Walmart 2014 Annual Report Download

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So many ways to
Save money.
Live better.
2014 Annual Report

Table of contents

  • Page 1
    So many ways to Save money. Live better. 2014 Ann ual Repor t

  • Page 2
    ... Based on survey results from more than 2 million associates worldwide, approximately 4 of 5 are proud to work for Walmart. 300K * associates have 10+ years of service *Represents Walmart U.S. data only. 4 Walmart 2014 Annual Report 190,000 U.S. store/club associates promoted in fiscal 2014

  • Page 3
    Approximately * 75% of store management joined Walmart as hourly associates 100K honorably discharged U.S. veterans expected to be hired by Walmart U.S. and Sam's Club by 2018 of our International associates are women *Represents Walmart U.S. data only. Walmart 2014 Annual Report 1 57%

  • Page 4
    ... points for our customers worldwide. Delivering for customers and shareholders 250M customers served weekly in our stores in 27 countries 33M approximate retail square footage added in fiscal 2014 $68B* net sales growth over the past five years 30%* earnings per share growth $68B* returned...

  • Page 5
    ...customers and our store associates how we could do better. He was always in the market looking for new ideas. For Sam, the customer was always the boss, and the improvements he made to Walmart were Doug McMillon President and Chief Executive Officer Wal-Mart Stores, Inc. Walmart 2014 Annual Report...

  • Page 6
    ... foods, pharmacy and fuel, and delivered healthy comp sales growth in fiscal 2014. This year, we'll significantly accelerate their rollout to complement our core supercenter fleet. And, in Mexico and the U.K., we'll open more small stores to deliver convenience, assortment and low prices. Expanding...

  • Page 7
    ... mark, a 30 percent increase. A strong focus on e-commerce is now fully embedded within each of our businesses and we'll increase our investment as e-commerce opportunities present themselves. Doug McMillon President and Chief Executive Officer Wal-Mart Stores, Inc. Walmart 2014 Annual Report 5

  • Page 8
    ...right: We're bringing new, innovative grocery products to our broad assortment. Bottom right: Customers appreciate the convenient access to pharmacy, fresh foods, fuel and e-commerce pickup at our Walmart Express pilot stores. Bottom left: In fiscal 2015, we expect to add about 200 new Neighborhood...

  • Page 9
    ... and customer access to fresh foods, pharmacy and fuel. Overall, we'll add between 21 and 23 million retail square feet, representing between 385 and 415 units in fiscal 2015. We'll also connect Walmart's physical assets to the broad assortment that is available through nearby stores and online...

  • Page 10
    International Positioning our portfolio for continued growth In fiscal 2014, Walmart International's net sales, excluding the impact of currency exchange rate fluctuations and acquisitions, increased 4.6 percent to $140.9 billion. We added 12.5 million square feet and 324 stores, bringing our total...

  • Page 11
    ... our growth in China by opening 110 additional facilities by 2016. Bottom right: Supercenters in Mexico provide a broad assortment with local relevance at everyday low prices. Bottom left: Asda customers enjoy the quality of George apparel. Overall, Asda will invest £1.25 billion in price and...

  • Page 12
    ... helps business members supply their needs in restaurants, convenience stores, and others. Middle top right: Initiatives to promote the health and wellness of members is a key priority. Middle bottom right: Sales of traffic-driving categories, such as fresh produce, saw strong growth in fiscal 2014...

  • Page 13
    ... Sam's Club opened 20 new, relocated or expanded clubs in fiscal 2014, the largest number of openings in several years. We invested in membership acquisition to build a critical mass in our new club openings, including the use of social media marketing. In fiscal 2015, we plan to open between 17 and...

  • Page 14
    ... China, Yihaodian's new, more intuitive mobile app has helped expand mobile transactions eightfold in one year. In the U.S., walmart.com customers enjoy an expanded online assortment of more than 5 million SKUs and convenient delivery options to their home or through Site to Store. We're investing...

  • Page 15
    ... consistently ranks as the #1 or #2 most visited retail site. Traffic on Sam's Club's mobile platform nearly doubled in the last year. Walmart To Go, now in test in the U.S., leverages best practices from our successful Asda grocery delivery business in the U.K. Walmart 2014 Annual Report 13

  • Page 16
    ... refine our business strategy for changing customer needs. Walmart's Board views succession planning as a critical responsibility, and it's a topic upon which the company has spent considerable time and effort. This diligence has served shareholders well, as we've added talented new directors over...

