CASE 8-4 CERTIFIED ORGANIC
Whole Foods Market Inc. included these statements in its 2010 annual report.*
WHOLE FOODS MARKET INC.
Consolidated Balance Sheets
(in thousands)
September 26 2010 and September 27 2009
Assets 2010 2009
Current Assets:
Cash and cash equivalents $ 131996 $ 430130
Short-term investments %u2013 available-for-sale securities 329738 %u2014
Restricted cash 86802 71023
Accounts receivable 133346 104731
*%u201CWhole Foods Market is the world%u2019s leading natural and organic foods supermarket and America%u2019s first national
%u201CCertified Organic%u201D grocer.%u201D 10-K
Source: Whole Foods Market Inc. 2010 10-K
Assets 2010 2009
Merchandise inventories $ 323487 $ 310602
Prepaid expenses and other current assets 54686 51137
Deferred income taxes 101464 87757
Total current assets 1161519 1055380
**Property and equipment net of accumulated
depreciation and amortization 1886130 1897853
Long-term investments %u2013 available-for-sale securities 96146 %u2014
Goodwill 665224 658254
Intangible assets net of accumulated amortization 69064 73035
Deferred income taxes 99156 91000
Other assets 9301 7866
Total assets $3986540 $3783388
Liabilities and Shareholders Equity
Current Liabilities:
Current installments of long-term debt and capital
lease obligations $ 410 $ 389
Accounts payable 213212 189597
Accrued payroll bonus and other benefits due team
members 244427 207983
Dividends payable %u2014 8217
Other current liabilities 289823 277838
Total current liabilities 747872 684024
Long-term debt and capital lease obligations less
current installments 508288 738848
Deferred lease liabilities 294291 250326
Other long-term liabilities 62831 69262
Total liabilities 1613282 1742460
Series A redeemable preferred stock $0.10 par value
425 shares authorized; zero and 425 shares issued
and outstanding at 2010 and 2009 respectively %u2014 413052
Shareholders%u2019 equity:
Common stock no par value 300000 shares
authorized; 172033 and 140542 shares issued and
outstanding at 2010 and 2009 respectively 1773897 1283028
Accumulated other comprehensive income (loss) 791 (13367)
Retained earnings 598570 358215
Total shareholders%u2019 equity 2373258 1627876
Commitments and contingencies
Total liabilities and shareholders%u2019 equity $3986540 $3783388
**Property and equipment include construction in progress and equipment not yet in service (2010 %u2013 $120845;
2009 %u2013 $130068)
WHOLE FOODS MARKET INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
Fiscal years ended September 26 2010 September 27 2009 and September 28 2008
2010 2009 2008
Sales $9005794 $8031620 $7953912
Cost of goods sold and occupancy costs 5870393 5277310 5247207
Gross profit 3135401 2754310 2706705
Direct store expenses 2375716 2145809 2107940
General and administrative expenses 272449 243749 270428
Pre-opening expenses 38044 49218 55554
Relocation store closure and lease termination costs 11217 31185 36545
Operating income 437975 284349 236238
Interest expense (33048) (36856) (36416)
Investment and other income $ 6854 $ 3449 $ 6697
Income before income taxes 411781 250942 206519
Provision for income taxes 165948 104138 91995
Net income 245833 146804 114524
Preferred stock dividends 5478 28050 %u2014
Income available to common shareholders $ 240355 $ 118754 $ 114524
Basic earnings per share $ 1.45 $ 0.85 $ 0.82
Weighted average shares outstanding 166244 140414 139886
Diluted earnings per share $ 1.43 $ 0.85 $ 0.82
Weighted average shares outstanding diluted basis 171710 140414 140011
Dividends declared per common share $ %u2014 $ %u2014 $ 0.60
Required
a. Compute the following for 2010 and 2009:
1. Net profit margin
2. Total asset turnover (use year-end assets)
3. Return on assets (use year-end assets)
4. Operating income margin
5. Return on operating assets (use year-end assets)
6. Sales to fixed assets (use year-end fixed assets)
7. Return on investment (use year-end balance sheet accounts)
8. Return on total equity (use year-end equity)
9. Gross profit margin
b. Comment on the trends in (a).