NameYour nameClass(02290 for 8am, 02465 for 12:30pm, 02470 for 2pm)

5-Year SummarySource: WFM 10-K for the year ended Sept 28 2014, filed on Nov 21, 2014Item 6 (Page 20):Sept. 28, 2014Sept. 29, 2013Sept. 30, 2012Sept. 25, 2011Sept. 26, 2010Consolidated Statements of Operations Data (1)Sales$14,194$12,917$11,699$10,108$9,006Cost of goods sold and occupancy costs9,1508,2887,5436,5715,870Gross profit5,0444,6294,1563,5373,136Direct store expenses3,5863,2852,9832,6292,377General and administrative expenses446397372311272Pre-opening expenses6752474138Relocation, store closure and lease termination costs111210811Operating income934883744548438Interest expense0.00.00.0(4)(33)Investment and other income1211887Income before income taxes946894752552412Provision for income taxes367343286209166Net income579551466343246Preferred stock dividends0.00.00.00.06Income available to common shareholders$579$551$466$343$240

Basic earnings per share$1.57$1.48$1.28$0.98$0.72Weighted average shares outstanding367.8371.2364.8350.5332.5

Diluted earnings per share$1.56$1.47$1.26$0.97$0.72Weighted average shares outstanding, diluted basis370.5374.5368.9354.6343.4

Dividends declared per common share$0.48$1.40$0.28$0.200.0

Consolidated Balance Sheets DataNet working capital$499$892$1,126$574$414Total assets5,7445,5385,2944,2923,987Long-term debt (including current maturities)62272418509Shareholders equity3,8133,8783,8022,9912,373

Operating DataNumber of stores at end of fiscal year399362335311299Average store size (gross square footage)38,00038,00038,00038,00038,000Average weekly sales per store$722,000$711,000$682,000$636,000$588,000Comparable store sales increase (2)4.3%6.9%8.7%8.5%7.1%(1) Fiscal years 2014, 2013, 2011 and 2010 were 52-week years and fiscal year 2012 was a 53-week year.(2) Sales of a store are deemed to be comparable commencing in the fifty-third full week after the store was opened. Stores acquired in purchase acquisitions enter the comparable store base effective the fifty-third full week following the date of merger. Stores closed for eight or more days are excluded from the comparable store base from the first fiscal week of closure until re-opened for a full fiscal week. Comparable sales growth is calculated on a same-calendar-week to same-calendar-week basis.From page 520142013201220112010Stores at beginning of fiscal year362335311299284Stores opened3426251816Acquired stores460.00.02Relocated stores(1)(5)(1)(6)0.0Divested or closed stores0.00.00.00.0(3)Stores at end of fiscal year399362335311299Stores with major expansions (1)0.02210.0Total gross square footage at end of fiscal year15,162,00013,779,00012,735,00011,832,00011,231,000Year-over-year growth10%8%8%5%6%(1)Defined as square footage increases of greater than 20% completed during the fiscal year.

20142013201220112010Sales mix:Identical stores (1)93.3%93.5%93.3%94.6%93.2%New and acquired stores, including relocated stores6.2%5.6%5.4%4.5%5.9%Other retail sales, primarily stores with major expansions0.2%0.5%0.8%0.5%0.2%Other sales, primarily non-retail external sales0.3%0.4%0.5%0.4%0.7%Total sales100.0%100.0%100.0%100.0%100.0%(1) Identical store sales do not include sales from new, acquired or relocated stores or stores with major expansions.

Our historical store development pipeline as of the dates indicated is summarized below:November5,November6,November7,November2,November3,20142013201220112010Stores in development11494796252Average size (gross square feet)41,00038,00037,00035,00039,000Total gross square footage in development4,723,0003,605,0002,896,0002,192,0002,052,000As a percentage of existing square footage31%26%22%18%18%

OutlookFrom page 21 of 10-K:Targets for Fiscal Year 2015The Company is focusing on metrics it believes are key to the long-term health of the Company. The Companys annual targets for fiscal year 2015 are:

Sales growth over 9%; Comparable store sales growth in the low to middle single digits; Square footage growth of 9% to 10% based on 38 to 42 new stores, including five to six relocations; EBITDA margin of approximately 9%; and ROIC greater than 14%.

The Company expects to continue its value strategy and to make additional investments in areas such as technology, marketing, and new and existing stores. The Company believes this is the right strategy to drive sales growth over the longer term. Reflecting its ongoing value efforts, the Company expects a greater decline in gross margin, excluding LIFO, in fiscal year 2015 than in fiscal year 2014. The Company expects to maintain expense discipline and improve its cost structure, with the biggest savings coming from internal distribution, coordinated purchasing and labor leverage. Results may fluctuate on a quarterly basis, but for fiscal year 2015, the Company expects annual diluted earnings per share growth in line with or slightly higher than sales growth.

The Company expects store openings to be spread fairly evenly throughout the year, with the seven former Dominicks locations re-opening as Whole Foods Market stores in the last three quarters of the year. The Company also notes that Easter will fall in the second quarter of fiscal year 2015 versus the third quarter of fiscal year 2014, positively impacting comparable store sales growth in the second quarter and negatively impacting comparable store sales growth in the third quarter by an estimated 50 to 60 basis points.From page 25 of 10-K:The following table provides information about the Companys store growth and development activities:

Stores opened during fiscal year 2013Stores opened during fiscal year 2014Stores opened during fiscal year 2015 as of Nov. 5, 2014Total leases signed as of Nov. 5, 2014Number of stores (including relocations)32383114Number of relocations51114Percentage in new markets31%55%0%17%Average store size (gross square feet)36,00037,00046,00041,000Total square footage1,138,0001,408,000139,0004,723,000Average pre-opening expense per store$2 million$2 millionAverage pre-opening rent per store$1 million$1 million

We believe we will produce operating cash flows in excess of the capital expenditures needed to open the 114 stores in our current store development pipeline. As of November 5, 2014, the Company operated 401 stores totaling approximately 15.2 million square feet and expects to cross the 500-store mark in fiscal year 2017. Longer term, the Company sees demand for 1,200 Whole Foods Market stores in the United States. We have a disciplined, opportunistic real estate strategy, opening stores in existing trade areas as well as new areas, including international locations. Our growth strategy is to expand primarily through new store openings, and while we may continue to pursue acquisitions of smaller chains that provide access to desirable geographic areas and experienced team members, such acquisitions are not expected to significantly impact our future store growth or financial results.