  • Page 17
    ... of Wal-Mart Stores, Inc. 15| Christopher J. Williams Mr. Williams is the Chairman of the Board of Directors and Chief Executive Officer of The Williams Capital Group, L.P., an investment bank. 16| Pamela J. Craig Ms. Craig is the retired Chief Financial Officer of Accenture plc, a global management...

  • Page 18
    ... customers and deliver growth, leverage and returns for shareholders. "At Walmart, we're guided by our financial priorities - growth, leverage and returns." Charles Holley, Jr. Charles M. Holley, Jr. Executive Vice President and Chief Financial Officer Wal-Mart Stores, Inc. 16 Walmart 2014 Annual...

  • Page 19
    ... of Income Consolidated Statements of Comprehensive Income 37 Consolidated Balance Sheets 38 Consolidated Statements of Shareholders' Equity 39 Consolidated Statements of Cash Flows 40 Notes to Consolidated Financial Statements 60 Report of Independent Registered Public Accounting Firm 61 Report of...

  • Page 20
    ... common share Financial position Inventories Property, equipment and capital lease assets, net Total assets Long-term debt and long-term capital lease obligations (excluding amounts due within one year) Total Walmart shareholders' equity Unit counts Walmart U.S. segment Walmart International segment...

  • Page 21
    ... underlying performance without the effects of currency exchange rate fluctuations or acquisitions. Volatility in currency exchange rates may impact the results, including net sales and operating income, of the Company and the Walmart International segment in the future. Walmart 2014 Annual Report...

  • Page 22
    ... exchange rates and decreases in comparable store sales at Walmart U.S. and in a number of our international operations. The increase in net sales for fiscal 2013 was due to 3.3% growth in retail square feet and positive comparable store and club sales. Additionally, net sales from acquisitions...

  • Page 23
    ... new stores and clubs are opened. Leverage Operating Income Fiscal Years Ended January 31, (Amounts in millions) Operating Income 2014 Percent of Total Percent Change Operating Income 2013 Percent of Total Percent Change 2012 Operating Income Percent of Total Walmart U.S. Walmart International Sam...

  • Page 24
    ...our global compliance program and related organizational enhancements, and investments in price, which reduced gross margin. Returns Return on Investment Management believes return on investment ("ROI") is a meaningful metric to share with investors because it helps investors assess how effectively...

  • Page 25
    ... for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows. Although other companies report their free cash flow, numerous methods may exist for calculating a company's free...

  • Page 26
    ... exchange rates and decreases in comparable store sales at Walmart U.S. and in a number of our international operations. The increase in net sales for fiscal 2013 was due to 3.3% growth in retail square feet and positive comparable store and club sales. Additionally, net sales from acquisitions...

  • Page 27
    .... Gross profit rate decreased 10 basis points for fiscal 2014 and was flat for fiscal 2013, when compared to the previous fiscal year. The fiscal 2014 decrease in gross profit rate was primarily due to price investments in certain countries, including Brazil, Canada and Mexico. Walmart International...

  • Page 28
    ... debt and short-term borrowings, to fund our operations and global expansion activities. Generally, some or all of the remaining available cash flow funds all or part of the dividends on our common stock and share repurchases. Fiscal Years Ended January 31, (Amounts in millions) 2014 2013 2012 $50...

  • Page 29
    ... offered on our websites. Each of these accomplishments further supports the operations of our segments. Our fiscal 2015 global expansion plans include continuing to grow our retail square feet, which will include a significant increase in the number of Neighborhood Markets and other small stores...

  • Page 30
    ... U.S. Walmart International Total capital expenditures Dividends Our total dividend payments were $6.1 billion, $5.4 billion, and $5.0 billion for fiscal 2014, 2013 and 2012, respectively. On February 20, 2014, the Board of Directors approved the fiscal 2015 annual dividend at $1.92 per share, an...

  • Page 31
    ... its joint venture, franchise and supply agreements with Bharti Retail Limited ("Bharti Retail"), which operates Bharti's retail business in India, and transferred its investment in that business to Bharti. In connection with the agreements related to the Bharti retail business, the Company paid and...

  • Page 32
    ... The following table sets forth certain information concerning our obligations and commitments to make contractual future payments, such as debt and lease agreements, and certain contingent commitments: Payments Due During Fiscal Years Ending January 31, (Amounts in millions) Total 2015 2016-2017...

