Walmart 2012 Annual Report Download - page 38
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Please find page 38 of the 2012 Walmart annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.36 Walmart 2012 Annual Report
1 Summary of Signi cant Accounting Policies
General
Wal-Mart Stores, Inc. (“Walmart” or the “Company”) operates retail stores
in various formats around the world, aggregated into three reportable
segments: the Walmart U.S. segment; the Walmart International segment;
and the Sam’s Club segment. Walmart is committed to saving people
money so they can live better. Walmart earns the trust of its customers
every day by providing a broad assortment of quality merchandise and
services at everyday low prices (“EDLP”) while fostering a culture that
rewards and embraces mutual respect, integrity and diversity. EDLP is
the Company’s pricing philosophy under which it prices items at a low
price every day so its customers trust that its prices will not change
under frequent promotional activity.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Walmart
and its subsidiaries. All material intercompany accounts and transactions
have been eliminated in consolidation. Investments in unconsolidated
affi liates, which are 50% or less owned and do not meet the consolidation
criteria of Topic 810 of the Financial Accounting Standards Codifi cation
(“ASC”), are accounted for using the equity method. These investments
are immaterial to the Company’s Consolidated Financial Statements.
The Company’s operations in the United States (“U.S.”) and Canada
are consolidated using a January 31 fi scal year-end. The Company’s
operations in 12 countries in Africa, Argentina, Brazil, 5 countries in
Central America, Chile, China, India, Japan, Mexico and the United
Kingdom are consolidated using a December 31 fi scal year-end,
generally due to statutory reporting requirements. There were no
signifi cant intervening events during January 2012 which materially
aff ected the Consolidated Financial Statements.
Use of Estimates
The Consolidated Financial Statements have been prepared in
conformity with accounting principles generally accepted in the United
States. Those principles require management to make estimates and
assumptions that aff ect the reported amounts of assets and liabilities.
Management’s estimates and assumptions also aff ect the disclosure of
contingent assets and liabilities at the date of the fi nancial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results may diff er from those estimates.
Cash and Cash Equivalents
The Company considers investments with a maturity when purchased
of three months or less to be cash equivalents. All credit card, debit card
and electronic benefi ts transfer transactions that process in less than
seven days are classifi ed as cash and cash equivalents. The amounts due
from banks for these transactions classifi ed as cash totaled $1.2 billion at
January 31, 2012 and 2011. In addition, cash and cash equivalents includes
restricted cash primarily related to cash collateral holdings from various
counterparties, as required by certain derivative and trust agreements, of
$547 million and $504 million at January 31, 2012 and 2011, respectively.
The Company’s cash balances are held in various locations around the
world. Of the Company’s $6.6 billion and $7.4 billion of cash and cash
equivalents at January 31, 2012 and 2011, respectively, $5.6 billion and
$7.1 billion, respectively, were held outside of the U.S. and are generally
utilized to support liquidity needs in the Company’s foreign operations.
The Company employs fi nancing strategies in an eff ort to ensure that
cash can be made available in the country in which it is needed with
the minimum cost possible. The Company does not believe it will be
necessary to repatriate cash and cash equivalents held outside of the
U.S. and anticipates its domestic liquidity needs will be met through
other funding sources (ongoing cash fl ows generated from operations,
external borrowings, or both). Accordingly, the Company intends, with
only certain limited exceptions, to continue to permanently reinvest the
cash in its foreign operations. Were the Company’s intention to change,
most of the amounts held within the Company’s foreign operations
could be repatriated to the U.S., although any repatriations under current
U.S. tax laws would be subject to U.S. federal income taxes, less applicable
foreign tax credits. As of January 31, 2012 and 2011, approximately
$768 million and $691 million, respectively, may not be freely transferable
to the U.S. due to local laws or other restrictions. The Company does
not expect local laws, other limitations or potential taxes on anticipated
future repatriations of amounts held outside of the United States to have
a material eff ect on its overall liquidity, fi nancial condition or results
of operations.
Receivables
Receivables are stated at their carrying values, net of a reserve for
doubtful accounts. Receivables consist primarily of amounts due from:
• insurance companies resulting from pharmacy sales;
• banks for customer credit card, debit card and electronic bank transfers
that take in excess of seven days to process;
• suppliers for marketing or incentive programs;
• consumer fi nancing programs in certain international subsidiaries; and
• real estate transactions.
The Company establishes a reserve for doubtful accounts based on
historical trends in collection of past due amounts and write-off history.
The total reserve for doubtful accounts was $323 million and $252 million
at January 31, 2012 and 2011, respectively.
Walmart International off ers a limited amount of consumer credit products,
primarily through its fi nancial institution operations in Chile, Canada and
Mexico. The balance of these receivables was $1,049 million, net of a reserve
for doubtful accounts of $63 million at January 31, 2012, compared to a
receivable balance of $673 million, net of a reserve for doubtful accounts
of $83 million at January 31, 2011. These balances are included in receiv-
ables, net in the Company’s Consolidated Balance Sheets.
Inventories
The Company values inventories at the lower of cost or market as
determined primarily by the retail method of accounting, using the
last-in, fi rst-out (“LIFO”) method for substantially all of the Walmart U.S.
segment’s merchandise inventories. The retail method of accounting
results in inventory being valued at the lower of cost or market since per-
manent markdowns are currently taken as a reduction of the retail value
of inventory. The Sam’s Club segment’s merchandise is valued based on
the weighted-average cost using the LIFO method. Inventories for the
Walmart International operations are primarily valued by the retail
method of accounting and are stated using the fi rst-in, fi rst-out (“FIFO”)
method. At January 31, 2012 and 2011, the Company’s inventories valued
at LIFO approximate those inventories as if they were valued at FIFO.
Notes to Consolidated Financial Statements