Walmart 2010 Annual Report Download

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2010 ANNUAL REPORT
We save people money
so they can live better.

Table of contents

  • Page 1
    2010 AnnuAl RepoRt We save people money so they can live better.

  • Page 2
    ...'s Discussion and Analysis of Financial Condition and Results of operations included in this Annual Report. Business Description: Walmart was built on the foundation of saving people money so they can live better. this mission has allowed the company to grow to more than 8,400 stores in 15...

  • Page 3
    ... our shareholders. I want to thank our two million associates around the world for this success. I appreciate them for all they do every day to serve our customers and uphold our company's beliefs and values. Michael T. Duke President and Chief Executive Officer Wal-Mart Stores, Inc. Walmart 2010...

  • Page 4
    ... believe that Walmart is the best positioned global ouR FInAnCIAl Priorities • Growth: We are continuing to grow around the world. We have many opportunities to grow by opening new stores, entering new markets, making acquisitions, integrating online channels, and developing new, innovative...

  • Page 5
    ... customers is an important part of our culture. It's through customer interactions that we truly understand their expectations of Walmart as we work to save people money so they can live better. Michael t. Duke president and Chief executive officer Wal-Mart Stores, Inc. Walmart 2010 Annual Report...

  • Page 6
    ...customers. Busy moms expect a clean and efficient store layout with clear messages on price and value. They also depend on Walmart to have high-quality products at everyday low prices, whether it is the freshest produce or basic apparel. Our continued investments in systems and processes contribute...

  • Page 7
    ... our business. Walmart u.S. repositioned the business to leverage operating expenses on a slower rate of sales growth this past year. Improved productivity through enhanced scheduling systems better matched associate staffing levels in our stores to customer traffic. Stronger supply chain processes...

  • Page 8
    International Walmart International's significant growth demonstrates that delivering low prices on quality products resonates with consumers in every market. Today, we are helping to make this a reality for millions of customers in 14 countries outside the United States. Last year, we added more ...

  • Page 9
    ... Walmart Canada continues to increase sales through its supercentre expansion program. Brazil, China and Mexico continue to offer significant opportunities to add new stores and serve more customers. We will grow in our countries by winning locally. each country's management team works strategically...

  • Page 10
    ...reducing inventory, leveraging expenses and eliminating non-value-added activities. our process improvements significantly strengthened scores in associate productivity and member satisfaction this year. In addition, our new innovations team leverages key learnings from the Walmart u.S. business, as...

  • Page 11
    .... International • exceeded $100 billion in net sales for the first time in company history, growing 11.2% on a constant currency basis. • Achieved strong comparable store sales, gaining market share in many countries. • Brazil, China and Mexico added 17.5 million square feet of retail space...

  • Page 12
    Walmart has a responsibility to lead on issues that make a difference in helping people live better. Our commitment is built on four pillars: associate opportunity, sustainability, responsible sourcing and community involvement. The Walmart story is also about influencing the world around us to ...

  • Page 13
    ...in a number of countries, Walmart and CARe help empower women to achieve more equitable, consistent incomes. We work with farmers and small manufacturers in South and Central America to increase efficiency, improve supply chain processes, and link them to the global marketplace. Walmart 2010 Annual...

  • Page 14
    ... and returns - that are designed to improve shareholder value. Just as important, our businesses around the world have never been more aligned behind our mission to save people money so they can live better. Rob Walton S. Robson Walton Chairman of the Board of Directors Wal-Mart Stores, Inc...

  • Page 15
    ... is the retired Chief executive officer and Group Managing Director of Woolworths limited, the largest retail company in Australia. Arne M. Sorenson(a) Mr. Sorenson is the president and Chief operating officer of Marriott International, Inc. Committees (a) Audit (b) Strategic planning and Finance...

  • Page 16
    ... Consolidated Financial Statements Report of 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 2010 end-of-year Store Count Corporate and Stock Information...

