Hogar
Providing career
opportunities for
U.S. veterans
We're proud of our five-year commitment
to hire 100,000 veterans by 2018. Over the
past two years, we've hired approximately
80,000 veterans to join the Walmart team.
And, more than 6,000 have been promoted
to roles of greater responsibility and higher
pay. They possess discipline, training and
a passion for service to improve our business
for customers.
2015 Annual Report
Walmart
5
Walmart
International
wo
Walmart
Precios
With our extensive store base, distribution
network and e-commerce capabilities,
we're best-positioned to succeed at the
integration of digital and physical retail.
We'll continue to make the walmart.com
experience more intuitive, personalized
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Driving increased
profitability through
balanced growth
In fiscal 2015, Walmart International's net sales increased 3.6 percent on
a constant currency basis, to $141.4 billion. We grew operating income
faster than sales, demonstrating balanced growth and improved
profitability. We also added 9.4 million square feet of retail space and
183 stores, bringing our total portfolio to more than 6,200 stores and
10 e-commerce websites in 26 countries. By remaining focused on
being in good businesses and being the best-in-class retailer, we're
ensuring a balanced portfolio for customers with the right formats
and merchandise, supported by EDLP to drive sales growth.
Delivering sales through customer relevance
We're passionate about driving sales wherever we operate. Customers
around the world choose Walmart for our low prices, convenient
access to compelling merchandise and a shopping experience that
meets their expectations. EDLP, enabled by being a low-cost operator,
is the foundation of our customer proposition. In fiscal 2015, we contin-
ued to make progress on the transition to EDLP in markets such as Brazil
ASDA
En to
Todos
Aligning formats and channels
with customers' needs
Customers want to save time and money,
and Walmart has an ability to serve them
anytime, anywhere. While our supercenters
provide a convenient one-stop solution,
we'll reinvent the format to exceed cus-
tomer expectations. And, we're upgrading
our Neighborhood Markets to accentuate
our fresh and organic offering. Overall, we
expect to add approximately 15 to 16 mil-
lion total net retail square feet in fiscal 2016,
representing between 240 and 270 units.
Focusing on a quality assortment
We're an agent for our customer, driving
value through improving quality and
expanding key brands, at an everyday
low price. Customers expect a consistent
high quality fresh food experience, which
is a key traffic driver to our stores. We'll
continue to strengthen our fresh depart-
ments by improving quality, consistency,
and presentation, especially with more
locally sourced fresh fruits and vegetables.
Operational enhancements, from product
flow and forecasting, to associate training
and development, will ensure a superior
fresh offering. Additionally, by leveraging
our unified physical and digital capabilities,
customers have access to approximately
8 million items across our entire product
offering, with more to come this year.
customers.
PICKED BY
FARMERS
GARANTEED BY US
$12
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Delivering an improved
shopping experience
In fiscal 2015, Walmart U.S. delivered a 3.1 percent increase in net
sales to $288 billion. Comp sales growth of 0.6 percent included
more than 6 percent growth in our Neighborhood Market format.
Operating income declined 2.1 percent to $21.3 billion, due primarily to
increased health-care costs. We improved sales and operating income
trends each consecutive quarter in fiscal 2015. Our new leadership
team, led by Greg Foran, is focused on improving our customer
experience through assortment, price and access.
Enhancing the customer experience
We're focused on exceeding our customers' expectations by strengthening
the shopping experience. We've expanded the Checkout Promise to
provide a faster checkout experience, with more lanes available during
peak hours and weekends. In February, we announced an array of
changes for associates and a bold new approach to our jobs. These
changes to training, scheduling and pay will lead to expanded career
opportunities and increased wages for hundreds of thousands of
WE PROMISE
FRESH.QUALITY
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100%
Walmart
2015 Annual Report
VALUE PACK 24
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Walmart
and relevant, and we've refreshed our
mobile app. We'll continue to test, learn
and innovate as we explore initiatives, such
as online grocery delivery and Walmart
Grocery Pickup, to provide greater access
to our brand anytime and anywhere.
And, we'll accomplish all of this through
investments in technology, systems and
our supply chain, including our more than
4,500 stores. These investments will give
our customers better access to merchan-
dise and make the shopping experience
more rewarding.
full-time and part-time hourly store asso-
ciates. Across the country, all entry-level
associates now earn a minimum of $9.00
per hour, and by February 2016, current
associates will earn at least $10.00 per hour.
Our people will have more control over
their schedules and access to training
that provides a pathway to greater career
opportunities. These investments are
designed to reignite our associate pride
and ownership to improve service to our
Walmart
2015 Annual Report
SSIC
DEL
FNOU LISTEN TO THIS
WOU'LL BUY IT
Klipsch
VIZIO
VIZIO
SamsClub.com
Visit us online for more brands and assortments
A Sam's Club
Membership Makes
a Great Gift
498
498
8
Walmart
2015 Annual Report
Get $10 for every
$500 in qualifying
purchases
Always open at
SamsClub.com
Thousands of
additional items available
NEW
Earn cash back
5% 3% 1
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Introducing
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and Africa. In other highly competitive
markets such as the U.K. and Canada, we
remained focused on price investment to
drive sales. We're also leveraging best
practices globally - improving our fresh
and private brand assortments and driv-
ing greater operational efficiency. Our
EDLC agenda had a strong year, with our
'We Operate for Less' and 'We Buy for Less'
programs saving us $150 million in China,
for example. We're also providing cus-
tomers greater convenience by opening
more small-format stores. And, when
necessary, we've closed underperforming
stores and divested non-core elements of
our business. We'll continue to strategically
optimize our global positioning across key
geographies and formats to maximize
future growth potential.
Accelerating e-commerce and
digital/physical integration
In all markets, we're committed to providing
customers convenient access to Walmart.
We're innovating through e-commerce,
mobile and various pickup sites to pro-
vide customers more shopping options
than ever before. We're especially
focused on grocery home shopping,
with expanded operations in the U.K.,
Mexico and Japan. Asda doubled its Click
& Collect sites, and in Japan, we automated
the order picking process to fulfill Seiyu.com
grocery orders more efficiently and sus-
tainably. E-commerce sales growth has
been strong. Brazil e-commerce sales in
fiscal 2015 grew faster than the market
despite strong competitive pressures, and
in China, Yihaodian saw traffic increase
more than 60 percent. No matter the
shopper preference, we'll continue to
strive to be the destination of choice.
Building world-class talent and trust
With nearly 800,000 associates serving
customers in the International business,
we're committed to investing in our peo-
ple's success through training initiatives
and opportunity, ensuring we have high
performing associates in all markets.
We're leveraging our global leadership
talent by giving them opportunities in
various markets, such as Mexico and
Brazil, to lead improvements in business
performance. Our leadership team is
focused on a common goal to be the
most trusted retailer everywhere we
operate. We aim to strengthen customer
trust with a strong focus on EDLP, high
quality fresh food and excellent customer
service. For example, in China, we've
invested to improve our distribution
network for fresh products and also utilized
Walmart's "Worry Free Fresh" program to
provide a money-back guarantee if our
produce and meats don't meet customer
expectations. Our commitment to having
world-class compliance and leading on
social and environmental issues also con-
tributes to building trust with customers.
In fiscal 2015, we continued to execute a
comprehensive compliance-focused
training program, including areas encom-
passing anti-corruption, food safety and
other compliance areas. Our consistent
focus on good corporate citizenship helps
strengthen community relationships.
Empowering women
entrepreneurs around
the world
Walmart's Global Women's Economic
Empowerment Initiative provides
training, access to markets and career
opportunities to nearly 1 million women,
many on farms and in factories. We're
committed to affording them economic
opportunities and increasing our sourcing
from women-owned businesses.
MZA
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2015 Annual Report
Walmart
7
Sam's
CLUB
Savings Made SimpleSM
MALY SONE
Creating a more rewarding
member experience
In fiscal 2015, Sam's Club's commitment to creating the most valued
membership organization in the U.S. contributed to growth in net sales,
operating income and enhanced member engagement. Overall net
sales increased 1.5 percent to $58 billion, while comp sales, excluding
fuel, were up 0.6 percent. Membership income grew 10.3 percent, driving
operating income growth, without fuel, of 2 percent to $1.9 billion.
The most valuable card in a member's wallet
Delivering exceptional value is what a Sam's Club membership is all
about, and we're finding more ways to strengthen our member
engagement. We expect that our increased hourly wages and additional
investments in training, announced in February, will provide greater career
opportunities for our club associates and allow us to continue delivering
award-winning service to members. In addition, Plus members appreciate
the benefits of our Cash Rewards program. Response has been strong,
On the menu:
smart and healthy food
choices for members
Whether they're millennials or boomers,
Sam's Club members are seeking healthier
food options - and we deliver. Last year,
we more than doubled our organic portfolio.
And, "healthy for you" items such as breakfast
bars, squeezable fruit pouches and protein
drinks are resonating with members as well.
Cash
Rewards
11M
Maintaining price leadership
Customers want value and we're committed
to delivering EDLP. We're focused on
executing a consistent pricing strategy that
will provide transparent pricing for our cus-
tomers through new tools and capabilities.
We'll continue to work with our supplier
partners to achieve EDLC. This will allow
us to invest in and strengthen our EDLP
pricing strategy and offer the value our
customers seek.
Save money. Live better.
here for
LONDON FOO
PRICE
ACCESS
Walmart
Customer
Proposition
EXPERIENCE
ASSORTMENT
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Customers want to save time and money, and have an
enjoyable shopping experience. We're investing to
increase associate wages and training to improve the
service in our stores and clubs.
Customers want more choice, more items than they ever did
before. Walmart.com increased assortment by 60% in fiscal
2015, and we'll surpass 10 million items this year.
We're investing to win in retail by
providing our customers what they
want, when they want it, at
unrivaled prices.
Doug McMillon
President and Chief Executive Officer
Wal-Mart Stores, Inc.
Our framework for growth
and collect
What is the strategic plan to drive
Walmart's continued growth in
a changing retail environment
around the world?
13
ASDA.COM
Walmart
2015 Annual Report
8:00 a.m. CT
United States
Supercenter customers
enjoy low prices and
fast, friendly checkout.
2:00 p.m.
United Kingdom
Click & Collect lets Asda
shoppers order online and
collect their groceries at
various pickup points.
10:00 a.m.
Brazil
Walmartbrasil.com's
expanded assortment
puts a million items
within reach.
Click
Collect
ollection
ASDA
www.ASDA.COM
ASDA
.CO
Winning the future of retail
One customer at a time
More c
Walmart shoppers are driven by value. We continue to
expand everyday low prices to more markets globally.
**Low Price
$648
"Technology-driven savers" are a fast growing segment of our
customer base. Globally, we're investing to improve mobile
capabilities and to test alternative access points. For example,
Asda now has Click & Collect at all stores.
Click &
Collect
Low Price
Order your
Given the breadth of our business, strategic
clarity is really important. We're thinking
about the future through the lens of the
customer. Customers are channel agnostic
- shopping in stores, online or with their
phones is more seamless than it used to
be. We're thinking the same way. Walmart
possesses unique assets and capabilities
to serve customers with our stores, clubs,
global supply chain, data and great associ-
ates. We want to enable customers to find
what they want, at a value, in a convenient,
enjoyable way, regardless of how they
shop. Our customer proposition is focused
on four areas - price, access, assortment
and experience. Each dimension is
important, and we take a holistic view
to how they integrate with each other.
Our plan provides a framework to ignite,
energize and accelerate change, as we
make decisions and investments.
shopping online
We serve value conscious customers,
regardless of household income, all over
the world. So, we'll always be aggressive on
Walmart
2015 Annual Report
$486B
Consolidated fiscal
2015 revenue
16%
Fiscal 2015 total
shareholder return
technology, assortment and supply chain. The investments
in our global technology platform provide a foundation that
strengthens usability and conversion across our e-commerce
websites and mobile apps. We're also investing in more fulfillment
centers around the world to enable faster delivery of merchandise
to customers. Each of our business segments continues to
increase the integration of e-commerce and mobile assets with
our stores and clubs. For example, we're testing Click & Collect
pickup points in many of our key markets. Asda already has
Click & Collect capabilities in all stores.
Investing in customer relevance
Engaged associates fuel our success
Highly motivated and engaged associates are essential to providing
customers with excellent service. And, it's only through associates
who are merchant-minded that we'll continue to connect custom-
ers with new items that they want and need. Although technology
has transformed our business, retail is still a people business.
Walmart has always provided a ladder of opportunity - one that
today is available to our 2.2 million associates globally. Regardless
of your background, Walmart will give you the opportunity to
grow a career as far as your ability and hard work will take you. I
am one of many leaders in our company who benefited from this
opportunity to begin as an hourly associate and grow into roles
with increased responsibility.
Talent is the essential enabler to reach our objectives. I'm excited
by the new initiatives we've put in place around the world to
better train and equip our associates for success. For example, the
steps we've taken in the U.S., China and Mexico to strengthen
compensation structures and increase training opportunities give
associates more ownership and accountability, so they can react
faster to customers' needs. Adding new talent is also important as
we work to grow digital retail and fully align our organization with
a changing retail environment. Some of the brightest minds in retail
are joining Walmart because they know this is an organization that's
embracing innovation to deliver a better future for customers.
Committed to a better world
We're not only thinking differently about retail, we're thinking differently
about the world. Walmart is a powerful change agent, and we're
committed to global responsibility initiatives that make our world
better. I'm proud of our work to advance environmental sustainability,
to support women's economic empowerment, and to offer healthier
food choices for our customers. We continue to look for more ways
to lead and have an even greater impact on the communities that
we serve. We'll also remain steadfast in our commitment to compli-
ance, ethics and doing business the right way. I'm pleased with the
enhancements we've made, including better technology, to
strengthen these organizations and build world-class compliance.
My career at Walmart began more than three decades ago, and I've
never been more excited about our future than I am today. Walmart
has a great purpose - to save people money so they can live better.
We're embracing change so we can deliver that promise more effec-
tively. As I look back over this past year, we've made great strides
towards our goals. We know where our customers' expectations
are going, and we're ideally positioned to deliver for them. Walmart
has great assets and capabilities, but there's more we must do. We're
continuing to build a Walmart that excels globally at the integration
of digital and physical retail, providing our customers with a seam-
less experience to shop whenever, wherever and however they want.
It's a great opportunity. I'm excited about the next steps in our journey.
Sincerely,
Dong
2015 Annual Report
Walmart
3
Walmart
How does Walmart's everyday low
price (EDLP) philosophy translate
across markets globally?
in 27 countries
and through
websites globally
Customers served
weekly in our stores
As we invest to expand our global e-commerce capabilities and
build more stores, we keep customer expectations at the forefront.
The type of store format or fulfillment center we build, the location
of where we put a club, or the functionality of a website are all
predicated on how we can better serve our customers. And, as
we make these choices, we're striving to balance sales growth
and profitability. We're being thoughtful with our investments,
ensuring we have the infrastructure in place for sustainable
growth. Walmart's strong balance sheet and robust cash flow
provide a solid foundation to support these investments. While
we grow, we remain focused on expense management and EDLC.
When we operate and grow efficiently, we'll generate increased
value for shareholders.
2015 Annual Report
price. EDLP builds customer trust, both in
stores and online. That's especially important
in a digital era where there's greater price
transparency. To deliver price leadership, we
continue to focus on driving everyday low
cost (EDLC) through improvements in supply
chain, processes and other efficiencies.
260M
How are you providing greater
access for customers to shop Walmart?
Through our more than 11,000 stores,
websites and mobile apps, customers can
access Walmart in more ways than ever
before. It's vital to have relevant formats
in each market we serve. But the future of
retail is not just in-store or online - it's put-
ting the two together in new ways. I'm
excited that we're leaders in integrating
digital and physical retail in a seamless
fashion. We'll continue to test and learn
as we explore options for convenient
merchandise pickup or delivery to save
customers' time.
How are you expanding
the assortment with your
e-commerce offering?
Customers want more merchandise
choices, and they expect to find almost
anything when shopping Walmart. In
our stores, we're focused on providing
quality merchandise, desirable national
brands and great private brand options.
On the e-commerce front, we provide
those same things through an expanded
assortment of approximately 8 million
items on walmart.com in the U.S.
Interestingly, 75 percent of walmart.com
sales come from non-store inventory,
thus providing incremental sales growth
beyond our stores. And, this is a global
effort. In Brazil, for example, our online
assortment, including from marketplace
partners, grew 10-fold last year.
What are your most important
objectives to improve customer
experience, both in stores and online?
Retail has always been a people business,
and we win when associates exceed
customer expectations. That's why we're
investing in higher wages and increased
training and development for our U.S.
associates. We'll also equip them with
information and technology to facilitate
great customer service. We're focused
on running great stores and websites by
improving in-stock and driving a faster
checkout, both online and in stores. I'm
excited about the progress we'll make for
customers this year.
Walmart
Save
Money.
Live
Better.
Walmart
Walmart U.S. team is implementing a broad
range of initiatives focused on strengthening
our assortment (especially the fresh offering),
driving the integration of e-commerce with our
stores, and improving the customer experience.
For example, in February, we announced a
$1 billion investment in our U.S. hourly associates
to provide higher wages, more training and
increased opportunities to build a career with
Walmart. These are strategic investments in our
people to reignite the sense of ownership they have in our stores
and foster an improved customer experience to drive sales growth.
Dear Shareholders,
Associates and Customers: operating income growth. On a constant currency basis, net sales
It's an exciting time for Walmart. From the U.S. to the U.K., from
Mexico to China, and across all the markets we serve, retail is
changing in fundamental ways. Our future is bright because
we're increasing our investments in associates, stores and
e-commerce capabilities to prepare for the way customers will
want to shop with us in this new era of retail.
Each week, we serve close to 260 million customers in our
stores, in 27 countries, and through our websites globally. While
language and culture may differ, remarkable similarities exist
globally in what customers expect from a retailer. Whether it's a
young mom in Toronto or a retired couple in Phoenix, custom-
ers everywhere want to save money and save time. They want
to shop on their terms in a manner that's easy and convenient.
They seek broad choices in assortment. And, regardless of how
they shop, in stores or on their mobile device, they expect a great
price and experience. At Walmart, our enterprise strategy guides
how we fulfill those expectations and deliver on our customer
proposition. We'll drive sales growth by executing well, in stores
and e-commerce, every time we serve customers.
Delivering a solid financial performance
I'm encouraged that Walmart's fiscal 2015 revenue grew
by more than $9 billion to nearly $486 billion and earnings
per share were $4.99, a nearly 3 percent increase from the
prior year. But, we have higher expectations. Our priority
is to run great stores, clubs and e-commerce everywhere
we operate to grow the business.
Walmart U.S. delivered net sales of $288 billion, a more
than 3 percent increase, and improved its sales and
operating income trends each consecutive quarter
during the year. I'm pleased by the positive comp sales
growth, especially the strong performance from
Neighborhood Markets, but we're not satisfied. The
surpassed $141 billion, while operating income increased to more
than $6 billion. I'm pleased that we're running better stores in our
International markets. Operations in Canada, Mexico and China
continue to improve, leading to stronger sales and profitability.
The U.K. market has become fiercely competitive, and in Brazil, we
continue to work on improving performance. Across International,
our commitment to a compelling fresh food offering and innova-
tions in e-commerce, like grocery home shopping, will be important
growth drivers for the future.
The emphasis of the Sam's Club team on making membership
more rewarding helped drive net sales of $58 billion and an
increase of more than 10 percent in membership income.
Members appreciate the value-added benefits offered by Sam's
Club like Plus Cash Rewards and the suite of comprehensive
business member services. The team is focused on bringing
merchandise excitement and newness to drive sales. In addition,
Sam's Club continues to strengthen digital integration with clubs
through initiatives like Club Pickup.
Our 22 percent growth in global e-commerce sales surpassed
the overall market and was supported by enhancements to our
100%
Almost
Walmart International produced solid constant currency sales and
Unit Counts as of January 31, 2015
64
39 Consolidated Statements of Cash Flows
54
Corporate and Stock Information
Report of Independent Registered Public
Accounting Firm
Walmart *
17
Five-Year Financial Summary
63
(Amounts in millions, except per share and unit count data)
2015 Annual Report
38 Consolidated Statements of Shareholders' Equity and
Redeemable Noncontrolling Interest
36
62
Consolidated Balance Sheets
37
Accounting Firm on Internal Control over
Financial Reporting
Consolidated Statements of Comprehensive Income
Report of Independent Registered Public
61
Consolidated Statements of Income
36
Financial Condition and Results of Operations
2015
Management's Report to Our Shareholders
As of and for the Fiscal Years Ended January 31,
1.6%
2013
5.0%
60
6.0%
1.9%
Percentage change in net sales from previous fiscal year
418,500
443,416
465,604
473,076
482,229
Net sales
3.4%
2014
6.0%
1.6%
2.0%
Percentage change in total revenues from previous fiscal year
$421,395
$446,509
$468,651
$ 476,294
$485,651
Total revenues
Operating results
2011
2012
5.0%
Management's Discussion and Analysis of
Retail is changing and we're investing to
serve customers more effectively, which we
believe will benefit shareholders over time.
We know that customers expect value, a
broad assortment, and various options in
how and where they shop. They also want
an enjoyable shopping experience, both in
stores and online. Our fiscal 2016 investments
in associate wages and training, as well as our
stepped-up investments in global e-commerce,
will strengthen our ability to deliver a great
experience for customers. These important
investments will make us even more relevant
in the future.
Notes to Consolidated Financial Statements
2015 Annual Report
16
Walmart
*Data reflects five-year period including fiscal 2011 through 2015.
Clack M Holly
As I close, I encourage you to review
our financial results in the next section.
Walmart's business is strong, and we are
confident that our strategic investments
will make Walmart's future even brighter.
I'm proud of Walmart's long record of consistent
returns to shareholders. After growth initiatives,
we use our remaining cash flows to provide
shareholder returns through dividends and
share repurchases. Last year, we returned
over $7 billion to shareholders. This year, we
increased our annual dividend to $1.96 per
share, representing 42 consecutive years of
dividend increases.
Investing in our people and shareholders
This year, we're making a $1 billion incremental
investment in strategic people initiatives
within our U.S. businesses. This wage restruc-
turing and expanded training opportunities
will help hourly associates earn higher pay and
advance their careers. This investment will
benefit our customers through a better store
and club experience, leading to higher sales
and returns.
Sometimes, it is more convenient for customers
to shop online and have their order delivered
to their doorstep. Other times, they may
want to pick up their online order when
they are already shopping at our store. We
are building the capabilities to provide
customers with best-in-class e-commerce -
from user-friendly websites and mobile
apps to high-tech fulfillment centers and
the infrastructure required for grocery home
shopping. Our incremental investments in
and around e-commerce will be well over
$1 billion this year, and we will continue
to seek the right balance between sales
growth and profitability as we grow our
e-commerce business.
dividends and
share repurchases
Returned to
shareholders through
$64B*
Earnings per
share growth
19%*
Investing for customers to drive growth
We take a long-term view as we position our
business for the future. Globally, customers
will always need to shop in stores, and we
will continue to serve customers with a
variety of formats. That is why we will add
26-30 million net retail square feet this
year with new stores and clubs around the
world, to bring Walmart closer to customers.
more than $16 billion, the best performance
in over a decade. Our return on investment
was 16.9 percent, as we continue to invest in
store growth and e-commerce initiatives.
Consolidated net
sales growth
$64B*
Walmart is well-positioned to deliver for
customers because we have the financial
strength to invest in growth. Our AA credit
rating, unmatched in retail, is a testament to
our financial discipline and strong balance
sheet. We've consistently delivered strong
cash flow for many years. In fact, in fiscal
2015, Walmart generated free cash flow of
Walmart had a solid year in fiscal 2015 as
each operating segment improved its
performance as the year progressed. While
net sales grew nearly 2 percent and operating
income increased 1 percent, our underlying
performance was actually stronger. Our
results were impacted by significant
headwinds from currency exchange rate
fluctuations. These currency headwinds
may continue throughout this current year.
Our top priority is to run great stores in all
of our markets. That is the only way to have
sustainable increases in comp sales, as well
as top line growth. We're pleased that
e-commerce sales rose faster than the
market globally last year at approximately
22 percent. As we continue to integrate our
websites and mobile apps with our stores
and clubs, we'll enable customers to shop
anytime and anywhere they want.
Wal-Mart Stores, Inc.
Chief Financial Officer
Executive Vice President and
3.4%
Charles M. Holley, Jr.
Neil M. Ashe
Executive Officers
Executive Vice President, President and
Chief Executive Officer, Global eCommerce
Daniel J. Bartlett
40
Five-Year Financial Summary
18
Walmart
Senior Vice President and Controller
Steven P. Whaley
President and Chief Executive Officer
C. Douglas McMillon
Chief Financial Officer
Executive Vice President and
Charles M. Holley, Jr.
Executive Vice President, Global Governance
and Corporate Secretary
19
Jeffrey J. Gearhart
Rollin L. Ford
Chief Executive Officer, Walmart U.S.
Executive Vice President, President and
Greg S. Foran
Chief Executive Officer, Walmart International
Executive Vice President, President and
David Cheesewright
Executive Vice President, Global People
M. Susan Chambers
Executive Vice President, President and
Chief Executive Officer, Sam's Club
Rosalind G. Brewer
Executive Vice President, Corporate Affairs
Executive Vice President and
Chief Administrative Officer
Increase (decrease) in calendar comparable sales (1)
620
Walmart U.S.
76,255
81,394
Total Walmart shareholders' equity
43,842
47,079
41,417
44,559
43,692
Long-term debt and long-term capital lease obligations
(excluding amounts due within one year)
180,782
193,406
203,105
204,751
203,706
Total assets
107,878
$ 36,437
$ 40,714
112,324
116,681
117,907
116,655
Property, equipment and capital lease assets, net
$ 43,803
$ 44,858
$ 45,141
76,343
71,315
68,542
Unit counts
18
(1) Comparable sales include sales from stores and clubs open for the previous 12 months, including remodels, relocations and expansions, as well as e-commerce sales.
Comparable store and club sales include fuel.
8,604
9,766
10,408
10,942
11,453
609
611
A solid fiscal 2015
performance; investing
for a stronger future
632
647
Inventories
4,191
5,783
6,107
6,290
3,804
3,868
4,005
4,203
4,516
Total units
Sam's Club segment
Walmart International segment
Walmart U.S. segment
5,287
in the United States
Financial position
1.46
24.3%
24.3%
24.3%
3.9%
8.4%
4.1%
0.3%
0.0%
(1.5)%
0.3%
2.0%
(0.6)%
0.6%
(0.6)%
1.6%
2.4%
(0.5)%
0.5%
Net income per common share:
Income from continuing operations attributable to Walmart
Operating income
as a percentage of net sales
Operating, selling, general and administrative expenses,
Gross profit margin
Sam's Club
24.5%
24.8%
19.4%
19.3%
4.18
$
4.53
$
5.01
1.59
$
4.85
1.88
$
4.99
1.92
Dividends declared per common share
$
continuing operations attributable to Walmart
1.21
Diluted income per common share from
15,734
16,963
15,918
16,182
$ 25,508
$ 26,491
$ 27,725
$ 26,872
$ 27,147
19.4%
19.2%
19.0%
15,340
15
We're delivering
2015 Annual Report
Fostering opportunities for
Walmart associates globally
11
Walmart
2015 Annual Report
Walmart's e-commerce investments around
the world are focused on four priorities:
a global technology platform, a next gen-
eration fulfillment network, talent and the
integration of digital and physical retail. Our
new technology platform makes shopping
easier on any device and enables deployment
of innovation to multiple markets quickly.
Our new, highly automated fulfillment centers
allow more orders to be shipped faster, and at
a lower cost, to customers' doorsteps. We're
attracting many of the industry's top engi-
neers and scientists as we build a technology
company inside the world's largest retailer.
And, we continue to use our stores to test
innovations like order pickup and grocery
home shopping to position Walmart as
the global leader in integrating digital
and physical retailing.
ASE
We guarantee & or your money back
You'll love the tande
THE TASTE
-LOVE-
Great Prices
on Everyday
Essentials
Fresh Food
Investing in our
e-commerce capabilities
PLENASE
Stock up for
allergy season
Increase in
walmart.com
assortment in FY 15
(to 8 million items)
60%
Walmart
ASDA
Approximate
walmart.com traffic
from mobile devices
during FY 15 Q4
holidays
70%
must-haves
DOORS
(22% growth)
sales in FY 15
Global e-commerce
$1B
$12.2B
Walmart's incremental
investment in higher
wages, education and
training for U.S. store
and club associates
"Walmart will continue
to provide a ladder of
opportunity that any
associate can climb.
If you work hard,
develop new skills and
3,600
fiscal 2015
Bonuses earned by
hourly associates in
$500M
2015 Annual Report
12
Walmart
Wal-Mart Stores, Inc.
President and Chief Executive Officer
Doug McMillon
69
tomatoes
do here."
onions
associates globally
limit to what you can
Dedicated
there should be no
199
Bon
are women
Of our associates
57%
2.2M
care for our customers,
Ben
チャレンジ
さらにいろいろパッ
B
ブライスロック
e-commerce
dedicated Walmart
Countries with
11
Walmart
世界水日
Integrating digital and physical
retail for Walmart customers
10
2015 Annual Report
Walmart
Brands and values that delight
members in club and online
Having great merchandise builds members'
trust and loyalty. Sam's Club members look
for household staples, as well as new, excit-
ing, on-trend merchandise - from children's
apparel to home décor - at members-only
prices. We're focused on infusing newness
across every merchandise category - build-
ing excitement, driving traffic, enhancing
engagement and increasing retention of
club members. Members increasingly shop
Sam's Club for healthy options, including
organics, active wear and nutrition bars that
support their active lifestyles. In addition,
our award-winning pharmacists, free health
screening services and immunizations make
Sam's Club an important health-care
destination for many members.
mobile app allow members to search
for products, track Instant Savings and
purchase exciting merchandise whenever
and wherever they want. Club Pickup,
which had been aimed at our Business
members, was relaunched in fiscal 2015
so both Savings and Business members
can order online and then pick up their
merchandise at their local club at a
convenient time for them. And, the
online Easy Reorder tool allows members
to see past purchases and quickly add
them to their current cart. Members can
shop Sam's Club in a matter of minutes -
no matter how big the order. As we grow,
we'll also give greater access through new
clubs. In fiscal 2016, Sam's Club will open
9 to 12 new and relocated clubs, and
remodel at least 55 clubs, while investing
in innovation at SamsClub.com.
Integrating digital and physical
access for member convenience
We're focused on giving members the
choices they want by continuing to
integrate digital and physical retail.
Improved digital access through our
investments in SamsClub.com and our
increasing the percentage of members
who choose to become Plus members.
Putting money back in the pockets of Plus
members after they make qualifying pur-
chases at the club significantly enhances
the value of this membership. And, all
of our members are enthusiastic about
our cash back credit card. This secure,
chip-enabled 5-3-1 MasterCard® offers
the best cash-back program in the market.
We've also expanded our portfolio of
services to provide more convenience
and value. We're helping small business
members take care of back office needs
by providing easy access to leading
providers of affordable health insurance
plans, payroll services, merchant pay-
ment processing and legal services.
Our goal is to curate a suite of anywhere,
anytime business member services with
exclusive savings that make the Sam's
Club membership the most valuable
"business card" for these members, while
supporting the small business community.
We also launched a Sam's Club Travel app
in December to give all members faster
access to outstanding travel savings.
010
S's Club MasterC
鱼
@1%
#3%
15%
Earn
cash
back
VIZIO
Sam's
DIZI
י
websites
2015 Annual Report
Walmart
Ta
にて勝ち越し
値上げしないで
On.M.
安い
o
5
SHOFF
370
チャレンジ
安
プライスロック
ELIMINATE TOUGH CAR ODORS
FOR UP TO 30 DAYS
SENSITIVE BLADDERS
Global eCommerce
associates around
Sem
SEIYU
2.499
opening in FY 16
fulfillment centers
e-commerce
4 new U.S.
Average size of our
1.2M sq. ft.
OMU
REMOCAO DAS MANCHAS OMU
DETO NA MAQUINA
Tira Manchas
OMO
Walmart
Walmart
the world
Of store operations
management joined
*
Thomas W. Horton(FE)
*(c)
*(C)
C. Douglas McMillon
*(C)
Timothy P. Flynn (FE)
Tech &
Strategic
Planning
Comp. & Finance e-commerce
*
*(C)
Linda S. Wolf
*
*
S. Robson Walton
Global
Comp.,
Nominating &
Governance Executive
Audit
Name
& Finance e-commerce
Tech &
Strategic
Planning
Global
Comp.
Comp.,
Nominating &
Governance Executive
Audit
Name
Jim C. Walton
*
*
Michael T. Duke
(FE) Financial Expert
(Committee Chair
*(C)
Steven S Reinemund
*(C)
*
*
Gregory B. Penner
*
Pamela J. Craig(FE)
*
Roger C. Corbett
Board Committees:
*
Aida M. Alvarez
Kevin Y. Systrom
*
Douglas N. Daft
*
*
Marissa A. Mayer
*
*
James I. Cash, Jr., Ph.D. (FE)
*
*
*
*
75%
Mr. Reinemund is the retired Dean of Business and
Professor of Leadership and Strategy at Wake Forest
University. He previously served as the Chairman of
the Board and Chairman and Chief Executive Officer
of PepsiCo, Inc.
Ms. Craig is the retired Chief Financial Officer of
Accenture plc, a global management consulting,
technology services, and outsourcing company.
2015 Annual Report
Walmart
14
Slukitt
This is an exciting time for Walmart and
retail in general. Our future is bright for our
customers, associates and shareholders.
Despite all the change that's occurring,
Walmart remains true to delivering on the
purpose we've always had, to save people
money so they can live better. And, we're
committed to growing the company in
an ethical and compliant way, endeavor-
ing to always do the right thing.
Listening to our shareholders
All of us believe it's important for the
company to hear from shareholders and
respond accordingly. Over the past year,
management engaged in a proactive out-
reach with many of our largest shareholders
to discuss Walmart's strategy, governance
and compensation practices, as well as
our environmental and social initiatives.
These meetings were insightful, and the
feedback was shared with the Board. We'll
continue to evaluate and act upon the rec-
ommendations that the Board feels are in
the best interest of all of our shareholders.
committee meetings last year, with the
overall meeting attendance for the year
being 98 percent. The Walton family has
a passion to see the company succeed,
and we're proud to have representation on
Walmart's Board. But, we also recognize the
importance of having an independent board
with diverse experiences and viewpoints.
Today, the majority of our board members
are independent. Dr. James Cash serves as
our Lead Independent Director, adding
exceptional value to our governance
processes. And, we've had separate
Chairman and CEO roles since 1988. This
structure allows our management team
to focus on long-term value creation for
all shareholders and avoids the tempta-
tion to respond to short-term pressure
that's not best for our business.
Committed to Board independence
Our Board is dedicated and challenges
management to grow Walmart in the best
interest of our stakeholders. In fact, most
directors attended all of our Board and
Because change is inevitable, succession
planning is one of our key responsibilities.
Greg Penner, who has served on the
Board since 2008, became the Board's
Vice Chairman this past year, and he has
taken a more active leadership role in
Board and management interactions
focused on strategy, management devel-
opment and Board processes. As part of
our standard refreshment, we have a rig-
orous Board candidate evaluation process
to ensure that we maintain the right skill
sets for our growing business. Two board
additions in 2014, Kevin Systrom and Tom
Horton, underscore the benefits of this
approach and demonstrate how we're
strengthening our oversight to keep pace
with the changing retail dynamics.
and gender, to business experience and
tenure. The median length of service on
our Board is approximately 6½ years. This
includes a healthy mix of directors with
fresh perspectives who joined our Board
over the past few years, combined with
longer-serving directors with expertise in
our business and broader retail acumen.
Walmart has an exceptional Board of
Directors comprised of a diverse mix of
highly qualified members committed to
upholding strong governance standards
and demonstrating integrity in all activi-
ties. Our Board continually reviews our
composition, leadership structure, and our
way of working to ensure that we're fully
leveraging these talented individuals. Our
Board's diversity is broad - from ethnicity
Across our markets, Walmart is in a period
of rapid change, and our Board of Directors
is highly engaged in overseeing the
development and execution of Walmart's
enterprise strategy. Under Doug's leader-
ship, management is focused on driving
long-term growth and profitability. We're
investing in our associates and e-commerce,
and integrating our e-commerce offering
with our stores and clubs to exceed
customers' expectations. I'm proud that
the Board fully supported a $1 billion
investment in our U.S. store and club hourly
associates to increase pay and provide a
pathway to greater career opportunities.
We also endorsed a more than $300 million
incremental investment in e-commerce to
continue development of fulfillment and
technology capabilities in fiscal 2016.
These commitments are expected to
improve the store and digital experience
for our customers.
Chairman of the Board of Directors
Wal-Mart Stores, Inc.
S. Robson Walton
strong governance
for shareholders.
Walmart
13
Walmart
Based on survey results
from more than 2 million
associates worldwide
Are proud to work
at Walmart
4 of 5
2015 Annual Report
क
d
Pharmacy
Walmart as
hourly associates
Board of Directors
Steven S Reinemund
Pictured below from left to right:
Mr. Walton is Chairman of the Board of Directors of
Wal-Mart Stores, Inc.
Pamela J. Craig
Mr. Corbett is the retired Chief Executive Officer and
Group Managing Director of Woolworths Limited,
the largest retail company in Australia.
Roger C. Corbett
Mr. Daft is the retired Chairman of the Board of Directors
and Chief Executive Officer of The Coca-Cola Company, a
beverage manufacturer, where he served in that capacity
from February 2000 until May 2004, and in various other
capacities since 1969.
Douglas N. Daft
Ms. Mayer is the Chief Executive Officer and President
and Director of Yahoo!, Inc., a digital media company.
Marissa A. Mayer
Mr. Walton is the Chairman of the Board of Directors
and Chief Executive Officer of Arvest Bank Group, Inc.,
a group of banks operating in the states of Arkansas,
Kansas, Missouri and Oklahoma.
Jim C. Walton
Mr. McMillon is the President and Chief Executive Officer
of Wal-Mart Stores, Inc.
C. Douglas McMillon
Ms. Wolf is the retired Chairman of the Board of Directors
and Chief Executive Officer of Leo Burnett Worldwide,
Inc., an advertising agency and division of Publicis
Groupe S.A.
S. Robson Walton (Chairman)
Linda S. Wolf
Gregory B. Penner (Vice Chairman)
Ms. Alvarez is the former Administrator of the U.S. Small
Business Administration and was a member of President
Clinton's Cabinet from 1997 to 2001.
Aida M. Alvarez
Mr. Systrom is the Chief Executive Officer and co-founder
of Instagram, a social media application.
Kevin Y. Systrom
James I. Cash, Jr., Ph.D. (Lead Independent Director)
Dr. Cash is the James E. Robison Emeritus Professor of
Business Administration at Harvard Business School,
where he served from July 1976 to October 2003.
Mr. Duke is the former Chairman of the Executive
Committee of the Board of Directors of Wal-Mart Stores,
Inc., where he served in that capacity until January 31,
2015. He previously served as the President and Chief
Executive Officer of Wal-Mart Stores, Inc. from February
2009 to January 2014.
Michael T. Duke
Mr. Horton is the former Chairman of American Airlines
Group Inc. and the former Chairman of American Airlines,
Inc. He also previously served as the Chairman and
Chief Executive Officer of AMR Corporation and CEO
of American Airlines, Inc.
Thomas W. Horton
Mr. Flynn is the retired Chairman of KPMG International,
a professional services firm.
Timothy P. Flynn
Mr. Penner is the Vice Chairman of the Board of Directors
of Wal-Mart Stores, Inc. and a General Partner at Madrone
Capital Partners, an investment firm.
2015 Annual Report
Walmart
2015 Annual Report
+ Rent x 8
Net cash used
investing activities (1)
Net cash used in
Free cash flow
and equipment
operating activities
Payments for property
(Amounts in millions)
Net cash provided by
(1) The average is based on the addition of the account balance at the end of the current
period to the account balance at the end of the prior period and dividing by 2.
in financing activities
Accrued liabilities
2015
Fiscal Years Ended January 31,
2013
The following table sets forth a reconciliation of free cash flow, a
non-GAAP financial measure, to net cash provided by operating activities,
which we believe to be the GAAP financial measure most directly
comparable to free cash flow, as well as information regarding net cash
used in investing activities and net cash used in financing activities.
Although other companies report their free cash flow, numerous
methods may exist for calculating a company's free cash flow. As a result,
the method used by Walmart's management to calculate our free cash
flow may differ from the methods used by other companies to calculate
their free cash flow. We urge you to understand the methods used by
other companies to calculate their free cash flow before comparing our
free cash flow to that of such other companies.
Walmart's definition of free cash flow is limited in that it does not
represent residual cash flows available for discretionary expenditures
due to the fact that the measure does not deduct the payments required
for debt service and other contractual obligations or payments made
for business acquisitions. Therefore, we believe it is important to view
free cash flow as a measure that provides supplemental information
to our Consolidated Statements of Cash Flows.
We define free cash flow as net cash provided by operating activities
in a period minus payments for property and equipment made in that
period. We generated free cash flow of $16.4 billion, $10.1 billion and
$12.7 billion for fiscal 2015, 2014 and 2013, respectively. The increase in
free cash flow for fiscal 2015, when compared to the previous fiscal year,
was primarily due to the timing of payments for accounts payable and
accrued liabilities, as well as the timing of income tax payments, com-
bined with lower capital expenditures. The fiscal 2014 decline in free
cash flow, when compared to the previous fiscal year, was primarily due
to the timing of income tax payments, as well as lower income from
continuing operations and slightly higher capital expenditures.
Free cash flow is considered a non-GAAP financial measure. Management
believes, however, that free cash flow, which measures our ability to
generate additional cash from our business operations, is an important
financial measure for use in evaluating the Company's financial perform-
ance. Free cash flow should be considered in addition to, rather than
as a substitute for, consolidated income from continuing operations as
a measure of our performance and net cash provided by operating
activities as a measure of our liquidity.
Free Cash Flow
2014
18,808
$ 28,564
$ 16,390
except unit counts)
(Amounts in millions,
2013
Fiscal Years Ended January 31,
Consolidated Results of Operations
Results of Operations
Management's Discussion and Analysis of
Financial Condition and Results of Operations
23
(12,174)
Walmart
which is also included in our computation of free cash flow.
(1) "Net cash used in investing activities" includes payments for property and equipment,
(10,789) (11,946)
(15,071)
$(11,125) $(12,526) $(12,637)
$ 10,142 $ 12,693
(13,115) (12,898)
$ 23,257 $25,591
2015 Annual Report
18,793
19,152
38,080
Income from continuing operations
Numerator
CALCULATION OF RETURN ON ASSETS
17.0%
16.9%
Return on investment (ROI)
$227,661
$232,704
$ 16,814 $ 16,551
= Average invested capital
22,216
18,802
18,973
- Average accrued liabilities (1)
37,748
37,913
- Average accounts payable (1)
63,375 57,907
22,624
Denominator
Average total assets
of continuing operations (1)
37,415
55,043
60,771
65,979
38,410
$203,706 $204,291 $203,068
8.1%
Accounts payable
and amortization
Accumulated depreciation
continuing operations
Total assets of
Certain Balance Sheet Data
2013
As of January 31,
2014
2015
8.2%
Return on assets (ROA)
$203,680
$203,999
2015
+ Average accumulated depreciation
and amortization (1)
2014
$485,651
Net sales
2013
Fiscal Years Ended January 31,
2014
2015
except unit counts)
2013
2014
2015
$288,049
except unit counts)
Fiscal Years Ended January 31,
Walmart International Segment
(Amounts in millions,
Management's Discussion and Analysis of
Financial Condition and Results of Operations
2015 Annual Report
Walmart
24
As a result of the factors discussed above, we reported $16.8 billion,
$16.6 billion and $17.7 billion of consolidated income from continuing
operations for fiscal 2015, 2014 and 2013, respectively, an increase of
$263.0 million for fiscal 2015 and a decrease of $1.1 billion for fiscal 2014
when compared to the previous fiscal year. Diluted income from
continuing operations per common share attributable to Walmart ("EPS")
was $4.99, $4.85 and $5.01 for fiscal 2015, 2014 and 2013, respectively.
(Amounts in millions,
Our effective income tax rates were 32.2%, 32.9% and 31.0%, for fiscal 2015,
2014 and 2013, respectively. The reconciliation from the U.S. statutory
rate to the effective income tax rates for fiscal 2015, 2014 and 2013 is pre-
sented in Note 9 in the "Notes to Consolidated Financial Statements."
$279,406
Net sales
$ 6,365
$ 5,153
$ 6,171
Operating income
Calendar comparable
7.4%
1.3%
(0.3)%
$274,433
comparable period
1.8%
3.1%
comparable period
Percentage change from
Percentage change from
$134,748
$136,513
$136,160
3.9%
For fiscal 2015, we did not meet our objective of growing operating
income at the same rate or a faster rate than net sales as operating
income increased 1.0% while net sales increased 1.9% when compared
to the previous fiscal year. This was primarily due to the factors we
discussed for not leveraging operating expenses. For fiscal 2014, we also
did not meet our objective of growing operating income at a faster
rate than net sales as operating income decreased 3.1% while net sales
increased 1.6%, when compared to the previous fiscal year. This was
primarily due to the factors we discussed for not leveraging operating
expenses, partially offset by increases in membership and other income.
For fiscal 2015, we did not meet our objective of growing operating
expenses at a slower rate than net sales as operating expenses as a
percentage of net sales increased 6 basis points when compared to the
same period in the previous fiscal year. Our continued investments in
digital retail, higher health-care expenses in the U.S. from increased
enrollment and medical cost inflation, the $249 million impact of wage
and hour litigation in the U.S., as well as expenses of $148 million related
to the closure of approximately 30 underperforming stores in Japan were
the primary factors that caused us not to leverage for fiscal 2015. For fiscal
2014, we did not meet our objective of growing operating expenses at a
slower rate than net sales as operating expenses as a percentage of net
sales increased 27 basis points. Overall, lower than anticipated net sales,
higher investment in key areas, such as global leverage and e-commerce
initiatives, and nearly $1.0 billion of increased expenses for various matters
described in the Walmart International segment discussion, were the
primary cause for the increase in operating expenses as a percentage of
net sales.
Our gross profit rate was relatively flat for fiscal 2015, when compared to the
previous fiscal year. While the gross profit rate at Walmart International
increased, the gross profit rate at Walmart U.S. and Sam's Club decreased.
Our gross profit rate decreased 3 basis points for fiscal 2014, when
compared to the previous fiscal year, primarily due to our ongoing
investment in price, as well as merchandise mix.
2.4%
5.0%
percentage of net sales
store and club sales increase
Total U.S. calendar comparable
1.6%
1.9%
comparable period
(decrease)
Percentage change from
1.6%
$473,076
$482,229
Net sales
2.0%
comparable period
Percentage change from
$468,651
$476,294
5.0%
$465,604
0.5%
(0.5)%
Gross profit margin as a
Our total revenues, which are mostly comprised of net sales, but also
include membership and other income, increased 2.0% and 1.6% for fiscal
2015 and 2014, respectively, when compared to the previous fiscal year.
The increase in total revenues was consistent with the 1.9% and 1.6%
increases in net sales. The increase in net sales was primarily due to 3.0%
year-over-year growth in retail square feet, positive comparable sales in
the U.S. and higher e-commerce sales across the Company. The increase
was partially offset by $5.3 billion of negative impact from fluctuations in
currency exchange rates for fiscal 2015. The increase in net sales for fiscal
2014 was due to 3.1% growth in retail square feet, higher e-commerce
sales, the impact of fiscal 2013 acquisitions and positive comparable club
sales at Sam's Club. The increase in net sales for fiscal 2014 was partially
offset by $5.1 billion of negative impact from fluctuations in currency
exchange rates. An increase in membership and other income in both
fiscal years, primarily due to growth in membership income at Sam's
Club, also contributed to the increase in total revenues.
$ 17,704
10,408
1,070
percentage of net sales
$ 16,551
10,942
1,101
$ 16,814
11,453
1,135
Retail square feet at period end
Unit counts at period end
operations
Income from continuing
6.0%
5.7%
5.6%
Operating income as a
24.3%
$ 27,725
$ 26,872
$ 27,147
Operating income
24.3%
24.3%
Total revenues
store sales increase
(decrease)
$203,999 $203,680
119
8,870
2,828
100.0%
$473,076
12.1%
56,423
1.3%
12.1%
57,157
28.9%
1.6%
134,748
28.9%
136,513
59.0%
$274,433
1.8%
59.0%
$279,406
Percent
of Total
1.3%
Net Sales
$465,604
Our consolidated net sales increased 1.9% and 1.6% for fiscal 2015 and 2014, respectively, when compared to the previous fiscal year. The increase
in net sales for fiscal 2015 was primarily due to 3.0% year-over-year growth in retail square feet, positive comparable sales in the U.S. and higher
e-commerce sales across the Company. The increase was partially offset by $5.3 billion of negative impact from fluctuations in currency exchange
rates for fiscal 2015. The increase in net sales for fiscal 2014 was due to 3.1% growth in retail square feet, higher e-commerce sales, the impact of
fiscal 2013 acquisitions and positive comparable club sales at Sam's Club. The increase in net sales for fiscal 2014 was partially offset by $5.1 billion
of negative impact from fluctuations in currency exchange rates.
0.0%
(0.6)%
(0.6)%
0.3%
0.6%
0.0%
Fuel Impact
With Fuel
2014
2015
2014
100.0%
2015
Total U.S.
Walmart U.S.
Sam's Club
Comparable store and club sales is a metric which indicates the performance of our existing U.S. stores and clubs by measuring the change in sales
for such stores and clubs, including e-commerce sales, for a particular period over the corresponding period in the previous year. The retail industry
generally reports comparable store and club sales using the retail calendar (also known as the 4-5-4 calendar). To be consistent with the retail indus-
try, we provide comparable store and club sales using the retail calendar in our quarterly earnings releases. However, when we discuss our compara-
ble store and club sales below, we are referring to our calendar comparable store and club sales calculated using our fiscal calendar. As our fiscal
calendar differs from the retail calendar, our calendar comparable store and club sales also differ from the retail calendar comparable store and club
sales provided in our quarterly earnings releases. Calendar comparable store and club sales, as well as the impact of fuel, for fiscal 2015 and 2014, were
as follows:
Calendar Comparable Store and Club Sales
Management's Discussion and Analysis of
Financial Condition and Results of Operations
2015 Annual Report
Walmart
20
Fiscal Years Ended January 31,
Percent
Change
Percent
of Total
Net Sales
Management's Discussion and Analysis of
Financial Condition and Results of Operations
19
Walmart
2015 Annual Report
Comparable store and club sales is a metric that indicates the
performance of our existing U.S. stores and clubs by measuring the
change in sales for such stores and clubs, including e-commerce sales,
for a particular period from the corresponding period in the previous
year. Walmart's definition of comparable store and club sales
includes sales from stores and clubs open for the previous 12 months,
including remodels, relocations, expansions and conversions, as well as
e-commerce sales. We measure the e-commerce sales impact by includ-
ing those sales initiated through our websites and fulfilled through our
e-commerce distribution facilities, as well as an estimate for sales initiated
online, but fulfilled through our stores and clubs. Changes in format are
excluded from comparable store and club sales when the conversion is
accompanied by a relocation or expansion that results in a change in
retail square feet of more than five percent. Comparable store and club
sales are also referred to as "same-store" sales by others within the retail
industry. The method of calculating comparable store and club sales
Throughout this Management's Discussion and Analysis of Financial
Condition and Results of Operations, we discuss segment operating
income, comparable store and club sales and other measures.
Management measures the results of the Company's segments using
each segment's operating income, including certain corporate overhead
allocations, as well as other measures. From time to time, we revise the
measurement of each segment's operating income, including certain
corporate overhead allocations, and other measures as determined by
the information regularly reviewed by our chief operating decision
maker. When we do so, the previous period amounts and balances are
reclassified to conform to the current period's presentation. The amounts
disclosed for "Corporate and support" in the leverage discussion of the
Company's performance metrics consist of corporate overhead and
other items not allocated to any of the Company's segments.
This discussion, which presents our results for the fiscal ended
January 31, 2015 ("fiscal 2015"), January 31, 2014 ("fiscal 2014") and
January 31, 2013 ("fiscal 2013"), should be read in conjunction with our
Consolidated Financial Statements and the accompanying notes. We
intend for this discussion to provide the reader with information that will
assist in understanding our financial statements, the changes in certain
key items in those financial statements from period to period and the
primary factors that accounted for those changes. We also discuss certain
performance metrics that management uses to assess the Company's
performance. Additionally, the discussion provides information about the
financial results of the three segments of our business to provide a better
understanding of how each of those segments and its results of operations
affect the financial condition and results of operations of the Company
as a whole.
years
varies across the retail industry. As a result, our calculation of comparable
store and club sales is not necessarily comparable to similarly titled
measures reported by other companies.
Our fiscal year ends on January 31 for our U.S. and Canadian operations.
We consolidate all other operations generally using a one-month lag and
on a calendar year basis. Our business is seasonal to a certain extent due
to calendar events and national and religious holidays, as well as weather
patterns. Historically, our highest sales volume and operating income
have occurred in the fiscal quarter ending January 31.
Through the operations in each of our segments, we help people around
the world save money and live better – anytime and anywhere - in retail
stores or through our e-commerce and mobile capabilities. Through
innovation, we are striving to create a customer-centric experience that
seamlessly integrates digital and physical shopping. Physical retail
encompasses our brick and mortar presence in each of the markets we
operate. Digital retail is comprised of our e-commerce websites and
mobile commerce applications. Each week, we serve nearly 260 million
customers who visit our over 11,000 stores under 72 banners in 27 coun-
tries and e-commerce websites in 11 countries. Our strategy is to lead on
price, invest to differentiate on access, be competitive on assortment and
deliver a great experience. By leading on price we earn the trust of our
customers every day by providing a broad assortment of quality merchandise
and services at everyday low prices ("EDLP"), while fostering a culture that
rewards and embraces mutual respect, integrity and diversity. EDLP is our
pricing philosophy under which we price items at a low price every day so
our customers trust that our prices will not change under frequent promo-
tional activity. Price leadership is core to who we are. Everyday low cost
("EDLC") is our commitment to control expenses so those cost savings
can be passed along to our customers. Our digital and physical presence
Each of our segments contributes to the Company's operating results
differently, but each has generally maintained a consistent contribution
rate to the Company's net sales and operating income in recent years.
• Sam's Club consists of membership-only warehouse clubs and operates
in 48 states in the U.S. and in Puerto Rico, as well as digital retail. Sam's
Club accounted for approximately 12% of our fiscal 2015 net sales. As a
membership-only warehouse club, membership income is a significant
component of the segment's operating income. As a result, Sam's Club
operates with a lower gross profit rate and lower operating expenses as
a percentage of net sales than our other segments.
• Walmart International consists of operations in 26 countries outside of
the U.S. and includes retail, wholesale and other businesses. These busi-
nesses consist of numerous formats, including supercenters, supermarkets,
hypermarkets, warehouse clubs, including Sam's Clubs, cash & carry, home
improvement, specialty electronics, restaurants, apparel stores, drug stores
and convenience stores, as well as digital retail. Walmart International
generated approximately 28% of our fiscal 2015 net sales. The overall
gross profit rate for Walmart International is lower than that of Walmart
U.S. because of its merchandise mix. Walmart International is our second
largest segment and has grown through acquisitions, as well as by adding
retail, wholesale and other units.
• Walmart U.S. is our largest segment and operates retail stores in all
50 states in the United States ("U.S."), Washington D.C. and Puerto Rico,
with three primary store formats, as well as digital retail. Walmart U.S.
generated approximately 60% of our net sales in fiscal 2015 and, of our
three segments, Walmart U.S. is the largest and has historically had
the highest gross profit as a percentage of net sales ("gross profit rate").
In addition, Walmart U.S. has historically contributed the greatest amount
to the Company's net sales and operating income.
Wal-Mart Stores, Inc. ("Walmart," the "Company" or "we") is engaged in
the operation of retail, wholesale and other units in various formats
around the world. Our operations consist of three reportable segments:
Walmart U.S., Walmart International and Sam's Club.
Overview
Management's Discussion and Analysis of
Financial Condition and Results of Operations
provides customers access to our broad assortment anytime and
anywhere. We strive to give our customers and members a great digital
and physical shopping experience.
In discussing our operating results, the term currency exchange rates
refers to the currency exchange rates we use to convert the operating
results for all countries where the functional currency is not the U.S. dollar.
We calculate the effect of changes in currency exchange rates as the
difference between current period activity translated using the current
period's currency exchange rates, and the comparable prior year period's
currency exchange rates. Throughout our discussion, we refer to the
results of this calculation as the impact of currency exchange rate fluc-
tuations. When we refer to constant currency operating results, we are
referring to our operating results without the impact of the currency
exchange rate fluctuations and without the impact of acquisitions until
the acquisitions are included in both comparable periods. The disclosure
of constant currency amounts or results permits investors to understand
better Walmart's underlying performance without the effects of currency
exchange rate fluctuations or acquisitions. Volatility in currency exchange
rates may impact the results, including net sales and operating income,
of the Company and the Walmart International segment in the future.
We made certain reclassifications to prior period amounts or balances to
conform to the presentation in the current fiscal year. These reclassifications
did not impact the Company's operating income or consolidated net
income. Additionally, certain prior period segment asset and expense
allocations have been reclassified among segments to be comparable
with the current period presentation.
The Retail Industry
Percent
Change
59.8% 3.1%
28.2% (0.3)%
12.0% 1.5%
100.0% 1.9%
$288,049
136,160
58,020
$482,229
Percent
of Total
Net Sales
2013
2014
2015
Fiscal Years Ended January 31,
Net sales
Sam's Club
Walmart International
Walmart U.S.
(Amounts in millions)
Net Sales
Growth
Our performance metrics emphasize three priorities for improving
shareholder value: growth, leverage and returns. Our priority of growth
focuses on sales through growth in net sales, comparable store and club
sales, including e-commerce sales, and unit square feet growth; the
priority of leverage encompasses our objective to increase our operating
income at the same rate as or a faster rate than the growth in net sales
by growing our operating, selling, general and administrative expenses
("operating expenses") at a slower rate than the growth of our net sales;
and the priority of returns focuses on how efficiently we employ assets
through return on investment and how effectively we manage working
capital through free cash flow. While all three priorities are important,
our top priority is growth, with increased investment in digital retail and
our associates. Sales growth will contribute to improving leverage and
returns over time.
Company Performance Metrics
are national, regional or international chains or have a national or interna-
tional online presence. We compete with a number of companies for
prime retail site locations, as well as in attracting and retaining quality
employees (whom we call "associates"). We, along with other retail compa-
nies, are influenced by a number of factors including, but not limited to:
catastrophic events, weather, competitive pressures, consumer disposable
income, consumer debt levels and buying patterns, consumer credit avail-
ability, cost of goods, currency exchange rate fluctuations, customer
preferences, deflation, inflation, fuel and energy prices, general economic
conditions, insurance costs, interest rates, labor costs, tax rates, cybersecurity
attacks and unemployment. Further information on the factors that can
affect our operating results and on certain risks to our Company and an
investment in its securities can be located in "Item 1A. Risk Factors" in our
Annual Report on Form 10-K for the fiscal year ended January 31, 2015, and in
the discussion under "Cautionary Statement Regarding Forward-Looking
Statements and Information" in our Annual Report on Form 10-K for the
fiscal year ended January 31, 2015.
We operate in the highly competitive retail industry in all of the markets we
serve. We face strong sales competition from other discount, department,
drug, dollar, variety and specialty stores, warehouse clubs and supermarkets,
as well as e-commerce and catalog businesses. Many of these competitors
0.0%
$ 39,210 $ 38,689
(0.3)%
(0.5)%
We define ROI as adjusted operating income (operating income plus
interest income, depreciation and amortization, and rent expense) for
the trailing 12 months divided by average invested capital during that
period. We consider average invested capital to be the average of our
beginning and ending total assets, plus average accumulated depreciation
and average amortization, less average accounts payable and average
accrued liabilities for that period, plus a rent factor equal to the rent for
the fiscal year or trailing 12 months multiplied by a factor of eight.
When we have discontinued operations, we exclude the impact of the
discontinued operations.
ROI was 16.9% and 17.0% for the fiscal years ended January 31, 2015
and 2014, respectively. The slight change in ROI was primarily due to
continued investments in store growth and digital retail initiatives,
offset by currency exchange rate fluctuations.
Management believes return on investment ("ROI") is a meaningful
metric to share with investors because it helps investors assess how
effectively Walmart is deploying its assets. Trends in ROI can fluctuate
over time as management balances long-term potential strategic
initiatives with possible short-term impacts.
Return on Investment
Returns
For fiscal 2015, we did not meet our objective of growing operating
income at the same rate or a faster rate than net sales as operating
income increased 1.0%, while net sales increased 1.9% when compared
to the previous fiscal year. This was primarily due to the factors we
discussed for not leveraging operating expenses. For fiscal 2014, we also
did not meet our objective of growing operating income at a faster rate
than net sales as operating income decreased 3.1% while net sales
increased 1.6%, when compared to the previous fiscal year. This was
primarily due to the factors we discussed for not leveraging operating
expenses, partially offset by increases in membership and other income
of 5.6%.
Operating Income
During the first quarter of fiscal 2016, the Company announced a new
associate wage structure combined with comprehensive associate
training and educational programs. We anticipate the additional
expenses in fiscal 2016 resulting from these programs will be approximately
$1.0 billion, which may impact our ability to leverage operating expenses
in fiscal 2016.
Our calculation of ROI is considered a non-GAAP financial measure
because we calculate ROI using financial measures that exclude and
include amounts that are included and excluded in the most directly
comparable GAAP financial measure. For example, we exclude the
impact of depreciation and amortization from our reported operating
income in calculating the numerator of our calculation of ROI. In addition,
we include a factor of eight for rent expense that estimates the
hypothetical capitalization of our operating leases. We consider return
on assets ("ROA") to be the financial measure computed in accordance
with generally accepted accounting principles ("GAAP") that is the most
directly comparable financial measure to our calculation of ROI. ROI differs
from ROA (which is consolidated income from continuing operations
for the period divided by average total assets of continuing operations
for the period) because ROI: adjusts operating income to exclude certain
expense items and adds interest income; adjusts total assets of continuing
operations for the impact of accumulated depreciation and amortization,
accounts payable and accrued liabilities; and incorporates a factor of rent
to arrive at total invested capital.
For fiscal 2015, operating expenses increased 2.3%, when compared
to the previous fiscal year, while net sales increased 1.9%, respectively,
when compared to the previous fiscal year. Accordingly, we did not
meet our objective of growing operating expenses at a slower rate than
net sales. Our continued investments in digital retail, higher health-care
expenses in the U.S. from increased enrollment and medical cost infla-
tion, the $249 million impact of wage and hour litigation in the U.S., as
well as expenses of $148 million related to the closure of approximately
30 underperforming stores in Japan were the primary factors that caused
us not to leverage for fiscal 2015. For fiscal 2014, we did not meet our
objective of growing operating expenses at a slower rate than net sales as
operating expenses as a percentage of net sales increased 27 basis points.
Overall, lower than anticipated sales, higher investment in key areas, such
as global leverage and digital retail initiatives, and the nearly $1.0 billion
of increased expenses for various matters described in the Walmart
International segment discussion, were the primary cause for the
increase in operating expenses as a percentage of net sales.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
21
Walmart
2015 Annual Report
We believe comparing both the growth of our operating expenses and our operating income to the growth of our net sales are meaningful measures,
as they indicate how effectively we manage costs and leverage operating expenses. Our objective for a fiscal year is to grow operating expenses at a
slower rate than net sales and to grow operating income at the same rate as or a faster rate than net sales. On occasion, we may make strategic growth
investments that may, at times, cause our operating expenses to grow at a faster rate than net sales and that may result in our operating income growing
at a slower rate than net sales.
100.0%
$27,725
(5.8)%
Operating Expenses
(1,602)
Although ROI is a standard financial metric, numerous methods exist
for calculating a company's ROI. As a result, the method used by
management to calculate our ROI may differ from the methods used
by other companies to calculate their ROI. We urge you to understand
the methods used by other companies to calculate their ROI before
comparing our ROI to that of such other companies.
Walmart
$ 27,147 $ 26,872
113
9,173
2,777
2014
2015
Fiscal Years
Ended January 31,
of continuing operations (1)
Average total assets
Denominator
= Adjusted operating income
22
+ Rent
+ Interest income
Operating income
Numerator
CALCULATION OF RETURN ON INVESTMENT
(Amounts in millions)
The calculation of ROI, along with a reconciliation to the calculation
of ROA, the most comparable GAAP financial measure, is as follows:
Management's Discussion and Analysis of
Financial Condition and Results of Operations
2015 Annual Report
+ Depreciation and amortization
(7.1)% (19.3)%
100.0% (3.1)%
6.7%
1,859
Percent
Operating
2013
2014
2015
Fiscal Years Ended January 31,
Operating income
Corporate and support
Percent
Sam's Club
Walmart U.S.
(Amounts in millions)
Operating Income
Leverage
As we continue to add new stores and clubs in the U.S., we do so with an understanding that additional stores and clubs may take sales away from
existing units. We estimate the negative impact on comparable store and club sales as a result of opening new stores and clubs was approximately
0.9% and 0.8% in fiscal 2015 and 2014, respectively. Our estimate is calculated primarily by comparing the sales trends of the impacted stores and
clubs, which are identified based on their proximity to the new stores and clubs, to those of nearby non-impacted stores and clubs, in each case,
as measured after the new stores and clubs are opened.
Comparable store and club sales in the U.S., including fuel, increased 0.5% in fiscal 2015 and decreased 0.5% in fiscal 2014, when compared to the
previous fiscal year. The fiscal 2015 total U.S. comparable store and club sales were positively impacted by higher traffic and lower gas prices during
the end of the fiscal year. E-commerce sales positively impacted comparable sales approximately 0.3% and 0.2% for Walmart U.S. and Sam's Club,
respectively, for the fiscal year ended January 31, 2015. For fiscal 2014, the total U.S. comparable store and club sales were negatively impacted by
lower consumer spending primarily due to the slow recovery in general economic conditions, the 2% increase in the 2013 payroll tax rate, and the
reduction in government food benefits and severe winter storms that occurred during the fourth quarter. These factors were partially offset by
increased member traffic at Sam's Club primarily coming from Savings Members. Additionally, e-commerce sales positively impacted the Walmart U.S.
comparable store and Sam's Club comparable club sales percentages by approximately 0.3% for fiscal 2014.
(0.1)%
(0.1)%
Walmart International
Income
of Total Change
Operating
Income
6.9% (0.9)%
1,843
(1,911)
$26,872
7.3%
7.2%
(8.6)% (22.2)%
100.0% 1.0%
1,976
(2,336)
$27,147
23.0%
6,365
76.1%
$21,103
of Total
Percent
Operating
Income
Percent Percent
of Total Change
81.0% 3.2%
19.2% (19.0)%
5,153
$21,787
(2.1)%
19.8%
22.7%
6,171
78.6%
$21,336
0.5%
Operating income as a
Walmart U.S. Segment
$ 1,843
Expenses for the termination of the joint venture, franchise and supply
agreements related to our former partner's retail store operations
in India.
Store lease expenses in China and Mexico to correct a historical
accounting practice that did not conform to our global accounting
policies; and
⚫ Charges for the closure of 29 units in China and 25 units in Brazil due
to poor performance;
For fiscal 2014, operating expenses as a percentage of net sales increased
80 basis points, when compared to the previous fiscal year. Operating
expenses as a percentage of net sales were primarily impacted by the
nearly $1.0 billion of aggregated expenses for the following matters:
• Charges for contingencies for non-income taxes and employment
claims in Brazil;
Operating expenses as a percentage of net sales decreased 51 basis
points for fiscal 2015, when compared to the previous fiscal year. The
decrease was due to the nearly $1.0 billion of aggregated expenses
incurred in fiscal 2014 detailed below, which were partially offset by fiscal
2015 expenses of $148 million related to the closure of approximately
30 underperforming stores in Japan.
Gross profit rate increased 12 basis points for fiscal 2015 and decreased
10 basis points for fiscal 2014, when compared to the previous fiscal year.
The fiscal 2015 increase in gross profit rate was primarily due to changes
in the merchandise mix in a number of the segment's larger operations.
The fiscal 2014 decrease in gross profit rate was primarily due to price
investments in certain countries, including Brazil, Canada and Mexico.
Net sales for the Walmart International segment decreased 0.3% and
increased 1.3% for fiscal 2015 and 2014, respectively, when compared to
the previous fiscal year. For fiscal 2015, the decrease in net sales was due
to $5.3 billion of negative impact from fluctuations in currency exchange
rates, partially offset by year-over-year net growth in retail square feet of
2.6% and higher e-commerce sales in each country with e-commerce
operations, particularly in the United Kingdom, China and Brazil. For
fiscal 2014, the increase in net sales was due to year-over-year net growth
in retail square feet of 3.6% and the impact of fiscal 2013 acquisitions,
which accounted for $730 million of the net sales increase. In addition,
higher e-commerce sales in each country with e-commerce operations
contributed to the increase. The increase in net sales was partially offset
by $5.1 billion of negative impact from fluctuations in currency
exchange rates.
•
•
As a result of the factors discussed above, segment operating income
was $21.3 billion, $21.8 billion and $21.1 billion during fiscal 2015, 2014 and
2013, respectively. Walmart U.S. did not grow operating income faster
than sales during fiscal 2015, but grew operating income faster than sales
during fiscal 2014.
Walmart U.S. did not leverage operating expenses for fiscal 2015, as
operating expenses as a percentage of segment net sales increased
24 basis points. The increase in operating expenses as a percentage of
segment net sales was primarily driven by higher health-care expenses
from increased enrollment and medical cost inflation. In addition,
expenses from severe winter storms early in the year contributed to the
increase in operating expenses as a percentage of segment net sales.
Walmart U.S. leveraged operating expenses for fiscal 2014, driven by
productivity initiatives as well as lower incentive expenses in fiscal 2014.
The fiscal 2015 gross profit rate decreased 12 basis points compared to
the previous fiscal year. The decrease in the gross profit rate was primarily
the result of the segment's strategic focus on price investment, pharmacy
cost inflation, reductions in third-party reimbursement rates and changes
in merchandise mix. The fiscal year 2014 gross profit rate was relatively
flat when compared to the previous fiscal year primarily due to price
investment and low price leadership, partially offset by cost of goods
savings initiatives and supply chain productivity.
Net sales for the Walmart U.S. segment increased 3.1% and 1.8% for fiscal
2015 and 2014, respectively, when compared to the previous fiscal year.
For fiscal 2015, the increase in net sales was due to year-over-year growth
in retail square feet of 3.2%, as well as an increase in comparable store
sales of 0.6%. Positive traffic and lower gas prices late in the fiscal year
contributed to the increase in comparable store sales. For fiscal 2014, the
increase in net sales was due to year-over-year growth in retail square
feet of 2.9%, partially offset by a decline in comparable store sales of 0.6%.
Fiscal 2014 comparable store sales were negatively impacted by lower
consumer spending primarily due to the slow recovery in general eco-
nomic conditions, the 2% increase in the 2013 payroll tax rate and the
reduction in government food benefits.
641
659
2015 Annual Report
680
Walmart
Management's Discussion and Analysis of
Financial Condition and Results of Operations
$57,157 $56,423
$58,020
Net sales
Including Fuel
except unit counts)
(Amounts in millions,
4.1%
2014
2015
Fiscal Years Ended January 31,
2013
Operating income
club sales increase
We believe the information in the following table under the caption
"Excluding Fuel" is useful to investors because it permits investors to
understand the effect of the Sam's Club segment's fuel sales on its
results of operations, which are impacted by the volatility of fuel prices.
Volatility in fuel prices may continue to impact the operating results
of the Sam's Club segment in the future.
Sam's Club Segment
As a result of the factors discussed above, segment operating income
was $6.2 billion, $5.2 billion and $6.4 billion for fiscal 2015, 2014 and 2013,
respectively. Fluctuations in currency exchange rates negatively impacted
operating income $225 million, $26 million and $111 million in fiscal 2015,
2014 and 2013 respectively. Although currency fluctuations caused net
sales for Walmart International to decline, operating income grew for fiscal
2015. Operating income did not grow faster than net sales in fiscal 2014.
25
822
period end
4,005
3.8%
4.5%
percentage of net sales
2.0%
(0.6)%
0.6%
1,030
8,238
8,652
3,936
4,463
$12,174
$13,115
Also reducing net cash used in investing activities were cash proceeds
of $671 million received from the sale of the Vips Restaurant Business in
Mexico ("Vips") on May 12, 2014, which is further described in Note 13
to our Consolidated Financial Statements.
We continue to focus on striving to seamlessly integrate the digital and
physical shopping experience for our customers and expanded in digital
retail in each of our segments during fiscal 2015, with Walmart U.S. and
Sam's Club focused on digital retail in the U.S. and Walmart International
focused on digital retail in countries outside of the U.S. Some of our fiscal
2015 accomplishments in this area were to successfully launch our new
web platform in the U.S., grow mobile and increase our third-party
marketplace offering.
Operating income
$ 21,336
$ 21,787
$ 21,103
346
358
368
period end
7.7%
7.8%
4,203
4,516
Percentage change from
Unit counts at period end
Retail square feet at
percentage of net sales
Retail square feet at
Operating income as a
4.7%
5,783
6,107
6,290
Unit counts at period end
7.4%
2015 Annual Report
comparable period
1.3%
During the first quarter of fiscal 2016, the Company announced a new
associate wage structure combined with comprehensive associate
training and educational programs. We anticipate cash flows provided
by operating activities will be sufficient to fund these programs.
Net cash provided by operating activities was $28.6 billion, $23.3 billion
and $25.6 billion for fiscal 2015, 2014 and 2013, respectively. The increase
in net cash provided by operating activities for fiscal 2015, when
compared to the previous fiscal year, was primarily due to the timing
of payments for accounts payable and accrued liabilities, as well as the
timing of income tax payments. The decrease in cash flows provided by
operating activities in fiscal 2014, when compared to the previous fiscal
year, was primarily due to the timing of income tax payments, as well as
lower income from continuing operations.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
2015 Annual Report
Walmart
26
$28,564 $23,257 $25,591
2015
Fiscal Years Ended January 31,
2014
2013
(Amounts in millions)
Net cash provided by
operating activities
Net Cash Provided by Operating Activities
The strength and stability of our operations have historically supplied us
with a significant source of liquidity. Our cash flows provided by operating
activities, supplemented with our long-term debt and short-term bor-
rowings, have been sufficient to fund our operations while allowing us to
invest in activities that support the long-term growth of our operations.
Generally, some or all of the remaining available cash flow has been used
to fund the dividends on our common stock and share repurchases.
We believe our sources of liquidity will continue to be adequate to fund
operations, finance our global expansion activities, pay dividends and
fund our share repurchases for the foreseeable future.
Liquidity and Capital Resources
Liquidity
As a result of the factors discussed above, operating income was
$2.0 billion, $1.8 billion and $1.9 billion for fiscal 2015, 2014 and 2013,
respectively. Sam's Club did grow operating income faster than
net sales in fiscal 2015, but did not grow operating income faster than
sales in fiscal 2014.
Sam's Club leveraged operating expenses for fiscal 2015, as operating
expenses as a percentage of segment net sales decreased 16 basis points
compared to the previous fiscal year. The decrease in operating expenses
as a percentage of segment net sales for fiscal 2015 was primarily due to
better expense management in a number of areas, including the opti-
mization of the new in-club staffing structure announced in fiscal 2014,
which resulted in decreases in wage expense and payroll taxes. This was
partially offset by higher health-care expenses, mostly from increased
enrollment and medical cost inflation. For fiscal 2014, Sam's Club did not
leverage expenses, as operating expenses as a percentage of segment
net sales increased 26 basis points, when compared to the previous fiscal
year. The increase in operating expenses as a percentage of segment net
sales was primarily due to a $59 million charge for the implementation
of the new in-club staffing structure and the pending closure of one club,
as well as a state excise tax refund credit we received in the previous
fiscal year.
Cash Equivalents and Working Capital
Membership and other income increased 7.7% and 14.1% for fiscal 2015
and 2014, respectively, when compared to the previous fiscal year. For
fiscal 2015, the increase was primarily the result of increased membership
upgrades, Plus Member renewals and an increase in members from the
opening of 15 new clubs. For fiscal 2014, the increase was primarily due
to improved contract terms relating to the profit sharing arrangement
with our credit card provider, increased membership fees that were
introduced on May 15, 2013, $24 million of income from the sale of two
real estate properties and an increase in members from the opening
of 12 new clubs.
Cash and cash equivalents were $9.1 billion and $7.3 billion for fiscal 2015
and 2014, respectively. Our working capital deficit was $2.0 billion and
$8.2 billion at January 31, 2015 and 2014, respectively. The decrease in our
working capital deficit is primarily the result of using less of our net cash
provided by operating activities for share repurchases and capital
expenditures during fiscal 2015, which allowed us to reduce our short-
term borrowings. We generally operate with a working capital deficit
due to our efficient use of cash in funding operations, consistent access
to the capital markets and in providing returns to our shareholders in
the form of payments of cash dividends and share repurchases.
Net Cash Used in Investing Activities
2014
2015
Allocation of Capital Expenditures
Fiscal Years Ending January 31,
Total capital expenditures
Walmart International
Total U.S.
New stores and clubs, including
expansions and relocations
Information systems, distribution,
digital retail and other
Remodels
(Amounts in millions)
Capital Expenditures
Net cash used in investing activities was $11.1 billion, $12.5 billion and
$12.6 billion for fiscal 2015, 2014 and 2013, respectively, and generally
consisted of payments to add stores, remodel numerous existing stores,
expand our digital retail capabilities and invest in other technologies.
Net cash used in investing activities decreased $1.4 billion for fiscal 2015,
when compared to the previous fiscal year, primarily due to lower
capital expenditures. The following table provides additional capital
expenditure detail:
$(11,125) $(12,526) $(12,637)
Fiscal Years Ended January 31,
2013
2014
2015
Net cash used in
investing activities
(Amounts in millions)
We use intercompany financing arrangements in an effort to ensure cash
can be made available in the country in which it is needed with the mini-
mum cost possible. We do not believe it will be necessary to repatriate
cash and cash equivalents held outside of the U.S. and anticipate our
domestic liquidity needs will be met through cash flows provided by
operating activities, supplemented with long-term debt and short-term
borrowings. Accordingly, we intend, with only certain exceptions, to
continue to indefinitely reinvest our cash and cash equivalents held
outside of the U.S. in our foreign operations. When the income earned,
either from operations or through intercompany financing arrangements,
and indefinitely reinvested outside of the U.S. is taxed at local country tax
rates, which are generally lower than the U.S. statutory rate, we realize an
effective tax rate benefit. If our intentions with respect to reinvestment
were to change, most of the amounts held within our foreign operations
could be repatriated to the U.S., although any repatriation under current
U.S. tax laws would be subject to U.S. federal income taxes, less applicable
foreign tax credits. As of January 31, 2015 and 2014, cash and cash
equivalents of approximately $1.7 billion and $1.9 billion, respectively,
may not be freely transferable to the U.S. due to local laws or other
restrictions. We do not expect local laws, other limitations or potential
taxes on anticipated future repatriations of cash amounts held outside
of the U.S. to have a material effect on our overall liquidity, financial
condition or results of operations.
Gross profit rate decreased 12 basis points for fiscal 2015 and was flat for
fiscal 2014, when compared to the previous fiscal year. For fiscal 2015, the
gross profit rate decreased primarily due to the segment's investment in
the Cash Rewards program, changes in merchandise mix, and commodity
cost inflation, partially offset by an increased gross profit rate on fuel sales.
For fiscal 2014, our gross profit was negatively impacted by an increase
to our product warranty liabilities, which was offset by a favorable impact
from merchandise mix.
Net sales for the Sam's Club segment increased 1.5% and 1.3% for fiscal
2015 and 2014, respectively, when compared to the previous fiscal year.
The fiscal 2015 increase in net sales was primarily due to year-over-year
growth in retail square feet of 2.5%, driven by the addition of 15 new
clubs, partially offset by a decrease in fuel sales due to the lower average
selling price. Comparable club sales were flat for fiscal 2015. The fiscal
2014 increase in net sales was due to year-over-year growth in retail
square feet of 2.1%, driven by the addition of 12 new clubs, as well as pos-
itive comparable club sales of 0.3%. The fiscal 2014 positive comparable
club sales were the result of increased member traffic primarily coming
from our Savings Members, partially offset by severe winter storms that
occurred in the fourth quarter of fiscal 2014.
3.6%
Retail square feet at period end
632
647
Unit counts at period end
3.2%
3.4%
a percentage of net sales
Operating income as
$ 1,859
2,539
$ 1,976
0.3%
0.0%
Calendar comparable
4.9%
87
84
3.3%
620
83
Excluding Fuel
3,288
3.6%
3.6%
a percentage of net sales
Operating income as
$ 1,817 $ 1,812
$ 1,854
1.5%
Operating income
1.6%
2.1%
comparable period
Percentage change from
$50,574 $49,789
$51,630
Net sales
4.6%
Walmart
27
Management's Discussion and Analysis of
Financial Condition and Results of Operations
4,267
344
(4,267)
(1,592) (1,248)
Net Cash Used in Financing Activities
(Amounts in millions)
Net cash used in
financing activities
Fiscal Years Ended January 31,
2014
2013
2015
$(15,071) $(10,789) $(11,946)
Cash flows used in financing activities generally consist of transactions
related to our short-term and long-term debt, as well as dividends paid and
the repurchase of Company stock. Transactions with noncontrolling interest
shareholders are also classified as cash flows from financing activities.
Balances as of January 31, 2015 $ 4,810 $41,086 $45,896
Other
Our total outstanding long-term debt balance was relatively flat as of
January 31, 2015 compared to the balance as of January 31, 2014. During
fiscal 2015, we used the proceeds from the issuance of long-term debt to
pay
down and refinance existing debt and for other corporate purposes.
Our total dividend payments were $6.2 billion, $6.1 billion and $5.4 billion
for fiscal 2015, 2014 and 2013, respectively, and on February 19, 2015,
the Board of Directors approved the fiscal 2016 annual dividend of
$1.96 per share, an increase compared to the fiscal 2015 annual dividend
of $1.92 per share. For fiscal 2016, the annual dividend will be paid in
four quarterly installments of $0.49 per share, according to the following
record and payable dates:
Record Date
March 13, 2015
May 8, 2015
August 7, 2015
December 4, 2015
Payable Date
April 6, 2015
June 1, 2015
September 8, 2015
January 4, 2016
28
$ 4,128
Dividends
long-term debt
$ 5,083
(3,904)
Growth Activities
(3,904)
In fiscal 2016, we plan to add between 26 and 30 million square feet,
which will include a continued investment in Neighborhood Markets
and a moderation of Supercenter growth in the U.S. compared to recent
fiscal years. In addition, we plan to accelerate the growth of our digital
retail capabilities by investing $1.2 billion to $1.5 billion in e-commerce
websites and mobile commerce applications that will include technol-
ogy, infrastructure and other areas to better serve our customers and
support our stores and clubs. We anticipate financing these growth
activities through cash flows provided by operating activities and future
debt financings.
The following table provides our estimated range for fiscal 2016 capital
expenditures, as well as our estimated range for growth in retail square
feet. Our anticipated digital retail expenditures are included in our esti-
mated range for fiscal 2016 capital expenditures. The amounts in the
table do not include capital expenditures or growth in retail square feet
from any pending or future acquisitions.
Short-term Borrowings
Short-term borrowings decreased $6.3 billion for fiscal 2015 and
increased $0.9 billion for fiscal 2014, when compared to the previous
fiscal year. We generally utilize the liquidity provided by short-term
borrowings to provide funding used for our operations, dividend
payments, share repurchases, capital expenditures and other cash
requirements. However, more cash provided from operating activities
combined with less cash used for share repurchases and capital
expenditures during fiscal 2015, allowed us to minimize our short-term
borrowings at January 31, 2015. In addition to our short-term borrowings,
we also have various undrawn committed lines of credit that provide
$15.0 billion of additional liquidity, if needed.
Long-term Debt
The following table provides the changes in our long-term debt for
fiscal 2015:
Fiscal 2016
Projected Growth in
Retail Square Feet
(in thousands)
(Amounts in millions)
Long-term
debt due
within
one year
Long-term
debt
Total
Fiscal 2016
Projected Capital
Expenditures
(in billions)
$4,103 $41,771
Balances as of February 1, 2014
Proceeds from issuance
5,174
of long-term debt
Payments of long-term debt
Reclassifications of
3.7 to
4.2
0.8 to 0.8
1.0 to 1.3
$11.6 to $12.9
Corporate and support
Total
10,000 to 13,000
1,000 to 1,000
― to
26,000 to 30,000
Walmart International
15,000 to 16,000
$ 6.1 to $ 6.6
Walmart U.S.
$45,874
Sam's Club
5,174
(2,409)
Purchase of Company stock
(2,409)
5.07
(2,720)
(66)
Cash dividends declared
($1.88 per share)
(294)
།
(6,139)
(6,139)
(87)
(6,254)
(6,557)
| |
(6,139)
(6,557)
net of income taxes
Redemption value
Other comprehensive loss,
332 3,620
16,617
1
285
(10)
276
(342)
6995
(66)
(9)
Balances as of January 31, 2013
3,314
adjustment of redeemable
72,978
(587)
76,343
5,395
81,738
519
Consolidated net income
16,022
16,022
595
78
noncontrolling interest
Other comprehensive income,
(1,019)
16,363
17,099
---- (4,172)
(4,172)
(546)
(4,718)
Purchase of Company stock
(13)
(1)
16,363
(29)
(6,185)
(6,185)
(980)
(980)
Purchase of redeemable
noncontrolling interest
(1,491)
Other
8
(6,185)
(950)
1,491
81,339
5,084
(1,019)
(1,019)
1,019
6
55
(41)
14
(595)
(581)
(59)
Balances as of January 31, 2014
Consolidated net income
net of income taxes
Cash dividends declared
($1.92 per share)
3,233
323
2,362
76,566
(2,996)
76,255
Other
736
$ 5.01
$ 16,999
24,799
24,656
25,662
Provision for income taxes:
Current
8,504
8,619
7,976
Deferred
(519)
(514)
(18)
Total provision for income taxes
7,985
8,105
7,958
Income from continuing operations
11
Income from discontinued operations, net of income taxes
Income from continuing operations before income taxes
2,216
26,872
27,725
Interest:
Debt
2,161
2,072
1,977
Capital leases
300
263
272
Interest income
(113)
(119)
(186)
Interest, net
2,348
2,063
27,147
Consolidated net income
Consolidated net income attributable to Walmart
$85,777
$(7,168)
$81,394
(731)
$4,543
(618)
$85,937
$
See accompanying notes.
38
Walmart
2015 Annual Report
$
0.01
0.03
0.06
$ 5.03
4.87
$
$323 $ 2,462
Less consolidated net income attributable to noncontrolling interest
3,228
113
Basic net income per common share:
Basic income per common share from continuing operations attributable to Walmart
Basic income per common share from discontinued operations attributable to Walmart
Basic net income per common share attributable to Walmart
Diluted net income per common share:
16,814
16,551
17,704
285
144
52
17,099
(736)
16,695
(673)
17,756
(757)
$ 16,363
$ 16,022
(17)
Balances as of January 31, 2015
Operating income
88,629
91,353
2015 Annual Report
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Risks, Factors and Uncertainties Relating to Consumers Generally
and Our Customers
⚫ consumer confidence, disposable income, debt levels, credit availability,
spending levels, shopping patterns and demand for certain merchandise
in one or more of the markets in which we operate;
⚫ consumer acceptance of our stores and clubs, e-commerce websites
and mobile commerce applications, our digital and physical retail initia-
tives, programs and merchandise offerings, including our fresh food
offerings, globally in one or more of the markets in which we operate;
Risks, Factors and Uncertainties Specifically Relating to Our
Operations in Any or All of the Markets in which We Operate
⚫ our historical financial performance, including our U.S. and Walmart
International cash flows, for one or more periods or historical financial
position as of one or more dates completed or occurring after the date
the pertinent forward-looking statement is made;
⚫the cost of the goods we sell;
⚫ the availability, at an acceptable cost, of adequate supplies of consistent,
high-quality produce from suppliers in the local markets in which we
operate;
•
the availability of persons with the skills and abilities necessary to meet our
needs for managing and staffing our operations, including to manage and
staff new and relocated units;
⚫ the mix of merchandise we sell globally or in one or more of the markets
in which we operate;
⚫ the size of and turnover in our hourly workforce;
⚫ our selling prices of gasoline and diesel fuel;
•
⚫ cyberattacks on our information systems, including any of those used
to operate our e-commerce websites and our information security
•
Walmart
costs and any costs and liabilities we would incur as a result of a
successful cyberattack;
• adoption of or changes in tax, labor and other laws and regulations
and interpretations thereof that affect our business, including
changes in corporate and personal tax rates and the imposition
of new taxes and surcharges;
market selling prices of gasoline and diesel fuel;
129
under "Creating a more rewarding member experience.," in connec-
tion with our Sam's Club segment, Sam's Club's goal of having a suite
of business member services making membership in Sam's Club such
members' most valuable business card and the range for the number
of new and relocated clubs to be opened, and the number of clubs to
be remodeled, in fiscal 2016; and
⚫ under "A solid FY 15 performance; investing for a stronger future,"
currency exchange rates possibly continuing to be a headwind to
operating results in fiscal 2016, the range of net retail square footage
we will add in fiscal 2016, Walmart enabling customers to shop any-
time and anywhere, incremental e-commerce investment in fiscal
2016 and Walmart continuing to seek the right balance between sales
growth and profitability as we grow our e-commerce business and
the investment in wages and other initiatives for U.S. associates lead-
ing to higher sales and returns.
The forward-looking statements described above are identified by the
use in such statements of one or more of the words or phrases "aim,"
"anticipate," "could be," "could reduce," "estimated," "expansion," "expect,"
"goal," "grow," "intend," "investment," "is expected," "may cause," "may
continue," "may fluctuate," "may impact," "may not be," "may result,"
"objective," "plan," "priority is to," "projected," "should continue," "more to
come," "we'll," "we'll accomplish," "we'll also equip," "we'll always be,"
"we'll continue," "we'll drive," "we'll generate," "we'll reinvent," "will add,"
"will allow," "will be," "will be met," "will be paid," "will continue," "will
depend," "will ensure," "will have," "will impact," "will include," "will
increase," "will open," "would be," and "would increase," variations of
such words and phrases and other similar words or phrases.
The forward-looking statements included in this Annual Report and that
we make elsewhere are subject to certain risks, factors and uncertainties
that could materially affect our actual results and the realization of our
objectives and plans. These risks, factors and uncertainties include, but
are not limited to:
Risks, Factors and Uncertainties Relating to the Markets in which
We Operate
•
.
•
•
economic, geo-political, financial markets, capital markets and business
conditions, changes, trends and events globally and in one or more of
the markets in which we operate;
unemployment and underemployment levels globally and in one or
more of the markets in which we operate;
monetary policies of the U.S.government, the Board of Governors of
the Federal Reserve System, other governments or central banks, eco-
nomic or sovereign debt crises and disruptions in the financial markets;
supply of and demand for particular commodities and commodity
prices, including the prices of crude oil, natural gas, refined petroleum
products and electricity;
inflation and deflation;
currency exchange rate fluctuations and volatility;
fluctuations in market rates of interest;
•
market labor costs in the U.S.;
⚫ competitive initiatives of other retailers, other competitive pressures
and new competitors entering a market;
disruption in the availability of our e-commerce websites and mobile
commerce applications;
the availability of attractive opportunities for investment in retail
operations in the markets in which we currently operate and in new
markets and for investment in digital retail acquisitions and initiatives;
• disruption in our supply chain, including of the availability and transport
of goods from domestic and foreign suppliers to our stores and other
facilities;
⚫ the mix of our earnings from our U.S. and operations in one or more of
the markets in which we operate;
$473,076
$465,604
Membership and other income
3,422
3,218
3,047
Total revenues
485,651
476,294
468,651
Costs and expenses:
Cost of sales
365,086
358,069
352,297
Operating, selling, general and administrative expenses
93,418
$482,229
2013
2014
Fiscal Years Ended January 31,
⚫ the amounts of our net sales and expenses for a period denominated
in particular currencies other than the U.S. dollar;
• changes in our assessment of certain tax contingencies, increases or
decreases in valuation allowances, outcome of administrative audits,
the impact of discrete items on our effective tax rate and the resolution
of other tax matters;
• developments in and the outcome of legal and regulatory proceedings
to which we are a party or are subject and the expenses associated
therewith;
⚫ the requirements for expenditures in connection with the FCPA-related
matters;
• unanticipated changes in operating philosophy, plans and objectives;
• availability and the cost of acceptable building sites for new and relocated
stores, clubs and other facilities;
real estate, zoning, land use and other laws, ordinances, legal restrictions
and initiatives that may prevent Walmart from building, or that impose
limitations on Walmart's ability to build new units in certain locations or
relocate or expand existing units;
⚫ availability of necessary utilities for new or expanded units; and
• availability of skilled labor and labor, material and other construction
costs in areas in which new or relocated units are proposed to be con-
structed or existing units are proposed to be expanded or remodeled.
1
Other Risk Factors; No Duty to Update
2015 Annual Report
Walmart
35
Consolidated Statements of Income
(Amounts in millions, except per share data)
Revenues:
Net sales
2015
We discuss certain of these factors more fully, as well as certain other risk
factors that may affect the results and other matters discussed in the
forward-looking statements identified above, in our filings with the
Securities and Exchange Commission (the "SEC"), including our Annual
Report on Form 10-K under the heading "Item 1A. Risk Factors." We filed
our Annual Report on Form 10-K for the fiscal year ended January 31,
2015, with the SEC on April 1, 2015. The forward-looking statements
described above are made based on knowledge of our business and the
environment in which we operate and assumptions that we believe to
be reasonable at the time such forward-looking statements are made.
However, as a consequence of the risks, factors and uncertainties we dis-
cuss above, and in the other reports mentioned above, other risks not
known to us at this time, changes in facts, assumptions not being realized
or other circumstances, our actual results may differ materially from
those results discussed in or implied or contemplated by such forward-
looking statements. We cannot assure the reader that the results or
developments expected or anticipated by us will be realized or, even if
substantially realized, that those results or developments will result in the
expected consequences for us or affect us, our business or our operations
in the way we expect. You are urged to consider all of these risks, factors
and uncertainties carefully in evaluating the forward-looking statements
and not to place undue reliance on such forward-looking statements. The
forward-looking statements included in this Annual Report speak only as
of the date of this report, and we undertake no obligation to update these
forward-looking statements to reflect subsequent events or circumstances,
except as may be required by applicable law.
Other
(311)
469
2015 Annual Report
Walmart
36
See accompanying notes.
$17,822
$13,613
$12,191
(124)
(822)
(295)
(1)
(190)
Less comprehensive income (loss) attributable to nonredeemable noncontrolling interest
Less comprehensive income (loss) attributable to redeemable noncontrolling interest
Comprehensive income attributable to Walmart
18,768
13,909
12,381
Comprehensive income, net of income taxes
823
(2,409)
(4,172)
Other comprehensive income (loss) attributable to Walmart
(51)
66
-
(138)
311
546
Less other comprehensive income (loss) attributable to nonredeemable noncontrolling interest
Less other comprehensive income (loss) attributable to redeemable noncontrolling interest
1,012
(2,786)
(Amounts in millions)
(4,718)
ASSETS
Cash and cash equivalents
Deferred income taxes and other
Long-term obligations under capital leases
Long-term debt
Total current liabilities
Current liabilities of discontinued operations
Obligations under capital leases due within one year
Long-term debt due within one year
Accrued income taxes
Accrued liabilities
Accounts payable
Short-term borrowings
Current liabilities:
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY
Total assets
Other assets and deferred charges
Goodwill
Property under capital leases, net
Less accumulated amortization
Property under capital leases
Property under capital leases:
Property and equipment, net
Less accumulated depreciation
Property and equipment
Property and equipment:
Total current assets
Current assets of discontinued operations
Prepaid expenses and other
Inventories
Receivables, net
Current assets:
Other comprehensive income (loss), net of income taxes
(166)
153
-
$17,099
2015
Consolidated net income attributable to Walmart
Less consolidated net income attributable to nonredeemable noncontrolling interest
Less consolidated net income attributable to redeemable noncontrolling interest
Consolidated net income
(Amounts in millions)
Consolidated Statements of Comprehensive Income
See accompanying notes.
Dividends declared per common share
Diluted
Basic
Weighted-average common shares outstanding:
5.02
$
4.88
$
5.05
$
0.01
0.03
0.06
5.01
$
$ 4.85
4.99
$
Diluted income per common share from continuing operations attributable to Walmart
Diluted income per common share from discontinued operations attributable to Walmart
Diluted net income per common share attributable to Walmart
5.04
3,230
3,269
3,374
3,243
(69)
Minimum pension liability
136
207
(470)
Derivative instruments
1,042
(3,146)
(4,179)
Other comprehensive income (loss), net of income taxes
Currency translation and other
16,999
16,022
16,363
(73)
Redeemable noncontrolling interest
(67)
(606)
(736)
$17,756
$16,695
2013
2014
Fiscal Years Ended January 31,
1.59
$
1.88
$
$ 1.92
3,389
3,283
(684)
Commitments and contingencies
Equity:
Consolidated Balance Sheets
$342 $ 3,692
3,418
Balances as of February 1, 2012
Interest
Redeemable
Total Noncontrolling
Equity
Nonredeemable
Noncontrolling
Interest
Accumulated
Total
Other
Walmart
Comprehensive Shareholders'
Income (Loss) Equity
Earnings
Amount Par Value
Shares
(Amounts in millions)
Retained
Capital in
Excess of
Common Stock
and Redeemable Noncontrolling Interest
Consolidated Statements of Shareholders' Equity
37
Walmart
2015 Annual Report
$204,751
$203,706
Total liabilities, redeemable noncontrolling interest, and equity
See accompanying notes.
81,339
85,937
Total equity
5,084
4,543
76,255
81,394
$68,691
$(1,410)
$71,315
$4,446
(7,709)
(5,361)
ཅི།།
interest of acquired entity
Nonredeemable noncontrolling
(7,709)
(7,341)
(11) (357)
(5,361)
(5,361)
21
(115)
Purchase of Company stock
($1.59 per share)
(2,996)
51
138
823
823
Cash dividends declared
net of income taxes
Other comprehensive income,
73
17,683
684
16,999
16,999
Consolidated net income
$ 404
$75,761
961
469
(7,168)
85,777
6,149
5,671
19,510
18,102
2,543
2,375
(3,046)
(2,864)
5,589
5,239
115,364
114,280
(57,725)
(63,115)
173,089
177,395
61,185
63,278
460
1,909
2,224
44,858
45,141
6,677
$ 7,281
$ 9,135
6,778
2014
2015
As of January 31,
$203,706
$204,751
$ 1,592
38,410
•
Nonredeemable noncontrolling interest
Total Walmart shareholders' equity
Accumulated other comprehensive income (loss)
Retained earnings
2,362
2,462
323
323
value
Capital in excess of par
Common stock
1,491
8,017
8,805
76,566
2,788
41,771
41,086
69,345
65,272
89
309
287
4,103
4,810
966
1,021
18,793
19,152
$ 7,670
37,415
2,606
⚫ under "Driving increased profitability through balanced growth.," in
connection with our Walmart International segment, the segment stra-
tegically optimizing its global positioning across key geographies and
formats to maximize growth potential and its objective of strengthen-
ing customer trust with a focus on everyday low price, high quality fresh
food and excellent customer service;
$ 4.90
⚫ in our Chief Executive Officer's letter, driving sales growth by execut-
ing well in stores and e-commerce, our objective of running great
stores, clubs and e-commerce to grow our business, investment in
increased wages and other initiatives for our U.S. associates, our fresh
food offering and e-commerce innovations being future growth drivers
and generating increased shareholder value when we operate and grow
efficiently and our commitment to compliance, ethics and doing business
the right way;
84
652
3,428
6,548
10,712
Purchase obligations
1,898
1,898
2,723
2,723
23,871
3,399
3,690
1,950
32,910
10,464
2,590
3,097
1,759
17,910
3,252
778
920
504
5,454
1,592
1,592
Total commercial commitments
$119,095
$21,784
$14,970
Fiscal 2018
Fiscal 2017
Fiscal 2016
(Amounts in millions)
The table below provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations, the table
represents the principal cash flows and related weighted-average interest rates by expected maturity dates. For interest rate swaps, the table
represents the contractual cash flows and weighted-average interest rates by the contractual maturity date, unless otherwise noted. The notional
amounts are used to calculate contractual cash flows to be exchanged under the contracts. The weighted-average variable rates are based upon
prevailing market rates at January 31, 2015.
We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt issuances. We hedge a portion of our
interest rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For fiscal 2015, the net fair value of
our interest rate swaps decreased approximately $158 million primarily due to fluctuations in market interest rates and the termination of forward
starting receive variable-rate, pay fixed-rate swaps in October and April 2014 concurrently with the issuance of debt.
Interest Rate Risk
Management's Discussion and Analysis of
Financial Condition and Results of Operations
2015 Annual Report
Walmart
30
The analysis presented below for each of our market risk sensitive
instruments is based on a hypothetical scenario used to calibrate
potential risk and does not represent our view of future market changes.
The effect of a change in a particular assumption is calculated without
adjusting any other assumption. In reality, however, a change in one
factor could cause a change in another, which may magnify or negate
other sensitivities.
In addition to the risks inherent in our operations, we are exposed to
certain market risks, including changes in interest rates and fluctuations
in currency exchange rates.
$33,219
Market Risk
The Company has future lease commitments for land and buildings for
approximately 282 future locations. These lease commitments have lease
terms ranging from 1 to 30 years and provide for certain minimum
rentals. If executed, payments under operating leases would increase
by $58 million for fiscal 2016, based on current estimates.
In addition to the unrecorded contractual obligations presented
above, we have entered into certain arrangements, as discussed below,
for which the timing of payment, if any, is unknown.
Off Balance Sheet Arrangements
"Notes to Consolidated Financial Statements" for additional discussion
of unrecognized tax benefits.
In addition to the amounts shown in the table above, $838 million of
unrecognized tax benefits are considered uncertain tax positions and
have been recorded as liabilities. The timing of the payment, if any,
associated with these liabilities is uncertain. Refer to Note 9 in the
The expected timing for payment of the obligations discussed above is
estimated based on current information. Timing of payments and actual
amounts paid with respect to some unrecorded contractual commit-
ments may be different depending on the timing of receipt of goods or
services or changes to agreed-upon amounts for some obligations.
Purchase obligations include legally binding contracts, such as firm
commitments for inventory and utility purchases, as well as commitments
to make capital expenditures, software acquisition and license
commitments and legally binding service contracts. Purchase orders for
inventory and other services are not included in the table above.
Purchase orders represent authorizations to purchase rather than binding
agreements. For the purposes of this table, contractual obligations for
the purchase of goods or services are defined as agreements that are
enforceable and legally binding and that specify all significant terms,
including: fixed or minimum quantities to be purchased; fixed, minimum
or variable price provisions; and the approximate timing of the transac-
tion. Our purchase orders are based on our current inventory needs and
are fulfilled by our suppliers within short time periods. We also enter into
contracts for outsourced services; however, the obligations under these
contracts are not significant and the contracts generally contain clauses
allowing for cancellation without significant penalty.
Estimated interest payments are based on our principal amounts
and expected maturities of all debt outstanding at January 31, 2015,
and management's forecasted market rates for our variable rate debt.
Additionally, the Company has $15.0 billion in undrawn committed lines
of credit which, if drawn upon, would be included in the current liabilities
section of the Company's Consolidated Balance Sheets.
(2) "Capital lease obligations" includes executory costs and imputed interest related to capital lease obligations that are not yet recorded. Refer to Note 11 in the "Notes to the
Consolidated Financial Statements" for more information.
(1) "Long-term debt" includes the fair value of our derivatives classified as fair value hedges.
$70,890
$11,451
In connection with certain long-term debt issuances, we could be liable
for early termination payments if certain unlikely events were to occur.
At January 31, 2015, the aggregate termination payment would have been
$64 million. The arrangement pursuant to which this payment could be
made will expire in fiscal 2019.
$ 4,032
$ 3,835
$ 4,810
Average price paid per share
13.4
Total number of shares repurchased
2013
Fiscal Years Ended January 31,
2014
2015
except per share data)
(Amounts in millions,
AA
F1+
Aa2
P-1
Moody's Investors Service
Fitch Ratings
$75.82
AA
Standard & Poor's
Long-term debt
Commercial paper
Rating agency
We have strong commercial paper and long-term debt ratings that have
enabled and should continue to enable us to refinance our debt as it
becomes due at favorable rates in capital markets. At January 31, 2015,
the ratings assigned to our commercial paper and rated series of our
outstanding long-term debt were as follows:
We believe cash flows from continuing operations, our current cash
position and access to capital markets will continue to be sufficient to
meet our anticipated operating cash needs, including to fund seasonal
buildups in merchandise inventories, and to fund our capital expenditures,
dividend payments and share repurchases.
Capital Resources
We regularly review share repurchase activity and consider several factors
in determining when to execute share repurchases, including, among
other things, current cash needs, capacity for leverage, cost of borrowings,
our results of operations and the market price of our common stock.
The following table provides, on a settlement date basis, the number of
shares repurchased, average price paid per share and total cash paid for
share repurchases for fiscal 2015, 2014 and 2013:
From time to time, we repurchase shares of our common stock under
share repurchase programs authorized by the Board of Directors. The
current $15.0 billion share repurchase program has no expiration date or
other restrictions limiting the period over which we can make share
repurchases. At January 31, 2015, authorization for $10.3 billion of share
repurchases remained under the current share repurchase program.
Any repurchased shares are constructively retired and returned to an
unissued status.
Company Share Repurchase Program
Management's Discussion and Analysis of
Financial Condition and Results of Operations
⚫ under "Delivering an improved shopping experience.," in connection
with our Walmart U.S. segment, certain wage increases for U.S. associ-
ates, continuing to strengthen fresh departments, certain factors
ensuring a superior fresh offering to Walmart U.S.'s customers, addition
of items sold on walmart.com, continuing to work with supplier partners
to ensure everyday low cost and ensuring everyday low cost allowing
investment in and strengthening of the segment's everyday low cost
pricing strategy and offering value to customers, the ranges of the num-
ber of units and amount of retail square feet to be added by Walmart
U.S. in fiscal 2016, and transparent pricing for customers occurring
through new tools and capabilities;
$
A-1+
Expected Maturity Date
Fiscal 2019
Total cash paid for share repurchases
89.1 113.2
$74.99 $67.15
$6,683 $7,600
$ 45,896
Stand-by letters of credit
Trade letters of credit
Non-cancelable operating leases
Unrecorded contractual obligations:
Capital lease obligations (2)
Short-term borrowings
Long-term debt (1)
Recorded contractual obligations:
(Amounts in millions)
Thereafter
2019-2020
2017-2018
$1,015
2016
Payments Due During Fiscal Years Ending January 31,
The following table sets forth certain information concerning our obligations and commitments to make contractual future payments, such as debt
and lease agreements, and certain contingent commitments:
Contractual Obligations and Other Commercial Commitments
Financial Condition and Results of Operations
Management's Discussion and Analysis of
29
Walmart
2015 Annual Report
We monitor our credit rating and our capacity for long-term financing
using various qualitative and quantitative factors, including our debt-to-
total capitalization, as support for our long-term financing decisions. For
the purpose of the debt-to-total capitalization calculation, debt is defined
as the sum of short-term borrowings, long-term debt due within one year,
obligations under capital leases due within one year, long-term debt and
long-term obligations under capital leases. Total capitalization is defined as
debt plus total Walmart shareholders' equity. At January 31, 2015 and 2014,
the ratio of our debt-to-total capitalization was 38.2% and 42.6%, respec-
tively. The decrease in our debt-to-total capitalization ratio was the result
of using less cash for share repurchases and capital expenditures during
fiscal 2015, which allowed us to minimize our short-term borrowings at
January 31, 2015. The reduced share repurchases also resulted in increased
growth in retained earnings. These impacts were partially offset by
additional currency translation losses recorded in accumulated other
comprehensive income (loss).
Credit rating agencies review their ratings periodically and, therefore, the
credit ratings assigned to us by each agency may be subject to revision
at any time. Accordingly, we are not able to predict whether our current
credit ratings will remain consistent over time. Factors that could affect
our credit ratings include changes in our operating performance, the
general economic environment, conditions in the retail industry, our
financial position, including our total debt and capitalization, and
changes in our business strategy. Any downgrade of our credit ratings
by a credit rating agency could increase our future borrowing costs or
impair our ability to access capital and credit markets on terms com-
mercially acceptable to us. In addition, any downgrade of our current
short-term credit ratings could impair our ability to access the commer-
cial paper markets with the same flexibility that we have experienced
historically, potentially requiring us to rely more heavily on more
expensive types of debt financing. The credit rating agency ratings are
not recommendations to buy, sell or hold our commercial paper or debt
securities. Each rating may be subject to revision or withdrawal at
any time by the assigning rating organization and should be evaluated
independently of any other rating. Moreover, each credit rating is
specific to the security to which it applies.
As described in Note 13 to our Consolidated Financial Statements,
during fiscal 2015, we completed the purchase of substantially all of the
remaining noncontrolling interest in Walmart Chile for approximately
$1.5 billion, using existing cash to complete this transaction.
Transactions with Noncontrolling Interests
We decreased the total cash paid for share repurchases by $5.7 billion
for fiscal 2015, compared to the previous fiscal year, as a result of current
cash needs, capacity for leverage and increased cash used in transactions
with noncontrolling interests described further below. In addition, our
results of operations influenced our share repurchase activity.
Total
Fiscal 2020
Estimated interest on long-term debt
Total
When necessary, we record a LIFO provision for the estimated annual
effect of inflation, and these estimates are adjusted to actual results
determined at year-end. Our LIFO provision is calculated based on
inventory levels, markup rates and internally generated retail price
indices. At January 31, 2015 and 2014, our inventories valued at LIFO
approximated those inventories as if they were valued at FIFO.
Under the retail method of accounting, inventory is valued at the lower
of cost or market, which is determined by applying a cost-to-retail ratio
to each merchandise grouping's retail value. The FIFO cost-to-retail ratio
is generally based on the fiscal year purchase activity. The cost-to-retail
ratio for measuring any LIFO provision is based on the initial margin of
the fiscal year purchase activity less the impact of any permanent
markdowns. The retail method of accounting requires management to
make certain judgments and estimates that may significantly impact the
ending inventory valuation at cost, as well as the amount of gross profit
recognized. Judgments made include recording markdowns used to sell
inventory and shrinkage. When management determines the ability to
sell inventory has diminished, markdowns for clearance activity and the
related cost impact are recorded. Factors considered in the determina-
tion of markdowns include current and anticipated demand, customer
preferences and age of merchandise, as well as seasonal and fashion trends.
Changes in weather and customer preferences could cause material
changes in the amount and timing of markdowns from year to year.
We value inventories at the lower of cost or market as determined primarily
by the retail method of accounting, using the last-in, first-out ("LIFO")
method for substantially all of the Walmart U.S. segment's inventories.
The inventory at the Walmart International segment is valued primarily
by the retail inventory method of accounting, using the first-in, first-out
("FIFO") method. The retail method of accounting results in inventory
being valued at the lower of cost or market since permanent markdowns
are immediately recorded as a reduction of the retail value of inventory.
The inventory at the Sam's Club segment is valued based on the
weighted-average cost using the LIFO method.
Inventories
Management continually reviews our accounting policies, how they
are applied and how they are reported and disclosed in our financial
statements. Following is a summary of our critical accounting estimates
and how they are applied in preparation of the financial statements.
Summary of Critical Accounting Estimates
Management strives to report our financial results in a clear and
understandable manner, although in some cases accounting and
disclosure rules are complex and require us to use technical terminology.
In preparing the Company's Consolidated Financial Statements, we fol-
low accounting principles generally accepted in the U.S. These principles
require us to make certain estimates and apply judgments that affect our
financial position and results of operations as reflected in our financial
statements. These judgments and estimates are based on past events
and expectations of future outcomes. Actual results may differ from
our estimates.
We discuss our existing FCPA investigation and related matters in the
Annual Report on Form 10-K for fiscal 2015, including certain risks arising
therefrom, in Part I, Item 1A of the Form 10-K under the caption "Risk
Factors" and in Note 10 to our Consolidated Financial Statements, which
is captioned "Contingencies," under the sub-caption "FCPA Investigation
and Related Matters." We also discuss various legal proceedings related
to the FCPA investigation in Item 3 of the Form 10-K under the caption
"Item 3. Legal Proceedings," under the sub-caption "II. Certain Other
Proceedings." We discuss our "equal value" claims against our United
Kingdom subsidiary, ASDA Stores, Ltd., in the Annual Report on
Form 10-K for fiscal 2015, including certain risks arising therefrom, in
Part I, Item 1A of the Form 10-K under the caption "Risk Factors" and
in Note 10 to our Consolidated Financial Statements, which is captioned
"Contingencies," under the sub-caption "Legal Proceedings."
Other Matters
In addition to currency swaps, we have designated foreign-currency-
denominated long-term debt as nonderivative hedges of net investments
of certain of our foreign operations. At January 31, 2015 and 2014, we had
£2.5 billion of outstanding long-term debt designated as a hedge of our
net investment in the United Kingdom. At January 31, 2015, a hypothetical
10% increase or decrease in the value of the U.S. dollar relative to the
British pound would have resulted in a gain or loss in the value of the
debt of $342 million. In addition, we had outstanding long-term debt of
¥100 billion at January 31, 2015 and ¥200 billion at January 31, 2014, that
was designated as a hedge of our net investment in Japan. At January 31,
2015, a hypothetical 10% increase or decrease in value of the U.S. dollar
relative to the Japanese yen would have resulted in a gain or loss in the
value of the debt of $77 million.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
31
Walmart
2015 Annual Report
We provide for estimated inventory losses, or shrinkage, between
physical inventory counts on the basis of a percentage of sales.
Following annual inventory counts, the provision is adjusted to reflect
updated historical results.
We hold currency swaps to hedge the currency exchange component of
our net investments and also to hedge the currency exchange rate fluc-
tuation exposure associated with the forecasted payments of principal
and interest of non-U.S. denominated debt. The aggregate fair value of
these swaps was in a liability position of $110 million at January 31, 2015
and in an asset position of $550 million at January 31, 2014. The change in
the fair value of these swaps was due to fluctuations in currency exchange
rates, primarily the strengthening of the U.S. dollar relative to other curren-
cies in the latter half of fiscal 2015. A hypothetical 10% increase or decrease
in the currency exchange rates underlying these swaps from the market
rate at January 31, 2015 would have resulted in a loss or gain in the value
of the swaps of $435 million. A hypothetical 10% change in interest rates
underlying these swaps from the market rates in effect at January 31, 2015
would have resulted in a loss or gain in value of the swaps of $20 million.
Foreign Currency Risk
As of January 31, 2015, our variable rate borrowings, including the effect
of our commercial paper and interest rate swaps, represented 7% of our
total short-term and long-term debt. Based on January 31, 2015 debt
levels, a 100 basis point change in prevailing market rates would cause
our annual interest costs to change by approximately $23 million.
(1) The long-term debt amounts in the table exclude the Company's derivatives classified as fair value hedges.
1.5%
3.3%
3.3%
―%
1.5%
-%
-%
―%
―%
-%
-%
-%
-%
We are exposed to fluctuations in foreign currency exchange rates as a
result of our net investments and operations in countries other than the
U.S. For fiscal 2015, movements in currency exchange rates and the
related impact on the translation of the balance sheets of the Company's
subsidiaries in Canada, the United Kingdom, Japan, Mexico and Chile
were the primary cause of the $3.6 billion net loss in the currency transla-
tion and other category of accumulated other comprehensive income
(loss). We hedge a portion of our foreign currency risk by entering into
currency swaps and designating certain foreign-currency-denominated
long-term debt as net investment hedges.
Weighted-average receive rate
32
Management's Discussion and Analysis of
Financial Condition and Results of Operations
⚫ under "Our framework for growth," our strategic plan, Walmart always
being aggressive on price and equipping customers with information
and technology to facilitate great customer service;
in this Annual Report regarding:
Thereafter
the realization of certain net deferred tax assets, tax audit resolutions
over fiscal 2016 reducing unrecognized tax benefits within a certain
range or beyond and the reasons for that reduction, any change not
having a significant impact on our Consolidated Financial Statements
and the possibility that the resolution of a group of related non-income
tax matters might result in a material liability to Walmart (Note 9);
⚫ an adverse decision in, or settlement of, certain litigation possibly
resulting in material liability to us and matters relating to an FCPA
investigation not having a material adverse effect on our business
(Note 10);
in the Notes to our Consolidated Financial Statements regarding:
⚫any portion of our net investment and cash flow instruments that is an
ineffective hedge being insignificant and the amounts related to our
derivatives expected to be reclassified from accumulated other comp-
rehensive income (loss) to net income during the next 12 months
being insignificant (Note 8);
⚫our cash flows from continuing operations, current cash position and
access to debt and capital markets continuing to be sufficient to meet
our cash needs for operations and other specified purposes; and
⚫the amount of increases in payments under operating leases if certain
leases are executed (which statement also appears in Note 11 to our
Consolidated Financial Statements);
⚫ our estimated range of capital expenditures (including digital retail
capital expenditures) in fiscal 2016 for each of our reportable seg-
ments, in the "Corporate and support" category and in total;
⚫the estimated/projected growth in retail square feet in total and by
reportable segment in fiscal 2016;
⚫our fiscal 2016 global expansion plans, continued investment in
Neighborhood Markets, moderation in U.S. supercenter growth, growing
our retail square feet and expanding our digital retail capabilities and our
plans to finance our growth activities;
Management's Discussion and Analysis of
Financial Condition and Results of Operations
33
Walmart
2015 Annual Report
•the recently announced new associate wage structure and comprehensive
associate training and educational programs adversely affecting Walmart's
ability to leverage in the future and cash provided by operating activities
being sufficient to fund those programs;
2015 Annual Report
⚫ meeting our liquidity needs through sources other than cash held
outside of the U.S., intending to permanently reinvest such cash outside
of the U.S., and our ability to repatriate cash held outside of the
U.S. (which statements also appear in Note 1 to our Consolidated
Financial Statements);
⚫volatility of currency exchange rates possibly affecting future results of
Walmart and Walmart International;
in our Management's Discussion and Analysis of Financial Condition and
Results of Operations regarding:
Those forward-looking statements include statements:
Forward-looking Statements
Cautionary Statement Regarding Forward-Looking Statements
This Annual Report to Shareholders contains statements that we believe
are "forward-looking statements" entitled to the protection of the safe
harbor for forward-looking statements provided by the Private Securities
Litigation Reform Act of 1995, as amended.
Deferred tax assets represent amounts available to reduce income taxes
payable on taxable income in future years. Such assets arise because
of temporary differences between the financial reporting and tax bases
of assets and liabilities, as well as from net operating loss and tax credit
carryforwards. Deferred tax assets are evaluated for future realization
and reduced by a valuation allowance to the extent that a portion is not
more likely than not to be realized. Many factors are considered when
assessing whether it is more likely than not that the deferred tax assets
will be realized, including recent cumulative earnings, expectations of
future taxable income, carryforward periods and other relevant quan-
titative and qualitative factors. The recoverability of the deferred tax
assets is evaluated by assessing the adequacy of future expected taxable
income from all sources, including reversal of taxable temporary
differences, forecasted operating earnings and available tax planning
strategies. This evaluation relies heavily on estimates.
Our tax returns are routinely audited and settlements of issues raised
in these audits sometimes affect our tax provisions. The benefits of
uncertain tax positions are recorded in our financial statements only
after determining a more likely than not probability that the uncertain
tax positions will withstand challenge, if any, from taxing authorities.
When facts and circumstances change, we reassess these probabilities
and record any changes in the financial statements as appropriate.
We account for uncertain tax positions by determining the minimum
recognition threshold that a tax position is required to meet before
being recognized in the financial statements. This determination
requires the use of significant judgment in evaluating our tax positions
and assessing the timing and amounts of deductible and taxable items.
Income taxes have a significant effect on our net earnings. We are
subject to income taxes in the U.S. and numerous foreign jurisdictions.
Accordingly, the determination of our provision for income taxes requires
significant judgment, the use of estimates and the interpretation and
application of complex tax laws. Our effective income tax rate is affected
by many factors, including changes in our assessment of certain tax
contingencies, increases and decreases in valuation allowances, changes
in tax law, outcomes of administrative audits, the impact of discrete
items and the mix of earnings among our U.S. and international
operations where the statutory rates are generally lower than the
U.S. statutory rate, and may fluctuate as a result.
Income Taxes
As of January 31, 2015, the fair value of certain recently acquired
indefinite-lived intangible assets approximated their carrying value of
$419 million. Any deterioration in the fair value of these assets would
result in a related impairment charge. Management will continue to
monitor the fair value of these assets in future periods.
Goodwill and other indefinite-lived acquired intangible assets are
not amortized, but are evaluated for impairment annually or whenever
events or changes in circumstances indicate that the value of a certain
asset may be impaired. Generally, this evaluation begins with a qualitative
assessment to determine whether a quantitative impairment test is
necessary. If we determine, after performing an assessment based on
the qualitative factors, that the fair value of the reporting unit is more
likely than not less than the carrying amount, or that a fair value of the
reporting unit substantially in excess of the carrying amount cannot
be assured, then a quantitative impairment test would be performed.
The quantitative test for impairment requires management to make
judgments relating to future cash flows, growth rates and economic
and market conditions. These evaluations are based on determining the
fair value of a reporting unit or asset using a valuation method such as
discounted cash flow or a relative, market-based approach. Historically,
our reporting units have generated sufficient returns to recover the
cost of goodwill and other indefinite-lived acquired intangible assets.
Because of the nature of the factors used in these tests, if different
conditions occur in future periods, future operating results could be
materially impacted.
We evaluate long-lived assets other than goodwill and assets with
indefinite lives for indicators of impairment whenever events or changes
in circumstances indicate their carrying amounts may not be recover-
able. Management's judgments regarding the existence of impairment
indicators are based on market conditions and operational performance,
such as operating income and cash flows. The evaluation for long-lived
assets is performed at the lowest level of identifiable cash flows, which is
generally at the individual store level or, in certain markets, at the market
group level. The variability of these factors depends on a number of
conditions, including uncertainty about future events and changes in
demographics. Thus, our accounting estimates may change from period
to period. These factors could cause management to conclude that
indicators of impairment exist and require impairment tests be
performed, which could result in management determining the value
of long-lived assets is impaired, resulting in a write-down of the related
long-lived assets.
Impairment of Assets
⚫our objectives of growing net sales at a faster rate than operating
expenses and operating income at a faster rate than net sales and our
strategic growth investments affecting those metrics in certain ways;
⚫the possible fluctuation of our effective tax rate for future periods;
⚫volatility of fuel prices possibly affecting the operating results of our
Sam's Club segment in the future;
Weighted-average pay rate
Walmart
500
$44,884
$33,219
4.9%
4.3%
3.1%
$514
$3,518
$1,523
4.0%
1.9%
2.5%
Weighted-average interest rate
$2,055
$4,055
Long-term debt (1):
4.4%
0.5%
―%
-%
-%
―%
0.5%
Weighted-average interest rate
$ 1,592
$ - $ - $ - $ - $ - $
$1,592
$ 500
Variable rate
Short-term borrowings:
Liabilities
―%
Variable rate
Fixed rate
Weighted-average pay rate
$ 755
-%
0.6%
Weighted-average receive rate
0.9%
0.9%
Fixed to variable
255
$
$
$ 255
Interest rate swaps:
$
Variable to fixed
3.9%
$ 257
$
$
Interest rate derivatives
$ 1,012
Weighted-average interest rate
$
4.2%
-%
-%
―%
―%
3.8%
0.6%
3.3%
36,500
36,000
Fixed
2023-2030
2,821
Average
4.9%
Variable
Total Euro denominated
2,821
1,356
Total U.S. dollar denominated
1,356
5.4%
Rate (1)
5.4%
Fixed
Rate (1)
Amount
Average
January 31, 2015
Unsecured debt
500
Fixed
2016-2045
2019
$36,000
4.3%
$35,500
4.3%
500
Variable
2031-2039
Total other debt (in USD) (2)
5.3%
45,874
Amount
45,896
Total debt
801
453
45,073
45,443
Total unsecured debt
1,947
851
Total Yen denominated
0.7%
457
0.6%
255
2016
5,770
5.3%
Variable
-
Total Sterling denominated
5,271
5,271
5,770
2016-2021
596
1.0%
1,490
1.3%
Variable
Fixed
As of January 31,
8,110
January 31, 2014
0.1%
6,007
$8,740
$13,318
8,971
0.1%
$11,581
7,009
0.5%
2013
2014
2015
Fiscal Years Ended January 31,
Weighted-average interest rate
Maximum amount outstanding at any month-end
Average daily short-term borrowings
(Amounts in millions)
Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings outstanding at January 31, 2015 and 2014 were
$1.6 billion and $7.7 billion, respectively. The following table includes additional information related to the Company's short-term borrowings for
fiscal 2015, 2014 and 2013:
6 Short-term Borrowings and Long-term Debt
Notes to Consolidated Financial Statements
2015 Annual Report
Walmart
Less amounts due within one year
$ 4,954
$ 4,652
3,306
3,477
2,592
The Company has various committed lines of credit, committed with 23 financial institutions, totaling $15.0 billion as of January 31, 2015 and with 24 financial
institutions, totaling $15.4 billion as of January 31, 2014. The committed lines of credit are summarized in the following table:
2,554
$19,152
$18,793
(1) Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans.
(2) Self-insurance consists of all insurance-related liabilities, such as workers' compensation, general liability, vehicle liability, property liability and employee-related
health care benefits.
(3) Accrued non-income taxes include accrued payroll, value added, sales and miscellaneous other taxes.
(4) Other accrued liabilities consist of various items such as maintenance, utilities, advertising and interest.
8,300
(Amounts in millions)
Fiscal Years Ended January 31,
2015
The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following:
Notes to Consolidated Financial Statements
47
Walmart
2015 Annual Report
Apart from the committed lines of credit, the Company has trade and stand-by letters of credit totaling $4.6 billion and $4.7 billion at January 31, 2015
and 2014, respectively. These letters of credit are utilized in normal business activities.
The committed lines of credit mature at various times between June 2015 and June 2019, carry interest rates generally ranging between LIBOR plus 10
basis points and LIBOR plus 75 basis points, and incur commitment fees ranging between 1.5 and 4.0 basis points. In conjunction with the lines of
credit listed in the table above, the Company has agreed to observe certain covenants, the most restrictive of which relates to the maximum amount
of secured debt.
(1) In June 2014, the Company renewed and extended its existing five-year credit facility, which is used to support its commercial paper program.
(2) In June 2014, the Company renewed and extended its existing 364-day revolving credit facility, which is used to support its commercial paper program.
$15,400
$
$15,400
9,400
9,400
$ 6,000
$
$ 6,000
$ 6,000
9,000
$15,000
2014
Available
Drawn
Undrawn
Available
Drawn
(Amounts in millions)
Undrawn
$ 6,000
$
364-day revolving credit facility (2)
Total
9,000
$15,000
$
Five-year credit facility (1)
(4,810)
75.30
Long-term debt
Total number of shares repurchased
13.4
89.1
113.2
Average price paid per share
$75.82
$74.99
$67.15
Total cash paid for share repurchases
$1,015
$6,683
$7,600
2015 Annual Report
Walmart
45
Notes to Consolidated Financial Statements
4 Accumulated Other Comprehensive Income (Loss)
136
853
Other comprehensive income (loss) before reclassifications
$(1,410)
$(597)
$
2013
$ (806)
Total
Minimum
Pension Liability
Derivative
Instruments
Currency Translation
and Other
(Amounts in millions and net of income taxes)
The following table provides the fiscal 2015, 2014 and 2013 changes in the composition of total accumulated other comprehensive income (loss),
including the amounts reclassified out of accumulated other comprehensive income (loss) by component for fiscal 2015 and 2014:
Balances as of January 31, 2012
(166)
2014
(Amounts in millions, except per share data)
Grant-Date
Fair Value
Weighted-Average
Grant-Date
Fair Value
Shares
Per Share
Shares
Per Share
9,951
$63.26
17,785
$55.87
3,328
5,671
69.39
(2,799)
The Company considers several factors in determining when to execute
share repurchases, including, among other things, current cash needs,
capacity for leverage, cost of borrowings, its results of operations and
the market price of its common stock. The following table provides, on a
settlement date basis, the number of shares repurchased, average price
paid per share and total cash paid for share repurchases for fiscal 2015,
2014 and 2013:
From time to time, the Company repurchases shares of its common stock
under share repurchase programs authorized by the Board of Directors.
On June 6, 2013, the Company's Board of Directors replaced the previous
$15.0 billion share repurchase program, which had approximately
$712 million of remaining authorization for share repurchases as of that
date, with a new $15.0 billion share repurchase program, which was
announced on June 7, 2013. As was the case with the replaced share
repurchase program, the current share repurchase program has no
expiration date or other restrictions limiting the period over which the
Company can make share repurchases. At January 31, 2015, authorization
for $10.3 billion of share repurchases remained under the current share
repurchase program. Any repurchased shares are constructively retired
and returned to an unissued status.
Share Repurchase Program
$61.00
17,568
$68.89
2015
8,723
(1,334)
62.35
(1,757)
47.81
(4,554)
55.64
61.63
(4,103)
823
47
(Amounts in millions)
Accrued wages and benefits (1)
Self-insurance (2)
Accrued non-income taxes (3)
Other (4)
Total accrued liabilities
$45,896
33,219
514
3,518
1,523
2,312
$ 4,810
Annual
Maturities
2015 Annual Report
Walmart
Total
$41,086
$41,771
(1) The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end interest rates. Interest costs
are also impacted by certain derivative financial instruments described in Note 8.
(2) A portion of other debt at January 31, 2015 and 2014 includes secured debt in the amount of $139 million and $572 million, respectively, which was collateralized by property
that had an aggregate carrying amount of approximately $19 million and $471 million, respectively.
At January 31, 2015 and 2014, the Company had $500 million in debt with embedded put options. The issuance of money market puttable reset
securities in the amount of $500 million is structured to be remarketed in connection with the annual reset of the interest rate. If, for any reason, the
remarketing of the notes does not occur at the time of any interest rate reset, the holders of the notes must sell, and the Company must repurchase,
the notes at par. Accordingly, this issuance has been classified as long-term debt due within one year in the Company's Consolidated Balance Sheets.
Annual maturities of long-term debt during the next five years and thereafter are as follows:
The Company's accrued liabilities consist of the following:
(Amounts in millions)
2016
2017
2018
2019
2020
Thereafter
Fiscal Year
Balances as of January 31, 2013
5 Accrued Liabilities
Amounts reclassified from accumulated other comprehensive income (loss) for derivative instruments are recorded in interest, net, in the Company's
Consolidated Statements of Income, and the amounts for the minimum pension liability are recorded in operating, selling, general and administrative
expenses in the Company's Consolidated Statements of Income.
129
(763)
(587)
Other comprehensive income (loss) before reclassifications
(2,769)
194
149
(2,426)
Amounts reclassified from accumulated other comprehensive income (loss)
13
4
17
Balances as of January 31, 2014
(2,722)
336
(610)
(2,996)
$(7,168)
$(679)
$(134)
$(6,355)
Balances as of January 31, 2015
15
The Company's unrealized net gains and losses on net investment hedges, included in the currency translation and other category of accumulated
other comprehensive income (loss), were not significant as of January 31, 2015 and January 31, 2014.
(11)
Amounts reclassified from accumulated other comprehensive income (loss)
(4,187)
(58)
(496)
(3,633)
Other comprehensive income (loss) before reclassifications
26
Fiscal Years Ended January 31,
Maturity Dates
By Fiscal Year
2015
The Company estimates the expected term of a lease by assuming the
exercise of renewal options where an economic penalty exists that
would preclude the abandonment of the lease at the end of the initial
non-cancelable term and the exercise of such renewal is at the sole dis-
cretion of the Company. The expected term is used in the determination
of whether a store or club lease is a capital or operating lease and in the
calculation of straight-line rent expense. Additionally, the useful life of
leasehold improvements is limited by the expected lease term or the
economic life of the asset, whichever is shorter. If significant expenditures
are made for leasehold improvements late in the expected term of a
lease and renewal is reasonably assured, the useful life of the leasehold
improvement is limited to the end of the renewal period or economic
life of the asset, whichever is shorter.
Leases
Advertising costs are expensed as incurred and were $2.4 billion for both
fiscal 2015 and fiscal 2014 and $2.3 billion for fiscal 2013. Advertising costs
consist primarily of print, television and digital advertisements and are
recorded in operating, selling, general and administrative expenses in
the Company's Consolidated Statements of Income. Reimbursements
from suppliers that are for specific, incremental and identifiable advertis-
ing costs are recognized as a reduction of advertising costs in operating,
selling, general and administrative expenses.
Advertising Costs
Operating, Selling, General and Administrative Expenses
Operating, selling, general and administrative expenses include all
operating costs of the Company, except cost of sales, as described above.
As a result, the majority of the cost of warehousing and occupancy for
the Walmart U.S. and Walmart International segments' distribution
facilities is included in operating, selling, general and administrative
expenses. Because the Company does not include most of the cost of its
Walmart U.S. and Walmart International segments' distribution facilities
in cost of sales, its gross profit and gross profit as a percentage of net
sales may not be comparable to those of other retailers that may include
all costs related to their distribution facilities in cost of sales and in the
calculation of gross profit.
The Company receives consideration from suppliers for various programs,
primarily volume incentives, warehouse allowances and reimbursements
for specific programs such as markdowns, margin protection, advertising
and supplier-specific fixtures. Payments from suppliers are accounted
for as a reduction of cost of sales and are recognized in the Company's
Consolidated Statements of Income when the related inventory is sold,
except when the payment is a reimbursement of specific, incremental
and identifiable costs.
Payments from Suppliers
Notes to Consolidated Financial Statements
2015 Annual Report
Walmart
Cost of sales includes actual product cost, the cost of transportation to
the Company's distribution facilities, stores and clubs from suppliers, the
cost of transportation from the Company's distribution facilities to the
stores, clubs and customers and the cost of warehousing for the Sam's
Club segment and import distribution centers. Cost of sales is reduced
by supplier payments that are not a reimbursement of specific,
incremental and identifiable costs.
Cost of Sales
The Company recognizes revenue from service transactions at the time
the service is performed. Generally, revenue from services is classified
as a component of net sales in the Company's Consolidated Statements
of Income.
Financial and Other Services
Customer purchases of shopping cards are not recognized as revenue
until the card is redeemed and the customer purchases merchandise
using the shopping card. Shopping cards in the U.S. do not carry an
expiration date; therefore, customers and members can redeem their
shopping cards for merchandise indefinitely. Shopping cards in certain
foreign countries where the Company does business may have expiration
dates. A certain number of shopping cards, both with and without
expiration dates, will not be fully redeemed. Management estimates
unredeemed shopping cards and recognizes revenue for these
amounts over shopping card historical usage periods based on historical
redemption rates. Management periodically reviews and updates its
estimates of usage periods and redemption rates.
Shopping Cards
Membership fee revenue is included in membership and other income
in the Company's Consolidated Statements of Income. The deferred
membership fee is included in accrued liabilities in the Company's
Consolidated Balance Sheets.
$ 575
$ 759 $ 641
Pre-Opening Costs
The cost of start-up activities, including organization costs, related to new
store openings, store remodels, relocations, expansions and conversions
are expensed as incurred and included in operating, selling, general
and administrative expenses in the Company's Consolidated Statements
of Income. Pre-opening costs totaled $317 million, $338 million and
$316 million for fiscal 2015, 2014 and 2013, respectively.
Currency Translation
The assets and liabilities of all international subsidiaries are translated
from the respective local currency to the U.S. dollar using exchange rates
at the balance sheet date. Related translation adjustments are recorded
as a component of accumulated other comprehensive income (loss). The
income statements of all international subsidiaries are translated from
the respective local currencies to the U.S. dollar using average exchange
rates for the period covered by the income statements.
Denominator
attributable to Walmart
Income from continuing operations
Income from continuing operations
Less income from continuing
operations attributable to
noncontrolling interest
2014
Fiscal Years Ended January 31,
2013
2015
(Amounts in millions, except per share data)
Numerator
The following table provides a reconciliation of the numerators and
denominators used to determine basic and diluted income per common
share from continuing operations attributable to Walmart:
$ 641 $ 575 $ 559
1,410 1,249 1,133
(1,292) (1,183) (1,117)
Basic income per common share from continuing operations
attributable to Walmart is based on the weighted-average common
shares outstanding during the relevant period. Diluted income per
common share from continuing operations attributable to Walmart is
based on the weighted-average common shares outstanding during the
relevant period adjusted for the dilutive effect of share-based awards.
The Company did not have significant share-based awards outstanding
that were antidilutive and not included in the calculation of diluted
income per common share from continuing operations attributable to
Walmart for fiscal 2015, 2014 and 2013.
Notes to Consolidated Financial Statements
43
Walmart
2015 Annual Report
In May 2014, the Financial Accounting Standards Board issued ASU 2014-09,
Revenue from Contracts with Customers. This ASU is a comprehensive
new revenue recognition model that requires a company to recognize
revenue to depict the transfer of goods or services to a customer at an
amount that reflects the consideration it expects to receive in exchange
for those goods or services. This ASU is effective for annual reporting
periods beginning after December 15, 2016 and early adoption is not
permitted. Accordingly, the Company will adopt this ASU on February 1,
2017. Companies may use either a full retrospective or a modified
retrospective approach to adopt this ASU. Management is currently
evaluating this standard, including which transition approach to use,
and does not expect this ASU to materially impact the Company's
consolidated net income, financial position or cash flows.
In April 2014, the Financial Accounting Standards Board issued
Accounting Standards Update ("ASU") 2014-08, Reporting Discontinued
Operations and Disclosures of Disposals of Components of an Entity, which
provides guidance for the recognition of discontinued operations,
changes the requirements for reporting discontinued operations and
requires additional disclosures about discontinued operations. This ASU
applies to prospective transactions beginning on or after December 15,
2014, with early adoption permitted. The Company adopted this ASU for
the fiscal year ended January 31, 2015 and adoption did not materially
impact the Company's consolidated net income, financial position or
cash flows.
Recent Accounting Pronouncements
Certain reclassifications have been made to previous fiscal year amounts
and balances to conform to the presentation in the current fiscal year.
These reclassifications did not impact consolidated operating income or
net income. Additionally, certain segment asset and expense allocations
have been reclassified among segments in the current period. See
Note 14 for further discussion of the Company's segments.
Reclassifications
2 Net Income Per Common Share
2015
Fiscal Years Ended January 31,
2014 2013
Deferred membership fee revenue,
beginning of year
Cash received from members
Membership fee revenue recognized
Deferred membership fee revenue,
end of year
10
10
(1,418)
(1,418)
translation and other
Acquisitions (1)
19,510
313
18,746
451
Balances as of
January 31, 2014
Changes in currency
(1,000)
5
8
-
$20,497
$313
$19,741
$443
Total
Walmart U.S. International Sam's Club
(1,000)
13
outstanding, basic
January 31, 2015
$17,328
(Amounts in millions)
The Company recognizes membership fee revenue both in the U.S.
and internationally over the term of the membership, which is typically
12 months. The following table summarizes membership fee activity
for fiscal 2015, 2014 and 2013:
Membership Fee Revenue
The Company recognizes sales revenue, net of sales taxes and estimated
sales returns, at the time it sells merchandise to the customer.
Revenue Recognition
Sales
The Company records a liability for unrecognized tax benefits resulting
from uncertain tax positions taken or expected to be taken in a tax return.
The Company records interest and penalties related to unrecognized tax
benefits in interest expense and operating, selling, general and administra-
tive expenses, respectively, in the Company's Consolidated Statements
of Income. Refer to Note 9 for additional income tax disclosures.
In determining the provision for income taxes, an annual effective
income tax rate is used based on annual income, permanent differences
between book and tax income, and statutory income tax rates. Discrete
events such as audit settlements or changes in tax laws are recognized
in the period in which they occur.
Deferred tax assets are evaluated for future realization and reduced by
a valuation allowance to the extent that a portion is not more likely than
not to be realized. Many factors are considered when assessing whether
it is more likely than not that the deferred tax assets will be realized,
including recent cumulative earnings, expectations of future taxable
income, carryforward periods, and other relevant quantitative and quali-
tative factors. The recoverability of the deferred tax assets is evaluated
by assessing the adequacy of future expected taxable income from all
sources, including reversal of taxable temporary differences, forecasted
operating earnings and available tax planning strategies. These sources
of income rely heavily on estimates.
Income taxes are accounted for under the balance sheet method.
Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases ("temporary differences"). Deferred tax assets and
liabilities are measured using enacted tax rates in effect for the year in
which those temporary differences are expected to be recovered or set-
tled. The effect on deferred tax assets and liabilities of a change in tax rate
is recognized in income in the period that includes the enactment date.
$461
Income Taxes
Self Insurance Reserves
Indefinite-lived intangible assets are included in other assets and
deferred charges in the Company's Consolidated Balance Sheets. These
assets are evaluated for impairment based on their fair values using valu-
ation techniques which are updated annually based on the most recent
variables and assumptions. There were no impairment charges related to
indefinite-lived intangible assets recorded for fiscal 2015, 2014 and 2013.
Notes to Consolidated Financial Statements
41
Walmart
2015 Annual Report
(1) Goodwill recorded for fiscal 2015 and 2014 acquisitions relates to acquisitions that
are not significant, individually or in the aggregate, to the Company's Consolidated
Financial Statements.
$18,102
$313
The Company uses a combination of insurance and self insurance for a
number of risks, including, but not limited to, workers' compensation,
general liability, auto liability, product liability and the Company's obliga-
tion for employee-related health care benefits. Liabilities relating to the
claims associated with these risks are estimated by considering historical
claims experience, frequency, severity, demographic factors and other
actuarial assumptions, including incurred but not reported claims. In
estimating its liability for such claims, the Company periodically analyzes
its historical trends, including loss development, and applies appropriate
loss development factors to the incurred costs associated with the
claims. To limit exposure to certain risks, the Company maintains
stop-loss insurance coverage for workers' compensation of $5 million
per occurrence, and in most instances, $15 million per occurrence for
general liability.
(Amounts in millions)
Balances as of
February 1, 2013
Changes in currency
translation and other
Acquisitions (1)
Balances as of
$16,814 $16,551 $17,704
$16,182 $15,918 $16,963
189
218
Fair value of restricted stock units vested
$156
Fair value of restricted stock and
performance share units vested
(Amounts in millions)
Fiscal Years Ended January 31,
2014 2013
2015
The following table includes additional information related to restricted
stock and performance share units and restricted stock units:
(1) Assumes payout rate at 100% for Performance Share Units.
Outstanding at January 31, 2015
Forfeited or expired
Vested/exercised
Granted
Outstanding at February 1, 2014
(Shares in thousands)
The following table shows the activity for restricted stock and performance share units and restricted stock units during fiscal 2015:
Notes to Consolidated Financial Statements
2015 Annual Report
$116 $155
168
Unrecognized compensation cost
for restricted stock and
performance share units
Weighted-Average
Restricted Stock Units
Restricted Stock and
Performance Share Units (1)
1.7
2.1
1.7
Weighted average remaining period
to expense for restricted stock
units (years)
2.0
2.0
Walmart
1.3
Weighted average remaining period
437
497
570
for restricted stock units
Unrecognized compensation cost
233
200
154
to expense for restricted stock and
performance share units (years)
In addition to the Plan, the Company's subsidiary in the United Kingdom
has stock option plans for certain colleagues which generally vest over
three years. The stock option share-based compensation expense is
included in the other line in the table above.
Restricted Stock and Performance Share Units. Restricted stock awards are
for shares that vest based on the passage of time and include restric-
tions related to employment. Performance share units vest based on
the passage of time and achievement of performance criteria and may
range from 0% to 150% of the original award amount. Vesting periods
for these awards are generally between one and three years. Restricted
stock and performance share units may be settled or deferred in stock
and are accounted for as equity in the Company's Consolidated Balance
Sheets. The fair value of restricted stock awards is determined on the date
of grant and is expensed ratably over the vesting period. The fair value
of performance share units is determined on the date of grant using the
Company's stock price discounted for the expected dividend yield
through the vesting period and is recognized over the vesting period.
• Restricted Stock Units. Restricted stock units provide rights to Company
stock after a specified service period; 50% vest three years from the grant
date and the remaining 50% vest five years from the grant date. The fair
value of each restricted stock unit is determined on the date of grant
using the stock price discounted for the expected dividend yield through
the vesting period and is recognized ratably over the vesting period. The
expected dividend yield is based on the anticipated dividends over the
vesting period. The weighted-average discount for the dividend yield
used to determine the fair value of restricted stock units granted in fiscal
2015, 2014 and 2013 was 9.5%, 10.3% and 12.2%, respectively.
.
(Amounts in millions)
total income tax benefit recognized for share-based compensation was
$173 million, $145 million and $142 million for fiscal 2015, 2014 and 2013,
respectively. The following table summarizes the Company's share-based
compensation expense by award type:
The Company has awarded share-based compensation to associates and
nonemployee directors of the Company. The compensation expense
recognized for all plans was $462 million, $388 million and $378 million
for fiscal 2015, 2014 and 2013, respectively. Share-based compensation
expense is included in operating, selling, general and administrative
expenses in the Company's Consolidated Statements of Income. The
$ 5.01 $ 4.87 $ 5.03
4.99 4.85 5.01
3,389
3,283
3,243
Share-Based Compensation
3 Shareholders' Equity
Fiscal Years Ended January 31,
from continuing operations
attributable to Walmart
Basic
Diluted
Weighted-average common shares
outstanding, diluted
Dilutive impact of stock options
Weighted-average common shares
15
14
13
and other share-based awards
3,269 3,374
3,230
Income per common share
(632) (633) (741)
2015
2013
The Plan's award types are summarized as follows:
The Company's shareholder-approved Stock Incentive Plan of 2010
(the "Plan") became effective June 4, 2010 and amended and restated
the Company's Stock Incentive Plan of 2005. The Plan was established to
grant stock options, restricted (non-vested) stock, performance share
units and other equity compensation awards for which 210 million shares
of common stock issued or to be issued under the Plan have been
registered under the Securities Act of 1933, as amended. The Company
believes that such awards serve to align the interests of its associates
with those of its shareholders.
$378
$388
$462
expense
Share-based compensation
Other
31
2014
23
195
224
277
Restricted stock units
$152
$141
$157
share units
Restricted stock and performance
28
Walmart
Rent abatements and escalations are considered in the calculation of
minimum lease payments in the Company's capital lease tests and in
determining straight-line rent expense for operating leases.
Long-Lived Assets
671
Proceeds from the disposal of certain operations
(12,898)
532
727
570
Proceeds from the disposal of property and equipment
(13,115)
(12,174)
Payments for property and equipment
Other investing activities
Cash flows from investing activities:
25,591
23,257
28,564
981
(1,224)
166
271
103
1,249
Net cash provided by operating activities
Accrued income taxes
(192)
(271)
(4,968)
(3,904)
211
7,072
5,174
2,754
911
(6,288)
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(138)
Effect of exchange rates on cash and cash equivalents
Dividends paid to noncontrolling interest
Purchase of noncontrolling interest
Other financing activities
Purchase of Company stock
Dividends paid
Net change in short-term borrowings
Proceeds from issuance of long-term debt
Payments of long-term debt
Cash flows from financing activities:
(12,637)
(12,526)
(11,125)
Net cash used in investing activities
Net cash used in financing activities
(1,478)
Accrued liabilities
531
17,704
16,551
16,814
(52)
(144)
(285)
$ 17,756
$ 16,695
$ 17,099
provided by operating activities:
2013
Fiscal Years Ended January 31,
2015
Adjustments to reconcile income from continuing operations to net cash
Income from continuing operations
Income from discontinued operations, net of income taxes
Consolidated net income
Cash flows from operating activities:
(Amounts in millions)
Consolidated Statements of Cash Flows
2014
1,061
Depreciation and amortization
8,870
2,678
Accounts payable
(2,759)
(1,667)
(1,229)
Inventories
(614)
(566)
(569)
9,173
Receivables, net
602
938
785
Other operating activities
(133)
(279)
(503)
Deferred income taxes
Long-lived assets are stated at cost. Management reviews long-lived
assets for indicators of impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
The evaluation is performed at the lowest level of identifiable cash flows,
which is at the individual store or club level or, in certain circumstances,
a market group of stores. Undiscounted cash flows expected to be
generated by the related assets are estimated over the assets' useful lives
based on updated projections. If the evaluation indicates that the carrying
amount of the assets may not be recoverable, any potential impairment
is measured based upon the fair value of the related asset or asset group
as determined by an appropriate market appraisal or other valuation
technique. Impairment charges of long-lived assets for fiscal 2015, 2014
and 2013 were not significant.
Changes in certain assets and liabilities, net of effects of acquisitions:
(6,185)
8,478
(5,361)
Estimated
Useful Lives
(Amounts in millions)
Fiscal Years Ended
January 31,
Property and equipment are stated at cost. Gains or losses on disposition
are recognized as earned or incurred. Costs of major improvements are
capitalized, while costs of normal repairs and maintenance are charged
to expense as incurred. The following table summarizes the Company's
property and equipment balances and includes the estimated useful lives
that are generally used to depreciate the assets on a straight-line basis:
Property and Equipment
The Company values inventories at the lower of cost or market as
determined primarily by the retail inventory method of accounting,
using the last-in, first-out ("LIFO") method for substantially all of the
Walmart U.S. segment's inventories. The inventory at the Walmart
International segment is valued primarily by the retail inventory method
of accounting, using the first-in, first-out ("FIFO") method. The retail
inventory method of accounting results in inventory being valued at the
lower of cost or market since permanent markdowns are immediately
recorded as a reduction of the retail value of inventory. The inventory at
the Sam's Club segment is valued based on the weighted-average cost
using the LIFO method. At January 31, 2015 and January 31, 2014, the
Company's inventories valued at LIFO approximated those inventories
as if they were valued at FIFO.
Inventories
Notes to Consolidated Financial Statements
2015 Annual Report
2015
Walmart
⚫ consumer financing programs in certain international operations;
⚫ suppliers for marketing or incentive programs; and
real estate transactions.
⚫ banks for customer credit and debit cards and electronic bank transfers
that take in excess of seven days to process;
⚫ insurance companies resulting from pharmacy sales;
Receivables are stated at their carrying values, net of a reserve for
doubtful accounts. Receivables consist primarily of amounts due from:
Receivables
The Company uses intercompany financing arrangements in an effort
to ensure cash can be made available in the country in which it is needed
with the minimum cost possible. Management does not believe it will
be necessary to repatriate cash and cash equivalents held outside of the
U.S. and anticipates the Company's domestic liquidity needs will be met
through cash flows provided by operating activities, supplemented with
long-term debt and short-term borrowings. Accordingly, the Company
intends, with only certain exceptions, to continue to indefinitely reinvest
the Company's cash and cash equivalents held outside of the U.S. in our
foreign operations. When the income earned, either from operations
or through intercompany financing arrangements, and indefinitely
reinvested outside of the U.S. is taxed at local country tax rates, which are
generally lower than the U.S. statutory rate, the Company realizes an
effective tax rate benefit. If the Company's intentions with respect to
reinvestment were to change, most of the amounts held within the
Company's foreign operations could be repatriated to the U.S., although
any repatriation under current U.S. tax laws would be subject to U.S.
federal income taxes, less applicable foreign tax credits. As of January 31,
2015 and 2014, cash and cash equivalents of approximately $1.7 billion
and $1.9 billion, respectively, may not be freely transferable to the U.S.
due to local laws or other restrictions. The Company does not expect
local laws, other limitations or potential taxes on anticipated future
repatriations of cash amounts held outside of the U.S. to have a material
effect on the Company's overall liquidity, financial condition or results
of operations.
The Company's cash balances are held in various locations around the
world. Of the Company's $9.1 billion and $7.3 billion of cash and cash
equivalents at January 31, 2015 and 2014, respectively, $6.3 billion and
$5.8 billion, respectively, were held outside of the U.S. and were generally
utilized to support liquidity needs in the Company's non-U.S. operations.
The Company considers investments with a maturity when purchased
of three months or less to be cash equivalents. All credit card, debit card
and electronic benefits transfer transactions that process in less than
seven days are classified as cash and cash equivalents. The amounts due
from banks for these transactions classified as cash and cash equivalents
totaled $2.9 billion and $1.6 billion at January 31, 2015 and 2014, respec-
tively. In addition, cash and cash equivalents included restricted cash of
$345 million and $654 million at January 31, 2015 and 2014, respectively,
which was primarily related to cash collateral holdings from various
counterparties, as required by certain derivative and trust agreements.
Cash and Cash Equivalents
The Walmart International segment offers a limited number of consumer
credit products, primarily through its financial institutions in select
markets. The receivable balance from consumer credit products was
$1.2 billion, net of a reserve for doubtful accounts of $114 million at
January 31, 2015, compared to a receivable balance of $1.3 billion, net
of a reserve for doubtful accounts of $119 million at January 31, 2014.
These balances are included in receivables, net, in the Company's
Consolidated Balance Sheets.