  • Page 33
    ...on January 31, 2014 debt levels, a 100 basis point change in prevailing market rates would cause our annual interest costs to change by approximately $78 million. Foreign Currency Risk We are exposed to fluctuations in foreign currency exchange rates as a result of our net investments and operations...

  • Page 34
    ... margin of the fiscal year purchase activity less the impact of any permanent markdowns. The retail method of accounting requires management to make certain judgments and estimates that may significantly impact the ending inventory valuation at cost, as well as the amount of gross profit recognized...

  • Page 35
    ... shareholders, associates and customers contained in this Annual Report (the "CEO Letter") with respect to Walmart's fiscal 2015 global expansion plans, including a significant increase in the number of Neighborhood Markets and other small format stores, growing our retail square feet and expanding...

  • Page 36
    ... affect our financial 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...

  • Page 37
    ...fuel, the cost of healthcare and other benefits, accident costs, our casualty and other insurance costs, information security costs, the cost of construction materials, availability and the cost of acceptable building sites for new stores, clubs and other units, availability of qualified labor pools...

  • Page 38
    ...Years Ended January 31, (Amounts in millions, except per share data) 2014 2013 2012 Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income Interest: Debt Capital leases Interest income...

  • Page 39
    ... INTEREST AND EQUITY 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 Current liabilities of discontinued operations Total current liabilities Long-term...

  • Page 40
    ...January 31, 2012 Consolidated net income Other comprehensive income, net of income taxes Cash dividends declared ($1.59 per share) Purchase of Company stock Nonredeemable noncontrolling interest of acquired entity Other Balances as of January 31, 2013 Consolidated net income Other comprehensive loss...

  • Page 41
    Consolidated Statements of Cash Flows Fiscal Years Ended January 31, (Amounts in millions) 2014 2013 2012 Cash ï¬,ows from operating activities: Consolidated net income Income (loss) from discontinued operations, net of income taxes Income from continuing operations Adjustments to reconcile income ...

  • Page 42
    ... 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, first-out ("LIFO") method for substantially all of the Walmart U.S. segment's inventories. The Walmart International...

  • Page 43
    ... price allocation for the fiscal 2012 acquisition of Massmart. (2) Goodwill recorded for fiscal 2014 and 2013 acquisitions relates to several acquisitions that are not significant, individually or in the aggregate, to the Company's Consolidated Financial Statements. Walmart 2014 Annual Report...

  • Page 44
    ... uncertain tax positions taken or expected to be taken in a tax return. The Company records interest and penalties related to unrecognized tax benefits in interest expense and operating, selling, general and administrative expenses, respectively, in the Company's Consolidated Statements of Income...

  • Page 45
    ... in the Company's capital lease tests and in determining straight-line rent expense for operating leases. Pre-Opening Costs The cost of start-up activities, including organization costs, related to new store openings, store remodels, relocations, expansions and conversions are expensed as incurred...

  • Page 46
    ... all plans was $388 million, $378 million and $355 million for fiscal 2014, 2013 and 2012, respectively. Share-based compensation expense is included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized...

  • Page 47
    ...weighted-average assumptions used to estimate the fair values of the Company's stock options granted in fiscal 2014, 2013 and 2012: Fiscal Years Ended January 31, 2014 2013 2012 Fair value of restricted stock and performance share awards vested Fair value of restricted stock rights vested Dividend...

  • Page 48
    ... for leverage, cost of borrowings and the market price of its common stock. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total cash paid for share repurchases for fiscal 2014, 2013 and 2012: Fiscal Years Ended January 31...

  • Page 49
    ...commercial paper and lines of credit. Short-term borrowings outstanding at January 31, 2014 and 2013 were $7.7 billion and $6.8 billion, respectively. The following table includes additional information related to the Company's short-term borrowings for fiscal 2014, 2013 and 2012: Fiscal Years Ended...

  • Page 50
    ... debt due within one year in the Company's Consolidated Balance Sheets. Annual maturities of long-term debt during the next five years and thereafter are as follows: (Amounts in millions) Fiscal Year Annual Maturity Debt Issuances Information on significant long-term debt issued during fiscal 2014...

  • Page 51
    ...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, 2014 and 2013...