  • Page 17
    ...-year Financial Summary (Amounts in millions except per share and unit count data) As of and for the Fiscal years ended January 31, 2010 2009 2008 2007 2006 Operating Results (1) net sales net sales increase Comparable store sales in the united States (2) Walmart u.S. Sam's Club Gross profit margin...

  • Page 18
    ... and Analysis of Financial Condition and Results of operations Overview Wal-Mart Stores, Inc. ("Walmart," 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 our customers every day by...

  • Page 19
    ... the company manages working capital through free cash flow. Growth Net Sales Fiscal years ended January 31, (Dollar amounts in millions) Net sales 2010 Percent of total Percent increase net sales 2009 percent of total percent increase net sales 2008 percent of total Walmart u.S. International Sam...

  • Page 20
    ... fluctuations in currency exchange rates. Wal-Mart Stores, Inc. Operating Income (Amounts in millions) $24,000 Returns Return on Investment Management believes return on investment is a meaningful metric to share with investors because it helps investors assess how effectively Walmart is employing...

  • Page 21
    ... during the third quarter of fiscal 2009. All of these activities have been disclosed as discontinued operations. Total assets as of January 31, 2010, 2009 and 2008 in the table above exclude assets of discontinued operations that are reï¬,ected in the Consolidated Balance Sheets of $140 million...

  • Page 22
    ... We generated positive free cash flow of $14.1 billion, $11.6 billion and $5.7 billion for the years ended January 31, 2010, 2009 and 2008, respectively. The increase in our free cash flow is primarily the result of improved operating results and inventory management. 20 Walmart 2010 Annual Report

  • Page 23
    ... previous fiscal year. net sales in fiscal 2010 increased due to increased customer traffic, continued global expansion activities and the acquisition of D&S in January 2009, offset primarily by a $9.8 billion unfavorable currency exchange rate impact in our International segment and price deflation...

  • Page 24
    ...The fiscal 2010 increase in the International segment's net sales primarily resulted from our expansion activities and the inclusion of the results of D&S, acquired in January 2009, offset by the unfavorable impact of changes in currency exchange rates of $9.8 billion. 22 Walmart 2010 Annual Report

  • Page 25
    ... our operations and global expansion activities. Generally, some or all of the remaining free cash flow funds the dividends on our common stock and share repurchases. Fiscal years ended January 31, (Amounts in millions) 2010 2009 2008 net cash provided by operating activities payments for property...

  • Page 26
    ... rating. Rating Agency Commercial paper long-term Debt Global Expansion Activities Cash paid for property and equipment was $12.2 billion, $11.5 billion and $14.9 billion during the fiscal years ended January 31, 2010, 2009 and 2008, respectively. these expenditures primarily relate to new store...

  • Page 27
    .... Refer to note 8 to the Consolidated Financial Statements for additional discussion on unrecognized tax benefits. We paid dividends of $1.09 per share in fiscal 2010, representing a 15% increase over fiscal 2009. The fiscal 2009 dividend of $0.95 per share represented an 8% increase over fiscal...

  • Page 28
    ... 10% increase in these rates in effect at January 31, 2010 and 2009 would have increased the annual interest expense for the respective outstanding balances by $1 million. We enter into interest rate swaps to minimize the risks and costs associated with financing activities, as well as to...

  • Page 29
    ...for a quarter 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, 2010 and 2009, our inventories...

  • Page 30
    ...Report: under the caption "Walmart u.S. - Saving Customers Money So They Can Live Better " and relate to management's expectations that growth will come from additional penetration into more metropolitan markets, as well as new formats and stronger integration with our online business and for global...

  • Page 31
    ... pressures, accident-related costs, weather patterns, catastrophic events, storm and other damage to our stores and distribution centers, climate change, weather-related closing of stores, availability and transport of goods from domestic and foreign suppliers, currency exchange fluctuations and...

