Walmart 2006 Annual Report Download

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BUILDING SMILES
2006 Annual Report

Table of contents

  • Page 1
    2006 Annual Report BUILDING SMILES

  • Page 2
    ... organization is more committed than ever to Dad's founding principles. Being a good and respectful employer: Wal-Mart offers tremendous opportunities for our associates to develop their professional skills and pursue a long-term career if they choose. Our management teams foster an environment...

  • Page 3
    I'm smiling because there is more selection at Wal-Mart than ever before. - Stephanie, customer and associate 1

  • Page 4
    ... food choices Today's consumers want healthier and more responsible food choices. That's why we are doubling the organic product and socially responsible offerings in select U.S. Wal-Mart stores. SAM'S CLUB also is expanding its array of organic and socially responsible products by more than 100 new...

  • Page 5
    ... as online at www.walmart.com and www.samsclub.com. Wal-Mart gift cards are available for in-country use around the world. Customers can personalize gift cards either online or at our one-hour photo labs at stores and clubs, so they can carry a photo of loved ones. Wal-Mart was first to market with...

  • Page 6
    ...in the USA" cookware for Wal-Mart and SAM'S CLUB, everyone came out ahead. Tramontina USA, Inc., headquartered in Houston, Texas, has facilities around the world, and has supplied Wal-Mart since 1988. The relationship began with a simple claw hammer, sold in Wal-Mart's hardware department. Today, as...

  • Page 7
    I'm smiling because Wal-Mart makes a real difference in my community. - James Sexton, Mayor, Evergreen Park, IL 5

  • Page 8
    ... sustainable business - to being a positive force in America's communities and around the world. Local success story Local Chinese men and women account for 99% of Wal-Mart China's senior managers. Du Limin is a shining example of such talent. She started at Wal-Mart knowing nothing about retailing...

  • Page 9
    ... local community and more associate jobs, all with great career potential. Local success story Can a mom with only a high school diploma become manager of an exciting multi-million-dollar operation? She can if she's high-energy Sherry Bryan, manager of our Lexington, Kentucky Wal-Mart on Richmond...

  • Page 10
    ... of 2006, is just one great example of what can be done. In the next year, we are significantly increasing our organic food offering in Wal-Mart stores and SAM'S CLUBs in the U.S., as well as around the world. Our product offering includes many that can help the environment and save money for our...

  • Page 11
    I'm smiling because Wal-Mart helps people. - Kirstyn, student 9

  • Page 12
    ...and in-store technology to help customers, associates and the public access information and relief services, as well as search for messages about loved ones. Wal-Mart donation centers were set up at key shelters to provide basic necessities to Louisiana, Mississippi and Texas victims. Vacant Company...

  • Page 13
    ...disasters strike, Wal-Mart associates around the world respond with funds, volunteers and needed goods. Military support Our support of the military includes the Sesame Workshop® program, Talk, Listen, Connect, which helps children of active duty personnel manage the stresses associated with being...

  • Page 14
    ... every day in our more than 6,100 stores worldwide. And thanks to these hard-working men and women and their ability to grow with our Company, we are excited about the future. Together, we are going to leverage the changes of this past year into even greater success for Wal-Mart and the communities...

  • Page 15
    ... is good for the working men and women we employ, the thousands of communities we support, and the millions of customers we serve worldwide. And that's why it is also good for our Company and our shareholders. "Today, we find ourselves operating 2,285 international stores, buying products from...

  • Page 16
    ... in information systems, global procurement, real estate, logistics, advertising, merchandising, accounting, recruiting - to name just some. At Wal-Mart, we know every detail counts, and we are fortunate to have associates who take care of countless details with skill and imagination every day, all...

  • Page 17
    ... experience in our stores • Implemented successful Network Remix in Florida, reducing store inventory and enhancing shelf in-stock • Provided exceptional, timely logistical service to customers and hurricane victims Looking ahead Wal-Mart U.S. expects to open over 305 new, relocated or expanded...

  • Page 18
    ..., food and drug stores, general merchandise stores, bodegas (small markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants. Formats Supercenters 2,460 locations In the U.S., Mexico, Brazil, Germany, Japan, U.K., China, Argentina, South Korea...

  • Page 19
    "As our global and domestic presence expands, so too, does our commitment to support our local communities and to act as good stewards of the environment." - Lee Scott, President and Chief Executive Officer Membership warehouse clubs 670 locations In the U.S., Mexico, Brazil, Canada, China and ...

  • Page 20
    ...debt Long-term obligations under capital leases Shareholders' equity Financial Ratios Current ratio Return on assets (2) Return on shareholders' equity (3) Other Year-End Data Discount stores in the United States Supercenters in the United States SAM'S CLUBs in the United States Neighborhood Markets...

