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2009 ANNUAL REPORT
Now more than ever.
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★ ★★★★
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Table of contents

  • Page 1
    2009 ANNUAL REPORT Now more than ever.

  • Page 2
    ...Ever Wal-Mart is There for Customers and Members. More than 40 years ago, our founder Sam Walton, understood people needed to save money so they could live better. Today, this mission is more important than ever to our customers and members around the world. We work hard every day in all our markets...

  • Page 3
    ... $308.9 9.8% $ 18.7 $ 2.72 $ 0.60 Twelve Months Ended 2005 $281.5 11.4% $ 17.3 $ 2.46 $ 0.52 (Amounts in millions) January 31, 2009 $ 23,147 (11,499) January 31, 2008 $ 20,642 (14,937) Net cash provided by operating activities Payments for property and equipment Free cash flow $11,648 $5,705

  • Page 4
    ... strong management team, able to execute our strategy, perform every single day, and deliver results." Michael T. Duke To Our Shareholders, Associates and Customers: I'm fortunate to have assumed my new role as president and chief executive officer at this time in Wal-Mart's history. Our Company is...

  • Page 5
    ... as a Company. By executing well and adhering to our values, we plan to distance ourselves even further from the competition and do even more to "save people money so they can live better." Michael T. Duke President and Chief Executive Officer, Wal-Mart Stores, Inc. Wal-Mart 2009 Annual Report 3

  • Page 6
    ...at Walmart U.S. Save money. Live b Strong Growth: Net sales increased 6.8 percent to $255.7 billion, while segment operating income grew 7.1 percent to $18.8 billion. HIGHLIGHTS 4 Wal-Mart 2009 Annual Report Improved Customer Experience: We ended the year with more than 3,600 stores in 50 states...

  • Page 7
    ...plan has been positive. Under this plan, we expect to update approximately 700 new and existing stores this year. Our logistics team implemented a number of productivity initiatives in warehouse handling and transportation. We passed along these savings to our customers through lower prices. Walmart...

  • Page 8
    ... working. Clearly, helping customers save money is leading to increased sales, increased profit and improved return on investment, or ROI, for our Wal-Mart International businesses. Improving ROI starts with profitable growth and is aided by our capital efficiency focus. We also are building stores...

  • Page 9
    S UNITES ALL MARKETS. United Kingdom Mexico Brazil Expanding in Asia: We opened a Hong Kong regional office to facilitate long-term opportunities in Asia, to support existing operations in Japan, China and India, and to further build our leadership team. New Market: Wal-Mart entered Chile ...

  • Page 10
    ...at Sam's Club VALUE DRIVES CLUB M HIGHLIGHTS 8 Wal-Mart 2009 Annual Report Solid Performance: Sam's Club finished fiscal year 2009 with net sales of $46.9 billion, an increase of 5.6 percent. Segment operating income for the year was $1.6 billion. Sustainability-Focused Products: Home efficiency...

  • Page 11
    ... compelling value on quality items that membership offers. The numbers help tell the story. In a small business, every penny counts, especially in today's economy. We show small business members that by purchasing products at Sam's Club, they save money and increase their own business' profitability...

  • Page 12
    ... sourcing, innovation, efficiency and sustainability. Giving Back to Communities The Wal-Mart Foundation is dedicated to supporting programs that help people live better, primarily by expanding access to education, health care, and job opportunities, as well as by promoting responsible sourcing. We...

  • Page 13
    ... programs by buying more from farmers located close to our stores. By 2011, our China stores expect to buy from more than one million farmers in that country. Creating Jobs: Wal-Mart created approximately 63,000 jobs around the world in 2008, including more than 33,000 in the United States. We plan...

  • Page 14
    ... teams work with suppliers to ensure we offer value, variety and quality. Our price leadership position throughout the world is working for customers, members, associates and shareholders alike. Our sales are strong. Wal-Mart has a very solid balance sheet and manages the business prudently...

  • Page 15
    ... President and Chief Executive Officer of Wal-Mart Stores, Inc., serving in that position from January 2000 to January 2009. M. Michele Burns(b) Ms. Burns is the Chairman and Chief Executive Officer of Mercer LLC, a subsidiary of Marsh and McLennan Companies, Inc. Michael T. Duke(d)(e) Mr. Duke is...