  • Page 32
    Consolidated Statements of Income Fiscal years ended January 31, (Amounts in millions except per share data) 2010 2009 2008 Revenues: net sales Membership and other income $405,046 3,168 408,214 $401,087 3,287 404,374 $373,821 3,202 377,023 Costs and expenses: Cost of sales operating, selling, ...

  • Page 33
    ...100 shares authorized, none issued) Common stock ($0.10 par value; 11,000 shares authorized, 3,786 and 3,925 issued and outstanding at January 31, 2010 and January 31, 2009, respectively) Capital in excess of par value Retained earnings Accumulated other comprehensive loss total Walmart shareholders...

  • Page 34
    ... dividends ($0.88 per share) purchase of company stock other Adoption of accounting for uncertainty in income taxes Balances - January 31, 2008 Consolidated net income other comprehensive income Cash dividends ($0.95 per share) purchase of company stock other Balances - January 31, 2009 Consolidated...

  • Page 35
    Consolidated Statements of Cash Flows Fiscal years ended January 31, (Amounts in millions) 2010 2009 2008 Cash ï¬,ows from operating activities: Consolidated net income loss (income) from discontinued operations, net of tax Income from continuing operations Adjustments to reconcile income from ...

  • Page 36
    ... 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. our fiscal year ends on January 31. Consolidation the Consolidated Financial Statements include the accounts of Wal-Mart Stores, Inc...

  • Page 37
    .... the deferred membership fee is included in accrued liabilities on the accompanying Consolidated Balance Sheets. Cost of Sales Cost of sales includes actual product cost, the cost of transportation to the company's warehouses, stores and clubs from suppliers, the cost of transportation from the...

  • Page 38
    ...-Opening Costs the costs of start-up activities, including organization costs, related to new store openings, store remodels, expansions and relocations are expensed as incurred. pre-opening costs totaled $227 million, $289 million and $353 million for the years ended January 31, 2010, 2009 and 2008...

  • Page 39
    ... times starting between June 2010 and June 2012, carry interest rates in some cases equal to the company's one-year credit default swap mid-rate spread and in other cases lIBoR plus 15 basis points and incur commitment fees of 4.0 to 10.0 basis points on undrawn amounts. Walmart 2010 Annual Report...

  • Page 40
    ...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. All of these issuances have been classified as long-term debt due within one year in the Consolidated Balance Sheets. 38 Walmart 2010 Annual Report

  • Page 41
    ... interest rate swaps designated as cash flow hedges total $4,445 $260 $5,195 $321 1,250 638 2,902 $9,235 189 (20) 286 $715 1,250 462 - $6,907 526 (17) - $830 the fair values above are the estimated amounts the company would receive or pay upon a termination of the agreements relating to...

  • Page 42
    notes to Consolidated Financial Statements Fair Value Instruments the company is party to receive fixed-rate, pay floating-rate interest rate swaps to hedge the fair value of fixed-rate debt. under certain swap agreements, the company pays floating-rate interest and receives fixedrate interest ...

  • Page 43
    notes to Consolidated Financial Statements 7 Accumulated Other Comprehensive Income Amounts included in accumulated other comprehensive income (loss) for the company's derivative instruments and minimum pension liabilities are recorded net of the related income tax effects. the following table ...

  • Page 44
    ...to Consolidated Financial Statements Deferred Taxes the significant components of our deferred tax account balances are as follows: January 31, (Amounts in millions) 2010 2009 Effective Tax Rate Reconciliation A reconciliation of the significant differences between the effective income tax rate and...

  • Page 45
    ... for its u.S. federal income taxes generally for the fiscal years 2009 and 2010, with fiscal years 2004 through 2008 remaining open for a limited number of issues. the company is also subject to income tax examinations for non-u.S. income taxes for the tax years 2003 through 2010, and for state and...

