Walmart 2013 Annual Report Download

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2013 Annual Report
One mission:

Table of contents

  • Page 1
    One mission: 2013 Annual Report

  • Page 2
    ... the website, Walmart serves customers with one core mission: to help people save money so they can live better. To learn more about Walmart's business strategies and company mission, please visit our electronic report at www.stock.walmart.com. You'll hear from management, associates and customers...

  • Page 3
    ... of Walmart's most innovative ideas originate from the insights of associates across our global operations. Michael T. Duke President and Chief Executive Officer Wal-Mart Stores, Inc. To our shareholders, associates and customers Over the last few years, I've shared with you how we would build the...

  • Page 4
    ...mobile self-checkout through our Scan and Goâ„¢ app. Perhaps most important to our growth plans, we've launched a multi-year process to build the next generation global technology platform. By Exceptional customer service is a key contributor to Walmart Canada's strong market position. every level...

  • Page 5
    ... business. The job of every Walmart associate must begin with integrity. Over the past year, I've had countless opportunities to speak to our associates, and I've been very clear that ethics and Michael T. Duke President and Chief Executive Officer Wal-Mart Stores, Inc. Walmart 2013 Annual Report...

  • Page 6
    ...'s largest grocer. Middle: Focusing on basics drove apparel sales to the best comp sales performance in 7 years. Bottom: More than 240 Neighborhood Markets offer groceries and a pharmacy. Right: Supercenters offer a broad assortment to deliver one-stop shopping. 4 || Walmart 2013 Annual Report

  • Page 7
    ... the next 10 years. We also drive innovation across our supply chain and store operations to reduce cost. Productivity initiatives, including One-Touch and MyGuide, help our stores manage expenses, while continuing to provide good customer service. Engaged associates drive customer satisfaction. Sam...

  • Page 8
    ... improved productivity in store operations, purchasing practices, information technology, logistics and back office support functions. Deeper talent enables growth. We're investing in our outstanding group of Walmart International associates. The secret to our continued success lies in the strength...

  • Page 9
    Walmart 2013 Annual Report || 7

  • Page 10
    ...strong. Middle: Assortment, quality and value drive membership renewals and upgrades. Bottom: Business members rely on Click 'n' Pull® to save time. Right: Our extensive fresh food assortment drives traffic by offering value to both Advantage and Business members. 8 || Walmart 2013 Annual Report

  • Page 11
    ... workforce scheduling to more closely align with member traffic patterns. Productivity measures enable us to expand strategic price investments on key traffic-driving items - further strengthening members' long-term loyalty. Innovations that enhance the shopping experience. We invest in technology...

  • Page 12
    ... mobile and in our stores; and • deliver merchandise at the lowest possible cost to customers when and where they want it. We're driving increased sales by building world class e-commerce technologies, such as the upgraded search engine for walmart.com which is enabled by the new global technology...

  • Page 13
    ... energy resources. Bottom: Associates have the opportunity to build long-term careers with Walmart. To learn more about Walmart's responsibility initiatives to help people live better, access our 2013 Global Responsibility Report (GRR) at corporate.walmart.com. The Global Reporting Initiative...

  • Page 14
    ... and corporate responsibility. This year, we added board committee oversight for legislative affairs and public policy engagement strategies, as well as adopted restrictions on hedging and pledging of Walmart stock. Progress made is the foundation for a bright future As I reflect on fiscal 2013...

  • Page 15
    ... of KPMG International, a professional services firm. 10| Marissa A. Mayer Ms. Mayer is the Chief Executive Officer and President and Director of Yahoo! Inc., a digital media company. 11| Gregory B. Penner Mr. Penner is a General Partner at Madrone Capital Partners, an investment management firm. 12...

  • Page 16
    ... FY11 FY12 FY13 Dividends Share repurchases Walmart U.S.* Net sales surpassed Walmart International* Net sales surpassed Sam's Club* Net sales surpassed $274B 3.9% Increase from fiscal 2012 Operating income grew to $135B 7.4% Increase from fiscal 2012 Operating income grew to $56B...