  • Page 16
    ... leases Shareholders' equity Financial ratios Current ratio Return on assets (2) Return on shareholders' equity (3) Other year-end data Walmart U.S. Segment Discount stores in the United States Supercenters in the United States Neighborhood Markets in the United States International Segment Units...

  • Page 17
    ...SALES BY SEGMENT Net sales in fiscal 2009 were a record $401.2 billion, up 7.2% from fiscal 2008. Sam's Club 11.7% International 24.6% Walmart U.S. 63.7% For certain financial information relating to our segments, see Note 11 to our Consolidated Financial Statements. Wal-Mart 2009 Annual Report...

  • Page 18
    ... so with an understanding that additional stores may take sales away from existing units. During fiscal 2008, in connection with our revisions to our capital efficiency model, we revised our methodology for calculating the negative impact of new stores on comparable 16 Wal-Mart 2009 Annual Report

  • Page 19
    ... reducing the number of weighted average shares outstanding. Return on Investment Management believes return on investment ("ROI") is a meaningful metric to share with investors because it helps investors assess how efficiently Wal-Mart is employing its assets. ROI was 19.3% for fiscal 2009 and 19...

  • Page 20
    ... assets of discontinued operations of $195 million, $967 million and $929 million, respectively. (2) 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. 18 Wal-Mart 2009 Annual Report

  • Page 21
    ... 2009 from fiscal 2008 due to the increase in net cash provided by operating activities of continuing operations and the reduction in our capital expenditures primarily associated with our planned slowing of store expansion in the United States. Free cash flow is considered a non-GAAP financial...

  • Page 22
    ... Walmart U.S. segment 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. During fiscal 2009 we opened two discount stores, 23 Neighborhood Markets and 165 supercenters...

  • Page 23
    ... expansion program, offset by the unfavorable impact of changes in foreign currency exchange rates of $2.3 billion. Our international expansion program added 517 units and 29.2 million or 13.1% of additional unit square footage, net of relocations and closings. Wal-Mart 2009 Annual Report...

  • Page 24
    ...liabilities was 0.9 at January 31, 2009 and 0.8 at January 31, 2008. We generally have a working capital deficit due to our efficient use of cash in funding operations and in providing returns to shareholders in the form of stock repurchases and payment of dividends. 22 Wal-Mart 2009 Annual Report

  • Page 25
    ... of goods or services or changes to agreed-upon amounts for some obligations. On March 5, 2009, the Company's Board of Directors approved an increase in the annual dividend for fiscal 2010 to $1.09 per share, an increase of 15% over the dividends paid in fiscal 2009. Wal-Mart 2009 Annual Report 23

  • Page 26
    ..., payments under operating leases would increase by $72 million for fiscal 2010, based on current cost estimates. Capital Resources During fiscal 2009, we issued $6.6 billion of long-term debt. The net proceeds from the issuance of such long-term debt were used to repay outstanding commercial paper...

  • Page 27
    ... 27,222 3,513 $39,018 (2) ($42,218 + $44,671)/2 for fiscal year 2009 and ($44,671 + $39,018)/2 for fiscal year 2008. (3) 8 X (($1,751 + $1,604)/2) for fiscal year 2009 and 8 X (($1,604 + $1,427)/2) for fiscal year 2008. (4) The calculation of the ratio as defined. Wal-Mart 2009 Annual Report 25

  • Page 28
    ...loss in the value of the debt of $601 million. In addition, we have designated debt of approximately ¥437.4 and ¥142.1 billion as of January 31, 2009 and 2008, respectively, Supercenters Neighborhood Markets Total Walmart U.S. Sam's Club Segment Total United States Total International Grand total...

  • Page 29
    ...all our Walmart U.S. segment's merchandise. Sam's Club merchandise and merchandise in our distribution warehouses are valued based on weighted average cost using the LIFO method. Inventories for international operations are primarily valued by the retail method of accounting and are stated using the...

