Walmart 2011 Annual Report Download - page 39

Walmart 2011 Annual Report 37
2 Accounting Change
Eective May 1, 2010, the Company implemented a new nancial system for its operations in the United States, Canada and Puerto Rico. Concurrent
with this implementation and the increased system capabilities, the Company changed the level at which it applies the retail method of accounting
for inventory in these operations from 13 divisions to 49 departments. The Company believes the change is preferable because applying the retail
method of accounting for inventory at the departmental level better segregates merchandise with similar cost-to-retail ratios and turnover, as well as
providing a more accurate cost of goods sold and ending inventory value at the lower of cost or market for each reporting period. The retrospective
application of this accounting change impacted both segment and consolidated operating income, as well as consolidated net income for all
comparable periods presented.
The retrospective application of the accounting change impacted the following nancial statement line items:
Fiscal Year Ended January 31, 2010 Fiscal Year Ended January 31, 2009
(Amounts in millions, except per share data) As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted
Consolidated Statements of Income:
Cost of sales
(1)
$304,657 $(213) $304,444 $304,056 $(115) $303,941
Operating income 23,950 52 24,002 22,798 (31) 22,767
Provision for income taxes 7,139 17 7,156 7,145 (12) 7,133
Income from continuing operations 14,927 35 14,962 13,753 (19) 13,734
Consolidated net income attributable to Walmart 14,335 35 14,370 13,400 (19) 13,381
Basic net income per share attributable to Walmart 3.71 0.01 3.72 3.40 — 3.40
Diluted net income per share attributable to Walmart 3.70 0.01 3.71 3.39 — 3.39
(1)
The cost of sales adjustments includes $(52) million and $31 million pertaining to the accounting change for the fiscal years ended January 31, 2010 and 2009, respectively.
Certain reclassifications that had no effect on operating income or on the consolidated net income attributable to Walmart represent the remainder of the amounts included
in the cost of sales adjustment columns above.
Fiscal Year Ended January 31, 2010
(Amounts in millions) As Reported Adjustments As Adjusted
Consolidated Balance Sheets:
Inventories $33,160 $(447) $32,713
Prepaid expenses and other 2,980 148 3,128
Accrued income taxes 1,365 (18) 1,347
Retained earnings 66,638 (281) 66,357
Notes to Consolidated Financial Statements
3 Net Income Per Common Share
Basic net income per common share attributable to Walmart is based on
the weighted-average number of outstanding common shares. Diluted
net income per common share attributable to Walmart is based on the
weighted-average number of outstanding common shares adjusted for
the dilutive eect of share-based awards. The dilutive eect of share-
based awards was 14 million, 11 million and 12 million shares in scal
2011, 2010 and 2009, respectively. The Company had approximately
4 million, 5 million and 6 million stock options outstanding at January 31,
2011, 2010 and 2009, respectively, which were not included in the diluted
net income per common share calculation because their eect would
be antidilutive.
For purposes of determining consolidated net income per common share
attributable to Walmart, income from continuing operations attributable
to Walmart and the income (loss) from discontinued operations, net of
tax, are as follows:
Fiscal Years Ended January 31,
(Amounts in millions) 2011 2010 2009
Income from continuing operations $15,959 $14,962 $13,734
Less consolidated net income
attributable to noncontrolling
interest (604) (513) (499)
Income from continuing operations
attributable to Walmart 15,355 14,449 13,235
Income (loss) from discontinued
operations, net of tax 1,034 (79) 146
Consolidated net income attributable
to Walmart $16,389 $14,370 $13,381