  • Page 17
    ...to gain share as well. Our fiscal 2014 capital expenditure plan is to spend between $12 billion and $13 billion. This capital plan includes continued growth in new stores, logistics and supply chain expansion, investments to drive productivity and reduce expenses, and Global eCommerce expansion. Our...

  • Page 18
    ...Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting 58 Management's Report to Our Shareholders 59 Fiscal 2013 Unit Count 60 Corporate and Stock Information Neil M. Ashe Executive Vice President, President and Chief Executive Officer, Global eCommerce...

  • Page 19
    ... to Walmart Dividends declared per common share Financial position Inventories Property, equipment and capital lease assets, net Total assets Long-term debt, including obligations under capital leases Total Walmart shareholders' equity Unit counts Walmart U.S. segment Walmart International segment...

  • Page 20
    Management's Discussion 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 under 69 banners around the world and is committed to saving people money so they can live better. We earn...

  • Page 21
    ... its assets through return on investment and how effectively the Company manages working capital and capital expenditures through free cash flow. Growth Net Sales Fiscal Years Ended January 31, (Amounts in millions) Net Sales 2013 Percent of Total Percent Change Net Sales 2012 Percent of Total...

  • Page 22
    ... metric to share with investors because it helps investors assess how effectively Walmart is deploying its assets. Trends in ROI can fluctuate over time as management balances long-term potential strategic initiatives with possible short-term impacts. ROI was 18.2% and 18.6% for fiscal 2013 and 2012...

  • Page 23
    ... Balance Sheets. (3) Accrued liabilities as of January 31, 2013, 2012 and 2011 exclude liabilities of discontinued operations of $6 million, $26 million and $47 million, respectively, which are included in accrued liabilities in the Company's Consolidated Balance Sheets. Walmart 2013 Annual Report...

  • Page 24
    ... believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities. Fiscal Years Ended January 31, (Amounts in millions) 2013 2012 2011 Net cash provided by operating...

  • Page 25
    ...the U.S. statutory rate to the effective income tax rates for fiscal 2013, 2012 and 2011 is presented in Note 9 in the "Notes to Consolidated Financial Statements." Looking forward, we expect the annual effective income tax rate for fiscal year ended January 31, 2014 ("fiscal 2014") to range between...

  • Page 26
    ... net sales for fiscal 2012 compared to fiscal 2011 was primarily due to an increase of 1.6% in retail square feet. Gross profit rate declined 16 basis points for fiscal 2013, when compared to the previous fiscal year, primarily due to our strategic focus on price investment and low price leadership...

  • Page 27
    ... our long-term debt due within one year, as well as an increase in accrued income taxes. We generally operate with a working capital deficit due to our efficient use of cash in funding operations and in providing returns to our shareholders in the form of stock repurchases and payments of dividends...

  • Page 28
    ... they can live better. Our Walmart International segment also increased its investment in Newheight Holdings Ltd, a company that owns Yihaodian, an e-commerce business in China, to approximately 51% during fiscal 2013. Our fiscal 2014 global expansion plans include growing our retail square feet and...

  • Page 29
    ... 2013, primarily due to a $17.0 billion increase in consolidated net income attributable to Walmart. Standard & Poor's Moody's Investors Service Fitch Ratings A-1+ P-1 F1+ AA Aa2 AA In the event that the ratings of our commercial paper or any rated series of our outstanding long-term debt issues...

  • Page 30
    ... tax positions and have been recorded as liabilities. The timing of the payment, if any, associated with these liabilities is uncertain. Refer to Note 9 in the "Notes to Consolidated Financial Statements" for additional discussion of unrecognized tax benefits. Off Balance Sheet Arrangements...

  • Page 31
    ..., our variable rate borrowings, including the effect of our commercial paper and interest rate swaps, represented 23% of our total short-term and long-term debt. Based on January 31, 2013 debt levels, a 100 basis point change in prevailing market rates would cause our annual interest costs to change...