  • Page 30
    ... share of $0.05 for the second quarter of fiscal year 2008. For a summary of our significant accounting policies, please see Note 1 to our Consolidated Financial Statements that appear after this discussion. the opening of new stores on comparable store sales and the decline in that impact over time...

  • Page 31
    ... Executive Officer appearing in this Annual Report includes forward-looking statements that relate to our efforts contributing to our efficiency, maintaining focus on price leadership, our contribution to sustainability, our efforts in responsible sourcing, our plan to create jobs in fiscal 2010...

  • Page 32
    Consolidated Statements of Income Fiscal Year Ended January 31, (Amounts in millions except per share data) 2009 2008 2007 Revenues: Net sales Membership and other income $401,244 4,363 405,607 $374,307 4,169 378,476 $344,759 3,609 348,368 Costs and expenses: Cost of sales Operating, selling, ...

  • Page 33
    ... leases Deferred income taxes and other Minority interest Commitments and contingencies Shareholders' equity: Preferred stock ($0.10 par value; 100 shares authorized, none issued) Common stock ($0.10 par value; 11,000 shares authorized, 3,925 and 3,973 issued and outstanding at January 31, 2009...

  • Page 34
    Consolidated Statements of Shareholders' Equity Accumulated Other Comprehensive Income (Loss) (Amounts in millions except per share data) Number of Shares Common Stock Capital in Excess of Par Value Retained Earnings Total Balance... (6) 2 $393 (95) 987 $3,920 32 Wal-Mart 2009 Annual Report

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

  • Page 36
    Notes to Consolidated Financial Statements 1 Summary of Significant Accounting Policies General Wal-Mart Stores, Inc. ("Wal-Mart," the "Company" or "we") operates retail stores in various formats around the world and is committed to saving people money so they can live better. We earn the trust of ...

  • Page 37
    ...to the Company's warehouses, stores and clubs from suppliers, the cost of transportation from the Company's warehouses to the stores and clubs and the cost of warehousing for our Sam's Club segment. Payments from Suppliers Wal-Mart receives money from suppliers for various programs, primarily volume...

  • Page 38
    .... The Company had approximately 6 million, 62 million and 62 million option shares outstanding at January 31, 2009, 2008 and 2007, respectively, which were not included in the diluted net income per share calculation because their effect would be antidilutive. 36 Wal-Mart 2009 Annual Report

  • Page 39
    ... used to support commercial paper remained undrawn as of January 31, 2009. The committed lines of credit mature at varying times starting between June 2009 and June 2012, carry interest rates of LIBOR plus 11 to 15 basis points and at prime plus zero to 50 basis points, and incur commitment fees of...

  • Page 40
    ...elected hedge accounting, are valued at fair value with unrealized gains or losses reported in earnings during the period of change. Net Investment Instruments At January 31, 2009 and 2008, the Company is party to cross-currency interest rate swaps that hedge its net investment in the United Kingdom...

  • Page 41
    ... on the Company's current incremental borrowing rate for similar types of borrowing arrangements or, where applicable, quoted market prices. Derivative financial instruments designated for hedging: The fair values are estimated amounts the Company would receive or pay to terminate the agreements as...

  • Page 42
    ... earnings Subsidiary minimum pension liability Adjustment for initial application of SFAS 158, net of tax Balance at January 31, 2007 Foreign currency translation adjustment Subsidiary minimum pension liability Balance at January 31, 2008 Foreign currency translation adjustment Change in fair value...

  • Page 43
    ..., 2009 2008 2007 Statutory tax rate State income taxes, net of federal income tax benefit Income taxes outside the United States Other Effective income tax rate 35.00% 1.89% -1.66% -1.04% 34.19% 35.00% 1.72% -1.56% -0.98% 34.18% 35.00% 1.80% -1.90% -1.40% 33.50% Wal-Mart 2009 Annual Report 41

  • Page 44
    ... 1, 2007, and at January 31, 2009, the Company had unrecognized tax benefits of $1.7 billion which are related to a worthless stock deduction the Company has claimed on its disposition of its German operations in the second quarter of fiscal 2007, as mentioned 42 Wal-Mart 2009 Annual Report

  • Page 45
    ... into a franchise agreement with an Indian subsidiary of Wal-Mart under which it will provide technical support to Bharti Retail's retail business. In October 2007, the Company announced the launch of a tender offer to acquire the remaining outstanding common and preferred shares of our Japanese...