BSWhole Foods Market, Inc.Consolidated Balance Sheets(In millions)

AssetsSeptember28,September29,20142013Current assets:Cash and cash equivalents$190$290Short-term investments - available-for-sale securities553733Restricted cash109111Accounts receivable198188Merchandise inventories441414Prepaid expenses and other current assets9793Deferred income taxes168151Total current assets1,7561,980Property and equipment, net of accumulated depreciation and amortization2,9232,428Long-term investments - available-for-sale securities120302Goodwill708679Intangible assets, net of accumulated amortization8165Deferred income taxes13272Other assets2412Total assets$5,744$5,538

Liabilities and Shareholders EquityCurrent liabilities:Current installments of capital lease obligations$2$1Accounts payable276247Accrued payroll, bonus and other benefits due team members379367Dividends payable4337Other current liabilities557436Total current liabilities1,2571,088Long-term capital lease obligations, less current installments6026Deferred lease liabilities548500Other long-term liabilities6646Total liabilities1,9311,660

Commitments and contingencies

Shareholders equity:Common stock, no par value, 600.0 shares authorized; 377.1 and 375.7 shares issued; 360.4 and 372.4 shares outstanding at 2014 and 2013, respectively2,8632,765Common stock in treasury, at cost, 16.7 and 3.3 shares at 2014 and 2013, respectively(711)(153)Accumulated other comprehensive income (loss)(7)1Retained earnings1,6681,265Total shareholders equity3,8133,878Total liabilities and shareholders equity$5,744$5,538

ISWhole Foods Market,Inc.Consolidated Statements of OperationsFiscal years endedSeptember28, 2014,September29, 2013andSeptember30, 2012(In millions, except per share amounts)Adjusted2014201320122012 ( 52/53)aSales$14,194$12,917$11,699$11,478.26Cost of goods sold and occupancy costs9,1508,2887,5437,401Gross profit5,0444,6294,1564,078Direct store expenses3,5863,2852,9832,927General and administrative expenses446397372365Pre-opening expenses67524746Relocation, store closure and lease termination costs11121010Operating income934883744730Investment and other income, net of interest expense121188Income before income taxes946894752738Provision for income taxes367343286281Net income$579$551$466$457

Basic earnings per share$1.57$1.48$1.28Weighted average shares outstanding367.8371.2364.8

Diluted earnings per share$1.56$1.47$1.26Weighted average shares outstanding, diluted basis370.5374.5368.9

Dividends declared per common share$0.48$1.40$0.28

a) Another way to adjust for the 53-week year is to deduct 1/13 of the Q4 income numbers. For example, see page 25 of WFM's 2013 10K.Whole Foods Market,Inc.Consolidated Statements of Comprehensive IncomeFiscal years endedSeptember28, 2014,September29, 2013andSeptember30, 2012(In millions)

201420132012Net income$579$551$466Other comprehensive income (loss), net of tax:Foreign currency translation adjustments(8)(4)5Other comprehensive income (loss), net of tax(8)(4)5Comprehensive income$571$547$471

SEWhole Foods Market,Inc.Consolidated Statements of Shareholders EquityFiscal years endedSeptember28, 2014,September29, 2013andSeptember30, 2012(In millions)

SharesCommonCommonAccumulatedRetainedTotaloutstandingstockstock inotherearningsshareholderstreasurycomprehensiveequityincome (loss)Balances at September 25, 2011357.8$2,1210.00.0$870$2,991Net income0.00.00.00.0466466Other comprehensive income, net of tax0.00.00.050.05Dividends ($0.28 per common share)0.00.00.00.0(103)(103)Issuance of common stock pursuant to team member stock plans13.83660.00.00.0366Purchase of treasury stock(0.7)0.0(28)0.00.0(28)Tax benefit related to exercise of team member stock options0.0630.00.00.063Share-based payment expense0.0420.00.00.042Balances at September 30, 2012370.92,592(28)51,2333,802Net income0.00.00.00.0551551Other comprehensive loss, net of tax0.00.00.0(4)0.0(4)Dividends ($1.40 per common share)0.00.00.00.0(519)(519)Issuance of common stock pursuant to team member stock plans4.1810.00.00.081Purchase of treasury stock(2.6)0.0(125)0.00.0(125)Tax benefit related to exercise of team member stock options0.0360.00.00.036Share-based payment expense0.0560.00.00.056Balances at September 29, 2013372.42,765(153)11,2653,878Net income0.00.00.00.0579579Other comprehensive loss, net of tax0.00.00.0(8)0.0(8)Dividends ($0.48 per common share)0.00.00.00.0(176)(176)Issuance of common stock pursuant to team member stock plans1.921200.00.041Purchase of treasury stock(13.9)0.0(578)0.00.0(578)Tax benefit related to exercise of team member stock options0.090.00.00.09Share-based payment expense0.0680.00.00.068Balances at September 28, 2014360.4$2,863$(711)$(7)$1,668$3,813

CFWhole Foods Market,Inc.Consolidated Statements of Cash Flows Fiscal years endedSeptember28, 2014,September29, 2013andSeptember30, 2012 (In millions)

