Walmart 2009 Annual Report Download - page 45

43Wal-Mart 2009 Annual Report
tions in India, in compliance with Government of India guidelines.
The  rst wholesale facility is targeted to open in mid- scal 2010. The
joint venture was formed to establish wholesale warehouse facilities
to serve retailers and business owners by selling them merchandise
at wholesale prices, including Bharti Retail, a wholly-owned subsidiary
of Bharti Enterprises, that is developing a chain of retail stores in India.
In addition, Bharti Retail has entered 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
o er to acquire the remaining outstanding common and preferred
shares of our Japanese subsidiary, The Seiyu Ltd. (“Seiyu”). Prior to the
o er, the Company owned 50.9% of Seiyu. The tender o er commenced
on October 23, expired on December 4, and closed on December 11,
2007. At closing, the Company acquired the majority of the common
shares and all minority preferred shares. The Company purchased the
remaining minority common shares in  scal 2009 and now owns all
of the common and preferred shares of Seiyu. Total purchase price
for the tendered shares was $937 million, including transaction costs.
This acquisition of the remaining Seiyu shares not owned by the
Company resulted in the recording of $775 million of goodwill and
the elimination of $299 million minority interest related to the pre-
ferred shareholders.
In January 2009, the Company completed a tender o er for the shares
of Distribución y Servicio D&S S.A. (“D&S”), acquiring approximately
58.2% of the outstanding D&S shares (the “First Offer”). D&S has
197 stores, 10 shopping centers and 85 PRESTO  nancial services
branches throughout Chile. The purchase price for the D&S shares in
the First O er was approximately $1.55 billion. As of January 31, 2009,
assets recorded in the acquisition after the First O er, were approxi-
mately $3.6 billion, including approximately $1.0 billion in goodwill,
liabilities assumed were approximately $1.7 billion and minority inter-
est was approximately $395 million. Under the Chilean securities laws,
the Company was required after the First O er to initiate a second
tender o er (the “Second O er”) for the remaining outstanding shares
of D&S on the same terms as the First O er. The Company completed
the Second O er in March 2009, acquiring approximately 16.4% of
the outstanding D&S shares for approximately $430 million, resulting
in the Company owning approximately 74.6% of the D&S shares. In
connection with the transaction, the former D&S controlling share-
holders were each granted a put option that is exercisable begin-
ning in January 2011 through January 2016. During the exercise period,
the put option allows each former controlling shareholder the
right to require the Company to purchase up to all of their shares
of D&S (approximately 25.1%) owned following the Second O er at
fair market value at the time of an exercise, if any. The consolidated
 nancial statements of D&S, as well as the allocation of the purchase
price as of January 31, 2009, are preliminary.
Disposals
During  scal 2007, the Company disposed of its operations in South
Korea and Germany, which had been included in our International
segment. Consequently, the net losses and cash  ows related to
these operations are presented as discontinued operations in our
Consolidated Statements of Income and our Consolidated State-
ments of Cash Flows for the appropriate periods presented.
The Company recorded a pretax gain on the sale of its retail business
in South Korea of $103 million, and tax expense of $63 million during
 scal 2007. In determining the gain on the disposition of our South
Korean operations, the Company allocated $206 million of goodwill
from the International reporting unit.
The Company recorded a loss of $918 million on the disposal of its
German operations during  scal 2007. In addition, the Company
recognized a tax bene t of $126 million related to this transaction in
 scal 2007. The Company recorded a charge of $153 million in  scal
2008 to discontinued operations related to the settlement of a post-
closing adjustment and certain other indemni cation obligations.
During  scal 2009, the Company disposed of Gazeley, an ASDA
commercial property development subsidiary in the United King-
dom. Consequently, the results of operations associated with Gazeley
are presented as discontinued operations in our Consolidated State-
ments of Income and Consolidated Balance Sheets for all periods
presented. The cash  ows related to this operation were insigni cant
for all periods presented. In fiscal 2009, the Company recognized
approximately $212 million, after tax, in operating pro ts and gains
from the sale of Gazeley as discontinued operations. The transaction
continues to remain subject to certain indemni cation obligations. In
calculating the gain on disposal, the Company allocated $192 million
of goodwill from the International segment.
During  scal 2009, the Company initiated a restructuring program
under which the Company’s Japanese subsidiary, Seiyu, will close
23 stores and dispose of certain excess properties. This restructuring
will involve incurring costs associated with lease termination obliga-
tions, asset impairment charges and employee separation bene ts.
The costs associated with this restructuring are presented as discon-
tinued operations in our Consolidated Statements of Income and
Consolidated Balance Sheets for all periods presented. The cash  ows
and accrued liabilities related to this restructuring were insigni cant
for all periods presented. The Company recognized approximately
$122 million, after tax, in restructuring expenses and operating results
as discontinued operations during  scal 2009. Additional costs will
be recorded in future periods for lease termination obligations and
employee separation bene ts and are not expected to be material.
In addition, the Company recorded a $63 million bene t to discon-
tinued operations in  scal 2009, from the successful resolution of a
tax contingency related to McLane Company, Inc., a former Wal-Mart
subsidiary sold in  scal 2004.
In addition to the gain and loss on the dispositions noted above,
discontinued operations as presented in the Company’s Consolidated
Statements of Income also include net sales and net operating
income and losses from our discontinued operations as follows:
Fiscal Year Ended January 31,
(Amounts in millions) 2008 2007
Net sales $219 $2,722
Net operating income (losses) 21 (153)