x
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended July 2, 2017; or
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o
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________.
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Texas
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74-1989366
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(State of
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(IRS employer
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incorporation)
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identification no.)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Emerging growth company
o
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Page
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Assets
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July 2,
2017 |
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September 25,
2016 |
||||
Current assets:
|
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||||
Cash and cash equivalents
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$
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279
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$
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351
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Short-term investments - available-for-sale securities
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720
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379
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Restricted cash
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124
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122
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Accounts receivable
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246
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|
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242
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Merchandise inventories
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483
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|
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517
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Prepaid expenses and other current assets
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117
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167
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Deferred income taxes
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222
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197
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Total current assets
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2,191
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1,975
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Property and equipment, net of accumulated depreciation and amortization
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3,482
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3,442
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Long-term investments - available-for-sale securities
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24
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—
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Goodwill
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710
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710
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Intangible assets, net of accumulated amortization
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70
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74
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Deferred income taxes
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87
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100
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Other assets
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46
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40
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Total assets
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$
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6,610
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$
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6,341
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Liabilities and Shareholders’ Equity
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Current liabilities:
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Current installments of long-term debt and capital lease obligations
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$
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2
|
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$
|
3
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|
Accounts payable
|
305
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|
|
307
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Accrued payroll, bonus and other benefits due team members
|
391
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|
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407
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Dividends payable
|
58
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43
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Other current liabilities
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568
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581
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Total current liabilities
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1,324
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1,341
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Long-term debt and capital lease obligations, less current installments
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1,046
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1,048
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Deferred lease liabilities
|
678
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640
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Other long-term liabilities
|
104
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|
|
88
|
|
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Total liabilities
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3,152
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3,117
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Commitments and contingencies
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Shareholders’ equity:
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Common stock, no par value, 1,200 shares authorized; 376.8 and 377.0 shares issued; 320.1 and 318.3 shares outstanding at 2017 and 2016, respectively
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2,946
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2,933
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Common stock in treasury, at cost, 56.7 and 58.7 shares at 2017 and 2016, respectively
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(1,959
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)
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(2,026
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)
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Accumulated other comprehensive loss
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(30
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)
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(32
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)
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Retained earnings
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2,501
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2,349
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Total shareholders’ equity
|
3,458
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3,224
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Total liabilities and shareholders’ equity
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$
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6,610
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$
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6,341
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Twelve weeks ended
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Forty weeks ended
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||||||||||||
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July 2,
2017 |
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July 3,
2016 |
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July 2,
2017 |
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July 3,
2016 |
||||||||
Sales
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$
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3,725
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$
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3,703
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$
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12,381
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$
|
12,227
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Cost of goods sold and occupancy costs
|
2,457
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|
2,417
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8,189
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|
8,010
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||||
Gross profit
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1,268
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1,286
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4,192
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|
|
4,217
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Selling, general and administrative expenses
|
1,072
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1,057
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3,546
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|
|
3,458
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|
||||
Pre-opening expenses
|
13
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|
|
18
|
|
|
46
|
|
|
49
|
|
||||
Relocation, store closure and lease termination costs
|
3
|
|
|
2
|
|
|
77
|
|
|
8
|
|
||||
Operating income
|
180
|
|
|
209
|
|
|
523
|
|
|
702
|
|
||||
Interest expense
|
(11
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)
|
|
(12
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)
|
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(37
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)
|
|
(30
|
)
|
||||
Investment and other income (expense)
|
4
|
|
|
(1
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)
|
|
6
|
|
|
8
|
|
||||
Income before income taxes
|
173
|
|
|
196
|
|
|
492
|
|
|
680
|
|
||||
Provision for income taxes
|
67
|
|
|
76
|
|
|
192
|
|
|
261
|
|
||||
Net income
|
$
|
106
|
|
|
$
|
120
|
|
|
$
|
300
|
|
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$
|
419
|
|
|
|
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|
|
|
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||||||||
Basic earnings per share
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$
|
0.33
|
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$
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0.37
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$
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0.94
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$
|
1.27
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Weighted average shares outstanding
|
319.4
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320.6
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319.7