201420132012

Cash flows from operating activitiesNet income$579$551$466Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization377339311Share-based payment expense685742LIFO expense1620.0Deferred income tax benefit(78)(51)(8)Excess tax benefit related to exercise of team member stock options(9)(37)(50)Accretion of premium/discount on marketable securities273116Deferred lease liabilities365177Other1291Net change in current assets and liabilities:Accounts receivable(14)9(30)Merchandise inventories(41)(42)(37)Prepaid expenses and other current assets(4)(17)(2)Accounts payable300.010Accrued payroll, bonus and other benefits due team members126025Other current liabilities545195Net change in other long-term liabilities23(4)4Net cash provided by operating activities1,0881,009920Cash flows from investing activitiesDevelopment costs of new locations(447)(339)(262)Other property and equipment expenditures(263)(198)(194)Purchase of intangible assets(20)(1)(2)Purchases of available-for-sale securities(720)(1,252)(3,009)Sales and maturities of available-for-sale securities1,0541,5342,138Decrease (increase) in restricted cash2(8)(11)Payment for purchase of acquired entities, net of cash acquired(73)(22)0.0Other investing activities(17)(3)(1)Net cash used in investing activities(484)(289)(1,341)Cash flows from financing activitiesCommon stock dividends paid(170)(508)(95)Issuance of common stock4281370Purchase of treasury stock(578)(125)(28)Excess tax benefit related to exercise of team member stock options93750Payments on capital lease obligations(1)(2)0.0Net cash provided by (used in) financing activities(698)(517)297Effect of exchange rate changes on cash and cash equivalents(6)(2)1Net change in cash and cash equivalents(100)201(123)Cash and cash equivalents at beginning of period29089212Cash and cash equivalents at end of period$190$290$89

Supplemental disclosure of cash flow information:Federal and state income taxes paid$429$378$202

SalesActualForecast2010201120122013201420152016201720182019Stores and square footageaBeginning stores284299311335362399437477517557+New stores18182532384340404040-Closures and relocations3615150.00.00.00.0=Ending stores299311335362399437477517557597

Net new stores15122427373840404040204204Sq. feet per store (1000s)44503839374242424242238238=New square footage6656019031,0441,3831,5961,6801,6801,6801,680255255+Beginning square footage10,56611,23111,83212,73513,77915,16216,75818,43820,11821,798=Ending square footage11,23111,83212,73513,77915,16216,75818,43820,11821,79823,478% Change5.4%7.6%8.2%10.0%10.5%10.0%9.1%8.4%7.7%

Sales - Bottom-upSales/square foot ($1000s)b$826$877$934$974$981$996$1,016$1,036$1,057$1,078% Change6.1%6.6%4.3%0.7%1.5%2.0%2.0%2.0%2.0%Avg. gross sq. footage (1000s)10,89911,53212,28413,25714,47115,96017,59819,27820,95822,638=Sales ($M)$9,006$10,108$11,478$12,917$14,194$15,890$17,871$19,969$22,143$24,396% Change12.2%13.6%12.5%9.9%11.9%12.5%11.7%10.9%10.2%Sales - Fiscal-year basisc$9,006$10,108$11,699$12,917$14,194$15,890$17,871$19,969$22,569$24,396

Food retail industry ($B, MarketLine)Canada$96.5$97.1$98.7$102.2$104.0$105.4$106.4$107.2$107.9UK174.8182.4182.1181.3178.3181.6188.5195.6203.3Canada and UK271.3279.5280.8283.5282.3287.0294.9302.8311.2US877.9925.8955.7984.01,008.51,100.71,161.51,231.01,301.2US, Canada and UK$1,149.2$1,205.3$1,236.5$1,267.5$1,290.8$1,387.7$1,456.4$1,533.8$1,612.4

WFM sales by region (From p. 1 of 10-K)US97.0%96.9%96.8%96.7%96.7%97.0%97.0%97.0%97.0%Canada and UK3.0%3.1%3.2%3.3%3.3%3.0%3.0%3.0%3.0%

US market share1.0%1.1%1.2%1.3%1.4%1.4%1.5%1.6%1.7%Canada and UK market share0.1%0.1%0.1%0.2%0.2%0.2%0.2%0.2%0.2%US, Canada and UK market share0.8%0.8%0.9%1.0%1.1%1.1%1.2%1.3%1.4%

ForecastsBottom-up$15,890$17,871$19,969$22,569Morgan Stanley (11/6/2014)$15,860$17,738$19,922$22,435Wedbush (11/6/2014)$15,761Yahoo! Finance (12/17/2014)Average estimate$15,700$17,470Low estimate$15,520$17,060High estimate$15,920$18,390

Notes:a)Historical data from page 5 of 10-K; 2010 beginning square footage from page 5 of 2013 10-K

New and closed stores2015: Outlook mentions 38 - 42 new stores, including 5 - 6 relocations2017: Conference call and p. 25 of 10K mention expect to pass 500 stores in Fiscal 2017Conference call and p. 25 of 10K - Long term 1,200 storesSquare footage for new stores2015: Conference call mentions 20,000 to 60,000 sq. ft., p. 25 shows between 41 and 46K sq. ft.

