Key questions and answers from the fourth quarter fiscal 2008 earnings call conducted by Whole Foods Market on November 5, 2008.

Neil Currie (UBS): What are the chances of getting out of the Ideal stores soon?

Jim Sud: It’s becoming more and more challenging as the economy is not cooperating with this so we have hired an outside firm to work with this. They are in charge of disposition of excess properties and they are taking a very conservative approach based on current economic conditions.

Mark Wiltamuth (Morgan Stanley): Could you give us some progress update on how you’re doing on downsizing stores in the pipeline and any other efforts you have on expense control?

John Mackey: As far as downsizing, we are for the most part almost done with that process. There are a few sizes that we are currently working on.

Walter Robb: With respect to expense controls, the results in the Q4 and the item stores particularly show reasonable discipline in the gross margin and discipline in the labor and other direct store expenses. We are happy to say that those trends are continuing and are reflected in the guidance.

Mark Wiltamuth (Morgan Stanley): Do you see any scenario where you would cut store numbers any further or you are going to keep moving forward with these store openings?

Walter Robb: If you notice in the press release that we spaced up 66 stores that were still in development over the next four years and we should have operating cash flow adequate to open those stores at a measure rate. Thus we don’t anticipate adding that many new stores to the inventory unless there is a simultaneous elimination of stores from landlords who want to able to get their financing or haven’t been able to meet the covenants of the lease. In that way, we have got it organized and we are growing in a very sustainable pace that we should have adequate cash flow from operations to cover. Hence we are not looking to gut our development any further.

Ed Aaron (RBC Capital Markets): On the preferred investment, is the $425 million just for modeling purposes or its net proceeds? Can you also talk about the use of those proceeds; will you pay down debt immediately or do you plan on just keeping the cash on the balance sheet for now and how does that affect your debt covenants?

Glenda Chamberlain: We will pay down our line of credit immediately and the rest of that will just remain on the balance sheet. We have two debt covenants; one is our leverage ratio and of course it has the positive impact on that because it reduces our debt, although we certainly had tremendous amount of cushion anyway on that one. The other one is the fixed charge coverage ratio which has less effect on that but it does have a slight improvement because of that investment income that would be included in the calculation of earnings before interest and taxes and because the denominator would be lower as your interest expense goes down. We also weren’t in any trouble at all on that covenant.

Josh Dexter (Soak Bee): Looking at the market cap of about $4 billion to $5 billion and say that each of your stores has a value of $5 million or $6 million in the current market and you are spending $20 million to open new stores. Why would we want to sell stock to a new party at that level?

John Mackey: It makes sense because we are in very uncertain economic times and we are certain what is going to happen. The Management Team in looking out over the long-term wanted to be as prudent as possible to make sure we had adequate liquidity to see as through whatever comes down in the pike.

Josh Dexter (Soak Bee): Do you think EVA per share will be positive?

Walter Robb: We believe that the stores that we have in development will produce positive EVA on a present value basis, for both the short term and the long term.

Josh Dexter (Soak Bee): If you decided to stop fighting the government and spending $5 million a year for something that in effect is considered valueless by the market, what would happen if you changed your position?

Jim Sud: We can’t get our money back. If we could get money back, we would take it back.

Andrew Wolf (BB&T Capital): Concerning the Leonard Green investment, can they convert that currently at $40 to $50 a share?

Glenda Chamberlain: What we are going to do is put all of the terms on. We know there are a lot of questions about the investment and the term so rather than going through all of those on this call, we’re going to quote out the term sheet, the summary term sheet on our website either tonight or in the morning. Hence everyone will have all their questions answered.

Andrew Wolf (BB&T Capital): Your EPS beat your guidance. What were the sources of this superior performance?

John Mackey: One factor was the strong reduction in G&A percentage, which would have been running high on the year. We invested ahead of our growth to integrate Wild Oats as well as the 20 stores reopened in this fiscal year. We also had a reduction in force to cutback some of our G&A in the quarter. We also had a salary-freeze. Hence, we’ve been trying to manage our G&A number down and we were successful in Q4 with such reductions.