Luckily unloaded all May puts today
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Whole Foods Market Reports Second Quarter 2009 Results
* On Wednesday May 13, 2009, 4:03 pm EDT
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 - News) 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® 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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