Providing opportunity &
serving our communities
2018 ANNUAL REPORT
250,000+
U.S. associates
graduated from
Walmart Academy
$250B
Commitment to
purchase products that
support American jobs
1 Gigaton
Commitment to
work with suppliers to
reduce emissions in the
value chain
$35M+
Donated to 2017
hurricane relief
For more information, please see our Global Responsibility Report at:
corporate.walmart.com/global-responsibility
Walmart Inc. (NYSE: WMT)
702 S.W. 8th Street
Bentonville, Arkansas 72716 USA
479-273-4000
walmart.com
The minimized environmental footprint of this report is the result of an extensive, collaborative effort of Walmart and our supply
chain partners. The environmental and social impact continues to be an important consideration. It is printed on paper from
well-managed forests containing recycled PCW fiber that is Elementally Chlorine Free (ECF). It is printed using environmental
manufacturing principles that were utilized in the printing process. These practices include environmentally responsible
procurement, lean manufacturing, green chemistry principles, the recycling of residual materials and reduced volatile organic
compound inks and coatings.
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ACCELERATING
INNOVATION
Walmart by the numbers
$500.3 billion
Total Revenue
$28.3 billion
Operating Cash Flow
$14.4 billion
cash returned to
shareholders through
dividends and share
repurchases
$10.1 billion
Capital Expenditures
$11.5 billion
Walmart U.S.
eCommerce
sales
Serve nearly
270 million
customers
a week
over
11,700 stores
operating in
28 countries
Corporate and Stock Information
Listing
New York Stock Exchange
Stock Symbol: WMT
Corporate Information
Stock Registrar and Transfer Agent:
Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, Kentucky 40233-5000
1-800-438-6278
TDD for hearing-impaired inside the U.S. 1-800-952-9245
Internet: http://www.computershare.com
Annual Meeting
Our Annual Meeting of Shareholders will be held on Wednesday,
May 30, 2018 at 10:00 a.m. (Central Time) in the John Q. Hammons
Center, Rogers, Arkansas.
Communication With Shareholders
Walmart 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 following reports are available without charge upon request
by writing the 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 Responsibility Report
• Culture, Diversity & Inclusion Report
Independent Registered Public Accounting Firm
Ernst & Young LLP
5417 Pinnacle Point Dr., Suite 501
Rogers, AR 72758
Market Price of Common Stock
The high market price and low market price per share for the
Company’s common stock for each fiscal quarter in fiscal 2018
and 2017 were as follows:
Fiscal Years Ended January 31,
2018
2017
High
Low
High
Low
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
$ 75.77 $ 66.04
73.13
77.50
87.00
80.47
89.11
109.98
$ 70.08 $ 62.35
62.72
67.07
65.28
74.35
75.19
72.48
The high market price and low market price per share for the Company’s
common stock for the first fiscal quarter of fiscal 2019, were as follows:
Dividends Payable Per Share
For fiscal 2019, dividends will be paid based on the following schedule:
April 2, 2018
June 4, 2018
September 4, 2018
January 2, 2019
$0.52
0.52
0.52
0.52
Dividends Paid Per Share
For fiscal 2018, dividends were paid based on the following schedule:
April 3, 2017
June 5, 2017
September 5, 2017
January 2, 2018
$0.51
0.51
0.51
0.51
For fiscal 2017, dividends were paid based on the following schedule:
April 4, 2016
June 6, 2016
September 6, 2016
January 3, 2017
$0.50
0.50
0.50
0.50
Stock Performance Chart
This graph compares the cumulative total shareholder return on
Walmart’s common stock during the five fiscal years ending in
fiscal 2018 to the cumulative total returns on the S&P 500 Retailing
Index and the S&P 500 Index. The comparison assumes $100 was
invested on February 1, 2013, in shares of our common stock and
in each of the indices shown and assumes that all of the dividends
were reinvested.
Comparison of 5-Year Cumulative Total Return*
Among Walmart Inc., the S&P 500 Index and S&P 500 Retailing Index
Walmart Inc.
S&P 500 Index
S&P 500 Retailing Index
$350
$300
$250
$200
$150
$100
$ 50
$ 0
2013
2014
2015
2016
2017
2018
Fiscal Years
* Assumes $100 Invested on February 1, 2013
Assumes Dividends Reinvested
Fiscal Year Ending January 31, 2018
Fiscal Years Ended January 31,
2013
2014
2015
2016
2017
2018
$100.00 $109.39 $127.58 $102.39 $105.97 $173.61
Walmart Inc.
137.88
S&P 500 Index
165.51 209.22
100.00
184.32 218.76 321.37
S&P 500 Retailing Index 100.00
138.80
153.64
121.52
127.72
2 | WALMART
1st Quarter(1)
(1) Through March 28, 2018.
2019
High
Low
$106.56
$85.28
Holders of Record of Common Stock
As of March 28, 2018, there were 229,858 holders of record of
Walmart’s common stock.
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CEO LETTER
Dear shareholders,
associates and customers:
Recently I was talking to Chad Daggett about his experience leading
our Sam’s Club in Bangor, Maine (he was recently promoted to a new
role). Chad’s club had a good year and we were recognizing him for his
servant leadership in the club and the community. He was quick to give
credit to his team and said, “If you treat people like they make a
difference, they will.”
In that moment, he captured what makes our company unique: it’s our people, our culture, our
purpose and our values that make the difference for our business and have enabled our success
since the start. And those are the things that will empower our success in the future.
We’ve had an exciting year at Walmart. We have the right strategy and we’re
making progress putting our unique assets to work to serve customers in
all the ways they want to shop. We are confident in our strategy because
customers are responding. We are confident in our ability to execute the
strategy because we have the culture, the talent and the resources not
only to deliver the current plan, but also to dream of new things and new
ways to transform our business. We will delight customers in ways they
might not have even thought of yet. We’re out to provide an easy, fast,
friendly and fun shopping experience for them whether they shop with
us in stores, online, via a mobile device, with their voice or with
virtual reality, augmented reality or whatever comes next.