The Consolidated Financial Statements have been prepared in conformity
with U.S. generally accepted accounting principles. Those principles
require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities. Management's estimates and
assumptions also affect the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
2014
N/A
(6,139)
Leasehold improvements are depreciated over the shorter of the estimated
useful life of the asset or the remaining expected lease term. Depreciation
expense for property and equipment, including amortization of property
under capital leases, for fiscal 2015, 2014 and 2013 was $9.1 billion,
$8.8 billion and $8.4 billion, respectively. Interest costs capitalized on
construction projects were $59 million, $78 million and $74 million
in fiscal 2015, 2014 and 2013, respectively.
Property and equipment, net
Accumulated depreciation
The following table reflects goodwill activity, by reportable segment,
for fiscal 2015 and 2014:
The Company's reporting units were evaluated using a quantitative
impairment test. Management determined the fair value of each reporting
unit is greater than the carrying amount and, accordingly, the Company
has not recorded any impairment charges related to goodwill.
Goodwill is evaluated for impairment using either a qualitative or
quantitative approach for each of the Company's reporting units.
Generally, a qualitative assessment is first performed to determine
whether a quantitative goodwill impairment test is necessary. If man-
agement determines, after performing an assessment based on the
qualitative factors, that the fair value of the reporting unit is more likely
than not less than the carrying amount, or that a fair value of the
reporting unit substantially in excess of the carrying amount cannot be
assured, then a quantitative goodwill impairment test would be required.
The quantitative test for goodwill impairment is performed by
determining the fair value of the related reporting units. Fair value is
measured based on the discounted cash flow method and relative
market-based approaches.
Goodwill represents the excess of the purchase price over the fair value
of net assets acquired in business combinations and is allocated to the
appropriate reporting unit when acquired. Other acquired intangible
assets are stated at the fair value acquired as determined by a valuation
technique commensurate with the intended use of the related asset.
Goodwill and indefinite-lived intangible assets are not amortized; rather,
they are evaluated for impairment annually and whenever events or
changes in circumstances indicate that the value of the asset may be
impaired. Definite-lived intangible assets are considered long-lived
assets and are amortized on a straight-line basis over the periods that
expected economic benefits will be provided.
Goodwill and Other Acquired Intangible Assets
Land
2,807
5,787
$177,395 $173,089
(63,115) (57,725)
$114,280 $115,364
$ 26,261 $ 26,184
95,488
42,971
2,785
5,661
3-15 years
N/A
Construction in progress
45,044
2-30 years
Fixtures and equipment
Transportation equipment
97,496
3-40 years
Buildings and improvements
Property and equipment
Use of Estimates
2014
The Consolidated Financial Statements include the accounts of
Walmart and its subsidiaries as of and for the fiscal years ended January 31,
2015 ("fiscal 2015"), January 31, 2014 ("fiscal 2014") and January 31, 2013
("fiscal 2013"). All material intercompany accounts and transactions have
been eliminated in consolidation. Investments in unconsolidated affiliates,
which are 50% or less owned and do not otherwise meet consolidation
requirements, are accounted for primarily using the equity method.
These investments are immaterial to the Company's Consolidated
Financial Statements.
(500)
1,854
223
(442)
(514)
(11,946)
(10,789)
(15,071)
(58)
1,231
(260)
(132)
(296)
(282)
(426)
(600)
(7,600)
(6,683)
The Company's Consolidated Financial Statements are based on a fiscal
year ending on January 31, for the United States ("U.S.") and Canadian
operations. The Company consolidates all other operations generally
using a one-month lag and based on a calendar year. There were no
significant intervening events during January 2015 that materially
affected the Consolidated Financial Statements.
(1,015)
(409)
7,281
(1,844)
1 Summary of Significant Accounting Policies
Principles of Consolidation
Wal-Mart Stores, Inc. ("Walmart" or the "Company") helps people around
the world save money and live better – anytime and anywhere - in retail
stores or through the Company's e-commerce and mobile capabilities.
Through innovation, the Company is striving to create a customer-centric
experience that seamlessly integrates digital and physical shopping. Each
week, the Company serves nearly 260 million customers who visit its over
11,000 stores under 72 banners in 27 countries and e-commerce websites in
11 countries. The Company's strategy is to lead on price, invest to differenti-
ate on access, be competitive on assortment and deliver a great experience.
General
The Company's operations comprise three reportable segments:
Walmart U.S., Walmart International and Sam's Club.
Notes to Consolidated Financial Statements
39
Walmart
2,262
2,362
2015 Annual Report
8,641
8,169
2,433
See accompanying notes.
Interest paid
Supplemental disclosure of cash flow information:
Income taxes paid
$ 7,781
$ 7,281
$ 9,135
6,550
7,304
7,781
$58,020
(2,336)
1,976
$482,229
$
$279,406
21,787
21,336
$288,049
Consolidated
Corporate and
support
Sam's Club
27,147
Walmart
International
$136,160
6,171
(2,348)
3,370
101,381
Walmart U.S.
12,174
1,199
753
3,936
6,286
$ 24,799
9,173
2,665
2,665
$203,706
7,825
13,995
80,505
473
Capital expenditures
Operating income (loss)
Total assets
$136,513
5,153
Net sales
Fiscal Year Ended January 31, 2015
(Amounts in millions)
Information for the Company's segments, as well as for Corporate and support, including the reconciliation to income from continuing operations
before income taxes, is provided in the following table:
Notes to Consolidated Financial Statements
Interest expense, net
57
2015 Annual Report
The Company measures the results of its segments using, among other
measures, each segment's net sales and operating income, which
includes certain corporate overhead allocations. From time to time, the
Company revises the measurement of each segment's operating
income, including any corporate overhead allocations, as determined by
the information regularly reviewed by its CODM. When the measure-
ment of a segment changes, previous period amounts and balances are
reclassified to be comparable to the current period's presentation.
The Walmart U.S. segment includes the Company's mass merchant
concept in the U.S. operating under the "Walmart" or "Wal-Mart" brands,
as well as walmart.com. The Walmart International segment consists of
the Company's operations outside of the U.S., including various retail
websites. The Sam's Club segment includes the warehouse membership
clubs in the U.S., as well as samsclub.com. Corporate and support con-
sists of corporate overhead and other items not allocated to any of the
Company's segments.
The Company is engaged in the operation of retail, wholesale and
other units located in the U.S., Africa, Argentina, Brazil, Canada, Central
America, Chile, China, India, Japan, Mexico and the United Kingdom.
The Company's operations are conducted in three business segments:
Walmart U.S., Walmart International and Sam's Club. The Company
defines its segments as those operations whose results its chief operating
decision maker ("CODM") regularly reviews to analyze performance and
allocate resources. The Company sells similar individual products and
services in each of its segments. It is impractical to segregate and identify
revenues for each of these individual products and services.
14 Segments
In September 2013, Walmex, a majority-owned subsidiary of the Company,
entered into a definitive agreement with Alsea S.A.B. de C.V. to sell the
Vips restaurant business ("Vips") in Mexico. The sale of Vips was completed
on May 12, 2014. Upon completion of the sale, the Company received
$671 million of cash and recognized a net gain of $262 million, which is
recorded in discontinued operations in the Company's Consolidated
Statements of Income for the fiscal year ended January 31, 2015.
Walmart
Depreciation and amortization
Income from continuing operations before income taxes
Depreciation and amortization
Income from continuing operations before income taxes
Interest expense, net
Operating income (loss)
Net sales
Fiscal Year Ended January 31, 2013
Capital expenditures
Total assets
Depreciation and amortization
Income from continuing operations before income taxes
Interest expense, net
Operating income (loss)
Net sales
Fiscal Year Ended January 31, 2014
Capital expenditures
Total assets
$57,157
$56,423
$473,076
12,898
Total revenues, consisting of net sales and membership and other income,
and long-lived assets, consisting primarily of property and equipment,
net, aggregated by the Company's U.S. and non-U.S. operations for fiscal
2015, 2014 and 2013, are as follows:
(Amounts in millions)
Total revenues
U.S. operations
Non-U.S. operations
Total revenues
Long-lived assets
U.S. operations
Non-U.S. operations
Fiscal Years Ended January 31,
2014
2013
2015
$348,227 $338,681 $332,788
137,424 137,613 135,863
$485,651 $476,294 $468,651
$ 80,879 $ 79,644 $ 77,692
38,263
38,989
35,776
$116,655 $117,907 $116,681
No individual country outside of the U.S. had total revenues or
long-lived assets that were material to the consolidated totals.
Additionally, the Company did not generate material total revenues
from any single customer.
15 Subsequent Event
Vips Restaurant Business in Mexico
2015 Annual Report
Walmart
58
January 4, 2016
September 8, 2015
8,478
June 1, 2015
Payable Date
December 4, 2015
March 13, 2015
May 8, 2015
August 7, 2015
Record Date
On February 19, 2015, the Board of Directors approved the fiscal 2016
annual dividend at $1.96 per share, an increase from the fiscal 2015
dividend of $1.92 per share. For fiscal 2016, the annual dividend will be
paid in four quarterly installments of $0.49 per share, according to the
following record and payable dates:
Dividends Declared
April 6, 2015
$203,105
$ 7,697
2,819
1,396
868
8,870
3,135
$204,751
$ 6,583
$14,053
437
2,658
4,463
2,640
6,378
$ 98,745
$ 24,656
(2,216)
26,872
(1,911)
1,843
$ 85,370
$
1,071
13,115
$13,479
410
$ 85,695
2,605
4,640
5,994
2,644
$ 96,234
$ 25,662
1,203
(2,063)
(1,602)
1,859
$465,604
$
$134,748
6,365
$274,433
21,103
27,725
Total long-lived assets
Debt Issuances
In fiscal 2015, the Company completed the following transactions that
impact the operations of Walmart International:
Notes to Consolidated Financial Statements
The Company uses derivative financial instruments for the purpose of
hedging its exposure to interest and currency exchange rate risks and,
accordingly, the contractual terms of a hedged instrument closely mirror
those of the hedged item, providing a high degree of risk reduction and
correlation. Contracts that are effective at meeting the risk reduction and
correlation criteria are recorded using hedge accounting. If a derivative
financial instrument is recorded using hedge accounting, depending on
the nature of the hedge, changes in the fair value of the instrument will
either be offset against the change in fair value of the hedged assets,
liabilities or firm commitments through earnings or be recognized in
accumulated other comprehensive income (loss) until the hedged item
is recognized in earnings. Any hedge ineffectiveness is immediately
recognized in earnings. The Company's net investment and cash flow
instruments are highly effective hedges and the ineffective portion has
not been, and is not expected to be, significant. Instruments that do not
meet the criteria for hedge accounting, or contracts for which the
Company has not elected hedge accounting, are recorded at fair value
with unrealized gains or losses reported in earnings during the period
of the change.
Fair Value Instruments
The Company is a party to receive fixed-rate, pay variable-rate interest
rate swaps that the Company uses to hedge the fair value of fixed-rate
debt. The notional amounts are used to measure interest to be paid or
received and do not represent the Company's exposure due to credit
loss. The Company's interest rate swaps that receive fixed-interest rate
payments and pay variable-interest rate payments are designated as
fair value hedges. As the specific terms and notional amounts of the
derivative instruments match those of the fixed-rate debt being hedged,
the derivative instruments are assumed to be perfectly effective hedges.
Changes in the fair values of these derivative instruments are recorded
in earnings, but are offset by corresponding changes in the fair values
of the hedged items, also recorded in earnings, and, accordingly, do not
impact the Company's Consolidated Statements of Income. These fair
value instruments will mature in October 2020.
Net Investment Instruments
The Company is a party to cross-currency interest rate swaps that the
Company uses to hedge its net investments. The agreements are con-
tracts to exchange fixed-rate payments in one currency for fixed-rate
payments in another currency. All changes in the fair value of these
instruments are recorded in accumulated other comprehensive income
(loss), offsetting the currency translation adjustment of the related
investment that is also recorded in accumulated other comprehensive
income (loss). These instruments will mature on dates ranging from
October 2023 to February 2030.
The Company has issued foreign-currency-denominated long-term debt
as hedges of net investments of certain of its foreign operations. These
foreign-currency-denominated long-term debt issuances are designated
and qualify as nonderivative hedging instruments. Accordingly, the
foreign currency translation of these debt instruments is recorded in
accumulated other comprehensive income (loss), offsetting the foreign
currency translation adjustment of the related net investments that is
also recorded in accumulated other comprehensive income (loss).
At January 31, 2015 and January 31, 2014, the Company had ¥100 billion
and ¥200 billion, respectively, of outstanding long-term debt designated
as a hedge of its net investment in Japan, as well as outstanding long-term
debt of £2.5 billion at January 31, 2015 and 2014 that was designated as a
hedge of its net investment in the United Kingdom. These nonderivative
net investment hedges will mature on dates ranging from July 2015 to
January 2039.
Cash Flow Instruments
The Company is a party to receive variable-rate, pay fixed-rate interest
rate swaps that the Company uses to hedge the interest rate risk of certain
non-U.S. denominated debt. The swaps are designated as cash flow
hedges of interest expense risk. Amounts reported in accumulated other
comprehensive income (loss) related to these derivatives are reclassified
from accumulated other comprehensive income (loss) to earnings as
interest is expensed for the Company's variable-rate debt, converting
the variable-rate interest expense into fixed-rate interest expense.
These cash flow instruments will mature in July 2015.
The Company is also a party to receive fixed-rate, pay fixed-rate
cross-currency interest rate swaps to hedge the currency exposure
associated with the forecasted payments of principal and interest of
certain non-U.S. denominated debt. The swaps are designated as cash
flow hedges of the currency risk related to payments on the non-U.S.
denominated debt. The effective portion of changes in the fair value of
derivatives designated as cash flow hedges of foreign exchange risk is
recorded in accumulated other comprehensive income (loss) and is
subsequently reclassified into earnings in the period that the hedged
forecasted transaction affects earnings. The hedged items are recog-
nized foreign currency-denominated liabilities that are remeasured at
spot exchange rates each period, and the assessment of effectiveness
(and measurement of any ineffectiveness) is based on total changes in
the related derivative's cash flows. As a result, the amount reclassified
into earnings each period includes an amount that offsets the related
transaction gain or loss arising from that remeasurement and the
adjustment to earnings for the period's allocable portion of the initial
spot-forward difference associated with the hedging instrument. These
cash flow instruments will mature on dates ranging from April 2022
to March 2034.
The Company used forward starting receive variable-rate, pay fixed-rate
swaps ("forward starting swaps") to hedge its exposure to the variability
in future cash flows due to changes in the LIBOR swap rate for debt
issuances forecasted to occur in the future. These forward starting swaps
were terminated in October 2014, April 2014 and April 2013 concurrently
with the issuance of the hedged debt. Upon termination of the forward
starting swaps, the Company received net cash payments from the
related counterparties of $96 million in fiscal 2015 and made net cash
payments to the related counterparties of $74 million in fiscal 2014. The
payments were recorded in accumulated other comprehensive income
(loss) and will be reclassified to earnings over the life of the related debt
through May 2044, effectively adjusting interest expense to reflect the
fixed interest rates entered into by the forward starting swaps.
2015 Annual Report
2015 Annual Report
Walmart
Notes to Consolidated Financial Statements
Financial Statement Presentation
Although subject to master netting arrangements, the Company does not offset derivative assets and derivative liabilities in its Consolidated Balance
Sheets. Derivative instruments with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either current or non-current
assets, based on maturity date, and those hedging instruments with an unrealized loss are recorded as either current or non-current liabilities, based
on maturity date.
The Company's derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified
as follows in the Company's Consolidated Balance Sheets:
January 31, 2015
Fair Value
Instruments
Net Investment
Instruments
Cash Flow
Instruments
Fair Value
Instruments
January 31, 2014
Net Investment
Instruments
Cash Flow
Instruments
(Amounts in millions)
Derivative instruments
51
Walmart
50
The Company only enters into derivative transactions with counterparties
rated "A-" or better by nationally recognized credit rating agencies.
Subsequent to entering into derivative transactions, the Company regu-
larly monitors the credit ratings of its counterparties. In connection with
various derivative agreements, including master netting arrangements,
the Company held cash collateral from counterparties of $323 million
and $641 million at January 31, 2015 and January 31, 2014, respectively.
The Company records cash collateral received as amounts due to the
counterparties exclusive of any derivative asset. Furthermore, as part
of the master netting arrangements with these counterparties, the
Company is also required to post collateral if the Company's net
derivative liability position exceeds $150 million with any counterparty.
The Company did not have any cash collateral posted with counterparties
at January 31, 2015 or January 31, 2014. The Company records cash
collateral it posts with counterparties as amounts receivable from those
counterparties exclusive of any derivative liability.
255
(1)
457
(2)
Receive variable-rate, pay fixed-rate forward starting interest rate swaps
designated as cash flow hedges
-
2,500
166
Total
$6,334
$ (99)
$8,211
$719
Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company's assets and liabilities are also subject to
nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.
The Company did not record any significant impairment charges to assets measured at fair value on a nonrecurring basis during the fiscal years
ended January 31, 2015, or 2014.
Other Fair Value Disclosures
The Company records cash and cash equivalents and short-term borrowings at cost. The carrying values of these instruments approximate their
fair value due to their short-term maturities.
The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the Company's current incremental
borrowing rate for similar types of borrowing arrangements. The carrying value and fair value of the Company's long-term debt as of January 31, 2015
and 2014, are as follows:
(Amounts in millions)
Long-term debt, including amounts due within one year
January 31, 2015
Carrying Value
$45,896
Fair Value
$56,237
January 31, 2014
Carrying Value
$45,874
Fair Value
$50,757
8 Derivative Financial Instruments
The Company uses derivative financial instruments for hedging and
non-trading purposes to manage its exposure to changes in interest and
currency exchange rates, as well as to maintain an appropriate mix of
fixed- and variable-rate debt. Use of derivative financial instruments in
hedging programs subjects the Company to certain risks, such as market
and credit risks. Market risk represents the possibility that the value of the
derivative financial instrument will change. In a hedging relationship, the
change in the value of the derivative financial instrument is offset to a
great extent by the change in the value of the underlying hedged item.
Credit risk related to a derivative financial instrument represents the pos-
sibility that the counterparty will not fulfill the terms of the contract. The
notional, or contractual, amount of the Company's derivative financial
instruments is used to measure interest to be paid or received and does
not represent the Company's exposure due to credit risk. Credit risk is
monitored through established approval procedures, including setting
concentration limits by counterparty, reviewing credit ratings and requiring
collateral (generally cash) from the counterparty when appropriate.
Prepaid expenses and other
designated as cash flow hedges
Other assets and deferred charges
Accrued liabilities
Nonderivative hedging instruments
Long-term debt due within one year
Long-term debt
$-
$ 766
3,850
$ 973
5,095
Nonderivative hedge
liability subtotals
$-
$4,616
$
$-
$ 2
$6,068
Gains and losses related to the Company's derivatives primarily relate to interest rate hedges, which are recorded in interest, net, in the
Company's Consolidated Statements of Income. Amounts related to the Company's derivatives expected to be reclassified from accumulated
other comprehensive income (loss) to net income during the next 12 months are not significant.
9 Taxes
Income from Continuing Operations
A summary of the provision for income taxes is as follows:
The components of income from continuing operations before income
taxes are as follows:
Fiscal Years Ended January 31,
2015
2014
2013
(Amounts in millions)
(Amounts in millions)
2015
Fiscal Years Ended January 31,
2013
$
$
$-
$611
Deferred income taxes and other
Derivative liability subtotals
$-
-
$ 5
$
$
12
207
293
97
619
$12
$ 207
$293
$ 5
es
$
97
$619
$ 1
$
ՄԴ
Դ
$
1
610
1
$
Derivative asset subtotals
Current:
Receive variable-rate, pay fixed-rate interest rate swaps
3,004
Fixed
3.300%
992
1,000 USD
April 22, 2044
Fixed
4.300%
985
500 USD
April 22, 2024
Fixed
3.300%
508
April 22, 2024
$5,030
(Amounts in millions)
Issue Date
April 11, 2013
April 11, 2013
April 11, 2013
April 11, 2013
October 2, 2013
October 2, 2013
Total
Principal Amount
Maturity Date
Fixed vs. Floating
Interest Rate
Information on significant long-term debt issued during fiscal 2014 is as follows:
1,000 USD
499
1.000%
Notes to Consolidated Financial Statements
Information on significant long-term debt issued during fiscal 2015 is as follows:
(Amounts in millions)
Issue Date
April 8, 2014
April 8, 2014
April 22, 2014
April 22, 2014
April 22, 2014
October 22, 2014
Total
Principal Amount
Maturity Date
Fixed vs. Floating
Interest Rate
Proceeds
850 Euro
April 8, 2022
Fixed
1.900%
$ 1,161
650 Euro
April 8, 2026
Fixed
2.550%
885
500 USD
April 21, 2017
Fixed
Proceeds
453
1,000 USD
Fixed
The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an asset is the price at which
the asset could be sold in an ordinary transaction between unrelated, knowledgeable and willing parties able to engage in the transaction. The fair
value of a liability is the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that
would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which
prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:
• Level 1: observable inputs such as quoted prices in active markets;
⚫ Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and
⚫ Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.
2015 Annual Report
Walmart
49
Notes to Consolidated Financial Statements
Recurring Fair Value Measurements
The Company holds derivative instruments that are required to be measured at fair value on a recurring basis. The fair values are the estimated
amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have
been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves.
As of January 31, 2015 and 2014, the notional amounts and fair values of these derivatives were as follows:
(Amounts in millions)
Receive fixed-rate, pay variable-rate interest rate swaps
designated as fair value hedges
January 31, 2015
7 Fair Value Measurements
January 31, 2014
$ 500
$ 12
$1,000
$ 5
Receive fixed-rate, pay fixed-rate cross-currency interest rate swaps
designated as net investment hedges
1,250
207
1,250
97
Receive fixed-rate, pay fixed-rate cross-currency interest rate swaps
designated as cash flow hedges
4,329
(317)
Notional Amount Fair Value Notional Amount Fair Value
During fiscal 2015 and 2014, the Company also repaid other, smaller long-term debt as it matured in several of its non-U.S. operations.
On April 15, 2013, $1.0 billion of 4.250% Notes matured and were repaid; on May 1, 2013, $1.5 billion of 4.550% Notes matured and were repaid; on
June 1, 2013, $500 million of 7.250% Notes matured and were repaid; on August 5, 2013, ¥25 billion of 2.010% and ¥50 billion of floating rate Notes
matured and were repaid; and on October 25, 2013, $750 million of 0.750% Notes matured and were repaid.
On February 3, 2014, $500 million of 3.000% Notes matured and were repaid; on April 14, 2014, $1.0 billion of 1.625% Notes matured and were repaid;
on May 15, 2014, $1.0 billion of 3.200% Notes matured and were repaid; and on August 6, 2014, ¥100 billion of floating rate Notes matured and were repaid.
0.600%
$ 997
1,250 USD
April 11, 2018
Fixed
1.130%
1,244
1,750 USD
April 11, 2023
Fixed
2.550%
1,738
1,000 USD
April 11, 2043
Fixed
4.000%
988
1,000 USD
750 USD
December 15, 2018
October 2, 2043
Fixed
1.950%
995
Fixed
4.750%
738
$6,700
During fiscal 2015 and 2014, the Company also received additional proceeds from other, smaller long-term debt issuances by several of its non-U.S.
operations. The proceeds in both fiscal years were used to pay down and refinance existing debt and for other general corporate purposes.
Maturities
April 11, 2016
Walmart Chile
2014
$6,165
Walmart
2015 Annual Report
Notes to Consolidated Financial Statements
On November 14, 2007, the trial judge entered a final judgment in the
approximate amount of $188 million, which included the jury's back-pay
award plus statutory penalties, prejudgment interest and attorneys' fees.
By operation of law, post-judgment interest accrues on the judgment
amount at the rate of six percent per annum from the date of entry of the
judgment, which was November 14, 2007, until the judgment is paid,
unless the judgment is set aside on appeal. On December 7, 2007, the
Company filed its Notice of Appeal. On June 10, 2011, the Pennsylvania
Superior Court of Appeals issued an opinion upholding the trial court's
certification of the class, the jury's back pay award, and the awards of
statutory penalties and prejudgment interest, but reversing the award of
attorneys' fees. On September 9, 2011, the Company filed a Petition for
Allowance of Appeal with the Pennsylvania Supreme Court. On July 2,
2012, the Pennsylvania Supreme Court granted the Company's Petition.
On December 15, 2014, the Pennsylvania Supreme Court issued its
opinion affirming the Superior Court of Appeals' decision. At that time,
the Company recorded expenses of $249 million for the judgment amount
and post-judgment interest incurred to date. The Company will continue
to accrue for the post-judgment interest until final resolution. However, the
Company continues to believe it has substantial factual and legal defenses
to the claims at issue and, on March 13, 2015, the Company filed a petition
for writ of certiorari with the U.S. Supreme Court.
ASDA Equal Value Claims: ASDA Stores, Ltd. ("ASDA"), a wholly-owned
subsidiary of the Company, is a defendant in over 4,000 "equal value"
claims that are proceeding before an Employment Tribunal in
Manchester (the "Employment Tribunal") in the United Kingdom ("UK")
on behalf of current and former ASDA store employees, who allege that
the work performed by female employees in ASDA's retail stores is of
equal value in terms of, among other things, the demands of their jobs to
that of male employees working in ASDA's warehouse and distribution
facilities, and that the disparity in pay between these different job positions
is not objectively justified. Claimants are requesting differential back pay
based on higher wage rates in the warehouse and distribution facilities and
those higher wage rates on a prospective basis as part of these equal value
proceedings. ASDA believes that further claims may be asserted in the near
future. On March 23, 2015, ASDA asked the Employment Tribunal to stay all
proceedings, contending that the High Court, which is the superior first
instance civil court in the UK that is headquartered in the Royal Courts of
Justice in the City of London, is the more convenient and appropriate forum
to hear these claims. On March 23, 2015, ASDA also asked the Employment
Tribunal to "strike out" substantially all of the claims for failing to comply
with Employment Tribunal rules. At present, the Company cannot predict
the number of such claims that may be filed, and cannot reasonably esti-
mate any loss or range of loss that may arise from these proceedings. The
Company believes it has substantial factual and legal defenses to these
claims, and intends to defend the claims vigorously
FCPA Investigation and Related Matters
The Audit Committee (the "Audit Committee") of the Board of Directors
of the Company, which is composed solely of independent directors, is
conducting an internal investigation into, among other things, alleged
violations of the U.S. Foreign Corrupt Practices Act ("FCPA") and other
alleged crimes or misconduct in connection with foreign subsidiaries,
including Wal-Mart de México, S.A.B. de C.V. ("Walmex"), and whether
prior allegations of such violations and/or misconduct were appropriately
handled by the Company. The Audit Committee and the Company have
engaged outside counsel from a number of law firms and other advisors
who are assisting in the on-going investigation of these matters.
The Company is also conducting a voluntary global review of its policies,
practices and internal controls for FCPA compliance. The Company is
engaged in strengthening its global anti-corruption compliance program
through appropriate remedial anti-corruption measures. In November 2011,
the Company voluntarily disclosed that investigative activity to the
U.S. Department of Justice (the "DOJ") and the Securities and Exchange
Commission (the "SEC"). Since the implementation of the global review
and the enhanced anti-corruption compliance program, the Audit
Committee and the Company have identified or been made aware of
additional allegations regarding potential violations of the FCPA. When
such allegations are reported or identified, the Audit Committee and the
Company, together with their third party advisors, conduct inquiries and
when warranted based on those inquiries, open investigations. Inquiries
or investigations regarding allegations of potential FCPA violations have
been commenced in a number of foreign markets where the Company
operates, including, but not limited to, Brazil, China and India.
The Company has been informed by the DOJ and the SEC that it is also
the subject of their respective investigations into possible violations of
the FCPA. The Company is cooperating with the investigations by the
DOJ and the SEC. A number of federal and local government agencies
in Mexico have also initiated investigations of these matters. Walmex is
cooperating with the Mexican governmental agencies conducting
these investigations. Furthermore, lawsuits relating to the matters under
investigation have been filed by several of the Company's shareholders
against it, certain of its current directors, certain of its former directors,
certain of its current and former officers and certain of Walmex's current
and former officers.
The Company could be exposed to a variety of negative consequences
as a result of the matters noted above. There could be one or more
enforcement actions in respect of the matters that are the subject of
some or all of the on-going government investigations, and such
actions, if brought, may result in judgments, settlements, fines, penalties,
injunctions, cease and desist orders, debarment or other relief, criminal
convictions and/or penalties. The shareholder lawsuits may result in
judgments against the Company and its current and former directors
and officers named in those proceedings. The Company cannot predict
at this time the outcome or impact of the government investigations,
the shareholder lawsuits, or its own internal investigations and review.
In addition, the Company has incurred and expects to continue to incur
costs in responding to requests for information or subpoenas seeking
documents, testimony and other information in connection with the
government investigations, in defending the shareholder lawsuits, and in
conducting the review and investigations. These costs will be expensed
as incurred. For the fiscal years ended January 31, 2015, 2014 and 2013,
the Company incurred the following third-party expenses in connection
with the FCPA investigation and related matters:
(Amounts in millions)
2015
Fiscal Years Ended January 31,
2014 2013
Wage-and-Hour Class Action: The Company is a defendant in
Braun/Hummel v. Wal-Mart Stores, Inc., a class-action lawsuit commenced
in March 2002 in the Court of Common Pleas in Philadelphia,
Pennsylvania. The plaintiffs allege that the Company failed to pay class
members for all hours worked and prevented class members from taking
their full meal and rest breaks. On October 13, 2006, a jury awarded
back-pay damages to the plaintiffs of approximately $78 million on
their claims for off-the-clock work and missed rest breaks. The jury
found in favor of the Company on the plaintiffs' meal-period claims.
Ongoing inquiries and investigations
Global compliance program and
organizational enhancements
$173 $100
52
109
57
Total
$173
$282 $157
2015 Annual Report
Walmart
55
Notes to Consolidated Financial Statements
These matters may require the involvement of certain members of the
Company's senior management that could impinge on the time they
have available to devote to other matters relating to the business. The
Company expects that there will be on-going media and governmental
interest, including additional news articles from media publications on
these matters, which could impact the perception among certain
audiences of the Company's role as a corporate citizen.
The Company's process of assessing and responding to the governmental
investigations and the shareholder lawsuits continues. While the Company
believes that it is probable that it will incur a loss from these matters,
given the on-going nature and complexity of the review, inquiries and
investigations, the Company cannot reasonably estimate any loss or
range of loss that may arise from these matters. Although the Company
does not presently believe that these matters will have a material adverse
effect on its business, given the inherent uncertainties in such situations,
the Company can provide no assurance that these matters will not be
material to its business in the future.
$121
Unless stated otherwise, the matters, or groups of related matters,
discussed below, if decided adversely to or settled by the Company,
individually or in the aggregate, may result in a liability material to the
Company's financial condition or results of operations.
The Company is involved in a number of legal proceedings. The Company
has made accruals with respect to these matters, where appropriate,
which are reflected in the Company's Consolidated Financial Statements.
For some matters, a liability is not probable or the amount cannot be
reasonably estimated and therefore an accrual has not been made.
However, where a liability is reasonably possible and may be material,
such matters have been disclosed. The Company may enter into
discussions regarding settlement of these matters, and may enter into
settlement agreements, if it believes settlement is in the best interest
of the Company's shareholders.
Legal Proceedings
7
41
88
Decreases related to prior year
tax positions
(17)
(112)
(232)
Increases related to current year
tax positions
174
133
431
Settlements during the period
(89)
(117)
(80)
Lapse in statutes of limitations
Unrecognized tax benefits,
end of year
$838
$ 763
$ 818
The Company classifies interest and penalties related to uncertain
tax benefits as interest expense and as operating, selling, general and
administrative expenses, respectively. During fiscal 2015, 2014 and 2013,
the Company recognized interest and penalty expense (benefit) related
to uncertain tax positions of $18 million, $(7) million and $2 million,
respectively. As of January 31, 2015 and 2014, accrued interest related to
uncertain tax positions of $57 million and $40 million, respectively, was
recorded in the Company's Consolidated Balance Sheets. The Company
did not have any accrued penalties recorded for income taxes as of
January 31, 2015 or 2014.
During the next twelve months, it is reasonably possible that tax audit
resolutions could reduce unrecognized tax benefits by between $50 million
and $350 million, either because the tax positions are sustained on audit
or because the Company agrees to their disallowance. The Company is
focused on resolving tax audits as expeditiously as possible. As a result
of these efforts, unrecognized tax benefits could potentially be reduced
beyond the provided range during the next twelve months. The Company
does not expect any change to have a significant impact to its
Consolidated Financial Statements.
The Company remains subject to income tax examinations for its
U.S. federal income taxes generally for fiscal 2013 through 2015.
The Company also remains subject to income tax examinations for
international income taxes for fiscal 2000 through 2015, and for
U.S. state and local income taxes generally for the fiscal years ended
2006 through 2015.
Other Taxes
The Company is subject to tax examinations for payroll, value added,
sales-based and other non-income taxes. A number of these examinations
are ongoing in various jurisdictions, including Brazil. In certain cases, the
Company has received assessments from the respective taxing authorities
in connection with these examinations. Where a probable loss has
occurred, the Company has made accruals, which are reflected in the
Company's Consolidated Financial Statements. While the possible losses
or range of possible losses associated with these matters are individually
immaterial, a group of related matters, if decided adversely to the Company,
could result in a liability material to the Company's Consolidated
Financial Statements.
10 Contingencies
11 Commitments
tax positions
The Company has long-term leases for stores and equipment. Rentals
(including amounts applicable to taxes, insurance, maintenance, other
operating expenses and contingent rentals) under operating leases and
other short-term rental arrangements were $2.8 billion in both fiscal 2015
and 2014 and $2.6 billion in fiscal 2013.
(Amounts in millions)
Present value of minimum lease payments
Certain of the Company's leases provide for the payment of contingent
rentals based on a percentage of sales. Such contingent rentals were not
material for fiscal 2015, 2014 and 2013. Substantially all of the Company's
store leases have renewal options, some of which may trigger an escalation
in rentals.
(Amounts in millions)
Defined contribution plans:
U.S.
International
Defined benefit plans:
International
Total contribution expense for
retirement-related benefits
56
Walmart
2015 Annual Report
Fiscal Years Ended January 31,
2015
2014
The following table summarizes the contribution expense related to the
Company's retirement-related benefits for fiscal 2015, 2014 and 2013:
2013
$ 877
$ 818
167
165
166
5
20
26
$1,070
$1,062
$1,010
Notes to Consolidated Financial Statements
13 Acquisitions, Disposals and Related Items
$ 898
Additionally, the Company's subsidiaries in the United Kingdom and
Japan have sponsored defined benefit pension plans. The plan in the
United Kingdom was underfunded by $85 million and $69 million at
January 31, 2015 and 2014, respectively. The plan in Japan was under-
funded by $223 million and $281 million at January 31, 2015 and 2014,
respectively. These underfunded amounts are recorded as liabilities in
the Company's Consolidated Balance Sheets in deferred income taxes
and other. Certain other international operations also have defined
benefit arrangements that are not significant.
Associates in international countries who are not U.S. citizens are covered
by various defined contribution post-employment benefit arrangements.
These plans are administered based upon the legislative and tax
requirements in the countries in which they are established.
The Company offers a 401(k) plan for associates in the U.S. under which
eligible associates can begin contributing to the plan immediately upon
hire. The Company also offers a 401(k) type plan for associates in Puerto
Rico under which associates can begin to contribute generally after one
year of employment. Under these plans, after one year of employment,
the Company matches 100% of participant contributions up to 6% of
annual eligible earnings. The matching contributions immediately vest at
100% for each associate. Participants can contribute up to 50% of their
pretax earnings, but not more than the statutory limits. Participants age
50 or older may defer additional earnings in catch-up contributions
up to the maximum statutory limits.
Fiscal Year
Operating
Leases
Capital
Leases
2016
2017
$ 1,759
1,615
2018
1,482
2019
1,354
$ 504
476
444
408
2020
1,236
370
Thereafter
10,464
3,252
Total minimum rentals
$17,910
$5,454
Less estimated executory costs
49
Net minimum lease payments
Less imputed interest
5,405
2,512
$2,893
The Company has future lease commitments for land and buildings for
approximately 282 future locations. These lease commitments have lease
terms ranging from 1 to 30 years and provide for certain minimum
rentals. If executed, payments under operating leases would increase
by $58 million for fiscal 2016, based on current cost estimates.
In connection with certain long-term debt issuances, the Company
could be liable for early termination payments if certain unlikely events
were to occur. At January 31, 2015, the aggregate termination payment
would have been $64 million. The arrangement pursuant to which this
payment could be made will expire in fiscal 2019.
12 Retirement-Related Benefits
Aggregate minimum annual rentals at January 31, 2015, under
non-cancelable leases are as follows:
U.S. federal
Increases related to prior year
$ 818
Total deferred tax expense (benefit)
(519)
(514)
(18)
Total provision for income taxes
$7,985
$8,105
$7,958
52
Walmart
2015 Annual Report
Notes to Consolidated Financial Statements
Effective Income Tax Rate Reconciliation
(48)
The Company's effective income tax rate is typically lower than the U.S.
statutory tax rate primarily because of benefits from lower-taxed global
operations, including the use of global funding structures and certain
U.S. tax credits as further discussed in the "Cash and Cash Equivalents"
section of the Company's significant accounting policies in Note 1. The
Company's non-U.S. income is generally subject to local country tax rates
that are below the 35% U.S. statutory tax rate. Certain non-U.S. earnings
have been indefinitely reinvested outside the U.S. and are not subject to
current U.S. income tax. A reconciliation of the significant differences
between the U.S. statutory tax rate and the effective income tax rate on
pretax income from continuing operations is as follows:
(Amounts in millions)
Balance Sheet classification:
Assets:
Prepaid expenses and other
Other assets and deferred charges
Asset subtotals
Liabilities:
Accrued liabilities
January 31,
2015
2014
$ 728
$ 822
1,033
1,151
1,761
1,973
The deferred taxes are classified as follows in the Company's
Consolidated Balance Sheets:
(479)
(77)
International
$6,377
$5,611
U.S.
$18,610
Non-U.S.
Total income from continuing
6,189
$19,412 $19,352
5,244
6,310
U.S. state and local
International
810
719
622
1,529
1,523 1,743
Total current tax provision
8,504
8,619 7,976
operations before income taxes
$24,799 $24,656 $25,662
Deferred:
U.S. federal
(387)
(72)
38
U.S. state and local
(55)
37
(8)
56
$ 611
176
Fiscal Years Ended January 31,
2014
2013
January 31,
2015
2014
$ 3,255 $ 3,566
3,395 2,986
184
126
1,119 1,573
7,953 8,251
(1,504) (1,801)
6,449 6,450
5,972 6,295
1,825 1,641
1,618 1,827
9,415 9,763
$2,966 $3,313
Unremitted Earnings
U.S. income taxes have not been provided on accumulated but
undistributed earnings of the Company's international subsidiaries of
approximately $23.3 billion and $21.4 billion as of January 31, 2015 and
2014, respectively, as the Company intends to permanently reinvest
these amounts outside of the U.S. However, if any portion were to be
distributed, the related U.S. tax liability may be reduced by foreign
income taxes paid on those earnings. Determination of the unrecog-
nized deferred tax liability related to these undistributed earnings is not
practicable because of the complexities with its hypothetical calculation.
The Company provides deferred or current income taxes on earnings of
international subsidiaries in the period that the Company determines it
will remit those earnings.
Net Operating Losses, Tax Credit Carryforwards
and Valuation Allowances
At January 31, 2015, the Company had net operating loss and capital loss
carryforwards totaling approximately $5.6 billion. Of these carryforwards,
approximately $2.9 billion will expire, if not utilized, in various years
through 2033. The remaining carryforwards have no expiration. At
January 31, 2015, the Company had foreign tax credit carryforwards of
$2.0 billion, which will expire in various years through 2025, if not utilized.
The recoverability of these future tax deductions and credits is evaluated
by assessing the adequacy of future expected taxable income from all
sources, including taxable income in prior carryback years, reversal of
taxable temporary differences, forecasted operating earnings and available
tax planning strategies. To the extent management does not consider it
more likely than not that a deferred tax asset will be realized, a valuation
allowance is established. If a valuation allowance has been established
and management subsequently determines that it is more likely than
not that the deferred tax assets will be realized, the valuation allowance
is released.
2015 Annual Report
Net deferred tax liabilities
Walmart
Notes to Consolidated Financial Statements
As of January 31, 2015 and 2014, the Company had valuation allowances
recorded of approximately $1.5 billion and $1.8 billion, respectively,
on deferred tax assets associated primarily with net operating loss
carryforwards for which management has determined it is more likely
than not that the deferred tax asset will not be realized. The $0.3 billion
net decrease in the valuation allowance during fiscal 2015 related to
releases arising from the use of deferred tax assets, changes in judgment
regarding the future realization of deferred tax assets, increases from
certain net operating losses and deductible temporary differences
arising in fiscal 2015, decreases due to operating loss expirations and
fluctuations in currency exchange rates. Management believes that it
is more likely than not that the remaining net deferred tax assets will
be fully realized.
Uncertain Tax Positions
The benefits of uncertain tax positions are recorded in the Company's
Consolidated Financial Statements only after determining a more likely
than not probability that the uncertain tax positions will withstand
challenge, if any, from taxing authorities.
As of January 31, 2015 and 2014, the amount of unrecognized tax benefits
related to continuing operations was $838 million and $763 million,
respectively. The amount of unrecognized tax benefits that would affect
the Company's effective income tax rate was $763 million and $698 million
for January 31, 2015 and 2014, respectively.
A reconciliation of unrecognized tax benefits from continuing operations
was as follows:
(Amounts in millions)
Unrecognized tax benefits,
Fiscal Years Ended January 31,
2015
2014
2013
beginning of year
$763
53
Total deferred tax liabilities
Deferred tax liabilities:
Property and equipment
Inventories
Other
Deferred tax assets, net of
valuation allowance
Deferred income taxes and other
4,671
5,110
Liability subtotals
4,727
5,286
U.S. statutory tax rate
35.0%
35.0% 35.0%
Net deferred tax liabilities
$2,966
$3,313
U.S. state income taxes, net of
federal income tax benefit
Income taxed outside the U.S.
1.8% 2.0%
(2.7)% (2.8)%
1.7%
(2.6)%
Net impact of repatriated
international earnings
Other, net
Effective income tax rate
(1.5)% (1.4)% (2.5)%
(0.4)% 0.1% (0.6)%
32.2% 32.9% 31.0%
Deferred Taxes
The significant components of the Company's deferred tax account
balances are as follows:
(Amounts in millions)
Deferred tax assets:
Loss and tax credit carryforwards
Accrued liabilities
Share-based compensation
Other
Total deferred tax assets
Valuation allowances
2015
In fiscal 2014, the redeemable noncontrolling interest shareholders
exercised put options that required the Company to purchase their
shares in Walmart Chile. At that time, the Company recorded an
increase to redeemable noncontrolling interest of $1.0 billion, with a
corresponding decrease to capital in excess of par value, to reflect
the redemption value of the redeemable noncontrolling interest at
$1.5 billion. In February 2014, the Company completed this transaction
using existing cash of the Company, increasing its ownership interest in
Walmart Chile to 99.7 percent. In March 2014, the Company completed a
tender offer for most of the remaining noncontrolling interest shares at
the same value per share as was paid to the redeemable noncontrolling
interest shareholders. As a result of completing these transactions, the
Company owns substantially all of Walmart Chile.
$300
Rogers, AR 72758
33
9
1367353-432 - 36
138
13
International
The Walmart International segment comprises the Company's
operations outside of the U.S. and is represented in three major brand
categories. Unit counts (1) as of January 31, 2015 for Walmart International
are summarized by brand category for each geographic market as follows:
124
8
128
Retail
Wholesale Other (2)
Total
306
Africa (3)
302
105
Argentina
Geographic Market
105
2
65
19
26
26
89
64
62
30
17
29
77
79
28
81
14
40
104
12
330-393-823-250+=1120122622246
14
87
39
468
197
Japan
372
59
16 126
Mexico
2,120
160
20
8
United Kingdom
589
22503
13
557
394
690
24
68
Brazil
India
11
10
Canada
394
340
Central America (4)
689
$ |ཥཾ |-
94
26
396
76
205
Chile
377
3
12
China
400
105
404
76
57
Colorado
Connecticut
Delaware
Florida
Georgia
150
Hawaii
Idaho
117
Illinois
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Indiana
Minnesota
California
Arizona
Sam's Club
U.S. Total
3,407
470
639
647 5,163
Walmart U.S.
Neighborhood
Markets and
Arkansas
Discount
State or Territory
Supercenters
Stores
formats
Clubs
Grand
Total
Alabama
Alaska
other small
57
Mississippi
109
99
1
24
2
79
3
26
75
2822162622 232222222222222322323±32215513112-1
8
92
64
67
18
22
2
3
92
38
Missouri
Virginia
Utah
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Vermont
North Dakota
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Ohio
411
20
431
$0.49
$0.49
$0.49
$0.49
June 1, 2015
September 8, 2015
January 4, 2016
Dividends paid per share
April 6, 2015
For fiscal 2015, dividends were paid based on the following schedule:
$0.48
June 2, 2014
$0.48
September 3, 2014
$0.48
January 5, 2015
$0.48
For fiscal 2014, dividends were paid based on the following schedule:
April 1, 2013
April 1, 2014
June 3, 2013
For fiscal 2016, dividends will be paid based on the following schedule:
Independent registered public accounting firm
P.O. Box 43069
Providence, Rhode Island 02940-3069
1-800-438-6278
TDD for hearing-impaired inside the U.S. 1-800-952-9245
Internet: http://www.computershare.com
Annual meeting
Our Annual Meeting of Shareholders will be held on Friday, June 5, 2015,
at 7:30 a.m. (Central Time) in the Bud Walton Arena on the University of
Arkansas campus, Fayetteville, Arkansas.
Communication with shareholders
Dividends payable per share
Wal-Mart Stores, Inc. periodically communicates with its shareholders
and other members of the investment community about our operations.
For further information regarding our policy on shareholder and investor
communications refer to our website, www.stock.walmart.com.
• Annual Report on Form 10-K
• Quarterly Reports on Form 10-Q
•Earnings Releases
• Current Reports on Form 8-K
• Annual Shareholders' Meeting Proxy Statement
• Global Responsibility Report
• Diversity and Inclusion Report (Includes the content previously
reported in the "Workforce Diversity Report")
The following reports are available without charge upon request by
writing the Company c/o Investor Relations or by calling (479) 273-8446.
These reports are also available via the corporate website.
Stock Registrar and Transfer Agent:
Computershare Trust Company, N.A.
September 3, 2013
Stock Performance Chart
$79.50 $68.13
2nd Quarter
79.76
73.54
79.96
72.90
3rd Quarter
79.37
$72.27
72.61
71.51
4th Quarter
90.97
75.59
81.37
73.64
$350
$250
79.00
January 2, 2014
$79.99
Low
$0.47
$0.47
$0.47
$0.47
This graph compares the cumulative total shareholder return on
Walmart's common stock during the five fiscal years ending with fiscal
2015 to the cumulative total returns on the S&P 500 Retailing Index and
the S&P 500 Index. The comparison assumes $100 was invested on
February 1, 2010, in shares of our common stock and in each of the
indices shown and assumes that all of the dividends were reinvested.
Comparison of 5-Year Cumulative Total Return*
Among Wal-Mart Stores, Inc., the S&P 500 Index, and S&P 500 Retailing Index
Wal-Mart Stores, Inc.
S&P 500 Index
1st Quarter
S&P 500 Retailing Index
5417 Pinnacle Point Dr., Suite 501
Market price of common stock
The high and low market price per share for the Company's common
stock in fiscal 2015 and 2014 were as follows:
2015
2014
High
Low
High
Ernst & Young LLP
Corporate information
Stock Symbol: WMT
New York Stock Exchange
52
26
120
14
84
9
7
82
3
16
7
11
10
6
2
16
43
7
18
29
59
25
10
2,290
592
18
9
88
International total
5,816
12
365
6,290
8
9
101
23
15
127
3
109
30
11
7
45
160
1
10
12
104
16
16
129
141
58
5
138
2015 Annual Report
Walmart
Walmart
Corporate and Stock Information
Listing
559
175
17
210
10
11
10
91
81
10
82574076332=2-2200% 16
154
15
47
50
(1) Walmart International unit counts, with the exception of Canada, are stated
as of December 31, 2014, to correspond with the balance sheet date of the related
geographic market. Canada unit counts are stated as of January 31, 2015.
(2) "Other" includes restaurants, drug stores, convenience stores and banks operating
under varying banners.
(3) Africa unit counts by country are Botswana (11), Ghana (1), Lesotho (3), Malawi (2),
Mozambique (5), Namibia (4), Nigeria (6), South Africa (360), Swaziland (1),
Tanzania (1), Uganda (1) and Zambia (1).
(4) Central America unit counts by country are Costa Rica (217), El Salvador (89),
Guatemala (217), Honduras (81) and Nicaragua (86).
31
69
50
117
55
11
5
6
$200
16 Quarterly Financial Data (Unaudited)
Notes to Consolidated Financial Statements
Fiscal Year Ended January 31, 2015
(Amounts in millions, except per share data)
Q1
Q2
Q3
$150
Q4
Total revenues
Net sales
$114,960
114,167
$120,125 $119,001
$131,565
$485,651
119,336
118,076
Total
130,650
$100
$ 0
High
2016
2015 Annual Report
Walmart
26
1st Quarter (1)
As of March 30, 2015, there were 249,876 holders of record of Walmart's
common stock.
Shareholders
$ 50
The high and low market price per share for the Company's common
stock for the first quarter of fiscal 2016, were as follows:
*Assumes $100 Invested on February 1, 2010
Fiscal Years
2015
2014
2013
2012
2011
2010
Assumes Dividends Reinvested
Fiscal Year Ending January 31, 2015
Low
482,229
86,714
Basic net income per common share (¹):
Basic income per common share from continuing
operations attributable to Walmart
1.10
1.22
1.15
1.54
5.01
16,363
Basic income (loss) per common share from discontinued
operations attributable to Walmart
0.05
0.06
Basic net income per common share attributable to Walmart
1.11
1.27
1.15
1.54
5.07
0.01
Cost of sales
4,966
4,093
90,010
89,247
99,115
365,086
Income from continuing operations
3,711
4,089
3,826
3,711
5,188
Consolidated net income
3,726
4,359
3,826
5,188
17,099
Consolidated net income attributable to Walmart
3,593
16,814
$88.00 $80.43
Designed and produced by Corporate Reports Inc./Atlanta
www.corporatereport.com
Walmart
省心价
RESEAR
沃尔玛
Walmart
they can trust.
access to quality food
customers have more
SE IT NO
in FY 15, Walmart
9:00 p.m.
China
Walmart **
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Every day, we offer affordable food, apparel and
other merchandise to customers in 27 countries
globally. We believe it is our responsibility to
operate in a way that is sustainable for the planet
and people who work all along our supply chains,
that creates economic opportunity for our
associates while growing our suppliers and the
economy more broadly, and that strengthens
the communities where we operate. To learn
more, read our GRR at corporate.walmart.com/
microsites/globalresponsibility-report-2015.
Global Responsibility Report:
The minimized environmental footprint of this report is the result of an extensive,
collaborative effort of Walmart and our supply chain partners. The environmental and
social impact continues to be an important consideration. It is printed on paper from
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Our sustainable, next-generation report
£1
Diluted net income per common share (¹):
Diluted income per common share from continuing
(1) Through April 1, 2015.
1.10
Report of Independent Registered Public Accounting Firm
on Internal Control over Financial Reporting.
The Board of Directors and Shareholders of Wal-Mart Stores, Inc.
We have audited Wal-Mart Stores, Inc.'s internal control over financial
reporting as of January 31, 2015, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO
criteria). Wal-Mart Stores, Inc.'s management is responsible for maintaining
effective internal control over financial reporting, and for its assessment
of the effectiveness of internal control over financial reporting included
in the accompanying "Management's Report to Our Shareholders." Our
responsibility is to express an opinion on the Company's internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assur-
ance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A company's internal control over financial reporting is a process
designed 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.
A company's internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit prep-
aration of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company's assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
In our opinion, Wal-Mart Stores, Inc. maintained, in all material respects,
effective internal control over financial reporting as of January 31, 2015,
based on the COSO criteria.
2015 Annual Report
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated
balance sheets of Wal-Mart Stores, Inc. as of January 31, 2015 and 2014,
and related consolidated statements of income, comprehensive income,
shareholders' equity and redeemable noncontrolling interest and cash
flows for each of the three years in the period ended January 31, 2015
and our report dated April 1, 2015 expressed an unqualified opinion
thereon.
Rogers, Arkansas
April 1, 2015
2015 Annual Report
Walmart
61
Management's Report to Our Shareholders
Wal-Mart Stores, Inc.
Management of Wal-Mart Stores, Inc. ("Walmart," the "company" or "we")
is responsible for the preparation, integrity and objectivity of Walmart's
Consolidated Financial Statements and other financial information con-
tained in this Annual Report to Shareholders. Those Consolidated Financial
Statements were prepared in conformity with accounting principles
generally accepted in the United States. In preparing those Consolidated
Financial Statements, management is required to make certain estimates
and judgments, which are based upon currently available information
and management's view of current conditions and circumstances.
Ernst & Young LLP
The Audit Committee of the Board of Directors, which consists solely
of independent directors, oversees our process of reporting financial
information and the audit of our Consolidated Financial Statements. The
Audit Committee stays informed of the financial condition of Walmart
and regularly reviews management's financial policies and procedures,
the independence of our independent auditors, our internal control over
financial reporting and the objectivity of our financial reporting. Both the
independent auditors and the internal auditors have free access to the
Audit Committee and meet with the Audit Committee periodically, both
with and without management present.
Walmart
Rogers, Arkansas
April 1, 2015
Diluted net income per common share attributable to Walmart
1.14
1.24
1.14
1.36
4.88
(1) The sum of quarterly income per common share attributable to Walmart data may not agree to annual amounts due to rounding.
2015 Annual Report
Young LLP
Walmart
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
of Wal-Mart Stores, Inc.
We have audited the accompanying consolidated balance sheets of
Wal-Mart Stores, Inc. as of January 31, 2015 and 2014, and the related
consolidated statements of income, comprehensive income, shareholders'
equity and redeemable noncontrolling interest, and cash flows for each
of the three years in the period ended January 31, 2015. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Wal-Mart
Stores, Inc. at January 31, 2015 and 2014, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended January 31, 2015, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), Wal-Mart Stores,
Inc.'s internal control over financial reporting as of January 31, 2015, based
on criteria established in Internal Control-Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) and our report dated April 1, 2015
expressed an unqualified opinion thereon.
Ernst &
59
0.03
Acting through our Audit Committee, we have retained Ernst & Young
LLP, an independent registered public accounting firm, to audit our
Consolidated Financial Statements found in this Annual Report to
Shareholders. We have made available to Ernst & Young LLP all of our
financial records and related data in connection with their audit of our
Consolidated Financial Statements. We have filed with the Securities
and Exchange Commission ("SEC") the required certifications related to
our Consolidated Financial Statements as of and for the year ended
January 31, 2015. These certifications are attached as exhibits to our
Annual Report on Form 10-K for the year ended January 31, 2015.
Additionally, we have also provided to the New York Stock Exchange
the required annual certification of our Chief Executive Officer regarding
our compliance with the New York Stock Exchange's corporate
governance listing standards.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide
reasonable assurance that information required to be timely disclosed is
accumulated and communicated to management in a timely fashion.
Management has assessed the effectiveness of these disclosure controls
and procedures as of January 31, 2015, and determined they were effec-
tive as of that date to provide reasonable assurance that information
required to be disclosed by us in the reports we file or submit under the
Securities Exchange Act of 1934, as amended, was accumulated and
communicated to management, as appropriate, to allow timely decisions
regarding required disclosure and were effective to provide reasonable
assurance that such information is recorded, processed, summarized and
reported within the time periods specified by the SEC's rules and forms.
2
2
38
1
5
44
Wisconsin
80
Washington D.C.
West Virginia
8
12
operations attributable to Walmart
Wyoming
11
2
13
Puerto Rico
12
5
Report on Internal Control Over Financial Reporting
Management has responsibility for establishing and maintaining
adequate internal control over financial reporting. Internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in accordance with
accounting principles generally accepted in the United States. Because
of its inherent limitations, internal control over financial reporting may
not prevent or detect misstatements. Management has assessed the
effectiveness of the Company's internal control over financial reporting
as of January 31, 2015. In making its assessment, management has utilized
the criteria set forth by the Committee of Sponsoring Organizations
("COSO") of the Treadway Commission in Internal Control-Integrated
Framework (2013). Management concluded that based on its assessment,
Walmart's internal control over financial reporting was effective as of
January 31, 2015. The Company's internal control over financial reporting
as of January 31, 2015, has been audited by Ernst & Young LLP as stated in
their report which appears in this Annual Report to Shareholders.
69
5
Report on Ethical Standards
Our Company was founded on the belief that open communications
and the highest standards of ethics are necessary to be successful. Our
long-standing "Open Door" communication policy helps management
be aware of and address issues in a timely and effective manner. Through
the open door policy all associates are encouraged to inform management
at the appropriate level when they are concerned about any matter
pertaining to Walmart.
Walmart has adopted a Statement of Ethics to guide our associates in the
continued observance of high ethical standards such as honesty, integrity
and compliance with the law in the conduct of Walmart's business.
Familiarity and compliance with the Statement of Ethics is required of all
associates who are part of management. The Company also maintains a
separate Code of Ethics for our senior financial officers. Walmart also has in
place a Related-Party Transaction Policy. This policy applies to Walmart's
senior officers and directors and requires material related-party trans-
actions to be reviewed by the Audit Committee. The senior officers
and directors are required to report material related-party transactions
to Walmart. We maintain a global ethics office which oversees and
administers an ethics helpline. The ethics helpline provides a channel for
associates to make confidential and anonymous complaints regarding
potential violations of our statements of ethics, including violations
related to financial or accounting matters.
Dong Mchillon
C. Douglas McMillon
President and Chief Executive Officer
Chad M Holly
Charles M. Holley, Jr.
3
Executive Vice President and Chief Financial Officer
2015 Annual Report
United States
The Walmart U.S. and Sam's Club segments comprise the Company's
operations in the U.S. As of January 31, 2015, unit counts for Walmart U.S.
and Sam's Club are summarized by format for each state and territory
as follows:
Unit Counts as of January 31, 2015
Wal-Mart Stores, Inc.
Washington
51
10
Walmart
0.02
105
operations attributable to Walmart
$114,071
$116,829
$115,688
$129,706
$476,294
Net sales
113,313
116,101
Total revenues
114,876
473,076
Cost of sales
85,991
87,420
86,687
97,971
358,069
Income from continuing operations
128,786
3,932
Total
Q3
0.01
1.21
1.15
1.53
Diluted income (loss) per common share from discontinued
operations attributable to Walmart
0.01
0.05
0.0
Q4
0.06
1.11
1.26
1.15
1.53
5.05
Fiscal Year Ended January 31, 2014
Q1
Q2
Diluted net income per common share attributable to Walmart
4,205
4.99
4,544
0.01
0.01
0.02
0.03
Basic net income per common share attributable to Walmart
1.15
1.24
1.15
Basic income (loss) per common share from discontinued
operations attributable to Walmart
1.37
Diluted net income per common share (¹);
Diluted income per common share from continuing
operations attributable to Walmart
1.14
1.23
1.34
3,870
4.85
4.90
4.87
1.14
1.14
16,551
Consolidated net income
1.35
3,944
4,216
3,885
4,650
16,695
Consolidated net income attributable to Walmart
Diluted income (loss) per common share from discontinued
4,069
3,738
4,431
3,784
16,022
1.24
Basic net income per common share (¹):
Basic income per common share from continuing
operations attributable to Walmart
1.14
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mart.com
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3rd most-
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website
Pickup
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Shop a million more items on
260 million times a week
Focused on a seamless experience
Retail is changing – and so is Walmart. Customers want to
save money and time while shopping. Our mobile apps
and innovative services like Online Grocery and Walmart
Pay deliver the convenience customers seek today. With
our global footprint, only Walmart can deliver a seamless
shopping experience at scale. We're investing in people
and technology to connect customers to convenience
more than a quarter billion times a week.
REPORT
Save $25
2016
ANNUAL
(on a constant currency basis)
$2.7
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Cheerios
KPOT CROCK POT CROCK PO
1984
Walmart's success is dependent upon engaged,
motivated associates who love serving customers.
Globally, we are doing more to invest in our
associates' futures - through increased training and
development, higher pay and better opportunities
to build rewarding careers. Walmart is positioned
to win the future of retail by providing a ladder of
opportunity for every member of our team.
the difference
Our people make
associates
worldwide
2.3
million
Rid
SWEE AVEN
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more markets
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Grocery to
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Around the world, we face stiff competition, but our future is within
our control. We are a strong and profitable business, with unique
strengths and assets. Our people, stores and supply chain,
combined with our customer relationships and willingness to
change, provide the opportunity for us to continue to win with
customers. In fiscal 2016, we took several important steps to
reimagine Walmart, including initiating an approximately $2.7 billion
Walmart.com
BILLION
•Trust us to save them money,
We want customers to:
We will put these pieces
together in a way no one
else can. We will
reimagine Walmart by
being the first and only to
deliver a truly seamless
shopping experience at
scale, with great savings
and massive selection.
But it also requires new capabilities and fresh thinking.
This includes new digital tools for customers and frontline
associates, as well as back-end software and platform work
that benefits the entire enterprise. The use of data, algorithms,
advanced forecasting capabilities - and more - is of extreme
strategic significance.
Our plan to win is clear. It starts with unparalleled assets that
only Walmart has - our 2.3 million people; more than 11,500 retail
locations; e-commerce websites and apps; and a dynamic,
optimized supply chain.
The winners in this time of change will be those who put the
customer first.
TOTAL REVENUE
beyond just selling products to being the brand customers rely
on to make their lives simpler and more meaningful as they
save money.
Our customers deserve and demand value, professional service
and a simple, easy experience. And when they're searching for an
item or paying for their purchase, they want it to be fast. Winning
with customers today means being actively on their side – making
their daily lives better. Customers should be able to shop on their
own terms - in a great store or club, with a quick pickup stop on
the way home from work, or with items reliably arriving at the front
door. And customers want to have some money left over to put
toward their priorities: an experience together as a family, a special
gift every once in a while, or savings for a rainy day.
Our customers have high expectations of us. And they absolutely
should. People have limited time, limited money and limited
patience. With so many options and technological tools available
today, shopping shouldn't be a hassle.
the best online shopping experience. And beyond just retail,
they compare us with every business they interact with in their
lives. They compare our pickup experience to the speed and
friendliness of the best drive-through. They compare our checkout
process to the ease of paying with an app.
DOUG MCMILLON
President and Chief Executive Officer, Wal-Mart Stores, Inc.
6 Walmart 2016 Annual Report
Our work starts and ends with the customer. Technology has
changed customer expectations. Customers used to compare
us with the store down the street; now they compare us with
where we are going, and we will win with a strategy that
only Walmart can execute."
Retail is not just about putting items on a shelf anymore. It's
about fighting for our customers, cutting out the hassles and the
headaches and advocating for them on price, too. We're moving
• Find it simple and easy to do business with us, whether digitally
or physically,
• Know they can find whatever they're looking for, either in stores,
on our e-commerce sites, or with our marketplace vendors, and
•
Only Walmart
8 Walmart 2016 Annual Report
As we win with the customer, we will also create a great place to
work. We will create tremendous opportunities for people from all
walks of life, with all kinds of skill sets and education levels. We're
striving to create a true meritocracy. Diversity and inclusion are core
to who we are and make us a stronger company. No matter where
you start from or what your unique and special characteristics are,
Overall, we served nearly 260 million customers a week last year
in 28 countries. In the United States, more than 78 percent of
Americans shopped with us during the year, and traffic was up
over last year. Excluding more than $17 billion in currency impacts,
we delivered revenue of $499.4 billion, up 2.8 percent, which is
$13.7 billion of growth.
Last year, we also took difficult but necessary
steps to sharpen the focus of our portfolio.
The decision to close stores is not one we
took lightly, but we must do what's right
for the company. We'll continue to evaluate
our portfolio as part of the normal course
of business.
We're also accelerating e-commerce and technology advances
globally. We expanded Online Grocery shopping to new markets,
ramped up in-store and in-club pickup, fully acquired the Chinese
online retailer Yihaodian, and began to add new mobile services
such as Walmart Pay. We developed a technology platform that
we can scale across the business. We improved our fulfillment
capabilities with new centers that are helping us get orders to
customers' doors faster and more efficiently.
We made great progress against this strategy over the past
year. To help our associates succeed and better serve our
customers, we're making big changes - including investing
approximately $2.7 billion over two years in higher wages,
education and training to make Walmart U.S. a better place to
work and shop. This is an investment to strengthen our company,
and we're already seeing positive results: our fourth quarter of
fiscal 2016 marked six consecutive quarters of positive comps and
five straight quarters of positive traffic at Walmart U.S. There is
an underlying strength to the U.S. business that was not there a
year ago. Everything we're doing in omnichannel depends on
customers having great interactions with us in our stores.
George
35
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CLUB
Sam's
7
Walmart
Only Walmart
Ultimately, customers don't care about what channel they're
shopping in, or about how we deliver them a product or service.
They simply know they're shopping with Walmart.
Get items when and where they want them - in stores and clubs,
through pickup on or off-site, or delivered to their door.
investment in our people over
two years and ramping up Online
Grocery. And we will move even
faster going forward. The bottom
line is this: we have the resources
to chart our own destiny, we
know where we are going, and we will win with a strategy that
only Walmart can execute.
"We have the resources to chart our own destiny, we know
driven by rapid technological advances, and that change is likely
to accelerate even further. Our efforts are squarely focused on
emerging as the retail leader.
Throughout our history, Walmart his chef disruption, argely
33
Live better:
Improved
in-stock through
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Walmart
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Walmart
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Walmart
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33
Shop a million more items on
3
our stores
▪hroughout our history, Walmart has been an innovator
associates and
customers:
Dear shareholders,
Picku
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time of change
President and Chief Executive Officer
Wal-Mart Stores, Inc.
Doug McMillon
Winning in a
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store traffic
Focused
on fresh:
a key
driver of
Operating great stores that have friendly associates,
well-stocked shelves and fast checkouts is central to
our growth agenda. We're infusing our stores with
efficient processes and new technology to help
associates serve customers better. Our merchandise
offering in key categories like fresh food has been
strengthened. When customers have an exceptional
in-store experience, they shop more, buy more and
recommend us to friends and family.
Winning with
16
$482
Audit
Sincerely,
Gray Peener
Walmart 2016 Annual Report
Board of Directors
Pictured below from left to right:
Linda S. Wolf
Ms. Wolf is the retired Chairman of the Board
of Directors and Chief Executive Officer of Leo
Burnett Worldwide, Inc., an advertising
agency and division of Publicis Groupe S.A.
Steven S Reinemund
Mr. Reinemund is the retired Dean of Business
and Professor of Leadership and Strategy at
Wake Forest University. He previously served
as the Chairman of the Board and Chairman
and Chief Executive Officer of PepsiCo, Inc.
S. Robson Walton
As we look ahead, the Board is confident that Walmart's strategy
is the right one, our governance processes are strong and
management is fully aligned with an actionable plan for success.
Mr. Walton is the retired Chairman of the
Board of Directors of Wal-Mart Stores, Inc.
Mr. McMillon is the President and Chief
Executive Officer of Wal-Mart Stores, Inc.
Roger C. Corbett
Mr. Corbett is the retired Chief Executive
Officer and Group Managing Director of
Woolworths Limited, the largest retail
company in Australia.
Marissa A. Mayer
Ms. Mayer is the Chief Executive Officer and
President and Director of Yahoo!, Inc., a digital
media company.
James I. Cash, Jr., Ph.D.
(Lead Independent Director)
Dr. Cash is the James E. Robison Professor of
Business Administration, Emeritus at Harvard
Business School, where he served from July
1976 to October 2003.
Gregory B. Penner (Chairman)
Mr. Penner is the Chairman of the Board of
Directors of Wal-Mart Stores, Inc. and a
General Partner at Madrone Capital Partners,
an investment firm.
C. Douglas McMillon
The past year has also brought an unprecedented level of engagement
with Walmart shareholders. Members of management have actively
engaged with the majority of our largest institutional shareholders
to hear their perspectives on Walmart's strategy, Board structure and
compensation programs. I participated in several of those meetings,
as did Dr. Cash. Shareholders told us that we're focused on the right
strategy to deliver a seamless shopping experience for customers.
Shareholders value the quality and diversity of our director skill sets
and believe that the Board is a strategic asset. And, most shareholders
felt our executive compensation program was appropriately
performance-based and aligned with Walmart's strategy and
shareholder interests. The views of shareholders have always been
important to us, and we continually strive to improve our level of
disclosure and transparency with shareholders. Thank you for the
feedback you provided this past year.
During this period of change, Board refreshment and succession
planning remain top of mind. The Board is committed to
continuous improvement, and we have adapted the way we
operate to maximize our effectiveness. We're reducing the Board's
size while maintaining its independence, changing our Board
committee composition and ensuring that Walmart's strategic
priorities are a key focus. Shareholders benefit as we leverage the
Board's strategic expertise to guide Walmart's path forward.
Our Board members are dedicated in their service to shareholders,
demonstrated by their attendance at 98 percent of Board and
committee meetings last year.
Driving value
Towels
At Sam's Club, we are focused on delivering value
for our members through price, quality and
convenience. We are lowering our costs as part
of our commitment to provide new products
and services at a value that is unmatched.
A member-centric approach
to convenience and value
Relevant merchandise
We are doing more with data and analytics
to enhance our assortment. Our members
expect to be excited when they shop with us,
and we are focused on delivering compelling
merchandise across all categories both online
and in our clubs.
SAM'S CLUB
Member growth and retention
We are creating winning moments with our members and
exceeding their expectations through personal engagement
and a value proposition designed to save them time and
money. We know our members, and we are building a
shopping experience for them that is seamless no matter
how they choose to shop.
Only Walmart
Walmart 13
14
Delivering strong
governance
GREG PENNER
Chairman of the Board of Directors
Wal-Mart Stores, Inc.
The
The past year has been a period of transition for Walmart as
we make strategic investments to position the company for
sustainable growth. Management took bold steps focused on
winning with customers by increasing wages and training for
U.S. store associates, investing in the technology powering our
websites and apps, and expanding our e-commerce fulfillment
capabilities. Walmart's Board of Directors fully supports these
investments in people and technology as they will strengthen
the company's competitive position both now and in the future.
We've challenged management to increase the pace of change
even further, and we're tracking comp sales, customer satisfaction
scores and growth in gross merchandise value to monitor
progress on delivering this strategy.
Walmart's Board also experienced changes this past year, and
none was more notable than the retirement of my father-in-law,
Rob Walton, as Chairman. We are fortunate that Rob continues
to serve on our Board, offering his expertise and unequaled
perspective derived from his more than two decades of effective
leadership as Chairman. I'm honored to succeed him as Chairman
and excited to lead a Board that is deeply committed to our
company's success, to strong governance and to the interests of
Walmart's shareholders. The members of our Board represent an
exceptional array of talent, diversity and expertise in retail and a
broad range of other industries and disciplines. We are committed
to an independent Board, and Dr. James Cash is our Lead
Independent Director.
Walmart
2015
We've continued to improve our
proxy statement disclosure. As you
review the proxy, we hope you find
it informative and we ask you to
vote your shares.
Kevin Y. Systrom
Mr. Systrom is the Chief Executive Officer and
co-founder of Instagram, a social media
application.
Aida M. Alvarez
Ms. Alvarez is the former Administrator of the
U.S. Small Business Administration and was a
member of President Clinton's Cabinet from
1997 to 2001.
4,574
Total units
Sam's Club segment
Walmart International segment
Walmart U.S. segment
Unit counts (3)
71,315
76,343
76,255
81,394
80,546
Total Walmart shareholders' equity
46,818
41,240
44,368
43,495
44,030
Long-term debt (2) and long-term capital lease and financing obligations
(excluding amounts due within one year)
193,120
202,910
204,541
203,490
199,581
4,516
Whether through Club Pickup
or advances in mobile check-in
capabilities, we are transforming
the shopping experience with
technology, simplifying the
way members interact with
and shop at Sam's Club.
4,203
3,868
Thomas W. Horton
Mr. Horton is the former Chairman of
American Airlines Group Inc. and the former
Chairman of American Airlines, Inc. He also
previously served as the Chairman and
Chief Executive Officer of AMR Corporation
and CEO of American Airlines, Inc.
Michael T. Duke
Mr. Duke is the former Chairman of the
Executive Committee of the Board of
Directors of Wal-Mart Stores, Inc., where
he served in that capacity until January 31,
2015. He previously served as the President
and Chief Executive Officer of Wal-Mart
Stores, Inc. from February 2009 to
January 2014.
Timothy P. Flynn
Mr. Flynn is the retired Chairman of KPMG
International, a professional services firm.
Jim C. Walton
Mr. Walton is the Chairman of the Board of
Directors and Chief Executive Officer of Arvest
Bank Group, Inc., a group of banks operating
in the states of Arkansas, Kansas, Missouri and
Oklahoma.
Pamela J. Craig
Ms. Craig is the retired Chief Financial Officer
of Accenture plc, a global management
consulting, technology services, and
outsourcing company.
Board Committees:
Comp.,
Strategic
Nominating &
Global Planning Tech &
Governance Executive Comp. & Finance e-commerce
11,528
611
620
632
647
655
5,287
5,783
6,107
6,290
6,299
Name
Deeper digital
relationships
Ziploc
Surf
BILLION
DIVIDENDS/SHARE REPURCHASES
* Projected net sales growth on a constant currency basis for fiscal
years 2017-2019.
Only Walmart
Walmart
WALMART U.S.
Investments that
Walmart
Ⓡ
Save money. Live better.
win with customers
DELI
Customer experience
Stores that are clean and easy to navigate, service that is helpful and
friendly, relevant brands that are in stock, checkout that is fast and
efficient - these are the ingredients of a great Walmart experience.
Across our U.S. fleet, we're making big improvements in processes and
technology, focusing on the retail fundamentals that result in a great
customer experience.
Optimizing Supercenters and
Neighborhood Markets
Supercenters are strong and profitable, providing
customers one-stop shopping with a broad
assortment at everyday low prices. We're enhancing
them to meet evolving customer needs through a
better fresh offering, e-commerce integration and
expansion of Store Pickup and Online Grocery.
Customers appreciate Neighborhood Markets
for their convenience and access to fresh
food, fuel, pharmacy and e-commerce
order pickup. We're focused on refining
processes and selecting quality
locations to improve their
profitability.
People and culture
Throughout Walmart's history our
people have made the difference.
That's why we're investing
approximately $2.7 billion to raise
wages, increase training and
expand opportunities for our
U.S. associates. We're putting more
highly engaged store associates
closer to customers. We've added
Garanimal
B
I
$10.4
more than 8,000 new department managers and empowered
them to be great merchants. These changes are helping us
recruit and retain a motivated, customer-centric team.
STORES WORLDWIDE
IN 11 COUNTRIES
Walmart 2016 Annual Report
18
(3) Unit counts related to discontinued operations have been removed from all relevant periods.
(2) Total assets and long-term debt were adjusted to reflect the adoption of ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of
Debt Issuance Cost, for all periods.
(1) Comparable sales include sales from stores and clubs open for the previous 12 months, including remodels, relocations and expansions, as well as e-commerce sales.
Comparable store and club sales include fuel.
9,766
10,408
10,942
11,453
you can fulfill your potential here. We believe in opportunity and
that hard work, dedication and talent should be rewarded.
We will also shape global systems using our size, mindset and
policies and help make the world a better place. We create
opportunity throughout our global supply chain - on farms and
in factories, by buying more from women-owned businesses, by
hiring veterans and by strengthening the retail industry workforce.
We also work to be more sustainable, both in our own operations
and in our supply chain. We have three big goals: creating zero
waste, running on 100 percent renewable energy and selling
products that sustain people and the environment. And we give
back to the communities we serve - supporting American
manufacturing, preparing for and responding to natural disasters
and fighting hunger. Customers can be proud to shop at Walmart.
When you put it all together, we'll enable customers around the
world to save money and time, so they can invest more of both in
the things they love. And we'll help make the world a better place
one community at a time.
We will win with a differentiated, disruptive strategy and a
foundation of operational excellence. As we do, we believe
shareholders will benefit by receiving above-average returns.
We have a continued commitment to our
shareholders that we're very proud of. Last
year, we were able to return more than
$10 billion to shareholders through
dividends and share repurchases. This year,
we announced a dividend increase to $2.00
per share, marking the 43rd consecutive
year of dividend increases for Walmart.
Although this will be another year of
foundational investments, we believe we
will soon be growing faster than the retail
market. We are a growth company; we just
happen to be a large one.
ANAR
The road ahead will not always be easy, but by being customer-
focused, hungry, fast and accountable, we will win and have a
good time doing it.
Thank you for your continued interest in our company. It's an
incredible time to be a part of Walmart.
Sincerely,
Doug
2.3 MILLION
ASSOCIATES
$45-60
BILLION
3-YEAR PROJECTED
SALES GROWTH*
16 WEBSITES
~11,5300
112,324
Walmart
10
B
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Lowering our costs
We're reducing our cost of goods sold and overhead
expenses to fuel growth in our core business. We started
a cost analytics program in Canada and the U.K. to
provide merchants with tools and cost visibility to lead
fact-based negotiations with suppliers. We're continuing
to see benefits from productivity initiatives in China as
we build a platform for sustainable growth.
6.1%
INCREASE
IN MEMBERSHIP INCOME
Sam's
CLUBⓇ
Savings Made Simple
%
m.yhd.com/17track
Neighborhood Market
11:39 AM
Actively managing
the portfolio
Walmart 2016 Annual Report
Convenience/Online Grocery
Order groceries through our website or mobile
app and pick them up whenever it's convenient -
what could be better for today's busy families?
Customers love Online Grocery and it attracts new
customers who on average purchase a bigger
basket. We've expanded Online Grocery to more
than 150 locations across more than 20 U.S. markets.
And, we continue to grow. It's another great
example of how only Walmart can deliver
seamless shopping at scale.
Walmart.com
FC 7356
Adding supply chain
capabilities
World-class e-commerce requires
world-class distribution and fulfillment
capabilities. We provide online shop-
pers with options - home delivery
or in-store pickup as soon as today.
To ensure that customers get items
quickly, efficiently and in whatever
way is most convenient for them,
we've expanded our fleet of highly
automated, next-generation fulfill-
ment centers in Texas, California,
Georgia, Pennsylvania and Indiana.
85-
MILLION
average monthly
unique visitors to
walmart.com
Fresh food
Appealing, high-quality fresh food is key to
driving store traffic. As we work to improve
store operations, enhancing the quality
of our fresh offering is a key focus. We're
emphasizing the basics - with better processes
at every step of the supply chain - from
farm to fork. We're also expanding our
assortment of organic foods, healthy snacks
and easy-prep meals.
Only Walmart
Walmart 11
WALMART INTERNATIONAL
Walmart
International
Disciplined growth
Mexico and Canada drove overall sales growth
for the International segment in fiscal 2016. In
China, despite ongoing economic challenges, we
continued to gain share in the Hypermarket channel
and are building a platform for sustainable growth.
Our business in Brazil has been impacted by an
increasingly challenging economic environment,
while competitive intensity continued to increase
in the U.K. All other markets had solid performance.
with a focused portfolio
Delivering balanced growth
We're focused on delivering value to customers across
income levels in each of our markets. We've grown
comp sales in a majority of our markets for seven
consecutive quarters, fueled by investments in price,
private brands and our fresh offering. We continued
to open stores across our markets and expanded our
reach in Online Grocery to China and Canada,
leveraging our experience from the U.K.
800,000
INTERNATIONAL ASSOCIATES
We continue to review our
portfolio, a key strategic priority
aimed at sharpening our focus on
our core food retail business, in both
stores and online, and driving
increased profitability. As a result,
we sold properties in Canada,
exited bank operations in Mexico,
and closed underperforming stores
in Latin America, while enhancing
our portfolio by taking full
ownership of Yihaodian in China.
These actions position us for
improved profitable growth.
$ 40,714
4,005
117,907
61
19 Management's Discussion and Analysis of
Financial Condition and Results of Operations
Consolidated Statements of Income
35
Five-Year Financial Summary
18
Notes to Consolidated Financial Statements
60 Report of Independent Registered Public
Accounting Firm
40
FINANCIALS
2016
Walmart **
36 Consolidated Statements of Comprehensive Income
Walmart 2016 Annual Report
Sincerely,
As I conclude my first letter to you as CFO, let me thank you for
being a Walmart shareholder. I am honored to serve in this
capacity during this exciting time at Walmart. Our business is
strong, and we are making the strategic investments to become
even stronger. As a result, I'm confident that we will serve
customers more effectively, drive sales growth and continue
to deliver strong returns for our shareholders.
We will continue to invest in our business, with capital investments of
approximately $11 billion in fiscal 2017, including more than $1 billion
in global e-commerce initiatives that will improve our technology
and fulfillment capabilities to ensure that customers receive items
efficiently and in a cost-effective manner. I'm excited that we are
building one of the world's largest technology companies inside of
one of the world's most financially strong companies.
Only Walmart can deliver a seamless shopping experience at
scale, and we are strengthening our proposition for customers.
Winning with stores is critical to our strategy. That's why the
approximately $2.7 billion wage and training investment in our
U.S. associates that was started in fiscal 2016 is not only the right
thing to do for our associates, but it positions us to be a stronger
company going forward.
During this past year, Walmart's financial strength allowed for
shareholder returns in excess of $10 billion through dividends
and share repurchases. Also, in February 2016, we raised our
annual dividend for the 43rd consecutive year to $2.00 per share.
I'm proud of Walmart's long record of shareholder returns.
Executive Vice President and
Chief Financial Officer
Wal-Mart Stores, Inc.
BRETT BIGGS
Our great financial strength positions us to make the necessary
investments in our business to drive sustainable long-term results,
even as shareholders see a solid return on their investment.
we project to add more than 300 new stores globally. We are
a growth company.
1 percent of our global
revenue and square footage.
A key takeaway from this
portfolio review was the
health of our overall store
base. During fiscal 2017,
Brett
37
$ 43,803
116,681
38 Consolidated Statements of Shareholders' Equity and
Redeemable Noncontrolling Interest
Executive Vice President and
Rollin L. Ford
Executive Vice President, President and
Chief Executive Officer, Walmart U.S.
Greg S. Foran
Executive Vice President, President and
Chief Executive Officer, Walmart International
David Cheesewright
Executive Vice President, Global People
Jacqueline P. Canney
Executive Officers
Executive Vice President, President and
Chief Executive Officer, Sam's Club
Rosalind G. Brewer
Executive Vice President and
Chief Financial Officer
M. Brett Biggs
Executive Vice President, Corporate Affairs
Daniel J. Bartlett
Executive Vice President, President and
Chief Executive Officer, Global eCommerce
and Technology
Neil M. Ashe
64 Corporate and Stock Information
Unit Counts as of January 31, 2016
63
62 Management's Report to Our Shareholders
Report of Independent Registered Public
Accounting Firm on Internal Control Over
Financial Reporting
39 Consolidated Statements of Cash Flows
representing less than
(through dividends and
share repurchases)
returned to shareholders
$55B
Timothy P. Flynn (FE)
Michael T. Duke
*(C)
*(C)
Thomas W. Horton (FE)
*
*
Aida M. Alvarez
*(c)
*
Roger C. Corbett
C. Douglas McMillon
S. Robson Walton
Steven S Reinemund
Kevin Y. Systrom
*
*(C)
Linda S. Wolf
Audit
Name
Strategic
Global Planning Tech &
Comp. & Finance e-commerce
Executive
Comp.,
Nominating &
Governance
*(c)
Chief Administrative Officer
Marissa A. Mayer
*
cash flow from operations decision to close stores
However, running a healthy
business sometimes requires
sharpening the focus of the
portfolio. After a thorough
review of our stores from
both a financial and strategic
standpoint, we made the
Over the past 5 years
$60B
revenue growth
$129B
In fiscal 2016, Walmart generated revenue of $482 billion, operating
income of $24 billion, operating cash flow of $27 billion and return on
investment of 15.5 percent. Excluding more than $17 billion in currency
impacts, revenue would have been over $499 billion. Looking
ahead, we expect to add approximately $45 billion to $60 billion of
sales on a constant currency basis in the three years ending in fiscal
2019, an amount equivalent to a Fortune 50 company.
We take these steps with confidence because Walmart is one of the
strongest companies in the world, with a strong balance sheet and
significant cash generation.
marketplace. Yet change is nothing new for our
industry - nor for Walmart. For more than 50 years, we
have been a disruptor in retail, tailoring our proposition
to align with evolving customer preferences. To continue
leading, Walmart is making significant investments
in people and technology to deliver results for our
associates, customers and shareholders.
Спо
hange is sweeping through today's retail
a position of great financial strength
Transforming the company from
16
*
*(C)
*
(C) Committee Chair (FE) Financial Expert
*
Pamela J. Craig (FE)
Jim C. Walton
**
*
*
Gregory B. Penner
*
James I. Cash, Jr., Ph.D. (FE)
Jeffrey J. Gearhart
Consolidated Balance Sheets
C. Douglas McMillon
14,694
$ 26,491
$ 27,725
$ 26,872
$ 27,147
$ 24,105
19.2%
19.0%
19.3%
19.4%
20.3%
24.5%
24.3%
24.3%
24.3%
24.6%
8.4%
4.1%
0.3%
0.0%
(3.2)%
0.3%
2.0%
16,182
(0.6)%
15,918
15,734
116,655
116,516
Property, equipment, capital lease and financing obligation assets, net
Total assets (2)
$ 44,858
$ 45,141
$ 44,469
Inventories
Financial position
1.46
1.59
4.53
$
5.01
$
4.85
1.88
1.92
$
$ 4.99
4.57
1.96
Dividends declared per common share
$
continuing operations attributable to Walmart
Diluted income per common share from
Executive Vice President, Global Governance
and Corporate Secretary
0.6%
16,963
1.6%
5.0%
1.6%
2.0%
(0.7)%
Percentage change in total revenues from previous fiscal year
$446,509
$468,651
$476,294
$485,651
$482,130
Operating results
2012
2013
2014
2015
2016
(Amounts in millions, except per share and unit count data)
As of and for the Fiscal Years Ended January 31,
Five-Year Financial Summary
Senior Vice President and Controller
Steven P. Whaley
President and Chief Executive Officer
1.0%
6.0%
Net sales
Total revenues
$482,229
2.4%
$478,614
(0.5)%
0.5%
0.3%
Net income per common share:
Income from continuing operations attributable to Walmart
Operating income
Operating, selling, general and administrative expenses,
Gross profit margin
Sam's Club
Walmart U.S.
as a percentage of net sales
$465,604
Increase (decrease) in calendar comparable sales (1)
6.0%
5.0%
1.6%
1.9%
(0.7)%
Percentage change in net sales from previous fiscal year
$443,416
in the United States
$473,076
Percent
Percent Percent
of Total Change
59.8% 3.1%
28.2% (0.3)%
12.0% 1.5%
100.0%
Net Sales
$288,049
136,160
58,020
$482,229
Percent Percent
of Total Change
$298,378 62.3% 3.6%
123,408 25.8% (9.4)%
56,828 11.9% (2.1)%
$478,614 100.0% (0.7)%
Net Sales
Net sales
2015
2016
Net Sales
Fiscal Years Ended January 31,
2014
of Total
Walmart 2016 Annual Report
59.0%
136,513
28.9%
57,157
12.1%
1.9%
$473,076
100.0%
Our consolidated net sales decreased $3.6 billion or 0.7% for fiscal 2016 and increased $9.2 billion or 1.9% for fiscal 2015, when compared to the previous
fiscal year. Net sales for fiscal 2016 were negatively impacted by $17.1 billion or 3.5% as a result of fluctuations in currency exchange rates and a $1.9 billion
decrease in fuel sales primarily due to the lower selling prices of fuel at our Sam's Club segment. The negative effect of such factors was offset by 1.3%
year-over-year growth in retail square feet, positive comparable sales in the Walmart U.S. segment and higher e-commerce sales across the Company.
The increase in net sales for fiscal 2015 was primarily due to 3.0% year-over-year growth in retail square feet, positive comparable sales in the U.S. and
higher e-commerce sales across the Company. The increase was partially offset by $5.3 billion of negative impact from fluctuations in currency
exchange rates for fiscal 2015.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Sam's Club
$279,406
Walmart International
Overview
(Amounts in millions)
Calendar Comparable Store and Club Sales
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Wal-Mart Stores, Inc. ("Walmart," the "Company" or "we") is engaged in
retail and wholesale operations in various formats around the world.
Through our operations, we help people around the world save money
and live better - anytime and anywhere - in retail stores or through our
e-commerce and mobile capabilities. Through innovation, we are striving
to create a customer-centric experience that seamlessly integrates digital
and physical shopping. Physical retail encompasses our brick and mortar
presence in each of the markets in which we operate. Digital retail is
comprised of our e-commerce websites and mobile commerce applica-
tions. Each week, we serve nearly 260 million customers who visit our
over 11,500 stores under 63 banners in 28 countries and e-commerce
websites in 11 countries. Our strategy is to lead on price, invest to differ-
entiate on access, be competitive on assortment and deliver a great
experience. By leading on price we earn the trust of our customers every
day by providing a broad assortment of quality merchandise and services
at everyday low prices ("EDLP"). EDLP is our pricing philosophy under
which we price items at a low price every day so our customers trust
that our prices will not change under frequent promotional activity.
Price leadership is core to who we are. Everyday low cost ("EDLC") is
our commitment to control expenses so those cost savings can be
passed along to our customers. Our digital and physical presence, which
we are investing in to integrate, provides customers access to our broad
assortment anytime and anywhere. We strive to give our customers
and members a great digital and physical shopping experience.
Our operations consist of three reportable segments: Walmart U.S.,
Walmart International and Sam's Club.
•Walmart U.S. is our largest segment with three primary store formats,
as well as digital retail. Of our three reportable segments, Walmart U.S.
has historically had the highest gross profit as a percentage of net
sales ("gross profit rate"). In addition, it has historically contributed the
greatest amount to the Company's net sales and operating income.
• Walmart International consists of our operations outside of the U.S.
and includes retail, wholesale and other businesses. These businesses
consist of numerous formats, including supercenters, supermarkets,
hypermarkets, warehouse clubs, including Sam's Clubs, cash & carry,
home improvement, specialty electronics, apparel stores, drug stores
and convenience stores, as well as digital retail. The overall gross
profit rate for Walmart International is lower than that of Walmart U.S.
because of its merchandise mix. Walmart International is our second
largest segment and has grown through acquisitions, as well as by
adding retail, wholesale and other units, and expanding digital retail.
⚫ Sam's Club consists of membership-only warehouse clubs as well as
digital retail. As a membership-only warehouse club, membership
income is a significant component of the segment's operating income.
Sam's Club operates with a lower gross profit rate and lower operating
expenses as a percentage of net sales than our other segments.
Each of our segments contributes to the Company's operating results
differently, but each has generally maintained a consistent contribution
rate to the Company's net sales and operating income in recent years.
Our fiscal year ends on January 31 for our U.S. and Canadian operations.
We consolidate all other operations generally using a one-month lag and
on a calendar year basis. Our business is seasonal o a certain extent due
to calendar events and national and religious holidays, as well as weather
patterns. Historically, our highest sales volume and operating income
have occurred in the fiscal quarter ending January 31.
This discussion, which presents our results for periods occurring in the
fiscal years ended January 31, 2016 ("fiscal 2016"), January 31, 2015 ("fiscal
2015") and January 31, 2014 ("fiscal 2014") should be read in conjunction
with our Consolidated Financial Statements and the accompanying notes.
We intend for this discussion to provide the reader with information
that will assist in understanding our financial statements, the changes in
certain key items in those financial statements from period to period and
the primary factors that accounted for those changes. We also discuss
certain performance metrics that management uses to assess the
Company's performance. Additionally, the discussion provides informa-
tion about the financial results of the three segments of our business
to provide a better understanding of how each of those segments and
its results of operations affect the financial condition and results of
operations of the Company as a whole.
Throughout this Management's Discussion and Analysis of Financial
Condition and Results of Operations, we discuss segment operating
income, comparable store and club sales and other measures.
Management measures the results of the Company's segments using
each segment's operating income, including certain corporate overhead
allocations, as well as other measures. From time to time, we revise the
measurement of each segment's operating income, including certain
corporate overhead allocations, and other measures as determined by
the information regularly reviewed by our chief operating decision
maker. When we do so, the previous period amounts and balances are
reclassified to conform to the current period's presentation.
Comparable store and club sales is a metric that indicates the performance
of our existing U.S. stores and clubs by measuring the change in sales
for such stores and clubs, including e-commerce sales, for a particular
period from the corresponding period in the previous year. Walmart's
definition of comparable store and club sales includes sales from stores and
clubs open for the previous 12 months, including remodels, relocations,
expansions and conversions, as well as e-commerce sales. We measure
the e-commerce sales impact by including those sales initiated through
our websites and our mobile commerce applications and fulfilled
through our e-commerce distribution facilities, as well as an estimate
for sales initiated online and on our mobile commerce applications,
but fulfilled through our stores and clubs. Sales of a store that has changed
in format are excluded from comparable store and club sales when the
conversion of that store is accompanied by a relocation or expansion
that results in a change in the store's retail square feet of more than five
percent. Comparable store and club sales are also referred to as "same-
store" sales by others within the retail industry. The method of calculating
comparable store and club sales varies across the retail industry. As a
result, our calculation of comparable store and club sales is not necessarily
comparable to similarly titled measures reported by other companies.
Only Walmart
Walmart 19
20
Management's Discussion and Analysis of
Financial Condition and Results of Operations
In discussing our operating results, we use the term "currency exchange
rates" to refer to the currency exchange rates we use to convert the
operating results for all countries where the functional currency is not
the U.S. dollar into U.S. dollars for financial reporting purposes. We
calculate the effect of changes in currency exchange rates from the prior
period to the current period as the difference between current period
activity translated using the current period's currency exchange rates,
and current period activity translated using the comparable prior year
period's currency exchange rates. Throughout our discussion, we refer
to the results of this calculation as the impact of currency exchange rate
fluctuations. Volatility in currency exchange rates may impact the results,
including net sales and operating income, of the Company and the
Walmart International segment in the future.
We made certain reclassifications to prior period amounts or balances
to conform to the presentation in the current fiscal year. These reclassi-
fications did not impact the Company's operating income or consolidated
net income.
The Retail Industry
We operate in the highly competitive retail industry in all of the markets
we serve. We face strong sales competition from other discount, depart-
ment, drug, dollar, variety and specialty stores, warehouse clubs and
supermarkets, as well as e-commerce and catalog businesses. Many of
these competitors are national, regional or international chains or have
a national or international online presence. We compete with a number
of companies for prime retail site locations, as well as in attracting and
retaining quality employees (whom we call "associates"). We, along with
other retail companies, are influenced by a number of factors including,
but not limited to: catastrophic events, weather, competitive pressures,
consumer disposable income, consumer debt levels and buying patterns,
consumer credit availability, cost of goods, currency exchange rate fluc-
tuations, customer preferences, deflation, inflation, fuel and energy prices,
general economic conditions, insurance costs, interest rates, labor costs,
Growth
tax rates, cybersecurity attacks and unemployment. Further information
on the factors that can affect our operating results and on certain risks
to our Company and an investment in its securities can be found under
"Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal
year ended January 31, 2016, and in the discussion under "Cautionary
Statement Regarding Forward-Looking Statements and Information" in
our Annual Report on Form 10-K for the fiscal year ended January 31, 2016.
Company Performance Metrics
We are committed to helping customers save money and live better
through everyday low prices, supported by everyday low costs. At times,
we adjust our business strategies to ensure we maintain our strong
leadership position around the world and in the countries in which we
operate. For several years, our performance metrics emphasized three
financial priorities: growth, leverage and returns. We are currently making
strategic investments in our associates and in the integration of digital
and physical retail. These investments support long-term growth while
we maintain our heritage of everyday low prices which are supported
by everyday low cost. During this time of increased investments, we have
shifted our financial priorities to focus primarily on growth, balanced by
the long-term health of the Company including returns. We will continue
to grow through new stores and clubs, and through increasing compara-
ble store and club sales, which include our e-commerce sales. While
leverage remains important to everyday low cost, during this time of
increased investments, operating expenses may grow at a rate that is
greater than or equal to the rate of our net sales growth, and operating
income may grow at a rate that is equal to or less than the rate of our
net sales growth.
Our objective of balancing growth with returns means that we are
focused on efficiently employing assets for return on investment and
more effectively managing working capital to deliver strong free cash
flow. We will also continue to provide returns to our shareholders
through share repurchases and dividends.
We measure our growth primarily by the amount of the period-over-period growth in our net sales and our comparable store and club sales. We also
review the progress of our digital retail investments by measuring the impact e-commerce sales have on our comparable store and club sales. At times,
we make strategic investments which are focused on the long-term growth of the Company. These strategic investments may not benefit net sales
and comparable store and club sales in the near term.
Net Sales
Walmart U.S.
Comparable store and club sales is a metric which indicates the performance of our existing U.S. stores and clubs by measuring the change in sales
for such stores and clubs, including e-commerce sales, for a particular period over the corresponding period in the previous year. The retail industry
generally reports comparable store and club sales using the retail calendar (also known as the 4-5-4 calendar). To be consistent with the retail industry,
we provide comparable store and club sales using the retail calendar in our quarterly earnings releases. However, when we discuss our comparable
store and club sales below, we are referring to our calendar comparable store and club sales calculated using our fiscal calendar. As our fiscal calendar
differs from the retail calendar, our fiscal calendar comparable store and club sales also differ from the retail calendar comparable store and club
sales provided in our quarterly earnings releases. Calendar comparable store and club sales, as well as the impact of fuel, for fiscal 2016 and 2015,
were as follows:
2014
Sam's Club
0.3%
except unit counts)
Including Fuel
Net sales
$56,828
$58,020
$57,157
Percentage change from
comparable period
(2.1)%
1.5%
1.3%
Calendar comparable club
sales increase (decrease)
(3.2)%
2014
0.0%
Fiscal Years Ended January 31,
2015
(Amounts in millions,
680
659
Net sales for the Walmart U.S. segment increased 3.6% and 3.1% for fiscal
2016 and 2015, respectively, when compared to the previous fiscal year.
The increases in net sales were primarily due to year-over-year growth in
retail square feet of 1.4% and 3.2% for fiscal 2016 and 2015, respectively,
as well as increases in comparable store sales of 1.0% and 0.6% for
fiscal 2016 and 2015, respectively. Positive customer traffic and higher
e-commerce sales contributed to the increases in comparable store
sales in both periods.
The fiscal 2016 gross profit rate increased 12 basis points compared to the
previous fiscal year, primarily due to improved margin in food, general
merchandise, and consumables, partially offset by continued pharmacy
reimbursement pressure. The fiscal 2015 gross profit rate decreased 12 basis
points when compared to the previous fiscal year, primarily due to the
result of the segment's strategic focus on price investment, pharmacy
cost inflation, reductions in third-party reimbursement rates and changes
in merchandise mix.
Operating expenses as a percentage of segment net sales increased
113 and 24 basis points for fiscal 2016 and 2015, respectively, when
compared to the previous fiscal year. For fiscal 2016, the increase was
primarily driven by an increase in wage expense due to the new associate
wage structure and increased associate hours. Enhancements to the
customer-facing areas of the store to improve the overall customer
experience drove the increase in associate hours as well as increased
maintenance expenses. In addition, the approximately $700 million
charge for the closures of 150 stores announced in January 2016, an
increase in store associate incentive expense and our continued invest-
ments in digital retail and information technology contributed to the
fiscal 2016 increase in operating expenses as a percentage of segment
net sales. For fiscal 2015, the increase in operating expenses as a percentage
of segment net sales was primarily driven by higher health-care expenses
from increased enrollment in our associate health-care plans and medical
cost inflation. In addition, expenses from severe winter storms early
in fiscal 2015 contributed to the increase in operating expenses as a
percentage of segment net sales.
As a result of the factors discussed above, segment operating income
was $19.1 billion, $21.3 billion and $21.8 billion during fiscal 2016, 2015
and 2014, respectively.
Net sales for the Walmart International segment decreased 9.4% and
0.3% for fiscal 2016 and 2015, respectively, when compared to the previous
fiscal year. For fiscal 2016, the decrease in net sales was primarily due to
the $17.1 billion of negative impact from fluctuations in currency
exchange rates and negative comparable sales in the U.K. and China,
partially offset by year-over-year growth in retail square feet of 1.2% and
positive comparable sales in Mexico and Canada. For fiscal 2015, the
decrease in net sales was primarily due to $5.3 billion of negative impact
from fluctuations in currency exchange rates, partially offset by year-
over-year growth in retail square feet of 2.6% and higher e-commerce
sales in each country with e-commerce operations, particularly in the
United Kingdom, China and Brazil.
Gross profit rate increased 23 and 12 basis points for fiscal 2016 and 2015,
respectively, when compared to the same periods in the previous fiscal
year. The fiscal 2016 and 2015 increases in gross profit rate were primarily
due to changes in the merchandise mix in certain markets.
Operating expenses as a percentage of segment net sales increased
44 basis points for fiscal 2016, when compared to the previous fiscal
year. The increase in operating expenses as a percentage of segment net
sales for fiscal 2016 was primarily driven by the approximately $150 million
charge for the announced closure of 115 underperforming stores in Brazil
and other Latin American markets in January 2016, increased employment
claim contingencies and higher utility rates in Brazil and continued
investments in digital retail and information technology.
Operating expenses as a percentage of segment net sales decreased
51 basis points for fiscal 2015 when compared to the previous fiscal year
due to the nearly $1.0 billion of aggregated expenses incurred in fiscal
2014, including charges for contingencies in Brazil, store closure costs in
China and Brazil, store lease expenses in China and Mexico and expenses
for the termination of the joint venture in India, partially offset by fiscal
2015 expenses of $148 million related to the closure of approximately
30 underperforming stores in Japan.
As a result of the factors discussed above, segment operating income
was $5.3 billion, $6.2 billion and $5.2 billion for fiscal 2016, 2015 and 2014,
respectively. Fluctuations in currency exchange rates negatively impacted
operating income $765 million, $225 million and $26 million in fiscal 2016,
2015 and 2014, respectively.
Walmart 2016 Annual Report
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Sam's Club Segment
We believe the information in the following table under the caption
"Excluding Fuel" is useful to investors because it permits investors to
understand the effect of the Sam's Club segment's fuel sales on its
results of operations, which are impacted by the volatility of fuel prices.
Volatility in fuel prices may continue to impact the operating results of
the Sam's Club segment in the future.
2016
690
Operating income
$ 1,976
Percentage change from
comparable period
1.4%
2.1%
Operating income
$ 1,746
$ 1,854
$ 1,817
Operating income as a
percentage of net sales
3.3%
3.6%
1.6%
3.6%
Net sales for the Sam's Club segment decreased 2.1% for fiscal 2016 and
increased 1.5% for fiscal 2015 when compared to the previous fiscal year.
The fiscal 2016 decrease in net sales was primarily due to declines in
comparable club sales, which were driven by a decrease of $1.9 billion
in fuel sales that resulted primarily from lower selling prices for fuel.
The decrease in net sales was partially offset by year-over-year growth in
retail square feet of 1.2% and higher e-commerce sales at samsclub.com.
The fiscal 2015 increase in net sales was primarily due to year-over-year
growth in retail square feet of 2.5%, driven by the addition of 15 new
clubs, partially offset by a decrease in fuel sales from lower fuel prices.
Comparable club sales were flat for fiscal 2015.
$50,574
$ 1,820
$51,630
Net sales
$ 1,843
Operating income as a
percentage of net sales
3.2%
3.4%
3.2%
Unit counts at period end
655
647
632
Retail square feet at period end
88
87
84
Excluding Fuel
$52,330
period end
Retail square feet at
4,203
2014
except unit counts)
2016
2015
Net sales
$298,378
$288,049
$279,406
Net sales
$123,408
$136,160 $136,513
Percentage change from
Percentage change from
comparable period
3.6%
2015
3.1%
2016
(Amounts in millions,
Our total revenues, which are mostly comprised of net sales, but also
include membership and other income, decreased 0.7% for fiscal 2016
and increased 2.0% for fiscal 2015 when compared to the previous fiscal
year. Net sales decreased 0.7% for fiscal 2016 and increased 1.9% for fiscal
2015 when compared to the previous fiscal year. For fiscal 2016, net sales
were negatively impacted by $17.1 billion as a result of fluctuations in
currency exchange rates and a decrease of $1.9 billion in fuel sales that
resulted primarily from lower selling prices for fuel at our Sam's Club
segment. The negative effect of such factors on our consolidated net sales
was partially offset by the 1.3% year-over-year growth in retail square
feet, positive comparable sales in the Walmart U.S. segment and higher
e-commerce sales across the Company. For fiscal 2015, the increase in net
sales was primarily due to 3.0% year-over-year growth in retail square feet,
positive comparable sales in the U.S. and higher e-commerce sales across
the Company. The increase was partially offset by $5.3 billion of negative
impact from fluctuations in currency exchange rates for fiscal 2015.
Our gross profit rate increased 29 basis points for fiscal 2016 when
compared to fiscal 2015. Improved margins in food, general merchandise,
and consumables in the Walmart U.S. segment positively impacted our
gross profit rate. Changes in the merchandise mix in the Walmart
International segment and a reduction in low margin fuel sales in the
Sam's Club segment also positively impacted our gross profit rate,
while continued pharmacy reimbursement pressure at the Walmart U.S.
segment negatively impacted our gross profit rate. Our gross profit rate
was relatively flat in fiscal 2015 when compared to fiscal 2014.
Operating expenses as a percentage of net sales increased 91 and 6 basis
points for fiscal 2016 and 2015, respectively, when compared to the
previous fiscal year. For fiscal 2016, the increase in operating expenses
as a percentage of net sales was primarily due to an increase in wage
expense at the Walmart U.S. segment due to the new associate wage
structure and increased associate hours to improve the overall customer
experience, the approximately $0.9 billion charge for the store closures
announced in January 2016 and our continued investments in digital
retail and information technology. For fiscal 2015, the increase in operating
expenses as a percentage of net sales was due to our continued
investments in digital retail and higher health-care expenses in the
U.S. from increased enrollment in our associate health-care plans and
medical cost inflation, the $249 million impact of wage and hour litigation
in the U.S., as well as expenses of $148 million related to the closure of
approximately 30 underperforming stores in Japan. The impact of these
factors in the increase of operating expenses as a percentage of net sales
for fiscal 2015 was partially offset by nearly $1.0 billion of aggregated
expenses incurred in fiscal 2014.
Our effective income tax rate was 30.3%, 32.2% and 32.9% for fiscal 2016,
2015 and 2014, respectively. Our effective tax rate fluctuates from period
to period and may be impacted by a number of factors, including changes
in our assessment of certain tax contingencies, valuation allowances,
changes in laws, outcomes of administrative audits, the impacts of discrete
items and the mix of earnings among our U.S. and international operations.
The reconciliation from the U.S. statutory rate to the effective income tax
rates for fiscal 2016, 2015 and 2014 is presented in Note 9 in the "Notes to
Consolidated Financial Statements."
As a result of the factors discussed above, we reported $15.1 billion,
$16.8 billion and $16.6 billion of consolidated income from continuing
operations for fiscal 2016, 2015 and 2014, respectively; a decrease of
$1.7 billion for fiscal 2016 and an increase of $263 million for fiscal 2015
when compared to the previous fiscal year. Diluted income from con-
tinuing operations per common share attributable to Walmart ("EPS")
was $4.57, $4.99 and $4.85 for fiscal 2016, 2015 and 2014, respectively.
Only Walmart
Walmart 23
24
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Walmart U.S. Segment
(Amounts in millions,
Walmart International Segment
Fiscal Years Ended January 31,
Fiscal Years Ended January 31,
except unit counts)
1.8%
comparable period
(9.4)%
Operating income as a
Unit counts at period end
6,299
6,290
6,107
percentage of net sales
6.4%
Unit counts at period end
4,574
7.4%
4,516
7.8%
Retail square feet at period end
372
368
358
3.8%
4.5%
4.3%
percentage of net sales
(0.3)%
1.3%
Calendar comparable
Operating income
$ 5,346
$ 6,171
$ 5,153
Gross profit rate increased 30 basis points for fiscal 2016 and decreased
12 basis points for fiscal 2015, when compared to the previous fiscal
year. For fiscal 2016, the increase was primarily due to the reduction in
low margin fuel sales and lower merchandise acquisition costs, partially
offset by the segment's continued investment in the Cash Rewards
program. For fiscal 2015, the gross profit rate decreased primarily due
to the segment's investment in the Cash Rewards program, changes in
merchandise mix, and commodity cost inflation, partially offset by an
increased gross profit rate on fuel sales.
store sales increase
0.6%
(0.6)%
Operating income as a
Operating income
$ 19,087
$ 21,336
$ 21,787
1.0%
Walmart U.S.
Membership and other income increased 5.3% and 7.7% for fiscal 2016
and 2015, respectively, when compared to the previous fiscal year. For
fiscal 2016, the increase was primarily the result of increased member-
ship upgrades and Plus Member renewals. For fiscal 2015, the increase
was primarily the result of increased membership upgrades, Plus Member
renewals and an increase in members from the opening of 15 new clubs.
As a result of the factors discussed above, segment operating income
was $1.8 billion, $2.0 billion and $1.8 billion for fiscal 2016, 2015 and
2014, respectively.
Net cash used in
financing activities
2016
Fiscal Years Ended January 31,
2015
2014
$(16,122) $(15,071) $(10,789)
Net cash flows used in financing activities generally consist of transactions
related to our short-term and long-term debt, financing obligations,
dividends paid and the repurchase of Company stock. Transactions with
noncontrolling interest shareholders are also classified as cash flows
from financing activities. Net cash used in financing activities increased
$1.1 billion and $4.3 billion for fiscal 2016 and fiscal 2015, respectively,
when compared to the same period in the previous fiscal year.
Short-term Borrowings
Net cash flows provided by short-term borrowings increased $1.2 billion
in fiscal 2016 and decreased $6.3 billion in fiscal 2015, when compared to
the balance at the end of the previous fiscal year. We generally utilize the
liquidity provided by short-term borrowings to provide funding for our
operations, dividend payments, share repurchases, capital expenditures
and other cash requirements. For fiscal 2016, the increase in net cash flows
provided by short-term borrowings partially offset a larger $2.0 billion
decrease in long-term debt due within one year. For fiscal 2015, more cash
provided from operating activities combined with less cash used for share
repurchases and capital expenditures during fiscal 2015 allowed us to
minimize our short-term borrowings as of January 31, 2015. In addition to
our short-term borrowings, we also have various undrawn committed
lines of credit that provide $15.0 billion of additional liquidity, if needed.
Balances as of January 31, 2016 $2,745
Our total outstanding long-term debt balance decreased $4.7 billion for
the twelve months ended January 31, 2016, primarily due to no significant
new long-term debt issuances in the current year offset by maturities of
existing long-term debt.
Dividends
Our total dividend payments were $6.3 billion, $6.2 billion and $6.1 billion
for fiscal 2016, 2015 and 2014, respectively. On February 18, 2016, the
Board of Directors approved the fiscal 2017 annual dividend of $2.00 per
share, an increase over the fiscal 2016 annual dividend of $1.96 per share.
For fiscal 2017, the annual dividend will be paid in four quarterly installments
of $0.50 per share, according to the following record and payable dates:
Record Date
March 11, 2016
May 13, 2016
August 12, 2016
December 9, 2016
(Amounts in millions)
Payable Date
April 4, 2016
June 6, 2016
Net Cash Used in Financing Activities
long-term debt
Payments of long-term debt
(4,432)
39
(4,432)
1.0
Reclassifications of
$11.0
long-term debt
2,000
(2,000)
Other
386
(714)
(328)
$38,214
$40,959
Total
0.8
September 6, 2016
January 3, 2017
Walmart 27
We have strong commercial paper and long-term debt ratings that have
enabled and should continue to enable us to refinance our debt as it
becomes due at favorable rates in capital markets. At January 31, 2016,
the ratings assigned to our commercial paper and rated series of our
outstanding long-term debt were as follows:
Rating agency
Standard & Poor's
Commercial paper
Long-term debt
A-1+
AA
Moody's Investors Service
Fitch Ratings
P-1
Aa2
F1+
AA
Credit rating agencies review their ratings periodically and, therefore, the
credit ratings assigned to us by each agency may be subject to revision
at any time. Accordingly, we are not able to predict whether our current
credit ratings will remain consistent over time. Factors that could affect
our credit ratings include changes in our operating performance, the
general economic environment, conditions in the retail industry, our
financial position, including our total debt and capitalization, and
changes in our business strategy. Any downgrade of our credit ratings
by a credit rating agency could increase our future borrowing costs or
impair our ability to access capital and credit markets on terms
commercially acceptable to us. In addition, any downgrade of our
current short-term credit ratings could impair our ability to access the
commercial paper markets with the same flexibility that we have
experienced historically, potentially requiring us to rely more heavily
on more expensive types of debt financing. The credit rating agency
ratings are not recommendations to buy, sell or hold our commercial
paper or debt securities. Each rating may be subject to revision or
withdrawal at any time by the assigning rating organization and should
be evaluated independently of any other rating. Moreover, each credit
rating is specific to the security to which it applies.
28
Walmart 2016 Annual Report
We believe cash flows from continuing operations, our current cash
position and access to capital markets will continue to be sufficient to
meet our anticipated operating cash needs, which include funding
seasonal buildups in merchandise inventories and funding our capital
expenditures, dividend payments and share repurchases.
Only Walmart
Capital Resources
Significant Transactions with Noncontrolling Interests
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Company Share Repurchase Program
From time to time, we repurchase shares of our common stock under
share repurchase programs authorized by the Company's Board of
Directors. On October 13, 2015, the Board of Directors replaced the
previous $15.0 billion share repurchase program, which had $8.6 billion
of remaining authorization for share repurchases as of that date, with a
new $20.0 billion share repurchase program. As was the case with the
replaced share repurchase program, the new share repurchase program
has no expiration date or other restrictions limiting the period over
which we can make share repurchases. At January 31, 2016, authorization
for $17.5 billion of share repurchases remained under the current share
repurchase program. Any repurchased shares are constructively retired
and returned to an unissued status. The Company intends to utilize the
current share repurchase authorization through the fiscal year ending
January 31, 2018.
We regularly review share repurchase activity and consider several factors
in determining when to execute share repurchases, including, among
other things, current cash needs, capacity for leverage, cost of borrowings,
our results of operations and the market price of our common stock. We
anticipate that a significant majority of the ongoing share repurchase
program will be funded through the Company's free cash flows. The
following table provides, on a settlement date basis, the number of
shares repurchased, average price paid per share and total amount paid
for share repurchases for fiscal 2016, 2015 and 2014:
Fiscal Years Ended January 31,
2015 2014
(Amounts in millions,
except per share data)
2016
Total number of shares repurchased
Average price paid per share
62.4
$65.90
Total amount paid for share repurchases
$4,112
13.4 89.1
$75.82 $74.99
$1,015 $6,683
Share repurchases increased $3.1 billion for fiscal 2016 and decreased
$5.7 billion for fiscal 2015, respectively, when compared to the previous
fiscal year. For fiscal 2016, the increase in share repurchases resulted from
our intention to utilize the current share repurchase authorization over
the next two years. For fiscal 2015, the decrease was a result of cash
needs, reduced leverage and increased cash used in transactions with
noncontrolling interests described further below.
As described in Note 13 to our Consolidated Financial Statements, in July
2015, we completed the purchase of all of the remaining noncontrolling
interest in Yihaodian, our e-commerce operations in China, for approxi-
mately $760 million, using existing cash to complete this transaction and
during fiscal 2015, we completed the purchase of substantially all of the
remaining noncontrolling interest in Walmart Chile for approximately
$1.5 billion, using existing cash to complete this transaction.
39
3.0
Proceeds from issuance of
As of January 31, 2016 and January 31, 2015, cash and cash equivalents of
approximately $1.1 billion and $1.7 billion, respectively, may not be freely
transferable to the U.S. due to local laws or other restrictions.
Net Cash Used in Investing Activities
(Amounts in millions)
Net cash used in
investing activities
2016
As of January 31,
2015
2014
$(10,675) $(11,125) $(12,526)
Net cash used in investing activities was $10.7 billion, $11.1 billion and
$12.5 billion for fiscal 2016, 2015 and 2014, respectively, and generally
consisted of payments to add stores and clubs, remodel existing stores
and clubs, expand our digital retail capabilities and invest in other tech-
nologies. For fiscal 2016, we opened 423 new stores and clubs. Net cash
used in investing activities decreased $450 million and $1.4 billion for
fiscal 2016 and 2015, respectively, when compared to the previous fiscal
year, primarily due to lower capital expenditures. The following table
provides additional capital expenditure detail:
(Amounts in millions)
Capital Expenditures
New stores and clubs, including
expansions and relocations
Information systems, distribution,
digital retail and other
Remodels
Total U.S.
Walmart International
Total capital expenditures
We use intercompany financing arrangements in an effort to ensure
cash can be made available in the country in which it is needed with
the minimum cost possible. We do not believe it will be necessary to
repatriate earnings held outside of the U.S. and anticipate our domestic
liquidity needs will be met through cash flows provided by operating
activities, supplemented with long-term debt and short-term borrowings.
Accordingly, we intend, with only certain exceptions, to continue to
indefinitely reinvest our earnings held outside of the U.S. in our foreign
operations. When the income earned, either from operations or through
intercompany financing arrangements, and indefinitely reinvested outside
of the U.S. is taxed at local country tax rates, which are generally lower
than the U.S. statutory rate, we realize an effective tax rate benefit. If our
intentions with respect to reinvestment were to change, most of the
amounts held within our foreign operations could be repatriated to the
U.S., although any repatriation under current U.S. tax laws would be
subject to U.S. federal income taxes, less applicable foreign tax credits.
We do not expect local laws, other limitations or potential taxes on
anticipated future repatriations of earnings held outside of the U.S. to
have a material effect on our overall liquidity, financial condition or
results of operations.
Allocation of Capital Expenditures
Fiscal Years Ending January 31,
Cash and cash equivalents were $8.7 billion and $9.1 billion at January 31,
2016 and 2015, respectively. Our working capital deficit was $4.4 billion
and $2.0 billion at January 31, 2016 and 2015, respectively. The increase in
our working capital deficit reflects the Company's efficient leverage
achieved through improved working capital management, in addition
to the timing of payments. We generally operate with a working capital
deficit due to our efficient use of cash in funding operations, consistent
access to the capital markets and in providing returns to our shareholders
in the form of payments of cash dividends and share repurchases.
**
Liquidity and Capital Resources
Liquidity
The strength and stability of our operations have historically supplied us
with a significant source of liquidity. Our cash flows provided by operating
activities, supplemented with our long-term debt and short-term
borrowings, have been sufficient to fund our operations while allowing us
to invest in activities that support the long-term growth of our operations.
Generally, some or all of the remaining available cash flow has been
used to fund the dividends on our common stock and share repurchases.
We believe our sources of liquidity will continue to be adequate to fund
operations, finance our global expansion activities, pay dividends and
fund our share repurchases for the foreseeable future.
Net Cash Provided by Operating Activities
(Amounts in millions)
Net cash provided by
operating activities
Fiscal Years Ended January 31,
2015
2016
2014
$27,389
$28,564 $23,257
Net cash provided by operating activities was $27.4 billion, $28.6 billion
and $23.3 billion for fiscal 2016, 2015 and 2014, respectively. The decrease in
net cash provided by operating activities for fiscal 2016, when compared
to the previous fiscal year, was primarily due to lower income from
continuing operations, partially offset by improved working capital
management. The increase in net cash provided by operating activities
for fiscal 2015, when compared to the previous fiscal year, was primarily
due to the timing of payments for accounts payable and accrued liabilities,
as well as the timing of income tax payments.
In fiscal 2017, the Company will move forward with the second year of our
new associate wage structure combined with comprehensive associate
training and educational programs which was announced in fiscal 2016.
We anticipate cash flows provided by operating activities will be sufficient
to fund these programs in fiscal 2017 and future years.
Only Walmart
Walmart 25
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Cash Equivalents and Working Capital
2016
2015
$ 3,194
Walmart U.S.
Sam's Club
Walmart International
Corporate and support
Long-term Debt
The following table provides the changes in our long-term debt for
fiscal 2016:
Approximate Fiscal 2017
Projected Capital Expenditures
(Amounts in millions)
Long-term debt
due within
one year
Long-term
debt
Total
Balances as of February 1, 2015
$ 4,791
$40,889 $45,680
$ 6.2
(Amounts in billions)
future acquisitions.
The following table provides our projected fiscal 2017 capital expenditures.
Our anticipated digital retail expenditures are included in our projected
fiscal 2017 capital expenditures. The amounts in the table do not include
capital expenditures or growth in retail square feet from any pending or
Management's Discussion and Analysis of
Financial Condition and Results of Operations
$ 4,128
3,963
3,288
1,390
822
8,547
8,238
Operating expenses as a percentage of segment net sales increased
67 basis points for fiscal 2016 and decreased 16 basis points for fiscal 2015,
when compared to the previous fiscal year. For fiscal 2016, the increase in
operating expenses as a percentage of segment net sales was primarily
due to lower fuel sales, an increase in wage expense due to the new
associate wage structure, our continued investments in new clubs,
digital retail and information technology, and the approximately $60 mil-
lion charge for club closures announced in January 2016. For fiscal 2015,
the decrease in operating expenses as a percentage of segment net
sales was primarily due to better expense management in a number of
areas, including the optimization of the new in-club staffing structure
announced in fiscal 2014, which resulted in decreases in wage expense
and payroll taxes.
2,930
$11,477
$12,174
Cash proceeds of $671 million received from the sale of the Vips restaurant
business in Mexico ("Vips") on May 12, 2014, which is further described in
Note 13 to our Consolidated Financial Statements, also reduced net cash
used in investing activities in fiscal 2015.
We continued to focus on seamlessly integrating the digital and physical
shopping experience for our customers and expanding in digital retail in
each of our segments during fiscal 2016. Some of our fiscal 2016 accom-
plishments in this area were to successfully launch "Walmart Pay," grow
integrated mobile applications and services including "Online Grocery"
and "Pickup Today," continue to roll out our new web platform in the U.S.
and open new e-commerce dedicated fulfillment centers.
Growth Activities
In fiscal 2017, we plan to add between 342 and 405 new stores and clubs,
which will include a continued investment in Neighborhood Markets
and a moderation of Supercenter growth in the U.S. compared to recent
fiscal years. In addition, we plan to continue the growth of our digital
retail capabilities by investing approximately $1.1 billion in e-commerce
websites and mobile commerce applications that will include technology,
infrastructure and other elements of our e-commerce operations to
better serve our customers and support our stores and clubs. We antici-
pate financing these growth activities through cash flows provided by
operating activities and future debt financings.
26 Walmart 2016 Annual Report
3,936
$ 16,814
11,453
1,135
$ 16,551
10,942
1,101
5.7%
- Average accrued liabilities (1)
63,375
37,913
38,449
- Average accounts payable(1)
68,759
and amortization (1)
+ Average accumulated depreciation
$201,536 $203,786
19,380
Average total assets of
Fiscal Years Ended January 31,
2016
2015
2016
2015
With Fuel
Fuel Impact
1.0%
Total U.S.
(3.2)%
0.3%
18,973
20,256
8.2%
7.5%
Return on assets (ROA)
$203,786
$201,536
continuing operations (1)
Average total assets of
Denominator
+ Rent x 8
Income from continuing operations
$ 15,080 $ 16,814
16.9%
CALCULATION OF RETURN ON ASSETS
15.5%
Return on investment (ROI)
$232,491
= Average invested capital
22,216
Numerator
0.6%
0.0%
0.0%
(3.4)%
0.0%
CALCULATION OF RETURN ON INVESTMENT
Operating income
Numerator
continuing operations (1)
Fiscal Years
Ended January 31,
2015
2016
$ 24,105
$ 27,147
(Amounts in millions)
+ Interest income
+ Depreciation and amortization
9,454
+ Rent
2,532
113
9,173
2,777
= Adjusted operating income
$ 36,172 $ 39,210
Denominator
81
The calculation of ROI, along with a reconciliation to the calculation of
ROA, the most comparable GAAP financial measure, is as follows:
Although ROI is a standard financial metric, numerous methods exist for
calculating a company's ROI. As a result, the method used by management
to calculate our ROI may differ from the methods used by other companies
to calculate their ROI.
a factor of eight for rent expense that estimates the hypothetical capitalization
of our operating leases. We consider return on assets ("ROA") to be the
financial measure computed in accordance with GAAP that is the most
directly comparable financial measure to our calculation of ROI. ROI differs
from ROA (which is consolidated income from continuing operations for the
period divided by average total assets of continuing operations for the
period) because ROI: adjusts operating income to exclude certain expense
items and adds interest income; adjusts total assets of continuing opera-
tions for the impact of accumulated depreciation and amortization,
accounts payable and accrued liabilities; and incorporates a factor of rent to
arrive at total invested capital. Because of the adjustments mentioned
above, we believe ROI more accurately measures how we are deploying
our key assets and is more meaningful to investors than ROA.
(0.6)%
0.5%
(0.6)%
(0.1)%
Comparable store and club sales in the U.S., including fuel, increased
0.3% and 0.5% in fiscal 2016 and 2015, respectively, when compared to
the previous fiscal year. The fiscal 2016 total U.S. comparable store and
club sales were positively impacted by continued traffic improvement
and higher e-commerce sales at the Walmart U.S. segment, offset to a
significant degree by the negative impact of lower fuel sales primarily
due to lower fuel prices at the Sam's Club segment. E-commerce sales
positively impacted comparable sales approximately 0.2% and 0.6% for
Walmart U.S. and Sam's Club, respectively, for fiscal 2016. The fiscal 2015
total U.S. comparable store and club sales were positively impacted by
higher traffic during the end of the fiscal year. E-commerce sales positively
impacted comparable sales approximately 0.3% and 0.2% for Walmart
U.S. and Sam's Club, respectively, for fiscal 2015.
As we continue to add new stores and clubs in the U.S., we do so with an
understanding that additional stores and clubs may take sales away from
existing units. We estimate the negative impact on comparable store and
club sales as a result of opening new stores and clubs was approximately
0.8% and 0.9% in fiscal 2016 and 2015, respectively. Our estimate is calcu-
lated primarily by comparing the sales trends of the impacted stores and
clubs, which are identified based on their proximity to the new stores
and clubs, to those of nearby non-impacted stores and clubs, in each
case, as measured after the new stores and clubs are opened.
Strategic Growth Investments
During fiscal 2016, we made capital investments globally of $11.5 billion.
These capital investments primarily consisted of payments to add new
stores and clubs, remodel existing stores and clubs, construct distribution
centers and invest in technology. In addition, we made an incremental
operational investment of $296 million in e-commerce in fiscal 2016 as
compared to fiscal 2015. We also made operational investments of
approximately $1.2 billion in fiscal 2016 in connection with the new
associate wage structure and comprehensive associate training and
educational programs announced in first quarter of fiscal 2016. These
operational investments will continue into the year ending January 31,
2017 ("fiscal 2017").
Returns
While we are focused primarily on growth, we also place a priority on
generating returns to ensure our approach is appropriately balanced.
We generate returns by efficiently deploying assets and effectively
managing working capital. We monitor these efforts through our return
on investment and free cash flow metrics, which we discuss below. In
addition, we are focused on providing returns to our shareholders in
the form of share repurchases and dividends, which are discussed in the
Liquidity and Capital Resources section.
Return on Investment
Management believes return on investment ("ROI") is a meaningful
metric to share with investors because it helps investors assess how
effectively Walmart is deploying its assets. Trends in ROI can fluctuate
over time as management balances long-term potential strategic
initiatives with possible short-term impacts.
ROI was 15.5% and 16.9% for the fiscal years ended January 31, 2016 and
2015, respectively. The decline in ROI was primarily due to our decrease
in operating income, as well as continued capital investments.
We define ROI as adjusted operating income (operating income plus
interest income, depreciation and amortization, and rent expense) for the
fiscal year divided by average invested capital during that period. We
consider average invested capital to be the average of our beginning and
ending total assets, plus average accumulated depreciation and average
accumulated amortization, less average accounts payable and average
accrued liabilities for that period, plus a rent factor equal to the rent for
the fiscal year multiplied by a factor of eight. When we have discontinued
operations, we exclude the impact of the discontinued operations.
Our calculation of ROI is considered a non-GAAP financial measure because
we calculate ROI using financial measures that exclude and include amounts
that are included and excluded in the most directly comparable financial
measure calculated and presented in accordance with generally accepted
accounting principles in the U.S. ("GAAP"). For example, we exclude the impact
of depreciation and amortization from our reported operating income in
calculating the numerator of our calculation of ROI. In addition, we include
Only Walmart
Walmart 21
$ 15,080
11,528
1,149
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Certain Balance Sheet Data
2016
$232,722
2014
$478,614
Net sales
As of January 31,
2015
(0.7)%
comparable period
Percentage change from
$482,130
Total revenues
1.6%
$482,229 $473,076
2016
(Amounts in millions,
$485,651 $476,294
Fiscal Years Ended January 31,
2015
2014
Consolidated Results of Operations
Results of Operations
(1) "Net cash used in investing activities" includes payments for property and equipment,
which is also included in our computation of free cash flow.
(10,789)
(15,071)
except unit counts)
Percentage change from
comparable period
(0.7)%
5.6%
5.0%
(0.5)%
24.3%
$ 26,872
$ 27,147
$ 24,105
0.5%
24.3%
0.3%
24.6%
Unit counts at period end
Retail square feet at period end
operations
Income from continuing
percentage of net sales
Operating income as a
Operating income
Total U.S. calendar comparable
Gross profit rate
increase (decrease)
store and club sales
1.6%
1.9%
(16,122)
$(10,675) $(11,125) $(12,526)
2.0%
Net cash used in
(2) Total assets of continuing operations were adjusted to reflect the adoption of
ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying
the Presentation of Debt Issuance Cost, for all periods.
(1) The average is based on the addition of the account balance at the end of the current
period to the account balance at the end of the prior period and dividing by 2.
Accrued liabilities
and amortization
Accounts payable
18,793
19,152
19,607
37,415
38,410
38,487
60,771
65,979
71,538
Accumulated depreciation
$204,081
financing activities
$199,581
continuing operations (2)
Total assets of
Free Cash Flow
Free cash flow is considered a non-GAAP financial measure. Management
believes, however, that free cash flow, which measures our ability to
generate additional cash from our business operations, is an important
financial measure for use in evaluating the Company's financial perfor-
mance. Free cash flow should be considered in addition to, rather than
as a substitute for, consolidated income from continuing operations
as a measure of our performance and net cash provided by operating
activities as a measure of our liquidity.
$203,490
Walmart's definition of free cash flow is limited in that it does not
represent residual cash flows available for discretionary expenditures due
to the fact that the measure does not deduct the payments required for
debt service and other contractual obligations or payments made for
business acquisitions. Therefore, we believe it is important to view free
cash flow as a measure that provides supplemental information to our
Consolidated Statements of Cash Flows.
We define free cash flow as net cash provided by operating activities
in a period minus payments for property and equipment made in that
period. We generated free cash flow of $15.9 billion, $16.4 billion and
$10.1 billion for fiscal 2016, 2015 and 2014, respectively. The decrease in
free cash flow in fiscal 2016 from fiscal 2015 was primarily due to lower
income from continuing operations, partially offset by lower capital
spending and improved working capital management.
investing activities (1)
Net cash used in
$ 15,912
(11,477)
$ 27,389
$ 28,564 $23,257
2014
2016
(12,174) (13,115)
$ 16,390 $10,142
and equipment
(Amounts in millions)
Net cash provided by
operating activities
Payments for property
The following table sets forth a reconciliation of free cash flow, a
non-GAAP financial measure, to net cash provided by operating activities,
which we believe to be the GAAP financial measure most directly
comparable to free cash flow, as well as information regarding net cash
used in investing activities and net cash used in financing activities.
Fiscal Years Ended January 31,
2015
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Walmart 2016 Annual Report
22
Although other companies report their free cash flow, numerous methods
may exist for calculating a company's free cash flow. As a result, the
method used by Walmart's management to calculate our free cash flow
may differ from the methods used by other companies to calculate their
free cash flow.
Free cash flow
$3,351
$484
$3,502
$1,518
$2,032
Fixed rate
$ 2,708
Long-term debt(¹):
―%
―%
―%
―%
-%
Weighted-average interest rate
$29,353
1.5%
1.5%
$40,240
719
1.9%
Interest rate swaps:
$ $ $ - $ -
Interest rate derivatives
―%
―%
―%
―%
5.2%
Weighted-average interest rate
$ 719
Variable rate
4.5%
5.0%
3.4%
4.3%
3.1%
4.1%
Weighted-average interest rate
$
1,279
Variable rate
$ 5,016
$ 3,850
$29,348
2,708
2,708
8,655
815
1,468
5,093
21,505
2,057
3,783
3,227
12,438
30,391
1,806
3,445
3,129
22,011
$ 2,745
$ 40,959
Thereafter
2020-2021
Fixed to variable
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Contractual obligations and Other Commercial Commitments
The following table sets forth certain information concerning our obligations and commitments to make contractual future payments, such as debt
and lease agreements, and certain contingent commitments:
(Amounts in millions)
Recorded contractual obligations:
Long-term debt (1)
Short-term borrowings
Capital lease and financing obligations (2)
2,709
Unrecorded contractual obligations:
Estimated interest on long-term debt
Trade letters of credit
Stand-by letters of credit
Purchase obligations
Total commercial commitments
Payments Due During Fiscal Years Ending January 31,
Total
2017
2018-2019
Non-cancelable operating leases
$2,708
2,709
1,813
The analysis presented below for each of our market risk sensitive
instruments is based on a hypothetical scenario used to calibrate
potential risk and does not represent our view of future market changes.
The effect of a change in a particular assumption is calculated without
adjusting any other assumption. In reality, however, a change in one
factor could cause a change in another, which may magnify or negate
other sensitivities.
Only Walmart
Walmart
29
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Interest Rate Risk
We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt issuances. We hedge a portion of our interest
rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For fiscal 2016, the net fair value of our interest
rate swaps increased approximately $162 million primarily due to additional interest rate swaps acquired in fiscal 2016 and fluctuations in market
interest rates.
The table below provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations, the table
represents the principal cash flows and related weighted-average interest rates by expected maturity dates. For interest rate swaps, the table repre-
sents the contractual cash flows and weighted-average interest rates by the contractual maturity date, unless otherwise noted. The notional amounts
are used to calculate contractual cash flows to be exchanged under the contracts. The weighted-average variable rates are based upon prevailing
market rates at January 31, 2016.
(Amounts in millions)
Liabilities
Short-term borrowings:
Fiscal 2017
Fiscal 2018
Fiscal 2019
Expected Maturity Date
Fiscal 2020
Fiscal 2021
Thereafter
Total
In addition to the risks inherent in our operations, we are exposed to
certain market risks, including changes in interest rates and fluctuations
in currency exchange rates.
Market Risk
In connection with certain long-term debt issuances, we could be liable
for early termination payments if certain unlikely events were to occur.
At January 31, 2016, the aggregate termination payment would have
been $44 million. The arrangement pursuant to which this payment
could be made will expire in fiscal 2019.
The Company has future lease commitments for land and buildings for
approximately 215 future locations. These lease commitments have
lease terms ranging from 10 to 30 years and provide for certain mini-
mum rentals. If leases for all of those future locations had been executed
as of February 1, 2016, payments under operating leases would increase
by $34 million for fiscal 2017, based on current estimates.
14,099
6,830
5,527
1,549
193
$122,839
$21,483
$19,239
$13,034
1,813
$69,083
(2) "Capital lease and financing obligations" includes executory costs and imputed interest related to capital lease and financing obligations that are not yet recorded.
Refer to Note 11 in the "Notes to the Consolidated Financial Statements" for more information.
Additionally, the Company has $15.0 billion in undrawn committed lines
of credit which, if drawn upon, would be included in the current liabilities
section of the Company's Consolidated Balance Sheets.
Estimated interest payments are based on our principal amounts and
expected maturities of all debt outstanding at January 31, 2016, and
management's forecasted market rates for our variable rate debt.
Purchase obligations include legally binding contracts, such as firm
commitments for inventory and utility purchases, as well as commitments
to make capital expenditures, software acquisition and license commit-
ments and legally binding service contracts. Purchase orders for inventory
and other services are not included in the table above. Purchase orders
represent authorizations to purchase rather than binding agreements.
For the purposes of this table, contractual obligations for the purchase
of goods or services are defined as agreements that are enforceable and
legally binding and that specify all significant terms, including: fixed or
minimum quantities to be purchased; fixed, minimum or variable price
provisions; and the approximate timing of the transaction. Our purchase
orders are based on our current inventory needs and are fulfilled by our
suppliers within short time periods. We also enter into contracts for
outsourced services; however, the obligations under these contracts
are not significant and the contracts generally contain clauses allowing
for cancellation without significant penalty.
The expected timing for payment of the obligations discussed above is
estimated based on current information. Timing of payments and actual
amounts paid with respect to some unrecorded contractual commitments
may be different depending on the timing of receipt of goods or services
or changes to agreed-upon amounts for some obligations.
In addition to the amounts shown in the table above, $607 million of
unrecognized tax benefits are considered uncertain tax positions and
have been recorded as liabilities. The timing of the payment, if any,
associated with these liabilities is uncertain. Refer to Note 9 in the
"Notes to Consolidated Financial Statements" for additional discussion
of unrecognized tax benefits.
Off Balance Sheet Arrangements
In addition to the unrecorded contractual obligations presented above,
we have entered into certain arrangements, as discussed below, for which
the timing of payment, if any, is unknown.
(1) "Long-term debt" includes the fair value of our derivatives classified as fair value hedges.
$
―%
$
Accumulated other comprehensive income (loss)
85,777
90,021
Retained earnings
2,462
1,805
Capital in excess of par value
323
317
Common stock
Equity:
Commitments and contingencies
8,805
7,321
Deferred income taxes and other
2,606
5,816
1,021
Long-term debt due within one year
2,745
4,791
Capital lease and financing obligations due within one year
551
(11,597)
287
64,619
65,253
Long-term debt
38,214
40,889
Long-term capital lease and financing obligations
Total current liabilities
521
(7,168)
80,546
$ 76,343
(587)
$
$ 72,978
$332 $3,620
3,314
Balances as of February 1, 2013
Redeemable
Total Noncontrolling
Equity Interest
Nonredeemable
Noncontrolling
Interest
Accumulated
Total
Other
Walmart
Comprehensive Shareholders'
Income (Loss) Equity
Retained
Earnings
Capital in
Excess of
Par Value
Amount
Shares
(Amounts in millions)
Common Stock
and Redeemable Noncontrolling Interest
81,394
Nonredeemable noncontrolling interest
3,065
4,543
Total equity
83,611
Total Walmart shareholders' equity
85,937
$199,581
$203,490
See accompanying notes.
Only Walmart
Walmart 37
Consolidated Statements of Shareholders' Equity
Total liabilities and equity
Accrued income taxes
19,152
19,607
60,239
2,224
1,441
45,141
44,469
6,778
5,624
$ 9,135
$ 8,705
2015
2016
Total current assets
Prepaid expenses and other
Inventories
Cash and cash equivalents
Receivables, net
Current assets:
ASSETS
12,381
13,909
155
(190)
(295)
-
63,278
(1)
$12,191
$13,613
36 Walmart 2016 Annual Report
Consolidated Balance Sheets
Fiscal Years Ended January 31,
(Amounts in millions)
$10,265
Property and equipment:
Property and equipment
Less accumulated depreciation
Other assets and deferred charges
6,131
5,455
Total assets
$199,581
$203,490
18,102
LIABILITIES AND EQUITY
Short-term borrowings
Accounts payable
$ 2,708
38,487
$ 1,592
38,410
Accrued liabilities
Current liabilities:
$ 5,395
16,695
2,375
Property and equipment, net
Property under capital lease and financing obligations:
Property under capital lease and financing obligations
Less accumulated amortization
176,958
177,395
(66,787)
(63,115)
Goodwill
110,171
11,096
5,239
(4,751)
(2,864)
Property under capital lease and financing obligations, net
6,345
114,280
10,110
$ 81,738
Consolidated net income
(541)
(4,429)
---- (4,429)
15,080
386
14,694
14,694
85,937
4,543
81,394
(7,168)
85,777
323 2,462
3,228
(618)
(731)
113
(13)
12
(6,185)
(6,185)
(6,185)
(29)
(4,970)
(950)
(980)
(1,491)
8
1
129
(17)
(980)
|2
Cash dividends declared
(6,294)
Walmart 2016 Annual Report
38
See accompanying notes.
$
$83,611
$3,065
$80,546
$(11,597)
$90,021
$317 $1,805
3,162
Balances as of January 31, 2016
(1,195)
(632)
(563)
(8)
(555)
(6,294)
(6,294)
Purchase of Company stock
(65)
(6) (102)
(4,148)
($1.96 per share)
(4,256)
Cash dividend declared to
noncontrolling interest
(691)
(691)
Other
(1)
(4,256)
(4,718)
(546)
(4,172)
1,019
(1,019)
(1,019)
(1,019)
redeemable noncontrolling interest
Redemption value adjustment of
(6,557)
(6,557)
(6,254)
(294)
(9)
(87)
Purchase of Company stock
(6,139)
(6,139)
(6,139)
།
16,022
16,022
595
16,617
78
Other comprehensive income,
Other
net of income taxes
(2,409)
(311)
(2,720)
(66)
Cash dividends declared
($1.88 per share)
(2,409)
6
55
(41)
17,099
Other comprehensive loss,
net of income taxes
Cash dividends declared
($1.92 per share)
Purchase of Company stock
Purchase of redeemable
736
noncontrolling interest
Balances as of January 31, 2015
Consolidated net income
Other comprehensive income,
net of income taxes
☐
(4,172)
Other
$ 519
16,363
Consolidated net income
14
(595)
(581)
(59)
Balances as of January 31, 2014
3,233
16,363
323
76,566
(2,996)
76,255
5,084
81,339
1,491
2,362
$
See accompanying notes.
Comprehensive income, net of income taxes
Membership and other income
Net sales
Revenues:
(Amounts in millions, except per share data)
Fiscal Years Ended January 31,
Consolidated Statements of Income
Walmart 2016 Annual Report
34
This cautionary statement qualifies all of the forward-looking statements
made in this Annual Report to Shareholders. We cannot assure you that
the results, events or developments expected or anticipated by us will
be realized or, even if substantially realized, that those results, events or
developments will result in the expected consequences for us or affect
us, our business or our operations in the way to the extent we expect.
You are urged to consider all of these risks, factors and uncertainties
carefully in evaluating the forward-looking statements made in this
Annual Report to Shareholders and not to place undue reliance on such
forward-looking statements. The forward-looking statements included
in this Annual Report speak only as of the date of this Annual Report to
Shareholders, and we undertake no obligation to update any of these
forward-looking statements to reflect subsequent events or circumstances,
except to the extent required by applicable law.
We discuss certain of these factors more fully, as well as certain other
risk factors that may affect the results and other matters discussed in
the forward-looking statements identified above, in our filings with
the Securities and Exchange Commission (the "SEC"), including in our
Annual Report on Form 10-K under the heading "Item 1A. Risk Factors."
We filed our Annual Report on Form 10-K for the fiscal year ended
January 31, 2016, with the SEC on March 30, 2016. The forward-looking
statements described above are made based on knowledge of our
business and our operating environment and assumptions we believed
to be reasonable when such forward-looking statements were made.
As a consequence of the risks, factors and uncertainties we discuss
above, and in the Annual Report on Form 10-K and other reports we
may file with the SEC, other risks not known to us at this time, changes
in facts, assumptions not being realized or other circumstances, our
actual results may differ materially from those results discussed in or
implied or contemplated by such forward-looking statements.
Other Risk Factors; No Duty to Update
We typically earn a disproportionate part of our annual operating income
in the fourth quarter as a result of seasonal buying patterns, which patterns
are difficult to forecast with certainty and can be affected by many factors.
⚫ unanticipated changes in generally accepted accounting principles
or their interpretations or applicability and in accounting estimates
and judgments.
⚫ changes in the rating of any of our indebtedness and our access to the
capital markets; and
⚫ changes in our assessment of certain tax contingencies, changes in
valuation allowances, outcome of administrative audits, impact of
discrete items on our effective tax rate and resolution of tax matters;
⚫developments in and the outcome of our legal and regulatory proceedings
and our FCPA-related matters, and associated costs and expenses;
⚫ costs of compliance with laws and regulations and effects of new or
changed tax, labor and other laws and regulations, including those
changing tax rates and imposing new taxes and surcharges;
⚫trade restrictions, changes in tariff and freight rates and disruptions in
our supply chain;
⚫the size of and turnover in our hourly workforce and our labor costs,
including health-care and other benefit costs;
Only Walmart
Walmart
33
Management's Discussion and Analysis of
Financial Condition and Results of Operations
⚫ costs of transportation and other essential services, such as medical
care;
Total revenues
⚫ casualty- and accident-related costs and our casualty and other
insurance costs;
• availability and cost of acceptable building sites and necessary utilities
for new and relocated units;
• availability and cost of skilled construction labor and materials and
other construction costs;
• availability of qualified labor pools for existing, new or expanded units
and to meet seasonal hiring needs;
• real estate, zoning, land use and other laws, ordinances, legal restrictions
and initiatives affecting our ability to build new units in certain locations
or relocate or expand existing units;
• weather conditions, patterns and events, climate change, catastrophic
events and disasters, public health emergencies, civil disturbances and
terrorist attacks, resulting damage to our units and store and club closings
and limitations on our customers' access to our stores and clubs resulting
from such events;
⚫disruptions in the availability of our e-commerce websites and mobile
commerce applications;
⚫ cyberattacks on and incidents relating to our information systems,
related costs and liabilities and information security costs;
⚫ unanticipated store or club closures, unanticipated restructurings and
the related expenses;
2016
2014
Interest income
263
300
521
Capital lease and financing obligations
2,072
2,161
2,027
Debt
Interest:
26,872
27,147
24,105
Operating income
91,353
93,418
97,041
$478,614
3,516
$482,229
3,422
$473,076
3,218
482,130
2015
485,651
Costs and expenses:
Cost of sales
360,984
365,086
358,069
Operating, selling, general and administrative expenses
476,294
⚫the seasonality of business, seasonal buying patterns and the disruption
of such patterns;
⚫ competitive initiatives, and changes in the operations, of other retailers,
and warehouse club operators and e-commerce retailers, arrival of new
competitors and other competitive pressures;
⚫the amounts of sales and earnings from our United States and foreign
operations and our cost of goods sold;
Inventories
Management continually reviews our accounting policies, how they
are applied and how they are reported and disclosed in our financial
statements. Following is a summary of our critical accounting estimates
and how they are applied in preparation of the financial statements.
Summary of Critical Accounting Estimates
Management strives to report our financial results in a clear and
understandable manner, although in some cases accounting and disclo-
sure rules are complex and require us to use technical terminology.
In preparing the Company's Consolidated Financial Statements, we follow
accounting principles generally accepted in the U.S. These principles
require us to make certain estimates and apply judgments that affect
our financial position and results of operations as reflected in our financial
statements. These judgments and estimates are based on past events
and expectations of future outcomes. Actual results may differ from
our estimates.
We discuss our existing FCPA investigation and related matters in the
Annual Report on Form 10-K for fiscal 2016, including certain risks arising
therefrom, in Part I, Item 1A of the Form 10-K under the caption "Risk
Factors" and under the sub-caption "FCPA Investigation and Related
Matters" in Note 10 to our Consolidated Financial Statements, which is
captioned "Contingencies," and appears elsewhere herein. We also discuss
various legal proceedings related to the FCPA investigation in Item 3 of
the Form 10-K under the caption "Part I, Item 3. Legal Proceedings,"
under the sub-caption "II. Certain Other Proceedings." We discuss the
"equal value" claims against our United Kingdom subsidiary, ASDA Stores,
Ltd., in the Annual Report on Form 10-K for fiscal 2016, including certain
risks arising therefrom, in Part I, Item 1A of the Form 10-K under the
caption "Risk Factors" and under the sub-caption "Legal Proceedings"
in Note 10 to our Consolidated Financial Statements, which is captioned
"Contingencies," and appears elsewhere herein.
Other Matters
In certain countries, we also enter into immaterial foreign currency forward
contracts to hedge the purchase and payment of purchase commitments
denominated in non-functional currencies.
In addition to currency swaps, we have designated foreign-currency-
denominated long-term debt as nonderivative hedges of net investments
of certain of our foreign operations. At January 31, 2016 and 2015, we had
£2.5 billion of outstanding long-term debt designated as a hedge of our
net investment in the United Kingdom. At January 31, 2016, a hypothetical
10% increase or decrease in the value of the U.S. dollar relative to the
British pound would have resulted in a gain or loss in the value of the
debt of $324 million. In addition, we had outstanding long-term debt of
¥10 billion at January 31, 2016 and ¥100 billion at January 31, 2015, that
was designated as a hedge of our net investment in Japan. At January 31,
2016, a hypothetical 10% increase or decrease in value of the U.S. dollar
relative to the Japanese yen would have resulted in a gain or loss in the
value of the debt of $8 million.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Walmart 2016 Annual Report
30
We hold currency swaps to hedge the currency exchange component
of our net investments and also to hedge the currency exchange rate
fluctuation exposure associated with the forecasted payments of principal
and interest of non-U.S. denominated debt. The aggregate fair value of
these swaps was in a liability position of $290 million at January 31, 2016
and in a liability position of $110 million at January 31, 2015. The change
in the fair value of these swaps was due to fluctuations in currency
exchange rates, primarily the strengthening of the U.S. dollar relative to
other currencies in fiscal 2016. A hypothetical 10% increase or decrease in
the currency exchange rates underlying these swaps from the market
rate at January 31, 2016 would have resulted in a loss or gain in the value
of the swaps of $445 million. A hypothetical 10% change in interest rates
underlying these swaps from the market rates in effect at January 31, 2016
would have resulted in a loss or gain in value of the swaps of $14 million.
We are exposed to fluctuations in foreign currency exchange rates as a
result of our net investments and operations in countries other than the
U.S. For fiscal 2016, movements in currency exchange rates and the related
impact on the translation of the balance sheets of the Company's subsid-
iaries in Canada, the United Kingdom, Japan, Mexico and Chile were the
primary cause of the $4.7 billion net loss in the currency translation and
other category of accumulated other comprehensive income (loss). We
hedge a portion of our foreign currency risk by entering into currency
swaps and designating certain foreign-currency-denominated long-term
debt as net investment hedges.
Foreign Currency Risk
As of January 31, 2016, our variable rate borrowings, including the effect
of our commercial paper and interest rate swaps, represented 19% of our
total short-term and long-term debt. Based on January 31, 2016 debt
levels, a 100 basis point change in prevailing market rates would cause
our annual interest costs to change by approximately $79 million.
(1) The long-term debt amounts in the table exclude the Company's derivatives classified as fair value hedges.
1.6%
3.1%
1.5%
3.0%
$1,500
$ 3,500
$ 5,000
Weighted-average pay rate
-%
-%
We value inventories at the lower of cost or market as determined primarily
by the retail method of accounting, using the last-in, first-out ("LIFO")
method for substantially all of the Walmart U.S. segment's inventories.
The inventory at the Walmart International segment is valued primarily
by the retail inventory method of accounting, using the first-in, first-out
("FIFO") method. The retail method of accounting results in inventory
being valued at the lower of cost or market since permanent markdowns
are immediately recorded as a reduction of the retail value of inventory.
The inventory at the Sam's Club segment is valued based on the weighted-
average cost using the LIFO method.
-%
Weighted-average receive rate
―%
-%
―%
-%
2.0%
3.3%
-%
Under the retail method of accounting, inventory is valued at the lower
of cost or market, which is determined by applying a cost-to-retail ratio
to each merchandise grouping's retail value. The FIFO cost-to-retail ratio
is generally based on the fiscal year purchase activity. The cost-to-retail
ratio for measuring any LIFO provision is based on the initial margin of
the fiscal year purchase activity less the impact of any permanent mark-
downs. The retail method of accounting requires management to make
certain judgments and estimates that may significantly impact the ending
inventory valuation at cost, as well as the amount of gross profit recognized.
Judgments made include recording markdowns used to sell inventory and
shrinkage. When management determines the ability to sell inventory has
diminished, markdowns for clearance activity and the related cost impact
are recorded. Factors considered in the determination of markdowns
include current and anticipated demand, customer preferences and age
of merchandise, as well as seasonal and fashion trends. Changes in
weather and customer preferences could cause material changes in the
amount and timing of markdowns from year to year.
When necessary, we record a LIFO provision for the estimated annual
effect of inflation, and these estimates are adjusted to actual results
determined at year-end. Our LIFO provision is calculated based on
inventory levels, markup rates and internally generated retail price
indices. At January 31, 2016 and 2015, our inventories valued at LIFO
approximated those inventories as if they were valued at FIFO.
We provide for estimated inventory losses, or shrinkage, between
physical inventory counts on the basis of a historical percentage of sales.
Following annual inventory counts, the provision is adjusted to reflect
updated historical results.