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328.4
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||||
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||||||||
Diluted earnings per share
|
$
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0.33
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$
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0.37
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$
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0.94
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$
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1.27
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Weighted average shares outstanding, diluted basis
|
320.3
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|
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321.2
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320.2
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329.3
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||||
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||||||||
Dividends declared per common share
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$
|
0.180
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$
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0.135
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$
|
0.460
|
|
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$
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0.405
|
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Twelve weeks ended
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Forty weeks ended
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||||||||||||
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July 2,
2017 |
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July 3,
2016 |
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July 2,
2017 |
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July 3,
2016 |
||||||||
Net income
|
$
|
106
|
|
|
$
|
120
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|
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$
|
300
|
|
|
$
|
419
|
|
Other comprehensive income (loss), net of tax:
|
|
|
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||||||||
Foreign currency translation adjustments
|
4
|
|
|
(1
|
)
|
|
2
|
|
|
(1
|
)
|
||||
Other comprehensive income (loss), net of tax
|
4
|
|
|
(1
|
)
|
|
2
|
|
|
(1
|
)
|
||||
Comprehensive income
|
$
|
110
|
|
|
$
|
119
|
|
|
$
|
302
|
|
|
$
|
418
|
|
|
Shares
outstanding
|
Common
stock
|
Common
stock in
treasury
|
Accumulated
other
comprehensive
income (loss)
|
Retained
earnings
|
Total
shareholders’
equity
|
|||||||||||
Balances at September 27, 2015
|
348.9
|
|
$
|
2,904
|
|
$
|
(1,124
|
)
|
$
|
(28
|
)
|
$
|
2,017
|
|
$
|
3,769
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
507
|
|
507
|
|
|||||
Other comprehensive loss, net of tax
|
—
|
|
—
|
|
—
|
|
(4
|
)
|
—
|
|
(4
|
)
|
|||||
Dividends ($0.54 per common share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(174
|
)
|
(174
|
)
|
|||||
Issuance of common stock pursuant to team member stock plans
|
1.1
|
|
(23
|
)
|
42
|
|
—
|
|
—
|
|
19
|
|
|||||
Purchase of treasury stock
|
(31.7
|
)
|
—
|
|
(944
|
)
|
—
|
|
—
|
|
(944
|
)
|
|||||
Tax benefit related to exercise of team member stock options
|
—
|
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
|
|||||
Share-based payment expense
|
—
|
|
49
|
|
—
|
|
—
|
|
—
|
|
49
|
|
|||||
Other
|
—
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
(1
|
)
|
|||||
Balances at September 25, 2016
|
318.3
|
|
2,933
|
|
(2,026
|
)
|
(32
|
)
|
2,349
|
|
3,224
|
|
|||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
300
|
|
300
|
|
|||||
Other comprehensive income, net of tax
|
—
|
|
—
|
|
—
|
|
2
|
|
—
|
|
2
|
|
|||||
Dividends ($0.46 per common share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(148
|
)
|
(148
|
)
|
|||||
Issuance of common stock pursuant to team member stock plans
|
1.8
|
|
(22
|
)
|
67
|
|
—
|
|
—
|
|
45
|
|
|||||
Tax benefit related to exercise of team member stock options
|
—
|
|
5
|
|
—
|
|
—
|
|
—
|
|
5
|
|
|||||
Share-based payment expense
|
—
|
|
30
|
|
—
|
|
—
|
|
—
|
|
30
|
|
|||||
Other
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Balances at July 2, 2017
|
320.1
|
|
$
|
2,946
|
|
$
|
(1,959
|
)
|
$
|
(30
|
)
|
$
|
2,501
|
|
$
|
3,458
|
|
|
Forty weeks ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
300
|
|
|
$
|
419
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
417
|
|
|
376
|
|
||
Share-based payment expense
|
30
|
|
|
39
|
|
||
LIFO expense
|
6
|
|
|
1
|
|
||
Deferred income tax (benefit) expense
|
(13
|
)
|
|
16
|
|
||
Excess tax benefit related to exercise of team member stock options
|
(5
|
)
|
|
(4
|
)
|
||
Accretion of premium/discount on marketable securities
|
1
|
|
|
1
|
|
||
Deferred lease liabilities
|
50
|
|
|
31
|
|
||
Other
|
10
|
|
|
7
|
|
||
Net change in current assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
(2
|
)
|
|
(100
|
)
|
||
Merchandise inventories
|
29
|
|
|
(25
|
)
|
||
Prepaid expenses and other current assets
|
53
|
|
|
(39
|
)
|
||
Accounts payable
|
(2
|
)
|
|
(2
|
)
|
||
Accrued payroll, bonus and other benefits due team members
|
(16
|
)
|
|
(27
|
)
|
||
Other current liabilities
|
28
|
|
|
57
|
|
||
Net change in other long-term liabilities
|
15
|
|
|
14
|
|
||
Net cash provided by operating activities
|
901
|
|
|
764
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Development costs of new locations
|
(291
|
)
|
|
(295
|
)
|
||
Other property and equipment expenditures
|
(217
|
)
|
|
(226
|
)
|
||
Purchases of available-for-sale securities
|
(767
|
)
|
|
(311
|
)
|
||
Sales and maturities of available-for-sale securities
|
401
|
|
|
375
|
|
||
Payment for purchase of acquired entities, net of cash acquired
|
—
|
|
|
(11
|
)
|
||
Other investing activities
|
(13
|
)
|
|
(12
|
)
|
||
Net cash used in investing activities
|
(887
|
)
|
|
(480
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Purchases of treasury stock
|
—
|
|
|
(929
|
)
|
||
Common stock dividends paid
|
(132
|
)
|
|
(133
|
)
|
||
Issuance of common stock
|
43
|
|
|
17
|
|
||
Excess tax benefit related to exercise of team member stock options
|
5
|
|
|
4
|
|
||
Proceeds from long-term borrowings
|
—
|
|
|
999
|
|
||
Proceeds from revolving line of credit
|
—
|
|
|
300
|
|
||
Payments on long-term debt and capital lease obligations
|
(3
|
)
|
|
(306
|
)
|
||
Other financing activities
|
(1
|
)
|
|
(9
|
)
|
||
Net cash used in financing activities
|
(88
|
)
|
|
(57
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
4
|
|
|
4
|
|
||
Net change in cash, cash equivalents, and restricted cash
|
(70
|
)
|
|
231
|
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
473
|
|
|
364
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
403
|
|
|
$
|
595
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Federal and state income taxes paid
|
$
|
181
|
|
|
$
|
357
|
|
Interest paid
|
$
|
53
|
|
|
$
|
27
|
|
|
Twelve weeks ended
|
Forty weeks ended
|
||||||||
|
July 2,
2017 |
|
July 3,
2016 |
July 2,
2017 |
|
July 3,
2016 |
||||
Sales:
|
|
|
|
|
|
|
||||
United States
|
97.0
|
%
|
|
96.9
|
%
|
97.1
|
%
|
|
97.1
|
%
|
Canada and United Kingdom
|
3.0
|
|
|
3.1
|
|
2.9
|
|
|
2.9
|
|
Total sales
|
100.0
|
%
|
|
100.0
|
%
|
100.0
|
%
|
|
100.0
|
%
|
|
July 2,
2017 |
|
September 25,
2016 |
||
Long-lived assets, net:
|
|
|
|
|
|
United States
|
97.4
|
%
|
|
97.5
|
%
|
Canada and United Kingdom
|
2.6
|
|
|
2.5
|
|
Total long-lived assets, net
|
100.0
|
%
|
|
100.0
|
%
|
Standard
|
Description
|
Effective Date
|
Effect on financial statements and other significant matters
|
ASU No. 2017-04
Simplifying the Test for Goodwill Impairment (Topic 350)
|
The amendments eliminate Step 2 from the goodwill impairment test. Instead, an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value should be recognized; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Income tax effects from any tax deductible goodwill on the carrying amount of the reporting
unit when measuring the goodwill impairment loss should also be considered, if applicable. The amendments should be applied on a prospective basis.
|
First quarter of fiscal year ending September 27, 2020
|
We are currently evaluating the impact that the adoption of these provisions will have on the Company’s consolidated financial statements.
|
Standard
|
Description
|
Effective Date
|
Effect on financial statements and other significant matters
|
ASU No. 2016-13
Measurement of Credit Losses on Financial Instruments(Topic 326)
|
The amendments guide on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. The amendments require a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. The amendments also require that credit losses on available-for-sale debt securities be presented as an allowance. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic.
|
First quarter of fiscal year ending September 29, 2021
|
We are currently evaluating the impact that the adoption of these provisions will have on the Company’s consolidated financial statements.
|
ASU No. 2016-09
Improvements to Employee Share-Based Payment Accounting (Topic 718)
|
The amendments aim to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, forfeitures, and certain classifications on the statement of cash flows. The amendments should be applied on either a prospective, retrospective, or modified-retrospective basis depending on the subtopic.
|
First quarter of fiscal year ending September 30, 2018
|
We are currently evaluating the impact that the adoption of these provisions will have on the Company’s consolidated financial statements.
|
ASU No. 2016-08
Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (Topic 606)
|
The amendments, which do not change the core principle of the guidance in Topic 606, clarify the implementation guidance on principal versus agent considerations, including how an entity should identify the unit of accounting (i.e., the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. The amendments may be applied on either a full or modified retrospective basis.
|
First quarter of fiscal year ending September 29, 2019
|
We are currently evaluating the impact that the adoption of these provisions will have on the Company’s consolidated financial statements.
|
ASU No. 2016-07
Simplifying the Transition to the Equity Method of Accounting (Topic 323)
|
The amendments eliminate the requirement to retroactively apply the equity method of accounting when an investment qualifies for the use of the equity method due to an increase in the level of ownership interest or degree of influence. The amendments should be applied on a prospective basis.
|
First quarter of fiscal year ending September 30, 2018
|
We do not expect the adoption of these provisions to have a significant impact on the Company’s consolidated financial statements.
|
ASU No. 2016-04
Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the Emerging Issues Task Force) (Subtopic 405-20)
|
The amendments require entities to recognize liabilities related to the sale of prepaid stored-value products redeemable for goods, services or cash as financial liabilities in the scope of ASC 405. Additionally, the new guidance amends ASC 405-20 to include a narrow scope exception requiring entities to recognize breakage for these liabilities in a way that is consistent with how gift card breakage will be recognized under the new revenue recognition standard. The amendments may be applied on either a full or modified retrospective basis.