This year we made great progress accelerating innovation to save
customers both money and time. In our stores, we’re digitizing
experiences to make it easier for customers to shop and more
efficient for associates to manage inventory and perform routine
tasks. Our eCommerce business continues to scale as we launch
new ways to enhance the customer experience. We’re moving
faster, getting stronger and we have good momentum
throughout the business.
Last fiscal year we reached more than $500 billion in revenue
for the first time as a company. Walmart U.S. delivered the
highest comp sales growth in nine years and U.S. eCommerce
sales grew 44 percent. Walmart International had 10 of 11 markets
post positive comp sales for the year and five of those markets
grew comp sales by more than 5 percent. Sam’s Club comp
sales continue to improve and the business is repositioned
to capitalize on future growth. We have a strong foundation
and great opportunities to better serve customers.
I’m excited about what the future holds.
HERE’S MORE ABOUT WHAT WE’VE BEEN
UP TO: First, we know our customers’ lives are busier
than ever before, so our first objective is to make every
day easier for them. They rely on us for low prices and
they want us to save them time. We’re leveraging our
stores as a strategic advantage in new ways. This past
year, we nearly doubled the number of stores offering
online grocery pickup to more than 1,100 locations in
the U.S. and we’ll add another 1,000 locations in fiscal
2019. We’re expanding online grocery in Canada, Mexico
and China as well. We’re also broadening our delivery
capabilities in the U.S., China and other international
markets. For example, through our partnership with
JD Daojia in China, we offer grocery delivery in less
than one hour in over 160 stores in China. We launched
an express checkout experience in pharmacy, money
services, and returns at Walmart U.S. Sam’s Club Scan
& Go has been well-received by members and we’ve
introduced this capability in certain Walmart U.S.
stores as well as in Canada.
We launched free 2-day shipping and easy reorder on
Walmart.com and the response has been strong. Sam’s
Club also enhanced the value of the Plus membership with
the offer of free shipping. Our eCommerce assortment
has also improved. In the U.S., we’ve doubled the number
of items on Walmart.com over the past year. Jet.com
continues to complement Walmart.com nicely with
its appeal to higher-income, urban,
millennial customers. Acquisitions
like Bonobos bring unique,
private branded products to
our shopping experience,
and relationships with
partners like Lord & Taylor
enable us to offer brands
and experiences that
complement our own
assortment. We’re also
partnering with Google on
personalized voice shopping.
Outside the U.S., we launched
A YEAR OF ACCELERATED INNOVATION
eCommerce marketplaces in Canada and Mexico so that
customers have access to more of the general merchandise
assortments they desire. Overall, it’s a lot easier to shop
with Walmart today than it used to be. And, we’re going
to keep getting better as we focus on serving customers
seamlessly across our apps, sites and stores.
Nearly
2X
the spend
Stores
eCommerce
Customers who shop in store and become eCommerce
customers spend nearly twice as much overall.
Second, we’re changing how we work to become more
efficient. We’re equipping and empowering our associates
to be successful with better information, tools and
training. In stores, this means our associates are
spending more time driving sales and less time doing
repetitive tasks. We’ve opened training academies to
further develop the retail skills of our associates and
we’ve deployed new technology and apps to help them
improve in-stock levels and better manage price changes.
We’re also testing shelf-scanning technology in stores
and distribution centers to handle routine tasks. We
will compete with technology, but we will win with our
people. We’re creating a high-performance culture that
rewards achievements and fosters accountability while
remaining true to our core values.
JANUARY
Launched 2-day free
shipping on Walmart.com
for orders over $35
FEBRUARY
Walmart U.S. mobile
express money and
pharmacy services
launched
2 | WALMART
MARCH
Acquired
ModCloth
APRIL
Introduced pickup
discount on
Walmart.com
MAY
Launched Sam’s Club
Global Flagship Store
on JD.com in China
JUNE
Acquired
Bonobos
The investments we’re
making are critical
to winning with
customers as
we’re focused on
delivering results
and operating
with discipline.
An everyday low
cost mindset is
core to who we
are as a company
and it helps fuel the
productivity loop
enabling lower prices
for customers. We’re
laser-focused on improving
productivity throughout the
organization and leveraging expenses as
a company. We’re also being more strategic with capital
allocation to deliver strong efficient growth. We’re
prioritizing eCommerce, store remodels and customer
initiatives like online grocery over new store openings.
In addition, we’ve made strategic choices around our
portfolio including closing certain stores and clubs and
winding-down the first party eCommerce business in
Brazil. These decisions are positioning the business for
more efficient, sustainable growth in the future.
Finally, we want to be the most trusted retailer. We
believe in the concept of shared value where Walmart
operates for the benefit of not just customers, associates
and shareholders, but all stakeholders including suppliers,
communities and society in general. It’s important for
us to do things ethically and the right way. Customers
trust us for low prices on quality merchandise. They
also want the products they buy to be good for the
planet and the people who made them so we’ve invested
to promote the safety and dignity of the people who
make the products we sell. We’ve also implemented
leading technologies in our stores and supply chain to
promote the highest freshness, quality and safety in
the food we sell, while at the same time improving
the safety of our operations worldwide.
CEO LETTER
Many of our customers also value the role we play
in their communities. We provide good jobs for our
associates with opportunity to build a career with
Walmart. Earlier this year, we increased the starting
wage for our U.S. associates to $11 per hour and
expanded maternity and parental leave for salaried
and hourly associates. Families are a priority to us and
connecting with and caring for a new family member
is obviously important. We’re working hard to provide
opportunities for associates to be successful at Walmart
or wherever their careers take them.
We’re also ready to support the communities we serve
during times of crisis. I could not be more proud of
the resolve our associates displayed this past year in
responding to the devastating damage caused by the
hurricanes in Puerto Rico, Texas and Florida and the
earthquake in Mexico. The character of our people was
on full display. We believed they would make a difference
and they did not disappoint. In addition, we’re enhancing
the environmental sustainability of our operations
and we’re investing to make our supply chain more
transparent. It’s really all about being true to our
purpose: we save people money so they can live better.
Thanks for your continued interest in our company and
for investing in our future. We’re well-positioned to
win—we have the plan, we have the assets, and most
importantly, we have the people who are hungry to
make a difference and innovate for customers in new
ways. This is a great time to be at Walmart. I am excited
for the year and what we will accomplish.