  • Page 46
    Notes to Consolidated Financial Statements 7 Share-Based Compensation Plans As of January 31, 2009, the Company has awarded share-based compensation to executives and other associates of the Company through various share-based compensation plans. The compensation cost recognized for all plans was $...

  • Page 47
    ...2008, and 2007 was 6.8%, 8.4% and 6.9%, respectively. A summary of the Company's restricted stock rights activity for fiscal 2009 presented below represents the maximum number of shares that could be earned or vested under the Plan: Weighted-Average Grant-Date Fair Value Sheets unless the associate...

  • Page 48
    .... In another wage-and-hour lawsuit, Braun v. Wal-Mart Stores, Inc., the Company agreed in October 2008 to settle the case by paying up to approximately $54 million, part of which is to be paid to the State of Minnesota and part to the class members and their counsel. On January 14, 2009, the trial...

  • Page 49
    ..., management does not believe the outcome will have a material effect on the Company's financial condition or results of operations. 9 Commitments The Company and certain of its subsidiaries have long-term leases for stores and equipment. Rentals (including amounts applicable to taxes, insurance...

  • Page 50
    ... in the United States as well as samsclub.com. The International segment consists of the Company's operations outside of the United States. The amounts under the caption "Other" in the table below relating to operating income are unallocated corporate overhead items. 48 Wal-Mart 2009 Annual Report

  • Page 51
    .... Information on segments and the reconciliation to consolidated income from continuing operations before income taxes, minority interest and discontinued operations appear in the following tables. (Amounts in millions) Fiscal Year Ended January 31, 2009 Walmart U.S. International Sam's Club Other...

  • Page 52
    ... Statements 12 Quarterly Financial Data (Unaudited) Quarters Ended (Amounts in millions except per share data) April 30, July 31, October 31, January 31, Fiscal 2009 Net sales Cost of sales Gross profit Income from continuing operations (Loss) income from discontinued operations, net of tax...

  • Page 53
    ... uncertain tax positions related to acquired businesses. SFAS 141(R) is effective for all business combinations with an acquisition date in the first annual period following December 1, 2008; early adoption is not permitted. The Company adopted this statement as of February 1, 2009. The Company does...

  • Page 54
    ... of Wal-Mart Stores, Inc. as of January 31, 2009 and 2008, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended January 31, 2009. These financial statements are the responsibility of the Company's management. Our...

  • Page 55
    ..., 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, 2009 and 2008, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the...

  • Page 56
    ... to Shareholders. Management's assessment of the effectiveness of the Company's internal control over financial reporting excluded Distribución y Michael T. Duke President and Chief Executive Officer Thomas M. Schoewe Executive Vice President and Chief Financial Officer 54 Wal-Mart 2009 Annual...

  • Page 57
    ... and technical support to the retail stores of Bharti Retail through a franchise agreement. International unit counts and operating formats as of January 31, 2009: Supermarkets Discount SuperStores centers Hypermarkets Country Other Total Argentina Brazil (1) Canada (2) Chile China Costa...

  • Page 58
    ... 8-K Copy of Annual Shareholders' Meeting Proxy Statement Supplier Standards Report $175 $150 $125 $100 $ 75 www.corporatereport.com Designed and produced by Corporate Reports Inc./Atlanta $ 50 $ 25 Market Price of Common Stock Fiscal year ended January 31, 2009 High Low High 2008 Low 0 2004 2005...

  • Page 59
    ...the second quarter we will publish an online version of our 2009 Global Sustainability Report. A condensed, executive summary highlighting our economic, environmental and social performance is available online now at walmartstores.com/sustainability. A More Responsible Annual Report In line with our...

  • Page 60
    ... Unit counts as of January 31, 2009. *India retail locations are owned and operated by Bharti Retail. Wal-Mart India provides technical support to these stores through a franchise agreement. Wal-Mart Stores, Inc. 702 S.W. 8th Street Bentonville, Arkansas 72716 USA 479-273-4000 walmartstores.com