⚫the Company continuing to provide returns to shareholders through share
repurchases and dividends, the use of share repurchase authorization
over a certain period or the source of funding of a certain portion of our
share repurchases;
⚫our sources of liquidity, including our cash, continuing to be adequate
or sufficient to fund and finance our operations, expansion activities,
dividends and share repurchases, to meet our cash needs and to fund
our domestic operations without repatriating earnings we hold outside
of the U.S.;
⚫our intention to reinvest the earnings we hold outside of the U.S. in our
foreign operations and certain laws, other limitations and potential
taxes on anticipated future repatriations of such earnings not materially
affecting our liquidity, financial condition or results of operations;
⚫the insignificance of ineffective hedges and reclassification of amounts
related to our derivatives;
⚫ the realization of certain net deferred tax assets and the effects of reso-
lutions of tax-related matters;
⚫the effect of adverse decisions in, or settlement of, litigation to which we
are subject and the effect of an FCPA-investigation on our business; or
⚫ the effect on the Company's results of operations or financial condition
of the Company's adoption of certain new, or amendments to existing,
accounting standards.
⚫volatility in currency exchange rates and fuel prices affecting our or one
of our segments' results of operations;
Statement of our plans, objectives and goals in this Annual Report to
Shareholders, including our priority of the growth of the Company being
balanced by the long-term health of the Company, including returns, are
also forward-looking statements.
Risks, Factors and Uncertainties Affecting Our Business
Our business operations are subject to numerous risks, factors and
uncertainties, domestically and internationally, outside of our control. One,
or a combination, of these risks, factors and uncertainties could materially
affect any of those matters as to which we have made forward-looking
statements in this Annual Report to Shareholders and cause our actual
results or an actual event or occurrence to differ materially from those
results or an event or occurrence described in any such forward-looking
statement. These factors include, but are not limited to:
⚫economic, geo-political, financial markets and business conditions,
trends, changes, and events, economic crises, including sovereign
debt crises, and disruptions in the financial markets;
⚫ monetary policies of the various governments, governmental entities,
and central banks;
⚫currency exchange rate fluctuations and volatility and changes in market
rates of interest;
⚫inflation and deflation, generally and in certain product categories,
including gasoline and diesel fuel;
⚫consumer confidence, disposable income, credit availability, spending
levels, shopping patterns, debt levels, demand for certain merchandise
and receipt of income tax refunds and public assistance payments;
⚫ consumer acceptance of our stores and clubs, e-commerce websites,
mobile commerce applications, initiatives, programs and merchandise
offerings and customer traffic and average ticket in our stores and clubs
and on our retail websites and mobile commerce applications;
⚫commodity and energy prices and selling prices of commodity items,
such as gasoline and diesel fuel;
⚫our historical results of operations, cash flows, financial condition
and liquidity;
The forward-looking statements described above are identified by the
use in such statements of words or phrases such as "aim," "anticipate,"
"could be," "could increase," "estimated," "expansion," "expect,” “expected
to be," "focus," "goal," "grow," "intend," "invest," "is expected," "may continue,"
"may fluctuate," "may grow," "may impact," "may result," "objective," "plan,"
"priority," "project," "strategy," "to be," "to win," "we'll," "we will," "will add,"
"will allow," "will be," "will benefit," "will continue," "will decrease," "will
have," "will impact," "will include," "will increase," "will open," "will result,"
"will strengthen," "will win," "would be," "would decrease" and "would
increase," variations of such words and phrases and other words or
phrases of similar import.
(81)
⚫ the amount, number, growth or increase, in or over certain periods, of or
in certain financial items or measures or operating measures, including
net sales, comparable store and club sales, liabilities, expenses of certain
categories, returns, capital and operating investments or expenditures of
particular types, new store openings, or investments in particular formats;
⚫investments we will make and how certain of those investments are
expected to be financed;
Cautionary Statement Regarding Forward-Looking Statements
This Annual Report to Shareholders contains statements that we believe
are "forward-looking statements" entitled to the protection of the safe
harbor for forward-looking statements provided by the Private Securities
Litigation Reform Act of 1995, as amended.
Only Walmart
Walmart 31
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Impairment of Assets
We evaluate long-lived assets other than goodwill and assets with
indefinite lives for indicators of impairment whenever events or changes
in circumstances indicate their carrying amounts may not be recoverable.
Management's judgments regarding the existence of impairment indicators
are based on market conditions and operational performance, such as
operating income and cash flows. The evaluation for long-lived assets is
performed at the lowest level of identifiable cash flows, which is generally
at the individual store level or, in certain markets, at the market group
level. The variability of these factors depends on a number of conditions,
including uncertainty about future events and changes in demographics.
Thus, our accounting estimates may change from period to period.
These factors could cause management to conclude that indicators of
impairment exist and require impairment tests be performed, which
could result in management determining the value of long-lived assets
is impaired, resulting in a write-down of the related long-lived assets.
Goodwill and other indefinite-lived acquired intangible assets are not
amortized, but are evaluated for impairment annually or whenever events
or changes in circumstances indicate that the value of a certain asset
may be impaired. Generally, this evaluation begins with a qualitative
assessment to determine whether a quantitative impairment test is
necessary. If we determine, after performing an assessment based on
the qualitative factors, that the fair value of the reporting unit is more
likely than not less than the carrying amount, or that a fair value of the
reporting unit substantially in excess of the carrying amount cannot be
assured, then a quantitative impairment test would be performed. The
quantitative test for impairment requires management to make judgments
relating to future cash flows, growth rates and economic and market
conditions. These evaluations are based on determining the fair value
of a reporting unit or asset using a valuation method such as discounted
cash flow or a relative, market-based approach. Historically, our reporting
units have generated sufficient returns to recover the cost of goodwill
and other indefinite-lived acquired intangible assets. Because of the
nature of the factors used in these tests, if different conditions occur in
future periods, future operating results could be materially impacted.
The forward-looking statements made in this Annual Report to Shareholders
are not statements of historical facts, but instead express our estimates or
expectations for our consolidated, or one of our segment's, economic
performance or results of operations for future periods or as of future
dates or events or developments that may occur in the future or discuss
our plans, objectives or goals. These forward-looking statements relate to:
⚫the growth of our business or change in our competitive position in the
future or in or over particular periods;
As of January 31, 2016, the fair value of certain indefinite-lived intangible
assets held in our International segment exceeded its carrying value of
$398 million by approximately 5%. Management will continue to monitor
the fair value of these assets in future periods.
Income taxes have a significant effect on our net earnings. We are subject
to income taxes in the U.S. and numerous foreign jurisdictions. Accordingly,
the determination of our provision for income taxes requires significant
judgment, the use of estimates and the interpretation and application
of complex tax laws. Our effective income tax rate is affected by many
factors, including changes in our assessment of certain tax contingencies,
increases and decreases in valuation allowances, changes in tax law,
outcomes of administrative audits, the impact of discrete items and the
mix of earnings among our U.S. and international operations where the
statutory rates are generally lower than the U.S. statutory rate, and may
fluctuate as a result.
Our tax returns are routinely audited and settlements of issues raised in
these audits sometimes affect our tax provisions. The benefits of uncertain
tax positions are recorded in our financial statements only after determining
a more likely than not probability that the uncertain tax positions will
withstand challenge, if any, from taxing authorities. When facts and
circumstances change, we reassess these probabilities and record any
changes in the financial statements as appropriate. We account for
uncertain tax positions by determining the minimum recognition threshold
that a tax position is required to meet before being recognized in the
financial statements. This determination requires the use of significant
judgment in evaluating our tax positions and assessing the timing and
amounts of deductible and taxable items.
Deferred tax assets represent amounts available to reduce income taxes
payable on taxable income in future years. Such assets arise because of
temporary differences between the financial reporting and tax bases of
assets and liabilities, as well as from net operating loss and tax credit
carryforwards. Deferred tax assets are evaluated for future realization
and reduced by a valuation allowance to the extent that a portion is not
more likely than not to be realized. Many factors are considered when
assessing whether it is more likely than not that the deferred tax assets will
be realized, including recent cumulative earnings, expectations of future
taxable income, carryforward periods and other relevant quantitative
and qualitative factors. The recoverability of the deferred tax assets is
evaluated by assessing the adequacy of future expected taxable income
from all sources, including reversal of taxable temporary differences,
forecasted operating earnings and available tax planning strategies.
This evaluation relies heavily on estimates.
32
Walmart 2016 Annual Report
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Income Taxes
Less comprehensive income (loss) attributable to nonredeemable noncontrolling interest
Less comprehensive income (loss) attributable to redeemable noncontrolling interest
Comprehensive income attributable to Walmart
(113)
Interest, net
$15,080
2014
2015
2016
Fiscal Years Ended January 31,
Net investment hedges
Currency translation and other
Other comprehensive income (loss), net of income taxes
Less consolidated net income attributable to nonredeemable noncontrolling interest
Less consolidated net income attributable to redeemable noncontrolling interest
Consolidated net income attributable to Walmart
Consolidated net income
(Amounts in millions)
Consolidated Statements of Comprehensive Income
Walmart 35
Only Walmart
$ 1.88
1.92
$
$
4.88
Weighted-average common shares outstanding:
Basic
Diluted
Dividends declared per common share
$17,099
See accompanying notes.
3,230
3,269
3,243
3,283
$
1.96
3,207
3,217
5.05
$16,695
(736)
(2,409)
(4,172)
(4,429)
66
311
546
541
Less other comprehensive income (loss) attributable to nonredeemable noncontrolling interest
Less other comprehensive income (loss) attributable to redeemable noncontrolling interest
Other comprehensive income (loss) attributable to Walmart
(2,786)
(4,718)
(4,970)
Other comprehensive income (loss), net of income taxes
153
(69)
86
Minimum pension liability
207
(606)
(67)
14,694
16,363
16,022
(5,220)
(386)
(4,558)
366
379
75
Cash flow hedges
(202)
(470)
(3,221)
$
4.57
$
16,695
17,099
15,080
144
285
Consolidated net income
Income from discontinued operations, net of income taxes
16,551
16,814
15,080
8,105
7,985
6,558
Income from continuing operations
Total provision for income taxes
(514)
(519)
2,467
2,348
2,216
Income from continuing operations before income taxes
21,638
24,799
Consolidated net income attributable to noncontrolling interest
24,656
Current
7,584
8,504
8,619
Deferred
(1,026)
Provision for income taxes:
(386)
(736)
(673)
4.58
$
5.07
$
4.90
Diluted income per common share from continuing operations attributable to Walmart
Diluted income per common share from discontinued operations attributable to Walmart
Diluted net income per common share attributable to Walmart
$
$
$
4.99
$
4.85
0.06
0.03
4.57
(119)
0.03
-
Consolidated net income attributable to Walmart
Basic net income per common share:
Basic income per common share from continuing operations attributable to Walmart
Basic income per common share from discontinued operations attributable to Walmart
Basic net income per common share attributable to Walmart
Diluted net income per common share:
$ 14,694
0.06
$ 16,363
$
4.58
$
5.01
$
4.87
$ 16,022
5.2%
$68.89
29,348
18,102
$461
January 31, 2016
Balances as of
(1,412)
5
Acquisitions (1)
translation and other
Changes in currency
313
17,328
461
January 31, 2015
Balances as of
(1,418)
10
10
Acquisitions (1)
(1,418)
(1,412)
translation and other
5
$313 $16,695
(Amounts in millions)
The Company recognizes membership fee revenue both in the U.S.
and internationally over the term of the membership, which is typically
12 months. The following table summarizes membership fee activity
for fiscal 2016, 2015 and 2014:
Membership Fee Revenue
The Company recognizes sales revenue, net of sales taxes and estimated sales
returns, at the time it sells merchandise to the customer. Digital retail sales
include shipping revenue and are recorded upon delivery to the customer.
Sales
Revenue Recognition
The Company records a liability for unrecognized tax benefits resulting
from uncertain tax positions taken or expected to be taken in a tax return.
The Company records interest and penalties related to unrecognized tax
benefits in interest expense and operating, selling, general and adminis-
trative expenses, respectively, in the Company's Consolidated Statements
of Income. Refer to Note 9 for additional income tax disclosures.
In determining the provision for income taxes, an annual effective income
tax rate is used based on annual income, permanent differences between
book and tax income, and statutory income tax rates. Discrete events
such as audit settlements or changes in tax laws are recognized in the
period in which they occur.
income, carryforward periods, and other relevant quantitative and
qualitative factors. The recoverability of the deferred tax assets is evaluated
by assessing the adequacy of future expected taxable income from all
sources, including reversal of taxable temporary differences, forecasted
operating earnings and available tax planning strategies. These sources
of income rely heavily on estimates.
Walmart 2016 Annual Report
Deferred tax assets are evaluated for future realization and reduced by
a valuation allowance to the extent that a portion is not more likely than
not to be realized. Many factors are considered when assessing whether
it is more likely than not that the deferred tax assets will be realized,
including recent cumulative earnings, expectations of future taxable
Income taxes are accounted for under the balance sheet method. Deferred
tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases ("temporary differences"). Deferred tax assets and liabilities are
measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rate is recognized
in income in the period that includes the enactment date.
Income Taxes
The Company self-insures a number of risks, including, but not limited
to, workers' compensation, general liability, auto liability, product liability
and certain employee-related healthcare benefits. Standard actuarial
procedures and data analysis are used to estimate the liabilities associated
with these risks as of the balance sheet date on an undiscounted basis.
The recorded liabilities reflect the ultimate cost for claims incurred but
not paid and any estimable administrative run-out expenses related to
the processing of these outstanding claim payments. On a regular basis,
claims reserve valuations are provided by independent third-party
actuaries to ensure liability estimates are appropriate. To limit exposure
to some risks, the Company maintains insurance coverage with varying
limits and retentions, including stop-loss insurance coverage for workers'
compensation, general liability and auto liability.
Self Insurance Reserves
Indefinite-lived intangible assets are included in other assets and
deferred charges in the Company's Consolidated Balance Sheets. These
assets are evaluated for impairment based on their fair values using valu-
ation techniques which are updated annually based on the most recent
variables and assumptions. There were no impairment charges related to
indefinite-lived intangible assets recorded for fiscal 2016, 2015 and 2014.
(1) Goodwill recorded for fiscal 2016 and 2015 acquisitions relates to acquisitions that
are not significant, individually or in the aggregate, to the Company's Consolidated
Financial Statements.
$15,921
Changes in currency
$19,510
$313
Property and equipment, net
Accumulated depreciation
$176,958 $177,395
(66,787) (63,115)
$110,171 $114,280
Property and equipment
4,539
N/A
Construction in progress
2,917
3-15 years
Transportation equipment
47,033
1-30 years
96,845
N/A
3-40 years
Buildings and improvements
Fixtures and equipment
2016
Estimated
Useful Lives
Leasehold improvements are depreciated or amortized over the shorter
of the estimated useful life of the asset or the remaining expected lease
term. Total depreciation and amortization expense for property and
equipment, property under financing obligations and property under
capital leases for fiscal 2016, 2015 and 2014 was $9.4 billion, $9.1 billion
and $8.8 billion, respectively. Interest costs capitalized on construction
projects were $39 million, $59 million and $78 million in fiscal 2016, 2015
and 2014, respectively.
Leases
The Company estimates the expected term of a lease by assuming the
exercise of renewal options where an economic penalty exists that
would preclude the abandonment of the lease at the end of the initial
non-cancelable term and the exercise of such renewal is at the sole
discretion of the Company. The expected term is used in the determination
of whether a store or club lease is a capital or operating lease and in the
calculation of straight-line rent expense. Additionally, the useful life of
leasehold improvements is limited by the expected lease term or the
economic life of the asset, whichever is shorter. If significant expenditures
are made for leasehold improvements late in the expected term of a
lease and renewal is reasonably assured, the useful life of the leasehold
improvement is limited to the end of the renewal period or economic
life of the asset, whichever is shorter. Rent abatements and escalations
are considered in the calculation of minimum lease payments in the
Company's capital lease tests and in determining straight-line rent
expense for operating leases.
The Company is often involved in the construction of its leased stores.
In certain cases, payments made for certain structural components
included in the lessor's construction of the leased assets result in the
Company being deemed the owner of the leased assets for accounting
purposes. As a result, regardless of the significance of the payments,
$18,746
$451
February 1, 2014
Total
(Amounts in millions)
Balances as of
Walmart
The following table reflects goodwill activity, by reportable segment, for
fiscal 2016 and 2015:
Notes to Consolidated Financial Statements
Deferred membership fee revenue,
beginning of year
Cash received from members
Membership fee revenue recognized
Deferred membership fee revenue,
end of year
42
Walmart
Only Walmart
The Company's reporting units were evaluated using a quantitative
impairment test. Management determined the fair value of each reporting
unit is greater than the carrying amount and, accordingly, the Company
has not recorded any impairment charges related to goodwill.
Goodwill is evaluated for impairment using either a qualitative or
quantitative approach for each of the Company's reporting units. Generally,
a qualitative assessment is first performed to determine whether a
quantitative goodwill impairment test is necessary. If management
determines, after performing an assessment based on the qualitative
factors, that the fair value of the reporting unit is more likely than not
less than the carrying amount, or that a fair value of the reporting unit
substantially in excess of the carrying amount cannot be assured, then
a quantitative goodwill impairment test would be required. The quantitative
test for goodwill impairment is performed by determining the fair
value of the related reporting units. Fair value is measured based on the
discounted cash flow method and relative market-based approaches.
Goodwill and Other Acquired Intangible Assets
Goodwill represents the excess of the purchase price over the fair value
of net assets acquired in business combinations and is allocated to the
appropriate reporting unit when acquired. Other acquired intangible
assets are stated at the fair value acquired as determined by a valuation
technique commensurate with the intended use of the related asset.
Goodwill and indefinite-lived intangible assets are not amortized; rather,
they are evaluated for impairment annually and whenever events or
changes in circumstances indicate that the value of the asset may be
impaired. Definite-lived intangible assets are considered long-lived
assets and are amortized on a straight-line basis over the periods that
expected economic benefits will be provided.
Long-lived assets are stated at cost. Management reviews long-lived assets
for indicators of impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. The evaluation
is performed at the lowest level of identifiable cash flows, which is at the
individual store or club level or, in certain circumstances, a market group of
stores. Undiscounted cash flows expected to be generated by the related
assets are estimated over the assets' useful lives based on updated projections.
If the evaluation indicates that the carrying amount of the assets may not
be recoverable, any potential impairment is measured based upon the fair
value of the related asset or asset group as determined by an appropriate
market appraisal or other valuation technique. Impairment charges of
long-lived assets for fiscal 2016, 2015 and 2014 were not material.
Long-Lived Assets
Accounting Standards Codification 840, Leases, ("ASC 840") defines those
payments as automatic indicators of ownership and requires the Company
to capitalize the lessor's total project cost with a corresponding financing
obligation. Upon completion of the lessor's project, the Company performs
a sale-leaseback analysis pursuant to ASC 840 to determine if these assets
and the related financing obligation can be derecognized from the
Company's Consolidated Balance Sheets. If the Company is deemed to
have "continuing involvement," the leased assets and the related financing
obligation remain on the Company's Consolidated Balance Sheets and
are generally amortized over the lease term.
41
Fiscal Years Ended January 31,
2016
2015
2014
10
3,207 3,230 3,269
$14,694 $16,182 $15,918
(386) (632) (633)
$15,080 $16,814 $16,551
2014
2015
2016
Fiscal Years Ended January 31,
Share-Based Compensation
3. Shareholders' Equity
Diluted
attributable to Walmart
Basic
continuing operations
Income per common share from
Dilutive impact of stock options
and other share-based awards
Weighted-average common shares
outstanding, diluted
Denominator
Weighted-average common shares
outstanding, basic
13
14
3,217
3,243 3,283
277
292
Restricted stock units
$141
$157
$134
share units
Restricted stock and performance
Income from continuing operations
attributable to Walmart
2014
2016
Fiscal Years Ended January 31,
(Amounts in millions)
expense is included in operating, selling, general and administrative
expenses in the Company's Consolidated Statements of Income. The
total income tax benefit recognized for share-based compensation was
$151 million, $173 million and $145 million for fiscal 2016, 2015 and 2014,
respectively. The following table summarizes the Company's share-based
compensation expense by award type:
Walmart 2016 Annual Report
The Company has awarded share-based compensation to associates and
nonemployee directors of the Company. The compensation expense
recognized for all plans was $448 million, $462 million and $388 million
for fiscal 2016, 2015 and 2014, respectively. Share-based compensation
4.85
$ 4.58 $ 5.01 $ 4.87
4.57 4.99
2015
$ 25,624 $ 26,261
97,496
45,044
2,807
5,787
Income from continuing operations
Income from continuing operations
attributable to noncontrolling
interest
The following table provides a reconciliation of the numerators and
denominators used to determine basic and diluted income per common
share from continuing operations attributable to Walmart:
Operating, Selling, General and Administrative Expenses
Operating, selling, general and administrative expenses include all operating
costs of the Company, except cost of sales, as described above. As a result,
the majority of the cost of warehousing and occupancy for the Walmart
U.S. and Walmart International segments' distribution facilities is included
in operating, selling, general and administrative expenses. Because the
Company does not include most of the cost of its Walmart U.S. and Walmart
International segments' distribution facilities in cost of sales, its gross
profit and gross profit as a percentage of net sales may not be comparable
to those of other retailers that may include all costs related to their
distribution facilities in cost of sales and in the calculation of gross profit.
The Company receives consideration from suppliers for various programs,
primarily volume incentives, warehouse allowances and reimbursements
for specific programs such as markdowns, margin protection, advertising
and supplier-specific fixtures. Payments from suppliers are accounted
for as a reduction of cost of sales and are recognized in the Company's
Consolidated Statements of Income when the related inventory is sold,
except when the payment is a reimbursement of specific, incremental
and identifiable costs.
Payments from Suppliers
Cost of sales includes actual product cost, the cost of transportation to
the Company's distribution facilities, stores and clubs from suppliers, the
cost of transportation from the Company's distribution facilities to the
stores, clubs and customers and the cost of warehousing for the Sam's
Club segment and import distribution centers. Cost of sales is reduced by
supplier payments that are not a reimbursement of specific, incremental
and identifiable costs.
Cost of Sales
The Company recognizes revenue from service transactions at the time
the service is performed. Generally, revenue from services is classified
as a component of net sales in the Company's Consolidated Statements
of Income.
Financial and Other Services
Notes to Consolidated Financial Statements
Customer purchases of shopping cards are not recognized as revenue
until the card is redeemed and the customer purchases merchandise
using the shopping card. Shopping cards in the U.S. do not carry an
expiration date; therefore, customers and members can redeem their
shopping cards for merchandise indefinitely. Shopping cards in certain
foreign countries where the Company does business may have expiration
dates. A certain number of shopping cards, both with and without
expiration dates, will not be fully redeemed. Management estimates
unredeemed shopping cards and recognizes revenue for these
amounts over shopping card historical usage periods based on historical
redemption rates. Management periodically reviews and updates its
estimates of usage periods and redemption rates.
Shopping Cards
Membership fee revenue is included in membership and other income
in the Company's Consolidated Statements of Income. The deferred
membership fee is included in accrued liabilities in the Company's
Consolidated Balance Sheets.
$ 744 $ 759 $ 641
1,410
(1,292) (1,183)
1,249
$ 575
$ 641
$ 759
1,333
(1,348)
Advertising Costs
Advertising costs are expensed as incurred, consist primarily of print,
television and digital advertisements and are recorded in operating,
selling, general and administrative expenses in the Company's
Consolidated Statements of Income. Reimbursements from suppliers
that are for specific, incremental and identifiable advertising costs are
recognized as a reduction of advertising costs in operating, selling,
general and administrative expenses. Advertising costs were $2.5 billion
for fiscal 2016 and $2.4 billion for both fiscal 2015 and fiscal 2014.
Pre-Opening Costs
The cost of start-up activities, including organization costs, related to new
store openings, store remodels, relocations, expansions and conversions
are expensed as incurred and included in operating, selling, general and
administrative expenses in the Company's Consolidated Statements
of Income. Pre-opening costs totaled $271 million, $317 million and
$338 million for fiscal 2016, 2015 and 2014, respectively.
Basic income per common share from continuing operations attributable to
Walmart is based on the weighted-average common shares outstanding
during the relevant period. Diluted income per common share from
continuing operations attributable to Walmart is based on the weighted-
average common shares outstanding during the relevant period adjusted
for the dilutive effect of share-based awards. The Company did not have
significant share-based awards outstanding that were antidilutive and not
included in the calculation of diluted income per common share from
continuing operations attributable to Walmart for fiscal 2016, 2015 and 2014.
2. Net Income Per Common Share
In March 2016, FASB issued ASU 2016-08, Revenue from Contracts with
Customers (Topic 606): Principal versus Agent Considerations (Reporting
Revenue Gross versus Net). The amendments are intended to improve the
operability and understandability of the implementation guidance on
principal versus agent considerations. The effective date for this ASU is
the same as the effective date for ASU 2014-09. Management is currently
evaluating this standard.
guidance is effective for fiscal years and interim periods within those years
beginning after December 15, 2018, with early adoption permitted.
Management is currently evaluating this standard.
**
Notes to Consolidated Financial Statements
Walmart 43
Only Walmart
(Amounts in millions, except per share data)
Numerator
In February 2016, FASB issued ASU 2016-02, Leases (Topic 842). FASB
issued ASU 2016-02 to increase transparency and comparability among
organizations by recognizing lease assets and lease liabilities on the
balance sheet and disclosing key information about leasing arrangements.
Certain qualitative and quantitative disclosures are required, as well as
a retrospective recognition and measurement of impacted leases. The new
In April 2015, FASB issued ASU 2015-03, Interest-Imputation of Interest
(Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost.
FASB issued ASU 2015-03 to simplify the presentation of debt issuance
costs related to a recognized debt liability to present the debt issuance
costs as a direct deduction from the carrying value of the debt liability
rather than showing the debt issuance costs as a deferred charge on
the balance sheet. The new guidance is effective for fiscal years and
interim periods within those years beginning after December 15, 2015,
with early adoption permitted. Management elected to early adopt this
new guidance effective for the first quarter of fiscal year 2016, and has
applied the changes retrospectively to all periods presented. Adoption
of this ASU did not materially impact the Company's consolidated net
income, financial position or cash flows.
In May 2014, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts
with Customers (Topic 606). This ASU is a comprehensive new revenue
recognition model that requires a company to recognize revenue to depict
the transfer of goods or services to a customer at an amount that reflects
the consideration it expects to receive in exchange for those goods or
services. In August 2015, FASB issued ASU 2015-14, Revenue from Contracts
with Customers (Topic 606): Deferral of the Effective Date, which deferred
the effective date of ASU 2014-09 to reporting periods beginning after
December 15, 2017. Early adoption is permitted for reporting periods
beginning after December 15, 2016. The Company will adopt this ASU
on February 1, 2018. Companies may use either a full retrospective or a
modified retrospective approach to adopt this ASU. Management is
currently evaluating this standard, including which transition approach
to use, and does not expect this ASU to materially impact the Company's
consolidated net income, financial position or cash flows.
Recent Accounting Pronouncements
Certain reclassifications have been made to previous fiscal year amounts
and balances to conform to the presentation in the current fiscal year.
These reclassifications did not impact consolidated operating income
or net income.
Reclassifications
from the respective local currencies to the U.S. dollar using average
exchange rates for the period covered by the income statements.
The assets and liabilities of all international subsidiaries are translated
from the respective local currency to the U.S. dollar using exchange rates
at the balance sheet date. Related translation adjustments are recorded
as a component of accumulated other comprehensive income (loss).
The income statements of all international subsidiaries are translated
Currency Translation
In November 2015, FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance
Sheet Classification of Deferred Taxes. This ASU requires the presentation
of all deferred tax assets and liabilities as non-current in the consolidated
balance sheet. The new guidance is effective for fiscal years and interim
periods within those years beginning after December 15, 2016, with early
adoption permitted. Management elected to early adopt this new guidance
effective for the fourth quarter of fiscal year 2016 in order to simplify the
global close processes. The Company will apply the changes prospectively.
Prior periods were not retrospectively adjusted to reflect the adoption of
this ASU. Adoption of this ASU did not materially impact the Company's
consolidated financial position, and had no impact on the Company's
net income or cash flows.
2015
(Amounts in millions)
Land
Property and equipment are stated at cost. Gains or losses on disposition
are recognized as earned or incurred. Costs of major improvements are
capitalized, while costs of normal repairs and maintenance are charged
to expense as incurred. The following table summarizes the Company's
property and equipment balances and includes the estimated useful lives
that are generally used to depreciate the assets on a straight-line basis:
Fiscal Years Ended
January 31,
(11,477)
Payments for property and equipment
Cash flows from investing activities:
Net cash provided by operating activities
23,257
28,564
27,389
(1,224)
166
(472)
103
1,249
1,303
Accrued income taxes
Accrued liabilities
531
2,678
(12,174)
(13,115)
Proceeds from disposal of property and equipment
635
911
(6,288)
1,235
Net change in short-term borrowings
Proceeds from issuance of long-term debt
Cash flows from financing activities:
(12,526)
(11,125)
(10,675)
2,008
Net cash used in investing activities
(192)
(79)
Other investing activities
671
246
Proceeds from disposal of certain operations
727
570
(138)
39
Accounts payable
(1,229)
15,080
(144)
(285)
$ 16,695
$ 17,099
$ 15,080
2014
2015
Fiscal Years Ended January 31,
2016
Adjustments to reconcile income from continuing operations to net cash
Income from continuing operations
Income from discontinued operations, net of income taxes
Consolidated net income
Cash flows from operating activities:
(Amounts in millions)
Consolidated Statements of Cash Flows
16,814
16,551
provided by operating activities:
Depreciation and amortization
(703)
Inventories
(566)
(569)
(19)
Receivables, net
Changes in certain assets and liabilities, net of effects of acquisitions:
938
(1,667)
785
Other operating activities
(279)
(503)
(672)
Deferred income taxes
8,870
9,173
9,454
1,410
224
5,174
Payments of long-term debt
The Consolidated Financial Statements include the accounts of Walmart
and its subsidiaries as of and for the fiscal years ended January 31, 2016
("fiscal 2016"), January 31, 2015 ("fiscal 2015") and January 31, 2014 ("fiscal
2014"). All material intercompany accounts and transactions have been
eliminated in consolidation. Investments in unconsolidated affiliates,
which are 50% or less owned and do not otherwise meet consolidation
requirements, are accounted for primarily using the equity method.
These investments are immaterial to the Company's Consolidated
Financial Statements.
Principles of Consolidation
The Company's operations comprise three reportable segments:
Walmart U.S., Walmart International and Sam's Club.
Wal-Mart Stores, Inc. ("Walmart" or the "Company") helps people around
the world save money and live better - anytime and anywhere - in retail
stores or through the Company's e-commerce and mobile capabilities.
Through innovation, the Company is striving to create a customer-centric
experience that seamlessly integrates digital and physical shopping.
Each week, the Company serves nearly 260 million customers who visit
its over 11,500 stores under 63 banners in 28 countries and e-commerce
websites in 11 countries. The Company's strategy is to lead on price,
invest to differentiate on access, be competitive on assortment and
deliver a great experience.
General
1. Summary of Significant Accounting Policies
Notes to Consolidated Financial Statements
40
Walmart 39
Only Walmart
2,362
2,433
8,641
8,169
8,111
2,540
See accompanying notes.
Interest paid
The Company's Consolidated Financial Statements are based on a fiscal
year ending on January 31, for the United States ("U.S.") and Canadian
operations. The Company consolidates all other operations generally
using a one-month lag and based on a calendar year. There were no
significant intervening events during January 2016 that materially
affected the Consolidated Financial Statements.
Use of Estimates
The Consolidated Financial Statements have been prepared in conformity
with U.S. generally accepted accounting principles. Those principles
require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities. Management's estimates and
assumptions also affect the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results may
differ from those estimates.
Cash and Cash Equivalents
Property and Equipment
at the Sam's Club segment is valued based on the weighted-average
cost using the LIFO method. At January 31, 2016 and January 31, 2015,
the Company's inventories valued at LIFO approximated those inventories
as if they were valued at FIFO.
Notes to Consolidated Financial Statements
The Company values inventories at the lower of cost or market as
determined primarily by the retail inventory method of accounting,
using the last-in, first-out ("LIFO") method for substantially all of the
Walmart U.S. segment's inventories. The inventory at the Walmart
International segment is valued primarily by the retail inventory method
of accounting, using the first-in, first-out ("FIFO") method. The retail
inventory method of accounting results in inventory being valued at the
lower of cost or market since permanent markdowns are immediately
recorded as a reduction of the retail value of inventory. The inventory
Inventories
The Walmart International segment offers a limited number of consumer
credit products, primarily through its financial institutions in select
countries. The receivable balance from consumer credit products was
$1.0 billion, net of a reserve for doubtful accounts of $70 million at
January 31, 2016, compared to a receivable balance of $1.2 billion, net
of a reserve for doubtful accounts of $114 million at January 31, 2015.
These balances are included in receivables, net, in the Company's
Consolidated Balance Sheets.
• real estate transactions.
⚫ consumer financing programs in certain international operations;
⚫suppliers for marketing or incentive programs; and
Supplemental disclosure of cash flow information:
Income taxes paid
⚫ banks for customer credit and debit cards and electronic bank transfers
that take in excess of seven days to process;
Receivables are stated at their carrying values, net of a reserve for
doubtful accounts. Receivables consist primarily of amounts due from:
Receivables
As of January 31, 2016 and 2015, cash and cash equivalents of approximately
$1.1 billion and $1.7 billion, respectively, may not be freely transferable to
the U.S. due to local laws or other restrictions.
The Company uses intercompany financing arrangements in an effort to
ensure cash can be made available in the country in which it is needed
with the minimum cost possible. Management does not believe it will be
necessary to repatriate earnings held outside of the U.S. and anticipates
the Company's domestic liquidity needs will be met through cash flows
provided by operating activities, supplemented with long-term debt
and short-term borrowings. Accordingly, the Company intends, with only
certain exceptions, to continue to indefinitely reinvest the Company's
earnings held outside of the U.S. in our foreign operations. When the
income earned, either from operations or through intercompany financing
arrangements, and indefinitely reinvested outside of the U.S. is taxed at
local country tax rates, which are generally lower than the U.S. statutory
rate, the Company realizes an effective tax rate benefit. If the Company's
intentions with respect to reinvestment were to change, most of the
amounts held within the Company's foreign operations could be
repatriated to the U.S., although any repatriation under current U.S. tax
laws would be subject to U.S. federal income taxes, less applicable
foreign tax credits. The Company does not expect local laws, other
limitations or potential taxes on anticipated future repatriations of earnings
held outside of the U.S. to have a material effect on the Company's overall
liquidity, financial condition or results of operations.
$6.3 billion, respectively, were held outside of the U.S. and were generally
utilized to support liquidity needs in the Company's non-U.S. operations.
Walmart 2016 Annual Report
The Company's cash balances are held in various locations around the
world. Of the Company's $8.7 billion and $9.1 billion of cash and cash
equivalents at January 31, 2016 and 2015, respectively, $4.5 billion and
The Company considers investments with a maturity when purchased
of three months or less to be cash equivalents. All credit card, debit card
and electronic benefits transfer transactions that process in less than
seven days are classified as cash and cash equivalents. The amounts due
from banks for these transactions classified as cash and cash equivalents
totaled $3.4 billion and $2.9 billion at January 31, 2016 and 2015, respec-
tively. In addition, cash and cash equivalents included restricted cash of
$362 million and $345 million at January 31, 2016 and 2015, respectively,
which was primarily related to cash collateral holdings from various
counterparties, as required by certain derivative and trust agreements.
⚫ insurance companies resulting from pharmacy sales;
7,072
$ 7,281
$ 8,705
Other financing activities
Purchase of noncontrolling interest
(426)
(600)
(719)
Dividends paid to noncontrolling interest
(6,683)
(1,015)
(4,112)
Purchase of Company stock
(6,139)
(6,185)
(6,294)
Dividends paid
(4,968)
(3,904)
(4,432)
Net cash used in financing activities
Effect of exchange rates on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of period
7,781
7,281
9,135
(500)
1,854
(430)
(442)
(514)
$ 9,135
(1,022)
(15,071)
(16,122)
(260)
(409)
(513)
(296)
(1,844)
(1,326)
(10,789)
22
Walmart U.S. International Sam's Club
23
364-day revolving credit facility(1)
$ 6,000
$
$ 6,000
$ 6,000
$
$ 6,000
Five-year credit facility(1)
Undrawn
Drawn
Available
Undrawn
Drawn
Available
2015
2016
(Amounts in millions)
Total
9,000
$15,000
$
9,000
$15,000
Average
January 31, 2016
Amount
Maturity Dates
By Fiscal Year
(Amounts in millions)
January 31, 2015
The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following:
Notes to Consolidated Financial Statements
Fiscal Years Ended January 31,
Walmart 47
Apart from the committed lines of credit, the Company has trade and stand-by letters of credit totaling $4.5 billion and $4.6 billion at January 31, 2016
and 2015, respectively. These letters of credit are utilized in normal business activities.
The committed lines of credit mature at various times between June 2016 and June 2020, carry interest rates generally ranging between LIBOR plus
10 basis points and LIBOR plus 75 basis points, and incur commitment fees ranging between 1.5 and 4.0 basis points. In conjunction with the lines of
credit listed in the table above, the Company has agreed to observe certain covenants, the most restrictive of which relates to the maximum amount
of secured debt.
(1) In June 2015, the Company renewed and extended its existing five-year credit facility and its existing 364-day revolving credit facility, both of which are used to support its
commercial paper program.
$15,000
$
$15,000
9,000
9,000
Only Walmart
Rate (1)
The Company has various committed lines of credit, committed with 23 financial institutions, totaling $15.0 billion as of January 31, 2016 and 2015.
The committed lines of credit are summarized in the following table:
$13,318
8,971
$19,607
8,300
7,835
2,592
2,544
3,306
3,414
$ 4,954
$ 5,814
2015
2016
As of January 31,
Total accrued liabilities
Accrued non-income taxes(3)
Other(4)
Self-insurance (2)
Accrued wages and benefits (1)
(Amounts in millions)
$19,152
(1) Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans.
(2) Self-insurance consists of all insurance-related liabilities, such as workers' compensation, general liability, auto liability, product liability and certain employee-related
healthcare benefits.
(3) Accrued non-income taxes include accrued payroll, value added, sales and miscellaneous other taxes.
7,009
0.5%
4,536
1.5%
$11,581
$10,551
2014
2015
2016
Fiscal Years Ended January 31,
0.1%
Weighted-average interest rate
(Amounts in millions)
Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings outstanding at January 31, 2016 and 2015 were
$2.7 billion and $1.6 billion, respectively. The following table includes additional information related to the Company's short-term borrowings
for fiscal 2016, 2015 and 2014:
6. Short-term Borrowings and Long-term Debt
Notes to Consolidated Financial Statements
2016 Annual Report
Walmart
46
(4) Other accrued liabilities consist of various items such as maintenance, utilities, advertising and interest.
Maximum amount outstanding at any month-end
Average daily short-term borrowings
The Company's accrued liabilities consist of the following:
Amount
Unsecured debt
$40,889
Long-term debt
(4,791)
Less amounts due within one year
45,680
237
45,443
851
40,959
183
40,776
83
Total debt
Total other debt (in USD)(2)
28
Total Yen denominated
0.6%
(2,745)
$38,214
(1) The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end interest rates. Interest costs
are also impacted by certain derivative financial instruments described in Note 8.
(2) A portion of other debt at January 31, 2016 and 2015 includes secured debt in the amount of $131 million and $139 million, respectively, which was collateralized by property
that had an aggregate carrying amount of approximately $13 million and $19 million, respectively.
At January 31, 2016 and 2015, the Company had $500 million in debt with embedded put options. The issuance of money market puttable reset
securities in the amount of $500 million is structured to be remarketed in connection with the annual reset of the interest rate. If, for any reason, the
remarketing of the notes does not occur at the time of any interest rate reset, the holders of the notes must sell and the Company must repurchase
the notes at par. Accordingly, this issuance has been classified as long-term debt due within one year in the Company's Consolidated Balance Sheets.
3,352
498
3,497
1,519
$ 2,745
Annual
Maturities
Walmart 2016 Annual Report
48
255
Total
2021
2020
2019
2018
2017
Fiscal Year
(Amounts in millions)
Annual maturities of long-term debt during the next five years and thereafter are as follows:
Thereafter
Average
Rate (1)
Variable
596
2,708
2023-2030
Fixed
36,500
33,000
Total U.S. dollar denominated
5.4%
500
5.3%
500
4.3%
$36,000
4.5%
$32,500
2017-2045
2019
Variable
Fixed
3.3%
2,821
3.3%
Variable
1.6%
83
2021
Fixed
5,271
4,985
Total Sterling denominated
-
1.0%
Variable
5,271
5.3%
2,821
4,985
2031-2039
2,708
Fixed
Total Euro denominated
5.3%
5. Accrued Liabilities
Total unsecured debt
$(11,597)
Shares
Per Share
Shares
Grant-Date
Fair Value
Weighted-Average
Restricted Stock Units
Fair Value
Grant-Date
Weighted-Average
2.1
1.7
1.7
Weighted average remaining period
to expense for restricted stock
units (years)
2.0
1.3
1.3
to expense for restricted stock and
performance share units (years)
Per Share
8,723
$40,959
17,568
Share Repurchase Program
$65.67
17,591
$72.23
8,259
66.37
(1,925)
67.90
Weighted average remaining period
(1,446)
(4,444)
61.37
(2,313)
71.38
6,392
71.64
3,295
$61.00
53.71
From time to time, the Company repurchases shares of its common stock
under share repurchase programs authorized by the Board of Directors.
On October 13, 2015, the Board of Directors replaced the previous
$15.0 billion share repurchase program, which had approximately $8.6 billion
of remaining authorization for share repurchases as of that date, with a new
$20.0 billion share repurchase program. As was the case with the replaced
share repurchase program, the new share repurchase program has no
expiration date or other restrictions limiting the period over which the
Company can make share repurchases. The share repurchases the Company
made during fiscal 2016 were made under both the old and new authori-
zations. At January 31, 2016, authorization for $17.5 billion of share repurchases
remained under the current share repurchase program. Any repurchased
shares are constructively retired and returned to an unissued status.
497
628
Outstanding at February 1, 2015
(Shares in thousands)
Restricted Stock and
Performance Share Units (1)
The following table shows the activity for restricted stock and performance share units and restricted stock units during fiscal 2016:
Notes to Consolidated Financial Statements
44
In addition to the Plan, the Company's subsidiary in the United Kingdom
has stock option plans for certain colleagues which generally vest over
three years. The stock option share-based compensation expense is
included in the other line in the table above.
•Restricted Stock Units. Restricted stock units provide rights to Company
stock after a specified service period; generally 50% vest three years from
the grant date and the remaining 50% vest five years from the grant date.
The fair value of each restricted stock unit is determined on the date of
grant using the stock price discounted for the expected dividend yield
through the vesting period and is recognized ratably over the vesting
period. The expected dividend yield is based on the anticipated dividends
over the vesting period. The weighted-average discount for the dividend
yield used to determine the fair value of restricted stock units granted in
fiscal 2016, 2015 and 2014 was 8.7%, 9.5% and 10.3%, respectively.
•Restricted Stock and Performance Share Units. Restricted stock awards
are for shares that vest based on the passage of time and include
restrictions related to employment. Performance share units vest based
on the passage of time and achievement of performance criteria and
may range from 0% to 150% of the original award amount. Vesting periods
for these awards are generally between one and three years. Restricted
stock and performance share units may be settled or deferred in stock
and are accounted for as equity in the Company's Consolidated Balance
Sheets. The fair value of restricted stock awards is determined on the
date of grant and is expensed ratably over the vesting period. The fair
value of performance share units is determined on the date of grant
using the Company's stock price discounted for the expected dividend
yield through the vesting period and is recognized over the vesting
period. The weighted-average discount for the dividend yield used to
determine the fair value of performance share units in fiscal 2016, 2015
and 2014 was 7.4%, 7.1% and 6.7%, respectively.
The Plan's award types are summarized as follows:
The Company's shareholder-approved Stock Incentive Plan of 2015
(the "Plan") became effective June 5, 2015 and amended and restated
the Company's Stock Incentive Plan of 2010. The Plan was established to
grant stock options, restricted (non-vested) stock, performance shares
units and other equity compensation awards for which 210 million
shares of common stock issued or to be issued under the Plan have been
registered under the Securities Act of 1933, as amended. The Company
believes that such awards serve to align the interests of its associates
with those of its shareholders.
$388
$462
$448
Share-based compensation
expense
Other
Amounts reclassified from accumulated other comprehensive income (loss) for derivative instruments are recorded in interest, net, in the Company's
Consolidated Statements of Income, and the amounts for the minimum pension liability are recorded in operating, selling, general and administrative
expenses in the Company's Consolidated Statements of Income.
Granted
Vested/exercised
Outstanding at January 31, 2016
(1) Assumes payout rate at 100% for Performance Share Units.
for restricted stock units
Unrecognized compensation cost
200
154
133
performance share units
for restricted stock and
Unrecognized compensation cost
570
$156 $116
218 189
Fair value of restricted stock units vested
$142
Fair value of restricted stock and
performance share units vested
(Amounts in millions)
2014
Fiscal Years Ended January 31,
2015
2016
The following table includes additional information related to restricted
stock and performance share units and restricted stock units:
237
The Company considers several factors in determining when to execute
share repurchases, including, among other things, current cash needs,
capacity for leverage, cost of borrowings, its results of operations and
the market price of its common stock. The following table provides, on
a settlement date basis, the number of shares repurchased, average
price paid per share and total cash paid for share repurchases for fiscal
2016, 2015 and 2014:
Forfeited or expired
(Amounts in millions, except per share data)
Total number of shares repurchased
Average price paid per share
Total cash paid for share repurchases
15
(11)
26
comprehensive income (loss)
Amounts reclassified from accumulated other
(4,187)
(58)
(496)
379
(4,012)
Other comprehensive income (loss) before reclassifications
(2,996)
(610)
336
277
(2,999)
Balances as of January 31, 2014
Balances as of January 31, 2015
17
(7,011)
(134)
$(593)
Fiscal Years Ended January 31,
$(336)
$1,022
$(11,690)
Balances as of January 31, 2016
5
(10)
15
comprehensive income (loss)
(4,434)
(217)
366
(4,679)
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other
(7,168)
(679)
656
4
96
comprehensive income (loss)
Currency Translation
The following table provides changes in the composition of total accumulated other comprehensive income (loss) for fiscal 2016, 2015 and 2014:
4. Accumulated Other Comprehensive Income (Loss)
Notes to Consolidated Financial Statements
Walmart 45
Only Walmart
$6,683
$1,015
(Amounts in millions and net of income taxes)
$4,112
$65.90
89.1
13.4
62.4
2014
2016
13
2015
$74.99
and Other
$75.82
$ (763)
149
Amounts reclassified from accumulated other
$
194
75
(587)
(2,844)
$ 129
(2,426)
Other comprehensive income (loss) before reclassifications
(155)
$
Balances as of January 31, 2013
Total
Pension Liability
Minimum
Cash Flow
Hedges
$ 202
Net Investment
Hedges
Less estimated executory costs
Total minimum rentals
$21,505
$8,655
2017
Net minimum lease payments
8,616
1,070
(3,319)
5,093
$6,367
Noncash gain on future termination
39
12,438
710
624
1,530
2021
655
1,697
2020
1,794
2019
758
1,989
2018
Fiscal Year
of financing obligation
$ 815
Thereafter
The Company has future lease commitments for land and buildings for
approximately 215 future locations. These lease commitments have
lease terms ranging from 10 to 30 years and provide for certain minimum
rentals. If executed, payments under operating leases would increase
by $34 million for fiscal 2017, based on current cost estimates.
179
12. Retirement-Related Benefits
Notes to Consolidated Financial Statements
$1,062
(Amounts in millions)
$1,070
$1,152
retirement-related benefits
Total contribution expense for
20
5
6
International
Defined benefit plans:
$ 877
165
167
In connection with certain long-term debt issuances, the Company
could be liable for early termination payments if certain unlikely events
were to occur. At January 31, 2016, the aggregate termination payment
would have been $44 million. The arrangement pursuant to which this
payment could be made will expire in fiscal 2019.
$ 898
International
2014
Fiscal Years Ended January 31,
2016
2015
Walmart 2016 Annual Report
Defined contribution plans:
U.S.
(Amounts in millions)
Certain of the Company's leases provide for the payment of contingent
rentals based on a percentage of sales. Such contingent rentals were not
material for fiscal 2016, 2015 and 2014. Substantially all of the Company's
store leases have renewal options, some of which may trigger an escalation
in rentals.
Present value of minimum lease payments
Less imputed interest
The following table summarizes the contribution expense related to the
Company's retirement-related benefits for fiscal 2016, 2015 and 2014:
Additionally, the Company's subsidiaries in the United Kingdom and
Japan have sponsored defined benefit pension plans. The plan in the
United Kingdom was overfunded by $106 million and underfunded by
$85 million at January 31, 2016 and 2015, respectively. The plan in Japan
was underfunded by $205 million and $223 million at January 31, 2016
and 2015, respectively. Overfunded amounts are recorded as assets in
the Company's Consolidated Balance Sheets in other assets and deferred
charges. Underfunded amounts are recorded as liabilities in the Company's
Consolidated Balance Sheets in deferred income taxes and other. Certain
other international operations also have defined benefit arrangements
that are not significant.
Associates in international countries who are not U.S. citizens are covered
by various defined contribution post-employment benefit arrangements.
These plans are administered based upon the legislative and tax require-
ments in the countries in which they are established.
The Company offers a 401(k) plan for associates in the U.S. under which
eligible associates can begin contributing to the plan immediately upon
hire. The Company also offers a 401(k) type plan for associates in Puerto
Rico under which associates can begin to contribute generally after one
year of employment. Under these plans, after one year of employment,
the Company matches 100% of participant contributions up to 6% of
annual eligible earnings. The matching contributions immediately vest
at 100% for each associate. Participants can contribute up to 50% of their
pretax earnings, but not more than the statutory limits. Participants age
50 or older may defer additional earnings in catch-up contributions up
to the maximum statutory limits.
$ 967
Capital Lease
and Financial Obligations
During the next twelve months, it is reasonably possible that tax
audit resolutions could reduce unrecognized tax benefits by between
$50 million and $150 million, either because the tax positions are
sustained on audit or because the Company agrees to their disallowance.
The Company is focused on resolving tax audits as expeditiously as
possible. As a result of these efforts, unrecognized tax benefits could
potentially be reduced beyond the provided range during the next
twelve months. The Company does not expect any change to have a
significant impact to its Consolidated Financial Statements.
Operating
Leases
The Company is involved in a number of legal proceedings. The Company
has made accruals with respect to these matters, where appropriate,
which are reflected in the Company's Consolidated Financial Statements.
For some matters, a liability is not probable or the amount cannot be
reasonably estimated and therefore an accrual has not been made.
However, where a liability is reasonably possible and may be material, such
matters have been disclosed. The Company may enter into discussions
regarding settlement of these matters, and may enter into settlement
agreements, if it believes settlement is in the best interest of the
Company's shareholders.
Legal Proceedings
10. Contingencies
The Company remains subject to income tax examinations for its U.S.
federal income taxes generally for fiscal 2013 through 2016. The Company
also remains subject to income tax examinations for international
income taxes for fiscal 2000 through 2016, and for U.S. state and local
income taxes generally for the fiscal years ended 2008 through 2016.
The Company classifies interest and penalties related to uncertain tax
benefits as interest expense and as operating, selling, general and
administrative expenses, respectively. During fiscal 2016, 2015 and 2014,
the Company recognized interest and penalty expense (benefit) related
to uncertain tax positions of $5 million, $18 million and $(7) million,
respectively. As of January 31, 2016 and 2015, accrued interest related to
uncertain tax positions of $60 million and $57 million, respectively, was
recorded in the Company's Consolidated Balance Sheets. The Company
did not have any accrued penalties recorded for income taxes as of
January 31, 2016 or 2015.
རྗ®
$ 763
$838
$ 607
end of year
Unrecognized tax benefits,
(43)
Lapse in statutes of limitations
(117)
Unless stated otherwise, the matters, or groups of related matters,
discussed below, if decided adversely to or settled by the Company,
individually or in the aggregate, may result in a liability material to the
Company's financial condition or results of operations.
(89)
133
174
119
tax positions
Settlements during the period
Increases related to current year
(112)
(17)
(446)
tax positions
Decreases related to prior year
41
7
13. Acquisitions, Disposals and Related Items
164
(25)
$ 2,057
Wage-and-Hour Class Action: The Company is a defendant in Braun/Hummel
v. Wal-Mart Stores, Inc., a class-action lawsuit commenced in March 2002
in the Court of Common Pleas in Philadelphia, Pennsylvania. The plaintiffs
allege that the Company failed to pay class members for all hours
worked and prevented class members from taking their full meal and
rest breaks. On October 13, 2006, a jury awarded back-pay damages to the
plaintiffs of approximately $78 million on their claims for off-the-clock
work and missed rest breaks. The jury found in favor of the Company on
the plaintiffs' meal-period claims. On November 14, 2007, the trial judge
entered a final judgment in the approximate amount of $188 million, which
included the jury's back-pay award plus statutory penalties, prejudgment
interest and attorneys' fees. By operation of law, post-judgment interest
accrues on the judgment amount at the rate of six percent per annum
from the date of entry of the judgment, which was November 14, 2007,
until the judgment is paid, unless the judgment is set aside on appeal.
On December 7, 2007, the Company filed its Notice of Appeal. On June
10, 2011, the Pennsylvania Superior Court of Appeals issued an opinion
upholding the trial court's certification of the class, the jury's back pay
award, and the awards of statutory penalties and prejudgment interest,
but reversing the award of attorneys' fees. On September 9, 2011, the
Company filed a Petition for Allowance of Appeal with the Pennsylvania
Supreme Court. On July 2, 2012, the Pennsylvania Supreme Court granted
the Company's Petition. On December 15, 2014, the Pennsylvania Supreme
Court issued its opinion affirming the Superior Court of Appeals' decision.
Walmart 2016 Annual Report
Aggregate minimum annual rentals at January 31, 2016, under
non-cancelable leases are as follows:
The Company has long-term leases for stores and equipment. Rentals
(including amounts applicable to taxes, insurance, maintenance, other
operating expenses and contingent rentals) under operating leases and
other short-term rental arrangements were $2.5 billion in fiscal 2016 and
$2.8 billion in both fiscal 2015 and 2014.
11. Commitments
The Company's process of assessing and responding to the governmen-
tal investigations and the shareholder lawsuits continues. While the
Company believes that it is probable that it will incur a loss from these
matters, given the on-going nature and complexity of the review, inqui-
ries and investigations, the Company cannot reasonably estimate any
loss or range of loss that may arise from these matters. Although the
Company does not presently believe that these matters will have a mate-
rial adverse effect on its business, given the inherent uncertainties in
such situations, the Company can provide no assurance that these mat-
ters will not be material to its business in the future.
These matters may require the involvement of certain members of the
Company's senior management that could impinge on the time they
have available to devote to other matters relating to the business. The
Company expects that there will be on-going media and governmental
interest, including additional news articles from media publications on
these matters, which could impact the perception among certain
audiences of the Company's role as a corporate citizen.
Notes to Consolidated Financial Statements
56
55
Walmart
Only Walmart
$173 $282
$126
Total
109
54
52
2014
$121 $173
$ 95
Ongoing inquiries and investigations
Global compliance program and
organizational enhancements
2015
Fiscal Years Ended January 31,
2016
(Amounts in millions)
The Company could be exposed to a variety of negative consequences
as a result of the matters noted above. There could be one or more
enforcement actions in respect of the matters that are the subject of
some or all of the on-going government investigations, and such
actions, if brought, may result in judgments, settlements, fines, penalties,
injunctions, cease and desist orders, debarment or other relief, criminal
convictions and/or penalties. The shareholder lawsuits may result in
judgments against the Company and its current and former directors
and officers named in those proceedings. The Company cannot predict
at this time the outcome or impact of the government investigations,
the shareholder lawsuits, or its own internal investigations and review. In
addition, the Company has incurred and expects to continue to incur
costs in responding to requests for information or subpoenas seeking
documents, testimony and other information in connection with the
government investigations, in defending the shareholder lawsuits, and in
conducting the review and investigations. These costs will be expensed
as incurred. For the fiscal years ended January 31, 2016, 2015 and 2014,
the Company incurred the following third-party expenses in connection
with the FCPA investigation and related matters:
The Company has been informed by the DOJ and the SEC that it is also
the subject of their respective investigations into possible violations of
the FCPA. The Company is cooperating with the investigations by the
DOJ and the SEC. A number of federal and local government agencies
in Mexico have also initiated investigations of these matters. Walmex is
cooperating with the Mexican governmental agencies conducting
these investigations. Furthermore, lawsuits relating to the matters under
investigation have been filed by several of the Company's shareholders
against it, certain of its current directors, certain of its former directors,
certain of its current and former officers and certain of Walmex's current
and former officers.
The Company is also conducting a voluntary global review of its policies,
practices and internal controls for anti-corruption compliance. The Company
is engaged in strengthening its global anti-corruption compliance program
through appropriate remedial anti-corruption measures. In November
2011, the Company voluntarily disclosed that investigative activity to the
U.S. Department of Justice (the "DOJ") and the Securities and Exchange
Commission (the "SEC"). Since the implementation of the global review
and the enhanced anti-corruption compliance program, the Audit
Committee and the Company have identified or been made aware of
additional allegations regarding potential violations of the FCPA. When
such allegations are reported or identified, the Audit Committee and the
Company, together with their third party advisors, conduct inquiries and
when warranted based on those inquiries, open investigations. Inquiries
or investigations regarding allegations of potential FCPA violations have
been commenced in a number of foreign markets where the Company
operates, including, but not limited to, Brazil, China and India.
The Audit Committee (the "Audit Committee") of the Board of Directors
of the Company, which is composed solely of independent directors, is
conducting an internal investigation into, among other things, alleged
violations of the U.S. Foreign Corrupt Practices Act ("FCPA") and other
alleged crimes or misconduct in connection with foreign subsidiaries,
including Wal-Mart de México, S.A.B. de C.V. ("Walmex"), and whether prior
allegations of such violations and/or misconduct were appropriately
handled by the Company. The Audit Committee and the Company have
engaged outside counsel from a number of law firms and other advisors
who are assisting in the on-going investigation of these matters.
FCPA Investigation and Related Matters
ASDA Equal Value Claims: ASDA Stores, Ltd. ("ASDA"), a wholly-owned
subsidiary of the Company, is a defendant in over 7,000 "equal value"
claims that are proceeding before an Employment Tribunal in Manchester
(the "Employment Tribunal") in the United Kingdom ("UK") on behalf of
current and former ASDA store employees, who allege that the work
performed by female employees in ASDA's retail stores is of equal value
in terms of, among other things, the demands of their jobs to that of
male employees working in ASDA's warehouse and distribution facilities,
and that the disparity in pay between these different job positions is not
objectively justified. Claimants are requesting differential back pay based
on higher wage rates in the warehouse and distribution facilities and
those higher wage rates on a prospective basis as part of these equal
value proceedings. ASDA believes that further claims may be asserted in
the near future. On March 23, 2015, ASDA asked the Employment Tribunal
to stay all proceedings, contending that the High Court, which is the
superior first instance civil court in the UK that is headquartered in the
Royal Courts of Justice in the City of London, is the more convenient and
appropriate forum to hear these claims. On March 23, 2015, ASDA also
asked the Employment Tribunal to "strike out" substantially all of the claims
for failing to comply with Employment Tribunal rules. On July 23, 2015,
the Employment Tribunal denied ASDA's requests to stay all proceedings
and to "strike out" substantially all of the claims. On September 2, 2015,
ASDA filed a Notice of Appeal with the Employment Appeal Tribunal
seeking to appeal both rulings. On October 14, 2015, the Employment
Appeal Tribunal denied ASDA's requests for an appeal. Following additional
argument and proceedings, the issue of "strike out" and the scope of
Employment Tribunal Rules are subject of further appellate review by
the Employment Appeal Tribunal but the request to appeal the stay
issue was denied by the Employment Appeal Tribunal. On March 8, 2016,
ASDA filed a notice of appeal with the Court of Appeals seeking to appeal
the Employment Appeal Tribunal's decision to disallow an appeal of the
stay issue. At present, the Company cannot predict the number of such
claims that may be filed, and cannot reasonably estimate any loss or range
of loss that may arise from these proceedings. The Company believes it
has substantial factual and legal defenses to these claims, and intends to
defend the claims vigorously.
At that time, the Company recorded expenses of $249 million for the
judgment amount and post-judgment interest incurred to date. The
Company will continue to accrue for the post-judgment interest until final
resolution. However, the Company continues to believe it has substantial
factual and legal defenses to the claims at issue, and, on March 13, 2015,
the Company filed a petition for writ of certiorari with the U.S. Supreme
Court. On April 20, 2015, the plaintiffs filed their response in opposition
and on May 4, 2015, the Company filed its reply brief.
Notes to Consolidated Financial Statements
31
In fiscal 2016, the Company completed the following transaction that
impacts the operations of Walmart International:
Capital expenditures
In July 2015, the Company completed the purchase of all of the remaining
noncontrolling interest in Yihaodian, our e-commerce operations in
China, for approximately $760 million, using existing cash to complete
this transaction.
437
2,658
4,463
6,378
2,640
$ 14,053
$ 85,370
$ 98,745
$ 24,656
26,872
(2,216)
(1,911)
$ 473,076
$
$ 57,157
1,843
$136,513
5,153
1,071
21,787
Depreciation and amortization
Total assets
Income from continuing operations before income taxes
Interest expense, net
Operating income (loss)
Net sales
Fiscal Year Ended January 31, 2014
9,173
12,174
$ 203,490
$ 7,609
3,370
1,199
753
473
2,665
3,936
2,665
6,286
$ 279,406
Capital expenditures
$ 6,373
3,135
1,203
8,870
13,115
tax positions
2016 Annual Report
Walmart
58
No individual country outside of the U.S. had total revenues or long-lived
assets that were material to the consolidated totals. Additionally, the
Company did not generate material total revenues from any single customer.
$116,516 $116,655 $117,907
Total long-lived assets
Non-U.S. operations
January 3, 2017
September 6, 2016
June 6, 2016
April 4, 2016
Payable Date
December 9, 2016
$ 204,541
March 11, 2016
May 13, 2016
August 12, 2016
On February 18, 2016, the Board of Directors approved the fiscal 2017
annual dividend at $2.00 per share, an increase over the fiscal 2016
dividend of $1.96 per share. For fiscal 2017, the annual dividend will be
paid in four quarterly installments of $0.50 per share, according to the
following record and payable dates:
Dividends Declared
15. Subsequent Event
$ 79,644
38,263
$ 82,475 $ 80,879
34,041 35,776
$357,559 $348,227 $338,681
124,571 137,424 137,613
$482,130 $485,651 $476,294
2016
Fiscal Years Ended January 31,
2015
2014
Long-lived assets
U.S. operations
Total revenues
U.S. operations
Non-U.S. operations
Total revenues
(Amounts in millions)
Total revenues, consisting of net sales and membership and other income,
and long-lived assets, consisting primarily of property and equipment,
net, aggregated by the Company's U.S. and non-U.S. operations for
fiscal 2016, 2015 and 2014, are as follows:
Record Date
Yihaodian
Depreciation and amortization
$ 80,505
$478,614
$
$56,828
$123,408
5,346
19,087
$298,378
Consolidated
Corporate
and support
Sam's Club
Walmart
International
Walmart U.S.
Interest expense, net
Operating income (loss)
Net sales
1,820
Fiscal Year Ended January 31, 2016
Information for the Company's segments, as well as for Corporate and support, including the reconciliation to income from continuing operations
before income taxes, is provided in the following table:
Notes to Consolidated Financial Statements
Walmart 57
Only Walmart
The Company measures the results of its segments using, among other
measures, each segment's net sales and operating income, which includes
certain corporate overhead allocations. From time to time, the Company
revises the measurement of each segment's operating income, including
any corporate overhead allocations, as determined by the information
regularly reviewed by its CODM. When the measurement of a segment
changes, previous period amounts and balances are reclassified to be
comparable to the current period's presentation.
The Walmart U.S. segment includes the Company's mass merchant
concept in the U.S. operating under the "Walmart" or "Wal-Mart" brands,
as well as walmart.com. The Walmart International segment consists of
the Company's operations outside of the U.S., including various retail
websites. The Sam's Club segment includes the warehouse membership
clubs in the U.S., as well as samsclub.com. Corporate and support consists
of corporate overhead and other items not allocated to any of the
Company's segments.
The Company is engaged in the operation of retail, wholesale and other
units located in the U.S., Africa, Argentina, Brazil, Canada, Central America,
Chile, China, India, Japan, Mexico and the United Kingdom. The Company's
operations are conducted in three business segments: Walmart U.S.,
Walmart International and Sam's Club. The Company defines its segments
as those operations whose results its chief operating decision maker
("CODM") regularly reviews to analyze performance and allocate resources.
The Company sells similar individual products and services in each of its
segments. It is impractical to segregate and identify revenues for each of
these individual products and services.
Segments
14.
In fiscal 2014, Walmex, a majority-owned subsidiary of the Company,
entered into a definitive agreement with Alsea S.A.B. de C.V. to sell the
Vips restaurant business ("Vips") in Mexico. The sale of Vips was com-
pleted on May 12, 2014. The Company received $671 million of cash and
recognized a net gain of $262 million in discontinued operations at the
time of the sale.
Vips Restaurant Business in Mexico
In fiscal 2014, the redeemable noncontrolling interest shareholders exercised
put options that required the Company to purchase their shares in
Walmart Chile. In February 2014, the Company completed this transaction
for approximately $1.5 billion using existing cash of the Company,
increasing its ownership interest in Walmart Chile to 99.7 percent. In
March 2014, the Company completed a tender offer for most of the
remaining noncontrolling interest shares at the same value per share
as was paid to the redeemable noncontrolling interest shareholders. As a
result of completing these transactions, the Company owns substantially
all of Walmart Chile.
Walmart Chile
In fiscal 2015, the Company completed the following transactions that
impact the operations of Walmart International:
(Amounts in millions)
$ 13,995
(2,148)
Income from continuing operations before income taxes
$ 101,381
Total assets
$ 24,799
Income from continuing operations before income taxes
27,147
(2,348)
Interest expense, net
(2,336)
$ 482,229
$
$ 58,020
1,976
$136,160
6,171
$ 288,049
21,336
Operating income (loss)
Net sales
24,105
(2,467)
Fiscal Year Ended January 31, 2015
1,124
695
9,454
3,633
$199,581
$ 21,638
$ 8,754
$13,998
472
$ 73,720
2,549
2,930
2,800
6,728
$103,109
Capital expenditures
Depreciation and amortization
Total assets
11,477
Increases related to prior year
738
$763
7. Fair Value Measurements
The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an asset is the price at which
the asset could be sold in an ordinary transaction between unrelated, knowledgeable and willing parties able to engage in the transaction. The fair
value of a liability is the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount
that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using the fair value hierarchy,
which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:
• Level 1: observable inputs such as quoted prices in active markets;
⚫Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and
⚫Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.
Only Walmart
Walmart 49
Notes to Consolidated Financial Statements
Recurring Fair Value Measurements
During fiscal 2016 and 2015, the Company also repaid other, smaller long-term debt as it matured in several of its non-U.S. operations.
The Company holds derivative instruments that are required to be measured at fair value on a recurring basis. The fair values are the estimated
amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have
been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of
January 31, 2016 and 2015, the notional amounts and fair values of these derivatives were as follows:
Receive fixed-rate, pay variable-rate interest rate swaps
designated as fair value hedges
Receive fixed-rate, pay fixed-rate cross-currency swaps
designated as net investment hedges
Receive fixed-rate, pay fixed-rate cross-currency swaps
designated as cash flow hedges
Receive variable-rate, pay fixed-rate interest rate swaps
designated as cash flow hedges
Total
January 31, 2016
January 31, 2015
Notional Amount Fair Value Notional Amount
Fair Value
(Amounts in millions)
$ 5,000
$3,475
Floating
Interest Rate
Repayment
500 USD
Fixed
3.000%
$ 500
1,000 USD
Fixed
1.625%
165
1,000
Fixed
3.200%
1,000
83,100 JPY
Fixed
1.490%
810
16,900 JPY
Floating
1,000 USD
$ 173
$ 500
$ 12
$40,959
$46,965
January 31, 2015
Carrying Value
$45,896
Fair Value
$56,237
8. Derivative Financial Instruments
The Company uses derivative financial instruments for hedging and
non-trading purposes to manage its exposure to changes in interest
and currency exchange rates, as well as to maintain an appropriate mix
of fixed- and variable-rate debt. Use of derivative financial instruments in
hedging programs subjects the Company to certain risks, such as market
and credit risks. Market risk represents the possibility that the value of the
derivative financial instrument will change. In a hedging relationship, the
change in the value of the derivative financial instrument is offset to a great
extent by the change in the value of the underlying hedged item. Credit
risk related to a derivative financial instrument represents the possibility
that the counterparty will not fulfill the terms of the contract. The notional,
or contractual, amount of the Company's derivative financial instruments
is used to measure interest to be paid or received and does not represent
the Company's exposure due to credit risk. Credit risk is monitored through
established approval procedures, including setting concentration limits
by counterparty, reviewing credit ratings and requiring collateral (gener-
ally cash) from the counterparty when appropriate.
The Company only enters into derivative transactions with counterparties
rated "A-" or better by nationally recognized credit rating agencies.
Subsequent to entering into derivative transactions, the Company regularly
monitors the credit ratings of its counterparties. In connection with various
derivative agreements, including master netting arrangements, the
Company held cash collateral from counterparties of $345 million and
$323 million at January 31, 2016 and January 31, 2015, respectively. The
Company records cash collateral received as amounts due to the counter-
parties exclusive of any derivative asset. Furthermore, as part of the master
netting arrangements with each of these counterparties, the Company
is also required to post collateral with a counterparty if the Company's net
derivative liability position exceeds $150 million with such counterparties.
The Company had an insignificant amount of cash collateral posted with
counterparties at January 31, 2016 and did not have any cash collateral
posted with counterparties at January 31, 2015. The Company records
cash collateral it posts with counterparties as amounts receivable from
those counterparties exclusive of any derivative liability.
50
Fair Value
Walmart 2016 Annual Report
The Company uses derivative financial instruments for the purpose of
hedging its exposure to interest and currency exchange rate risks and,
accordingly, the contractual terms of a hedged instrument closely mirror
those of the hedged item, providing a high degree of risk reduction and
correlation. Contracts that are effective at meeting the risk reduction and
correlation criteria are recorded using hedge accounting. If a derivative
financial instrument is recorded using hedge accounting, depending
on the nature of the hedge, changes in the fair value of the instrument
will either be offset against the change in fair value of the hedged assets,
liabilities or firm commitments through earnings or be recognized in
accumulated other comprehensive income (loss) until the hedged item
is recognized in earnings. Any hedge ineffectiveness is immediately
recognized in earnings. The Company's net investment and cash flow
instruments are highly effective hedges and the ineffective portion has
not been, and is not expected to be, significant. Instruments that do
not meet the criteria for hedge accounting, or contracts for which the
Company has not elected hedge accounting, are recorded at fair value
with unrealized gains or losses reported in earnings during the period
of the change.
Fair Value Instruments
The Company is a party to receive fixed-rate, pay variable-rate interest
rate swaps that the Company uses to hedge the fair value of fixed-rate
debt. The notional amounts are used to measure interest to be paid or
received and do not represent the Company's exposure due to credit
loss. The Company's interest rate swaps that receive fixed-interest rate
payments and pay variable-interest rate payments are designated as
fair value hedges. As the specific terms and notional amounts of the
derivative instruments match those of the fixed-rate debt being hedged,
the derivative instruments are assumed to be perfectly effective hedges.
Changes in the fair values of these derivative instruments are recorded
in earnings, but are offset by corresponding changes in the fair values
of the hedged items, also recorded in earnings, and, accordingly, do not
impact the Company's Consolidated Statements of Income. These fair
value instruments will mature on dates ranging from October 2020 to
April 2024.
Net Investment Instruments
The Company is a party to cross-currency interest rate swaps that the
Company uses to hedge its net investments. The agreements are contracts
to exchange fixed-rate payments in one currency for fixed-rate payments
in another currency. All changes in the fair value of these instruments are
recorded in accumulated other comprehensive income (loss), offsetting
the currency translation adjustment of the related investment that is
also recorded in accumulated other comprehensive income (loss).
These instruments will mature on dates ranging from October 2023 to
February 2030.
The Company has issued foreign-currency-denominated long-term debt
as hedges of net investments of certain of its foreign operations. These
foreign-currency-denominated long-term debt issuances are designated
and qualify as nonderivative hedging instruments. Accordingly, the foreign
currency translation of these debt instruments is recorded in accumulated
other comprehensive income (loss), offsetting the foreign currency
translation adjustment of the related net investments that is also recorded
in accumulated other comprehensive income (loss). At January 31, 2016
and January 31, 2015, the Company had ¥10 billion and ¥100 billion,
respectively, of outstanding long-term debt designated as a hedge
of its net investment in Japan, as well as outstanding long-term debt of
£2.5 billion at January 31, 2016 and January 31, 2015 that was designated as
a hedge of its net investment in the United Kingdom. These nonderivative
net investment hedges will mature on dates ranging from July 2020 to
January 2039.
Cash Flow Instruments
The Company was a party to receive variable-rate, pay fixed-rate interest
rate swaps that matured in July 2015. The Company used these interest
rate swaps to hedge the interest rate risk of certain non-U.S. denominated
debt. The swaps were designated as cash flow hedges of interest expense
risk. Amounts reported in accumulated other comprehensive income
(loss) related to these derivatives were reclassified from accumulated
other comprehensive income (loss) to earnings as interest was expensed
for the Company's variable-rate debt, converting the variable-rate
interest expense into fixed-rate interest expense.
The Company is also a party to receive fixed-rate, pay fixed-rate
cross-currency interest rate swaps to hedge the currency exposure
associated with the forecasted payments of principal and interest of
certain non-U.S. denominated debt. The swaps are designated as cash
flow hedges of the currency risk related to payments on the non-U.S.
denominated debt. The effective portion of changes in the fair value of
derivatives designated as cash flow hedges of foreign exchange risk is
recorded in accumulated other comprehensive income (loss) and is
subsequently reclassified into earnings in the period that the hedged
forecasted transaction affects earnings. The hedged items are recognized
foreign currency-denominated liabilities that are re-measured at spot
exchange rates each period, and the assessment of effectiveness (and
measurement of any ineffectiveness) is based on total changes in the
related derivative's cash flows. As a result, the amount reclassified into
earnings each period includes an amount that offsets the related
transaction gain or loss arising from that re-measurement and the
adjustment to earnings for the period's allocable portion of the initial
spot-forward difference associated with the hedging instrument. These
cash flow instruments will mature on dates ranging from April 2022 to
March 2034.
Notes to Consolidated Financial Statements
Carrying Value
January 31, 2016
Long-term debt, including amounts due within one year
1,250
319
1,250
207
4,132
(609)
4,329
(317)
-
255
(1)
$10,382
$(117)
$6,334
$ (99)
Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company's assets and liabilities are also subject to
nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.
The Company did not record any significant impairment charges to assets measured at fair value on a nonrecurring basis during the fiscal years
ended January 31, 2016 or 2015.
Other Fair Value Disclosures
The Company records cash and cash equivalents and short-term borrowings at cost. The carrying values of these instruments approximate their
fair value due to their short-term maturities.
The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the Company's current incremental
borrowing rate for similar types of borrowing arrangements. The carrying value and fair value of the Company's long-term debt as of January 31, 2016
and 2015, are as follows:
(Amounts in millions)
Fixed vs. Floating
Principal Amount
$4,230
1,250
Fixed
2.550%
885
500 USD
April 21, 2017
Fixed
1.000%
499
1,000 USD
April 8, 2026
April 22, 2024
3.300%
992
1,000 USD
April 22, 2044
Fixed
4.300%
985
500 USD
April 22, 2024
Fixed
650 Euro
$ 1,161
1.900%
Notes to Consolidated Financial Statements
Debt Issuances
The Company did not have any material long-term debt issuances during fiscal 2016, but received proceeds from a number of small, immaterial
long-term debt issuances by several of its non-U.S. operations.
Information on significant long-term debt issued during fiscal 2015 is as follows:
(Amounts in millions)
Issue Date
April 8, 2014
April 8, 2014
April 22, 2014
April 22, 2014
April 22, 2014
October 22, 2014
Total
Principal Amount
Maturity Date
Fixed vs. Floating
Interest Rate
Proceeds
850 Euro
April 8, 2022
Fixed
Fixed
Only Walmart
3.300%
$5,030
2.875%
$ 750
750 USD
Fixed
4.500%
750
750 USD
Fixed
2.250%
Fixed
750
Floating
Floating
243
60,000 JPY
1,250 USD
Fixed
0.940%
487
Fixed
1.500%
30,000 JPY
750 USD
Repayment
Interest Rate
During fiscal 2015, the Company also received additional proceeds from other, smaller long-term debt issuances by several of its non-U.S. operations.
The proceeds in fiscal 2015 were used to pay down and refinance existing debt and for other general corporate purposes.
Maturities
During fiscal 2016, the following long-term debt matured and was repaid:
(Amounts in millions)
Maturity Date
April 1, 2015
July 1, 2015
July 8, 2015
July 28, 2015
July 28, 2015
October 25, 2015
During fiscal 2015, the following long-term debt matured and was repaid:
(Amounts in millions)
Maturity Date
February 3, 2014
April 15, 2014
$ 818
August 6, 2014
August 6, 2014
Principal Amount
Fixed vs. Floating
508
Walmart 51
May 15, 2014
**
2015
$
$ 728
1,504
1,033
1,504
1,761
2016
Fiscal Years Ended January 31,
2015
2016
2014
56
3,357 4,671
U.S. statutory tax rate
35.0%
35.0%
35.0%
Net deferred tax liabilities
$1,853
3,357 4,727
$2,966
Asset subtotals
Liabilities:
Accrued liabilities
Deferred income taxes and other
Liability subtotals
January 31,
Prepaid expenses and other
Other assets and deferred charges
Balance Sheet classification:
Assets:
2016 Annual Report
U.S. federal
U.S. state and local
International
Total deferred tax expense (benefit)
(704) (387)
(72)
(106)
(55)
37
(216)
(77) (479)
(1,026) (519) (514)
Total provision for income taxes
$ 6,558
$7,985 $8,105
Notes to Consolidated Financial Statements
Effective Income Tax Rate Reconciliation
The Company's effective income tax rate is typically lower than the U.S.
statutory tax rate primarily because of benefits from lower-taxed global
operations, including the use of global funding structures and certain
U.S. tax credits as further discussed in the "Cash and Cash Equivalents"
section of the Company's significant accounting policies in Note 1. The
Company's non-U.S. income is generally subject to local country tax rates
that are below the 35% U.S. statutory tax rate. Certain non-U.S. earnings
have been indefinitely reinvested outside the U.S. and are not subject
to current U.S. income tax. A reconciliation of the significant differences
between the U.S. statutory tax rate and the effective income tax rate on
pretax income from continuing operations is as follows:
The deferred taxes are classified as follows in the Company's
Consolidated Balance Sheets:
(Amounts in millions)
U.S. state income taxes, net of
federal income tax benefit
Income taxed outside the U.S.
Walmart
1.8% 1.8%
(4.0)% (2.7)%
Net impact of repatriated
international earnings
U.S. income taxes have not been provided on accumulated but
undistributed earnings of the Company's international subsidiaries of
approximately $26.1 billion and $23.3 billion as of January 31, 2016 and
2015, respectively, as the Company intends to permanently reinvest
these amounts outside of the U.S. However, if any portion were to be
distributed, the related U.S. tax liability may be reduced by foreign
income taxes paid on those earnings. Determination of the unrecognized
deferred tax liability related to these undistributed earnings is not
practicable because of the complexities with its hypothetical calculation.
The Company provides deferred or current income taxes on earnings of
international subsidiaries in the period that the Company determines it
will remit those earnings.
Net Operating Losses, Tax Credit Carryforwards
and Valuation Allowances
At January 31, 2016, the Company had net operating loss and capital loss
carryforwards totaling approximately $5.3 billion. Of these carryforwards,
approximately $3.0 billion will expire, if not utilized, in various years through
2036. The remaining carryforwards have no expiration. At January 31, 2016,
the Company had foreign tax credit carryforwards of $1.8 billion, which
will expire in various years through 2026, if not utilized.
The recoverability of these future tax deductions and credits is evaluated
by assessing the adequacy of future expected taxable income from all
sources, including taxable income in prior carryback years, reversal of
taxable temporary differences, forecasted operating earnings and available
tax planning strategies. To the extent management does not consider it
more likely than not that a deferred tax asset will be realized, a valuation
allowance is established. If a valuation allowance has been established
and management subsequently determines that it is more likely than
not that the deferred tax assets will be realized, the valuation allowance
is released.
Only Walmart
Walmart 53
Notes to Consolidated Financial Statements
The Company had valuation allowances recorded of approximately
$1.5 billion as of January 31, 2016 and 2015, respectively, on deferred tax
assets associated primarily with net operating loss carryforwards for
which management has determined it is more likely than not that the
deferred tax asset will not be realized. The net activity in the valuation
allowance during fiscal 2016 related to releases arising from the use of
deferred tax assets, changes in judgment regarding the future realization
of deferred tax assets, increases from certain net operating losses and
deductible temporary differences arising in fiscal 2016, decreases due to
operating loss expirations and fluctuations in currency exchange rates.
Management believes that it is more likely than not that the remaining
net deferred tax assets will be fully realized.
Uncertain Tax Positions
Unremitted Earnings
The benefits of uncertain tax positions are recorded in the Company's
Consolidated Financial Statements only after determining a more likely
than not probability that the uncertain tax positions will withstand
challenge, if any, from taxing authorities.
A reconciliation of unrecognized tax benefits from continuing operations
was as follows:
(Amounts in millions)
Unrecognized tax benefits,
Fiscal Years Ended January 31,
2016
2015
2014
beginning of year
$ 838
Notes to Consolidated Financial Statements
As of January 31, 2016 and 2015, the amount of unrecognized tax benefits
related to continuing operations was $607 million and $838 million,
respectively. The amount of unrecognized tax benefits that would
affect the Company's effective income tax rate was $522 million and
$763 million for January 31, 2016 and 2015, respectively.
5,813 5,972
1,790 1,825
1,452 1,618
9,055 9,415
$ 1,853 $2,966
7,202 6,449
8,658 7,953
(1,456) (1,504)
Other, net
Effective income tax rate
Deferred Taxes
0.1% (1.5)% (1.4)%
(2.6)% (0.4)% 0.1%
30.3% 32.2% 32.9%
The significant components of the Company's deferred tax account
balances are as follows:
(Amounts in millions)
Deferred tax assets:
2016
January 31,
2015
Loss and tax credit carryforwards
Accrued liabilities
Share-based compensation
$3,313 $ 3,255
3,763 3,395
192
184
1,390 1,119
Total deferred tax assets
Valuation allowances
Deferred tax assets, net of
valuation allowance
Deferred tax liabilities:
Property and equipment
Inventories
Other
Total deferred tax liabilities
Net deferred tax liabilities
2.0%
(2.8)%
52
Other
$21,638 $24,799 $24,656
12
207
$
293
$173
$ 319
$129
$12
$ 207
$293
129
Accrued liabilities
$ - $ = $7
$
$
1
610
Derivative liability subtotals
$ - $ -
$738
$-
Deferred income taxes and other
$
319
$
Financial Statement Presentation
Deferred:
Although subject to master netting arrangements, the Company does not offset derivative assets and derivative liabilities in its Consolidated Balance
Sheets. Derivative instruments with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either current or non-current
assets, based on maturity date, and those hedging instruments with an unrealized loss are recorded as either current or non-current liabilities, based
on maturity date. Refer to Note 7 for the net presentation of the Company's derivative instruments.
The Company's derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified
as follows in the Company's Consolidated Balance Sheets:
(Amounts in millions)
Derivative instruments
Prepaid expenses and other
Other assets and deferred charges
Derivative asset subtotals
173
Fair Value
Instruments
Net Investment
Instruments
Cash Flow
Instruments
Fair Value
Instruments
January 31, 2015
Net Investment
Instruments
Cash Flow
Instruments
$
$
$-
January 31, 2016
$611
$
$
2014
Fiscal Years Ended January 31,
(Amounts in millions)
2016
2015
2014
Current:
U.S. federal
$ 5,562
U.S.
operations before income taxes
$16,685
4,953
$18,610
6,189
$19,412
5,244
U.S. state and local
International
622
1,400
Total income from continuing
Total current tax provision
$6,165
810
1,529
7,584 8,504 8,619
$6,377
719
Nonderivative hedging instruments
Long-term debt due within one year
1,523
2015
2016
Non-U.S.
Fiscal Years Ended January 31,
$
Long-term debt
3,644
$ 766
$
3,850
Nonderivative hedge
liability subtotals
$
$3,644
$—
$4,616
$
Gains and losses related to the Company's derivatives primarily relate to interest rate hedges, which are recorded in interest, net, in the Company's
Consolidated Statements of Income. Amounts related to the Company's derivatives expected to be reclassified from accumulated other
comprehensive income (loss) to net income during the next 12 months are not significant.
$
9. Taxes
Income from Continuing Operations
A summary of the provision for income taxes is as follows:
The components of income from continuing operations before income
taxes are as follows:
$
(Amounts in millions)
12
16
111
16
(2) "Other" includes drug stores and convenience stores operating under
varying banners.
83
565
(1) Walmart International unit counts, with the exception of Canada, are stated as
of December 31, 2015, to correspond with the balance sheet date of the related
geographic market. Canada unit counts are stated as of January 31, 2016.
10
(3) Africa unit counts by country are Botswana (11), Ghana (1), Kenya (1), Lesotho (3),
Malawi (2), Mozambique (6), Namibia (4), Nigeria (8), South Africa (366),
Swaziland (1), Tanzania (1), Uganda (1) and Zambia (3).
(4) Central America unit counts by country are Costa Rica (225), El Salvador (91),
Guatemala (223), Honduras (82) and Nicaragua (88).
150
161
6,299
44
131
12
174
29
17
212
42
358
5,899
16
116
International total
24
Only Walmart
⚫Global Responsibility Report
Walmart **
September 6, 2016
$0.50
621
$0.50
April 4, 2016
For fiscal 2017, dividends will be paid based on the following schedule:
June 6, 2016
Dividends payable per share
reported in the "Workforce Diversity Report")
⚫ Diversity and Inclusion Report (Includes the content previously
⚫ Annual Shareholders' Meeting Proxy Statement
⚫ Current Reports on Form 8-K
•Earnings Releases
• Quarterly Reports on Form 10-Q
The following reports are available without charge upon request by
writing the Company c/o Investor Relations or by calling (479) 273-8446.
These reports are also available via the corporate website.
•Annual Report on Form 10-K
Wal-Mart Stores, Inc. periodically communicates with its shareholders
and other members of the investment community about our operations.
For further information regarding our policy on shareholder and investor
communications refer to our website, www.stock.walmart.com.
Communication with shareholders
Our Annual Meeting of Shareholders will be held on Friday, June 3, 2016,
at 8:00 a.m. (Central Time) in the Bud Walton Arena on the University of
Arkansas campus, Fayetteville, Arkansas.
Annual meeting
TDD for hearing-impaired inside the U.S. 1-800-952-9245
Internet: http://www.computershare.com
Providence, Rhode Island 02940-3069
1-800-438-6278
P.O. Box 43069
Computershare Trust Company, N.A.
Stock Registrar and Transfer Agent:
Corporate information
Stock Symbol: WMT
New York Stock Exchange
Listing
Corporate and Stock Information
Walmart 63
18
7
2,360
51
2,189
Mexico
70
10
07633222-2263
88
17
18
4
9
31
9
United Kingdom
7
2
7
34
Japan
31
4
9
India
49
47
Chile
$0.50
15
43
Argentina
Canada
China
10
161
346
346
21
21
432
12
420
395
3
392
709
709
400
400
499
14
71
414
108
108
408
90
318
Total
Other (2)
Wholesale
Retail
603
January 3, 2017
Visit our digital annual report for
expanded content about our
strategy and progress
Dividends paid per share
Only Walmart
Seamless shopping at scale
www.corporatereport.com
Designed and produced by Corporate Reports Inc./Atlanta
As of March 28, 2016, there were 243,327 holders of record of Walmart's
common stock.
Shareholders
$100.00 $112.46 $131.34 $143.67 $167.56 $134.48
100.00 104.22 121.71 147.89 168.93 167.81
S&P 500 Retailing Index 100.00 115.66 149.35 189.57 227.53 266.59
S&P 500 Index
Wal-Mart Stores Inc.
$68.92 $62.35
Low
High
2017
ENTER REPORT
2016
2011
Fiscal Years Ended January 31,
Assumes Dividends Reinvested
Fiscal Year Ending January 31, 2016
*Assumes $100 Invested on February 1, 2011
Fiscal Years
2016
2015
2014
2013
2012
2011
$ 0
$ 50
2012 2013 2014 2015
Our enhanced digital annual report offers more insight about our performance
and strategy. Visit www.stock.walmart.com to access video perspectives from our
leaders, and gain additional insight on how we're changing to deliver a seamless
shopping experience at scale. On the site, you can also enroll to receive future
materials digitally for our Annual Shareholders' Meetings.
BY THE
NUMBERS
MEDIA
CENTER
257
walmart.com
479-273-4000
Bentonville, Arkansas 72716 USA
702 S.W. 8th Street
Wal-Mart Stores, Inc. (NYSE: WMT)
16
ENERGY
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WIND
100%
PRINTED
CAINFORES
CERTIFIED
Walmart
responsible sources
FSC® C018101
Paper from
MIX
www.fsc.org
FSC
The minimized environmental footprint of this report is the result of an extensive, collaborative effort of Walmart
and our supply chain partners. The environmental and social impact continues to be an important consideration.
The report is printed on paper from well-managed forests containing recycled PCW fiber that is Elementally
Chlorine Free (ECF). It is printed using 100 percent renewable wind power (RECS), along with environmental
manufacturing principles that were utilized in the printing process. These practices include environmentally
responsible procurement, lean manufacturing, green chemistry principles, the recycling of residual materials
and reduced volatile organic compound inks and coatings.
The work we do to help people live better extends far beyond the
walls of our stores. We're committed to making a real difference by
working to create economic opportunity, enhance the sustainability
of our operations as well as the systems we operate in, and
strengthen local communities. From supporting the development
of our associates, suppliers and women entrepreneurs to
pursuing a more affordable, secure food supply chain to building
resiliency in the face of disasters, Walmart is using its strengths to
promote the well-being of people and our planet. To learn more
about these initiatives and others, read our GRR by visiting
corporate.walmart.com/2016GRR.
Global
Responsibility
a user-friendly format. With the app, you can access quarterly
results, stock price, financial presentations and company news
at any time from your mobile device. It's available for the iPad,
iPhone, Android or Microsoft device. Download the free app
from iTunes or Google Play.
Our IR app offers shareholders an array of investor resources in
Walmart's investor relations
app: anytime, anywhere
access to financial and
company news
00000
ENHANCED
CONTENT
$100
$0.50
$150
$250
Market price of common stock
Rogers, AR 72758
5417 Pinnacle Point Dr., Suite 501
Ernst & Young LLP
Independent registered public accounting firm
S&P 500 Retailing Index
S&P 500 Index
Wal-Mart Stores, Inc.
Comparison of 5-Year Cumulative Total Return*
Among Wal-Mart Stores, Inc., the S&P 500 Index, and S&P 500 Retailing Index
This graph compares the cumulative total shareholder return on
Walmart's common stock during the five fiscal years ending with fiscal
2016 to the cumulative total returns on the S&P 500 Retailing Index
and the S&P 500 Index. The comparison assumes $100 was invested
on February 1, 2011, in shares of our common stock and in each of the
indices shown and assumes that all of the dividends were reinvested.
$0.48
$0.48
$0.48
The high and low market price per share for the Company's common
stock in fiscal 2016 and 2015 were as follows:
$0.48
January 5, 2015
September 3, 2014
June 2, 2014
For fiscal 2015, dividends were paid based on the following schedule:
April 1, 2014
$0.49
$0.49
$0.49
$0.49
January 4, 2016
September 8, 2015
June 1, 2015
April 6, 2015
For fiscal 2016, dividends were paid based on the following schedule:
Stock Performance Chart
2016
2015
High
$300
$350
2016 Annual Report
Walmart
64
(1) Through March 29, 2016.
1st Quarter (1)
The high and low market price per share for the Company's common
stock for the first quarter of fiscal 2017, were as follows:
75.59
90.97
56.30
66.53
4th Quarter
72.61
79.37
57.16
73.69
3rd Quarter
73.54
79.76
70.36
79.94
2nd Quarter
$79.99 $72.27
$88.00 $77.55
1st Quarter
Low
High
Low
$200
11
Em
Central America (4)
1.21
1.15
1.53
4.99
Diluted income (loss) per common share from discontinued
operations attributable to Walmart
0.01
0.06
Diluted net income per common share attributable to Walmart
1.11
1.26
1.15
1.53
5.05
Only Walmart
Walmart
59
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
of Wal-Mart Stores, Inc.
1.10
operations attributable to Walmart
Diluted income per common share from continuing
Diluted net income per common share:
16,363
Basic net income per common share:
Basic income per common share from continuing
operations attributable to Walmart
1.10
1.22
1.15
1.54
5.01
We have audited the accompanying consolidated balance sheets of
Wal-Mart Stores, Inc. as of January 31, 2016 and 2015, and the related
consolidated statements of income, comprehensive income, shareholders'
equity and redeemable noncontrolling interest, and cash flows for each
of the three years in the period ended January 31, 2016. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
Basic income (loss) per common share from discontinued
operations attributable to Walmart
0.05
0.06
།
Basic net income per common share attributable to Walmart
1.11
1.27
1.15
1.54
5.07
0.01
4,966
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), Wal-Mart Stores,
Inc.'s internal control over financial reporting as of January 31, 2016,
based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) and our report dated March 30, 2016
expressed an unqualified opinion thereon.
Report on Ethical Standards
Our Company was founded on the belief that open communications
and the highest standards of ethics are necessary to be successful. Our
long-standing "Open Door" communication policy helps management
be aware of and address issues in a timely and effective manner. Through
the open door policy all associates are encouraged to inform management
at the appropriate level when they are concerned about any matter
pertaining to Walmart.
Walmart has adopted a Statement of Ethics to guide our associates in
the continued observance of high ethical standards such as honesty,
integrity and compliance with the law in the conduct of Walmart's
business. Familiarity and compliance with the Statement of Ethics is
required of all associates who are part of management. The Company
also maintains a separate Code of Ethics for our senior financial officers.
Walmart also has in place a Related-Party Transaction Policy. This policy
applies to Walmart's senior officers and directors and requires material
related-party transactions to be reviewed by the Audit Committee. The
senior officers and directors are required to report material related-party
transactions to Walmart. We maintain a global ethics and compliance
office which oversees and administers several reporting mechanisms,
including an ethics helpline. The ethics helpline provides a channel for
associates to make confidential and anonymous complaints regarding
potential violations of our statements of ethics, including violations
related to financial or accounting matters.
/s/C. Douglas McMillon
C. Douglas McMillon
President and Chief Executive Officer
/s/ M. Brett Biggs
M. Brett Biggs
Executive Vice President and Chief Financial Officer
62
62
Walmart 2016 Annual Report
Unit Counts as of January 31, 2016
Wal-Mart Stores, Inc.
United States
The Walmart U.S. and Sam's Club segments comprise the Company's operations in the U.S. As of January 31, 2016, unit counts for Walmart U.S. and
Sam's Club are summarized by format for each state and territory as follows:
Walmart U.S.
Sam's Club
Walmart U.S.
We maintain disclosure controls and procedures designed to provide
reasonable assurance that information required to be timely disclosed
is accumulated and communicated to management in a timely fashion.
Management has assessed the effectiveness of these disclosure controls
and procedures as of January 31, 2016, and determined they were
effective as of that date to provide reasonable assurance that information
required to be disclosed by us in the reports we file or submit under the
Securities Exchange Act of 1934, as amended, was accumulated and
communicated to management, as appropriate, to allow timely decisions
regarding required disclosure and were effective to provide reasonable
assurance that such information is recorded, processed, summarized and
reported within the time periods specified by the SEC's rules and forms.
Evaluation of Disclosure Controls and Procedures
Report on Internal Control Over Financial Reporting
Management has responsibility for establishing and maintaining
adequate internal control over financial reporting. Internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in accordance with
accounting principles generally accepted in the United States. Because
of its inherent limitations, internal control over financial reporting may
not prevent or detect misstatements. Management has assessed the
effectiveness of the Company's internal control over financial reporting
as of January 31, 2016. In making its assessment, management has utilized
the criteria set forth by the Committee of Sponsoring Organizations
("COSO") of the Treadway Commission in Internal Control-Integrated
Framework (2013). Management concluded that based on its assessment,
Walmart's internal control over financial reporting was effective as of
January 31, 2016. The Company's internal control over financial reporting
as of January 31, 2016, has been audited by Ernst & Young LLP as stated
in their report which appears in this Annual Report to Shareholders.
Acting through our Audit Committee, we have retained Ernst & Young LLP,
an independent registered public accounting firm, to audit our
Consolidated Financial Statements found in this Annual Report to
Shareholders. We have made available to Ernst & Young LLP all of our
financial records and related data in connection with their audit of our
Consolidated Financial Statements. We have filed with the Securities and
Exchange Commission ("SEC") the required certifications related to our
Consolidated Financial Statements as of and for the year ended January 31,
2016. These certifications are attached as exhibits to our Annual Report
on Form 10-K for the year ended January 31, 2016. Additionally, we have
also provided to the New York Stock Exchange the required annual
certification of our Chief Executive Officer regarding our compliance with
the New York Stock Exchange's corporate governance listing standards.
Ernst & Young LLP
Rogers, Arkansas
March 30, 2016
60 Walmart 2016 Annual Report
Report of Independent Registered Public Accounting Firm
on Internal Control over Financial Reporting
The Board of Directors and Shareholders of Wal-Mart Stores, Inc.
We have audited Wal-Mart Stores, Inc.'s internal control over financial
reporting as of January 31, 2016, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO
criteria). Wal-Mart Stores, Inc.'s management is responsible for maintaining
effective internal control over financial reporting, and for its assessment
of the effectiveness of internal control over financial reporting included
in the accompanying "Management's Report to Our Shareholders." Our
responsibility is to express an opinion on the Company's internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A company's internal control over financial reporting is a process
designed 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. A company's internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company's assets that could have
a material effect on the financial statements.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Wal-Mart
Stores, Inc. at January 31, 2016 and 2015, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended January 31, 2016, in conformity with U.S. generally accepted
accounting principles.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated
balance sheets of Wal-Mart Stores, Inc. as of January 31, 2016 and 2015,
and related consolidated statements of income, comprehensive income,
shareholders' equity and redeemable noncontrolling interest, and cash
flows for each of the three years in the period ended January 31, 2016 and
our report dated March 30, 2016 expressed an unqualified opinion thereon.
Ernst & Young LLP
Rogers, Arkansas
March 30, 2016
Only Walmart
Walmart 61
Management's Report to Our Shareholders
Wal-Mart Stores, Inc.
Management of Wal-Mart Stores, Inc. ("Walmart," the "company" or "we")
is responsible for the preparation, integrity and objectivity of Walmart's
Consolidated Financial Statements and other financial information
contained in this Annual Report to Shareholders. Those Consolidated
Financial Statements were prepared in conformity with accounting
principles generally accepted in the United States. In preparing those
Consolidated Financial Statements, management is required to make
certain estimates and judgments, which are based upon currently
available information and management's view of current conditions
and circumstances.
The Audit Committee of the Board of Directors, which consists solely
of independent directors, oversees our process of reporting financial
information and the audit of our Consolidated Financial Statements.
The Audit Committee stays informed of the financial condition of
Walmart and regularly reviews management's financial policies and
procedures, the independence of our independent auditors, our internal
control over financial reporting and the objectivity of our financial reporting.
Both the independent auditors and the internal auditors have free access
to the Audit Committee and meet with the Audit Committee regularly,
both with and without management present.
In our opinion, Wal-Mart Stores, Inc. maintained, in all material respects,
effective internal control over financial reporting as of January 31, 2016,
based on the COSO criteria.
3,711
4,093
3,593
96,999
360,984
Income from continuing operations
3,283
3,635
3,414
4,748
15,080
Consolidated net income
3,283
3,635
3,414
4,748
15,080
Consolidated net income attributable to Walmart
3,341
3,475
3,304
4,574
87,446
90,056
86,483
478,614
16. Quarterly Financial Data (Unaudited)
Notes to Consolidated Financial Statements
Fiscal Year Ended January 31, 2016
(Amounts in millions, except per share data)
Q1
Q2
Q3
Q4
Total
14,694
Total revenues
Cost of sales
$114,826
114,002
$120,229
$117,408
$129,667
$482,130
119,330
116,598
128,684
Net sales
Basic net income per common share attributable to Walmart
Diluted net income per common share attributable to Walmart
1.03
1.08
482,229
Cost of sales
86,714
90,010
89,247
99,115
365,086
Income from continuing operations
3,711
130,650
4,089
5,188
16,814
Consolidated net income
3,726
4,359
3,826
5,188
17,099
Consolidated net income attributable to Walmart
3,826
Sam's Club
118,076
$485,651
1.03
1.44
4.58
1.03
1.08
1.03
1.43
4.57
Fiscal Year Ended January 31, 2015
119,336
Q1
Q3
Q4
Total
Total revenues
Net sales
$114,960
114,167
$120,125
$119,001
$131,565
Q2
Neighborhood
0.05
State or Territory
17
1
12
∞ 352
8
59
5
148
70
3
44
101
2
14
19
11
48
24
214
20
10
225 22
1460165
Virginia
105
123
Washington
52
310
Washington D.C.
3
107
U.S. total
West Virginia
38
Wisconsin
81
10
Wyoming
12
47 355
Puerto Rico
13
38
3,465
442
667
25
Geographic Market
19
12
59
3
52
Africa (3)
26
3
119
84
Brazil
5
7
80
11
16
19
157
14
127
134
29
655 5,229
12
26
196
8
11
16
130
9
15
69
7
9
Markets and
8
9
9
103
International
The Walmart International segment comprises the Company's operations
outside of the U.S. and is represented in three major brand categories.
Unit counts (1) as of January 31, 2016 for Walmart International are
summarized by brand category for each geographic market as follows:
15
1
84
13
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
Idaho
Hawaii
Georgia
Florida
Vermont
Supercenters
Discount
Stores
other small
Grand
formats
Clubs
Total
State or Territory
New York
Discount
Supercenters Stores
Grand
Clubs Total
Alabama
Alaska
Arizona
California
Colorado
Connecticut
Delaware
Neighborhood
Markets and
other small
formats
North Carolina
Arkansas
North Dakota
89
64
29
78
14
79
14
35232301203302322454 = 20226/2012122
67
27
18
36
2
7
1367353-722-31
14
140
Utah
Ohio
41
1
19
75
77
Oklahoma
Oregon
88
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
8222625222222222222322132215110
25
2
3
1
76
57
7
57
33
83
69
28
95
OCTOBER
New membership
sign-up process
at Sam's Club
NOVEMBER
Expanded one-hour
grocery delivery to
nearly 140 stores
in China
DECEMBER
Announced our
name change
CFO MESSAGE
2018 ANNUAL REPORT 3
Winning with customers and shareholders
Our financial strength
provides the flexibility to
win with both customers and
shareholders. For customers,
we've invested in initiatives such
as online grocery, mobile express
checkout in our stores, and free 2-day
shipping for orders over $35 from Walmart.com. We
made acquisitions to improve our online assortment and
we're partnering with others, like Google and JD.com,
in new ways. At the same time, we provided solid cash
returns to shareholders through a meaningful and growing
dividend and continued share repurchases.
SEPTEMBER
1,000th Online
Grocery location
in Walmart U.S.
as we're transforming the
business to serve customers
more effectively. Customers
are busier than ever, so
we're innovating and
leveraging technology
to save them time as
well as money.
It's an exciting time at Walmart
to Walmart Inc.
AUGUST
Google partnership to
deliver personalized
voice shopping
We're also ready to support the communities we serve
during times of crisis. I could not be more proud of
the resolve our associates displayed this past year in
responding to the devastating damage caused by the
hurricanes in Puerto Rico, Texas and Florida and the
earthquake in Mexico. The character of our people was
on full display. We believed they would make a difference
and they did not disappoint. In addition, we're enhancing
the environmental sustainability of our operations
and we're investing to make our supply chain more
transparent. It's really all about being true to our
purpose: we save people money so they can live better.
Opened new
JULY
President and Chief Executive Officer
Walmart Inc.
Doug McMillon
Dong
Sincerely,
Thanks for your continued interest in our company and
for investing in our future. We're well-positioned to
win-we have the plan, we have the assets, and most
importantly, we have the people who are hungry to
make a difference and innovate for customers in new
ways. This is a great time to be at Walmart. I am excited
for the year and what we will accomplish.
Many of our customers also value the role we play
in their communities. We provide good jobs for our
associates with opportunity to build a career with
Walmart. Earlier this year, we increased the starting
wage for our U.S. associates to $11 per hour and
expanded maternity and parental leave for salaried
and hourly associates. Families are a priority to us and
connecting with and caring for a new family member
is obviously important. We're working hard to provide
opportunities for associates to be successful at Walmart
or wherever their careers take them.
CEO LETTER
Finally, we want to be the most trusted retailer. We
believe in the concept of shared value where Walmart
operates for the benefit of not just customers, associates
and shareholders, but all stakeholders including suppliers,
communities and society in general. It's important for
us to do things ethically and the right way. Customers
trust us for low prices on quality merchandise. They
also want the products they buy to be good for the
planet and the people who made them so we've invested
to promote the safety and dignity of the people who
make the products we sell. We've also implemented
leading technologies in our stores and supply chain to
promote the highest freshness, quality and safety in
the food we sell, while at the same time improving
the safety of our operations worldwide.
The investments we're
making are critical
to winning with
customers as
we're focused on
delivering results
and operating
with discipline.
An everyday low
cost mindset is
core to who we
are as a company
and it helps fuel the
productivity loop
enabling lower prices
for customers. We're
laser-focused on improving
productivity throughout the
organization and leveraging expenses as
a company. We're also being more strategic with capital
allocation to deliver strong efficient growth. We're
prioritizing eCommerce, store remodels and customer
initiatives like online grocery over new store openings.
In addition, we've made strategic choices around our
portfolio including closing certain stores and clubs and
winding-down the first party eCommerce business in
Brazil. These decisions are positioning the business for
more efficient, sustainable growth in the future.
We're incredibly well-positioned with unique assets to
win in this new age of retail and the fiscal 2018 results
reflect Walmart's strong financial position:
BONOBOS
JUNE
Acquired
Bonobos
eCommerce fulfillment
center in Florida
• Total revenue surpassed $500 billion for the first time;
for the fiscal year ended January 31, 2018, or
• Walmart U.S. eCommerce sales grew 44 percent;
• Operating cash flow was $28.3 billion, and;
(Address of principal executive offices)
MAY
Launched Sam's Club
Global Flagship Store
on JD.com in China
702 S.W. 8th Street
Bentonville, Arkansas
(State or other jurisdiction of
incorporation or organization)
Delaware
(Exact name of registrant as specified in its charter)
WALMART INC.
Walmart
Commission file number 001-6991.
☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
FORM 10-K
Washington, D.C. 20549
• Walmart U.S. comp sales were the highest since
fiscal 2009;
SECURITIES AND EXCHANGE COMMISSION
4 WALMART
Executive Vice President
and Chief Financial Officer
Walmart Inc.
Brett Biggs
Brett
Sincerely,
Thanks for your investment in Walmart.
In closing, we're executing our strategy, we're delivering
results and we're doing this from a base of incredible
financial strength. We're committed to growing the
value of the company for our shareholders while we win
with customers.
We're confident that over time, these financial priorities
will help us drive sustainable top line and bottom line
growth, and generate solid returns for shareholders.
STRATEGIC CAPITAL ALLOCATION. Walmart
generates substantial cash and we've aligned our capital
priorities with the long-term strategy. Our first priority
is to invest in growing the business efficiently. We're
being more disciplined and thoughtful with every dollar
of capital, which led to a decline in capital expenditures
in fiscal 2018. We've shifted spend from opening new
stores to remodels, eCommerce, supply chain and
technology to set us up for the future. We'll continue
to invest in customer initiatives like online grocery,
pickup towers, and an expansion of grocery delivery.
We'll also be opportunistic with M&A while being open
to taking action on assets within our portfolio to
simplify the business. Secondly, our dividend is important
and we've increased it for 45 consecutive years. Finally,
we're committed to the share repurchase program we
announced last October as we continue to believe in
the long-term value of Walmart.
CONSISTENT OPERATING DISCIPLINE. The
everyday low prices we provide to customers are enabled
when we operate at everyday low costs. We've made
headway in cost of goods efficiencies and working capital
productivity with strong inventory management. Expenses
are not where we want them to be overall, but we started
bending the cost curve last year, particularly in Walmart
U.S. stores and in International. We're changing how we
work by improving processes and increasingly using
technology and automation to be more productive,
especially in support functions. We'll continue to make
smart investments that help us grow faster and compete
more effectively to win long-term.
STRONG, EFFICIENT GROWTH. We're focused on
our most productive and profitable growth opportunities
by prioritizing growth from comp sales and eCommerce
versus opening new stores. We've seen good momentum
with each of our segments delivering strong comp sales
growth this past year. The customer experience in our
stores has improved as we're making shopping easy,
fast, friendly and fun. Walmart U.S. eCommerce sales
growth was also strong and we're focused on continuing
to accelerate eCommerce innovation and omni-channel
offerings to provide the convenience customers expect.
Our financial framework helps guide decisions as we
grow the business. The three key elements are: strong,
efficient growth; consistent operating discipline; and
strategic capital allocation.
• We returned $14.4 billion to shareholders through
dividends and share repurchases.
UNITED STATES
discount on
Walmart.com
Total Revenue
2 WALMART
K
sales
Walmart U.S.
eCommerce
$11.5 billion
$10.1 billion
Capital Expenditures
cash returned to
shareholders through
dividends and share
repurchases
$14.4 billion
【京东到家
יוון
Operating Cash Flow
$28.3 billion
$500.3 billion
Walmart by the numbers
Serve nearly
INNOVATION
NO
PARKING
FIRE
LANE
icku
Walmartcom
Pickup
OME
Walmartcom
Walm
Pickup
Walmart com
uce
2018 ANNUAL REPORT
Walmart
71-0415188
ACCELERATING
APRIL
Introduced pickup
270 million
customers
over
MARCH
Acquired
ModCloth
FEBRUARY
Walmart U.S. mobile
express money and
pharmacy services
launched
JANUARY
Launched 2-day free
shipping on Walmart.com
for orders over $35
MODCLOTH
A YEAR OF ACCELERATED INNOVATION
Second, we're changing how we work to become more
efficient. We're equipping and empowering our associates
to be successful with better information, tools and
training. In stores, this means our associates are
spending more time driving sales and less time doing
repetitive tasks. We've opened training academies to
further develop the retail skills of our associates and
we've deployed new technology and apps to help them
improve in-stock levels and better manage price changes.
We're also testing shelf-scanning technology in stores
and distribution centers to handle routine tasks. We
will compete with technology, but we will win with our
people. We're creating a high-performance culture that
rewards achievements and fosters accountability while
remaining true to our core values.
Customers who shop in store and become eCommerce
customers spend nearly twice as much overall.
eCommerce
the spend
2X
Nearly
Stores
eCommerce marketplaces in Canada and Mexico so that
customers have access to more of the general merchandise
assortments they desire. Overall, it's a lot easier to shop
with Walmart today than it used to be. And, we're going
to keep getting better as we focus on serving customers
seamlessly across our apps, sites and stores.
a week
We launched free 2-day shipping and easy reorder on
Walmart.com and the response has been strong. Sam's
Club also enhanced the value of the Plus membership with
the offer of free shipping. Our eCommerce assortment
has also improved. In the U.S., we've doubled the number
of items on Walmart.com over the past year. Jet.com
continues to complement Walmart.com nicely with
its appeal to higher-income, urban,
millennial customers. Acquisitions
like Bonobos bring unique,
private branded products to
our shopping experience,
and relationships with
partners like Lord & Taylor
enable us to offer brands
and experiences that
complement our own
assortment. We're also
partnering with Google on
personalized voice shopping.
Outside the U.S., we launched
UP TO: First, we know our customers' lives are busier
than ever before, so our first objective is to make every
day easier for them. They rely on us for low prices and
they want us to save them time. We're leveraging our
stores as a strategic advantage in new ways. This past
year, we nearly doubled the number of stores offering
online grocery pickup to more than 1,100 locations in
the U.S. and we'll add another 1,000 locations in fiscal
2019. We're expanding online grocery in Canada, Mexico
and China as well. We're also broadening our delivery
capabilities in the U.S., China and other international
markets. For example, through our partnership with
JD Daojia in China, we offer grocery delivery in less
than one hour in over 160 stores in China. We launched
an express checkout experience in pharmacy, money
services, and returns at Walmart U.S. Sam's Club Scan
& Go has been well-received by members and we've
introduced this capability in certain Walmart U.S.
stores as well as in Canada.
HERE'S MORE ABOUT WHAT WE'VE BEEN
Last fiscal year we reached more than $500 billion in revenue
for the first time as a company. Walmart U.S. delivered the
highest comp sales growth in nine years and U.S. eCommerce
sales grew 44 percent. Walmart International had 10 of 11 markets
post positive comp sales for the year and five of those markets
grew comp sales by more than 5 percent. Sam's Club comp
sales continue to improve and the business is repositioned
to capitalize on future growth. We have a strong foundation
and great opportunities to better serve customers.
I'm excited about what the future holds.
This year we made great progress accelerating innovation to save
customers both money and time. In our stores, we're digitizing
experiences to make it easier for customers to shop and more
efficient for associates to manage inventory and perform routine
tasks. Our eCommerce business continues to scale as we launch
new ways to enhance the customer experience. We're moving
faster, getting stronger and we have good momentum
throughout the business.
We've had an exciting year at Walmart. We have the right strategy and we're
making progress putting our unique assets to work to serve customers in
all the ways they want to shop. We are confident in our strategy because
customers are responding. We are confident in our ability to execute the
strategy because we have the culture, the talent and the resources not
only to deliver the current plan, but also to dream of new things and new
ways to transform our business. We will delight customers in ways they
might not have even thought of yet. We're out to provide an easy, fast,
friendly and fun shopping experience for them whether they shop with
us in stores, online, via a mobile device, with their voice or with
virtual reality, augmented reality or whatever comes next.
In that moment, he captured what makes our company unique: it's our people, our culture, our
purpose and our values that make the difference for our business and have enabled our success
since the start. And those are the things that will empower our success in the future.
Recently I was talking to Chad Daggett about his experience leading
our Sam's Club in Bangor, Maine (he was recently promoted to a new
role). Chad's club had a good year and we were recognizing him for his
servant leadership in the club and the community. He was quick to give
credit to his team and said, "If you treat people like they make a
difference, they will."
associates and customers:
Dear shareholders,
CEO LETTER
28 countries
operating in
11,700 stores
Club Pickup
(IRS Employer Identification No.)
BBBBB
Registrant's telephone number, including area code: (479) 273-4000
Item 15
Part IV
87
87
87
87
87
Principal Accounting Fees and Services
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Directors, Executive Officers and Corporate Governance
Item 14
Item 13
Item 12
Exhibits, Financial Statement Schedules
Signatures
Executive Compensation
Item 10
Part III
86
Other Information
Item 9B
85
85
51
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Financial Statements and Supplementary Data
Item 9A
Item 9
Item 8
Item 11
48
Exhibit Index
88
72716
(Zip Code)
4
Our forward-looking statements may also include statements of our strategies, plans and objectives for our operations,
including areas of future focus in our operations, and the assumptions underlying any of the forward-looking statements we
make. The forward-looking statements we make can typically be identified by the use therein of words and phrases such as
"aim," "anticipate," "believe," "could be," "could increase," "could occur," "could result," "continue," "estimate," "expansion,"
"expect," "expectation," "expected to be," "focus," "forecast," "goal," "grow," "guidance," "intend," "invest," "is expected,"
the effect on the Company's results of operations or financial condition of the Company's adoption of certain new, or
amendments to existing, accounting standards.
the effect of adverse decisions in, or settlement of, litigation or other proceedings to which we are subject; or
our effective tax rate for certain periods and the realization of certain net deferred tax assets and the effects of
resolutions of tax-related matters;
the insignificance of ineffective hedges and reclassification of amounts related to our derivatives;
our intention to reinvest the earnings we hold outside of the United States in our foreign operations and certain laws,
other limitations and potential taxes on anticipated future repatriations of such earnings not materially affecting our
liquidity, financial condition or results of operations;
volatility in currency exchange rates and fuel prices affecting our or one of our segments' results of operations;
the Company continuing to provide returns to shareholders through share repurchases and dividends, the use of share
repurchase authorization over a certain period or the source of funding of a certain portion of our share repurchases;
our sources of liquidity, including our cash, continuing to be adequate or sufficient to fund and finance our operations,
expansion activities, dividends and share repurchases, to meet our cash needs and to fund our domestic operations
without repatriating earnings we hold outside of the United States;
our plans to increase investments in eCommerce, technology, store remodels and other customer initiatives, such as
online grocery locations;
investments and capital expenditures we will make and how certain of those investments and capital expenditures are
expected to be financed;
the growth of our business or change in our competitive position in the future or in or over particular periods;
the amount, number, growth or increase, in or over certain periods, of or in certain financial items or measures or
operating measures, including our earnings per share, including as adjusted for certain items, net sales, comparable
store and club sales, our Walmart U.S. operating segment's eCommerce sales, liabilities, expenses of certain
categories, expense leverage, returns, capital and operating investments or expenditures of particular types, new store
openings and investments in particular formats;
•
888
•
•
•
Such forward-looking statements are not statements of historical facts, but instead express our estimates or expectations for our
consolidated, or one of our segment's, economic performance or results of operations for future periods or as of future dates or
events or developments that may occur in the future or discuss our plans, objectives or goals. These forward-looking
statements relate to:
Nature of Forward-Looking Statements
This Annual Report on Form 10-K and other reports, statements, and information that Walmart Inc. (which individually or
together with its subsidiaries, as the context otherwise requires, is referred to as "we," "Walmart" or the "Company") has filed
with or furnished to the Securities and Exchange Commission ("SEC") or may file with or furnish to the SEC in the future, and
prior or future public announcements and presentations that we or our management have made or may make, include or may
include, or incorporate or may incorporate by reference, statements that may be deemed to be "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Act"), that are intended to enjoy
the protection of the safe harbor for forward-looking statements provided by the Act.
Cautionary Statement Regarding Forward-Looking Statements
PART I
On February 1, 2018, the legal name of our corporation became "Walmart Inc.," changing from "Wal-Mart Stores, Inc." All
references in this Annual Report on Form 10-K, the information incorporated into this Annual Report on Form 10-K by
reference to information in the Proxy Statement of Walmart Inc. for its Annual Shareholders' Meeting to be held on May 30,
2018 and in the exhibits to this Annual Report on Form 10-K to "Walmart Inc.," "Wal-Mart Stores, Inc.," "Walmart," "the
Company," "our Company," "we," "us" and "our" are to the Delaware corporation named "Wal-Mart Stores, Inc." prior to
February 1, 2018 and named "Walmart Inc." commencing on February 1, 2018 and, except where expressly noted otherwise or
the context otherwise requires, that corporation's consolidated subsidiaries.
FOR THE FISCAL YEAR ENDED JANUARY 31, 2018
ANNUAL REPORT ON FORM 10-K
(formerly "WAL-MART STORES, INC.")
WALMART INC.
90
•
34
•
Item 7A
Parts Into Which Incorporated
Part III
DOCUMENTS INCORPORATED BY REFERENCE
The registrant had 2,950,696,818 shares of common stock outstanding as of March 28, 2018.
As of July 31, 2017, the aggregate market value of the voting common stock of the registrant held by non-affiliates of the
registrant, based on the closing sale price of those shares on the New York Stock Exchange reported on July 31, 2017, was
$114,770,199,895. For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers (as
defined in Rule 3b-7 under the Exchange Act) and the beneficial owners of 5% or more of the registrant's outstanding common
stock are the affiliates of the registrant.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
ㅁㅁㅁ
Smaller Reporting Company
Emerging Growth Company
Accelerated Filer
☑
Large Accelerated Filer
Non-Accelerated Filer
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Document
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.
Yes ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☑ No ☐
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Name of each exchange on which registered
2.550% Notes Due 2026
1.900% Notes Due 2022
Common Stock, par value $0.10 per share
Title of each class
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Securities registered pursuant to Section 12(b) of the Act:
Yes ☑No ☐
Portions of the registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held May 30, 2018 (the "Proxy
Statement")
Securities registered pursuant to Section 12(g) of the Act: None
Walmart Inc.
33
Part I
Item 7
31
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Item 6
Item 5
30
29
26
17
772222
Mine Safety Disclosures
Item 4
Legal Proceedings
Part II
Item 3
Table of Contents
Page
Item 1
Item 1A
Form 10-K
Business
Item 1B
Item 2
Unresolved Staff Comments
Properties
Risk Factors
For the Fiscal Year Ended January 31, 2018
/s/ Kevin Y. Systrom
Kevin Y. Systrom
Director
By /s/ S. Robson Walton
S. Robson Walton
Director
By /s/ Thomas W. Horton
Thomas W. Horton
Director
Date: March 30, 2018
Date: March 30, 2018
By
Date: March 30, 2018
By /s/ Steven S Reinemund
Steven S Reinemund
Director
By /s/ Marissa A. Mayer
Marissa A. Mayer
Director
By /s/ Timothy P. Flynn
Timothy P. Flynn
Director
Sarah Friar
Director
By /s/ Sarah Friar
Date: March 30, 2018
By /s/ James I. Cash, Jr.
James I. Cash, Jr., Ph.D.
Director
Signature Page to Walmart Inc.
Form 10-K for the Fiscal Year Ended January 31, 2018
Date: March 30, 2018
Date: March 30, 2018
By /s/ Steuart L. Walton
Date: March 30, 2018
Date: March 30, 2018
By /s/ Carla A. Harris
Carla A. Harris
Director
Steuart L. Walton
4(e)
Signature Page to Walmart Inc.
Indenture dated as of December 11, 2002, between the Company and J.P. Morgan Trust Company, National
Association, as successor trustee to Bank One Trust Company, NA, is incorporated by reference to Exhibit 4.5
to Registration Statement on Form S-3 (File Number 333-101847)
Indenture dated as of July 5, 2001, between the Company and J.P. Morgan Trust Company, National
Association, as successor trustee to Bank One Trust Company, NA, is incorporated by reference to Exhibit 4.1
to Registration Statement on Form S-3 (File Number 333-64740)
Date: March 30, 2018
First Supplemental Indenture dated as of September 9, 1992, to the Indenture dated as of April 1, 1991,
between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank
One Trust Company, NA, as successor trustee to The First National Bank of Chicago, Trustee, is incorporated
herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-51344) (P)
Indenture dated as of April 1, 1991, between the Company and J.P. Morgan Trust Company, National
Association, as successor trustee to Bank One Trust Company, NA, as successor trustee to The First National
Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(a) to Registration Statement on
Form S-3 (File Number 33-51344)
Form of Indenture dated as of July 15, 1990, between the Company and Harris Trust and Savings Bank,
Trustee, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File
Number 33-35710))
Amended and Restated Bylaws of the Company are incorporated herein by reference to Exhibit 3.2 to the
Report on Form 8-K that the Company filed on February 1, 2018 (File No. 001-06991)
Restated Certificate of Incorporation of the Company dated February 1, 2018 is incorporated herein by
reference to Exhibit 3.1 to the Report on Form 8-K that the Company filed on February 1, 2018 (File No.
001-06991)
4(h)
4(g)
Director
4(f)
4(c)
4(b)
4(a)
3(b)
3(a)
The following exhibits are filed or furnished as part of this Form 10-K or are incorporated herein by reference.
Exhibit Index (1),(2)
88
89
Form 10-K for the Fiscal Year Ended January 31, 2018
4(d)
Date: March 30, 2018
The required exhibits are included at the end of the Form 10-K or are incorporated herein by reference and
are described in the Exhibit Index immediately preceding the first exhibit to this Annual Report on Form 10-
K.
(Principal Accounting Officer)
(c)
The exhibits furnished with this Annual Report on Form 10-K in accordance with the requirement of Form 10-K of the
SEC are listed in the Exhibit Index, which appears immediately following the signature pages to this Annual Report on
Form 10-K and which is incorporated in this Item 15(b) by reference to such Exhibit Index.
Exhibits:
Certain schedules have been omitted because the required information is not present or is not present in
amounts sufficient to require submission of the schedule, or because the information required is included in
the Consolidated Financial Statements, including the notes thereto.
Financial Statement Schedules:
See the Financial Statements in Part II, Item 8.
Financial Statements:
3.
2.
Documents filed as part of this report are as follows:
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(b)
(a)
ITEM 15.
PART IV
87
88
The information required by this item is incorporated herein by reference to all information under the caption "Proposal No. 3 –
Ratification of Independent Accountants" and the sub-caption thereunder "Audit Committee Pre-Approval Policy" included in
our Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Indenture dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National
Association is incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3 (File Number
333-126512)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Financial Statement Schedules
88
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Senior Vice President and Controller
David M. Chojnowski
By /s/ David M. Chojnowski
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
M. Brett Biggs
By /s/ M. Brett Biggs
Chairman of the Board and Director
Gregory B. Penner
By /s/ Gregory B. Penner
President and Chief Executive Officer and Director
(Principal Executive Officer)
C. Douglas McMillon
By /s/ C. Douglas McMillon
Date: March 30, 2018
Date: March 30, 2018
Date: March 30, 2018
Date: March 30, 2018
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated:
President and Chief Executive Officer
By /s/ C. Douglas McMillon
C. Douglas McMillon
Date: March 30, 2018
Walmart Inc.
SIGNATURES
First Supplemental Indenture, dated December 1, 2006, between the Company and The Bank of New York
Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as
Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust
Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.6 to Post-
Effective Amendment No. 1 to Registration Statement on Form S-3 (File Number 333-130569)
*
10(a)*
BOARD OF DIRECTORS
92
The Company and its subsidiaries have in the past issued, and may in the future issue from time to time, long-term
debt instruments, but the aggregate principal amount of the debt instruments of any one series of such debt instruments
has not exceeded or will not exceed 10% of the assets of the Company at any pertinent time. The Company has
previously filed with the SEC its agreement to, and hereby agrees to, file copies of the agreements relating to long-
term debt instruments and the instruments representing or evidencing such long-term debt instruments with the SEC
upon request. As a result, in accordance with the provisions of paragraph (b)(4)(iii)(A) of Item 601 of Regulation S-K
of the SEC, copies of such long-term debt instruments have not been filed as exhibits to the Annual Report on Form
10-K of the Company for the fiscal year ended January 31, 2018. The Company has previously filed the documents
and instruments establishing the specific terms of long-term debt instruments offered and sold by the Company
pursuant to its effective registration statements filed with the SEC pursuant to the Securities Act of 1933, as amended,
as exhibits to the applicable registration statement or as exhibits to a Current Report on Form 8-K filed in connection
with the applicable registration statement and the sale and issuance of those long-term debt instruments.
The exhibits listed in this Exhibit Index and incorporated as exhibits to the Annual Report on Form 10-K of Walmart
Inc. (the "Company") for the fiscal year ended January 31, 2018 by reference to an Annual Report on Form 10-K,
Quarterly Report on Form 10-Q or Current Report on Form 8-K of the Company previously filed with the SEC by the
Company are available for review online on the EDGAR system of the SEC at www.sec.gov as exhibits to the Annual
Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K referred to above in the
description of the exhibit incorporated by reference. The historical filings of the Company may be reviewed and
copied at the Public Reference Room of the SEC at 100 F Street, NE Washington, DC 20549-2521 under Commission
File No. 001-6991.
نه
1.
Notes to Exhibit Index:
This Exhibit was originally filed in paper format. Accordingly, a hyperlink has not been provided.
Furnished herewith as an Exhibit.
Filed herewith as an Exhibit.
(P)
**
XBRL Taxonomy Extension Presentation Linkbase Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
Chief Financial Officer Section 302 Certification
Chief Executive Officer Section 906 Certification
Chief Financial Officer Section 906 Certification
XBRL Instance Document
31.2*
32.1**
32.2**
101.INS*
101.SCH*
101.CAL*
101.DEF*
101.LAB*
101.PRE*
Chief Executive Officer Section 302 Certification
31.1*
Consent of Independent Registered Public Accounting Firm
23*
List of the Company's Significant Subsidiaries
James I. Cash, Jr., Ph.D.
Dr. Cash is the James E. Robison Professor of Business Administration, Emeritus at Harvard Business School,
where he served from July 1976 to October 2003.
Timothy P. Flynn
Mr. Flynn is the retired Chairman of KPMG International, a professional services firm.
The information required by this item is incorporated herein by reference to all information under the sub-captions "Holdings of
Major Shareholders" and "Holdings of Officers and Directors" that appear under the caption "Stock Ownership" and all
information that appears under the caption "Executive Compensation Tables - Equity Compensation Plan Information"
included in our Proxy Statement.
[THIS PAGE INTENTIONALLY LEFT BLANK]
Mr. Walton is the founder and Chairman of RZC Investments, an investment business located in Bentonville, Arkansas,
and the founder and former Chief Executive Officer of Game Composites, Ltd., a company that manufactures carbon
fiber aircraft and aircraft parts.
Steuart L. Walton
Mr. Walton is the retired Chairman of the Board of Directors of Walmart Inc.
S. Robson Walton
Mr. Systrom is the Chief Executive Officer and co-founder of Instagram, a social media application.
Kevin Y. Systrom
Mr. Reinemund is the retired Dean of Business and Professor of Leadership and Strategy at Wake Forest University.
He previously served as the Chairman of the Board and Chairman and Chief Executive Officer of PepsiCo, Inc.
Steven S Reinemund
21*
Mr. Penner is the Chairman of the Board of Directors of Walmart Inc. and a General Partner at Madrone Capital Partners,
an investment firm.
Mr. McMillon is the President and Chief Executive Officer of Walmart Inc.
C. Douglas McMillon
Ms. Mayer is the former Chief Executive Officer and President and Director of Yahoo!, Inc., a digital media company.
Marissa A. Mayer
Mr. Horton is a Senior Advisor at Warburg Pincus, LLC, a private equity firm. He is the former Chairman of
American Airlines Group Inc. and the former Chairman of American Airlines, Inc.
Thomas W. Horton
Ms. Harris is the Vice Chair, Wealth Management as well as Managing Director and Senior Client Advisor for
Morgan Stanley.
Carla A. Harris
Ms. Friar is the Chief Financial Officer of Square, Inc., a provider of commerce solutions, including managed payments
and point-of-sale systems for businesses and mobile financial offerings for consumers.
Sarah Friar
Gregory B. Penner
Second Supplemental Indenture, dated December 19, 2014, between the Company and The Bank of New
York Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as
Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust
Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.3 to Registration
Statement on Form S-3 (File Number 333-201074)
91
Non-Competition, Non-Solicitation and No-Hire Agreement between the Company and Marc Lore dated
September 19, 2016 is incorporated herein by reference to Exhibit 10(x) to the Annual Report on Form 10-K
of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017(¹)
10(n)
10(m)*
10(1)*
10(k)
10(j)
10(i)
90
Walmart Deferred Compensation Matching Plan, as amended effective February 1, 2018
Amended Schedule of Executive Officers who have executed a Post-Termination Agreement and Covenant
Not to Compete in the form filed as Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the
fiscal year ended January 31, 2011
Form of Post-Termination Agreement and Covenant Not to Compete with attached Schedule of Executive
Officers who have executed a Post-Termination Agreement and Covenant Not to Compete is incorporated by
reference to Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the fiscal year ended
(1)
January 31, 2011, filed on March 30, 2011"
10(h)*
10(g).1*
10(g)
Walmart Inc. Supplemental Executive Retirement Plan, as amended effective February 1, 2018
Walmart Inc. Director Compensation Deferral Plan, as amended effective February 1, 2018
10(f)*
10(e)*
Walmart Inc. Management Incentive Plan, as amended effective February 1, 2018
Walmart Inc. 2016 Associate Stock Purchase Plan, as amended effective February 1, 2018
Walmart Inc. Stock Incentive Plan of 2015, as amended effective February 1, 2018
10(d)*
10(c)*
10(b)*
Walmart Inc. Officer Deferred Compensation Plan, as amended effective February 1, 2018
10(0)
10(p)
10(q)
10(r)
Amendment to Deferred Contingent Merger Consideration Agreement dated September 12, 2016, between the
Company and Marc Lore is incorporated herein by reference to Exhibit 10(w) to the Annual Report on Form
10-K of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017(
Deferred Contingent Merger Consideration Agreement dated August 7, 2016, between the Company and Marc
Lore is incorporated herein by reference to Exhibit 10(v) to the Annual Report on Form 10-K of the Company
for the fiscal year ended January 31, 2017 filed on March 30, 2017
Share Settled Restricted Stock Unit Notification and Terms and Conditions Awarded to Marc Lore on
September 19, 2016, is incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10-Q of
the Company for the fiscal quarter ended October 31, 2016, filed on December 1, 2016
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Global Share-Settled Performance-Based
Restricted Stock Unit Notification and Terms and Conditions (January 2017 annual award - all executive
officers) is incorporated by reference to Exhibit 10(t) to the Annual Report on Form 10-K of the Company for
the fiscal year ended January 31, 2017 filed on March 31, 2017“
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Share Settled Restricted Stock Unit Notification
and Terms and Conditions (January 2017 annual award - David Cheesewright) is incorporated by reference to
Exhibit 10(s) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017,
filed on March 31, 2017“
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Restricted Stock Award and Notification and
Terms and Conditions of Award (January 2017 annual award - all executive officers other than David
Cheesewright) is incorporated by reference to Exhibit 10(r) to the Annual Report on Form 10-K of the
Company for the fiscal year ended January 31, 2017, filed on March 31, 2017“
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Share-Settled Restricted Unit Notification and
Terms and Conditions (Wal-Mart Canada Corp.-related - January 2016 annual award to David Cheesewright)
is incorporated by reference to Exhibit 10(s) to the Annual Report on Form 10-K of the Company for the
fiscal year ended January 31, 2016, filed on March 30, 2016™
(1)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Performance-Based Restricted Stock Award,
Notification of Award and Terms and Conditions of Award (January 2016 award to Neal Ashe and Greg
Foran) is incorporated by reference to Exhibit 10(r) to the Annual Report on Form 10-K of the Company for
the fiscal year ended January 31, 2016, filed on March 30, 2016
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Restricted Stock Award, Notification of Award
and Terms and Conditions of Award (January 2016 annual award - executive officers other than David
Cheesewright) is incorporated by reference to Exhibit 10(q) to the Annual Report on Form 10-K of the
Company for the fiscal year ended January 31, 2016, filed on March 30, 2016“
Statement regarding computation of the Earnings to Fixed Charges Ratios
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Share-Settled Performance Unit Notification and
Terms and Conditions (Wal-Mart Canada Corp.-related - January 2016 annual award to David B
Cheesewright) is incorporated by reference to Exhibit 10(p) to the Annual Report on Form 10-K of the
Company for the fiscal year ended January 31, 2016, filed on March 30, 2016“
Post-Termination Agreement and Covenant Not to Compete between Wal-Mart Canada Corp. and David
Cheesewright dated as of January 31, 2014, is incorporated by reference to Exhibit 10(u) to the Annual Report
on Form 10-K of the Company for the fiscal year ended January 31, 2014, filed on March 21, 2014(¹)
Form of Walmart Inc. Restricted Stock Award Notification of Award and Terms and Conditions of Award
(January 2018 annual award - all executive officers)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2010 Restricted Stock Award, Notification of Award
and Terms and Conditions of Award is incorporated by reference to Exhibit 10(t) to the Annual Report on
Form 10-K of the Company for the fiscal year ended January 31, 2014, filed on March 21, 2014“
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2010 Performance Unit Award, Notification of Award
and Terms and Conditions of Award is incorporated by reference to Exhibit 10(s) to the Annual Report on
Form 10-K of the Company for the fiscal year ended January 31, 2014, filed on March 21, 2014“‍
12.1*
10(x)
10(w)
10(v)
10(u)
10(t)
10(s)
Form of Walmart Inc. Global Share-Settled Performance-Based Restricted Stock Unit Award Notification of
Award and Terms and Conditions of Award (January 2018 annual award - all executive officers)
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated herein by reference to all information under the caption "Corporate
Governance - Fiscal 2018 Review of Related Person Transactions" and under the caption "Corporate Governance - How We
Determine Director Independence" included in our Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
85
85
There has been no change in the Company's internal control over financial reporting as of January 31, 2018, that has materially
affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
Management has responsibility for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles
generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial
reporting as of January 31, 2018. In making its assessment, management has utilized the criteria set forth by the Committee of
Sponsoring Organizations ("COSO") of the Treadway Commission in Internal Control-Integrated Framework (2013).
Management concluded that based on its assessment, Walmart's internal control over financial reporting was effective as of
January 31, 2018. The Company's internal control over financial reporting as of January 31, 2018, has been audited by Ernst &
Young LLP as stated in their report which appears herein.
Report on Internal Control Over Financial Reporting
Report on Ethical Standards
An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the
period covered by this report was performed under the supervision and with the participation of management, including our
Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that
information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of
1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable
assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's
rules and forms.
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is
required to be timely disclosed, is accumulated and communicated to management in a timely fashion. In designing and
evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily
required to use judgment in evaluating controls and procedures. Also, we have investments in unconsolidated entities. Since
we do not control or manage those entities, our controls and procedures with respect to those entities are substantially more
limited than those we maintain with respect to our consolidated subsidiaries.
Evaluation of Disclosure Controls and Procedures
CONTROLS AND PROCEDURES
ITEM 9A.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The information required by this item is incorporated herein by reference to all information under the captions "Corporate
Governance - Director Compensation," "Executive Compensation" and under the sub-captions "Compensation Committee
Interlocks and Insider Participation" and "Compensation Committee Report" that appear under the caption "Executive
Compensation" included in our Proxy Statement.
In the ordinary course of business, we review our internal control over financial reporting and make changes to our systems and
processes to improve such controls and increase efficiency, while ensuring that we maintain an effective internal control
environment. Changes may include such activities as implementing new, more efficient systems, updating existing systems,
automating manual processes, migrating certain processes to our shared services organizations and increasing monitoring
controls. These changes have not materially affected, and are not reasonably likely to materially affect, the Company's internal
control over financial reporting. However, they allow us to continue to enhance our internal control over financial reporting
and ensure that our internal control environment remains effective.
Our Company was founded on the belief that open communication and the highest ethical standards are necessary to be
successful. Our long-standing "Open Door" communication policy helps management be aware of and address issues in a
timely and effective manner. Through the open door policy all associates are encouraged to inform management at the
appropriate level when they are concerned about any matter pertaining to Walmart.
None.
/s/ C. Douglas McMillon
Walmart has adopted a Statement of Ethics to guide our associates in the continued observance of high ethical standards such as
honesty, integrity and compliance with the law in the conduct of Walmart's business. Familiarity and compliance with the
Statement of Ethics is required of all associates. The Company also maintains a separate Code of Ethics for our senior financial
officers. Walmart also has in place a Related-Party Transaction Policy. This policy applies to Walmart's senior officers and
directors and requires material related-party transactions to be reviewed by the Audit Committee. The senior officers and
directors are required to report material related-party transactions to Walmart. We maintain a global ethics and compliance
office which oversees and administers several reporting mechanisms, including an ethics helpline. The ethics helpline provides
a channel for associates to ask questions and make confidential complaints regarding potential violations of our statements of
ethics, including violations related to financial or accounting matters. These contacts may be made anonymously.
No material changes have been made to the procedures by which shareholders of the Company may recommend nominees to
our board of directors since those procedures were disclosed in our proxy statement relating to our 2017 Annual Shareholders'
Meeting as previously filed with the SEC.
Information required by this item with respect to the Company's directors, certain family relationships, and compliance by the
Company's directors, executive officers and certain beneficial owners of the Company's common stock with Section 16(a) of
the Securities Exchange Act of 1934, as amended, is incorporated by reference to such information under the captions entitled
"Proposal No. 1 - Election of Directors" and "Stock Ownership – Section 16(a) Beneficial Ownership Reporting Compliance"
in our Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 30, 2018 (our "Proxy Statement").
Please see the information concerning our executive officers contained in Part I, Item 1 herein under the caption "Executive
Officers of the Registrant," which is included there in accordance with Instruction 3 to Item 401(b) of the SEC's Regulation S-
K.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
PART III
86
98
ITEM 10.
None.
Executive Vice President and Chief Financial Officer
M. Brett Biggs
/s/ M. Brett Biggs
President and Chief Executive Officer
C. Douglas McMillon
ITEM 9B. OTHER INFORMATION
The information regarding our Audit Committee, including our audit committee financial experts and our Codes of Ethics for
the CEO and Senior Financial Officers and our Statement of Ethics applicable to all of our associates, including our Chief
Executive Officer, Chief Financial Officer and our Controller, who is our principal accounting officer, required by this item is
incorporated herein by reference to the information under the captions "Corporate Governance - Board Committees" and
"Proposal No. 4: Ratification of Independent Accountants - Audit Committee Independence and Financial Expert
Determination" included in our Proxy Statement. "Item 1. Business" above contains information relating to the availability of a
copy of our Code of Ethics for our CEO and Senior Financial Officers and our Statement of Ethics and the posting of
amendments to and any waivers of the Code of Ethics for our CEO and Senior Financial Officers and our Statement of Ethics
on our website.
$0.50
September 6, 2016
January 3, 2017
June 6, 2016
0.50
0.50
0.50
0.51
For fiscal 2017, dividends were paid based on the following schedule:
0.51
January 2, 2018
0.51
September 5, 2017
Stock Performance Chart
April 4, 2016
This graph compares the cumulative total shareholder return on
Walmart's common stock during the five fiscal years ending in
fiscal 2018 to the cumulative total returns on the S&P 500 Retailing
Index and the S&P 500 Index. The comparison assumes $100 was
invested on February 1, 2013, in shares of our common stock and
in each of the indices shown and assumes that all of the dividends
were reinvested.
$250
Walmart Inc.
S&P 500 Index S&P 500 Retailing Index
$350
Independent Registered Public Accounting Firm
$300
Ernst & Young LLP
5417 Pinnacle Point Dr., Suite 501
$200
Rogers, AR 72758
$150
Market Price of Common Stock
The high market price and low market price per share for the
Company's common stock for each fiscal quarter in fiscal 2018
and 2017 were as follows:
$100
June 5, 2017
Comparison of 5-Year Cumulative Total Return*
Among Walmart Inc., the S&P 500 Index and S&P 500 Retailing Index
$0.51
Earnings Releases
For fiscal 2018, dividends were paid based on the following schedule:
Listing
New York Stock Exchange
Stock Symbol: WMT
Corporate Information
Stock Registrar and Transfer Agent:
Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, Kentucky 40233-5000
1-800-438-6278
TDD for hearing-impaired inside the U.S. 1-800-952-9245
Internet: http://www.computershare.com
Annual Meeting
Our Annual Meeting of Shareholders will be held on Wednesday,
May 30, 2018 at 10:00 a.m. (Central Time) in the John Q. Hammons
Center, Rogers, Arkansas.
Communication With Shareholders
Walmart Inc. periodically communicates with its shareholders and
other members of the investment community about our operations.
For further information regarding our policy on shareholder and
investor communications refer to our website: www.stock.walmart.com.
The following reports are available without charge upon request
by writing the Company c/o Investor Relations or by calling
(479) 273-8446. These reports are also available via the
corporate website.
Annual Report on Form 10-K
• Quarterly Reports on Form 10-Q
$ 50
Current Reports on Form 8-K
Dividends Paid Per Share
0.52
January 2, 2019
0.52
September 4, 2018
0.52
April 3, 2017
$0.52
For fiscal 2019, dividends will be paid based on the following schedule:
Dividends Payable Per Share
June 4, 2018
• Culture, Diversity & Inclusion Report
Global Responsibility Report
• Annual Shareholders' Meeting Proxy Statement
April 2, 2018
$ 0
$ 75.77 $ 66.04
2014
2018
$100.00 $109.39 $127.58 $102.39 $105.97 $173.61
100.00 121.52 138.80 137.88 165.51 209.22
S&P 500 Retailing Index 100.00 127.72 153.64 184.32 218.76
Holders of Record of Common Stock
As of March 28, 2018, there were 229,858 holders of record of
Walmart's common stock.
321.37
Designed and produced by Corporate Reports Inc./Atlanta
www.cricommunications.com
Providing opportunity &
serving our communities
250,000+
U.S. associates
graduated from
Walmart Academy
$250B
Commitment to
purchase products that
support American jobs
1 Gigaton
Commitment to
2015 2016 2017
work with suppliers to
value chain
$35M+
Donated to 2017
hurricane relief
For more information, please see our Global Responsibility Report at:
corporate.walmart.com/global-responsibility
Walmart Inc. (NYSE: WMT)
702 S.W. 8th Street
Bentonville, Arkansas 72716 USA
479-273-4000
The minimized environmental footprint of this report is the result of an extensive, collaborative effort of Walmart and our supply
chain partners. The environmental and social impact continues to be an important consideration. It is printed on paper from
well-managed forests containing recycled PCW fiber that is Elementally Chlorine Free (ECF). It is printed using environmental
manufacturing principles that were utilized in the printing process. These practices include environmentally responsible
procurement, lean manufacturing, green chemistry principles, the recycling of residual materials and reduced volatile organic
compound inks and coatings.
MIX
Paper from
responsible sources
FSC
www.fsc.org
FSC® C018101
reduce emissions in the
Fiscal Years Ended January 31,
2014
2013
$85.28
2015
2016
2017
2018
Fiscal Years
*Assumes $100 Invested on February 1, 2013
Assumes Dividends Reinvested
Fiscal Year Ending January 31, 2018
Fiscal Years Ended January 31,
2018
2017
High
Low
High
Low
1st Quarter
Corporate and Stock Information
2nd Quarter
3rd Quarter
$106.56
Low
High
2019
(1) Through March 28, 2018.
1st Quarter (1)
2013
The high market price and low market price per share for the Company's
common stock for the first fiscal quarter of fiscal 2019, were as follows:
Walmart Inc.
$ 70.08 $ 62.35
74.35 62.72
75.19
67.07
72.48 65.28
109.98 87.00
4th Quarter
73.13
77.50
80.47
89.11
S&P 500 Index
Walmart
walmart.com
2
621
37,044
6,299 372,198
2017
439
73,172
20
100,308
1,091
2,411
101,681
631
37,338
6,363
376,769
2018
341 21,921
2,360
22,551
346
2015
411
68,269
20
1,083
431
24,429
2,290
98,419
592
36,277
6,290 367,630
2016
432
71,724
21
1,146
443
73,615
20
1,091
106
Brazil
Canada
380
70
15
465
410
410
Central America (4)
778
778
Chile
373
5
378
China
106
358,207
424
335
336 21,181
2,358 97,024
642
37,587
6,360
373,281
(1) "Unit Count" includes retail stores, wholesale clubs and other, which includes drugstores and convenience stores. Walmart International unit counts, with
the exception of Canada, are stated as of December 31, to correspond with the fiscal year end of the related geographic market. Canada unit counts and
square footage are stated as of January 31. For the balance forward, all country balances are stated as of the end of fiscal year 2013.
(2) "Square Feet" columns are reported in thousands.
(3) All periods presented exclude units and square feet for the Vips restaurant business. The Company completed the sale of the Vips restaurant business in
fiscal 2015.
Unit counts (¹) as of January 31, 2018 for Walmart International are summarized by major category for each geographic market
as follows:
Geographic Market
Africa
(3)
Argentina
Retail
Wholesale Other(2)
Total
89
424
6,107
576
Unit Square
Count
Feet
642
9,873
329
12,671
661
Unit Square
Count Feet
10,427
13,697
690 11,094
404
14,762
709
731 11,770
778 12,448
11,410
395
380
Unit Square
Count
Feet
379 48,354
389 49,914
394 50,927
400 51,784
410 53,088
410 53,082
29,824
465
408
21,869
108
8,280
499
30,675
2017
412
22,542
107
8,264
498
30,642
2018
424 23,134
106
8,305
15,407
363
15,260
378 15,990
Unit Square
Count Feet
1,988 88,833
Unit Square
Count
Unit
Feet
Count
Square
Feet
565
34,810
5,783 345,673
2014
405
67,205
20
1,083
438
24,489
2,199 94,900
24,448
35,416
438
20
China
India
Japan
Mexico (3)
United
Kingdom
Total Segment
Fiscal Year
Count
Unit Square
Feet
Unit Square
Count
Feet
Count
Unit Square
Feet
Balance forward
393
65,801
1,083
19
443
India
Technology, office and entertainment includes electronics, wireless, software, video games, movies, books, music,
office supplies, office furniture, photo processing and third-party gift cards; and
Health and wellness includes pharmacy, optical and hearing services and over-the-counter drugs.
The Member's Mark brand continues to expand assortment and deliver member value. In fiscal 2018, Member's Mark sales
exceeded $10 billion, driven by growth in grocery, seasonal items and apparel. The percentage of net sales for Sam's Club,
including eCommerce sales, by merchandise category, was as follows for fiscal 2018, 2017 and 2016:
MERCHANDISE CATEGORY
Grocery and consumables
Fuel and other categories
Home and apparel
Home and apparel includes home improvement, outdoor living, grills, gardening, furniture, apparel, jewelry,
housewares, toys, seasonal items, mattresses and small appliances;
Technology, office and entertainment
Total
Fiscal Years Ended January 31,
2018
2017
2016
58%
59%
Health and wellness
Fuel and other categories consists of gasoline stations, tobacco, tools and power equipment, and tire and battery
centers;
and nonalcoholic beverages, floral, snack foods, candy, other grocery items, health and beauty aids, paper goods,
laundry and home care, baby care, pet supplies and other consumable items;
Grocery and consumables includes dairy, meat, bakery, deli, produce, dry, chilled or frozen packaged foods, alcoholic
8
655
87,552
9
(4)
660
88,376
4
(67)
597
80,068
2017
2018
(1) "Total" and "Square Feet" columns are as of January 31 for the fiscal years shown. Retail square feet are reported in thousands.
Digital. Sam's Club provides its members access to a broad assortment of merchandise, including products not found in our
clubs, and services online at samsclub.com and through our mobile commerce applications. Samsclub.com experiences on
average 20.4 million unique visitors a month and offers access to approximately 59,000 SKUs providing the member the option
of delivery direct-to-home or to the club through services such as "Club Pickup." Digital retail supports our physical clubs with
capabilities like "Scan and Go," a mobile checkout and payment solution, which allows members to bypass the checkout line.
Merchandise. Sam's Club offers merchandise in the following five merchandise categories:
•
•
59%
21%
20%
20%
Operated
3
Leased and
Operated
Third Party
Owned and
Operated
Total
3
13
22
The principal focus of Sam's Club's distribution operations is on cross-docking merchandise, while stored inventory is
minimized. Cross-docking is a distribution process under which shipments are directly transferred from inbound to outbound
trailers. Shipments typically spend less than 24 hours in a cross-dock facility, and sometimes less than an hour.
Sam's Club uses a combination of our private truck fleet, as well as common carriers, to transport non-perishable merchandise
from distribution facilities to clubs. The segment contracts with common carriers to transport perishable grocery merchandise
from distribution facilities to clubs.
Sam's Club ships merchandise purchased by members on samsclub.com and through its mobile commerce applications by a
number of methods from its dedicated eCommerce fulfillment centers and other distribution centers.
Other Segment Information
Certain financial information relating to our segments is included in Part II, Item 7 under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and in Note 15 to our Consolidated Financial
Statements. Note 15 also includes information regarding total revenues and long-lived assets aggregated by our U.S. and non-
U.S. operations.
Intellectual Property
We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary
technologies, and similar intellectual property as important to our success, and with respect to our associates, customers and
others, we rely on trademark, copyright, and patent law, trade-secret protection, and confidentiality and/or license agreements to
protect our proprietary rights. We have registered, or applied for the registration of, a number of U.S. and international domain
names, trademarks, service marks and copyrights. Additionally, we have filed U.S. and international patent applications
covering certain of our proprietary technology. We have licensed in the past, and expect that we may license in the future,
certain of our proprietary rights to third parties.
Suppliers and Supply Chain
As a retailer and warehouse club operator, we utilize a global supply chain that includes over 100,000 suppliers located around
the world, including in the United States, from whom we purchase the merchandise that we sell in our stores, clubs and online.
In many instances, we purchase merchandise from producers located near the stores and clubs in which such merchandise will
be sold, particularly products in the "fresh" category. Our purchases may represent a significant percentage of a number of our
suppliers' annual sales, and the volume of product we acquire from many suppliers allows us to obtain favorable pricing from
such suppliers. Our suppliers are subject to standards of conduct, including requirements that they comply with local labor
laws, local worker safety laws and other applicable laws. Our ability to acquire from our suppliers the assortment and volume
of products we wish to offer to our customer, to receive those products within the required time through our supply chain and to
distribute those products to our stores and clubs determines, in part, our in-stock levels in our stores and clubs and the
attractiveness of our merchandise assortment we offer to our customers and members.