Sincerely,
Doug McMillon
President and Chief Executive Officer
Walmart Inc.
JULY
Opened new
eCommerce fulfillment
center in Florida
AUGUST
Google partnership to
deliver personalized
voice shopping
SEPTEMBER
1,000th Online
Grocery location
in Walmart U.S.
OCTOBER
New membership
sign-up process
at Sam’s Club
NOVEMBER
Expanded one-hour
grocery delivery to
nearly 140 stores
in China
DECEMBER
Announced our
name change
to Walmart Inc.
2018 ANNUAL REPORT | 3
CFO MESSAGE
Winning with customers and shareholders
It’s an exciting time at Walmart
as we’re transforming the
business to serve customers
more effectively. Customers
are busier than ever, so
we’re innovating and
leveraging technology
to save them time as
well as money.
Our financial strength
provides the flexibility to
win with both customers and
shareholders. For customers,
we’ve invested in initiatives such
as online grocery, mobile express
checkout in our stores, and free 2-day
shipping for orders over $35 from Walmart.com. We
made acquisitions to improve our online assortment and
we’re partnering with others, like Google and JD.com,
in new ways. At the same time, we provided solid cash
returns to shareholders through a meaningful and growing
dividend and continued share repurchases.
We’re incredibly well-positioned with unique assets to
win in this new age of retail and the fiscal 2018 results
reflect Walmart’s strong financial position:
• Total revenue surpassed $500 billion for the first time;
• Walmart U.S. comp sales were the highest since
fiscal 2009;
• Walmart U.S. eCommerce sales grew 44 percent;
• Operating cash flow was $28.3 billion, and;
• We returned $14.4 billion to shareholders through
dividends and share repurchases.
Our financial framework helps guide decisions as we
grow the business. The three key elements are: strong,
efficient growth; consistent operating discipline; and
strategic capital allocation.
STRONG, EFFICIENT GROWTH. We’re focused on
our most productive and profitable growth opportunities
by prioritizing growth from comp sales and eCommerce
versus opening new stores. We’ve seen good momentum
with each of our segments delivering strong comp sales
growth this past year. The customer experience in our
stores has improved as we’re making shopping easy,
fast, friendly and fun. Walmart U.S. eCommerce sales
growth was also strong and we’re focused on continuing
to accelerate eCommerce innovation and omni-channel
offerings to provide the convenience customers expect.
4 | WALMART
CONSISTENT OPERATING DISCIPLINE. The
everyday low prices we provide to customers are enabled
when we operate at everyday low costs. We’ve made
headway in cost of goods efficiencies and working capital
productivity with strong inventory management. Expenses
are not where we want them to be overall, but we started
bending the cost curve last year, particularly in Walmart
U.S. stores and in International. We’re changing how we
work by improving processes and increasingly using
technology and automation to be more productive,
especially in support functions. We’ll continue to make
smart investments that help us grow faster and compete
more effectively to win long-term.
STRATEGIC CAPITAL ALLOCATION. Walmart
generates substantial cash and we’ve aligned our capital
priorities with the long-term strategy. Our first priority
is to invest in growing the business efficiently. We’re
being more disciplined and thoughtful with every dollar
of capital, which led to a decline in capital expenditures
in fiscal 2018. We’ve shifted spend from opening new
stores to remodels, eCommerce, supply chain and
technology to set us up for the future. We’ll continue
to invest in customer initiatives like online grocery,
pickup towers, and an expansion of grocery delivery.
We’ll also be opportunistic with M&A while being open
to taking action on assets within our portfolio to
simplify the business. Secondly, our dividend is important
and we’ve increased it for 45 consecutive years. Finally,
we’re committed to the share repurchase program we
announced last October as we continue to believe in
the long-term value of Walmart.
We’re confident that over time, these financial priorities
will help us drive sustainable top line and bottom line
growth, and generate solid returns for shareholders.
In closing, we’re executing our strategy, we’re delivering
results and we’re doing this from a base of incredible
financial strength. We’re committed to growing the
value of the company for our shareholders while we win
with customers.
Thanks for your investment in Walmart.
Sincerely,
Brett Biggs
Executive Vice President
and Chief Financial Officer
Walmart Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
FORM 10-K
___________________________________________
ý Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
¨ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended January 31, 2018, or
Commission file number 001-6991.
___________________________________________
WALMART INC.
(Exact name of registrant as specified in its charter)
___________________________________________
Delaware
(State or other jurisdiction of
incorporation or organization)
702 S.W. 8th Street
Bentonville, Arkansas
(Address of principal executive offices)
71-0415188
(IRS Employer Identification No.)
72716
(Zip Code)
Registrant's telephone number, including area code: (479) 273-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.10 per share
1.900% Notes Due 2022
2.550% Notes Due 2026
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
___________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ý No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act.
Yes ¨ No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.
Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ý No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Non-Accelerated Filer
ý
o
Accelerated Filer
Smaller Reporting Company
Emerging Growth Company
o
o
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No ý
As of July 31, 2017, the aggregate market value of the voting common stock of the registrant held by non-affiliates of the
registrant, based on the closing sale price of those shares on the New York Stock Exchange reported on July 31, 2017, was
$114,770,199,895. For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers (as
defined in Rule 3b-7 under the Exchange Act) and the beneficial owners of 5% or more of the registrant's outstanding common
stock are the affiliates of the registrant.
The registrant had 2,950,696,818 shares of common stock outstanding as of March 28, 2018.
DOCUMENTS INCORPORATED BY REFERENCE
Document
Portions of the registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held May 30, 2018 (the "Proxy
Statement")
Parts Into Which Incorporated
Part III
Walmart Inc.
Form 10-K
For the Fiscal Year Ended January 31, 2018
Table of Contents
Part I
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4
Part II
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
Part III
Item 10
Item 11
Item 12
Item 13
Item 14
Part IV
Item 15
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits, Financial Statement Schedules
Signatures
Exhibit Index
Page
7
17
26
27
29
30
31
33
34
48
51
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88
90
WALMART INC.
(formerly "WAL-MART STORES, INC.")