Conference call for 2014Q4 mentions only one non-US store - Ottawab)Growth rate based on 2014Q3 survey of professional forecasters showing about 2% forecastfor inflation of personal consumer expenditures. Uses headline rate because it is available atlonger horizons and because the core PCE excludes food expenditures, which omits WFM'sprimary product.c)2012 and 2018 are 53-week years

LeasesFrom Note 8Minimum rental commitments and sublease rental income required by all noncancelable leases are approximately as follows (in millions):

CapitalOperatingSubleaseFiscal year 2015$5$401$8Fiscal year 201654588Fiscal year 201754817Fiscal year 201854916Fiscal year 201954935Future fiscal years725,9481097$8,272$44Less amounts representing interest35Net present value of capital lease obligations$62

ComputationsCapitalYears listed5Years for 'thereafter'15Total years20

Rate4.7%

Rollforward schedule - Capital leases20152016201720182019Beginning balance$62$60$58$56$53Interest (Rate Beginning balance)33333Payment55555Ending balance (PV of remaining payments)$60$58$56$53$51Check0.0PV of 'Thereafter' payments

Forecasts(Historical financial statements downloaded from Mergent)NOTES:Income statementsAs Reported Annual Income Statement Forecast2010201120122013201420152016201720182019Sales (See 'Sales')$9,006$10,108$11,699$12,917$14,194$15,890$17,871$19,969$22,569$24,396% Growtha12.2%13.6%12.5%9.9%11.9%12.5%11.7%10.9%10.2%Cost of goods sold & occupancy costs (Excl. Stock-based comp)5,8706,5707,5418,2869,14810,32811,61612,98014,67015,858% Sales65.2%65.0%64.5%64.1%64.4%65.0%65.0%65.0%65.0%65.0%Conference call verifies 35-35% margin (Charles Grom); call mentions ex-LIFO, but LIFO expense is tinyGross profit3,1363,5384,1584,6315,0465,5616,2556,9897,8998,539% Sales34.8%35.0%35.5%35.9%35.6%35.0%35.0%35.0%35.0%35.0%Direct store expenses (Excl. Stock-based comp and Depr.)2,0912,3282,6502,9143,1753,4963,9324,3934,9655,367% Sales23.2%23.0%22.7%22.6%22.4%22.0%22.0%22.0%22.0%22.0%Based on historicalGeneral & administrative expenses (Excl. Stock-based comp)260299354374414477536599677732% Sales2.9%3.0%3.0%2.9%2.9%3.0%3.0%3.0%3.0%3.0%Pre-opening expenses38414752678680808080Per new store (See 'Sales' for new stores)2.12.31.91.61.82.02.02.02.02.0Based on historical, per-storeStock-based compensation (See Note 12)23274257687989100113122% Sales0.3%0.3%0.4%0.4%0.5%0.5%0.5%0.5%0.5%0.5%Based on historical % salesDepreciation and amortization of PP&E (See below)275287311339377430479524571621% Sales3.1%2.8%2.7%2.6%2.7%2.7%2.7%2.6%2.5%2.5%Relocation, store closure & lease termination cost118101211500.00.00.00.0Per closed store (See 'Sales' for closed stores)3.71.310.02.411.010.010.010.010.010.0Based on historical, per-storePretax operating income4385487448839349441,1391,2931,4931,616% Sales4.9%5.4%6.4%6.8%6.6%5.9%6.4%6.5%6.6%6.6%Imputed tax on operating income176207283339362368444504582630% Pretax income40.3%37.9%38.0%38.4%38.8%39.0%39.0%39.0%39.0%39.0%Based on historicalNOPAT262341461544572576695789910986

Investment & other income7881112% Beginning cash and investments1.4%1.2%0.8%0.9%Imputed tax on interest income33345% Pretax income40.3%37.9%38.0%38.4%38.8%After tax interest income45577

Interest expense (See Item 6 for historical)3340.00.00.0Imputed tax on interest expense1320.00.00.0% Pretax income40.3%37.9%0.0%0.0%0.0%After tax interest expense2020.00.00.0Preferred stock dividends60.00.00.00.0After tax interest expense and preferred dividends2620.00.00.0

Income before income taxes412552752894946Provision for income taxes166209286343367% Pretax income40.3%37.9%38.0%38.4%38.8%Net income (loss)246343466551579Preferred stock dividends60.00.00.00.0Income available to common shareholders$240$343$466$551$579

NOPAT$262$341$461$544$572After tax interest income45577After tax interest expense and preferred dividends2620.00.00.0Income available to common shareholders$240$343$466$551$579Check0.00.00.00.00.0

Pretax operating income$438$548$744$883$934$944$1,139$1,293$1,493$1,616Depreciation and amortization of PP&E275287311339377430479524571621EBITDA$713$835$1,055$1,222$1,311$1,374$1,618$1,817$2,064$2,238EBIT/Sales7.9%8.3%9.0%9.5%9.2%8.6%9.1%9.1%9.1%9.2%

a) The sales growth numbers adjust the 53-week years 2012 and 2018 to a 52-week basis

As Reported Annual Income Statement Forecast201020112012a201320142015201620172018b2019Supplemental expense informationOperating expenses$8,568$9,560$10,955$12,034$13,260$14,946$16,732$18,676$21,076$22,780% Sales95.1%94.6%93.6%93.2%93.4%94.1%93.6%93.5%93.4%93.4%

Depreciation and amortization of PP&E (Note 5)$265$274$297$324$360$424$474$519$566$616% Prior year net PP&E14.5%14.9%14.8%14.8%14.5%14.5%14.5%14.5%14.5%Based on historicalAmortization of intangibles (See Note 6)6765565555Other (to reconcile to historical cash flow statements)46810120.00.00.00.00.0Total depreciation and amortization$275$287$311$339$377$430$479$524$571$621

Development costs of new locations (See Cash from investing)$171$203$262$339$447$531$519$545$572$601Costs per new store (See 'Sales' for new stores)10111011121213141415Historical with 5% annual increaseOther property & equipment expenditures (See Cash from investing)6785162195198238268300339366% Sales0.7%0.8%1.4%1.5%1.4%1.5%1.5%1.5%1.5%1.5%Based on historicalTotal capital expenditures$238$288$424$534$645$769$787$844$910$966

Gross stock-compensation expense$23$27$42$57$68$79$89$100$113$122% Sales0.3%0.3%0.4%0.4%0.5%0.5%0.5%0.5%0.5%0.5%Tax benefit (Note 12)9101622263135394448% Stock-compensation expense39.1%37.0%38.1%38.6%38.2%39.0%39.0%39.0%39.0%39.0%Based on historicalNet stock compensation expense$14$17$26$35$42$48$55$61$69$74

