Walmart 2010 Annual Report Download - page 30

Self-Insurance
We use a combination of insurance, self-insured retention and self-
insurance for a number of risks, including, but not limited to, workers’
compensation, general liability, vehicle liability, and the company’s
obligation for employee-related health care benefits. Liabilities associated
with the risks that we retain are estimated by considering historical claims
experience, including frequency, severity, demographic factors and
other actuarial assumptions. In calculating 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 significantly affected if future occurrences or loss
development differ from these assumptions. For example, for our workers’
compensation and general liability accrual, a 1% increase or decrease
to the assumptions for claims costs or loss development factors would
increase or decrease our self-insurance accrual by $26 million.
In fiscal 2008, our actuarially determined ultimate loss estimates were
reduced primarily for our fiscal 2004 through 2007 workers’ compensa-
tion and general liability claims. The reductions in ultimate loss estimates
resulted primarily from improved claims handling experience, which
impacts loss development factors and other actuarial assumptions. Due to
the beneficial change in estimate of our ultimate losses, accrued liabilities
for general liability and workers’ compensation claims were reduced by
$298 million, or $196 million after tax, resulting in an increase in net
income per basic and diluted common share of $0.05 for the second
quarter of fiscal year 2008.
Forward-Looking Statements
This Annual Report contains statements that Walmart believes are
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, as amended. Those statements are intended
to enjoy the protection of the safe harbor for forward-looking statements
provided by that Act. Those forward-looking statements include statements
in Management’s Discussion and Analysis of Financial Condition and
Results of Operations: under the captions “Company Performance
Metrics – Growth – Net Sales” and “Results of Operations – Consolidated
Results of Operations” with respect to the volatility of currency exchange
rates possibly continuing to affect our International segment’s net sales;
under the caption “Company Performance Metrics – Growth – Comparable
Store Sales” regarding the effect of the opening of new stores on com-
parable store sales stabilizing over time; under the caption “Liquidity
and Capital Resources – Capital Resources” with respect to our ability
to finance seasonal build-ups in inventories and to meet other cash
requirements with cash flows from operations and short-term borrowings,
our ability to fund certain cash flow shortfalls by short-term borrowings
and long-term debt, our plan to refinance long-term debt as it matures,
our anticipated funding of any shortfall in cash to pay dividends and make
capital expenditures through short-term borrowings and long-term
debt, our plan to refinance existing long-term debt as it matures, and our
ability to sell our long-term securities; under the caption “Liquidity and
Capital Resources – Global Expansion Activities” with respect to our
capital expenditures in fiscal 2011, how we will finance expansion and
any acquisitions made during fiscal 2011, the anticipated number of new
stores and clubs to be opened in the United States and internationally
and the anticipated allocation of capital expenditures in fiscal 2011;
under the caption “Liquidity and Capital Resources – Common Stock
Dividends,” as well as in Note 1 to our Consolidated Financial Statements,
regarding the payment of dividends in fiscal 2011; and under the caption
“Liquidity and Capital Resources – Off Balance Sheet Arrangements” with
respect to the amount of increases in payments under operating leases
if certain leases are executed. These forward-looking statements also
include statements in Note 8 to our Consolidated Financial Statements
regarding the possible reduction of U.S. tax liability on accumulated
but undistributed earnings of our non-U.S. subsidiaries, the realization
of certain deferred tax assets, possible reduction of unrecognized tax
benefits, the reasons for such reductions and the magnitude of their
impact on our results of operations and financial condition, the possible
timing of the resolution of certain tax matters and how the resulting tax
items will be recorded, and the possibility that the resolution of certain
non-U.S. federal income tax matters could result in a material liability
for us. In addition, these statements include a statement in the material
entitled “Our Financial Priorities” relating to Walmart continuing to
grow around the world. The letter of our President and Chief Executive
Officer appearing in this Annual Report includes forward-looking
statements that relate to: Walmart continuing to expand into new
channels so customers can shop and experience Walmart when, where
and how they want; Walmart growing operating expenses slower than
sales and operating income faster than sales; Walmart doing even more
to leverage the size, scale, expenses and expertise of the total company;
Walmart continuing to make investments in technology; Walmart
planning to move quickly and being a more innovative company;
Walmart expanding our commitment to inclusion and providing career
opportunities to associates; Walmart building on our leading in sustain-
ability through continued work on its Sustainable Product Index and
new commitment to reduce greenhouse gas emissions; Walmart living
and upholding our culture, showing that we respect individual people,
putting customers first and driving changes need to be an even better
company, and Walmart making the absolute most of our opportunity to
lead as a retailer, as a company and as people. Forward-looking statements
appear elsewhere in this Annual 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
sourcing initiatives to strengthen our Walmart U.S. segment’s efforts
to drive down the cost of goods and pass the savings on to customers.
Moreover, forward-looking statements appear under the caption
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
28 Walmart 2010 Annual Report