|
First quarter of fiscal year ending September 29, 2019
|
We are currently evaluating the impact that the adoption of these provisions will have on the Company’s consolidated financial statements.
|
|
|
|
|
July 2, 2017
|
Level 1 Inputs
|
|
Level 2 Inputs
|
|
Level 3 Inputs
|
|
Total
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market fund
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Municipal bonds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Marketable securities - available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
—
|
|
|
45
|
|
|
—
|
|
|
45
|
|
||||
Municipal bonds
|
—
|
|
|
144
|
|
|
—
|
|
|
144
|
|
||||
Variable-rate demand notes
|
—
|
|
|
555
|
|
|
—
|
|
|
555
|
|
||||
Total
|
$
|
—
|
|
|
$
|
744
|
|
|
$
|
—
|
|
|
$
|
744
|
|
September 25, 2016
|
Level 1 Inputs
|
|
Level 2 Inputs
|
|
Level 3 Inputs
|
|
Total
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market fund
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
62
|
|
Commercial paper
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
||||
Municipal bonds
|
—
|
|
|
46
|
|
|
—
|
|
|
46
|
|
||||
Marketable securities - available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
||||
Municipal bonds
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
||||
Variable rate demand notes
|
—
|
|
|
323
|
|
|
—
|
|
|
323
|
|
||||
Total
|
$
|
62
|
|
|
$
|
455
|
|
|
$
|
—
|
|
|
$
|
517
|
|
|
July 2,
2017 |
|
September 25,
2016 |
||||
Short-term marketable securities - available-for-sale:
|
|
|
|
||||
Commercial paper
|
$
|
45
|
|
|
$
|
30
|
|
Municipal bonds
|
120
|
|
|
26
|
|
||
Variable rate demand notes
|
555
|
|
|
323
|
|
||
Total short-term marketable securities
|
$
|
720
|
|
|
$
|
379
|
|
Long-term marketable securities - available-for-sale:
|
|
|
|
||||
Municipal bonds
|
24
|
|
|
—
|
|
||
Total long-term marketable securities
|
$
|
24
|
|
|
$
|
—
|
|
|
July 2, 2017
|
|
September 25, 2016
|
||||||||||||
|
Gross carrying
amount
|
|
Accumulated
amortization
|
|
Gross carrying
amount
|
|
Accumulated
amortization
|
||||||||
Definite-lived contract-based
|
$
|
118
|
|
|
$
|
(57
|
)
|
|
$
|
120
|
|
|
$
|
(55
|
)
|
Indefinite-lived contract-based
|
9
|
|
|
|
|
9
|
|
|
|
||||||
Total
|
$
|
127
|
|
|
$
|
(57
|
)
|
|
$
|
129
|
|
|
$
|
(55
|
)
|
|
July 2,
2017 |
|
September 25,
2016 |
||||
Beginning balance
|
$
|
26
|
|
|
$
|
28
|
|
Additions
|
29
|
|
|
6
|
|
||
Usage
|
(12
|
)
|
|
(10
|
)
|
||
Adjustments
|
1
|
|
|
2
|
|
||
Ending balance
|
$
|
44
|
|
|
$
|
26
|
|
|
July 2,
2017 |
|
September 25,
2016 |
||||
5.2% senior notes due 2025
|
$
|
1,000
|
|
|
$
|
1,000
|
|
Less: unamortized discount and debt issuance costs related to senior notes
|
(7
|
)
|
|
(7
|
)
|
||
Carrying value of senior notes
|
993
|
|
|
993
|
|
||
Capital lease obligations
|
55
|
|
|
58
|
|
||
Total long-term debt and capital lease obligations
|
1,048
|
|
|
1,051
|
|
||
Less: current installments
|
(2
|
)
|
|
(3
|
)
|
||
Total long-term debt and capital lease obligations, less current installments
|
$
|
1,046
|
|
|
$
|
1,048
|
|
Date of declaration
|
Dividend per
common share
|
|
Date of record
|
|
Date of payment
|
|
Total amount
|
||||
Fiscal year 2017:
|
|
|
|
|
|
|
|
||||
November 2, 2016
|
$
|
0.14
|
|
|
January 13, 2017
|
|
January 24, 2017
|
|
$
|
45
|
|
February 17, 2017
|
0.14
|
|
|
April 7, 2017
|
|
April 18, 2017
|
|
45
|
|
||
May 10, 2017
(1)
|
0.18
|
|
|
June 30, 2017
|
|
July 11, 2017
|
|
58
|
|
||
Fiscal year 2016:
|
|
|
|
|
|
|
|
||||
November 4, 2015
|
$
|
0.135
|
|
|
January 15, 2016
|
|
January 26, 2016
|
|
$
|
44
|
|
March 9, 2016
|
0.135
|
|
|
April 8, 2016
|
|
April 19, 2016
|
|
44
|
|
||
June 7, 2016
|
0.135
|
|
|
July 1, 2016
|
|
July 12, 2016
|
|
43
|
|
||
September 22, 2016
|
0.135
|
|
|
October 3, 2016
|
|
October 14, 2016
|
|
43
|
|
|
Twelve weeks ended
|
|
Forty weeks ended
|
||||
|
July 3,
2016 |
|
July 3,
2016 |
||||
Number of common shares acquired
|
6.5
|
|
|
31.2
|
|
||
Average price per common share acquired
|
$
|
30.01
|
|
|
$
|
29.85
|
|
Total cost of common shares acquired
|
$
|
195
|
|
|
$
|
929
|
|
|
Twelve weeks ended
|
|
Forty weeks ended
|
||||||||||||
|
July 2,
2017 |
|
July 3,
2016 |
|
July 2,
2017 |
|
July 3,
2016 |
||||||||
Net income
(numerator for basic and diluted earnings per share)
|
$
|
106
|
|
|
$
|
120
|
|
|
$
|
300
|
|
|
$
|
419
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
(denominator for basic earnings per share)
|
319.4
|
|
|
320.6
|
|
|
319.7
|
|
|
328.4
|
|
||||
Incremental common shares attributable to dilutive effect of share-based awards
|
0.9
|
|
|
0.6
|
|
|
0.5
|
|
|
0.9
|
|
||||
Weighted average common shares outstanding and
potential additional common shares outstanding
(denominator for diluted earnings per share)
|
320.3
|
|
|
321.2
|
|
|
320.2
|
|
|
329.3
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
0.33
|
|
|
$
|
0.37
|
|
|
$
|
0.94
|
|
|
$
|
1.27
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share
|
$
|
0.33
|
|
|
$
|
0.37
|
|
|
$
|
0.94
|
|
|
$
|
1.27
|
|
|
July 2, 2017
|
||||||||||||||
Assets
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Current assets:
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
$
|
172
|
|
$
|
107
|
|
$
|
—
|
|
$
|
279
|
|
Short-term investments - available-for-sale securities
|
—
|
|
720
|
|
—
|
|
—
|
|
720
|
|
|||||
Restricted cash
|
—
|
|
118
|
|
6
|
|
—
|
|
124
|
|
|||||
Accounts receivable
|
—
|
|
223
|
|
23
|
|
—
|
|
246
|
|
|||||
Intercompany receivable
|
—
|
|