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JANUARY 31, 2018
On February 1, 2018, the legal name of our corporation became "Walmart Inc.," changing from "Wal-Mart Stores, Inc." All
references in this Annual Report on Form 10-K, the information incorporated into this Annual Report on Form 10-K by
reference to information in the Proxy Statement of Walmart Inc. for its Annual Shareholders' Meeting to be held on May 30,
2018 and in the exhibits to this Annual Report on Form 10-K to "Walmart Inc.," "Wal-Mart Stores, Inc.," "Walmart," "the
Company," "our Company," "we," "us" and "our" are to the Delaware corporation named "Wal-Mart Stores, Inc." prior to
February 1, 2018 and named "Walmart Inc." commencing on February 1, 2018 and, except where expressly noted otherwise or
the context otherwise requires, that corporation's consolidated subsidiaries.
Cautionary Statement Regarding Forward-Looking Statements
PART I
This Annual Report on Form 10-K and other reports, statements, and information that Walmart Inc. (which individually or
together with its subsidiaries, as the context otherwise requires, is referred to as "we," "Walmart" or the "Company") has filed
with or furnished to the Securities and Exchange Commission ("SEC") or may file with or furnish to the SEC in the future, and
prior or future public announcements and presentations that we or our management have made or may make, include or may
include, or incorporate or may incorporate by reference, statements that may be deemed to be "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Act"), that are intended to enjoy
the protection of the safe harbor for forward-looking statements provided by the Act.
Nature of Forward-Looking Statements
Such forward-looking statements are not statements of historical facts, but instead express our estimates or expectations for our
consolidated, or one of our segment's, economic performance or results of operations for future periods or as of future dates or
events or developments that may occur in the future or discuss our plans, objectives or goals. These forward-looking
statements relate to:
•
•
•
•
•
•
•
•
•
•
•
•
the growth of our business or change in our competitive position in the future or in or over particular periods;
the amount, number, growth or increase, in or over certain periods, of or in certain financial items or measures or
operating measures, including our earnings per share, including as adjusted for certain items, net sales, comparable
store and club sales, our Walmart U.S. operating segment's eCommerce sales, liabilities, expenses of certain
categories, expense leverage, returns, capital and operating investments or expenditures of particular types, new store
openings and investments in particular formats;
investments and capital expenditures we will make and how certain of those investments and capital expenditures are
expected to be financed;
our plans to increase investments in eCommerce, technology, store remodels and other customer initiatives, such as
online grocery locations;
volatility in currency exchange rates and fuel prices affecting our or one of our segments' results of operations;
the Company continuing to provide returns to shareholders through share repurchases and dividends, the use of share
repurchase authorization over a certain period or the source of funding of a certain portion of our share repurchases;
our sources of liquidity, including our cash, continuing to be adequate or sufficient to fund and finance our operations,
expansion activities, dividends and share repurchases, to meet our cash needs and to fund our domestic operations
without repatriating earnings we hold outside of the United States;
our intention to reinvest the earnings we hold outside of the United States in our foreign operations and certain laws,
other limitations and potential taxes on anticipated future repatriations of such earnings not materially affecting our
liquidity, financial condition or results of operations;
the insignificance of ineffective hedges and reclassification of amounts related to our derivatives;
our effective tax rate for certain periods and the realization of certain net deferred tax assets and the effects of
resolutions of tax-related matters;
the effect of adverse decisions in, or settlement of, litigation or other proceedings to which we are subject; or
the effect on the Company's results of operations or financial condition of the Company's adoption of certain new, or
amendments to existing, accounting standards.
Our forward-looking statements may also include statements of our strategies, plans and objectives for our operations,
including areas of future focus in our operations, and the assumptions underlying any of the forward-looking statements we
make. The forward-looking statements we make can typically be identified by the use therein of words and phrases such as
"aim," "anticipate," "believe," "could be," "could increase," "could occur," "could result," "continue," "estimate," "expansion,"
"expect," "expectation," "expected to be," "focus," "forecast," "goal," "grow," "guidance," "intend," "invest," "is expected,"
4
"may continue," "may fluctuate," "may grow," "may impact," "may result," "objective," "plan," "priority," "project," "strategy,"
"to be," "we'll," "we will," "will add," "will allow," "will be," "will benefit," "will change," "will come in at," "will continue,"
"will decrease," "will grow," "will have," "will impact," "will include," "will increase," "will open," "will remain," "will result,"
"will stay," "will strengthen," "would be," "would decrease" and "would increase," variations of such words or phrases, other
phrases commencing with the word "will" or similar words and phrases denoting anticipated or expected occurrences or results.
The forward-looking statements include statements made in Part I, Item 3. "Legal Proceedings" in this Annual Report on Form
10-K as to our belief that the possible loss or range of any possible loss that may be incurred in connection with certain legal
proceedings will not be material to our financial condition, results of operations, or liquidity.