Regular common dividends declared0.0$70$103$148$176% Prior year net income29.2%30.0%31.8%31.9%Special dividend (See page 22)0.00.00.03710.0Total common dividends0.0$70$103$519$176

Share repurchases0.00.0$28$125$578

Balance sheetsAs Reported Annual Balance Sheet Forecast09/26/201009/25/201109/30/201209/29/20139/28/149/27/159/25/169/24/179/30/189/29/19Net operating assetsOperating cash0.00.00.00.00.00.00.00.00.00.0% Sales0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%Restricted cash (related to workers' compensation per Note 2)8792103111109120134149169182% Operating expenses1.0%1.0%0.9%0.9%0.8%0.8%0.8%0.8%0.8%0.8%Accounts receivable133175197188198218245274309334Days' sales outstanding5.46.36.15.35.15.05.05.05.05.0Merchandise inventories323337374414441495557622703760Days' inventory on hand20.118.718.118.217.617.517.517.517.517.5Prepaid expenses & other current assets5574779397105117131148159% Operating expenses0.6%0.8%0.7%0.8%0.7%0.7%0.7%0.7%0.7%0.7%Total operating current assets (Excluding current DTA)5986787518068459371,0531,1761,3291,436Property & equipment, net (See above for Capex and Depreciation)1,8871,9972,1932,4282,9233,2693,5813,9064,2504,601% Sales21.0%19.8%18.7%18.8%20.6%20.6%20.0%19.6%18.8%18.9%Goodwill 665663663679708708708708708708Intangible assets, net of accumulated amortization (See above)69676265817570656055Deferred income taxes (Current + Long-term)200171175223300270304339384415% Sales2.2%1.7%1.5%1.7%2.1%1.7%1.7%1.7%1.7%1.7%Other assets99912241618202324% Sales0.1%0.1%0.1%0.1%0.2%0.1%0.1%0.1%0.1%0.1%Operating assets3,4283,5853,8534,2134,8815,2755,7346,2156,7537,239Accounts payable213237247247276313352393445480Days' purchases outstanding13.111.910.811.011.011.011.011.011.0Accrued payroll, bonus & other benefits due team members244282307367379448502560632683% Operating expenses2.8%2.9%2.8%3.0%2.9%3.0%3.0%3.0%3.0%3.0%Other current liabilities291342396436557598669747843911% Operating expenses3.4%3.6%3.6%3.6%4.2%4.0%4.0%4.0%4.0%4.0%Total current operating liabilities7488619501,0501,2121,3591,5231,7001,9202,074Deferred lease liabilities294355441500548612668724780836Per store (See 'Sales' ending stores)1.01.11.31.41.41.41.401.401.401.40Other liabilities63505146666060606060Operating liabilities1,1051,2661,4421,5961,8262,0312,2512,4842,7602,970Net operating assets$2,323$2,319$2,411$2,617$3,055$3,244$3,483$3,731$3,994$4,269

Net financingCash & cash equivalents$132$212$89$290$190Operating cash0.00.00.00.00.0Dividends payable0.0(18)(26)(37)(43)Excess cash13219463253147Short-term investments - available-for-sale securities3314421,131733553Long-term investments - available-for-sale securities9653221302120Net excess cash and investments5596891,4151,288820

Debt & capital leases, incl. current (See 'Leases' tab)50817242762Net debt(51)(672)(1,391)(1,261)(758)

Common stock1,7742,1212,5932,7652,863Common stock in treasury, at cost0.00.0(29)(153)(711)Accumulated other comprehensive income (loss)10.051(7)Retained earnings (accumulated deficit)5998701,2331,2651,668Total common shareholders' equity2,3742,9913,8023,8783,813Net financing$2,323$2,319$2,411$2,617$3,055Check0.00.00.00.00.0

Total assets$3,987$4,292$5,294$5,538$5,744Total liabilities$1,613$1,301$1,492$1,660$1,931Total equity2,3742,9913,8023,8783,813Total liabilities and equity$3,987$4,292$5,294$5,538$5,744Check0.00.00.00.00.0

Outstanding shares (from Balance sheets)172.0178.9185.4372.4360.4Price at year-end (from Yahoo! Finance)$37.53$71.57$97.49$58.50$37.56Market value$6,455$12,804$18,075$21,785$13,537

Debt-to-Book equity0.2140.0060.0060.0070.016Debt-to-Market equity0.0790.0010.0010.0010.005

Excess cash and investments-to-Book equity0.240.230.370.330.22Excess cash and investments-to-Market equity0.090.050.080.060.06

Cash flow statementsAs Reported Annual Cash Flow 201020112012a20132014Net income (loss)$246$343$466$551$579Depreciation & amortization275287311339377Loss (gain) on disposition of fixed assets0.0220.00.0Impairment of long-lived assets210.00.00.0Share-based payment expense2327425768LIFO expense (benefit)(7)100.0216Deferred income tax expense (benefit)(34)20(8)(51)(78)Excess tax benefit related to exercise of team member stock options(3)(23)(50)(37)(9)Accretion of premium/discount on marketable securities0.00.0163127Deferred lease liabilities4053775136Other net income adjustments(2)6(1)912Net change in current assets and liabilities:Accounts receivable(28)(35)(30)9(14)Merchandise inventories(3)(23)(37)(42)(41)Prepaid expenses & other current assets(2)(19)(2)(17)(4)Accounts payable2324100.030Accrued payroll, bonus & other benefits due team member3637256012Other current liabilities2054955154Other long-term assets0.00.00.00.00.0Other long-term liabilities(1)(9)4(4)23Net cash flows from operating activities5857559201,0091,088