727
|
|
—
|
|
(727
|
)
|
—
|
|
|||||
Merchandise inventories
|
—
|
|
422
|
|
61
|
|
—
|
|
483
|
|
|||||
Prepaid expenses and other current assets
|
—
|
|
99
|
|
18
|
|
—
|
|
117
|
|
|||||
Deferred income taxes
|
—
|
|
222
|
|
—
|
|
—
|
|
222
|
|
|||||
Total current assets
|
—
|
|
2,703
|
|
215
|
|
(727
|
)
|
2,191
|
|
|||||
Property and equipment, net of accumulated depreciation and amortization
|
—
|
|
3,088
|
|
394
|
|
—
|
|
3,482
|
|
|||||
Long-term investments - available-for-sale securities
|
—
|
|
24
|
|
—
|
|
—
|
|
24
|
|
|||||
Investments in consolidated subsidiaries
|
4,916
|
|
109
|
|
480
|
|
(5,505
|
)
|
—
|
|
|||||
Goodwill
|
—
|
|
703
|
|
7
|
|
—
|
|
710
|
|
|||||
Intangible assets, net of accumulated amortization
|
1
|
|
60
|
|
9
|
|
—
|
|
70
|
|
|||||
Deferred income taxes
|
—
|
|
81
|
|
6
|
|
—
|
|
87
|
|
|||||
Other assets
|
—
|
|
13
|
|
33
|
|
—
|
|
46
|
|
|||||
Total assets
|
$
|
4,917
|
|
$
|
6,781
|
|
$
|
1,144
|
|
$
|
(6,232
|
)
|
$
|
6,610
|
|
|
|
|
|
|
|
||||||||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
||||||||||
Current installments of long-term debt and capital lease obligations
|
$
|
—
|
|
$
|
2
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2
|
|
Accounts payable
|
—
|
|
212
|
|
93
|
|
—
|
|
305
|
|
|||||
Intercompany payable
|
404
|
|
—
|
|
323
|
|
(727
|
)
|
—
|
|
|||||
Accrued payroll, bonus and other benefits due team members
|
—
|
|
365
|
|
26
|
|
—
|
|
391
|
|
|||||
Dividends payable
|
58
|
|
—
|
|
—
|
|
—
|
|
58
|
|
|||||
Other current liabilities
|
4
|
|
535
|
|
29
|
|
—
|
|
568
|
|
|||||
Total current liabilities
|
466
|
|
1,114
|
|
471
|
|
(727
|
)
|
1,324
|
|
|||||
Long-term debt and capital lease obligations, less current installments
|
993
|
|
46
|
|
7
|
|
—
|
|
1,046
|
|
|||||
Deferred lease liabilities
|
—
|
|
625
|
|
53
|
|
—
|
|
678
|
|
|||||
Other long-term liabilities
|
—
|
|
103
|
|
1
|
|
—
|
|
104
|
|
|||||
Total liabilities
|
1,459
|
|
1,888
|
|
532
|
|
(727
|
)
|
3,152
|
|
|||||
|
|
|
|
|
|
||||||||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
||||||||||
Total shareholders’ equity
|
3,458
|
|
4,893
|
|
612
|
|
(5,505
|
)
|
3,458
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
4,917
|
|
$
|
6,781
|
|
$
|
1,144
|
|
$
|
(6,232
|
)
|
$
|
6,610
|
|
|
September 25, 2016
|
||||||||||||||
Assets
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Current assets:
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
$
|
254
|
|
$
|
97
|
|
$
|
—
|
|
$
|
351
|
|
Short-term investments - available-for-sale securities
|
—
|
|
379
|
|
—
|
|
—
|
|
379
|
|
|||||
Restricted cash
|
—
|
|
114
|
|
8
|
|
—
|
|
122
|
|
|||||
Accounts receivable
|
—
|
|
216
|
|
26
|
|
—
|
|
242
|
|
|||||
Intercompany receivable
|
—
|
|
649
|
|
—
|
|
(649
|
)
|
—
|
|
|||||
Merchandise inventories
|
—
|
|
441
|
|
76
|
|
—
|
|
517
|
|
|||||
Prepaid expenses and other current assets
|
—
|
|
150
|
|
17
|
|
—
|
|
167
|
|
|||||
Deferred income taxes
|
—
|
|
197
|
|
—
|
|
—
|
|
197
|
|
|||||
Total current assets
|
—
|
|
2,400
|
|
224
|
|
(649
|
)
|
1,975
|
|
|||||
Property and equipment, net of accumulated depreciation and amortization
|
—
|
|
3,063
|
|
379
|
|
—
|
|
3,442
|
|
|||||
Investments in consolidated subsidiaries
|
4,593
|
|
103
|
|
472
|
|
(5,168
|
)
|
—
|
|
|||||
Goodwill
|
—
|
|
702
|
|
8
|
|
—
|
|
710
|
|
|||||
Intangible assets, net of accumulated amortization
|
1
|
|
63
|
|
10
|
|
—
|
|
74
|
|
|||||
Deferred income taxes
|
—
|
|
94
|
|
6
|
|
—
|
|
100
|
|
|||||
Other assets
|
—
|
|
16
|
|
24
|
|
—
|
|
40
|
|
|||||
Total assets
|
$
|
4,594
|
|
$
|
6,441
|
|
$
|
1,123
|
|
$
|
(5,817
|
)
|
$
|
6,341
|
|
|
|
|
|
|
|
||||||||||
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
||||||||||
Current installments of long-term debt and capital lease obligations
|
$
|
—
|
|
$
|
3
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3
|
|
Accounts payable
|
—
|
|
227
|
|
80
|
|
—
|
|
307
|
|
|||||
Intercompany payable
|
317
|
|
—
|
|
333
|
|
(650
|
)
|
—
|
|
|||||
Accrued payroll, bonus and other benefits due team members
|
—
|
|
381
|
|
26
|
|
—
|
|
407
|
|
|||||
Dividends payable
|
43
|
|
—
|
|
—
|
|
—
|
|
43
|
|
|||||
Other current liabilities
|
17
|
|
536
|
|
28
|
|
—
|
|
581
|
|
|||||
Total current liabilities
|
377
|
|
1,147
|
|
467
|
|
(650
|
)
|
1,341
|
|
|||||
Long-term debt and capital lease obligations, less current installments
|
993
|
|
48
|
|
7
|
|
—
|
|
1,048
|
|
|||||
Deferred lease liabilities
|
—
|
|
592
|
|
48
|
|
—
|
|
640
|
|
|||||
Other long-term liabilities
|
—
|
|
87
|
|
1
|
|
—
|
|
88
|
|
|||||
Total liabilities
|
1,370
|
|
1,874
|
|
523
|
|
(650
|
)
|
3,117
|
|
|||||
|
|
|
|
|
|
||||||||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
||||||||||
Total shareholders’ equity
|
3,224
|
|
4,567
|
|
600
|
|
(5,167
|
)
|
3,224
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
4,594
|
|
$
|
6,441
|
|
$
|
1,123
|
|
$
|
(5,817
|
)
|
$
|
6,341
|
|
|
Twelve weeks ended July 2, 2017
|
||||||||||||||
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Sales
|
$
|
—
|
|
$
|
3,551
|
|
$
|
217
|
|
$
|
(43
|
)
|
$
|
3,725
|
|
Cost of goods sold and occupancy costs
|
—
|
|
2,341
|
|
158
|
|
(42
|
)
|
2,457
|
|
|||||
Gross profit
|
—
|
|
1,210
|
|
59
|
|
(1
|
)
|
1,268
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
1,014
|
|
58
|
|
—
|
|
1,072
|
|
|||||
Pre-opening expenses
|
—
|
|
11
|
|
2
|
|
—
|
|
13
|
|
|||||
Relocation, store closure and lease termination costs
|
—
|
|
4
|
|
(1
|
)
|
—
|
|
3
|
|
|||||