Risks Factors and Uncertainties Affecting Our Business
Our business operations are subject to numerous risks, factors and uncertainties, domestically and internationally, outside of our
control. One, or a combination, of these risks, factors and uncertainties could materially affect any of those matters as to which
we have made forward-looking statements and cause our actual results or an actual event or occurrence to differ materially from
those results or an event or occurrence described in a forward-looking statement. These risks, factors and uncertainties, which
may be global in their effect or affect only some of the markets in which we operate and which may affect us on a consolidated
basis or affect only some of our reportable segments, include, but are not limited to:
Economic Factors
•
•
•
•
•
•
•
•
•
•
•
•
•
economic, geo-political, capital markets and business conditions, trends and events around the world and in the
markets in which Walmart operates;
currency exchange rate fluctuations;
changes in market rates of interest;
changes in market levels of wages;
changes in the size of various markets, including eCommerce markets;
unemployment levels;
inflation or deflation, generally and in certain product categories;
transportation, energy and utility costs;
commodity prices, including the prices of oil and natural gas;
consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt levels, and
demand for certain merchandise;
trends in consumer shopping habits around the world and in the markets in which Walmart operates;
consumer enrollment in health and drug insurance programs and such programs' reimbursement rates and drug
formularies; and
initiatives of competitors, competitors' entry into and expansion in Walmart's markets, and competitive pressures;
Operating Factors
•
•
the amount of Walmart's net sales and operating expenses denominated in U.S. dollar and various foreign currencies;
the financial performance of Walmart and each of its segments, including the amounts of Walmart's cash flow during
various periods;
customer traffic and average ticket in Walmart's stores and clubs and on its eCommerce platforms;
the mix of merchandise Walmart sells and its customers purchase;
the availability of goods from suppliers and the cost of goods acquired from suppliers;
the effectiveness of the implementation and operation of Walmart's strategies, plans, programs and initiatives;
• Walmart's need to repatriate earnings held outside of the U.S. and changes in U.S. and international tax regulations;
•
•
•
•
• Walmart's ability to successfully integrate acquired businesses, including within the eCommerce space;
•
•
the amount of shrinkage Walmart experiences;
consumer acceptance of and response to Walmart's stores and clubs, digital platforms, programs, merchandise
offerings and delivery methods;
• Walmart's gross profit margins, including pharmacy margins and margins of other product categories;
•
•
• Walmart's expenditures for Foreign Corrupt Practices Act ("FCPA") and other compliance-related matters including
the selling prices of gasoline and diesel fuel;
disruption of seasonal buying patterns in Walmart's markets;
the adequacy of our accrual for the FCPA matter;
disruptions in Walmart's supply chain;
cybersecurity events affecting Walmart and related costs and impact of any disruption in business;
•
•
• Walmart's labor costs, including healthcare and other benefit costs;
• Walmart's casualty and accident-related costs and insurance costs;
•
the size of and turnover in Walmart's workforce and the number of associates at various pay levels within that
workforce;
the availability of necessary personnel to staff Walmart's stores, clubs and other facilities;
•
5
•
•
unexpected changes in Walmart's objectives and plans;
developments in, and the outcome of, legal and regulatory proceedings and investigations to which Walmart is a party
or is subject, and the liabilities, obligations and expenses, if any, that Walmart may incur in connection therewith;
changes in the credit ratings assigned to the Company's commercial paper and debt securities by credit rating agencies;
•
• Walmart's effective tax rate; and
•
unanticipated changes in accounting judgments and estimates;
Regulatory and Other Factors
•
•
•
•
•
•
•
•
changes in existing tax, labor and other laws and changes in tax rates, including the enactment of laws and the
adoption and interpretation of administrative rules and regulations;
adoption or creation of new, and modification of existing, governmental policies, programs and initiatives in the
markets in which Walmart operates and elsewhere and actions with respect to such policies, programs and initiatives;
the possibility of the imposition of new taxes on imports and new tariffs and trade restrictions and changes in tariff
rates and trade restrictions;
changes in currency control laws;
changes in the level of public assistance payments;
the timing of federal income tax refunds;
natural disasters, public health emergencies, civil disturbances, and terrorist attacks; and
changes in generally accepted accounting principles in the United States.
We typically earn a disproportionate part of our annual operating income in the fourth quarter as a result of seasonal buying
patterns, which patterns are difficult to forecast with certainty and can be affected by many factors.
Other Risk Factors; No Duty to Update
The above list of factors that may affect the estimates and expectations discussed in or implied or contemplated by forward-
looking statements we make or made on our behalf is not exclusive. We are subject to other risks discussed under the caption
"Item 1A. Risk Factors," and that we may discuss in Management's Discussions and Analysis of Financial Condition and
Results of Operations and in risks that may be discussed under "Part II, Item 1A. Risk Factors" and "Part I, Item 2.
Management's Discussions and Analysis of Financial Condition and Results of Operations" appearing in our Quarterly Reports
on Form 10-Q or may otherwise be disclosed in our Quarterly Reports on Form 10-Q and other reports filed with the SEC.
Investors and other readers are urged to consider all of these risks, uncertainties and other factors carefully in evaluating our
forward-looking statements.
The forward-looking statements that we make or are made by others on our behalf are based on our knowledge of our business
and our operating environment and assumptions that we believe to be or will believe to be reasonable when such forward-
looking statements were or are made. As a consequence of the factors described above, the other risks, uncertainties and factors
we disclose below and in the other reports as mentioned above, other risks not known to us at this time, changes in facts,
assumptions not being realized or other circumstances, our actual results may differ materially from those discussed in or
implied or contemplated by our forward-looking statements. Consequently, this cautionary statement qualifies all forward-
looking statements we make or that are made on our behalf, including those made herein and incorporated by reference herein.
We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially
realized, that those results or developments will result in the expected consequences for us or affect us, our business, our
operations or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on
such forward-looking statements, which speak only as of their dates. We undertake no obligation to revise or update any of the
forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.
6
ITEM 1.
BUSINESS
General
Walmart Inc. ("Walmart," the "Company" or "we") helps people around the world save money and live better – anytime and
anywhere – in retail stores and through eCommerce. Through innovation, we are striving to create a customer-centric
experience that seamlessly integrates our eCommerce and retail stores in an omni-channel offering that saves time for our
customers. Each week, we serve nearly 270 million customers who visit our more than 11,700 stores and numerous
eCommerce websites under 65 banners in 28 countries.
Our strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience.
Leading on price is designed to earn the trust of our customers every day by providing a broad assortment of quality
merchandise and services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a
low price every day so our customers trust that our prices will not change under frequent promotional activity. Price leadership
is core to who we are. Everyday low cost ("EDLC") is our commitment to control expenses so those cost savings can be passed
along to our customers. Our omni-channel presence provides customers access to our broad assortment anytime and anywhere.
We strive to give our customers and members a great digital and physical shopping experience.
Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club. Our fiscal year ends
on January 31 for our United States ("U.S.") and Canadian operations. We consolidate all other operations generally using a
one-month lag and on a calendar year basis. Our discussion is as of and for the fiscal years ended January 31, 2018 ("fiscal
2018"), January 31, 2017 ("fiscal 2017") and January 31, 2016 ("fiscal 2016"). During fiscal 2018, we generated total revenues
of $500.3 billion, which was primarily comprised of net sales of $495.8 billion.
We maintain our principal offices at 702 S.W. 8th Street, Bentonville, Arkansas 72716, USA. Our common stock trades on the
New York Stock Exchange under the symbol "WMT."