Employees
Owned and
Third Party
86,510
Owned and
Operated
3
Distribution. During fiscal 2018, approximately 68% of Sam's Club's non-fuel purchases were shipped from Sam's Club's 22
dedicated distribution facilities located strategically throughout the U.S., or from some of the Walmart U.S. segment's
distribution facilities, which service the Sam's Club segment for certain items. Suppliers shipped the balance of the Sam's Club
segment's purchases directly to Sam's Club locations. The following table provides further details of our dedicated distribution
facilities, including two dedicated eCommerce fulfillment centers and two dedicated import facilities, as of January 31, 2018:
9%
9%
9%
6%
6%
7%
6%
6%
5%
100%
100%
100%
Operations. Operating hours for Sam's Clubs are generally Monday through Friday from 10:00 a.m. to 8:30 p.m., Saturday
from 9:00 a.m. to 8:30 p.m. and Sunday from 10:00 a.m. to 6:00 p.m. Additionally, all club locations offer Plus Members the
ability to shop before the regular operating hours Monday through Saturday, starting at 7:00 a.m. A variety of payment methods
are accepted at our clubs and online, including the co-branded Sam's Club "Cash Back" MasterCard.
Seasonal Aspects of Operations. Sam's Club's business is seasonal to a certain extent due to calendar events and national and
religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating income
have occurred in the fiscal quarter ending January 31.
Competition. Sam's Club competes with other membership-only warehouse clubs, the largest of which is Costco, as well as
with discount retailers, retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations as well
as digital retailers and catalog businesses. At Sam's Club, we provide value at members-only prices, a quality merchandise
assortment, and bulk sizing to serve both our Plus and Club members. Our eCommerce website and mobile commerce
13
applications have increasingly become important factors in our ability to compete with other membership-only warehouse
clubs.
Sam's Club distribution facilities
647
(1)
16
(3)
Africa unit counts by country are Botswana (11), Ghana (2), Kenya (1), Lesotho (3), Malawi (2), Mozambique (5), Namibia (4), Nigeria (5), South Africa
(382), Swaziland (1), Tanzania (1), Uganda (1) and Zambia (6).
(4) Central America unit counts by country are Costa Rica (247), El Salvador (95), Guatemala (238), Honduras (103) and Nicaragua (95).
Digital. Walmart International operates eCommerce websites in numerous countries. Customers have access through our
eCommerce websites and, in countries where available, mobile commerce applications to a broad assortment of merchandise
and services, both of which vary by country. Our omni-channel offerings include capabilities like "Click & Collect" in the
United Kingdom and our grocery pick-up and delivery business in several other markets.
Merchandise. The merchandising strategy for Walmart International is similar to that of our operations in the U.S. in terms of
the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of our sales, we
have both leveraged U.S. private brands and developed market specific private brands to serve our customers with high quality,
lower priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday
Time," "Mainstays," "Ol' Roy" and "Parent's Choice," our international markets have developed market specific brands
including "Aurrera," "Cambridge," "Chosen by You" and "Extra Special." In addition, we have developed relationships with
11
regional and local suppliers in each market to ensure reliable sources of quality merchandise that is equal to national brands at
low prices.
Operations. The hours of operation for operating units in Walmart International vary by country and by individual markets
within countries, depending upon local and national ordinances governing hours of operation. Operating units in each country
accept a variety of payment methods.
Seasonal Aspects of Operations. Walmart International's business is seasonal to a certain extent. Historically, the segment's
highest sales volume and operating income have occurred in the fourth quarter of our fiscal year. The seasonality of the
business varies by country due to different national and religious holidays, festivals and customs, as well as different weather
patterns.
Competition. Walmart International competes with both physical retailers who operate department, drug, discount, variety and
specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty
electronics stores, cash & carry operations and convenience stores, and digital retailers, as well as catalog businesses. We also
operate, on a limited basis, consumer credit operations. We compete with others for desirable sites for new or relocated units.
Our ability to develop, open and operate units at the right locations and to deliver a customer-centric experience that seamlessly
integrates digital and physical shopping determines, to a large extent, our competitive position in the markets in which Walmart
International operates. We believe price leadership is a critical part of our business model and we continue to focus on moving
our markets towards an EDLP approach. Additionally, our ability to operate food departments effectively has a significant
impact on our competitive position in the markets where we operate. In the markets in which we have eCommerce websites or
mobile commerce applications, those websites and applications help differentiate us from our competitors and help us compete
with other retailers for customers and their purchases, both in our digital and physical retail operations.
Distribution. We utilize a total of 188 distribution facilities located in Argentina, Brazil, Canada, Central America, Chile,
China, Japan, Mexico, South Africa and the United Kingdom. Through these facilities, we process and distribute both imported
and domestic products to the operating units of the Walmart International segment. During fiscal 2018, approximately 83% of
Walmart International's purchases passed through these distribution facilities. Suppliers ship the balance of Walmart
International's purchases directly to our stores in the various markets in which we operate. The following table provides further
details of our international distribution facilities, including 17 dedicated eCommerce fulfillment centers, as of December 31,
2017, with the exception of distribution facilities in Canada, which are stated as of January 31, 2018:
International distribution facilities
Owned and
Operated
Owned and
Third Party
Operated
Leased and
Operated
Third Party
Owned and
Operated
(2) Other includes drug stores and convenience stores.
Total
(1) Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2017, to correspond with the balance sheet date of the
related geographic market. Canada unit counts are stated as of January 31, 2018.
50
20
20
Japan
336
336
Mexico
2,186
162
10
2,358
United Kingdom
617
25
642
Total
5,945
365
6,360
2016
43
87
Physical. As a membership-only warehouse club, Sam's Club facility sizes generally range between 94,000 and 168,000 square
feet, with an average size of approximately 134,000 square feet.
The following table provides the retail unit count and retail square feet for the fiscal years shown:
Fiscal Year
Balance forward
2014
2015
2016
Square
Opened
Closed
Total (¹)
Feet(1)
620
82,653
12
632
84,382
12
12
All memberships include a spouse/household card at no additional cost. Plus Members are eligible for Cash Rewards, which is
a benefit that provides $10 for every $500 in qualifying Sam's Club purchases up to a $500 cash reward annually. The amount
earned can be used for purchases, membership fees or redeemed for cash. Plus Members are also eligible for Free Shipping on
the vast majority of merchandise available online, with no minimum order size. Free Shipping is yet another example of
creating a new Sam's Club for our members.
No
46
188
We ship merchandise purchased by customers on our eCommerce websites and through our mobile commerce applications by a
number of methods from multiple locations including from our dedicated eCommerce fulfillment centers.
Sam's Club Segment
The Sam's Club segment operates membership-only warehouse clubs, as well as samsclub.com, in the U.S. and had net sales of
$59.2 billion, $57.4 billion and $56.8 billion for fiscal 2018, 2017 and 2016, respectively. During the most recent fiscal year,
no single club location accounted for as much as 1% of total Company net sales.
Membership. Beginning in the year ending January 31, 2019 ("fiscal 2019"), Sam's Club simplified the membership program.
The following two options are available to members:
Annual Membership Fee
Number of Add-on Memberships ($40 each)
Eligible for Cash Rewards
Eligible for Free Shipping
Membership Type
Plus
Club
$100
$45
Up to 16
Yes
Yes
Up to 8
No
(40)
33,028
8,119
•
Walmart's labor costs, including healthcare and other benefit costs;
•
cybersecurity events affecting Walmart and related costs and impact of any disruption in business;
disruptions in Walmart's supply chain;
Walmart's expenditures for Foreign Corrupt Practices Act ("FCPA") and other compliance-related matters including
the adequacy of our accrual for the FCPA matter;
disruption of seasonal buying patterns in Walmart's markets;
Walmart's casualty and accident-related costs and insurance costs;
•
the selling prices of gasoline and diesel fuel;
470
49,327
(16)
19
3,465
616,428
•
the size of and turnover in Walmart's workforce and the number of associates at various pay levels within that
workforce;
the availability of necessary personnel to staff Walmart's stores, clubs and other facilities;
5
changes in the level of public assistance payments;
changes in currency control laws;
the possibility of the imposition of new taxes on imports and new tariffs and trade restrictions and changes in tariff
rates and trade restrictions;
markets in which Walmart operates and elsewhere and actions with respect to such policies, programs and initiatives;
adoption or creation of new, and modification of existing, governmental policies, programs and initiatives in the
changes in existing tax, labor and other laws and changes in tax rates, including the enactment of laws and the
adoption and interpretation of administrative rules and regulations;
•
•
•
Regulatory and Other Factors
unanticipated changes in accounting judgments and estimates;
changes in the credit ratings assigned to the Company's commercial paper and debt securities by credit rating agencies;
Walmart's effective tax rate; and
or is subject, and the liabilities, obligations and expenses, if any, that Walmart may incur in connection therewith;
developments in, and the outcome of, legal and regulatory proceedings and investigations to which Walmart is a party
•
unexpected changes in Walmart's objectives and plans;
•
(19)
442
45,991
(2)
2015
2016
2017
2018
consumer acceptance of and response to Walmart's stores and clubs, digital platforms, programs, merchandise
offerings and delivery methods;
Conversions (¹)
Total(2)
Feet (2)
Opened (3)
Closed
Total(2)
Feet (2)
286
11,226
4,005
640,733
122
2014
the timing of federal income tax refunds;
Balance forward
Fiscal Year
21
3,522
625,930
(6)
(21)
415
43,347
9
3,561
632,479
(6)
(9) 400
41,926
Neighborhood Markets and Other Small Formats
Total Segment
Square
Square
Opened Closed
235
natural disasters, public health emergencies, civil disturbances, and terrorist attacks; and
We typically earn a disproportionate part of our annual operating income in the fourth quarter as a result of seasonal buying
patterns, which patterns are difficult to forecast with certainty and can be affected by many factors.
561
570,409
3,158
Balance forward
Feet(2)
Total(2)
Conversions(¹)
59,098
Closed
Square
Square
Feet (2)
Conversions (¹) Total(2)
Opened Closed
Fiscal Year
Discount Stores
Supercenters
Opened
2014
72
2015
607,415
3,407
40
53,496
508
(57)
4
589,858
58 3,288
| | སྱི།
30
2018
38
2017
55
2016
79
The following table provides the retail unit count and retail square feet by format for the fiscal years shown:
42,000
65,000
28,000
Walmart International consists of operations in 27 countries outside of the U.S. and is divided into three major categories: retail,
wholesale and other. These categories consist of many formats, including: supercenters, supermarkets, hypermarkets,
warehouse clubs (including Sam's Clubs) and cash & carry, as well as eCommerce. Walmart International generated
Walmart U.S. is our largest segment and operates retail stores in all 50 states in the U.S., Washington D.C. and Puerto Rico,
with three primary store formats, as well as eCommerce. Walmart U.S. generated approximately 64% of our net sales in fiscal
2018, and of our three segments, Walmart U.S. is the largest and has historically had the highest gross profit as a percentage of
net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the Company's net
sales and operating income.
The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located
throughout the U.S., Africa, Argentina, Brazil, Canada, Central America, Chile, China, India, Japan, Mexico and the United
Kingdom. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and
Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker
("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products
and services in each of its segments. It is impractical to segregate and identify revenues for each of these individual products
and services.
Information About Our Segments
In 1991, we began our first international initiative when we entered into a joint venture in Mexico. Since then, our international
presence has expanded and, as of January 31, 2018, our Walmart International segment conducted business in 27 countries.
In 2000, we began our first eCommerce initiative by creating walmart.com. That same year, we also created samsclub.com.
Since then, our digital presence has continued to grow. In 2007, walmart.com launched its Site to Store service, enabling
customers to make a purchase online and pick up merchandise in stores. In 2016, we acquired jet.com in the U.S. and formed a
strategic alliance with JD.com in China. Subsequent to the jet.com purchase, we have acquired several other U.S. eCommerce
entities. In 2017, walmart.com launched free two-day shipping on more than 2 million items and we created Store N° 8, a tech
incubator with a focus to drive commerce forward. These eCommerce efforts have led to omni-channel offerings in many
markets, including over 1,100 "Online Grocery" pickup locations in the U.S.
Although Walmart was incorporated in Delaware in October 1969, the businesses conducted by our founders began in 1945
when Sam M. Walton opened a franchise Ben Franklin variety store in Newport, Arkansas. In 1946, his brother, James L.
Walton, opened a similar store in Versailles, Missouri. Until 1962, our founders' business was devoted entirely to the operation
of variety stores. In that year, the first Wal-Mart Discount City, which was a discount store, opened in Rogers, Arkansas. In
1983, we opened our first Sam's Club, and in 1988, we opened our first supercenter. In 1998, we opened our first
Neighborhood Market.
The Development of Our Company
We maintain our principal offices at 702 S.W. 8th Street, Bentonville, Arkansas 72716, USA. Our common stock trades on the
New York Stock Exchange under the symbol "WMT."
Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club. Our fiscal year ends
on January 31 for our United States ("U.S.") and Canadian operations. We consolidate all other operations generally using a
one-month lag and on a calendar year basis. Our discussion is as of and for the fiscal years ended January 31, 2018 ("fiscal
2018"), January 31, 2017 ("fiscal 2017") and January 31, 2016 ("fiscal 2016"). During fiscal 2018, we generated total revenues
of $500.3 billion, which was primarily comprised of net sales of $495.8 billion.
Our strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience.
Leading on price is designed to earn the trust of our customers every day by providing a broad assortment of quality
merchandise and services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a
low price every day so our customers trust that our prices will not change under frequent promotional activity. Price leadership
is core to who we are. Everyday low cost ("EDLC") is our commitment to control expenses so those cost savings can be passed
along to our customers. Our omni-channel presence provides customers access to our broad assortment anytime and anywhere.
We strive to give our customers and members a great digital and physical shopping experience.
Walmart Inc. ("Walmart," the "Company" or "we") helps people around the world save money and live better – anytime and
anywhere – in retail stores and through eCommerce. Through innovation, we are striving to create a customer-centric
experience that seamlessly integrates our eCommerce and retail stores in an omni-channel offering that saves time for our
customers. Each week, we serve nearly 270 million customers who visit our more than 11,700 stores and numerous
eCommerce websites under 65 banners in 28 countries.
General
ITEM 1. BUSINESS
6
The forward-looking statements that we make or are made by others on our behalf are based on our knowledge of our business
and our operating environment and assumptions that we believe to be or will believe to be reasonable when such forward-
looking statements were or are made. As a consequence of the factors described above, the other risks, uncertainties and factors
we disclose below and in the other reports as mentioned above, other risks not known to us at this time, changes in facts,
assumptions not being realized or other circumstances, our actual results may differ materially from those discussed in or
implied or contemplated by our forward-looking statements. Consequently, this cautionary statement qualifies all forward-
looking statements we make or that are made on our behalf, including those made herein and incorporated by reference herein.
We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially
realized, that those results or developments will result in the expected consequences for us or affect us, our business, our
operations or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on
such forward-looking statements, which speak only as of their dates. We undertake no obligation to revise or update any of the
forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.
The above list of factors that may affect the estimates and expectations discussed in or implied or contemplated by forward-
looking statements we make or made on our behalf is not exclusive. We are subject to other risks discussed under the caption
"Item 1A. Risk Factors," and that we may discuss in Management's Discussions and Analysis of Financial Condition and
Results of Operations and in risks that may be discussed under "Part II, Item 1A. Risk Factors" and "Part I, Item 2.
Management's Discussions and Analysis of Financial Condition and Results of Operations" appearing in our Quarterly Reports
on Form 10-Q or may otherwise be disclosed in our Quarterly Reports on Form 10-Q and other reports filed with the SEC.
Investors and other readers are urged to consider all of these risks, uncertainties and other factors carefully in evaluating our
forward-looking statements.
Other Risk Factors; No Duty to Update
7
changes in generally accepted accounting principles in the United States.
approximately 24% of our fiscal 2018 net sales. The overall gross profit rate for Walmart International is lower than that of
Walmart U.S. primarily because of its merchandise mix. Walmart International is our second largest segment.
The Company measures the results of its segments using, among other measures, each segment's net sales and operating
income, which includes certain corporate overhead allocations. From time to time, we revise the measurement of each
segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed
by our CODM. When the measurement of a segment changes, previous period amounts and balances are reclassified to be
comparable to the current period's presentation.
105,000
206,000
30,000
178,000
260,000
69,000
Average
Square Feet
Maximum
Square Feet
Minimum
Square Feet
(1) Excludes other small formats.
Neighborhood Markets (grocery)
(1)
Discount stores (general merchandise and limited grocery)
Supercenters (general merchandise and grocery)
Physical. Walmart U.S. operates retail stores in the U.S., including in all 50 states, Washington D.C. and Puerto Rico, with
supercenters in 49 states, Washington D.C. and Puerto Rico, discount stores in 41 states and Puerto Rico and Neighborhood
Markets and other small store formats in 36 states, Washington D.C. and Puerto Rico. The following table provides square
footage details on each of our formats as of January 31, 2018:
The Walmart U.S. segment is a mass merchandiser of consumer products, operating under the "Walmart," "Wal-Mart" and
"Walmart Neighborhood Market" brands, as well as walmart.com and other eCommerce brands. The Walmart U.S. segment
had net sales of $318.5 billion, $307.8 billion and $298.4 billion for fiscal 2018, 2017 and 2016, respectively. During the most
recent fiscal year, no single unit accounted for as much as 1% of total Company consolidated net sales.
Walmart U.S. Segment
Sam's Club consists of membership-only warehouse clubs and operates in 44 states in the U.S. and in Puerto Rico, as well as
eCommerce. Sam's Club accounted for approximately 12% of our fiscal 2018 net sales. As a membership-only warehouse
club, membership income is a significant component of the segment's operating income. Sam's Club operates with a lower
gross profit rate and lower operating expenses as a percentage of net sales than our other segments.
(3)
161
(133)
initiatives of competitors, competitors' entry into and expansion in Walmart's markets, and competitive pressures;
Operating Factors
•
•
•
the amount of Walmart's net sales and operating expenses denominated in U.S. dollar and various foreign currencies;
the financial performance of Walmart and each of its segments, including the amounts of Walmart's cash flow during
various periods;
Walmart's need to repatriate earnings held outside of the U.S. and changes in U.S. and international tax regulations;
customer traffic and average ticket in Walmart's stores and clubs and on its eCommerce platforms;
the mix of merchandise Walmart sells and its customers purchase;
consumer enrollment in health and drug insurance programs and such programs' reimbursement rates and drug
formularies; and
the availability of goods from suppliers and the cost of goods acquired from suppliers;
As of the end of fiscal 2018, Walmart Inc. and our subsidiaries employed approximately 2.3 million employees ("associates")
worldwide, with 1.5 million associates in the U.S. and 0.8 million associates internationally. Similar to other retailers, the
Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates
are good and are continuing to improve. A large number of associates turn over each year, although Walmart U.S. turnover has
been improving in fiscal 2018 as a result of our focus on increasing wages and providing improved tools, technology and
training to associates.
Pickup Today: customer places order online and picks it up at a store within four hours for free. The order is fulfilled
through existing store inventory;
Online Grocery: customer places grocery order online and has it delivered to home or picks it up at one of our
participating stores or remote locations; and
Money Back Guarantee: our commitment to ensure the quality and freshness of the fruits and vegetables in our stores
by offering our customers a 100 percent money-back guarantee if they are not satisfied.
We offer a broad assortment of merchandise that provides one-stop shopping, in-stock levels that give our customers confidence
that we will have the products they need and operating hours that allow customers to shop at their convenience. In addition, our
eCommerce capabilities, including omni-channel transactions that involve both an eCommerce platform and a physical format,
are important factors in our competition with other retailers.
Distribution. For fiscal 2018, approximately 78% of Walmart U.S.'s purchases of store merchandise were shipped through our
157 distribution facilities, which are located strategically throughout the U.S. The remaining merchandise we purchased was
shipped directly from suppliers. General merchandise and dry grocery merchandise is transported primarily through the
segment's private truck fleet; however, we contract with common carriers to transport the majority of our perishable grocery
merchandise.
We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from multiple locations
including from our 30 dedicated eCommerce fulfillment centers.
the effectiveness of the implementation and operation of Walmart's strategies, plans, programs and initiatives;
Walmart's ability to successfully integrate acquired businesses, including within the eCommerce space;
the amount of shrinkage Walmart experiences;
trends in consumer shopping habits around the world and in the markets in which Walmart operates;
consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt levels, and
demand for certain merchandise;
commodity prices, including the prices of oil and natural gas;
Rollbacks: our commitment to pass cost savings on to the customer by lowering prices on selected goods;
Savings Catcher, Save Even More and Ad Match: strategies to meet or be below a competitor's advertised price;
Walmart Pickup: customer places order online and picks it up for free from a store. The merchandise is fulfilled
through our distribution facilities;
"may continue," "may fluctuate," "may grow," "may impact," "may result," "objective," "plan," "priority," "project," "strategy,"
"to be," "we'll," "we will," "will add," "will allow," "will be," "will benefit," "will change," "will come in at," "will continue,"
"will decrease," "will grow," "will have," "will impact," "will include," "will increase," "will open," "will remain," "will result,"
"will stay," "will strengthen," "would be," "would decrease" and "would increase," variations of such words or phrases, other
phrases commencing with the word "will" or similar words and phrases denoting anticipated or expected occurrences or results.
The forward-looking statements include statements made in Part I, Item 3. "Legal Proceedings" in this Annual Report on Form
10-K as to our belief that the possible loss or range of any possible loss that may be incurred in connection with certain legal
proceedings will not be material to our financial condition, results of operations, or liquidity.
Risks Factors and Uncertainties Affecting Our Business
Our business operations are subject to numerous risks, factors and uncertainties, domestically and internationally, outside of our
control. One, or a combination, of these risks, factors and uncertainties could materially affect any of those matters as to which
we have made forward-looking statements and cause our actual results or an actual event or occurrence to differ materially from
those results or an event or occurrence described in a forward-looking statement. These risks, factors and uncertainties, which
may be global in their effect or affect only some of the markets in which we operate and which may affect us on a consolidated
basis or affect only some of our reportable segments, include, but are not limited to:
Economic Factors
•
•
•
economic, geo-political, capital markets and business conditions, trends and events around the world and in the
markets in which Walmart operates;
currency exchange rate fluctuations;
changes in market rates of interest;
changes in market levels of wages;
changes in the size of various markets, including eCommerce markets;
unemployment levels;
inflation or deflation, generally and in certain product categories;
transportation, energy and utility costs;
The following table provides further details of our distribution facilities, including return facilities and dedicated eCommerce
fulfillment centers, as of January 31, 2018:
Owned and
Operated
103
Owned and
Third Party
Operated
2
Balance forward
377
19,775
94
7,531
Unit Square Unit Square
Count Feet
Count
Feet
558 32,494
2014
379
20,513
104
8,062
556
32,501
2015
396
21,223
105
Square
Feet
•
Unit
Count
Chile
Leased and
Operated
Third Party
Owned and
Operated
23
29
Total
157
Walmart U.S. distribution facilities
Walmart International Segment
The Walmart International segment consists of operations in 27 countries outside of the U.S. and includes numerous formats
divided into three major categories: retail, wholesale and other. These categories, including eCommerce, consist of many
formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's Clubs) and cash & carry. The
segment's net sales for fiscal 2018, 2017 and 2016, were $118.1 billion, $116.1 billion and $123.4 billion, respectively, which
have been impacted by currency exchange rate fluctuations. During the most recent fiscal year, no single unit accounted for as
much as 1% of total Company net sales.
Physical. Walmart International includes physical stores operated by: our wholly-owned subsidiaries operating in Argentina,
Brazil, Canada, Chile, China, India, Japan and the United Kingdom; and our majority-owned subsidiaries operating in Africa
(which includes Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, South Africa, Swaziland,
Tanzania, Uganda and Zambia), Central America (which includes Costa Rica, El Salvador, Guatemala, Honduras and
Nicaragua) and Mexico.
Generally, retail units range in size from 8,900 square feet to 186,000 square feet. Our wholesale stores generally range in size
from 35,000 square feet to 185,000 square feet. Other, which includes drugstores and convenience stores operating under
various banners in Brazil, Mexico and the United Kingdom, range in size up to 2,400 square feet. Also, on a limited basis,
Walmart International operates financial institutions that provide consumer credit.
10
The following table provides the retail unit count (¹) and retail square feet (2) for the fiscal years shown:
Africa
Argentina
Brazil
Canada
Central
America
Fiscal Year
•
•
•
735
30,012
111
(13) 4,672
699,289
800
30,111
115
(26) 4,761
704,516
(1) Conversions of discount stores or Neighborhood Markets to supercenters.
(2) "Total" and "Square Feet" columns are as of January 31 for the years shown. Retail square feet are reported in thousands.
(3) Total opened, net of conversions of discount stores or Neighborhood Markets to supercenters.
Digital. Walmart U.S. provides its customers access to a broad assortment of merchandise, including products not found in our
physical stores, and services online through our eCommerce family of brands' websites and third party retail partnership
channels, as well as through related mobile commerce and voice-activated commerce applications. Our eCommerce family of
brands includes walmart.com, jet.com, hayneedle.com, shoes.com, moosejaw.com, modcloth.com and bonobos.com.
Walmart.com offers access to nearly 75 million SKUs, including those carried on Marketplace, a feature of the website that
permits third parties to sell merchandise on walmart.com. Walmart.com is also integrated with our physical stores through
8
services like "Walmart Pickup," "Pickup Today" and in over 1,100 "Online Grocery" pickup locations to provide an omni-
channel offering to our customers. Walmart U.S. also offers access to digital content and services including Vudu.
Merchandise. Walmart U.S. does business in three strategic merchandise units, listed below, across several store formats
including supercenters, discount stores, Neighborhood Markets and other small store formats, as well as on our eCommerce
websites.
•
⋅
689,647
Grocery consists of a full line of grocery items, including meat, produce, natural & organics, deli & bakery, dairy,
frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables such as health and
beauty aids, baby products, household chemicals, paper goods and pet supplies;
4,574
216
73
85
(5)
(20)
(1)
407
15,778
198
4,203
659,132
639
23,370
316
(3)
4,516
680,112
667
27,228
(158)
557
Health and wellness includes pharmacy, optical services, clinical services, and over-the-counter drugs and other
medical products;
°
11%
11%
33%
33%
33%
100%
100%
100%
Periodically, revisions are made to the categorization of the components comprising our strategic merchandise units. When
revisions are made, the previous periods' presentation is adjusted to maintain comparability.
Operations. Many supercenters, discount stores and Neighborhood Markets are open 24 hours each day. A variety of payment
methods are accepted at our stores and through our eCommerce websites and mobile commerce applications.
Seasonal Aspects of Operations. Walmart U.S.'s business is seasonal to a certain extent due to calendar events and national
and religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating
income have occurred in the fiscal quarter ending January 31.
Competition. Walmart U.S. competes with both physical retailers operating discount, department, retail and wholesale grocers,
drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, and digital retailers, as well
as catalog businesses. We also compete with others for desirable sites for new or relocated retail units.
Our ability to develop, open and operate units at the right locations and to deliver a customer-centric omni-channel experience
largely determines our competitive position within the retail industry. We employ many programs designed to meet competitive
pressures within our industry. These programs include the following:
•
EDLP: our pricing philosophy under which we price items at a low price every day so our customers trust that our
prices will not change under frequent promotional activity;
EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our
customers;
9
11%
General merchandise includes:
56%
56%
°
о
°
Entertainment (e.g., electronics, cameras and supplies, photo processing services, wireless, movies, music,
video games and books);
Hardlines (e.g., stationery, automotive, hardware and paint, sporting goods, outdoor living and horticulture);
Apparel (e.g., apparel for women, girls, men, boys and infants, as well as shoes, jewelry and accessories); and
Home/Seasonal (e.g., home furnishings, housewares and small appliances, bedding, home decor, toys, fabrics
and crafts and seasonal merchandise).
Walmart U.S. also offers fuel and financial services and related products, including money orders, prepaid cards, wire transfers,
money transfers, check cashing and bill payment. These services total less than 1% of annual net sales.
Brand name merchandise represents a significant portion of the merchandise sold in Walmart U.S. We also market lines of
merchandise under our private-label store brands, including: "Adventure Force," "AutoDrive," "BlackWeb," "Equate,"
"Everstart," "Faded Glory," "George," "Great Value," "Holiday Time," "Hyper Tough," "Kid Connection," "Mainstays,"
"Marketside," "My Life As," "No Boundaries," "Ol' Roy," "Onn," "Ozark Trail," "Parent's Choice," "Prima Della," "Pure
Balance,"
," 
"Sam's Choice," "Special Kitty," "Spring Valley," "Terra & Sky," "Time and Tru," "Way to Celebrate" and "Wonder
Nation." The Company also markets lines of merchandise under licensed brands, some of which include: "Better Homes &
Gardens," "Farberware," "Russell" and "Swiss Tech."
The percentage of strategic merchandise unit net sales for Walmart U.S., including online sales, was as follows for fiscal 2018,
2017 and 2016:
STRATEGIC MERCHANDISE UNITS
Grocery
Health and wellness
General merchandise
Total
Fiscal Years Ended January 31,
2018
2017
2016
56%
14
•
Walmart's gross profit margins, including pharmacy margins and margins of other product categories;
The retail business is rapidly evolving and consumers are increasingly embracing shopping online and through mobile
commerce applications. As a result, the portion of total consumer expenditures with retailers and wholesale clubs occurring
through digital platforms is increasing and the pace of this increase could accelerate.
Our strategy, which includes investments in eCommerce, technology, store remodels and other customer initiatives may not
adequately or effectively allow us to grow our eCommerce business, increase comparable store sales, maintain or grow our
overall market position or otherwise offset the impact on the growth of our business of a moderated pace of new store and club
openings. The success of this strategy will depend in large measure on our ability to build and deliver a seamless omni-channel
shopping experience and is further subject to the risks we face as outlined in this Item 1A. As a result, our market position, net
sales and financial performance could be adversely affected. In addition, a greater concentration of eCommerce sales could
result in a reduction in the amount of traffic in our stores and clubs, which would, in turn, reduce the opportunities for cross-
store or cross-club sales of merchandise that such traffic creates and could reduce our sales within our stores and clubs and
materially adversely affect the financial performance of the physical retail side of our operations.
The following chart names the executive officers of the Company as of the date of the filing of this Annual Report on Form 10-
K with the SEC, each of whom is elected by and serves at the pleasure of the Board of Directors. The business experience
shown for each officer has been his or her principal occupation for at least the past five years, unless otherwise noted.
Failure to grow our eCommerce business through the omni-channel integration of physical and digital retail or
otherwise, and the cost of our increasing eCommerce investments, may materially adversely affect our market position,
net sales and financial performance.
It is difficult to predict consistently and successfully the products and services our customers will demand and changes in their
shopping patterns. The success of our business depends in part on how accurately we predict consumer demand, availability of
merchandise, the related impact on the demand for existing products and the competitive environment, whether for customers
purchasing products at our stores and clubs, through our digital platforms or through the combination of both. Price
transparency, assortment of products, customer experience, convenience and the speed and cost of shipping are of primary
importance to customers and continue to increase in importance, particularly as a result of digital tools and social media
available to consumers and the choices available to consumers for purchasing products. Our failure to adequately or effectively
respond to changing consumer tastes, preferences and shopping patterns, or any other failure on our part to timely identify or
effectively respond to changing consumer tastes, preferences and shopping patterns could negatively affect our relationship
with our customers, the demand for the products we sell, our market share and the growth of our business.
We may not timely identify or effectively respond to consumer trends or preferences, which could negatively affect our
relationship with our customers, demand for the products and services we sell, our market share and the growth of our
business.
Certain segments of the retail industry are undergoing consolidation, which could result in increased competition and
significantly alter the dynamics of the retail marketplace. Such consolidation, or other business combinations or alliances, may
result in competitors with greatly improved financial resources, improved access to merchandise, greater market penetration
than they previously enjoyed and other improvements in their competitive positions. Such business combinations or alliances
could result in the provision of a wider variety of products and services at competitive prices by such consolidated or aligned
companies, which could adversely affect our financial performance.
A failure to respond effectively to competitive pressures and changes in the retail markets or delays or failure in execution of
our strategy could materially adversely affect our financial performance. See "Item 1. Business" above for additional
discussion of the competitive situation of each of our reportable segments.
We compete in a variety of ways, including the prices at which we sell our merchandise, merchandise selection and availability,
services offered to customers, location, store hours, in-store amenities, the shopping convenience and overall shopping
experience we offer, the attractiveness and ease of use of our digital platforms, cost and speed of and options for delivery to
customers of merchandise purchased through our digital platforms or through the omni-channel integration of our physical and
digital retail operations.
Our Walmart International segment competes with both physical retailers who operate department, drug, discount, variety and
specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty
electronics stores, cash & carry operations and convenience stores, and digital retailers, as well as catalog businesses.
17
Our Walmart U.S. segment competes with both physical retailers operating discount, department, retail and wholesale grocers,
drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, and digital retailers, as well
as catalog businesses. Our Sam's Club segment competes with other wholesale club operators, as well as discount retailers,
retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations, as well as digital retailers and
catalog businesses.
Each of our segments competes for customers, employees, store and club sites, digital prominence, products and services and in
other important aspects of its business with many other local, regional, national and global physical and digital retailers,
wholesale club operators and retail intermediaries.
We face strong competition from other retailers and wholesale club operators (whether through physical retail, digital
retail or the integration of both), which could materially adversely affect our financial performance.
The economic factors that affect our operations may also adversely affect the operations of our suppliers, which can result in an
increase in the cost to us of the goods we sell to our customers or, in more extreme cases, in certain suppliers not producing
goods in the volume typically available to us for sale.
In addition, the economic factors listed above, any other economic factors or circumstances resulting in higher transportation,
labor, insurance or healthcare costs or commodity prices, and other economic factors in the U.S. and other countries in which
we operate can increase our cost of sales and operating, selling, general and administrative expenses and otherwise materially
adversely affect our operations and operating results.
General economic conditions and other economic factors, globally or in one or more of the markets we serve, may adversely
affect our financial performance. Higher interest rates, lower or higher prices of petroleum products, including crude oil,
natural gas, gasoline, and diesel fuel, higher costs for electricity and other energy, weakness in the housing market, inflation,
deflation, increased costs of essential services, such as medical care and utilities, higher levels of unemployment, decreases in
consumer disposable income, unavailability of consumer credit, higher consumer debt levels, changes in consumer spending
and shopping patterns, fluctuations in currency exchange rates, higher tax rates, imposition of new taxes or other changes in tax
laws, changes in healthcare laws, other regulatory changes, the imposition of measures that create barriers to or increase the
costs associated with international trade, overall economic slowdown and other economic factors in the U.S. or in any of the
other markets in which we operate could adversely affect consumer demand for the products we sell in the U.S. or such other
markets, change the mix of products we sell to one with a lower average gross margin, cause a slowdown in discretionary
purchases of goods, adversely affect our net sales and result in slower inventory turnover and greater markdowns of inventory,
or otherwise materially adversely affect our operations and operating results.
General or macro-economic factors, both domestically and internationally, may materially adversely affect our financial
performance.
Strategic Risks
The risks described below could materially and adversely affect our business, results of operations, financial condition and
liquidity. Our business operations could also be affected by additional factors that apply to all companies operating in the U.S.
and globally.
Furthermore, the cost of certain eCommerce and technology investments, including any operating losses incurred by acquired
eCommerce businesses will adversely impact our financial performance in the short-term and may adversely impact our
financial performance over the longer term.
The performance of strategic alliances to support the expansion of our Walmart International segment could materially
adversely affect our financial performance.
Our Walmart International segment may enter into strategic alliances in the countries in which we have existing operations or in
other markets to expand our digital retail operations, physical retail operations or both. Any strategic alliance may not generate
the level of eCommerce or other sales we anticipate when entering into that alliance or may otherwise adversely impact our
18
Any failure to maintain the security of the information relating to our company, customers, members, associates and
vendors, whether as a result of cybersecurity attacks on our information systems or otherwise, could damage our
reputation, result in litigation or other legal actions against us, cause us to incur substantial additional costs, and
materially adversely affect our business and operating results.
Our digital platforms, which are increasingly important to our business and continue to grow in complexity and scope, and the
computer and operating systems on which they run, including those applications and systems in our acquired eCommerce
businesses, may be subject to cyber-attacks. Those attacks could involve attempts to gain access to one of our eCommerce
websites or mobile commerce applications to obtain and make unauthorized use of customers' or members' payment
information and related risks discussed below. Such attacks, if successful, can also create denials of service or otherwise
disable, degrade or sabotage one or more of our digital platforms and otherwise significantly disrupt our customers' and
members' shopping experience. If we are unable to maintain the security of our digital platforms and keep them operating
within acceptable parameters, we could suffer loss of sales, reductions in traffic, reputational damage and deterioration of our
competitive position and incur liability for any damage to customers whose personal information is unlawfully obtained and
used, any of which events could have a material adverse impact on our business and results of operations and impede the
execution of our strategy for the growth of our business.
We must anticipate and meet our customers' changing expectations while adjusting for technology investments and
developments in our competitors' operations through focusing on the building and delivery of a seamless shopping experience
across all channels by each operating segment. Any failure on our part to provide attractive, user-friendly secure digital
platforms that offer a wide assortment of merchandise at competitive prices and with low cost and rapid delivery options and
that continually meet the changing expectations of online shoppers and developments in online and digital platform
merchandising and related technology could place us at a competitive disadvantage, result in the loss of eCommerce and other
sales, harm our reputation with customers, have a material adverse impact on the growth of our eCommerce business globally
and have a material adverse impact on our business and results of operations.
If the technology-based systems that give our customers the ability to shop with us online do not function effectively, our
operating results, as well as our ability to grow our eCommerce business globally, could be materially adversely affected.
Many of our customers shop with us using our digital platforms, which are a part of our omni-channel sales strategy.
Increasingly, customers are using computers, tablets, and smart phones to shop online and through digital platforms with us and
with our competitors and to do comparison shopping. We use social media and electronic mail to interact with our customers
and as a means to enhance their shopping experience. As a part of our omni-channel sales strategy, in addition to home
delivery, we offer "Walmart Pickup," "Pickup Today" and "Club Pickup" and, in a growing number of locations, "Online
Grocery" programs under which many products available for purchase online can be picked up by the customer at a local
Walmart store or Sam's Club, which provides additional customer traffic at such stores and clubs. Omni-channel retailing is a
rapidly evolving part of the retail industry and of our operations in the U.S. (whether through organic growth or eCommerce
acquisitions) and in a number of markets in which our Walmart International segment operates.
Given the number of individual transactions we have each year, it is crucial that we maintain uninterrupted operation of our
business-critical information systems. Our information systems are subject to damage or interruption from power outages,
computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service
attacks, security breaches (through cyber-attacks from cyber-attackers and sophisticated organizations), catastrophic events
such as fires, tornadoes, earthquakes and hurricanes, and usage errors by our associates or contractors. Our information
systems are essential to our business operations, including the processing of transactions, management of our associates,
facilities, logistics, inventories, physical stores and clubs and our online operations. Our information systems are not fully
redundant and if our systems are damaged, breached or cease to function properly, we may have to make a significant
investment to repair or replace them, and we may suffer interruptions in our business operations in the interim. Any
interruption to our information systems may have a material adverse effect on our business or results of operations. In addition,
we are constantly updating our information technology processes and systems. The risk of system disruption is increased when
significant system changes are undertaken. If we fail to timely integrate and update our information systems and processes, we
may fail to realize the cost savings anticipated to be derived from these initiatives.
We rely extensively on information systems to process transactions, summarize results and manage our business.
Disruptions in our systems could harm our ability to conduct our operations.
19
Our customers count on us to provide them with safe products. Concerns regarding the safety of food and non-food products
that we source from our suppliers or that we prepare and then sell could cause customers to avoid purchasing certain products
from us, or to seek alternative sources of supply for all of their food and non-food needs, even if the basis for the concern is
outside of our control. Any lost confidence on the part of our customers would be difficult and costly to reestablish. As such,
any issue regarding the safety of any food or non-food items we sell, regardless of the cause, could adversely affect our brand,
reputation and financial performance.
If the products we sell are not safe or otherwise fail to meet our customers' expectations, we could lose customers, incur
liability for any injuries suffered by customers using or consuming a product we sell or otherwise experience material
adverse effects to our brand, reputation and financial performance.
In addition, the U.S.'s foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain
countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other
countries and other factors relating to foreign trade are beyond our control. These and other factors affecting our suppliers and
our access to products could adversely affect our financial performance.
Political and economic instability in the countries in which our foreign suppliers and their manufacturers are located, the
financial instability of suppliers, suppliers' failure to meet certain of our supplier standards (including our responsible sourcing
standards), labor problems experienced by our suppliers and their manufacturers, the availability of raw materials to suppliers,
merchandise safety and quality issues, disruption in the transportation of merchandise from the suppliers and manufacturers to
our stores, clubs, and other facilities, including as a result of labor slowdowns at any port at which a material amount of
merchandise we purchase enters into the U.S., currency exchange rates, transport availability and cost, transport security,
inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control.
The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the
products we sell is an important factor in our financial performance. We expect all of our suppliers to comply with applicable
laws, including labor, safety and environmental laws, and to otherwise meet our required supplier standards of conduct. Our
ability to find qualified suppliers who uphold our standards, and to access products in a timely and efficient manner, is a
significant challenge, especially with respect to suppliers located and goods sourced outside the U.S.
Risks associated with the suppliers from whom our products are sourced could materially adversely affect our financial
performance.
We bear the risk of losses incurred as a result of physical damage to, or destruction of, any stores, clubs and distribution
facilities, loss or spoilage of inventory and business interruption caused by such events. These events and their impacts could
otherwise disrupt and adversely affect our operations in the areas in which they occur and could materially adversely affect our
financial performance.
Such events could result in physical damage to, or the complete loss of, one or more of our properties, the closure of one or
more stores, clubs and distribution facilities, the lack of an adequate work force in a market, the inability of customers and
associates to reach or have transportation to our stores and clubs affected by such events, the evacuation of the populace from
areas in which our stores, clubs and distribution facilities are located, the unavailability of our digital platforms to our
customers, changes in the purchasing patterns of consumers and in consumers' disposable income, the temporary or long-term
disruption in the supply of products from some local and overseas suppliers, the disruption in the transport of goods from
overseas, the disruption or delay in the delivery of goods to our distribution facilities or stores within a country in which we are
operating, the reduction in the availability of products in our stores, the disruption of utility services to our stores and our
facilities, and disruption in our communications with our stores.
The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis,
cyclones, typhoons, weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of
climate change or otherwise, severe changes in climate and geo-political events, such as war, civil unrest or terrorist attacks in a
country in which we operate or in which our suppliers are located could adversely affect our operations and financial
performance.
Natural disasters, changes in climate, and geo-political events could materially adversely affect our financial
performance.
Operational Risks
business and competitive position relative to the results we could have achieved in the absence of such alliance. In addition,
any investment we make in connection with a strategic alliance could materially adversely affect our financial performance.
ITEM 1A. RISK FACTORS
A description of any substantive amendment or waiver of Walmart's Code of Ethics for the CEO and Senior Financial Officers
or our Statement of Ethics for our chief executive officer, our chief financial officer and our controller, who is our principal
accounting officer, will be disclosed on our website at www.stock.walmart.com under the Corporate Governance section. Any
such description will be located on our website for a period of 12 months following the amendment or waiver.
Our corporate website is located at www.stock.walmart.com. We file with or furnish to the SEC Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy statements and annual
reports to shareholders, and, from time to time, other documents. The reports and other documents filed with or furnished to
the SEC are available to investors on or through our corporate website free of charge as soon as reasonably practicable after we
electronically file them with or furnish them to the SEC. The SEC maintains a website that contains reports, proxy and
information statements and other information regarding issuers, such as the Company, that file electronically with the SEC.
The address of that website is www.sec.gov. In addition, the public may read and copy any of the materials we file with the
SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings, our Code of Ethics for
our CEO and Senior Financial Officers and our Statement of Ethics can be found on our website at www.stock.walmart.com.
These documents are available in print to any shareholder who requests a copy by writing or calling our Investor Relations
Department, which is located at our principal offices.
Our Website and Availability of SEC Reports and Other Information
Business Experience
Jacqueline P. Canney
M. Brett Biggs
Name
Daniel J. Bartlett
43
2017
56
2014
48
48
50
50
2017
2015
49
2016
46
2013
Age
Executive Vice President, Corporate Affairs, effective June 2013. From
November 2007 to June 2013, he served as the Chief Executive Officer and
President of U.S. Operations at Hill & Knowlton, Inc., a public relations
company.
As do most retailers, we receive and store in our digital information systems certain personal information about our customers
and members, and we receive and store personal information concerning our associates and vendors. Some of that information
is stored digitally in connection with our digital platforms. We also utilize third-party service providers for a variety of reasons,
including, without limitation, for encryption and authentication technology, content delivery to customers and members, back-
office support, and other functions. Such providers may have access to information we hold about our customers, members,
associates or vendors. In addition, our eCommerce operations depend upon the secure transmission of confidential information
over public networks, including information permitting cashless payments.
Executive Vice President and Chief Financial Officer, effective January 1,
2016. From January 2014 to December 2015, he served as Executive Vice
President and Chief Financial Officer of Walmart International. From January
2013 to January 2014, he was Executive Vice President and Chief Financial
Officer of Walmart U.S.
David M. Chojnowski Senior Vice President and Controller effective January 1, 2017. From October
2014 to January 2017, he served as Vice President and Controller, Walmart
U.S. From January 2013 to October 2014, he served as Vice President, Finance
Transformation, of Walmart International.
16
Effective April 2, 2018, Rachel Brand, age 44, will join the Company as Executive Vice President, Global Governance and
Corporate Secretary. From May 2017 to February 2018, she served as Associate Attorney General in the United States
Department of Justice. From January 2017 to May 2017, she was an Associate Professor of Law at George Mason University
Antonin Scalia Law School. Prior to that position, she served as a Board Member on the Privacy and Civil Liberties Oversight
Board of the U.S. government from August 2012 to February 2017.
51
2014
51
2018
46
2016
New Executive Officer
President and Chief Executive Officer, effective February 1, 2014. From
February 2009 to January 2014, he served as Executive Vice President,
President and Chief Executive Officer, Walmart International.
Executive Vice President, President and Chief Executive Officer, Walmart
International, effective February 1, 2018. From February 2015 to January
2018, she served as Executive Vice President and Chief Operating Officer of
Walmart U.S. Prior to that position, she served as Executive Vice President
and Chief Development Officer for Walmart U.S. from April 2014 to February
2015; as Executive Vice President, Strategy and Development, for Walmart
International, from April 2013 to April 2014; and as Chief Operating Officer of
Asda Group Limited, the Company's subsidiary in the United Kingdom, from
July 2011 to April 2013.
Executive Vice President, President and Chief Executive Officer, U.S.
eCommerce, effective September 2016. From April 2014 to September 2016,
he served as President and Chief Executive Officer of Jet.com, Inc. From
January 2005 to July 2013, he served as Chief Executive Officer of Quidsi,
Inc., an eCommerce retailer that became a wholly-owned subsidiary of
Amazon.com, Inc. in April 2011.
Executive Vice President, President and Chief Executive Officer, Sam's Club,
effective February 1, 2017. From October 2015 to January 2017, he served as
Executive Vice President and Chief Merchandising Officer of Sam's Club.
From January 2013 to October 2015, he served as Senior Vice President and
Chief Merchandising Officer of Walmart China.
Executive Vice President, President and Chief Executive Officer, Walmart U.S.
effective August 2014. From May 2014 to August 2014, he served as President
and Chief Executive Officer for the Walmart Asia region. From March 2012 to
May 2014, he served as President and Chief Executive Officer of Walmart
China.
C. Douglas McMillon
Judith McKenna
Marc Lore
John Furner
Gregory Foran
Executive Vice President, Global People, effective August 3, 2015. From
September 2003 to July 2015, she served as the Managing Director of Global
Human Resources at Accenture plc., a global management consulting,
technology services and outsourcing company.
20
Cyber threats are rapidly evolving and those threats and the means for obtaining access to information in digital and other
storage media are becoming increasingly sophisticated. Cyber threats and cyber-attackers can be sponsored by countries or
sophisticated criminal organizations or be the work of single "hackers" or small groups of "hackers." Each year, cyber-attackers
make numerous attempts to access the information stored in our information systems. As cyber threats evolve, change and
become more difficult to detect and successfully defend against, one or more cyber-attacks might defeat our or a third-party
service provider's security measures in the future and obtain the personal information of customers, members, associates and
vendors.
Associate error or malfeasance, faulty password management or other irregularities may also result in a defeat of our or our
third-party service providers' security measures and a breach of our or their information systems. Moreover, hardware, software
or applications we use may have inherent defects of design, manufacture or operations or could be inadvertently or intentionally
implemented or used in a manner that could compromise information security. We or our third-party service providers may not
discover any security breach and loss of information for a significant period of time after the security breach occurs.
Any breach of our security measures or any breach, error or malfeasance of those of our third-party service providers and loss
of our confidential information, or any failure by us to comply with applicable privacy and information security laws and
regulations, could cause us to incur significant costs to protect any customers, members, associates and vendors whose personal
data was compromised and to restore their confidence in us and to make changes to our information systems and administrative
processes to address security issues and compliance with applicable laws and regulations.
During fiscal 2018, our Walmart International operations generated approximately 24% of our consolidated net sales. Walmart
International's operations in various countries also sources goods and services from other countries. Our future operating
results in these countries could be negatively affected by a variety of factors, most of which are beyond our control. These
factors include political conditions, including political instability, local and global economic conditions, legal and regulatory
constraints, local product safety and environmental laws, tax regulations, local labor laws, anti-money laundering laws and
regulations, trade policies, currency regulations, and other matters in any of the countries or regions in which we operate, now
or in the future.
Our business and results of operations in the UK may be negatively affected by fluctuations in currency exchange rates,
increases in food costs, changes in trade policies, or changes in labor, immigration, tax or other laws resulting from the UK's
anticipated exit from the European Union.
Brazilian federal, state and local laws are complex and subject to varying interpretations. Although the Company believes it
complies with those laws, the Company's subsidiaries in Brazil are party to a large number of labor claims and non-income tax
assessments, which have arisen during the normal course of business in Brazil. These matters are subject to inherent
uncertainties and if decided adversely to the Company, could materially adversely affect our financial performance.
The economies of some of the countries in which we have operations have in the past suffered from high rates of inflation and
currency devaluations, which, if they occurred again, could adversely affect our financial performance. Other factors which
may impact our international operations include foreign trade, monetary and fiscal policies of the U.S. and of other countries,
laws, regulations and other activities of foreign governments, agencies and similar organizations, and risks associated with
having numerous facilities located in countries which have historically been less stable than the U.S. Additional risks inherent
in our international operations generally include, among others, the costs and difficulties of managing international operations,
adverse tax consequences and greater difficulty in enforcing intellectual property rights in countries other than the U.S. The
various risks inherent in doing business in the U.S. generally also exist when doing business outside of the U.S., and may be
exaggerated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws and
regulations.
In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in contravention
of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the Foreign
Corrupt Practices Act ("FCPA"), or the laws and regulations of other countries, such as the UK Bribery Act. We maintain a
global policy prohibiting such business practices and have in place a global anti-corruption compliance program designed to
ensure compliance with these laws and regulations. Nevertheless, we remain subject to the risk that one or more of our
associates, contractors or agents, including those based in or from countries where practices that violate such U.S. laws and
regulations or the laws and regulations of other countries may be customary, will engage in business practices that are
prohibited by our policies, circumvent our compliance programs and, by doing so, violate such laws and regulations. Any such
violations, even if prohibited by our internal policies, could adversely affect our business or financial performance and our
reputation.
We are subject to income taxes and other taxes in both the U.S. and the foreign jurisdictions in which we currently operate or
have historically operated. The determination of our worldwide provision for income taxes and current and deferred tax assets
and liabilities requires judgment and estimation. Our income taxes could be materially adversely affected by earnings being
23
lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have
higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in worldwide tax
laws, regulations, or accounting principles.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted and contains significant changes to U.S.
income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35 percent to 21 percent and creates
new taxes focused on foreign-sourced earnings and related-party payments. In addition, the Company was subject to a one-
time transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax. The
Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin No. 118 ("SAB 118") on December 22,
2017, which allows companies to record provisional amounts during a measurement period not to extend beyond one year of
the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act,
the Company made reasonable estimates of the effects and recorded provisional amounts in our financial statements as of
January 31, 2018, in accordance with SAB 118. As the Company collects and prepares necessary data, and interprets the Tax
Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the
Company may make adjustments to the provisional amounts during fiscal 2019. Those adjustments may materially impact our
provision for income taxes and effective tax rate in the period in which the adjustments are made and could impact our net
income and our earnings per share, as well as our consolidated cash flows and liquidity.
In fiscal 2018, our Walmart U.S. and Sam's Club operating segments generated approximately 76% of our consolidated net
sales. The Federal Government has created the potential for significant changes in trade policies, including tariffs and
government regulations affecting trade between the U.S. and other countries where we source many of the products we sell in
our stores and clubs. Potential changes which have been discussed include the renegotiation or termination of trade agreements
and the imposition of higher tariffs on imports into the U.S. A significant portion of the general merchandise we sell in our U.S.
stores and clubs is manufactured in other countries. Any such actions could increase the cost to us of such merchandise
(whether imported directly or indirectly) and cause increases in the prices at which we sell such merchandise to our customers,
which could materially adversely affect the financial performance of our U.S. operations and our business.
We are subject to regular review and audit by both domestic and foreign tax authorities as well as subject to the prospective and
retrospective effects of changing tax regulations and legislation. Although we believe our tax estimates are reasonable, the
ultimate tax outcome may materially differ from the tax amounts recorded in our consolidated financial statements and may
materially affect our income tax provision, net income, or cash flows in the period or periods for which such determination and
settlement is made.
For example, in the United States the DEA and various other regulatory authorities regulate the distribution and dispensing of
pharmaceuticals and controlled substances. We are required to hold valid DEA and state-level licenses, meet various security
and operating standards and comply with the federal and various state controlled substance acts and related regulations
governing the sale, dispensing, disposal, holding and distribution of controlled substances. The DEA, FDA and state regulatory
authorities have broad enforcement powers, including the ability to seize or recall products and impose significant criminal,
civil and administrative sanctions for violations of these laws and regulations. We are also governed by foreign, national and
state laws of general applicability, including laws regulating matters of working conditions, health and safety and equal
employment opportunity and other labor and employment matters, as well as employee benefit, competition, anti-money
laundering, antitrust matters and health and wellness related regulations for our pharmacy operations outside of the United
States. Changes in laws, regulations and policies and the related interpretations and enforcement practices may alter the
landscape in which we do business and may significantly affect our cost of doing business.
The impact of new laws, regulations and policies and the related interpretations and enforcement practices generally cannot be
predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices
may require extensive system and operational changes, be difficult to implement, increase our operating costs and require
significant capital expenditures. Untimely compliance or noncompliance with applicable laws and regulations could result in
the imposition of civil and criminal penalties that could adversely affect the continued operation of our businesses, including:
suspension of payments from government programs; loss of required government certifications; loss of authorizations to
participate in or exclusion from government programs, including the Medicare and Medicaid programs in the United States;
loss of licenses; and significant fines or monetary damages and/or penalties. Any failure to comply with applicable regulatory
requirements in the United States or in any of the countries in which we operate could result in significant legal and financial
Executive Officers of the Registrant
15
Similarly, in the operations outside the U.S., we provide a variety of associate benefits that vary based on customary local
practices and statutory requirements.
In addition to retirement-related benefits, in the U.S., we offer a broad range of Company-paid benefits to our associates. These
include a store discount card or Sam's Club membership, bonuses based on Company performance, matching a portion of
purchases of our stock by associates through our Associate Stock Purchase Plan and life insurance. In addition to the health-
care benefits for eligible full-time and part-time associates in the U.S., as announced in January 2018, we expanded maternity
leave and implemented a new paid parental leave program to all full-time associates. We also introduced a $5,000 benefit to
assist eligible associates with adoption.
Certain information relating to retirement-related benefits we provide to our associates is included in Note 12 to our
Consolidated Financial Statements.
Position
Held Since
24
We operate in complex regulated environments in the United States and in the other countries in which we operate and could be
adversely affected by changes to existing legal requirements including the related interpretations and enforcement practices,
new legal requirements and/or any failure to comply with applicable regulations. Our pharmacy operations in the United States
are subject to numerous federal, state and local regulations including licensing and other requirements for pharmacies and
reimbursement arrangements. The regulations to which we are subject include, but are not limited to: federal and state
registration and regulation of pharmacies; dispensing and sale of controlled substances and products containing
pseudoephedrine; applicable governmental payer regulations including Medicare and Medicaid; data privacy and security laws
and regulations including the Health Insurance Portability and Accountability Act, the Affordable Care Act or any successor
thereto; laws and regulations relating to the protection of the environment and health and safety matters, including those
governing exposure to, and the management and disposal of, hazardous substances; regulations regarding food and drug safety
including those of the U.S. Food and Drug Administration (the "FDA") and the Drug Enforcement Administration (the "DEA"),
trade regulations including those of the U.S. Federal Trade Commission, and consumer protection and safety regulations
including those of the Consumer Product Safety Commission, as well as state regulatory authorities, governing the availability,
sale, advertisement and promotion of products we sell and the financial services we offer; anti-kickback laws; false claims laws;
and federal and state laws governing health care fraud and abuse and the practice of the professions of pharmacy, optical care
and nurse practitioner services.
In addition to our U.S. operations, we operate our retail business principally through wholly-owned subsidiaries in Argentina,
Brazil, Canada, Chile, China, India, Japan and the United Kingdom and our majority-owned subsidiaries in Africa, Central
America and Mexico.
Current
Legal, Tax, Regulatory, Compliance, Reputational and Other Risks
Our operations subject us to legislative, judicial, accounting, legal, regulatory, tax, political and economic risks and
conditions specific to the countries or regions in which we operate, which could materially adversely affect our business
or financial performance.
In addition, such events could be widely publicized and could materially adversely affect our reputation with our customers,
members, associates, vendors and shareholders, could harm our competitive position particularly with respect to our
eCommerce operations, and could result in a material reduction in our net sales in our eCommerce operations, as well as in our
stores thereby materially adversely affecting our operations, net sales, results of operations, financial condition, cash flows and
liquidity. Such events could also result in the release to the public of confidential information about our operations and
financial condition and performance and could result in litigation or other legal actions against us or the imposition of penalties,
fines, fees or liabilities, which may not be covered by our insurance policies. Moreover, a security breach could require us to
devote significant management resources to address the problems created by the security breach and to expend significant
additional resources to upgrade further the security measures we employ to guard personal information against cyber-attacks
and other attempts to access such information and could result in a disruption of our operations, particularly our digital retail
operations.
Changes in the results of our retail pharmacy business could adversely affect our overall results of operations, cash
flows and liquidity.
Walmart has retail pharmacy operations in our Walmart U.S. and Sam's Club segments and a large majority of the retail
pharmacy net sales are generated by filling prescriptions for which we receive payment through established contractual
relationships with third-party payers and payment administrators, such as private insurers, governmental agencies and
pharmacy benefit managers ("PBMs").
Our retail pharmacy operations are subject to numerous risks, including: reductions in the third-party reimbursement rates for
drugs; changes in our payer mix (i.e., shifts in the relative distribution of our pharmacy customers across drug insurance plans
and programs toward plans and programs with less favorable reimbursement terms); changes in third party payer drug
formularies (i.e., the schedule of prescription drugs approved for reimbursement or which otherwise receive preferential
coverage treatment); growth in, and our participation in or exclusion from, exclusive and preferred pharmacy network
arrangements operated by PBMS and/or any insurance plan or program; increases in the prices we pay for brand name and
generic prescription drugs we sell; increases in the administrative burdens associated with seeking third-party reimbursement;
changes in the frequency with which new brand name pharmaceuticals become available to consumers; introduction of lower
cost generic drugs as substitutes for existing brand name drugs for which there was no prior generic drug competition; changes
in drug mix (i.e., the relative distribution of drugs customers purchase at our pharmacies between brands and generics); changes
21
in the health insurance market generally; changes in the scope of or the elimination of Medicare Part D or Medicaid drug
programs; increased competition from other retail pharmacy operations; further consolidation among third party payers, PBMs
or purchasers of drugs; overall economic conditions and the ability of our pharmacy customers to pay for drugs prescribed for
them to the extent the costs are not reimbursed by a third party; failure to meet any performance or incentive thresholds to
which our level of third party reimbursement may be subject; and changes in the regulatory environment for the retail pharmacy
industry and the pharmaceutical industry, including as a result of restrictions on the further implementation of or the repeal of
the Patient Protection and Affordable Care Act or the enactment and implementation of a law replacing such act, and other
changes in laws, rules and regulations that affect our retail pharmacy business.
If the supply of certain pharmaceuticals provided by one or more of our vendors were to be disrupted for any reason, our
pharmacy operations could be severely affected until at least such time as we could obtain a new supplier for such
pharmaceuticals. Any such disruption could cause reputational damage and result in a significant number of our pharmacy
customers transferring their prescriptions to other pharmacies.
One or a combination of such factors may adversely affect the volumes of brand name and generic pharmaceuticals we sell, our
cost of sales associated with our retail pharmacy operations, and the net sales and gross margin of those operations, result in the
loss of cross-store or cross-club selling opportunities and, in turn, adversely affect our overall net sales, other results of
operations, cash flows and liquidity.
Our failure to attract and retain qualified associates, increases in wage and benefit costs, changes in laws and other
labor issues could materially adversely affect our financial performance.
We accept payments using a variety of methods, including cash, checks, credit and debit cards, our private label credit cards and
gift cards, and we may offer new payment options over time, which may have information security risk implications. As a
retailer accepting debit and credit cards for payment, we are subject to various industry data protection standards and protocols,
such as payment network security operating guidelines and the Payment Card Industry Data Security Standard. We cannot be
certain that the security measures we maintain to protect all of our information technology systems are able to prevent, contain
or detect any cyber-attacks, cyber terrorism, or security breaches from known cyber-attacks or malware that may be developed
in the future. To the extent that any cyber-attack or incursion in our or one of our third-party service provider's information
systems results in the loss, damage or misappropriation of information, we may be materially adversely affected by claims from
customers, financial institutions, regulatory authorities, payment card networks and others. In certain circumstances, payment
card association rules and obligations to which we are subject under our contracts with payment card processors make us liable
to payment card issuers if information in connection with payment cards and payment card transactions that we hold is
compromised, which liabilities could be substantial. In addition, the cost of complying with stricter and more complex data
privacy, data collection and information security laws and standards could be significant to us.
In addition, if our costs of labor or related costs increase for other reasons or if new or revised labor laws, rules or regulations or
healthcare laws are adopted or implemented that further increase our labor costs, our financial performance could be materially
adversely affected.
Financial Risks
Fluctuations in foreign exchange rates may materially adversely affect our financial performance and our reported
results of operations.
Our operations in countries other than the U.S. are conducted primarily in the local currencies of those countries. Our
consolidated financial statements are denominated in U.S. dollars, and to prepare those financial statements we must translate
the amounts of the assets, liabilities, net sales, other revenues and expenses of our operations outside of the U.S. from local
currencies into U.S. dollars using exchange rates for the current period. In recent years, fluctuations in currency exchange rates
that were unfavorable to us coupled with such translations have had a material adverse effect on our reported results of
operations.
As a result of such translations, fluctuations in currency exchange rates from period-to-period that are unfavorable to us may
also result in our consolidated financial statements reflecting significant adverse period-over-period changes in our financial
performance or reflecting a period-over-period improvement in our financial performance that is not as robust as it would be
without such fluctuations in the currency exchange rates. Such unfavorable currency exchange rate fluctuations will adversely
affect the reported performance of our Walmart International operating segment and have a corresponding adverse effect on our
reported consolidated results of operations.
We may pay for products we purchase for sale in our stores and clubs around the world with a currency other than the local
currency of the country in which the goods will be sold. When we must acquire the currency to pay for such products and the
exchange rates for the payment currency fluctuate in a manner unfavorable to us, our cost of sales may increase and we may be
unable or unwilling to change the prices at which we sell those goods to address that increase in our costs, with a corresponding
adverse effect on our gross profit. Consequently, fluctuations in currency exchange rates may adversely affect our results of
operations.
Failure to meet market expectations for our financial performance could adversely affect the market price and volatility
of our stock.
We believe that the price of our stock generally reflects high market expectations for our future operating results. Any failure to
meet or delay in meeting these expectations, including our comparable store and club sales growth rates, eCommerce growth
rates, gross margin, or earnings and earnings per share could cause the market price of our stock to decline, as could changes in
our dividend or stock repurchase programs or policies. Additionally, failure of Walmart's performance to match that of other
retailers may have a negative effect on the price of our stock.
Our ability to continue to conduct and expand our operations depends on our ability to attract and retain a large and growing
number of qualified associates globally. Our ability to meet our labor needs, including our ability to find qualified personnel to
fill positions that become vacant at our existing stores, clubs and distribution centers, while controlling our associate wage and
related labor costs, is generally subject to numerous external factors, including the availability of a sufficient number of
qualified persons in the work force of the markets in which we operate, unemployment levels within those markets, prevailing
wage rates, changing demographics, health and other insurance costs and adoption of new or revised employment and labor
laws and regulations. If we are unable to locate, to attract or to retain qualified personnel, the quality of service we provide to
our customers may decrease and our financial performance may be adversely affected.
22
6,360
6,363
Sam's Club segment
6,290
6,107
Total units
6,299
Walmart International segment
4,761
4,516
4,574
4,672
Walmart U.S. segment
Unit counts (2)
Total Walmart shareholders' equity
76,255
597
11,718
81,394
4,203
660
33
647
34
This discussion, which presents our results for the fiscal years ended January 31, 2018 ("fiscal 2018"), January 31, 2017 ("fiscal
2017") and January 31, 2016 ("fiscal 2016") should be read in conjunction with our Consolidated Financial Statements and the
accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our
financial statements, the changes in certain key items in those financial statements from period to period and the primary factors
that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's
performance. Additionally, the discussion provides information about the financial results of the three segments of our business
to provide a better understanding of how each of those segments and its results of operations affect the financial condition and
results of operations of the Company as a whole.
Our fiscal year ends on January 31 for our U.S. and Canadian operations. We consolidate all other operations generally using a
one-month lag and on a calendar year basis. Our business is seasonal to a certain extent due to calendar events and national and
religious holidays, as well as weather patterns. Generally, our highest sales volume and operating income have occurred in the
fiscal quarter ending January 31.
Each of our segments contributes to the Company's operating results differently. Each, however, has generally maintained a
consistent contribution rate to the Company's net sales and operating income in recent years other than minor changes to the
contribution rate for the Walmart International segment due to fluctuations in currency exchange rates.
Sam's Club consists of membership-only warehouse clubs as well as eCommerce through samsclub.com. As a
membership-only warehouse club, membership income is a significant component of the segment's operating income.
Sam's Club operates with a lower gross profit rate and lower operating expenses as a percentage of net sales than our
other segments.
Walmart International consists of our operations outside of the U.S. and includes retail, wholesale and other
businesses. These categories, including eCommerce, consist of many formats, including: supercenters, supermarkets,
hypermarkets, warehouse clubs (including Sam's Clubs) and cash & carry. Overall gross profit rate for Walmart
International is lower than that of Walmart U.S. primarily because of its merchandise mix. Walmart International is
our second largest segment and has grown in recent years by adding retail, wholesale and other units, and expanding
eCommerce.
Walmart U.S. is our largest segment with three primary store formats and eCommerce, as well as an omni-channel
offering. Of our three reportable segments, Walmart U.S. has historically had the highest gross profit as a percentage
of net sales ("gross profit rate"). In addition, it has historically contributed the greatest amount to the Company's net
sales and operating income.
Our operations consist of three reportable segments: Walmart U.S., Walmart International and Sam's Club.
Walmart Inc. ("Walmart," the "Company" or "we") is engaged in retail and wholesale operations in various formats around the
world. Through our operations, we help people around the world save money and live better – anytime and anywhere – in retail
stores and through eCommerce. Through innovation, we are striving to create a customer-centric experience that seamlessly
integrates digital and physical shopping into an omni-channel offering that saves time for our customers. Physical retail
encompasses our brick and mortar presence in each of the markets in which we operate. Digital retail, or eCommerce, is
comprised of our eCommerce websites, mobile commerce applications and transactions involving both an eCommerce platform
and a physical format, which we refer to as omni-channel. Each week, we serve nearly 270 million customers who visit our
more than 11,700 stores and numerous eCommerce websites under 65 banners in 28 countries. Our strategy is to lead on price,
invest to differentiate on access, be competitive on assortment and deliver a great experience. By leading on price we earn the
trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices
("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our
prices will not change under frequent promotional activity. Price leadership is core to who we are. Everyday low cost
("EDLC") is our commitment to control expenses so our cost savings can be passed along to our customers. Our physical and
digital presence, in which we are investing to integrate into a seamless omni-channel, provides customers convenient access to
our broad assortment anytime and anywhere. We strive to give our customers and members a great shopping experience
through whichever shopping method they prefer.
655
Overview
ITEM 7.
33
eCommerce sales and sales from eCommerce acquisitions when such acquisitions have been owned for 12 months. Comparable sales include fuel.
(2) Unit counts related to discontinued operations have been removed from all relevant periods.
(1) Comparable sales include sales from stores and clubs open for the previous 12 months, including remodels, relocations and expansions, as well as
10,942
11,453
11,528
11,695
632
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations, we discuss segment
operating income, comparable store and club sales and other measures. Management measures the results of the Company's
segments using each segment's operating income, including certain corporate overhead allocations, as well as other measures.
From time to time, we revise the measurement of each segment's operating income, including certain corporate overhead
allocations, and other measures as determined by the information regularly reviewed by our chief operating decision maker.
When we do so, the previous period amounts and balances are reclassified to conform to the current period's presentation.
3
85.28
Low
High
Low
High
2017
2018
The high market price and low market price per share for the Company's common stock for each fiscal quarter in fiscal 2018
and 2017 were as follows:
Market Price of Common Stock
Walmart's common stock is listed for trading on the New York Stock Exchange, which is the primary market for Walmart's
common stock. The common stock trades under the symbol "WMT."
Market for Common Stock
1st Quarter
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
PART II
30
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
In January 2011, the Environmental Department of Porto Alegre Municipality formally notified Walmart Brazil of soil
inspection reports indicating soil contamination due to leakage of oil from power generating equipment at nine store locations
in Brazil. Walmart Brazil is cooperating with the agency as well as the District Attorney's Office for the State of Rio Grande do
Sul and has filed a mitigation plan to address the situation.
In April 2013, a subsidiary of the Company, Corporacion de Compañias Agroindustriales, operating in Costa Rica, became
aware that the Municipality of Curridabat is seeking a penalty of approximately $380,000 in connection with the construction of
a retaining wall seventeen years ago for a perishables distribution center that is situated along a protected river bank. The
subsidiary obtained permits from the Municipality and the Secretaria Técnica Nacional Ambiental at the time of construction,
but the Municipality now alleges that the wall is non-conforming.
On April 6, 2015, representatives for the Brazilian Institute of the Environment alleged that Walmart Brazil had failed to file
required reports documenting the number of tires imported, sold and recycled. The agency proposed a penalty of approximately
$857,000, which may be doubled and excludes additional amounts in respect of inflation and interest, and prohibited Walmart
Brazil from selling or importing tires until the matter is resolved. In October 2015, Walmart Brazil filed its defense with the
agency against the imposition of this penalty.
In November and December 2016, the Environmental and Natural History Ministry of Chiapas, Mexico ("Ministry") notified a
subsidiary of the Company, Arrendadora de Centros Comerciales, S. de R.L. de C.V. ("Arrendadora"), that it was proposing
aggregated penalties approximating $430,000 in respect to four stores which the Ministry believed may have been constructed
without first obtaining a required environmental impact license. Arrendadora has challenged the penalties before an
administrative court and the trials are in process. The Ministry had previously proposed penalties of approximately $640,000
related to this matter in 2014, but Arrendadora was released by an administrative court from payment of such penalties on the
basis that the Ministry had failed to comply with legal formalities in connection with their imposition.
In May 2017, WMS Supermercados do Brasil Ltda ("Walmart Brazil") self-reported to the relevant municipal environmental
agency, and proposed a remediation plan for, an oil contamination in the soil and underground water at the Walmart and Sam's
Club store location in Barueri, São Paulo (Tamboré), which contamination had been confirmed by an internal investigation in
April 2017. Walmart Brazil is cooperating with the agency, including seeking authorization to start a remediation plan.
In April 2017, the California Air Resources Board ("ARB") notified the Company that it had taken the position that retailers are
required to use unclaimed deposits collected on sales of small containers of automotive refrigerant to fund certain consumer
education programs. The ARB alleged that the Company had improperly retained approximately $4.2 million in unclaimed
deposits and has sought reimbursement. The Company has denied any wrongdoing.
On January 25, 2018, the Environmental Prosecutor of the State of Chiapas (Procuraduría Ambiental del Estado de Chiapas) in
Mexico imposed a fine of $163,000 for the absence of an Environmental Impact Authorization License related to the store Mi
Bodega Las Rosas. The Company plans to challenge the fine before an administrative court.
ITEM 5.
2nd Quarter
3rd Quarter
$
106.56 $
$
1st Quarter(¹)
Low
High
2019
The high market price and low market price per share for the Company's common stock for the first fiscal quarter of fiscal
2019, were as follows:
65.28
72.48
87.00
109.98
4th Quarter
67.07
75.19
77.50
89.11
62.72
62.35
70.08 $
74.35
73.13
80.47
66.04 $
75.77
80,546
77,798
77,869
44,368
209.22
165.51
173.61
$
105.97
102.39 $
137.88
127.58 $
138.80
$
109.39
121.52
127.72
100.00
100.00
S&P 500 Retailing Index
S&P 500 Index
100.00 $
$
Walmart Inc.
2018
2017
2016
2015
2014
2013
Fiscal Years Ended January 31,
Fiscal Year Ending January 31, 2018
*Assumes $100 Invested on February 1, 2013
Assumes Dividends Reinvested
S&P 500 Retailing Index
153.64
184.32
218.76
321.37
19.2
19.8
Approximate Dollar Value of
Shares that May Yet Be
Purchased Under the
(1)
Plans or Programs"
(in billions)
16,580,953
4,170,041
5,594,137
$
6,816,775
Programs
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
102.37
4,170,041
16,580,953
e
Total
97.92
5,594,137
93.00
$
6,816,775
November 1-30, 2017
December 1-31, 2017
Average Price Paid
per Share
(in dollars)
Total Number of
Shares Repurchased
Fiscal Period
Share repurchase activity under our share repurchase programs, on a trade date basis, for each month in the quarter ended
January 31, 2018, was as follows:
From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Company's
Board of Directors. All repurchases made during the fiscal year prior to November 20, 2017 were made under the plan in effect
at the beginning of fiscal 2018. On October 9, 2017, the Board of Directors approved a new $20.0 billion share repurchase
program which, beginning on November 20, 2017, replaced the previous share repurchase program. As of January 31, 2018,
authorization for $18.8 billion of share repurchases remained under the current share repurchase program. Any repurchased
shares are constructively retired and returned to an unissued status.
Issuer Purchases of Equity Securities
January 1-31, 2018
18.8
A S&P 500 Index
2018
0.52
0.52
0.52
$
Stock Performance Chart
January 3, 2017
September 6, 2016
June 6, 2016
April 4, 2016
For fiscal 2017, dividends were paid based on the following schedule:
January 2, 2018
September 5, 2017
June 5, 2017
April 3, 2017
For fiscal 2018, dividends were paid based on the following schedule:
Dividends Paid Per Share
January 2, 2019
September 4, 2018
June 4, 2018
April 2, 2018
For fiscal 2019, dividends will be paid based on the following schedule:
Dividends Payable Per Share
As of March 28, 2018, there were 229,858 holders of record of Walmart's common stock.
Holders of Record of Common Stock
(1) Through March 28, 2018.
0.52
$
0.51
0.51
2017
2016
2015
2014
2013
$0
$50
$100
$150
$200
$250
$300
廿一 Walmart Inc.
$350
and S&P 500 Retailing Index
Among Walmart Inc., the S&P 500 Index
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
31
This graph compares the cumulative total shareholder return on Walmart's common stock during the five fiscal years ending
with fiscal 2018 to the cumulative total returns on the S&P 500 Retailing Index and the S&P 500 Index. The comparison
assumes $100 was invested on February 1, 2013, in shares of our common stock and in each of the indices shown and assumes
that all of the dividends were reinvested.
0.50
0.50
0.50
0.50
$
0.51
0.51
(Fiscal Years Ending January 31)
III. ENVIRONMENTAL MATTERS: Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters.
The following matters are disclosed in accordance with that requirement. For the matters listed below, management does not
believe any possible loss or the range of any possible loss that may be incurred in connection with each matter, individually or
in the aggregate, will be material to the Company's financial condition or results of operations.
(1) Represents the approximate dollar value of shares that could have been purchased under the current plan at the end of the month. The approximate dollar
value of shares that could still have been purchased under the plan in effect at the beginning of fiscal 2018, as of November 17, 2017, when such plan was
replaced, was $2.2 billion.
32
$
4.57
$
4.38
3.28 $
$
Diluted income per common share from continuing operations
attributable to Walmart
15,918
16,182
14,694
13,643
9,862
Income from continuing operations attributable to Walmart
26,872
27,147 $
24,105 $
22,764 $
20,437 $
$
Operating income
19.3 %
19.4%
20.3 %
21.2%
21.5%
4.99
$
4.85
Dividends declared per common share
43,495
44,030
42,018
36,825
Long-term debt and long-term capital lease and financing obligations
(excluding amounts due within one year)
204,541
203,490
199,581
198,825
204,522
117,907
116,655
Operating, selling, general and administrative expenses, as a percentage
of net sales
116,516
114,818
Property, equipment, capital lease and financing obligation assets, net
Total assets
$ 44,469 $ 45,141 $ 44,858
43,783 $ 43,046
$
Inventories
Financial position
1.88
1.92
1.96
2.00
2.04
114,178
32
24.3 %
24.6 %
481,317
495,761 $
$
1.6 %
$ 476,294
485,651
2.0%
(0.7)%
$
$ 482,130
485,873
0.8%
3.0%
Percentage change in total revenues from previous fiscal year
Net sales
$
$
Total revenues
2014
2015
2016
2017
As of and for the Fiscal Years Ended January 31,
2018
(Amounts in millions, except per share and unit count data)
Operating results
Walmart Inc.
Five-Year Financial Summary
ITEM 6. SELECTED FINANCIAL DATA
$ 478,614 $
482,229
$ 473,076
Percentage change in net sales from previous fiscal year
24.9%
24.7%
Gross profit margin
0.3 %
0.0%
(3.2)%
0.5%
2.8%
Sam's Club
(0.6)%
0.6%
1.0 %
24.3%
1.6%
Walmart U.S.
(0.5)%
0.5%
0.3 %
1.4%
2.2%
Increase (decrease) in calendar comparable sales (1) in the U.S.
1.6 %
1.9%
(0.7)%
0.6%
3.0%
2.1%
Derivative Lawsuits: In re Wal-Mart Stores, Inc. Delaware Derivative Litigation, Delaware Ct. of Chancery, 4/25/12;
Delaware Supreme Court, Dover, DE; 6/10/16.
Securities Class Action: City of Pontiac General Employees Retirement System v. Wal-Mart Stores, Inc., USDC, Western Dist.
of AR; 5/7/12.
in the United States District Court for the Western District of Arkansas and the other in the Delaware Court of Chancery. On
March 31, 2015, the Western District of Arkansas granted the defendants' motion to dismiss the consolidated derivative
proceedings in that court. On April 15, 2015, plaintiffs filed their notice of appeal with the United States Court of Appeals for
the Eighth Circuit. On July 22, 2016, the United States Court of Appeals for the Eighth Circuit affirmed the dismissal of the
consolidated derivative proceedings in Arkansas. There was no appeal from that ruling. On May 13, 2016, the Delaware Court
of Chancery granted the defendants' motion to dismiss the consolidated derivative proceedings in that court. On June 10, 2016,
plaintiffs in the Delaware consolidated derivative proceedings filed their notice of appeal to the Delaware Supreme Court. On
January 25, 2018, the Delaware Supreme Court affirmed the dismissal of the consolidated derivative proceedings in Delaware.
Management does not believe any possible loss or the range of any possible loss that may be incurred in connection with these
proceedings will be material to the Company's financial condition or results of operations.
9
Montana
14
Nebraska
35
Nevada
30
New Hampshire
19
New Jersey
29
34
New Mexico
35
New York
80
North Carolina
144
6
North Dakota
14
Ohio
139
6
Oklahoma
112
3
65
Missouri
Supercenters
State or Territory
Sam's Club
Walmart U.S.
The Walmart U.S. and Sam's Club segments comprise the Company's operations in the U.S. As of January 31, 2018, unit
counts for Walmart U.S. and Sam's Club are summarized by format for each state and territory as follows:
United States
ITEM 2. PROPERTIES
26
26
None.
ITEM 1B. UNRESOLVED STAFF COMMENTS
While we have made an Accrual for these matters, because the discussions are continuing, there can be no assurance as to the
timing or the terms of the final resolution of these matters. Although we do not presently believe that these matters will have a
material adverse effect on our business, given the inherent uncertainties in such situations, we can provide no assurance that
these matters will not be material to our business in the future.
81
connection with the government investigations, in defending the shareholder lawsuits and in conducting our review and
investigations.
We could be exposed to a variety of negative consequences as a result of these matters. One or more enforcement actions could
be instituted in respect of the matters that are the subject of some or all of the on-going government investigations, and such
actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist orders, debarment or
other relief, criminal convictions and/or penalties. The shareholder lawsuits may result in judgments against us and our current
and former directors and officers named in those proceedings. We also expect that there will be ongoing media and
governmental interest regarding these matters, including additional news articles on these matters that could impact the
perception of our role as a corporate citizen among certain audiences. Moreover, we have incurred and expect to continue to
incur costs in responding to requests for information or subpoenas seeking documents, testimony and other information in
A number of federal and local government agencies in Mexico have also initiated investigations of these matters. Furthermore,
lawsuits relating to the matters under investigation have been filed by several of our shareholders against us, certain of our
current and former directors and officers and certain of Walmex's current and former officers.
The Audit Committee of our Board of Directors has been conducting an internal investigation into, among other things, alleged
violations of the FCPA and other alleged crimes or misconduct in connection with certain of our foreign subsidiaries, including
Wal-Mart de México, S.A.B. de C.V. ("Walmex"), and whether prior allegations of such violations and/or misconduct were
appropriately handled by the Company. We have also been conducting a voluntary global review of our policies, practices and
internal controls for anti-corruption compliance and are engaged in strengthening our global anti-corruption compliance
programs. Since the implementation of the global review and enhanced anti-corruption compliance programs, the Audit
Committee and we have identified or been made aware of additional allegations regarding potential violations of the FCPA.
Inquiries or investigations regarding allegations of potential FCPA violations have been commenced in a number of foreign
markets in which we operate, including, but not limited to, Brazil, China and India. In November 2011, we voluntarily
disclosed our investigative activity to the U.S. Department of Justice (the "DOJ") and the SEC. We have been cooperating with
those agencies and discussions have been ongoing with them regarding the resolution of these matters. These discussions have
progressed to a point that we can now reasonably estimate a probable loss and have recorded an aggregate accrual of $283
million with respect to these matters (the "Accrual").
We could be subject to liability, penalties and other sanctions and other adverse consequences arising out of our on-
going FCPA matter.
We discuss these cases and other litigation to which we are party below under the caption "Item 3. Legal Proceedings" and in
Note 10 in the "Notes to our Consolidated Financial Statements," which are part of this Annual Report on Form 10-K.
In addition, ASDA Stores, Ltd. ("ASDA"), a wholly-owned subsidiary of the Company, has been named as a defendant in over
10,000 "equal value" claims pending in the Manchester Employment Tribunal (the "Employment Tribunal") in the United
Kingdom. The claimants, who are current and former ASDA store employees, allege that the work performed by female
employees in ASDA's retail stores is of equal value in terms of, among other things, the demands of their jobs to that of male
employees working in ASDA's warehouses and distribution facilities, and that the disparity in pay between these different job
positions is not objectively justified. The claimants are seeking differential back pay based on higher wage rates in the
warehouses and distribution facilities and higher wage rates on a prospective basis. At present, we cannot predict the number of
such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from these proceedings.
In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a
wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes,
individuals, and third-party payors, asserting claims generally concerning the impacts of widespread opioid abuse. The
consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804), and is pending in
the U.S. District Court for the Northern District of Ohio. The Company named as a defendant in some of the cases included
in this multidistrict litigation, including cases filed by several counties in West Virginia; by healthcare providers in Mississippi,
Alabama, Texas, and Florida; and by the St. Croix Chippewa Indians of Wisconsin. Similar cases that name the Company have
been filed in state courts by various counties and municipalities; by health care providers; and by various Native American
Tribes. At present, we cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or
range of loss that may arise from such claims.
We are involved in a number of legal proceedings, which include consumer, employment, tort and other litigation. In particular,
we are currently a defendant in a number of cases containing class-action allegations in which the plaintiffs have brought claims
under federal and state wage and hour laws, as well as a number of cases containing class-action allegations in which the
plaintiffs have brought claims under federal and state consumer laws.
We are subject to certain legal proceedings that may materially adversely affect our results of operations, financial
condition and liquidity.
exposure, damage our reputation, and have a material adverse effect on our business operations, financial condition and results
of operations.
65
4
Mississippi
25
Discount Stores
Oregon
28
10
12
|27|32118 53021
239-08 |~= | | 92 | T&TES 262-2
2812801
11
61
52
23
126
1
12
82
10
7
85
18
19
158
2
16
7
5
47
7
8
× 725-223604
83
38
116
21
Puerto Rico
13
Rhode Island
5
South Carolina
84
South Dakota
Tennessee
Texas
Utah
Pennsylvania
15
41
Vermont
3
Virginia
109
Washington
52
Washington D.C.
West Virginia
Wisconsin
Wyoming
U.S. total
3
117
389
50
Neighborhood Markets
and other small formats
Grand Total
Kansas
69
9
2
58
Iowa
128
13
11
7
97
Indiana
192
25
11
17
139
Illinois
27
1
3
23
Idaho
12
2
58
2
16
9
91
Michigan
22
27
Massachusetts
18
30
Maryland
25
3
3
19
10
Maine
14
34
2
89
Louisiana
107
9
11
8
79
Kentucky
85
139
Clubs
Hawaii
380
74
141
California
128
9
37
6
76
Arkansas
128
12
31
2
83
Arizona
9
2
7
Alaska
145
13
30
1
101
Alabama
76
29
320
Colorado
46
10
1
-42
35
2
154
Georgia
94
9
231
Florida
215
3
Delaware
35
1
1
21
12
Connecticut
109
17
18
4
70
6
2
29
7
22
179
5,537
39
385
66
40
209
256
124
286
Central America
304
474
Chile
228
150
China
3
440
India
2
18
Japan
56
13
157
5,358
597
Third Party
Owned and
Operated
Total
4,066
695
512
85
4,578
780
103
2
23
280
29
3
3
106
5
26
42
4,684
5
806
42
1112277
4,761
3
Leased and
Operated
Mexico
1,689
Total retail units
6,720
4,998
Total distribution facilities
149
17
113
88
11,718
367
Total properties
6,869
17
5,111
88
12,085
We own office facilities in Bentonville, Arkansas, that serve as our principal office and own and lease office facilities
throughout the U.S. and internationally for operations as well as for field and market management. The land on which our
28
stores are located is either owned or leased by the Company. We use independent contractors to construct our buildings. All
store leases provide for annual rentals, some of which escalate during the original lease or provide for additional rent based on
sales volume. Substantially all of the Company's store and club leases have renewal options, some of which include rent
escalation clauses.
For further information on our distribution centers, see the caption "Distribution" provided for each of our segments under
"Item 1. Business."
ITEM 3. LEGAL PROCEEDINGS
I. SUPPLEMENTAL INFORMATION: We discuss certain legal proceedings in Note 10 to our Consolidated Financial
Statements, entitled "Contingencies," which is included in Part II, Item 8. Financial Statements and Supplementary Data of this
Annual Report on Form 10-K. We refer you to that discussion for important information concerning those legal proceedings,
including the basis for such actions and, where known, the relief sought. We provide the following additional information
concerning those legal proceedings, including the name of the lawsuit, the court in which the lawsuit is pending, and the date on
which the petition commencing the lawsuit was filed.
ASDA Equal Value Claims: Ms S Brierley & Others v ASDA Stores Ltd (2406372/2008 & Others - Manchester Employment
Tribunal); ASDA Stores Ltd v Brierley & Ors (A2/2016/0973 - United Kingdom Court of Appeal); ASDA Stores Ltd v Ms S
Brierley & Others (UKEAT/0059/16/DM - United Kingdom Employment Appeal Tribunal); ASDA Stores Ltd v Ms S Brierley
& Others (UKEAT/0009/16/JOJ - United Kingdom Employment Appeal Tribunal).
National Prescription Opiate Litigation: In re National Prescription Opiate Litigation (MDL No. 2804); Lac Courte Oreilles
Band of Lake Superior Chippewa Indians v. McKesson Corp., et al., WI Circuit Court, Sawyer County, 3/16/18; ApolloMD
Bus. Servs., LLC v. Attain Med, Inc., et al., GA State Ct., Fulton Cty., 3/8/2018; Center Point, Inc. v. McKesson Corp., et al, CA
Superior Ct., San Francisco County, 3/6/2018; Cty. of Greenville v. Rite Aid of S.C., Inc., et al., SC Ct. of Common Pleas, 13th
Judicial Dist., 3/5/2018; Big Sandy Rancheria of W. Mono Indians v. McKesson Corp., et al., CA Superior Ct., San Francisco
County, 3/2/2018; Consolidated Tribal Health Project, Inc. v. McKesson Corp., et al., CA Superior Ct., San Francisco County,
3/2/2018; Robinson Rancheria v.McKesson Corp., et al., CA Superior Ct., San Francisco County, 3/2/2018; Round Valley
Indian Tribes; Round Valley Indian Health Center, Inc. v. McKesson Corp., et al., CA Superior Ct., San Francisco County,
3/2/2018; Hopland Band of Pomo Indians v. McKesson Corp., et al., CA Superior Ct., San Francisco County, 2/21/2018;
Redwood Valley or Little River Band of Pomo Indians of Redwood Valley Rancheria v. McKesson Corp., et al., CA Superior Ct.,
San Francisco County, 2/21/2018; Scotts Valley Band of Pomo Indians v. McKesson Corp., et al., CA Superior Ct., San
Francisco County, 2/21/2018; Big Valley Band of Pomo Indians of the Big Valley Rancheria v. McKesson Corp., et al., CA
Superior Ct., San Francisco County, 2/13/2018; Guidiville Rancheria of Cal. v. McKesson Corp., et al., CA Superior Ct., San
Francisco County, 2/13/2018; Odyssey House La., Inc. v. Morris & Dickson Co., et al., LA Civil Dist. Ct., New Orleans Parish,
2/6/2018; Coyote Valley Band of Pomo Indians v. McKesson Corp., et al., CA Superior Ct., San Francisco County, 1/29/2018;
Cty. Comm'n of Mingo Cty. v. Purdue Pharma, L.P., et al., WV Circuit Ct., Mingo County, 1/18/2018; Brooke Cty. Comm'n v.
Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Hancock Cty. Comm'n v. Purdue Pharma L.P., et al.,
WV Circuit Ct., Marshall County, 12/13/2017; Harrison Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall
County, 12/13/2017; Lewis Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Marshall
Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Ohio Cty. Comm'n v. Purdue Pharma
L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Tyler Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct.,
Marshall County, 12/13/2017; Wetzel Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017.
II. CERTAIN OTHER PROCEEDINGS: The Company is a defendant in several lawsuits in which the complaints closely
track the allegations set forth in a news story that appeared in The New York Times (the "Times") on April 21, 2012. One of
these is a securities lawsuit that was filed on May 7, 2012, in the United States District Court for the Middle District of
Tennessee, and subsequently transferred to the Western District of Arkansas, in which the plaintiff alleges various violations of
the U.S. Foreign Corrupt Practices Act (the "FCPA") beginning in 2005, and asserts violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, as amended, relating to certain prior disclosures of the Company. The plaintiff seeks to
represent a class of shareholders who purchased or acquired stock of the Company between December 8, 2011, and April 20,
2012, and seeks damages and other relief based on allegations that the defendants' conduct affected the value of such stock. On
September 20, 2016, the court granted plaintiff's motion for class certification. On October 6, 2016, the defendants filed a
petition to appeal the class certification ruling to the U.S. Court of Appeals for the Eighth Circuit. On November 7, 2016, the
U.S. Court of Appeals for the Eighth Circuit denied the Company's petition.
In addition, a number of derivative complaints have been filed in Delaware and Arkansas, also tracking the allegations of the
Times story, and naming various current and former directors and certain former officers as additional defendants. The
plaintiffs in the derivative suits (in which the Company is a nominal defendant) allege, among other things, that the defendants
who are or were directors or officers of the Company breached their fiduciary duties in connection with their oversight of FCPA
compliance. All of the derivative suits have been combined into two consolidated proceedings, one of which was consolidated
29
188
6,548
46
46
6,360
United Kingdom
442
200
Total International retail units
2,142
4,218
International distribution facilities
43
12
87
Total International properties
2,185
669
12
| | | | | | |4
424
106
465
410
778
378
443
20
336
2,358
642
4,305
Owned and
Third Party
Operated
Owned and
Operated
Canada
111
601
12
61
6
154
68
5
44
99
14
3,561
400
800
597
5,358
27
International
The Walmart International segment comprises the Company's operations outside of the U.S. Unit counts as of January 31, 2018
for Walmart International are summarized by major category for each geographic market as follows:
(1)
Geographic Market
Africa (3)
Argentina
Brazil
Canada
154
14
21
17
70
7
53
7
12
117
45
22
217
3
17
27
Central America (4)
172
13
136
10
45
3
24
164
17
42
9
27
124
34
Chile
China
India
United Kingdom
International total
617
5,945
25
642
365
50
6,360
(1) Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2017, to correspond with the balance sheet date of the
related geographic market. Canada unit counts are stated as of January 31, 2018.
(2) Other includes drug stores and convenience stores.
(3) Africa unit counts by country are Botswana (11), Ghana (2), Kenya (1), Lesotho (3), Malawi (2), Mozambique (5), Namibia (4), Nigeria (5), South Africa
(382), Swaziland (1), Tanzania (1), Uganda (1) and Zambia (6).
(4) Central America unit counts by country are Costa Rica (247), El Salvador (95), Guatemala (238), Honduras (103) and Nicaragua (95).
2,358
Owned and Leased Properties
U.S. properties
Walmart U.S. retail units
Sam's Club retail units
Total U.S. retail units
Walmart U.S. distribution facilities
Sam's Club distribution facilities
Total U.S. distribution facilities
Total U.S. properties
International properties
Africa
Argentina
Brazil
The following table provides further details of our retail units and distribution facilities, including return facilities, as of
January 31, 2018:
Minnesota
10
336
Japan
336
Mexico
2,186
Retail
Wholesale
335
106
380
410
778
373
162
424
89
Other(2)
Total
424
106
15
465
410
778
378
443
20
8| gཋ༠། | ༅| ༄
500,343
11
We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases,
including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the
market price of our common stock. We anticipate that a significant majority of the ongoing share repurchase program will be
As of January 31,
2017
2016
$
204,522 $
83,039
46,092
198,825
76,951
41,433
$
199,581
71,538
38,487
22,122
20,654
2018
19,607
Free Cash Flow
Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which
measures our ability to generate additional cash from our business operations, is an important financial measure for use in
evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute
for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our
liquidity. See Liquidity and Capital Resources for discussions of GAAP metrics including net cash provided by operating
activities, net cash used in investing activities and net cash used in financing activities.
We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment
made in that period. We had net cash provided by operating activities of $28.3 billion, $31.7 billion and $27.6 billion for fiscal
2018, 2017 and 2016, respectively. We generated free cash flow of $18.3 billion, $21.1 billion and $16.1 billion for fiscal 2018,
2017 and 2016, respectively. The decreases in net cash provided by operating activities and free cash flow in fiscal 2018 from
fiscal 2017 were primarily due to the timing of tax and other payments, as well as lapping the previous year's improvements in
working capital management and the benefit from the application of tax regulations adopted in fiscal 2017. The increase in net
cash provided by operating activities and free cash flow in fiscal 2017 from fiscal 2016 was primarily due to improved working
capital management. Additionally, we benefited from the application of new tax regulations related to the accelerated deduction
of remodels and related expenses.
Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary
expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual
obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a
measure that provides supplemental information to our Consolidated Statements of Cash Flows.
38
Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow.
As a result, the method used by Walmart's management to calculate our free cash flow may differ from the methods used by
other companies to calculate their free cash flow.
The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by
operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as
information regarding net cash used in investing activities and net cash used in financing activities:
Fiscal Years Ended January 31,
(Amounts in millions)
2018
2017
2016
Net cash provided by operating activities
(1) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and
dividing by 2.
Payments for property and equipment
15.2%
234,253
$
199,203
5.2%
7.2%
20,437
$
22,764
152
100
10,529
10,080
2,932
2,612
14.2%
34,050 $
201,674 $
199,203
79,995
74,245
43,763
39,960
21,388
20,131
23,456
20,896
$
239,974
$
35,556
201.674
Free cash flow
28,337
(10,051)
18,286
$
482,130
3.0%
0.8%
(0.7)%
$
495,761
$
481,317 $
478,614
3.0%
0.6%
(0.7)%
485,873
2.2%
24.7%
24.9%
0.3 %
24.6 %
$
20,437 $
22,764
$
24,105
4.1%
4.7%
5.0 %
10,523
$
1.4%
$
500,343 $
Fiscal Years Ended January 31,
2017
$
31,673 $
(10,619)
27,552
(11,477)
$
21,054 $
16,075
Net cash used in investing activities (1)
Net cash used in financing activities
(9,060) $
(19,875)
(13,987) $
(19,072)
(10,675)
(16,285)
2016
(1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.
Consolidated Results of Operations
(Amounts in millions, except unit counts)
Total revenues
Percentage change from comparable period
Net sales
Percentage change from comparable period
Total U.S. calendar comparable sales increase
Gross profit rate
Operating income
Operating income as a percentage of net sales
Consolidated net income
Unit counts at period end
Retail square feet at period end
2018
Results of Operations
14,293
10.523
$
(0.1)%
Comparable sales in the U.S., including fuel, increased 2.2% and 1.4% in fiscal 2018 and 2017, respectively, when compared to
the previous fiscal year. The fiscal 2018 total U.S. comparable sales were positively impacted by continued traffic
improvement, higher eCommerce sales and the impact of higher fuel sales. eCommerce sales positively impacted comparable
sales approximately 0.7% for both Walmart U.S. and Sam's Club for fiscal 2018. The fiscal 2017 total U.S. comparable sales
were positively impacted by continued traffic improvement and higher eCommerce sales at the Walmart U.S. segment, partially
offset by the negative impact of lower fuel sales primarily due to lower fuel prices at the Sam's Club segment. eCommerce
sales positively impacted comparable sales approximately 0.4% and 0.7% for Walmart U.S. and Sam's Club, respectively, for
fiscal 2017.
In the past, when we were focused on adding new stores and clubs in the U.S., we did so with an understanding that additional
stores and clubs may take sales away from existing units. We reduced the number of new store and club openings in fiscal 2018
and the negative impact on comparable sales as a result of these openings was not significant. We expect this trend to continue
in the future as well. In fiscal 2017, we estimate the negative impact on comparable sales as a result of opening new stores and
clubs was approximately 0.7%. Our estimate was calculated primarily by comparing the sales trends of the impacted stores and
clubs, which are identified based on their proximity to the new stores and clubs, to those of nearby non-impacted stores and
clubs, in each case, as measured after the new stores and clubs are opened.
Operating Discipline
We operate with discipline by managing expenses and optimizing the efficiency of how we work. We measure operating
discipline through expense leverage, which we define as net sales growing at a faster rate than operating expenses.
(Amounts in millions, except unit counts)
Net sales
Percentage change from comparable period
Operating, selling, general and administrative expenses
Percentage change from comparable period
Operating, selling, general and administrative expenses as a percentage of net sales
Fiscal Years Ended January 31,
2018
2017
0.2%
$
$
481,317
3.0%
0.6%
106,510 $
4.6%
101,853
5.0%
21.5%
21.2%
For fiscal 2018, operating, selling, general and administrative ("operating") expenses as a percentage of net sales increased 32
basis points, when compared to the same period in the previous fiscal year. While our increase in net sales and improving
expense management had a positive impact on our operating expenses as a percentage of net sales, we did not leverage
expenses as a result of approximately $0.6 billion of charges related to Sam's Club closures and discontinued real estate
projects, approximately $400 million related to a lump sum bonus paid to associates, $300 million related to Home Office
severance, a legal accrual of $283 million related to the FCPA matter, a charge of $244 million related to Walmart U.S.
discontinued real estate projects, and the decisions to exit certain international properties and wind down the first party Brazil
eCommerce operations.
Strategic Capital Allocation
We are allocating more capital to remodels, eCommerce, technology and supply chain and less to new store and club openings,
when compared to prior years. This allocation aligns with our initiatives of improving our customer proposition in stores and
clubs and integrating digital and physical shopping. The following table provides additional detail:
(Amounts in millions)
495,761
Allocation of Capital Expenditures
1.4%
1.0%
Comparable store and club sales, or comparable sales, is a metric that indicates the performance of our existing stores and clubs
by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period from the
corresponding period in the previous year. Walmart's definition of comparable sales includes sales from stores and clubs open
for the previous 12 months, including remodels, relocations, expansions and conversions, as well as eCommerce sales. We
measure the eCommerce sales impact by including all sales initiated online or though mobile applications, including omni-
channel transactions which are fulfilled through our stores and clubs. Sales of a store that has changed in format are excluded
from comparable sales when the conversion of that store is accompanied by a relocation or expansion that results in a change in
the store's retail square feet of more than five percent. Additionally, sales related to eCommerce acquisitions are excluded until
such acquisitions have been owned for 12 months. Comparable sales are also referred to as "same-store" sales by others within
the retail industry. The method of calculating comparable sales varies across the retail industry. As a result, our calculation of
comparable sales is not necessarily comparable to similarly titled measures reported by other companies.
In discussing our operating results, we use the term "currency exchange rates" to refer to the currency exchange rates we use to
convert the operating results for all countries where the functional currency is not the U.S. dollar into U.S. dollars for financial
reporting purposes. We calculate the effect of changes in currency exchange rates from the prior period to the current period as
the difference between current period activity translated using the current period's currency exchange rates, and current period
activity translated using the comparable prior year period's currency exchange rates. Throughout our discussion, we refer to the
results of this calculation as the impact of currency exchange rate fluctuations. Volatility in currency exchange rates may
impact the results, including net sales and operating income, of the Company and the Walmart International segment in the
future.
The Retail Industry
We operate in the highly competitive retail industry in all of the markets we serve. We face strong sales competition from other
discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as well as eCommerce
businesses. Many of these competitors are national, regional or international chains or have a national or international online
presence. We compete with a number of companies for prime retail site locations, as well as in attracting and retaining quality
employees ("associates"). We, along with other retail companies, are influenced by a number of factors including, but not
limited to: catastrophic events, weather, competitive pressures, consumer disposable income, consumer debt levels and buying
patterns, consumer credit availability, cost of goods, currency exchange rate fluctuations, customer preferences, deflation,
inflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor costs, tax rates,
cybersecurity attacks and unemployment. Further information on the factors that can affect our operating results and on certain
risks to our Company and an investment in its securities can be found herein under "Item 1A. Risk Factors," and under
"Cautionary Statement Regarding Forward-Looking Statements."
Company Performance Metrics
We are committed to helping customers save money and live better through everyday low prices, supported by everyday low
costs. At times, we adjust our business strategies to maintain and strengthen our competitive positions in the countries in which
we operate. Our financial framework is defined as:
strong, efficient growth;
operating discipline; and
strategic capital allocation.
As we execute on this financial framework, we believe our returns on capital will improve over time.
Strong, Efficient Growth
Our objective of prioritizing strong, efficient growth means we will focus on increasing comparable sales and eCommerce sales
growth while slowing the rate of growth of new stores and clubs. At times, we make strategic investments which are focused
on the long-term growth of the Company, which may not benefit comparable sales in the near term.
Comparable sales is a metric which indicates the performance of our existing stores and clubs by measuring the change in sales
for such stores and clubs, including eCommerce sales, for a particular period over the corresponding period in the previous
year. The retail industry generally reports comparable sales using the retail calendar (also known as the 4-5-4 calendar). To be
consistent with the retail industry, we provide comparable sales using the retail calendar in our quarterly earnings releases.
However, when we discuss our comparable sales below, we are referring to our calendar comparable sales calculated using our
fiscal calendar. As our fiscal calendar differs from the retail calendar, our fiscal calendar comparable sales also differ from the
retail calendar comparable sales provided in our quarterly earnings releases.
(0.9)%
35
Walmart U.S.
Sam's Club
Total U.S.
2018
Fiscal Years Ended January 31,
2017
2018
2017
With Fuel
Fuel Impact
2.1%
2.8%
2.2%
1.6%
0.1%
0.0%
0.5%
Calendar comparable sales, as well as the impact of fuel, for fiscal 2018 and 2017, were as follows:
New stores and clubs, including expansions and relocations
Remodels
eCommerce, technology, supply chain and other
CALCULATION OF RETURN ON ASSETS
Numerator
Consolidated net income
Denominator
Average total assets (1)
Return on assets (ROA)
CALCULATION OF RETURN ON INVESTMENT
Numerator
Operating income
+ Interest income
+ Depreciation and amortization
+ Rent
= Adjusted operating income
(Amounts in millions)
Denominator
+ Average accumulated depreciation and amortization (¹)
- Average accounts payable(¹)
- Average accrued liabilities (¹)
+ Rent x 8
= Average invested capital
Return on investment (ROI)
Certain Balance Sheet Data
Total assets
Accumulated depreciation and amortization
Accounts payable
Accrued liabilities
2018
Fiscal Years Ended January 31,
2017
Average total assets (1)
The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP
financial measure,
is as follows:
37
37
Total U.S.
Walmart International
Total capital expenditures
Fiscal Years Ended January 31,
2018
2017
914 $
2,171
2,009
1,589
4,521
4,162
7,444
7,922
2,607
2,697
$
10,051
$
10,619
36
Total U.S. capital expenditures decreased $478 million for fiscal 2018, when compared to the previous fiscal year. Capital
expenditures related to new stores and clubs, including expansions and relocations, decreased $1.3 billion, partially offset by
increases to capital expenditures for remodels and for eCommerce, technology, supply chain and other. These changes were a
result of our shift in capital allocation strategy to support growth in comparable store and club sales and eCommerce, while
slowing the rate at which we open new stores and clubs.
Returns
As we execute our financial framework, we believe our returns on capital will improve over time. We measure returns on
capital with our return on investment and free cash flow metrics. In addition, we provide returns in the form of share
repurchases and dividends, which are discussed in the Liquidity and Capital Resources section.
Return on Assets and Return on Investment
We include Return on Assets ("ROA"), the most directly comparable measure based on our financial statements presented in
accordance with generally accepted accounting principles in the U.S. ("GAAP"), and Return on Investment ("ROI") as metrics
to assess returns on assets. While ROI is considered a non-GAAP financial measure, management believes ROI is a meaningful
metric to share with investors because it helps investors assess how effectively Walmart is deploying its assets. Trends in ROI
can fluctuate over time as management balances long-term potential strategic initiatives with possible short-term impacts. ROA
was 5.2% and 7.2% for the fiscal years ended January 31, 2018 and 2017, respectively. The decline in ROA was primarily due
to the loss on extinguishment of debt and the decrease in operating income for the fiscal year ended January 31, 2018. ROI was
14.2% and 15.2% for the fiscal years ended January 31, 2018 and 2017, respectively. The decline in ROI was primarily due to
the decrease in operating income for the fiscal year ended January 31, 2018.
We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent
expense) for the fiscal year or trailing 12 months divided by average invested capital during that period. We consider average
invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average
accumulated amortization, less average accounts payable and average accrued liabilities for that period, plus a rent factor equal
to the rent for the fiscal year or trailing 12 months multiplied by a factor of eight. When we have discontinued operations, we
exclude the impact of the discontinued operations.
Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that
exclude and include amounts that are included and excluded in the most directly comparable financial measure calculated and
presented in accordance with GAAP. For example, we exclude the impact of depreciation and amortization from our reported
operating income in calculating the numerator of our calculation of ROI. In addition, we include a factor of eight for rent
expense that estimates the hypothetical capitalization of our operating leases. As mentioned above, we consider ROA to be the
financial measure computed in accordance with GAAP that is the most directly comparable financial measure to our calculation
of ROI. ROI differs from ROA (which is consolidated net income for the period divided by average total assets for the period)
because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts total assets for the
impact of accumulated depreciation and amortization, accounts payable and accrued liabilities; and incorporates a factor of rent
to arrive at total invested capital. Because of the adjustments mentioned above, we believe ROI more accurately measures how
we are deploying our key assets and is more meaningful to investors than ROA.
Although ROI is a standard financial metric, numerous methods exist for calculating a company's ROI. As a result, the method
used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI.
14,293
$
44
11,718
(Amounts in millions)
Net cash used in investing activities
2018
Fiscal Years Ended January 31,
2017
2016
$
(9,060) $
(13,987) $
(10,675)
Net cash used in investing activities was $9.1 billion, $14.0 billion and $10.7 billion for fiscal 2018, 2017 and 2016,
respectively, and generally consisted of payments to remodel existing stores and clubs, expand our eCommerce capabilities,
invest in other technologies and add stores and clubs. Net cash used in investing activities decreased $4.9 billion for fiscal
2018, when compared to the previous fiscal year. Fiscal 2018 included cash received of $1.0 billion from the sale of Suburbia
in Mexico, while fiscal 2017 included our acquisition of Jet.com, Inc. ("jet.com") for approximately $2.4 billion and our
purchase of $1.9 billion of available for sale securities in JD.com ("JD"). Net cash used in investing activities increased $3.3
billion for fiscal 2017, when compared to the previous fiscal year, primarily due to our acquisition of jet.com and investment in
JD, partially offset by $0.7 billion in cash received from the sales of shopping malls in Chile. Refer to Note 13 to our
Consolidated Financial Statements for further details on our acquisition of jet.com and investment in JD. Additionally, refer to
the "Strategic Capital Allocation" section in our Company Performance Metrics for capital expenditure detail for fiscal 2018
and 2017.
We continued to focus on eCommerce, including a seamless omni-channel shopping experience, in each of our segments during
fiscal 2018. Our fiscal 2018 accomplishments in this area include growing "Online Grocery" to over 1,100 pickup locations in
the U.S., new dedicated eCommerce fulfillment centers, two-day free shipping with no membership fee at Walmart U.S. and
one-hour delivery from stores in China.
Growth Activities
For the fiscal year ending January 31, 2019 ("fiscal 2019"), we project capital expenditures will be approximately $11.0 billion
and involve:
Net Cash Used in Investing Activities
•
in Walmart International, investing more in fulfillment capabilities in addition to new stores; and,
eCommerce investments that include enhanced supply chain capabilities.
Globally, in fiscal 2019, we expect to add approximately 280 new, expanded or relocated stores and clubs, with approximately
255 of those in Walmart International, focusing on key markets such as Mexico and China.
Net Cash Used in Financing Activities
(Amounts in millions)
2018
Fiscal Years Ended January 31,
2017
2016
(19,875) $
(19,072) $
Net cash used in financing activities
(16,285)
Net cash flows used in financing activities generally consist of transactions related to our short-term and long-term debt,
financing obligations, dividends paid and the repurchase of Company stock. Transactions with noncontrolling interests are also
classified as cash flows from financing activities. Net cash used in financing activities increased $0.8 billion and $2.8 billion
for fiscal 2018 and 2017, respectively, when compared to the same period in the previous fiscal year. Net cash used in
financing activities for fiscal 2018 increased due to premiums paid for early extinguishment of debt. Net cash used in financing
43
in Walmart U.S., continuing to prioritize store remodels and digital experiences, with approximately 1,000 additional
online grocery locations;
activities for fiscal 2017 increased primarily due to repurchases of Company stock partially offset by lower repayments of long-
term debt. Further discussion of financing activities is provided by major category below.
As of January 31, 2018 and 2017, cash and cash equivalents of $1.4 billion and $1.0 billion, respectively, may not be freely
transferable to the U.S. due to local laws or other restrictions.
42
$
53,289
$
1.8%
1,619 $
52,330
1.4 %
1,746
3.0%
3.3 %
Net sales for the Sam's Club segment increased $1.9 billion or 3.2% and $0.5 billion or 0.9% for fiscal 2018 and 2017,
respectively, when compared to the previous fiscal year. For fiscal 2018, the increase in net sales was primarily due to an
increase in comparable sales which were benefited by an increase of $0.7 billion in fuel sales from higher fuel prices in fiscal
2018. For fiscal 2017, the increase in net sales was primarily due to an increase in comparable sales without fuel driven by
higher eCommerce sales, and a year-over-year increase in retail square feet of 0.9%, partially offset by a decrease of $0.4
billion in fuel sales primarily from lower fuel prices in fiscal 2017. In the future, net sales will be negatively impacted by our
decision to remove tobacco in certain clubs.
Gross profit rate decreased 44 basis points for fiscal 2018 and increased 39 basis points for fiscal 2017, when compared to the
previous fiscal year. For fiscal 2018, the decrease in gross profit rate was primarily due to the impact of markdowns to
liquidate inventory related to the club closures, a reclassification of certain supply expenses from operating expenses to cost of
goods sold, higher inventory shrink, increased shipping costs at samsclub.com and the investment in cash rewards. For fiscal
2017, the increase in gross profit rate was primarily due to margin rate improvement in home and apparel, health and wellness,
and grocery, partially offset by changes in merchandise mix and the growth of the Cash Rewards program.
Membership and other income increased 2.3% for fiscal 2018 and decreased 6.5% for fiscal 2017, when compared to the
previous fiscal year. For fiscal 2018, the increase in membership and other income was primarily due to higher recycling
income from our sustainability efforts and an increase of 1.3% in membership income resulting from increased Plus Member
penetration. For fiscal 2017, the decrease was primarily due to a reduction in other income partially offset by an increase of
2.3% in membership income as a result of increased Plus Member renewals.
Operating expenses as a percentage of segment net sales increased 80 and 49 basis points for fiscal 2018 and 2017, respectively,
when compared to the previous fiscal year. For fiscal 2018, the increase in operating expenses as a percentage of segment net
sales was primarily due to a charge of approximately $0.6 billion related to club closures and discontinued real estate projects.
For fiscal 2017, the increase in operating expenses as a percentage of segment net sales was primarily due to an increase in
wage, benefit and incentive expenses from the investment in the associate wage structure, as well as our investments in
eCommerce and technology and an increase in advertising expense.
As a result of the factors discussed above, segment operating income decreased $689 million and $149 million for fiscal 2018
and 2017, respectively.
We use intercompany financing arrangements in an effort to ensure cash can be made available in the country in which it is
needed with the minimum cost possible. We do not believe it will be necessary to repatriate earnings held outside of the U.S.
and anticipate our domestic liquidity needs will be met through cash flows provided by domestic operating activities,
supplemented with long-term debt and short-term borrowings. Accordingly, we intend, with only certain exceptions, to
continue to indefinitely reinvest our earnings held outside of the U.S. in our foreign operations. As part of U.S. tax reform
enacted on December 22, 2017, we are currently assessing the impact of the new legislation, which can in turn, impact our
assertion regarding any potential future repatriation. If our intentions with respect to reinvestment were to change, most of the
amounts held within our foreign operations could be repatriated to the U.S., although any repatriation under new U.S. tax laws
could be subject to incremental withholding taxes. We do not expect current local laws, other existing limitations or potential
taxes on anticipated future repatriations of cash amounts held outside of the U.S. to have a material effect on our overall
liquidity, financial condition or results of operations.
Liquidity and Capital Resources
The strength and stability of our operations have historically supplied us with a significant source of liquidity. Our cash flows
provided by operating activities, supplemented with our long-term debt and short-term borrowings, have been sufficient to fund
our operations while allowing us to invest in activities that support the long-term growth of our operations. Generally, some or
all of the remaining available cash flow has been used to fund the dividends on our common stock and share repurchases. We
believe our sources of liquidity will continue to be adequate to fund operations, finance our global investment and expansion
activities, pay dividends and fund our share repurchases for the foreseeable future.
Net Cash Provided by Operating Activities
(Amounts in millions)
Net cash provided by operating activities
2018
Fiscal Years Ended January 31,
2017
2016
28,337 $
31,673 $
27,552
Net cash provided by operating activities was $28.3 billion, $31.7 billion and $27.6 billion for fiscal 2018, 2017 and 2016,
respectively. The decrease in net cash provided by operating activities for fiscal 2018, when compared to the previous fiscal
year, was due to the timing of tax and other payments, as well as lapping the previous year's improvements in working capital
management and the benefit from the application of tax regulations adopted in fiscal 2017. The increase in net cash provided
by operating activities for fiscal 2017, when compared to the previous fiscal year, was primarily due to improved working
capital management. Additionally, we benefited from the application of new tax regulations related to the accelerated deduction
of remodels and related expenses.
Cash Equivalents and Working Capital
Cash and cash equivalents were $6.8 billion and $6.9 billion at January 31, 2018 and 2017, respectively. Our working capital
deficit was $18.9 billion and $9.2 billion at January 31, 2018 and 2017, respectively. The increase in our working capital deficit
reflects an increase in short-term borrowings as part of our long-term debt extinguishment activity as well as improved
procurement and inventory management. We generally operate with a working capital deficit due to our efficient use of cash in
funding operations, consistent access to the capital markets and returns provided to our shareholders in the form of payments of
cash dividends and share repurchases.
Liquidity
54,456
2.2%
864 $
1.6%
Short-term Borrowings
(Amounts in millions)
7,476
(1,789)
3,224
(11,272)
(13,061)
(3,224)
47
1,050
1,097
$
3,738
$
30,045
$
7,476
33,783
Dividends
Our total dividend payments were $6.1 billion, $6.2 billion and $6.3 billion for fiscal 2018, 2017 and 2016, respectively. On
February 20, 2018, the Board of Directors approved the fiscal 2019 annual dividend of $2.08 per share, an increase over the
fiscal 2018 annual dividend of $2.04 per share. For fiscal 2019, the annual dividend will be paid in four quarterly installments
of $0.52 per share, according to the following record and payable dates:
Record Date
March 9, 2018
May 11, 2018
August 10, 2018
December 7, 2018
Payable Date
April 2, 2018
June 4, 2018
September 4, 2018
January 2, 2019
Company Share Repurchase Program
From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Company's
Board of Directors. All repurchases made during the fiscal year prior to November 20, 2017 were made under the plan in effect
at the beginning of fiscal 2018. On October 9, 2017, the Board of Directors approved a new $20.0 billion share repurchase
program which, beginning on November 20, 2017, replaced the previous share repurchase program. As of January 31, 2018,
authorization for $18.8 billion of share repurchases remained under the current share repurchase program. Any repurchased
shares are constructively retired and returned to an unissued status.
15,080
Our total long-term debt decreased $4.5 billion for fiscal 2018, primarily due to the extinguishment and maturities of certain
long-term debt, partially offset by the issuance of long-term debt. The extinguishment of certain long-term debt allowed us to
retire higher rate debt to reduce interest expense in future periods.
Net cash flows provided by short-term borrowings increased $4.1 billion in fiscal 2018 and decreased $1.7 billion in fiscal
2017, when compared to the balance at the end of the previous fiscal year. We generally utilize the liquidity provided by short-
term borrowings to provide funding for our operations, dividend payments, share repurchases, capital expenditures and other
cash requirements. For fiscal 2018, the additional cash provided by short-term borrowings was primarily due to the timing of
our January 2018 debt extinguishment. For fiscal 2017, the decrease in net cash flows provided by short-term borrowings was
due to improved cash flows from operations driven by working capital improvements and changes to tax regulations.
The following table includes additional information related to the Company's short-term borrowings for fiscal 2018, 2017 and
2016:
38,271
$
Maximum amount outstanding at any month-end
Average daily short-term borrowings
2018
Fiscal Years Ended January 31,
2017
2016
$
11,386 $
8,131
9,493 $
5,691
10,551
4,536
1.3%
1.8%
1.5%
36,015 $
In addition to our short-term borrowings, we also have various undrawn committed lines of credit in the U.S. that provide $12.5
billion and various undrawn committed lines of credit outside of the U.S. that provide approximately $4.0 billion of additional
liquidity, if needed.
The following table provides the changes in our long-term debt for fiscal 2018:
(Amounts in millions)
Balances as of February 1, 2017
Proceeds from issuance of long-term debt
Payments of long-term debt
Reclassifications of long-term debt
Other
Balances as of January 31, 2018
Long-term debt due
within one year
Long-term debt
Total
$
2,256
Long-term Debt
$
Annual weighted-average interest rate
Operating income as a percentage of net sales
1.0%
19,087
5.6%
5.8%
6.4%
4,761
4,672
4,574
705
699
690
Net sales for the Walmart U.S. segment increased $10.6 billion or 3.5% and $9.5 billion or 3.2% for fiscal 2018 and 2017,
respectively, when compared to the previous fiscal year. The increases in net sales were primarily due to increases in
comparable store sales of 2.1% and 1.6% for fiscal 2018 and 2017, respectively, and year-over-year growth in retail square feet
of 0.7% and 1.4% for fiscal 2018 and 2017, respectively. Additionally, for fiscal 2018, sales generated from eCommerce
acquisitions further contributed to the year-over-year increase.
Gross profit rate decreased 24 basis points for fiscal 2018 and increased 24 basis points for fiscal 2017, when compared to the
previous fiscal year. For fiscal 2018, the decrease was primarily due to strategic price investments and the mix impact from
eCommerce. Partially offsetting the negative factors for fiscal 2018 was the positive impact of savings from procuring
merchandise. For fiscal 2017, the increase in gross profit rate was primarily due to improved margin in food and consumables,
including the impact of savings in procuring merchandise and lower transportation expense from lower fuel costs.
Operating expenses as a percentage of segment net sales was relatively flat for fiscal 2018 and increased 101 basis points for
fiscal 2017, when compared to the previous fiscal year. Fiscal 2018 and fiscal 2017 included charges related to discontinued
real estate projects of $244 million and $249 million, respectively. For fiscal 2017, the increase was primarily driven by an
increase in wage expense due to the investment in the associate wage structure; the charge related to discontinued real estate
projects; and investments in digital retail and technology. The increase in operating expenses as a percentage of segment net
sales for fiscal 2017 was partially offset by the impact of store closures in fiscal 2016.
3.6%
As a result of the factors discussed above, segment operating income increased $124 million for fiscal 2018 and decreased $1.3
billion for fiscal 2017, respectively.
40
Walmart International Segment
(Amounts in millions, except unit counts)
Net sales
Percentage change from comparable period
Operating income
Operating income as a percentage of net sales
Unit counts at period end
Retail square feet at period end
Fiscal Years Ended January 31,
2018
2017
2016
40
118,068
2016
298,378
17,869 $
41
11,695
11,528
1,158
1,164
1,149
Our total revenues, which are mostly comprised of net sales, but also include membership and other income, increased $14.5
billion or 3.0% and $3.7 billion or 0.8% for fiscal 2018 and 2017, respectively, when compared to the previous fiscal year. Net
sales increased $14.4 billion or 3.0% and $2.7 billion or 0.6% for fiscal 2018 and 2017, respectively, when compared to the
previous fiscal year. For fiscal 2018, net sales were positively impacted by overall positive comparable sales, the impact from
new store openings and sales generated from eCommerce acquisitions. Additionally, for fiscal 2018, the increase in net sales
was partially offset by a reduction in net sales of $1.9 billion due to divesting our Yihaodian and Suburbia businesses and the
$0.5 billion of negative impact from fluctuations in currency exchange rates. For fiscal 2017, net sales were positively
impacted by overall positive comparable sales and the 1.3% year-over-year growth in consolidated retail square feet. The
positive effect of such factors on our consolidated net sales for fiscal 2017 was partially offset by a negative impact of $11.0
billion or 2.3% as a result of fluctuations in currency exchange rates and a $0.4 billion decrease in fuel sales from lower fuel
prices at the Sam's Club segment.
Our gross profit rate decreased 26 basis points for fiscal 2018 and increased 36 basis points for fiscal 2017, when compared to
the previous fiscal year. For fiscal 2018, the decrease was primarily due to strategic price investments and the mix impact from
eCommerce. For fiscal 2017, the increase in gross profit rate was primarily due to improved margin in food and consumables,
including the impact of savings in procuring merchandise and lower transportation expense from lower fuel costs in the
Walmart U.S. segment. Additionally, improvement in certain markets' inventory management and cost analytics programs in
the Walmart International segment also positively impacted our gross profit rate for fiscal 2017.
Operating expenses as a percentage of net sales increased 32 and 88 basis points for fiscal 2018 and 2017, respectively, when
compared to the previous fiscal year. For fiscal 2018, the increase in operating expenses as a percentage of net sales was
primarily due to approximately $0.6 billion in charges related to Sam's Club closures and discontinued real estate projects,
approximately $400 million related to a lump sum bonus paid to associates, $300 million related to Home Office severance, a
legal accrual of $283 million related to the FCPA matter in the third quarter, a charge of $244 million related to discontinued
real estate projects in Walmart U.S., and the decisions to exit certain international properties and wind down the first party
Brazil eCommerce operations. For fiscal 2017, the increase in operating expenses as a percentage of net sales was primarily
due to an increase in wage expense at the Walmart U.S. and Sam's Club segments resulting from the continued investment in
associate wage structure, a $370 million charge related to discontinued domestic real estate projects and severance, and our
39
continued investments in eCommerce and technology. The increase in operating expenses as a percentage of net sales for fiscal
2017 was partially offset by the impact of store closures in the fourth quarter of fiscal 2016.
Membership and other income was relatively flat for fiscal 2018 and increased $1.0 billion for fiscal 2017, when compared to
the same period in the previous fiscal year. While fiscal 2018 included a $387 million gain from the sale of Suburbia, a $47
million gain from a land sale, higher recycling income from our sustainability efforts and higher membership income from
increased Plus Member penetration at Sam's Club, these gains were less than gains recognized in fiscal 2017. Fiscal 2017
included a $535 million gain from the sale of our Yihaodian business and a $194 million gain from the sale of shopping malls in
Chile.
For fiscal 2018, loss on extinguishment of debt was $3.1 billion, due to the early extinguishment of long-term debt which
allowed us to retire higher rate debt to reduce interest expense in future periods.
Our effective income tax rate was 30.4% for fiscal 2018 and 30.3% for both fiscal 2017 and 2016. Although relatively
consistent year-over-year, our effective income tax rate may fluctuate from period to period as a result of factors including
changes in our assessment of certain tax contingencies, valuation allowances, changes in tax laws, outcomes of administrative
audits, the impact of discrete items and the mix of earnings among our U.S. operations and international operations. The
reconciliation from the U.S. statutory rate to the effective income tax rates for fiscal 2018, 2017 and 2016 is presented in Note 9
in the "Notes to Consolidated Financial Statements" and describes the impact of the enactment of the Tax Cuts and Jobs Act of
2017 (the "Tax Act") to the fiscal 2018 effective income tax rate.
307,833
3.2%
1.6%
17,745 $
As a result of the factors discussed above, we reported $10.5 billion and $14.3 billion of consolidated net income for fiscal
2018 and 2017, respectively, which represents a decrease of $3.8 billion and $0.8 billion for fiscal 2018 and 2017, respectively,
when compared to the previous fiscal year. Diluted net income per common share attributable to Walmart ("EPS") was $3.28
and $4.38 for fiscal 2018 and 2017, respectively.
(Amounts in millions, except unit counts)
Net sales
Percentage change from comparable period
Calendar comparable sales increase
Operating income
Operating income as a percentage of net sales
Unit counts at period end
Retail square feet at period end
Fiscal Years Ended January 31,
2018
318,477 $
2017
3.5%
2.1%
Walmart U.S. Segment
$
$
$
Percentage change from comparable period
59,216 $
3.2%
57,365
$
56,828
0.9%
(2.1)%
Calendar comparable sales increase (decrease)
2.8%
0.5%
(3.2)%
Operating income
Operating income as a percentage of net sales
982 $
1.7%
1,671 $
1,820
2.9%
3.2%
Unit counts at period end
Retail square feet at period end
597
80
660
655
88
88
Excluding Fuel
Net sales
116,119
Percentage change from comparable period
Operating income
$
2016
$
$
1.7%
Fiscal Years Ended January 31,
2017
(5.9)%
(9.4)%
$
5,352
$
5,758
5,346
4.5%
5.0 %
123,408
6,360
6,363
4.3 %
Sam's Club Segment
373
377
372
Net sales for the Walmart International segment increased $1.9 billion or 1.7% for fiscal 2018 and decreased $7.3 billion or
5.9% for fiscal 2017, when compared to the previous fiscal year. For fiscal 2018, the increase in net sales was due to positive
comparable sales in the majority of our markets and the impact of new stores, partially offset by a reduction in net sales of $1.9
billion due to divesting our Yihaodian and Suburbia businesses and a $0.5 billion negative impact from fluctuations in currency
exchange rates. For fiscal 2017, the decrease in net sales was due to a $11.0 billion negative impact from fluctuations in
currency exchange rates. Additionally, net sales for fiscal 2017 were impacted by positive comparable sales in all of our
markets, except in the United Kingdom, and year-over-year growth in retail square feet of 1.2%.
Gross profit rate decreased 28 basis points for fiscal 2018 and increased 46 basis points for fiscal 2017, when compared to the
previous fiscal year. For fiscal 2018, the decrease in the gross profit rate was primarily due to strategic price investments in
certain markets. For fiscal 2017, the increase in gross profit rate was primarily due to improvement in certain markets'
inventory management and cost analytics programs.
Membership and other income decreased 14.0% for fiscal 2018 and increased 69.4% for fiscal 2017, when compared to the
previous fiscal year. While fiscal 2018 included a $387 million gain from the sale of Suburbia and a $47 million gain from a
land sale, these gains were less than gains recognized in fiscal 2017. Fiscal 2017 included a $535 million gain from the sale of
our Yihaodian business and a $194 million gain from the sale of shopping malls in Chile.
Operating expenses as a percentage of segment net sales decreased 11 basis points for fiscal 2018 and increased 58 basis points
for fiscal 2017, when compared to the previous fiscal year. The decrease in operating expenses as a percentage of segment net
sales for fiscal 2018 was primarily due to an increase in net sales partially offset by restructuring and impairment charges in
certain markets of approximately $0.5 billion, including charges from decisions to exit certain properties and to wind down the
first party Brazil eCommerce operations. The increase in operating expenses as a percentage of segment net sales for fiscal
2017 was primarily due to declining sales on relatively flat fixed costs in the United Kingdom, as well as adjustments to useful
lives of certain assets and impairment charges in certain markets.
Segment operating income was negatively impacted by fluctuations in currency exchange rates of $68 million and $642 million
for fiscal 2018 and 2017, respectively. As a result of the factors discussed above, segment operating income decreased $406
million for fiscal 2018 and increased $412 million for fiscal 2017, respectively.
6,299
We believe the information in the below table under the caption "Excluding Fuel" is useful to investors because it permits
investors to understand the effect of the Sam's Club segment's fuel sales on its results of operations, which are impacted by the
volatility of fuel prices. Volatility in fuel prices may continue to impact the operating results of the Sam's Club segment in the
future.
(Amounts in millions, except unit counts)
Including Fuel
2018
Net sales
$
$
―%
―%
-%
$
Weighted-average receive rate
In certain countries, we also enter into immaterial foreign currency forward contracts to hedge the purchase and payment of
purchase commitments denominated in non-functional currencies.
Fixed to variable
Interest rate swaps:
Interest rate derivatives
4.1%
-%
―%
Weighted-average pay rate
―%
We hold currency swaps to hedge the currency exchange component of our net investments and also to hedge the currency
exchange rate fluctuation exposure associated with the forecasted payments of principal and interest of non-U.S. denominated
debt. The aggregate fair value of these swaps was in an asset position of $413 million at January 31, 2018 and a liability
position of $147 million at January 31, 2017. The change in the fair value of these swaps was due to fluctuations in currency
exchange rates, primarily the strengthening of other currencies relative to the U.S. dollar in fiscal 2018. A hypothetical 10%
increase or decrease in the currency exchange rates underlying these swaps from the market rate at January 31, 2018 would
have resulted in a loss or gain in the value of the swaps of $560 million. A hypothetical 10% change in interest rates underlying
these swaps from the market rates in effect at January 31, 2018 would have resulted in a loss or gain in the value of the swaps
of $22 million.
3,250 $
4,000
2.5%
2.6%
―%
2.9%
3.0%
(1) The long-term debt amounts in the table exclude the Company's derivatives classified as fair value hedges.
As of January 31, 2018, our variable rate borrowings, including the effect of our commercial paper and interest rate swaps,
represented 26% of our total short-term and long-term debt. Based on January 31, 2018 debt levels, a 100 basis point change in
prevailing market rates would cause our annual interest costs to change by approximately $96 million.
Foreign Currency Risk
We are exposed to fluctuations in foreign currency exchange rates as a result of our net investments and operations in countries
other than the U.S. For fiscal 2018, movements in currency exchange rates and the related impact on the translation of the
balance sheets of the Company's subsidiaries in the United Kingdom and Canada were the primary cause of the $2.3 billion
gain in the currency translation and other category of accumulated other comprehensive loss. We hedge a portion of our foreign
currency risk by entering into currency swaps and designating certain foreign-currency-denominated long-term debt as net
investment hedges.
In addition to currency swaps, we have designated foreign-currency-denominated long-term debt as nonderivative hedges of net
investments of certain of our foreign operations. We had outstanding long-term debt of £1.7 billion at January 31, 2018 and
£2.5 billion at January 31, 2017 that was designated as a hedge of our net investment in the United Kingdom. At January 31,
2018, a hypothetical 10% increase or decrease in the value of the U.S. dollar relative to the British pound would have resulted
in a change in the value of the debt of $217 million. In addition, we had outstanding long-term debt of ¥180 billion at
January 31, 2018 and ¥10 billion at January 31, 2017 that was designated as a hedge of our net investment in Japan. At
January 31, 2018, a hypothetical 10% increase or decrease in value of the U.S. dollar relative to the Japanese yen would have
resulted in a change in the value of the debt of $150 million.
Investment Risk
―%
750 $ - $ - $
3.2%
―%
―%
3.3%
―%
Fixed rate
1.7%
―%
During fiscal 2018, the fair value of our available-for-sale investment in JD increased approximately $1.5 billion, due to an
increase in the market value of JD.
$ 5,257
1.5%
Long-term debt():
$
3,233
$
1,614 $
Weighted-average interest rate
3.2%
2.6%
3,336 $
2.8%
607 $
5.5%
2,934 $
1.7%
21,259 $
32,983
5.5%
Weighted-average interest rate
800
$
$
$
―%
$
300
500 $
$
Variable rate
3.9%
4.6%
$
49
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
50
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Walmart Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Walmart Inc. (the Company) as of January 31, 2018 and 2017,
the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three
years in the period ended January 31, 2018, and the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at January 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended
January 31, 2018, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of January 31, 2018, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated March 30, 2018 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 1969.
Rogers, Arkansas
March 30, 2018
53
53
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Walmart Inc.
Opinion on Internal Control over Financial Reporting
―%
...
54
March 30, 2018
Rogers, Arkansas
/s/ Ernst & Young LLP
52
A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that
could have a material effect on the financial statements.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting included in the accompanying Report on Internal Control over
Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
Basis for Opinion
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the accompanying consolidated balance sheets of Walmart Inc. as of January 31, 2018 and 2017, the related consolidated
statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended
January 31, 2018, and the related notes and our report dated March 30, 2018 expressed an unqualified opinion thereon.
We have audited Walmart Inc.'s internal control over financial reporting as of January 31, 2018, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) (the COSO criteria). In our opinion, Walmart Inc. (the Company) maintained, in all material respects, effective internal
control over financial reporting as of January 31, 2018, based on the COSO criteria.
Definition and Limitations of Internal Control over Financial Reporting
49
52
The Audit Committee of the Board of Directors oversees our process of reporting financial information and the audit of our
Consolidated Financial Statements. The Audit Committee stays informed of the financial condition of Walmart and regularly
reviews management's financial policies and procedures, the independence of our independent auditors, our internal control
over financial reporting and the objectivity of our financial reporting. Both the independent auditors and the internal auditors
have free access to the Audit Committee and meet with the Audit Committee regularly, both with and without management
present.
50
Other Matters
We discuss our existing FCPA investigation and related matters for fiscal 2018, including certain risks arising therefrom, in Part
I, Item 1A of this Form 10-K under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our
Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein. We also discuss various
legal proceedings related to the FCPA investigation in Item 3 herein under the caption "Part I, Item 3. Legal Proceedings,"
under the sub-caption "II. Certain Other Proceedings." We discuss the "equal value" claims against our United Kingdom
subsidiary, ASDA Stores, Ltd., for fiscal 2018, including certain risks arising therefrom, in Part I, Item 1A of this Form 10-K
under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial
Statements, which is captioned "Contingencies," and appears elsewhere herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements of Walmart Inc.
(formerly "Wal-Mart Stores, Inc.")
For the Fiscal Year Ended January 31, 2018
Table of Contents
Management's Report to Our Shareholders
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
51
Management of Walmart Inc. ("Walmart," the "company" or "we") is responsible for the preparation, integrity and objectivity of
Walmart's Consolidated Financial Statements and other financial information contained in this Annual Report on Form 10-K.
Those Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the
United States. In preparing those Consolidated Financial Statements, management is required to make certain estimates and
judgments, which are based upon currently available information and management's view of current conditions and
circumstances.
Management's Report to Our Shareholders
Walmart Inc.
60
59
58
Acting through our Audit Committee, we have retained Ernst & Young LLP, an independent registered public accounting firm,
to audit our Consolidated Financial Statements appearing below. We have made available to Ernst & Young LLP all of our
financial records and related data in connection with their audit of our Consolidated Financial Statements. We have filed with
the Securities and Exchange Commission ("SEC") the required certifications related to our Consolidated Financial Statements
as of and for the year ended January 31, 2018. These certifications are attached as exhibits to this Annual Report on Form 10-
K. Additionally, we have also provided to the New York Stock Exchange the required annual certification of our Chief
Executive Officer regarding our compliance with the New York Stock Exchange's corporate governance listing standards.
57
55
54
53
52
Page
51
56
-%
Fiscal 2023 Thereafter
―%
Credit rating agencies review their ratings periodically and, therefore, the credit ratings assigned to us by each agency may be
subject to revision at any time. Accordingly, we are not able to predict whether our current credit ratings will remain consistent
over time. Factors that could affect our credit ratings include changes in our operating performance, the general economic
environment, conditions in the retail industry, our financial position, including our total debt and capitalization, and changes in
our business strategy. Any downgrade of our credit ratings by a credit rating agency could increase our future borrowing costs
or impair our ability to access capital and credit markets on terms commercially acceptable to us. In addition, any downgrade
of our current short-term credit ratings could impair our ability to access the commercial paper markets with the same flexibility
that we have experienced historically, potentially requiring us to rely more heavily on more expensive types of debt financing.
The credit rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities. Each
rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated
independently of any other rating. Moreover, each credit rating is specific to the security to which it applies.
45
Contractual Obligations
The following table sets forth certain information concerning our obligations to make contractual future payments, such as debt
and lease agreements, and certain contingent commitments as of January 31, 2018:
(Amounts in millions)
Total
2020-2021
Payments Due During Fiscal Years Ending January 31,
2019
2022-2023
Thereafter
Recorded contractual obligations:
Long-term debt(1)
Short-term borrowings
33,783 $
5,257
3,733 $
5,257
5,250 $
3,541
$
7,644
2,539
3,250
1,933
15,366
Non-cancelable operating leases (3)
AA
Unrecorded contractual obligations:
1,539
1,929
1,039
9,930
Capital lease and financing obligations (2)
21,259
5,423
Estimated interest on long-term debt
Aa2
Long-term debt
―%
funded through the Company's free cash flows. The following table provides, on a settlement date basis, the number of shares
repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2018, 2017 and 2016:
Fiscal Years Ended January 31,
(Amounts in millions, except per share data)
2018
2017
2016
Total number of shares repurchased
104.9
119.9
62.4
Average price paid per share
$
Total amount paid for share repurchases
79.11 $
8,296 $
69.18 $
8,298 $
65.90
P-1
F1+
A-1+
Commercial paper
Fitch Ratings
Moody's Investors Service
Standard & Poor's
AA
Rating agency
We believe cash flows from operations, our current cash position and access to capital markets will continue to be sufficient to
meet our anticipated operating cash needs, which include funding seasonal buildups in merchandise inventories and funding our
capital expenditures, dividend payments and share repurchases.
Capital Resources
In fiscal 2016, as described in Note 13 to our Consolidated Financial Statements, we completed the purchase of all of the
remaining noncontrolling interest in Yihaodian, our eCommerce operations in China, for approximately $760 million, using
existing cash to complete the transaction. The Company subsequently sold Yihaodian to JD in fiscal 2017.
Significant Transactions with Noncontrolling Interests
Share repurchases were flat for fiscal 2018 and increased $4.2 billion for fiscal 2017, respectively, when compared to the
previous fiscal year.
4,112
We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance
our debt as it becomes due at favorable rates in capital markets. At January 31, 2018, the ratings assigned to our commercial
paper and rated series of our outstanding long-term debt were as follows:
17,601
$
2,319
47
Income Taxes
Income taxes have a significant effect on our net earnings. We are subject to income taxes in the U.S. and numerous foreign
jurisdictions. Accordingly, the determination of our provision for income taxes requires significant judgment, the use of
estimates and the interpretation and application of complex tax laws. Our effective income tax rate is affected by many factors,
including changes in our assessment of certain tax contingencies, increases and decreases in valuation allowances, changes in
tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings among our U.S. and
international operations where the statutory rates are generally lower than the U.S. statutory rate, and may fluctuate as a result.
Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions. The
benefits of uncertain tax positions are recorded in our financial statements only after determining a more likely than not
probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and
circumstances change, we reassess these probabilities and record any changes in the financial statements as appropriate. We
account for uncertain tax positions by determining the minimum recognition threshold that a tax position is required to meet
before being recognized in the financial statements. This determination requires the use of significant judgment in evaluating
our tax positions and assessing the timing and amounts of deductible and taxable items.
Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets
arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net
operating loss and tax credit carryforwards. Deferred tax assets are evaluated for future realization and reduced by a valuation
allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing
whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings,
expectations of future taxable income, carryforward periods and other relevant quantitative and qualitative factors. The
recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all
sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies.
This evaluation relies heavily on estimates.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted and contains significant changes to U.S.
income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35 percent to 21 percent and creates
new taxes on foreign-sourced earnings and related-party payments. In addition, the Company was subject to a one-time
transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax.
During the fourth quarter of fiscal 2018, the Company recorded a net tax benefit of $0.2 billion related to the enactment of the
Tax Act. The benefit primarily related to the remeasurement of the Company's deferred tax assets and liabilities considering the
Tax Act's newly enacted tax rates and is net of the Tax Act's one-time transition tax on previously unremitted earnings of non-
U.S. subsidiaries. As discussed in Note 9 to our Consolidated Financial Statements, as the Company collects and prepares
necessary data, and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and
other standard-setting bodies, the Company may make adjustments to the provisional amounts. Those adjustments may
materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. The
accounting for the tax effects of the Tax Act is provisional and will be completed by the measurement period provided in Staff
Accounting Bulletin No. 118.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
In addition to the risks inherent in our operations, we are exposed to certain market risks, including changes in interest rates and
fluctuations in currency exchange rates.
The analysis presented below for each of our market risk sensitive instruments is based on a hypothetical scenario used to
calibrate potential risk and does not represent our view of future market changes. The effect of a change in a particular
assumption is calculated without adjusting any other assumption. In reality, however, a change in one factor could cause a
change in another, which may magnify or negate other sensitivities.
Interest Rate Risk
We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt issuances. We hedge a
portion of our interest rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For
fiscal 2018, the net fair value of our interest rate swaps decreased approximately $87 million primarily due to fluctuations in
market interest rates.
The table below provides information about our financial instruments that are sensitive to changes in interest rates. For debt
obligations, the table represents the principal cash flows and related weighted-average interest rates by expected maturity dates.
For interest rate swaps, the table represents the contractual cash flows and weighted-average interest rates by the contractual
48
maturity date, unless otherwise noted. The notional amounts are used to calculate contractual cash flows to be exchanged under
the contracts. The weighted-average variable rates are based upon prevailing market rates at January 31, 2018.
(Amounts in millions)
Expected Maturity Date
Fiscal 2019 Fiscal 2020
$
1,291
$
$
$
1.5%
Goodwill and other indefinite-lived acquired intangible assets are not amortized, but are evaluated for impairment annually or
whenever events or changes in circumstances indicate that the value of a certain asset may be impaired. Generally, this
evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If we
determine, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely
than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount
cannot be assured, then a quantitative impairment test would be performed. The quantitative test for impairment requires
management to make judgments relating to future cash flows, growth rates and economic and market conditions. These
evaluations are based on determining the fair value of a reporting unit or asset using a valuation method such as discounted cash
flow or a relative, market-based approach. Historically, our reporting units and other indefinite-lived acquired intangible assets
have generated sufficient returns to recover the cost of goodwill and other indefinite-lived acquired intangible assets. Because
of the nature of the factors used in these tests, if different conditions occur in future periods, future operating results could be
materially impacted. For approximately $300 million of certain acquired indefinite-lived intangible assets, the fair value
approximated the carrying value; any deterioration in the fair value may result in an impairment charge.
Weighted-average interest rate
Variable rate
Short-term borrowings:
Liabilities
Total
Fiscal 2022
Fiscal 2021
5,257
We evaluate long-lived assets, other than goodwill and assets with indefinite lives, for indicators of impairment whenever
events or changes in circumstances indicate their carrying amounts may not be recoverable. Management's judgments
regarding the existence of impairment indicators are based on market conditions and financial performance. The evaluation of
long-lived assets is performed at the lowest level of identifiable cash flows, which is generally at the individual store level. The
variability of these factors depends on a number of conditions, including uncertainty about future events and changes in
demographics. Thus, our accounting estimates may change from period to period. These factors could cause management to
conclude that indicators of impairment exist and require impairment tests be performed, which could result in management
determining the value of long-lived assets is impaired, resulting in a write-down of the related long-lived assets. Although
impairment charges for fiscal 2018 were $1.4 billion, these charges primarily related to restructuring activities described in
Note 14, as well as discontinued real estate projects in the U.S. and decisions to exit certain international properties.
Impairment charges not related to restructuring activities or decisions to exit properties for fiscal 2018 were not material and
would not change materially with a 10% decrease in the undiscounted cash flows for the stores with indicators of impairment.
Additionally, total impairment charges for fiscal 2017 were not material.
$
We provide for estimated inventory losses, or shrinkage, between physical inventory counts on the basis of a historical
percentage of sales. Following annual inventory counts, the provision is adjusted to reflect updated historical results.
Historically, our estimated inventory losses have been materially accurate when compared to annual inventory counts and we
expect that trend to continue.
11,870
Impairment of Assets
2,121
Trade and stand-by letters of credit
Purchase obligations
2,626
2,626
6,121
5,094
1,138
925
Total contractual obligations
$
97,841 $ 22,000 $ 17,842 $ 10,878 $ 47,121
(1) "Long-term debt" includes the fair value of our derivatives designated as fair value hedges.
(2) "Capital lease and financing obligations" includes executory costs and imputed interest related to capital lease and financing obligations that are not yet
recorded. Refer to Note 11 to our Consolidated Financial Statements for more information.
(3) Represents minimum contractual obligation for non-cancelable leases with initial or remaining terms greater than 12 months as of January 31, 2018.
13,278
Estimated interest payments are based on our principal amounts and expected maturities of all debt outstanding at January 31,
2018, and assumes interest rates remain at current levels for our variable rate debt.
We value inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using
the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Walmart International
segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO") method. The
retail inventory method of accounting results in inventory being valued at the lower of cost or market, since permanent
markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's Club segment
is valued using the weighted-average cost LIFO method.
Additionally, the Company has $12.5 billion in undrawn committed lines of credit in the U.S. and approximately $4.0 billion of
undrawn committed lines of credit outside of the U.S. which, if drawn upon, would be included in the current liabilities section
of the Company's Consolidated Balance Sheets.
Inventories
Management continually reviews our accounting policies, how they are applied and how they are reported and disclosed in our
financial statements. Following is a summary of our critical accounting estimates and how they are applied in preparation of
the financial statements.
Management strives to report our financial results in a clear and understandable manner, although in some cases accounting and
disclosure rules are complex and require us to use technical terminology. In preparing the Company's Consolidated Financial
Statements, we follow accounting principles generally accepted in the U.S. These principles require us to make certain
estimates and apply judgments that affect our financial position and results of operations as reflected in our financial
statements. These judgments and estimates are based on past events and expectations of future outcomes. Actual results may
differ from our estimates.
Summary of Critical Accounting Estimates
When necessary, we record a LIFO provision for the estimated annual effect of inflation, and these estimates are adjusted to
actual results determined at year-end. Our LIFO provision is calculated based on inventory levels, markup rates and internally
generated retail price indices. As a measure of sensitivity, a 1% increase to our retail price indices would not have resulted in a
decrease to the carrying value of inventory. At January 31, 2018 and 2017, our inventories valued at LIFO approximated those
inventories as if they were valued at FIFO.
46
As of January 31, 2018, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or
future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital
Purchase obligations include legally binding contracts, such as firm commitments for inventory and utility purchases, as well as
commitments to make capital expenditures, software acquisition and license commitments and legally binding service
contracts. For the purposes of this table, contractual obligations for the purchase of goods or services are defined as agreements
that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be
purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts that specify
the Company will purchase all or a portion of its requirements of a specific product or service from a supplier, but do not
include a fixed or minimum quantity, are excluded from the table above. Additionally, purchase orders for inventory are not
included in the table above as purchase orders represent authorizations to purchase rather than binding agreements. Our
purchase orders are based on our current inventory needs and are fulfilled by our suppliers within short time periods. We also
enter into contracts for outsourced services; however, the obligations under these contracts are not significant and the contracts
generally contain clauses allowing for cancellation without significant penalty.
resources.
The expected timing for payment discussed above is estimated based on current information. Timing of payments and actual
amounts paid may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for
some obligations.
Under the retail method of accounting, inventory is valued at the lower of cost or market, which is determined by applying a
cost-to-retail ratio to each merchandise grouping's retail value. The FIFO cost-to-retail ratio is generally based on the fiscal
year purchase activity. The cost-to-retail ratio for measuring any LIFO provision is based on the initial margin of the fiscal
year
purchase activity less the impact of any permanent markdowns. The retail method of accounting requires management to make
certain judgments and estimates that may significantly impact the ending inventory valuation at cost, as well as the amount of
gross profit recognized. Judgments made include recording markdowns used to sell inventory and shrinkage. When
management determines the ability to sell inventory has diminished, markdowns for clearance activity and the related cost
impact are recorded. Factors considered in the determination of markdowns include current and anticipated demand, customer
preferences and age of merchandise, as well as seasonal and fashion trends. Changes in weather and customer preferences
could also cause changes in the amount and timing of markdowns from year to year.
In addition to the amounts shown in the table above, $1.0 billion of unrecognized tax benefits are considered uncertain tax
positions and have been recorded as liabilities. The timing of the payment, if any, associated with these liabilities is uncertain.
Refer to Note 9 to our Consolidated Financial Statements for additional discussion of unrecognized tax benefits.
Off Balance Sheet Arrangements
210
541
Other comprehensive income (loss) attributable to Walmart
(2,635)
(4,429)
(169)
Comprehensive income, net of income taxes
14,743
11,448
10,110
4,051
13,913
(830)
(440)
155
Comprehensive income attributable to Walmart
$
11,008
$
10,265
Other comprehensive (income) loss attributable to noncontrolling interest
See accompanying notes.
56
56
Comprehensive (income) loss attributable to noncontrolling interest
(4,970)
(405)
4,220
(650)
(386)
Walmart Inc.
9,862
13,643
14,694
Other comprehensive income (loss), net of income taxes
Currency translation and other
Net investment hedges
Unrealized gain on available-for-sale securities
Cash flow hedges
2,540
(3,027)
413
(5,220)
366
1,501
145
437
21
(202)
Minimum pension liability
147
(397)
86
Other comprehensive income (loss), net of income taxes
(2,845)
Consolidated Balance Sheets
Capital in excess of par value
ASSETS
Common stock
Retained earnings
Accumulated other comprehensive loss
Total Walmart shareholders' equity
Noncontrolling interest
Total equity
Total liabilities and equity
See accompanying notes.