Development costs of new locations(171)(203)(262)(339)(447)Other property & equipment expenditures(85)(162)(194)(198)(263)Purchase of intangible assets(2)(5)(2)(1)(20)Purchase of available-for-sale securities(1,072)(1,229)(3,009)(1,252)(720)Sale of available-for-sale securities0.00.00.00.00.0Sales & maturities of available-for-sale securities6461,1562,1381,5341,054Decrease (increase) in restricted cash(16)(5)(11)(8)2Payment for purchase of acquired entities, net of cash acquired(14)(2)0.0(22)(73)Other investing activities(1)(1)(1)(3)(17)Net cash flows from investing activities(715)(451)(1,341)(289)(484)

Common stock dividends paid0.0(52)(95)(508)(170)Preferred stock dividends paid(9)0.00.00.00.0Issuance of common stock472973708142Purchase of treasury stock0.00.0(28)(125)(578)Excess tax benefit related to exercise of team member stock options32350379Proceeds from issuance of redeemable preferred stock, net0.00.00.00.00.0Proceeds from long-term borrowings0.00.00.00.00.0Payments on long-term debt & capital lease obligations(210)(491)0.0(2)(1)Other financing activities0.00.00.00.00.0Net cash flows from financing activities(169)(223)297(517)(698)Effect of exchange rate changes on cash & cash equivalents1(1)1(2)(6)Net change in cash & cash equivalents(298)80(123)201(100)Cash & cash equivalents at beginning of year43013221289290Cash & cash equivalents at end of year$132$212$89$290$190Check0.00.00.00.00.0

ShortcutsSummary statisticsAs Reported Annual Income Statement Forecast201020112012201320142015201620172018b2019Sales$9,006$10,108$11,699$12,917$14,194$15,890$17,871$19,969$22,569$24,396Operating expenses8,5689,56010,95512,03413,26014,94616,73218,67621,07622,780Pretax operating income4385487448839349441,1391,2931,4931,616Imputed tax on operating income176207283339362368444504582630NOPAT262341461544572$576$695$789$910$986After tax interest income45577After tax interest expense and preferred dividends2620.00.00.0Income available to common shareholders$240$343$466$551$579Check0.00.00.00.00.0

Total assets$3,987$4,292$5,294$5,538$5,744

Net excess cash and investments$559$689$1,415$1,288$820Debt & capital leases, incl. current (See 'Leases' tab)50817242762Net debt(51)(672)(1,391)(1,261)(758)Total common shareholders' equity2,3742,9913,8023,8783,813Net financing = Net operating assets$2,323$2,319$2,411$2,617$3,055$3,244$3,483$3,731$3,994$4,269Check0.00.00.00.00.0

NOPAT profit margin (NOPAT/Sales)3.4%3.9%4.2%4.0%3.6%3.9%3.9%4.0%4.0%NOA turnover (Sales/Avg. NOA)4.364.955.145.005.055.315.545.845.91=RNOA14.7%19.5%21.6%20.2%18.3%20.7%21.9%23.6%23.9%

RNOA14.7%19.5%21.6%20.2%-Borrowing rate (Int. and pref'd/Avg. Outside financing)0.9%0.0%0.0%0.0%=Spread13.7%19.5%21.6%20.2%Leverage (Avg. Outside/Avg. Equity)0.100.010.010.01=Impact of outside financing on ROE1.3%0.1%0.1%0.2%

Rate of return on cash and investments0.8%0.5%0.5%0.7%-RNOA14.7%19.5%21.6%20.2%=Spread-13.9%-19.0%-21.1%-19.5%Investments (Avg. Investments/Avg. Equity)0.230.310.350.27=Impact of investments on ROE-3.2%-5.9%-7.4%-5.3%

RNOA14.7%19.5%21.6%20.2%Impact of outside financing on ROE1.3%0.1%0.1%0.2%Impact of investments on ROE-3.2%-5.9%-7.4%-5.3%ROE12.8%13.7%14.3%15.1%Check0.00.00.00.0

ROA profit margin (NOPAT+Investment income/Sales)3.4%4.0%4.3%4.1%Asset turnover (Sales/Avg. Assets)2.442.442.382.52=ROA8.3%9.7%10.2%10.3%Check0.00.00.00.0

Net Income$343$466$551$579Average NOA + Cash and investments2,9453,4173,8663,890=Return on invested capital (approx. WFM definition)11.6%13.6%14.3%14.9%

Shortcut - Forecast sales and summary ratiosAs Reported Annual Income Statement Forecast201020112012201320142015201620172018b2019Sales$10,108$11,699$12,917$14,194$15,890$17,871$19,969$22,569$24,396NOPAT margin3.4%3.9%4.2%4.0%4.0%4.0%4.0%4.0%4.0%NOA Turnover4.364.955.145.004.504.504.504.504.50

Sales$10,108$11,699$12,917$14,194$15,890$17,871$19,969$22,569$24,396NOPAT margin3.4%3.9%4.2%4.0%4.0%4.0%4.0%4.0%4.0%=NOPAT$341$461$544$572$636$715$799$903$976

Sales$10,108$11,699$12,917$14,194$15,890$17,871$19,969$22,569$24,396NOA Turnover4.364.955.145.004.504.504.504.504.50=Avg. NOA2,3212,3652,5142,8363,5313,9714,4375,0155,4212222222222-Beginning NOA2,3232,3192,4112,6173,0554,0073,9364,9395,091=Ending NOA$2,319$2,411$2,617$3,055$4,007$3,936$4,939$5,091$5,752

CostOfCapitalComparables' unlevered cost of capitalUsing Comparables from ThomsonONE - Under "Fundamentals" menu itemaUnless otherwise noted, data are from the respective companies' 10Ks.($ millions)Whole Foods (WFM)Kroger (KR)Safeway (SWY)Fresh Market (TFM)Sprouts (SFM)Fiscal year-endSeptemberJanuaryDecemberJanuaryDecemberClosest fiscal year endb9/28/142/1/1412/28/131/26/1412/29/13