Operating income
|
—
|
|
181
|
|
—
|
|
(1
|
)
|
180
|
|
|||||
Interest expense
|
(11
|
)
|
—
|
|
—
|
|
—
|
|
(11
|
)
|
|||||
Investment and other income (expense)
|
—
|
|
5
|
|
(1
|
)
|
—
|
|
4
|
|
|||||
Equity in net income of subsidiaries
|
113
|
|
3
|
|
4
|
|
(120
|
)
|
—
|
|
|||||
Income before income taxes
|
102
|
|
189
|
|
3
|
|
(121
|
)
|
173
|
|
|||||
Provision for income taxes
|
(4
|
)
|
72
|
|
(1
|
)
|
—
|
|
67
|
|
|||||
Net income
|
$
|
106
|
|
$
|
117
|
|
$
|
4
|
|
$
|
(121
|
)
|
$
|
106
|
|
|
Twelve weeks ended July 3, 2016
|
||||||||||||||
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Sales
|
$
|
—
|
|
$
|
3,511
|
|
$
|
229
|
|
$
|
(37
|
)
|
$
|
3,703
|
|
Cost of goods sold and occupancy costs
|
—
|
|
2,293
|
|
160
|
|
(36
|
)
|
2,417
|
|
|||||
Gross profit
|
—
|
|
1,218
|
|
69
|
|
(1
|
)
|
1,286
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
996
|
|
61
|
|
—
|
|
1,057
|
|
|||||
Pre-opening expenses
|
—
|
|
17
|
|
1
|
|
—
|
|
18
|
|
|||||
Relocation, store closure and lease termination costs
|
—
|
|
2
|
|
—
|
|
—
|
|
2
|
|
|||||
Operating income
|
—
|
|
203
|
|
7
|
|
(1
|
)
|
209
|
|
|||||
Interest expense
|
(12
|
)
|
—
|
|
—
|
|
—
|
|
(12
|
)
|
|||||
Investment and other income (expense)
|
—
|
|
(1
|
)
|
(1
|
)
|
1
|
|
(1
|
)
|
|||||
Equity in net income of subsidiaries
|
127
|
|
3
|
|
8
|
|
(138
|
)
|
—
|
|
|||||
Income before income taxes
|
115
|
|
205
|
|
14
|
|
(138
|
)
|
196
|
|
|||||
Provision for income taxes
|
(5
|
)
|
79
|
|
2
|
|
—
|
|
76
|
|
|||||
Net income
|
$
|
120
|
|
$
|
126
|
|
$
|
12
|
|
$
|
(138
|
)
|
$
|
120
|
|
|
Forty weeks ended July 2, 2017
|
||||||||||||||
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Sales
|
$
|
—
|
|
$
|
11,770
|
|
$
|
752
|
|
$
|
(141
|
)
|
$
|
12,381
|
|
Cost of goods sold and occupancy costs
|
—
|
|
7,783
|
|
544
|
|
(138
|
)
|
8,189
|
|
|||||
Gross profit
|
—
|
|
3,987
|
|
208
|
|
(3
|
)
|
4,192
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
3,352
|
|
194
|
|
—
|
|
3,546
|
|
|||||
Pre-opening expenses
|
—
|
|
41
|
|
5
|
|
—
|
|
46
|
|
|||||
Relocation, store closure and lease termination costs
|
—
|
|
77
|
|
—
|
|
—
|
|
77
|
|
|||||
Operating income
|
—
|
|
517
|
|
9
|
|
(3
|
)
|
523
|
|
|||||
Interest expense
|
(37
|
)
|
—
|
|
—
|
|
—
|
|
(37
|
)
|
|||||
Investment and other income (expense)
|
—
|
|
5
|
|
(3
|
)
|
4
|
|
6
|
|
|||||
Equity in net income of subsidiaries
|
323
|
|
6
|
|
8
|
|
(337
|
)
|
—
|
|
|||||
Income before income taxes
|
286
|
|
528
|
|
14
|
|
(336
|
)
|
492
|
|
|||||
Provision for income taxes
|
(14
|
)
|
204
|
|
2
|
|
—
|
|
192
|
|
|||||
Net income
|
$
|
300
|
|
$
|
324
|
|
$
|
12
|
|
$
|
(336
|
)
|
$
|
300
|
|
|
Forty weeks ended July 3, 2016
|
||||||||||||||
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Sales
|
$
|
—
|
|
$
|
11,606
|
|
$
|
741
|
|
$
|
(120
|
)
|
$
|
12,227
|
|
Cost of goods sold and occupancy costs
|
—
|
|
7,611
|
|
516
|
|
(117
|
)
|
8,010
|
|
|||||
Gross profit
|
—
|
|
3,995
|
|
225
|
|
(3
|
)
|
4,217
|
|
|||||
Selling, general and administrative expenses
|
—
|
|
3,262
|
|
196
|
|
—
|
|
3,458
|
|
|||||
Pre-opening expenses
|
—
|
|
44
|
|
5
|
|
—
|
|
49
|
|
|||||
Relocation, store closure and lease termination costs
|
—
|
|
8
|
|
—
|
|
—
|
|
8
|
|
|||||
Operating income
|
—
|
|
681
|
|
24
|
|
(3
|
)
|
702
|
|
|||||
Interest expense
|
(30
|
)
|
—
|
|
—
|
|
—
|
|
(30
|
)
|
|||||
Investment and other income (expense)
|
—
|
|
8
|
|
(4
|
)
|
4
|
|
8
|
|
|||||
Equity in net income of subsidiaries
|
437
|
|
8
|
|
23
|
|
(468
|
)
|
—
|
|
|||||
Income before income taxes
|
407
|
|
697
|
|
43
|
|
(467
|
)
|
680
|
|
|||||
Provision for income taxes
|
(12
|
)
|
265
|
|
8
|
|
—
|
|
261
|
|
|||||
Net income
|
$
|
419
|
|
$
|
432
|
|
$
|
35
|
|
$
|
(467
|
)
|
$
|
419
|
|
|
Twelve weeks ended July 2, 2017
|
||||||||||||||
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Net income
|
$
|
106
|
|
$
|
117
|
|
$
|
4
|
|
$
|
(121
|
)
|
$
|
106
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
—
|
|
4
|
|
—
|
|
—
|
|
4
|
|
|||||
Other comprehensive income (loss), net of tax
|
—
|
|
4
|
|
—
|
|
—
|
|
4
|
|
|||||
Comprehensive income
|
$
|
106
|
|
$
|
121
|
|
$
|
4
|
|
$
|
(121
|
)
|
$
|
110
|
|
|
Forty weeks ended July 2, 2017
|
||||||||||||||
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Net income
|
$
|
300
|
|
$
|
324
|
|
$
|
12
|
|
$
|
(336
|
)
|
$
|
300
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
—
|
|
2
|
|
—
|
|
—
|
|
2
|
|
|||||
Other comprehensive income (loss), net of tax
|
—
|
|
2
|
|
—
|
|
—
|
|
2
|
|
|||||
Comprehensive income
|
$
|
300
|
|
$
|
326
|
|
$
|
12
|
|
$
|
(336
|
)
|
$
|
302
|
|
|
Twelve weeks ended July 3, 2016
|
||||||||||||||
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Net income
|
$
|
120
|
|
$
|
126
|
|
$
|
12
|
|
$
|
(138
|
)
|
$
|
120
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
—
|
|
(4
|
)
|
3
|
|
—
|
|
(1
|
)
|
|||||
Other comprehensive income (loss), net of tax
|
—
|
|
(4
|
)
|
3
|
|
—
|
|
(1
|
)
|
|||||
Comprehensive income
|
$
|
120
|
|
$
|
122
|
|
$
|
15
|
|
$
|
(138
|
)
|
$
|
119
|
|
|
Forty weeks ended July 3, 2016
|
||||||||||||||
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Net income
|
$
|
419
|
|
$
|
432
|
|
$
|
35
|
|
$
|
(467
|
)
|
$
|
419
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
—
|
|
(10
|
)
|
9
|
|
—
|
|
(1
|
)
|
|||||
Other comprehensive income (loss), net of tax
|
—
|
|
(10
|
)
|
9
|
|
—
|
|
(1
|
)
|
|||||
Comprehensive income
|
$
|
419