57
57
As of January 31,
Equity:
2018
6,756 $
6,867
5,614
5,835
43,783
43,046
3,511
1,941
59,664
57,689
(661)
2017
Commitments and contingencies
Deferred income taxes and other
Long-term capital lease and financing obligations
Current assets:
Cash and cash equivalents
Receivables, net
Inventories
Prepaid expenses and other
Total current assets
Property and equipment:
Property and equipment
Less accumulated depreciation
Property and equipment, net
Property under capital lease and financing obligations:
Property under capital lease and financing obligations
Less accumulated amortization
Property under capital lease and financing obligations, net
Goodwill
Other assets and deferred charges
Total assets
Current liabilities:
Short-term borrowings
Accounts payable
Accrued liabilities
Accrued income taxes
Long-term debt due within one year
Capital lease and financing obligations due within one year
Total current liabilities
Long-term debt
(Amounts in millions)
Consolidated net income attributable to noncontrolling interest
Consolidated net income attributable to Walmart
323
14,293 $
360,984
Operating, selling, general and administrative expenses
106,510
101,853
97,041
20,437
22,764
24,105
1,978
2,044
2,027
361,256
Capital lease and financing obligations
Interest, net
Loss on extinguishment of debt
352
521
(152)
(100)
(81)
2,178
2,267
2,467
3,136
Interest income
373,396
Debt
Interest:
185,154
Walmart Inc.
Consolidated Statements of Income
Fiscal Years Ended January 31,
(Amounts in millions, except per share data)
Revenues:
Net sales
Membership and other income
Total revenues
Costs and expenses:
2018
2017
2016
$
495,761 $
481,317 $
478,614
4,582
4,556
3,516
500,343
485,873
482,130
Cost of sales
Operating income
Income before income taxes
15,123
20,497
21,638
Diluted
Dividends declared per common share
See accompanying notes.
55
2,995
3,101
3,207
3,010
3,112
3,217
$
2.04
$
2.00
$
1.96
Walmart Inc.
Consolidated Statements of Comprehensive Income
(Amounts in millions)
Consolidated net income
2018
Fiscal Years Ended January 31,
2017
2016
$
10,523 $
Basic
15,080
Weighted-average common shares outstanding:
4.38
Provision for income taxes
4,600
6,204
6,558
Consolidated net income
10,523
14,293
15,080
Consolidated net income attributable to noncontrolling interest
Consolidated net income attributable to Walmart
(661)
(650)
(386)
$
9,862
$
13,643 $
14,694
Net income per common share:
Basic net income per common share attributable to Walmart
Diluted net income per common share attributable to Walmart
$
3.29
$
4.40 $
4.58
3.28
4.57
179,492
LIABILITIES AND EQUITY
(71,782)
See accompanying notes.
2,540
2,351
2,450
Interest paid
8,111
4,507
6,179
Income taxes paid
Supplemental disclosure of cash flow information:
8,705
6,867 $
6,756
9,135
8,705
6,867
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(430)
(1,838)
(111)
Net increase (decrease) in cash and cash equivalents
(1,022)
(452)
487
Effect of exchange rates on cash and cash equivalents
(16,285)
(19,072)
59
59
Walmart Inc.
Notes to Consolidated Financial Statements
(Amounts in millions)
Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as earned or incurred.
Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred.
The following table summarizes the Company's property and equipment balances and includes the estimated useful lives that
are generally used to depreciate the assets on a straight-line basis:
Property and Equipment
Assets held for sale represent components and businesses that meet accounting requirements to be classified as held for sale and
are presented as single asset and liability amounts in the Company's financial statements with a valuation allowance, if
necessary, to recognize the net carrying amount at the lower of cost or fair value, less cost to sell. The Company reviews all
businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully
recoverable in comparison to estimated fair values. As of January 31, 2018 and 2017, immaterial amounts for assets and
liabilities held for sale were classified within prepaid expenses and other and accrued liabilities, respectively, in the
Consolidated Balance Sheets.
Assets Held for Sale
The Company values inventories at the lower of cost or market as determined primarily by the retail inventory method of
accounting, using the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Walmart
International segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO")
method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market, since
permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's
Club segment is valued using the weighted-average cost LIFO method. At January 31, 2018 and January 31, 2017, the
Company's inventories valued at LIFO approximated those inventories as if they were valued at FIFO.
Inventories
real estate transactions.
banks for customer credit and debit cards and electronic bank transfers that take in excess of seven days to process;
suppliers for marketing or incentive programs; and
insurance companies resulting from pharmacy sales;
•
•
Receivables are stated at their carrying values, net of a reserve for doubtful accounts. Receivables consist primarily of amounts
due from:
(19,875)
Receivables
60
The Company uses intercompany financing arrangements in an effort to ensure cash can be made available in the country in
which it is needed with the minimum cost possible. Management does not believe it will be necessary to repatriate earnings
held outside of the U.S. and anticipates the Company's domestic liquidity needs will be met through cash flows provided by
domestic operating activities, supplemented with long-term debt and short-term borrowings. Accordingly, the Company
intends, with only certain exceptions, to continue to indefinitely reinvest the Company's earnings held outside of the U.S. in its
foreign operations. As part of the U.S. tax reform enacted on December 22, 2017, the Company is currently assessing the
impact of the new legislation, which can in turn, impact its assertion regarding any potential future repatriation. If the
Company's intentions with respect to reinvestment were to change, most of the amounts held within the Company's foreign
operations could be repatriated to the U.S., although any repatriation under new U.S. tax laws could be subject to incremental
withholding taxes. The Company does not expect current local laws, other existing limitations or potential taxes on anticipated
future repatriations of earnings held outside of the U.S. to have a material effect on the Company's overall liquidity, financial
condition or results of operations.
The Company's cash balances are held in various locations around the world. Substantially all of the Company's $6.8 billion of
cash and cash equivalents at January 31, 2018, was held outside of the U.S. Of the Company's $6.9 billion of cash and cash
equivalents at January 31, 2017, $5.9 billion was held outside of the U.S. Cash and cash equivalents held outside of the U.S.
are generally utilized to support liquidity needs in the Company's non-U.S. operations.
The Company considers investments with a maturity when purchased of three months or less to be cash equivalents. All credit
card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash
equivalents. The amounts due from banks for these transactions classified as cash and cash equivalents totaled $1.6 billion and
$1.5 billion at January 31, 2018 and 2017, respectively. In addition, cash and cash equivalents included restricted cash of $300
million and $265 million at January 31, 2018 and 2017, respectively, which was primarily related to cash collateral holdings
from various counterparties, as required by certain derivative and trust agreements.
Cash and Cash Equivalents
The Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles.
Those principles require management to make estimates and assumptions that affect the reported amounts of assets and
liabilities. Management's estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may
differ from those estimates.
Use of Estimates
The Company's Consolidated Financial Statements are based on a fiscal year ending on January 31 for the United States
("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag and based
on a calendar year. There were no significant intervening events during the month of January 2018 related to the operations
consolidated using a lag that materially affected the Consolidated Financial Statements.
The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended
January 31, 2018 ("fiscal 2018"), January 31, 2017 ("fiscal 2017") and January 31, 2016 ("fiscal 2016"). All material
intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates variable interest
entities where it has been determined that the Company is the primary beneficiary of those entities' operations. Investments in
unconsolidated affiliates, which are 50% or less owned and do not otherwise meet consolidation requirements, are accounted
for primarily using the equity method. These equity method investments are immaterial to the Company's Consolidated
Financial Statements.
Principles of Consolidation
The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club.
Walmart Inc. (formerly "Wal-Mart Stores, Inc.") ("Walmart" or the "Company") helps people around the world save money and
live better – anytime and anywhere - in retail stores and through eCommerce. Through innovation, the Company is striving to
create a customer-centric experience that seamlessly integrates digital and physical shopping into an omni-channel offering that
saves time for its customers. Each week, the Company serves nearly 270 million customers who visit its more than 11,700
stores and numerous eCommerce websites under 65 banners in 28 countries. The Company's strategy is to lead on price, invest
to differentiate on access, be competitive on assortment and deliver a great experience.
Note 1. Summary of Significant Accounting Policies
General
As of January 31, 2018 and 2017, cash and cash equivalents of approximately $1.4 billion and $1.0 billion, respectively, may
not be freely transferable to the U.S. due to local laws or other restrictions.
Net cash used in financing activities
(676)
(398)
Cash flows from financing activities:
(10,675)
(13,987)
(9,060)
(79)
(122)
(58)
Net cash used in investing activities
Other investing activities
(2,463)
(375)
Business acquisitions, net of cash acquired
(1,901)
Net change in short-term borrowings
Purchase of available for sale securities
662
1,046
Proceeds from the disposal of certain operations
635
456
378
Proceeds from the disposal of property and equipment
(11,477)
(10,619)
(10,051)
Payments for property and equipment
Cash flows from investing activities:
27,552
246
Land
4,148
1,235
(261)
Other financing activities
(1,326)
(90)
(8)
Purchase of noncontrolling interest
(719)
(479)
(690)
Dividends paid to noncontrolling interest
(4,112)
(8,298)
(8,296)
(1,673)
Purchase of Company stock
(6,216)
(6,124)
Dividends paid
(3,059)
Premiums paid to extinguish debt
(4,432)
(2,055)
(13,061)
Repayments of long-term debt
39
137
7,476
Proceeds from issuance of long-term debt
(6,294)
31,673
Buildings and improvements
Property and equipment, net
Fiscal Years Ended January 31,
2017
2018
Deferred membership fee revenue, end of year
Membership fee revenue recognized
Cash received from members
Deferred membership fee revenue, beginning of year
(Amounts in millions)
The Company recognizes membership fee revenue both in the U.S. and internationally over the term of the membership, which
is typically 12 months. The following table summarizes membership fee activity for fiscal 2018, 2017 and 2016:
Membership Fee Revenue
The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise to the
customer. eCommerce sales include shipping revenue and are recorded upon delivery to the customer. Additionally, estimated
sales returns are calculated using historical experience of actual returns as a percent of sales.
Sales
Revenue Recognition
The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be
taken in a tax return. The Company records interest and penalties related to unrecognized tax benefits in interest expense and
operating, selling, general and administrative expenses, respectively, in the Company's Consolidated Statements of Income.
Refer to Note 9 for additional income tax disclosures.
In determining the provision for income taxes, an annual effective income tax rate is used based on annual income, permanent
differences between book and tax income, and statutory income tax rates. Discrete events such as audit settlements or changes
in tax laws are recognized in the period in which they occur.
Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not
more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the
deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward
periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by
assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences,
forecasted operating earnings and available tax planning strategies. These sources of income rely heavily on estimates.
Income taxes are accounted for under the balance sheet method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases ("temporary differences"). Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the
enactment date.
Income Taxes
The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto
liability, product liability and certain employee-related healthcare benefits. Standard actuarial procedures and data analysis are
used to estimate the liabilities associated with these risks as of the balance sheet date on an undiscounted basis. The recorded
liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run-out expenses related to
the processing of these outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with
claims reserve valuations provided by independent third-party actuaries. To limit exposure to some risks, the Company
maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers'
compensation, general liability and auto liability.
Self Insurance Reserves
62
62
(1) Goodwill recorded for fiscal 2017 Walmart U.S. acquisitions primarily relates to Jet.com, Inc. ("jet.com").
Indefinite-lived intangible assets are included in other assets and deferred charges in the Company's Consolidated Balance
Sheets. These assets are evaluated for impairment based on their fair values using valuation techniques which are updated
annually based on the most recent variables and assumptions. There were no significant impairment charges related to
indefinite-lived intangible assets recorded for fiscal 2018, 2017 and 2016.
18,242
$
313
$
15,484
2016
743 $
1,398
(1,411)
744 $
1,371
(1,372)
759
64
On December 22, 2017, the Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin No. 118,
Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), in response to the Tax Cuts and Jobs Act of
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09,
Compensation-Stock Compensation (Topic 718), which is intended to simplify accounting for share-based payment
transactions. The ASU changed several aspects of the accounting for share-based payment award transactions, including
accounting for income taxes, forfeitures and minimum statutory tax withholding requirements. Management adopted this ASU
beginning February 1, 2017, and as a result, reclassified an immaterial amount from operating activities to financing activities
in the Company's prior year consolidated cash flows.
Pronouncements Adopted in Fiscal 2018
Recent Accounting Pronouncements
The assets and liabilities of all international subsidiaries are translated from the respective local currency to the U.S. dollar
using exchange rates at the balance sheet date. Related translation adjustments are recorded as a component of accumulated
other comprehensive loss. The Company's Consolidated Statements of Income of all international subsidiaries are translated
from the respective local currencies to the U.S. dollar using average exchange rates for the period covered by the income
statements.
Currency Translation
The cost of start-up activities, including organization costs, related to new store openings, store remodels, relocations,
expansions and conversions are expensed as incurred and included in operating, selling, general and administrative expenses in
the Company's Consolidated Statements of Income. Pre-opening costs totaled $106 million, $131 million and $271 million for
fiscal 2018, 2017 and 2016, respectively.
Pre-Opening Costs
Advertising costs are expensed as incurred, consist primarily of print, television and digital advertisements and are recorded in
operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. In certain limited
situations, reimbursements from suppliers that are for specific, incremental and identifiable advertising costs are recognized as
a reduction of advertising costs in operating, selling, general and administrative expenses. Advertising costs were $3.1 billion,
$2.9 billion and $2.5 billion for fiscal 2018, 2017 and 2016, respectively.
Advertising Costs
Operating, selling, general and administrative expenses include all operating costs of the Company, except cost of sales, as
described above. As a result, the majority of the cost of warehousing and occupancy for the Walmart U.S. and Walmart
International segments' distribution facilities is included in operating, selling, general and administrative expenses. Because the
Company only includes a portion of the cost of its Walmart U.S. and Walmart International segments' distribution facilities in
cost of sales, its gross profit and gross profit as a percentage of net sales may not be comparable to those of other retailers that
may include all costs related to their distribution facilities in cost of sales and in the calculation of gross profit.
Operating, Selling, General and Administrative Expenses
209
The Company receives consideration from suppliers for various programs, primarily volume incentives, warehouse allowances
and reimbursements for specific programs such as markdowns, margin protection, advertising and supplier-specific fixtures.
Payments from suppliers are accounted for as a reduction of cost of sales, except in certain limited situations when the payment
is a reimbursement of specific, incremental and identifiable costs, and are recognized in the Company's Consolidated
Statements of Income when the related inventory is sold.
Cost of sales includes actual product cost, the cost of transportation to the Company's distribution facilities, stores and clubs
from suppliers, the cost of transportation from the Company's distribution facilities to the stores, clubs and customers and the
cost of warehousing for the Sam's Club segment and import distribution centers. Cost of sales is reduced by supplier payments
that are not a reimbursement of specific, incremental and identifiable costs.
Cost of Sales
The Company recognizes revenue from service transactions at the time the service is performed. Generally, revenue from
services is classified as a component of net sales in the Company's Consolidated Statements of Income.
Financial and Other Services
revenue for these amounts when it is determined the likelihood of redemption is remote. Management periodically reviews and
updates its estimates.
63
Customer purchases of gift cards, to be utilized in our stores or on our eCommerce websites, are not recognized as revenue until
the card is redeemed and the customer purchases merchandise using the gift card. Gift cards in the U.S. and some countries do
not carry an expiration date; therefore, customers and members can redeem their gift cards for merchandise indefinitely. Gift
cards in some foreign countries where the Company does business have expiration dates. A certain number of gift cards, both
with and without expiration dates, will not be fully redeemed. Management estimates unredeemed gift cards and recognizes
Membership fee revenue is included in membership and other income in the Company's Consolidated Statements of Income.
The deferred membership fee is included in accrued liabilities in the Company's Consolidated Balance Sheets.
Gift Cards
744
743 $
730 $
$
1,333
(1,348)
Payments from Suppliers
209
2,445 $
$
996
Leases
Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining
expected lease term. Total depreciation and amortization expense for property and equipment, property under financing
obligations and property under capital leases for fiscal 2018, 2017 and 2016 was $10.5 billion, $10.1 billion and $9.5 billion,
respectively.
107,710
107,675 $
$
(71,782)
(77,479)
179,492
185,154 $
$
4,301
3,619
N/A
The Company estimates the expected term of a lease by assuming the exercise of renewal options where an economic penalty
exists that would preclude the abandonment of the lease at the end of the initial non-cancelable term and the exercise of such
renewal is at the sole discretion of the Company. The expected term is used in the determination of whether a store or club
lease is a capital or operating lease and in the calculation of straight-line rent expense. Additionally, the useful life of leasehold
improvements is limited by the expected lease term or the economic life of the asset, whichever is shorter. If significant
expenditures are made for leasehold improvements late in the expected term of a lease and renewal is reasonably assured, the
2,845
3-15 years
48,998
52,695
1-30 years
98,547
101,155
3-40 years
24,801
25,298 $
$
2017
As of January 31,
2018
Estimated Useful Lives
N/A
2,387
Fixtures and equipment
Transportation equipment
Construction in progress
Property and equipment
Accumulated depreciation
61
The Company is often involved in the construction of its leased stores. In certain cases, payments made for certain structural
components included in the lessor's construction of the leased assets result in the Company being deemed the owner of the
leased assets for accounting purposes. As a result, the payments, regardless of the significance, are automatic indicators of
ownership and require the Company to capitalize the lessor's total project cost with a corresponding financing obligation. Upon
completion of the lessor's project, the Company performs a sale-leaseback analysis to determine if these assets and the related
financing obligation can be derecognized from the Company's Consolidated Balance Sheets. If the Company is deemed to have
"continuing involvement," the leased assets and the related financing obligation remain on the Company's Consolidated
Balance Sheets and are generally amortized over the lease term. At the end of the lease term, including exercise of any renewal
options, the net remaining financing obligation over the net carrying value of the fixed asset will be recognized as a non-cash
gain on sale of the property.
17,037
313
14,488
996
1,775
1,775
2,236
(1,433)
16,695
$
313
15,921 $
(1,433)
$
Total
Sam's Club
useful life of the leasehold improvement is limited to the end of the renewal period or economic life of the asset, whichever is
shorter. Rent abatements and escalations are considered in the calculation of minimum lease payments in the Company's
capital lease tests and in determining straight-line rent expense for operating leases.
Walmart
International
$
Balances as of January 31, 2018
Acquisitions
Changes in currency translation and other
Balances as of January 31, 2017
Acquisitions (¹)
Changes in currency translation and other
Balances as of February 1, 2016
(77,479)
The following table reflects goodwill activity, by reportable segment, for fiscal 2018 and 2017:
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is
allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired
as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indefinite-lived
intangible assets are not amortized; rather, they are evaluated for impairment annually and whenever events or changes in
circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived
assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided.
Goodwill is evaluated for impairment using either a qualitative or quantitative approach for each of the Company's reporting
units. Generally, a qualitative assessment is first performed to determine whether a quantitative goodwill impairment test is
necessary. If management determines, after performing an assessment based on the qualitative factors, that the fair value of the
reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in
excess of the carrying amount cannot be assured, then a quantitative goodwill impairment test would be required. The
quantitative test for goodwill impairment is performed by determining the fair value of the related reporting units. Fair value is
measured based on the discounted cash flow method and relative market-based approaches. After evaluation, management
determined the fair value of each reporting unit is greater than the carrying amount and, accordingly, the Company has not
recorded any impairment charges related to goodwill.
Long-lived assets are initially recorded at cost. Management reviews long-lived assets for indicators of impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is performed at
the lowest level of identifiable cash flows, which is at the individual store or club level. Undiscounted cash flows expected to
be generated by the related assets are estimated over the assets' useful lives based on updated projections. If the evaluation
indicates that the carrying amount of the assets may not be recoverable, any potential impairment is measured based upon the
fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique.
Goodwill and Other Acquired Intangible Assets
Long-Lived Assets
Walmart U.S.
461
28,337
(Amounts in millions)
492
(65)
Purchase of Company stock
386 15,080
4,543 $85,937
14,694
14,694
81,394 $
(7,168) $
$
2,462 $ 85,777
$
323
3,228 $
Equity
Interest
Equity
Income (Loss)
Earnings
Par Value
Amount
Share
Cash dividends declared ($1.96 per
share)
Other comprehensive income (loss),
net of income taxes
Balances as of February 1, 2015
Consolidated net income
(Amounts in millions)
Total
Noncontrolling
Cash dividend declared to
Consolidated net income
net of income taxes
Cash dividends declared ($2.00 per
(541) (4,970)
(4,429)
(4,429)
| ཅེ ། ། | Ë། ། དྱེ། | |༄|| | རྱེ | | │
Cash dividend declared to
(103)
Purchase of Company stock
Cash dividends declared ($2.04 per
share)
net of income taxes
Other comprehensive income (loss),
Consolidated net income
305
(120)
Shareholders'
3,048
6
Other
noncontrolling interest
Cash dividend declared to
Purchase of Company stock
share)
317
Other comprehensive income (loss),
3,162
Balances as of January 31, 2016
(1)
Other
noncontrolling interest
Balances as of January 31, 2017
(6,294)
Walmart
Accumulated
Other
Comprehensive
3,738
921
645
20,654
22,122
41,433
46,092
1,099
5,257 $
$
198,825
$
204,522
$
9,921
11,798
17,037
18,242
6,468
7,143
(5,169)
(5,560)
11,637
12,703
107,710
107,675
(472)
2,256
667
565
78,521
Excess of Retained
Common Stock
Capital in
Consolidated Statements of Shareholders' Equity
Walmart Inc.
198,825
$
204,522
$
80,535
80,822
2,737
2,953
Total
77,798
(14,232)
89,354
85,107
305
2,371
2,648
295
9,344
8,354
6,003
6,780
36,015
30,045
66,928
77,869
(6,294)
(10,181)
(102)
10,529
Depreciation and amortization
Adjustments to reconcile consolidated net income to net cash provided by operating
activities:
15,080
14,293 $
$
10,523
$
Consolidated net income
2016
Fiscal Years Ended January 31,
2017
2018
Cash flows from operating activities:
(Amounts in millions)
Consolidated Statements of Cash Flows
Walmart Inc.
58
58
See accompanying notes.
$80,822
559
73
2,953
$
77,869
(10,181) $
$ 85,107 $
486
10,080
9,454
Deferred income taxes
(304)
(557)
(6,294)
1,280
928
Net cash provided by operating activities
Accrued income taxes
Accrued liabilities
2,008
3,942
4,086
Accounts payable
(703)
1,021
(10)
(140)
(19)
(402)
(1,074)
Receivables, net
Changes in certain assets and liabilities, net of effects of acquisitions:
1,410
206
1,210
Other operating activities
3,136
Loss on extinguishment of debt
(672)
761
Inventories
496
2,648
1,466
Balances as of January 31, 2018
(8,276)
(8,276)
(8,090)
(174)
(12)
(6,216)
(6,216)
(6,216)
(2,845)
(210)
(2,635)
(2,635)
650 14,293
13,643
13,643
(4,148)
3,065
80,546
(11,597)
90,021
1,805
(632) (1,195)
(563)
(8)
(555)
(691) (691)
(4,256)
(4,256)
2,952 $ 295 $
(519) (519)
740
83,611
736
Other
7
(4)
(687)
noncontrolling interest
(687)
(8,204)
(8,204)
(219)
(10)
(6,124)
(6,124)
(6,124)
4,220
(7,975)
4,051
4,051
2,371
10,523
661
9,862
89,354
9,862
487
(14,232)
(249)
2,737 80,535
77,798
169
April 15, 2021
Fixed
3.250%
1,750 USD
553
1,000 USD
250 USD
4.250%
491
October 16, 2023
Fixed
6.750%
April 5, 2027
October 25, 2020
98
Fixed
661
February 1, 2019
Fixed
Fixed
500 USD
1.000%
500
Total repayment of matured debt
1,500
December 15, 2018
July 8, 2020
1,000 USD
Fixed
1.950%
276
500 USD
Fixed
4.125%
136
1,500 USD
3.625%
750 USD
January 19, 2039
5.875%
2,000 USD
Fixed
6.200%
1,081
April 21, 2017
1,000 GBP
Fixed
4.875%
851
April 2, 2040
1,250 USD
Fixed
5.625%
499
July 9, 2040
October 25, 2040
April 15, 2041
April 15, 2038
1,700
6.500%
Fixed
267
February 15, 2030
500 USD
Fixed
7.550%
412
September 4, 2035
2,500 USD
Fixed
Fixed
532
September 28, 2035
1,000 GBP
Fixed
5.250%
260
August 17, 2037
3,000 USD
5.250%
1,000
October 20, 2017
5.375%
354
July 18, 2017
60,000 JPY
July 16, 2027
Fixed
0.520%
530
October 20, 2017
300 USD
October 9, 2019
Floating
Floating
299
October 20, 2017
1,200 USD
October 9, 2019
Fixed
0.298%
1.750%
Fixed
40,000 JPY
April 11, 2043
33,783
(Amounts in millions)
Issue Date
Principal Amount
Maturity Date
Fixed vs. Floating
Interest Rate
Proceeds
July 18, 2017
70,000 JPY
July 15, 2022
Fixed
0.183%
$
619
July 18, 2017
July 18, 2024
$
1,198
1,250 USD
$
7,476
As described in Note 8, the current year issuances of foreign-currency-denominated long-term debt are designated as a hedge of
the Company's net investment in Japan.
The Company did not have any significant long-term debt issuances during fiscal 2017, but received some proceeds from a
number of small long-term debt issuances by several of its non-U.S. operations.
70
70
Maturities and Extinguishments
The following table provides details of debt repayments during fiscal 2018:
(Amounts in millions)
Maturity Date
Principal Amount
Fixed vs. Floating
Interest Rate
Repayment (1)
April 5, 2017
1,000 USD
Fixed
990
October 20, 2017
3.625%
December 15, 2047
December 15, 2020
Fixed
1.900%
1,245
October 20, 2017
1,250 USD
December 15, 2022
Fixed
2.350%
1,245
1,000 USD
December 15, 2024
Fixed
2.650%
996
October 20, 2017
Total
1,000 USD
Fixed
October 2, 2043
The Company has issued foreign-currency-denominated long-term debt as hedges of net investments of certain of its foreign
operations. These foreign-currency-denominated long-term debt issuances are designated and qualify as nonderivative hedging
instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other
comprehensive loss, offsetting the foreign currency translation adjustment of the related net investment that is also recorded in
accumulated other comprehensive loss. At January 31, 2018 and January 31, 2017, the Company had ¥180 billion and ¥10
billion, respectively, of outstanding long-term debt designated as a hedge of its net investment in Japan, as well as outstanding
long-term debt of £1.7 billion and £2.5 billion at January 31, 2018 and January 31, 2017, respectively, that was designated as a
Fixed
January 31, 2018
Carrying Value Fair Value
$
33,783 $
38,766
$
January 31, 2017
Carrying Value Fair Value
38,271 $
44,602
72
Note 8. Derivative Financial Instruments
The Company uses derivative financial instruments for hedging and non-trading purposes to manage its exposure to changes in
interest and currency exchange rates, as well as to maintain an appropriate mix of fixed- and variable-rate debt. Use of
derivative financial instruments in hedging programs subjects the Company to certain risks, such as market and credit risks.
Market risk represents the possibility that the value of the derivative financial instrument will change. In a hedging
relationship, the change in the value of the derivative financial instrument is offset to a great extent by the change in the value
of the underlying hedged item. Credit risk related to a derivative financial instrument represents the possibility that the
counterparty will not fulfill the terms of the contract. The notional, or contractual, amount of the Company's derivative
financial instruments is used to measure interest to be paid or received and does not represent the Company's exposure due to
credit risk. Credit risk is monitored through established approval procedures, including setting concentration limits by
counterparty, reviewing credit ratings and requiring collateral from the counterparty when appropriate.
The Company only enters into derivative transactions with counterparties rated "A-" or better by nationally recognized credit
rating agencies. Subsequent to entering into derivative transactions, the Company regularly monitors the credit ratings of its
counterparties. In connection with various derivative agreements, including master netting arrangements, the Company held
cash collateral from counterparties of $279 million and $242 million at January 31, 2018 and January 31, 2017, respectively.
The Company records cash collateral received as amounts due to the counterparties exclusive of any derivative asset.
Furthermore, as part of the master netting arrangements with each of these counterparties, the Company is also required to post
collateral with a counterparty if the Company's net derivative liability position exceeds $150 million with such counterparties.
The Company did not have any cash collateral posted with counterparties at January 31, 2018 and January 31, 2017,
respectively. The Company records cash collateral it posts with counterparties as amounts receivable from those counterparties
exclusive of any derivative liability.
The Company uses derivative financial instruments for the purpose of hedging its exposure to interest and currency exchange
rate risks and, accordingly, the contractual terms of a hedged instrument closely mirror those of the hedged item, providing a
high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria
are recorded using hedge accounting. If a derivative financial instrument is recorded using hedge accounting, depending on the
nature of the hedge, changes in the fair value of the instrument will either be offset against the change in fair value of the
hedged assets, liabilities or firm commitments through earnings or be recognized in accumulated other comprehensive loss until
the hedged item is recognized in earnings. Any hedge ineffectiveness is immediately recognized in earnings. The Company's
net investment and cash flow instruments are highly effective hedges and the ineffective portion has not been, and is not
expected to be, significant. Instruments that do not meet the criteria for hedge accounting, or contracts for which the Company
has not elected hedge accounting, are recorded at fair value with unrealized gains or losses reported in earnings during the
period of the change.
Fair Value Instruments
The Company is a party to receive fixed-rate, pay variable-rate interest rate swaps that the Company uses to hedge the fair
value of fixed-rate debt. The notional amounts are used to measure interest to be paid or received and do not represent the
Company's exposure due to credit loss. The Company's interest rate swaps that receive fixed-interest rate payments and pay
variable-interest rate payments are designated as fair value hedges. As the specific terms and notional amounts of the derivative
instruments match those of the fixed-rate debt being hedged, the derivative instruments are assumed to be perfectly effective
hedges. Changes in the fair values of these derivative instruments are recorded in earnings, but are offset by corresponding
changes in the fair values of the hedged items, also recorded in earnings, and, accordingly, do not impact the Company's
Consolidated Statements of Income. These fair value instruments will mature on dates ranging from October 2020 to April
2024.
Net Investment Instruments
The Company is a party to cross-currency interest rate swaps that the Company uses to hedge its net investments. The
agreements are contracts to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. All
changes in the fair value of these instruments are recorded in accumulated other comprehensive loss, offsetting the currency
translation adjustment of the related investment that is also recorded in accumulated other comprehensive loss. These
instruments will mature on dates ranging from July 2020 to February 2030.
Long-term debt, including amounts due within one year
73
(Amounts in millions)
The Company records cash and cash equivalents and short-term borrowings at cost. The carrying values of these instruments
approximate their fair value due to their short-term maturities.
322 $
11,207 $
(151)
Additionally, the Company's available-for-sale securities are measured at fair value on a recurring basis using Level 1 inputs.
Changes in fair value are recorded in accumulated other comprehensive loss. The cost basis and fair value of the Company's
available-for-sale securities as of January 31, 2018 and 2017, are as follows:
(Amounts in millions)
Available-for-sale securities
Nonrecurring Fair Value Measurements
January 31, 2018
January 31, 2017
$
Cost Basis
1,901 $
Fair Value
3,547 $
Cost Basis
1,901 $
Fair Value
2,046
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company's assets and liabilities are
also subject to nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a
result of impairment charges. Fiscal 2018 impairment charges to assets measured at fair value on a nonrecurring basis were
$1.4 billion and primarily related to restructuring activities described in Note 14, as well as discontinued real estate projects in
the U.S. and decisions to exit certain international properties. These impairment charges were classified in operating, selling,
general and administrative expenses in the Company's Consolidated Statement of Income. The fair value was determined based
on comparable market values of similar properties or on a rental income approach, using Level 2 inputs. Impairment charges
not related to restructuring or decisions to exit properties for fiscal 2018 were not material. Additionally, total impairment
charges for fiscal 2017 were not material.
Other Fair Value Disclosures
The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the
Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying value and fair value
of the Company's long-term debt as of January 31, 2018 and 2017, are as follows:
10,773 $
hedge of its net investment in the United Kingdom. These nonderivative net investment hedges will mature on dates ranging
from July 2020 to January 2039.
The Company is a party to receive fixed-rate, pay fixed-rate cross-currency interest rate swaps to hedge the currency exposure
associated with the forecasted payments of principal and interest of certain non-U.S. denominated debt. The swaps are
designated as cash flow hedges of the currency risk related to payments on the non-U.S. denominated debt. The effective
portion of changes in the fair value of derivatives designated as cash flow hedges of foreign exchange risk is recorded in
accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted
transaction affects earnings. The hedged items are recognized foreign currency-denominated liabilities that are re-measured at
spot exchange rates each period, and the assessment of effectiveness (and measurement of any ineffectiveness) is based on total
changes in the related derivative's cash flows. As a result, the amount reclassified into earnings each period includes an amount
that offsets the related transaction gain or loss arising from that re-measurement and the adjustment to earnings for the period's
allocable portion of the initial spot-forward difference associated with the hedging instrument. These cash flow instruments
will mature on dates ranging from April 2022 to March 2034.
$
471
$
Derivative liabilities:
Deferred income taxes and other
91
95
12
Nonderivative hedging instruments
Long-term debt
4,041
3,209
618
Realized gains and losses related to the Company's derivatives are recorded in interest, net, in the Company's Consolidated
Statements of Income. Amounts related to the Company's derivatives expected to be reclassified from accumulated other
comprehensive loss to net income during the next 12 months are not significant.
74
74
$
8
Cash Flow Instruments
$
$
Financial Statement Presentation
Although subject to master netting arrangements, the Company does not offset derivative assets and derivative liabilities in its
Consolidated Balance Sheets. Derivative instruments with an unrealized gain are recorded in the Company's Consolidated
Balance Sheets as either current or non-current assets, based on maturity date, and those hedging instruments with an unrealized
loss are recorded as either current or non-current liabilities, based on maturity date. Refer to Note 7 for the net presentation of
the Company's derivative instruments.
The Company's derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net
investment hedges, were classified as follows as of January 31, 2018 and 2017 in the Company's Consolidated Balance Sheets:
(Amounts in millions)
January 31, 2018
Fair Value
Instruments
Net Investment
Instruments
Cash Flow
Instruments
Fair Value
Instruments
January 31, 2017
Net Investment
Instruments
Cash Flow
Instruments
Derivative instruments
Derivative assets:
Other assets and deferred charges
$
$
208
300
750 USD
$
(618)
(1) Represents portion of the principal amount repaid during fiscal 2018.
1,000 USD
Fixed
4.300%
498
11,272
$
12,772
In connection with extinguishing debt, the Company paid premiums of approximately $3.1 billion during fiscal 2018, resulting
in a loss on extinguishment of debt of approximately $3.1 billion.
During fiscal 2017, the following long-term debt matured and was repaid:
(Amounts in millions)
Maturity Date
April 11, 2016
April 15, 2016
Principal Amount
1,000 USD
1,000 USD
Fixed vs. Floating
Fixed
Fixed
Interest Rate
0.600%
2.800%
Total
Repayment
Total repayment of extinguished debt
481
4.875%
372
1,250 USD
Fixed
5.000%
731
2,000 USD
Fixed
5.625%
1,082
1,000 USD
Fixed
4.000%
291
750 USD
Fixed
4.750%
April 22, 2044
Total
$
1,000
Fair Value
Receive fixed-rate, pay variable-rate interest rate swaps designated as fair
value hedges
$
4,000 $
(91) $
5,000
$
(4)
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as net
investment hedges
2,250
208
2,250
471
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash
flow hedges
4,523
205
3,957
Notional
Amount
1,000
Fair Value
(Amounts in millions)
$
2,000
During fiscal 2018 and 2017, the Company also repaid other, smaller long-term debt as it matured in several of its non-U.S.
operations.
71
Note 7. Fair Value Measurements
The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an
asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties
able to engage in the transaction. The fair value of a liability is the amount that would be paid to transfer the liability to a new
obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. Assets
and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring
fair value. The levels of the fair value hierarchy are:
.
Level 1: observable inputs such as quoted prices in active markets;
•
Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and
•
Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop
its own assumptions.
Recurring Fair Value Measurements
The Company holds derivative instruments that are required to be measured at fair value on a recurring basis. The fair values
are the estimated amounts the Company would receive or pay upon termination of the related derivative agreements as of the
reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant
interest rate and foreign currency forward curves. As of January 31, 2018 and 2017, the notional amounts and fair values of
these derivatives were as follows:
January 31, 2018
January 31, 2017
Notional
Amount
21,259
(2)
607
344
261
237
Unrecognized compensation cost for restricted stock and performance share units
Unrecognized compensation cost for restricted stock units
291
211
133
972
986
628
Weighted average remaining period to expense for restricted stock and performance share
units (years)
1.2
1.3
1.3
Weighted average remaining period to expense for restricted stock units (years)
1.8
1.9
1.7
Share Repurchase Program
From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the
Company's Board of Directors. All repurchases made during the fiscal year prior to November 20, 2017 were made under the
plan in effect at the beginning of fiscal 2018. On October 9, 2017, the Board of Directors approved a new $20.0 billion share
repurchase program which, beginning on November 20, 2017, replaced the previous share repurchase program. As of
January 31, 2018, authorization for $18.8 billion of share repurchases remained under the current share repurchase program.
Any repurchased shares are constructively retired and returned to an unissued status.
The Company considers several factors in determining when to execute share repurchases, including, among other things,
current cash needs, capacity for leverage, cost of borrowings, its results of operations and the market price of its common stock.
The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and
total amount paid for share repurchases for fiscal 2018, 2017 and 2016:
Fair value of restricted stock units vested
142
149 $
181 $
71.55
(5,440)
63.02
(1,592)
68.59
(3,253)
66.28
Outstanding at January 31, 2018
8,558
$
(Amounts in millions, except per share data)
70.47
$
66.69
(1) Assumes payout rate at 100% for Performance Share Units.
The following table includes additional information related to restricted stock and performance share units and restricted stock
units:
(Amounts in millions, except years)
2018
Fiscal Years Ended January 31,
2017
2016
Fair value of restricted stock and performance share units vested
$
24,153
Total number of shares repurchased
Average price paid per share
Total cash paid for share repurchases
$
(7,011) $
656
$
(134) $
(679) $
(7,168)
Other comprehensive income (loss)
before reclassifications, net
(4,679)
366
Balances as of February 1, 2015
(217)
(4,434)
Amounts reclassified from
accumulated other comprehensive
--15
(10)
5
loss, net
Balances as of January 31, 2016
(11,690)
1,022
96
(2,525)
Total
Pension
67
67
Fiscal Years Ended January 31,
2018
2017
2016
$
104.9
79.11 $
8,296
119.9
69.18 $
8,298 $
62.4
Liability
65.90
Note 4. Accumulated Other Comprehensive Loss
The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2018,
2017 and 2016:
(Amounts in millions and net of
income taxes)
Currency
Translation
and Other
Net Investment
Hedges
Unrealized
Gain on
Available-for-
Minimum
Sale Securities
Cash Flow
Hedges
4,112
67.54
65.52
$
14,293 $
(650)
13.643 $
15,080
(386)
14,694
Denominator
Weighted-average common shares outstanding, basic
Dilutive impact of stock options and other share-based awards
Weighted-average common shares outstanding, diluted
Net income per common share attributable to Walmart
Basic
Diluted
Note 3. Shareholders' Equity
Share-Based Compensation
10,523 $
(661)
9,862 $
2,995
3,207
15
11
10
3,010
3,112
3,217
$
3.29
$
3,101
4.40
$
$
2,934
2017 ("Tax Act"). The Company has elected to record provisional amounts, as allowed by SAB 118, during a measurement
period not to extend beyond one year of the enactment date. Management expects to complete the analysis within the
measurement period in accordance with SAB 118.
Pronouncements to Be Adopted in the Year Ending January 31, 2019 ("fiscal 2019")
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU represents a
single comprehensive model to recognize revenue to depict the transfer of promised goods or services to a customer at an
amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company
adopted this ASU on February 1, 2018, under the modified retrospective approach, which resulted in an immaterial cumulative
adjustment to retained earnings. Also, this ASU will require additional disclosures.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Topic 825), which updates certain aspects of
recognition, measurement, presentation and disclosure of financial instruments. This ASU primarily impacts the Company's
accounting for its investment in JD.com ("JD"). The Company adopted this ASU on February 1, 2018, which resulted in a
cumulative positive adjustment to retained earnings of approximately $2.9 billion based on the market value of our investment
in JD at January 31, 2018. The retained earnings adjustment relates to both the available for sale portion and the cost portion of
the investment. Beginning February 1, 2018, the adoption requires the remeasurement of our investment in JD due to
observable price changes and impairments, if any, to be recorded through the Consolidated Statement of Income, introducing
volatility to reported net income.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows-Restricted Cash (Topic 230), which requires
restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the
statement of cash flows. The Company adopted this ASU on February 1, 2018, which, while immaterial, will modify the
Company's presentation of Consolidated Statements of Cash Flows. At January 31, 2018, the Company had restricted cash
recorded in line items other than cash and cash equivalents of $258 million.
In February 2018, the FASB issued Accounting Standards Update ASU 2018-02, Income Statement-Reporting Comprehensive
Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The ASU
provides that the stranded tax effects from the Tax Act in accumulated other comprehensive loss may be reclassified to retained
earnings. The ASU is effective February 1, 2019, with early adoption permitted. Management anticipates early adopting this
optional standard and is evaluating the effect on the Company's consolidated financial statements.
Other Pronouncements Being Evaluated
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lease assets and liabilities to be recorded
on the balance sheet. Certain qualitative and quantitative disclosures are also required, as well as retrospective recognition and
measurement of impacted leases. The Company will adopt this ASU on February 1, 2019 and is implementing new lease
systems in connection with the adoption. Management is progressing with implementation and continuing to evaluate the effect
to the Company's consolidated financial statements and disclosures. Management expects a material impact to the Company's
Consolidated Balance Sheet.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which modifies the
measurement of expected credit losses of certain financial instruments. The Company will adopt this ASU on February 1,
2020. Management is currently evaluating this ASU to determine its impact to the Company's consolidated financial
Consolidated net income attributable to noncontrolling interest
Consolidated net income attributable to Walmart
statements.
65
Note 2. Net Income Per Common Share
Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding
during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average
common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did
not have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted net
income per common share attributable to Walmart for fiscal 2018, 2017 and 2016.
The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net
income per common share attributable to Walmart:
(Amounts in millions, except per share data)
Numerator
2018
Fiscal Years Ended January 31,
2017
2016
Consolidated net income
55
(336)
$
3.28
Restricted Stock and Performance Share Units. Restricted stock awards are for shares that vest based on the
passage of time and include restrictions related to employment. Performance share units vest based on the
passage of time and achievement of performance criteria and may range from 0% to 150% of the original award
amount. Vesting periods for these awards are generally between one and three years. Restricted stock and
performance share units may be settled or deferred in stock and are accounted for as equity in the Company's
Consolidated Balance Sheets. The fair value of restricted stock awards is determined on the date of grant and is
expensed ratably over the vesting period. The fair value of performance share units is determined on the date of
grant using the Company's stock price discounted for the expected dividend yield through the vesting period and
is recognized over the vesting period. The weighted-average discount for the dividend yield used to determine the
fair value of performance share units in fiscal 2018, 2017 and 2016 was 7.2%, 8.3% and 7.4%, respectively.
66
Restricted Stock Units. Restricted stock units provide rights to Company stock after a specified service period;
generally 50% vest three years from the grant date and the remaining 50% vest five years from the grant date.
The fair value of each restricted stock unit is determined on the date of grant using the stock price discounted for
the expected dividend yield through the vesting period and is recognized ratably over the vesting period. The
expected dividend yield is based on the anticipated dividends over the vesting period. The weighted-average
discount for the dividend yield used to determine the fair value of restricted stock units granted in fiscal 2018,
2017 and 2016 was 9.0%, 9.0% and 8.7%, respectively.
In addition to the Plan, the Company's subsidiary in the United Kingdom has stock option plans for certain colleagues which
generally vest over three years. The stock option share-based compensation expense is included in the Other line in the table
above.
The following table shows the activity for restricted stock and performance share units and restricted stock units during fiscal
2018:
Restricted Stock and Performance Share Units (¹)
Restricted Stock Units
(Shares in thousands)
Outstanding at February 1, 2017
Granted
The Plan's award types are summarized as follows:
Vested/exercised
Shares
Weighted-Average
Grant-Date Fair Value
Per Share
Shares
Weighted-Average
Grant-Date Fair Value
Per Share
9,077
$
68.61
3,598
74.73
24,276
8,570
Forfeited or expired
4.58
The Walmart Inc. Stock Incentive Plan of 2015 (the "Plan"), as amended and restated effective February 23, 2016, and as
amended further as of February 1, 2017, and as renamed on February 1, 2018, was established to grant stock options, restricted
(non-vested) stock, performance share units and other equity compensation awards for which 210 million shares of Walmart
common stock issued or to be issued under the Plan have been registered under the Securities Act of 1933, as amended. The
Company believes that such awards serve to align the interests of its associates with those of its shareholders.
$
4.38
4.57
The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The
compensation expense recognized for all plans was $626 million, $596 million and $448 million for fiscal 2018, 2017 and
2016, respectively. Share-based compensation expense is generally included in operating, selling, general and administrative
expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for share-based
compensation was $150 million, $212 million and $151 million for fiscal 2018, 2017 and 2016, respectively. The following
table summarizes the Company's share-based compensation expense by award type:
(Amounts in millions)
Restricted stock and performance share units
Restricted stock units
Other
Share-based compensation expense
2018
Fiscal Years Ended January 31,
2017
448
2016
234 $
368
237 $
332
134
292
24
27
22
626
$
596
$
(593)
As of January 31,
Other comprehensive income (loss)
500
5.5%
Total U.S. dollar denominated
25,340
31,000
Fixed
2023 - 2030
3,101
3.3%
2,674
4.1%
3.3%
Total Euro denominated
3,101
2,674
Fixed
2031 - 2039
3,801
5.4%
4,370
5.3%
Variable
Variable
Total Sterling denominated
800
Variable
7,500
$ 12,500
(1) In May 2017, the Company renewed and extended its existing five-year credit facility and its existing 364-day revolving credit facility, both of which are
used to support its commercial paper program.
The committed lines of credit in the table above mature at various times between May 2018 and May 2022, carry interest rates
generally ranging between LIBOR plus 10 basis points and LIBOR plus 75 basis points, and incur commitment fees ranging
between 1.5 and 4.0 basis points. In conjunction with the committed lines of credit listed in the table above, the Company has
agreed to observe certain covenants, the most restrictive of which relates to the maximum amount of secured debt.
Additionally, the Company also maintains other committed lines of credit outside of the U.S. with an available and undrawn
amount of approximately $4.0 billion as of January 31, 2018.
Apart from the committed lines of credit, the Company has trade and stand-by letters of credit totaling $2.6 billion and $3.6
billion at January 31, 2018 and 2017, respectively. These letters of credit are utilized in normal business activities.
The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following:
January 31, 2017
January 31, 2018
(Amounts in millions)
Unsecured debt
Maturity Dates
By Fiscal Year
2019-2020
Amount
Amount
Average Rate(1)
Fixed
2019 - 2048
$
24,540
3.9%
$
30,500
4.7%
Average Rate (¹)
7,500
12,500 $
3,801
Fixed
Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt. At January 31, 2018 and 2017 the Company had secured
debt in the amount of $10 million and $14 million, respectively, which was collateralized by property that had an aggregate carrying amount of
approximately $101 million and $82 million, respectively.
At January 31, 2018 and 2017, the Company had $500 million in debt with embedded put options. The issuance of money
market puttable reset securities in the amount of $500 million is structured to be remarketed in connection with the annual reset
of the interest rate. If, for any reason, the remarketing of the notes does not occur at the time of any interest rate reset, the
holders of the notes must sell and the Company must repurchase the notes at par. Accordingly, this issuance has been classified
as long-term debt due within one year in the Company's Consolidated Balance Sheets.
69
Annual maturities of long-term debt during the next five years and thereafter are as follows:
(Amounts in millions)
Fiscal Year
2019
2020
2021
2022
(1) The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end interest rates.
Interest costs are also impacted by certain derivative financial instruments described in Note 8.
2023
Total
Debt Issuances
Information on significant long-term debt issued during fiscal 2018 is as follows:
Annual
Maturities
$
3,733
1,914
3,336
(11,597)
Thereafter
4,370
36,015
(2,256)
2021 - 2028
0.4%
88
1.6%
Variable
Total Yen denominated
Total unsecured debt
Total other (2)
Total debt
Less amounts due within one year
$
Long-term debt
33,897
(114)
33,783
(3,738)
$
30,045
88
38,132
139
38,271
1,655
$
1,655
5,000
83
3,960
Amounts reclassified from
accumulated other comprehensive
26
1
64
91
loss, net
Balances as of January 31, 2018
436
$
1,030 $
1.646
$
122
$
(843) $
(10,181)
Amounts reclassified from accumulated other comprehensive loss for derivative instruments are recorded in interest, net, in the
Company's Consolidated Statements of Income, and the amounts for the minimum pension liability are recorded in operating,
selling, general and administrative expenses in the Company's Consolidated Statements of Income. The income tax impact for
each of the amounts shown in the table above is immaterial.
Note 5. Accrued Liabilities
The Company's accrued liabilities consist of the following:
(12,136) $
(Amounts in millions)
(405)
2,345
(2,817)
before reclassifications, net
$ 12,500
413
145
(22)
(389)
(2,670)
Amounts reclassified from
accumulated other comprehensive
before reclassifications, net
43
35
loss, net
Balances as of January 31, 2017
(14,507)
1,435
145
(315)
(990)
(14,232)
Other comprehensive income (loss)
(8)
Accrued wages and benefits (¹)
1,501
Accrued non-income taxes (3)
Note 6. Short-term Borrowings and Long-term Debt
Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings at January 31, 2018 and 2017
were $5.3 billion and $1.1 billion, respectively, with weighted-average interest rates of 1.5% and 6.2%, respectively.
The Company has various committed lines of credit in the U.S., committed with 23 financial institutions, totaling $12.5 billion
as of January 31, 2018 and 2017, respectively. These committed lines of credit are summarized in the following table:
(Amounts in millions)
Five-year credit facility(1)
364-day revolving credit facility(1)
Total
As of January 31,
Available
2017
Undrawn
Available
Drawn
Undrawn
$
5,000 $
$
7,500
12,500 $
$ 5,000
7,500
Self-insurance (2)
$
5,000 $
$
68
(4) Other accrued liabilities consist of various items such as maintenance, utilities, advertising, interest and legal contingencies.
2018
Drawn
Accrued non-income taxes include accrued payroll, value added, sales and miscellaneous other taxes.
Other(4)
Total accrued liabilities
2018
2017
$
6,105
3,737
3,922
3,073
2,816
6,998 $
2,017
(3)
(1) Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans.
(2) Self-insurance consists of insurance-related liabilities, such as workers' compensation, general liability, auto liability, product liability and certain
employee-related healthcare benefits.
20,654
22,122 $
Deferred gift card revenue
5,955
6,297
1,856
$
Other than the jet.com transaction discussed below, the Company completed certain eCommerce acquisitions during fiscal 2018
and 2017, which were immaterial, individually and in the aggregate, to the Company's Consolidated Financial Statements.
$
1,124 $
126
1,250 $
$
967
179
1,146
Additionally, the Company's subsidiaries in the United Kingdom and Japan have sponsored defined benefit pension plans. The
plan in the United Kingdom was overfunded by $97 million at January 31, 2018 and underfunded by $129 million at
January 31, 2017. The plan in Japan was underfunded by $184 million and $203 million at January 31, 2018 and 2017,
respectively. Overfunded amounts are recorded as assets in the Company's Consolidated Balance Sheets in other assets and
deferred charges. Underfunded amounts are recorded as liabilities in the Company's Consolidated Balance Sheets in deferred
income taxes and other. Certain other international operations also have defined benefit arrangements that are not significant.
81
Note 13. Acquisitions, Disposals and Related Items
1,064 $
173
1,237 $
In June 2016, the Company sold certain assets relating to Yihaodian, its eCommerce operations in China, including the
Yihaodian brand, website and application, to JD in exchange for Class A ordinary shares of JD representing approximately five
percent of JD's outstanding ordinary shares on a fully diluted basis. The $1.5 billion investment in JD is carried at cost and is
included in other assets and deferred charges in the accompanying Consolidated Balance Sheets. The sale resulted in the
recognition of a $535 million noncash gain, which was included in membership and other income in the accompanying
Consolidated Statements of Income. Subsequently, during fiscal 2017, the Company purchased $1.9 billion of additional JD
shares classified as available for sale securities, representing an incremental ownership percentage of approximately five
percent, for a total ownership of approximately ten percent of JD's outstanding ordinary shares.
The following significant transaction primarily impacts the operations of the Company's Walmart U.S. segment:
Jet.com, Inc.
In September 2016, the Company completed the acquisition of jet.com, a U.S.-based eCommerce company. The integration of
jet.com into the Walmart U.S. segment is building upon the current eCommerce foundation, allowing for synergies from talent,
logistical operations and access to a broader customer base. The total purchase price for the acquisition was $2.4 billion, net of
cash acquired. The allocation of the purchase price includes $1.7 billion in goodwill and $0.6 billion in intangible assets. As
part of the transaction, the Company agreed to pay additional compensation of approximately $0.8 billion over a five year
period.
The following significant transactions impact the operations of the Company's Walmart International segment:
Suburbia
In April 2017, one of the Company's subsidiaries sold Suburbia, the apparel retail division in Mexico, for $1.0 billion. As part
of the sales agreement, the Company is also leasing certain real estate to the purchaser. The sale resulted in a pre-tax gain of
$0.7 billion, of which $0.4 billion was recognized in the second quarter of fiscal 2018 in membership and other income, and the
remainder was deferred and is being recognized over the lease terms of approximately 20 years.
Yihaodian and JD.com, Inc. ("JD")
In the fourth quarter of fiscal 2018, the Company announced several organizational changes to position the business for more
efficient growth going forward. As a result, the Company recorded $1.2 billion in pre-tax restructuring charges in fiscal 2018
as follows:
In fiscal 2016, the Company completed the purchase of all of the remaining noncontrolling interest in Yihaodian for
approximately $760 million, using existing cash to complete this transaction.
Note 14. Restructuring Charges
(Amounts in millions)
Fiscal Years Ended January 31,
2017
2016
Walmart International
2018
7,644
International
1,381
942
Sam's Club
843
1,158
696
5,423
15,366
9,930
27
9,903
Total contribution expense for defined contribution plans
1,111
$
7,447
(1) Represents minimum contractual obligation for non-cancelable leases with initial or remaining terms greater than 12 months as of January 31, 2018.
Certain of the Company's leases provide for the payment of contingent rentals based on a percentage of sales. Such contingent
rentals were not material for fiscal 2018, 2017 and 2016. Substantially all of the Company's store leases have renewal options,
some of which may trigger an escalation in rentals.
Note 12. Retirement-Related Benefits
The Company offers a 401(k) plan for associates in the U.S. under which eligible associates can begin contributing to the plan
immediately upon hire. The Company also offers a 401(k) type plan for associates in Puerto Rico under which associates can
begin to contribute generally after one year of employment. Under these plans, after one year of employment, the Company
matches 100% of participant contributions up to 6% of annual eligible earnings. The matching contributions immediately vest
at 100% for each associate. Participants can contribute up to 50% of their pretax earnings, but not more than the statutory
limits.
Associates in international countries who are not U.S. citizens are covered by various defined contribution post-employment
benefit arrangements. These plans are administered based upon the legislative and tax requirements in the countries in which
they are established.
The following table summarizes the contribution expense related to the Company's defined contribution plans for fiscal 2018,
2017 and 2016:
(Amounts in millions)
Defined contribution plans:
U.S.
(3,567)
Corporate and support
20,437
Fiscal Year Ended January 31, 2018
Net sales
Operating income (loss)
Interest, net
Loss on extinguishment of debt
Income before income taxes
Total assets
Walmart
U.S.
Walmart
International Sam's Club
Corporate
and support
Consolidated
$
318,477 $ 118,068 $
17,869
5,352
59,216 $
982
$
495,761
(3,766)
(2,178)
(3,136)
$
15,123
$
104,347 $
1,532
81,549 $
Fiscal Year Ended January 31, 2018
(Amounts in millions)
Information for the Company's segments, as well as for Corporate and support, including the reconciliation to income before
income taxes, is provided in the following table:
The Company measures the results of its segments using, among other measures, each segment's net sales and operating
income, which includes certain corporate overhead allocations. From time to time, the Company revises the measurement of
each segment's operating income, including any corporate overhead allocations, as determined by the information regularly
reviewed by its CODM. When the measurement of a segment changes, previous period amounts and balances are reclassified
to be comparable to the current period's presentation.
Asset
Impairment
Severance Costs
Total
$
193
596
$
43
$
236
69
665
300
Total
300
789
$
412
$
1,201
The asset impairment charges primarily relate to the real estate of the Sam's Club closures and the wind-down of the Brazil
first-party eCommerce business, which were written down to their estimated fair value. Refer to Note 7 for information on fair
value measurement.
The pre-tax restructuring charges of $1.2 billion are classified in operating, selling, general and administrative expenses in the
Company's Consolidated Statement of Income for fiscal 2018. At January 31, 2018, substantially all of the severances costs
were recorded in accrued liabilities in the Company's Consolidated Balance Sheet. Almost all of these severance costs are
expected to be paid during the first quarter of fiscal 2019.
82
62
Note 15. Segments
The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located
throughout the U.S., Africa, Argentina, Brazil, Canada, Central America, Chile, China, India, Japan, Mexico and the United
Kingdom. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and
Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker
("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products
and services in each of its segments. It is impractical to segregate and identify revenues for each of these individual products
and services.
The Walmart U.S. segment includes the Company's mass merchant concept in the U.S. operating under the "Walmart" or "Wal-
Mart" brands, as well as eCommerce. The Walmart International segment consists of the Company's operations outside of the
U.S., including eCommerce. The Sam's Club segment includes the warehouse membership clubs in the U.S., as well as
samsclub.com. Corporate and support consists of corporate overhead and other items not allocated to any of the Company's
segments.
$
987
$
1,039
(23)
(46)
(25)
Lapse in statutes of limitations
Unrecognized tax benefits, end of year
(15)
(12)
(43)
$
1,010 $
1,050 $
607
The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling,
general and administrative expenses, respectively. During fiscal 2018, 2017 and 2016, the Company recognized interest
expense related to uncertain tax positions of $32 million, $35 million and $5 million, respectively. As of January 31, 2018 and
2017, accrued interest related to uncertain tax positions of $96 million and $72 million, respectively, was recorded in the
Company's Consolidated Balance Sheets. As of January 31, 2018, accrued penalties related to uncertain tax positions of $12
million were recorded in the Company's Consolidated Balance Sheets. As of January 31, 2017, there were no accrued penalties
related to uncertain tax positions recorded in the Company's Consolidated Balance Sheets.
During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by
between $50 million and $400 million, either because the tax positions are sustained on audit or because the Company agrees to
their disallowance. The Company is focused on resolving tax audits as expeditiously as possible. As a result of these efforts,
unrecognized tax benefits could potentially be reduced beyond the provided range during the next twelve months. The
Company does not expect any change to have a material impact to its Consolidated Financial Statements.
The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2013 through
2018. The Company also remains subject to income tax examinations for international income taxes for fiscal 2011 through
2018, and for U.S. state and local income taxes generally for the fiscal years ended 2013 through 2018.
Other Taxes
The Company is subject to tax examinations for value added, sales-based, payroll and other non-income taxes. A number of
these examinations are ongoing in various jurisdictions. In certain cases, the Company has received assessments from the
respective taxing authorities in connection with these examinations. Unless otherwise indicated, the possible losses or range of
possible losses associated with these matters are individually immaterial, but a group of related matters, if decided adversely to
the Company, could result in a liability material to the Company's Consolidated Financial Statements.
In particular, Brazil federal, state and local laws are complex and subject to varying interpretations, and the Company's
subsidiaries in Brazil are party to a large number of non-income tax assessments. One of these interpretations common to the
retail industry in Brazil relates to whether credits received from suppliers should be treated as a reduction of cost for purposes
of calculating certain indirect taxes. The Company believes credits received from suppliers are reductions in cost and that it has
substantial legal defenses in this matter and intends to defend this matter vigorously. As such, the Company has not accrued for
this matter, although the Company may be required to deposit funds in escrow or secure financial guarantees to continue the
judicial process in defending this matter in Brazil.
78
78
Note 10. Contingencies
Legal Proceedings
The Company is involved in a number of legal proceedings. The Company has made accruals with respect to these matters,
where appropriate, which are reflected in the Company's Consolidated Financial Statements. For some matters, a liability is not
probable or the amount cannot be reasonably estimated and therefore an accrual has not been made. However, where a liability
is reasonably possible and may be material, such matters have been disclosed. The Company may enter into discussions
regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of
the Company and its shareholders.
Unless stated otherwise, the matters discussed below, if decided adversely to or settled by the Company, individually or in the
aggregate, may result in a liability material to the Company's financial condition or results of operations.
ASDA Equal Value Claims
Settlements during the period
ASDA Stores, Ltd. ("ASDA"), a wholly-owned subsidiary of the Company, is a defendant in over 10,000 "equal value" claims
that are proceeding before an Employment Tribunal in Manchester (the "Employment Tribunal") in the United Kingdom
("UK") on behalf of current and former ASDA store employees, and further claims may be asserted in the future. The claimants
allege that the work performed by female employees in ASDA's retail stores is of equal value in terms of, among other things,
the demands of their jobs compared to that of male employees working in ASDA's warehouse and distribution facilities, and
that the disparity in pay between these different job positions is not objectively justified. As a result, claimants are requesting
differential back pay based on higher wage rates in the warehouse and distribution facilities and higher wage rates on a
prospective basis.
119
122
The Company had valuation allowances of approximately $1.8 billion and $1.5 billion as of January 31, 2018 and 2017,
respectively, on deferred tax assets associated primarily with net operating loss carryforwards for which management has
determined it is more likely than not that the deferred tax asset will not be realized. Net activity in the valuation allowance
during fiscal 2018 related to releases arising from the use of deferred tax assets, changes in judgment regarding the future
realization of deferred tax assets, increases from certain net operating losses and deductible temporary differences arising in
fiscal 2018, decreases due to operating loss expirations and fluctuations in currency exchange rates. Management believes that
it is more likely than not that the remaining deferred tax assets will be fully realized.
Uncertain Tax Positions
The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining
a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities.
As of January 31, 2018 and 2017, the amount of unrecognized tax benefits related to continuing operations was $1.0 billion and
$1.1 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate
was $690 million and $703 million as of January 31, 2018 and 2017, respectively.
77
A reconciliation of unrecognized tax benefits from continuing operations is as follows:
(Amounts in millions)
2018
Fiscal Years Ended January 31,
2017
2016
Unrecognized tax benefits, beginning of year
Increases related to prior year tax positions
Decreases related to prior year tax positions
Increases related to current year tax positions
13,418 $
1,050 $
607
$
838
130
388
164
(254)
(32)
(446)
145
On March 23, 2015, ASDA asked the Employment Tribunal to stay all proceedings and to "strike out" substantially all of the
claims because the claimants had not adhered to the Tribunal's procedural rule for including multiple claimants on the same
claim form. On July 23, 2015, the Employment Tribunal denied ASDA's requests. Following additional proceedings, on June
20, 2017, the Employment Appeal Tribunal ruled in favor of ASDA on the "strike out" issue and remitted the matter to the
Employment Tribunal to determine whether the improperly filed claims should be struck out. On July 12, 2017, claimants
sought permission from the Court of Appeals to appeal this ruling, which was granted on October 3, 2017. A hearing before the
Court of Appeals is scheduled for October 23, 2018.
As to the initial phase of the Equal Value claims, on October 14, 2016, following a preliminary hearing, the Employment
Tribunal ruled that claimants could compare their positions in ASDA's retail stores with those of employees in ASDA's
warehouse and distribution facilities. On August 31, 2017, the Employment Appeal Tribunal affirmed the Employment
Tribunal's ruling. The Employment Appeal Tribunal also granted permission for ASDA to appeal substantially all of its
findings on August 31, 2017. ASDA sought permission to appeal the remainder of the Employment Appeal Tribunal's findings
to the Court of Appeals on September 21, 2017. A hearing before the Court of Appeals is scheduled for October 10, 2018.
Claimants are now proceeding in the next phase of their claims. That phase will determine whether the work performed by the
claimants is of equal value to the work performed by employees in ASDA's warehouse and distribution facilities.
At present, the Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss
or range of loss that may arise from these proceedings. The Company believes it has substantial factual and legal defenses to
these claims, and intends to defend the claims vigorously.
The Company does not presently believe that these matters, including the Accrual (and the payment of the Accrual at some
point-in-time in the future), will have a material adverse effect on its business, although given the inherent uncertainties in such
situations, the Company can provide no assurance that these matters will not be material to its business in the future.
80
80
Note 11. Commitments
The Company has long-term leases for stores and equipment. Rentals (including amounts applicable to taxes, insurance,
maintenance, other operating expenses and contingent rentals) under operating leases and other short-term rental arrangements
were $2.9 billion, $2.6 billion and $2.5 billion in fiscal 2018, 2017 and 2016, respectively.
Aggregate minimum annual rentals at January 31, 2018, under non-cancelable leases are as follows:
(Amounts in millions)
Fiscal Year
2019
2020
2021
2022
2023
Thereafter
Total minimum rentals
Less estimated executory costs
Net minimum lease payments
Noncash gain on future termination of financing obligation
Less imputed interest
Present value of minimum lease payments
Operating Leases (1)
Capital Lease and
Financing Obligations
$
1,933
$
126
$
99
$
National Prescription Opiate Litigation
In December 2017, the United States Judicial Panel on Multidistrict Litigation ordered consolidated numerous lawsuits filed
against a wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes,
individuals, and third-party payors, asserting claims generally concerning the impacts of widespread opioid abuse. The
consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804), and is pending in
the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included
in this multidistrict litigation, including cases filed by several counties in West Virginia; by healthcare providers in Mississippi,
Alabama, Texas, and Florida; and by the St. Croix Chippewa Indians of Wisconsin. Similar cases that name the Company have
been filed in state courts by various counties and municipalities; by health care providers; and by various Native American
Tribes. The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or
range of loss that may arise from such claims. The Company believes it has substantial factual and legal defenses to these
claims, and intends to defend the claims vigorously.
FCPA Investigation and Related Matters
The Audit Committee (the "Audit Committee") of the Board of Directors of the Company has been conducting an internal
investigation into, among other things, alleged violations of the U.S. Foreign Corrupt Practices Act ("FCPA") and other alleged
crimes or misconduct in connection with foreign subsidiaries, including Wal-Mart de México, S.A.B. de C.V. ("Walmex"), and
79
whether prior allegations of such violations and/or misconduct were appropriately handled by the Company. The Audit
Committee and the Company have engaged outside counsel from a number of law firms and other advisors who are assisting in
the on-going investigation of these matters.
The Company has also been conducting a voluntary global review of its policies, practices and internal controls for anti-
corruption compliance. The Company is engaged in strengthening its global anti-corruption compliance program through
appropriate remedial anti-corruption measures. In November 2011, the Company voluntarily disclosed that investigative
activity to the U.S. Department of Justice (the "DOJ") and the Securities and Exchange Commission (the "SEC"). Since the
implementation of the global review and the enhanced anti-corruption compliance program, the Audit Committee and the
Company have identified or been made aware of additional allegations regarding potential violations of the FCPA. When such
allegations have been reported or identified, the Audit Committee and the Company, together with their third party advisors,
have conducted inquiries and when warranted based on those inquiries, opened investigations. Inquiries or investigations
regarding allegations of potential FCPA violations were commenced in a number of foreign markets where the Company
operates, including, but not limited to, Brazil, China and India.
As previously disclosed, the Company is under investigation by the DOJ and the SEC regarding possible violations of the
FCPA. The Company has been cooperating with the agencies and discussions have been ongoing regarding the resolution of
these matters. These discussions have progressed to a point that the Company can now reasonably estimate a probable loss and
has recorded an aggregate accrual of $283 million with respect to these matters (the "Accrual"). As the discussions are
continuing, there can be no assurance as to the timing or the terms of the final resolution of these matters.
A number of federal and local government agencies in Mexico have also initiated investigations of these matters. Walmex is
cooperating with the Mexican governmental agencies conducting these investigations. Furthermore, lawsuits relating to the
matters under investigation have been filed by several of the Company's shareholders against it, certain of its current directors,
and certain of its former directors, certain of its former officers and certain of Walmex's former officers.
The Company could be exposed to a variety of negative consequences as a result of the matters noted above. There could be
one or more enforcement actions in respect of the matters that are the subject of some or all of the on-going government
investigations, and such actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist
orders, debarment or other relief, criminal convictions and/or penalties and the shareholder lawsuits referenced above may
result in judgments against the Company and its current and former directors and officers named in those proceedings. The
Company expects that there will be on-going media and governmental interest, including additional news articles from media
publications on these matters, which could impact the perception among certain audiences of the Company's role as a corporate
citizen.
In addition, the Company has incurred and expects to continue to incur costs in responding to requests for information or
subpoenas seeking documents, testimony and other information in connection with the government investigations, in defending
the shareholder lawsuits, and in conducting the review and investigations. These costs will be expensed as incurred. For the
fiscal years ended January 31, 2018, 2017 and 2016, the Company incurred the following third-party expenses in connection
with the FCPA investigation and related matters:
(Amounts in millions)
1,718
Ongoing inquiries and investigations
Total
2018
Fiscal Years Ended January 31,
2017
2016
$
26 $
14
80 $
95
19
31
$
40
Global compliance program and organizational enhancements
5,208 $
380,580 $
119,763
3,655
Cost of sales
Consolidated net income
116,526
121,949
122,136
135,150
495,761
87,688
91,521
91,547
102,640
373,396
3,152
3,104
1,904
2,363
10,523
Consolidated net income attributable to Walmart
3,039
2,899
1,749
2,175
9,862
Basic net income per common share attributable to Walmart
Diluted net income per common share attributable to Walmart (¹)
1.00
Net sales
0.96
500,343
123,179 $
Dividends Declared
On February 20, 2018, the Board of Directors approved the fiscal 2019 annual dividend at $2.08 per share, an increase over the
fiscal 2018 dividend of $2.04 per share. For fiscal 2019, the annual dividend will be paid in four quarterly installments of $0.52
per share, according to the following record and payable dates:
Record Date
March 9, 2018
May 11, 2018
August 10, 2018
Payable Date
April 2, 2018
June 4, 2018
September 4, 2018
December 7, 2018
Note 17. Quarterly Financial Data (Unaudited)
January 2, 2019
Fiscal Year Ended January 31, 2018
(Amounts in millions, except per share data)
Q1
Q2
Q3
Q4
Total
Total revenues
$
117,542
$
123,355 $
136,267 $
0.59
0.74
3.29
97,743
361,256
3,216
3,889
3,202
3,986
14,293
3,079
3,773
3,034
3,757
13,643
0.98
1.21
0.98
1.23
4.40
0.98
1.21
0.98
1.22
4.38
(1) The sum of quarterly amounts may not agree to annual amount due to rounding and the impact of a decreasing amount of shares outstanding during the
year.
ळ
84
87,484
89,485
86,544
481,317
1.00
0.96
0.58
0.73
3.28
Total revenues
Net sales
Cost of sales
Consolidated net income
Consolidated net income attributable to Walmart
Basic net income per common share attributable to Walmart
Diluted net income per common share attributable to Walmart (¹)
Note 16. Subsequent Event
Fiscal Year Ended January 31, 2017
Q2
Q3
$
115,904 $
120,854 $
118,179 $
114,986
119,405
117,176
Q4
130,936 $
129,750
Total
485,873
Q1
204,522
No individual country outside of the U.S. had total revenues or long-lived assets that were material to the consolidated totals.
Additionally, the Company did not generate material total revenues from any single customer.
34,041
20,497
Total assets
$
104,262 $
74,508 $
14,125 $
5,930 $
198,825
Depreciation and amortization
3,298
2,629
487
Capital expenditures
6,090
2,697
639
3,666
1,193
10,080
10,619
Fiscal Year Ended January 31, 2016
Net sales
$
Operating income (loss)
298,378
19,087
123,408
5,346
$
56,828
1,820
Income before income taxes
Interest, net
2,601
466
3,807
10,529
5,680
2,607
626
1,138
10,051
Depreciation and amortization
Capital expenditures
Fiscal Year Ended January 31, 2017
Net sales
$
307,833 $
116,119 $
Operating income (loss)
17,745
5,758
57,365
1,671
$
$
481,317
(2,410)
22,764
(2,267)
$
$
478,614
U.S. operations
Non-U.S. operations
Total revenues
Long-lived assets
U.S. operations
Non-U.S. operations
Total long-lived assets
2018
Fiscal Years Ended January 31,
2017
2016
$
$
500,343 $
367,784 $
118,089
485,873 $
357,559
124,571
482,130
$
81,478 $
33,340
$
114,818 $
82,746
31,432
114,178 $
$
82,475
Revenues
(Amounts in millions)
Total revenues, consisting of net sales and membership and other income, and long-lived assets, consisting primarily of
property and equipment, net, aggregated by the Company's U.S. and non-U.S. operations for fiscal 2018, 2017 and 2016, are as
follows:
83
(2,148)
24,105
Interest, net
(2,467)
Income before income taxes
$
21,638
Total assets
$
Depreciation and amortization
Capital expenditures
103,109
2,800
116,516
$
13,998 $
8,754 $
199,581
472
3,633
9,454
6,728
2,930
695
1,124
11,477
86
73,720 $
2,549
At January 31, 2018, the Company had net operating loss and capital loss carryforwards totaling approximately $6.7 billion. Of
these carryforwards, approximately $3.6 billion will expire, if not utilized, in various years through 2038. The remaining
carryforwards have no expiration. At January 31, 2018, the Company's provisional transition tax calculation fully utilized all
foreign tax credit carryforwards.
The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable
income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences,
forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely
than not that a deferred tax asset will be recovered, a valuation allowance is established. To the extent that a valuation
allowance has been established and it is subsequently determined that it is more likely than not that the deferred tax assets will
be recovered, the valuation allowance will be released.
The Company has previously asserted all of its unremitted earnings offshore were permanently reinvested. Accordingly, the
Company did not record any deferred taxes related to any outside basis differences associated with its foreign subsidiaries. As
part of the tax reform enacted on December 22, 2017, the Company is currently assessing the impact of the new legislation,
which can in turn, impact its assertion regarding any potential future repatriation. After consideration of the provisional
transition tax calculation and deemed repatriation of the previously unremitted earnings, the Company is estimating, on a
provisional basis, its outside tax basis exceeds the outside book basis of its foreign subsidiaries by approximately $10.0 billion.
Once the calculations are completed regarding the transition tax, taking into account the timeline provided in SAB 118, the
Company will provide updated disclosures regarding any potential changes for its previous assertions.
$
(1,026)
745
(180)
(216)
(360)
(146)
(106)
51
(12)
(704)
1,054
(22)
7,584
5,459
4,780
1,400
1,510
1,377
4,600 $
622
6,204 $
On December 22, 2017, the Tax Act was enacted and contains significant changes to U.S. income tax law. Effective in 2018,
the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes focused on foreign-sourced earnings and
related-party payments, including the creation of the base erosion anti-abuse tax and a new tax on global intangible low-taxed
income ("GILTI"). By operation of law, the Company will apply a blended U.S. statutory federal income tax rate of 33.8% for
fiscal 2018. In addition, the Company was subject to a one-time transition tax in fiscal 2018 on accumulated foreign subsidiary
earnings not previously subject to U.S. income tax.
2016
Fiscal Years Ended January 31,
2017
2018
Other, net
Net impact of repatriated international earnings
Deferred tax effects
One-time transition tax
Impact of the Tax Act:
U.S. state income taxes, net of federal income tax benefit
U.S. statutory tax rate
The Company's effective income tax rate is typically lower than the U.S. statutory tax rate primarily because of benefits from
lower-taxed global operations, including the use of global funding structures and certain U.S. tax credits as further discussed in
the "Cash and Cash Equivalents" section of the Company's significant accounting policies in Note 1. The Company's non-U.S.
income is generally subject to local country tax rates that are below the U.S. statutory tax rate. Certain non-U.S. earnings have
been indefinitely reinvested outside the U.S. A reconciliation of the significant differences between the U.S. statutory tax rate
and the effective income tax rate on pretax income from continuing operations is as follows:
are settled or realized. The Company recognized a deferred tax benefit of $2.1 billion to reflect the reduced U.S. tax rate and
other effects of the Tax Act. The benefit associated with the remeasurement of the deferred taxes is provisional as of January
31, 2018, as the Company continues gathering the necessary information to complete the calculations. The Company has no
provisional adjustment with respect to the GILTI provision of the Tax Act as the Company is not able to make reasonable
estimates of its related effects at this time. The Company has not yet elected an accounting policy to determine whether it will
recognize GILTI as a period cost when incurred or to recognize deferred taxes for basis differences expected to reverse.
Effective Income Tax Rate Reconciliation
75
The Tax Act reduces the U.S. statutory tax rate from 35% to 21% for years after 2017. Accordingly, the Company re-measured
its deferred taxes as of January 31, 2018, to reflect the reduced rate that will apply in future periods when these deferred taxes
Deferred Tax Effects
The Tax Act requires the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject
to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets, as defined by the Tax Act,
and 8.0% on the remaining earnings. The Company recorded a provisional amount of $1.9 billion of additional income tax
expense for its one-time transitional tax liability. The Company recorded a provisional amount based on estimates as it
completes its analysis of the application of the effects of the Tax Act as well as finalize its calculations surrounding the
components of its foreign subsidiaries subject to the transition tax including the potential of any correlative adjustments.
One-time Transition Tax
Provisional amounts for the following income tax effects of the Tax Act have been recorded as of January 31, 2018, and are
subject to change during fiscal 2019. The net tax benefit recognized in fiscal 2018 related to the Tax Act was $0.2 billion. As
the Company completes its analysis of the Tax Act and incorporates additional guidance that may be issued by the U.S.
Treasury Department, the IRS or other standard-setting bodies, the Company may identify additional effects not reflected as of
January 31, 2018.
The Securities and Exchange Commission (SEC) staff issued SAB 118 on December 22, 2017, which allows companies to
record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the
timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable
estimates of the effects and recorded provisional amounts in its financial statements as of January 31, 2018, in accordance with
SAB 118. As the Company collects and prepares necessary data, and interprets the Tax Act and any additional guidance issued
by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the Company may make adjustments to the
provisional amounts during fiscal 2019. Those adjustments may materially impact the Company's provision for income taxes
and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be
completed by the measurement period provided in SAB 118.
6,558
495
405
5,562
4,401
16,685
15,680 $
10,722 $
$
2016
2017
2018
Fiscal Years Ended January 31,
(Amounts in millions)
A summary of the provision for income taxes is as follows:
Total income before income taxes
Non-U.S.
U.S.
(Amounts in millions)
The components of income before income taxes are as follows:
Income Before Income Taxes
Note 9. Taxes
Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances
4,817
4,953
$
15,123 $
3,454 $
2,998 $
$
Total provision for income taxes
Total deferred tax expense (benefit)
International
U.S. state and local
U.S. federal
Deferred:
33.8 %
Total current tax provision
U.S. state and local
U.S. federal
Current:
2016
2017
2018
Fiscal Years Ended January 31,
21,638
20,497 $
International
35.0 %
Income taxed outside the U.S.
1.8 %
$
10,127
6,048
1,884
941
1,808
1,153
6,435
3,954
7,359
4,096
(1,494)
(1,843)
8,853
5,939
1,474
1,251
309
217
1,952 $
2,768
The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:
(Amounts in millions)
35.0 %
Unremitted Earnings
2,768
$
1,952
$
4,333
3,831
1,565
3,437
$
$
2017
2018
Net deferred tax liabilities
Deferred income taxes and other
Liabilities:
Other assets and deferred charges
Assets:
Balance Sheet classification
1,879
2,482
January 31,
1,989 $
30.3 %
30.4 %
(2.6)%
(0.9)%
0.8%
1.7 %
0.1 %
(1.0)%
(0.1)%
(4.0)%
(4.5)%
(4.1)%
%
(14.1)%
― %
%
12.3 %
3,633
1.8%
30.3 %
Effective income tax rate
%
The Company recorded a provisional adjustment to its U.S. deferred income taxes as of January 31, 2018 to reflect the
reduction in the U.S. statutory tax rate from 35% to 21% resulting from the Tax Act. The significant components of the
Company's deferred tax account balances are as follows:
2017
Deferred Taxes
2018
January 31,
Net deferred tax liabilities
Total deferred tax liabilities
Other
Inventories
Property and equipment
76
Deferred tax assets, net of valuation allowance
(Amounts in millions)
Deferred tax assets:
Deferred tax liabilities:
Loss and tax credit carryforwards
Accrued liabilities
$
Share-based compensation
Other
Valuation allowances
Total deferred tax assets
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
As of July 31, 2020, the aggregate market value of the voting common stock of the registrant held by non-affiliates of the
registrant, based on the closing sale price of those shares on the New York Stock Exchange reported on July 31, 2020, was
$182,886,052,366. For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers (as
defined in Rule 3b-7 under the Exchange Act) and the beneficial owners of 5% or more of the registrant's outstanding common
stock are the affiliates of the registrant.
The registrant had 2,817,071,695 shares of common stock outstanding as of March 17, 2021.
DOCUMENTS INCORPORATED BY REFERENCE
Parts Into Which Incorporated
Part III
Document
Portions of the registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held June 2, 2021 (the "Proxy
Statement")
Item 1A
Item 1
Business
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Part I
Yes ☑ No ☐
☐ ☐ ☐
Smaller Reporting Company
Emerging Growth Company
Accelerated Filer
☑ ☐
Large Accelerated Filer
Non-Accelerated Filer
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.
Yes ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☑ No ☐
Securities registered pursuant to Section 12(g) of the Act: None
Risk Factors
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1B
Item 6
Unresolved Staff Comments
2.550% Notes Due 2026
Item 9A
Item 9
48
33
23
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Item 7A
Item 8
Item 7
32
31
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Item 5
Part II
Item 2
30
26
25
14
6
Page
Table of Contents
For the Fiscal Year Ended January 31, 2021
Form 10-K
Walmart Inc.
Mine Safety Disclosures
Item 4
Legal Proceedings
Item 3
Properties
28
NYSE
Announced
NYSE
Walmart+
Launched
curbside pickup at
all Sam's Clubs
Launched
Walmart Connect
Launched
Express Delivery
RD
Financial Statements and Supplementary Data
wage increases for
590K
associates
$559.2 Billion
in revenue
8.7%
Walmart U.S.
comp sales
$36.1 Billion
Launched
in operating cash flow
in returns
to shareholders
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☑Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended January 31, 2021, or
□ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Commission file number 001-06991.
Walmart
WALMART INC.
(Exact name of registrant as specified in its charter)
DE
(State or other jurisdiction of
incorporation or organization)
702 S.W. 8th Street
$8.7 Billion
Annualized PhonePe
Total Payment Value of
~$300
Billion
triple-digits
eCommerce
marketplace grew
Name of each exchange on which registered
WMT26
WMT22
WMT
8
Trading Symbol(s)
1.900% Notes Due 2022
Common Stock, par value $0.10 per share
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Registrant's telephone number, including area code: (479) 273-4000
72716
(Zip Code)
(Address of principal executive offices)
Bentonville, AR
Nahart
Walmart >
ID
for associate special cash bonuses
$1.6 Billion
Paid
YOY
$35 Billion
Revenue grew
NYSE
Key Highlights for FY 2021
Free unlimited
w+
2021 Annual Report
Uniquely Walmart
Walmart
Walmart
delivery
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
or measures or operating measures, including our earnings per share, net sales, comparable store and club sales, our
Walmart U.S. operating segment's eCommerce sales, liabilities, expenses of certain categories, expense leverage,
returns, capital and operating investments or expenditures of particular types and new store openings;
81
106,000
221,000
30,000
178,000
260,000
69,000
Average
Square Feet
Maximum
Square Feet
Minimum
Square Feet
(1) Excludes other small formats.
Discount stores (general merchandise and limited grocery)
Neighborhood markets(¹) (grocery)
Supercenters (general merchandise and grocery)
Omni-channel. Walmart U.S. provides an omni-channel experience to customers, integrating retail stores and eCommerce,
through services such as pickup and delivery, ship-from-store, and digital pharmacy fulfillment options. As of January 31,
2021, we had approximately 3,750 pickup locations and 3,000 delivery locations. Our Walmart+ membership incorporates
several service offerings which provide enhanced omni-channel shopping experiences and benefits for members. We have
several eCommerce websites, the largest of which is walmart.com. We define eCommerce sales as sales initiated by customers
digitally and fulfilled by a number of methods including our dedicated eCommerce fulfillment centers and leveraging our
stores. The following table provides the approximate size of our retail stores as of January 31, 2021:
Walmart U.S. is our largest segment and operates in the U.S., including in all 50 states, Washington D.C. and Puerto Rico.
Walmart U.S. is a mass merchandiser of consumer products, operating under the "Walmart" and "Walmart Neighborhood
Market" brands, as well as walmart.com and other eCommerce brands. Walmart U.S. had net sales of $370.0 billion for fiscal
2021, representing 67% of our fiscal 2021 consolidated net sales, and had net sales of $341.0 billion and $331.7 billion for
fiscal 2020 and 2019, respectively. Of our three segments, Walmart U.S. has historically had the highest gross profit as a
percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the
Company's net sales and operating income.
28,000
Walmart U.S. Segment
Information About Our Segments
9
During fiscal 2021, the world has been, and continues to be, impacted by the COVID-19 pandemic. While we have incurred
incremental costs associated with operating during a global health crisis, the COVID-19 pandemic has also accelerated our
business growth and eCommerce expansion. We have continued to invest in our omni-channel offering which resonates with
customers around the world who are increasingly seeking convenience.
In fiscal 2021, we launched Walmart+ in the U.S., a new membership offering with omni-channel shopping benefits that
currently include unlimited free shipping on eligible items with no order minimum, unlimited delivery from store, fuel
discounts, and mobile scan & go for a streamlined in-store shopping experience. We are enhancing our ecosystem with our
omni-channel capabilities, stores, services, eCommerce sites and supply chain combined with our more than 2.3 million
associates as of January 31, 2021 to better serve our customers. Together, we believe these elements produce a flywheel effect
which creates customer relationships where customers view Walmart as their primary destination.
In 2000, we began our first eCommerce initiative by creating both walmart.com and samsclub.com. Since then, our
eCommerce presence has continued to grow. In 2007, leveraging our physical stores, walmart.com launched its Site to Store
service, enabling customers to make a purchase online and pick up merchandise in stores. To date, we now have approximately
7,300 pickup and 5,200 delivery locations globally. In recent years, we have heavily invested in omni-channel and eCommerce
innovation, as well as made several eCommerce acquisitions to better serve our customers. These investments have enabled us
to leverage technology, talent and expertise, incubate digitally-native brands, and expand our assortment and service offerings
in stores and on walmart.com. We have also continued to enhance our eCommerce initiatives internationally, such as with our
acquisition of a majority stake of Flipkart Private Limited ("Flipkart"), which is our ecosystem in India that includes
eCommerce platforms of Flipkart and Myntra as well as PhonePe, a digital transaction platform.
The businesses conducted by our founders began in 1945 when Sam M. Walton opened a franchise Ben Franklin variety store
in Newport, Arkansas. In 1946, his brother, James L. Walton, opened a similar store in Versailles, Missouri. Until 1962, our
founders' business was devoted entirely to the operation of variety stores. In 1983, we opened our first Sam's Club, and in 1988,
we opened our first supercenter. In 1998, we opened our first Walmart Neighborhood Market. In 1991, we began our first
international initiative when we entered into a joint venture in Mexico and, as of January 31, 2021, our Walmart International
segment conducted business in 25 countries.
The Development of Our Company
We maintain our principal offices in Bentonville, Arkansas. Our common stock trades on the New York Stock Exchange under
the symbol "WMT."
Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club. Our fiscal year ends
on January 31 for our United States ("U.S.") and Canadian operations. We consolidate all other operations generally using a
one-month lag and on a calendar year basis. Our discussion is as of and for the fiscal years ended January 31, 2021 ("fiscal
2021"), January 31, 2020 ("fiscal 2020") and January 31, 2019 ("fiscal 2019"). During fiscal 2021, we generated total revenues
of $559.2 billion, which was primarily comprised of net sales of $555.2 billion.
Our strategy is to make every day easier for busy families, operate with discipline, sharpen our culture and become digital, and
make trust a competitive advantage. Making life easier for busy families includes our commitment to price leadership, which
has been and will remain a cornerstone of our business, as well as increasing convenience to save our customers time. By
leading on price, we earn the trust of our customers every day by providing a broad assortment of quality merchandise and
services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every
day so our customers trust that our prices will not change under frequent promotional activity. Everyday low cost ("EDLC") is
our commitment to control expenses so our cost savings can be passed along to our customers.
Walmart Inc. ("Walmart," the "Company" or "we") helps people around the world save money and live better – anytime and
anywhere - by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, we strive to
continuously improve a customer-centric experience that seamlessly integrates our eCommerce and retail stores in an omni-
channel offering that saves time for our customers. Each week, we serve over 240 million customers who visit approximately
11,400 stores and numerous eCommerce websites under 54 banners in 26 countries.
General
ITEM 1. BUSINESS
5
We are engaged in global operations of retail, wholesale and other units, as well as eCommerce, located throughout the U.S.,
Africa, Canada, Central America, Chile, China, India and Mexico. The Company also engaged in operations in the U.K. and
Japan, both of which were classified as held for sale as of January 31, 2021. We also operated in Argentina and Brazil prior to
the sale of Walmart Argentina in November 2020 and the majority stake of Walmart Brazil in fiscal 2019. Refer to Note 12 to
our Consolidated Financial Statements for information on these divestitures. Our operations are conducted in three reportable
segments: Walmart U.S., Walmart International and Sam's Club, which are further described below. Each segment contributes
to the Company's operating results differently. However, each has generally maintained a consistent contribution rate to the
Company's net sales and operating income in recent years other than minor changes to the contribution rate for the Walmart
International segment due to fluctuations in currency exchange rates. Additional information on our operating segments and
geographic and product information is contained in Note 13 to our Consolidated Financial Statements.
"may continue," "may fluctuate," "may grow," "may impact," "may result," "objective," "plan," "priority," "project," "strategy,"
"to be," "we'll," "we will," "will add," "will allow," "will be," "will benefit," "will change," "will come in at," "will continue,"
"will decrease,"
," 
"will grow," "will have," "will impact," "will include," "will increase," "will open," "will remain," "will result,"
"will stay," "will strengthen," "would be," "would decrease" and "would increase," variations of such words or phrases, other
phrases commencing with the word "will" or similar words and phrases denoting anticipated or expected occurrences or results.
The forward-looking statements that we make or that are made by others on our behalf are based on our knowledge of our
business and our operating environment and assumptions that we believe to be or will believe to be reasonable when such
forward-looking statements were or are made. As a consequence of the factors described above, the other risks, uncertainties
and factors we disclose below and in the other reports as mentioned above, other risks not known to us at this time, changes in
facts, assumptions not being realized or other circumstances, our actual results may differ materially from those discussed in or
implied or contemplated by our forward-looking statements. Consequently, this cautionary statement qualifies all forward-
looking statements we make or that are made on our behalf, including those made herein and incorporated by reference herein.
We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially
realized, that those results or developments will result in the expected consequences for us or affect us, our business, our
operations or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on
such forward-looking statements, which speak only as of their dates. We undertake no obligation to revise or update any of the
forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.
65,000
Merchandise. Walmart U.S. does business in three strategic merchandise units, listed below:
Walmart International includes numerous formats divided into three major categories: retail, wholesale and other. These
categories consist of many formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's
Clubs) and cash & carry, as well as eCommerce through walmart.com.mx, walmart.ca, flipkart.com and other sites. Walmart
International had net sales of $121.4 billion for fiscal 2021, representing 22% of our fiscal 2021 consolidated net sales, and had
net sales of $120.1 billion and $120.8 billion for fiscal 2020 and 2019, respectively. The segment's net sales were negatively
impacted by currency exchange rate fluctuations for all years presented. The gross profit rate is lower than that of Walmart
U.S. primarily because of its merchandise mix.
Walmart International is our second largest segment and operated in 25 countries outside of the U.S as of January 31, 2021.
Walmart International operated through our wholly-owned subsidiaries in Canada, Chile, and China, as well as our businesses
classified as held for sale in Japan and the United Kingdom as of January 31, 2021. Walmart International also operates
through our majority-owned subsidiaries in Africa (which includes Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique,
Namibia, Nigeria, South Africa, Swaziland, Tanzania, Uganda and Zambia), Central America (which includes Costa Rica, El
Salvador, Guatemala, Honduras and Nicaragua), India and Mexico. Walmart International previously operated in Argentina and
Brazil prior to the sale of Walmart Argentina in fiscal 2021 and the majority stake of Walmart Brazil in fiscal 2019. Refer to
Note 12 for discussion of recent divestitures.
Walmart International Segment
Distribution. For fiscal 2021, the majority of Walmart U.S.'s purchases of store merchandise were shipped through our 156
distribution facilities, which are located strategically throughout the U.S. The remaining store merchandise we purchased was
shipped directly from suppliers. General merchandise and dry grocery merchandise is transported primarily through the
segment's private truck fleet; however, we contract with common carriers to transport the majority of our perishable grocery
merchandise. We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from
multiple locations including from our 32 dedicated eCommerce fulfillment centers, as well as leveraging our ability to ship
directly from approximately 3,000 stores.
Omni-channel offerings such as pickup and delivery and our new Walmart+ membership offering, all of which
enhance convenience and seek to serve customers in the ways they want to be served.
EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our
customers; and
•
•
EDLP: our pricing philosophy under which we price items at everyday low prices so our customers trust that our
prices will not change under frequent promotional activity;
•
Competition. Walmart U.S. competes with omni-channel retailers operating discount, department, retail and wholesale grocers,
drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, as well as eCommerce
retailers. Our ability to develop and operate units at the right locations and to deliver a customer-centric omni-channel
experience largely determines our competitive position within the retail industry. We employ many programs designed to meet
competitive pressures within our industry. These programs include the following:
Seasonal Aspects of Operations. Walmart U.S.'s business is seasonal to a certain extent due to calendar events and national
and religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating
income have occurred in the fiscal quarter ending January 31. However, the COVID-19 pandemic may have an impact on
consumer behaviors that could result in temporary changes in the seasonal fluctuations of our business.
Operations. Historically, many supercenters, discount stores and neighborhood markets were generally open 24 hours each
day. In response to the COVID-19 pandemic, we reduced store hours to allow for additional cleaning and sanitizing but
expanded store hours slightly toward the end of fiscal 2021. Consistent with its strategy, Walmart U.S. continues to develop
technology tools and services that help better serve customers and help stores operate more efficiently, such as pickup and
delivery, Walmart+, ship-from-store and other initiatives which provide convenient and seamless omni-channel shopping
experiences.
Periodically, revisions are made to the categorization of the components comprising our strategic merchandise units. When
revisions are made, the previous periods' presentation is adjusted to maintain comparability.
42,000
"Equate," "Freshness Guaranteed," "George," "Great Value," "Holiday Time," "Mainstays," "Marketside," "No Boundaries,"
"Onn," "Ozark Trail," "Parent's Choice," "Sam's Choice," "Scoop," "Spring Valley," "SwissTech," "Time and Tru" and
"Wonder Nation." The Company also markets lines of merchandise under licensed brands, some of which include: "Better
Homes & Gardens," "Farberware," "Pioneer Woman" and "Russell."
Brand name merchandise represents a significant portion of the merchandise sold in Walmart U.S. We also market lines of
merchandise under our private-label brands, including brands such as: "Allswell," "Athletic Works," "Bonobos," "Eloquii,"
Walmart U.S. recently launched Walmart+, a membership offering providing omni-channel shopping benefits such as unlimited
free shipping on eligible items with no order minimums, as well as delivery and other benefits which help customers save more
time and money. Walmart U.S. also offers an in-house advertising offering via Walmart Connect, supply chain and fulfillment
capabilities to online marketplace sellers via Walmart Fulfillment Services, as well as quality, affordable, and accessible
healthcare via Walmart Health. Additional service offerings include fuel and financial services and related products, such as
money orders, prepaid cards, money (wire) transfers, check cashing and bill payment. Combined, these offerings did not
represent a significant portion of annual segment revenues.
Health and wellness includes pharmacy, over-the-counter drugs and other medical products, optical services and
clinical services.
Home (e.g., housewares and small appliances, bed & bath, furniture and home organization, home
furnishings, home decor, fabrics and crafts).
Apparel (e.g., apparel for men, women, girls, boys and infants, as well as shoes, jewelry and accessories); and
о
°
•
Hardlines (e.g., automotive, hardware and paint, sporting goods, outdoor living and stationery);
0
Entertainment (e.g., electronics, toys, seasonal merchandise, wireless, video games, movies, music and
books);
о
General merchandise includes:
Grocery consists of a full line of grocery items, including dry grocery, snacks, dairy, meat, produce, deli & bakery,
frozen foods, alcoholic and nonalcoholic beverages, as well as consumables such as health and beauty aids, pet
supplies, household chemicals, paper goods and baby products;
7
4
Our forward-looking statements may also include statements of our strategies, plans and objectives for our operations, including
areas of future focus in our operations, and the assumptions underlying any of the forward-looking statements we make. The
forward-looking statements we make can typically be identified by the use therein of words and phrases such as "aim,"
"anticipate," "believe," "could be," "could increase," "could occur," "could result," "continue," "estimate," "expansion,"
"expect," "expectation," "expected to be," "focus," "forecast," "goal," "grow," "guidance," "intend," "invest," "is expected,"
our commitments, intentions, plans or goals related to the sustainability of our environment and supply chains, the
promotion of economic opportunity or other societal initiatives.
WALMART INC.
86
85
83
Signatures
Form 10-K Summary
Item 16
Exhibits, Financial Statement Schedules
Item 15
Part IV
82
82
82
82
ANNUAL REPORT ON FORM 10-K
82
Principal Accounting Fees and Services
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Directors, Executive Officers and Corporate Governance
Item 14
Item 13
Item 12
Executive Compensation
Item 11
Item 10
Part III
81
Other Information
Item 9B
81
22222
FOR THE FISCAL YEAR ENDED JANUARY 31, 2021
All references in this Annual Report on Form 10-K, the information incorporated into this Annual Report on Form 10-K by
reference to information in the Proxy Statement of Walmart Inc. for its Annual Shareholders' Meeting to be held on June 2,
2021 and in the exhibits to this Annual Report on Form 10-K to "Walmart Inc.," "Walmart," "the Company," "our Company,"
"we," "us" and "our" are to the Delaware corporation named "Walmart Inc." and, except where expressly noted otherwise or the
context otherwise requires, that corporation's consolidated subsidiaries.
PART I
the effect on the Company's results of operations or financial position of the Company's adoption of certain new, or
amendments to existing, accounting standards; or
the effect of adverse decisions in, or settlement of, litigation or other proceedings or investigations to which we are
subject;
our effective tax rate for certain periods and the realization of certain net deferred tax assets and the effects of
resolutions of tax-related matters;
•
•
•
the reclassification of amounts related to our derivatives;
•
cash flows from operations, our current cash position and access to capital markets will continue to be sufficient to
meet our anticipated operating cash needs;
our sources of liquidity, including our cash, continuing to be adequate or sufficient to fund our operations, finance our
global investment and expansion activities, pay dividends and fund share repurchases;
repurchase authorization over a certain period or the source of funding of a certain portion of our share repurchases;
the Company continuing to provide returns to shareholders through share repurchases and dividends, the use of share
volatility in currency exchange rates affecting our or one of our segments' results of operations;
•
•
•
•
Cautionary Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K and other reports, statements, and information that Walmart Inc. (which individually or
together with its subsidiaries, as the context otherwise requires, is referred to as "we," "Walmart" or the "Company") has filed
with or furnished to the Securities and Exchange Commission ("SEC") or may file with or furnish to the SEC in the future, and
prior or future public announcements and presentations that we or our management have made or may make, include or may
include, or incorporate or may incorporate by reference, statements that may be deemed to be "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Act"), that are intended to enjoy
the protection of the safe harbor for forward-looking statements provided by the Act as well as protections afforded by other
federal securities laws.
Nature of Forward-Looking Statements
Such forward-looking statements are not statements of historical facts, but instead express our estimates or expectations for our
consolidated, or one of our segment's, economic performance or results of operations for future periods or as of future dates or
events or developments that may occur in the future or discuss our plans, objectives or goals. These forward-looking
statements may relate to:
•
•
50
the growth of our business or change in our competitive position in the future or in or over particular periods;
71-0415188
investments and capital expenditures we will make and how certain of those investments and capital expenditures are
expected to be financed;
our increasing investments in eCommerce, technology, supply chain, store remodels and other omni-channel customer
initiatives, such as same day pickup and delivery;
•
our workforce strategy;
•
the amount, number, growth, increase, reduction or decrease in or over certain periods, of or in certain financial items
(IRS Employer Identification No.)
2021
Walmart
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.
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
b)
a)
The registrant's other certifying officer 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 registrant's Board of Directors:
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 that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
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 evaluations; and
d)
c)
b) 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;
a) 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;
The registrant's other certifying officer 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:
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;
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;
5.
4.
3.
2.
Exhibit 31.2
I have reviewed this Annual Report on Form 10-K of Walmart Inc. (the "registrant");
1.
I, M. Brett Biggs, certify that:
President and Chief Executive Officer
Date: March 19, 2021
C. Douglas McMillon
/s/ M. Brett Biggs
Executive Vice President and Chief Financial Officer
Listing
Corporate and Stock Information
Walmart
Executive Vice President and Chief Financial Officer
M. Brett Biggs
/s/ M. Brett Biggs
IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 19, 2021.
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company as of the dates and for the periods expressed in the Report.
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31,
2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, M. Brett Biggs, Executive
Vice President and Chief Financial Officer of the Company, certify to my knowledge and in my capacity as an officer of the
Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
18 U.S.C. SECTION 1350 (AS ADOPTED
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002)
CERTIFICATION PURSUANT TO
Exhibit 32.2
President and Chief Executive Officer
C. Douglas McMillon
/s/ C. Douglas McMillon
IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 19, 2021.
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company as of the dates and for the periods expressed in the Report.
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31,
2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, C. Douglas McMillon,
President and Chief Executive Officer of the Company, certify to my knowledge and in my capacity as an officer of the
Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
18 U.S.C. SECTION 1350 (AS ADOPTED
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002)
CERTIFICATION PURSUANT TO
Exhibit 32.1
M. Brett Biggs
/s/ C. Douglas McMillon
Date: March 19, 2021
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.
Form S-8 File No. 333-228631
Form S-3 ASR File No. 333-251124
Form S-8 File No. 333-214060
Form S-8 File No. 333-187577
Form S-8 File No. 333-178717
Form S-3 ASR File No. 333-178385
Exhibit 23
Form S-8 File No. 333-109421
Form S-8 File No. 333-109417
Form S-8 File No. 333-109414
Form S-8 File No. 333-128204
Form S-8 File No. 333-44659
Form S-8 File No. 333-62965
Form S-8 File No. 333-60329
Form S-3 File No. 333-02089
Form S-8 File No. 333-24259
Form S-8 File No. 333-29847
(16) Walmart Inc. 2016 Associate Stock Purchase Plan
(17) Walmart Inc. Stock Incentive Plan of 2015
(18) Walmart 401(k) Plan
(15) Debt Securities of Walmart Inc.
(14) Wal-Mart Stores, Inc. Associate Stock Purchase Plan
(13) Walmart 401(k) Plan
(12) Wal-Mart Stores, Inc. Common Stock
(11) Walmart Deferred Compensation Matching Plan
(10) Wal-Mart Stores, Inc. Stock Incentive Plan of 2015, which amended and
restated the 2010 plan
(9) Wal-Mart Puerto Rico Profit Sharing and 401(k) Plan
(8) Wal-Mart Stores, Inc. Associate Stock Purchase Plan of 1996
(7) Wal-Mart Profit Sharing and 401(k) Plan
(6) Wal-Mart Stores, Inc. Stock Incentive Plan of 2015, which amended and
restated the 2010 plan
(5) Wal-Mart Stores, Inc. Associate Stock Purchase Plan of 1996
(1) Shareholder Investment Plan of Wal-Mart Stores, Inc.
(2) Wal-Mart Stores, Inc. Director Compensation Plan
(3) Wal-Mart Stores, Inc. 401(k) Retirement Savings Plan
(4) Wal-Mart Puerto Rico, Inc., 401(k) Retirement Savings Plan
We consent to the incorporation by reference in the following Registration Statements:
Form S-8 File No. 333-228635
Form S-8 File No. 333-233682
of our reports dated March 19, 2021, with respect to the consolidated financial statements of Walmart Inc. and the effectiveness
of internal control over financial reporting of Walmart Inc., included in this Annual Report (Form 10-K) of Walmart Inc. for the
year ended January 31, 2021.
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
b)
a)
The registrant's other certifying officer 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 registrant's Board of Directors:
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 that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
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 evaluations; and
d)
c)
b) 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;
a) 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;
The registrant's other certifying officer 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:
New York Stock Exchange
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;
5.
4.
3.
2.
Exhibit 31.1
I have reviewed this Annual Report on Form 10-K of Walmart Inc. (the "registrant");
1.
I, C. Douglas McMillon, certify that:
March 19, 2021
Rogers, Arkansas
/s/ Ernst & Young LLP
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;
Stock Symbol: WMT
Corporate Information
Stock Registrar and Transfer Agent:
Low
2020
Low
High
$133.38 $102.00
134.13 117.01
151.33 128.27
153.66 139.03
4th Quarter
3rd Quarter
1st Quarter
2nd Quarter
2021
Fiscal Years Ended January 31,
The high market price and low market price per share for the
Company's common stock for each fiscal quarter in fiscal 2021 and
2020 were as follows:
Market Price of Common Stock
Fiscal Years
2021
2020
2019
2018
2017
2016
$ 0
$ 50
Rogers, AR 72758
$100
5417 Pinnacle Point Dr., Suite 501
*Assumes $100 Invested on February 1, 2016
Assumes Dividends Reinvested
Fiscal Year Ended January 31, 2021
High
$104.18 $93.11
115.49 98.85
120.71 104.84
125.38 112.68
The high market price and low market price per share for the Company's
common stock for the first fiscal quarter of fiscal 2022, were as follows:
1st Quarter (1)
Source 20 commodities
more sustainably by 2025
by 2040
Targeting zero
emissions
energy
by 2035
100% renewable
Achieve
of ocean by 2030
and 1M square miles
With the Walmart Foundation,
help protect, manage or restore
at least 50M
acres of land
Work with suppliers to avoid
1 gigaton of greenhouse
gas emissions across our
supply chain by 2030
Walmart is committed to leading on environmental, social, and
governance issues. For example, we are taking action beyond
sustainability to restore, renew, and replenish the environment.
$150
Our Bold Objective: To Become
a Regenerative Company
As of March 17, 2021, there were 214,673 holders of record of
Walmart's common stock.
Retailing Index 100.00 120.09 174.49 186.29 219.46 316.05
Holders of Record of Common Stock
2018
$100.00 $103.50 $169.56 $156.05 $190.21 $237.33
S&P 500 Index 100.00 120.04 151.74 148.23 180.37 211.48
S&P 500
2020
Fiscal Years Ended January 31,
2019
2017
2016
Walmart Inc.
Low
High
$147.50 $126.28
2022
(1) Through March 17, 2021
702 SW 8th St. Bentonville, AR 72716 | corporate.walmart.com
Independent Registered Public Accounting Firm
Ernst & Young LLP
• Culture, Diversity, Equity and Inclusion Report
0.55
0.55
$0.55
Dividends Paid Per Share
January 3, 2022
September 7, 2021
June 1, 2021
For fiscal 2022, dividends will be paid based on the following schedule:
Dividends Payable Per Share
April 5, 2021
⚫ Current Reports on Form 8-K
• Earnings Releases
• Quarterly Reports on Form 10-Q
• Annual Report on Form 10-K
The following reports are available without charge upon request
by writing the company c/o Investor Relations or by calling
(479) 273-8446. These reports are also available via the
corporate website.
Walmart Inc. periodically communicates with our shareholders
and other members of the investment community about our
operations. For further information regarding our policy on
shareholder and investor communications refer to our website,
www.stock.walmart.com.
Communication with Shareholders
Due to the continuation of the COVID-19 pandemic, for the safety of
all of our associates and shareholders, our 2021 Annual Shareholders'
Meeting will be held on Wednesday, June 2, 2021 at 10:30am CDT in a
virtual meeting format only, with no physical in-person meeting. Our
Annual Shareholders' Meeting will be available for viewing at
www.virtualshareholdermeeting.com/WMT2021.
Annual Meeting
TDD for hearing-impaired inside the U.S. 1-800-952-9245
Internet: http://www.computershare.com
Louisville, Kentucky 40233-5000
1-800-438-6278
P.O. Box 505000
Computershare Trust Company, N.A.
0.55
For fiscal 2021, dividends were paid based on the following schedule:
April 6, 2020
June 1, 2020
$250
• Environmental, Social and Governance Report
$300
• Annual Shareholders' Meeting Proxy Statement
S&P 500 Index
Walmart Inc.
Comparison of 5-Year Cumulative Total Return*
Among Walmart Inc., the S&P 500 Index and S&P 500 Retailing Index
S&P 500 Retailing Index
This graph compares the cumulative total shareholder return
on Walmart's common stock during the five fiscal years ending
through fiscal 2021 to the cumulative total returns on the S&P 500
Retailing Index and the S&P 500 Index. The comparison assumes
$100 was invested on February 1, 2016, in shares of our common
stock and in each of the indices shown and assumes that all of the
dividends were reinvested.
0.53
0.53
0.53
$200
$0.53
January 2, 2020
September 3, 2019
June 3, 2019
For fiscal 2020, dividends were paid based on the following schedule:
April 1, 2019
0.54
0.54
0.54
$0.54
Dividends Paid Per Share
January 4, 2021
September 8, 2020
Stock Performance Chart
$350
Consent of Independent Registered Public Accounting Firm
Our digital platforms, which are increasingly important to our business and continue to grow in complexity and scope, and the
systems on which they run, including those applications and systems in our acquired eCommerce businesses, are regularly
subject to cyberattacks. Those attacks involve attempts to gain unauthorized access to our eCommerce websites (including
marketplace platforms) or mobile commerce applications to obtain and misuse customers' or members' information including
payment information and related risks discussed in this Item 1A. Such attacks, if successful, in addition to potential data misuse
and/or loss, may also create denials of service or otherwise disable, degrade or sabotage one or more of our digital platforms or
otherwise significantly disrupt our customers' and members' shopping experience, our supply chain integrity and continuity, and
our ability to efficiently operate our business. If we are unable to maintain the security of our digital platforms and keep them
operating within acceptable parameters, we could suffer loss of sales, reductions in transactions, reputational damage and
deterioration of our competitive position and incur liability for any damage to customers or others whose personal or
confidential information is unlawfully obtained and misused, any of which events could have a material adverse impact on our
business and results of operations and impede the execution of our strategy for the growth of our business.
54
2019
47
2014
54
2020
53
Our Website and Availability of SEC Reports and Other Information
Our corporate website is located at www.stock.walmart.com. We file with or furnish to the SEC Annual Reports on Form 10-
K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy statements and annual
reports to shareholders, and, from time to time, other documents. The reports and other documents filed with or furnished to
the SEC are available to investors on or through our corporate website free of charge as soon as reasonably practicable after we
electronically file them with or furnish them to the SEC. The SEC maintains a website that contains reports, proxy and
information statements and other information regarding issuers, such as the Company, that file electronically with the SEC.
The address of that website is www.sec.gov. Our SEC filings, our Reporting Protocols for Senior Financial Officers and our
Code of Conduct can be found on our website at www.stock.walmart.com. These documents are available in print to any
shareholder who requests a copy by writing or calling our Investor Relations Department, which is located at our principal
offices.
A description of any substantive amendment or waiver of Walmart's Reporting Protocols for Senior Financial Officers or our
Code of Conduct for our chief executive officer, our chief financial officer and our controller, who is our principal accounting
officer, will be disclosed on our website at www.stock.walmart.com under the Corporate Governance section. Any such
description will be located on our website for a period of 12 months following the amendment or waiver.
ITEM 1A. RISK FACTORS
The risks described below could, in ways we may or may not be able to accurately predict, materially and adversely affect our
business, results of operations, financial position and liquidity. Our business operations could also be affected by additional
factors that apply to all companies operating in the U.S. and globally. The following risk factors do not identify all risks that we
may face.
Strategic Risks
Failure to successfully execute our omni-channel strategy and the cost of our investments in eCommerce and technology
may materially adversely affect our market position, net sales and financial performance.
The retail business continues to rapidly evolve and consumers increasingly embrace digital shopping. As a result, the portion of
total consumer expenditures with retailers and wholesale clubs occurring through digital platforms is increasing and the pace of
this increase could continue to accelerate.
Our strategy, which includes investments in eCommerce, technology, acquisitions, joint ventures, store remodels and other
customer initiatives, may not adequately or effectively allow us to continue to grow our eCommerce business, increase
comparable store sales, maintain or grow our overall market position or otherwise offset the impact on the growth of our
business of a moderated pace of new store and club openings. The success of this strategy will depend in large measure on our
ability to continue building and delivering a seamless omni-channel shopping experience for our customers and is further
subject to the related risks discussed in this Item 1A. Failure to successfully execute this strategy may adversely affect our
market position, net sales and financial performance which could also result in impairment charges to intangible assets or other
long-lived assets. In addition, a greater concentration of eCommerce sales, including increasing online grocery sales, could
result in a reduction in the amount of traffic in our stores and clubs, which would, in turn, reduce the opportunities for cross-
store or cross-club sales of merchandise that such traffic creates and could reduce our sales within our stores and clubs and
materially adversely affect our financial performance.
If we do not timely identify or effectively respond to consumer trends or preferences, it could negatively affect our
relationship with our customers, demand for the products and services we sell, our market share and the growth of our
business.
2018
56
2019
46
C. Douglas McMillon
Donna Morris
Business Experience
Executive Vice President, Corporate Affairs, effective June 2013. From
November 2007 to June 2013, he served as the Chief Executive Officer and
President of U.S. Operations at Hill & Knowlton, Inc., a public relations
company.
Executive Vice President and Chief Financial Officer, effective January 2016.
From January 2014 to December 2015, he served as Executive Vice President
and Chief Financial Officer of Walmart International.
Executive Vice President, Global Governance, Chief Legal Officer and
Corporate Secretary, effective April 2018. From May 2017 to February 2018,
she served as Associate Attorney General in the United States Department of
Justice. From January 2017 to May 2017, Ms. Brand was an Associate
Professor of Law at George Mason University Antonin Scalia Law School.
From August 2012 to February 2017, she served as a board member on the
Privacy and Civil Liberties Oversight Board of the U.S. government.
Senior Vice President and Controller effective January 2017. From October
2014 to January 2017, he served as Vice President and Controller, Walmart
U.S.
Executive Vice President, President and Chief Executive Officer, Walmart U.S.
effective November 2019. From February 2017 until November 2019, he
served as President and Chief Executive Officer, Sam's Club. From October
2015 to January 2017, he served as Executive Vice President and Chief
Merchandising Officer of Sam's Club.
It is difficult to predict consistently and successfully the products and services our customers will demand and changes in their
shopping patterns. The success of our business depends in part on how accurately we predict consumer demand, availability of
merchandise, the related impact on the demand for existing products and the competitive environment. Price transparency,
assortment of products, customer experience, convenience, ease and the speed and cost of shipping are of primary importance
to customers and continue to increase in importance, particularly as a result of digital tools and social media available to
consumers and the choices available to consumers for purchasing products. Our failure to adequately or effectively respond to
changing consumer tastes, preferences (including those related to sustainability) and shopping patterns, or any other failure on
our part to timely identify or effectively respond to changing consumer tastes, preferences and shopping patterns could
negatively affect our reputation and relationship with our customers, the demand for the products we sell or services we offer,
our market share and the growth of our business.
Executive Vice President, Global Chief Technology Officer and Chief
Development Officer effective July 2019. From February 2018 until June 2019,
Mr. Kumar was Vice President and General Manager at Google LLC. From
May 2014 until February 2018, he was Corporate Vice President at Microsoft
Corporation.
Executive Vice President, President and Chief Executive Officer, Sam's Club
effective November 15, 2019. From February 2019 to November 2019, she
served as Executive Vice President, Walmart U.S. Neighborhood Markets.
From December 2015 until February 2019, she served as Senior Vice President,
U.S. Supply Chain. Ms. McLay originally joined the Company in April 2015 as
Vice President of U.S. Finance and Strategy.
President and Chief Executive Officer, effective February 2014. From February
2009 to January 2014, he served as Executive Vice President, President and
Chief Executive Officer, Walmart International.
Executive Vice President, Global People, and Chief People Officer, effective
February 2020. From April 2002 to January 2020, she worked at Adobe Inc. in
various roles, including most recently, Chief Human Resources Officer and
Executive Vice President, Employee Experience.
13
2017
51
2019
46
Executive Vice President, President and Chief Executive Officer, Walmart
International, effective February 2018. From February 2015 to January 2018,
she served as Executive Vice President and Chief Operating Officer of
Walmart U.S.
Kathryn McLay
14
Each of our segments competes for customers, employees, digital prominence, products and services and in other important
aspects of its business with many other local, regional, national and global physical, eCommerce and omni-channel retailers,
wholesale club operators and retail intermediaries.
Furthermore, the long-term impacts of climate change, whether involving physical risks (such as extreme weather conditions or
rising sea levels) or transition risks (such as regulatory or technology changes) are expected to be widespread and
unpredictable. These changes over time could affect, for example, the availability and cost of certain consumer products,
commodities and energy (including utilities), which in turn may impact our ability to procure those certain goods or services
required for the operation of our business at the quantities and levels we require.
We bear the risk of losses incurred as a result of physical damage to, or destruction of, any stores, clubs and distribution or
fulfillment centers, loss or spoilage of inventory and business interruption caused by such events. These events and their
impacts could otherwise disrupt and adversely affect our operations in the areas in which they occur and could materially
adversely affect our financial performance.
Risks associated with our suppliers could materially adversely affect our financial performance.
The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the
products we sell is an important factor in our financial performance. We expect our suppliers to comply with applicable laws,
including labor, safety, anti-corruption and environmental laws, and to otherwise meet our required supplier standards of
conduct. Our ability to find qualified suppliers who uphold our standards, and to access products in a timely and efficient
manner and in the large volumes we may demand, is a significant challenge, especially with respect to suppliers located and
goods sourced outside the U.S.
Political and economic instability, as well as other impactful events and circumstances in the countries in which our suppliers
and their manufacturers are located (such as the ongoing COVID-19 pandemic), the financial instability of suppliers, suppliers'
failure to meet our terms and conditions or our supplier standards (including our responsible sourcing standards), labor
problems experienced by our suppliers and their manufacturers, the availability of raw materials to suppliers, merchandise
safety and quality issues, disruption or delay in the transportation of merchandise from the suppliers and manufacturers to our
stores, clubs, and other facilities, including as a result of labor slowdowns at any port at which a material amount of
merchandise we purchase enters into the markets in which we operate, currency exchange rates, transport availability and cost,
transport security, inflation and other factors relating to the suppliers and the countries in which they are located are beyond our
control.
In addition, the U.S. foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain
countries and entities, the limitation on the importation of certain types of goods or of goods containing certain materials from
other countries and other factors relating to foreign trade are beyond our control. These and other factors affecting our
suppliers and our access to products could adversely affect our financial performance.
If the products we sell are not safe or otherwise fail to meet our customers' expectations, we could lose customers, incur
liability for any injuries suffered by customers using or consuming a product we sell or otherwise experience a material
impact to our brand, reputation and financial performance. We are also subject to reputational and other risks related
to third-party sales on our digital platforms.
Our customers count on us to provide them with safe products. Concerns regarding the safety of food and non-food products
that we source from our suppliers or that we prepare and then sell could cause customers to avoid purchasing certain products
from us, or to seek alternative sources of supply for all of their food and non-food needs, even if the basis for the concern is
outside of our control. Any lost confidence on the part of our customers would be difficult and costly to reestablish and such
products also expose us to product liability or food safety claims. As such, any issue regarding the safety of any food or non-
food items we sell, regardless of the cause, could adversely affect our brand, reputation and financial performance. In addition,
third-parties sell goods on some of our digital platforms, which we refer to as marketplace transactions. Whether laws related
to such sales apply to us is currently unsettled and any unfavorable changes could expose us to loss of sales, reduction in
transactions and deterioration of our competitive position. In addition, we may face reputational, financial and other risks,
including liability, for third-party sales of goods that are controversial, counterfeit or otherwise fail to comply with applicable
law. Although we impose contractual terms on sellers that are intended to prohibit sales of certain type of products, we may not
be able to detect, enforce, or collect sufficient damages for breaches of such agreements. Any of these events could have a
material adverse impact on our business and results of operations and impede the execution of our eCommerce growth strategy.
We rely extensively on information systems to process transactions, summarize results and manage our business.
Disruptions in our systems could harm our ability to conduct our operations.
Given the number of individual transactions we have each year, it is crucial that we maintain uninterrupted operation of our
business-critical information systems. Our information systems are subject to damage or interruption from power outages,
computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service
attacks, security breaches (through cyberattacks from cyberattackers and sophisticated organizations including nation states),
catastrophic events such as fires, tornadoes, earthquakes and hurricanes, and usage errors by our associates or contractors. Our
information systems are essential to our business operations, including the processing of transactions, management of our
associates, facilities, logistics, inventories, physical stores and clubs and our online operations. Our information systems are not
17
fully redundant and our disaster recovery planning cannot account for all eventualities. If our systems are damaged, breached
or cease to function properly, we may have to make a significant investment to repair or replace them, and may experience loss
or corruption of critical data as well as suffer interruptions in our business operations in the interim. Any interruption to our
information systems may have a material adverse effect on our business or results of operations. In addition, we are constantly
updating our information technology processes and systems. The risk of system disruption is increased when significant system
changes are undertaken. If we fail to timely integrate and update our information systems and processes, we may fail to realize
the cost savings or operational benefits anticipated to be derived from these initiatives.
If the technology-based systems that give our customers the ability to shop with us online do not function effectively, our
operating results, as well as our ability to grow our omni-channel business globally, could be materially adversely
affected.
Increasingly, customers are using computers, tablets, and smart phones to shop with us and with our competitors and to do
comparison shopping. We use social media, online advertising, and email to interact with our customers and as a means to
enhance their shopping experience. As a part of our omni-channel sales strategy, we offer various pickup, delivery and
shipping programs including options where many products available for purchase online can be picked up by the customer or
member at a local Walmart store or Sam's Club, which provides additional customer traffic at such stores and clubs. Omni-
channel retailing is a rapidly evolving part of the retail industry and of our operations around the world. We must anticipate and
meet our customers' changing expectations while adjusting for technology investments and developments in our competitors'
operations through focusing on the building and delivery of a seamless shopping experience across all channels by each
operating segment. Any failure on our part to provide attractive, user-friendly secure digital platforms that offer a wide
assortment of merchandise at competitive prices and with low cost and rapid delivery options and that continually meet the
changing expectations of online shoppers and developments in online and digital platform merchandising and related
technology could place us at a competitive disadvantage, result in the loss of eCommerce and other sales, harm our reputation
with customers, have a material adverse impact on the growth of our eCommerce business globally and have a material adverse
impact on our business and results of operations.
Any failure to maintain the security of the information relating to our company, customers, members, associates and
vendors, whether as a result of cybersecurity attacks on our information systems or otherwise, could damage our
reputation, result in litigation or other legal actions against us, cause us to incur substantial additional costs, and
materially adversely affect our business and operating results.
Like most retailers, we receive and store in our information systems personal information about our customers and members,
and we receive and store personal information concerning our associates and vendors. Some of that information is stored
digitally in connection with our digital platforms. We also utilize third-party service providers for a variety of reasons,
including, without limitation, for digital storage technology, content delivery to customers and members, back-office support,
and other functions. Such providers may have access to information we hold about our customers, members, associates or
vendors. In addition, our eCommerce operations depend upon the secure transmission of confidential information over public
networks, including information permitting cashless payments.
Cyber threats are rapidly evolving and those threats and the means for obtaining access to information in digital and other
storage media are becoming increasingly sophisticated. Cyber threats and cyberattackers can be sponsored by countries or
sophisticated criminal organizations or be the work of hackers with a wide range of motives and expertise. We and the
businesses with which we interact have experienced and continue to experience threats to data and systems, including by
perpetrators of random or targeted malicious cyberattacks, computer viruses, worms, bot attacks, ransomware or other
destructive or disruptive software and attempts to misappropriate customer information, including credit card and payment
information, and cause system failures and disruptions. The increased use of remote work infrastructure due to the COVID-19
pandemic has also increased the possible attack surfaces. Some of our systems and third-party service providers' systems have
experienced limited security breaches or incidents and although they did not have a material adverse effect on our operating
results, there can be no assurance of a similar result in the future.
18
16
Such events could result in physical damage to, or the complete loss of, one or more of our properties, the closure of one or
more stores, clubs and distribution or fulfillment centers, limitations on store or club operating hours, the lack of an adequate
work force in a market, the inability of customers and associates to reach or have transportation to our stores and clubs affected
by such events, the evacuation of the populace from areas in which our stores, clubs and distribution and fulfillment centers are
located, the unavailability of our digital platforms to our customers, changes in the purchasing patterns of consumers (including
the frequency of visits by consumers to physical retail locations, whether as a result of limitations on large gatherings, travel
and movement limitations or otherwise) and in consumers' disposable income, the temporary or long-term disruption in the
supply of products from some suppliers, the disruption in the transport of goods from overseas, the disruption or delay in the
delivery of goods to our distribution and fulfillment centers or stores within a country in which we are operating, the reduction
in the availability of products in our stores, the disruption of utility services to our stores and our facilities, and the disruption in
our communications with our stores.
The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis,
cyclones, typhoons; weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of
climate change or otherwise; geopolitical events; global health epidemics or pandemics or other contagious outbreaks such as
the ongoing COVID-19 pandemic; and catastrophic events, such as war, civil unrest, terrorist attacks or other acts of violence,
including active shooter situations (such as those that have occurred in our U.S. stores), in countries in which we operate or in
which our suppliers are located, could adversely affect our operations and financial performance.
Natural disasters, climate change, geopolitical events, global health epidemics or pandemics and catastrophic events
could materially adversely affect our financial performance.
We compete in a variety of ways, including the prices at which we sell our merchandise, merchandise selection and availability,
services offered to customers, location, store hours, in-store amenities, the shopping convenience and overall shopping
experience we offer, the attractiveness and ease of use of our digital platforms, cost and speed of and options for delivery to
customers of merchandise purchased through our digital platforms or through our omni-channel integration of our physical and
digital operations.
A failure to respond effectively to competitive pressures and changes in the retail markets or delays or failure in execution of
our strategy could materially adversely affect our financial performance. See "Item 1. Business" above for additional
discussion of the competitive situation of each of our reportable segments.
Certain segments of the retail industry are undergoing consolidation or substantially reducing operations, whether due to
bankruptcy, consolidation or other factors. Such consolidation, or other business combinations or alliances, or reduction in
operation may result in competitors with greatly improved financial resources, improved access to merchandise, greater market
penetration than they previously enjoyed and other improvements in their competitive positions. Such business combinations
or alliances could result in the provision of a wider variety of products and services at competitive prices by such consolidated
or aligned companies, which could adversely affect our financial performance.
General or macro-economic factors, both domestically and internationally, may materially adversely affect our financial
performance.
General economic conditions and other economic factors, globally or in one or more of the markets we serve, may adversely
affect our financial performance. Higher interest rates, lower or higher prices of petroleum products, including crude oil,
natural gas, gasoline, and diesel fuel, higher costs for electricity and other energy, weakness in the housing market, inflation,
deflation, increased costs of essential services, such as medical care and utilities, higher levels of unemployment, decreases in
consumer disposable income, unavailability of consumer credit, higher consumer debt levels, changes in consumer spending
and shopping patterns, fluctuations in currency exchange rates, higher tax rates, imposition of new taxes or other changes in tax
laws, changes in healthcare laws, other regulatory changes, the imposition of tariffs or other measures that create barriers to or
increase the costs associated with international trade, overall economic slowdown or recession and other economic factors in
the U.S. or in any of the other markets in which we operate could adversely affect consumer demand for the products we sell in
the U.S. or such other markets, change the mix of products we sell to one with a lower average gross margin, cause a slowdown
in discretionary purchases of goods, adversely affect our net sales and result in slower inventory turnover and greater
markdowns of inventory, or otherwise materially adversely affect our operations and operating results and could result in
impairment charges to intangible assets, goodwill or other long-lived assets.
In addition, the economic factors listed above, any other economic factors or circumstances resulting in higher transportation,
labor, insurance or healthcare costs or commodity prices, and other economic factors in the U.S. and other countries in which
we operate can increase our cost of sales and operating, selling, general and administrative expenses and otherwise materially
adversely affect our operations and operating results.
The economic factors that affect our operations may also adversely affect the operations of our suppliers, which can result in an
increase in the cost to us of the goods we sell to our customers or, in more extreme cases, in certain suppliers not producing
goods in the volume typically available to us for sale.
The performance of strategic alliances and other business relationships to support the expansion of our business could
materially adversely affect our financial performance.
We face strong competition from other retailers and wholesale club operators which could materially adversely affect
our financial performance.
We may enter into strategic alliances and other business relationships in the countries in which we have existing operations or
in other markets to expand our business. These arrangements may not generate the level of sales we anticipate when entering
into the arrangement or may otherwise adversely impact our business and competitive position relative to the results we could
have achieved in the absence of such alliance. In addition, any investment we make in connection with a strategic alliance,
business relationship or in certain of our recently divested markets, could materially adversely affect our financial performance.
Operational Risks
The impact of the COVID-19 pandemic on our business, financial position and results of operations is in many respects
unpredictable, and we may be unable to sustain our revenue growth rate in the future.
The continuing impacts of the COVID-19 pandemic are highly unpredictable and volatile, with varying impacts on certain
business operations, demand for our products and services, in-stock positions, costs of doing business, access to inventory,
supply chain operations, our ability to predict future performance, exposure to litigation, and our financial performance, among
other things.
The COVID-19 pandemic has resulted in widespread and continuing impacts on the global economy and on our domestic and
international associates, members, suppliers and other people and entities with which we do business. There is considerable
uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of measures to try to
contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders and business and government
shutdowns and other restrictions on retailers.
Customer demand for certain products has also fluctuated as the pandemic has progressed and customer behaviors have
changed, which has challenged our ability to anticipate and/or adjust inventory levels to meet that demand. These factors have
resulted in higher out-of-stock positions in certain products, as well as delays in delivering those products, and could impact
inventory levels in the future.
Other factors and uncertainties include, but are not limited to: the severity and duration of the pandemic, including whether
there are additional outbreaks or spikes in the number of COVID-19 cases, future mutations or related strains of the virus in
areas in which we operate; further increased operational costs associated with operating during a global pandemic; evolving
macroeconomic factors, including general economic uncertainty, unemployment rates, and recessionary pressures; unknown
consequences on our business performance and initiatives stemming from the substantial investment of time, capital and other
resources to the pandemic response; the availability of, and prevalence of access to, effective medical treatments and vaccines
for COVID-19; the pace of recovery when the pandemic subsides; and the long-term impact of the COVID-19 pandemic on our
business, including consumer behaviors. These risks and their impacts are difficult to predict and could otherwise disrupt and
adversely affect our operations and our financial performance.
The COVID-19 pandemic has led to increased revenue growth relative to historic trends, and has particularly accelerated our
eCommerce growth. These results, as well as those of other metrics such as net income and other financial and operating data,
may not be indicative of results for future periods. Once the impact of the COVID-19 pandemic subsides, particularly as
vaccines become more widely available, and customers return to work or school or are otherwise no longer subject to the
aforementioned containment directives and similar mandates, a failure by us to continue capitalizing on growth opportunities
may result in declining revenue and future operating results may fall below expectations.
To the extent that the COVID-19 pandemic continues to adversely affect the U.S. and the global economy, it may also heighten
other risks described in this section, including but not limited to those related to consumer behavior and expectations,
competition, our reputation, implementation of strategic initiatives, cybersecurity threats, payment-related risks, technology
systems disruption, supply chain disruptions, labor availability and cost, litigation, and regulatory requirements.
15
Judith McKenna
Furthermore, the cost of certain eCommerce and technology investments, including any operating losses incurred, will
adversely impact our financial performance in the short-term and failure to realize the benefits of these investments may
adversely impact our financial performance over the longer term.
John Furner
Membership. The following two options are available to members:
Annual Membership Fee
Number of Add-on Memberships ($40 each)
Eligible for Cash Rewards
Plus Membership
$100
Club Membership
$45
Up to 16
Yes
Up to 8
No
All memberships include a spouse/household card at no additional cost. Plus Members are eligible for Cash Rewards, which is
a benefit that provides 2% back on qualifying Sam's Club purchases up to a $500 cash reward annually. The amount earned can
be used for purchases or redeemed for cash. Plus Members are also eligible for free shipping on the majority of merchandise,
with no minimum order size, and receive discounts on prescriptions and glasses.
Omni-channel. Sam's Club is a membership-only warehouse club which provides an omni-channel experience to customers,
integrating retail stores and eCommerce through such services as Curbside Pickup, mobile Scan & Go, and ship-from-club.
Members have access to a broad assortment of merchandise and services, including those not found in our clubs, online at
samsclub.com and through our mobile commerce applications. The warehouse facility sizes generally range between 32,000
and 168,000 square feet, with an average size of approximately 134,000 square feet.
Merchandise. Sam's Club offers merchandise in the following five merchandise categories:
•
•
Grocery and consumables includes dairy, meat, bakery, deli, produce, dry, chilled or frozen packaged foods, alcoholic
and nonalcoholic beverages, floral, snack foods, candy, other grocery items, health and beauty aids, paper goods,
laundry and home care, baby care, pet supplies and other consumable items;
Fuel, tobacco and other categories consists of gasoline stations and tobacco;
Sam's Club operates in 44 states in the U.S. and in Puerto Rico. Sam's Club is a membership-only warehouse club that also
operates samsclub.com. Sam's Club had net sales of $63.9 billion for fiscal 2021, representing 11% of our consolidated fiscal
2021 net sales, and had net sales of $58.8 billion and $57.8 billion for fiscal 2020 and 2019, respectively. As a membership-
only warehouse club, membership income is a significant component of the segment's operating income. Sam's Club operates
with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments.
Sam's Club Segment
Distribution. We utilize a total of 221 distribution facilities located in Canada, Central America, Chile, China, India, Mexico
and South Africa, as well as Japan and the United Kingdom, whose operations are classified as held for sale as of January 31,
2021, and subsequently divested in the first quarter of fiscal 2022. Through these facilities, we process and distribute both
imported and domestic products to the operating units of the Walmart International segment. During fiscal 2021, the majority
of Walmart International's purchases passed through these distribution facilities. Suppliers ship the remainder of Walmart
International's purchases directly to our stores in the various markets in which we operate. Across the segment, we have
efficient networks connecting physical stores and distribution and fulfillment centers which facilitate the movement of goods to
where our customers live. We ship merchandise purchased by customers on our eCommerce platforms by a number of methods
from multiple locations including from our 83 dedicated eCommerce fulfillment centers, more than 2,800 eCommerce sort
centers and last-mile delivery facilities in India, as well as our physical retail stores.
9
Walmart International's strategy is to create strong local businesses powered by Walmart which means being locally relevant
and customer-focused in each of the markets it operates. We are being deliberate about where and how we choose to operate
and continue to re-shape the portfolio to best enable long-term, sustainable and profitable growth. As such, we have taken
certain strategic actions to strengthen our Walmart International portfolio for the long-term, which include the following
highlights over the last three years:
•
Suresh Kumar
•
•
Acquisition of a majority stake of Flipkart in August 2018.
Divestiture of 80 percent of Walmart Brazil in August 2018.
Divestiture of the Walmart Chile banking operations in December 2018 and the divestiture of the Walmart Canada
banking operations in April 2019.
Home and apparel includes home improvement, outdoor living, gardening, furniture, apparel, jewelry, tools and power
Divestiture of Walmart Argentina in November 2020.
Divestiture of a majority stake in Seiyu, our retail operations in Japan, in March 2021.
Omni-channel. Walmart International provides an omni-channel experience to customers, integrating retail stores and
eCommerce, such as through pickup and delivery services in most of our markets, our marketplaces such as Flipkart in India,
and a digital transaction platform anchored in payments such as PhonePe in India. In China, our partnerships with JD.com and
JD Daojia provide customers one-hour delivery by leveraging Walmart stores as fulfillment centers.
Generally, retail units' selling area range in size from 1,400 square feet to 186,000 square feet. Our wholesale stores' selling
area generally range in size from 24,000 square feet to 156,000 square feet. As of January 31, 2021, Walmart International had
approximately 3,000 pickup and 2,200 delivery locations.
Merchandise. The merchandising strategy for Walmart International is similar to that of our operations in the U.S. in terms of
the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of our sales, we
have both leveraged U.S. private brands and developed market specific private brands to serve our customers with high quality,
low priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday
Time," "Mainstays," "Marketside" and "Parent's Choice," our international markets have developed market specific brands
including "Aurrera," "Cambridge," "Lider," "Myntra," and "PhonePe." In addition, we have developed and continue to grow
our relationships with regional and local suppliers in each market to ensure reliable sources of quality merchandise that is equal
to national brands at low prices.
Walmart International also offers fuel, financial services and related products in various markets. Our businesses in Mexico and
Canada, for example, offer prepaid cards and money (wire) transfers, and our PhonePe business in India provides a platform
that offers mobile and bill payment, person-to-person (P2P) payment, investment and insurance solutions, financial services and
advertising. Combined, these offerings did not represent a significant portion of annual segment revenues.
Operations. The hours of operation for operating units in Walmart International vary by country and by individual markets
within countries, depending upon local and national ordinances governing hours of operation. Toward the beginning of the
COVID-19 pandemic, government mandates led to extensive store and operational closures in several of our international
markets as well as limitations on certain merchandise sales in select markets. While most closed stores and warehouses
resumed operations by the end of fiscal 2021, store hours have been partially reduced or modified in several markets.
Additionally, several markets implemented enhanced safety and sanitization protocols, as well as provided increased customer
options and capacity for pickup and delivery services.
Seasonal Aspects of Operations. Walmart International's business is seasonal to a certain extent. Historically, its highest sales
volume and operating income have occurred in the fourth quarter of our fiscal year. The seasonality of the business varies by
country due to different national and religious holidays, festivals and customs, as well as different weather patterns. However,
the COVID-19 pandemic may have an impact on consumer behaviors that could result in temporary changes in the seasonal
fluctuations of our business.
Competition. Walmart International competes with omni-channel retailers who operate department, drug, discount, variety and
specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty
electronics stores, cash & carry operations and convenience stores, and eCommerce retailers, as well as catalog businesses. Our
ability to develop and operate units at the right locations and to deliver a customer-centric omni-channel experience largely
determines our competitive position within the retail industry. We believe price leadership is a critical part of our business
model and we continue to focus on moving our markets towards an EDLP approach. Additionally, our ability to operate food
departments effectively has a significant impact on our competitive position in the markets where we operate.
Divestiture of Asda Group Limited ("Asda"), our retail operations in the U.K., in February 2021.
equipment, housewares, toys, seasonal items, mattresses, and tire and battery centers;
•
Health and wellness includes pharmacy, optical and hearing services and over-the-counter drugs.
In fiscal 2021, we added incremental benefits to support associate health and well-being during the COVID-19 pandemic. We
provided extra pay and benefits, including special cash bonuses totaling $1.6 billion, and the introduction of the COVID-19
Emergency Leave Policy in the U.S. See "COVID-19 Updates" in Management's Discussion and Analysis for additional
information regarding our response to the COVID-19 pandemic.
Growth - Provide ongoing growth, development and learning opportunities for associates and continue to attract talent with
new skills. To help associates acquire the experiences and skills needed for success in the jobs of today and tomorrow, we have
invested in their development - including new roles and career paths, cross-training, on-the-job coaching, and formal,
classroom-style training such as Walmart Academy in the U.S. We also provide access to educational opportunities for our
eligible associates through our Live Better U program, which provides a pathway to earn a high school diploma at no cost or a
college degree for $1 a day, as well as multiple digital learning opportunities.
Digital - Accelerate digital transformation and ways of working to improve the associate experience and drive business results.
To deliver a seamless customer and associate experience, we continue to invest in digital tools to improve associate
productivity, engagement, and performance. As more customers shop digitally, we have adapted by adding more roles in
eCommerce fulfillment and our home office associates have accelerated tech-based solutions that enhance the customer and
associate experiences.
12
Information About Our Executive Officers
The following chart names the executive officers of the Company as of the date of the filing of this Annual Report on Form 10-
K with the SEC, each of whom is elected by and serves at the pleasure of the Board of Directors. The business experience
shown for each officer has been his or her principal occupation for at least the past five years, unless otherwise noted.
Current
Position
Held Since
Age
Well-being - Focus on the physical, emotional, and financial well-being of our associates. We invest in our associates by
offering competitive wages including bonuses based on Company performance, as well as a broad range of benefits that vary
based on customary local practices and statutory requirements and believe these investments in our associates are important to
our future. In the U.S., we offer affordable healthcare coverage to our full-time and eligible part-time associates, as well as
Company paid benefits such as a store discount card or Sam's Club membership, 401(k) match, maternity leave, a paid parental
leave program to all full-time associates, paid time off, Associate Stock Purchase Plan match, life insurance and behavioral
health services. Certain information relating to retirement-related benefits we provide to our associates is included in Note 11
to our Consolidated Financial Statements.
2013
2016
52
2018
47
Name
Daniel J. Bartlett
Rachel Brand
David M. Chojnowski
Technology, office and entertainment includes consumer electronics and accessories, software, video games, office
supplies, appliances, and third-party gift cards; and
49
To build a company where associates feel valued and heard, we gather and respond to associates' feedback in a variety of ways,
including but not limited to an anonymous, periodic, formal, associate engagement survey, our Open Door process, and one-on-
one interactions. Management reviews the results of feedback obtained from our formal associate engagement survey.
Feedback and suggestions received through these channels have led to meaningful changes in our business, including a new
U.S. attendance policy, for example.
M. Brett Biggs
Inclusion - Build a Walmart for everyone: a diverse, equitable and inclusive company, where associates' ideas and opinions
matter. We are focused on creating an inclusive culture and a diverse associate base, where all associates believe they belong
and are empowered to be themselves, which we believe is important in serving our customers now and in the future.
Management provides recurring culture, diversity, equity and inclusion updates to senior leadership, including our President
and CEO, and the Compensation, Management and Development Committee of the Board of Directors. Of the more than 2.3
million associates employed worldwide, 54% identify as women. In the U.S., 47% of the 1.6 million associates identify as
ethnically diverse.
We review our processes regarding our commitment to fair-pay practices. We are committed to creating a performance culture
where associates are rewarded based on meaningful factors such as qualifications, experience, performance and the type of
work they do.
In addition, the Member's Mark private label brand continues to expand assortment and deliver member value.
Operations. Operating hours for Sam's Clubs are generally Monday through Friday from 10:00 a.m. to 8:00 p.m., Saturday
from 9:00 a.m. to 8:00 p.m. and Sunday from 10:00 a.m. to 6:00 p.m. Additionally, most club locations offer Plus Members the
ability to shop before the regular operating hours Monday through Saturday, starting at 8:00 a.m. While store operating hours
generally remained stable during the COVID-19 pandemic, designated “Hero Hours” were also established for first responders,
health care workers, and associates. Consistent with its strategy, Sam's Club continues to develop technology tools to drive a
great member experience. During the pandemic, Curbside Pickup was launched at all clubs to help provide fast, easy and
contact-free shopping for members. Sam's Club also offers "Scan & Go," a mobile checkout and payment solution, which
allows members to bypass the checkout line.
Seasonal Aspects of Operations. Sam's Club's business is seasonal to a certain extent due to calendar events and national and
religious holidays, as well as different weather patterns. Historically, its highest sales volume has occurred in the fiscal quarter
ending January 31. However, the COVID-19 pandemic may have an impact on consumer behaviors that could result in
temporary changes in the seasonal fluctuations of our business.
Competition. Sam's Club competes with other membership-only warehouse clubs, the largest of which is Costco, as well as
with discount retailers, retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations as well
as omni-channel and eCommerce retailers and catalog businesses. At Sam's Club, we provide value at members-only prices, a
quality merchandise assortment, and bulk sizing to serve both our Plus and Club members. Our eCommerce website and
mobile commerce applications have increasingly become important factors in our ability to compete and recently enabled the
launch of Curbside Pickup across all clubs.
Distribution. During fiscal 2021, the majority of Sam's Club's non-fuel club purchases were shipped from Sam's Club's 27
dedicated distribution facilities, located strategically throughout the U.S., or from some of the Walmart U.S. segment's
distribution facilities, which service the Sam's Club segment for certain items. Suppliers shipped the remainder of the Sam's
Club segment's club purchases directly to Sam's Club locations. Sam's Club ships merchandise purchased on samsclub.com and
through its mobile commerce applications by a number of methods including shipments made directly from clubs, 11 dedicated
eCommerce fulfillment centers and other distribution centers.
Sam's Club uses a combination of our private truck fleet, as well as common carriers, to transport non-perishable merchandise
from distribution facilities to clubs. The segment contracts with common carriers to transport perishable grocery merchandise
from distribution facilities to clubs.
Intellectual Property
We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary
technologies, and similar intellectual property as important to our success, and with respect to our associates, customers and
others, we rely on trademark, copyright, and patent law, trade-secret protection, and confidentiality and/or license agreements to
protect our proprietary rights. We have registered, or applied for the registration of, a number of U.S. and international domain
names, trademarks, service marks and copyrights. Additionally, we have filed U.S. and international patent applications
covering certain of our proprietary technology. We have licensed in the past, and expect that we may license in the future,
certain of our proprietary rights to third parties.
10
As a retailer and warehouse club operator, we utilize a global supply chain that includes both U.S. and international suppliers
from whom we purchase the merchandise that we sell in our stores, clubs and online. In many instances, we purchase
merchandise from producers located near the stores and clubs in which such merchandise will be sold, particularly products in
the "fresh" category. Our purchases may represent a significant percentage of the annual sales for a number of our suppliers,
and the volume of product we acquire from many suppliers allows us to obtain favorable pricing from such suppliers. Our
suppliers are subject to standards of conduct, including requirements that they comply with local labor laws, local worker safety
laws and other applicable laws. Our ability to acquire from our suppliers the assortment and volume of products we wish to
offer to our customer, to receive those products within the required time through our supply chain and to distribute those
products to our stores and clubs determines, in part, our in-stock levels in our stores and clubs and the attractiveness of our
merchandise assortment we offer to our customers and members.
Government Regulation
As a company with global operations, we are subject to the laws of the United States and multiple foreign jurisdictions in which
we operate and the rules and regulations of various governing bodies, which may differ among jurisdictions. For additional
information, see the risk factors herein in "Item 1A. Risk Factors" under the sub-caption “Legal, Tax, Regulatory, Compliance,
Reputational and Other Risks".
11
Human Capital Management
Our commitment to help people around the world save money and live better is delivered by our associates who make the
difference for our customers every day. As of the end of fiscal 2021, we employed more than 2.3 million associates worldwide,
with 1.6 million associates in the U.S. and 0.7 million associates internationally. In the U.S., approximately 94% of these
associates are hourly and approximately 64% are full-time.
We believe the strength of our workforce is a significant contributor to our success. Walmart is a place of opportunity, not only
as a foundational entry point to develop critical skills that are relevant for a variety of careers, but also a place where people can
grow in their careers across our global omni-channel business. As customer demands and technology change the nature of
work, we need to attract, develop and retain associates to thrive in an ever-changing omni-channel environment. Approximately
75% of our U.S. salaried store, club and supply chain management started their careers in hourly positions. We believe our
focus on improving career paths for our associates through robust training, competitive wages, new ways of working, and
opportunities for advancement has improved turnover in the U.S. over the past few years.
Suppliers and Supply Chain
Our workforce strategy includes the following strategic priorities:
Total
Wholesale Other(2)
Retail
Geographic Market
Square
The Walmart International segment comprises the Company's operations outside of the U.S. Unit counts as of January 31,
2021¹) for Walmart International are summarized by major category for each geographic market as follows:
International
29,414
783,271
80,239
39,464
634,154
Square feet (in thousands)
5,342
599
799
26
feet(3)
408
Africa (4)
15,932
374
China
India
358
6
352
Chile
13,724
855
855
52,976
408
24,537
423
91
332
Central America(5)
Canada
3,570
216
14
187223222722±28 55028
12
Wyoming
10
2
1
2
15
21
13
14
26
12
24
10
23032220225
Japan (6)
71
U.S. total
53
17
99
44
5
67
150
6
62
602
152
17
123
9
37
163
46
136
174
118
Mexico
97
International total
108
5,342
762
4,580
599
86
513
48
4,743
4,067
Total
Leased (¹)
Owned
Central America
Canada
Africa
676
156
11
16
110
Total International properties
International distribution facilities
Total International retail units
United Kingdom (2)
Mexico
Japan (2)
India
China
Chile
5,525
826
4,699
183
64
119
27
International properties
Total U.S. properties
Total U.S. distribution facilities
Walmart U.S. distribution facilities
Sam's Club distribution facilities
18
614
5,762
101,993
2,634
164
2,470
19,570
328
-
328
1,569
29
29
69,312
434
31
403
632
United Kingdom (6)
37,660
18
Total U.S. retail units
Sam's Club retail units
Walmart U.S. retail units
U.S. properties
The following table provides further details of our retail units and distribution facilities, including return facilities and dedicated
eCommerce fulfillment centers, as of January 31, 2021:
Owned and Leased Properties
27
(6) As of January 31, 2021, the Company's operations in Japan and the United Kingdom were classified as held for sale. Refer to Note 12.
Central America unit counts reside in Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.
(5)
(4) Africa unit counts primarily reside in South Africa, with other locations in Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria,
Swaziland, Tanzania, Uganda and Zambia.
(3) Square feet reported in thousands.
(2) Other includes stand-alone gas stations.
(1) Walmart International unit counts, with the exception of Canada, are as of December 31, 2020, to correspond with the balance sheet date of the related
geographic market. Canada unit counts are as of January 31, 2021.
€ DO O
337,273
6,101
321
1
11
7
25
138
103
85
99131
14
34
62
9
69
9
127
13
11
191
25
16
Massachusetts
27
21
3
65
Mississippi
81
12
1
3
65
Minnesota
125
23
9
3
90
Michigan
52
4
27
Total properties
1
2
22228-23321 1 623
18
30
Maryland
3
19
Maine
13
2
Louisiana
7
78
Kentucky
2
58
Kansas
88
144
-
9
215
24
35
385
46
10
1
35
1
109
17
320
29
127
9
125
12
12
7
86
Missouri
41
Utah
18
392
Texas
117
Tennessee
Vermont
15
84
South Carolina
5
Rhode Island
13
116
29
South Dakota
3
Virginia
110
45
9
9
1
28
2
7
52256orront-83404
83
Wisconsin
38
West Virginia
3
Washington D.C.
10
52
Washington
Puerto Rico
Pennsylvania
Oregon
81
30
Nevada
47
5
7
35
Nebraska
16
2
_
14
Montana
158
19
18
9
112
2
7
11
50
Oklahoma
139
Ohio
14
North Dakota
143
North Carolina
17
80
New York
35
New Mexico
27
35
New Jersey
19
New Hampshire
7
37
California
423
The Walmart U.S. and Sam's Club segments comprise the Company's operations in the U.S. As of January 31, 2021, unit
counts for Walmart U.S. and Sam's Club are summarized by format for each state and territory as follows:
United States
PROPERTIES
ITEM 2.
25
None.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the
State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for claims, including derivative
claims that are based upon a violation of a duty by a current or former director, officer, associate or shareholder in such capacity
or as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery. The exclusive forum
provision may increase the costs for a shareholder to bring a claim or limit a shareholder's ability to bring a claim in a judicial
forum that the shareholder finds favorable for disputes with us or our directors, officers, associates or shareholders in such
capacity, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these
provisions of our bylaws inapplicable to, or unenforceable in respect of, the claims as to which they are intended to apply, then
we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our
business, financial position or results of operations. While the exclusive forum provision applies to state and federal law claims,
our shareholders will not be deemed to have waived our compliance with, and the exclusive forum provision will not preclude
or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under, the federal securities laws,
including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by our shareholders, which could increase the
costs for our shareholders to bring claims, discourage our shareholders from bringing claims, or limit our shareholders'
ability to obtain a favorable judicial forum for disputes with us or our directors, officers, associates or shareholders in
such capacity.
24
We discuss these cases and other litigation to which we are party below under the caption "Item 3. Legal Proceedings" and in
Note 10 in the "Notes to our Consolidated Financial Statements," which are part of this Annual Report on Form 10-K.
The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of
loss that may arise from such claims and the related opioid matters.
The Company has also been responding to subpoenas, information requests and investigations from governmental entities
related to nationwide controlled substance dispensing and distribution practices involving opioids and is also a defendant in
numerous litigation proceedings related to opioids including the consolidated multidistrict litigation entitled In re National
Prescription Opiate Litigation (MDL No. 2804), currently pending in the U.S. District Court for the Northern District of Ohio.