The Development of Our Company
Although Walmart was incorporated in Delaware in October 1969, the businesses conducted by our founders began in 1945
when Sam M. Walton opened a franchise Ben Franklin variety store in Newport, Arkansas. In 1946, his brother, James L.
Walton, opened a similar store in Versailles, Missouri. Until 1962, our founders' business was devoted entirely to the operation
of variety stores. In that year, the first Wal-Mart Discount City, which was a discount store, opened in Rogers, Arkansas. In
1983, we opened our first Sam's Club, and in 1988, we opened our first supercenter. In 1998, we opened our first
Neighborhood Market.
In 1991, we began our first international initiative when we entered into a joint venture in Mexico. Since then, our international
presence has expanded and, as of January 31, 2018, our Walmart International segment conducted business in 27 countries.
In 2000, we began our first eCommerce initiative by creating walmart.com. That same year, we also created samsclub.com.
Since then, our digital presence has continued to grow. In 2007, walmart.com launched its Site to Store service, enabling
customers to make a purchase online and pick up merchandise in stores. In 2016, we acquired jet.com in the U.S. and formed a
strategic alliance with JD.com in China. Subsequent to the jet.com purchase, we have acquired several other U.S. eCommerce
entities. In 2017, walmart.com launched free two-day shipping on more than 2 million items and we created Store No 8, a tech
incubator with a focus to drive commerce forward. These eCommerce efforts have led to omni-channel offerings in many
markets, including over 1,100 "Online Grocery" pickup locations in the U.S.
Information About Our Segments
The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located
throughout the U.S., Africa, Argentina, Brazil, Canada, Central America, Chile, China, India, Japan, Mexico and the United
Kingdom. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and
Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker
("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products
and services in each of its segments. It is impractical to segregate and identify revenues for each of these individual products
and services.
Walmart U.S. is our largest segment and operates retail stores in all 50 states in the U.S., Washington D.C. and Puerto Rico,
with three primary store formats, as well as eCommerce. Walmart U.S. generated approximately 64% of our net sales in fiscal
2018, and of our three segments, Walmart U.S. is the largest and has historically had the highest gross profit as a percentage of
net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the Company's net
sales and operating income.
Walmart International consists of operations in 27 countries outside of the U.S. and is divided into three major categories: retail,
wholesale and other. These categories consist of many formats, including: supercenters, supermarkets, hypermarkets,
warehouse clubs (including Sam's Clubs) and cash & carry, as well as eCommerce. Walmart International generated
7
approximately 24% of our fiscal 2018 net sales. The overall gross profit rate for Walmart International is lower than that of
Walmart U.S. primarily because of its merchandise mix. Walmart International is our second largest segment.
Sam's Club consists of membership-only warehouse clubs and operates in 44 states in the U.S. and in Puerto Rico, as well as
eCommerce. Sam's Club accounted for approximately 12% of our fiscal 2018 net sales. As a membership-only warehouse
club, membership income is a significant component of the segment's operating income. Sam's Club operates with a lower
gross profit rate and lower operating expenses as a percentage of net sales than our other segments.
The Company measures the results of its segments using, among other measures, each segment's net sales and operating
income, which includes certain corporate overhead allocations. From time to time, we revise the measurement of each
segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed
by our CODM. When the measurement of a segment changes, previous period amounts and balances are reclassified to be
comparable to the current period's presentation.
Walmart U.S. Segment
The Walmart U.S. segment is a mass merchandiser of consumer products, operating under the "Walmart," "Wal-Mart" and
"Walmart Neighborhood Market" brands, as well as walmart.com and other eCommerce brands. The Walmart U.S. segment
had net sales of $318.5 billion, $307.8 billion and $298.4 billion for fiscal 2018, 2017 and 2016, respectively. During the most
recent fiscal year, no single unit accounted for as much as 1% of total Company consolidated net sales.
Physical. Walmart U.S. operates retail stores in the U.S., including in all 50 states, Washington D.C. and Puerto Rico, with
supercenters in 49 states, Washington D.C. and Puerto Rico, discount stores in 41 states and Puerto Rico and Neighborhood
Markets and other small store formats in 36 states, Washington D.C. and Puerto Rico. The following table provides square
footage details on each of our formats as of January 31, 2018:
Supercenters (general merchandise and grocery)
Discount stores (general merchandise and limited grocery)
Neighborhood Markets(1) (grocery)
(1) Excludes other small formats.
Minimum
Square Feet
Maximum
Square Feet
Average
Square Feet
69,000
30,000
28,000
260,000
206,000
65,000
178,000
105,000
42,000
The following table provides the retail unit count and retail square feet by format for the fiscal years shown:
Supercenters
Discount Stores
Fiscal Year
Opened
Closed
Conversions(1)
Balance forward
2014
2015
2016
2017
2018
72
79
55
38
30
—
—
(16)
(2)
—
58
40
19
21
9
Total(2)
3,158
3,288
3,407
3,465
3,522
3,561
Square
Feet(2)
570,409
589,858
607,415
616,428
625,930
632,479
Opened
Closed
Conversions(1)
4
2
—
—
—
—
—
(9)
(6)
(6)
(57)
(40)
(19)
(21)
(9)
Total(2)
561
508
470
442
415
400
Neighborhood Markets and Other Small Formats
Total Segment
Fiscal Year
Opened
Closed
Conversions(1)
Balance forward
2014
2015
2016
2017
2018
122
235
161
73
85
—
(3)
(133)
(5)
(20)
(1)
—
—
—
—
Total(2)
286
407
639
667
735
800
Square
Feet(2)
11,226
15,778
23,370
27,228
30,012
30,111
Opened(3)
Closed
198
316
216
111
115
Total(2)
4,005
4,203
4,516
4,574
4,672
4,761
—
(3)
(158)
(13)
(26)
(1) Conversions of discount stores or Neighborhood Markets to supercenters.
(2)
(3) Total opened, net of conversions of discount stores or Neighborhood Markets to supercenters.
"Total" and "Square Feet" columns are as of January 31 for the years shown. Retail square feet are reported in thousands.
