Walmart 2013 Annual Report Download - page 38

36 || Walmart 2013 Annual Report
1 Summary of Signi cant Accounting Policies
General
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 and
Sam’s Club. 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 philoso-
phy 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 as of and for the  scal years ended January 31, 2013
(“ scal 2013”), January 31, 2012 (“ scal 2012”) and January 31, 2011 (“ scal
2011”). All material intercompany accounts and transactions have been
eliminated in consolidation. Investments in unconsolidated a liates,
which are 50% or less owned, are accounted for primarily using the
equity method. These investments are immaterial to the Company’s
Consolidated Financial Statements.
The Company’s Consolidated Financial Statements are based on a  scal
year ending on January 31 for the United States (“U.S.”) and Canadian
operations. The Company consolidates all other operations generally
using a one-month lag and based on a calendar year. There were no
signi cant intervening events during January 2013 that materially
a ected the Consolidated Financial Statements.
Use of Estimates
The Consolidated Financial Statements have been prepared in conformity
with U.S. generally accepted accounting principles. Those principles
require management to make estimates and assumptions that a ect the
reported amounts of assets and liabilities. Management’s estimates and
assumptions also a ect the disclosure of contingent assets and liabilities
at the date of the  nancial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results may
di 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 bene ts transfer transactions that process in less than
seven days are classi ed as cash and cash equivalents. The amounts due
from banks for these transactions classi ed as cash and cash equivalents
totaled $1.3 billion and $1.2 billion at January 31, 2013 and 2012, respectively.
In addition, cash and cash equivalents includes restricted cash of
$715 million and $547 million at January 31, 2013 and 2012, respectively,
which is primarily related to cash collateral holdings from various
counterparties, as required by certain derivative and trust agreements.
The Company’s cash balances are held in various locations around the
world. Of the Company’s $7.8 billion and $6.6 billion of cash and cash
equivalents at January 31, 2013 and 2012, respectively, $5.2 billion and
$5.6 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  nancing strategies in an e ort to ensure that
cash can be made available in the country in which it is needed with the
minimum cost possible. Management 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  ows generated from operations, external
borrowings, or both). Accordingly, management intends, with only certain
limited exceptions, to continue to permanently reinvest the Company’s
cash and cash equivalents in its foreign operations. If the Company’s
current intentions were 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,
2013 and 2012, cash and cash equivalents of approximately $876 million
and $768 million, respectively, may not be freely transferable to the U.S.
due to local laws or other restrictions. Management does not expect
local laws, other limitations or potential taxes on anticipated future
repatriations of amounts held outside of the U.S. to have a material
e ect on the Company’s overall liquidity,  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
the following:
• Insurance companies resulting from pharmacy sales;
• Banks for customer credit cards, debit cards and electronic bank
transfers that take in excess of seven days to process;
• Consumer  nancing programs in certain international operations;
• Suppliers for marketing or incentive programs; and
• Real estate transactions.
The Walmart International segment o ers a limited number of consumer
credit products, primarily through its  nancial institutions in select
countries. The receivable balance from consumer credit products was
$1.2 billion, net of a reserve for doubtful accounts of $115 million, at
January 31, 2013, compared to a receivable balance of $1.0 billion, net of
a reserve for doubtful accounts of $63 million, at January 31, 2012. These
balances are included in receivables, 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,  rst-out (“LIFO”) method for substantially all of the Walmart U.S.
segment’s inventories. The retail method of accounting results in
inventory being valued at the lower of cost or market since permanent
markdowns are currently taken as a reduction of the retail value of
inventory. The Walmart International segment’s inventories are primarily
valued by the retail method of accounting, using the  rst-in,  rst-out
(“FIFO”) method. The Sam’s Club segment’s inventories are valued based
on weighted-average cost using the LIFO method. At January 31, 2013
and 2012, the Company’s inventories valued at LIFO approximate those
inventories as if they were valued at FIFO.
Notes to Consolidated Financial Statements