Sales$14,194$98,375$36,139$1,512$2,438Depreciation and amortization(377)(1,703)(944)(55)(47)Other operating expenses(13,637)(93,947)(34,601)(1,373)(2,251)Pretax operating profit9342,72559483140Tax (based on ETR)(362)(897)(159)(30)(55)NOPAT5721,8284365385After-tax interest income (tax based on ETR)70.0110.00.0After-tax interest expense (tax based on ETR)0.0(297)(200)(2)(23)Earnings attributable to non-controlling interests0.0(12)(15)0.00.0Other (Discontinued operations and Debt extinguishment)0.00.03,2760.0(11)Net income attributable to common shareholders$579$1,519$3,508$51$51

Beginning balance sheet data:Debt and capital leases$27$8,879$5,574$44$3,910Noncontrolling interests0.0760.00.0Total outside financing278,8865,579443,910Cash and investments1,2881,193352967Net debt(1,261)7,6935,227353,843Common equity3,8784,2072,904198387Net financing = Net operating assets$2,617$11,900$8,131$233$4,229Market value of debt and capital leases$27$9,742$5,856$44$3,910

Ending balance sheet data:Debt and capital leases$62$11,310$4,193$51$431Noncontrolling interests0.011560.00.0Total outside financing6211,3214,24951431Cash and investments8201,3594,6471278Net debt(758)9,962(399)39353Common equity3,8135,3845,820256514Net financing = Net operating assets$3,055$15,346$5,421$295$867Market value of debt and capital leases$62$12,077$4,375$51$431

Interest expense0.0443273437Average market debt and capital leases4510,9105,115472,170Estimated interest rate for WACCc0.0%4.1%5.3%8.0%1.7%

Interest incomed120.0310.00.0Average cash and investments1,0541,2762,5001072Estimated interest rate1.1%0.0%1.2%0.0%0.0%

Price at year-end (From Yahoo! Finance)$37.56$36.10$32.50$35.06$38.03Shares outstandinge360.450823048148Market value of outstanding equityf13,53718,3397,4781,6925,614Ending noncontrolling interests0.011560.00.0Ending market value of debt and capital leases6212,0774,37551431Total firm value13,59930,42711,9081,7436,045Ending cash and investments8201,3594,6471278Value of operations12,77929,0687,2611,7315,967

Beta (From Yahoo! Finance)g1.031.220.911.001.20Market risk premium6.0%6.0%6.0%6.0%6.0%Excess return10-Year Treasury rate at year-end (from www.treasury.gov)2.50%2.67%3.02%2.78%2.99%Equity return8.68%9.99%8.48%8.78%10.19%

Unlevered cost of capitalhMarket value-weighted average of WFM and comparables8.9%

Debt-to-Value of operations0.5%41.5%60.2%2.9%7.2%Market value-weighted average of WFM and comparables29.9%

Debt-to-NOAMarket value-weighted average of WFM and comparables53.8%

Ratio comparisonsProfit margin (NOPAT/Sales)4.0%1.9%1.2%3.5%3.5%NOA Turnover (Sales/Average NOA)5.007.225.335.720.96RNOA20.2%13.4%6.4%20.1%3.4%

ROE (Net income/Average equity)15.1%31.7%80.4%22.4%11.4%

Market value of equity$13,537$18,339$7,478$1,692$5,614Net income5791,5193,5085151Price/Earnings ratio23.412.12.133.3109.4

Market value of equity$13,537$18,339$7,478$1,692$5,614Book value of equity3,8135,3845,820256514Market-to-book ratio3.63.41.36.610.9

Pretax operating profit$934$2,725$594$83$140Depreciation and amortization3771,7039445547EBITDA1,3114,4281,538138187Market value of firm13,59930,42711,9081,7436,045Value-to-EBITDA ratio10.46.97.712.632.3

a) Excluded Supervalu (SVU), Sysco (SYY), United Natural Foods (UNFI) because they are distributors. Amcon has a retail segment, but it represents a tiny fraction of tis overall sales. Also, UNFI is WFM's main supplier rather than a direct competitor. Royal Ahold has large portion of sales outside US, Canada, and UK. Costco has a large portion of non-grocery sales.

b) You can also use quarterly reports to adjust to a period that more closely overlaps with WFM's reporting period.

c) You can also use the discussion in MD&A to get weighted average interest rates (sometimes excludes capital leases).

d) For SWY, assuming that reported "Other income" is interest and investment income (e.g., MD&A attributes change in this item to interest income).

e) Where applicable (KR, SWY), computing Shares outstanding as Issued - Treasury shares.

f) Technically, the market value of equity claims should also include value of outstanding options and restricted stock since these are equity claims not reflected in the market value (See, e.g., Holthausen and Zmijewski 2012 Journal of Applied Corporate Finance).g) For SFM, used beta of 1.2 from 11/7/2014 Morgan Stanley report rather than the -11 beta from Yahoo! Finance since the -11 implies negative expected returns, which is unreasonable, and is likely based on a simple regression rather than a forward-looking beta.

For TFM, used beta of 1.0 from 11/20/2014 Morgan Stanley report rather than the 0.37 beta from Yahoo! Finance since the 0.37 seems unreasonableh) Use the formula from Class 13.