Square
Feet(2)
59,098
53,496
49,327
45,991
43,347
41,926
Square
Feet(2)
640,733
659,132
680,112
689,647
699,289
704,516
Digital. Walmart U.S. provides its customers access to a broad assortment of merchandise, including products not found in our
physical stores, and services online through our eCommerce family of brands' websites and third party retail partnership
channels, as well as through related mobile commerce and voice-activated commerce applications. Our eCommerce family of
brands includes walmart.com, jet.com, hayneedle.com, shoes.com, moosejaw.com, modcloth.com and bonobos.com.
Walmart.com offers access to nearly 75 million SKUs, including those carried on Marketplace, a feature of the website that
permits third parties to sell merchandise on walmart.com. Walmart.com is also integrated with our physical stores through
8
services like "Walmart Pickup," "Pickup Today" and in over 1,100 "Online Grocery" pickup locations to provide an omni-
channel offering to our customers. Walmart U.S. also offers access to digital content and services including Vudu.
Merchandise. Walmart U.S. does business in three strategic merchandise units, listed below, across several store formats
including supercenters, discount stores, Neighborhood Markets and other small store formats, as well as on our eCommerce
websites.
•
•
•
Grocery consists of a full line of grocery items, including meat, produce, natural & organics, deli & bakery, dairy,
frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables such as health and
beauty aids, baby products, household chemicals, paper goods and pet supplies;
Health and wellness includes pharmacy, optical services, clinical services, and over-the-counter drugs and other
medical products;
General merchandise includes:
◦
◦
◦
◦
Entertainment (e.g., electronics, cameras and supplies, photo processing services, wireless, movies, music,
video games and books);
Hardlines (e.g., stationery, automotive, hardware and paint, sporting goods, outdoor living and horticulture);
Apparel (e.g., apparel for women, girls, men, boys and infants, as well as shoes, jewelry and accessories); and
Home/Seasonal (e.g., home furnishings, housewares and small appliances, bedding, home decor, toys, fabrics
and crafts and seasonal merchandise).
Walmart U.S. also offers fuel and financial services and related products, including money orders, prepaid cards, wire transfers,
money transfers, check cashing and bill payment. These services total less than 1% of annual net sales.
Brand name merchandise represents a significant portion of the merchandise sold in Walmart U.S. We also market lines of
merchandise under our private-label store brands, including: "Adventure Force," "AutoDrive," "BlackWeb," "Equate,"
"Everstart," "Faded Glory," "George," "Great Value," "Holiday Time," "Hyper Tough," "Kid Connection," "Mainstays,"
"Marketside," "My Life As," "No Boundaries," "Ol' Roy," "Onn," "Ozark Trail," "Parent's Choice," "Prima Della," "Pure
Balance," "Sam's Choice," "Special Kitty," "Spring Valley," "Terra & Sky," "Time and Tru," "Way to Celebrate" and "Wonder
Nation." The Company also markets lines of merchandise under licensed brands, some of which include: "Better Homes &
Gardens," "Farberware," "Russell" and "SwissTech."
The percentage of strategic merchandise unit net sales for Walmart U.S., including online sales, was as follows for fiscal 2018,
2017 and 2016:
STRATEGIC MERCHANDISE UNITS
Grocery
Health and wellness
General merchandise
Total
Fiscal Years Ended January 31,
2018
56%
11%
33%
100%
2017
56%
11%
33%
100%
2016
56%
11%
33%
100%
Periodically, revisions are made to the categorization of the components comprising our strategic merchandise units. When
revisions are made, the previous periods' presentation is adjusted to maintain comparability.
Operations. Many supercenters, discount stores and Neighborhood Markets are open 24 hours each day. A variety of payment
methods are accepted at our stores and through our eCommerce websites and mobile commerce applications.
Seasonal Aspects of Operations. Walmart U.S.'s business is seasonal to a certain extent due to calendar events and national
and religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating
income have occurred in the fiscal quarter ending January 31.
Competition. Walmart U.S. competes with both physical retailers operating discount, department, retail and wholesale grocers,
drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, and digital retailers, as well
as catalog businesses. We also compete with others for desirable sites for new or relocated retail units.
Our ability to develop, open and operate units at the right locations and to deliver a customer-centric omni-channel experience
largely determines our competitive position within the retail industry. We employ many programs designed to meet competitive
pressures within our industry. These programs include the following:
•
•
EDLP: our pricing philosophy under which we price items at a low price every day so our customers trust that our
prices will not change under frequent promotional activity;
EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our
customers;
9
•
•
Rollbacks: our commitment to pass cost savings on to the customer by lowering prices on selected goods;
Savings Catcher, Save Even More and Ad Match: strategies to meet or be below a competitor's advertised price;
• Walmart Pickup: customer places order online and picks it up for free from a store. The merchandise is fulfilled
through our distribution facilities;
•
•
Pickup Today: customer places order online and picks it up at a store within four hours for free. The order is fulfilled
through existing store inventory;
Online Grocery: customer places grocery order online and has it delivered to home or picks it up at one of our
participating stores or remote locations; and
• Money Back Guarantee: our commitment to ensure the quality and freshness of the fruits and vegetables in our stores
by offering our customers a 100 percent money-back guarantee if they are not satisfied.
We offer a broad assortment of merchandise that provides one-stop shopping, in-stock levels that give our customers confidence
that we will have the products they need and operating hours that allow customers to shop at their convenience. In addition, our
eCommerce capabilities, including omni-channel transactions that involve both an eCommerce platform and a physical format,
are important factors in our competition with other retailers.
Distribution. For fiscal 2018, approximately 78% of Walmart U.S.'s purchases of store merchandise were shipped through our
157 distribution facilities, which are located strategically throughout the U.S. The remaining merchandise we purchased was
shipped directly from suppliers. General merchandise and dry grocery merchandise is transported primarily through the
segment's private truck fleet; however, we contract with common carriers to transport the majority of our perishable grocery
merchandise.
We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from multiple locations
including from our 30 dedicated eCommerce fulfillment centers.