  • Page 46
    ... technical support to Bharti Retail's retail business. In January 2009, the company completed a tender offer for the shares of D&S, acquiring approximately 58.2% of the outstanding D&S shares. As of the acquisition date, D&S had 197 stores, 10 shopping centers and 85 pReSto financial services...

  • Page 47
    ... rate expected life in years 2.1% 18.7% 1.4% 3.1 1.9% 16.7% 2.0% 3.4 2.1% 18.6% 4.5% 5.6 A summary of the stock option award activity for fiscal 2010 is presented below: Weighted-Average exercise price Weighted-Average Remaining life in years Aggregate Intrinsic Value Stock options Shares...

  • Page 48
    ... company's restricted stock rights activity for fiscal 2010 presented below represents the maximum number of shares that could be earned or vested under the plan: Weighted-Average Grant-Date Fair Value liabilities and deferred income taxes and other in the accompanying Consolidated Balance Sheets...

  • Page 49
    ... past and present female employees in all of the company's retail stores and warehouse clubs in the united States. the complaint alleges that the company has engaged in a pattern and practice of discriminating against women in promotions, pay, training and job assignments. the complaint seeks, among...

  • Page 50
    ... income taxes and other in our Consolidated Balance Sheets at January 31, 2010 and 2009. Certain other international operations have defined benefit arrangements that are not significant. 12 Commitments the company and certain of its subsidiaries have long-term leases for stores and equipment...

  • Page 51
    ...to the International segment. ASDA's net revenues during fiscal 2010, 2009 and 2008 were $31.2 billion, $34.0 billion and $33.4 billion, respectively. Currency exchange rate fluctuations during fiscal 2010 compared to fiscal 2009 negatively impacted ASDA's sales in by $5.3 billion. ASDA's long-lived...

  • Page 52
    ... Subsequent to February 1, 2009, the company applies the following policies in accounting for business combinations, when applicable: • costs related to an acquisition are expensed as incurred; • regardless of the level of ownership acquired, the company records the full fair value of all assets...

  • Page 53
    ...operations attributable to Walmart - Diluted net income per common share attributable to Walmart Fiscal 2009 net sales Cost of sales Gross profit Income from continuing operations Income (loss) from discontinued operations, net of tax Consolidated net income less consolidated net income attributable...

  • Page 54
    ... balance sheets of Wal-Mart Stores, Inc. as of January 31, 2010 and 2009, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended January 31, 2010. these financial statements are the responsibility of the Company...

  • Page 55
    ...the standards of the public Company Accounting oversight Board (united States), the consolidated balance sheets of Wal-Mart Stores, Inc. as of January 31, 2010 and 2009, and related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended...

  • Page 56
    Management's Report to our Shareholders 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....

  • Page 57
    ... Total 844 Grand Total 650 1,119 (1) International unit counts, with the exception of Canada and Puerto Rico, are stated as of December 31, 2009 to correspond with their balance sheet date. (2) "Other" format includes 23 Sam's Clubs, 43 cash-n-carry stores, 100 combination discount and grocery...

  • Page 58
    ... Annual Shareholders' Meeting proxy Statement • Supplier Standards Report • Sustainability Report $140 $120 $100 www.corporatereport.com Designed and produced by Corporate Reports Inc./Atlanta $ 80 $ 60 $ 40 $ 20 0 2005 2006 2007 2008 2009 2010 Fiscal Years Market Price of Common Stock Fiscal...

  • Page 59
    Online Reports Drive Sustainability Commitments our shareholders can continue to help Walmart become a more sustainable company by registering to receive Annual Shareholders' Meeting materials and other company information electronically. In the past two years, we have cut the paper usage for the ...

  • Page 60
    ... as of January 31, 2010 * Effective February 1, 2010, Walmart stores and Sam's Clubs in Puerto Rico became a part of their respective U.S. segments. Sales for the year ended January 31, 2010 Wal-Mart Stores, Inc. 702 S.W. 8th Street Bentonville, Arkansas 72716 uSA 479-273-4000 walmartstores.com