Walmart 2007 Annual Report Download - page 40

Wal-Mart 2007 Annual Report 38
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
Self-Insurance
We use a combination of insurance, self-insured retention and self-
insurance for a number of risks, including, without limitation, workers’
compensation, general liability, vehicle liability and the Company’s
obligation for employee-related healthcare benefits. Liabilities
associated with the risks that we retain are estimated by consid-
ering historical claims experience, including frequency, severity,
demographic factors, and other actuarial assumptions. In calcu-
lating our liability, we analyze our historical trends, including loss
development, and apply appropriate loss development factors to
the incurred costs associated with the claims made against our self-
insured program. The estimated accruals for these liabilities could be
signi cantly a ected if future occurrences or loss development di er
from these assumptions. For example, for our workers’ compensation
and general liability, a 1% increase or decrease to the assumptions for
claims costs or loss development factors would increase or decrease
our self-insurance accrual by $25 million or $72 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 believes are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Those statements are intended
to enjoy the protection of the safe harbor for forward-looking state-
ments provided by that Act. These forward-looking statements
include statements under the caption “Results of Operations” in
Management’s Discussion and Analysis of Financial Condition and
Results of Operations regarding the e ect of the opening of new
stores on existing stores sales and the trend in the percentages that
the net sales of certain of our business segments represent of our
total net sales, and under the caption “Liquidity and Capital Resources”
in Management’s Discussion and Analysis of Financial Condition and
Results of Operations with respect to our capital expenditures, our
ability to fund certain cash  ow shortfalls by the sale of commercial
paper and long-term debt securities, our ability to sell our long-term
securities and our anticipated reasons for repurchasing shares of our
common stock and in Note 5 to our Consolidated Financial Statements
regarding the possible tax treatment and e ect of the loss recorded
in connection with the disposition of our German operations in  scal
year 2007. These statements are identi ed by the use of the words
“anticipate,” “believe,” “could increase,” “could result,” “expect,” “will result,”
“may result,” “plan,” “will be” and other, similar words or phrases. Similarly,
descriptions of our objectives, strategies, plans, goals or targets are
also forward-looking statements. These statements discuss, among
other things, expected growth, future revenues, future cash  ows,
future capital expenditures, future performance and the anticipation
and expectations of Wal-Mart and its management as to future occur-
rences and trends. These forward-looking statements are subject to
certain factors, in the United States and internationally, that could
a ect our  nancial performance, business strategy, plans, goals and
objectives. Those factors include, but are not limited to, the cost
of goods, information security costs, labor costs, the cost of fuel
and electricity, the cost of healthcare benefits, insurance costs,
cost of construction materials, catastrophic events, competitive
pressures, inflation, accident-related costs, consumer buying pat-
terns and debt levels, weather patterns, transport of goods from
foreign suppliers, currency exchange  uctuations, trade restrictions,
changes in tariff and freight rates, changes in tax and other laws
and regulations that affect our business, the outcome of legal
proceedings to which we are a party, unemployment levels, inter-
est rate  uctuations, changes in employment legislation and other
capital market, economic and geo-political conditions and events.
Moreover, we typically earn a disproportionate part of our annual
operating income in the fourth quarter as a result of the seasonal
buying patterns. Those buying patterns are difficult to forecast
with certainty. The foregoing list of factors that may affect our
performance is not exclusive. Other factors and unanticipated
events could adversely a ect our business operations and  nancial
performance. We discuss certain of these matters more fully, as
well as certain risk factors that may affect our business operations,
financial condition, results of operations and liquidity in other of
our filings with the Securities and Exchange Commission (“SEC”),
including our Annual Report on Form 10-K. We filed our Annual
Report on Form 10-K for the year ended January 31, 2007, with the
SEC on or about March 27, 2007. The forward-looking statements
described above are made based on a knowledge of our business
and the environment in which we operate. However, because of
the factors described and listed above, as well as other factors, or as
a result of changes in facts, assumptions not being realized or other
circumstance, actual results may materially differ from anticipated
results described or implied in these forward-looking statements.
We cannot assure the reader that the results or developments
expected or anticipated by us will be realized or, even if substan-
tially 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, uncertainties and other factors 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 re ect subsequent events or circumstances,
except as may be required by applicable law.