  • Page 21
    ... summary. The acquisition of the ASDA Group PLC and the Company's related debt issuance had a significant impact on the fiscal 2000 amounts in this summary. Years prior to 1998 have not been restated for the effects of the change in accounting method for SAM'S CLUB membership revenue recognition...

  • Page 22
    ...independent registered public accounting firm Report of independent registered public accounting firm on internal control over financial reporting Management's report to our shareholders Fiscal 2006 end-of-year store count Senior officers and board of directors Corporate and stock information 20...

  • Page 23
    ..., and Wal-Mart's online retail format, Walmart.com. Our traditional Wal-Mart Stores retail formats include: • Supercenters, which average approximately 187,000 square feet in size and offer a wide assortment of general merchandise and a full-line supermarket; • Discount stores, which average...

  • Page 24
    ... $3.6 billion of our common stock under our share repurchase program and paid dividends of $2.5 billion. Additionally during fiscal 2006, we issued $7.7 billion in long-term debt, repaid $2.7 billion of long-term debt and funded a net decrease in commercial paper of $704 million. • Total...

  • Page 25
    ...the Wal-Mart Stores and SAM'S CLUB segments' implementation of a new job classification and pay structure for hourly field associates in the United States. The job classification and pay structure, which was implemented in the second quarter of fiscal 2005, was designed to help maintain internal...

  • Page 26
    Management's Discussion and Analysis of Results of Operations and Financial Condition WAL-MART Our expansion programs consist of opening new units, converting discount stores to supercenters, relocations that result in more square footage, as well as expansions of existing stores. Segment expansion...

  • Page 27
    ..., our international expansion program and the impact of foreign currency exchange rate changes. In fiscal 2005, the International segment opened 232 units, net of relocations and closings, which added 18 million, or 15.6%, of additional unit square footage. This includes the acquisition of Bompre...

  • Page 28
    ...'s Discussion and Analysis of Results of Operations and Financial Condition WAL-MART Company Share Repurchase Program From time to time, we repurchase shares of our common stock under a $10.0 billion share repurchase program authorized by our Board of Directors in September 2004. During the...

  • Page 29
    ...The following table details the ratings of the credit rating agencies that rated our outstanding indebtedness at January 31, 2006. Rating agency Standard and Poor's Moody's Investors Service Fitch Ratings Dominion Bond Rating Service Commercial paper A-1+ P-1 F1+ R-1(middle) Long-term debt AA Aa2 AA...

  • Page 30
    Management's Discussion and Analysis of Results of Operations and Financial Condition WAL-MART We enter into interest rate swaps to minimize the risks and costs associated with financing activities, as well as to maintain an appropriate mix of fixed- and ï¬,oating-rate debt. Our preference is to ...

  • Page 31
    ... self-insurance accrual by $23 million and $62 million, respectively. For a summary of our significant accounting policies, please see Note 1 to our consolidated financial statements that appear after this discussion. Forward-Looking Statements This Annual Report contains statements that Wal-Mart...

  • Page 32
    Consolidated Statements Management's Discussion of and Income Analysis of Results of Operations -MART W A L and Financial Condition WAL-MART (Amounts in millions except per share data) Fiscal Year Ended January 31, Revenues: Net sales Other income, net Costs and expenses: Cost of sales Operating, ...

  • Page 33
    Consolidated Balance Sheets WAL-MART (Amounts in millions except per share data) January 31, Assets Current assets: Cash and cash equivalents Receivables Inventories Prepaid expenses and other Total current assets Property and equipment, at cost: Land Buildings and improvements Fixtures and ...

  • Page 34
    Consolidated Statements of Shareholders' Equity WAL-MART (Amounts in millions except per share data) Number of Shares Common Stock Capital in Excess of Par Value Accumulated Other Comprehensive Income Retained Earnings Total Balance - January 31, 2003 Comprehensive income: Net income from ...

  • Page 35
    ... Increase (decrease) in commercial paper Proceeds from issuance of long-term debt Purchase of Company stock Dividends paid Payment of long-term debt Payment of capital lease obligations Other financing activities Net cash used in financing activities Effect of exchange rate changes on cash Net...

  • Page 36
    ... receivables from property insurance claims. Additionally, amounts due from banks for customer credit card, debit card and EBT transactions that take in excess of seven days to process are classified as accounts receivable. Inventories The Company values inventories at the lower of cost or market...

  • Page 37
    ... and administrative expenses include all operating costs of the Company that are not related to the transportation of products from the supplier to the warehouse or from the warehouse to the store. Additionally, the cost of warehousing and occupancy for our Wal-Mart Stores segment distribution...