  • Page 52
    ...offset by corresponding changes in the fair values of the hedged items, also recorded in earnings, and, accordingly, do not impact the Company's Consolidated Statements of Income. These fair value instruments will mature on dates ranging from February 2014 to May 2014. 50 Walmart 2014 Annual Report

  • Page 53
    ... 6. The $74 million loss was recorded in accumulated other comprehensive income (loss) and will be reclassified to earnings over the life of the related debt, effectively adjusting interest expense to reflect the fixed-rate entered into by the forward starting swaps. Walmart 2014 Annual Report 51

  • Page 54
    ...the provision for income taxes is as follows: Fiscal Years Ended January 31, (Amounts in millions) 2014 2013 2012 Current: U.S. federal U.S. state and local International Total current tax provision Deferred: U.S. federal U.S. state and local International Total deferred tax expense (benefit) Total...

  • Page 55
    ... tax rate and the effective income tax rate on pretax income from continuing operations is as follows: Fiscal Years Ended January 31, 2014 2013 2012 The deferred taxes are classified as follows in the Company's Consolidated Balance Sheets: January 31, (Amounts in millions) 2014 2013 Balance Sheet...

  • Page 56
    ... and penalties related to uncertain tax benefits as interest expense and as operating, selling, general and administrative expenses, respectively. During fiscal 2014, 2013 and 2012, the Company recognized interest and penalty expense (benefit) related to uncertain tax positions of $(7) million...

  • Page 57
    ... District of Texas entitled Odle v. Wal-Mart Stores, Inc., proposing a class of current and former female associates employed in any Walmart region that includes stores located in the state of Texas. On October 15, 2012, the court in the Odle case granted the Company's motion to dismiss, dismissing...

  • Page 58
    ...including amounts applicable to taxes, insurance, maintenance, other operating expenses and contingent rentals) under operating leases and other short-term rental arrangements were $2.8 billion, $2.6 billion and $2.4 billion in fiscal 2014, 2013 and 2012, respectively. 56 Walmart 2014 Annual Report

  • Page 59
    ... Financial Statements respectively. These underfunded amounts are recorded as liabilities in the Company's Consolidated Balance Sheets in deferred income taxes and other. Certain other international operations also have defined benefit arrangements that are not significant. In fiscal 2012, Asda...

  • Page 60
    ... Company's U.S. and non-U.S. operations for fiscal 2014, 2013 and 2012, are as follows: Fiscal Years Ended January 31, (Amounts in millions) 2014 2013 2012 15 Subsequent Event Dividends Declared On February 20, 2014, the Board of Directors approved the fiscal 2015 annual dividend at $1.92 per share...

  • Page 61
    ...Quarterly Financial Data (Unaudited) Fiscal Year Ended January 31, 2014 (Amounts in millions except per share data) Q1 Q2 Q3 Q4 Total Total revenues Net sales Cost of sales Income from continuing operations Consolidated net income Consolidated net income attributable to Walmart Basic net income per...

  • Page 62
    ... consolidated balance sheets of Wal-Mart Stores, Inc. as of January 31, 2014 and 2013, 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, 2014. These financial statements...

  • Page 63
    ... Company Accounting Oversight Board (United States), the consolidated balance sheets of Wal-Mart Stores, Inc. as of January 31, 2014 and 2013, and related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended...

  • Page 64
    Management's Report to Our Shareholders Wal-Mart Stores, Inc. Management of Wal-Mart Stores, Inc. ("Walmart," the "company" or "we") is responsible for the preparation, integrity and objectivity of Walmart's Consolidated Financial Statements and other financial information contained in this Annual ...

  • Page 65
    ... Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2013, to correspond with the balance sheet date of the related geographic market. Canada unit counts are stated as of January 31, 2014. (2) "Other" includes restaurants, drugstores and convenience stores...

  • Page 66
    ...Company c/o Investor Relations or by calling (479) 273-8446. These reports are also available via the corporate website. • Annual Report on Form 10-K • Quarterly Reports on Form 10-Q • Earnings Releases • Current Reports on Form 8-K • Annual Shareholders' Meeting Proxy Statement • Global...

  • Page 67
    .... Walmart's investor relations app is our company at your fingertips. Walmart's IR app gives shareholders anytime and anywhere access to financial and company news from their mobile devices. Find presentations, quarterly results, virtual store tours, a global footprint map and the stock price on...

  • Page 68
    ... food In FY 2014, we opened 96 new stores in America's food deserts, with 224 opened since our initiative began. Meeting community needs around the world Last year, Walmart and the Walmart Foundation gave more than $1 billion in cash and in-kind gifts to charitable organizations. Associate career...