  • Page 32
    ...segment in fiscal 2014; under the caption "Liquidity and Capital Resources - Cash Flows Used in Financing Activities - Dividends," as well as in Note 15 to our Consolidated Financial Statements and elsewhere in this Annual Report under the caption "Dividends payable per share," regarding the payment...

  • Page 33
    ... performance, our results of operations, including our sales, earnings per share or comparable store sales or comparable club sales and our effective income tax rate for any period and our business operations, business strategy, plans, goals or objectives. These factors include, but are not limited...

  • Page 34
    Consolidated Statements of Income Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2013 2012 2011 Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income ...

  • Page 35
    ... Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Obligations under capital leases due within one year Total current liabilities Long-term debt Long-term obligations under capital leases Deferred income taxes...

  • Page 36
    ...) Total Walmart Shareholders' Equity Nonredeemable Noncontrolling Total Interest Equity Balances as of February 1, 2010 Consolidated net income Other comprehensive income, net of income taxes Cash dividends declared ($1.21 per share) Purchase of Company stock Other Balances as of January 31, 2011...

  • Page 37
    ... in investing activities Cash flows from nancing activities: Net change in short-term borrowings Proceeds from issuance of long-term debt Payments of long-term debt Dividends paid Purchase of Company stock Other financing activities Net cash used in financing activities Effect of exchange rates on...

  • Page 38
    ... to Consolidated Financial Statements 1 Summary of Signi General cant Accounting Policies Wal-Mart Stores, Inc. ("Walmart" or the "Company") operates retail stores in various formats under 69 banners around the world, aggregated into three reportable segments: Walmart U.S., Walmart International...

  • Page 39
    ... The following table summarizes the Company's property and equipment balances and includes the estimated useful lives that are generally used to depreciate the assets on a straight-line basis: Fiscal Years Ended January 31, 2013 2012 (Amounts in millions) Estimated Useful Lives Land Buildings and...

  • Page 40
    ...to the customer. Membership Fee The Company recognizes membership fee revenue both in the United States and internationally over the term of the membership, which is typically 12 months. The following table summarizes membership fee activity for fiscal 2013, 2012 and 2011: Fiscal Years Ended January...

  • Page 41
    ..., selling, general and administrative expenses in the Company's Consolidated Statements of Income. Advertising reimbursements received from suppliers are generally accounted for as a reduction of cost of sales and recognized in the Company's Consolidated Statements of Income when the related...

  • Page 42
    ..., selling, general and administrative expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for share-based compensation was $142 million, $134 million and $141 million for fiscal 2013, 2012 and 2011, respectively. The following table summarizes...

  • Page 43
    ... information related to stock option awards: Fiscal Years Ended January 31, (Amounts in millions) 2013 2012 2011 Fair value of stock options vested Proceeds from stock options exercised Intrinsic value of stock options exercised $ 33 320 207 $ 50 420 91 $ 54 205 51 Walmart 2013 Annual Report...

  • Page 44
    ... things, current cash needs, capacity for leverage, cost of borrowings and the market price of its common stock. Cash paid for share repurchases during fiscal 2013, 2012 and 2011, was as follows: Total Number of Shares Repurchased (in millions) Dividend yield Volatility (2) Risk-free interest rate...

  • Page 45
    ...Short-term Borrowings and Long-term Debt Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings outstanding at January 31, 2013 and 2012, were $6.8 billion and $4.0 billion, respectively. The following table includes additional information related to the Company...

  • Page 46
    ... of long-term debt during fiscal 2013. Information on significant long-term debt issued during fiscal 2012, is as follows (amounts in millions): Issue Date Maturity Date Interest Rate Principal Amount April 18, 2011 April 18, 2011 April 18, 2011 April 18, 2011 Total April 15, 2014 April 15, 2016...

  • Page 47
    ...Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of January 31, 2013 and 2012...

  • Page 48
    ... Consolidated Statements of Income. These fair value instruments will mature on dates ranging from April 2013 to May 2014. Net Investment Instruments The Company is a party to cross-currency interest rate swaps that the Company uses to hedge its net investments, as well as its currency exchange rate...