Similar cases that name the Company have also been filed in state courts by state, local and tribal governments, health care
providers and other plaintiffs. Plaintiffs are seeking compensatory and punitive damages, as well as injunctive relief including
abatement. On October 22, 2020, the Company filed a declaratory judgment action in the U.S. District Court for the Eastern
District of Texas against the U.S. Department of Justice (the “DOJ") and the U.S. Drug Enforcement Administration, asking a
federal court to clarify the roles and responsibilities of pharmacists and pharmacies as to the dispensing and distribution of
opioids under the Controlled Substances Act (the "CSA”). The Company's action was dismissed and the Company is appealing
the decision. On December 22, 2020, the DOJ filed a civil complaint against the Company in the U.S. District Court for the
District of Delaware alleging that the Company unlawfully dispensed controlled substances from its pharmacies and unlawfully
distributed controlled substances to those pharmacies in violation of the CSA. The DOJ is seeking civil penalties and injunctive
relief. The Company filed a motion to dismiss the DOJ complaint on February 22, 2021. In addition, the Company is the subject
of two securities class actions alleging violations of the federal securities laws regarding the Company's disclosures with
respect to opioids filed in the U.S. District Court for the District of Delaware on January 20, 2021 and March 5, 2021
purportedly on behalf of a class of investors who acquired Walmart stock from March 30, 2016 through December 22, 2020. A
derivative action was also filed by one of the Company's shareholders in the U.S. District Court for the District of Delaware on
February 9, 2021 alleging breach of fiduciary duties against certain of its current and former directors with respect to oversight
of the Company's distribution and dispensing of opioids.
We operate in a highly regulated and litigious environment. We are involved in legal proceedings, including litigation,
arbitration and other claims, and investigations, inspections, audits, claims, inquiries and similar actions by pharmacy,
healthcare, tax, environmental and other governmental authorities. We may also have indemnification obligations for legal
commitments of certain businesses we have divested. Legal proceedings, in general, and securities, derivative action and class
action and multi-district litigation, in particular, can be expensive and disruptive. Some of these suits may purport or may be
determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or
exemplary damages, and may remain unresolved for several years. For example, we are currently a defendant in a number of
cases containing class or collective-action allegations, or both, in which the plaintiffs have brought claims under federal and
state wage and hour laws, as well as a number of cases containing class-action allegations in which the plaintiffs have brought
claims under federal and state consumer laws.
We are subject to risks related to litigation and other legal proceedings that may materially adversely affect our results
of operations, financial position and liquidity.
While we strive to adhere our practices and procedures to these laws, they are subject to evolving regulations, interpretations
and regulator discretion. To the extent a regulator or court disagrees with our interpretation of these laws and determines that
our practices are not in compliance with applicable laws and regulations, we could be subject to civil and criminal penalties that
could adversely affect the continued operation of our businesses, including: suspension of payments from government
programs; loss of required government certifications; loss of authorizations to participate in or exclusion from government
programs, including the Medicare and Medicaid programs in the U.S.; loss of licenses; termination from contractual
relationships, including those with our drug suppliers and third-party payers; and significant fines or monetary damages and/or
penalties. In addition, failure to comply with applicable legal or regulatory requirements in the U.S. or in any of the countries
in which we operate could result in significant legal and financial exposure, damage to our reputation, and have a material
adverse effect on our business operations, financial position and results of operations.
23
Walmart U.S.
The impact of new laws, regulations and policies and the related interpretations, as well as changes in enforcement practices or
regulatory scrutiny generally cannot be predicted, and changes in applicable laws, regulations and policies and the related
interpretations and enforcement practices may require extensive system and operational changes, be difficult to implement,
increase our operating costs, require significant capital expenditures, or adversely impact the cost or attractiveness of the
products or services we offer, or result in adverse publicity and harm our reputation.
Sam's Club
Supercenters
76
386
Arkansas
2
83
Arizona
2
7
Alaska
29
1
101
Alabama
Grand Total
Clubs
Neighborhood
Markets and
other small
formats
Discount Stores
State or Territory
We are also governed by foreign, national and state laws and regulations of general applicability, including laws and regulations
related to working conditions, health and safety, equal employment opportunity, employee benefit and other labor and
employment matters, laws and regulations related to competition and antitrust matters, and health and wellness related
regulations for our pharmacy operations outside of the U.S. In addition, certain financial services we offer or make available,
such as our money transfer agent services, are subject to legal and regulatory requirements, including those intended to help
detect and prevent money laundering, sanctions, fraud and other illicit activity as well as consumer financial protection. We are
also subject to data privacy and protection laws regulating the collection, use, retention, disclosure, transfer and processing of
personal information, such as the California Consumer Protection Act ("CCPA”), which was recently significantly modified by
the California Privacy Rights Act ("CPRA"), as well as the European Union's General Data Protection Regulation ("GDPR").
The potential effects of these laws are far-reaching and may require us to modify our data processing practices and policies and
to incur substantial costs and expenses to comply. In the case of non-compliance with a material provision of the GDPR (such
as non-adherence to the core principles of processing personal data), regulators have the authority to levy a fine in an amount
that is up to the greater of €20 million or 4% of global annual turnover in the prior year. These administrative fines are
discretionary and based, in each case, on a multi-factored approach. The CCPA and CPRA give California residents expanded
rights to access, correct and require deletion of their personal information, opt out of certain personal information sharing and
receive detailed information about how their personal information is used. The CCPA and CPRA provide for civil penalties for
violations, as well as a private right of action for data breaches. Furthermore, our marketing and customer engagement
activities are subject to communications privacy laws such as the Telephone Consumer Protection Act. We may be subjected to
penalties and other consequences for noncompliance, including changing some portions of our business. Even an unsuccessful
challenge by customer or regulatory authorities of our activities could result in adverse publicity and could require a costly
response from and defense by us.
For example, in the U.S., the DEA and various other regulatory authorities regulate the distribution and dispensing of
pharmaceuticals and controlled substances. We are required to hold valid DEA and state-level licenses, meet various security
and operating standards and comply with the federal and various state controlled substance acts and related regulations
governing the sale, dispensing, disposal and holding of controlled substances. The DEA, the FDA and state regulatory
authorities have broad enforcement powers, including the ability to seize or recall products and impose significant criminal,
civil and administrative sanctions for violations of these laws and regulations.
Our operations in the U.S. are subject to numerous federal, state and local regulations including licensing and other
requirements and reimbursement arrangements affecting our health and wellness operations. The regulations to which we are
subject include, but are not limited to: federal and state registration and regulation of pharmacies; dispensing and sale of
controlled substances and products containing pseudoephedrine; applicable governmental payer regulations including Medicare
and Medicaid; data privacy and security laws and regulations including the Health Insurance Portability and Accountability Act,
the Affordable Care Act, laws and regulations relating to the protection of the environment and health and safety matters,
including those governing exposure to, and the management and disposal of, hazardous substances; regulations regarding food
and drug safety including those of the U.S. Food and Drug Administration (the "FDA") and the Drug Enforcement
Administration (the "DEA"), trade regulations including those of the U.S. Federal Trade Commission, and consumer protection
and safety regulations including those of the Consumer Product Safety Commission, as well as state regulatory authorities,
governing the availability, sale, advertisement and promotion of products we sell and the financial services we offer; anti-
kickback laws; false claims laws; patient inducement regulations; and federal and state laws governing health care fraud and
abuse and the practice of the professions of pharmacy, optical care and health care services.
20
In addition, if our costs of labor or related costs increase for other reasons or if new or revised labor laws, rules or regulations or
healthcare laws are adopted or implemented that further increase our labor costs, our financial performance could be materially
adversely affected.
Our ability to continue to conduct and expand our operations depends on our ability to attract and retain a large and growing
number of qualified associates globally. Our ability to meet our labor needs, including our ability to find qualified personnel to
fill positions that become vacant at our existing stores, clubs, distribution and fulfillment centers and corporate offices, while
controlling our associate wage and related labor costs, is generally subject to numerous external factors, including the
availability of a sufficient number of qualified persons in the work force of the markets in which we operate, unemployment
levels within those markets, prevailing wage rates, changing demographics, health and other insurance costs and adoption of
new or revised employment and labor laws and regulations. Additionally, our ability to successfully execute organizational
changes, including management transitions within the Company's senior leadership, and to effectively motivate and retain
associates are critical to our business success. If we are unable to locate, attract or retain qualified personnel, or manage
leadership transition successfully, the quality of service we provide to our customers may decrease and our financial
performance may be adversely affected.
Our failure to attract and retain qualified associates, increases in wage and benefit costs, changes in laws and other
labor issues could materially adversely affect our financial performance.
One or a combination of such factors may adversely affect the volumes of brand name and generic pharmaceuticals we sell, our
cost of sales associated with our retail pharmacy operations, and the net sales and gross margin of those operations or result in
the loss of cross-store or cross-club selling opportunities and, in turn, adversely affect our overall net sales, other results of
operations, cash flows and liquidity.
If the supply of certain pharmaceuticals provided by one or more of our vendors were to be disrupted for any reason, our
pharmacy operations could be severely affected until at least such time as we could obtain a new supplier for such
pharmaceuticals. Any such disruption could cause reputational damage and result in a significant number of our pharmacy
customers transferring their prescriptions to other pharmacies.
Our retail pharmacy operations are subject to numerous risks, including: reductions in the third-party reimbursement rates for
drugs; changes in our payer mix (i.e., shifts in the relative distribution of our pharmacy customers across drug insurance plans
and programs toward plans and programs with less favorable reimbursement terms); changes in third-party payer drug
formularies (i.e., the schedule of prescription drugs approved for reimbursement or which otherwise receive preferential
coverage treatment); growth in, and our participation in or exclusion from, pharmacy payer network arrangements including
exclusive and preferred pharmacy network arrangements operated by PBMs and/or any insurance plan or program; increases in
the prices we pay for brand name and generic prescription drugs we sell; increases in the administrative burdens associated with
seeking third-party reimbursement; changes in the frequency with which new brand name pharmaceuticals become available to
consumers; introduction of lower cost generic drugs as substitutes for existing brand name drugs for which there was no prior
generic drug competition; changes in drug mix (i.e., the relative distribution of drugs customers purchase at our pharmacies
between brands and generics); changes in the health insurance market generally; changes in the scope of or the elimination of
Medicare Part D or Medicaid drug programs; increased competition from other retail pharmacy operations including
competitors offering online retail pharmacy options with or without home delivery options; further consolidation and strategic
alliances among third-party payers, PBMs or purchasers of drugs; overall economic conditions and the ability of our pharmacy
customers to pay for drugs prescribed for them to the extent the costs are not reimbursed by a third-party; failure to meet any
performance or incentive thresholds to which our level of third-party reimbursement may be subject; changes in laws or
regulations or the practices of third-party payers and PBMs related to the use of third-party financial assistance to assist our
pharmacy customers with paying for drugs prescribed for them; and any additional changes in the regulatory environment for
the retail pharmacy industry and the pharmaceutical industry, including as a result of restrictions on the further implementation
of or the repeal of the Patient Protection and Affordable Care Act or the enactment and implementation of a law replacing such
act, and other changes in laws, rules and regulations that affect our retail pharmacy business.
Walmart has retail pharmacy operations in our Walmart U.S. and Sam's Club segments, as well as the recent addition of
Walmart Health Centers in a number of states. A large majority of our retail pharmacy net sales are generated by filling
prescriptions for which we receive payment through established contractual relationships with third-party payers and payment
administrators, such as private insurers, governmental agencies and pharmacy benefit managers ("PBMs").
Changes in the results of our health and wellness business could adversely affect our overall results of operations, cash
flows and liquidity.
19
The Company also has compliance obligations associated with new privacy laws enacted to protect and regulate the collection,
use, retention, disclosure and transfer of personal information, which include statutory liability for security breaches.
Consequently, cybersecurity attacks that cause a data breach could subject us to fines, sanctions and other legal liability and
harm our reputation.
Additionally, we offer money (wire) transfer services, digital payment platforms, bill payment, money orders and check cashing
and we sell prepaid cards and gift cards. We further offer co-branded credit cards and installment loans through financial
services partners. These products and services require us to comply with legal and regulatory requirements, including global
anti-money laundering and sanctions laws and regulations as well as international, federal and state consumer financial laws
and regulations. Failure to comply with these laws and regulations could result in fines, sanctions, penalties and harm to our
reputation.
We accept payments using a variety of methods, including cash, checks, credit and debit cards, and our private label credit
cards and gift cards, and we may offer new payment options over time, which may have information security risk implications.
As a retailer accepting debit and credit cards for payment, we are subject to various industry data protection standards and
protocols, such as payment network security operating guidelines and the Payment Card Industry Data Security Standard. We
cannot be certain that the security measures we maintain to protect all of our information technology systems are able to
prevent, contain or detect cyberattacks, cyberterrorism, security breaches or other compromises from known malware or
ransomware or other threats that may be developed in the future. In certain circumstances, our contracts with payment card
processors and payment card networks (such as Visa, Mastercard, American Express and Discover) generally require us to
adhere to payment card network rules which could make us liable to payment card issuers and others if information in
connection with payment cards and payment card transactions that we process is compromised, which liabilities could be
substantial.
In addition, such security-related events could be widely publicized and could materially adversely affect our reputation with
our customers, members, associates, vendors and shareholders, could harm our competitive position particularly with respect to
our eCommerce operations, and could result in a material reduction in our net sales in our eCommerce operations, as well as in
our stores thereby materially adversely affecting our operations, net sales, results of operations, financial position, cash flows
and liquidity. Such events could also result in the release to the public of confidential information about our operations and
financial position and performance and could result in litigation or other legal actions against us or the imposition of penalties,
fines, fees or liabilities, which may not be covered by our insurance policies. Moreover, a security compromise or ransomware
event could require us to devote significant management resources to address the problems created by the issue and to expend
significant additional resources to upgrade further the security measures we employ to guard personal and confidential
information against cyberattacks and other attempts to access or otherwise compromise such information and could result in a
disruption of our operations, particularly our digital operations.
Our compliance programs, information technology, and enterprise risk management efforts cannot eliminate all systemic risk.
Disruptions in our systems caused by security breaches or cyberattacks – including attacks on those parties we do business with
- could harm our ability to conduct our operations, which may have a material effect on us, may result in losses that could have
a material adverse effect on our financial position or results of operations, or may have a cascading effect that adversely impacts
our partners, third-party service providers, customers, financial services firms, and other third parties that we interact with on a
regular basis.
Any compromise of our data security systems or of those of businesses with which we interact, which results in confidential
information being accessed, obtained, damaged, disclosed, destroyed, modified, lost or used by unauthorized persons could
harm our reputation and expose us to regulatory actions, customer attrition, remediation expenses, and claims from customers,
members, associates, vendors, financial institutions, payment card networks and other persons, any of which could materially
and adversely affect our business operations, financial position and results of operations. Because the techniques used to obtain
unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs
of a compromise, we may be unable to anticipate these techniques or to implement adequate preventative measures and we or
our third-party service providers may not discover any security breach, vulnerability or compromise of information for a
significant period of time after the security incident occurs. To the extent that any cyberattack, ransomware or incursion in our
or one of our third-party service provider's information systems results in the loss, damage, misappropriation or other
compromise of information, we may be materially adversely affected by claims from customers, financial institutions,
regulatory authorities, payment card networks and others.
Associate error or malfeasance, faulty password management, social engineering or other vulnerabilities and irregularities may
also result in a defeat of our or our third-party service providers' security measures and a breach of our or their information
systems. Moreover, hardware, software or applications we use may have inherent vulnerabilities or defects of design,
manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise
information security.
Financial Risks
Failure to meet market expectations for our financial performance could adversely affect the market price and volatility
of our stock.
We believe that the price of our stock generally reflects high market expectations for our future operating results. Any failure
to meet or delay in meeting these expectations, including our comparable store and club sales growth rates, eCommerce growth
rates, gross margin, or earnings and adjusted earnings per share could cause the market price of our stock to decline, as could
changes in our dividend or stock repurchase programs or policies, changes in our financial estimates and recommendations by
securities analysts or, failure of Walmart's performance to compare favorably to that of other retailers may have a negative
effect on the price of our stock.
Fluctuations in foreign exchange rates may materially adversely affect our financial performance and our reported
results of operations.
We operate in complex regulated environments in the U.S. and in the other countries in which we operate and could be
adversely affected by changes to existing legal requirements including the related interpretations and enforcement practices,
new legal requirements and/or any failure to comply with applicable regulations.
Changes in and/or failure to comply with other laws and regulations specific to the environments in which we operate
could materially adversely affect our reputation, market position, or our business and financial performance.
22
Furthermore, we are subject to regular review and audit by both domestic and foreign tax authorities as well as subject to the
prospective and retrospective effects of changing tax regulations and legislation. Although we believe our tax estimates are
reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our Consolidated Financial
Statements and may materially affect our income tax provision, net income, or cash flows in the period or periods for which
such determination and settlement is made.
In addition, in response to significant market volatility and disruptions to business operations resulting from the global spread
of COVID-19, legislatures and taxing authorities in many jurisdictions in which we operate may enact changes to their tax
rules. These changes could include modifications that have temporary effect and more permanent changes. The impact of these
potential new rules as well as any other changes in domestic and international tax rules and regulations could have a material
effect on our effective tax rate.
We are also exposed to future tax legislation, as well as the issuance of future regulations and changes in administrative
interpretations of existing tax laws, any of which can impact our current and future years' tax provision. The effect of such
changes in tax law could have a material effect on our business, financial position and results of operations. In the U.S., the Tax
Cuts and Jobs Act of 2017 (the "Tax Act") significantly changed federal income tax laws that affect U.S. corporations and
additional guidance from the U.S. Treasury Department, the IRS, and other standard-setting bodies is still pending. As further
guidance is issued by these taxing authorities, any resulting changes in our estimates will be treated in accordance with the
relevant accounting guidance. Compliance with the Tax Act, including collecting information not regularly produced by the
Company or unexpected changes in our estimates, may require us to incur additional costs and could affect our results of
operations.
In fiscal 2021, our Walmart U.S. and Sam's Club operating segments generated approximately 78% of our consolidated net
sales. Significant changes in tax and trade policies, including tariffs and government regulations affecting trade between the
U.S. and other countries where we source many of the products we sell in our stores and clubs could have an adverse effect on
our financial performance. A significant portion of the general merchandise we sell in our U.S. stores and clubs is manufactured
in other countries. Any such actions including the imposition of further tariffs on imports could increase the cost to us of such
merchandise (whether imported directly or indirectly) and cause increases in the prices at which we sell such merchandise to
our customers, which could materially adversely affect the financial performance of our U.S. operations and our business.
We are subject to income taxes and other taxes in both the U.S. and the foreign jurisdictions in which we currently operate or
have historically operated. The determination of our worldwide provision for income taxes and current and deferred tax assets
and liabilities requires judgment and estimation. Our income taxes could be materially adversely affected by earnings being
lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have
higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in worldwide tax
laws, tax rates, regulations or accounting principles.
Changes in tax and trade laws and regulations could materially adversely affect our financial performance.
5
In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in contravention
of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the Foreign
Corrupt Practices Act or the laws and regulations of other countries. We maintain a global policy prohibiting such business
practices and have in place a global anti-corruption compliance program designed to ensure compliance with these laws and
regulations. Nevertheless, we remain subject to the risk that one or more of our associates, contractors or agents, including
those based in or from countries where practices that violate such U.S. laws and regulations or the laws and regulations of other
countries may be customary, will engage in business practices that are prohibited by our policies, circumvent our compliance
programs and, by doing so, violate such laws and regulations. Any such violations, even if prohibited by our internal policies,
could adversely affect our business or financial performance and our reputation.
21
During fiscal 2021, our Walmart International operations generated approximately 22% of our consolidated net sales. Walmart
International's operations in various countries also source goods and services from other countries. Our future operating results
in these countries could be negatively affected by a variety of factors, most of which are beyond our control. These factors
include political conditions, including political instability, local and global economic conditions, legal and regulatory
constraints (such as regulation of product and service offerings including regulatory restrictions (such as foreign ownership
restrictions) on eCommerce and retail operations in international markets, such as India), restrictive governmental actions (such
as trade protection measures), antitrust and competition law regulatory matters (such as the competition investigations currently
underway in Mexico related to our subsidiary Wal-Mart de Mexico, in Canada related to our subsidiary Wal-Mart Canada and
competition proceedings in India related to our Flipkart subsidiary), local product safety and environmental laws, tax
regulations, local labor laws, anti-money laundering laws and regulations, trade policies, currency regulations, laws and
regulations regarding consumer and data protection, and other matters in any of the countries or regions in which we operate,
now or in the future.
In addition to our U.S. operations, we operate our retail business in Africa, Canada, Central America, Chile, China, India and
Mexico.
Our international operations subject us to legislative, judicial, accounting, legal, regulatory, tax, political and economic
risks and conditions specific to the countries or regions in which we operate, which could materially adversely affect our
business or financial performance.
Legal, Tax, Regulatory, Compliance, Reputational and Other Risks
We may pay for products we purchase for sale in our stores and clubs around the world with a currency other than the local
currency of the country in which the goods will be sold. When we must acquire the currency to pay for such products and the
exchange rates for the payment currency fluctuate in a manner unfavorable to us, our cost of sales may increase and we may be
unable or unwilling to change the prices at which we sell those goods to address that increase in our costs, with a corresponding
adverse effect on our gross profit. Consequently, unfavorable fluctuations in currency exchange rates have and may continue to
adversely affect our results of operations.
As a result of such translations, fluctuations in currency exchange rates from period-to-period that are unfavorable to us may
also result in our Consolidated Financial Statements reflecting significant adverse period-over-period changes in our financial
performance or reflecting a period-over-period improvement in our financial performance that is not as robust as it would be
without such fluctuations in the currency exchange rates. Such unfavorable currency exchange rate fluctuations will adversely
affect the reported performance of our Walmart International operating segment and have a corresponding adverse effect on our
reported consolidated results of operations.
Our operations in countries other than the U.S. are conducted primarily in the local currencies of those countries. Our
Consolidated Financial Statements are denominated in U.S. dollars, and to prepare those financial statements we must translate
the amounts of the assets, liabilities, net sales, other revenues and expenses of our operations outside of the U.S. from local
currencies into U.S. dollars using exchange rates for the current period. In recent years, fluctuations in currency exchange rates
that were unfavorable have had adverse effects on our reported results of operations.
The economies of some of the countries in which we have operations have in the past suffered from high rates of inflation and
currency devaluations, which, if they occurred again, could adversely affect our financial performance. Other factors which
may impact our international operations include foreign trade, monetary and fiscal policies of the U.S. and of other countries,
laws, regulations and other activities of foreign governments, agencies and similar organizations, and risks associated with
having numerous facilities located in countries that have historically been less stable than the U.S. Additional risks inherent in
our international operations generally include, among others, the costs and difficulties of managing international operations,
adverse tax consequences and greater difficulty in enforcing intellectual property rights in countries other than the U.S. The
various risks inherent in doing business in the U.S. generally also exist when doing business outside of the U.S., and may be
exaggerated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws and
regulations.
37
58
142
Indiana
6
Iowa
28
For further information on our distribution centers, see the caption "Distribution" provided for each of our segments under
"Item 1. Business."
We own office facilities in Bentonville, Arkansas, that serve as our principal office and own and lease office facilities
throughout the U.S. and internationally for operations as well as for field and market management. The land on which our
stores are located is either owned or leased by the Company. We use independent contractors to construct our buildings. All
store leases provide for annual rentals, some of which escalate during the original lease or provide for additional rent based on
sales volume. Substantially all of the Company's store and club leases have renewal options, some of which include rent
escalation clauses.
Also includes U.S. and international distribution facilities which are third-party owned and operated.
As of January 31, 2021, the Company's operations in Japan and the United Kingdom were classified as held for sale. Refer to Note 12,
15
11,847
6,629
404
253
151
11,443
4,965
6,478
5,218
(2)
139
23
Connecticut
12
21
Delaware
6
3
Florida
Illinois
2
98
Georgia
154
2
Hawaii
10
Idaho
9
(1)
Total properties
Total distribution facilities
54
29
27
2
434
432
2
274
358
188
855
497
358
408
284
124
170
328
700
1,934
Total retail units
11,847
5,218
6,629
6,322
4,392
1,930
221
189
32
6,101
4,203
1,898
632
199
433
2,634
4
70
232
78
71
Colorado
$
With Fuel
Fuel Impact
8.7%
2.9%
2016
Fiscal Years Ended January 31,
Assumes Dividends Reinvested
Fiscal Year ended January 31, 2021
*Assumes $100 Invested on February 1, 2016
- S&P 500 Retailing Index
A S&P 500 Index
Walmart Inc.
2020
2019
2018
2020
2017
2021
2021
Managing the business well both operationally and financially and driving our long-term strategy. We are maintaining
our everyday low-price discipline while investing in our omni-channel offering which continues to resonate with
customers around the world who are increasingly seeking convenience.
While we incurred incremental costs of $4.0 billion during fiscal 2021 associated with operating during a global health crisis,
the COVID-19 pandemic resulted in overall net sales growth during fiscal 2021 with strong comparable sales in the U.S. and
the majority of our international markets. Sales trends were positively affected by eCommerce growth acceleration and we also
saw customers consolidate shopping trips and purchase larger baskets. For a detailed discussion on results of operations by
reportable segment, refer to "Results of Operations" below.
We expect continued uncertainty in our business and the global economy due to the duration and intensity of the COVID-19
pandemic; the duration and extent of economic stimulus; timing and effectiveness of global vaccines; and volatility in
employment trends and consumer confidence which may impact our results.
Company Performance Metrics
We are committed to helping customers save money and live better through everyday low prices, supported by everyday low
costs. At times, we adjust our business strategies to maintain and strengthen our competitive positions in the countries in which
we operate. We define our financial framework as:
.
strong, efficient growth;
•
consistent operating discipline; and
•
strategic capital allocation.
As we execute on this financial framework, we believe our returns on capital will improve over time.
34
Strong, Efficient Growth
Our objective of prioritizing strong, efficient growth means we will focus on the most productive growth opportunities,
increasing comparable store and club sales, accelerating eCommerce sales growth and expanding omni-channel initiatives while
slowing the rate of growth of new stores and clubs. At times, we make strategic investments which are focused on the long-
term growth of the Company.
Comparable sales is a metric that indicates the performance of our existing stores and clubs by measuring the change in sales
for such stores and clubs, including eCommerce sales, for a particular period over the corresponding period in the previous
year. The retail industry generally reports comparable sales using the retail calendar (also known as the 4-5-4 calendar). To be
consistent with the retail industry, we provide comparable sales using the retail calendar in our quarterly earnings releases.
However, when we discuss our comparable sales below, we are referring to our calendar comparable sales calculated using our
fiscal calendar, which may result in differences when compared to comparable sales using the retail calendar.
Calendar comparable sales, including the impact of fuel, for fiscal 2021 and 2020, were as follows:
Walmart U.S.
Sam's Club
Fiscal Years Ended January 31,
2020
2016
$0
$50
ITEM 5.
MINE SAFETY DISCLOSURES
Not applicable.
ITEM 4.
29
III. ENVIRONMENTAL MATTERS: Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters
when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the
Company reasonably believes will exceed an applied threshold not to exceed $1 million. Applying this threshold, there are no
environmental matters to disclose for this period.
II. CERTAIN OTHER MATTERS: The Company has received grand jury subpoenas issued by the United States Attorney's
Office for the Middle District of Pennsylvania seeking documents regarding the Company's consumer fraud program and anti-
money laundering compliance related to the Company's money transfer services, where Walmart is an agent. The most recent
subpoena was issued in August 2020. The Company has been responding to these subpoenas and is cooperating with the
government's investigation. The Company has also responded to civil investigative demands from the United States Federal
Trade Commission (the "FTC") and is cooperating with the FTC's investigation related to money transfers and the Company's
anti-fraud program in its capacity as an agent. The Company is unable to predict the outcome of the investigations or any
related actions by the governmental entities regarding these matters at this time. While the Company does not currently believe
that the outcome of these matters will have a material adverse effect on its business, financial position, results of operations or
cash flows, the Company can provide no assurance as to the scope and outcome of these matters and whether its business,
financial position, results of operations or cash flows will not be materially adversely affected.
PART II
Securities Class Actions: Stanton v. Walmart Inc. et al., USDC, Dist. of DE, 1/20/21; Martin v. Walmart Inc. et al., USDC,
Dist. of DE, 3/5/21.
Opioids Related Securities Class Actions and Derivative Litigation: A derivative complaint and class action lawsuits
drawing heavily on the allegations of the DOJ complaint have been filed in Delaware naming various current and former
directors and certain officers as defendants. The plaintiff in the derivative suit (in which the Company is a nominal defendant)
alleges, among other things, that the defendants breached their fiduciary duties in connection with their oversight of opioids
dispensing and distribution. The securities class actions, alleging violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, as amended regarding the Company's disclosures with respect to opioids were purportedly filed on
behalf of a class of investors who acquired Walmart stock from March 30, 2016 through December 22, 2020.
DOJ Opioid Litigation: On October 22, 2020, the Company filed a declaratory judgment action in the Eastern District of
Texas against the U.S. Department of Justice (the “DOJ") and the U.S. Drug Enforcement Administration, asking a federal
court to clarify the roles and responsibilities of pharmacists and pharmacies as to the dispensing and distribution of opioids
under the Controlled Substances Act (the "CSA"). The Company's action, Walmart Inc. v. U.S. Department of Justice et al.,
USDC, Eastern Dist. of Texas, 10/22/20, was dismissed and the Company is appealing the decision. A civil complaint pending
in the U.S. District Court for the District of Delaware has been filed by the DOJ against the Company, in which the DOJ alleges
violations of the CSA related to nationwide distribution and dispensing of opioids. U.S. v. Walmart Inc., et al., USDC, Dist. of
DE, 12/22/20. The Company filed a motion to dismiss the DOJ complaint on February 22, 2021.
National Prescription Opiate Litigation: In re National Prescription Opiate Litigation (MDL No. 2804) (the "MDL"). The
MDL is pending in the U.S. District Court for the Northern District of Ohio and includes over 2,000 cases as of March 5, 2021,
some of which cases are in the process of being transferred to the MDL. A trial previously scheduled to begin on May 10, 2021
against a number of parties, including the Company, regarding opioid dispensing and distribution claims has been postponed
and rescheduled for October 4, 2021. A separate trial in the MDL that had been expected to start in November 2020 against a
number of parties, including the Company, regarding opioid distribution claims has been postponed indefinitely. There is one
case in which the Company is named as a defendant that was remanded from the MDL court to the U.S. District Court for the
Eastern District of Oklahoma. In addition, there are over 200 state court cases pending as of March 5, 2021, some of which may
be removed to federal court to seek MDL transfer. The case citations for the state cases are listed on Exhibit 99.1 to this Form
10-K.
Asda Equal Value Claims: Ms S Brierley & Others v ASDA Stores Ltd (2406372/2008 & Others - Manchester Employment
Tribunal); ASDA Stores Ltd v Brierley & Ors (A2/2016/0973 - United Kingdom Court of Appeal); ASDA Stores Ltd v Ms S
Brierley & Others (UKEAT/0059/16/DM - United Kingdom Employment Appeal Tribunal); ASDA Stores Ltd v Ms S Brierley
& Others (UKEAT/0009/16/JOJ - United Kingdom Employment Appeal Tribunal).
We provide the following additional information concerning those legal proceedings, including the name of the lawsuit, the
court in which the lawsuit is pending, and the date on which the petition commencing the lawsuit was filed.
I. SUPPLEMENTAL INFORMATION: We discuss certain legal proceedings in Note 10 to our Consolidated Financial
Statements, which is included in "Item 8. Financial Statements and Supplementary Data." We refer you to that discussion for
important information concerning those legal proceedings, including the basis for such actions and, where known, the relief
sought.
ITEM 3. LEGAL PROCEEDINGS
Derivative Lawsuit: Abt v. Alvarez et al., USDC, Dist. of DE, 2/9/21.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market for Common Stock
The principal market on which Walmart's common stock is listed for trading is the New York Stock Exchange. The common
stock trades under the symbol "WMT."
$100
$150
$200
$250
$300
(Fiscal Years Ended January 31)
and S&P 500 Retailing Index
Among Walmart Inc., the S&P 500 Index
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
$350
S&P 500 Retailing Index
S&P 500 Index
Walmart Inc.
This graph compares the cumulative total shareholder return on Walmart's common stock during the five fiscal years ended
through fiscal 2021 to the cumulative total returns on the S&P 500 Retailing Index and the S&P 500 Index. The comparison
assumes $100 was invested on February 1, 2016 in shares of our common stock and in each of the indices shown and assumes
that all of the dividends were reinvested.
Stock Performance Chart
As of March 17, 2021, there were 214,673 holders of record of Walmart's common stock.
Holders of Record of Common Stock
Helping others which includes waiving or discounting rent for in-store tenants in April and May 2020 as well as hiring
more than 500,000 new associates.
Serving our customers as safely as possible and keeping our supply chain operating. We reduced our store operating
hours at the onset of the COVID-19 pandemic and have expanded store hours slightly toward the end of the year.
Supporting our associates on the front lines in terms of their physical safety, financial health and emotional well-being.
We are providing extra pay and benefits, including special cash bonuses to associates and the introduction of a
COVID-19 Emergency Leave Policy in the U.S.
•
156.05 $
148.23
186.29
174.49
103.50 $
120.04
120.09
100.00
100.00
100.00 $
$
2021
2019
2017
146.33
3,926,701
145.80
10,088,388
Total Number of
Shares Repurchased
as Part of Publicly
Announced Plans or
Programs
2018
2020
2021
190.21 $
180.37
1,827,372
per Share
(in dollars)
Total Number of
Shares Repurchased
Average Price Paid
Total
January 1-31, 2021
December 131, 2020
November 1-30, 2020
Fiscal Period
Share repurchase activity under our share repurchase programs, on a trade date basis, for each month in the quarter ended
January 31, 2021, was as follows:
31
From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Company's
Board of Directors. All repurchases made during fiscal 2021 were made under the $20.0 billion share repurchase program
approved in October 2017, of which authorization for $3.0 billion of share repurchases remained as of January 31, 2021. On
February 18, 2021, the Board of Directors approved a new $20.0 billion share repurchase program which, beginning February
22, 2021, replaced the previous share repurchase program. Any repurchased shares are constructively retired and returned to an
unissued status.
Issuer Repurchases of Equity Securities
316.05
219.46
211.48
237.33
Approximate Dollar Value of
Shares that May Yet Be
Repurchased Under the
Plans or Programs (1)
(in billions)
148.91
1,827,372
4,334,315
•
•
Acquisition of 81 percent of the outstanding shares, or 77 percent of the diluted shares, of Flipkart Private Limited
("Flipkart") in August 2018. Refer to Note 12 for additional information on the transaction.
Divestiture of 80 percent of Walmart Brazil in August 2018, for which we recorded a pre-tax loss of $4.8 billion in
fiscal 2019. Refer to Note 12 for additional information on the transaction.
Divestiture of banking operations in Walmart Chile and Walmart Canada in December 2018 and April 2019,
respectively.
In October 2020, we agreed to sell Asda for net consideration of $9.4 billion and recognized an estimated non-cash
loss in fiscal 2021 of $5.7 billion, after tax, which includes the loss associated with the expected derecognition of the
Asda pension plan. In February 2021, we completed the sale of Asda. Refer to Note 11 and Note 12.
In November 2020, we completed the sale of Walmart Argentina and recorded a non-cash loss of $1.0 billion, after-
tax, primarily due to cumulative foreign currency translation losses. Refer to Note 12.
•
33
In November 2020, we agreed to sell a majority stake in Seiyu for net consideration of approximately $1.2 billion and
recognized an estimated non-cash loss of $1.9 billion, after-tax, in fiscal 2021. In March 2021, we completed the sale
of Seiyu. Refer to Note 12.
We operate in the highly competitive omni-channel retail industry in all of the markets we serve. We face strong sales
competition from other discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as
well as eCommerce businesses. Many of these competitors are national, regional or international chains or have a national or
international omni-channel or eCommerce presence. We compete with a number of companies for attracting and retaining
quality associates. We, along with other retail companies, are influenced by a number of factors including, but not limited to:
catastrophic events, weather, global health epidemics including the ongoing COVID-19 pandemic, competitive pressures,
consumer disposable income, consumer debt levels and buying patterns, consumer credit availability, cost of goods, currency
exchange rate fluctuations, customer preferences, deflation, inflation, fuel and energy prices, general economic conditions,
insurance costs, interest rates, labor costs, tax rates, the imposition of tariffs, cybersecurity attacks and unemployment. Further
information on the factors that can affect our operating results and on certain risks to our Company and an investment in its
securities can be found herein under "Item 1A. Risk Factors."
COVID-19 Updates
Throughout fiscal 2021, we have operated with a clear set of priorities to guide our decision making through the COVID-19
pandemic. These priorities are:
•
•
.
•
•
We have taken certain strategic actions to strengthen our Walmart International portfolio for the long-term, including the
following highlights over the last three years:
Our business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather
patterns. Generally, our highest sales volume and operating income have occurred in the fiscal quarter ending January 31;
however, the COVID-19 pandemic may have an impact on consumer behaviors that could result in temporary changes in the
seasonal fluctuations of our business.
3,926,701
10,088,388
(1) Represents the approximate dollar value of shares that could have been repurchased at the end of the month.
ITEM 6.
SELECTED FINANCIAL DATA
This Item is reserved as a result of the Company's early adoption of Item 301 of Regulation S-K, as deleted pursuant to SEC
Release No. 33-10890; 34-90459 (Management's Discussion and Analysis; Selected Financial Data, and Supplementary
Financial Information) adopted by the Securities and Exchange Commission on November 19, 2020.
32
4.2
3.6
3.0
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
This discussion, which presents our results for the fiscal years ended January 31, 2021 ("fiscal 2021"), January 31, 2020 ("fiscal
2020") and January 31, 2019 ("fiscal 2019"), should be read in conjunction with our Consolidated Financial Statements and the
accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our
financial statements, the changes in certain key items in those financial statements from period to period and the primary factors
that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's
performance. Additionally, the discussion provides information about the financial results of each of the three segments to
provide a better understanding of how each of those segments and its results of operations affect the financial position and
results of operations of the Company as a whole.
Throughout this Item 7, we discuss segment operating income, comparable store and club sales and other measures.
Management measures the results of the Company's segments using each segment's operating income, including certain
corporate overhead allocations, as well as other measures. From time to time, we revise the measurement of each segment's
operating income and other measures as determined by the information regularly reviewed by our chief operating decision
maker.
Management also measures the results of comparable store and club sales, or comparable sales, a metric that indicates the
performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce
sales, for a particular period from the corresponding period in the previous year. Walmart's definition of comparable sales
includes sales from stores and clubs open for the previous 12 months, including remodels, relocations, expansions and
conversions, as well as eCommerce sales. We measure the eCommerce sales impact by including all sales initiated digitally,
including omni-channel transactions which are fulfilled through our stores and clubs. Sales at a store that has changed in
format are excluded from comparable sales when the conversion of that store is accompanied by a relocation or expansion that
results in a change in the store's retail square feet of more than five percent. Sales related to divested businesses are excluded
from comparable sales, and sales related to acquisitions are excluded until such acquisitions have been owned for 12 months.
Comparable sales are also referred to as "same-store" sales by others within the retail industry. The method of calculating
comparable sales varies across the retail industry. As a result, our calculation of comparable sales is not necessarily comparable
to similarly titled measures reported by other companies.
In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the
operating results for countries where the functional currency is not the U.S. dollar into U.S. dollars. We calculate the effect of
changes in currency exchange rates as the difference between current period activity translated using the current period's
currency exchange rates and the comparable prior year period's currency exchange rates. Additionally, no currency exchange
rate fluctuations are calculated for non-USD acquisitions until owned for 12 months. Throughout our discussion, we refer to
the results of this calculation as the impact of currency exchange rate fluctuations. Volatility in currency exchange rates may
impact the results, including net sales and operating income, of the Company and the Walmart International segment in the
future.
$
4,334,315
169.56 $
151.74
0.0%
(2) For fiscal 2020, as a result of adopting ASU 2016-02, average total assets is based on the average of total assets without leased assets, net plus leased
assets, net as of January 31, 2020. Average accumulated depreciation and amortization is based on the average of accumulated depreciation and
amortization, without leased assets plus accumulated amortization on leased assets as of January 31, 2020.
NP = Not provided.
Free Cash Flow
Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which
measures our ability to generate additional cash from our business operations, is an important financial measure for use in
evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute
for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our
liquidity. See "Liquidity and Capital Resources" for discussions of GAAP metrics including net cash provided by operating
activities, net cash used in investing activities and net cash used in financing activities.
We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment
made in that period. We had net cash provided by operating activities of $36.1 billion, $25.3 billion and $27.8 billion for fiscal
2021, 2020 and 2019, respectively. We generated free cash flow of $25.8 billion, $14.6 billion and $17.4 billion for fiscal
2021, 2020 and 2019, respectively. Net cash provided by operating activities for fiscal 2021 increased when compared to fiscal
2020 primarily due to the impact of the global health crisis which accelerated inventory sell-through, as well as the timing and
payment of inventory purchases, incremental COVID-19 related expenses and certain benefit payments. Free cash flow for
fiscal 2021 increased when compared to fiscal 2020 due to the same reasons as the increase in net cash provided by operating
activities, as well as $0.4 billion in decreased capital expenditures. Net cash provided by operating activities for fiscal 2020
declined when compared to fiscal 2019 was primarily due to the contribution to the Asda pension plan in anticipation of its
37
future settlement, the inclusion of a full year of Flipkart operations, and the timing of vendor payments. Free cash flow for
fiscal 2020 declined when compared to fiscal 2019 due to the same reasons as the decline in net cash provided by operating
activities, as well as $0.4 billion in increased capital expenditures.
Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary
expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual
obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a
measure that provides supplemental information to our Consolidated Statements of Cash Flows.
Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow.
As a result, the method used by management to calculate our free cash flow may differ from the methods used by other
companies to calculate their free cash flow.
The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by
operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as
information regarding net cash used in investing activities and net cash used in financing activities.
(Amounts in millions)
Net cash provided by operating activities
Payments for property and equipment
2021
(1) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the corresponding prior
period and dividing by 2. Average total assets as used in ROA includes the average impact of the adoption of ASU 2016-02.
Fiscal Years Ended January 31,
2020
$
36,074 $
(10,264)
25,255 $
(10,705)
27,753
(10,344)
Free cash flow
$
25,810 $
14,550 $
17,409
Net cash used in investing activities (¹)
$
Net cash used in financing activities
(10,071) $
(16,117)
2019
(9,128) $
(14,299)
22,159
37,966
Leased assets, net
Total assets without leased assets, net
Accumulated depreciation and amortization
$
252,496
$
NP
236,495
21,841
$
219,295
7,078
NP
214,654
212,217
22,296
94,187
87,175
Accumulated amortization on leased assets
NP
4,694
5,682
Accumulated depreciation and amortization, without leased assets
NP
89,820
81,493
Accounts payable
49,141
46,973
47,060
Accrued liabilities
94,514
Total assets
(2,537)
Results of Operations
4.0 %
24.3 %
24.1 %
24.5 %
$
22,548
$
20,568
$
21,957
4.1 %
4.0%
4.3 %
$
2.7%
13,706
15,201
$
7,179
11,443
11,501
11,361
1,121
1,129
1,129
(1) Unit counts and associated retail square feet are presented for stores and clubs generally open as of period end, and includes stores associated with
operations classified as held for sale as of January 31, 2021. Permanently closed locations are not included.
Our total revenues, which includes net sales and membership and other income, increased $35.2 billion or 6.7% and $9.6 billion
or 1.9% for fiscal 2021 and 2020, respectively, when compared to the previous fiscal year. These increases in revenues were
due to increases in net sales, which increased $35.3 billion or 6.8% and $9.6 billion or 1.9% for fiscal 2021 and 2020,
respectively, when compared to the previous fiscal year. For fiscal 2021, the increase was primarily due to strong positive
comparable sales for the Walmart U.S. and Sam's Club segments as well as positive comparable sales in the majority of our
international markets resulting from increased demand stemming from the COVID-19 pandemic. Overall net sales growth was
strong despite certain operating limitations in several international markets in the second quarter of fiscal 2021 due to
government regulations and precautionary measures taken as a result of the COVID-19 pandemic. The net sales increase was
partially offset by negative fluctuations in currency exchange rates of $5.0 billion. For fiscal 2020, net sales were positively
impacted by overall positive comparable sales for Walmart U.S. and Sam's Club segments, along with the addition of net sales
from Flipkart, which we acquired in August 2018, and positive comparable sales in the majority of our international markets.
These increases were partially offset by $4.1 billion of negative impact from fluctuations in currency exchange rates in fiscal
2020 and our sale of the majority stake in Walmart Brazil in August 2018.
Our gross profit rate increased 20 basis points and decreased 40 basis points for fiscal 2021 and 2020, respectively, when
compared to the previous fiscal year. For fiscal 2021, the increase was primarily due to strategic sourcing initiatives, strong
sales in higher margin categories, and fewer markdowns. This was partially offset in the Walmart U.S. segment by carryover of
prior year price investment as well as the temporary closure of our Auto Care Centers and Vision Centers in response to the
38
(0.2)%
$
(1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.
8.7 %
1.9 %
Consolidated Results of Operations
(Amounts in millions, except unit counts)
Total revenues
Percentage change from comparable period
Net sales
Percentage change from comparable period
Total U.S. calendar comparable sales increase
Gross profit rate
Operating income
Operating income as a percentage of net sales
Consolidated net income
Unit counts at period end(¹)
Retail square feet at period end (¹)
Fiscal Years Ended January 31,
2021
$
2.9 %
559,151
2020
523,964
2019
$
514,405
6.7 %
1.9 %
2.8 %
$
555,233
$
519,926
$
510,329
6.8%
$
Certain Balance Sheet Data
(24,036)
2019
Remodels
New stores and clubs, including expansions and relocations
Total U.S.
Walmart International
Total capital expenditures
Fiscal Years Ended January 31,
2021
2020
$
5,681 $
5,643
2,013
2,184
134
77
$
7,828 $
7,904
2,436
2,801
$
10,264 $
10,705
Returns
As we execute our financial framework, we believe our return on capital will improve over time. We measure return on capital
with our return on assets, return on investment and free cash flow metrics. We also provide returns in the form of share
repurchases and dividends, which are discussed in the Liquidity and Capital Resources section.
Return on Assets and Return on Investment
We include Return on Assets ("ROA"), the most directly comparable measure based on our financial statements presented in
accordance with generally accepted accounting principles in the U.S. ("GAAP"), and Return on Investment ("ROI") as metrics
to assess returns on assets. While ROI is considered a non-GAAP financial measure, management believes ROI is a
meaningful metric to share with investors because it helps investors assess how effectively Walmart is deploying its assets.
Trends in ROI can fluctuate over time as management balances long-term strategic initiatives with possible short-term impacts.
ROA was 5.6% and 6.7% for fiscal 2021 and 2020, respectively. The decrease in ROA was primarily due to the losses on
certain international operations held for sale or sold, partially offset by the fair value change in our equity investments as well
as the increase in operating income. ROI was 14.0% and 13.4% for fiscal 2021 and 2020, respectively. The increase in ROI
was primarily due to the increase in operating income.
We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent
expense) for the trailing twelve months divided by average invested capital during that period. We consider average invested
capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average
amortization, less average accounts payable and average accrued liabilities for that period. For fiscal 2020, lease related assets
and associated accumulated amortization are included in the denominator at their carrying amount as of that balance sheet date,
rather than averaged, because they are not directly comparable to the prior year calculation which included rent for the trailing
12 months multiplied by a factor of 8. A two-point average was used for leased assets beginning in fiscal 2021, after one full
year from the date of adoption of ASU 2016-02, Leases (Topic 842) ("ASU 2016-02").
Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that
exclude and include amounts that are included and excluded in the most directly comparable GAAP financial measure. For
example, we exclude the impact of depreciation and amortization from our reported operating income in calculating the
numerator of our calculation of ROI. As mentioned above, we consider ROA to be the financial measure computed in
accordance with generally accepted accounting principles most directly comparable to our calculation of ROI. ROI differs from
ROA (which is consolidated net income for the period divided by average total assets for the period) because ROI: adjusts
operating income to exclude certain expense items and adds interest income; adjusts total assets for the impact of accumulated
depreciation and amortization, accounts payable and accrued liabilities to arrive at total invested capital. Because of the
adjustments mentioned above, we believe ROI more accurately measures how we are deploying our key assets and is more
meaningful to investors than ROA. Although ROI is a standard financial measure, numerous methods exist for calculating a
company's ROI. As a result, the method used by management to calculate our ROI may differ from the methods used by other
companies to calculate their ROI.
Allocation of Capital Expenditures
(Amounts in millions)
Our strategy includes improving our customer-facing initiatives in stores and clubs and creating a seamless omni-channel
experience for our customers. As such, we are allocating more capital to eCommerce, technology, supply chain, and store
remodels and less to new store and club openings. Total fiscal 2021 capital expenditures decreased slightly compared to the
prior year. The following table provides additional detail:
Strategic Capital Allocation
8.7%
1.6%
(3.4)%
0.8%
8.7%
2.7%
0.1%
Total U.S.
(0.6)%
Comparable sales in the U.S., including fuel, increased 8.7% and 2.7% in fiscal 2021 and 2020, respectively, when compared to
the previous fiscal year. Walmart U.S. comparable sales increased 8.7% and 2.9% in fiscal 2021 and 2020, respectively. For
fiscal 2021, comparable sales growth was driven by growth in average ticket primarily resulting from increased demand due to
the COVID-19 pandemic, partially offset by a decline in transactions as customers consolidated shopping trips. For fiscal 2020,
comparable sales growth was driven by growth in average ticket and transactions. Walmart U.S. eCommerce sales positively
contributed approximately 5.4% and 2.1% to comparable sales for fiscal 2021 and 2020, respectively, as we continue to focus
on a seamless omni-channel experience for our customers.
Sam's Club comparable sales increased 8.7% and 1.6% in fiscal 2021 and 2020, respectively. For fiscal 2021, Sam's Club
comparable sales benefited from growth in transactions and average ticket resulting from the COVID-19 pandemic, partially
offset by both our decision to remove tobacco from certain club locations and by lower fuel sales. Sam's Club comparable sales
for fiscal 2020 benefited from growth in transactions and higher fuel sales, which were partially offset by lower average ticket
due to our decision to remove tobacco from certain club locations. Sam's Club eCommerce sales positively contributed
approximately 2.2% and 1.8% to comparable sales for fiscal 2021 and 2020, respectively.
Consistent Operating Discipline
We operate with discipline by managing expenses, optimizing the efficiency of how we work and creating an environment in
which we have sustainable lowest cost to serve. We invest in technology and process improvements to increase productivity,
manage inventory and reduce costs. We measure operating discipline through expense leverage, which we define as net sales
growing at a faster rate than operating, selling, general and administrative ("operating") expenses.
Fiscal Years Ended January 31,
36
(Amounts in millions, except unit counts)
Percentage change from comparable period
Operating, selling, general and administrative expenses
Percentage change from comparable period
2021
2020
555,233 $
6.8 %
116,288 $
6.9 %
20.9 %
519,926
1.9 %
108,791
1.5 %
Operating, selling, general and administrative expenses as a percentage of net sales
20.9%
For fiscal 2021, operating expenses as a percentage of net sales was flat when compared to the previous fiscal year. Operating
expenses as a percentage of net sales benefited from strong growth in comparable sales and lapping the $0.9 billion business
restructuring charges from the prior year described below. These benefits were offset by $4.0 billion of incremental costs
related to the COVID-19 pandemic and a $0.4 billion business restructuring charge in the Walmart U.S. segment recorded in
the second quarter of fiscal 2021.
For fiscal 2020, operating expenses as a percentage of net sales decreased 8 basis points compared to the previous fiscal year
due to our focus on expense management combined with our growth in comparable store sales. These improvements were
partially offset by $0.9 billion in business restructuring charges consisting primarily of non-cash impairment charges for certain
trade names, acquired developed technology, and other business restructuring charges due to strategic decisions that resulted in
the write down of certain assets in the Walmart U.S. and Walmart International segments.
35
Net sales
The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP
financial measure, is as follows:
eCommerce, technology, supply chain and other
2020
2,670
$
36,447 $
34,414
Denominator
Average total assets
(1), (2)
$
244,496
$
235,277
+ Average accumulated depreciation and amortization (1), (2)
90,351
- Average accounts payable(1)
2,626
48,057
- Average accrued liabilities (¹)
30,131
22,228
Average invested capital
Return on investment (ROI)
$
260,659
$
256,383
14.0 %
13.4%
As of January 31,
2021
(Amounts in millions)
47,017
10,987
94,351
Denominator
Numerator
11,152
Fiscal Years Ended January 31,
2021
2020
CALCULATION OF RETURN ON ASSETS
Consolidated net income
Average total assets (1)
Return on assets (ROA)
$
$
15,201
$
244,496
$
5.6 %
13,706
121
189
227,895
6.7 %
ROI operating income
+ Rent
+ Depreciation and amortization
20,568
+ Interest income
22,548
$
Operating income
Numerator
CALCULATION OF RETURN ON INVESTMENT
$
Additionally, refer to the "Strategic Capital Allocation" section in our Company Performance Metrics for capital expenditure
detail for fiscal 2021 and 2020.
(Amounts in millions)
Net Cash Used in Financing Activities
For the fiscal year ending January 31, 2022 ("fiscal 2022"), we project capital expenditures will be approximately $14 billion,
with a focus on supply chain, automation, customer-facing initiatives and technology.
Growth Activities
42
Fiscal Years Ended January 31,
2020
(24,036)
(9,128) $
(10,071) $
$
2019
Net cash used in financing activities
Net cash used in investing activities was $10.1 billion, $9.1 billion and $24.0 billion for fiscal 2021, 2020 and 2019,
respectively, and generally consisted of payments for business acquisitions and to expand our eCommerce capabilities, invest in
other technologies and supply chain, remodel existing stores and clubs and add new stores and clubs. Net cash used in
investing activities increased $0.9 billion for fiscal 2021 when compared to the previous fiscal year primarily as a result of
lapping the net proceeds received from the sale of our banking operations in Walmart Canada and the change in other investing
activities, partially offset by decreased capital expenditures. Net cash used in investing activities decreased $14.9 billion for
fiscal 2020 when compared to the previous fiscal year, primarily as a result of the $13.8 billion payment for the acquisition of
Flipkart, net of cash acquired, as well as payments for other, smaller acquisitions in fiscal 2019.
2021
Fiscal Years Ended January 31,
2020
2019
2021
2019
2021
Annual weighted-average interest rate
Average daily short-term borrowings
Maximum amount outstanding at any month-end
Fiscal Years Ended January 31,
2020
(Amounts in millions)
Short-term Borrowings
Net cash used in financing activities generally consists of transactions related to our short-term and long-term debt, financing
obligations, dividends paid and the repurchase of Company stock. Transactions with noncontrolling interest shareholders are
also classified as cash flows from financing activities. Fiscal 2021 net cash used in financing activities increased $1.8 billion
when compared to the same period in the previous fiscal year. The increase is primarily due to the timing of issuances and
repayments of long-term debt, partially offset by both a reduction in cash used to pay down short-term borrowings as well as
share repurchases as we manage our financial position during the current economic environment. Fiscal 2020 net cash used in
financing activities increased $11.8 billion for fiscal 2020 when compared to the same period in the previous fiscal year. The
increase was primarily due to the $15.9 billion of net proceeds received in fiscal 2019 from the issuance of long-term debt to
fund a portion of the purchase price for Flipkart partially offset by $5.5 billion of additional long-term debt in the fiscal 2020 to
fund general business operations.
(2,537)
(14,299) $
(16,117) $
$
We generally utilize the liquidity provided by short-term borrowings to provide funding for our operations, dividend payments,
share repurchases, capital expenditures and other cash requirements. The following table includes additional information related
to the Company's short-term borrowings for fiscal 2021, 2020 and 2019:
Net cash used in investing activities
$
Net Cash Used in Investing Activities
1,486
$
1,383
2.8 %
2.8 %
2.6 %
(1) We believe the "Excluding Fuel" information is useful to investors because it permits investors to understand the effect of the Sam's Club segment's fuel
sales on its results of operations, which are impacted by the volatility of fuel prices. Volatility in fuel prices may continue to impact the operating results of
the Sam's Club segment in the future. Management uses such information to better measure underlying operating results in the segment.
Net sales for the Sam's Club segment increased $5.1 billion or 8.7% and $1.0 billion or 1.6% for fiscal 2021 and 2020,
respectively, when compared to the previous fiscal year. Our 8.7% growth in comparable sales for fiscal 2021 benefited from
growth in transactions and average ticket resulting from the COVID-19 pandemic, partially offset by both our decision to
remove tobacco from certain club locations and by lower fuel sales. Sam's Club eCommerce sales positively contributed
approximately 2.2% to comparable sales. For fiscal 2020, the increase was primarily due to comparable sales, including fuel, of
1.6%. Comparable sales benefited from growth in transactions and higher fuel sales, which were partially offset by lower ticket
due to our decision to remove tobacco from certain club locations. Sam's Club eCommerce sales positively contributed
approximately 1.8% to comparable sales.
A-1+
Gross profit rate increased 65 basis points and decreased 11 basis points for fiscal 2021 and 2020, respectively, when compared
to the previous fiscal year. The increase in gross profit rate was due to favorable sales mix, including lower fuel and tobacco
sales, and improvement in inventory losses which was partially offset by price investment and higher eCommerce fulfillment
costs. For fiscal 2020, gross profit rate decreased due to price investment and higher eCommerce fulfillment costs, partially
offset by reduced tobacco sales.
Membership and other income increased 6.8% and 4.7% for fiscal 2021 and 2020, respectively, when compared to the previous
fiscal year. For fiscal 2021 and 2020, the increases were primarily due to growth in total members, which benefited from
higher overall renewal rates, and higher Plus Member penetration. Fiscal 2021 growth was also positively affected by the
COVID-19 pandemic. Fiscal 2020 was also benefited by gains on property sales and other income.
Operating expenses as a percentage of segment net sales increased 42 and decreased 19 basis points for fiscal 2021 and 2020,
respectively, when compared to the previous fiscal year. Despite increased net sales from the strong demand resulting from the
COVID-19 pandemic, fiscal 2021 operating expenses as a percentage of net sales increased primarily due to $0.3 billion of
incremental costs related to the pandemic, which included additional costs such as special bonuses, expanded cleaning practices
and security, expanded sick and emergency leave pay, and outfitting our associates with masks and gloves. Additionally, the
increase in operating expense as a percentage of segment net sales was affected by reduced tobacco and fuel sales. For fiscal
2020, the decrease was primarily the result of lower labor-related costs and a charge of approximately $50 million related to
lease exit costs in the prior comparable period. These benefits were partially offset by a reduction in sales of tobacco and a
higher level of technology investment.
As a result of the factors discussed above, segment operating income increased $0.3 billion and $0.1 billion for fiscal 2021 and
2020, respectively, when compared to the previous fiscal year.
41
Liquidity and Capital Resources
Liquidity
The strength and stability of our operations have historically supplied us with a significant source of liquidity. Our cash flows
provided by operating activities, supplemented with our long-term debt and short-term borrowings, have been sufficient to fund
our operations while allowing us to invest in activities that support the long-term growth of our operations. Generally, some or
all of the remaining available cash flow has been used to fund dividends on our common stock and share repurchases. We
believe our sources of liquidity will continue to be adequate to fund operations, finance our global investment and expansion
activities, pay dividends and fund our share repurchases for the foreseeable future.
Net Cash Provided by Operating Activities
As of January 31, 2021 and 2020, cash and cash equivalents of $2.8 billion and $2.3 billion, respectively, may not be freely
transferable to the U.S. due to local laws or other restrictions. Of the $2.8 billion as of January 31, 2021, approximately
$1.0 billion can only be accessed through dividends or intercompany financing arrangements subject to approval of the Flipkart
minority shareholders; however, this cash is expected to be utilized to fund the operations of Flipkart.
We use intercompany financing arrangements an effort to ensure cash can be made available in the country in which it is
needed with the minimum cost possible. Additionally, from time-to-time, we repatriate earnings and related cash from
jurisdictions outside of the U.S. Historically, U.S. taxes were due upon repatriation of foreign earnings. Due to the enactment
of U.S. tax reform, repatriations of foreign earnings will generally be free of U.S. federal tax, but may incur other taxes such as
withholding or state taxes. While we are awaiting anticipated technical guidance from the Internal Revenue Service ("IRS") and
the U.S. Treasury Department, we do not expect current local laws, other existing limitations or potential taxes on anticipated
future repatriations of cash amounts held outside the U.S. to have a material effect on our overall liquidity, financial position or
results of operations.
Cash and cash equivalents were $17.7 billion and $9.5 billion as of January 31, 2021 and 2020, respectively. We maintained
more cash at January 31, 2021 compared to January 31, 2020 in order to provide us with enhanced financial flexibility due to
the uncertainties related to the COVID-19 pandemic. Our working capital deficit, defined as total current assets less total
current liabilities, was $2.6 billion and $16.0 billion as of January 31, 2021 and 2020, respectively. The decrease in working
capital deficit as compared to the previous fiscal year is primarily driven by the increase in cash and cash equivalents as well as
the increase in current assets and current liabilities due to the classification of the Company's operations in the U.K. and Japan
as held for sale. We generally operate with a working capital deficit due to our efficient use of cash in funding operations,
consistent access to the capital markets and returns provided to our shareholders in the form of payments of cash dividends and
share repurchases.
Cash Equivalents and Working Capital Deficit
Net cash provided by operating activities was $36.1 billion, $25.3 billion and $27.8 billion for fiscal 2021, 2020 and 2019,
respectively. Net cash provided by operating activities for fiscal 2021 increased when compared to the previous fiscal year
primarily due to the impact of the global health crisis which accelerated inventory sell-through, as well as the timing and
payment of inventory purchases, incremental COVID-19 related expenses and certain benefit payments. The decrease in net
cash provided by operating activities for fiscal 2020, when compared to the previous fiscal year, was primarily due to the
contribution to our Asda pension plan in anticipation of its future settlement, the inclusion of a full year of Flipkart operations,
and the timing of vendor payments.
27,753
(Amounts in millions)
25,255 $
$
2019
Fiscal Years Ended January 31,
2020
2021
Net cash provided by operating activities
(Amounts in millions)
36,074 $
4,048
1,577
3.1 %
Standard & Poor's
13,315 $
7,120
August 13, 2021
December 10, 2021
Payable Date
April 5, 2021
June 1, 2021
September 7, 2021
January 3, 2022
43
Company Share Repurchase Program
From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the
Company's Board of Directors. All repurchases made during fiscal 2021 were made under the $20 billion share repurchase
program approved in October 2017, of which authorization for $3.0 billion of share repurchases remained as of January 31,
2021. On February 18, 2021, the Board of Directors approved a new $20.0 billion share repurchase program which, beginning
February 22, 2021, replaced the previous share repurchase program. Any repurchased shares are constructively retired and
returned to an unissued status.
We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases,
including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the
market price of our common stock. We anticipate that a majority of the ongoing share repurchase program will be funded
through the Company's free cash flow. The following table provides, on a settlement date basis, the number of shares
repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2021, 2020 and 2019:
(Amounts in millions, except per share data)
Total number of shares repurchased
Average price paid per share
Total amount paid for share repurchases
2021
Fiscal Years Ended January 31,
2020
2019
Commercial paper
$
Moody's Investors Service
Fitch Ratings
Rating agency
We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance
our debt as it becomes due at favorable rates in capital markets. As of January 31, 2021, the ratings assigned to our commercial
paper and rated series of our outstanding long-term debt were as follows:
May 7, 2021
We believe cash flows from operations, our current cash position and access to capital markets will continue to be sufficient to
meet our anticipated operating cash needs, which include funding seasonal buildups in merchandise inventories and funding our
capital expenditures, acquisitions, dividend payments and share repurchases.
7,410
79.5
93.18
53.9
105.98 $
5,717 $
19.4
135.20 $
2,625 $
$
$
Capital Resources
March 19, 2021
Record Date
Our total dividend payments were $6.1 billion, $6.0 billion and $6.1 billion for fiscal 2021, 2020 and 2019, respectively. The
Board of Directors approved, effective February 18, 2021, the fiscal 2022 annual dividend of $2.20 per share, an increase over
the fiscal 2021 annual dividend of $2.16 per share. For fiscal 2022, the annual dividend will be paid in four quarterly
installments of $0.55 per share, according to the following record and payable dates:
Dividends
Balances as of January 31, 2021
Other
Reclassifications of long-term debt
Repayments of long-term debt
Balances as of February 1, 2020
$
(Amounts in millions)
Long-term Debt
We also have $15.0 billion of various undrawn committed lines of credit in the U.S. as of January 31, 2021 that provide
additional liquidity, if needed. Additionally, we maintain access to various credit facilities outside of the U.S. to further support
our Walmart International segment operations, as needed.
2.4 %
2.5 %
10,625
13,389
The following table provides the changes in our long-term debt for fiscal 2021:
$
Long-term debt due
within one year
5,362
Long-term debt
43,714
44,309
$
41,194
$
3,115
$
$
615
9
3,126
49,076
(5,382)
(5,382)
$
Total
(3,126)
606
1,645
369,963
(3.9)%
4,756
4,769
703
703
705
Net sales for the Walmart U.S. segment increased $29.0 billion or 8.5% and $9.3 billion or 2.8% for fiscal 2021 and 2020,
respectively, when compared to the previous fiscal year. The increases in net sales were primarily due to increases in
comparable sales of 8.7% and 2.9% for fiscal 2021 and 2020, respectively. Comparable sales in fiscal 2021 were driven by
growth in average ticket primarily resulting from meeting the increased demand due to economic conditions related to the
COVID-19 pandemic while transactions decreased as customers consolidated shopping trips. Comparable sales in fiscal 2020
were driven by both average ticket and transaction growth for fiscal 2020. Walmart U.S. eCommerce sales positively
contributed approximately 5.4% and 2.1% to comparable sales for fiscal 2021 and 2020, respectively, as we continue to focus
on a seamless omni-channel experience for our customers.
Gross profit rate was flat and decreased 14 basis points for fiscal 2021 and 2020, respectively, when compared to the previous
fiscal year. While fiscal 2021 gross profit rate was flat, it benefited from strategic sourcing initiatives and fewer markdowns,
offset by a change in merchandise mix, the carryover effect of prior year price investment and the temporary closure of our
Auto Care and Vision Centers in response to the COVID-19 pandemic. For fiscal 2020, the decrease was primarily the result
of continued price investments which were partially offset by better merchandise mix, including strength in private brands, and
less pressure from transportation costs.
39
Operating expenses as a percentage of segment net sales decreased 15 and 4 basis points for fiscal 2021 and 2020, respectively,
when compared to the previous fiscal year. We leveraged operating expenses in fiscal 2021 primarily as a result of strong sales,
which were partially offset by $3.2 billion of incremental costs related to the COVID-19 pandemic including special bonuses,
expanded sick and emergency leave pay, costs associated with outfitting our stores and associates with masks, gloves and
sanitizer, and expanded cleaning practices. Fiscal 2021 operating expenses as a percentage of net sales was also slightly aided
by lapping the $0.5 billion business restructuring charges from the prior year described below, offset by a $0.4 billion business
restructuring charge recorded in the second quarter of fiscal 2021 resulting from changes to Walmart U.S. support teams to
better support its omni-channel strategy. The decrease in fiscal 2020 was primarily due to strong sales and productivity
improvements which were mostly offset by business restructuring charges of $0.5 billion consisting primarily of non-cash
impairment charges for certain trade names, acquired developed technology and other business restructuring charges due to
decisions that resulted in the write down of certain eCommerce assets.
As a result of the factors discussed above, segment operating income increased $1.7 billion and decreased $6 million for fiscal
2021 and 2020, respectively, when compared to the previous fiscal year.
Walmart International Segment
(Amounts in millions, except unit counts)
Net sales
Percentage change from comparable period
Operating income
Operating income as a percentage of net sales
Unit counts at period end
$
3,660
$
1.0 %
120,824
120,130 $
4,743
$
$
2019
2020
2021
Fiscal Years Ended January 31,
Retail square feet at period end
121,360
5.2 %
5.1 %
5.2 %
Operating income as a percentage of net sales
Unit counts at period end
Retail square feet at period end
Fiscal Years Ended January 31,
2021
$
Operating income
P-1
F1+
2020
341,004 $
2019
331,666
8.5 %
8.7 %
2.8 %
4.1 %
$
(0.6)%
3,370 $
Calendar comparable sales increase
Net sales
17,386
$
17,380
$
19,116
$
Percentage change from comparable period
COVID-19 pandemic. For fiscal 2020, the decrease was primarily due to price investment in the Walmart U.S. segment and the
addition of Flipkart in the Walmart International segment, partially offset by favorable merchandise mix including strength in
private brands and less pressure from transportation costs in the Walmart U.S. segment.
For fiscal 2020, operating expenses as a percentage of net sales decreased 8 basis points, when compared to the previous fiscal
year, due to our focus on expense management combined with our growth in comparable store sales. These improvements were
partially offset by $0.9 billion in business restructuring charges consisting primarily of non-cash impairment charges for certain
trade names, acquired developed technology, and other business restructuring charges due to strategic decisions that resulted in
the write down of certain assets in the Walmart U.S. and Walmart International segments.
Other gains and losses consisted of net gains of $0.2 billion and $2.0 billion for fiscal 2021 and 2020, respectively. The gain in
fiscal 2021 primarily reflects $8.7 billion in net gains associated with the fair value changes of our equity investments, partially
offset by the $8.3 billion pre-tax loss related to the divestiture of certain international operations classified as held for sale or
sold in fiscal 2021. The gain in fiscal 2020 was primarily the result of a $1.9 billion increase in the market value of our
investment in JD.com.
Our effective income tax rate was 33.3% for fiscal 2021, 24.4% for fiscal 2020, and 37.4% for fiscal 2019. The increase in our
effective tax rate for fiscal 2021 as compared to fiscal 2020 is primarily due to the loss related to the divestiture of certain
international operations classified as held for or sold in fiscal 2021, which provided minimal realizable tax benefit. The
decrease in our effective tax rate for fiscal 2020 as compared to fiscal 2019 was primarily due to the fiscal 2019 loss on sale of a
majority stake in Walmart Brazil, which increased the previous comparative fiscal year's effective tax rate, as it provided
minimal realizable tax benefit. Our effective income tax rate may also fluctuate as a result of various factors, including changes
in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the
impact of discrete items and the mix and size of earnings among our U.S. operations and international operations, which are
subject to statutory rates that, beginning in fiscal 2019, are generally higher than the U.S. statutory rate. The reconciliation
from the U.S. statutory rate to the effective income tax rates for fiscal 2021, 2020 and 2019 is presented in Note 9.
As a result of the factors discussed above, we reported $13.7 billion and $15.2 billion of consolidated net income for fiscal 2021
and 2020, respectively, which represents a decrease of $1.5 billion and an increase of $8.0 billion for fiscal 2021 and 2020,
respectively, when compared to the previous fiscal year. Diluted net income per common share attributable to Walmart
("EPS") was $4.75, $5.19 and $2.26 for fiscal 2021, 2020 and 2019, respectively.
Walmart U.S. Segment
(Amounts in millions, except unit counts)
For fiscal 2021, operating expenses as a percentage of net sales was flat when compared to the previous fiscal year. Operating
expenses as a percentage of net sales benefited from strong growth in comparable sales and lapping the $0.9 billion business
restructuring charges from the prior year described below. These benefits were offset by $4.0 billion of incremental costs
related to the COVID-19 pandemic and a $0.4 billion business restructuring charge in the Walmart U.S. segment recorded in
the second quarter of fiscal 2021.
2.3 %
4,883
3.0 %
$
1,642
$
1,906
5.4 %
1.6 %
1,520
8.7 %
1.6 %
8.7 %
57,839
$
58,792
$
(2.3)%
63,910
3.0%
2.6%
0.9 %
12.1 %
52,332
$
52,792
$
2.8%
59,184
80
80
80
599
599
599
$
$
$
2020
40
As a result of the factors discussed above, segment operating income increased $0.3 billion and decreased $1.5 billion for fiscal
2021 and 2020, respectively, when compared to the previous fiscal year.
Operating expenses as a percentage of segment net sales increased 14 basis points and decreased 13 basis points for fiscal 2021
and 2020, respectively, when compared to the previous fiscal year. The increase in operating expenses as a percentage of
segment net sales for fiscal 2021 was primarily due to $0.5 billion of incremental costs related to the COVID-19 pandemic,
partially offset by positive comparable sales in the majority of our markets and lapping the impairment charges in the prior year
discussed below. Fiscal 2020 decreased primarily due to positive comparable sales in the majority of our markets as well as
cost discipline across multiple markets, partially offset by $0.4 billion in impairment charges primarily due to the write-off of
the carrying value of one of Flipkart's two fashion trade names, Jabong.com, as a result of a strategic decision to focus our
efforts on a single fashion platform in order to simplify the business and customer proposition.
Gross profit rate increased 50 basis points and decreased 136 basis points for fiscal 2021 and 2020, respectively, when
compared to the previous fiscal year. For fiscal 2021, the increase was primarily due to Flipkart's improved margin mix and
reduced fuel sales in the U.K. For fiscal 2020, the decrease was primarily due to Flipkart, as well as a change in merchandise
mix.
For fiscal 2020, the decrease was primarily due to negative fluctuations in currency exchange rates of $4.1 billion as well as a
reduction in sales due to our sale of the majority stake in Walmart Brazil in August 2018, offset by a full year of net sales from
Flipkart and positive comparable sales growth in the majority of our markets.
Net sales for the Walmart International segment increased $1.2 billion or 1.0% and decreased $0.7 billion or 0.6% for fiscal
2021 and 2020, respectively, when compared to the previous fiscal year. For fiscal 2021, the increase was primarily due to
positive comparable sales growth in the majority of our markets driven by changes in consumer behavior in response to the
COVID-19 pandemic, partially offset by negative fluctuations in currency exchange rates of $5.0 billion. The pandemic led to
significant economic pressures and channel and mix shifts due to changes in consumer behavior, including accelerated growth
in eCommerce in several markets. While several of our markets experienced extensive store and operational closures in the
second quarter as a result of government mandates, most closed stores and warehouses had resumed operations by the third
quarter.
40
344
337
5,993
6,146
6,101
4.0 %
2.8%
345
2019
Sam's Club Segment
Including Fuel
Fiscal Years Ended January 31,
2021
Operating income as a percentage of net sales
Operating income
Percentage change from comparable period
Net sales
(Amounts in millions, except unit counts)
Excluding Fuel (1)
Unit counts at period end
Operating income as a percentage of net sales
Operating income
Calendar comparable sales increase
Percentage change from comparable period
Net sales
Retail square feet at period end
Long-term debt
3.1 %
Aa2
1.9%
Long-term debt():
Fixed rate
$
2,365
$
3,014 $
4,721
$
4,360 $
Weighted-average interest rate
3.8 %
1.7 %
2.7%
1,480 $ 27,619 $
3.6 %
4.5 %
43,559
3.9 %
Variable rate
$
%
%
224
- $ - $ - $ - $
%
In addition to the risks inherent in our operations, we are exposed to certain market risks, including changes in interest rates,
currency exchange rates and the fair value of certain equity investments.
The analysis presented below for each of our market risk sensitive instruments is based on a hypothetical scenario used to
calibrate potential risk and does not represent our view of future market changes. The effect of a change in a particular
assumption is calculated without adjusting any other assumption. In reality, however, a change in one factor could cause a
change in another, which may magnify or negate other sensitivities.
Interest Rate Risk
We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt. We hedge a portion of
our interest rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For fiscal
2021, the net fair value of our interest rate swaps increased $69 million primarily due to fluctuations in market interest rates.
The table below provides information about our financial instruments that are sensitive to changes in interest rates. For long-
term debt, the table represents the principal cash flows and related weighted-average interest rates by expected maturity dates.
For interest rate swaps, the table represents the contractual cash flows and weighted-average interest rates by the contractual
maturity date, unless otherwise noted. The notional amounts are used to calculate contractual cash flows to be exchanged under
the contracts. The weighted-average variable rates are based upon prevailing market rates as of January 31, 2021.
(Amounts in millions)
Liabilities
Fiscal 2022
Fiscal 2023 Fiscal 2024
Expected Maturity Date
Fiscal 2025
Fiscal 2026
750
Thereafter
Short-term borrowings:
Variable rate
$
224
$
Weighted-average interest rate
1.9 %
– $
%
%
Total
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
$
АА
$
$
3,250
1.3 %
%
%
0.9%
3.3 %
%
― %
2.9%
(1) Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt.
As of January 31, 2021, our variable rate borrowings, including the effect of our commercial paper and interest rate swaps,
represented 9% of our total short-term and long-term debt. Based on January 31, 2021 debt levels, a 100 basis point change in
prevailing market rates would cause our annual interest costs to change by approximately $42 million.
Foreign Currency Risk
We are exposed to fluctuations in currency exchange rates as a result of our net investments and operations in countries other
than the U.S, as well as our foreign-currency-denominated long-term debt. For fiscal 2021, movements in currency exchange
rates and the related impact on the translation of the balance sheets resulted in the $0.2 billion net gain in the currency
translation and other category of accumulated other comprehensive loss.
We hedge a portion of our foreign currency risk by entering into currency swaps. The aggregate fair value of these swaps was
in a liability position of $83 million and $241 million as of January 31, 2021 and January 31, 2020, respectively. The change in
the fair value of these swaps was due to fluctuations in currency exchange rates, primarily due to the strengthening of certain
currencies relative to the U.S. dollar in fiscal 2021. The hypothetical result of a uniform 10% weakening in the value of the
U.S. dollar relative to other currencies underlying these swaps would have resulted in a change in the value of the swaps of
$524 million. A hypothetical 10% change in interest rates underlying these swaps from the market rates in effect as of
January 31, 2021 would have resulted in a change in the value of the swaps of $46 million.
42
48
2.9%
1,500 $
1,750 $
0.6%
2.6 %
%
%
%
%
$
$
$
750
Weighted-average interest rate
0.5 %
%
%
%
$
%
0.5%
Interest rate derivatives
Interest rate swaps:
Fixed to variable
$
$
$
Weighted-average pay rate
Weighted-average receive rate
%
47
$
Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets
arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net
operating loss and tax credit carryforwards. Deferred tax assets are evaluated for future realization and reduced by a valuation
allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing
whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations
of future taxable income, carryforward periods and other relevant quantitative and qualitative factors. The recoverability of the
deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal
of taxable temporary differences, forecasted operating earnings and available tax planning strategies. This evaluation relies on
estimates.
224
20,949
2,189
3,878
3,224
11,658
8,835
896
1,461
1,221
5,257
8,081
564
1,034
899
5,584
21,124
1,636
3,072
224
$ 27,619
44,309 $ 3,115 $ 7,735 $ 5,840
$
AA
On December 22, 2017, the Tax Act was enacted and contains significant changes to U.S. income tax law. Effective beginning
January 2018, the Tax Act reduced the U.S. statutory tax rate from 35% to 21% and created new taxes on foreign-sourced
earnings and related-party payments. As discussed in Note 9 to our Consolidated Financial Statements, we completed our
accounting for the tax effects of the Tax Act in fiscal 2019. As further guidance is issued by the U.S. Treasury Department, the
IRS, and other standard-setting bodies, any resulting changes to our estimates will be treated in accordance with the relevant
accounting guidance.
Credit rating agencies review their ratings periodically and, therefore, the credit ratings assigned to us by each agency may be
subject to revision at any time. Accordingly, we are not able to predict whether our current credit ratings will remain consistent
over time. Factors that could affect our credit ratings include changes in our operating performance, the general economic
environment, conditions in the retail industry, our financial position, including our total debt and capitalization, and changes in
our business strategy. Any downgrade of our credit ratings by a credit rating agency could increase our future borrowing costs
or impair our ability to access capital and credit markets on terms commercially acceptable to us. In addition, any downgrade
of our current short-term credit ratings could impair our ability to access the commercial paper markets with the same flexibility
that we have experienced historically, potentially requiring us to rely more heavily on more expensive types of debt financing.
The credit rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities. Each
rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated
independently of any other rating. Moreover, each credit rating is specific to the security to which it applies.
44
Contractual Obligations
The following table sets forth certain information concerning our obligations to make contractual future payments, such as debt
and lease agreements, and certain contingent commitments as of January 31, 2021:
(Amounts in millions)
Recorded contractual obligations:
Long-term debt(¹)
2,678
Short-term borrowings
Finance lease obligations and other (2)(3)
Obligations related to businesses held for sale (4)
Unrecorded contractual obligations:
Estimated interest on long-term debt
Syndicated and other letters of credit
Purchase obligations
Obligations related to businesses held for sale (4)
Total
Payments Due During Fiscal Years Ending January 31,
2022
2023-2024 2025-2026 Thereafter
Operating lease obligations (2)
13,738
3.7 %
2,019
resources.
45
Other Matters
We discuss our "Asda Equal Value Claims" which includes certain existing employment claims against our recently divested
United Kingdom subsidiary, Asda Group Limited, including certain risks arising therefrom, under the sub-caption "Legal
Proceedings" in Note 10 to our Consolidated Financial Statements. We also discuss the Opioids Litigation including certain
risks arising therefrom, in "Item 1A. Risk Factors" under the caption "Legal, Tax, Regulatory, Compliance, Reputational and
Other Risks" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial Statements. We also
discuss various legal proceedings related to the Asda Equal Value Claims and Opioids Litigation in "Item 3. Legal Proceedings"
herein under the caption "Supplemental Information." The foregoing matters and other matters described elsewhere in this
Annual Report on Form 10-K represent contingencies of the Company that may or may not result in the Company incurring a
material liability upon their final resolution.
Summary of Critical Accounting Estimates
Management strives to report our financial results in a clear and understandable manner, although in some cases accounting and
disclosure rules are complex and require us to use technical terminology. In preparing the Company's Consolidated Financial
Statements, we follow accounting principles generally accepted in the U.S. These principles require us to make certain
estimates and apply judgments that affect our financial position and results of operations as reflected in our financial statements.
These judgments and estimates are based on past events and expectations of future outcomes. Actual results may differ from
our estimates.
Management continually reviews our accounting policies, how they are applied and how they are reported and disclosed in our
financial statements. Following a summary of our critical accounting estimates and how they are applied in preparation of
the financial statements.
Inventories
We evaluate long-lived assets for indicators of impairment whenever events or changes in circumstances indicate their carrying
amounts may not be recoverable. Management's judgments regarding the existence of impairment indicators are based on
market conditions and financial performance. The evaluation of long-lived assets is performed at the lowest level of
identifiable cash flows, which is generally at the individual store level. The variability of these factors depends on a number of
conditions, including uncertainty about future events and changes in demographics. Thus, our accounting estimates may
change from period to period. These factors could cause management to conclude that indicators of impairment exist and
require impairment tests be performed, which could result in management determining the value of long-lived assets is
impaired, resulting in a write-down of the related long-lived assets. Impairment charges on assets held and used were
immaterial in fiscal 2021, 2020 and 2019. As a measure of sensitivity, fiscal 2021 impairment would not change materially
with a 10% decrease in the undiscounted cash flows for the stores or clubs with indicators of impairment.
As of January 31, 2021, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or
future material effect on our consolidated financial position, results of operations, liquidity, capital expenditures or capital
In fiscal 2021, the Company's operations in Argentina, Japan and the United Kingdom met the held for sale criteria. As a result,
the individual disposal groups were measured at fair value, less costs to sell, which resulted in impairment charges that were
included in the total estimated pre-tax loss of $8.3 billion recorded in fiscal 2021. Refer to Note 12. Fiscal 2019 included a
pre-tax loss of $4.8 billion related to the sale of the majority stake in Walmart Brazil, which included full impairment of all
related assets.
We account for business combinations using the acquisition method of accounting, which requires that once control is obtained,
all the assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their
respective fair values at the date of acquisition. The determination of fair values of identifiable assets and liabilities requires
estimates and the use of valuation techniques when market value is not readily available. For intangible assets acquired in a
business combination, we typically use the income method. Significant estimates in valuing certain intangible assets include,
but are not limited to, the amount and timing of future cash flows, growth rates, discount rates and useful lives. The excess of
the purchase price over fair values of identifiable assets and liabilities is recorded as goodwill.
46
46
Goodwill is assigned to the reporting unit which consolidates the acquisition. Components within the same reportable segment
are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of January 31,
2021, our reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill and other indefinite-
lived acquired intangible assets are not amortized, but are evaluated for impairment annually or whenever events or changes in
circumstances indicate that the value of a certain asset may be impaired. Generally, this evaluation begins with a qualitative
assessment to determine whether a quantitative impairment test is necessary. If we determine, after performing an assessment
based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or
that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative
impairment test would be performed. The quantitative test for impairment requires management to make judgments relating to
future cash flows, growth rates and economic and market conditions. These evaluations are based on determining the fair value
of a reporting unit or asset using a valuation method such as discounted cash flow or a relative, market-based approach.
Historically, our reporting units have generated sufficient returns to recover the cost of goodwill, as the fair value significantly
exceeded the carrying value. Our indefinite-lived acquired intangible assets have also historically generated sufficient returns
to recover their cost. Because of the nature of the factors used in these tests, if different conditions occur in future periods,
future operating results could be materially impacted. Due to certain strategic restructuring decisions, we recorded
approximately $0.7 billion in impairment in fiscal 2020 related to acquired trade names and acquired developed software.
Contingencies
We are involved in a number of legal proceedings. We record a liability when it is probable that a loss has been incurred and the
amount is reasonably estimable. We also perform an assessment of the materiality of loss contingencies where a loss is either
not probable or it is reasonably possible that a loss could be incurred in excess of amounts accrued. If a loss or an additional
loss has at least a reasonable possibility of occurring and the impact on the financial statements would be material, we provide
disclosure of the loss contingency in the footnotes to our financial statements. We review all contingencies at least quarterly to
determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or the range of the
loss can be made. Although we are not able to predict the outcome or reasonably estimate a range of possible losses in certain
matters described in Note 10 to our Consolidated Financial Statements, and have not recorded an associated accrual related to
these matters, an adverse judgment or negotiated resolution in any of these matters could have a material adverse effect on our
business, financial position, results of operations or cash flows.
Income taxes have a significant effect on our net earnings. We are subject to income taxes in the U.S. and numerous foreign
jurisdictions. Accordingly, the determination of our provision for income taxes requires judgment, the use of estimates
certain cases and the interpretation and application of complex tax laws. Our effective income tax rate is affected by many
factors, including changes in our assessment of certain tax contingencies, increases and decreases in valuation allowances,
changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings among our U.S. and
international operations where the statutory rates are generally higher than the U.S. statutory rate, and may fluctuate as a result.
Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions. The
benefits of uncertain tax positions are recorded in our financial statements only after determining a more likely than not
probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and
circumstances change, we reassess these probabilities and record any changes in the financial statements as appropriate. We
account for uncertain tax positions by determining the minimum recognition threshold that a tax position is required to meet
before being recognized in the financial statements. This determination requires the use of judgment in evaluating our tax
positions and assessing the timing and amounts of deductible and taxable items.
Income Taxes
2,019
Business Combinations, Goodwill, and Acquired Intangible Assets
Off Balance Sheet Arrangements
We value inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using
the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Sam's Club segment is
valued using the weighted-average cost LIFO method. When necessary, we record a LIFO provision for the estimated annual
effect of inflation, and these estimates are adjusted to actual results determined at year-end. Our LIFO provision is calculated
based on inventory levels, markup rates and internally generated retail price indices. As a measure of sensitivity, a 1% increase
to our retail price indices would not have resulted in a decrease to the carrying value of inventory. As of January 31, 2021 and
2020, our inventories valued at LIFO approximated those inventories as if they were valued at first-in, first-out ("FIFO").
Impairment of Assets
The expected timing for payment discussed above is estimated based on current information. Timing of payments and actual
amounts paid may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for
some obligations.
7,017
In addition to the amounts shown in the table above, $1.7 billion of net unrecognized tax benefits are considered uncertain tax
positions and have been recorded as liabilities. The timing of the payment, if any, associated with these liabilities is uncertain.
Refer to Note 9 to our Consolidated Financial Statements for additional discussion of unrecognized tax benefits.
15,004
5,562
856
621
210
22
930
3
1,495
Total contractual obligations
Purchase obligations include legally binding contracts, such as firm commitments for inventory and utility purchases, as well as
commitments to make capital expenditures, software acquisition and license commitments and legally binding service contracts.
For the purposes of the above table, contractual obligations for the purchase of goods or services are defined as agreements that
are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be
purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts that specify
the Company will purchase all or a portion of its requirements of a specific product or service from a supplier, but do not
include a fixed or minimum quantity, are excluded from the table above. Accordingly, purchase orders for inventory are not
included in the table above as purchase orders represent authorizations to purchase rather than binding agreements. Our
purchase orders are based on our current inventory needs and are fulfilled by our suppliers within short time periods. We also
enter into contracts for outsourced services; however, the obligations under these contracts are not significant and the contracts
generally contain clauses allowing for cancellation without significant penalty.
64,789
Under the terms of the sale of the majority stake of Walmart Brazil, we agreed to indemnify the purchaser for certain pre-
closing tax and legal contingencies and other matters for up to R$2.3 billion, adjusted for interest based on the Brazilian
interbank deposit rate. As of January 31, 2021, the indemnification liability was $0.6 billion and recorded in deferred income
taxes and other in the Company's Consolidated Balance Sheet.
(4) Includes obligations related to our operations in Japan and the United Kingdom which are classified as held for sale as of January 31, 2021.
(3) Finance lease obligations and other includes contractual obligations under other financing obligations of $1.3 billion.
Estimated interest payments are based on our principal amounts and expected maturities of all debt outstanding as of
January 31, 2021, and assumes interest rates remain at current levels for our variable rate debt. Additionally, we have $15.0
billion of various undrawn committed lines of credit in the U.S. as of January 31, 2021.
(1) Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt.
$ 121,401 $ 18,281 $ 22,952 $ 15,379 $
(2) Represents our contractual obligations to make future payments under non-cancelable operating leases and finance lease agreements, both of which are
recorded on the balance sheet at their present value. Refer to Note 7 to our Consolidated Financial Statements for additional information regarding
operating and finance leases.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Rogers, Arkansas
March 19, 2021
/s/ Ernst & Young LLP
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company's assets that could have a material effect on the financial statements.
Definition and Limitations of Internal Control over Financial Reporting
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
The Company's management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We have served as the Company's auditor since 1969.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the accompanying consolidated balance sheets of Walmart Inc. as of January 31, 2021 and 2020, the related
consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in
the period ended January 31, 2021, and the related notes and our report dated March 19, 2021 expressed an unqualified opinion
thereon.
We have audited Walmart Inc.'s internal control over financial reporting as of January 31, 2021, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) (the COSO criteria). In our opinion, Walmart Inc. (the Company) maintained, in all material respects,
effective internal control over financial reporting as of January 31, 2021, based on the COSO criteria.
Opinion on Internal Control over Financial Reporting
To the Shareholders and the Board of Directors of Walmart Inc.
Report of Independent Registered Public Accounting Firm
52
March 19, 2021
Rogers, Arkansas
/s/ Ernst & Young LLP
53
Basis for Opinion
Walmart Inc.
4,076
Fiscal Years Ended January 31,
559,151
523,964
To test the estimated fair values of the indefinite-lived intangible assets, we performed audit procedures
that included, among others, assessing methodologies used to determine the fair value, testing the
significant assumptions discussed above and testing the completeness and accuracy of the underlying
data used by the Company. For example, we evaluated management's forecasted revenue growth rates
used in the fair value estimates by comparing those assumptions to the historical results of the Company
and current industry, market and economic forecasts. We involved a valuation specialist to assist in
evaluating the valuation methodologies and the significant assumptions such as discount rates and royalty
rates. Additionally, we performed sensitivity analyses of significant assumptions to evaluate the effect on
the fair value estimates of the indefinite-lived intangible assets.
4,038
3,918
510,329
519,926 $
555,233 $
$
2019
2020
2021
Interest:
Operating income
Operating, selling, general and administrative expenses
Cost of sales
Costs and expenses:
Total revenues
Membership and other income
Net sales
(Amounts in millions, except per share data)
Revenues:
Consolidated Statements of Income
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls
over the Company's indefinite-lived intangible asset impairment review process. Our procedures
included, among others, testing controls over management's review of the significant assumptions
described above used to estimate the fair values of the indefinite-lived intangible assets.
Opinion on the Financial Statements
At January 31, 2021, the Company has $4.9 billion of indefinite-lived intangible assets which primarily
consist of acquired tradenames. As disclosed in Notes 1, 8 and 12 to the Consolidated Financial
Statements, these assets are evaluated for impairment at least annually using valuation techniques to
estimate fair value. These fair value estimates are sensitive to certain significant assumptions including
revenue growth rates, discount rates, and royalty rates.
Consolidated Statements of Cash Flows
57
Consolidated Statements of Shareholders' Equity
56
Consolidated Balance Sheets
55
Consolidated Statements of Comprehensive Income
54
53
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Consolidated Statements of Income
51
Report of Independent Registered Public Accounting Firm
Page
Table of Contents
For the Fiscal Year Ended January 31, 2021
Consolidated Financial Statements of Walmart Inc.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
We are exposed to changes in the stock price of our equity investments with readily determinable fair values. The change in
fair value is recorded within other gains and losses and resulted in a gain of $8.7 billion in fiscal 2021 due to net increases in the
stock price of those equity investments. As of January 31, 2021, the fair value of our equity investments with readily
Investment Risk
In certain countries, we also enter into immaterial foreign currency forward contracts to hedge the purchase and payment of
purchase commitments denominated in non-functional currencies.
In addition to currency swaps, we also hedge a portion of our foreign currency risk by designating foreign-currency-
denominated long-term debt as nonderivative hedges of net investments of certain of our foreign operations. We had
outstanding long-term debt of £1.7 billion as of January 31, 2021 and January 31, 2020 that was designated as a hedge of our
net investment in the U.K. As of January 31, 2021, a hypothetical 10% increase or decrease in the value of the U.S. dollar
relative to the British pound would have resulted in a change in the value of the debt of $210 million. In addition, we had
outstanding long-term debt of ¥100 billion as of January 31, 2021 and ¥180 billion as of January 31, 2020 that was designated
as a hedge of our net investment in Japan. As of January 31, 2021, a hypothetical 10% change in value of the U.S. dollar
relative to the Japanese yen would have resulted in a change in the value of the debt of $87 million. As of January 31, 2021, the
Company's operations in the U.K. and Japan are classified as held for sale, and subsequently closed in February 2021 and
March 2021, respectively. Refer to Note 12 to our Consolidated Financial Statements.
58
Auditing management's annual indefinite-lived intangible assets impairment tests was complex and
highly judgmental due to the significant measurement uncertainty in determining the fair values of the
indefinite-lived intangibles. For example, the fair value estimates are sensitive to significant assumptions
identified above that are affected by future market or economic conditions.
Notes to Consolidated Financial Statements
50
Valuation of Indefinite-Lived Intangible Assets
To test the Company's assessment of the probability of occurrence or determination of an estimate of
loss, or range of loss, among other procedures, we read the minutes of the meetings of the Board of
Directors and committees of the Board of Directors, reviewed opinions provided to the Company by
certain outside legal counsel, read letters received directly by us from internal and external counsel, and
evaluated the current status of contingencies based on discussions with internal legal counsel. We also
evaluated the appropriateness of the related disclosures. To test the estimated fair value of indemnities,
we involved a valuation specialist to evaluate the valuation methodologies and significant assumptions
including, among others, the discount rate.
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls
over the identification and evaluation of contingencies and related indemnities. For example, we tested
controls over the Company's assessment of the likelihood of loss and the Company's determinations
regarding the measurement of loss.
Auditing management's accounting for, and disclosure of, loss contingencies and the estimated fair value
of related indemnifications was complex and highly judgmental as it involved our assessment of the
significant judgments made by management when assessing the probability of occurrence for
contingencies or related indemnifications or when determining whether an estimate of the loss or range
of loss could be made.
How We
Addressed the
Matter in Our
Audit
Description of
the Matter
Addressed the
Matter in Our
Audit
How We
51
As described in Note 10 to the Consolidated Financial Statements, at January 31, 2021, the Company is
involved in a number of legal proceedings and has made accruals with respect to these matters, where
appropriate. For some matters, a liability is not probable, or the amount cannot be reasonably estimated
and therefore an accrual has not been made. Where a liability is reasonably possible and may be material,
such matters have been disclosed. Management assessed the probability of occurrence and the estimation
of any potential loss based on the ability to predict the number of claims that may be filed or whether any
loss or range of loss can be reasonably estimated. For example, in assessing the probability of occurrence
in a particular legal proceeding, management exercises judgment to determine if it can predict the
number of claims that may be filed and whether it can reasonably estimate any loss or range of loss that
may arise from that proceeding. In connection with the sale of Asda, the Company is no longer liable for
the Asda Equal Value Claims; however, the Company has agreed to provide indemnification for any
potential Asda liability related to these claims up to a contractually determined amount.
Contingencies
Description of
the Matter
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the Consolidated Financial Statements, taken
as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
Critical Audit Matters
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due
to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
Basis for Opinion
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of January 31, 2021, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated March 19, 2021 expressed an unqualified opinion thereon.
We have audited the accompanying consolidated balance sheets of Walmart Inc. (the Company) as of January 31, 2021 and
2020, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the
three years in the period ended January 31, 2021, and the related notes (collectively referred to as the "Consolidated Financial
Statements"). In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the financial
position of the Company at January 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three
years in the period ended January 31, 2021, in conformity with U.S. generally accepted accounting principles.
To the Shareholders and the Board of Directors of Walmart Inc.
Report of Independent Registered Public Accounting Firm
59
determinable fair values was $14.4 billion. As of January 31, 2021, a hypothetical 10% change in the stock price of such
investments would have changed the fair value of such investments by approximately $1.4 billion.
282
420,315
3,247
83,943
(12,805)
74,669
6,883
81,552
284
Consolidated net income
13,510
196
13,706
Other comprehensive income
(loss), net of income taxes
1,039
13,510
1,039
2,832
414
Other
7
1
481
26
| | | ||
Balances as of January 31,
2020
(6,048)
(5,639)
(5,639)
(475)
(475)
508
(94)
(6,048)
Cash dividend declared to
noncontrolling interest
(213)
Cash dividends declared
Balances as of January 31,
2021
2,821
$
282
$
3,646 $
586
88,763 $
80,925
$
6,606 $
87,531
See accompanying notes.
57
(11,766) $
826
105
(365)
(6,116)
($2.16 per share)
(6,116)
(6,116)
Purchase of Company stock
(20)
(365)
Other
9 496 (15) 481
ཅི།
(97)
(2,559)
(2,658)
(2,658)
Cash dividends declared to
noncontrolling interest
Walmart Inc.
(5,435)
(53)
noncontrolling interest
Noncontrolling interest of
acquired entity
Balances as of January 31,
2019
Adoption of new accounting
(80)
(8)
Cash dividend declared to
(245)
(7,487)
(7,487)
(488)
(488)
4,345
4,345
(7,234)
6
Purchase of Company stock
(6,102)
(1,436)
925
(1)
924
6,670
6,670
Other
509
ne --75
75
(188)
(113)
(6,102)
(6,102)
7,179
(199)
1
(17)
Other comprehensive income
(loss), net of income taxes
14,881
14,881
320
15,201
(1,263)
Consolidated net income
(1,263)
(1,235)
Cash dividends declared
($2.12 per share)
---
(6,048)
Purchase of Company stock
28
562
2019, net of income taxes
(34)
546
8
554
2,878
288
2,965
(300)
80,785
72,496
7,138
79,634
standards on February 1,
--- (266)
(266)
(11,542)
Consolidated Statements of Cash Flows
Fiscal Years Ended January 31,
(Amounts in millions)
(5,382)
(1,907)
(3,784)
Dividends paid
(6,116)
(6,048)
Repayments of long-term debt
(6,102)
(2,625)
(5,717)
(7,410)
Dividends paid to noncontrolling interest
(434)
(555)
Purchase of Company stock
(431)
15,872
Proceeds from issuance of long-term debt
(14,656)
Other investing activities
102
479
(431)
Net cash used in investing activities
5,492
(10,071)
(24,036)
Cash flows from financing activities:
Net change in short-term borrowings
(324)
(4,656)
(53)
(9,128)
(56)
Other financing activities
(908)
7,756
7,014
$
17,788
$
9,515 $
9,515
7,756
5,271 $
2,216
3,616 $
3,982
2,464
2,348
58
514,405
(1,236)
(1,848)
1,759
(629)
Net cash used in financing activities
(16,117)
(14,299)
(2,537)
Effect of exchange rates on cash, cash equivalents and restricted cash
742
235
(438)
Net increase in cash, cash equivalents and restricted cash
Cash and cash equivalents reclassified as assets held for sale
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
Supplemental disclosure of cash flow information:
Income taxes paid
Interest paid
See accompanying notes.
10,121
(69)
(180)
Payments for business acquisitions, net of cash acquired
876
Losses on disposal of business operations
8,401
15
4,850
Asda pension contribution
(1,036)
3,516
Deferred income taxes
320
(499)
Other operating activities
1,521
1,981
1,734
1,911
Changes in certain assets and liabilities, net of effects of acquisitions and dispositions:
(1,886)
Net unrealized and realized (gains) and losses
2021
2020
2019
Cash flows from operating activities:
Consolidated net income
$
(8,589)
13,706 $
7,179
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization
11,152
10,987
10,678
15,201 $
Receivables, net
(1,086)
154
36,074
25,255
27,753
Payments for property and equipment
(10,264)
(10,705)
(40)
(10,344)
215
321
519
Proceeds from the disposal of certain operations
56
833
Proceeds from the disposal of property and equipment
(93)
(136)
183
(368)
Inventories
(2,395)
(300)
(1,311)
Accounts payable
6,966
(274)
1,831
Accrued liabilities
Accrued income taxes
Net cash provided by operating activities
Cash flows from investing activities:
4,623
186
--- 2,361
|| ||
$
(loss), net of income taxes
13,706 $
15,201 $
7,179
(196)
(320)
(509)
$
13,510
6,670
842
286
(226)
(221)
122
14,881
272
2019
2021
2.12
$
2.08
Walmart Inc.
Consolidated Statements of Comprehensive Income
(Amounts in millions)
Fiscal Years Ended January 31,
2020
Consolidated net income
Other comprehensive income (loss), net of income taxes
Currency translation and other
Net investment hedges
Cash flow hedges
Minimum pension liability
Other comprehensive income (loss), net of income taxes
Consolidated net income attributable to noncontrolling interest
Consolidated net income attributable to Walmart
$
235
(290)
Comprehensive (income) loss attributable to noncontrolling interest
17
(348)
(321)
Comprehensive income attributable to Walmart
$
7,066
14,549
13,618 $
6,745
See accompanying notes.
55
55
(Amounts in millions)
$
(399)
13,966
Comprehensive income, net of income taxes
(30)
(1,244)
131
826
(1,235)
(113)
14,532
Other comprehensive (income) loss attributable to noncontrolling interest
(28)
188
Other comprehensive income (loss) attributable to Walmart
1,039
(1,263)
75
213
2.16
2,945
2,868
339
337
371
(121)
(189)
(217)
Income before income taxes
2,194
2,129
(210)
(1,958)
8,368
20,564
20,116
2,410
11,460
Other (gains) and losses
Interest income
Cash dividends declared
($2.08 per share)
394,605
385,301
116,288
108,791
107,147
Interest, net
22,548
21,957
Debt
1,976
2,262
1,975
Finance, capital lease and financing obligations
20,568
Provision for income taxes
6,858
4,915
Dividends declared per common share
See accompanying notes.
$
4.77 $
4.75
5.22 $
2.28
Diluted
5.19
EA
54
2,831
2,850
2,929
2,847
2.26
Weighted-average common shares outstanding:
Basic
Basic net income per common share attributable to Walmart
Diluted net income per common share attributable to Walmart
Net income per common share:
4,281
Consolidated net income
13,706
15,201
7,179
Consolidated net income attributable to noncontrolling interest
Consolidated net income attributable to Walmart
(196)
(320)
(509)
$
13,510
$
14,881
$
6,670
ASSETS
Current assets:
49
Receivables, net
284
3,247
88,763
83,943
(11,766)
(12,805)
80,925
3,646
74,669
6,883
87,531
81,552
$
252,496
$
6,606
236,495
44
14,370
3,115
5,362
1,466
1,793
491
511
12,961
92,645
41,194
43,714
12,909
16,171
3,847
4,307
77,790
Walmart Inc.
Consolidated Statements of Shareholders' Equity
Capital in
295
$ 2,648
$ 85,107
$
2018
(10,181) $
$
77,869
2,953 $ 80,822
Adoption of new accounting
standards, net of income
Consolidated net income
Cash and cash equivalents
Other comprehensive income
$
2,952
Balances as of February 1,
Equity
Common Stock
(Amounts in millions)
Shares
Amount
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Total
Walmart
Shareholders'
Noncontrolling
Total
Income (Loss)
Equity
Interest
280
242
taxes
37,966
Long-term operating lease obligations
Long-term finance lease obligations
Deferred income taxes and other
Commitments and contingencies
Equity:
Common stock
Long-term debt
Capital in excess of par value
Accumulated other comprehensive loss
Total Walmart shareholders' equity
Noncontrolling interest
Total equity
Total liabilities and equity
See accompanying notes.
56
Retained earnings
94
Finance lease obligations due within one year
Total current liabilities
Long-term debt due within one year
22,296
Inventories
Property and equipment, net
Operating lease right-of-use assets
Finance lease right-of-use assets, net
Goodwill
Operating lease obligations due within one year
Other long-term assets
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings
Accounts payable
Accrued liabilities
Accrued income taxes
Total assets
Walmart Inc.
Total current assets
As of January 31,
4,417
28,983
31,073
23,598
16,567
$
4,005
252,496 $
$
224 $
575
49,141
Consolidated Balance Sheets
46,973
236,495
17,424
Prepaid expenses and other
105,208
13,642
2020
$
17,741
$
2021
6,516
9,465
44,949
44,435
20,861
1,622
90,067
61,806
92,201
6,284
44,309
Total debt
(104)
3
Total other (2)
Variable
44,306
Total unsecured debt
1,652
1,624
Total Yen denominated
0.4%
49,180
49,076
$
(3,115)
2026
2025
2024
2023
2022
Fiscal Year
Less amounts due within one year
(Amounts in millions)
(1) The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end interest rates.
(2) Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt.
43,714
41,194
$
Long-term debt
(5,362)
Annual maturities of long-term debt during the next five years and thereafter are as follows:
1,652
Variable
1,624
Thereafter
$
39,752
3.8%
750
0.5%
1,500
2.1%
Total U.S. dollar denominated
35,966
41,252
Fixed
2023 - 2030
3,034
3.3%
2,758
3.3%
2023-2028
3,518
3,682
Fixed
Total Sterling denominated
5.4%
0.3%
3,518
3,682
2031 - 2039
Fixed
2,758
3,034
Variable
5.4%
Total Euro denominated
Balances as of February 1, 2018
Annual
79.5
53.9
105.98 $
5,717 $
19.4
135.20 $
2,625 $
$
$
2019
2020
66
66
Total cash paid for share repurchases
Average price paid per share
Total number of shares repurchased
(Amounts in millions, except per share data)
Fiscal Years Ended January 31,
2021
The Company regularly reviews share repurchase activity and considers several factors in determining when to execute share
repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, results of operations
and the market price of the Company's common stock. The following table provides, on a settlement date basis, the number of
shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2021, 2020 and 2019:
From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the
Company's Board of Directors. All repurchases made during fiscal 2021 were made under the $20.0 billion share repurchase
program approved in October 2017, of which authorization for $3.0 billion of share repurchases remained as of January 31,
2021. On February 18, 2021, the Board of Directors approved a new $20.0 billion share repurchase program which, beginning
February 22, 2021, replaced the previous share repurchase program. Any repurchased shares are constructively retired and
returned to an unissued status.
Share Repurchase Program
3.9%
1,096
1,002
Unrecognized compensation cost for restricted stock and performance-based restricted stock units
Weighted average remaining period to expense for restricted stock units (years)
344
326
93.18
362
1.3
1.6
Weighted average remaining period to expense for restricted stock and performance-based restricted stock
units (years)
1.4
1.4
1.1
1.1
7,410
Note 4. Accumulated Other Comprehensive Loss
The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2021,
2020, and 2019:
$
122
$
68
44,309
$
1,646
27,619
4,360
4,721
3,014
3,115
$
Maturities
1,480
Total
$
(12,136) $
(Amounts in millions and net of immaterial income
taxes)
Adoption of new accounting standards (¹)
Other comprehensive income (loss) before
reclassifications, net
Currency
Translation
Net
Investment
Unrealized
Gain on
Available-for-
1,030
and Other
Sale Securities
Cash Flow
Hedges
Minimum
Pension
Liability
Total
$
Hedges
35,216
12,734 $
2022 - 2050
2022
(539)
(1,956)
(12,805)
Other comprehensive income (loss) before
214
(221)
186
(172)
7
reclassifications, net
Reclassifications to income, net (4)
Balances as of January 31, 2021
$
841
(10,772) $
49
142
1,032
2021
(Amounts in millions)
January 31,
The Company's accrued liabilities consist of the following as of January 31, 2021 and 2020:
Note 5. Accrued Liabilities
Income.
1,517
Amounts reclassified from accumulated other comprehensive loss for derivatives are recorded in interest, net, in the Company's
Consolidated Statements of Income, and the amounts for the minimum pension liability, as well as the cumulative translation
resulting from the disposition of a business, are recorded in other gains and losses in the Company's Consolidated Statements of
(3) Primarily includes the remeasurement of Asda Group Limited's ("Asda") pension benefit obligation subsequent to the cash contribution made by Asda in
fiscal 2020. Refer to Note 11.
(2) Includes a cumulative foreign currency translation loss of $2.0 billion, for which there was no related income taxes, upon sale of the majority stake in
Walmart Brazil. Refer to Note 12.
(1) Primarily relates to the adoption of ASU 2016-01 and ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of
Certain Tax Effects from Accumulated Other Comprehensive Income.
(304) $ (1,986) $ (11,766)
$
1,296 $
(4) Includes a cumulative foreign currency translation loss of $0.8 billion, for which there was no related income taxes, upon sale of the majority stake in
Walmart Argentina. Refer to Note 12.
2020
(11,827)
16
89
93
(1,646)
28
(1,436)
(2,093)
272
(339)
93
(2,067)
Reclassifications to income, net (2)
2,055
49
38
2,142
Balances as of January 31, 2019
(12,085)
39
(23)
Reclassifications to income, net
(1,279)
(1,283)
(399)
Balances as of January 31, 2020
122
reclassifications, net (3)
Other comprehensive income (loss) before
(11,542)
(712)
(140)
1,395
281
Liabilities held for sale (¹)
$
1,062
$
5,000 $
$
364-day revolving credit facility(1)
10,000
5,000 $
10,000
Available
5,000 $
10,000
January 31, 2020
Drawn
Undrawn
$ 5,000
10,000
Total
$
15,000 $
$
15,000 $ 15,000 $
$
Variable
Fixed
Amount
Average
Average
Rate()
Amount
Five-year credit facility
Maturity Dates
By Fiscal Year
(Amounts in millions)
January 31, 2021
January 31, 2020
The committed lines of credit in the table above mature at various times between April 2021 and May 2024, carry interest rates
generally ranging between LIBOR plus 10 basis points and LIBOR plus 75 basis points, and incur commitment fees ranging
between 1.5 and 4.0 basis points. In conjunction with the committed lines of credit listed in the table above, the Company has
agreed to observe certain covenants, the most restrictive of which relates to the maximum amount of secured debt.
Additionally, the Company has syndicated and fronted letters of credit available which totaled $1.8 billion as of January 31,
2021 and 2020, of which $1.8 billion and $1.6 billion was drawn as of January 31, 2021 and 2020, respectively.
The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following
as of January 31, 2021 and 2020:
(1) In April 2020, the Company renewed and extended its existing 364-day revolving credit facility.
15,000
Unsecured debt
Undrawn
Drawn
Available
7,242
Other(5)
1,990
2,310
Deferred gift card revenue
3,039
6,705
3,328
4,469
4,698
Self-insurance (3)
6,093
7,654
Accrued wages and benefits (2)
Accrued non-income taxes (4)
$
Total accrued liabilities
37,966
(Amounts in millions)
January 31, 2021
The Company has various committed lines of credit in the U.S. to support its commercial paper program and are summarized in
the following table:
Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings as of January 31, 2021 and 2020
were $0.2 billion and $0.6 billion, respectively, with weighted-average interest rates of 1.9% and 5.0%, respectively. Short-term
borrowings as of January 31, 2020 were primarily outside of the U.S.
Note 6. Short-term Borrowings and Long-term Debt
67
$
62
(5)
(4) Accrued non-income taxes include accrued payroll, property, value-added, sales and miscellaneous other taxes.
(3) Self-insurance consists of insurance-related liabilities, such as workers' compensation, general liability, auto liability, product liability and certain
employee-related healthcare benefits.
(1) Liabilities held for sale relate to the Company's operations in Japan and the U.K. classified as held for sale as of January 31, 2021. See Note 12.
(2) Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans.
22,296
$
Other accrued liabilities consist of various items such as interest, maintenance, utilities, legal contingencies, and advertising.
Unrecognized compensation cost for restricted stock units
$
386
321
$
2,696
$
(2,211)
(2,211)
25,966 $
111
8
103
10
10
31,073
313
28,167
41
41
2,593
(149)
Balances as of January 31, 2020
Changes in currency translation and other
Acquisitions
Amounts reclassified related to operations held for sale (¹)
Balances as of January 31, 2021
Walmart U.S.
2,552
$
Walmart
International
Total
$
28,316 $
(149)
313
$
31,181
Sam's Club
Acquisitions
(1) Represents goodwill associated with operations in the U.K. and Japan which are classified as held for sale as of January 31, 2021. Refer to Note 12.
Intangible assets are included in other long-term assets in the Company's Consolidated Balance Sheets. As of January 31, 2021
and 2020, the Company had $4.9 billion and $5.2 billion, respectively, in indefinite-lived intangible assets which primarily
consists of acquired trade names. Refer to Note 12 for additional information related to acquired intangible assets for the
Flipkart acquisition in fiscal 2019. There were no significant impairment charges related to intangible assets for fiscal 2021.
During fiscal 2020, the Company incurred approximately $0.7 billion in impairment charges related to its intangible assets.
Refer to Note 8 for additional information.
Membership Fee Revenue
The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise or
services to the customer. eCommerce sales include shipping revenue and are recorded upon delivery to the customer.
Estimated sales returns are calculated based on expected returns.
Net Sales
Revenue Recognition
The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be
taken in a tax return. The Company records interest and penalties related to unrecognized tax benefits in interest expense and
operating, selling, general and administrative expenses, respectively, in the Company's Consolidated Statements of Income.
Refer to Note 9 for additional income tax disclosures.
In determining the provision for income taxes, an annual effective income tax rate is used based on annual income, permanent
differences between book and tax income, and statutory income tax rates. Discrete events such as audit settlements or changes
in tax laws are recognized in the period in which they occur.
The Tax Cuts and Jobs Act of 2017 (the "Tax Act") contains a provision which subjects a U.S. parent of a foreign subsidiary to
current U.S. tax on its global intangible low-taxed income (“GILTI”). The GILTI income is eligible for a deduction, which
lowers the effective tax rate to 10.5% for calendar years 2018 through 2025 and 13.125% after 2025. The Company will report
the tax impact of GILTI as a period cost when incurred. Accordingly, the Company is not providing deferred taxes for basis
differences expected to reverse as GILTI.
Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not
more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the
deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward
periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by
assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences,
forecasted operating earnings and available tax planning strategies. These sources of income rely on estimates.
Income taxes are accounted for under the balance sheet method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases ("temporary differences"). Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the
enactment date.
Income Taxes
These derivative and non-derivative gains or losses continue to defer in accumulated other comprehensive loss until the sale or
substantial liquidation of these foreign operations. Refer to Note 12 for additional detail regarding the divestiture of the
Company's operations in the United Kingdom and Japan.
The Company is a party to receive fixed-rate, pay fixed-rate cross currency interest rate swaps used to hedge the currency
exposure associated with net investments of certain of its foreign operations. The Company records changes in fair value
attributable to the hedged risk in accumulated other comprehensive loss. These derivatives, which relate to the Company's
operations in the United Kingdom held for sale as of January 31, 2021, have maturity dates ranging from October 2023 to
February 2030. The Company also designated certain foreign currency denominated long-term debt as a hedge of currency
exposure associated with the net investment of the Company's operations in the United Kingdom and Japan, both of which were
classified as held for sale as of January 31, 2021. The Company records foreign currency gain or loss associated with
designated long-term debt in accumulated other comprehensive loss. As of January 31, 2021 and 2020, the Company had
$3.3 billion and $3.9 billion, respectively, of outstanding long-term debt designated as net investment hedges.
Net Investment Hedges
2
62
The Company is a party to receive fixed-rate, pay fixed-rate cross currency interest rate swaps used to hedge the currency
exposure associated with the forecasted payments of principal and interest of certain non-U.S. denominated debt. The
Company records changes in the fair value of these swaps in accumulated other comprehensive loss which is subsequently
reclassified into earnings in the period that the hedged forecasted transaction affects earnings. These derivatives will mature on
dates ranging from April 2022 to March 2034.
Cash Flow Hedges
Fair Value Measurement
The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an
asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties
able to engage in the transaction. The fair value of a liability is the amount that would be paid to transfer the liability to a new
obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. Refer to
Note 8 for more information.
Additionally, the Company may provide routine indemnifications in connection with certain transactions, primarily divestitures,
for which an indemnification liability equal to the estimated fair value of the obligation is recorded upon inception. Where
necessary, these obligations are recorded at their fair value within deferred income taxes and other in the Consolidated Balance
Sheets.
61
Investments
Investments in equity securities with readily determinable fair values are recorded at fair value in other long-term assets in the
Consolidated Balance Sheets with changes in fair value recognized in other gains and losses in the Consolidated Statements of
Income. Refer to Note 8 for details. Equity investments without readily determinable fair values are carried at cost in other
long-term assets in the Consolidated Balance Sheets, and adjusted for any observable price changes or impairments recorded in
other gains and losses in the Consolidated Statements of Income.
28,983
Investments in debt securities classified as held-to-maturity are reported at amortized cost in other long-term assets in the
Consolidated Balance Sheets with interest or dividend income recorded in interest income in the Consolidated Statements of
Income.
The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto
liability, product liability and certain employee-related healthcare benefits. Standard actuarial procedures and data analysis are
used to estimate the liabilities associated with these risks as of the balance sheet date on an undiscounted basis. The recorded
liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run-out expenses related to
the processing of these outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with
claims reserve valuations. To limit exposure to some risks, the Company maintains insurance coverage with varying limits and
retentions, including stop-loss insurance coverage for workers' compensation, general liability and auto liability.
Derivatives
The Company uses derivatives for hedging purposes to manage its exposure to changes in interest and currency exchange rates,
as well as to maintain an appropriate mix of fixed- and variable-rate debt. Use of derivatives in hedging programs subjects the
Company to certain risks, such as market and credit risks. The Company may be exposed to credit-related losses in the event of
nonperformance by its counterparties to derivatives. Credit risk is monitored through established approval procedures,
including setting concentration limits by counterparty, reviewing credit ratings and requiring collateral from the counterparty.
The Company enters into derivatives with counterparties rated only "A-" or better by nationally recognized credit rating
agencies. The Company is subject to master netting arrangements which provides set-off and close out netting of exposures
with counterparties, but the Company does not offset derivative assets and liabilities in its Consolidated Balance Sheets. The
Company's collateral arrangements require the counterparty in a net liability position in excess of pre-determined thresholds,
after considering the effects of netting arrangements, to pledge cash collateral. Cash collateral received under these
arrangements was not significant as of January 31, 2021 and 2020. The Company was not required to provide any cash
collateral to counterparties as of January 31, 2021 and 2020.
In order to qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk
management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. If a
derivative is recorded using hedge accounting, depending on the nature of the hedge, derivative gains and losses are recorded
through the same financial statement line item in earnings or are recognized in accumulated other comprehensive loss until the
hedged item is recognized in earnings. Derivatives that do not meet the criteria for hedge accounting, or contracts for which the
Company has not elected hedge accounting, are recorded at fair value with unrealized gains or losses reported in earnings.
Derivatives with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either current or non-current
assets, based on maturity date, and derivatives with an unrealized loss are recorded as either current or non-current liabilities,
based on maturity date. Refer to Note 8 for the presentation of the Company's derivative assets and liabilities.
Fair Value Hedges
The Company is a party to receive fixed-rate, pay variable-rate interest rate swaps that the Company uses to hedge the fair value
of fixed-rate debt. All interest rate swaps designated as fair value hedges of the related long-term debt meet the shortcut
method requirements under U.S. GAAP. Accordingly, changes in the fair values of these interest rate swaps are considered to
exactly offset changes in the fair value of the underlying long-term debt. These derivatives will mature on dates ranging from
April 2023 to April 2024.
Self Insurance Reserves
Changes in currency translation and other
Balances as of February 1, 2019
(Amounts in millions)
As of January 31,
2021
Estimated Useful Lives
N/A
Accumulated depreciation
Property and equipment
Fixtures and equipment
Transportation equipment
Construction in progress
Buildings and improvements
Land
(Amounts in millions)
Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as earned or incurred.
Costs of major improvements are capitalized, while costs of normal repairs and maintenance are expensed as incurred. The
following table summarizes the Company's property and equipment balances, and includes the estimated useful lives that are
generally used to depreciate the assets on a straight-line basis:
Property and Equipment
Components and businesses that meet accounting requirements to be classified as held for sale are presented as single asset and
liability amounts in the Company's financial statements with a valuation allowance, if necessary, to recognize the net carrying
amount at the lower of cost or fair value, less costs to sell. The Company reviews its businesses and assets held for sale each
reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair
values. As of January 31, 2021, $19.2 billion assets held for sale and $12.7 billion liabilities held for sale were classified in
prepaid expenses and other and accrued liabilities in the Consolidated Balance Sheets, respectively, reflecting the Company's
operations in the U.K. and Japan classified as held for sale. Refer to Note 12 for additional details. As of January 31, 2020,
assets and liabilities held for sale were immaterial.
Held for Sale
The Company values inventories at the lower of cost or market as determined primarily by the retail inventory method of
accounting, using the last-in, first-out ("LIFO") method for the Walmart U.S. segment's inventories. The inventory for the
Walmart International segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out
("FIFO") method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market,
since permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's
Club segment is valued using the weighted-average cost LIFO method. As of January 31, 2021 and January 31, 2020, the
Company's inventories valued at LIFO approximated those inventories as if they were valued at FIFO.
Inventories
59
Receivables are stated at their carrying values, net of a reserve for doubtful accounts, and are primarily due from the following:
customers, which also includes insurance companies resulting from pharmacy sales, banks for customer credit, debit cards and
electronic transfer transactions that take in excess of seven days to process; suppliers for marketing or incentive programs;
governments for income taxes; and real estate transactions. As of January 31, 2021 and January 31, 2020, receivables from
transactions with customers, net were $2.7 billion and $2.9 billion, respectively.
Receivables
Walmart Inc.
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
General
Walmart Inc. ("Walmart" or the "Company") helps people around the world save money and live better – anytime and
anywhere - by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, the Company is
striving to continuously improve a customer-centric experience that seamlessly integrates eCommerce and retail stores in an
omni-channel offering that saves time for its customers.
The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club.
2020
Principles of Consolidation
Use of Estimates
The Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles.
Those principles require management to make estimates and assumptions, including potential impacts arising from the
COVID-19 pandemic and related government actions, that affect the reported amounts of assets and liabilities. Management's
estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.
Cash and Cash Equivalents
The Company considers investments with a maturity when purchased of three months or less to be cash equivalents. All credit
card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash
equivalents. The amounts due from banks for these transactions classified as cash and cash equivalents totaled $4.1 billion and
$1.7 billion as of January 31, 2021 and 2020, respectively.
The Company's cash balances are held in various locations around the world. Of the Company's $17.7 billion and $9.5 billion
in cash and cash equivalents as of January 31, 2021 and January 31, 2020, approximately 40% and 80% were held outside of
the U.S., respectively. Cash and cash equivalents held outside of the U.S. are generally utilized to support liquidity needs in the
Company's non-U.S. operations.
The Company uses intercompany financing arrangements in an effort to ensure cash can be made available in the country in
which it is needed with the minimum cost possible.
As of January 31, 2021 and 2020, cash and cash equivalents of approximately $2.8 billion and $2.3 billion, respectively, may
not be freely transferable to the U.S. due to local laws or other restrictions. Of the $2.8 billion as of January 31, 2021,
approximately $1.0 billion can only be accessed through dividends or intercompany financing arrangements subject to approval
of Flipkart Private Limited ("Flipkart") minority shareholders; however, this cash is expected to be utilized to fund the
operations of Flipkart.
The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended
January 31, 2021 ("fiscal 2021"), January 31, 2020 ("fiscal 2020") and January 31, 2019 ("fiscal 2019"). Intercompany
accounts and transactions have been eliminated in consolidation. The Company consolidates variable interest entities where it
has been determined that the Company is the primary beneficiary of those entities' operations. Investments for which the
Company exercises significant influence but does not have control are accounted for under the equity method. These variable
interest entities and equity method investments are immaterial to the Company's Consolidated Financial Statements.
The Company's Consolidated Financial Statements are based on a fiscal year ending on January 31 for the United States
("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag and based
on a calendar year. There were no significant intervening events during the month of January 2021 related to the operations
consolidated using a lag that materially affected the Consolidated Financial Statements.
$
19,308 $
24,619
105,208
Property and equipment, net
Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining
expected lease term. Total depreciation and amortization expense for property and equipment, property under finance leases
and financing obligations, property under capital leases and intangible assets for fiscal 2021, 2020 and 2019 was $11.2 billion,
$11.0 billion and $10.7 billion, respectively.
Leases
For any new or modified lease, the Company, at the inception of the contract, determines whether a contract is or contains a
lease. The Company records right-of-use ("ROU") assets and lease obligations for its finance and operating leases, which are
initially recognized based on the discounted future lease payments over the term of the lease. As the rate implicit in the
Company's leases is not easily determinable, the Company's applicable incremental borrowing rate is used in calculating the
present value of the sum of the lease payments.
Lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is
reasonably certain that the Company will exercise the option. The Company has elected not to recognize ROU asset and lease
obligations for its short-term leases, which are defined as leases with an initial term of 12 months or less.
92,201 $
For a majority of all classes of underlying assets, the Company has elected to not separate lease from non-lease components.
For leases in which the lease and non-lease components have been combined, the variable lease expense includes expenses such
as common area maintenance, utilities, and repairs and maintenance.
60
Impairment of Long-Lived Assets
Management reviews long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows, which
is at the individual store or club level. Undiscounted cash flows expected to be generated by the related assets are estimated
over the assets' useful lives based on updated projections. If the evaluation indicates that the carrying amount of the assets may
not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as
determined by an appropriate market appraisal or other valuation technique.
Goodwill and Other Acquired Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is
allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired
as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indefinite-lived
intangible assets are not amortized; rather, they are evaluated for impairment annually and whenever events or changes in
circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived
assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided.
Goodwill is assigned to the reporting unit which consolidates the acquisition. Components within the same reportable segment
are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of January 31,
2021, the Company's reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill is evaluated
for impairment using either a qualitative or quantitative approach for each of the Company's reporting units. Generally, a
qualitative assessment is first performed to determine whether a quantitative goodwill impairment test is necessary. If
management determines, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit
is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the
carrying amount cannot be assured, then a quantitative goodwill impairment test would be required. The quantitative test for
goodwill impairment is performed by determining the fair value of the related reporting units. Fair value is measured based on
the discounted cash flow method and relative market-based approaches. After evaluation, management determined the fair
value of each reporting unit is significantly greater than the carrying amount and, accordingly, the Company has not recorded
any impairment charges related to goodwill.
The following table reflects goodwill activity, by reportable segment, for fiscal 2021 and 2020:
60
63
$
(88,370)
3 - 40 years
97,582
105,674
1 - 30 years
56,639
58,607
(89,820)
3- 15 years
2,377
N/A
4,741
3,751
180,571
195,028
2,301
183
Gift Cards
Financial and Other Services
7,472
Granted
93.04
6,045 $
79.51
$
23,261
Outstanding as of February 1, 2020
Weighted-Average
Grant-Date Fair
Value Per Share
Shares
Weighted-Average
Grant-Date Fair
Value Per Share
Shares
(Shares in thousands)
Units
Restricted Stock Units
Restricted Stock and
Performance-based Restricted Stock
The following table shows the activity for restricted stock units and restricted stock and performance-based restricted stock
units during fiscal 2021:
1,169
$
553 $
270
31
854 $
456
293
24
114.51
773
•
Restricted Stock Units. Restricted stock units provide rights to Company stock after a specified service period.
Beginning in fiscal 2020, restricted stock units generally vest at a rate of 25% each year over a four year period from the
date of the grant. Prior to fiscal 2020, 50% of restricted stock units generally vested three years from the grant date and
the remaining 50% were vested five years from the grant date. The fair value of each restricted stock unit is determined
on the date of grant using the stock price discounted for the expected dividend yield through the vesting period and is
recognized ratably over the vesting period. The expected dividend yield is based on the anticipated dividends over the
vesting period. The weighted-average discount for the dividend yield used to determine the fair value of restricted stock
units granted in fiscal 2021, 2020 and 2019 was 4.4%, 4.9% and 7.2%, respectively.
65
•
Restricted Stock and Performance-based Restricted Stock Units. Restricted stock awards are for shares that vest based
on the passage of time and include restrictions related to employment. Performance-based restricted stock units vest
based on the passage of time and achievement of performance criteria and may range from 0% to 150% of the original
award amount. Vesting periods for these awards are generally between one and three years. Restricted stock and
performance-based restricted stock units may be settled or deferred in stock and are accounted for as equity in the
Company's Consolidated Balance Sheets. The fair value of restricted stock awards is determined on the date of grant
and is expensed ratably over the vesting period. The fair value of performance-based restricted stock units is
determined on the date of grant using the Company's stock price discounted for the expected dividend yield through the
vesting period and is recognized over the vesting period. The weighted-average discount for the dividend yield used to
determine the fair value of performance-based restricted stock units in fiscal 2021, 2020 and 2019 was 4.5%, 5.1% and
6.2%, respectively.
In addition to the Plan, Flipkart has certain share-based compensation plans for associates under which options to acquire
Flipkart common shares may be issued. Share-based compensation expense associated with these plans is included in the Other
line in the table above.
The Walmart Inc. Stock Incentive Plan of 2015 (the "Plan"), as subsequently amended and restated, was established to grant
stock options, restricted (non-vested) stock, performance share units and other equity compensation awards for which 260
million shares of Walmart common stock issued or to be issued under the Plan have been registered under the Securities Act of
1933. The Company believes that such awards serve to align the interests of its associates with those of its shareholders.
The Plan's award types are summarized as follows:
$
2,867
Adjustment for performance achievement(¹)
442 $
365
275
Fair value of restricted stock and performance-based restricted stock units vested
597 $
$
2019
2020
2021
Fair value of restricted stock units vested
(Amounts in millions, except years)
Fiscal Years Ended January 31,
The following table includes additional information related to restricted stock units and restricted stock and performance-based
restricted stock units:
Represents the adjustment to previously granted performance share units for performance achievement.
(1)
108.72
5,413 $
92.13
576
86.46
Vested/exercised
(7,798)
76.11
(3,075)
120.47
88.88
(3,035)
92.20
(1,000)
96.36
Outstanding as of January 31, 2021
19,900 $
Forfeited
150
742 $
277
2019
7,179
15,201 $
13,706 $
(196)
13,510 $
$
Consolidated net income attributable to noncontrolling interest
Consolidated net income attributable to Walmart
$
Consolidated net income
2019
Fiscal Years Ended January 31,
2020
2021
Numerator
(Amounts in millions, except per share data)
The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net
income per common share attributable to Walmart:
Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding
during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average
common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did
not have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted net
income per common share attributable to Walmart for fiscal 2021, 2020 and 2019.
Note 2. Net Income Per Common Share
64
64
The Company recognizes revenue from service transactions at the time the service is performed. Generally, revenue from
services is classified as a component of net sales in the Company's Consolidated Statements of Income.
Cost of Sales
Cost of sales includes actual product cost, the cost of transportation to the Company's distribution facilities, stores and clubs
from suppliers, the cost of transportation from the Company's distribution facilities to the stores, clubs and customers and the
cost of warehousing for the Sam's Club segment and import distribution centers. Cost of sales is reduced by supplier payments
that are not a reimbursement of specific, incremental and identifiable costs.
Payments from Suppliers
The Company receives consideration from suppliers for various programs, primarily volume incentives, warehouse allowances
and reimbursements for specific programs such as markdowns, margin protection, advertising and supplier-specific fixtures.
Payments from suppliers are accounted for as a reduction of cost of sales, except in certain limited situations when the payment
is a reimbursement of specific, incremental and identifiable costs, and are recognized in the Company's Consolidated
Statements of Income when the related inventory is sold.
Operating, Selling, General and Administrative Expenses
(320)
14,881 $
Operating, selling, general and administrative expenses include all operating costs of the Company, except cost of sales, as
described above. As a result, the majority of the cost of warehousing and occupancy for the Walmart U.S. and Walmart
International segments' distribution facilities is included in operating, selling, general and administrative expenses. Because the
Company only includes a portion of the cost of its Walmart U.S. and Walmart International segments' distribution facilities in
cost of sales, its gross profit and gross profit as a percentage of net sales may not be comparable to those of other retailers that
may include all costs related to their distribution facilities in cost of sales and in the calculation of gross profit.
Advertising costs are expensed as incurred, consist primarily of print, television and digital advertisements and are recorded in
operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. In certain limited
situations, reimbursements from suppliers that are for specific, incremental and identifiable advertising costs are recognized as a
reduction of advertising costs in operating, selling, general and administrative expenses. Advertising costs were $3.2 billion,
$3.7 billion and $3.5 billion for fiscal 2021, 2020 and 2019, respectively.
Currency Translation
The assets and liabilities of all international subsidiaries are translated from the respective local currency to the U.S. dollar
using exchange rates at the balance sheet date. Related translation adjustments are recorded as a component of accumulated
other comprehensive loss. The Company's Consolidated Statements of Income of all international subsidiaries are translated
from the respective local currencies to the U.S. dollar using average exchange rates for the period covered by the income
statements.
Recent Accounting Pronouncements
Financial Instruments
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which modifies the
measurement of expected credit losses of certain financial instruments. The Company adopted this ASU on February 1, 2020
with no material impact to the Company's Consolidated Financial Statements.
Advertising Costs
(509)
6,670
Denominator
$
2.28
4.75
5.19
2.26
The total authorized shares of $0.10 par value common stock is 11.0 billion, of which 2.8 billion were issued and outstanding as
of January 31, 2021 and 2020.
5.22
Share-Based Compensation
(Amounts in millions)
Restricted stock units
Restricted stock and performance-based restricted stock units
Other
Share-based compensation expense
2021
Fiscal Years Ended January 31,
2020
The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The
compensation expense recognized for all stock incentive plans, including expense associated with plans of the Company's
consolidated subsidiaries granted in the subsidiaries' respective stock, was $1.2 billion, $0.9 billion and $0.8 billion for fiscal
2021, 2020 and 2019, respectively. Share-based compensation expense is generally included in operating, selling, general and
administrative expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for
share-based compensation was $0.3 billion, $0.2 billion and $0.2 billion for fiscal 2021, 2020 and 2019, respectively. The
following table summarizes the Company's share-based compensation expense by award type for all plans:
Customer purchases of gift cards are not recognized as sales until the card is redeemed and the customer purchases merchandise
using the gift card. Gift cards in the U.S. and some countries do not carry an expiration date; therefore, customers and members
can redeem their gift cards for merchandise and services indefinitely. Gift cards in some countries where the Company does
business have expiration dates. While gift cards are generally redeemed within 12 months, a certain number of gift cards, both
with and without expiration dates, will not be fully redeemed. Management estimates unredeemed balances and recognizes
revenue for these amounts in membership and other income in the Company's Consolidated Statements of Income over the
expected redemption period.
$
$
Weighted-average common shares outstanding, basic
Dilutive impact of stock options and other share-based awards
Weighted-average common shares outstanding, diluted
Net income per common share attributable to Walmart
Basic
Diluted
Note 3. Shareholders' Equity
2,831
4.77
2,850
16
18
16
2,847
2,868
2,945
2,929
The Company recognizes membership fee revenue both in the U.S. and internationally over the term of the membership, which
is typically 12 months. Membership fee revenue was $1.7 billion for fiscal 2021, $1.5 billion for fiscal 2020 and $1.4 billion
for fiscal 2019, respectively. Membership fee revenue is included in membership and other income in the Company's
Consolidated Statements of Income. Deferred membership fee revenue is included in accrued liabilities in the Company's
Consolidated Balance Sheets.
(843) $
(10,181)
Principal Amount
1,010
92
516
620
(264)
(15)
(107)
1,582
66
203
(64)
(29)
(390)
(28)
(26)
(31)
1,305 $
1,817 $
$
2019
Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances
As of January 31, 2021, the Company's net operating loss and capital loss carryforwards totaled approximately $38.4 billion.
Of these carryforwards, approximately $26.4 billion will expire, if not utilized, in various years through 2041. The remaining
carryforwards have no expiration.
The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable
income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences,
forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely
than not that a deferred tax asset will be recovered, a valuation allowance is generally established. To the extent that a
valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets
will be recovered, the change in the valuation allowance is recognized in the Consolidated Statements of Income.
The Company had valuation allowances of $8.8 billion and $8.6 billion as of January 31, 2021 and 2020, respectively, on
deferred tax assets associated primarily with the net operating loss carryforwards. Activity in the valuation allowance during
fiscal 2021 related to valuation allowance builds in multiple markets, as well as releases due to the expiration of underlying
deferred tax assets.
Uncertain Tax Positions
The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining
a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities.
As of January 31, 2021 and 2020, the amount of gross unrecognized tax benefits related to continuing operations was $3.1
billion and $1.8 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective
income tax rate was $1.7 billion and $1.6 billion as of January 31, 2021 and 2020, respectively.
A reconciliation of gross unrecognized tax benefits from continuing operations is as follows:
(Amounts in millions)
$
Gross unrecognized tax benefits, beginning of year
Decreases related to prior year tax positions
Increases related to current year tax positions
Settlements during the period
Lapse in statutes of limitations
Gross unrecognized tax benefits, end of year
Fiscal Years Ended January 31,
2021
2020
Increases related to prior year tax positions
3,135 $
1,817 $
1,305
Defined contribution plans:
U.S.
International
Total contribution expense for defined contribution plans
2021
Fiscal Years Ended January 31,
2020
2019
(Amounts in millions)
$
1,290 $
200
1,490 $
1,184 $
177
1,361 $
1,165
126
1,291
Additionally, the Company's subsidiary in the United Kingdom has a sponsored defined benefit pension plan. In October 2019,
Asda, Walmart and the Trustee of the Asda Group Pension Scheme (the "Plan") entered into an agreement pursuant to which
Asda made a cash contribution of $1.0 billion to the Plan (the "Asda Pension Contribution") which enabled the Plan to purchase
a bulk annuity insurance contract for the benefit of Plan participants. The agreement between Asda, Walmart and the Trustee of
the Plan contemplates that subsequent to the purchase of the bulk annuity insurance contract by the Plan, each of the Plan
participants will be issued an individual annuity contract. The issuer of the individual annuity insurance contracts will be solely
responsible for paying each participant's benefits in full and will release the Plan and Asda from any future obligations. In
connection with the sale of Asda, all accumulated pension components of $2.3 billion were included in the disposal group and
the estimated pre-tax loss recognized during the fourth quarter of fiscal 2021 as discussed in Note 8 and Note 12.
76
$
The following table summarizes the contribution expense related to the Company's defined contribution plans for fiscal 2021,
2020 and 2019:
Associates in international countries who are not U.S. citizens are covered by various defined contribution post-employment
benefit arrangements. These plans are administered based upon the legislative and tax requirements in the countries in which
they are established.
The Company offers a 401(k) plan for associates the U.S. under which eligible associates can begin contributing to the plan
immediately upon hire. The Company also offers a 401(k) type plan for associates in Puerto Rico under which associates can
begin to contribute generally after one year of employment. Under these plans, after one year of employment, the Company
matches 100% of participant contributions up to 6% of annual eligible earnings. The matching contributions immediately vest
at 100% for each associate. Participants can contribute up to 50% of their pre-tax earnings, but not more than the statutory
limits.
The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling,
general and administrative expenses, respectively. Interest expense and penalties related to these positions were immaterial for
fiscal 2021, 2020 and 2019. During the next twelve months, it is reasonably possible that tax audit resolutions could reduce
unrecognized tax benefits by an immaterial amount, either because the tax positions are sustained on audit or because the
Company agrees to their disallowance. The Company is focused on resolving tax audits as expeditiously as possible. As a
result of these efforts, unrecognized tax benefits could potentially be reduced beyond the provided range during the next twelve
months. The Company does not expect any change to have a material impact to its Consolidated Financial Statements.
The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2014, and 2018
through 2021. The Company also remains subject to income tax examinations for international income taxes for fiscal 2013
through 2021, and for U.S. state and local income taxes generally for the fiscal years ended 2013 through 2021. With few
exceptions, the Company is no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years
before fiscal 2012.
74
Other Taxes
The Company is subject to tax examinations for value added, sales-based, payroll and other non-income taxes. A number of
these examinations are ongoing in various jurisdictions. In certain cases, the Company has received assessments from the
respective taxing authorities in connection with these examinations. Unless otherwise indicated, the possible losses or range of
possible losses associated with these matters are individually immaterial, but a group of related matters, if decided adversely to
the Company, could result in a liability material to the Company's Consolidated Financial Statements.
Note 10. Contingencies
Legal Proceedings
The Company is involved in a number of legal proceedings. The Company has made accruals with respect to these matters,
where appropriate, which are reflected in the Company's Consolidated Financial Statements. For some matters, a liability is not
probable or the amount cannot be reasonably estimated and therefore an accrual has not been made. However, where a liability
is reasonably possible and may be material, such matters have been disclosed. The Company may enter into discussions
regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of
the Company and its shareholders.
Unless stated otherwise, the matters discussed below, if decided adversely to or settled by the Company, individually or in the
aggregate, may result in a liability material to the Company's financial position, results of operations or cash flows.
Asda Equal Value Claims
Asda, a wholly-owned subsidiary of the Company which was sold in February 2021, is a defendant in over 40,000 "equal
value" claims that began in 2008 and are proceeding before an Employment Tribunal in Manchester (the "Employment
Tribunal") in the United Kingdom ("U.K.") on behalf of current and former Asda store employees, and further claims may be
asserted in the future. The claimants allege that the work performed by employees in Asda's retail stores is of equal value in
terms of, among other things, the demands of their jobs compared to that of employees working in Asda's warehouse and
distribution facilities, and that the difference in pay between these job positions disparately impacts women because more
women work in retail stores while more men work in warehouses and distribution facilities, and that the pay difference is not
objectively justified. The claimants are requesting differential back pay based on higher wage rates in the warehouse and
distribution facilities and higher wage rates on a prospective basis.
In October 2016, following a preliminary hearing, the Employment Tribunal ruled that claimants could compare their positions
in Asda's retail stores with those of employees in Asda's warehouse and distribution facilities. Asda appealed the ruling and is
awaiting a decision from the Supreme Court of the U.K. Notwithstanding the appeal, claimants are now proceeding in the next
phase of their claims. That phase will determine whether the work performed by the claimants is of equal value to the work
performed by employees in Asda's warehouse and distribution facilities.
The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of
loss that may arise from these proceedings. Accordingly, the Company can provide no assurance as to the scope and outcomes
of these matters and no assurance as to whether its business, financial position, results of operations or cash flows will not be
materially adversely affected. The Company believes it has substantial factual and legal defenses to these claims, and intends to
defend the claims vigorously. Following the sale of Asda described in Note 12, the Company will continue to conduct the
defense of these claims. While potential liability for these claims remains with Asda, the Company has agreed to provide
indemnification with respect to these claims up to a contractually determined amount.
Opioids Litigation
In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a
wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes,
individuals, and third-party payers, asserting claims generally concerning the impacts of widespread opioid abuse. The
consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804), and is pending in
the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included
in this multidistrict litigation. Similar cases that name the Company have also been filed in state courts by state, local and tribal
governments, health care providers and other plaintiffs. Plaintiffs are seeking compensatory and punitive damages, as well as
injunctive relief including abatement. The Company cannot predict the number of such claims that may be filed, but believes it
has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously. The Company has also
been responding to subpoenas, information requests and investigations from governmental entities related to nationwide
controlled substance dispensing and distribution practices involving opioids. On October 22, 2020, the Company filed a
declaratory judgment action in the U.S. District Court for the Eastern District of Texas against the U.S. Department of Justice
(the "DOJ") and the U.S. Drug Enforcement Administration, asking a federal court to clarify the roles and responsibilities of
pharmacists and pharmacies as to the dispensing and distribution of opioids under the Controlled Substances Act (the “CSA").
The Company's action was dismissed and the Company is appealing the decision. On December 22, 2020, the DOJ filed a civil
complaint in the U.S. District Court for the District of Delaware alleging that the Company unlawfully dispensed controlled
75
substances from its pharmacies and unlawfully distributed controlled substances to those pharmacies. The complaint alleges
that this conduct resulted in violations of the CSA. The DOJ is seeking civil penalties and injunctive relief. The Company filed
a motion to dismiss the DOJ complaint on February 22, 2021. In addition, the Company is the subject of two securities class
actions alleging violations of the federal securities laws regarding the Company's disclosures with respect to opioids, filed in
the U.S. District Court for the District of Delaware on January 20, 2021 and March 5, 2021 purportedly on behalf of a class of
investors who acquired Walmart stock from March 30, 2016 through December 22, 2020. A derivative action was also filed by
one of the Company's shareholders in the U.S. District Court for the District of Delaware on February 9, 2021 alleging breach
of fiduciary duties against certain of its current and former directors with respect to oversight of the Company's distribution and
dispensing of opioids.
The Company cannot reasonably estimate any loss or range of loss that may arise from the various Opioids Litigation and
intends to vigorously defend these litigation matters. Accordingly, the Company can provide no assurance as to the scope and
outcome of these matters and no assurance as to whether its business, financial position, results of operations or cash flows will
not be materially adversely affected.
Note 11. Retirement-Related Benefits
Prior to the Tax Act, the Company asserted that all unremitted earnings of its foreign subsidiaries were considered indefinitely
reinvested. As a result of the Tax Act, the Company reported and paid U.S. tax on the majority of its previously unremitted
foreign earnings, and repatriations of foreign earnings will generally be free of U.S. federal tax, but may incur other taxes such
as withholding or state taxes. As of January 31, 2021, the Company has not recorded approximately $2 billion of deferred tax
liabilities associated with remaining unremitted foreign earnings considered indefinitely reinvested, for which U.S. and foreign
income and withholding taxes would be due upon repatriation.
Unremitted Earnings
4,290
$
Lease right of use assets
Mark-to-market investments
Other
Total deferred tax liabilities
2,582
2,483
224
Inventory
250
4,098
589
887
17,024
16,774
(8,782)
(8,588)
4,450
8,242
Acquired intangibles
Deferred tax liabilities:
Deferred tax assets:
Loss and tax credit carryforwards
Share-based compensation
January 31,
2021
2020
$
Property and equipment
9,179
9,056
Accrued liabilities
Lease obligations
Other
Total deferred tax assets
Valuation allowances
Deferred tax assets, net of valuation allowances
$
8,186
4,802
4,364
2021
2020
Assets:
Other long-term assets
Liabilities:
Deferred income taxes and other
Net deferred tax liabilities
Balance Sheet classification
73
1,836
$
1,914
8,445
6,204
$
6,609
$
(Amounts in millions)
January 31,
The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:
1,071
1,153
1,235
1,414
4,390
3,998
2,678
723
675
824
14,851
12,476
Net deferred tax liabilities
$
6,609
$
4,290
6
Note 12. Disposals, Acquisitions and Related Items
The following disposals and acquisitions impact the Company's Walmart International segment.
Walmart Argentina
October 25, 2020
July 28, 2020
July 8, 2020
June 23, 2020
June 23, 2020
Maturity Date
(Amounts in millions)
December 15, 2020
The following table provides details of debt repayments during fiscal 2021:
The fiscal 2020 issuances are senior, unsecured notes which rank equally with all other senior, unsecured debt obligations of the
Company, and are not convertible or exchangeable. These issuances do not contain any financial covenants which restrict the
Company's ability to pay dividends or repurchase company stock.
5,492
$
Total
42
Various
Various
Repayments
975
Total repayment of matured debt
Fixed vs. Floating
¥10,000
840
3.630%
Fixed
$840
1,250
2.850%
Principal Amount
Fixed
750
$
Floating
Floating
$750
Repayment
Interest Rate
$1,250
2.950%
Fixed
September 24, 2049
Various
1,493
$
2.850%
Fixed
Net Proceeds
Interest Rate
Fixed vs. Floating
April 23, 2019
Maturity Date
July 8, 2024
April 23, 2019
Principal Amount
Issue Date
(Amounts in millions)
There were no long-term debt issuances in fiscal 2021. Information on long-term debt issued during fiscal 2020, for general
corporate purposes, is as follows:
Debt Issuances
Total repayment of matured debt
$1,500
$1,250
July 8, 2026
Fixed
$42
$1,000
September 24, 2019
Various
497
2.375%
Fixed
September 24, 2029
$500
September 24, 2019
1,243
3.250%
Fixed
July 8, 2029
$1,250
April 23, 2019
1,242
3.050%
Fixed
(Amounts in millions)
1.600%
$1,197
January 31,
2021
$
1,848
2,545
13,193
4,360
Total liabilities held for sale
1,395
1,063
(7,420)
$
19,195
6,535
4,245
1,495
2,211
459
Finance lease obligations, including amounts due within one year
Deferred income taxes and other
Current liabilities (3)
In November 2020, the Company completed the sale of Walmart Argentina. As a result, the Company recorded a pre-tax loss of
$1.0 billion in the third quarter of fiscal 2021 in other gains and losses in its Consolidated Statement of Income primarily due to
the impact of cumulative translation losses on the carrying value of the disposal group.
Asda
In October 2020, the Company agreed to sell Asda, the Company's retail operations in the U.K., for net consideration of $9.4
billion, which was classified as held for sale in the Consolidated Balance Sheet as of January 31, 2021. Under the terms of the
agreement, the Company agreed to indemnify the buyer for certain legal and tax matters and will retain an investment in Asda
that will be accounted for as a debt security. As a result, the Company recognized an estimated pre-tax loss of $5.5 billion in
other gains and losses in its Consolidated Statement of Income in the fourth quarter of fiscal 2021. In calculating the loss, the
fair value of the disposal group was reduced by approximately $0.8 billion related to the estimated fair value of certain
indemnities and other transaction related costs. The Company completed the sale in February 2021, and will deconsolidate the
financial statements of Asda in the first quarter of fiscal 2022 and begin recognizing immaterial interest income related to its
debt security.
In October 2019, Asda, Walmart, and the Trustee of the Plan entered into an agreement which provides for the issuance of
individual annuity contracts to each Plan participant and will release the Plan and Asda from any future obligations. Upon
classifying the Asda disposal group as held for sale, $2.3 billion of accumulated pension components associated with the
expected derecognition of the Asda pension plan were included as part of the loss mentioned above, which will be reclassified
from accumulated other comprehensive loss upon completion of the sale in February 2021.
Seiyu
In November 2020, the Company agreed to sell Seiyu, the Company's retail operations in Japan, for net consideration of $1.2
billion, which was classified as held for sale in the Consolidated Balance Sheet as of January 31, 2021. As a result, the
Company recognized an estimated pre-tax loss of $1.9 billion in other gains and losses in its Consolidated Statement of Income
in the fourth quarter of fiscal 2021. The sale was completed in March 2021 and the Company will deconsolidate the financial
statements of Seiyu in the first quarter of fiscal 2022 and account for its retained 15 percent ownership interest as an equity
investment.
Assets and liabilities held for sale associated with the Asda and Seiyu disposal groups as of January 31, 2021 were as follows:
Operating lease obligations, including amounts due within one year
(Amounts in millions)
Other current assets (1)
Property and equipment, net
Finance lease right-of-use assets, net
Goodwill
Other long-term assets
Valuation allowance against assets held for sale (2)
Total assets held for sale
Cash and cash equivalents
$
12,734
(1) Includes inventories, receivables, net and prepaid expenses and other.
Various
October 20, 2019
October 20, 2019
February 1, 2019
Maturity Date
(Amounts in millions)
The following table provides details of debt repayments during fiscal 2020:
(1)
5,382
1,250
1.900%
Fixed
$1,250
1,197
3.250%
Fixed
$
78
The Company measures the results of its segments using, among other measures, each segment's net sales and operating
income, which includes certain corporate overhead allocations. From time to time, the Company revises the measurement of
each segment's operating income, including any corporate overhead allocations, as determined by the information regularly
The Walmart U.S. segment includes the Company's mass merchant concept in the U.S., as well as eCommerce and omni-
channel initiatives. The Walmart International segment consists of the Company's operations outside of the U.S., as well as
eCommerce and omni-channel initiatives. The Sam's Club segment includes the warehouse membership clubs in the U.S., as
well as eCommerce and omni-channel initiatives. Corporate and support consists of corporate overhead and other items not
allocated to any of the Company's segments.
(2) Includes the $2.3 billion loss associated with the derecognition of the Asda pension plan and $1.3 billion cumulative foreign currency and related net
investment hedge and other impacts included within the disposal groups, which will be reclassified from accumulated other comprehensive loss upon
closure of each transaction.
