                26,060      27,769       48,995       54,413
    -------------                ------      ------       ------       ------
      Net income                 35,258      39,960       67,587       79,103
    ------------                 ------      ------       ------       ------
    Preferred stock
     dividends                    7,934           -       12,467            -
    ---------------               -----         ---       ------          ---
      Income available
       to common
       shareholders             $27,324     $39,960      $55,120      $79,103
    ------------------          -------     -------      -------      -------

    Basic earnings per
     share                        $0.19       $0.29        $0.39        $0.57
    ------------------            -----       -----        -----        -----
    Weighted average
     shares outstanding         140,404     139,818      140,362      139,566
    -------------------         -------     -------      -------      -------

    Diluted earnings
     per share                    $0.19       $0.29        $0.39        $0.56
    ----------------              -----       -----        -----        -----
    Weighted average
     shares outstanding,
     diluted basis              140,404     140,233      140,362      140,448
    -------------------         -------     -------      -------      -------

    Common dividends
     declared per share              $-       $0.20           $-        $0.40
    -------------------             ---       -----          ---        -----



    Whole Foods Market, Inc.
    Condensed Consolidated Balance Sheets (unaudited)
    April 12, 2009 and September 28, 2008
    (In thousands)

    Assets
                                                 2009            2008
    ---------------                              ----            ----
    Current assets:
    Cash and cash equivalents                $362,164         $30,534
    Restricted cash                               620             617
    Accounts receivable                       120,452         115,424
    Merchandise inventories                   322,006         327,452
    Prepaid expenses
     and other current assets                  37,563          68,150
    Deferred income taxes                      85,657          80,429
    -------------------------                  ------          ------
        Total current assets                  928,462         622,606
    Property and equipment,
     net of accumulated
     depreciation and amortization          1,895,800       1,900,117
    Goodwill                                  657,281         659,559
    Intangible assets, net of
     accumulated amortization                  74,772          78,499
    Deferred income taxes                     106,985         109,002
    Other assets                                7,697          10,953
    ------------------------------              -----          ------
        Total assets                       $3,670,997      $3,380,736
        ------------                       ----------      ----------

    Liabilities And Shareholders' Equity
                                                 2009            2008
    ------------------------------------         ----            ----
    Current liabilities:
    Current installments of
     long-term debt and capital
     lease obligations                           $380            $380
    Accounts payable                          186,462         183,134
    Accrued payroll, bonus and other
     benefits due team members                199,556         196,233
    Dividends payable                           1,133               -
    Other current liabilities                 272,908         286,430
    -------------------------                 -------         -------
        Total current liabilities             660,439         666,177
    Long-term debt and capital
     lease obligations, less
     current installments                     743,152         928,790
    Deferred lease liabilities                229,421         199,635
    Other long-term liabilities                78,230          80,110
    ---------------------------                ------          ------
        Total liabilities                   1,711,242       1,874,712
        -----------------                   ---------       ---------

    Series A redeemable preferred stock,
     $0.01 par value, 425 and no shares
     authorized, issued and outstanding
     in 2009 and 2008, respectively           413,052               -

    Shareholders' equity                    1,546,703       1,506,024
    --------------------                    ---------       ---------
    Commitments and contingencies
    -----------------------------
      Total liabilities and
       shareholders' equity                $3,670,997      $3,380,736
      ----------------                     ----------      ----------



    Whole Foods Market, Inc.
    Consolidated Statements of Cash Flows (unaudited)
    April 12, 2009 and April 13, 2008
    (In thousands)

                                                  Twenty-eight weeks ended
                                                  April 12,       April 13,
                                                    2009            2008
                                                    ----            ----
    Cash flows from operating activities:
    Net income                                   $67,587         $79,103
    Adjustments to reconcile net income
     to net cash provided by operating
     activities:
       Depreciation and amortization             141,815         131,597
       Loss on disposition of fixed assets         1,378           1,663
       Impairment of fixed assets                 15,383              99
       Share-based payments expense                6,142           5,352
       LIFO charge                                 3,600           5,332
       Deferred income tax expense (benefit)       1,892         (12,038)
       Excess tax benefit related to
        exercise of team member stock
        options                                        -          (4,999)
       Deferred lease liabilities                 29,406          24,135
       Other                                       8,413            (651)
       Net change in current assets and
        liabilities:
         Accounts receivable                      (5,570)        (13,384)
         Merchandise inventories                     297         (21,655)
         Prepaid expense and other current
          assets                                  29,964           1,408
         Accounts payable                          3,827         (57,762)
         Accrued payroll, bonus and other
          benefits due team members                3,883          18,784
         Other current liabilities                 8,548           8,593
       Net change in other long-term
        liabilities                               (1,469)         (4,300)
    -------------------------------------         ------          ------
    Net cash provided by operating
     activities                                  315,096         161,277
    ------------------------------               -------         -------
    Cash flows from investing activities:
      Development costs of new locations        (142,462)       (174,419)
      Other property and equipment
       expenditures                              (42,757)        (95,937)
      Proceeds from hurricane insurance                -           1,500
      Acquisition of intangible assets              (247)         (1,030)
      Purchase of available-for-sale
       securities                                      -        (194,316)
      Sale of available-for-sale securities            -         194,316
      Payment for purchase of acquired
       entities, net of cash                           -          (5,480)
      Proceeds from divestiture, net                   -         163,913
      Other investing activities                    (425)           (234)
    ---------------------------------------         ----            ----
    Net cash used in investing activities       (185,891)       (111,687)
    -------------------------------------       --------        --------
    Cash flows from financing activities:
      Common dividends paid                            -         (52,974)
      Preferred dividends paid                   (11,333)              -
      Issuance of common stock                     1,952          16,197
      Excess tax benefit related to exercise
       of team member stock options                    -           4,999
      Proceeds from issuance of redeemable
       preferred stock                           413,052               -
      Proceeds from long-term borrowings         123,000         111,000
      Payments on long-term debt and capital
       lease obligations                        (320,866)        (68,952)
      Other financing activities                       -               -
    ----------------------------------------         ---             ---
    Net cash provided by financing
     activities                                  205,805          10,270
    ------------------------------               -------          ------
    Effect of exchange rate changes on cash
     and cash equivalents                         (3,380)         (1,467)
    ---------------------------------------       ------          ------
    Net change in cash and cash equivalents      331,630          58,393
    Cash and cash equivalents at beginning
     of period                                    30,534               -
    --------------------------------------        ------             ---
    Cash and cash equivalents at end of
     period                                     $362,164         $58,393
    -----------------------------------         --------         -------