  • Page 49
    ... October 31, 2014, if the hedged forecasted debt issuances do not occur. Financial Statement Presentation Derivative instruments with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either a current or a non-current asset, based on maturity date, and those hedging...

  • Page 50
    ... in the Company's Consolidated Balance Sheets: January 31, (Amounts in millions) 2013 2012 E ective Income Tax Rate Reconciliation The Company's effective income tax rate is typically lower than the U.S. statutory tax rate primarily because of benefits from lower-taxed global operations, including...

  • Page 51
    ... is as follows: Fiscal Years Ended January 31, (Amounts in millions) 2013 2012 2011 Unrecognized tax benefits, beginning of year Increases related to prior year tax positions Decreases related to prior year tax positions Increases related to current year tax positions Settlements during the period...

  • Page 52
    ... or may be subjected to Wal-Mart's challenged pay and management track promotions policies and practices." The Company appealed the order to the Ninth Circuit Court of Appeals and subsequently to the United States Supreme Court. On June 20, 2011, the Supreme Court issued an opinion decertifying the...

  • Page 53
    ... and officers named in those proceedings. The Company cannot predict at this time the outcome or impact of the government investigations, the shareholder lawsuits, or its own internal investigations and review. In addition, the Company expects to incur costs in responding to requests for information...

  • Page 54
    ... actuarial losses in other comprehensive income. The following table summarizes the contribution expense related to the Company's retirement-related benefits for fiscal 2013, 2012 and 2011: Fiscal Years Ended January 31, (Amounts in millions) 2013 2012 2011 2014 2015 2016 2017 2018 Thereafter Total...

  • Page 55
    ... Internal Revenue Service a matter related to a worthless stock deduction from the final 2007 disposition of its German operations. This resulted in a $1.0 billion tax benefit recorded in discontinued operations in the Company's Consolidated Statement of Income. In addition, during fiscal 2012, tax...

  • Page 56
    ...'s presentation. Information for the Company's segments, as well as the reconciliation to income from continuing operations before income taxes, is in the following table: (Amounts in millions) Walmart U.S. Walmart International Sam's Club Other Unallocated Consolidated Fiscal Year Ended January...

  • Page 57
    ... Company did not generate material total revenues from any single customer. 16 Quarterly Financial Data (Unaudited) Fiscal Year Ended January 31, 2013 (Amounts in millions except per share data) Q1 Q2 Q3 Q4 Total Total revenues Net sales Cost of sales Income from continuing operations Consolidated...

  • Page 58
    ... balance sheets of Wal-Mart Stores, Inc. as of January 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended January 31, 2013. These financial statements are the responsibility...

  • Page 59
    ... Company Accounting Oversight Board (United States), the consolidated balance sheets of Wal-Mart Stores, Inc. as of January 31, 2013 and 2012, and related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended...

  • Page 60
    ... of and address issues in a timely and effective manner. Through the open door policy all associates are encouraged to inform management at the appropriate level when they are concerned about any matter pertaining to Walmart. Walmart has adopted a Statement of Ethics to guide our associates in the...

  • Page 61
    ... Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2012, to correspond with the balance sheet date of the related geographic market. Canada unit counts are stated as of January 31, 2013. (2) "Other" includes restaurants, drugstores and convenience stores...

  • Page 62
    ... with shareholders Wal-Mart Stores, Inc. periodically communicates with its shareholders and other members of the investment community about our operations. For further information regarding our policy on shareholder and investor communications refer to our website www.stock.walmart.com. The...

  • Page 63
    ... device. Download the free app here or from iTunes or Google Play. We're driving innovation and sustainability - and reducing costs - with our electronic annual report. Visit www.stock.walmart.com to hear directly from our leaders, associates, customers and suppliers. Also, visit this website to...

  • Page 64
    ... power generator 100K honorably discharged U.S. veterans Walmart is projected to hire by 2018 180K U.S. store/club associates promoted at Walmart and Sam's Club in fiscal 2013 For more information on our community leadership, review our 2013 Global Responsibility Report at www.corporate.walmart...