June 15, 2017
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street NE
Washington, D.C. 20549-3561
Attention: Ms. Jennifer Thompson
Re: Whole Foods Market, Inc.
Form 10-K for the Fiscal Year Ended September 25, 2016
Filed November 18, 2016
File No. 0-19797
Dear Ms. Thompson:
Whole Foods Market, Inc. (the “Company” or “we”) received comments from the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) by letter dated June 8, 2017 with respect to the Company’s Form 10-K for the fiscal year ended September 25, 2016 filed on November 18, 2016 with the Commission (the “Form 10-K”). The following information is provided in response to the comments in your letter. To assist in your review, the Staff’s comments are highlighted in bold below and are followed by the Company’s responses.
Form 10-K for the Fiscal Year Ended September 25, 2016
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Non-GAAP Measures, page 21
1. | Since your presentation of free cash flow appears to be a liquidity measure, please disclose the three major categories of the statement of cash flows or tell us why you believe such disclosure is not required. Refer to Item 10(e)(1)(i) of Regulation S-K and Question 102.06 of the May 17, 2016 Non-GAAP Financial Measures C&DIs. |
In future filings, the Company will present the three major categories of the statement of cash flows when presenting free cash flow or other non-GAAP liquidity measures. Below we provide an example of how we will revise the disclosure in future filings, using the identified disclosure from the Form 10-K:
The Company defines free cash flow as net cash provided by operating activities less capital expenditures. The following is a presentation of cash flow information and a tabular reconciliation of the non-GAAP financial measure free cash flow for the fiscal years indicated (in millions):
2016 | 2015 | 2014 | |||||||||
Cash flow information: | |||||||||||
Net cash provided by operating activities | $ | 1,116 | $ | 1,129 | $ | 1,088 | |||||
Net cash used in investing activities | (895 | ) | (455 | ) | (484 | ) | |||||
Net cash used in financing activities | (113 | ) | (622 | ) | (698 | ) | |||||
Free cash flow: | |||||||||||
Net cash provided by operating activities | $ | 1,116 | $ | 1,129 | $ | 1,088 | |||||
Development cost of new locations | (395 | ) | (516 | ) | (447 | ) | |||||
Other property and equipment expenditures | (321 | ) | (335 | ) | (263 | ) | |||||
Free cash flow | $ | 400 | $ | 278 | $ | 378 |
Liquidity and Capital Resources and Changes in Financial Condition, page 23
2. | Please include your long-term debt obligation for your 5.2% senior notes due 2025 in the contractual obligations table at the bottom of page 25. Please also include estimated interest payments on your debt to increase the transparency of your cash flows. Refer to Item 303(a)(5) of Regulation S-K. |
In future filings, the Company will include its long-term debt obligation, including estimated interest obligations, for its 5.2% senior notes due in 2025 in the contractual obligations table. Below we provide an example of how we will revise the disclosure in future filings, using the identified disclosure from the Form 10-K:
The following table shows payments due by period on contractual obligations as of September 25, 2016 (in millions):
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Long-term debt obligations | $ | 993 | $ | — | $ | — | $ | — | $ | 993 | |||||||||
Estimated interest on long-term debt obligations | 494 | 52 | 104 | 104 | 234 | ||||||||||||||
Capital lease obligations (including interest) | 90 | 6 | 9 | 10 | 65 | ||||||||||||||
Operating lease obligations (1) | 9,134 | 433 | 1,079 | 1,137 | 6,485 | ||||||||||||||
Total | $ | 10,711 | $ | 491 | $ | 1,192 | $ | 1,251 | $ | 7,777 |
(1) Amounts exclude taxes, insurance and other related expense
Financial Statements
Notes to Consolidated Financial Statements
(17) Guarantor Financial Statement Information, page 56
3. | We note that your subsidiary guarantors are wholly owned domestic subsidiaries of the Company. If true, please confirm to us that the subsidiary guarantors are 100% owned and clarify this in future filings. Refer to Rule 3-10 of Regulation S-X. |
We confirm that the subsidiary guarantors are 100% owned by the Company and will clarify this in future filings.
Should you have any questions regarding the above responses, please contact me at (512) 542-0215 or Sam Ferguson, Vice President of Accounting-Controller at (512) 542-0249.
Sincerely,
/s/ Keith Manbeck |
Keith Manbeck |
Executive Vice President and |
Chief Financial Officer |