    --------------------------------------
    Supplemental disclosure of cash flow
     information:
      Interest paid                              $32,214         $22,556
      Federal and state income taxes paid        $16,413         $61,459
    Non-cash transactions:
      Conversion of convertible debentures
       into common stock                              $-            $154
      ------------------------------------           ---            ----




    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"), Earnings before interest, taxes
    and non-cash expenses ("EBITANCE"),  Earnings before interest, taxes,
    depreciation and amortization ("EBITDA"), and Free Cash Flow 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. Management believes EBITANCE is a
    useful non-GAAP measure of financial performance, helping investors more
    meaningfully evaluate the Company's cash flow results by adjusting for
    certain non-cash expenses.  These expenses include depreciation,
    amortization, fixed asset impairment charges, non-cash share-based
    payments expense, deferred rent, and LIFO charge. Similar to EBITDA, this
    measure goes further by including other non-cash expenses, primarily those
    which have arisen since the use of EBITDA became common practice and
    because of accounting changes due to recent accounting pronouncements.
    Management uses EBITANCE as a supplement to cash flows from operations to
    assess the cash generated from our business available for capital
    expenditures and the servicing of other requirements including working
    capital. The Company defines Free Cash Flow as net cash provided by
    operating activities less capital expenditures. 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.



                               Twelve weeks ended     Twenty-eight weeks ended
                               April 12,  April 13,    April 12,     April 13,
    EVA                           2009       2008         2009          2008
    ---                        ---------  ---------    ---------     ---------
    Net income                   $35,258    $39,960     $67,587       $79,103
    Provision for income
     taxes                        26,060     27,769      48,995        54,413
    Interest expense and
     other                        11,346     12,813      30,475        29,838
    --------------------          ------     ------      ------        ------
        NOPBT                     72,664     80,542     147,057       163,354
    Income taxes (40%)            29,066     32,217      58,823        65,342
    ------------------            ------     ------      ------        ------
        NOPAT                     43,598     48,325      88,234        98,012
    Capital charge                61,840     52,888     138,844       121,701
    --------------                ------     ------     -------       -------
        EVA                     $(18,242)   $(4,563)   $(50,610)     $(23,689)
        ---                     --------    -------    --------      --------


    The following is a tabular presentation of the non-GAAP financial
    measures, EBITDA and EBITANCE including a reconciliation to GAAP net
    income, which the Company believes to be the most directly comparable GAAP
    financial measure.


                               Twelve weeks ended     Twenty-eight weeks ended
                               April 12,  April 13,    April 12,     April 13,
    EBITDA and EBITANCE          2009       2008         2009          2008
    -------------------        ---------  ---------    ---------     ---------
    Net income                  $35,258    $39,960      $67,587       $79,103
    Provision for income
     taxes                       26,060     27,769       48,995        54,413
    Interest expense, net         8,335      7,257       20,074        16,084
    ---------------------         -----      -----       ------        ------
        Operating income         69,653     74,986      136,656       149,600
    Depreciation and
     amortization                61,023     57,115      141,815       131,597
    ----------------             ------     ------      -------       -------
        Earnings before
         interest, taxes,
         depreciation &
         amortization
         (EBITDA)               130,676    132,101      278,471       281,197
    Impairment of fixed
     assets                      13,091         99       15,383            99
    -------------------          ------        ---       ------           ---
        Adjusted EBITDA         143,767    132,200      293,854       281,296
    Non-cash expenses:
        Share-based payments
         expense                  2,352      2,322        6,142         5,352
        LIFO charge                   -      2,700        3,600         5,332
        Deferred rent             8,659      6,295       19,534        19,055
        --------------            -----      -----       ------        ------
        Total other non-cash
         expenses                11,011     11,317       29,276        29,739
    ------------------------     ------     ------       ------        ------
    Earnings before
     interest,
     taxes, and non-cash
     expenses (EBITANCE)       $154,778   $143,517     $323,130      $311,035
    --------------------       --------   --------     --------      --------


    The following is a tabular reconciliation of the Free Cash Flow non-GAAP
    financial measure.

                               Twelve weeks ended     Twenty-eight weeks ended
                               April 12,  April 13,    April 12,     April 13,
    Free Cash Flow               2009       2008         2009          2008
    --------------             ---------  ---------    ---------     ---------
    Net cash provided by
     operating activities      $172,998    $85,137     $315,096      $161,277
    Development costs of
     new locations              (60,376)   (67,927)    (142,462)     (174,419)
    Other property and
     equipment expenditures     (14,548)   (36,887)     (42,757)      (95,937)
    ------------------          -------    -------      -------       -------
        Free cash flow          $98,074   $(19,677)    $129,877     $(109,079)
        --------------          -------   --------     --------     ---------


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SOURCE Whole Foods Market
Copyright©2009 PR Newswire.
All rights reserved


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