|
|
$
|
422
|
|
$
|
44
|
|
$
|
(467
|
)
|
$
|
418
|
|
|
Forty weeks ended July 2, 2017
|
||||||||||||||
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
(53
|
)
|
$
|
899
|
|
$
|
55
|
|
$
|
—
|
|
$
|
901
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
—
|
|
(467
|
)
|
(41
|
)
|
—
|
|
(508
|
)
|
|||||
Purchases of available-for-sale securities
|
—
|
|
(767
|
)
|
—
|
|
—
|
|
(767
|
)
|
|||||
Sales and maturities of available-for-sale securities
|
—
|
|
401
|
|
—
|
|
—
|
|
401
|
|
|||||
Payment for purchase of acquired entities, net of cash acquired
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Intercompany activity
|
141
|
|
—
|
|
—
|
|
(141
|
)
|
—
|
|
|||||
Other investing activities
|
—
|
|
(13
|
)
|
—
|
|
—
|
|
(13
|
)
|
|||||
Net cash provided by (used in) investing activities
|
141
|
|
(846
|
)
|
(41
|
)
|
(141
|
)
|
(887
|
)
|
|||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
||||||
Purchases of treasury stock
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Common stock dividends paid
|
(132
|
)
|
—
|
|
—
|
|
—
|
|
(132
|
)
|
|||||
Issuance of common stock
|
43
|
|
—
|
|
—
|
|
—
|
|
43
|
|
|||||
Excess tax benefit related to exercise of team member stock options
|
5
|
|
—
|
|
—
|
|
—
|
|
5
|
|
|||||
Proceeds from long-term borrowings
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Proceed for revolving line of credit
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Payments on long-term debt and capital lease obligations
|
(3
|
)
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
|||||
Intercompany activity
|
—
|
|
(131
|
)
|
(10
|
)
|
141
|
|
—
|
|
|||||
Other financing activities
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
|||||
Net cash used in financing activities
|
(88
|
)
|
(131
|
)
|
(10
|
)
|
141
|
|
(88
|
)
|
|||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
—
|
|
—
|
|
4
|
|
—
|
|
4
|
|
|||||
Net change in cash, cash equivalents, and restricted cash
|
—
|
|
(78
|
)
|
8
|
|
—
|
|
(70
|
)
|
|||||
Cash, cash equivalents, and restricted cash at beginning of period
|
—
|
|
368
|
|
105
|
|
—
|
|
473
|
|
|||||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
—
|
|
$
|
290
|
|
$
|
113
|
|
$
|
—
|
|
$
|
403
|
|
|
Forty weeks ended July 3, 2016
|
||||||||||||||
|
Parent/Issuer
|
Guarantor Subsidiaries
|
Non-guarantor Subsidiaries
|
Eliminations
|
Consolidated Total
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
(27
|
)
|
$
|
749
|
|
$
|
42
|
|
$
|
—
|
|
$
|
764
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
—
|
|
(457
|
)
|
(64
|
)
|
—
|
|
(521
|
)
|
|||||
Purchases of available-for-sale securities
|
—
|
|
(311
|
)
|
—
|
|
—
|
|
(311
|
)
|
|||||
Sales and maturities of available-for-sale securities
|
—
|
|
375
|
|
—
|
|
—
|
|
375
|
|
|||||
Payment for purchase of acquired entities, net of cash acquired
|
—
|
|
—
|
|
(11
|
)
|
—
|
|
(11
|
)
|
|||||
Intercompany activity
|
84
|
|
—
|
|
—
|
|
(84
|
)
|
—
|
|
|||||
Other investing activities
|
—
|
|
(12
|
)
|
—
|
|
—
|
|
(12
|
)
|
|||||
Net cash provided by (used in) investing activities
|
84
|
|
(405
|
)
|
(75
|
)
|
(84
|
)
|
(480
|
)
|
|||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
||||||
Purchases of treasury stock
|
(929
|
)
|
—
|
|
—
|
|
—
|
|
(929
|
)
|
|||||
Common stock dividends paid
|
(133
|
)
|
—
|
|
—
|
|
—
|
|
(133
|
)
|
|||||
Issuance of common stock
|
17
|
|
—
|
|
—
|
|
—
|
|
17
|
|
|||||
Excess tax benefit related to exercise of team member stock options
|
4
|
|
—
|
|
—
|
|
—
|
|
4
|
|
|||||
Proceeds from long-term borrowings
|
999
|
|
—
|
|
—
|
|
—
|
|
999
|
|
|||||
Proceed for revolving line of credit
|
300
|
|
—
|
|
—
|
|
—
|
|
300
|
|
|||||
Payments on long-term debt and capital lease obligations
|
(306
|
)
|
—
|
|
—
|
|
—
|
|
(306
|
)
|
|||||
Intercompany activity
|
—
|
|
(119
|
)
|
35
|
|
84
|
|
—
|
|
|||||
Other financing activities
|
(9
|
)
|
—
|
|
—
|
|
—
|
|
(9
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(57
|
)
|
(119
|
)
|
35
|
|
84
|
|
(57
|
)
|
|||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
—
|
|
4
|
|
—
|
|
—
|
|
4
|
|
|||||
Net change in cash, cash equivalents, and restricted cash
|
—
|
|
229
|
|
2
|
|
—
|
|
231
|
|
|||||
Cash, cash equivalents, and restricted cash at beginning of period
|
—
|
|
261
|
|
103
|
|
—
|
|
364
|
|
|||||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
—
|
|
$
|
490
|
|
$
|
105
|
|
$
|
—
|
|
$
|
595
|
|
•
|
Record sales of
$3.7 billion
, a
0.6%
increase over the prior year
|
•
|
Comparable store sales decrease of
1.9%
|
•
|
Net income of
$106 million
, or
2.8%
of sales
|
•
|
Diluted earnings per share of
$0.33
|
•
|
EBITDA of
$293 million
, or
7.9%
of sales
|
•
|
Return on Invested Capital (“ROIC”) of
9.6%
|
|
Twelve weeks ended
|
|
Forty weeks ended
|
||||||||
|
July 2,
2017 |
|
July 3,
2016 |
|
July 2,
2017 |
|
July 3,
2016 |
||||
Sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold and occupancy costs
|
66.0
|
|
|
65.3
|
|
|
66.1
|
|
|
65.5
|
|
Gross profit
|
34.0
|
|
|
34.7
|
|
|
33.9
|
|
|
34.5
|
|
Selling, general and administrative expenses
|
28.8
|
|
|
28.5
|
|
|
28.6
|
|
|
28.3
|
|
Pre-opening expenses
|
0.3
|
|
|
0.5
|
|
|
0.4
|
|
|
0.4
|
|
Relocation, store closure and lease termination costs
|
0.1
|
|
|
0.1
|
|
|
0.6
|
|
|
0.1
|
|
Operating income
|
4.8
|
|
|
5.6
|
|
|
4.2
|
|
|
5.7
|
|
Interest expense
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(0.2
|
)
|
Investment and other income
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Income before income taxes
