Walmart 2010 Annual Report Download - page 46

After closing the acquisition, the company began consolidating BCL
using a December 31 fiscal year-end. The company’s Consolidated
Statements of Income for fiscal 2008 include the results of BCL for the
period commencing upon the acquisition of the company’s interest in
BCL and ending December 31, 2007. BCL’s results of operations were
not material to the company in fiscal 2008. Assets recorded in the
acquisition were approximately $1.6 billion, including approximately
$1.1 billion in goodwill, and liabilities assumed were approximately
$1.0 billion.
In August 2007, Walmart and Bharti Enterprises, an Indian company,
established a joint venture called Bharti Walmart Private Limited to con-
duct wholesale cash-and-carry and back-end supply chain management
operations in India in compliance with Government of India guidelines.
The first wholesale facility opened in fiscal 2010. The joint venture
supplies merchandise to Bharti Retail, an affiliate of Bharti Enterprises
that is developing a chain of retail stores in India. Bharti Retail has
entered into a franchise agreement with an Indian subsidiary of Walmart
under which such subsidiary provides 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 branches throughout Chile.
The purchase price for the D&S shares in the offer was approximately
$1.55 billion. As of January 31, 2009, the preliminary allocation of the
purchase price resulted in recording approximately $3.6 billion in
assets, including approximately $1.0 billion in goodwill and liabilities
assumed of approximately $1.7 billion. The noncontrolling interest
was approximately $395 million, all of which was redeemable. The
final purchase price allocation had an insignificant impact to the pre-
liminary assets and liabilities recorded at the time of acquisition. In
March 2009, the company paid $436 million to acquire a portion of
the redeemable noncontrolling interest in D&S through a second
tender offer as required by the Chilean securities laws, increasing its
ownership stake in D&S to 74.6%. This transaction resulted in a
$148 million acquisition of that portion of the redeemable noncon-
trolling interest and the remaining $288 million is ref lected as a
reduction of Walmart shareholders’ equity. Additionally, the former
D&S controlling shareholders still hold a put option that is exercisable
beginning 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 at fair market value at the time
of an exercise, if any.
On February 15, 2010, our majority-owned subsidiary Wal-Mart de
México (“Walmex”) completed the acquisition of the noncontrolling
interest in our Central American subsidiary that had been held by
third parties. The consideration paid consisted of $111 million in cash
and $2.3 billion in shares in our majority-owned subsidiary Walmex.
The effect of this transaction on the consolidated company will be a
purchase of the outstanding noncontrolling interest of our Central
American business, with the company’s ownership of Walmex now at
approximately 68.5%.
Disposals
In fiscal 2008, the company recorded a charge of $153 million to
discontinued operations related to the settlement of a post-closing
adjustment and certain other indemnification obligations resulting
from the disposal of its German operations in fiscal 2007.
During fiscal 2009, the company disposed of Gazeley Limited (“Gazeley”),
an ASDA commercial property development subsidiary in the United
Kingdom. Consequently, the results of operations associated with
Gazeley are presented as discontinued operations in our Consolidated
Statements of Income and Consolidated Balance Sheets for all periods
presented. The cash flows related to this operation were insignificant
for all periods presented. In the third quarter of fiscal 2009, the com-
pany recognized approximately $212 million, after tax, in operating
profits and gains from the sale of Gazeley. The transaction continues
to remain subject to certain indemnification obligations. The company’s
operations in the United Kingdom are consolidated using a December 31
fiscal year-end. Since the sale of Gazeley closed in July 2008, the com-
pany recorded the gain to discontinued operations in the third quarter
of fiscal 2009.
During the third quarter of f iscal 2009, the company initiated a
restructuring program under the company’s Japanese subsidiary,
The Seiyu Ltd., to close approximately 23 stores and dispose of certain
excess properties and was substantially completed in fiscal 2010. This
restructuring involved incurring costs associated with lease termination
obligations, asset impairment charges and employee separation benefits.
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 flows
and accrued liabilities related to this restructuring were insignificant
for all periods presented. The company recognized approximately
$79 million and $122 million, after tax, in restructuring expenses
and operating results as discontinued operations, for the fiscal years
ended January 31, 2010 and 2009, respectively. Costs were recorded
for lease termination obligations and employee separation benefits;
additional costs are not expected to be material.
In addition, the company recorded a $63 million benefit to discontinued
operations in fiscal 2009, from the successful resolution of a tax
contingency related to McLane Company, Inc., a former Walmart
subsidiary sold in fiscal 2004.
Net sales related to our discontinued operations were not significant
during fiscal years 2010, 2009 and 2008. The net income or losses
related to our discontinued operations, including the gain and (losses)
upon disposition, are as follows:
January 31,
(Amounts in millions) 2010 2009 2008
Germany $ — $ — $(153)
McLane — 63 —
Gazeley — 212 39
Seiyu (79) (122) (18)
Other — (7) —
$(79) $ 146 $(132)
Notes to Consolidated Financial Statements
44 Walmart 2010 Annual Report