(3)
Includes accounts payable and accrued liabilities.
77
Walmart Brazil
In August 2018, the Company sold an 80 percent stake of Walmart Brazil to Advent International ("Advent"). Under the terms
of the sale, Advent agreed to contribute additional capital to the business over a three-year period and Walmart agreed to
indemnify Advent for certain matters.
As a result, the Company recorded a pre-tax net loss of $4.8 billion during fiscal 2019 in other gains and losses in the
Company's Consolidated Statement of Income. Substantially all of this charge was recorded during the second quarter of fiscal
2019 upon meeting the held for sale criteria. In calculating the loss, the fair value of the disposal group was reduced by $0.8
billion related to an indemnity, for which a liability was recognized upon closing and is recorded in deferred income taxes and
other in the Company's Consolidated Balance Sheets. Under the indemnity, the Company will indemnify Advent for certain
pre-closing tax and legal contingencies and other matters for up to R$2.3 billion, adjusted for interest based on the Brazilian
interbank deposit rate.
The Company deconsolidated the financial statements of Walmart Brazil during the third quarter of fiscal 2019 and began
accounting for its remaining 20 percent ownership interest using the equity method of accounting. This equity method
investment was determined to have no fair value and continues to have no carrying value.
Flipkart
In August 2018, the Company acquired 81 percent of the outstanding shares, or 77 percent of the diluted shares, of Flipkart, an
eCommerce marketplace in India, for cash consideration of approximately $16 billion. The acquisition increases the
Company's investment in India, a large, growing economy. In the second quarter of fiscal 2020, the Company finalized the
valuation of assets acquired and liabilities assumed for the Flipkart acquisition as follows:
Assets of $24.1 billion, which comprise primarily of $2.2 billion in cash and cash equivalents, $2.8 billion in other
current assets, $5.0 billion in intangible assets and $13.5 billion in goodwill. Of the intangible assets, $4.7 billion
represents the fair value of trade names, each with an indefinite life, which were estimated using the income approach
based on Level 3 unobservable inputs. The remaining $0.3 billion of intangible assets primarily relate to acquired
technology with a life of 3 years. The goodwill arising from the acquisition consists largely of anticipated synergies
and economies of scale primarily related to procurement and logistics and is not expected to be deductible for tax
purposes;
Liabilities of $3.7 billion, which comprise primarily of $1.8 billion of current liabilities and $1.7 billion of deferred
income taxes; and
Noncontrolling interest of $4.3 billion, for which the fair value was estimated using the income approach based on
Level 3 unobservable inputs.
The Company began consolidating the financial statements of Flipkart in the third quarter of fiscal 2019, using a one-month lag.
To finance the acquisition, the Company used a combination of cash provided by long-term debt as discussed in Note 6 and
cash on hand. The Flipkart results of operations since acquisition and the pro forma financial information are immaterial.
Note 13. Segments and Disaggregated Revenue
Segments
The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located
throughout the U.S., Africa, Canada, Central America, Chile, China, India and Mexico. The Company also engaged in
operations in Japan and the United Kingdom, both of which were classified as held for sale as of January 31, 2021, and
subsequently sold in February 2021 and March 2021, respectively. The Company also operated in Argentina prior to the sale of
Walmart Argentina in November 2020 and in Brazil prior to sale of the majority stake of Walmart Brazil in fiscal 2019. Refer
to Note 12 for discussion of recent divestitures. The Company's operations are conducted in three reportable segments:
Walmart U.S., Walmart International and Sam's Club. The Company defines its segments as those operations whose results the
chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. The Company
sells similar individual products and services in each of its segments. It is impracticable to segregate and identify revenues for
each of these individual products and services.
95
The significant components of the Company's deferred tax account balances are as follows:
Operating lease right-of-use assets
Effective income tax rate
1,697
496
1,527
449
11,658
4,746
20,949
551
7,572
(3,234)
$
14,375 $
4,338
Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in
measuring fair value. The levels of the fair value hierarchy are:
•
Level 1: observable inputs such as quoted prices in active markets;
(6,574)
•
1,861
2,017
Fiscal Year
2022
2023
2024
2025
2026
Thereafter
613
Total undiscounted lease obligations
Net lease obligations
Note 8. Fair Value Measurements
Operating Leases
Finance Leases
$
2,189
717
Less imputed interest
Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and
•
Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop
its own assumptions.
January 31, 2020
January 31, 2021
Notional
Notional
(Amounts in millions)
Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as net investment hedges
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges
Total
Amount Fair Value
The Company also has derivatives recorded at fair value. Derivative fair values are the estimated amounts the Company would
receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been
measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward
curves. As of January 31, 2021 and January 31, 2020, the notional amounts and fair values of these derivatives were as follows:
Amount
$ 3,250 $
166 (1) $
4,000
$
97 (1)
1,250
5,073
311 (1)
(394) (3)
Fair Value
Derivatives
5,438
$
The Company measures the fair value of equity investments on a recurring basis in the accompanying Consolidated Balance
Sheets. The fair value of the Company's equity investments with readily determinable fair values are as follows:
(Amounts in millions)
Equity investments measured using Level 1 inputs
Equity investments measured using Level 2 inputs
Total
70
70
Fair Value as of
January 31, 2021
Fair Value as of
January 31, 2020
$
6,517
$
2,715
7,905
2,723
$
14,422
(Amounts in millions)
(¹) For fiscal 2021, weighted average remaining lease term and discount rate amounts exclude operations classified as held for sale.
The aggregate annual lease obligations at January 31, 2021, are as follows:
8.6%
6.8%
1,907
(1) Includes repayments of smaller long-term debt as it matured in several non-U.S. operations.
Note 7. Leases
The Company leases certain retail locations, distribution and fulfillment centers, warehouses, office spaces,
throughout the U.S. and internationally.
land and equipment
The Company's lease costs recognized in the Consolidated Statement of Income consist of the following:
(Amounts in millions)
$
Fiscal years ended January 31,
2021
Operating lease cost (¹)
$
2,626 $
2,670
Finance lease cost:
Amortization of right-of-use assets
583
2020
43
Various
Various
$364
The following sections regarding deferred taxes, unremitted earnings, net operating losses, tax credit carryforwards, valuation
allowances and uncertain tax positions exclude amounts related to operations classified as held for sale as of January 31, 2021.
Deferred Taxes
Fixed vs. Floating
Fixed
Interest Rate
Repayment
4.125%
$
364
$300
Floating
Floating
300
$1,200
Fixed
1.750%
1,200
$43
480
3,750
Interest on lease obligations
306
1,547
As of January 31,
2020
2,614
278
485
2,151
2,131
1,081
2021
2020
12.5 years
15.6 years
13.7 years
6.1%
5.4%
Weighted-average remaining lease term - operating leases (1)
Weighted-average remaining lease term - finance leases (¹)
Weighted-average discount rate - operating leases (¹)
Weighted-average discount rate - finance leases(1)
546
286
2,629 $
Variable lease cost
777
691
(1)
Rentals (including amounts applicable to taxes, insurance, maintenance, other operating expenses and contingent rentals) under operating leases and other
short-term rental arrangements were $3.0 billion in fiscal 2019.
69
Other lease information is as follows:
(Dollar amounts in millions)
Cash paid for amounts included in measurement of lease obligations:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Assets obtained in exchange for operating lease obligations
Assets obtained in exchange for finance lease obligations
$
Fiscal years ended January 31,
2021
298
4,067
14.4 years
$
Effective Income Tax Rate Reconciliation
A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pre-tax
income from continuing operations is as follows:
U.S. statutory tax rate
U.S. state income taxes, net of federal income tax benefit
Impact of the Tax Act:
One-time transition tax
Deferred tax effects
72
Income taxed outside the U.S.
Valuation allowance
Net impact of repatriated international earnings
Federal tax credits
Enacted change in tax laws
Change in reserve for tax contingencies
Other, net
2021
Disposal and wind-down of certain business operations
The Tax Act required the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject
to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets, as defined by the Tax
Act, and 8.0% on the remaining earnings. The Company calculated the transition tax liability and increased the provisional
amount by $413 million, with the increase included as a component of provision for income taxes in fiscal 2019.
One-time Transition Tax
The SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act
("SAB 118"), which allowed companies to record provisional amounts during a measurement period not to extend beyond one
year of the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the
Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements as
of January 31, 2018, in accordance with SAB 118. The Company elected to apply the measurement period provisions of this
guidance to certain income tax effects of the Tax Act when it became effective. The provisional measurement period ended in
the fourth quarter of fiscal 2019. Management completed the Company's accounting for tax reform in fiscal 2019 based on
prevailing regulations and currently available information, and any additional guidance issued by the IRS could impact the
aforementioned amounts in future periods. In fiscal 2019, the Company recorded $442 million of additional tax expense related
to the Tax Act, included as a component of provision for income taxes.
2,316
663
(361)
23
35
(16)
(341)
(369)
(93)
1,998
329
(470)
$
6,858 $
4,915 $
4,281
In December 2017, the Tax Act was enacted and significantly changed U.S. income tax law. Beginning January 2018, the Tax
Act reduced the U.S. statutory tax rate and created new taxes focused on foreign-sourced earnings and related-party payments,
including the creation of the base erosion anti-abuse tax and a new tax on global intangible low-taxed income ("GILTI"). In
addition, the Company was subject to a one-time transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not
previously subject to U.S. income tax.
Fiscal Years Ended January 31,
2020
4,751
2019
21.0 %
(0.9)%
(0.8)%
(1.3)%
― %
(1.9)%
%
0.8 %
0.8 %
2.5 %
0.6%
(0.3)%
0.8%
33.3 %
455 (1)
(696) (2)
24.4 %
37.4 %
0.6 %
0.4 %
(0.4)%
6.3 %
2.9 %
2.2 %
3.0 %
―%
%
3.6%
―%
― %
(0.7)%
(0.1)%
(1.0)%
(3.4)%
7.1 %
%
6.7 %
2.3%
2.3 %
21.0 %
4,586
21.0 %
1,495
71
The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the
Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying value and fair value
of the Company's long-term debt as of January 31, 2021 and 2020, are as follows:
(Amounts in millions)
$
44,309 $
January 31, 2021
Carrying Value Fair Value
54,240
$
Other Fair Value Disclosures
January 31, 2020
Carrying Value Fair Value
49,076 $
Long-term debt, including amounts due within one year
Note 9. Taxes
The components of income (loss) before income taxes are as follows:
Fiscal Years Ended January 31,
(Amounts in millions)
U.S.
Non-U.S.
57,769
For the fiscal year ended January 31, 2019, the Company sold the majority stake in Walmart Brazil during fiscal 2019 as
discussed in Note 12. The assets of the disposal group totaled $3.3 billion and were comprised of $1.0 billion in current assets,
$1.6 billion in property and equipment and property under capital lease and financing obligations, net, and $0.7 billion of other
long-term assets. When measured as held for sale, these assets were fully impaired as the carrying value of the disposal group
exceeded the fair value, less costs to sell and contributed to a pre-tax net loss of $4.8 billion in the Walmart International
segment, which was recorded in other gains and losses in the Company's Consolidated Statement of Income. Other impairment
charges to assets measured at fair value on a nonrecurring basis during fiscal 2019 were immaterial.
These impairment charges were classified in operating, selling, general and administrative expenses in the Company's
Consolidated Statements of Income. Other impairment charges for assets measured at fair value on a nonrecurring basis during
fiscal 2020 were immaterial.
in the Walmart International segment, $0.4 billion in impairment charges consisting primarily of the write-off of the
carrying value of one of Flipkart's two fashion trade names, Jabong.com, as a result of a strategic decision to focus on
the Myntra.com fashion platform.
9,573 $
83
$ 11,817
4,860
(144)
(1) Classified in other long-term assets within the Company's Consolidated Balance Sheets.
(2)
Classified in deferred income taxes and other within the Company's Consolidated Balance Sheets.
(3)
Approximately $456 million of cash flow hedges were classified in deferred income taxes and other and $62 million of cash flow were classified in other
long-term assets in the Company's Consolidated Balance Sheets.
Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company's assets and liabilities are
also subject to nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a
result of impairment charges.
As further discussed in Note 12, the Company's operations in Argentina, Japan and the U.K. met the held for sale criteria in
fiscal 2021. As a result, the individual disposal groups were measured at fair value, less costs to sell, which is considered a
Level 3 fair value measurement based on each transaction's expected consideration. The carrying value of the Argentina, Japan
and U.K. disposal groups exceeded their fair value, less costs to sell, and as a result, the Company recognized non-recurring
impairment charges. The aggregate pre-tax loss of $8.3 billion associated with the divestiture of these operations in the
Walmart International segment was recorded in other gains and losses in the Consolidated Statements of Income for the year
ended January 31, 2021 and included these impairment charges as well as a $2.3 billion charge related to the Asda pension plan.
These impairment charges include the anticipated release of non-cash cumulative foreign currency translation losses associated
with the disposal groups. Other impairment charges for assets measured at fair value on a nonrecurring basis during fiscal 2021
were immaterial.
For the fiscal year ended January 31, 2020, the Company recorded impairment charges related to assets measured at fair value
on a non-recurring basis primarily related to the following:
•
.
in the Walmart U.S. segment, $0.5 billion in impairment charges for impaired assets consisting primarily of trade
names and acquired developed software due to strategic decisions that resulted in the write-down of certain
eCommerce assets; and
Total income before income taxes
2021
The Company records cash and cash equivalents, restricted cash and short-term borrowings at cost. The carrying values of
these instruments approximate their fair value due to their short-term maturities.
1,205
Total current tax provision
Deferred:
U.S. federal
U.S. state and local
International
Total deferred tax expense (benefit)
Total provision for income taxes
U.S. state and local
$
2,794 $
2,763
742
587
2020
1,127
493
2,991 $
U.S. federal
International
$
561
2019
17,098 $
3,018
15,875
(4,415)
Current:
20,564 $
20,116 $
11,460
A summary of the provision for income taxes is as follows:
(Amounts in millions)
Fiscal Years Ended January 31,
2021
2020
2019
$
20,003 $
June 1, 2021
April 5, 2021
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
ITEM 9.
None.
Payable Date
September 7, 2021
January 3, 2022
60
No material changes have been made to the procedures by which shareholders of the Company may recommend nominees to
our Board of Directors since those procedures were disclosed in our proxy statement relating to our 2020 Annual Shareholders'
Meeting as previously filed with the SEC.
December 10, 2021
August 13, 2021
May 7, 2021
March 19, 2021
Record Date
The Board of Directors approved, effective February 18, 2021, the fiscal 2022 annual dividend of $2.20 per share, an increase
over the fiscal 2021 dividend of $2.16 per share. For fiscal 2022, the annual dividend will be paid in four quarterly installments
of $0.55 per share, according to the following record and payable dates:
Dividends Declared
ITEM 9A.
Of Sam's Club's total net sales, approximately $5.3 billion and $3.8 billion related to eCommerce for fiscal 2021 and fiscal
2020, respectively.
80
Note 14. Subsequent Event
ITEM 10.
Evaluation of Disclosure Controls and Procedures
58,792
Information required by this Item 10 with respect to the Company's directors and certain family relationships is incorporated by
reference to such information under the caption "Proposal No. 1 – Election of Directors" included in our Proxy Statement
relating to our 2021 Annual Meeting of Shareholders (our "Proxy Statement").
Please see the information concerning our executive officers contained in "Item 1. Business" herein under the caption
"Information About Our Executive Officers," which is included in accordance with the Instruction to Item 401 of the SEC's
Regulation S-K.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
PART III
81
None.
The information regarding our Audit Committee, including our audit committee financial experts and our Reporting Protocols
for Senior Financial Officers and our Code of Conduct applicable to all of our associates, including our Chief Executive
Officer, Chief Financial Officer and our Controller, who is our principal accounting officer, required by this Item 10 is
incorporated herein by reference to the information under the captions "Corporate Governance" and "Proposal No. 3:
Ratification of Independent Accountants" included in our Proxy Statement. "Item 1. Business" above contains information
relating to the availability of a copy of our Reporting Protocols for Senior Financial Officers and our Code of Conduct and the
posting of amendments to and any waivers of the Reporting Protocols for Senior Financial Officers and our Code of Conduct on
our website.
OTHER INFORMATION
ITEM 9B.
There has been no change in the Company's internal control over financial reporting as of January 31, 2021, that has materially
affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
Management has responsibility for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles
generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial
reporting as of January 31, 2021. In making its assessment, management has utilized the criteria set forth by the Committee of
Sponsoring Organizations ("COSO") of the Treadway Commission in Internal Control-Integrated Framework (2013).
Management concluded that based on its assessment, Walmart's internal control over financial reporting was effective as of
January 31, 2021. The Company's internal control over financial reporting as of January 31, 2021, has been audited by Ernst &
Young LLP as stated in their report which appears herein.
Report on Internal Control Over Financial Reporting
An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the
period covered by this report was performed under the supervision and with the participation of management, including our
Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that
information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of
1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable
assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's
rules and forms.
In the ordinary course of business, we review our internal control over financial reporting and make changes to our systems and
processes to improve such controls and increase efficiency, while ensuring that we maintain an effective internal control
environment. Changes may include such activities as implementing new, more efficient systems, updating existing systems,
automating manual processes, standardizing controls globally, migrating certain processes to our shared services organizations
and increasing monitoring controls. These changes have not materially affected, and are not reasonably likely to materially
affect, the Company's internal control over financial reporting. However, they allow us to continue to enhance our internal
control over financial reporting and ensure that our internal control environment remains effective.
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is
required to be timely disclosed, is accumulated and communicated to management in a timely fashion. In designing and
evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily
required to use judgment in evaluating controls and procedures. Also, we have investments in unconsolidated entities. Since
we do not control or manage those entities, our controls and procedures with respect to those entities are substantially more
limited than those we maintain with respect to our consolidated subsidiaries.
CONTROLS AND PROCEDURES
63,910 $
$
Total
$
28,446
28,063
10,671
11,430
18,420
19,991
29,243
121,360 $
29,234
32,642 $
2020
Fiscal Years Ended January 31,
2021
Other
China
United Kingdom
ITEM 11. EXECUTIVE COMPENSATION
Canada
33,350
120,130
Of Walmart International's total net sales, approximately $16.6 billion and $11.8 billion related to eCommerce for fiscal 2021
and fiscal 2020, respectively.
(Amounts in millions)
3,062
3,040
Technology, office and entertainment
3,372
3,792
6,744
7,092
10,571
7,838
35,043
42,148 $
$
2020
Fiscal Years Ended January 31,
2021
Health and wellness
Home and apparel
Fuel, tobacco and other categories
Grocery and consumables
Sam's Club net sales by merchandise category
$
The information required by this Item 11 is incorporated herein by reference to the information under the captions "Corporate
Governance - Director Compensation" and "Executive Compensation" included in our Proxy Statement.
Form of Walmart Inc. Restricted Stock Award Notification of Award and Terms and Conditions of Award
(Suresh Kumar) dated July 9, 2019 is incorporated by reference to Exhibit 10.1 to the Quarterly Report of the
Company for the fiscal quarter ended July 31, 2019 filed on September 6, 2019 (©)
The information required by this Item 12 is incorporated herein by reference to the information that appears under the caption
"Stock Ownership" included in our Proxy Statement.
Walmart Inc. Stock Incentive Plan of 2015, as amended effective February 1, 2018 is incorporated by
reference to Exhibit 10(d) to the Annual Report on Form 10-K of the Company for the fiscal year ended
January 31, 2018, filed on March 30, 2018 (C)
Walmart Inc. 2016 Associate Stock Purchase Plan, as amended effective February 1, 2018 is incorporated by
reference to Exhibit 10(c) to the Annual Report on Form 10-K of the Company for the fiscal year ended
January 31, 2018, filed on March 30, 2018 (C)
Walmart Inc. Management Incentive Plan, as amended effective February 1, 2018 is incorporated by reference
to Exhibit 10(b) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31,
2018, filed on March 30, 2018 (C)
Walmart Inc. Officer Deferred Compensation Plan, as amended effective February 1, 2019 is incorporated by
reference to Exhibit 10(a) to the Annual Report on Form 10-K of the Company for the fiscal year ended
January 31, 2019, filed on March 30, 2019 (C)
10.14
10.13
10.12
10.11
Walmart Inc. Supplemental Executive Retirement Plan, as amended effective February 1, 2018 is
incorporated by reference to Exhibit 10(e) to the Annual Report on Form 10-K of the Company for the fiscal
year ended January 31, 2018, filed on March 30, 2018 (C)
10.10
10.8
10.7(a)
10.7
10.6
10.5
10.4
10.3
10.2
10.9
10.1
Walmart Inc. Director Compensation Deferral Plan, as amended effective February 1, 2018 is incorporated by
reference to Exhibit 10(f) to the Annual Report on Form 10-K of the Company for the fiscal year ended
January 31, 2018, filed on March 30, 2018
Form of Post-Termination Agreement and Covenant Not to Compete with attached Schedule of Executive
Officers who have executed a Post-Termination Agreement and Covenant Not to Compete is incorporated by
reference to Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the fiscal year ended
January 31, 2011, filed on March 30, 2011
10.18*
Mexico and Central America
10.17
(C)
Post Termination Agreement and Covenant Not to Compete between the Company and Suresh Kumar dated
June 6, 2019 is incorporated herein by reference to Exhibit 10.16 to the Annual Report on Form 10-K filed on
March 20, 2020
Form of Share Settled Restricted Stock Unit Notification and Terms and Conditions Awarded to Suresh
Kumar on July 9, 2019 is incorporated by reference to Exhibit 10.2 to the Quarterly Report of the Company
for the fiscal quarter ended July 31, 2019 filed on September 6, 2019 (C)
10.16
10.15
(C)
84
Amendment to Deferred Contingent Merger Consideration Agreement dated September 12, 2016, between the
Company and Marc Lore is incorporated herein by reference to Exhibit 10(w) to the Annual Report on Form
10-K of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017 (C)
Deferred Contingent Merger Consideration Agreement dated August 7, 2016, between the Company and
Marc Lore is incorporated herein by reference to Exhibit 10(v) to the Annual Report on Form 10-K of the
Company for the fiscal year ended January 31, 2017 filed on March 30, 2017 (C)
Share Settled Restricted Stock Unit Notification and Terms and Conditions Awarded to Marc Lore on
September 19, 2016, is incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10-Q of
the Company for the fiscal quarter ended October 31, 2016, filed on December 1, 2016 (C)
(C)
Form of Walmart Inc. Stock Incentive Plan of 2015 Global Share-Settled Performance-Based Restricted Stock
Unit Notification and Terms and Conditions (January 2020 annual award - all executive officers) is
incorporated herein by reference to Exhibit 10.9 to the Annual Report on Form 10-K filed on March 20, 2020
Form of Walmart Inc. Stock Incentive Plan of 2015 Restricted Stock Award, Notification of Award and
Terms and Conditions of Award is incorporated herein by reference to Exhibit 10.8 to the Annual Report on
Form 10-K filed on March 20, 2020 (C)
Amended Schedule of Executive Officers who have executed a Post-Termination Agreement and Covenant
Not to Compete in the form filed as Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the
fiscal year ended January 31, 2011 is incorporated herein by reference to Exhibit 10.7(a) to the Annual Report
on Form 10-K filed on March 20, 2020 (C)
(C)
Non-Competition, Non-Solicitation and No-Hire Agreement between the Company and Marc Lore dated
September 19, 2016 is incorporated herein by reference to Exhibit 10(x) to the Annual Report on Form 10-K
of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017 (C)
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
83
Third Supplemental Indenture, dated June 26, 2018, between the Company and The Bank of New York Trust
Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as Trustee,
under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company,
National Association, as Trustee, is incorporated herein by reference to Exhibit 4(S) to Current Report on
Form 8-K filed on June 26, 2018.
4.1
111
3.2
3.1
(b)
3.
2
1.
4.2
(a)
PART IV
2
82
The information required by this Item 14 is incorporated herein by reference to the information under the caption "Proposal No.
3- Ratification of Independent Accountants" included in our Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item 13 is incorporated herein by reference to the information under the caption "Corporate
Governance Board Processes and Practices" included in our Proxy Statement.
INDEPENDENCE
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
ITEM 15.
Description of Registrant's Securities is incorporated herein by reference to Exhibit 4.8 to the Annual Report
on Form 10-K filed on March 20, 2020
4.3
4.5
Second Supplemental Indenture, dated December 19, 2014, between the Company and The Bank of New York
Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as
Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust
Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.3 to Registration
Statement on Form S-3 (File Number 333-201074)
First Supplemental Indenture, dated December 1, 2006, between the Company and The Bank of New York
Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as
Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust
Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.6 to Post-
Effective Amendment No. 1 to Registration Statement on Form S-3 (File Number 333-130569)
Indenture dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National
Association is incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3 (File Number
333-126512)
Indenture dated as of December 11, 2002, between the Company and J.P. Morgan Trust Company, National
Association, as successor trustee to Bank One Trust Company, NA, is incorporated by reference to Exhibit 4.5
to Registration Statement on Form S-3 (File Number 333-101847)
(P)
First Supplemental Indenture dated as of September 9, 1992, to the Indenture dated as of April 1, 1991,
between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank
One Trust Company, NA, as successor trustee to The First National Bank of Chicago, Trustee, is incorporated
herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-51344)
Indenture dated as of April 1, 1991, between the Company and J.P. Morgan Trust Company, National
Association, as successor trustee to Bank One Trust Company, NA, as successor trustee to The First National
Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(a) to Registration Statement on
Form S-3 (File Number 33-51344) (P)
Restated Certificate of Incorporation of the Company dated February 1, 2018 is incorporated herein by
reference to Exhibit 3.1 to the Report on Form 8-K filed by the Company on February 1, 2018
Amended and Restated Bylaws of the Company dated July 23, 2019 are incorporated herein by reference to
Exhibit 3.1 to the Report on Form 8-K filed by the Company on July 26, 2019
4.4
The required exhibits are filed as part of this Form 10-K or are incorporated by reference herein.(¹)
Exhibits:
Certain schedules have been omitted because the required information is not present or is not present in
amounts sufficient to require submission of the schedule, or because the information required is included in
the Consolidated Financial Statements, including the notes thereto.
Financial Statements: See the Financial Statements in "Item 8. Financial Statements and Supplementary Data."
Financial Statement Schedules:
Documents filed as part of this report are as follows:
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
4.8
4.7
4.6
See exhibits listed under part (b) below.
Total
369,963
19,116
(Amounts in millions)
Interest, net
20,568
(1,824)
1,642
519,926
$
$
58,792
(2,410)
$
17,380
Operating income (loss)
$
341,004
$
Net sales
Fiscal Year Ended January 31, 2020
Capital expenditures
120,130
3,370
Depreciation and amortization
Other gains and (losses)
Income before income taxes
2,801
6,315
Capital expenditures
10,987
1,292
605
2,682
6,408
1,958
Depreciation and amortization
6,837 $
13,494 $
105,811 $
110,353 $
$
Total assets
20,116
$
236,495
10,264
1,209
488
$
121,360
3,660
$
Consolidated
Corporate
and support
Sam's Club
Walmart
International
Walmart U.S.
63,910 $
1,906
Total assets
Other gains and (losses)
Interest, net
Operating income (loss)
Net sales
Fiscal Year Ended January 31, 2021
(Amounts in millions)
reviewed by its CODM. Beginning with the first quarter in fiscal 2021, the Company revised its definition of eCommerce net
sales to include certain pharmacy transactions, and accordingly, revised prior period amounts to maintain comparability.
Information for the Company's segments, as well as for Corporate and support, including the reconciliation to income before
income taxes, is provided in the following table:
Separation Agreement between the Company and Gregory S. Foran dated December 3, 2019 is incorporated
herein by reference to Exhibit 10.17 to the Annual Report on Form 10-K filed on March 20, 2020
Separation Agreement between the Company and Marc Lore dated January 26, 2021
Income before income taxes
$
555,233
(2,134)
2,436
6,131
11,152
1,359
599
2,633
6,561
252,496
16,146 $
13,415 $
109,445 $
$
113,490
$
20,564
$
210
(2,194)
22,548
525
Walmart International net sales by market
1,064
Fiscal Year Ended January 31, 2019
Disaggregated Revenues
79
No individual country outside of the U.S. had total revenues or long-lived assets that were material to the consolidated totals.
Long-lived assets related to operations classified as held for sale are excluded from the table above. Additionally, the Company
did not generate material revenues from any single customer.
86,944 $ 81,144
40,105
30,251
127,049 $ 111,395
87,068 $
22,780
109,848 $
$
$
514,405
In the following tables, segment net sales are disaggregated by either merchandise category or market. In addition, net sales
related to eCommerce are provided for each segment, which include omni-channel sales, where a customer initiates an order
digitally and the order is fulfilled through a store or club.
392,265
122,140
559,151 $
$
122,502
436,649 $
$
2019
2020
2021
402,532 $
121,432
523,964 $
Fiscal Years Ended January 31,
(Amounts in millions)
Grocery
Other categories
Total
Of Walmart U.S.'s total net sales, approximately $43.0 billion and $24.1 billion related to eCommerce for fiscal 2021 and fiscal
2020, respectively.
341,004
$
369,963
3,331
3,622
Walmart U.S. net sales by merchandise category
36,558
108,687
119,406
192,428
208,413 $
$
Fiscal Years Ended January 31,
2021
2020
Health and wellness
General merchandise
38,522
Total long-lived assets
Non-U.S. operations
U.S. operations
Total assets
11,460
$
Income before income taxes
(8,368)
Loss on extinguishment of debt
(2,129)
Interest, net
105,114 $
21,957
510,329
$
57,839 $
1,520
120,824 $
4,883
331,666 $
17,386
Operating income (loss)
$
Net sales
(1,832)
97,066 $
Depreciation and amortization
6,201
Long-lived assets
Total revenues
Non-U.S. operations
U.S. operations
Revenues
(Amounts in millions)
Total revenues, consisting of net sales and membership and other income, and long-lived assets, consisting primarily of
property and equipment, net and lease right-of-use assets, aggregated by the Company's U.S. and non-U.S. operations for fiscal
2021, 2020 and 2019, are as follows:
10,344
1,199
450
2,661
6,034
Capital expenditures
10,678
219,295
4,222 $
1,248
$
12,893
639
2,590
10,705
(C)
(Principal Financial Officer)
10.19
100%
Walmart
Wal-Mart Stores Texas, LLC
(C)
Delaware, U.S.
100%
Walmart
Wal-Mart Property Company
Delaware, U.S.
Delaware, U.S.
ΝΑ
Wal-Mart Real Estate Business Trust
Delaware, U.S.
100%
ΝΑ
Sam's West, Inc.
Arkansas, U.S.
100%
100%
Name Under Which Doing Business
Other Than Subsidiary's
Percent of Equity
Securities Owned
Organized or
Incorporated
By
Randall L. Stephenson
Director
Date: March 19, 2021
By
/s/ S. Robson Walton
S. Robson Walton
Director
Cayman Islands
By /s/ Steuart L. Walton
Steuart L. Walton
Director
Signature Page to Walmart Inc.
Form 10-K for the Fiscal Year Ended January 31, 2021
87
82
Exhibit 21
Significant Subsidiaries of Walmart Inc.
The following list details certain of the subsidiaries of Walmart Inc. Subsidiaries not included in the list are omitted because, in
the aggregate, they are not significant as permitted by Item 601(b)(21) of Regulation S-K.
Subsidiary
Wal-Mart Stores East, LP
Sam's Club
Sam's East, Inc.
Arkansas, U.S.
100%
83%
Flipkart
(1)
Wal-Mart Japan Holdings K.K.
Japan
100%
Seiyu
Walmart Chile S.A.(²)
Chile
100%
Walmart Chile
Massmart Holdings Ltd.
South Africa
53%
The Company owns substantially all of Walmart Chile.
(2)
(1) The Company sold its retail operations in the U.K and Japan in February and March of 2021, respectively.
Massmart
ΝΑ
100%
Singapore
Date:
Flipkart Private Limited
100%
Sam's Club
Sam's Property Company
Delaware, U.S.
100%
ΝΑ
Sam's Real Estate Business Trust
Delaware, U.S.
100%
ΝΑ
ASDA Group Limited (1)
England
100%
ASDA
Wal-Mart de Mexico, S.A.B. de C.V.
Mexico
71%
Walmex
Wal-Mart Canada Corp.
Canada
Walmart
Steven S. Reinemund
Director
Date: March 19, 2021
By /s/ Marissa A. Mayer
Marissa A. Mayer
Director
*
Filed herewith as an Exhibit.
**
Furnished herewith as an Exhibit.
(C)
This Exhibit is a management contract or compensatory plan or arrangement
(P)
(1)
This Exhibit was originally filed in paper format. Accordingly, a hyperlink has not been provided.
Certain instruments defining the rights of holders of long-term debt securities of the Registrant are omitted pursuant to Item601(b)(4)(iii) of Regulation
S-K. The Company hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(c)
ITEM 16. FORM 10-K SUMMARY
None.
85
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Walmart Inc.
Date: March 19, 2021
By
/s/ C. Douglas McMillon
C. Douglas McMillon
Financial Statement Schedules: None.
104
Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.PRE*
10.20
Share Issuance and Acquisition Agreement by and Between Flipkart Private Limited and Walmart Inc. dated
as of May 9, 2018. is incorporated herein by reference to Exhibit 10.1. to the Quarterly Report of the
Company for the fiscal quarter ended July 31, 2018 filed on September 6, 2018 (portions of this exhibit have
been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)
Counterpart Form of Share Purchase Agreement by and Among Wal-Mart International Holdings, Inc. the
shareholders of Flipkart Private Limited identified on Schedule I thereto, Fortis Advisors LLC and Walmart
Inc. dated as of May 9, 2018 is incorporated herein by reference to Exhibit 10.2. to the Quarterly Report of the
Company for the fiscal quarter ended July 31, 2018 filed on September 6, 2018 (Portions of this exhibit have
been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)
List of the Company's Significant Subsidiaries
Consent of Independent Registered Public Accounting Firm
21*
23*
31.1*
Chief Executive Officer Section 302 Certification
31.2*
32.1**
Chief Financial Officer Section 302 Certification
Chief Executive Officer Section 906 Certification
32.2**
Chief Financial Officer Section 906 Certification
99.1*
101.INS*
State Court Opioids Litigation Case Citations and Currently Scheduled Trial Dates
XBRL Instance Document
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
101.DEF*
101.LAB*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated:
Date: March 19, 2021
Date: March 19, 2021
Executive Vice President and Chief Financial Officer
Date: March 19, 2021
By
/s/ David M. Chojnowski
David M. Chojnowski
Senior Vice President and Controller
(Principal Accounting Officer)
Signature Page to Walmart Inc.
Form 10-K for the Fiscal Year Ended January 31, 2021
98
86
Date: March 19, 2021
By /s/ Cesar Conde
Cesar Conde
Director
Date: March 19, 2021
Date: March 19, 2021
Date: March 19, 2021
Date: March 19, 2021
Date: March 19, 2021
Date: March 19, 2021
By /s/ Timothy P. Flynn
Timothy P. Flynn
Director
By /s/ Sarah Friar
Sarah Friar
Director
By /s/ Carla A. Harris
Carla A. Harris
Director
By /s/ Thomas W. Horton
Thomas W. Horton
Director
M. Brett Biggs
By /s/ Steven S Reinemund
/s/ M. Brett Biggs
Qomolangma Holdings Ltd.
By /s/ C. Douglas McMillon
C. Douglas McMillon
President and Chief Executive Officer and Director
(Principal Executive Officer)
Date: March 19, 2021
By /s/ Gregory B. Penner
Gregory B. Penner
Chairman of the Board and Director
By
investments and capital expenditures we will make and how certain of those investments and capital expenditures are
expected to be financed;
our increasing investments in eCommerce, technology, automation, supply chain, new stores and clubs as well as
remodels and other omni-channel customer initiatives, such as same day pickup and delivery;
the amount, number, growth, increase, reduction or decrease in or over certain periods, of or in certain financial items
or measures or operating measures, including our earnings per share, net sales, comparable store and club sales, our
eCommerce sales, liabilities, expenses of certain categories, expense leverage, operating income, returns, capital and
operating investments or expenditures of particular types and new store and club openings, inventory levels and
associated costs, product mix and demand for certain merchandise, consumer confidence, disposable income, credit
availability, spending levels, shopping patterns and debt levels;
All references in this Annual Report on Form 10-K, the information incorporated into this Annual Report on Form 10-K by
reference to information in the Proxy Statement of Walmart Inc. for its Annual Shareholders' Meeting to be held on May 31,
2023 and in the exhibits to this Annual Report on Form 10-K to "Walmart Inc.," "Walmart," "the Company," "our Company,"
"we," "us" and "our" are to the Delaware corporation named "Walmart Inc." and, except where expressly noted otherwise or the
context otherwise requires, that corporation's consolidated subsidiaries.
•
•
•
•
•
Such forward-looking statements are not statements of historical facts, but instead express our estimates or expectations for our
consolidated, or one of our segment's, economic performance or results of operations for future periods or as of future dates or
events or developments that may occur in the future or discuss our plans, objectives or goals. These forward-looking
statements may relate to:
Nature of Forward-Looking Statements
This Annual Report on Form 10-K and other reports, statements, and information that Walmart Inc. (which individually or
together with its subsidiaries, as the context otherwise requires, is referred to as "we," "Walmart" or the "Company") has filed
with or furnished to the Securities and Exchange Commission ("SEC") or may file with or furnish to the SEC in the future, and
prior or future public announcements and presentations that we or our management have made or may make, include or may
include, or incorporate or may incorporate by reference, statements that may be deemed to be "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Act"), that are intended to enjoy
the protection of the safe harbor for forward-looking statements provided by the Act as well as protections afforded by other
federal securities laws.
Cautionary Statement Regarding Forward-Looking Statements
PART I
the growth of our business or change in our competitive position in the future or in or over particular periods, both
generally and with respect to particular markets, segments or lines of business, including, but not limited to,
advertising, fulfillment, healthcare, and financial services;
macroeconomic, geopolitical, and business conditions, trends and events around the world and in the markets in which
we operate, including inflation or deflation, generally and in certain product categories, the impact of supply chain
challenges, and recessionary pressures;
General merchandise includes:
volatility in currency exchange rates affecting our consolidated, or one or more of our segments' results of operations;
the Company continuing to provide returns to shareholders through share repurchases and dividends, the use of share
repurchase authorization over a certain period or the source of funding of a certain portion of our share repurchases;
our sources of liquidity, including our cash, continuing to be adequate or sufficient to fund our operations, finance our
global investment and expansion activities, pay dividends and fund share repurchases;
Merchandise. Walmart U.S. does business primarily in three strategic merchandise units, listed below:
(1) Excludes other small formats.
42,000
65,000
28,000
105,000
•
206,000
178,000
260,000
69,000
Square Feet
Square Feet
Average
30,000
Maximum
Grocery consists of a full line of grocery items, including dry grocery, snacks, dairy, meat, produce, deli & bakery,
frozen foods, alcoholic and nonalcoholic beverages, as well as consumables such as health and beauty aids, pet
supplies, household chemicals, paper goods and baby products;
°
•
•
Our ability to develop and operate units at the right locations and to deliver a customer-centric omni-channel experience largely
determines our competitive position within the retail industry. We compete in a variety of ways, including the prices at which
we sell our merchandise, merchandise and selection availability, services offered to customers, location, store hours, in-store
amenities, the shopping convenience and overall shopping experience we offer, the attractiveness and ease of use of our digital
platforms, cost and speed of and options for delivery to customers of merchandise purchased through our digital platforms or
through our omni-channel integration of our physical and digital operations. We employ many strategies and programs
designed to meet competitive pressures within our industry. These strategies include the following:
Competition. Walmart U.S. competes with brick and mortar, eCommerce, and omni-channel retailers operating discount,
department, retail and wholesale grocers, drug, dollar, variety and specialty stores, supermarkets, hypermarkets and
supercenter-type stores, social commerce platforms, as well as companies that offer services in digital advertising, fulfillment
and delivery services, health and wellness, and financial services. Each of these landscapes is highly competitive and rapidly
evolving, and new business models and the entry of new, well-funded competitors continue to intensify this competition. Some
of our competitors have longer histories in these lines of business, more customers, and greater brand recognition. They may be
able to obtain more favorable terms from suppliers and business partners and to devote greater resources to the development of
these businesses. In addition, for eCommerce and other internet-based businesses, newer or smaller businesses may be better
able to innovate and compete with us.
Operations. Walmart U.S. is available to customers through supercenters, discount stores and neighborhood markets, as well
as online or through the mobile application 24 hours a day. Consistent with its strategy, Walmart U.S. continues to develop
technology tools and services to better serve customers and help stores operate more efficiently, such as pickup and delivery,
Walmart+, ship-from-store and other initiatives which provide convenient and seamless omni-channel shopping experiences.
Seasonal Aspects of Operations. Walmart U.S.'s business is seasonal to a certain extent due to calendar events and national
and religious holidays, as well as different weather patterns. Historically, its highest sales volume has occurred in the fiscal
quarter ending January 31.
Brand name merchandise represents a significant portion of the merchandise sold in Walmart U.S. We also market lines of
merchandise under our private brands, including brands such as: "Allswell," "Athletic Works," "Eloquii Elements," "Equate,"
"Free Assembly," "Freshness Guaranteed," "George," "Great Value," "Holiday Time," "Hyper Tough," "Mainstays,"
"Marketside," "No Boundaries," "onn.," "Ozark Trail," "Parent's Choice," "Sam's Choice," "Scoop," "Spring Valley," "Time
and Tru," "Way to Celebrate" and "Wonder Nation." The Company also markets lines of merchandise under licensed brands,
some of which include: "Avia," "Love & Sports," "Better Homes & Gardens," "Pioneer Woman" and "Sofia Jeans by Sofia
Vergara."
FOR THE FISCAL YEAR ENDED JANUARY 31, 2023
7
Health and wellness includes pharmacy, over-the-counter drugs and other medical products, optical services and other
clinical services.
Apparel (e.g., apparel for men, women, girls, boys and infants, as well as shoes, jewelry and accessories); and
Home (e.g., housewares and small appliances, bed & bath, furniture and home organization, home
furnishings, home decor, fabrics and crafts).
°
Hardlines (e.g., automotive, hardware and paint, sporting goods, outdoor living and stationery);
°
Entertainment (e.g., electronics, toys, seasonal merchandise, wireless, video games, movies, music and
books);
Other categories in the Walmart U.S. business include an in-house advertising offering via Walmart Connect, supply chain and
fulfillment capabilities to online marketplace sellers via Walmart Fulfillment Services, and newer initiatives such as B2B last
mile delivery services via Walmart GoLocal, and a suite of data products for merchants and suppliers via Walmart Luminate.
Additional service offerings include fuel, financial services and related products (including through our digital channels, stores
and our fintech venture, ONE), such as money orders, prepaid access, money transfers, check cashing, bill payment, and certain
types of installment lending.
Minimum
Square Feet
(grocery)
Discount stores (general merchandise and limited grocery)
our commitments, intentions, plans or goals related to environmental, social, and governance ("ESG") priorities,
including, but not limited to, the sustainability of our environment and supply chains, the promotion of economic
opportunity or other societal initiatives.
the effect on the Company's results of operations or financial position of the Company's adoption of certain new, or
amendments to existing, accounting standards; or
the effect of adverse decisions in, or settlement of, litigation or other proceedings or investigations to which we are
subject;
•
•
4
Our forward-looking statements may also include statements of our strategies, plans and objectives for our operations, including
areas of future focus in our operations, and the assumptions underlying any of the forward-looking statements we make. The
forward-looking statements we make can typically be identified by the use therein of words and phrases such as "aim,"
"anticipate," "believe," "could be," "could increase," "could occur," "could result," "continue," "estimate," "expansion,"
"expect," "expectation," "expected to be," "focus," "forecast," "goal," "grow," "guidance," "intend," "invest," "is expected,"
"may continue," "may fluctuate," "may grow," "may impact," "may result," "objective," "plan," "priority," "project," "strategy,"
"to be," "we'll," "we will," "will add," "will allow," "will be," "will benefit," "will change," "will come in at," "will continue,"
"will decrease," "will grow," "will have," "will impact," "will include," "will increase," "will open," "will remain," "will result,"
"will stay," "will strengthen," "would be," "would decrease" and "would increase," variations of such words or phrases, other
phrases commencing with the word "will" or similar words and phrases denoting anticipated or expected occurrences or results.
The forward-looking statements that we make or that are made by others on our behalf are based on our knowledge of our
business and our operating environment and assumptions that we believe to be or will believe to be reasonable when such
forward-looking statements were or are made. As a consequence of the factors described above, the other risks, uncertainties
and factors we disclose below and in the other reports as mentioned above, other risks not known to us at this time, changes in
facts, assumptions not being realized or other circumstances, our actual results may differ materially from those discussed in or
implied or contemplated by our forward-looking statements. Consequently, this cautionary statement qualifies all forward-
looking statements we make or that are made on our behalf, including those made herein and incorporated by reference herein.
We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially
realized, that those results or developments will result in the expected consequences for us or affect us, our business, our
operations or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on
such forward-looking statements, which speak only as of their dates. We undertake no obligation to revise or update any of the
forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.
in the markets in which we operate and elsewhere and actions with respect to such policies, programs and initiatives
(including, but not limited to, changes in the enforcement priorities of regulatory authorities);
our effective tax rate for certain periods and the realization of certain net deferred tax assets and the effects of
resolutions of tax-related matters;
•
•
the reclassification of amounts related to our derivatives;
•
cash flows from operations, our current cash position and access to capital markets or credit will continue to be
sufficient to meet our anticipated operating cash needs;
the adoption or creation of new, and modification of existing, governmental policies, programs, initiatives and actions
15
ITEM 1.
General
BUSINESS
Neighborhood markets (¹)
Supercenters (general merchandise and grocery)
Omni-channel. Walmart U.S. provides an omni-channel experience to customers, integrating retail stores and eCommerce,
through services such as pickup and delivery, in-home delivery, ship-from-store, and digital pharmacy fulfillment options. As
of January 31, 2023, we had more than 4,600 pickup locations and more than 3,900 same-day delivery locations. Our
Walmart+ membership offering provides enhanced omni-channel shopping benefits including unlimited free shipping on
eligible items with no order minimum, unlimited delivery from store, fuel discounts, access to Paramount+ streaming service,
and mobile scan & go for a streamlined in-store shopping experience. We have several eCommerce websites, the largest of
which is walmart.com. We define eCommerce sales as sales initiated by customers digitally and fulfilled by a number of
methods including our dedicated eCommerce fulfillment centers and leveraging our stores, as well as certain other business
offerings that are part of our flywheel strategy, such as our Walmart Connect advertising business. The following table
provides the approximate size of our retail stores as of January 31, 2023:
Walmart U.S. is our largest segment and operates in the U.S., including in all 50 states, Washington D.C. and Puerto Rico.
Walmart U.S. is a mass merchandiser of consumer products, operating under the "Walmart" and "Walmart Neighborhood
Market" brands, as well as walmart.com and other eCommerce brands. Walmart U.S. had net sales of $420.6 billion for fiscal
2023, representing 69% of our fiscal 2023 consolidated net sales, and had net sales of $393.2 billion and $370.0 billion for
fiscal 2022 and 2021, respectively. Of our three segments, Walmart U.S. has historically had the highest gross profit as a
percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the
Company's net sales and operating income.
Walmart U.S. Segment
We are engaged in global operations of retail, wholesale and other units, as well as eCommerce, located throughout the U.S.,
Africa, Canada, Central America, Chile, China, India and Mexico. We also previously operated in Argentina prior to the sale of
Walmart Argentina in fiscal 2021 and operated in the United Kingdom and Japan prior to the sale of those operations in the first
quarter of fiscal 2022. Refer to Note 12 to our Consolidated Financial Statements for information on these divestitures. Our
operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club, which are further
described below. Each segment contributes to the Company's operating results differently. However, each has generally
maintained a consistent contribution rate to the Company's net sales in recent years other than minor changes to the contribution
rate for the Walmart International segment due to the exit of certain markets and fluctuations in currency exchange rates.
Additional information on our operating segments and geographic information is contained in Note 13 to our Consolidated
Financial Statements.
Information About Our Segments
We are enhancing our ecosystem with our omni-channel capabilities, stores, service offerings, eCommerce websites and
marketplaces as well as our supply chain combined with approximately 2.1 million associates as of January 31, 2023 to better
serve our customers. Together, we believe these elements produce a flywheel effect which creates relationships where
customers view Walmart as their primary destination. In the U.S., our Walmart+ membership incorporates several service
offerings which provide enhanced omni-channel shopping experiences and benefits for members. As we execute on our
strategy globally, our flywheel is accelerating through offerings such as our Walmart Connect advertising business, Walmart
Fulfillment Services, providing access to quality, affordable healthcare via Walmart Health and Flipkart Health+, and our
financial services businesses. These offerings represent mutually reinforcing pieces of our flywheel centered around our
customers around the world who are increasingly seeking convenience.
In 2000, we began our first eCommerce initiative by creating both walmart.com and samsclub.com. Since then, our
eCommerce presence has continued to grow. In 2007, leveraging our physical stores, walmart.com launched its Site to Store
service, enabling customers to make a purchase online and pick up merchandise in stores. To date, we now have over 8,100
pickup and approximately 7,000 delivery locations globally. In recent years, we have heavily invested in omni-channel and
eCommerce innovation, which has enabled us to leverage technology, talent and expertise, incubate digitally-native brands, and
expand our assortment and service offerings. We have also continued to enhance our eCommerce initiatives, such as with our
acquisition of a majority stake in Flipkart Private Limited ("Flipkart"), which is our ecosystem in India that includes
eCommerce platforms of Flipkart and Myntra, as well as with our majority stake in PhonePe Private Limited ("PhonePe"), a
digital transaction platform.
The businesses conducted by our founders began in 1945 when Sam M. Walton opened a franchise Ben Franklin variety store
in Newport, Arkansas. In 1946, his brother, James L. Walton, opened a similar store in Versailles, Missouri. Until 1962, our
founders' business was devoted entirely to the operation of variety stores. In 1983, we opened our first Sam's Club, and in 1988,
we opened our first supercenter. In 1998, we opened our first Walmart Neighborhood Market. In 1991, we began our first
international initiative when we entered into a joint venture in Mexico and, as of January 31, 2023, our Walmart International
segment conducted business in 19 countries.
The Development of Our Company
We maintain our principal offices in Bentonville, Arkansas. Our common stock trades on the New York Stock Exchange under
the symbol "WMT."
Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club. Our fiscal year ends
on January 31 for our United States ("U.S.") and Canadian operations. We consolidate all other operations generally using a
one-month lag and on a calendar year basis. Our discussion is as of and for the fiscal years ended January 31, 2023 ("fiscal
2023"), January 31, 2022 ("fiscal 2022") and January 31, 2021 ("fiscal 2021"). During fiscal 2023, we generated total revenues
of $611.3 billion, which was comprised primarily of net sales of $605.9 billion.
Our strategy is to make every day easier for busy families, operate with discipline, sharpen our culture and become more digital,
and make trust a competitive advantage. Making life easier for busy families includes our commitment to price leadership,
which has been and will remain a cornerstone of our business, as well as increasing convenience to save our customers time.
By leading on price, we earn the trust of our customers every day by providing a broad assortment of quality merchandise and
services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every
day so our customers trust that our prices will not change under frequent promotional activity. Everyday low cost ("EDLC") is
our commitment to control expenses so our cost savings can be passed along to our customers.
Walmart Inc. ("Walmart," the "Company" or "we") is a people-led, technology-powered omni-channel retailer dedicated to help
people around the world save money and live better – anytime and anywhere – by providing the opportunity to shop in both
retail stores and through eCommerce, and to access our other service offerings. Through innovation, we strive to continuously
improve a customer-centric experience that seamlessly integrates our eCommerce and retail stores in an omni-channel offering
that saves time for our customers. Each week, we serve approximately 240 million customers who visit more than 10,500
stores and numerous eCommerce websites in 20 countries.
our workforce strategy, including the availability of necessary personnel to staff our stores, clubs and other facilities
and the potential impact of changes to the costs of labor;
ANNUAL REPORT ON FORM 10-K
Item 4
86
NYSE
NYSE
Name of each exchange on which registered
Trading Symbol(s)
WMT
WMT26
share
2.550% Notes Due 2026
Common Stock, par value $0.10 per
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Registrant's telephone number, including area code: (479) 273-4000
72716
(Zip Code)
(IRS Employer Identification No.)
71-0415188
(Address of principal executive offices)
Bentonville, AR
Securities registered pursuant to Section 12(g) of the Act: None
702 S.W. 8th Street
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☑ No ☐
Yes ☐ No ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to
§240.10D-1(b).
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
ㅁㅁㅁ
Smaller Reporting Company
Emerging Growth Company
Accelerated Filer
☑ ☐
Large Accelerated Filer
Non-Accelerated Filer
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act.
(State or other jurisdiction of
incorporation or organization)
DE
(Exact name of registrant as specified in its charter)
Pickup
-Encuentra miles
de articulos 
exclusivos
Bodega Aurrera
enlinea
TVD COMMBAS
ACUMULA
beneficios
SUMA
Walmart
Rounty
essentials
12-20
Walmart Walmart
COCOA
PEBB
Annual Report
23
2*
Compra
aqui
spensa
a tu casa
WALMART INC.
Walmart *
☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Commission file number 001-06991.
☑Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended January 31, 2023, or
FORM 10-K
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
As of July 31, 2022, the aggregate market value of the voting common stock of the registrant held by non-affiliates of the
registrant, based on the closing sale price of those shares on the New York Stock Exchange reported on July 29, 2022, was
$186,168,142,989. For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers (as
defined in Rule 3b-7 under the Exchange Act) and the beneficial owners of 5% or more of the registrant's outstanding common
stock are the affiliates of the registrant.
UNITED STATES
President and Chief Executive Officer
Walmart Inc.
Doug McMillon
Dong
"We started this new year with momentum across the business through
strength in our omnichannel model and by living our purpose every day.
Our customers and members expect to shop with us when and how they
choose, and that's what we do for them. We're thankful to our associates
that create a seamless experience that's uniquely Walmart."
A message from our CEO
Bodega Aurrers.com
tu pedido!
05463 
222 en
Read the full report and Doug's letter here:
The registrant had 2,695,655,933 shares of common stock outstanding as of March 15, 2023.
DOCUMENTS INCORPORATED BY REFERENCE
Parts Into Which Incorporated
Part III
82
Directors, Executive Officers and Corporate Governance
Item 10
Part III
81
81
81
81
50
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Financial Statements and Supplementary Data
Item 9C
Other Information
Item 9B
Item 11
Executive Compensation
82
Item 12
85
83
Signatures
Form 10-K Summary
Item 16
Exhibits, Financial Statement Schedules
Item 15
Item 9A
Part IV
82
Principal Accounting Fees and Services
Item 14
82
82
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Item 13
သဲသဲ၏၊
WALMART INC.
Item 9
48
Properties
Item 2
Unresolved Staff Comments
Item 1B
Risk Factors
Item 1A
Business
Item 1
Part I
Table of Contents
For the Fiscal Year Ended January 31, 2023
Form 10-K
Walmart Inc.
Portions of the registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held May 31, 2023 (the "Proxy
Statement")
Document
Item 3
Legal Proceedings
EDLP: our pricing philosophy under which we price items at everyday low prices so our customers trust that our
prices will not change under frequent promotional activity;
Mine Safety Disclosures
35
34
33
32
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Item 7A
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Reserved
Item 8
Item 5
Item 6
Item 7
32
31
28
27
15
6
Page
Part II
EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our
customers;
Periodically, revisions are made to the categorization of the components comprising our strategic merchandise units. When
revisions are made, the previous periods' presentation is adjusted to maintain comparability.
Expanding our flywheel and the products and services we offer in areas such as digital advertising, fulfillment
services, health and wellness, and financial services to provide our customers a broader set of offerings to meet
expanding needs.
8
Omni-channel offerings such as pickup and delivery and our Walmart+ membership offering, all of which enhance
convenience and seek to serve customers in the ways they want to be served; and
Distribution. We continue to invest in supply chain automation and utilize a total of 163 distribution facilities which are
located strategically throughout the U.S. For fiscal 2023, the majority of Walmart U.S.'s purchases of store merchandise were
shipped through these facilities, while most of the remaining store merchandise we purchased was shipped directly from
suppliers. General merchandise and dry grocery merchandise is transported primarily through the segment's private truck fleet;
however, we contract with common carriers to transport the majority of our perishable grocery merchandise. We ship
merchandise purchased by customers on our eCommerce platforms by a number of methods from multiple locations including
from our 34 dedicated eCommerce fulfillment centers, as well as leveraging our ability to ship or deliver directly from more
than 3,900 stores.
2nd Quarter
$160.77 $132.01
154.99 117.27
High
$147.50
144.58
3rd Quarter
143.07 125.12
152.57
Low
$126.28
134.40
134.71
*Assumes $100 Invested on February 1, 2018
Assumes Dividends Reinvested
Fiscal Year Ended January 31, 2023
1st Quarter
Fiscal Years Ended January 31,
154.64
138.17
152.00
133.95
2018
2019
The high market price and low market price per share for the
Company's common stock for the first fiscal quarter of fiscal 2024,
were as follows:
2024
High
4th Quarter
Low
High
Fiscal Years
Culture, Diversity, Equity & Inclusion Report
$250
Independent Registered Public Accounting Firm
$200
Ernst & Young LLP
5417 Pinnacle Point Dr., Suite 501
$150
Rogers, AR 72758
$100
Market Price of Common Stock
The high market price and low market price per share for the
Company's common stock for each fiscal quarter in fiscal 2023
and 2022 were as follows:
$ 50
$ 0
2018
2019
2020
2021
2022
2023
2023
2022
Low
S&P 500 Retailing Index
c)
100.00 108.42 127.45 180.19 195.77 160.10
•
Access to safer, healthier food, products & services
⚫ Disaster preparedness and relief
д
Sustainability
•
•
•
.
• Serving communities
Climate & renewable energy leadership
Regeneration of natural resources: forests, land & oceans
Sustainable product supply chains
Dignity of people in supply chains
Ethics & integrity
Highest ethical & compliance standards
Strong corporate governance
Engagement in public policy
⚫ Digital citizenship
Respect for human rights
Zero waste in operation, products and packaging
Community
88
Growth for suppliers, sellers and local economies
1st Quarter (1)
(1)
Through March 15, 2023
$148.34 $136.09
Holders of Record of Common Stock
As of March 15, 2023, there were 205,465 holders of record of
Walmart's common stock.
ESG Accomplishments FY23
CO2
>750 million metric tons CO₂e
emissions reduced or avoided
reported by suppliers cumulatively
since 2017 through Project Gigaton™
~75% of U.S. product net sales dollars
represented by suppliers reporting to
Project Gigaton™ for the most recent year
Raised average U.S. hourly wage to
more than $17.00
Achieved the highest level of women
and people of color in senior leadership
roles in the U.S. since 2020
>180,000 U.S. associates were promoted
to jobs of greater responsibility and
higher pay
YP
Donated more than 665 million pounds
of food to help fight hunger in the U.S.
ESG Themes and Priority Issues
目
•
Opportunity
• Good jobs and advancement for associates
Equity and inclusion at Walmart and beyond
2020 2021 2022 2023
$100.00 $92.03 $112.17 $139.96 $141.50 $147.89
100.00 97.69 118.87 139.37 171.83 157.71
Walmart Inc.
S&P 500 Index
S&P 500
Retailing Index
S&P 500 Index
Walmart
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350 (AS ADOPTED
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002)
In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31,
2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John David Rainey, Executive
Vice President and Chief Financial Officer of the Company, certify to my knowledge and in my capacity as an officer of the
Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company as of the dates and for the periods expressed in the Report.
IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 17, 2023.
/s/ John David Rainey
John David Rainey
Exhibit 32.2
Executive Vice President and Chief Financial Officer
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Walmart >
Corporate and Stock Information
Listing
New York Stock Exchange
Stock Symbol: WMT
Corporate Information
Stock Registrar and Transfer Agent:
[THIS PAGE INTENTIONALLY LEFT BLANK]
President and Chief Executive Officer
C. Douglas McMillon
/s/ C. Douglas McMillon
d)
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;
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 evaluations; and
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 that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
The registrant's other certifying officer 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 registrant's Board of Directors:
a)
b)
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
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.
Date: March 17, 2023
/s/ John David Rainey
John David Rainey
Executive Vice President and Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350 (AS ADOPTED
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002)
In connection with the Annual Report of Walmart Inc. (the "Company") on Form 10-K for the period ending January 31,
2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, C. Douglas McMillon,
President and Chief Executive Officer of the Company, certify to my knowledge and in my capacity as an officer of the
Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company as of the dates and for the periods expressed in the Report.
IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of March 17, 2023.
Computershare Trust Company, N.A.
Walmart Inc.
P.O. Box 43006
1-800-438-6278
April 4, 2022
May 31, 2022
September 6, 2022
January 3, 2023
Dividends Payable Per Share
$0.56
0.56
0.56
0.56
For fiscal 2023, dividends were paid based on the following schedule:
For fiscal 2022, dividends were paid based on the following schedule:
June 1, 2021
September 7, 2021
January 3, 2022
Stock Performance Chart
$0.55
0.55
0.55
0.55
This graph compares the cumulative total shareholder return
on Walmart's common stock during the five fiscal years ending
through fiscal 2023 to the cumulative total returns on the S&P 500
Retailing Index and the S&P 500 Index. The comparison assumes
$100 was invested on February 1, 2018, in shares of our common
stock and in each of the indices shown and assumes that all of the
dividends were reinvested.
April 5, 2021
0.57
0.57
0.57
TDD for hearing-impaired inside the U.S. 1-800-952-9245
Internet: http://www.computershare.com
Annual Meeting
Our 2023 Annual Shareholders' Meeting will be held on Wednesday,
May 31, 2023 at 10:30am CDT in a virtual meeting format only, with
no physical in-person meeting. Our Annual Shareholders' Meeting
will be available for viewing at www.virtualshareholdermeeting.com/
WMT2023.
Communication with Shareholders
Walmart Inc. periodically communicates with our shareholders and
other members of the investment community about our operations.
For further information regarding our policy on shareholder and
investor communications refer to our website, www.stock.walmart.com.
The following reports are available without charge upon request
by writing the company c/o Investor Relations or by emailing
IR@walmart.com. These reports are also available via the
corporate website.
• Annual Report on Form 10-K
• Quarterly Reports on Form 10-Q
•
•Earnings Releases
⚫ Current Reports on Form 8-K
• Annual Shareholders' Meeting Proxy Statement
• Environmental, Social and Governance Report
Dividends Payable Per Share
For fiscal 2024, dividends will be paid based on the following schedule:
April 3, 2023
May 30, 2023
September 5, 2023
January 2, 2024
Dividends Payable Per Share
$0.57
Providence RI 02940-3006
Comparison of 5-Year Cumulative Total Return*
Among Walmart Inc., the S&P 500 Index and S&P 500 Retailing Index
(Fiscal Years Ended January 31)
b)
C. Douglas McMillon
The registrant's other certifying officer 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 registrant's Board of Directors:
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 that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
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 evaluations; and
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;
d)
c)
a)
a) 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;
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;
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;
5.
4.
3.
2.
The registrant's other certifying officer 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:
Exhibit 31.1
b)
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.
The registrant's other certifying officer 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:
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;
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;
5.
4.
3.
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
2.
I have reviewed this Annual Report on Form 10-K of Walmart Inc. (the "registrant");
1.
I, John David Rainey, certify that:
President and Chief Executive Officer
/s/ C. Douglas McMillon
Date: March 17, 2023
Exhibit 31.2
I have reviewed this Annual Report on Form 10-K of Walmart Inc. (the "registrant");
b)
I, C. Douglas McMillon, certify that:
(11) Walmart Deferred Compensation Matching Plan
(12) Wal-Mart Stores, Inc. Common Stock
a) 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;
(10) Wal-Mart Stores, Inc. Stock Incentive Plan of 2015, which amended and
restated the 2010 plan
(9) Wal-Mart Puerto Rico Profit Sharing and 401(k) Plan
(8) Wal-Mart Stores, Inc. Associate Stock Purchase Plan of 1996
(7) Wal-Mart Profit Sharing and 401(k) Plan
(6) Wal-Mart Stores, Inc. Stock Incentive Plan of 2015, which amended and
restated the 2010 plan
1.
(3) Wal-Mart Stores, Inc. 401(k) Retirement Savings Plan
(4) Wal-Mart Puerto Rico, Inc., 401(k) Retirement Savings Plan
(2) Wal-Mart Stores, Inc. Director Compensation Plan
Shareholder Investment Plan of Wal-Mart Stores, Inc.
(1)
We consent to the incorporation by reference in the following Registration Statements:
Consent of Independent Registered Public Accounting Firm
Exhibit 23
(13) Walmart 401(k) Plan
(14) Wal-Mart Stores, Inc. Associate Stock Purchase Plan
(5) Wal-Mart Stores, Inc. Associate Stock Purchase Plan of 1996
(16) Walmart Inc. 2016 Associate Stock Purchase Plan
(15) Debt Securities of Walmart Inc.
March 17, 2023
Rogers, Arkansas
/s/ Ernst & Young LLP
of our reports dated March 17, 2023, with respect to the Consolidated Financial Statements of Walmart Inc. and the
effectiveness of internal control over financial reporting of Walmart Inc. included in this Annual Report (Form 10-K) of
Walmart Inc. for the year ended January 31, 2023.
Form S-3 ASR File No. 333-251124
Form S-8 File No. 333-228631
Form S-8 File No. 333-228635
Form S-8 File No. 333-214060
Form S-8 File No. 333-178717
Form S-3 ASR File No. 333-178385
Form S-8 File No. 333-187577
Form S-8 File No. 333-233682
Form S-8 File No. 333-44659
Form S-8 File No. 333-62965
Form S-8 File No. 333-60329
Form S-8 File No. 333-29847
Form S-3 File No. 333-02089
Form S-8 File No. 333-24259
(18) Walmart 401(k) Plan
(17) Walmart Inc. Stock Incentive Plan of 2015
Form S-8 File No. 333-109421
Form S-8 File No. 333-109417
Form S-8 File No. 333-109414
Form S-8 File No. 333-128204
We compete in a variety of ways, including the prices at which we sell our merchandise, merchandise selection and availability,
services offered to customers, location, store hours, in-store amenities, the shopping convenience and overall shopping
experience we offer, the attractiveness and ease of use of our digital platforms, cost and speed of and options for delivery to
customers of merchandise purchased through our digital platforms or through our omni-channel integration of our physical and
digital operations.
Furthermore, the cost of certain investments in eCommerce, technology, talent, automation, including any operating losses
incurred, will adversely impact our financial performance in the short-term and failure to realize the benefits of these
investments may adversely impact our financial performance over the longer term.
A failure to respond effectively to competitive pressures and changes in the retail and other markets in which we operate, omni-
channel innovations and omni-channel ecosystems developed by our competitors or delays or failure in execution of our
strategy could materially adversely affect our financial performance. See "Item 1. Business" above for additional discussion of
the competitive situation of each of our reportable segments.
pressures. In addition, for eCommerce and other internet-based businesses, newer or smaller businesses may be better able to
innovate and compete with us.
15
Each of our segments competes for customers, employees, digital prominence, products and services and in other important
aspects of its business with many other local, regional, national and global physical, eCommerce and omni-channel retailers,
social commerce platforms, wholesale club operators and retail intermediaries, as well as companies that offer services in
digital advertising, fulfillment and delivery services, health and wellness, and financial services. The omni-channel retail
landscape is highly competitive and rapidly evolving, and the entry of new, well-funded competitors may increase competitive
We face strong competition from other retailers, wholesale club operators, omni-channel retailers, and other businesses
which could materially adversely affect our financial performance.
It is difficult to predict consistently and successfully the products and services our customers will demand and changes in their
shopping patterns. The success of our business depends in part on how accurately we predict consumer demand, availability of
merchandise, the related impact on the demand for existing products and services and the competitive environment. Price
transparency, assortment of products, customer experience, convenience, ease and the speed and cost of shipping are of primary
importance to customers and continue to increase in importance, particularly as a result of digital tools and social media
available to consumers and the choices available to consumers for purchasing products. Our failure to adequately or effectively
respond to changing consumer tastes, preferences (including those related to ESG issues) and shopping patterns, or any other
failure on our part to timely identify or effectively respond to changing consumer tastes, preferences and shopping patterns
could negatively affect our reputation and relationship with our customers, the demand for the products we sell or services we
offer, our market share and the growth of our business.
If we do not timely identify or effectively respond to consumer trends or preferences, it could negatively affect our
relationship with our customers, demand for the products and services we sell, our market share and the growth of our
business.
Our strategy, which includes investments in eCommerce, technology, talent, supply chain automation, acquisitions, joint
ventures, store remodels and other customer initiatives, may not adequately or effectively allow us to continue to grow our
eCommerce business, increase comparable sales, maintain or grow our overall market position or otherwise offset the impact on
the growth of our business of a moderated pace of new store and club openings. The success of this strategy will depend in
large measure on our ability to continue building and delivering a seamless omni-channel shopping experience and
interconnected ecosystem for our customers that deepens and maintains our relationships with our customers across our various
businesses and partnerships and reinforces our overall enterprise strategy. The success of this strategy is further subject to the
related risks discussed in this Item 1A. With the interconnected components of this enterprise strategy and an increasing
allocation of capital expenditures focused on these initiatives, changes in customer or member perceptions about our reputation
or our failure to successfully execute on individual components of this strategy may adversely affect our market position, net
sales and financial performance which could also result in impairment charges to intangible assets or other long-lived assets. In
addition, a greater concentration of eCommerce sales, including increasing online grocery sales, could result in a reduction in
the amount of traffic in our stores and clubs, which would, in turn, reduce the opportunities for cross-store or cross-club sales of
merchandise that such traffic creates and could reduce our sales within our stores and clubs and materially adversely affect our
financial performance.
Our corporate website is located at www.stock.walmart.com. We file with or furnish to the SEC Annual Reports on Form 10-
K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy statements and annual
reports to shareholders, and, from time to time, other documents. The reports and other documents filed with or furnished to
the SEC are available to investors on or through our corporate website free of charge as soon as reasonably practicable after we
electronically file them with or furnish them to the SEC. The SEC maintains a website that contains reports, proxy and
information statements and other information regarding issuers, such as the Company, that file electronically with the SEC.
The address of that website is www.sec.gov. Our SEC filings, our Reporting Protocols for Senior Financial Officers and our
Code of Conduct can be found on our website at www.stock.walmart.com. These documents are available in print to any
shareholder who requests a copy by writing or calling our Investor Relations Department, which is located at our principal
offices.
Failure to successfully execute our omni-channel strategy and the cost of our investments in eCommerce and technology
may materially adversely affect our market position, net sales and financial performance.
Strategic Risks
The risks described below could, in ways we may or may not be able to accurately predict, materially and adversely affect our
business, results of operations, financial position and liquidity. Our business operations could also be affected by additional
factors that apply to all companies operating in the U.S. and globally. The following risk factors do not identify all risks that we
may face.
ITEM 1A. RISK FACTORS
A description of any substantive amendment or waiver of Walmart's Reporting Protocols for Senior Financial Officers or our
Code of Conduct for our chief executive officer, our chief financial officer and our controller, who is our principal accounting
officer, will be disclosed on our website at www.stock.walmart.com under the Corporate Governance section. Any such
description will be located on our website for a period of 12 months following the amendment or waiver.
14
Our Website and Availability of SEC Reports and Other Information
52
Certain segments of the retail industry are undergoing consolidation or substantially reducing operations, whether due to
bankruptcy, consolidation or other factors. Such consolidation, or other business combinations or alliances, competitive omni-
channel ecosystems, or reductions in operations may result in competitors with greatly improved financial resources, improved
access to merchandise, greater market penetration and other improvements in their competitive positions. Such business
combinations or alliances could allow these companies to provide a wider variety of products and services at competitive prices,
which could adversely affect our financial performance.
52
The retail business continues to rapidly evolve and consumers increasingly embrace digital shopping. As a result, the portion of
total consumer expenditures with retailers and wholesale clubs occurring through digital platforms is increasing and the pace of
this increase could continue to accelerate.
General or macro-economic factors, both domestically and internationally, may materially adversely affect our financial
performance.
Operations. Sam's Club is available to members through warehouse club locations, as well as online or through the mobile
application 24 hours a day. Club locations offer Plus Members the ability to shop before regular operating hours. Consistent
with its strategy, Sam's Club continues to develop technology tools to drive a great member experience. Curbside Pickup is
available at all clubs to help provide fast, easy and contact-free shopping for members. Sam's Club also offers "Scan & Go," a
mobile checkout and payment solution, which allows members to bypass the checkout line.
In addition, the economic factors listed above, any other economic factors or circumstances resulting in higher transportation,
labor, insurance or healthcare costs or commodity prices, including energy prices, and other economic factors in the U.S. and
other countries in which we operate can increase our cost of sales and operating, selling, general and administrative expenses
and otherwise materially adversely affect our operations and operating results.
2022
18
Our customers count on us to provide them with safe products. Concerns regarding the safety of food and non-food products
that we source from our suppliers or that we prepare and then sell could cause customers to avoid purchasing certain products
from us, or to seek alternative sources of supply for all of their food and non-food needs, even if the basis for the concern is
outside of our control. Any lost confidence on the part of our customers would be difficult and costly to reestablish and such
products also expose us to product liability or food safety claims. As such, any issue regarding the safety of any food or non-
food items we sell, regardless of the cause, could adversely affect our brand, reputation and financial performance. In addition,
third-parties sell goods on some of our digital platforms, which we refer to as marketplace transactions. Whether laws related
to these marketplace transactions, including, but not limited to, intellectual property and products liability laws, apply to us is
currently unsettled and any unfavorable changes or interpretations could expose us to liability, loss of sales, reduction in
transactions and deterioration of our competitive position. In addition, we may face reputational, financial and other risks,
including liability, for third-party sales of goods that are controversial, counterfeit, pirated, or stolen, or otherwise fail to
comply with applicable law or the proprietary rights of others. Although we have marketplace compliance controls and impose
contractual terms on sellers to prohibit sales of certain type of products, we may not be able to detect certain prohibited items,
enforce such terms, or collect sufficient damages for breaches. Any of these events could have a material adverse impact on our
business and results of operations and impede the execution of our eCommerce growth and enterprise strategy.
If the products we sell are not safe or otherwise fail to meet our customers' expectations, we could lose customers, incur
liability for any injuries suffered by customers using or consuming a product we sell or otherwise experience a material
impact to our brand, reputation and financial performance. We are also subject to reputational and other risks related
to third-party sales on our digital platforms.
In addition, U.S. and international trade policies, tariffs and other restrictions on the exportation and importation of goods, trade
sanctions imposed between certain countries and entities, the limitation on the exportation or importation of certain types of
goods or of goods containing certain materials from other countries and other factors relating to foreign trade are beyond our
control. These and other factors affecting our suppliers and our access to products could adversely affect our operations and
financial performance.
Political and economic instability, as well as other impactful events and circumstances in the countries in which our suppliers
and their manufacturers are located (such as the COVID-19 pandemic), the financial instability of suppliers, suppliers' failure to
meet our terms and conditions or our supplier standards (including our responsible sourcing standards), labor problems
experienced by our suppliers and their manufacturers, the availability of raw materials to suppliers, merchandise safety and
quality issues, disruption or delay in the transportation of merchandise from the suppliers and manufacturers to our stores,
clubs, and other facilities, including as a result of labor slowdowns at any port at which a material amount of merchandise we
purchase enters into the markets in which we operate, currency exchange rates, transport availability and cost, transport
security, inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control
(such as, for example, the factors that occurred with respect to the availability of supply for baby formula during the prior fiscal
year).
The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the
products we sell is an important factor in our financial performance. We expect our suppliers to comply with applicable laws,
including labor, safety, anti-corruption and environmental laws, and to otherwise meet our required supplier standards of
conduct. Our ability to find qualified suppliers who uphold our standards, and to access products in a timely and efficient
manner and in the large volumes we may demand, is a significant challenge, especially with respect to suppliers located and
goods sourced outside the U.S.
Risks associated with our suppliers could materially adversely affect our financial performance.
We bear the risk of losses incurred as a result of physical damage to, or destruction of, any stores, clubs and distribution or
fulfillment centers; theft, loss or spoilage of inventory; and business interruption caused by such events. These events and their
impacts could otherwise disrupt and adversely affect our operations and could materially adversely affect our financial
performance. Moreover, our operations in the U.S. comprise a significant portion of our financial and operational performance.
Therefore, any of the above matters that uniquely impact or are specifically concentrated in the U.S. could materially adversely
affect our financial and operational performance.
events that cause long-term disruption or threats to the habitability of the communities in which Walmart operates. Relative to
transition risk, certain impacts may include: changes in energy and commodity prices driven by climate-related weather events;
prolonged climate-related events affecting macroeconomic conditions with related effects on consumer spending and
confidence; stakeholder perception of our engagement in climate-related policies; and new regulatory requirements resulting in
higher compliance risk and operational costs.
General economic conditions and other economic factors, globally or in one or more of the markets we serve, may adversely
affect our financial performance. Higher interest rates, lower or higher prices of petroleum products, including crude oil,
natural gas, gasoline, and diesel fuel, higher costs for electricity and other energy, weakness in the housing market, inflation,
deflation, increased costs of essential services, such as medical care and utilities, higher levels of unemployment, decreases in
consumer disposable income, unavailability of consumer credit, higher consumer debt levels, changes in consumer spending
and shopping patterns, fluctuations in currency exchange rates, higher tax rates, imposition of new taxes or other changes in tax
laws, changes in healthcare laws, other regulatory changes, the imposition of tariffs or other measures that create barriers to or
increase the costs associated with international trade, overall economic slowdown or recession and other economic factors in
the U.S. or in any of the other markets in which we operate could adversely affect consumer demand for the products and
services we sell in the U.S. or such other markets, change the mix of products we sell to one with a lower average gross margin,
cause a slowdown in discretionary purchases of goods, adversely affect our net sales and result in slower inventory turnover and
greater markdowns of inventory, or otherwise materially adversely affect our operations and operating results and could result
in impairment charges to intangible assets, goodwill or other long-lived assets.
17
The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis,
cyclones, typhoons; weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of
climate change or otherwise; geopolitical tensions or events; regional or global health epidemics or pandemics or other
contagious outbreaks (such as COVID-19); and catastrophic and other events, such as war, civil unrest (including theft, looting
or vandalism), terrorist attacks or other acts of violence, including active shooter situations (such as those that have occurred in
our U.S. stores), or the loss of merchandise as a result of shrink or theft in countries in which we operate, in which our suppliers
are located, or in other areas of the world (such as in Ukraine where a war currently exists between Ukraine and Russia) could
adversely affect our operations and financial performance.
Natural disasters, climate change, geopolitical events, global health epidemics or pandemics, catastrophic and other
events could materially adversely affect our financial performance.
To the extent that the COVID-19 pandemic continues to adversely affect the U.S. and the global economy, or a future pandemic
or epidemic occurs, such events may also heighten other risks described in this section, including but not limited to those
related to consumer behavior and expectations, competition, our reputation, implementation of strategic initiatives,
cybersecurity threats, payment-related risks, technology systems disruption, supply chain disruptions, labor availability and
cost, litigation, and regulatory requirements.
The emergence, severity, magnitude and duration of global or regional pandemics or epidemics are uncertain and difficult to
predict. A pandemic, such as COVID-19, or other epidemic could impact our business operations, demand for our products and
services, in-stock positions, costs of doing business, access to inventory, supply chain operations, the extent and duration of
measures to try to contain the spread of a virus or other disease (such as travel bans and restrictions, quarantines, shelter-in-
place orders, business and government shutdowns, and other restrictions on retailers), our ability to predict future performance,
exposure to litigation, and our financial performance, among other things. Customer behaviors changed rapidly during the
course of the COVID-19 pandemic. In the event of a resurgence of infections or future mutations, variants or related strains of
the virus become prevalent, customer demand for certain products may fluctuate and customer behaviors may change, which
may challenge our ability to anticipate and/or adjust inventory levels to meet that demand. These factors may result in higher
demand for certain products and less demand for others, as well as out-of-stock positions in certain products, along with delays
in delivering those products (due to supply chain and transportation issues) and could impact inventory levels in the future.
Other factors and uncertainties may include, but are not limited to: the severity and duration of the pandemic, including whether
there are additional outbreaks or spikes in the number of cases, future mutations or related strains of the virus in areas in which
we and our suppliers operate; further increased operational costs; evolving macroeconomic factors, including general economic
uncertainty, unemployment rates, and recessionary pressures; unknown consequences on our business performance and
initiatives stemming from the substantial investment of time, capital and other resources to the pandemic response; the
effectiveness and extent of administration of vaccinations and medical treatments, including for any variants; the pace of
recovery when the pandemic subsides; and the long-term impact of the pandemic or epidemic on our business, including
consumer behaviors. These risks and their impacts are difficult to predict and could otherwise disrupt and adversely affect our
operations and our financial performance.
Global or regional health pandemics or epidemics, including COVID-19, could negatively impact our business, financial
position and results of operations.
Operational Risks
16
We may enter into strategic alliances and other business relationships in the countries in which we have existing operations or
in other markets to expand our business. These arrangements (such as ONE, our fintech joint venture, and our healthcare
initiative with UnitedHealth Group) may not generate the level of sales we anticipate when entering into the arrangement or
may otherwise adversely impact our business and competitive position relative to the results we could have achieved in the
absence of such alliance. In addition, any investment we make in connection with a strategic alliance, business relationship or
in certain of our recently divested markets, could materially adversely affect our financial performance.
The performance of strategic alliances and other business relationships to support the expansion of our business could
materially adversely affect our financial performance.
The economic factors that affect our operations may also adversely affect the operations of our suppliers, which can result in an
increase in the cost to us of the goods we sell to our customers or, in more extreme cases, in certain suppliers not producing
goods in the volume typically available to us for sale.
Such events could result in physical damage to, or the complete loss of, one or more of our properties, the closure of one or
more stores, clubs and distribution or fulfillment centers, limitations on store or club operating hours, the lack of an adequate
work force in a market, the inability of customers and associates to reach or have transportation to our stores and clubs affected
by such events, the evacuation of the populace from areas in which our stores, clubs and distribution and fulfillment centers are
located, the unavailability of our digital platforms to our customers, changes in the purchasing patterns of consumers (including
the frequency of visits by consumers to physical retail locations, whether as a result of limitations on large gatherings, travel
and movement limitations or otherwise) and in consumers' disposable income, the temporary or long-term disruption in the
supply of products from some suppliers, the disruption in the transport of goods from overseas, the disruption or delay in the
delivery of goods to our distribution and fulfillment centers or stores within a country in which we are operating, the reduction
in the availability of products in our stores, increases in the costs of procuring products as a result of either reduced availability
or economic sanctions, increased transportation costs (whether due to fuel prices, fuel supply, or otherwise), the disruption
(whether directly or indirectly) of critical infrastructure systems, banking systems, utility services or energy availability to our
stores, clubs and our facilities, and the disruption in our communications with our stores, clubs and our other facilities.
Furthermore, the long-term impacts of climate change, whether involving physical risks (such as extreme weather conditions,
drought, or rising sea levels) or transition risks (such as regulatory or technology changes) are expected to be widespread and
unpredictable. Certain impacts of physical risk may include: temperature changes that increase the heating and cooling costs at
stores, clubs, and distribution or fulfillment centers; extreme weather patterns that affect the production or sourcing of certain
commodities; flooding and extreme storms that damage or destroy our buildings and inventory; and heat and extreme weather
55
2020
56
Increased our ownership in PhonePe, our digital transaction platform in India, as part of the separation from Flipkart in
December 2022.
Bought out the noncontrolling interest shareholders of our Massmart subsidiary in November 2022 and exited
operations in certain countries in Africa in December 2022.
•
•
Divested of a majority stake in Seiyu, our retail operations in Japan, in March 2021.
•
Divested of Asda Group Limited ("Asda"), our retail operations in the U.K., in February 2021.
•
Divested of Walmart Argentina in November 2020.
.
Walmart International's strategy is to create strong local businesses powered by Walmart which means being locally relevant
and customer-focused in each of the markets it operates. We are being deliberate about where and how we choose to operate
and continue to re-shape the portfolio to best enable long-term, sustainable and profitable growth. As such, we have taken
certain strategic actions to strengthen our Walmart International portfolio for the long-term, which include the following
highlights over the last three years:
Walmart International includes numerous formats divided into two major categories: retail and wholesale. These categories
consist of many formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's Clubs) and
cash & carry, as well as eCommerce through walmart.com.mx, walmart.ca, flipkart.com, walmart.cn and other sites. Walmart
International had net sales of $101.0 billion for fiscal 2023, representing 17% of our fiscal 2023 consolidated net sales, and had
net sales of $101.0 billion and $121.4 billion for fiscal 2022 and 2021, respectively. The gross profit rate is lower than that of
Walmart U.S. primarily because of its format mix.
Omni-channel. Walmart International provides an omni-channel experience to customers, integrating retail stores and
eCommerce, such as through pickup and delivery services in most of our markets and our marketplaces such as Flipkart in
India. Our financial services offerings continue to expand with our digital transaction platform anchored in payments at
PhonePe in India. We have expanded our marketplace in Mexico and Canada, which unlocks fulfillment and advertising
services, and in China, our partnerships with JD.com and JD Daojia continue to drive ecommerce growth.
Generally, retail units' selling areas range in size from 1,400 square feet to 186,000 square feet. Our wholesale stores' selling
areas generally range in size from 24,000 square feet to 158,000 square feet. As of January 31, 2023, Walmart International
had over 2,900 pickup and approximately 2,500 delivery locations.
Walmart International is our second largest segment and operated in 19 countries outside of the U.S. as of January 31, 2023.
Walmart International operates through our wholly-owned subsidiaries in Canada, Chile, China, and Africa (which includes
Botswana, Kenya, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, and Zambia), and our majority-owned
subsidiaries in India, as well as Mexico and Central America (which includes Costa Rica, El Salvador, Guatemala, Honduras
and Nicaragua). Walmart International previously operated in Argentina prior to the sale of Walmart Argentina in fiscal 2021
and operated in the United Kingdom and Japan prior to the sale of those operations in the first quarter of fiscal 2022. Refer to
Note 12 to our Consolidated Financial Statements for discussion of recent divestitures.
Distribution. We utilize 29 dedicated distribution facilities located strategically throughout the U.S., as well as some of the
Walmart U.S. segment's distribution facilities which service the Sam's Club segment for certain items. During fiscal 2023, the
majority of Sam's Club's non-fuel club purchases were shipped from these facilities, while the remainder of our purchases were
shipped directly to Sam's Club locations by suppliers. Sam's Club ships merchandise purchased on samsclub.com and through
its mobile commerce applications by a number of methods including shipments made directly from clubs, 13 dedicated
eCommerce fulfillment centers and other distribution centers.
Sam's Club uses a combination of our private truck fleet, as well as common carriers, to transport perishable and non-perishable
merchandise from distribution facilities to clubs.
Intellectual Property
We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary
technologies, and similar intellectual property as important to our success, and with respect to our associates, customers and
others, we rely on trademark, copyright, and patent law, trade-secret protection, and confidentiality and/or license agreements to
protect our proprietary rights. We have registered, or applied for the registration of, a number of U.S. and international domain
names, trademarks, service marks and copyrights. Additionally, we have filed U.S. and international patent applications
covering certain of our proprietary technology. We have licensed in the past, and expect that we may license in the future,
certain of our proprietary rights to third parties.
11
Suppliers and Supply Chain
As a retailer and warehouse club operator, we utilize a global supply chain that includes both U.S. and international suppliers
from whom we purchase the merchandise that we sell in our stores, clubs and online. In many instances, we purchase
merchandise from producers located near the stores and clubs in which such merchandise will be sold, particularly products in
the "fresh" category. Consistent with applicable laws, we offer our suppliers the opportunity to efficiently sell significant
quantities of their products to us. These relationships enable us to obtain pricing that reflects the volume, certainty and cost-
effectiveness these arrangements provide to such suppliers, which in turn enables us to provide low prices to our customers.
Our suppliers are subject to standards of conduct, including requirements that they comply with local labor laws, local worker
safety laws and other applicable laws. Our ability to acquire from our suppliers the assortment and volume of products we wish
to offer to our customers, to receive those products within the required time through our supply chain and to distribute those
products to our stores and clubs, determines, along with other supply chain logistics matters (such as containers or port access
for example), in part, our in-stock levels in our stores and clubs and the attractiveness of our merchandise assortment we offer
to our customers and members.
Government Regulation
As a company with global operations, we are subject to the laws of the United States and multiple foreign jurisdictions in which
we operate and the rules and regulations of various governing bodies, which may differ among jurisdictions. For additional
information, see the risk factors herein in "Item 1A. Risk Factors" under the sub-caption "Legal, Tax, Regulatory, Compliance,
Reputational and Other Risks."
Environmental, Social and Governance ("ESG") Priorities
Our ESG strategy is centered on the concept of creating shared value: we believe we maximize long-term value and create
competitive advantage for the Company by serving our stakeholders, including our customers, associates, shareholders,
suppliers, business partners, and communities. We believe that addressing such societal needs builds the value of our business,
including by enhancing customer and associate trust, creating new revenue streams, managing cost and risk, building
capabilities for future advantage, and strengthening the underlying systems on which Walmart and our stakeholders rely.
We prioritize the ESG issues that offer the greatest potential for Walmart to create shared value: issues that rank high in
relevance to our business and stakeholders and which Walmart is positioned to make a positive impact. Our current ESG
priorities are categorized into four broad themes: opportunity, sustainability, community, and ethics and integrity.
•
Walmart International Segment
Merchandise. The merchandising strategy for Walmart International is similar to that of our operations in the U.S. in terms of
the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of our sales, we
have both leveraged U.S. private brands and developed market specific private brands to serve our customers with high quality,
low priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday
Time," "Mainstays," "Marketside" and "Parent's Choice," our international markets have developed market specific brands
including "Aurrera," "Lider," and "PhonePe." In addition, we have developed and continue to grow our relationships with
regional and local suppliers in each market to ensure reliable sources of quality merchandise that is equal to national brands at
low prices.
Consistent with its strategy, Walmart International continues to build mutually reinforcing businesses in areas such as
advertising, marketplace and fulfillment services, healthcare and financial services. Our businesses in Mexico and Canada, for
example, offer prepaid cards and money transfers, and our PhonePe business in India continues to grow, providing a platform
that offers mobile and bill payment, person-to-person (P2P) payment, investment and insurance solutions, financial services and
advertising. In Mexico, we also offer a value-based internet and telephone service allowing customers to enjoy digital
connectivity, and in India we launched Flipkart Health+ enabling us to increase access to affordable care in that country.
Combined, these offerings did not represent a significant portion of annual segment revenues.
Operations. The hours of operation for operating units in Walmart International vary by country and by individual markets
within countries, depending upon local and national ordinances governing hours of operation. Consistent with its strategy,
Walmart International continues to develop technology tools and services to better serve customers and help its various formats
operate more efficiently, as well as to provide convenient and seamless omni-channel shopping experiences.
Within the categories above, the Member's Mark private label brand continues to expand its assortment and deliver member
value.
office
Health and wellness includes pharmacy, optical and hearing services and over-the-counter drugs; and
Technology, office and entertainment includes consumer electronics and accessories, software, video games,
supplies, appliances, and third-party gift cards.
power
Home and apparel includes home improvement, outdoor living, gardening, furniture, apparel, jewelry, tools and
equipment, housewares, toys, seasonal items, mattresses, and tire and battery centers;
•
•
10
Fuel, tobacco and other categories;
•
Grocery and consumables includes dairy, meat, bakery, deli, produce, dry, chilled or frozen packaged foods, alcoholic
and nonalcoholic beverages, floral, snack foods, candy, other grocery items, health and beauty aids, paper goods,
laundry and home care, baby care, pet supplies and other consumable items;
Merchandise. Sam's Club offers merchandise in the following five merchandise categories:
Omni-channel. Sam's Club provides an omni-channel experience to members, integrating warehouse clubs and eCommerce
through such services as Curbside Pickup, mobile Scan & Go, ship-from-club, and delivery-from-club. Members have access
to a broad assortment of merchandise and services, including those not found in our clubs, online at samsclub.com and through
our mobile commerce applications. The warehouse facility sizes generally range between 32,000 and 168,000 square feet, with
an average size of approximately 134,000 square feet.
All memberships include a spouse/household card at no additional cost. Plus Members are also eligible for free shipping on the
majority of merchandise, with no minimum order size, and receive discounts on prescriptions and glasses. Beginning in fiscal
2023, Sam's Club launched a single loyalty rewards currency called Sam's Cash which merges and replaces existing Cash
Rewards for Plus members and Cash Back for Sam's Club Mastercard holders. Members may redeem Sam's Cash on purchases
in the club and online, to pay for membership fees or for cash in clubs. Sam's Cash does not expire and is available for monthly
redemption.
Up to 8
Club Membership
Plus Membership
$110
Up to 16
$50
Number of Add-on Memberships ($45 each)
Annual Membership Fee
Competition. Sam's Club competes with other membership-only warehouse clubs, the largest of which is Costco, as well as
with discount retailers, retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations as well
as omni-channel and eCommerce retailers and catalog businesses. At Sam's Club, we provide value at members-only prices, a
quality merchandise assortment, and bulk sizing to serve both our Plus and Club members. Our eCommerce website and
mobile commerce applications have increasingly become important factors in our ability to compete.
Sam's Club operates in 44 states in the U.S. and in Puerto Rico. Sam's Club is a membership-only warehouse club that also
operates samsclub.com. Sam's Club had net sales of $84.3 billion for fiscal 2023, representing 14% of our consolidated fiscal
2023 net sales, and had net sales of $73.6 billion and $63.9 billion for fiscal 2022 and 2021, respectively. As a membership-
only warehouse club, membership income is a significant component of the segment's operating income. Sam's Club operates
with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments.
Sam's Club Segment
Distribution. We utilize a total of 188 distribution facilities located in Canada, Central America, Chile, China, India, Mexico
and South Africa. Through these facilities, we process and distribute both imported and domestic products to the operating
units of the Walmart International segment. During fiscal 2023, the majority of Walmart International's purchases passed
through these distribution facilities. Suppliers ship the remainder of Walmart International's purchases directly to our stores in
the various markets in which we operate. Across the segment, we have efficient networks connecting physical stores and
distribution and fulfillment centers which facilitate the movement of goods to where our customers live. We ship merchandise
purchased by customers on our eCommerce platforms by a number of methods from multiple locations including from our 100
dedicated eCommerce fulfillment centers, more than 3,600 eCommerce sort centers and last-mile delivery facilities in India, as
well as our physical retail stores.
Competition. Walmart International competes with brick and mortar, eCommerce, and omni-channel retailers who operate
department, drug, discount, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale
clubs, home-improvement stores, specialty electronics stores, cash & carry operations and convenience stores, and eCommerce
retailers, as well as companies that offer services in digital advertising, fulfillment services, health and wellness, and financial
services. Our ability to develop and operate units at the right locations and to deliver a customer-centric omni-channel
experience largely determines our competitive position within the retail industry. We believe price leadership is a critical part
of our business model and we continue to focus on moving our markets towards an EDLP approach. Additionally, our ability
to operate food departments effectively has a significant impact on our competitive position in the markets where we operate.
Each of these landscapes is highly competitive and rapidly evolving, and new business models and the entry of new, well-
funded competitors continue to intensify this competition. Some of our competitors have longer histories in these lines of
business, more customers, and greater brand recognition. They may be able to obtain more favorable terms from suppliers and
business partners and to devote greater resources to the development of these businesses. In addition, for eCommerce and other
internet-based businesses, newer or smaller businesses may be better able to innovate and compete with us.
Seasonal Aspects of Operations. Walmart International's business is seasonal to a certain extent. Historically, its highest sales
volume has occurred in the fourth quarter of our fiscal year. The seasonality of the business varies by country due to different
national and religious holidays, festivals and customs, as well as different weather patterns.
9
Opportunity. Retail can be a powerful engine for inclusive economic opportunity. We aim to advance diversity,
equity, and inclusion, and create opportunity for Walmart associates (as further described in the Human Capital
Management section below), our suppliers and workers in supply chains, and the communities in which we operate.
Doing so helps us fulfill our customer mission, strengthens our business and helps people build a better life for
themselves and their families.
Seasonal Aspects of Operations. Sam's Club's business is seasonal to a certain extent due to calendar events and national and
religious holidays, as well as different weather patterns. Historically, its highest sales volume has occurred in the fiscal quarter
ending January 31.
Sustainability. Walmart's sustainability efforts focus on our ability to create and preserve long-term value for both
people and planet. With respect to people, our sustainability efforts include sourcing responsibly, helping prevent
forced labor, empowering women, creating inclusive economic opportunity and selling safer, healthier products. With
respect to the planet, our efforts aim to enhance the sustainability of product supply chains by reducing emissions,
protecting and restoring nature, and reducing waste. To help address the effects of climate change, Walmart has set
science-based targets for emissions reduction, including our goal to achieve zero emissions in our operations by 2040
―without offsets—and to reduce or avoid one billion metric tons of emissions in our value chain by 2030 under our
Project Gigaton™ initiative.
Ethics and Integrity. At every level of our Company, we work to create a culture that inspires trust among our
associates, with our customers, and in the communities we serve.
Executive Vice President, Global Chief Technology Officer and Chief
Development Officer effective July 2019. From February 2018 until June 2019,
Mr. Kumar was Vice President and General Manager at Google LLC.
Executive Vice President, President and Chief Executive Officer, Walmart
International, effective February 2018. From February 2015 to January 2018,
she served as Executive Vice President and Chief Operating Officer of
Walmart U.S.
Executive Vice President, President and Chief Executive Officer, Sam's Club
effective November 15, 2019. From February 2019 to November 2019, she
served as Executive Vice President, Walmart U.S. Neighborhood Markets.
From December 2015 until February 2019, she served as Senior Vice President,
U.S. Supply Chain.
President and Chief Executive Officer, effective February 2014. From February
2009 to January 2014, he served as Executive Vice President, President and
Chief Executive Officer, Walmart International.
Executive Vice President, Global People, and Chief People Officer, effective
February 2020. From April 2002 to January 2020, she worked at Adobe Inc. in
various roles, including most recently, Chief Human Resources Officer and
Executive Vice President, Employee Experience.
Executive Vice President and Chief Financial Officer, effective June 2022.
From September 2016 to June 2022, he served as Chief Financial Officer and
Executive Vice President, Global Customer Operations for PayPal Holdings,
Inc.
Current
Position
Held Since
Age
2013
51
2018
Executive Vice President, President and Chief Executive Officer, Walmart U.S.
effective November 2019. From February 2017 until November 2019, he
served as President and Chief Executive Officer, Sam's Club.
49
53
2019
48
48
2019
58
2018
56
2019
49
40
2014
2017
Senior Vice President and Controller effective January 2017. From October
2014 to January 2017, he served as Vice President and Controller, Walmart
U.S.
Executive Vice President, Global Governance, Chief Legal Officer and
Corporate Secretary, effective April 2018. From May 2017 to February 2018,
she served as Associate Attorney General in the United States Department of
Justice.
Executive Vice President, Corporate Affairs, effective June 2013. From
November 2007 to June 2013, he served as the Chief Executive Officer and
President of U.S. Operations at Hill & Knowlton, Inc., a public relations
company.
We periodically publish information on our ESG priorities, strategies, and progress on our corporate website and may update
those disclosures from time to time. Nothing on our website, including our ESG reporting, documents or sections thereof, shall
be deemed incorporated by reference into this Annual Report on Form 10-K or incorporated by reference into any of our other
filings with the Securities and Exchange Commission.
Human Capital Management
At Walmart, we're committed to help people save money and live better around the world. This mission is delivered by our
associates who make the difference for our millions of customers and members every day. As of the end of fiscal 2023, we
12
employed approximately 2.1 million associates worldwide, with approximately 1.6 million associates in the U.S. and
approximately 0.5 million associates internationally. In the U.S., approximately 93% of our associates are hourly and
approximately 70% of our associates are full-time.
We know the success and progress we've seen this year and throughout our Company's history is because of our associates who
work every day to fulfill our mission. That's why we're focused on providing opportunities for associates to grow and learn.
For some, we are a foundational entry point to develop critical skills that are relevant for a variety of careers, and for others a
place where associates can grow their careers across our global omni-channel business. No matter the role or location, we're
focused on developing, rewarding, and retaining associates in an ever-changing environment. As customer expectations and
technology change the nature of work, we know it's our people – our humanity – that will differentiate us from the competition,
so this must be a top priority.
Our workforce strategy includes the following strategic priorities: belonging, well-being, growth and digital.
Belonging - Build a Walmart for everyone: a diverse, equitable and inclusive company, where associates' ideas and opinions
matter. We are focused on having an inclusive culture where everyone feels they belong. We publish our diversity
representation twice yearly, and hold ourselves accountable to providing recurring culture, diversity, equity, and inclusion
updates to senior leadership, including our President and CEO, and members of the Board of Directors. Of the approximately
2.1 million associates employed worldwide, 52% identify as women. In the U.S., 50% of the approximately 1.6 million
associates identify as people of color.
We review our processes regarding our commitment to fair-pay practices. We are committed to creating a performance culture
where associates are rewarded based on meaningful factors such as qualifications, experience, performance, and the work they
do.
To build a company where associates feel engaged, valued and heard, we gather and respond to associates' feedback in a variety
of ways, including but not limited to our annual associate engagement survey, our Open Door process, and one-on-one
interactions. Management reviews the results of feedback obtained from our formal associate engagement survey.
Well-being - Focus on the physical, emotional, and financial well-being of our associates. We invest in our associates by
offering competitive wages, as well as a broad range of benefits that vary based on customary local practices and statutory
requirements. In the U.S., we offer affordable healthcare coverage to our full-time and eligible part-time associates as well as
company paid benefits such as 401(k) match, family building support, maternity leave, a paid parental leave program to all full-
time associates, paid time off, Associate Stock Purchase Plan match, life insurance, behavioral and mental health services, and a
store discount card or Sam's Club membership. Additional information about how we invest in our associates' well-being,
including wage structure and pay, can be found in our Human Capital brief in our most recent ESG reporting, which is available
on our corporate website. Nothing on our website, including our ESG reporting documents, or sections thereof, shall be
deemed incorporated by reference into this Annual Report on Form 10-K or incorporated by reference into any of our other
filings with the Securities and Exchange Commission. Certain information relating to retirement-related benefits we provide to
our associates is included in Note 11 to our Consolidated Financial Statements.
Growth - Provide ongoing growth, development and learning opportunities for associates and continue to attract talent with
new skills. We are invested in the growth of our associates in support of our business and their success by offering good jobs
that lead to great careers and better lives. We launched the global Walmart Academy to help associates build and grow their
careers, creating one of the largest learning ecosystems in the world. The global Walmart Academy offers training for on-the-
job retail skills, leadership courses, and well-being training, serving associates through combination of digital and in-person
offerings. The global focus builds on moving much more to a learning in the flow of work approach.
We also provide access to educational opportunities for our part-time and full-time frontline eligible associates in the U.S.
through our Live Better U program, which provides access to earn a high school diploma or a college degree. Walmart pays
100% of associates' college tuition, books and fees. Our Live Better U program aligns education offerings with Walmart's own
areas of growth, providing opportunities for associates to become great at the job they have today and prepare for the job of
tomorrow. Approximately 75% of our U.S. salaried store, club and supply chain management started their careers in hourly
positions. Our focus on providing a path of opportunity for our associates through robust training, competitive wages and
benefits, and career advancement creates a strong associate value proposition and strengthens our workforce.
Digital - Accelerate digital transformation and ways of working to improve the associate experience and drive business results.
To deliver a seamless customer and associate experience, we continue to invest in digital tools like Me@Walmart, MyClub and
Me@Campus to improve associate productivity, engagement, and performance. The MyFeedback app was developed to capture
real-time associate feedback. Walmart supports associates who are on the U.S. Medical Plan with free virtual visits which
include visits for medical doctor urgent care, along with mental health care with psychiatrist and psychologists.
13
Information About Our Executive Officers
The following chart names the executive officers of the Company as of the date of the filing of this Annual Report on Form 10-
K with the SEC, each of whom is elected by and serves at the pleasure of the Board of Directors. The business experience
shown for each officer has been his or her principal occupation for at least the past five years, unless otherwise noted.
Name
Daniel J. Bartlett
Rachel Brand
David M. Chojnowski
John Furner
Suresh Kumar
Judith McKenna
Kathryn McLay
C. Douglas McMillon
Donna Morris
John David Rainey
Business Experience
Community. Walmart aims to serve and strengthen communities by operating our business in a way that meets the
needs of our customer and community stakeholder groups, including by providing safer, healthier and more affordable
food and other products, disaster support, associate volunteerism, local grant programs and community cohesion
initiatives.
Membership. The following two options are available to members:
Maryland
782,076
5
36
9
126
144
68
70
12
6
233
Georgia
Hawaii
Idaho
154
10
23
Illinois
76
125
12
28
Delaware
Florida
Supercenters
Discount Stores
formats
Clubs
Grand Total
101
139
1
13
144
7
2
-
9
83
2
29
Connecticut
15
78
11
25
190
Indiana
97
6
11
13
127
Iowa
58
2
9
69
Kansas
58
2
27
1
3
12
30
320
18
17
109
1
1
34
84039205
1
98
46
386
35
24
215
-
2
10
Colorado
California
Arkansas
industry, including as a result of health reform efforts, and other changes to or novel interpretations of existing state or federal
laws, rules and regulations that affect our retail pharmacy business.
If the supply of certain pharmaceuticals provided by one or more of our vendors were to be disrupted for any reason, our
pharmacy operations could be severely affected until at least such time as we could obtain a new supplier for such
pharmaceuticals. Any such disruption could cause reputational damage and result in a significant number of our pharmacy
customers transferring their prescriptions to other pharmacies.
Walmart Health clinical operations are also subject to numerous risks, including but not limited to: reductions in the third-party
reimbursement rates for services; changes in our payer mix; changes in the health insurance market generally; our inability to
retain and negotiate favorable contracts with private third-party payers, including managed care plans; competition for patients
from other healthcare providers, including those that offer telehealth services; changes to healthcare provider utilization
practices and treatment methodologies; trends toward value-based purchasing and price transparency; overall economic
conditions and the ability of patients to pay for services; staffing challenges, including retention of a sufficient number and
quality of healthcare professionals; compliance with the complex and extensive laws and regulations governing the healthcare
industry; changes in laws and regulations, including as a result of health reform efforts; and healthcare technology initiatives,
including those related to patient data and interoperability; and public health conditions.
One or a combination of the factors above may adversely affect the volumes of brand name and generic pharmaceuticals we
sell, our cost of sales associated with our retail pharmacy operations, and the net sales and gross margin of those operations or
result in the loss of cross-store or cross-club selling opportunities. In addition, these and other factors may adversely affect the
type, volume and mix of services we provide, the reimbursement we receive for health and wellness services rendered, and the
scope and pace of expansion of Walmart Health and related offerings. Any of these developments could, in turn, adversely
affect our overall net sales, other results of operations, cash flows and liquidity.
Our failure to attract and retain qualified associates, increases in wage and benefit costs, changes in laws and other
labor issues could materially adversely affect our financial performance.
Our ability to continue to conduct and expand our operations depends on our ability to attract and retain a large and growing
number of qualified associates globally. Our ability to meet our labor needs, including our ability to find qualified personnel to
fill positions that become vacant at our existing stores, clubs, distribution and fulfillment centers and corporate offices, while
controlling our associate wage and related labor costs, is generally subject to numerous external factors, including the
availability of a sufficient number of qualified persons in the work force of the markets in which we operate, unemployment
levels within those markets, prevailing wage rates, changing demographics, health and other insurance costs and adoption of
new or revised employment and labor laws and regulations. Additionally, our ability to successfully execute organizational
changes, including our enterprise strategy and management transitions within the Company's senior leadership, and to
effectively motivate and retain associates are critical to our business success. We compete for talent with other retail and non-
retail businesses, including, for example, technology, health and wellness, and fintech businesses, and invest significant
resources in training and motivating our associates. Increased competition among potential employers at all levels, including
senior management and executive levels, could result in increased associate costs or make it more difficult to recruit and retain
associates. If we are unable to locate, attract or retain qualified personnel, or manage leadership transition successfully, the
quality of service we provide to our customers may decrease and our financial performance may be adversely affected.
In addition, if our costs of labor or related costs increase for other reasons or if new, revised, or novel interpretations of existing
labor laws, rules or regulations or healthcare laws are adopted or implemented that further increase our labor costs, our financial
performance could be materially adversely affected.
Financial Risks
Failure to meet market expectations for our financial performance could adversely affect the market price and volatility
of our stock.
We believe that the price of our stock generally reflects high market expectations for our future operating results. Any failure
to meet or delay in meeting these expectations, including our consolidated net sales, consolidated operating income, capital
expenditures, comparable store and club sales growth rates, eCommerce growth rates, gross margin, or earnings and adjusted
earnings per share could cause the market price of our stock to decline, as could changes in our dividend or stock repurchase
programs or policies, changes in our effective tax rates, changes in our financial estimates and recommendations by securities
analysts or, failure of Walmart's performance to compare favorably to that of other retailers may have a negative effect on the
price of our stock.
22
Fluctuations in foreign exchange rates may materially adversely affect our financial performance and our reported
results of operations.
Our operations in countries other than the U.S. are conducted primarily in the local currencies of those countries. Our
Consolidated Financial Statements are denominated in U.S. dollars, and to prepare those financial statements we must translate
the amounts of the assets, liabilities, net sales, other revenues and expenses of our operations outside of the U.S. from local
currencies into U.S. dollars using exchange rates for the current period. In recent years, fluctuations in currency exchange rates
that were unfavorable have had adverse effects on our reported results of operations.
As a result of such translations, fluctuations in currency exchange rates from period-to-period that are unfavorable to us may
also result in our Consolidated Financial Statements reflecting significant adverse period-over-period changes in our financial
performance or reflecting a period-over-period improvement in our financial performance that is not as robust as it would be
without such fluctuations in the currency exchange rates. Such unfavorable currency exchange rate fluctuations will adversely
affect the reported performance of our Walmart International operating segment and have a corresponding adverse effect on our
reported consolidated results of operations.
We may pay for products we purchase for sale in our stores and clubs around the world with a currency other than the local
currency of the country in which the goods will be sold. When we must acquire the currency to pay for such products and the
exchange rates for the payment currency fluctuate in a manner unfavorable to us, our cost of sales may increase and we may be
unable or unwilling to change the prices at which we sell those goods to address that increase in our costs, with a corresponding
adverse effect on our gross profit. Consequently, unfavorable fluctuations in currency exchange rates have and may continue to
adversely affect our results of operations.
Legal, Tax, Regulatory, Compliance, Reputational and Other Risks
Our international operations subject us to legislative, judicial, accounting, legal, regulatory, tax, political and economic
risks and conditions specific to the countries or regions in which we operate, which could materially adversely affect our
business or financial performance.
additional changes in the state or federal regulatory environment for the retail pharmacy industry and the pharmaceutical
21
A large majority of our retail pharmacy net sales are generated by filling prescriptions for which we receive payment through
established contractual relationships with third-party payers and payment administrators, such as private insurers, governmental
agencies and pharmacy benefit managers ("PBMs"). Our retail pharmacy operations are subject to numerous risks, including:
reductions in the third-party reimbursement rates for drugs; changes in our payer mix (i.e., shifts in the relative distribution of
our pharmacy customers across drug insurance plans and programs toward plans and programs with less favorable
reimbursement terms); changes in third-party payer drug formularies (i.e., the schedule of prescription drugs approved for
reimbursement or which otherwise receive preferential coverage treatment); growth in, and our participation in or exclusion
from, pharmacy payer network arrangements including exclusive and preferred pharmacy network arrangements operated by
PBMS and/or any insurance plan or program; increases in the prices we pay for brand name and generic prescription drugs we
sell; increases in the administrative burdens associated with seeking third-party reimbursement; changes in the frequency with
which new brand name pharmaceuticals become available to consumers; introduction of lower cost generic drugs as substitutes
for existing brand name drugs for which there was no prior generic drug competition; changes in drug mix (i.e., the relative
distribution of drugs customers purchase at our pharmacies between brands and generics); changes in the health insurance
market generally; changes in the scope of or the elimination of Medicare Part D or Medicaid drug programs; increased
competition from other retail pharmacy operations including competitors offering online retail pharmacy options and/or home
delivery options; further consolidation and strategic alliances among third-party payers, PBMs or purchasers of drugs; overall
economic conditions and the ability of our pharmacy customers to pay for drugs prescribed for them to the extent the costs are
not reimbursed by a third-party; failure to meet any performance or incentive thresholds to which our level of third-party
reimbursement may be subject; changes in laws or regulations or the practices of third-party payers and PBMs related to the use
of third-party financial assistance to assist our pharmacy customers with paying for drugs prescribed for them; and any
Walmart has retail pharmacy operations in our Walmart U.S. and Sam's Club segments across the U.S. and in various of our
international markets such as Canada and Mexico. We also provide management services to Walmart Health centers that offer
medical, dental, behavioral health and other health services in a number of states, as well as a national telehealth service
provider. In addition, Walmart's 10-year collaboration with UnitedHealth Group includes agreements for Walmart Health to
provide value-based care to patients in certain areas of the U.S., among other initiatives.
28
We rely extensively on information and financial systems to process transactions, summarize results and manage our
business. Disruptions in our systems could harm our ability to conduct our operations.
Given the number of individual transactions we have each year, it is crucial that we maintain uninterrupted operation of our
business-critical information systems. Our information systems are subject to damage or interruption from power outages,
computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service
attacks, security incidents and breaches (including through cyberattacks, which may be from cybercriminals or sophisticated
state-sponsored threat actors), catastrophic events such as fires, major or extended winter storms, tornadoes, earthquakes and
hurricanes, usage errors by our associates or contractors, civil or political unrest, or armed hostilities. Our information systems
are essential to our business operations, including the processing of transactions, management of our associates, facilities,
logistics, inventories, physical stores and clubs and our online operations. Our information systems are not fully redundant and
our disaster recovery planning cannot account for all eventualities. If our systems are damaged, breached, attacked, interrupted,
or otherwise cease to function properly, we may have to make a significant investment to repair or replace them, and may
experience loss or corruption of critical data as well as suffer interruptions in our business operations in the interim. Any
interruption to our information systems may have a material adverse effect on our business or results of operations. In addition,
we frequently update our information technology hardware, software, processes and systems. The risk of system disruption is
increased when significant system changes are undertaken. If we fail to timely or successfully integrate and update our
information systems and processes, we may fail to realize the cost savings or operational benefits anticipated to be derived from
these initiatives. For example, during the first quarter of fiscal year ending January 31, 2024, we initiated an upgrade to our
existing financial system, including our general ledger and other applications. If we are unable to implement this upgrade as
planned, the effectiveness of our internal control over financial reporting could be adversely affected; our ability to assess those
controls adequately could be delayed; and our reputation, business, results of operations, financial condition and cash flows
could be negatively impacted.
If the technology-based systems that give our customers the ability to shop with us online and enable us to deliver
products and services do not function effectively, our operating results, as well as our ability to grow our omni-channel
business globally, could be materially adversely affected.
Increasingly, customers are using computers, tablets, and smart phones to shop with us and with our competitors and to do
comparison shopping. We use social media, online advertising, and email to interact with our customers and as a means to
enhance their shopping experience. As a part of our omni-channel sales strategy, we offer various pickup, delivery and
shipping programs including options where many products available for purchase online can be picked up by the customer or
member at a local Walmart store or Sam's Club, which provides additional customer traffic at such stores and clubs. Omni-
channel retailing is a rapidly evolving part of the retail industry and of our operations around the world, and we continue to
make investments in supply chain automation to support our omni-channel strategy. We must anticipate and meet our
customers' changing expectations while adjusting for technology investments and developments in our competitors' operations
through focusing on the building and delivery of a seamless shopping experience across all channels by each operating
segment. Moreover, some of the various technology systems and services on which we rely are provided and managed by
third-party service providers. To the extent either our or such other third-party systems and services do not perform or function
as anticipated, whether because of an inherent flaw in the technology or a faulty implementation, such failure can significantly
interfere with our ability to meet our customers' changing expectations. Any disruption or failure on our part to provide
attractive, user-friendly, and secure digital platforms that offer a wide assortment of merchandise and services at competitive
prices and with low cost and rapid delivery options and that continually meet the changing expectations of online shoppers and
developments in online and digital platform merchandising and related technology in a cost-efficient manner could place us at a
competitive disadvantage, result in the loss of eCommerce and other sales, harm our reputation with customers, have a material
adverse impact on the growth of our eCommerce business globally and have a material adverse impact on our business and
results of operations.
Our digital platforms, which are increasingly important to our business and continue to grow in complexity and scope, and the
systems on which they run, including those applications and systems used in our acquired eCommerce, technology or other
businesses, are regularly subject to cyberattacks. Those attacks involve attempts to gain unauthorized access to our eCommerce
websites (including marketplace platforms) or mobile commerce applications to obtain and misuse customers' or members'
information including personal information and/or payment information and related risks discussed in this Item 1A. Such
attacks, if successful, in addition to potential data misuse and/or loss, may also create denials of service or otherwise disable,
degrade or sabotage one or more of our digital platforms or otherwise significantly disrupt our customers' and members'
shopping experience, our supply chain integrity and continuity, and our ability to efficiently operate our business. If we are
unable to maintain the security of our digital platforms and keep them operating within acceptable parameters, we could suffer
loss of sales, reductions in transactions, reputational damage and deterioration of our competitive position and incur liability for
any damage to customers, members or others whose personal or confidential information is unlawfully obtained and misused,
any of which events could have a material adverse impact on our business and results of operations and impede the execution of
our strategy for the growth of our business.
19
Any failure to maintain the privacy or security of the information relating to our company, customers, members,
associates, business partners and vendors, whether as a result of cyberattacks on our information systems or otherwise,
could damage our reputation, result in litigation or other legal actions against us, result in fines, penalties, and liability,
cause us to incur substantial additional costs, and materially adversely affect our business and operating results.
Like most retailers, we receive and store in our information systems personal information and/or payment information about our
customers and members, and we also receive and store information concerning our associates and vendors. In addition, our
health and wellness business operations, the Walmart Health locations, and third-party service providers who handle
information on our behalf, store and maintain personal health information. Some of this information is stored digitally in
connection with the digital platforms and technologies that we use to conduct and facilitate our various businesses. We utilize
third-party service providers for a variety of reasons, including, without limitation, for digital storage technology, content
delivery to customers and members, back-office support, and other functions. Such providers may have access to information
we hold about our customers, members, associates, business partners or vendors. In addition, our eCommerce operations
depend upon the secure transmission of confidential information over public networks, including information permitting
cashless payments.
In addition to our U.S. operations, we operate retail and eCommerce businesses in Africa, Canada, Central America, Chile,
China, India and Mexico.
Cyber threats are rapidly evolving and those threats and the means for obtaining access to information in digital and other
storage media are becoming increasingly sophisticated and frequent. Attacks against information systems and devices, whether
our own or those of our third-party service providers, create risk of cybersecurity incidents, including ransomware, malware, or
phishing incidents. We expect to continue to experience such attempted attacks in the future. Cyberattacks and threat actors can
be sponsored by particular countries or sophisticated criminal organizations or be the work of hackers with a wide range of
motives and expertise. We and the businesses with which we interact have experienced and continue to experience threats to
data and systems, including by perpetrators of random or targeted malicious cyberattacks, computer viruses, phishing incidents,
worms, bot attacks, ransomware or other destructive or disruptive software and attempts to misappropriate customer
information, including credit card and payment information, and cause system failures and disruptions. Mitigation and
remediation recommendations continue to evolve, and addressing vulnerabilities is a priority for us. The increased use of
remote work infrastructure in recent years has also increased the possible attack surfaces. Some of our systems and third-party
service providers' systems have experienced security incidents or breaches and although they have not had a material adverse
effect on our operating results, there can be no assurance of a similar result in the future.
Any compromise of our data security systems or of those of businesses with which we interact, which results in confidential
information being accessed, obtained, damaged, disclosed, destroyed, modified, lost or used by unauthorized persons could
harm our reputation and expose us to regulatory actions (including, with respect to health information, liability under the Health
Insurance Portability and Accountability Act of 1996, or "HIPAA"), customer attrition, remediation expenses, and claims from
customers, members, associates, vendors, financial institutions, payment card networks and other persons, any of which could
materially and adversely affect our business operations, financial position and results of operations. Because the techniques
used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately
produce signs of a compromise, we may be unable to anticipate these techniques or to implement adequate preventative
measures and we or our third-party service providers may not discover any security event, breach, vulnerability or compromise
of information for a significant period of time after the security incident occurs. To the extent that any cyberattack, ransomware
or incursion in our or one of our third-party service provider's information systems results in the loss, damage, misappropriation
or other compromise of information, we may be materially adversely affected by claims from customers, members, financial
institutions, regulatory authorities, payment card networks and others.
Our compliance programs, information technology, and enterprise risk management efforts cannot eliminate all systemic risk.
Disruptions in our systems caused by security incidents, breaches or cyberattacks – including attacks on those parties we do
business with (such as strategic partners, suppliers, banks, or utility companies) - could harm our ability to conduct our
operations, which may have a material effect on us, may result in losses that could have a material adverse effect on our
financial position or results of operations, or may have a cascading effect that adversely impacts our partners, third-party
service providers, customers, members, financial services firms, and other third parties that we interact with on a regular basis.
Our reputation with our customers and members is important to the success of our enterprise strategy, which combines
traditional retail, membership models, marketplaces, financial services, healthcare, and other customer and business services
into a series of interconnected assets to make it seamless for customers to interact with us. Security-related events could be
widely publicized and could materially adversely affect our reputation with our customers, members, associates, vendors and
shareholders, could harm our competitive position particularly with respect to our eCommerce operations, and could result in a
material reduction in our net sales in our eCommerce operations, as well as in our stores thereby materially adversely affecting
20
our operations, net sales, results of operations, financial position, cash flows and liquidity. Such events could also result in the
release to the public of confidential information about our operations and financial position and performance and could result in
litigation or other legal actions against us or the imposition of penalties, fines, fees or liabilities, which may not be covered by
our insurance policies. Moreover, a security compromise or ransomware event could require us to devote significant
management resources to address the problems created by the issue and to expend significant additional resources to upgrade
further the security measures we employ to guard personal and confidential information against cyberattacks and other attempts
to access or otherwise compromise such information and could result in a disruption of our operations, particularly our digital
operations.
We accept payments using a variety of methods, including cash, checks, credit and debit cards, electronic benefits transfer
(EBT) cards, mobile payments, and our private label credit cards and gift cards, and we may offer new payment options over
time, which may have information security risk implications. As a retailer accepting debit and credit cards for payment, we are
subject to various industry data protection standards and protocols, such as payment network security operating guidelines and
the Payment Card Industry Data Security Standard. We cannot be certain that the security measures we maintain to protect all
of our information technology systems are able to prevent, contain or detect cyberattacks, cyberterrorism, security incidents,
breaches, or other compromises from known malware or ransomware or other threats that may be developed in the future. In
certain circumstances, our contracts with payment card processors and payment card networks (such as Visa, Mastercard,
American Express and Discover) generally require us to adhere to payment card network rules which could make us liable to
payment card issuers and others if information in connection with payment cards and payment card transactions that we process
is compromised, which liabilities could be substantial.
Additionally, through various financial service partners and our ONE fintech joint venture, we offer various services such as
money transfers, digital payment platforms, bill payment, money orders, check cashing, prepaid access, co-branded credits
cards, installment lending, and earned wage access. These products and services require us to comply with legal and regulatory
requirements, including privacy, authentication and tokenization, global anti-money laundering and sanctions laws and
regulations as well as international, federal and state consumer financial laws and regulations. Failure to comply with these laws
and regulations could result in fines, sanctions, penalties and harm to our reputation.
The Company also has compliance obligations associated with privacy laws enacted to protect and regulate the collection, use,
retention, disclosure and transfer of personal information, which include liability for security and privacy breaches. Among
other obligations, breaches may trigger obligations under international, federal and state laws to notify affected individuals,
government agencies and the media. Consequently, cybersecurity attacks that cause a data breach could subject us to fines,
sanctions and other legal liability and harm our reputation.
Changes in type or scope of offerings of our health and wellness business or the Walmart Health business could
adversely affect our overall results of operations, cash flows and liquidity.
Associate error or malfeasance, faulty password management, social engineering or other vulnerabilities and irregularities may
also result in a defeat of our or our third-party service providers' security measures and a compromise or breach of our or their
information systems. Moreover, hardware, software or applications we use may have inherent vulnerabilities or defects of
design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could
compromise information security.
During fiscal 2023, our Walmart International operations generated approximately 17% of our consolidated net sales. Walmart
International's operations in various countries also source goods and services from other countries. Our future operating results
in these countries could be negatively affected by a variety of factors, most of which are beyond our control. These factors
include political conditions, including political instability, local and global economic conditions, legal and regulatory
constraints (such as regulation of product and service offerings including regulatory restrictions (such as foreign ownership
restrictions) on eCommerce and retail operations in international markets, such as India), restrictive governmental actions (such
as trade protection measures or nationalization), antitrust and competition law regulatory matters (such as the competition
investigations currently underway in Mexico related to our subsidiary Wal-Mart de Mexico, in Canada related to our subsidiary
Wal-Mart Canada and competition proceedings in India related to our Flipkart subsidiary), local product safety and
environmental laws, tax regulations, local labor laws, anti-money laundering laws and regulations, trade policies, foreign
exchange or currency regulations, laws and regulations regarding consumer and data protection, and other matters in any of the
countries or regions in which we operate, now or in the future.
The economies of some of the countries in which we have operations have in the past suffered from high rates of inflation and
currency devaluations, which, if they occurred again, could adversely affect our financial performance. Other factors which
may impact our international operations include foreign trade, monetary and fiscal policies of the U.S. and of other countries,
laws, regulations and other activities of foreign governments, agencies and similar organizations, and risks associated with
having numerous facilities located in countries that have historically been less stable than the U.S. Additional risks inherent in
our international operations generally include, among others, the costs and difficulties of managing international operations,
adverse tax consequences and greater difficulty in enforcing intellectual property rights in countries other than the U.S. The
various risks inherent in doing business in the U.S. generally also exist when doing business outside of the U.S., and may be
exaggerated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, geopolitical
tensions or events, laws and regulations.
In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in contravention
of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the Foreign
Corrupt Practices Act or the laws and regulations of other countries. We maintain a global policy prohibiting such business
practices and have in place a global anti-corruption compliance program designed to ensure compliance with these laws and
regulations. Nevertheless, we remain subject to the risk that one or more of our associates, contractors or agents, including
those based in or from countries where practices that violate such U.S. laws and regulations or the laws and regulations of other
countries may be customary, will engage in business practices that are prohibited by our policies, circumvent our compliance
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the
State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for claims, including derivative
claims that are based upon a violation of a duty by a current or former director, officer, associate or shareholder in such capacity
or as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery. The exclusive forum
provision may increase the costs for a shareholder to bring a claim or limit a shareholder's ability to bring a claim in a judicial
forum that the shareholder finds favorable for disputes with us or our directors, officers, associates or shareholders in such
capacity, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these
provisions of our bylaws inapplicable to, or unenforceable in respect of, the claims as to which they are intended to apply, then
we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our
business, financial position or results of operations. While the exclusive forum provision applies to state and federal law claims,
our shareholders will not be deemed to have waived our compliance with, and the exclusive forum provision will not preclude
or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under, the federal securities laws,
including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
Our reputation may be adversely affected if we are not able to achieve our ESG goals.
We strive to deliver shared value through our business and our diverse stakeholders expect us to make significant progress in
certain ESG priority issue areas. From time to time, we announce certain aspirations and goals relevant to our priority ESG
issues. We periodically publish information about our ESG priorities, strategies, and progress on our corporate website and
update our ESG reporting from time to time. Achievement of these aspirations and goals is subject to risks and uncertainties,
many of which are outside of our control, and it is possible that we may fail, or be perceived to have failed, in the achievement
of our ESG goals or that certain of our customers, associates, shareholders, investors, suppliers, business partners, government
agencies, and non-governmental organizations might not be satisfied with our goals or our efforts toward achieving those goals.
Certain challenges we face in the achievement of our ESG objectives are also captured within our ESG reporting, which is not
incorporated by reference into and does not form any part of this Annual Report on Form 10-K. A failure or perceived failure to
meet our goals could adversely affect public perception of our business, associate morale or customer or shareholder support.
ITEM 1B.
None.
UNRESOLVED STAFF COMMENTS
27
ITEM 2.
Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by our shareholders, which could increase the
costs for our shareholders to bring claims, discourage our shareholders from bringing claims, or limit our shareholders'
ability to obtain a favorable judicial forum for disputes with us or our directors, officers, associates or shareholders in
such capacity.
PROPERTIES
The Walmart U.S. and Sam's Club segments comprise the Company's operations in the U.S. As of January 31, 2023, unit
counts for Walmart U.S. and Sam's Club are summarized by format for each state and territory as follows:
Walmart U.S.
Sam's Club
Neighborhood
Markets and
other small
State or Territory
Alabama
Alaska
Arizona
United States
15
26
We operate in a highly regulated and litigious environment. We are involved in legal proceedings, including litigation,
arbitration and other claims, and investigations, inspections, audits, claims, inquiries and similar actions by pharmacy,
healthcare, tax, environmental and other governmental authorities. We may also have indemnification obligations for legal
commitments of certain businesses we have divested. Legal proceedings, in general, and securities, derivative action and class
action and multi-district litigation, in particular, can be expensive and disruptive. Some of these suits may purport or may be
determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or
exemplary damages, and may remain unresolved for several years. For example, we are currently a defendant in a number of
cases containing class or collective-action allegations, or both, in which the plaintiffs have brought claims under federal and
state wage and hour laws, as well as a number of cases containing class-action allegations in which the plaintiffs have brought
claims under federal and state consumer laws.
23
programs and, by doing so, violate such laws and regulations. Any such violations, even if prohibited by our internal policies,
could adversely affect our business or financial performance and our reputation.
Changes in tax and trade laws and regulations could materially adversely affect our financial performance.
In fiscal 2023, our Walmart U.S. and Sam's Club operating segments generated approximately 83% of our consolidated net
sales. Significant changes in tax and trade policies, including tariffs and government regulations affecting trade between the
U.S. and other countries where we source many of the products we sell in our stores and clubs could have an adverse effect on
our business and financial performance. A significant portion of the general merchandise we sell in our U.S. stores and clubs is
manufactured in other countries. Any such actions including the imposition of further tariffs on imports could increase the cost
to us of such merchandise (whether imported directly or indirectly) and cause increases in the prices at which we sell such
merchandise to our customers, which could materially adversely affect the financial performance of our U.S. and international
operations as well as our business.
We are subject to income taxes and other taxes in both the U.S. and the foreign jurisdictions in which we currently operate or
have historically operated. The determination of our worldwide provision for income taxes and current and deferred tax assets
and liabilities requires judgment and estimation. Our income taxes could be materially adversely affected by earnings being
lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have
higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in worldwide tax
laws, tax rates, regulations or accounting principles.
We are also exposed to future tax legislation, as well as the issuance of future regulations and changes in administrative
interpretations of existing tax laws, any of which can impact our current and future years' tax provision. The effect of such
changes in tax law could have a material effect on our business, financial position and results of operations. In the U.S., the Tax
Cuts and Jobs Act of 2017 (the "Tax Act") significantly changed federal income tax laws that affect U.S. corporations. As
further guidance is issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, any resulting changes in
our estimates will be treated in accordance with the relevant accounting guidance. Compliance with the Tax Act and any other
new tax rules, regulations, guidance, and interpretations, including collecting information not regularly produced by the
Company or unexpected changes in our estimates, may require us to incur additional costs and could affect our results of
operations.
In addition, legislatures and taxing authorities in many jurisdictions in which we operate may enact changes to or seek to
enforce novel interpretations of their tax rules. These changes could include modifications that have temporary effect and more
permanent changes. For example, the Organization for Economic Cooperation and Development (the "OECD"), the European
Union and other countries (including countries in which we operate) have committed to enacting substantial changes to
numerous long-standing tax principles impacting how large multinational enterprises are taxed. In particular, the OECD's Pillar
Two initiative introduces a 15% global minimum tax applied on a country-by-country basis and for which many jurisdictions
have now committed to an effective enactment date starting January 1, 2024. The impact of these potential new rules as well as
any other changes in domestic and international tax rules and regulations could have a material effect on our effective tax rate.
Furthermore, we are subject to regular review and audit by both domestic and foreign tax authorities as well as subject to the
prospective and retrospective effects of changing tax regulations and legislation. Although we believe our tax estimates are
reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our Consolidated Financial
Statements and may materially affect our income tax provision, net income, or cash flows in the period or periods for which
such determination and settlement is made.
Changes in and/or failure to comply with other laws, regulations, and interpretations of such laws and regulations
specific to the businesses and jurisdictions in which we operate could materially adversely affect our reputation, market
position, or our business and financial performance.
The Company has been responding to subpoenas, information requests and investigations from governmental entities related to
nationwide controlled substance dispensing and distribution practices involving opioids and also is a defendant in numerous
litigation proceedings related to opioids, including the consolidated multidistrict litigation entitled In re National Prescription
Opiate Litigation (MDL No. 2804) currently pending in the U.S. District Court for the Northern District of Ohio. Similar cases
that name the Company also have been filed in state courts by state, local and tribal governments, healthcare providers and
other plaintiffs. Plaintiffs are seeking compensatory and punitive damages, as well as injunctive relief including abatement.
The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of
loss that may arise from such claims and the related opioid matters. In addition, in July 2021, the Directorate of Enforcement in
India issued a show cause notice to Flipkart and other parties requesting the recipients show cause as to why further
proceedings under India's Foreign Direct Investment rules and regulations should not be initiated against them based on alleged
violations that related to a period prior to the Company's acquisition of a majority stake in Flipkart in 2018. The Company can
provide no assurance as to the scope or outcome of any proceeding that might result from the notice, the amount of proceeds the
Company may receive in indemnification, and can provide no assurance as to whether there will be a material adverse effect to
its business or its consolidated financial statements. The Company is also a defendant in litigation with the Federal Trade
Commission regarding the Company's money transfer agent services and is also cooperating with and responding to subpoenas
issued by the U.S Attorney's Office for the Middle District of Pennsylvania on behalf of the U.S. Department of Justice
regarding the Company's consumer fraud prevention program and anti-money laundering compliance related to the Company's
money transfer services, where Walmart is an agent. The Company is unable to predict the outcome of the litigation or
investigations or any other related actions by governmental entities regarding these matters and can provide no assurance as to
the scope and outcome of these matters and whether its business, financial position, results of operations or cash flows will not
be materially adversely affected. We discuss in more detail these cases and other litigation to which we are party below under
the caption "Item 3. Legal Proceedings" and in Note 10 in the "Notes to our Consolidated Financial Statements," which are part
of this Annual Report on Form 10-K.
We operate in complex regulated environments in the U.S. and in other countries in which we operate and could be materially
adversely affected by changes to existing legal requirements including the related interpretations and enforcement practices,
new legal requirements and/or any failure to comply with applicable regulations. In addition, the degree of regulatory, political,
and media scrutiny we face increases the likelihood that our efforts to adhere our practices and procedures to comply with these
laws and legal requirements may be subject to frequent or increasing challenges.
24
equipment; and the practice of the professions of pharmacy, medical, dental, and behavioral healthcare services, including
limitations on the corporate practice of medicine in certain states.
Health-related legislation at the federal and state level may have an adverse effect on our business or require us to modify
certain aspects of our operations. For example, in the U.S., the Drug Enforcement Administration ("DEA") and various other
regulatory authorities regulate the purchase, distribution, maintenance and dispensing of pharmaceuticals and controlled
substances. We are required to hold valid DEA and state-level licenses, meet various security and operating standards and
comply with the federal and various state controlled substance acts and related regulations governing the sale, dispensing,
disposal and holding of controlled substances. The DEA, the U.S. Food and Drug Administration and state regulatory
authorities have broad enforcement powers, including the ability to seize or recall products and impose significant criminal,
civil and administrative sanctions for violations of these laws and regulations. In addition, there has been recent heightened
governmental and public scrutiny of pharmaceutical product pricing, which has resulted in federal and state legislation and
regulations, executive orders and other initiatives and proposals designed to increase transparency in pharmaceutical product
pricing and reform government program reimbursement methodologies (for example, the Inflation Reduction Act, which
includes, among other matters, policies designed to impact drug prices and reduce drug spending by the federal government).
Other health reform efforts at the federal and state levels may also impact our business or require us to modify certain aspects of
our operations. We may not be able to predict the nature or success of reform initiatives, and the resulting uncertainties may
have an adverse effect on our business.
We are also governed by foreign, national and state laws and regulations of general applicability, including laws and regulations
related to competition and antitrust matters; protection of the environment and health and safety matters, including exposure to,
and the management and disposal of, hazardous substances; food and drug safety, including drug supply chain security
requirements; trade, consumer protection, and safety, including the availability, sale, price label accuracy, advertisement, and
promotion of products we sell and the financial services we offer (including through our digital channels, stores and clubs as
well as our ONE fintech joint venture); anti-money laundering prohibitions; consumer financial protection laws; economic,
trade, and other sanctions matters; licensure, certification, and enrollment with government programs; data privacy and security
and the sharing and interoperability of data; working conditions, health and safety, equal employment opportunity, employee
benefit and other labor and employment matters; and health and wellness related regulations for our pharmacy operations
outside of the U.S. In addition, certain financial services we offer or make available are subject to legal and regulatory
requirements, including those intended to help detect and prevent money laundering, fraud and other illicit activity as well as
consumer financial protections laws and U.S. sanctions. Increasing governmental and societal attention to ESG matters,
including expanding mandatory and voluntary reporting diligence, and disclosure topics such as climate change, sustainability
(including with respect to our supply chain), natural resources, waste reduction, energy, human capital, and risk oversight could
expand the nature, scope, and complexity of matters that we are required to control, assess, and report.
Moreover, we are also subject to data privacy and protection laws regulating the collection, use, retention, disclosure, transfer
and processing of personal information, such as the California Consumer Privacy Act ("CCPA"), which was significantly
modified by the California Privacy Rights Act ("CPRA"), new comprehensive privacy legislation passed in Connecticut (the
Connecticut Data Protection Act), Colorado (the Colorado Privacy Act), Utah (the Utah Privacy Act) and Virginia (the
Consumer Data Protection Act), each of which go into effect in 2023, as well as other laws and regulations such as the Illinois
Biometric Information Privacy Act, the European Union's General Data Protection Regulation ("GDPR"), the United
Kingdom's General Data Protection Regulation (which implements the GDPR into U.K. law), China's Personal Information
Protection Act, and similar legislation in Quebec (An Act to modernize legislative provisions as regards the protection of
personal information, SQ 2021, c 25). The potential effects of these laws are far-reaching, continue to evolve, and may require
us to modify our data processing practices and policies and to incur substantial costs and expenses to comply. These and other
privacy and cybersecurity laws may carry significant potential penalties for noncompliance. For example, in the case of non-
compliance with a material provision of the GDPR (such as non-adherence to the core principles of processing personal data),
regulators have the authority to levy a fine in an amount that is up to the greater of €20 million or 4% of global annual turnover
in the prior year. These administrative fines are discretionary and based, in each case, on a multi-factored approach. Residents
in jurisdictions with comprehensive privacy laws have expanded rights to access, correct and require deletion of their personal
information, opt out of certain personal information sharing and receive detailed information about how their personal
information is used. Laws such as those in California, Connecticut, Colorado, Illinois, Utah, and Virginia may allow civil
penalties for violations, and CCPA and CPRA provide a private right of action for data breaches. Furthermore, our marketing
and customer engagement activities are subject to communications privacy laws such as the Telephone Consumer Protection
Act. We may be subjected to penalties and other consequences for noncompliance, including changing some portions of our
business. Even an unsuccessful challenge by customer or regulatory authorities of our activities could result in adverse
publicity, impact our reputation and could require a costly response from and defense by us.
The impact of new laws, regulations and policies and the related interpretations, as well as changes in enforcement practices or
regulatory scrutiny as to existing laws and regulations (including, but not limited to, in the U.S., shifting enforcement priorities
for existing antitrust, competition, and pricing laws, as well as proposed new rules and regulations) generally cannot be
predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices of
25
existing laws and regulations may require extensive system and operational changes, be difficult to implement, increase our
operating costs, require significant capital expenditures, or adversely impact the cost or attractiveness of the products or
services we offer, or result in adverse publicity and harm our reputation. If we fail to predict or respond adequately to changes,
including by implementing strategic and operational initiatives, or do not respond as effectively as our competitors, our
business, operations, and financial performance may be adversely affected.
In addition, we may face audits or investigations by one or more government agencies relating to our compliance with
applicable laws and regulations. The regulatory, political, and media scrutiny we face, which may continue, amplifies these
risks. To the extent a regulator or court disagrees with our interpretation of these laws and determines that our practices are not
in compliance with applicable laws and regulations, we could be subject to civil and criminal penalties that could adversely
affect the continued operation of our businesses, including: suspension of payments from government programs; loss of
required licenses and certifications; loss of authorizations to participate in or exclusion from government programs, including
the Medicare and Medicaid programs in the U.S.; termination from contractual relationships, including those with our drug
suppliers and third-party payers; and significant fines or monetary damages. Failure to comply with applicable legal or
regulatory requirements in the U.S. or in any of the countries in which we operate could result in significant legal and financial
exposure, damage to our reputation, and have a material adverse effect on our business operations, financial position and results
of operations.
Our health and wellness operations in the U.S. and the operations of the Walmart Health locations are subject to numerous
federal, state and local laws and regulations including, but not limited to, those related to: licensing, reimbursement
arrangements, and other requirements and restrictions; registration and regulation of pharmacies; dispensing and sale of
controlled substances and products containing pseudoephedrine; governmental and commercial reimbursement (including
Medicare and Medicaid); data privacy and security and the sharing and interoperability of data, including obligations and
restrictions related to health information (such as those imposed under HIPAA); billing and coding for healthcare services and
properly handling overpayments; debt collection; necessity and adequacy of healthcare services; relationships with referral
sources and referral recipients and other fraud and abuse issues, such as those addressed by anti-kickback and false claims laws
and patient inducement regulations; qualification of healthcare practitioners; quality and standards of medical services and
9
We are subject to risks related to litigation and other legal proceedings that may materially adversely affect our results
of operations, financial position and liquidity.
Kentucky
West Virginia
38
Wisconsin
83
577954-8340+
1
104|2203|18|20=1262-2
9
12
13
24
13
19
14
82
8
601
3
Washington D.C.
52
Washington
13
Rhode Island
5
South Carolina
83
South Dakota
15
Tennessee
60
117
391
18
Utah
41
Vermont
3
Virginia
110
Texas
6
15
151
17
151
99
Wyoming
12
2
14
U.S. total
122
3,572
Square feet (in thousands)
634,615
38,226
781
28,885
600
5,317
84
80,351
364
Puerto Rico
9
162
5
66
5
44
10
ཋ གླ༠ སྦྲང ཊྛདྡྷ ༠ ༡ ^ཝR;
2572×7223222722±20 5S
16
25
50
71
53
119
216
17
172
135
46
28
19
47
29
27
21
4
52
Michigan
90
3
9
Massachusetts
23
Minnesota
65
3
1
12
81
Mississippi
Missouri
125
65
61
3
77
7
116
9
9
102
Louisiana
88
11
2
14
138
Maine
19
3
3
25
16
34
3
31
7
16
North Carolina
143
272256
7
11
1
8
45
North Dakota
14
-
Ohio
138
Oklahoma
11
81
82
New York
9
Oregon
112
35
9
18
19
86
Montana
Nebraska
Pennsylvania
158
14
35
30
New Hampshire
New Jersey
New Mexico
Nevada
35
19
4,832
ITEM 3. LEGAL PROCEEDINGS
30
We own office facilities in Bentonville, Arkansas, that serve as our principal office and own and lease office facilities
throughout the U.S. and internationally for operations as well as for field and market management. The land on which our
stores are located is either owned or leased by the Company. We use independent contractors to construct our buildings. All
store leases provide for annual rentals, some of which escalate during the original lease or provide for additional rent based on
sales volume. Substantially all of the Company's store and club leases have renewal options, some of which include rent
escalation clauses. For further information on our distribution centers, see the caption "Distribution" provided for each of our
segments under "Item 1. Business."
(1) Walmart International properties, with the exception of Canada, are as of December 31, 2022, to correspond with the balance sheet date of the related
geographic market. Canada unit counts are as of January 31, 2023.
Also includes U.S. and international distribution facilities which are third-party owned and operated.
(2)
11,003
6,171
29
I. SUPPLEMENTAL INFORMATION: We discuss certain legal proceedings in Note 10 to our Consolidated Financial
Statements included in "Item 8. Financial Statements and Supplementary Data," which is captioned "Contingencies," under the
sub-caption "Legal Proceedings." We refer you to that discussion for important information concerning those legal
proceedings, including the basis for such actions and, where known, the relief sought. We provide the following additional
information concerning those legal proceedings, including the name of the lawsuit, the court in which the lawsuit is pending,
and the date on which the petition commencing the lawsuit was filed.
In December 2021, the Office of the Attorney General of the State of California filed suit against the Company, bringing
enforcement claims regarding Walmart's management of waste consumer products at its California facilities that are alleged to
be hazardous. The suit was filed in Superior Court of Alameda County, California, Case No. 21CV004367, People v. Walmart
Inc., and a trial date has been scheduled for April 22, 2024. The Company believes the suit is without merit and is vigorously
defending this litigation matter. While the Company cannot predict the ultimate outcome of this matter, the potential for
penalties or settlement costs could exceed $1 million. Although the Company does not believe that this matter will have a
material adverse effect on its business, financial position, results of operations, or cash flows, the Company can provide no
assurance as to the scope and outcome of this matter and no assurance as to whether there will be a material adverse effect to its
business or its consolidated financial statements.
Opioid Settlement Framework: On November 15, 2022, the Company announced that it had agreed to a Settlement
Framework to resolve substantially all opioids-related lawsuits filed against the Company by states, political subdivisions, and
Native American tribes (other than the single, two-county trial on appeal to the Sixth Circuit Court of Appeals as described
above), as described in more detail in Note 10 to the Consolidated Financial Statements. The Company now has settlement
agreements with all 50 states, including four states that previously settled with the Company, as well as the District of
Columbia, Puerto Rico, and three other U.S. territories, that are intended to resolve substantially all opioids-related lawsuits
brought by state and local governments against the Company. The settlement will take effect if a sufficient number of political
subdivisions also join.
DOJ Opioid Civil Litigation: A civil complaint pending in the U.S. District Court for the District of Delaware has been filed
by the U.S. Department of Justice (the "DOJ") against the Company, in which the DOJ alleges violations of the Controlled
Substances Act related to nationwide distribution and dispensing of opioids. U.S. v. Walmart Inc., et al., USDC, Dist. of DE,
12/22/20. The Company filed a motion to dismiss the DOJ complaint on February 22, 2021. After the parties had fully briefed
the Company's motion to dismiss, the DOJ filed an amended complaint on October 7, 2022. On November 7, 2022, the
Company filed a partial motion to dismiss the amended complaint. The motion remains pending.
Opioids Related Securities Class Actions and Derivative Litigation: Three derivative complaints and two securities class
actions drawing heavily on the allegations of the DOJ complaint have been filed in Delaware naming the Company and various
current and former directors and certain current and former officers as defendants. The plaintiffs in the derivative suits (in
which the Company is a nominal defendant) allege, among other things, that the defendants breached their fiduciary duties in
connection with oversight of opioids dispensing and distribution and that the defendants violated Section 14(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and are liable for contribution under Section 10(b) of the Exchange
Act in connection with the Company's disclosures about opioids. Two of the derivative suits have been filed in the U.S. District
Court in Delaware and those suits have been stayed pending further developments in other opioids litigation matters. The other
derivative suit has been filed in the Delaware Court of Chancery. The defendants in the derivative suit pending in the Delaware
Court of Chancery moved to dismiss and/or to stay that case on December 21, 2021; the plaintiffs responded by filing an
amended complaint on February 22, 2022. On April 20, 2022, the defendants moved to dismiss and/or stay proceedings on the
amended complaint. The court held a hearing on that motion on September 26, 2022; a ruling remains pending. The securities
class actions, alleging violations of Sections 10(b) and 20(a) of the Exchange Act regarding the Company's disclosures with
respect to opioids, purport to be filed on behalf of a class of investors who acquired Walmart stock from March 30, 2016,
through December 22, 2020. On May 11, 2021, the U.S. District Court in Delaware consolidated the class actions and
appointed a lead plaintiff and lead counsel. The defendants moved to dismiss the consolidated securities class action on October
8, 2021. On October 14, 2022, plaintiffs filed an amended complaint, which revised the applicable putative class of investors to
those who acquired Walmart stock from March 31, 2017, through December 22, 2020. On November 16, 2022, the Company
moved to dismiss the amended complaint. That motion remains pending.
Derivative Lawsuits: Abt v. Alvarez et al., USDC, Dist. of DE, 2/9/21; Nguyen v. McMillon et al., USDC, Dist. of DE,
4/16/21: Ontario Provincial Council of Carpenters' Pension Trust Fund et al. v. Walton et al., DE Court of Chancery, 9/27/21.
31
Securities Class Actions: Stanton v. Walmart Inc. et al., USDC, Dist. of DE, 1/20/21 and Martin v. Walmart Inc. et al., USDC,
Dist. of DE, 3/5/21, consolidated into In re Walmart Inc. Securities Litigation, USDC, Dist. of DE, 5/11/21.
Money Transfer Agent Services Litigation: Federal Trade Commission v. Walmart Inc. (CV-3372), USDC, N. Dist. Of Ill,
6/28/22.
II. CERTAIN OTHER MATTERS:
Foreign Direct Investment Matters: In July 2021, the Directorate of Enforcement in India issued a show cause notice to
Flipkart Private Limited and one of its subsidiaries ("Flipkart"), and to unrelated companies and individuals, including certain
current and former shareholders and directors of Flipkart. The notice requests the recipients to show cause as to why further
proceedings under India's Foreign Direct Investment rules and regulations (the "Rules") should not be initiated against them
based on alleged violations during the period from 2009 to 2015, prior to the Company's acquisition of a majority stake in
Flipkart in 2018. The notice is an initial stage of proceedings under the Rules which could, depending upon the conclusions at
the end of the initial stage, lead to a hearing to consider the merits of the allegations described in the notice. If a hearing is
initiated and if it is determined that violations of the Rules occurred, the regulatory authority has the authority to impose
monetary and/or non-monetary relief. Flipkart has begun the process of responding to the notice and, if the matter progresses to
a consideration of the merits of the allegations described in the notice is initiated, Flipkart intends to defend against the
allegations vigorously. Due to the fact that this process is in an early stage, the Company is unable to predict whether the notice
will lead to a hearing on the merits or, if it does, the final outcome of the resulting proceedings. While the Company does not
currently believe that this matter will have a material adverse effect on its business, financial condition, results of operations or
cash flows, the Company can provide no assurance as to the scope or outcome of any proceeding that might result from the
notice, the amount of the proceeds the Company may receive in indemnification from individuals and entities that sold shares to
the Company under the 2018 agreement pursuant to which the Company acquired its majority stake in Flipkart, and can provide
no assurance as to whether there will be a material adverse effect to its business or its consolidated financial statements.
Total properties
III. ENVIRONMENTAL MATTERS: Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters
when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the
Company reasonably believes will exceed an applied threshold not to exceed $1 million.
Prescription Opiate Litigation: In re National Prescription Opiate Litigation (MDL No. 2804) (the "MDL"). The MDL is
pending in the U.S. District Court for the Northern District of Ohio and includes over 2,000 cases as of March 3, 2023. The
liability phase of a single, two-county trial in one of the MDL cases against a number of parties, including the Company,
regarding opioid dispensing claims resulted in a jury verdict on November 23, 2021, finding in favor of the plaintiffs as to the
liability of all defendants, including the Company. The abatement phase of the single, two-county trial resulted in a judgment
on August 17, 2022, that ordered all three defendants, including the Company, to pay an aggregate amount of approximately
$651 million over fifteen years, on a joint and several liability basis, and granted the plaintiffs injunctive relief. The Company
has filed an appeal with the Sixth Circuit Court of Appeals. The monetary aspect of the judgment is stayed pending appeal, and
the injunctive portion of the judgment went into effect on February 20, 2023. The MDL has designated five additional single-
county cases as bellwethers to proceed through discovery. In addition, there are over 300 other cases pending in state and
federal courts throughout the country as of March 3, 2023. The case citations and currently scheduled trial dates, where
applicable, are listed on Exhibit 99.1 to this Form 10-K.
ASDA Equal Value Claims: Ms S Brierley & Others v. ASDA Stores Ltd (2406372/2008 & Others - Manchester
Employment Tribunal); Abbas & Others v Asda Stores limited (KB-2022-003243); and Abusubih & Others v Asda Stores
limited (KB-2022-003240).
165
235
28
26
ITEM 4. MINE SAFETY DISCLOSURES
710
2,152
2,862
1,456
3,850
5,306
23
188
1,479
4,015
5,494
6,171
4,832
11,003
Total International properties
Total properties
Total retail units
6,026
4,597
10,623
Total distribution facilities
145
380
Not applicable.