Valuation-WACCAssumptionsFrom 'Assumptions'Unlevered cost of capital8.87%Cost of debt4.75%Tax rate on interest39.00%Target leverage29.92%WACC (Nominal)8.32%Terminal growth rate (nominal)4.24%Terminal RONIC (nominal)10.00%Shares outstanding at 9/28/2014360.4

Residual income valuation2014201520162017201820192020 (T+1)Ending Net operating assets$3,055$3,244$3,483$3,731$3,994$4,269

NOPAT$576$695$789$910$986$1,028-Rate Beginning NOA254270290310332=Residual income322425499600654+Terminal value of firm0.00.00.00.013,271-Beginning NOA0.00.00.00.04,269=Total$322$425$499$600$9,656

Present value of future residual income$7,966+Net operating assets3,055=Total value of operations11,021+Value of excess cash and investments820-Value of debt62Value of total equity11,779Shares outstanding360.4=Value per share$32.68

Free Cash flow valuation2014201520162017201820192020 (T+1)NOPAT$576$695$789$910$986$1,028-Change in NOA189239248263275=Free cash flows387456541647711+Terminal value0.00.00.00.013,271=Total$387$456$541$647$13,982

Present value of future free cash flows$11,021Check vs. residual income

Reconcile to existing debtTarget leverage0.6%See NOTE below.WACC8.9%

2014201520162017201820192020 (T+1)Ending Net operating assets$3,055$3,244$3,483$3,731$3,994$4,269

NOPAT$576$695$789$910$986$1,028-Rate Beginning shareholders equity270288309331354=Residual income306407480579632+Terminal value of firm0.00.00.00.012,118-Beginning NOA0.00.00.00.04,269=Total$306$407$480$579$8,481

Present value of future residual income$6,959+Net operating assets3,055=Total value of operations10,014Target leverage0.6%=Implied debt62-Actual debt62Difference$0

Total value of operations10,014+Value of excess cash and investments820-Value of debt62=Value of total equity10,772Shares outstanding360.4Value per share$29.89

NOTE: Leave the target leverage of 0.6% untouched or make a copy of the spreadsheet when trying different numbrers. If you make the other computationscorrectly, the 0.6% rate is the target leverage ratio that will result in valuation that is consistent with the 9/28/2014 debt being at the target

Terminal value ofresidual incomeTerminal value ofresidual income

Valuation-APVAssumptionsFrom 'Assumptions'Unlevered cost of capital8.87%Cost of debt4.75%Tax rate on interest39.00%Terminal growth rate (nominal)4.24%Terminal RONIC (nominal)10.00%Shares outstanding at 9/28/2014360.4

Interest tax shields201420152016201720182019Ending Net operating assets$3,055$3,244$3,483$3,731$3,994$4,269

Beginning Net operating assets$3,055$3,244$3,483$3,731$3,994Leverage (Debt/Net operating assets)2.0%2.0%2.0%2.0%2.0%=Beginning debt6165707580Interest rate4.7%4.7%4.7%4.7%4.7%=Interest expense33344Tax rate39.0%39.0%39.0%39.0%39.0%=Interest tax shield11111+Terminal value0.00.00.00.035=Total$1$1$1$1$36

Present value of future interest tax shields$28

Residual income valuation2014201520162017201820192020 (T+1)Ending Net operating assets$3,055$3,244$3,483$3,731$3,994$4,269

NOPAT$576$695$789$910$986$1,028-Rate Beginning NOA270288309331354=Residual income306407480579632+Terminal value of firm0.00.00.00.012,096-Beginning NOA0.00.00.00.04,269=Total$306$407$480$579$8,459

Present value of future residual income$6,940+Net operating assets3,055=Total value of operations9,995+Value of interest tax shields28=Firm value including interest tax shields10,023+Value of excess cash and investments820=Total firm value10,843-Value of debt62=Value of total equity10,781Shares outstanding360.4=Value per share$29.91

Free Cash flow valuation2014201520162017201820192020 (T+1)NOPAT$576$695$789$910$986$1,028-Change in NOA189239248263275=Free cash flow387456541647711+Terminal value0.00.00.00.012,096=Total$387$456$541$647$12,807

Present value of future free cash flows$9,995Check vs. residual income

Terminal value ofresidual income

AssumptionsAssumptionsDiscount rates:Unlevered cost of capital - Operations (See 'CostOfCapital')8.87%Cost of debt (See 'Leases')4.75%Tax rate on interest39.00%Target leverage (See 'CostOfCapital')29.92%WACC (Nominal)8.32%

Terminal growth rate:Terminal growth rate (real)2.20%Inflation (Fed target)2.00%Terminal growth rate (nominal)4.24%

RONIC (RNOA on terminal period investments)10.00%

Current price and sharesShares outstanding at 9/28/2014360.4Price at 9/29/2014$37.56Market value$13,537Book value$3,813Book-to-Market3.55

AnalystFrom DCF (Exhibit 7)2013201420152016201720182019EBIT$883.0$950.0$1,046.8$1,206.3$1,404.6$1,637.8$1,844.4Less: Tax Effect342.6368.6406.2468.0545.0635.5715.6NOPAT540.4581.4640.6738.3859.61,002.31,128.8Less: Free cash flows403.4308.4269.2322.1402.1492.41,192.2Increase/(Decrease) in NOA$137.0$273.0$371.4$416.2$457.5$509.9$(63.4)

Computation of NOA (From Exhibit 5)201420152016201720182019Debt - Current$2.0$2.0$2.0$2.0$2.0Debt - Long-term60.060.060.060.060.0Dividends payable43.043.043.043.043.0Cash and cash equivalents(190.0)(220.9)(257.6)(300.0)(355.9)ST Investments(553.0)(553.0)(553.0)(553.0)(553.0)LT Investments(120.0)(120.0)(120.0)(120.0)(120.0)Net debt(758.0)(788.9)(825.6)(868.0)(923.9)Stockholders' equity3,813.04,215.34,668.25,168.25,734.1Net financing = NOA$3,055.0$3,426.4$3,842.6$4,300.2$4,810.2$4,746.82019 NOA implied by 2018 ending and -64.4 2019 change in NOA

Change in NOA from balance sheet$371.4$416.2$457.6$510.0Change in NOA computed from Exhibit 7371.4416.2457.5509.9Difference (Verify consistency with DCF)$(0.0)$0.0$0.1$0.1