|
4.6
|
|
|
5.3
|
|
|
4.0
|
|
|
5.6
|
|
Provision for income taxes
|
1.8
|
|
|
2.1
|
|
|
1.6
|
|
|
2.1
|
|
Net income
|
2.8
|
%
|
|
3.2
|
%
|
|
2.4
|
%
|
|
3.4
|
%
|
|
Twelve weeks ended
|
|
Forty weeks ended
|
||||||||
|
July 2,
2017 |
|
July 3,
2016 |
|
July 2,
2017 |
|
July 3,
2016 |
||||
Comparable store sales
|
(1.9
|
)%
|
|
(2.6
|
)%
|
|
(2.4
|
)%
|
|
(2.4
|
)%
|
Change in transactions
|
(3.1
|
)%
|
|
(2.7
|
)%
|
|
(3.4
|
)%
|
|
(2.1
|
)%
|
Change in basket size
|
1.2
|
%
|
|
0.1
|
%
|
|
1.0
|
%
|
|
(0.3
|
)%
|
|
Twelve weeks ended
|
|
Forty weeks ended
|
||||||||
|
July 2,
2017 |
|
July 3,
2016 |
|
July 2,
2017 |
|
July 3,
2016 |
||||
New stores
|
5
|
|
|
11
|
|
|
20
|
|
|
21
|
|
Relocated stores
|
1
|
|
|
1
|
|
|
5
|
|
|
2
|
|
|
Twelve weeks ended
|
|
Forty weeks ended
|
||||||||||||
Adjusted Diluted EPS
|
July 2,
2017 |
|
July 3,
2016 |
|
July 2,
2017 |
|
July 3,
2016 |
||||||||
Net income
|
$
|
106
|
|
|
$
|
120
|
|
|
$
|
300
|
|
|
$
|
419
|
|
Advisory fees, net of tax
|
8
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||||
Store and facility closures, net of tax
|
—
|
|
|
—
|
|
|
38
|
|
|
—
|
|
||||
Mr. Robb's separation agreement, net of tax
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||||
Adjusted Net income
|
$
|
114
|
|
|
$
|
120
|
|
|
$
|
354
|
|
|
$
|
419
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Diluted Earnings per Share
|
$
|
0.36
|
|
|
$
|
0.37
|
|
|
$
|
1.11
|
|
|
$
|
1.27
|
|
Weighted average shares outstanding
|
320.3
|
|
|
321.2
|
|
|
320.2
|
|
|
329.3
|
|
|
Twelve weeks ended
|
|
Forty weeks ended
|
||||||||||||
|
July 2,
2017 |
|
July 3,
2016 |
|
July 2,
2017 |
|
July 3,
2016 |
||||||||
Net income
|
$
|
106
|
|
|
$
|
120
|
|
|
$
|
300
|
|
|
$
|
419
|
|
Provision for income taxes
|
67
|
|
|
76
|
|
|
192
|
|
|
261
|
|
||||
Interest expense
|
11
|
|
|
12
|
|
|
37
|
|
|
30
|
|
||||
Investment and other income
|
(4
|
)
|
|
1
|
|
|
(6
|
)
|
|
(8
|
)
|
||||
Operating income
|
180
|
|
|
209
|
|
|
523
|
|
|
702
|
|
||||
Depreciation and amortization
|
113
|
|
|
117
|
|
|
418
|
|
|
376
|
|
||||
EBITDA
|
$
|
293
|
|
|
$
|
326
|
|
|
$
|
941
|
|
|
$
|
1,078
|
|
|
Fifty-two weeks ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
Net income
|
$
|
388
|
|
|
$
|
475
|
|
Interest expense, net of tax
|
30
|
|
|
18
|
|
||
ROIC earnings
|
418
|
|
|
493
|
|
||
Total rent expense, net of tax
(1)
|
298
|
|
|
279
|
|
||
Estimated depreciation on capitalized operating leases, net of tax
(2)
|
(199
|
)
|
|
(186
|
)
|
||
ROIC earnings, including the effect of capitalized operating leases
|
$
|
517
|
|
|
$
|
586
|
|
|
|
|
|
||||
Average working capital, excluding current portion of long-term debt
|
$
|
715
|
|
|
$
|
598
|
|
Average property and equipment, net
|
3,445
|
|
|
3,240
|
|
||
Average other assets
|
942
|
|
|
1,016
|
|
||
Average other liabilities
|
(748
|
)
|
|
(682
|
)
|
||
Average invested capital
|
4,354
|
|
|
4,172
|
|
||
Average estimated asset base of capitalized operating leases
(3)
|
3,927
|
|
|
3,632
|
|
||
Average invested capital, including the effect of capitalized operating leases
|
$
|
8,281
|
|
|
$
|
7,804
|
|
|
|
|
|
||||
ROIC
|
9.6
|
%
|
|
11.8
|
%
|
||
ROIC, including the effect of capitalized operating leases
|
6.2
|
%
|
|
7.5
|
%
|
|
Fifty-two weeks ended
|
||||||
|
July 2,
2017 |
|
July 3,
2016 |
||||
Net income
|
$
|
388
|
|
|
$
|
475
|
|
Interest expense, net of tax
|
30
|
|
|
18
|
|
||
Adjustments, net of tax
(4)
|
57
|
|
|
48
|
|
||
Adjusted ROIC earnings
|
475
|
|
|
541
|
|
||
Total rent expense, net of tax
(1)
|
298
|
|
|
279
|
|
||
Estimated depreciation on capitalized operating leases, net of tax
(2)
|
(199
|
)
|
|
(186
|
)
|
||
Adjusted ROIC earnings, including the effect of capitalized operating leases
|
$
|
574
|
|
|
$
|
634
|
|
|
|
|
|
||||
Average working capital, excluding current portion of long-term debt
|
$
|
715
|
|
|
$
|
598
|
|
Average property and equipment, net
|
3,445
|
|
|
3,240
|
|
||
Average other assets
|
942
|
|
|
1,016
|
|
||
Average other liabilities
|
(748
|
)
|
|
(682
|
)
|
||
Average invested capital
|
4,354
|
|
|
4,172
|
|
||
Average estimated asset base of capitalized operating leases
(3)
|
3,927
|
|
|
3,632
|
|
||
Average invested capital, including the effect of capitalized operating leases
|
$
|
8,281
|
|
|
$
|
7,804
|
|
|
|
|
|
||||
Adjusted ROIC
|
10.9
|
%
|
|
13.0
|
%
|
||
Adjusted ROIC, including the effect of capitalized operating leases
|
6.9
|
%
|
|
8.1
|
%
|
|
July 2,
2017 |
|
September 25,
2016 |
||||
Cash and cash equivalents
|
$
|
279
|
|
|
$
|
351
|
|
Short-term investments - available-for-sale securities
|
720
|
|
|
379
|
|
||
Total
|
$
|
999
|
|
|
$
|
730
|
|
|
Number of common shares acquired
(1)
|
|
Average price per common share acquired
|
|
Total cost of common shares acquired
|
|||||
Fiscal year 2016:
|
|
|
|
|
|
|||||
First Quarter
|
21.2
|
|
|
$
|
29.96
|
|
|
$
|
634
|
|
Second Quarter
|
3.5
|
|
|
28.88
|
|
|
100
|
|
||
Third Quarter
|
6.5
|
|
|
30.01
|
|
|
195
|
|
||
Fourth Quarter
|
0.5
|
|
|
27.98
|
|
|
15
|
|
||
Total fiscal year 2016
|
31.7
|
|
|
$
|
29.82
|
|
|
$
|
944
|
|
Date of declaration
|
Dividend per
common share
|
|
Date of record
|
|
Date of payment
|
|
Total amount
|
||||
Fiscal year 2017:
|
|
|
|
|
|
|
|
||||
November 2, 2016
|
$
|
0.140
|
|
|
January 13, 2017
|
|
January 24, 2017
|
|
$
|
45
|
|
February 17, 2017
|
0.140
|
|
|
April 7, 2017
|
|
April 18, 2017
|
|
45
|
|
||
May 10, 2017
(1)
|
0.180
|