2023
PART II
Assumes Dividends Reinvested
Fiscal Year ended January 31, 2023
2022
S&P 500 Retailing Index
2023
2018
2019
Fiscal Years Ended January 31,
2020
2021
2022
$
100.00
*Assumes $100 Invested on February 1, 2018
$
92.03 $
97.69
108.42
112.17 $
118.87
139.96
139.37
$
141.50 $
171.83
147.89
157.71
127.45
180.19
2
195.77
100.00
100.00
32
2021
Walmart Inc.
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market for Common Stock
The principal market on which Walmart's common stock is listed for trading is the New York Stock Exchange. The common
stock trades under the symbol "WMT."
Holders of Record of Common Stock
As of March 15, 2023, there were 205,465 holders of record of Walmart's common stock.
Stock Performance Chart
This graph compares the cumulative total shareholder return on Walmart's common stock during the five fiscal years ended
through fiscal 2023 to the cumulative total returns on the S&P 500 Retailing Index and the S&P 500 Index. The comparison
assumes $100 was invested on February 1, 2018 in shares of our common stock and in each of the indices shown and assumes
that all of the dividends were reinvested.
Walmart Inc.
S&P 500 Index
S&P 500 Retailing Index
A S&P 500 Index
$250
$150
$100
$50
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Walmart Inc., the S&P 500 Index
and S&P 500 Retailing Index
(Fiscal Years Ended January 31)
$0
2018
2019
2020
$200
365
392
2
322
43
365
60,331
28
28
1,527
Mexico
2,694
168
2,862
17,688
106,412
4,968
338
5,306
273,450
(1)
Walmart International unit counts, with the exception of Canada, are as of December 31, 2022, to correspond with the balance sheet date of the related
geographic market. Canada unit counts are as of January 31, 2023.
(2)
Square feet reported in thousands.
(3)
Africa unit counts primarily reside in South Africa, with other locations in Botswana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Swaziland, and
Zambia.
(4)
International total
Central America unit counts reside in Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.
13
13,996
160.10
International
The Walmart International segment comprises the Company's operations outside of the U.S. Unit counts as of January 31,
2023(¹) for Walmart International are summarized by major category for each geographic market as follows:
Square
Geographic Market
Retail
Wholesale
Total
feet(2)
Africa
289
379
86
20,939
Canada
Central America (4)
Chile
China
India
402
402
52,557
882
882
375
Owned and Leased Properties
The following table provides further details of our retail units and distribution facilities, including return facilities and dedicated
eCommerce fulfillment centers, as of January 31, 2023(1):
Owned
4,692
817
5,509
Africa
Canada
Central America
Chile
China
India
Mexico
Total International retail units
192
International distribution facilities
342
375
124
278
402
380
502
882
205
187
392
33
70
122
29
Leased (2)
Total
U.S. properties
Walmart U.S. retail units
Sam's Club retail units
Total U.S. retail units
Walmart U.S. distribution facilities
Sam's Club distribution facilities
Total U.S. distribution facilities
Total U.S. properties
International properties
4,057
660
4,717
513
87
600
4,570
747
5,317
110
53
163
12
17
363
Issuer Repurchases of Equity Securities
Percentage change from comparable period
33
2023
Fiscal Years Ended January 31,
Total capital expenditures
Walmart International
New stores and clubs, including expansions and relocations
Total U.S.
Store and club remodels
Supply chain, customer-facing initiatives and technology
Allocation of Capital Expenditures
(Amounts in millions)
Our strategy includes improving our customer-facing initiatives in stores and clubs and creating a seamless omni-channel
experience for our customers. As such, we continue to allocate more capital to supply chain, omni-channel initiatives,
technology and store remodels and less to new store and club openings. The following table provides additional detail:
Strategic Capital Allocation
2022
For fiscal 2023, operating expenses as a percentage of net sales increased 23 basis points when compared to the previous fiscal
year. Operating expenses as a percentage of net sales were impacted by charges of $3.3 billion related to opioid-related legal
settlements and charges of $0.8 billion related to the reorganization and restructuring of certain businesses in the Walmart
International segment. These charges were partially offset by growth in net sales and lower incremental COVID-19 costs.
For fiscal 2022, operating expenses as a percentage of net sales decreased 19 basis points when compared to the previous fiscal
year. Operating expenses as a percentage of net sales benefited from growth in comparable sales and lower incremental
COVID-19 related costs of $2.5 billion as compared to the previous year, partially offset by increased wage investments
primarily in the Walmart U.S. segment.
21.0 %
1.3 %
7.9%
117,812
2.3 %
6.7 %
127,140 $
$
567,762
$
605,881
$
20.8 %
2022
$
7,197
Average total assets (¹)
Denominator
Consolidated net income
Numerator
CALCULATION OF RETURN ON ASSETS
(Amounts in millions)
Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that
exclude and include amounts that are included and excluded in the most directly comparable GAAP financial measure. For
example, we exclude the impact of depreciation and amortization from our reported operating income in calculating the
numerator of our calculation of ROI. As mentioned above, we consider ROA to be the financial measure computed in
accordance with GAAP most directly comparable to our calculation of ROI. ROI differs from ROA (which is consolidated net
income for the period divided by average total assets for the period) because ROI: adjusts operating income to exclude certain
expense items and adds interest income; and adjusts total assets for the impact of accumulated depreciation and amortization,
accounts payable and accrued liabilities to arrive at total invested capital. Because of the adjustments mentioned above, we
believe ROI more accurately measures how we are deploying our key assets and is more meaningful to investors than ROA.
Although ROI is a standard financial measure, numerous methods exist for calculating a company's ROI. As a result, the
method used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI.
The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP
financial measure, is as follows:
We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent
expense) for the trailing twelve months divided by average invested capital during that period. We consider average invested
capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average
amortization, less average accounts payable and average accrued liabilities for that period.
to assess returns on assets. While ROI is considered a non-GAAP financial measure, management believes ROI is a
meaningful metric to share with investors because it helps investors assess how effectively Walmart is deploying its assets.
Trends in ROI can fluctuate over time as management balances long-term strategic initiatives with possible short-term impacts.
ROA was 4.6% and 5.6% for fiscal 2023 and 2022, respectively. The decrease in ROA was primarily due to the decrease in net
income, which was driven by lower operating income, partially offset by lapping debt extinguishment charges. ROI was 12.7%
and 14.9% for fiscal 2023 and 2022, respectively, which was primarily due to a decrease in operating income which included
charges associated with opioid-related legal settlements as well as reorganization and restructuring expenses, all recorded in
fiscal 2023.
37
We include Return on Assets ("ROA"), the most directly comparable measure based on our financial statements presented in
accordance with generally accepted accounting principles in the U.S. ("GAAP"), and Return on Investment ("ROI") as metrics
9,209 $
Return on Assets and Return on Investment
Returns
13,106
16,857 $
$
2,497
10,609
134
33
14,232 $
2,625
$
3,278
4,990
As we execute our financial framework, we believe our return on capital will improve over time. We measure return on capital
with our return on assets, return on investment and free cash flow metrics. We also provide returns in the form of share
repurchases and dividends, which are discussed in the Liquidity and Capital Resources section.
Fiscal Years Ended January 31,
2023
Operating, selling, general and administrative expenses as a percentage of net sales
Percentage change from comparable period
Our objective of prioritizing strong, efficient growth means we will focus on the most productive growth opportunities,
increasing comparable store and club sales through increasing membership at Sam's Club and through Walmart+, accelerating
eCommerce sales growth and expanding omni-channel initiatives that complement our flywheel strategy. At times, we make
strategic investments which are focused on the long-term growth of the Company.
Strong, Efficient Growth
As we execute on this financial framework, we believe our returns on capital will improve over time.
strategic capital allocation.
consistent operating discipline; and
strong, efficient growth;
•
We are committed to helping customers save money and live better through everyday low prices, supported by everyday low
costs. At times, we adjust our business strategies to maintain and strengthen our competitive positions in the countries in which
we operate. We define our financial framework as:
Company Performance Metrics
We expect continued uncertainty in our business and the global economy due to pressure from inflation; swings in
macroeconomic conditions and their effect on consumer confidence; volatility in employment trends; supply chain pressures;
and ongoing uncertainties related to global health epidemics or pandemics, any of which may impact our results. For a detailed
discussion on results of operations by reportable segment, refer to "Results of Operations" below.
normal inventory levels throughout the year. In addition, our merchandise costs for the fiscal year ended January 31, 2023 have
been impacted by high inflation, greater than what we have experienced in recent years. The impact to our net sales and gross
profit margin is influenced in part by our pricing and merchandising strategies in response to cost increases. Those pricing
strategies include, but are not limited to: absorbing cost increases instead of passing those cost increases on to our customers
and members; reducing prices in certain merchandise categories; focusing on opening price points for certain food categories;
and when necessary, passing cost increases on to our customers and members. Merchandising strategies include, but are not
limited to: working with our suppliers to reduce product costs and share in absorbing cost increases; focusing on private label
brands and smaller pack sizes; earlier-than-usual purchasing and in greater volumes or moderating purchasing in certain
categories; and securing ocean carrier and container capacity. These strategies have and may continue to impact gross profit as
a percentage of net sales.
Comparable sales is a metric that indicates the performance of our existing stores and clubs by measuring the change in sales
for such stores and clubs, including eCommerce sales, for a particular period over the corresponding period in the previous
year. The retail industry generally reports comparable sales using the retail calendar (also known as the 4-5-4 calendar). To be
consistent with the retail industry, we provide comparable sales using the retail calendar in our quarterly earnings releases.
However, when we discuss our comparable sales below, we are referring to our calendar comparable sales calculated using our
fiscal calendar, which may result in differences when compared to comparable sales using the retail calendar.
Calendar comparable sales, including the impact of fuel, for fiscal 2023 and 2022, were as follows:
We are committed to helping customers save money and live better through everyday low prices, supported by everyday low
costs. However, like other retail companies, we have seen supply chain disruptions contributing to higher than
We operate in a highly competitive omni-channel retail industry in all of the markets we serve. We face strong sales
competition from other discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as
well as eCommerce, health and wellness, financial services, advertising, and data service businesses. Many of these
competitors are national, regional or international chains or have a national or international omni-channel or eCommerce
35
In December 2022, we increased our ownership in PhonePe as part of the separation from our majority-owned Flipkart
subsidiary. Refer to Note 3.
In November 2022, we completed the buyout of the noncontrolling interest shareholders of our Massmart subsidiary
(Refer to Note 3) and in December 2022, we exited operations in certain countries in Africa.
In March 2021, we completed the sale of Seiyu for net consideration of $1.2 billion, for which we recognized an
estimated pre-tax loss in fiscal 2021 of $1.9 billion, and an incremental loss of $0.2 billion in fiscal 2022 upon closing
of the transaction. Refer to Note 12.
In February 2021, we completed the sale of Asda for net consideration of $9.6 billion, for which we recognized an
estimated pre-tax loss in fiscal 2021 of $5.5 billion, and an incremental loss of $0.2 billion in fiscal 2022 upon closing
of the transaction. Refer to Note 11 and Note 12.
In November 2020, we completed the sale of Walmart Argentina and recorded a pre-tax non-cash loss in fiscal 2021 of
$1.0 billion, primarily due to cumulative foreign currency translation losses. Refer to Note 12.
•
•
•
•
We have taken certain strategic actions to strengthen our portfolio, primarily in the Walmart International segment, including
the following highlights over the last three years:
presence. We compete with a number of companies for attracting and retaining quality associates. We, along with other retail
companies, are influenced by a number of factors including, but not limited to: catastrophic events, weather and other risks
related to climate change, global health epidemics, including the COVID-19 pandemic, competitive pressures, consumer
disposable income, consumer debt levels and buying patterns, consumer credit availability, disruptions in supply chain,
inventory management, cost and availability of goods, currency exchange rate fluctuations, customer preferences, inflation,
deflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor availability and costs, tax
rates, the imposition of tariffs, cybersecurity attacks and unemployment. Further information on the factors that can affect our
operating results and on certain risks to our Company and an investment in its securities can be found herein under "Item 1A.
Risk Factors."
Walmart U.S.
Sam's Club
Total U.S.
Fiscal Years Ended January 31,
Operating, selling, general and administrative expenses
Net sales
(Amounts in millions, except unit counts)
We operate with discipline by managing expenses, optimizing the efficiency of how we work and creating an environment in
which we have sustainable lowest cost to serve. We invest in technology and process improvements to increase productivity,
manage inventory and reduce costs. We measure operating discipline through expense leverage, which we define as net sales
growing at a faster rate than operating, selling, general and administrative ("operating") expenses.
Consistent Operating Discipline
Comparable sales at Sam's Club increased 14.6% and 15.0% in fiscal 2023 and 2022, respectively. For fiscal 2023, Sam's Club
comparable sales benefited from growth in transactions and average ticket and included higher inflation impacts in certain
merchandise categories. Sam's Club comparable sales for fiscal 2022 benefited from growth in transactions and average ticket
and was aided by consumer spending due to government stimulus, and also included some higher inflation impacts in certain
merchandise categories compared to recent years. The growth in comparable sales was partially offset by our decision to
remove tobacco from certain club locations. Sam's Club eCommerce sales positively contributed approximately 0.8% and 1.3%
to comparable sales for fiscal 2023 and 2022, respectively.
fiscal 2023, comparable sales growth was driven by growth in average ticket, including strong food sales and higher inflation
impacts in certain merchandise categories, as well as growth in transactions. For fiscal 2022, comparable sales growth was
driven driven by growth in average ticket and transactions, which included strong consumer spending from government
stimulus and some higher inflation impacts in certain merchandise categories compared to recent years. Walmart U.S.
eCommerce sales positively contributed approximately 0.7% to comparable sales for both fiscal 2023 and 2022 as we continue
to focus on a seamless omni-channel experience for our customers.
36
Comparable sales in the U.S., including fuel, increased 8.2% and 7.7% in fiscal 2023 and 2022, respectively, when compared to
the previous fiscal year. Walmart U.S. comparable sales increased 7.0% and 6.4% in fiscal 2023 and 2022, respectively. For
1.2%
1.0%
7.7%
8.2%
5.5%
0.3%
0.4%
4.2%
15.0%
6.4%
7.0%
14.6%
Fuel Impact
With Fuel
2022
2023
2022
2023
Return on assets (ROA)
From time to time, the Company repurchases shares of our common stock under share repurchase programs authorized by the
Company's Board of Directors. All repurchases made during the fiscal year prior to November 21, 2022 were made under the
plan in effect at the beginning of fiscal 2022. In November 2022, the Company approved a new $20.0 billion share repurchase
program which, beginning on November 21, 2022, replaced the previous share repurchase program. As of January 31, 2023,
authorization for $19.3 billion of share repurchases remained under the share repurchase program. Any repurchased shares are
constructively retired and returned to an unissued status.
CALCULATION OF RETURN ON INVESTMENT
Operating income
19.3
Represents the approximate dollar value of shares that could have been repurchased under the current plan at the end of the month. The approximate dollar
value of shares that could still have been purchased under the plan in effect at the beginning of fiscal 2022, as of November 21, 2022, when such plan was
replaced, was $1.4 billion.
ITEM 6.
RESERVED
34
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
This discussion, which presents our results for the fiscal years ended January 31, 2023 ("fiscal 2023"), January 31, 2022 ("fiscal
2022") and January 31, 2021 ("fiscal 2021"), should be read in conjunction with our Consolidated Financial Statements and the
accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our
financial statements, the changes in certain key items in those financial statements from period to period and the primary factors
that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's
performance. Additionally, the discussion provides information about the financial results of each of the three segments to
provide a better understanding of how each of those segments and its results of operations affect the financial position and
results of operations of the Company as a whole.
Throughout this Item 7, we discuss segment operating income, comparable store and club sales and other measures.
Management measures the results of the Company's segments using each segment's operating income, including certain
corporate overhead allocations, as well as other measures. From time to time, we revise the measurement of each segment's
operating income and other measures as determined by the information regularly reviewed by our chief operating decision
maker.
37,966
19.6
26,060
49,141
55,261
53,742
94,187
252,496
$
244,860
102,211
243,197 $
110,286
$
38
Accrued liabilities
31,126
Accounts payable
19.9
2,108,707
Share repurchase activity under our share repurchase programs, on a trade date basis, for each month in the quarter ended
January 31, 2023, was as follows:
Fiscal Period
November 1-30, 2022
December 1-31, 2022
January 1-31, 2023
Total
(1)
Average Price Paid
Total Number of
Shares Repurchased
per Share
(in dollars)
3,972,269
8,116,491
$
2,035,515
145.82
2,108,707
143.15
8,116,491
Total Number of
Shares Repurchased
as Part of Publicly
Announced Plans or
Programs
Approximate Dollar Value of
Shares that May Yet Be
Repurchased Under the
Plans or Programs (¹)
(in billions)
3,972,269
$
2,035,515
144.52
Accumulated depreciation and amortization
Total assets
Certain Balance Sheet Data
10,945
158
254
25,942
$
20,428
$
248,678
5.6 %
4.6 %
$
244,029
10,658
$
$
11,292
$
Fiscal Years Ended January 31,
2023
2022
+ Average accumulated depreciation and amortization (¹)
Average total assets (1)
Denominator
ROI operating income
+ Rent
+ Depreciation and amortization
+ Interest income
13,940
2,306
2,274
$
2021
As of January 31,
2022
2023
(¹) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and dividing
by 2.
14.9 %
12.7 %
Return on investment (ROI)
262,663
$
267,183
$
Average invested capital
32,013
28,593
- Average accrued liabilities (¹)
52,201
54,502
- Average accounts payable(¹)
98,199
106,249
248,678
244,029 $
$
39,032
33,933 $
Numerator
In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the
operating results for countries where the functional currency is not the U.S. dollar into U.S. dollars. We calculate the effect of
changes in currency exchange rates as the difference between current period activity translated using the current period's
currency exchange rates and the comparable prior year period's currency exchange rates. Additionally, no currency exchange
rate fluctuations are calculated for non-USD acquisitions until owned for 12 months. Throughout our discussion, we refer to
the results of this calculation as the impact of currency exchange rate fluctuations. Volatility in currency exchange rates may
impact the results, including net sales and operating income, of the Company and the Walmart International segment in the
future.
Management also measures the results of comparable store and club sales, or comparable sales, a metric that indicates the
performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, for a particular period
from the corresponding period in the previous year. Walmart's definition of comparable sales includes sales from stores and
clubs
open for the previous 12 months, including remodels, relocations, expansions and conversions, as well as eCommerce
sales. We measure the eCommerce sales impact by including all sales initiated digitally, including omni-channel transactions
which are fulfilled through our stores and clubs as well as certain other business offerings that are part of our flywheel strategy,
such as our Walmart Connect advertising business. Sales at a store that has changed in format are excluded from comparable
sales when the conversion of that store is accompanied by a relocation or expansion that results in a change in the store's retail
square feet of more than five percent. Sales related to divested businesses are excluded from comparable sales, and sales
related to acquisitions are excluded until such acquisitions have been owned for 12 months. Comparable sales are also referred
to as "same-store" sales by others within the retail industry. The method of calculating comparable sales varies across the retail
industry. As a result, our calculation of comparable sales is not necessarily comparable to similarly titled measures reported by
other companies.
Net cash provided by operating activities
$
19,116
4.9%
5.5 %
5.2 %
4,717
4,742
4,743
702
703
21,587
703
Operating expenses as a percentage of segment net sales decreased 25 basis points for fiscal 2023 when compared to the
previous fiscal year primarily driven by strong sales growth and lower incremental COVID-19 related costs, partially offset by
increased wage costs. For fiscal 2022, operating expenses as a percentage of segment net sales increased 31 basis points
primarily due to investments in wages, partially offset by lower incremental COVID-19 related costs of $1.9 billion.
As a result of the factors discussed above, segment operating income decreased $1.0 billion and increased $2.5 billion for fiscal
2023 and 2022, respectively, when compared to the previous fiscal year.
41
Walmart International Segment
(Amounts in millions, except unit counts)
Net sales
Percentage change from comparable period
Operating income
Operating income as a percentage of net sales
Unit counts at period end
Net sales for the Walmart U.S. segment increased $27.3 billion or 6.9% and $23.3 billion or 6.3% for fiscal 2023 and 2022,
respectively, when compared to the previous fiscal year. The increases in net sales were primarily due to increases in
comparable sales of 7.0% and 6.4% for fiscal 2023 and 2022, respectively. Comparable sales in fiscal 2023 were driven by
growth in average ticket, including strong food sales and higher inflation impacts in certain merchandise categories, as well as
growth in transactions. Comparable sales in fiscal 2022 were driven by growth in average ticket and transactions, which
included strong consumer spending from government stimulus and some higher inflation impacts in certain merchandise
categories compared to recent years. Walmart U.S. eCommerce sales positively contributed approximately 0.7% to comparable
sales for both fiscal 2023 and 2022, as we continue to focus on a seamless omni-channel experience for our customers.
Gross profit rate decreased 85 basis points for fiscal 2023 and increased 51 basis points for fiscal 2022, when compared to the
respective previous fiscal year. The decrease in fiscal 2023 gross profit rate was primarily due to net markdowns and product
mix shifts into lower margin categories and increased supply chain costs, partially offset by price management impacts driven
by cost inflation. Gross profit rate for fiscal 2022 benefited from price management driven by cost inflation as well as
merchandise mix, which includes lapping the temporary closures of our Auto Care and Vision Centers and growth in our
advertising business, partially offset by increased supply chain costs.
20,620 $
$
8.7%
Walmart U.S. Segment
(Amounts in millions, except unit counts)
Net sales
Percentage change from comparable period
Calendar comparable sales increase
Operating income
Operating income as a percentage of net sales
Unit counts at period end
Retail square feet at period end
Fiscal Years Ended January 31,
2023
$
420,553
$
2022
393,247
2021
$
369,963
6.9 %
6.3 %
8.5 %
7.0 %
6.4 %
Retail square feet at period end
Fiscal Years Ended January 31,
2023
2022
Operating expenses as a percentage of segment net sales increased 41 basis points and decreased 71 basis points for fiscal 2023
and 2022, respectively, when compared to the previous fiscal year. The increase in operating expenses as a percentage of
segment net sales for fiscal 2023 was primarily due to business reorganization and restructuring charges incurred related to
Flipkart and Massmart during the fourth quarter. For fiscal 2022, the decrease was primarily due to impacts from the divested
markets and $0.4 billion of lower incremental COVID-19 related costs. Operating expenses as a percentage of net sales
benefited from depreciation and amortization expense not having been recorded for our operations in the U.K. and Japan
subsequent to their held for sale classification at the end of fiscal 2021 and prior to closing during the first quarter of fiscal
2022.
As a result of the factors discussed above, segment operating income decreased $0.8 billion and increased $0.1 billion for fiscal
2023 and 2022, respectively, when compared to the previous fiscal year.
Sam's Club Segment
(Amounts in millions, except unit counts)
Including Fuel
2023
Fiscal Years Ended January 31,
2022
2021
Net sales
$
Percentage change from comparable period
84,345
14.7 %
$
73,556
$
63,910
15.1 %
8.7 %
Calendar comparable sales increase
14.6 %
15.0 %
8.7 %
Operating income
Gross profit rate decreased 50 basis points and 55 basis points for fiscal 2023 and 2022, respectively, when compared to the
previous fiscal year. For fiscal 2023, the decrease was primarily driven by continued growth in lower margin formats and
channels in China and category mix shifts into lower margin categories. For fiscal 2022, the decrease was primarily driven by
shifts into lower margin formats and the impact related to our divested markets.
As a result of the factors discussed above, we reported $11.3 billion and $13.9 billion of consolidated net income for fiscal 2023
and 2022, respectively, which represents a decrease of $2.6 billion and an increase of $0.2 billion for fiscal 2023 and 2022,
respectively, when compared to the previous fiscal year. Diluted net income per common share attributable to Walmart
("EPS") was $4.27, $4.87 and $4.75 for fiscal 2023, 2022 and 2021, respectively.
Net sales for the Walmart International segment were flat and decreased $20.4 billion or 16.8% for fiscal 2023 and 2022,
respectively, when compared to the previous fiscal year. For fiscal 2023, net sales benefited from positive comparable sales in
all of our international markets, offset by the impacts of a decrease of $5.0 billion related to the divestiture of our operations in
the U.K. and Japan, which closed in the first quarter of fiscal 2022, as well as $3.7 billion of fluctuations in currency exchange
rates during fiscal 2023. For fiscal 2022, the reduction in net sales was driven by a $32.6 billion decrease primarily related to
the divestitures of our operations in the U.K. and Japan, which closed during the first quarter of fiscal 2022. This decrease was
partially offset by positive comparable sales in most of our remaining markets, as well as positive fluctuations in currency
exchange rates of $4.5 billion.
277
2021
$
100,983
$
100,959
$
121,360
%
(16.8)%
1.0 %
$
2,965
$
3,758
$
3,660
2.9 %
3.7 %
3.0 %
5,306
5,251
6,101
273
337
Our effective income tax rate was 33.6% for fiscal 2023, 25.4% for fiscal 2022, and 33.3% for fiscal 2021, respectively. The
increase in our effective tax rate for fiscal 2023 as compared to fiscal 2022 is primarily due to the tax impact of the business
reorganization resulting in the full separation of PhonePe from Flipkart. The decrease in our effective tax rate for fiscal 2022 as
compared to fiscal 2021 is primarily due to the $8.3 billion loss related to the divestiture of certain international operations
classified as held for sale or sold in fiscal 2021, which provided minimal realizable tax benefit. Our effective income tax rate
may also fluctuate as a result of various factors, including changes in our assessment of unrecognized tax benefits, valuation
allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix and size of earnings
among our U.S. operations and international operations, which are subject to statutory rates that are generally higher than the
U.S. statutory rate. The reconciliation from the U.S. statutory rate to the effective income tax rates for fiscal 2023, 2022 and
2021 is presented in Note 9.
40
Other gains and losses consist of certain non-operating items, such as the change in the fair value of our investments and gains
or losses on business dispositions, which by their nature can fluctuate from period to period. Other gains and losses consisted of
a net loss of $1.5 billion and $3.0 billion for fiscal 2023 and 2022, respectively. The net loss in fiscal 2023 primarily consists
of: (a) net losses associated with the fair value changes of our equity and other investments; (b) a gain of $0.4 billion
recognized on the sale of our remaining equity method investment in Brazil; and (c) a $0.2 billion dividend from one of our
investments. The net loss in fiscal 2022 primarily consists of net losses associated with the fair value changes of our equity
investments, as well as $0.4 billion in incremental losses associated with the divestitures of our operations in the U.K. and
Japan, which closed in the first quarter of fiscal 2022.
Consolidated Results of Operations
(Amounts in millions, except unit counts)
Total revenues
Percentage change from comparable period
Net sales
Fiscal Years Ended January 31,
2023
2022
2021
$
611,289
$
6.7%
572,754
2.4%
$
559,151
6.7 %
$
605,881
$
567,762
$
555,233
Percentage change from comparable period
6.7 %
Results of Operations
2.3 %
39
(16,117)
Free Cash Flow
Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which
measures our ability to generate additional cash from our business operations, is an important financial measure for use in
evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute
for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our
liquidity. See "Liquidity and Capital Resources" for discussions of GAAP metrics including net cash provided by operating
activities, net cash used in investing activities and net cash used in financing activities.
We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment
made in that period. We had net cash provided by operating activities of $28.8 billion, $24.2 billion and $36.1 billion for fiscal
2023, 2022 and 2021, respectively. We generated free cash flow of $12.0 billion, $11.1 billion and $25.8 billion for fiscal
2023, 2022 and 2021, respectively. Net cash provided by operating activities for fiscal 2023 increased when compared to fiscal
2022. The increase is primarily due to moderated levels of inventory purchases, partially offset by a decline in operating income
and the timing of certain payments. Free cash flow for fiscal 2023 increased when compared to fiscal 2022 due to the increase
in operating cash flows described above, partially offset by an increase of $3.8 billion in capital expenditures to support our
investment strategy. Net cash provided by operating activities for fiscal 2022 decreased when compared to fiscal 2021
primarily due to an increase in inventory costs and purchases to support strong sales and lapping the impact of accelerated
inventory sell-through in fiscal 2021, as well as timing and payment of wages. Free cash flow for fiscal 2022 decreased when
compared to fiscal 2021 due to the same reasons as the decrease in net cash provided by operating activities, as well as $2.8
billion in increased capital expenditures.
Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary
expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual
obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a
measure that provides supplemental information to our Consolidated Statements of Cash Flows.
Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow.
As a result, the method used by management to calculate our free cash flow may differ from the methods used by other
companies to calculate their free cash flow.
The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by
operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as
information regarding net cash used in investing activities and net cash used in financing activities.
(Amounts in millions)
2023
Fiscal Years Ended January 31,
2022
2021
$
Payments for property and equipment
28,841 $
(16,857)
Free cash flow
$
11,984 $
24,181 $
(13,106)
11,075 $
36,074
(10,264)
25,810
Net cash used in investing activities (¹)
Net cash used in financing activities
(17,722)
(17,039)
(6,015) $
(22,828)
(10,071)
(¹) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.
$
6.8 %
8.2%
1,538
$
3,000
$
(210)
$
11,292
$
13,940
$
13,706
10,623
10,593
11,443
Retail square feet at period end (¹)
1,056
1,060
1,121
(1) Unit counts and associated retail square feet are presented for stores and clubs generally open as of period end, and reflects the removal of stores in the
U.K. and Japan subsequent to closing the divestitures in fiscal 2022. Permanently closed locations are not included in these metrics.
Our total revenues, which includes net sales and membership and other income, increased $38.5 billion or 6.7% and $13.6
billion or 2.4% for fiscal 2023 and 2022, respectively, when compared to the previous fiscal year. These increases in revenues
were primarily due to increases in net sales, which increased $38.1 billion or 6.7% and $12.5 billion or 2.3% for fiscal 2023 and
2022, respectively, when compared to the previous fiscal year. For fiscal 2023, the increase was primarily due to strong
positive comparable sales for the Walmart U.S. and Sam's Club segments which was driven by growth in average ticket,
including strong food sales and higher inflation impacts in certain merchandise categories, as well as growth in transactions,
along with positive comparable sales in all of our international markets. Additionally, net sales were negatively impacted by a
decrease of $5.0 billion related to the divestiture of our operations in the U.K. and Japan, which closed in the first quarter of
fiscal 2022 and $3.7 billion of fluctuations in currency exchange rates during fiscal 2023. For fiscal 2022, the increase was
primarily due to strong positive comparable sales for the Walmart U.S. and Sam's Club which benefited from strong U.S.
consumer spending and some inflation, along with positive comparable sales in most of our remaining international markets.
The increase was partially offset by a $32.6 billion net sales decrease primarily related to the divestiture of our operations in the
U.K. and Japan, which closed in the first quarter of fiscal 2022. Net sales also benefited from a $4.5 billion positive impact of
fluctuations in currency exchange rates during fiscal 2022.
Our gross profit rate decreased 98 and increased 14 basis points for fiscal 2023 and 2022, respectively, when compared to the
previous fiscal year. For fiscal 2023, the decrease was primarily due to markdowns and merchandise mix in the U.S., higher
supply chain costs and inflation related LIFO charges in the Sam's Club segment. For fiscal 2022, the increase was primarily
due to price management in the Walmart U.S. segment driven by cost inflation as well as merchandise mix, partially offset by
increased supply chain costs.
For fiscal 2023, operating expenses as a percentage of net sales increased 23 basis points when compared to the previous fiscal
year. Operating expenses as a percentage of net sales were impacted by charges of $3.3 billion related to opioid-related legal
settlements and charges of $0.8 billion related to the reorganization and restructuring of certain businesses in the Walmart
International segment. These charges were partially offset by growth in net sales and lower incremental COVID-19 costs. For
fiscal 2022, operating expenses as a percentage of net sales decreased 19 basis points when compared to the previous fiscal
year. Operating expenses as a percentage of net sales benefited from growth in comparable sales and lower incremental
COVID-19 related costs of $2.5 billion as compared to the previous year, partially offset by increased wage investments
primarily in the Walmart U.S. segment.
Loss on extinguishment of debt was $2.4 billion in fiscal 2022 due to the early retirement of certain higher rate long-term debt
to reduce interest expense in future periods.
$
Total U.S. calendar comparable sales increase
Unit counts at period end (¹)
Other (gains) and losses
7.7%
8.7 %
Gross profit rate
23.5 %
24.4 %
24.3 %
Operating income
EA
$
20,428
$
25,942
$
22,548
Operating income as a percentage of net sales
Loss on extinguishment of debt
3.4 %
4.6%
4.1 %
$
$
2,410
$
Consolidated net income
1,964 $
40
1,906
$
38,840
Our total outstanding long-term debt increased $1.2 billion during fiscal 2023, primarily due to the issuance of new long-term
debt in September 2022, partially offset by the maturities of certain long-term debt. Refer to Note 6 to our Consolidated
Financial Statements for details on the issuances of long-term debt.
Estimated contractual interest payments associated with our long-term debt amount to $18.8 billion, with approximately $1.7
billion expected to be paid in fiscal 2024. Estimated interest payments are based on our principal amounts and expected
maturities of all debt outstanding as of January 31, 2023 and assumes interest rates remain at current levels for our variable rate
instruments.
Dividends
Our total dividend payments were $6.1 billion, $6.2 billion and $6.1 billion for fiscal 2023, 2022 and 2021, respectively.
Effective February 21, 2023, the Company approved the fiscal 2024 annual dividend of $2.28 per share, an increase over the
fiscal 2023 annual dividend of $2.24 per share. For fiscal 2024, the annual dividend will be paid in four quarterly installments
of $0.57 per share, according to the following record and payable dates:
Record Date
Payable Date
March 17, 2023
May 5, 2023
August 11, 2023
December 8, 2023
Company Share Repurchase Program
April 3, 2023
May 30, 2023
September 5, 2023
January 2, 2024
From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the
Company's Board of Directors. All repurchases made during the fiscal year prior to November 21, 2022 were made under the
plan in effect at the beginning of fiscal 2022. In November 2022, the Company approved a new $20.0 billion share repurchase
program which, beginning on November 21, 2022, replaced the previous share repurchase program. As of January 31, 2023,
authorization for $19.3 billion of share repurchases remained under the share repurchase program. Any repurchased shares are
constructively retired and returned to an unissued status.
We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases,
including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the
market price of our common stock. We anticipate that a majority of the ongoing share repurchase program will be funded
through the Company's free cash flow.
The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and
total amount paid for share repurchases for fiscal 2023, 2022 and 2021:
(Amounts in millions, except per share data)
Total number of shares repurchased
Average price paid per share
Total amount paid for share repurchases
2023
34,649
2021
$
$
Balances as of February 1, 2022
Proceeds from issuance of long-term debt
Repayments of long-term debt
Reclassifications of long-term debt
Currency and other adjustments
Balances as of January 31, 2023
Long-term debt due
within one year
Long-term debt
Total
$
2,803
$
34,864 $
37,667
5,041
5,041
(2,689)
(2,689)
4,197
(4,197)
(120)
(1,059)
(1,179)
4,191
(Amounts in millions)
$
73.9
134.17 $
9,920 $
Management strives to report our financial results in a clear and understandable manner, although in some cases accounting and
disclosure rules are complex and require us to use technical terminology. In preparing the Company's Consolidated Financial
Statements, we follow accounting principles generally accepted in the U.S. These principles require us to make certain
estimates and apply judgments that affect our financial position and results of operations as reflected in our financial statements.
These judgments and estimates are based on past events and expectations of future outcomes. Actual results may differ from
our estimates.
Management continually reviews our accounting policies including how they are applied and how they are reported and
disclosed in our financial statements. Following is a summary of our critical accounting estimates and how they are applied in
preparation of the financial statements.
Inventories
The Walmart U.S. segment comprises the largest portion of our inventory and is primarily accounted for under the retail
inventory method of accounting to determine inventory cost, using the last-in, first-out ("LIFO") valuation method. The
majority of the Sam's Club segment inventories are accounted for and valued using the weighted-average cost LIFO method.
When necessary, we record a LIFO provision for the estimated annual effect of inflation, and these estimates are adjusted to
actual results determined at year-end. As a measure of sensitivity, an incremental 1% inflationary impact to the cost of our
inventory purchases would not have resulted in a material increase to the LIFO provision recorded during fiscal 2023.
Indefinite-Lived Intangible Assets
Intangible assets acquired in a business combination are stated at the fair value acquired as determined by a valuation technique
commensurate with the intended use of the related asset. Significant estimates in valuing certain intangible assets include, but
are not limited to, the amount and timing of future cash flows, growth rates, discount rates and useful lives. Indefinite-lived
acquired intangible assets are not amortized but are evaluated for impairment annually and whenever events or changes in
circumstances indicate that the value of the asset may be impaired. Generally, this evaluation begins with a qualitative
assessment to determine whether a quantitative impairment test is necessary. If we determine, after performing an assessment
based on qualitative factors, that the fair value of the indefinite-lived acquired intangible asset is more likely than not less than
the carrying amount, then a quantitative impairment test would be performed. The quantitative test for impairment requires
management to make judgments relating to future cash flows, growth rates and economic and market conditions. Our
indefinite-lived acquired intangible assets have historically generated sufficient returns to recover their cost. Because of the
nature of the factors used in these tests, if different conditions occur in future periods, future operating results could be
materially impacted.
Contingencies
We are involved in a number of legal proceedings and certain regulatory matters. We record a liability when it is probable that a
loss has been incurred and the amount is reasonably estimable. We also perform an assessment of the materiality of loss
contingencies where a loss is either reasonably possible or it is reasonably possible that a loss could be incurred in excess of
47
amounts accrued. If a loss or an additional loss has at least a reasonable possibility of occurring and the impact on the financial
statements would be material, we provide disclosure of the loss contingency in the footnotes to our financial statements. We
review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a
reasonable estimate of the loss or the range of the loss can be made. Although we are not able to predict the outcome or
reasonably estimate a range of possible losses in certain matters described in Note 10 to our Consolidated Financial Statements
and have not recorded an associated accrual related to these matters, an adverse judgment or negotiated resolution in any of
these matters could have a material adverse effect on our business, reputation, financial position, results of operations or cash
flows.
Income Taxes
Income taxes have a significant effect on our net earnings. We are subject to income taxes in the U.S. and numerous foreign
jurisdictions. Accordingly, the determination of our provision for income taxes requires judgment, the use of estimates in
certain cases and the interpretation and application of complex tax laws. Our effective income tax rate is affected by many
factors, including changes in our assessment of unrecognized tax benefits, increases and decreases in valuation allowances,
changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings among our U.S. and
international operations where the statutory rates are generally higher than the U.S. statutory rate, and may fluctuate as a result.
Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions. The
benefits of uncertain tax positions are recorded in our financial statements only after determining a more likely than not
probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and
circumstances change, we reassess these probabilities and record any changes in the financial statements as appropriate. We
account for uncertain tax positions by determining the minimum recognition threshold that a tax position is required to meet
before being recognized in the financial statements. This determination requires the use of judgment in evaluating our tax
positions and assessing the timing and amounts of deductible and taxable items.
Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets
arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net
operating loss and tax credit carryforwards. Deferred tax assets are evaluated for future realization and reduced by a valuation
allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing
whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations
of future taxable income, carryforward periods and other relevant quantitative and qualitative factors. The recoverability of the
deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal
of taxable temporary differences, forecasted operating earnings and available tax planning strategies. This evaluation relies on
estimates.
As guidance is issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, any resulting changes to our
estimates will be treated in accordance with the relevant accounting guidance.
ITEM 7A.
Market Risk
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In addition to the risks inherent in our operations, we are exposed to certain market risks, including changes in interest rates,
currency exchange rates and the fair values of certain equity and equity method investments measured on a recurring basis.
The analysis presented below for each of our market risk sensitive instruments is based on a hypothetical scenario used to
calibrate potential risk and does not represent our view of future market changes. The effect of a change in a particular
assumption is calculated without adjusting any other assumption. In reality, however, a change in one factor could cause a
change in another, which may magnify or negate other sensitivities.
Interest Rate Risk
We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt. We hedge a portion of
our interest rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For fiscal
2023, the net fair value of our interest rate swaps decreased $0.6 billion primarily due to fluctuations in market interest rates.
The table below provides information about our financial instruments that are sensitive to changes in interest rates. For long-
term debt, the table represents the principal cash flows and related weighted-average interest rates by expected maturity dates.
For interest rate swaps, the table represents the contractual cash flows and weighted-average interest rates by the contractual
maturity date, unless otherwise noted. The notional amounts are used to calculate contractual cash flows to be exchanged under
the contracts. The weighted-average variable rates are based upon prevailing market rates as of January 31, 2023.
42
48
2,259 $
Summary of Critical Accounting Estimates
$
In Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies" and appears in Part II of this Annual
Report on Form 10-K under the caption "Item 8. Financial Statements and Supplementary Data," we discuss, under the sub-
captions "Settlement Framework Regarding Multidistrict and State or Local Opioid Related Litigation," and "Other Opioid
Related Litigation" the Prescription Opiate Litigation, the Settlement Framework, and other matters, including certain risks
arising therefrom. In that Note 10, we also discuss under the sub-caption "Asda Equal Value Claims" the Company's
indemnification obligation for the Asda Equal Value Claims matter as well as under the sub-caption "Money Transfer Agent
Services Matters", a United States Federal Trade Commission complaint related to money transfers and the Company's anti-
fraud program and a government investigation by the U.S. Attorney's Office for the Middle District of Pennsylvania into the
Company's consumer fraud prevention and anti-money laundering compliance related to the Company's money transfer agent
services. We discuss various legal proceedings related to the Federal and State Prescription Opiate Litigation, the Settlement
Framework, DOJ Opioid Civil Litigation and Opioids Related Securities Class Actions and Derivative Litigation in Part I of
this Annual Report on Form 10-K under the caption "Item 3. Legal Proceedings," under the sub-caption "I. Supplemental
Information." We also discuss items related to the Asda Equal Value Claims matter, the Money Transfer Agent Services
Matters and the Foreign Direct Investment matters in Part I of this Annual Report on Form 10-K under the caption "Item 3.
Legal Proceedings," under the sub-caption "II. Certain Other Matters." We also discuss an environmental matter with the State
of California in Part I of this Annual Report on Form 10-K under the caption "Item 3. Legal Proceedings," under the sub-
caption "III. Environmental Matters." The foregoing matters and other matters described elsewhere in this Annual Report on
Form 10-K represent contingent liabilities of the Company that may or may not result in the incurrence of a material liability by
the Company upon their final resolution.
46
69.7
140.45 $
9,787 $
19.4
135.20
2,625
Material Cash Requirements
Material cash requirements from operating activities primarily consist of inventory purchases, employee related costs, taxes,
interest and other general operating expenses, which we expect to be primarily satisfied by our cash from operations. Other
material cash requirements from known contractual and other obligations include opioid and other legal settlements, short-term
borrowings, long-term debt and related interest payments, leases, purchases of subsidiary stock and purchase obligations. See
Note 3, Note 6 and Note 7 to our Consolidated Financial Statements for information regarding purchase of subsidiary stock,
outstanding short-term borrowings and long-term debt, and leases, respectively.
45
As of January 31, 2023, the Company has $33.3 billion of unrecorded purchase obligations outstanding, of which $11.6 billion
is due within one year. Purchase obligations include legally binding contracts, such as firm commitments for inventory and
utility purchases, as well as commitments to make capital expenditures, software acquisition and license commitments and
legally binding service contracts. Contractual obligations for the purchase of goods or services are defined as agreements that
are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be
purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts that specify
the Company will purchase all or a portion of its requirements of a specific product or service from a supplier, but do not
include a fixed or minimum quantity, are excluded from the obligations quantified above. Accordingly, purchase orders for
inventory are also excluded as purchase orders represent authorizations to purchase rather than binding agreements. Our
purchase orders are based on our current inventory needs and are fulfilled by our suppliers within short time periods. We also
enter into contracts for outsourced services; however, the obligations under these contracts are not significant and the contracts
generally contain clauses allowing for cancellation without significant penalty. Timing of payments and actual amounts paid
may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for some
obligations.
Capital Resources
We believe our cash flows from operations, current cash position, short-term borrowings and access to capital markets will
continue to be sufficient to meet our anticipated cash requirements and contractual obligations, which includes funding seasonal
buildups in merchandise inventories and funding our capital expenditures, acquisitions, dividend payments and share
repurchases.
We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance
our debt as it becomes due at favorable rates in capital markets. As of January 31, 2023, the ratings assigned to our commercial
paper and rated series of our outstanding long-term debt were as follows:
Rating agency
Standard & Poor's
Moody's Investors Service
Fitch Ratings
Commercial paper
A-1+
P-1
F1+
Long-term debt
AA
Aa2
AA
Credit rating agencies review their ratings periodically and, therefore, the credit ratings assigned to us by each agency may be
subject to revision at any time. Accordingly, we are not able to predict whether our current credit ratings will remain consistent
over time. Factors that could affect our credit ratings include changes in our operating performance, the general economic
environment, conditions in the retail industry, our financial position, including our total debt and capitalization, and changes in
our business strategy. Any downgrade of our credit ratings by a credit rating agency could increase our future borrowing costs
or impair our ability to access capital and credit markets on terms commercially acceptable to us. In addition, any downgrade
of our current short-term credit ratings could impair our ability to access the commercial paper markets with the same flexibility
that we have experienced historically, potentially requiring us to rely more heavily on more expensive types of debt financing.
The credit rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities. Each
rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated
independently of any other rating. Moreover, each credit rating is specific to the security to which it applies.
46
Other Matters
The following table provides the changes in our long-term debt for fiscal 2023:
Fiscal Years Ended January 31,
2022
Long-term Debt
$
1,645
3.0 %
2.8 %
(¹) We believe the "Excluding Fuel" information is useful to investors because it permits investors to understand the effect of the Sam's Club segment's fuel
sales on its results of operations, which are impacted by the volatility of fuel prices. Volatility in fuel prices may continue to impact the operating results of
the Sam's Club segment in the future. Management uses such information to better measure underlying operating results in the segment.
Net sales for the Sam's Club segment increased $10.8 billion or 14.7% and $9.6 billion or 15.1% for fiscal 2023 and 2022,
respectively, when compared to the previous fiscal year. For fiscal 2023, the increase was primarily due to comparable sales
growth, including fuel, of 14.6%. Comparable sales benefited from growth in transactions and average ticket and included
higher inflation impacts in certain merchandise categories. Sam's Club eCommerce sales positively contributed approximately
0.8% to comparable sales which was primarily driven by ship to home and curbside pickup. For fiscal 2022, the increase was
primarily due to comparable sales growth, including fuel, of 15.0%. Comparable sales benefited from growth in transactions
and average ticket due to increased consumer spending, which was aided by government stimulus, and also includes some
42
higher inflation impacts in certain merchandise categories. The growth in comparable sales was partially offset by our decision
to remove tobacco from certain club locations. Sam's Club eCommerce sales positively contributed approximately 1.3% to
comparable sales.
Gross profit rate decreased 155 basis points and 68 basis points for fiscal 2023 and 2022, respectively, when compared to the
previous fiscal year. For fiscal 2023, the decrease in gross profit rate was primarily due to inventory write-downs, elevated
supply chain and eCommerce fulfillment costs and inflation related LIFO charges. For fiscal 2022, gross profit rate decreased
primarily due to increased fuel sales which have lower margins, cost inflation, and higher supply chain costs, partially offset by
favorable sales mix, including reduced tobacco sales.
Membership and other income increased 7.0% and 13.1% for fiscal 2023 and 2022, respectively, when compared to the
previous fiscal year. For fiscal 2023 and 2022, the increase was primarily due to increases in new member sign-ups and Plus
member penetration.
Operating expenses as a percentage of segment net sales decreased 97 basis points and 82 basis points for fiscal 2023 and 2022,
respectively, when compared to the previous fiscal year. Fiscal 2023 operating expenses as a percentage of net sales decreased
primarily due to higher sales. Fiscal 2022 operating expenses as a percentage of net sales decreased primarily due to higher
sales as well as a benefit from $0.2 billion of lower incremental COVID-19 related costs, partially offset by reduced tobacco
sales.
As a result of the factors discussed above, segment operating income decreased $0.3 billion and increased $0.4 billion for fiscal
2023 and 2022, respectively, when compared to the previous fiscal year.
Liquidity and Capital Resources
Liquidity
The strength and stability of our operations have historically supplied us with a significant source of liquidity. Our cash flows
provided by operating activities, supplemented with our long-term debt and short-term borrowings, have been sufficient to fund
our operations while allowing us to invest in activities that support the long-term growth of our operations. Generally, some or
all of the remaining available cash flow has been used to fund dividends on our common stock and share repurchases. We
believe our sources of liquidity will continue to be sufficient to fund operations, finance our global investment activities, pay
dividends and fund our share repurchases for at least the next 12 months and thereafter for the foreseeable future.
Net Cash Provided by Operating Activities
(Amounts in millions)
2023
Fiscal Years Ended January 31,
2022
2021
$
28,841 $
24,181 $
Net cash provided by operating activities
1,923
36,074
1,352 $
1.9%
59,184
12.1 %
2.3 %
3.1 %
3.0 %
Unit counts at period end
600
600
599
Retail square feet at period end
80
80
80
Excluding Fuel (1)
Net sales
Percentage change from comparable period
Operating income
Operating income as a percentage of net sales
$
71,665
$
64,860
$
10.5 %
9.6 %
$
Net cash provided by operating activities was $28.8 billion, $24.2 billion and $36.1 billion for fiscal 2023, 2022 and 2021,
respectively. Net cash provided by operating activities for fiscal 2023 increased when compared to the previous fiscal year. The
increase is primarily due to moderated levels of inventory purchases, partially offset by a decline in operating income and the
timing of certain payments. The decrease in net cash provided by operating activities for fiscal 2022, when compared to the
previous fiscal year, was primarily due to an increase in inventory costs and purchases to support strong sales and lapping the
impact of accelerated inventory sell-through in fiscal 2021, as well as timing and payment of wages.
Operating income as a percentage of net sales
2023
Purchase and Sale of Subsidiary Stock
In the fourth quarter of fiscal 2023, the Company completed a $0.4 billion buyout of the noncontrolling interest shareholders of
the Company's Massmart subsidiary. This transaction increased the Company's ownership of Massmart from approximately
53% to 100%. Additionally, the Company completed a $0.4 billion acquisition of Alert Innovation, which was previously
consolidated as a variable interest entity and resulted in the Company becoming a 100% owner.
Short-term Borrowings
We generally utilize the liquidity provided by short-term borrowings to provide funding for our operations, dividend payments,
share repurchases, capital expenditures and other cash requirements. The following table includes additional information related
to the Company's short-term borrowings for fiscal 2023, 2022 and 2021:
(Amounts in millions)
Maximum amount outstanding at any month-end
Average daily short-term borrowings
Annual weighted-average interest rate
Cash Equivalents and Working Capital Deficit
Fiscal Years Ended January 31,
2022
Net cash from financing activities generally consists of debt transactions, dividends paid, repurchases of Company stock and
transactions with noncontrolling interest shareholders. Fiscal 2023 net cash used in financing activities decreased $5.8 billion
when compared to the previous fiscal year. The decrease is primarily due to repayments of long-term debt and related payment
of premiums for the early extinguishment of certain notes in the prior fiscal period, partially offset by the equity funding from
the sale of subsidiary stock in the prior fiscal period. Fiscal 2022 net cash used in financing activities increased $6.7 billion
when compared to the previous fiscal year. The increase was primarily due to repayments of long-term debt and related
payment of premiums for the early extinguishment of certain notes, as well as increased share repurchases, partially offset by
long-term debt issuances and equity funding from the sale of subsidiary stock.
2021
11,432
7,250
2.4 %
$
716 $
626
4,048
1,577
3.7 %
3.1 %
Short-term borrowings as of January 31, 2023 and 2022 were $0.4 billion, with weighted-average interest rates of 6.6% and
2.9%, respectively. We also have $15.0 billion of various undrawn committed lines of credit in the U.S. as of January 31, 2023
that provide additional liquidity, if needed. Additionally, we maintain access to various credit facilities outside of the U.S. to
further support our Walmart International segment operations, as needed.
As of January 31, 2023, we have $2.1 billion of syndicated and fronted letters of credit available, of which $1.8 billion was
drawn and represents an unrecorded current obligation.
44
$
(16,117)
During fiscal 2022, the Company received $3.2 billion primarily related to a new equity funding for the Company's majority-
owned Flipkart subsidiary, which reduced the Company's ownership from approximately 83% as of January 31, 2021 to
approximately 75%.
(17,039) $
Cash and cash equivalents were $8.6 billion and $14.8 billion as of January 31, 2023 and 2022, respectively. Our working
capital deficit, defined as total current assets less total current liabilities, was $16.5 billion and $6.3 billion as of January 31,
2023 and 2022, respectively. The increase in our working capital deficit is primarily driven by a decrease in cash and cash
equivalents and an increase in accrued liabilities. We generally operate with a working capital deficit due to our efficient use of
cash in funding operations, consistent access to the capital markets and returns provided to our shareholders in the form of
payments of cash dividends and share repurchases.
We use intercompany financing arrangements in an effort to ensure cash can be made available in the country in which it is
needed with the minimum cost possible. Additionally, from time-to-time, we repatriate earnings and related cash from
jurisdictions outside of the U.S. Historically, U.S. taxes were due upon repatriation of foreign earnings. Due to the enactment
of U.S. tax reform, repatriations of foreign earnings will generally be free of U.S. federal tax, but may incur other taxes such as
withholding or state taxes. We do not expect current local laws, other existing limitations on anticipated future repatriations of
cash amounts held outside the U.S. to have a material effect on our overall liquidity, financial position or results of operations.
As of January 31, 2023 and 2022, cash and cash equivalents of $2.9 billion and $4.3 billion, respectively, may not be freely
transferable to the U.S. due to local laws or other restrictions or are subject to the approval of the noncontrolling interest
shareholders.
43
Net Cash Used in Investing Activities
(Amounts in millions)
Net cash used in investing activities
2023
(22,828) $
2021
$
(17,722) $
(6,015) $
Fiscal Years Ended January 31,
2022
Net cash used in investing activities was $17.7 billion, $6.0 billion and $10.1 billion for fiscal 2023, 2022 and 2021,
respectively, and generally consisted of capital expenditures. Net cash used in investing activities increased $11.7 billion for
fiscal 2023 when compared to the previous fiscal year primarily due to the result of lapping the net proceeds received from the
divestitures of our operations in the U.K. and Japan and an increase in capital expenditures to support our investment strategy.
Net cash used in investing activities decreased $4.1 billion for fiscal 2022 when compared to the previous fiscal year, primarily
due to the net proceeds received from the divestitures of our operations in the U.K. and Japan, partially offset by increased
capital expenditures.
(10,071)
2021
Fiscal Years Ended January 31,
2022
2023
$
(Amounts in millions)
Net Cash Used in Financing Activities
Refer to the "Strategic Capital Allocation" section in our Company Performance Metrics for capital expenditure detail for fiscal
2023 and 2022. For the fiscal year ending January 31, 2024 ("fiscal 2024"), we project capital expenditures will be
approximately $17 billion to $18 billion, with a focus on technology, supply chain, and customer-facing initiatives.
Capital expenditures
Net cash used in financing activities
Walmart Inc.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Rogers, Arkansas
March 17, 2023
53
Consolidated Statements of Income
We have audited the accompanying consolidated balance sheets of Walmart Inc. (the Company) as of January 31, 2023 and
2022, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the
three years in the period ended January 31, 2023, and the related notes (collectively referred to as the "Consolidated Financial
Statements"). In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the financial
position of the Company at January 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three
years in the period ended January 31, 2023, in conformity with U.S. generally accepted accounting principles.
Revenues:
Net sales
Membership and other income
Total revenues
Costs and expenses:
Cost of sales
Operating, selling, general and administrative expenses
Operating income
Fiscal Years Ended January 31,
2023
The Company's management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
(Amounts in millions, except per share data)
Basis for Opinion
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of January 31, 2023, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated March 17, 2023 expressed an unqualified opinion thereon.
We have audited Walmart Inc.'s internal control over financial reporting as of January 31, 2023, based on criteria established in
Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) (the COSO criteria). In our opinion, Walmart Inc. (the Company) maintained, in all material respects,
effective internal control over financial reporting as of January 31, 2023, based on the COSO criteria.
2022
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the Consolidated Financial Statements,
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical
audit matter or on the account or disclosure to which it relates.
Description of
the Matter
Contingencies
As described in Note 10 to the Consolidated Financial Statements, at January 31, 2023, the Company is
involved in a number of legal proceedings and regulatory matters. The Company records a liability for
those legal proceedings and regulatory matters when management determines it is probable that a loss
has been incurred and the amount of the loss can be reasonably estimated. The Company also discloses
when it is reasonably possible that a material loss may be incurred. In assessing the probability of
occurrence and whether an estimate of loss can be reasonably estimated for a particular legal proceeding,
management exercises judgment on matters relevant to each proceeding, such as whether sufficient
participation in settlement proceedings will occur, or whether it can predict the number of claims that
may be filed. For example, management exercised judgment in accruing a liability for approximately
$3.3 billion for the Settlement Framework and other previously agreed state and tribal settlements
regarding opioid-related lawsuits. Auditing management's accounting for, and disclosure of, loss
contingencies was complex and highly judgmental as it involved our assessment of the significant
judgments made by management when assessing the probability of occurrence for contingencies or when
determining whether an estimate of the loss or range of loss could be made.
51
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls
over the identification and evaluation of contingencies. For example, we tested controls over the
Company's assessment of the likelihood of loss and the Company's determinations regarding the
measurement of loss.
To test the Company's assessment of the probability of occurrence or determination of an estimate of
loss, or range of loss, among other procedures, we read the minutes of the meetings of the board of
directors and committees of the board of directors, reviewed documents provided to the Company by
certain outside legal counsel, read letters received directly by us from internal and outside legal counsel,
and evaluated the current status of contingencies based on discussions with internal and outside legal
counsel. As part of this assessment, we evaluated management's assumptions and calculations by, among
other things, comparing those assumptions to key terms in the Settlement Framework and to payments
made during the year. We also assessed the adequacy of the related disclosures.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 1969.
Rogers, Arkansas
March 17, 2023
52
52
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Walmart Inc.
Opinion on Internal Control over Financial Reporting
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of Walmart Inc. as of January 31, 2023 and 2022, the related consolidated statements
of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended
January 31, 2023, and the related notes and our report dated March 17, 2023 expressed an unqualified opinion thereon.
2021
341
605,881 $
Loss on extinguishment of debt
Other (gains) and losses
Income before income taxes
(254)
(158)
(121)
1,874
1,836
2,194
2,410
1,538
3,000
(210)
17,016
18,696
20,564
Provision for income taxes
5,724
4,756
6,858
Consolidated net income
11,292
13,940
Interest, net
$
Interest income
320
567,762
555,233
5,408
4,992
3,918
611,289
572,754
559,151
463,721
429,000
420,315
127,140
117,812
116,288
20,428
25,942
22,548
Interest:
Debt
Finance lease
1,787
1,674
1,976
339
Opinion on the Financial Statements
(Amounts in millions)
Report of Independent Registered Public Accounting Firm
Long-term debt():
Fixed rate
$
4,191
$
3,516 $
2,604 $
2,737
$
Weighted-average interest rate
3.2 %
2.9 %
3.8 %
2.0 %
1,817
3.5 %
$ 23,975 $ 38,840
4.3 %
3.8 %
Interest rate derivatives
Interest rate swaps:
Fixed to variable
$
1,750
$
6.6 %
1,500
%
- %
13,706
Fiscal 2028
Thereafter
Total
Expected Maturity Date
Fiscal 2024 Fiscal 2025 Fiscal 2026
Fiscal 2027
Liabilities
Short-term borrowings:
Variable rate
$
372
$
$
$
$
$
$
372
Weighted-average interest rate
6.6%
%
%
%
$
$
$
44
49
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements of Walmart Inc.
For the Fiscal Year Ended January 31, 2023
Table of Contents
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
50
Page
51
53
54
55
56
57
58
59
We are exposed to investment risk primarily related to changes in the fair value of equity securities, as well as certain
immaterial equity method investments where we have elected the fair value option measured on a recurring basis. These
changes in fair value are recorded within other gains and losses and resulted in a loss of $1.7 billion in fiscal 2023 primarily due
to net decreases in the underlying stock prices of those investments. As of January 31, 2023, the fair value of our equity
investments, including certain equity method investments, measured on a recurring basis was $10.7 billion. As of January 31,
2023, a hypothetical 10% change in the stock price of such investments would have changed the fair value of such investments
by approximately $1.1 billion.
Investment Risk
In certain countries, we also enter into immaterial foreign currency forward contracts to hedge the purchase and payment of
purchase commitments denominated in non-functional currencies.
We hedge a portion of our foreign currency risk by entering into currency swaps. The aggregate fair value of these swaps was
in a liability position of $1.4 billion and $1.0 billion as of January 31, 2023 and January 31, 2022, respectively. The change in
the fair value of these swaps was due to fluctuations in currency exchange rates, primarily due to the strengthening of the U.S.
dollar relative to certain currencies in fiscal 2023. The hypothetical result of a uniform 10% weakening in the value of the U.S.
dollar relative to other currencies underlying these swaps would have resulted in a change in the value of the swaps of $0.7
billion. A hypothetical 10% change in interest rates underlying these swaps from the market rates in effect as of January 31,
2023 would have resulted in a change in the value of the swaps of $0.1 billion.
$
4,771
$
8,021
Weighted-average pay rate
Weighted-average receive rate
5.2 %
2.6 %
5.9 %
%
%
%
To the Shareholders and the Board of Directors of Walmart Inc.
5.8 %
3.3 %
― %
― %
― %
2.5 %
2.7 %
(1)
Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt.
As of January 31, 2023, our variable rate borrowings, including the effect of our commercial paper and interest rate swaps,
represented 21% of our total short-term and long-term debt. Based on January 31, 2023 debt levels, a 100 basis point change in
prevailing market rates would cause our annual interest costs to change by approximately $0.1 billion.
Foreign Currency Risk
We are exposed to fluctuations in currency exchange rates as a result of our investments and operations in countries other than
the U.S., as well as our foreign-currency-denominated long-term debt. For fiscal 2023, movements in currency exchange rates
and the related impact on the translation of the balance sheets resulted in the $1.1 billion net loss in the currency translation and
other category of accumulated other comprehensive loss.
5.7 %
Consolidated net (income) loss attributable to noncontrolling interest
Consolidated net income attributable to Walmart
410
(267)
66
18
48
-
-
(1,773)
(493)
(1,280)
(1,262)
(18)
(449)
(449)
(9,866)
(9,866)
Other
(9,326)
(6,114)
(6,114)
ཆེ ཆེ ། ཕྱུ།
- - 48
Sale of subsidiary stock
Purchase of noncontrolling
interest
Cash dividend declared to
noncontrolling interest
(533)
(7)
(74)
Purchase of Company stock
($2.24 per share)
Cash dividends declared
net of income taxes
(6,114)
6
633
(9)
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization
13,706
$
13,940
$
11,292
$
Consolidated net income
Cash flows from operating activities:
2021
2022
Fiscal Years Ended January 31,
2023
Consolidated Statements of Cash Flows
Walmart Inc.
(Amounts in millions)
52
624
139
763
Balances as of January 31,
2023
2,693
269
(2,056)
4,969
(11,680)
76,693
7,061
83,754
See accompanying notes.
57
83,135
(404)
(1,652)
(1,652)
(70)
Purchase of Company stock
(6,152)
(6,152)
(6,152)
($2.20 per share)
Cash dividends declared
2,770
(230)
3,000
3,000
13,940
267
13,673
13,673
(loss), net of income taxes
Other comprehensive income
(15)
452
(6)
446
Balances as of January 31,
2021
2,821
(426)
282
88,763
(11,766)
80,925
6,606
87,531
Consolidated net income
3,646
10,945
(9,375)
(9,808)
Other comprehensive loss,
11,292
(388)
11,680
11,680
Consolidated net income
91,891
8,638
83,253
(8,766)
86,904
4,839
276
2,761
Balances as of January 31,
2022
787
124
Cash dividend declared to
noncontrolling interest
Sale of subsidiary stock
(416)
(416)
952
(9,808)
952
3,239
Other
10
1
667
663
2,287
467
10,658
Net unrealized and realized (gains) and losses
(9,787)
(9,920)
(6,116)
(6,152)
(6,114)
(2,317)
(5,382)
(13,010)
(2,689)
6,945
5,041
(324)
193
(34)
(2,625)
58
Interest paid
Supplemental disclosure of cash flow information:
Income taxes paid
Cash, cash equivalents and restricted cash at end of year
Cash, cash equivalents and restricted cash at beginning of year
Net increase (decrease) in cash, cash equivalents and restricted cash
Change in cash and cash equivalents reclassified from (to) assets held for sale
Effect of exchange rates on cash, cash equivalents and restricted cash
Net cash used in financing activities
Other financing activities
Sale of subsidiary stock
Purchase of noncontrolling interest
Dividends paid to noncontrolling interest
Purchase of Company stock
Dividends paid
Premiums paid to extinguish debt
See accompanying notes.
(444)
(424)
(434)
2,216
5,271
5,918 $
2,237
3,310 $
2,051
$
17,788
14,834 $
388
8,841
$
9,515
17,788
14,834
(1,848)
1,848
10,121
(4,802)
(827)
66
3,239
140
(2,118)
(1,515)
Repayments of long-term debt
(1,376)
(22,828)
(16,117)
(73)
(140)
235
(5,993)
(17,039)
Proceeds from issuance of long-term debt
Net change in short-term borrowings
Cash flows from financing activities:
Accrued income taxes
Accrued liabilities
6,966
5,520
(1,425)
Accounts payable
(2,395)
(11,764)
(528)
Inventories
(1,086)
(1,796)
240
Receivables, net
Changes in certain assets and liabilities, net of effects of acquisitions and dispositions:
1,521
1,652
1,683
2,440
(8,589)
Losses on disposal of business operations
433
8,401
Net cash provided by operating activities
Deferred income taxes
(755)
1,911
Loss on extinguishment of debt
2,410
Other operating activities
1,919
449
11,152
4,393
4,623
(10,071)
(6,015)
(17,722)
Net cash used in investing activities
102
(879)
(295)
Other investing activities
(180)
(359)
(740)
Payments for business acquisitions, net of cash acquired
56
7,935
-
Proceeds from disposal of certain operations, net of divested cash
215
(127)
39
(136)
28,841
24,181
36,074
1,404
Cash flows from investing activities:
(16,857)
(13,106)
(10,264)
Proceeds from the disposal of property and equipment
170
394
Payments for property and equipment
9
$
140
ASSETS
(Amounts in millions)
55
55
See accompanying notes.
14,549
$
16,673
$
10,028
$
17
(37)
792
Current assets:
Comprehensive (income) loss attributable to noncontrolling interest
Comprehensive income attributable to Walmart
16,710
9,236
Comprehensive income, net of income taxes
1,039
3,000
(1,652)
213
230
404
Other comprehensive loss attributable to noncontrolling interest
Other comprehensive income (loss) attributable to Walmart
826
2,770
(2,056)
(30)
14,532
Cash and cash equivalents
Receivables, net
Inventories
Total Walmart shareholders' equity
Accumulated other comprehensive loss
Retained earnings
Capital in excess of par value
Common stock
Equity:
Redeemable noncontrolling interest
Commitments and contingencies
Deferred income taxes and other
Long-term operating lease obligations
Long-term finance lease obligations
Long-term debt
Total current liabilities
Finance lease obligations due within one year
Operating lease obligations due within one year
Long-term debt due within one year
Accrued income taxes
Accrued liabilities
Prepaid expenses and other
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Finance lease right-of-use assets, net
Goodwill
1,974
Other long-term assets
Walmart Inc.
Consolidated Balance Sheets
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY
Current liabilities:
Short-term borrowings
Accounts payable
Total assets
5
235
(444)
$
2,847
2,805
2,734
2,831
2,792
2,724
54
See accompanying notes.
Dividends declared per common share
Diluted
Basic
Weighted-average common shares outstanding:
4.75
4.87
4.27
4.77
Other
(196)
$
11,680
$
$
2.24
13,510
Basic net income per common share attributable to Walmart
Diluted net income per common share attributable to Walmart
$
4.29
$
4.90
$
Net income per common share:
Noncontrolling interest
$
2.16
(203)
(221)
(1,202)
842
2,442
(1,858)
Other comprehensive income (loss), net of income taxes
Minimum pension liability
Cash flow hedges
Net investment hedges
Currency translation and other
Other comprehensive income (loss), net of income taxes
13,510
13,673
11,680
Consolidated net income attributable to Walmart
(196)
Walmart Inc.
Consolidated Statements of Comprehensive Income
(Amounts in millions)
2023
Fiscal Years Ended January 31,
2022
2021
2.20 $
Consolidated net income
Consolidated net (income) loss attributable to noncontrolling interest
11,292
388
$
13,940 $
13,706
(267)
$
Total equity
13,673
See accompanying notes.
Equity
Interest
Equity
Income (Loss)
Earnings
Par Value
Amount
Shares
Other comprehensive income
(loss), net of income taxes
Consolidated net income
Balances as of February 1,
2020
(Amounts in millions)
Total
Noncontrolling
2,832 $ 284
Shareholders'
Retained
Excess of
Common Stock
Total
Walmart
Other
Capital in
Accumulated
Consolidated Statements of Shareholders' Equity
Walmart Inc.
244,860
$
243,197
$
91,891
Comprehensive
$ 3,247
$
83,943
Total liabilities, redeemable noncontrolling interest, and equity
29
29
(365)
(2,658)
(2,658)
(2,559)
(97)
(2)
(20)
Sale of subsidiary stock
Cash dividend declared to
noncontrolling interest
Purchase of Company stock
(6,116)
(6,116)
(6,116)
($2.16 per share)
$
(12,805) $
74,669
$
6,883 $ 81,552
13,510
83,754
13,510
13,706
--- - 1,039
1,039
(213)
826
Cash dividends declared
196
8,638
(365)
83,253
244,860
$
243,197
$
22,152
20,134
29,014
28,174
4,351
4,919
13,758
13,555
94,515
100,760
$
81,070
1,519
2,521
56,511
56,576
8,280
7,933
14,760
8,625
2022
2023
As of January 31,
56
7,061
99
75,655
372
111
76,693
53,742
(11,680)
86,904
83,135
4,839
4,969
276
269
237
13,474
4,243
4,843
13,009
12,828
34,864
14,688
2,803
87,379
92,198
511
(8,766)
55,261
567
1,483
1,473
4,191
851
31,126
34,649
727
26,060
Other comprehensive loss before reclassifications,
(1,195)
(586)
(11,766)
(7)
net(2)
(1,133)
net
Reclassifications related to business dispositions,
3,258
(1,986)
(540)
(304)
(221)
(10,772)
Balances as of January 31, 2021
1,032
142
49
841
Reclassifications to income, net(¹)
7
(172)
186
30
214
Other comprehensive income (loss) before
reclassifications, net
(12,805)
1,296
1,966
(1) Represents the adjustment to previously granted performance share units for performance achievement.
Reclassifications to income, net
(2)
(1) Includes a cumulative foreign currency translation loss of $0.8 billion, for which there was no related income taxes, upon sale of the majority stake in
Walmart Argentina. Refer to Note 12.
(11,680)
(7) $
59
(951) $
368
94 $
(10,816) $
$
Balances as of January 31, 2023
(309)
Reclassifications to income, net
(1,262)
(1,262)
Return of currency translation to parent(3)
(1,711)
66
8
74
Balances as of January 31, 2022
(8,100)
94
4,059
(748)
(8,766)
Other comprehensive income (loss) before
reclassifications, net
(1,145)
Total
5
(12)
(571)
9,787 $
$
155
1.5
1.4
Weighted average remaining period to expense for restricted stock and performance-based restricted stock
units (years)
1.1
1.2
1.0
344
417
548
Unrecognized compensation cost for restricted stock and performance-based restricted stock units
Weighted average remaining period to expense for restricted stock units (years)
1,062
1,102
1,323
1.4
Unrecognized compensation cost for restricted stock units
597
703 $
264
390
Fair value of restricted stock and performance-based restricted stock units vested
931 $
$
Fair value of restricted stock units vested
2021
2022
Fiscal Years Ended January 31,
2023
(3)
(Amounts in millions, except years)
The following table includes additional information related to restricted stock units and restricted stock and performance-based
restricted stock units:
138.86
275
Minimum
Pension Liability
(1,956) $
66
Share Repurchase Program
(539)
1,517 $
(11,827) $
$
Balances as of February 1, 2020
Cash Flow
Hedges
Net Investment
Hedges
and Other
Currency
Translation
(Amounts in millions and net of immaterial income
taxes)
The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2023,
2022 and 2021:
Note 4. Accumulated Other Comprehensive Loss
2,625
9,920 $
66
$
69.7
140.45 $
$
134.17
$
73.9
2021
2022
2023
Fiscal Years Ended January 31,
Total cash paid for share repurchases
Average price paid per share
Total number of shares repurchased
(Amounts in millions, except per share data)
From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the
Company's Board of Directors. All repurchases made during the fiscal year prior to November 21, 2022 were made under the
plan in effect at the beginning of fiscal 2022. In November 2022, the Company approved a new $20.0 billion share repurchase
program which has no expiration date or other restrictions limiting the period over which the Company can make repurchases,
and beginning November 21, 2022, replaced the previous share repurchase program. As of January 31, 2023 authorization for
$19.3 billion of share repurchases remained under the share repurchase program. Any repurchased shares are constructively
retired and returned to an unissued status.
19.4
135.20
The Company regularly reviews share repurchase activity and considers several factors in determining when to execute share
repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, results of operations
and the market price of the Company's common stock. The following table provides, on a settlement date basis, the number of
shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2023, 2022 and 2021:
(Amounts in millions)
Upon closing of the noncontrolling interest shareholder buyout of the Company's Massmart subsidiary during the fourth quarter of fiscal 2023, the
cumulative amount of currency translation was reallocated from the Company's noncontrolling interest back to the Company. Refer to Note 3.
Amounts reclassified from accumulated other comprehensive loss for foreign currency on matured bonds (reflected in currency
translation and other) and derivatives are recorded in interest, net, in the Company's Consolidated Statements of Income. The
amounts for the minimum pension liability, as well as the cumulative translation resulting from the disposition of a business,
are recorded in other gains and losses in the Company's Consolidated Statements of Income. Amounts related to the Company's
derivatives expected to be reclassified from accumulated other comprehensive loss to net income during the next 12 months are
not significant.
5.4%
3,601
5.4%
3,318
2031 - 2039
Fixed
2,787
1,790
Total Euro denominated
3.3%
2,787
4.0%
1,790
2027-2030
Total Sterling denominated
Fixed
33,707
Total U.S. dollar denominated
3.5%
29,957
$
3.6%
33,707
$
2024 - 2053
Fixed
Unsecured debt
Average
Rate()
Amount
Average
Rate
29,957
Amount
3,318
Fixed
(2)
The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end interest rates.
Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt.
68
$
(1)
34,864
$
34,649
$
Long-term debt
(2,803)
(4,191)
Less amounts due within one year
37,667
3,601
38,840
(742)
Total debt
Total other (2)
37,820
39,582
Total unsecured debt
1,475
767
Total Yen denominated
0.3%
1,475
0.4%
767
2025 - 2028
(153)
Upon closing of the sale of the Company's operations in the U.K. and Japan during the first quarter of fiscal 2022, these amounts were released from
accumulated other comprehensive loss, the majority of which was considered in the impairment evaluation when the individual disposal groups met the held
for sale classification in fiscal 2021.
Maturity Dates
By Fiscal Year
January 31, 2023
Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans.
(1)
26,060
$
31,126
$
7,694
9,253
2,559
2,488
2,949
3,247
3,425
4,652
(2)
4,724
8,287
2022
2023
January 31,
Total accrued liabilities
Deferred gift card revenue
Other(5)
Opioid litigation settlement (4)
Accrued non-income taxes(3)
Self-insurance (2)
Accrued wages and benefits (1)
(Amounts in millions)
The Company's accrued liabilities consist of the following as of January 31, 2023 and 2022:
Note 5. Accrued Liabilities
67
7,908
January 31, 2022
Self-insurance consists of insurance-related liabilities, such as workers' compensation, general liability, auto liability, product liability and certain
employee-related healthcare benefits.
(4)
The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following
as of January 31, 2023 and 2022:
In April 2022, the Company renewed and extended its existing 364-day revolving credit facility as well as its five year credit facility.
The committed lines of credit in the table above mature in April 2023 and April 2027, carry interest rates of SOFR plus 60 basis
points, and incur commitment fees ranging between 1.5 and 4.0 basis points. In conjunction with the committed lines of credit
listed in the table above, the Company has agreed to observe certain covenants, the most restrictive of which relates to the
maximum amount of secured debt. Additionally, the Company has syndicated and fronted letters of credit available which
totaled $2.1 billion and $1.8 billion as of January 31, 2023 and 2022, respectively, of which $1.8 billion and $1.7 billion was
drawn as of January 31, 2023 and 2022, respectively.
15,000
$
15,000 $
10,000
$ 5,000
5,000 $
10,000
10,000
15,000 $
$
Undrawn
January 31, 2022
Drawn
Available
Undrawn
$ 5,000 $
(3)
5,000 $
10,000
15,000 $
$
January 31, 2023
Drawn
Available
(1)
Total
364-day revolving credit facility(1)
Five-year credit facility(¹)
(Amounts in millions)
The Company has various committed lines of credit in the U.S. to support its commercial paper program and are summarized in
the following table:
Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings as of January 31, 2023 and 2022
were $0.4 billion, with weighted-average interest rates of 6.6% and 2.9%, respectively.
Note 6. Short-term Borrowings and Long-term Debt
Other accrued liabilities includes items such as deferred membership revenue, the purchase of PhonePe stock (see Note 3), interest, supply chain,
advertising, and maintenance & utilities.
(5)
Accrued non-income taxes include accrued payroll, property, value-added, sales and miscellaneous other taxes.
Represents the remaining balance for the opioids litigation settlement. See Note 10.
$
7,160
The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise or
services to the customer. eCommerce sales include shipping revenue and are recorded upon delivery to the customer.
Estimated sales returns are calculated based on expected returns.
16,220 $
(1,475)
(1,475)
202
433
3,374 $
$
446
29,014
321
(415)
(415)
28,983
321 $
25,966 $
Total
Sam's Club
Walmart
International
635
Walmart U.S.
2,696
Balances as of January 31, 2023
Acquisitions
Changes in currency translation and other
Balances as of January 31, 2022
Acquisitions
Changes in currency translation and other
Balances as of February 1, 2021
(Amounts in millions)
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is
allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired
as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indefinite-lived
intangible assets are not amortized; rather, they are evaluated for impairment annually and whenever events or changes in
circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived
assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided.
Goodwill is typically assigned to the reporting unit which consolidates the acquisition. Components within the same reportable
segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of
January 31, 2023, the Company's reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill
and other indefinite-lived acquired intangible assets are evaluated for impairment using either a qualitative or quantitative
approach for each of the Company's reporting units. Generally, a qualitative assessment is first performed to determine whether
a quantitative goodwill impairment test is necessary. If management determines, after performing an assessment based on the
qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair
value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative goodwill
impairment test would be required. The quantitative test for goodwill impairment is performed by determining the fair value of
the related reporting units. Fair value is measured based on the discounted cash flow method and relative market-based
approaches. Management has performed its evaluation and determined the fair value of each reporting unit is significantly
greater than the carrying amount and, accordingly, the Company has not recorded any impairment charges related to goodwill.
The following table reflects goodwill activity, by reportable segment, for fiscal 2023 and 2022:
Goodwill and Other Acquired Intangible Assets
Management reviews long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows, which
is at the individual store or club level. Undiscounted cash flows expected to be generated by the related assets are estimated
over the assets' useful lives based on updated projections. If the evaluation indicates that the carrying amount of the assets may
not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as
determined by an appropriate market appraisal or other valuation technique.
Impairment of Long-Lived Assets
60
60
$
For a majority of all classes of underlying assets, the Company has elected to not separate lease from non-lease components.
For leases in which the lease and non-lease components have been combined, the variable lease expense includes expenses such
as common area maintenance, utilities, and repairs and maintenance.
24,479 $
$
Noncontrolling interests that are redeemable outside the Company's control at fixed or determinable prices and dates are
presented as temporary equity on the Consolidated Balance Sheets. Redeemable noncontrolling interests are
recorded at the greater of the redemption fair value or the carrying value of the noncontrolling interest and adjusted each
reporting period for income, loss and any distributions made. Remeasurements to the redemption value of the redeemable
noncontrolling interest are recognized in capital in excess of par. As of January 31, 2023, the Company has a redeemable
noncontrolling interest related to an acquisition in the Walmart U.S. segment as the minority interest owner holds a put option
which may require the Company to purchase its interest beginning in December 2027 with annual options thereafter.
Redeemable Noncontrolling Interest
The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be
taken in a tax return. The Company records interest and penalties related to unrecognized tax benefits in interest expense and
operating, selling, general and administrative expenses, respectively, in the Company's Consolidated Statements of Income.
Refer to Note 9 for additional income tax disclosures.
In determining the provision for income taxes, an annual effective income tax rate is used based on annual income, permanent
differences between book and tax income, and statutory income tax rates. Discrete events such as audit settlements or changes
in tax laws are recognized in the period in which they occur.
Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not
more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the
deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward
periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by
assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences,
forecasted operating earnings and available tax planning strategies. These sources of income rely on estimates.
enactment date.
Income taxes are accounted for under the balance sheet method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases ("temporary differences"). Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the
Income Taxes
Prior to the divestiture of the Company's operations in the United Kingdom and Japan as discussed in Note 12, the Company
was a party to receive fixed-rate, pay fixed-rate cross currency interest rate swaps used to hedge the currency exposure
associated with net investments of these foreign operations. Changes in fair value attributable to the hedged risk were recorded
in accumulated other comprehensive loss. The Company also previously designated certain foreign currency denominated
long-term debt as a hedge of currency exposure associated with the net investment of these divested operations and recorded
foreign currency gain or loss associated with designated long-term debt in accumulated other comprehensive loss. Upon
closing of the sale of the Company's operations in the U.K. and Japan during the first quarter of fiscal 2022, these amounts were
released from accumulated other comprehensive loss as discussed in Note 4.
Net Investment Hedges
62
The Company is a party to receive fixed-rate, pay fixed-rate cross currency interest rate swaps used to hedge the currency
exposure associated with the forecasted payments of principal and interest of certain non-U.S. denominated debt. The
Company records changes in the fair value of these swaps in accumulated other comprehensive loss which is subsequently
reclassified into earnings in the period that the hedged forecasted transaction affects earnings. These derivatives will mature on
dates ranging from July 2024 to January 2039.
Cash Flow Hedges
The Company is a party to receive fixed-rate, pay variable-rate interest rate swaps that the Company uses to hedge the fair value
of fixed-rate debt. All interest rate swaps designated as fair value hedges of the related long-term debt meet the shortcut
method requirements under U.S. GAAP. Accordingly, changes in the fair values of these interest rate swaps are considered to
exactly offset changes in the fair value of the underlying long-term debt. These derivatives will mature on dates ranging from
April 2023 to September 2031.
321
Fair Value Hedges
Derivatives
The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto
liability, product liability and certain employee-related healthcare benefits. Standard actuarial procedures and data analysis are
used to estimate the liabilities associated with these risks on an undiscounted basis. The recorded liabilities reflect the ultimate
cost for claims incurred but not paid and any estimable administrative run-out expenses related to the processing of these
outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with claims reserve valuations.
To limit exposure to some risks, the Company maintains insurance coverage with varying limits and retentions, including stop-
loss insurance coverage for workers' compensation, general liability and auto liability.
Self Insurance Reserves
The Company has provided certain indemnifications in connection with its divestitures and has recorded indemnification
liabilities equal to the estimated fair value of the obligations upon inception. As of January 31, 2023 and January 31, 2022, the
Company had $0.6 billion and $0.7 billion, respectively, of certain legal indemnification liabilities recorded within deferred
income taxes and other in the Consolidated Balance Sheets. The maximum of potential future payments under these
indemnities was $3.1 billion, based on exchange rates as of January 31, 2023.
Indemnification Liabilities
Investments in debt securities classified as trading are reported at fair value and adjustments in fair value are recorded within
other gains and losses in the Consolidated Statements of Income. As of January 31, 2023 and January 31, 2022, the Company
had $0.5 billion and $1.0 billion, respectively, in debt securities classified as trading.
determinable fair values are carried at cost and adjusted for any observable price changes or impairments within other gains and
losses in the Consolidated Statements of Income.
61
Investments in equity securities are recorded in other long-term assets in the Consolidated Balance Sheets. Changes in fair
value of equity securities, as well as certain immaterial equity method investments where the Company has elected the fair
value option measured on a recurring basis, are recognized within other gains and losses in the Consolidated Statements of
Income. These fair value changes, along with certain other immaterial investment activity, resulted in net losses of $1.7 billion
and $2.4 billion for fiscal 2023 and fiscal 2022, respectively and net gains of $8.6 billion in fiscal 2021, primarily due to net
changes in the underlying stock prices of those investments. Refer to Note 8 for details. Equity investments without readily
Investments
The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an
asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties
able to engage in the transaction. The fair value of a liability is the amount that would be paid to transfer the liability to a new
obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. Refer to
Note 8 for more information.
Fair Value Measurement
Intangible assets are recorded in other long-term assets in the Company's Consolidated Balance Sheets. As of January 31, 2023
and 2022, the Company had $4.3 billion and $4.8 billion, respectively, in indefinite-lived intangible assets which primarily
consists of acquired trade names. There were no significant impairment charges related to intangible assets for fiscal 2023,
2022 or 2021.
28,174
The Company uses derivatives for hedging purposes to manage its exposure to changes in interest and currency exchange rates,
as well as to maintain an appropriate mix of fixed- and variable-rate debt. Use of derivatives in hedging programs subjects the
Company to certain risks, such as market and credit risks. The Company may be exposed to credit-related losses in the event of
nonperformance by its counterparties to derivatives. Credit risk is monitored through established approval procedures,
including setting concentration limits by counterparty, reviewing credit ratings and requiring collateral from the counterparty.
The Company enters into derivatives with counterparties rated generally "A-" or better by nationally recognized credit rating
agencies. The Company is subject to master netting arrangements which provides set-off and close-out netting of exposures
with counterparties, but the Company does not offset derivative assets and liabilities in its Consolidated Balance Sheets. The
Company's collateral arrangements require the counterparty in a net liability position in excess of pre-determined thresholds,
after considering the effects of netting arrangements, to pledge cash collateral. Cash collateral received from counterparties and
cash collateral provided to counterparties under these arrangements was not significant as of January 31, 2023 and 2022.
In order to qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk
management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. If a
derivative is recorded using hedge accounting, depending on the nature of the hedge, derivative gains and losses are recorded
through the same financial statement line item in earnings or are recognized in accumulated other comprehensive loss until the
hedged item is recognized in earnings. Derivatives that do not meet the criteria for hedge accounting, or contracts for which the
Company has not elected hedge accounting, are recorded at fair value with unrealized gains or losses reported in earnings.
Derivatives with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either current or non-current
assets, based on maturity date, and derivatives with an unrealized loss are recorded as either current or non-current liabilities,
based on maturity date. Refer to Note 8 for the presentation of the Company's derivative assets and liabilities.
Revenue Recognition
Lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is
reasonably certain that the Company will exercise the option. The Company has elected not to recognize ROU asset and lease
obligations for its short-term leases, which are defined as leases with an initial term of 12 months or less.
Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining
expected lease term. Total depreciation and amortization expense for property and equipment, property under finance leases
and intangible assets for fiscal 2023, 2022 and 2021 was $10.9 billion, $10.7 billion and $11.2 billion, respectively.
Leases
Property and Equipment
For those segments that utilize the LIFO method, the Company records an adjustment each quarter, if necessary, for the
projected annual effect of inflation or deflation. These estimates are adjusted to actual results determined at year end for
inflation or deflation and inventory levels.
Sam's Club Segment - The majority of this segment's inventory is accounted for and valued using the weighted-
average cost LIFO method.
Walmart International Segment – Depending on the store format in each market, inventories are generally accounted
for using either the RIM or weighted-average cost method, using the first-in, first-out valuation method.
Walmart U.S. Segment - Inventories are primarily accounted for under the retail inventory method of accounting
("RIM") to determine inventory cost, using the last-in, first-out ("LIFO") valuation method. RIM generally results in
inventory being valued at the lower of cost or market as permanent markdowns are immediately recorded as a
reduction of the retail value of inventory.
•
The Company utilizes various inventory methods to account for and value its inventories depending upon the nature of the store
formats and businesses in each of its segments, resulting in inventories that are recorded at the lower of cost or market or net
realizable value, as appropriate.
Inventories
59
Receivables are stated at their carrying values, net of a reserve for doubtful accounts, and are primarily due from the following:
customers, which includes pharmacy insurance companies as well as advertisers, and banks for customer credit, debit cards and
electronic transfer transactions that take in excess of seven days to process; suppliers for marketing or incentive programs;
governments for income taxes; and real estate transactions. As of January 31, 2023 and January 31, 2022, net receivables from
transactions with customers were $3.7 billion and $3.4 billion, respectively.
Receivables
As of January 31, 2023 and 2022, cash and cash equivalents of approximately $2.9 billion and $4.3 billion, respectively, may
not be freely transferable to the U.S. due to local laws, other restrictions or are subject to the approval of the noncontrolling
interest shareholders.
The Company uses intercompany financing arrangements in an effort to ensure cash can be made available in the country in
which it is needed with the minimum cost possible.
The Company's cash balances are held in various locations around the world. Of the Company's $8.6 billion and $14.8 billion
in cash and cash equivalents as of January 31, 2023 and January 31, 2022, approximately 62% and 50% were held outside of
the U.S., respectively. Cash and cash equivalents held outside of the U.S. are generally utilized to support liquidity needs in the
Company's non-U.S. operations.
Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as earned or incurred.
Costs of major improvements are capitalized, while costs of normal repairs and maintenance are expensed as incurred. The
following table summarizes the Company's property and equipment balances and includes the estimated useful lives that are
generally used to depreciate the assets on a straight-line basis:
The Company considers investments with a maturity when purchased of three months or less to be cash equivalents. All credit
card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash
equivalents. The amounts due from banks for these transactions classified as cash and cash equivalents totaled $2.0 billion and
$1.7 billion as of January 31, 2023 and 2022, respectively.
The Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles.
Those principles require management to make estimates and assumptions that affect the reported amounts of assets and
liabilities. Management's estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may
differ from those estimates.
Use of Estimates
The Company's Consolidated Financial Statements are based on a fiscal year ending on January 31 for the United States
("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag and based
on a calendar year. There were no significant intervening events during the month of January 2023 related to the operations
consolidated using a lag that materially affected the Consolidated Financial Statements.
The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended
January 31, 2023 ("fiscal 2023"), January 31, 2022 ("fiscal 2022") and January 31, 2021 ("fiscal 2021"). Intercompany
accounts and transactions have been eliminated in consolidation. The Company consolidates variable interest entities where it
has been determined that the Company is the primary beneficiary of those entities' operations. Investments in common stock or
in-substance common stock for which the Company exercises significant influence but does not have control are accounted for
under the equity method. These variable interest entities and equity method investments are immaterial to the Company's
Consolidated Financial Statements.
Principles of Consolidation
Walmart Inc. ("Walmart" or the "Company") people-led, technology-powered omni-channel retailer dedicated to help people
around the world save money and live better – anytime and anywhere – by providing the opportunity to shop in both retail
stores and through eCommerce. Through innovation, the Company is striving to continuously improve a customer-centric
experience that seamlessly integrates eCommerce and retail stores in an omni-channel offering that saves time for its customers.
The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club.
-
General
Note 1. Summary of Significant Accounting Policies
Notes to Consolidated Financial Statements
Walmart Inc.
25,752
2,941
201
Cash and Cash Equivalents
For any new or modified lease, the Company, at the inception of the contract, determines whether a contract is or contains a
lease. The Company records right-of-use ("ROU") assets and lease obligations for its finance and operating leases, which are
initially recognized based on the discounted future lease payments over the term of the lease. If the rate implicit in the
Company's leases is not readily determinable, the Company's applicable incremental borrowing rate is used in calculating the
present value of the sum of the lease payments.
(Dollars in millions)
Buildings and improvements
Fixtures and equipment
Transportation equipment
Construction in progress
94,515
100,760 $
$
(94,809)
(101,610)
189,324
202,370
7,199
10,802
N/A
2,263
2,462
3-15
60,282
Land
65,235
100,376
104,554
3-40
19,204
19,317 $
N/A
2022
2023
(in Years)
As of January 31,
Estimated Useful Lives
Property and equipment, net
Accumulated depreciation
Property and equipment
2-30
128.01
Net Sales
The Company recognizes membership fee revenue over the term of the membership, which is typically 12 months.
Membership fee revenue was $2.6 billion for fiscal 2023, $2.2 billion for fiscal 2022 and $1.7 billion for fiscal 2021.
Membership fee revenue is included in membership and other income in the Company's Consolidated Statements of Income.
Deferred membership fee revenue is included in accrued liabilities in the Company's Consolidated Balance Sheets.
In addition to the Plan, Flipkart and PhonePe have share-based compensation plans for associates under which options to
acquire their own common shares may be issued. These plans may be subject to performance or other conditions, including
vesting upon an initial public offering. Share-based compensation expense associated with certain of these plans is included in
the Other line in the table above.
Restricted Stock and Performance-based Restricted Stock Units. Restricted stock awards are for shares that vest based
on the passage of time and include restrictions related to employment. Performance-based restricted stock units vest
based on the passage of time and achievement of performance criteria and generally range from 0% to 150% of the
original award amount. Vesting periods for restricted stock are generally between one month and three years. Vesting
periods for performance-based restricted stock units are generally between one and three years. Restricted stock and
performance-based restricted stock units may be settled or deferred in stock and are accounted for as equity in the
Company's Consolidated Balance Sheets. The fair value of restricted stock awards is determined on the date of grant
and is expensed ratably over the vesting period. The fair value of performance-based restricted stock units is
determined on the date of grant using the Company's stock price discounted for the expected dividend yield through the
vesting period and is recognized over the vesting period. The weighted-average discount for the dividend yield used to
determine the fair value of performance-based restricted stock units in fiscal 2023, 2022 and 2021 was 3.3%, 4.2% and
4.5%, respectively.
Restricted Stock Units. Restricted stock units provide rights to Company stock after a specified service period.
Beginning in fiscal 2023, restricted stock units generally vest at a rate of 8% each quarter over a three year period from
the date of grant. For grants made from fiscal 2020 through fiscal 2022, restricted stock units generally vest at a rate of
25% each year over a four year period from the date of the grant. Prior to fiscal 2020, 50% of restricted stock units
generally vested three years from the grant date and the remaining 50% were vested five years from the grant date. The
fair value of each restricted stock unit is determined on the date of grant using the stock price discounted for the
expected dividend yield through the vesting period and is recognized ratably over the vesting period. The expected
dividend yield is based on the anticipated dividends over the vesting period. The weighted-average discount for the
dividend yield used to determine the fair value of restricted stock units granted in fiscal 2023, 2022 and 2021 was 2.3%,
3.8% and 4.4%, respectively.
•
The Plan's award types are summarized as follows:
awards for which 260 million shares of Walmart common stock issued or to be issued under the Plan have been registered
under the Securities Act of 1933. The Company believes that such awards serve to align the interests of its associates with
those of its shareholders.
65
The Walmart Inc. Stock Incentive Plan of 2015 (the "Plan"), as subsequently amended and restated, was established to grant
stock options, restricted (non-vested) stock, restricted stock units, performance share units and other equity compensation
1,169
1,163 $
1,578 $
150
183
207
The following table shows the activity for restricted stock units and restricted stock and performance-based restricted stock
units during fiscal 2023:
277
742
659
927 $
444
2021
Fiscal Years Ended January 31,
2022
2023
$
Share-based compensation expense
Other
Restricted stock and performance-based restricted stock units
Restricted stock units
(Amounts in millions)
The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The
compensation expense recognized for all stock incentive plans, including expense associated with plans of the Company's
consolidated subsidiaries granted in the subsidiaries' respective stock, was $1.6 billion, $1.2 billion and $1.2 billion for fiscal
2023, 2022 and 2021, respectively. Share-based compensation expense is generally included in operating, selling, general and
administrative expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for
share-based compensation was $0.4 billion, $0.3 billion and $0.3 billion for fiscal 2023, 2022 and 2021, respectively. The
following table summarizes the Company's share-based compensation expense by award type for all plans:
Share-Based Compensation
321
During fiscal 2022, the Company received $3.2 billion primarily related to a new equity funding for the Company's majority-
owned Flipkart subsidiary, which reduced the Company's ownership from approximately 83% as of January 31, 2021 to
approximately 75%.
Restricted Stock and
Performance-based Restricted Stock
Outstanding as of February 1, 2022
Outstanding as of January 31, 2023
128.68
(948)
127.36
(2,082)
Forfeited
120.18
(3,242)
111.69
(8,338)
Vested/exercised
132.00
638
Adjustment for performance achievement (¹)
(Shares in thousands)
142.74
143.97
9,357
125.25
6,140 $
111.42
$
17,283
Value Per Share
Shares
Weighted-Average
Grant-Date Fair
Units
Restricted Stock Units
Weighted-Average
Grant-Date Fair
Value Per Share
Shares
Granted
4,572
Membership Fee Revenue
Also during fiscal 2023, the Company increased its ownership in PhonePe, a digital transaction platform in India, from
approximately 76% to approximately 89% as part of the separation from the Company's majority-owned Flipkart subsidiary. In
consideration for the transaction, the Company recorded a liability to noncontrolling interest holders of $0.9 billion within
accrued liabilities on the Company's Consolidated Balance Sheet.
Purchases and Sales of Subsidiary Stock
Consolidated net income
2021
2022
2023
Numerator
(Amounts in millions, except per share data)
Fiscal Years Ended January 31,
The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net
income per common share attributable to Walmart:
Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding
during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average
common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did
not have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted net
income per common share attributable to Walmart for fiscal 2023, 2022 and 2021.
Note 2. Net Income Per Common Share
64
64
In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of
Supplier Finance Program Obligations, which enhances the transparency about the use of supplier finance programs for
investors and other allocators of capital. The amendments are effective for fiscal years beginning after December 15, 2022,
including interim periods within those fiscal years, except for the disclosure of rollforward information, which is effective for
fiscal years beginning after December 15, 2023. Early adoption is permitted. The amendments should be applied retrospectively
to each period in which a balance sheet is presented, except for disclosure of rollforward information, which should be applied
prospectively. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.
Recent Accounting Pronouncements
$
statements.
Currency Translation
Advertising costs are expensed as incurred, consist primarily of digital, television and print advertisements and are recorded in
operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. Advertising costs
were $4.1 billion, $3.9 billion and $3.2 billion for fiscal 2023, 2022 and 2021, respectively.
Advertising Costs
Operating, selling, general and administrative expenses include all operating costs of the Company, except cost of sales, as
described above. As a result, the majority of the cost of warehousing and occupancy for the Walmart U.S. and Walmart
International segments' distribution facilities is included in operating, selling, general and administrative expenses. Because the
Company only includes a portion of the cost of its Walmart U.S. and Walmart International segments' distribution facilities in
cost of sales, its gross profit and gross profit as a percentage of net sales may not be comparable to those of other retailers that
may include all costs related to their distribution facilities in cost of sales and in the calculation of gross profit.
Operating, Selling, General and Administrative Expenses
The Company receives consideration from suppliers for various programs, primarily volume incentives, warehouse allowances
and reimbursements for specific programs such as markdowns, margin protection, certain advertising arrangements and
supplier-specific fixtures. Payments from suppliers are accounted for as a reduction of cost of sales, except in certain limited
situations when the payment is a reimbursement of specific, incremental and identifiable costs, and are recognized in the
Company's Consolidated Statements of Income when the related inventory is sold.
Payments from Suppliers
Cost of sales includes actual product cost, the cost of transportation to the Company's distribution facilities, stores and clubs
from suppliers, the cost of transportation from the Company's distribution facilities to the stores, clubs and customers and the
cost of warehousing for the Sam's Club segment and import distribution centers. Cost of sales is reduced by supplier payments
that are not a reimbursement of specific, incremental and identifiable costs.
Cost of Sales
The Company recognizes revenue from service transactions at the time the service is performed. Generally, revenue from
services is classified as a component of net sales in the Company's Consolidated Statements of Income.
Financial, Advertising and Other Services
Customer purchases of gift cards are not recognized as sales until the card is redeemed and the customer purchases merchandise
using the gift card. Gift cards in the U.S. and some countries do not carry an expiration date; therefore, customers and members
can redeem their gift cards for merchandise and services indefinitely. Gift cards in some countries where the Company does
business have expiration dates. While gift cards are generally redeemed within 12 months, a certain number of gift cards, both
with and without expiration dates, will not be fully redeemed. Management estimates unredeemed balances and recognizes
revenue for these amounts in membership and other income in the Company's Consolidated Statements of Income over the
expected redemption period.
Gift Cards
63
The assets and liabilities of all international subsidiaries are translated from the respective local currency to the U.S. dollar
using exchange rates at the balance sheet date. Related translation adjustments are recorded as a component of accumulated
other comprehensive loss. The Company's Consolidated Statements of Income of all international subsidiaries are translated
from the respective local currencies to the U.S. dollar using average exchange rates for the period covered by the income
During fiscal 2023, the Company completed a $0.4 billion buyout of the noncontrolling interest shareholders of the Company's
Massmart subsidiary. This transaction increased the Company's ownership in Massmart from approximately 53% to 100%.
Additionally, the Company completed a $0.4 billion acquisition of Alert Innovation, which was previously consolidated as a
variable interest entity, and resulted in the Company becoming a 100% owner.
Consolidated net (income) loss attributable to noncontrolling interest
Consolidated net income attributable to Walmart
11,292 $
388
11,680
The total authorized shares of $0.10 par value common stock is 11.0 billion, of which 2.7 billion and 2.8 billion were issued and
outstanding as of January 31, 2023 and 2022, respectively.
4.75
4.87
4.27
4.77
$
4.90
$
4.29
$
Note 3. Shareholders' Equity
Basic
Diluted
Net income per common share attributable to Walmart
2,847
$
2,805
16
13
10
2,831
2,792
2,724
Dilutive impact of stock options and other share-based awards
Weighted-average common shares outstanding, diluted
Weighted-average common shares outstanding, basic
Denominator
(196)
13,510
13,706
$
13,940
(267)
13,673 $
$
2,734
245
4,756 $
(Amounts in millions)
(297)
(129)
(341)
430
(759)
1,998
$
5,724 $
6,858
A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pre-tax
income from continuing operations is as follows:
2023
Fiscal Years Ended January 31,
2022
2021
U.S. statutory tax rate
21.0 %
U.S. state income taxes, net of federal income tax benefit
3.1 %
23
41
119
2,316
2022
2021
$
2,030 $
3,313
$
2,991
610
21.0 %
2.8%
649
2,654
1,553
1,127
5,294
5,515
4,860
608
(671)
742
2023
21.0 %
Separation, disposal and wind-down of certain business operations
Other, net
1.8 %
(0.6)%
0.6 %
Effective income tax rate
33.6 %
25.4 %
33.3 %
The following sections regarding deferred taxes, unremitted earnings, net operating losses, tax credit carryforwards, valuation
allowances and uncertain tax positions exclude amounts related to operations classified as held for sale.
Deferred Taxes
The significant components of the Company's deferred tax account balances are as follows:
(Amounts in millions)
Deferred tax assets:
Loss and tax credit carryforwards
Accrued liabilities
Share-based compensation
Lease obligations
Other
0.8 %
0.2 %
0.3 %
Change in unrecognized tax benefits
1.1 %
(1.5)%
2.9 %
(0.1)%
6.3 %
0.5 %
7.1 %
1.7 %
Income taxed outside the U.S.
4.4 %
Net impact of repatriated international earnings
(0.4)%
(0.3)%
(0.4)%
Federal tax credits
(1.3)%
(1.1)%
(0.9)%
2.3 %
Fiscal Years Ended January 31,
Effective Income Tax Rate Reconciliation
Total deferred tax expense (benefit)
Total provision for income taxes
The Company also has derivatives recorded at fair value. Derivative fair values are the estimated amounts the Company would
receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been
measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward
curves. As of January 31, 2023 and January 31, 2022, the notional amounts and fair values of these derivatives were as follows:
January 31, 2023
January 31, 2022
Notional
Amount
Notional
(Amounts in millions)
Amount
Fair Value
Fair Value
Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges
Total
$
8,021 $
5,900
(689) (1) $ 8,021 $
(1,423) (1) 7,855
(47) (1)
(1,048) (1)
$ 13,921 $ (2,112) $ 15,876 $ (1,095)
(1) Primarily classified in deferred income taxes and other in the Company's Consolidated Balance Sheets.
Nonrecurring Fair Value Measurements
Derivatives
11,888
$
10,669
Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in
measuring fair value. The levels of the fair value hierarchy are:
Level 1: observable inputs such as quoted prices in active markets;
.
Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop
its own assumptions.
As described in Note 1, the Company measures the fair value of certain equity investments, including certain equity method
investments, on a recurring basis in the accompanying Consolidated Balance Sheets. The fair values of the Company's equity
investments measured on a recurring basis are as follows:
(Amounts in millions)
Equity investments measured using Level 1 inputs
Equity investments measured using Level 2 inputs
Total
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company's assets and liabilities are
also subject to nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a
result of impairment charges.
71
Fair Value as of
January 31, 2022
$
5,099
$
6,069
5,570
5,819
$
Fair Value as of
January 31, 2023
Upon completing the sales of the Company's operations in the U.K. in February 2021 and Japan in March 2021, the Company
recorded incremental non-recurring impairment charges of $0.4 billion in the first quarter of fiscal 2022 within other gains and
losses in the Consolidated Statements of Income. Refer to Note 12. The Company did not have any material assets or liabilities
resulting in nonrecurring fair value measurements as of January 31, 2023.
For the fiscal year ended January 31, 2021, the Company's operations in Argentina, Japan and the U.K. met the held for sale
criteria in fiscal 2021, as further discussed in Note 12. As a result, the individual disposal groups were measured at fair value,
less costs to sell, which is considered a Level 3 fair value measurement based on each transaction's expected consideration. The
carrying value of the Argentina, Japan and U.K. disposal groups exceeded their fair value, less costs to sell, and as a result, the
Company recognized non-recurring impairment charges. The aggregate pre-tax loss of $8.3 billion associated with the
divestiture of these operations in the Walmart International segment was recorded in other gains and losses in the Consolidated
Statements of Income for the year ended January 31, 2021, and included these impairment charges as well as a $2.3 billion
charge related to the Asda pension plan. These impairment charges included the anticipated release of non-cash cumulative
foreign currency translation losses associated with the disposal groups. Other impairment charges for assets measured at fair
value on a nonrecurring basis during fiscal 2021 were immaterial.
Other Fair Value Disclosures
15,089 $
1,927
$
17,016 $
15,536 $
3,160
18,696
$
18,068
2,496
20,564
A summary of the provision for income taxes is as follows:
$
(Amounts in millions)
U.S. federal
U.S. state and local
International
Total current tax provision
Deferred:
U.S. federal
U.S. state and local
International
Current:
Total deferred tax assets
2021
2023
The Company records cash and cash equivalents, restricted cash and short-term borrowings at cost. The carrying values of
these instruments approximate their fair value due to their short-term maturities.
The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the
Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying value and fair value
of the Company's long-term debt as of January 31, 2023 and 2022, are as follows:
(Amounts in millions)
Long-term debt, including amounts due within one year
Note 9. Taxes
The components of income before income taxes are as follows:
(Amounts in millions)
U.S.
Fiscal Years Ended January 31,
2022
Non-U.S.
72
January 31, 2023
Carrying Value
$
38,840 $
Fair Value
38,169
$
January 31, 2022
Carrying Value Fair Value
37,667 $
42,381
Total income before income taxes
5,410
Valuation allowances
Deferred tax liabilities:
The Company is subject to tax examinations for value added, sales-based, payroll and other non-income taxes. A number of
these examinations are ongoing in various jurisdictions. In certain cases, the Company has received assessments and judgments
from the respective taxing authorities in connection with these examinations. Unless otherwise indicated, the possible losses or
range of possible losses associated with these matters are individually immaterial, but a group of related matters, if decided
adversely to the Company, could result in a liability material to the Company's Consolidated Financial Statements.
Note 10. Contingencies
Legal Proceedings
The Company is involved in a number of legal proceedings and certain regulatory matters. The Company records a liability for
those legal proceedings and regulatory matters when it determines it is probable that a loss has been incurred and the amount of
the loss can be reasonably estimated. The Company also discloses when it is reasonably possible that a material loss may be
incurred. From time to time, the Company may enter into discussions regarding settlement of these matters, and may enter into
settlement agreements, if it believes settlement is in the best interest of the Company and its shareholders.
Unless stated otherwise, the matters discussed below, if decided adversely to or settled by the Company, individually or in the
aggregate, may result in a liability material to the Company's financial position, results of operations or cash flows.
Settlement Framework Regarding Multidistrict and State or Local Opioid Related Litigation
During fiscal 2023, the Company accrued a liability for approximately $3.3 billion for the Settlement Framework (described
below) and other previously agreed upon state and tribal settlements. Because loss contingencies are inherently unpredictable
and unfavorable developments or resolutions can occur, the assessment is highly subjective and requires judgments about future
events. Moreover, the Settlement Framework will only take effect once a sufficient number of political subdivisions join, and
there is no assurance regarding such participation. The amount of ultimate loss may thus differ materially from this accrual. The
Settlement Framework includes no admission of wrongdoing or liability by the Company, and the Company continues to
believe it has substantial factual and legal defenses to opioids-related litigation.
In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a
wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes,
individuals, and third-party payers, asserting claims generally concerning the impacts of widespread opioid abuse. The
consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804) (the "MDL") and
is pending in the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the
cases included in the MDL.
Similar cases that name the Company also have been filed in state courts by state, local, and tribal governments, healthcare
providers, and other plaintiffs. Plaintiffs in these state court cases and in the MDL are seeking compensatory and punitive
damages, as well as injunctive relief including abatement. The Company has also been responding to subpoenas, information
requests, and investigations from governmental entities related to nationwide controlled substance dispensing and distribution
practices involving opioids.
On November 15, 2022, the Company announced it had agreed to financial amounts and payment terms to resolve substantially
all opioids-related lawsuits filed against the Company by states, political subdivisions, and Native American tribes whether as
part of the MDL (excluding, however, a single, two-county trial described further below) or pending state court, as well as all
potential claims that could be made against the Company by states, political subdivisions, and Native American tribes for up to
approximately $3.1 billion (the "Settlement Amount"). The Settlement Amount includes amounts for remediation of alleged
harms as well as attorneys' fees and costs and also includes some, but not all, amounts from previously agreed recent
settlements by the Company. One settlement framework with corresponding conditions and participation thresholds applies for
the states and political subdivisions, and another settlement framework with corresponding conditions and participation
thresholds applies for the Native American tribes. Both settlement frameworks are referred to collectively as the "Settlement
Framework."
The Settlement Framework, among other applicable conditions, provides that payments to states and political subdivisions are
contingent upon the number of states and political subdivisions, including those states and political subdivisions who have not
yet sued the Company, that agree to participate in the Settlement Framework or otherwise have their claims foreclosed within a
prescribed deadline. On December 20, 2022, the Company announced that it had settlement agreements with all 50 states,
including four states that previously settled with the Company, as well as the District of Columbia, Puerto Rico, and three other
75
U.S. territories (the "Settling States"), thus satisfying the initial threshold of required participation by Settling States. The
settlement with the Settling States is now contingent upon, among other applicable terms and conditions, a sufficient number of
political subdivisions also agreeing to participate in the Settlement Framework.
If all conditions for the Settlement Framework, including, but not limited to, the minimum participation thresholds applicable
for political subdivisions are satisfied within the prescribed deadlines, then the Company would expect to pay up to the full
portion of the Settlement Amount attributable to the Settling States, beginning as early as the second quarter of fiscal 2024 and
being completed during fiscal 2024. However, the Company cannot predict if, when, or to what extent the Settlement
Framework will be finalized with any of the Settling States.
In the fourth quarter of fiscal 2023, the Company paid $0.4 billion for separate settlements with Cherokee Nation, New Mexico,
and Florida. Following these payments, the remaining $2.9 billion liability for the Settlement Framework and other settlements
is recorded in accrued liabilities within the Company's Consolidated Balance Sheet as of January 31, 2023.
The Settlement Framework also provides for payments to Native American tribes (excluding Cherokee Nation), contingent
upon the number of tribes, including those tribes that have not yet sued the Company, that agreed to participate in the
Settlement Framework or otherwise have their claims foreclosed within a prescribed deadline (the "Settling Tribes"). Pursuant
to the terms of the Settlement Framework, on March 3, 2023, the Company paid approximately $0.1 billion to the Settling
Tribes in satisfaction of their claims against the Company.
Other Opioid Related Litigation
The Company will continue to vigorously defend against any opioid-related litigation not covered or otherwise extinguished by
the Settlement Framework, including, but not limited to, each of the matters described below; any other actions filed by
healthcare providers, individuals, and third-party payers, as well as any action filed by a state, political subdivision, or Native
American tribe that does not agree to the Settlement Framework. Accordingly, the Company has not accrued a liability for these
opioid-related litigation matters nor can the Company reasonably estimate any loss or range of loss that may arise from these
matters. The Company can provide no assurance as to the scope and outcome of any of these matters and no assurance that its
business, financial position, results of operations or cash flows will not be materially adversely affected.
Other Taxes
The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2018 through
2022. The Company also remains subject to income tax examinations for international income taxes for fiscal 2013 through
2022, and for U.S. state and local income taxes generally for the fiscal years ended 2015 through 2022. With few exceptions,
the Company is no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for years before fiscal
2013.
74
The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling,
general and administrative expenses, respectively. Interest expense and penalties related to these positions were immaterial for
fiscal 2023, 2022 and 2021. During the next twelve months, it is reasonably possible that tax audit resolutions could reduce
unrecognized tax benefits by an immaterial amount, either because the tax positions are sustained on audit or because the
Company agrees to their disallowance. The Company does not expect any change to have a material impact to its Consolidated
Financial Statements.
170
92
(248)
(97)
Annual maturities of long-term debt during the next five years and thereafter are as follows:
357
75
1,582
Two-county Trial and MDL Bellwethers. The liability phase of a single, two-county trial in one of the MDL cases resulted in a
jury verdict on November 23, 2021, finding in favor of the plaintiffs as to the liability of all defendants, including the Company.
The abatement phase of the single, two-county trial resulted in a judgment on August 17, 2022, that ordered all three
defendants, including the Company, to pay an aggregate amount of approximately $0.7 billion over fifteen years, on a joint and
several liability basis, and granted the plaintiffs injunctive relief. On September 7, 2022, the Company filed an appeal with the
Sixth Circuit Court of Appeals. The monetary aspect of the judgment is stayed pending appeal, and the injunctive aspect of the
judgment went into effect on February 20, 2023.
(89)
(64)
(37)
(33)
(28)
$
3,307 $
3,245 $
3,135
(5)
79
The MDL has designated five additional single-county cases as bellwethers to proceed through discovery; however, these five
counties ultimately may elect to participate in the Settlement Framework and receive a portion of the Settlement Amount rather
than go to trial.
Opioid Related Securities Class Actions and Derivative Litigation. In addition, the Company is the subject of two securities
class actions alleging violations of the federal securities laws regarding the Company's disclosures with respect to opioids, filed
in the U.S. District Court for the District of Delaware on January 20, 2021 and March 5, 2021 purportedly on behalf of a class
of investors who acquired Walmart stock from March 30, 2016 through December 22, 2020. Those cases have been
consolidated. On October 8, 2021, the defendants filed a motion to dismiss the consolidated securities action. After the parties
had fully briefed the motion to dismiss, on September 9, 2022, the Court entered an order permitting the plaintiffs to file an
amended complaint, which was filed on October 14, 2022 and which revised the applicable putative class of investors to those
who acquired Walmart stock from March 31, 2017, through December 22, 2020. On November 16, 2022, the defendants filed a
motion to dismiss the amended complaint. That motion remains pending.
77
Note 12. Disposals, Acquisitions and Related Items
The following dispositions impact the Company's Walmart International segment. Other immaterial transactions have also
occurred.
Asda
In February 2021, the Company completed the divestiture of Asda, the Company's retail operations in the U.K., for net
consideration of $9.6 billion. Upon closing of the transaction, the Company recorded an incremental pre-tax loss of $0.2 billion
in other gains and losses in its Consolidated Statement of Income in the first quarter of fiscal 2022, primarily related to changes
in the net assets of the disposal group, currency exchange rate fluctuations and customary purchase price adjustments upon
closing. During the first quarter of fiscal 2022, the Company deconsolidated the financial statements of Asda and recognized
its retained investment in Asda as a debt security within other long-term assets and also recognized certain legal and tax
indemnity liabilities within deferred income taxes and other on the Consolidated Balance Sheet.
Asda was classified as held for sale in the Consolidated Balance Sheet as of January 31, 2021, and as a result, the Company
recognized an estimated pre-tax loss of $5.5 billion in other gains and losses in its Consolidated Statement of Income in the
fourth quarter of fiscal 2021. Upon classifying the Asda disposal group as held for sale, $2.3 billion of accumulated pension
components associated with the expected derecognition of the Asda pension plan were included as part of the loss. In
calculating the loss, the fair value of the disposal group was reduced by approximately $0.8 billion related to the estimated fair
value of certain indemnities and other transaction related costs.
Seiyu
In March 2021, the Company completed the divestiture of Seiyu, the Company's retail operations in Japan, for net consideration
of $1.2 billion. Upon closing of the transaction, the Company recorded an incremental pre-tax loss of $0.2 billion in other gains
and losses in its Consolidated Statement of Income in the first quarter of fiscal 2022, primarily related to changes in the net
assets of the disposal group, currency exchange rate fluctuations and customary purchase price adjustments upon closing.
During the first quarter of fiscal 2022, the Company deconsolidated the financial statements of Seiyu and recognized its
retained 15 percent ownership interest in Seiyu as an equity investment within other long-term assets on the Consolidated
Balance Sheet.
Seiyu was classified as held for sale in the Consolidated Balance Sheet as of January 31, 2021, and as a result, the Company
recognized an estimated pre-tax loss of $1.9 billion in other gains and losses in its Consolidated Statement of Income in the
fourth quarter of fiscal 2021.
Walmart Argentina
In November 2020, the Company completed the sale of Walmart Argentina. As a result, the Company recorded a pre-tax loss of
$1.0 billion in the third quarter of fiscal 2021 in other gains and losses in its Consolidated Statement of Income primarily due to
the impact of cumulative translation losses on the carrying value of the disposal group.
Note 13. Segments and Disaggregated Revenue
Segments
The Company is engaged in the operation of retail and wholesale stores and clubs, as well as eCommerce websites, located
throughout the U.S., Africa, Canada, Central America, Chile, China, India and Mexico. The Company previously operated in
Argentina prior to the sale of Walmart Argentina in the fourth quarter of fiscal 2021 and operated in the United Kingdom and
Japan prior to the sale of those operations in the first quarter of fiscal 2022. Refer to Note 12 for discussion of recent
divestitures. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and
Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker
("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products
and services in each of its segments. It is impracticable to segregate and identify revenues for each of these individual products
and services.
The Walmart U.S. segment includes the Company's mass merchant concept in the U.S., as well as eCommerce, which includes
omni-channel initiatives and certain other business offerings such as advertising services through Walmart Connect. The
Walmart International segment consists of the Company's operations outside of the U.S., as well as eCommerce and omni-
channel initiatives. The Sam's Club segment includes the warehouse membership clubs in the U.S., as well as eCommerce and
omni-channel initiatives. Corporate and support consists of corporate overhead and other items not allocated to any of the
Company's segments.
The Company measures the results of its segments using, among other measures, each segment's net sales and operating
income, which includes certain corporate overhead allocations. From time to time, the Company revises the measurement of
each segment's operating income, including any corporate overhead allocations, as determined by the information regularly
78
Additionally, the Company's previously owned subsidiary in the United Kingdom sponsored a defined benefit pension plan. In
fiscal 2020, Asda, Walmart and the Trustee of the Asda Group Pension Scheme (the "Plan") entered into an agreement pursuant
to which Asda made a cash contribution of $1.0 billion to the Plan (the "Asda Pension Contribution") which enabled the Plan to
purchase a bulk annuity insurance contract for the benefit of Plan participants, and released the Plan and Asda from any future
obligations. In connection with the sale of Asda, all accumulated pension components of $2.3 billion were included in the
disposal group and the estimated pre-tax loss recognized during the fourth quarter of fiscal 2021 as discussed in Note 8 and
Note 12.
1,290
200
1,490
1,441 $
39
1,480 $
1,491 $
74
1,565 $
Derivative actions were also filed by two of the Company's shareholders in the U.S. District Court for the District of Delaware
on February 9, 2021 and April 16, 2021 alleging breach of fiduciary duties against certain of its current and former directors
with respect to oversight of the Company's distribution and dispensing of opioids and also alleging violations of the federal
securities laws and other breaches of duty by current directors and two current officers in connection with the Company's
opioids disclosures. Those cases have been stayed pending developments in other opioids litigation matters. On September 27,
2021, three shareholders filed a derivative action in the Delaware Court of Chancery alleging that certain members of the
76
current Board and certain former officers breached their fiduciary duties in failing to adequately oversee the Company's
prescription opioids business. The defendants moved to dismiss and/or to stay proceedings on December 21, 2021, and the
plaintiffs responded by filing an amended complaint on February 22, 2022. On April 20, 2022, the defendants moved to dismiss
and/or to stay proceedings with respect to the amended complaint. On September 26, 2022, the court held a hearing on that
motion, and a ruling remains pending.
Other Legal Proceedings
Asda Equal Value Claims. Asda, formerly a subsidiary of the Company, was and still is a defendant in certain equal value
claims that began in 2008 and are proceeding before an Employment Tribunal in Manchester in the United Kingdom on behalf
of current and former Asda store employees, as well as additional claims in the High Court of the United Kingdom (the "Asda
Equal Value Claims"). Further claims may be asserted in the future. Subsequent to the divestiture of Asda in February 2021, the
Company continues to oversee the conduct of the defense of these claims. While potential liability for these claims remains
with Asda, the Company has agreed to provide indemnification with respect to certain of these claims up to a contractually
determined amount. The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate
any loss or range of loss that may arise related to these proceedings. Accordingly, the Company can provide no assurance as to
the scope and outcome of these matters.
Money Transfer Agent Services Matters. The Company has responded to grand jury subpoenas issued by the United States
Attorney's Office for the Middle District of Pennsylvania on behalf of the U.S. Department of Justice (the "DOJ") seeking
documents regarding the Company's consumer fraud prevention program and anti-money laundering compliance related to the
Company's money transfer services, where Walmart is an agent. The most recent subpoena was issued in August 2020. The
Company continues to cooperate with and provide information in response to requests from the DOJ. The Company has also
responded to civil investigative demands from the United States Federal Trade Commission (the "FTC") in connection with the
FTC's investigation related to money transfers and the Company's anti-fraud program in its capacity as an agent. On June 28,
2022, the FTC filed a complaint against the Company in the U.S. District Court for the Northern District of Illinois alleging that
Walmart violated the Federal Trade Commission Act and the Telemarketing Sales Rule regarding its money transfer agent
services and is requesting non-monetary relief and civil penalties. On August 29, 2022, the Company filed a motion to dismiss
the complaint, on October 5, 2022, the FTC responded to the motion, and on October 28, 2022, the Company filed its reply.
The court has entered an order staying discovery pending a decision on the Company's motion to dismiss. The Company intends
to vigorously defend these matters. However, the Company can provide no assurance as to the scope and outcome of these
matters and cannot reasonably estimate any loss or range of loss that may arise. Accordingly, the Company can provide no
assurance that its business, financial position, results of operations or cash flows will not be materially adversely affected.
Note 11. Retirement-Related Benefits
The Company offers a 401(k) plan for associates in the U.S. under which eligible associates can begin contributing to the plan
immediately upon hire. The Company also offers a 401(k) type plan for associates in Puerto Rico under which associates can
begin to contribute generally after one year of employment. Under these plans, after one year of employment, the Company
matches 100% of participant contributions up to 6% of annual eligible earnings. The matching contributions immediately vest
at 100% for each associate. Participants can contribute up to 50% of their pre-tax earnings, but not more than the statutory
limits.
Associates in international countries who are not U.S. citizens are covered by various defined contribution post-employment
benefit arrangements. These plans are administered based upon the legislative and tax requirements in the countries in which
they are established.
DOJ Opioid Civil Litigation. On December 22, 2020, the U.S. Department of Justice (the "DOJ") filed a civil complaint in the
U.S. District Court for the District of Delaware alleging that the Company unlawfully dispensed controlled substances from its
pharmacies and unlawfully distributed controlled substances to those pharmacies. The complaint alleges that this conduct
resulted in violations of the Controlled Substances Act. The DOJ is seeking civil penalties and injunctive relief. The Company
initially moved to dismiss the DOJ complaint on February 22, 2021. After that motion was fully briefed, the DOJ filed an
amended complaint on October 7, 2022. On November 7, 2022, the Company filed a partial motion to dismiss the amended
complaint. That motion remains pending.
The following table summarizes the contribution expense related to the Company's defined contribution plans for fiscal 2023,
2022 and 2021:
Defined contribution plans:
U.S.
International
Total contribution expense for defined contribution plans
2023
Fiscal Years Ended January 31,
2022
2021
$
$
(Amounts in millions)
1,817
3,135 $
3,245 $
8,916
8,110
4,352
4,414
932
1,065
3,032
1,588
4,727
4,355
1,390
1,825
249
307
14,682
13,554
$
(9,542)
(7,815)
17,652
16,731
Property and equipment
Acquired intangibles
Inventory
Lease right of use assets
Mark-to-market investments
Other
Total deferred tax liabilities
Net deferred tax liabilities
5,766 $
January 31,
2022
$
7,690 $
3,312
237
9,456
2,752
231
4,653
4,320
839
893
2023
5,444
73
The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:
As of January 31, 2023, the Company's net operating loss and capital loss carryforwards totaled approximately $32.3 billion.
Of these carryforwards, approximately $19.6 billion will expire, if not utilized, in various years through 2043. The remaining
carryforwards have no expiration.
The realizability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable
income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences,
forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely
than not that a deferred tax asset will be recovered, a valuation allowance is generally established. To the extent that a
valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets
will be recovered, the change in the valuation allowance is recognized in the Consolidated Statements of Income.
The Company had valuation allowances of approximately $7.8 billion and $9.5 billion as of January 31, 2023 and 2022,
respectively, on deferred tax assets associated primarily with the net operating loss carryforwards. Activity in the valuation
allowance during fiscal 2023 related to valuation allowance builds in multiple markets, as well as releases due to the expiration
of unrealized deferred tax assets.
Uncertain Tax Positions
The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining
a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities.
As of January 31, 2023 and 2022, the amount of gross unrecognized tax benefits related to continuing operations was $3.3
billion and $3.2 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective
income tax rate was $1.5 billion and $1.8 billion as of January 31, 2023 and 2022, respectively.
A reconciliation of gross unrecognized tax benefits from continuing operations is as follows:
(Amounts in millions)
Gross unrecognized tax benefits, beginning of year
Increases related to prior year tax positions
Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances
Decreases related to prior year tax positions
Settlements during the period
Lapse in statutes of limitations
Gross unrecognized tax benefits, end of year
Fiscal Years Ended January 31,
2023
2022
2021
$
Increases related to current year tax positions
Deferred tax assets, net of valuation allowances
Prior to the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), the Company asserted that all unremitted earnings of its foreign
subsidiaries were considered indefinitely reinvested. As a result of the Tax Act, the Company reported and paid U.S. tax on the
majority of its previously unremitted foreign earnings, and repatriations of foreign earnings will generally be free of U.S.
federal tax, but may incur other taxes such as withholding or state taxes. As of January 31, 2023, the Company has not
recorded approximately $3 billion of deferred tax liabilities associated with remaining unremitted foreign earnings considered
indefinitely reinvested, for which U.S. and foreign income and withholding taxes would be due upon repatriation.
Net deferred tax liabilities
(Amounts in millions)
Balance Sheet classification
Assets:
Other long-term assets
Liabilities:
Deferred income taxes and other
January 31,
2023
Unremitted Earnings
2022
1,503
$
1,473
7,269
6,917
$
5,766 $
5,444
$
$
(264)
$
3.125%
1,750
Total repayment of matured debt
3,010
June 26, 2023
$2,750
Fixed
3.400%
470
October 15, 2023
$152
Fixed
6.750%
2
July 8, 2024
December 15, 2024
June 26, 2025
Fixed
$1,750
June 23, 2021
750
69
60
The following table provides details of debt repayments during fiscal 2022:
(Amounts in millions)
Maturity Date
Principal Amount
April 15, 2021
$510
July 8, 2026
Fixed vs. Floating
Fixed
Repayment
4.250%
$
510
June 23, 2021
$750
Floating
Floating
Interest Rate
April 5, 2027
$1,500
Fixed
1,271
July 8, 2029
$1,250
Fixed
3.250%
517
September 24, 2029
$500
3.700%
Fixed
181
February 15, 2030
$588
Fixed
7.550%
119
September 1, 2035
$1,968
2.375%
2,689
Fixed
June 26, 2028
2.850%
510
$1,000
Fixed
2.650%
370
$1,500
Fixed
$2,750
3.550%
$1,250
Fixed
3.050%
451
$483
Fixed
5.875%
110
625
Fixed
Total repayment of matured debt
2.350%
is as follows:
(Amounts in millions)
Issue Date
September 9, 2022
September 9, 2022
September 9, 2022
September 9, 2022
Total
Principal Amount
$1,750
Maturity Date
September 9, 2025
Fixed vs. Floating
Interest Rate
Net Proceeds
Fixed
3.900%
$
Information on significant long-term debt issued during fiscal 2023, for general corporate purposes,
38,840
$
23,975
14,301
Fiscal Year
2024
2025
2026
2027
2028
Thereafter
1,744
Total
Annual
Maturities
$
4,191
3,516
2,604
2,737
1,817
Debt Issuances
$1,000
September 9, 2027
Fixed
April 8, 2022
Principal Amount
Fixed vs. Floating
Interest Rate
Repayment
€850
Fixed
1.900%
Maturity Date
$
July 15, 2022
¥70,000
Fixed
0.183%
512
December 15, 2022
$1,250
Fixed
927
1,250
(Amounts in millions)
Maturities and Extinguishments
3.950%
$
994
$1,250
September 9, 2032
Fixed
4.150%
$
The following table provides details of debt repayments during fiscal 2023:
1,239
September 9, 2052
Fixed
4.500%
$
992
$
4,969
These issuances are senior, unsecured notes which rank equally with all other senior, unsecured debt obligations of the
Company, and are not convertible or exchangeable. These issuances do not contain any financial covenants which restrict the
Company's ability to pay dividends or repurchase Company stock. Additionally, the Company received immaterial proceeds
from debt issuances by certain international markets.
$1,000
5.250%
Valuation allowance
August 15, 2037
248
225
286
Financing cash flows from finance leases
563
538
546
Assets obtained in exchange for operating lease obligations
1,714
1,816
2,131
Assets obtained in exchange for finance lease obligations
1,226
1,044
1,547
Weighted-average remaining lease term - operating leases
Weighted-average remaining lease term - finance leases
Weighted-average discount rate - operating leases
Weighted-average discount rate - finance leases
Operating cash flows from finance leases
2,629
2,234
2,280
596
565
583
256
232
298
899
823
The aggregate annual lease obligations at January 31, 2023, are as follows:
777
Fiscal years ended January 31,
(Amounts in millions)
2023
2022
2021
Cash paid for amounts included in measurement of lease obligations:
Operating cash flows from operating leases
$
Other lease information is as follows:
(Amounts in millions)
Fiscal Year
2024
2,166
$
834
2,077
774
1,917
712
1,735
$
638
545
11,018
5,438
20,469
8,941
(6,168)
635
(3,531)
1,556
2,626
Finance Leases
6.5%
2025
2026
2027
2028
Thereafter
Total undiscounted lease obligations
Less imputed interest
Net lease obligations
6.5%
Note 8. Fair Value Measurements
2023
2022
12.0 years
12.2 years
13.3 years
13.4 years
6.0%
5.9%
As of January 31,
2,274 $
Operating Leases
2,306
4.875%
101
October 25, 2040
$519
Fixed
5.000%
125
April 15, 2041
$918
Fixed
5.625%
305
April 11, 2043
$709
Fixed
4.000%
296
Fixed
$378
July 8, 2040
142
June 28, 2038
April 15, 2038
$
$1,300
Fixed
6.500%
262
$919
October 2, 2043
Fixed
116
$1,500
3.950%
925
April 1, 2040
$751
Fixed
5.625%
6.200%
April 22, 2044
Fixed
$269
371
10,000
13,010
(1) Represents portion of the outstanding principal amount which was repaid during fiscal 2022. Individual repayment amounts may not sum due to rounding.
The Company recorded a $2.4 billion loss on extinguishment of debt during fiscal 2022, which included payment of $2.3 billion
in early extinguishment premiums.
Note 7. Leases
The Company leases certain retail locations, distribution and fulfillment centers, warehouses, office spaces, land and equipment
throughout the U.S. and internationally. The Company's lease costs recognized in the Consolidated Statement of Income consist
of the following:
(Amounts in millions)
Operating lease cost
2.950%
Finance lease cost:
Variable lease cost
10
70
2023
December 15, 2047
$
Fiscal years ended January 31,
2022
2021
Amortization of right-of-use assets
Fixed
Interest on lease obligations
$1,000
4.750%
Fixed
4.300%
$502
$1,000
Fixed
Fixed
3.625%
566
172
38
September 24, 2049
Total repayment of extinguished debt(¹)
Total
$3,000
Fixed
4.050%
1,317
June 29, 2048
Other categories
Total
Of Walmart U.S.'s total net sales, approximately $53.4 billion, $47.8 billion and $43.0 billion related to eCommerce for fiscal
2023, 2022 and 2021, respectively.
369,963
$ 420,553 $ 393,247 $
125,876
5,588
38,522
46,591
8,066
119,406
3,622
42,839
United Kingdom
Other
Walmart International net sales by market
Total
Mexico and Central America
Canada
China
32,642
Fiscal Years Ended January 31,
2023
2022
2021
$
40,496 $
118,597
35,964 $
(Amounts in millions)
208,413
87,068
247,299 $
2021
22,300
$
508,685 $
102,604
$
611,289 $
470,295 $
102,459
572,754 $
436,649
122,502
559,151
$
$
95,567 $
23,667
119,234 $ 112,624 $
89,795 $
22,829
218,944 $
22,780
No individual country outside of the U.S. had total revenues or long-lived assets that were material to the consolidated totals.
Long-lived assets related to operations classified as held for sale are excluded from the table above. Additionally, the Company
did not generate material revenues from any single customer.
79
Disaggregated Revenues
In the following tables, segment net sales are disaggregated by either merchandise category or market. In addition, net sales
related to eCommerce are provided for each segment, which include omni-channel sales where a customer initiates an order
digitally and the order is fulfilled through a store or club.
(Amounts in millions)
Walmart U.S. net sales by merchandise category
Grocery
General merchandise
Health and wellness
Fiscal Years Ended January 31,
2023
2022
2021
$
109,848
21,773
84,345 $
14,711
2,855
2,990
3,040
Total
$
73,556 $
63,910
Of Sam's Club's total net sales, approximately $8.4 billion, $6.9 billion and $5.3 billion related to eCommerce for fiscal 2023,
2022 and 2021, respectively.
Note 14. Subsequent Event
Dividends Declared
The Company approved, effective February 21, 2023, the fiscal 2024 annual dividend of $2.28 per share, an increase over the
fiscal 2023 dividend of $2.24 per share. For fiscal 2024, the annual dividend will be paid in four quarterly installments of $0.57
per share, according to the following record and payable dates:
Record Date
March 17, 2023
May 5, 2023
Technology, office and entertainment
August 11, 2023
Payable Date
April 3, 2023
May 30, 2023
September 5, 2023
January 2, 2024
80
60
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
None.
ITEM 9A.
FINANCIAL DISCLOSURE
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is
required to be timely disclosed, is accumulated and communicated to management in a timely fashion. In designing and
evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily
required to use judgment in evaluating controls and procedures. Also, we have investments in unconsolidated entities. Since
we do not control or manage those entities, our controls and procedures with respect to those entities are substantially more
limited than those we maintain with respect to our consolidated subsidiaries.
2022
December 8, 2023
19,991
3,792
4,248
13,852
11,430
3,811
29,234
$
23,476
100,983 $
25,559
28,063
100,959 $ 121,360
Of Walmart International's total net sales, approximately $20.3 billion, $18.5 billion and $16.6 billion related to eCommerce for
fiscal 2023, 2022 and 2021, respectively.
(Amounts in millions)
Sam's Club net sales by merchandise category
Grocery and consumables
Fuel, tobacco and other categories
3,956
Home and apparel
Fiscal Years Ended January 31,
2023
2022
2021
$
53,027 $
46,822 $
42,148
14,636
10,751
7,590
9,579
9,037
7,340
Health and wellness
2023
73,556 $
2,259
Total long-lived assets
609
11,425
2,625
727
1,318
2,080
10,945
16,857
Fiscal Year Ended January 31, 2022
Net sales
$
Operating income (loss)
393,247 $
21,587
100,959 $
3,758
In the ordinary course of business, we review our internal control over financial reporting and make changes to our systems and
processes to improve such controls and increase efficiency, while ensuring that we maintain an effective internal control
environment. Changes may include such activities as implementing new, more efficient systems, updating existing systems,
automating manual processes, standardizing controls globally, migrating certain processes to our shared services organizations
and increasing monitoring controls. These changes have not materially affected, and are not reasonably likely to materially
affect, the Company's internal control over financial reporting. However, they allow us to continue to enhance our internal
control over financial reporting and ensure that our internal control environment remains effective.
$
567,762
(1,662)
25,942
Interest, net
(1,836)
Loss on extinguishment of debt
(2,410)
Other gains and (losses)
(3,000)
Income before income taxes
$
18,696
Total assets
1,964
7,054
243,197
10,282 $
reviewed by its CODM. Information for the Company's segments, as well as for Corporate and support, including the
reconciliation to income before income taxes, is provided in the following table:
Corporate
(Amounts in millions)
Fiscal Year Ended January 31, 2023
Net sales
Operating income (loss)
Interest, net
Other gains and (losses)
Income before income taxes
Total assets
Depreciation and amortization
Capital expenditures
Walmart
Walmart U.S. International
Sam's Club and support
$
Consolidated
420,553 $ 100,983 $
20,620
2,965
84,345 $
1,964
$
605,881
(5,121)
20,428
(1,874)
(1,538)
$
17,016
$
130,659 $
86,766 $
15,490 $
$
Fiscal Years Ended January 31,
125,044 $
14,678
Depreciation and amortization
Capital expenditures
210
$
20,564
$
113,490 $
109,445 $
6,561
2,633
13,415 $
599
16,146 $
252,496
1,359
11,152
6,131
2,436
488
1,209
10,264
Total revenues, consisting of net sales and membership and other income, and long-lived assets, consisting primarily of
property and equipment, net and lease right-of-use assets, aggregated by the Company's U.S. and non-U.S. operations for fiscal
2023, 2022 and 2021, are as follows:
(Amounts in millions)
Revenues
U.S. operations
Non-U.S. operations
Total revenues
Long-lived assets
U.S. operations
Non-U.S. operations
Total assets
Income before income taxes
Other gains and (losses)
(2,194)
$
13,735
$
244,860
Depreciation and amortization
$
6,773 $
1,963 $
601 $
1,321
10,658
Capital expenditures
$
8,475 $
91,403 $
2,497 $
1,512
13,106
Fiscal Year Ended January 31, 2021
Net sales
$
Operating income (loss)
369,963 $
19,116
121,360 $
3,660
63,910 $
1,906
$
555,233
(2,134)
22,548
Interest, net
622 $
An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the
period covered by this report was performed under the supervision and with the participation of management, including our
Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that
information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of
1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable
assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's
rules and forms.
Walmart Inc. Stock Incentive Plan of 2015, as amended effective February 1, 2018 is incorporated by
reference to Exhibit 10(d) to the Annual Report on Form 10-K of the Company for the fiscal year ended
January 31, 2018, filed on March 30, 2018 (C)
Management has responsibility for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles
generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial
reporting as of January 31, 2023. In making its assessment, management has utilized the criteria set forth by the Committee of
Sponsoring Organizations ("COSO") of the Treadway Commission in Internal Control-Integrated Framework (2013).
Management concluded that based on its assessment, Walmart's internal control over financial reporting was effective as of
January 31, 2023. The Company's internal control over financial reporting as of January 31, 2023, has been audited by Ernst &
Young LLP as stated in their report which appears herein.
98
Date: March 17, 2023
Date: March 17, 2023
Date: March 17, 2023
Date: March 17, 2023
Date: March 17, 2023
Date: March 17, 2023
Date: March 17, 2023
Date: March 17, 2023
By /s/ Cesar Conde
Cesar Conde
Director
By /s/ Timothy P. Flynn
By
Timothy P. Flynn
Director
/s/ Sarah Friar
Sarah Friar
Director
By /s/ Carla A. Harris
Carla A. Harris
Director
By /s/ Thomas W. Horton
Thomas W. Horton
Director
By /s/ Marissa A. Mayer
Marissa A. Mayer
Director
By
/s/ Randall L. Stephenson
Randall L. Stephenson
Director
By /s/ S. Robson Walton
S. Robson Walton
Director
Date: March 17, 2023
By /s/ Steuart L. Walton
Steuart L. Walton
Director
Signature Page to Walmart Inc.
Form 10-K for the Fiscal Year Ended January 31, 2023
Form 10-K for the Fiscal Year Ended January 31, 2023
Signature Page to Walmart Inc.
(Principal Accounting Officer)
Senior Vice President and Controller
None.
85
55
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Walmart Inc.
Date: March 17, 2023
By /s/ C. Douglas McMillon
C. Douglas McMillon
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated:
Date: March 17, 2023
By /s/ C. Douglas McMillon
Date: March 17, 2023
88
By
C. Douglas McMillon
President and Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Gregory B. Penner
Gregory B. Penner
Chairman of the Board and Director
By /s/ John David Rainey
John David Rainey
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: March 17, 2023
By
/s/David M. Chojnowski
David M. Chojnowski
Date: March 17, 2023
ITEM 16. FORM 10-K SUMMARY
87
Significant Subsidiaries of Walmart Inc.
Delaware, U.S.
100%
NA
Wal-Mart de Mexico, S.A.B. de C.V.
Mexico
71%
Walmex
Wal-Mart Canada Corp.
Canada
100%
Walmart
Flipkart Private Limited
Singapore
75%
Flipkart
Walmart Chile S.A.(¹)
Chile
100%
Walmart Chile
Massmart Holdings Ltd.
South Africa
100%
Massmart
Qomolangma Holdings Ltd.
Cayman Islands
100%
ΝΑ
(1)
The Company owns substantially all of Walmart Chile.
Sam's Real Estate Business Trust
ΝΑ
100%
Delaware, U.S.
The following list details certain of the subsidiaries of Walmart Inc. Subsidiaries not included in the list are omitted because, in
the aggregate, they are not significant as permitted by Item 601(b)(21) of Regulation S-K.
Subsidiary
Organized or
Incorporated
Percent of Equity
Securities Owned
Name Under Which Doing Business
Other Than Subsidiary's
Wal-Mart Stores East, LP
Delaware, U.S.
100%
Walmart
Wal-Mart Stores Texas, LLC
Delaware, U.S.
100%
Walmart
Wal-Mart Property Company
Exhibit 21
Delaware, U.S.
ΝΑ
Wal-Mart Real Estate Business Trust
Delaware, U.S.
100%
ΝΑ
Sam's West, Inc.
Arkansas, U.S.
100%
Sam's Club
Sam's East, Inc.
Arkansas, U.S.
100%
Sam's Club
Sam's Property Company
100%
Report on Internal Control Over Financial Reporting
Financial Statement Schedules: None.
This Exhibit was originally filed in paper format. Accordingly, a hyperlink has not been provided.
4.1
171
4.2
4.3
4.4
14
55
4.5
4.6
46
4.7
4.8*
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Documents filed as part of this report are as follows:
Financial Statements: See the Financial Statements in "Item 8. Financial Statements and Supplementary Data."
Financial Statement Schedules:
Certain schedules have been omitted because the required information is not present or is not present in
amounts sufficient to require submission of the schedule, or because the information required is included in
the Consolidated Financial Statements, including the notes thereto.
Exhibits:
See exhibits listed under part (b) below.
The required exhibits are filed as part of this Form 10-K or are incorporated by reference herein.(¹)
Restated Certificate of Incorporation of the Company dated February 1, 2018 is incorporated herein by
reference to Exhibit 3.1 to the Report on Form 8-K filed by the Company on February 1, 2018
Amended and Restated Bylaws of the Company dated November 10, 2022 are incorporated herein by
reference to Exhibit 3.1 to the Report on Form 8-K filed by the Company on November 16, 2022
Indenture dated as of April 1, 1991, between the Company and J.P. Morgan Trust Company, National
Association, as successor trustee to Bank One Trust Company, NA, as successor trustee to The First National
Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(a) to Registration Statement on
Form S-3 (File Number 33-51344)
(P)
First Supplemental Indenture dated as of September 9, 1992, to the Indenture dated as of April 1, 1991,
between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank
One Trust Company, NA, as successor trustee to The First National Bank of Chicago, Trustee, is incorporated
herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-51344) (P)
Indenture dated as of December 11, 2002, between the Company and J.P. Morgan Trust Company, National
Association, as successor trustee to Bank One Trust Company, NA, is incorporated by reference to Exhibit 4.5
to Registration Statement on Form S-3 (File Number 333-101847)
Indenture dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National
Association is incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3 (File Number
333-126512)
First Supplemental Indenture, dated December 1, 2006, between the Company and The Bank of New York
Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as
Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust
Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.6 to Post-
Effective Amendment No. 1 to Registration Statement on Form S-3 (File Number 333-130569)
Second Supplemental Indenture, dated December 19, 2014, between the Company and The Bank of New York
Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as
Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust
Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.3 to Registration
Statement on Form S-3 (File Number 333-201074)
Third Supplemental Indenture, dated June 26, 2018, between the Company and The Bank of New York Trust
Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as Trustee,
under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company,
National Association, as Trustee, is incorporated herein by reference to Exhibit 4(S) to Current Report on
Form 8-K filed on June 26, 2018
Description of Registrant's Securities
83
3.2
3.1
93
(b)
Changes in Internal Control Over Financial Reporting
There has been no change in the Company's internal control over financial reporting as of January 31, 2023, that has materially
affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
In the first quarter of fiscal 2024, we will begin upgrading our financial system, including our general ledger and other
applications, in stages. This financial system will continue to be a significant component of our internal control over financial
reporting as it is implemented.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
81
ITEM 10.
PART III
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Please see the information concerning our executive officers contained in "Item 1. Business" herein under the caption
"Information About Our Executive Officers," which is included in accordance with the Instruction to Item 401 of the SEC's
Regulation S-K.
Information required by this Item 10 with respect to the Company's directors and certain family relationships is incorporated by
reference to such information under the caption "Proposal No. 1 - Election of Directors" included in our Proxy Statement
relating to our 2023 Annual Meeting of Shareholders (our "Proxy Statement").
No material changes have been made to the procedures by which shareholders of the Company may recommend nominees to
our Board of Directors since those procedures were disclosed in our proxy statement relating to our 2022 Annual Shareholders'
Meeting as previously filed with the SEC.
The information regarding our Audit Committee, including our audit committee financial experts, our Reporting Protocols for
Senior Financial Officers and our Code of Conduct applicable to all of our associates, including our Chief Executive Officer,
Chief Financial Officer and our Controller, who is our principal accounting officer, required by this Item 10 is incorporated
herein by reference to the information under the captions "Corporate Governance" and "Proposal No. 4: Ratification of
Independent Accountants" included in our Proxy Statement. "Item 1. Business" above contains information relating to the
availability of a copy of our Reporting Protocols for Senior Financial Officers and our Code of Conduct and the posting of
amendments to and any waivers of the Reporting Protocols for Senior Financial Officers and our Code of Conduct on our
website.
10.1*
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item 12 is incorporated herein by reference to the information that appears under the caption
"Stock Ownership" included in our Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item 13 is incorporated herein by reference to the information under the caption "Corporate
Governance - Board Processes and Practices" included in our Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item 14 is incorporated herein by reference to the information under the caption "Proposal No.
4 - Ratification of Independent Accountants" included in our Proxy Statement.
82
PART IV
ITEM 15.
(a)
1.
2.
3.
The information required by this Item 11 is incorporated herein by reference to the information under the captions "Corporate
Governance - Director Compensation" and "Executive Compensation" included in our Proxy Statement.
Certain instruments defining the rights of holders of long-term debt securities of the Registrant are omitted pursuant to Item601(b)(4)(iii) of Regulation
S-K. The Company hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.
10.2
10.4
List of the Company's Significant Subsidiaries
23*
Consent of Independent Registered Public Accounting Firm
31.1*
Chief Executive Officer Section 302 Certification
31.2*
32.1**
Chief Financial Officer Section 302 Certification
Chief Executive Officer Section 906 Certification
32.2**
99.1*
101.INS*
Chief Financial Officer Section 906 Certification
Certain Federal and State Court Opioids Litigation Case Citations and Currently Scheduled Trial Dates
Inline XBRL Instance Document
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
101.DEF*
101.LAB*
101.PRE*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
*
**
(C)
(P)
(1)
(c)
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
Filed herewith as an Exhibit.
Furnished herewith as an Exhibit.
This Exhibit is a management contract or compensatory plan or arrangement
21*
84
Share Issuance and Acquisition Agreement by and Between Flipkart Private Limited and Walmart Inc. dated
as of May 9, 2018 is incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of
the Company for the fiscal quarter ended July 31, 2018 filed on September 6, 2018 (portions of this exhibit
have been omitted and filed separately with the SEC pursuant to a request for confidential treatment.)
Counterpart Form of Share Purchase Agreement by and Among Wal-Mart International Holdings, Inc., the
shareholders of Flipkart Private Limited identified on Schedule I thereto, Fortis Advisors LLC and Walmart
Inc. dated as of May 9, 2018 is incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on
Form 10-Q of the Company for the fiscal quarter ended July 31, 2018 filed on September 6, 2018 (portions of
this exhibit have been omitted and filed separately with the SEC pursuant to a request for confidential
treatment.)
(C)
10.5*
10.6
10.7
10.7(a)*
10.8
10.9
10.10*
10.11
10.12
10.13
10.14
10.15
10.16
(C)
10.3
Walmart Inc. Deferred Compensation Matching Plan, as amended and restated effective February 1, 2023
Walmart Inc. Management Incentive Plan, as amended effective February 1, 2018 is incorporated by reference
to Exhibit 10(b) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31,
2018, filed on March 30, 2018 (C)
Walmart Inc. Supplemental Executive Retirement Plan, as amended and restated effective February 1, 2023
(C)
Walmart Inc. Director Compensation Deferral Plan, as amended effective February 1, 2018 is incorporated by
reference to Exhibit 10(f) to the Annual Report on Form 10-K of the Company for the fiscal year ended
January 31, 2018, filed on March 30, 2018 (C)
Form of Post-Termination Agreement and Covenant Not to Compete with attached Schedule of Executive
Officers who have executed a Post-Termination Agreement and Covenant Not to Compete is incorporated by
reference to Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the fiscal year ended
January 31, 2011, filed on March 30, 2011
(C)
Amended Schedule of Executive Officers who have executed a Post-Termination Agreement and Covenant
Not to Compete in the form filed as Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the
fiscal year ended January 31, 2011
(C)
Form of Walmart Inc. Stock Incentive Plan of 2015 Restricted Stock Notification of Award and Terms and
Conditions of Award is incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K of the
Company for the fiscal year ended January 31, 2022, filed March 18, 2022
(C)
(C)
Form of Walmart Inc. Stock Incentive Plan of 2015 Global Share-Settled Performance-Based Restricted Stock
Unit Notification and Terms and Conditions is incorporated by reference to Exhibit 10.9 to the Annual Report
on Form 10-K of the Company for the fiscal year ended January 31, 2022, filed on March 18, 2022
Walmart Inc. Officer Deferred Compensation Plan, as amended and restated effective February 1, 2023 (C)
Form of Share Settled Restricted Stock Unit Notification and Terms and Conditions Awarded to Suresh
Kumar on July 9, 2019 is incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q of
the Company for the fiscal quarter ended July 31, 2019 filed on September 6, 2019 (©)
Post Termination Agreement and Covenant Not to Compete between the Company and Suresh Kumar dated
June 6, 2019 is incorporated herein by reference to Exhibit 10.16 to the Annual Report on Form 10-K for the
fiscal 1 year ended January 31, 2020 filed on March 20, 2020 (C)
Separation Agreement between the Company and Marc Lore dated January 26, 2021 is incorporated herein by
reference to Exhibit 10.18 to the Annual Report on Form 10-K for the fiscal year ended January 31, 2021 filed
on March 19, 2021 (C)
Retirement Agreement between the Company and M. Brett Biggs dated November 29, 2021 is incorporated
herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on November 29, 2021
Walmart Inc. 2016 Associate Stock Purchase Plan, as amended effective February 1, 2018 is incorporated by
reference to Exhibit 10(c) to the Annual Report on Form 10-K of the Company for the fiscal year ended
January 31, 2018, filed on March 30, 2018 (C)
86