  • Page 38
    ... print and television advertisements. Pre-Opening Costs The costs of start-up activities, including organization costs and new store openings, are expensed as incurred. Share-Based Compensation The Company recognizes expense for its share-based compensation based on the fair value of the awards that...

  • Page 39
    ..., the Company had committed lines of credit of $5.0 billion with 57 firms and banks, which were used to support commercial paper, and committed and informal lines of credit with various banks totaling an additional $693 million. Long-term debt at January 31, consists of (in millions): Interest Rate...

  • Page 40
    ...to measure interest to be paid or received and do not represent the exposure due to credit loss. All of the Company's interest rate swaps that receive fixed interest rate payments and pay variable interest rate payments are Fair Value of Financial Instruments Instrument Fiscal Year Ended January 31...

  • Page 41
    ... of these instruments. Long-term debt: Fair value is based on the Company's current incremental borrowing rate for similar types of borrowing arrangements. Fair value instruments and net investment instruments: The fair values are estimated amounts the Company would receive or pay to terminate the...

  • Page 42
    Notes to Consolidated Financial Statements WAL-MART Items that give rise to significant portions of the deferred tax accounts are as follows (in millions): January 31, Deferred tax liabilities Property and equipment International, principally asset basis differences Inventory Other Total deferred ...

  • Page 43
    ... is accounted for in accordance with the fair-value based method of SFAS 123(R). The Company's Stock Incentive Plan of 2005 (the "Plan"), which is shareholder-approved, permits the grant of stock options, restricted (non-vested) stock and performance share compensation awards to its associates for...

  • Page 44
    Notes to Consolidated Financial Statements WAL-MART A summary of the stock option award activity for fiscal 2006 is presented below: Options Outstanding at January 31, 2005 Granted Exercised Forfeited or expired Outstanding at January 31, 2006 Exercisable at January 31, 2006 Shares 68,115,000 4,...

  • Page 45
    ... Associate incentive bonus plans, and a second putative class action in California asserts that the Company has omitted to include bonus payments in calculating associates' regular rate of pay for purposes of determining overtime. As to the first case (Cruz v. Wal-Mart Stores, Inc.), the Company...

  • Page 46
    ... interest at rates ranging from 3.0% to 29.0% Present value of minimum lease payments The Company has entered into sale/leaseback transactions involving buildings and the underlying land that were accounted for as capital and operating leases. Included in the annual maturities schedule above are...

  • Page 47
    ...on management responsibility within the United States and in total for international units. The Wal-Mart Stores segment includes the Company's supercenters, discount stores and Neighborhood Markets in the United States, as well as Walmart.com. The SAM'S CLUB segment includes the warehouse membership...

  • Page 48
    Notes to Consolidated Financial Statements WAL-MART The Company measures the profit of its segments as "segment operating income," which is defined as income from continuing operations before net interest expense, income taxes and minority interest. Information on segments and the reconciliation ...

  • Page 49
    ... amounts due to rounding. 13 SUBSEQUENT EVENTS On March 2, 2006, the Company's Board of Directors approved an increase in the Company's annual dividend to $0.67 per share. The annual dividend will be paid in four quarterly installments on April 3, 2006, June 5, 2006, September 5, 2006, and January...

  • Page 50
    ... balance sheets of Wal-Mart Stores, Inc. as of January 31, 2006 and 2005, and the related consolidated statements of income, shareholders' equity and cash ï¬,ows for each of the three years in the period ended January 31, 2006. These financial statements are the responsibility of the Company...

  • Page 51
    ... Organizations of the Treadway Commission (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. Our responsibility...

  • Page 52
    ... 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 Wal-Mart...

  • Page 53
    ... End-of-Year Store Count WAL-MART International/Worldwide State Discount SAM'S Stores Supercenters CLUBs Neighborhood Markets Country Discount SAM'S Stores Supercenters CLUBs Neighborhood Markets Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho...

  • Page 54
    ... President and Chief Financial Officer Douglas J. Degn Executive Vice President, Food, Consumables, and Hardlines, Wal-Mart Stores Division U.S. Craig R. Herkert Executive Vice President, President and Chief Executive Officer, The Americas, Wal-Mart International H. Lee Scott, Jr. President and...

  • Page 55
    ... Company, N.A. 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/equiserve Dividend reinvestment and direct stock purchase available Listings - Stock Symbol: WMT New York Stock Exchange...

  • Page 56
    ...® LCD television Exstoâ„¢ men's clothing Uniï¬,ame® gas grill Fresh ï¬,owers and plants Bose® speakers Georgeâ„¢ women's clothing GE® appliances Parent's Choice® organic baby formula Wal-Mart Stores, Inc. 702 S.W. 8th Street Bentonville, Arkansas 72716 www.walmartstores.com www.walmart.com...