|
|
June 30, 2017
|
|
July 11, 2017
|
|
58
|
|
||
Fiscal year 2016:
|
|
|
|
|
|
|
|
||||
November 4, 2015
|
$
|
0.135
|
|
|
January 15, 2016
|
|
January 26, 2016
|
|
$
|
44
|
|
March 9, 2016
|
0.135
|
|
|
April 8, 2016
|
|
April 19, 2016
|
|
44
|
|
||
June 7, 2016
|
0.135
|
|
|
July 1, 2016
|
|
July 12, 2016
|
|
43
|
|
||
September 22, 2016
|
0.135
|
|
|
October 3, 2016
|
|
October 14, 2016
|
|
43
|
|
|
Total
|
|
Less than 1
year
|
|
1-3
years
|
|
3-5
years
|
|
More than 5
years
|
||||||||||
Senior notes
|
$
|
993
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
993
|
|
Estimated interest on senior notes
|
442
|
|
|
52
|
|
|
104
|
|
|
104
|
|
|
182
|
|
|||||
Capital lease obligations (including interest)
|
85
|
|
|
5
|
|
|
10
|
|
|
10
|
|
|
60
|
|
|||||
Operating lease obligations
(1)
|
9,246
|
|
|
79
|
|
|
1,081
|
|
|
1,184
|
|
|
6,902
|
|
|||||
Total
|
$
|
9,331
|
|
|
$
|
84
|
|
|
$
|
1,091
|
|
|
$
|
1,194
|
|
|
$
|
6,962
|
|
2.1
|
Agreement and Plan of Merger, dated June 15, 2017, by and among Amazon.com, Inc., Walnut Merger Sub, Inc. and Whole Foods Market, Inc. (1)
|
3.1
|
Amended and Restated Articles of Incorporation of the Registrant, dated September 15, 2015 (2)
|
3.2
|
Amended and Restated Bylaws of the Registrant effective June 15, 2017 (1)
|
4.1
|
Amended and Restated Indenture, dated as of September 8, 2016, between the Registrant and U.S. Bank National Association, as Trustee (3)
|
4.2
|
First Supplemental Indenture, dated December 3, 2015, among the Registrant, the Guarantors, and U.S. Bank National Association (4)
|
4.3
|
Form of 5.2000% Senior Notes due 2025 (included in Exhibit 4.2) (4)
|
10.1
|
Offer Letter, dated May 9, 2017, by and between the Registrant and Keith Manbeck (5)
|
10.2
|
Change of Control Letter Agreement, dated as of June 14, 2017, by and between the Registrant and Keith Manbeck (1)
|
10.3
|
Amendment to the Whole Foods Executive Retention Plan and Non-Compete Arrangement (6)
|
10.4
|
Letter Agreement, dated as of July 5, 2017, by and between the Registrant and Keith Manbeck (6)
|
10.5
|
Amendment No. One to the Whole Foods Market 2009 Stock Incentive Plan (7)
|
31.1
|
Certification of Chief Executive Officer Pursuant to 17 CFR 240.13a -14(a) (7)
|
31.2
|
Certification of Chief Financial Officer Pursuant to 17 CFR 240.13a - 14(a) (7)
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 (8)
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (8)
|
101
|
The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended July 2, 2017 formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements (7)
|
|
(1)
|
Filed as an exhibit to Registrant’s Form 8-K filed June 16, 2017 and incorporated herein by reference.
|
|
(2)
|
Filed as an exhibit to Registrant’s Form 10-K for the period ended September 27, 2015 filed November 13, 2016 and incorporated herein by reference.
|
|
(3)
|
Filed as an exhibit to Registrant’s Form 8-K filed September 9, 2016 and incorporated herein by reference.
|
|
(4)
|
Filed as an exhibit to Registrant’s Form 8-K filed December 4, 2015 and incorporated herein by reference.
|
|
(5)
|
Filed as an exhibit to Registrant’s Form 8-K filed May 10, 2017 and incorporated herein by reference.
|
|
(6)
|
Filed as an exhibit to Registrant’s Form 8-K filed July 5, 2017 and incorporated herein by reference.
|
|
(7)
|
Filed herewith.
|
|
(8)
|
Furnished herewith.
|
|
|
|
WHOLE FOODS MARKET, INC.
|
|
|
|
|
|
|
Date:
|
August 4, 2017
|
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By:
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/s/ Keith Manbeck
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Keith Manbeck
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Executive Vice President and Chief Financial Officer
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(Duly authorized officer and principal financial officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Whole Foods Market, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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August 4, 2017
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/s/ John Mackey
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John Mackey
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Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Whole Foods Market, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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August 4, 2017
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/s/ Keith Manbeck
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Keith Manbeck
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Chief Financial Officer
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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Date:
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August 4, 2017
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/s/ John Mackey
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John Mackey
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Chief Executive Officer
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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Date:
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August 4, 2017
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/s/ Keith Manbeck
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Keith Manbeck
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Chief Financial Officer
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