The following table provides further details of our distribution facilities, including return facilities and dedicated eCommerce
fulfillment centers, as of January 31, 2018:
Walmart U.S. distribution facilities
Walmart International Segment
Owned and
Operated
Owned and
Third Party
Operated
Leased and
Operated
Third Party
Owned and
Operated
103
2
23
29
Total
157
The Walmart International segment consists of operations in 27 countries outside of the U.S. and includes numerous formats
divided into three major categories: retail, wholesale and other. These categories, including eCommerce, consist of many
formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's Clubs) and cash & carry. The
segment's net sales for fiscal 2018, 2017 and 2016, were $118.1 billion, $116.1 billion and $123.4 billion, respectively, which
have been impacted by currency exchange rate fluctuations. During the most recent fiscal year, no single unit accounted for as
much as 1% of total Company net sales.
Physical. Walmart International includes physical stores operated by: our wholly-owned subsidiaries operating in Argentina,
Brazil, Canada, Chile, China, India, Japan and the United Kingdom; and our majority-owned subsidiaries operating in Africa
(which includes Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, South Africa, Swaziland,
Tanzania, Uganda and Zambia), Central America (which includes Costa Rica, El Salvador, Guatemala, Honduras and
Nicaragua) and Mexico.
Generally, retail units range in size from 8,900 square feet to 186,000 square feet. Our wholesale stores generally range in size
from 35,000 square feet to 185,000 square feet. Other, which includes drugstores and convenience stores operating under
various banners in Brazil, Mexico and the United Kingdom, range in size up to 2,400 square feet. Also, on a limited basis,
Walmart International operates financial institutions that provide consumer credit.
10
The following table provides the retail unit count(1) and retail square feet(2) for the fiscal years shown:
Africa
Argentina
Brazil
Canada
Central
America
Chile
Unit
Count
Square
Feet
Unit
Count
Square
Feet
Unit
Count
Square
Feet
Unit
Count
Square
Feet
Unit
Count
Square
Feet
Unit
Count
Square
Feet
377
379
396
408
412
424
19,775
20,513
21,223
21,869
22,542
23,134
94
104
105
108
107
106
7,531
8,062
8,119
8,280
8,264
8,305
558
556
557
499
498
465
32,494
32,501
33,028
30,675
30,642
29,824
379
389
394
400
410
410
48,354
49,914
50,927
51,784
53,088
53,082
642
661
690
709
731
778
9,873
10,427
11,094
11,410
11,770
12,448
329
380
404
395
363
378
12,671
13,697
14,762
15,407
15,260
15,990
China
India
Japan
Mexico(3)
Unit
Count
Square
Feet
Unit
Count
Square
Feet
Unit
Count
Square
Feet
Unit
Count
393
405
411
432
439
443
65,801
67,205
68,269
71,724
73,172
73,615
20
20
20
21
20
20
1,083
1,083
1,083
1,146
1,091
1,091
438
438
431
346
341
336
24,448
24,489
24,429
22,551
21,921
21,181
1,988
2,199
2,290
2,360
2,411
2,358
Square
Feet
88,833
94,900
98,419
100,308
101,681
97,024
United
Kingdom
Unit
Count
Square
Feet
565
576
592
621
631
642
34,810
35,416
36,277
37,044
37,338
37,587
Total Segment
Unit
Count
5,783
6,107
6,290
6,299
6,363
6,360
Square
Feet
345,673
358,207
367,630
372,198
376,769
373,281
Fiscal Year
Balance forward
2014
2015
2016
2017
2018
Fiscal Year
Balance forward
2014
2015
2016
2017
2018
(1)
"Unit Count" includes retail stores, wholesale clubs and other, which includes drugstores and convenience stores. Walmart International unit counts, with
the exception of Canada, are stated as of December 31, to correspond with the fiscal year end of the related geographic market. Canada unit counts and
square footage are stated as of January 31. For the balance forward, all country balances are stated as of the end of fiscal year 2013.
"Square Feet" columns are reported in thousands.
(2)
(3) All periods presented exclude units and square feet for the Vips restaurant business. The Company completed the sale of the Vips restaurant business in
fiscal 2015.
Unit counts(1) as of January 31, 2018 for Walmart International are summarized by major category for each geographic market
as follows:
Geographic Market
Africa(3)
Argentina
Brazil
Canada
Central America(4)
Chile
China
India
Japan
Mexico
United Kingdom
Total
Retail
Wholesale
Other(2)
Total
335
106
380
410
778
373
424
—
336
2,186
617
5,945
89
—
70
—
—
5
19
20
—
162
—
365
—
—
15
—
—
—
—
—
—
10
25
50
424
106
465
410
778
378
443
20
336
2,358
642
6,360
(1) Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2017, to correspond with the balance sheet date of the
related geographic market. Canada unit counts are stated as of January 31, 2018.
(2) Other includes drug stores and convenience stores.
(3) Africa unit counts by country are Botswana (11), Ghana (2), Kenya (1), Lesotho (3), Malawi (2), Mozambique (5), Namibia (4), Nigeria (5), South Africa
(382), Swaziland (1), Tanzania (1), Uganda (1) and Zambia (6).
(4) Central America unit counts by country are Costa Rica (247), El Salvador (95), Guatemala (238), Honduras (103) and Nicaragua (95).
Digital. Walmart International operates eCommerce websites in numerous countries. Customers have access through our
eCommerce websites and, in countries where available, mobile commerce applications to a broad assortment of merchandise
and services, both of which vary by country. Our omni-channel offerings include capabilities like "Click & Collect" in the
United Kingdom and our grocery pick-up and delivery business in several other markets.
Merchandise. The merchandising strategy for Walmart International is similar to that of our operations in the U.S. in terms of
the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of our sales, we
have both leveraged U.S. private brands and developed market specific private brands to serve our customers with high quality,
lower priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday
Time," "Mainstays," "Ol' Roy" and "Parent's Choice," our international markets have developed market specific brands
including "Aurrera," "Cambridge," "Chosen by You" and "Extra Special." In addition, we have developed relationships with
11
regional and local suppliers in each market to ensure reliable sources of quality merchandise that is equal to national brands at
low prices.
Operations. The hours of operation for operating units in Walmart International vary by country and by individual markets
within countries, depending upon local and national ordinances governing hours of operation. Operating units in each country
accept a variety of payment methods.
Seasonal Aspects of Operations. Walmart International's business is seasonal to a certain extent. Historically, the segment's
highest sales volume and operating income have occurred in the fourth quarter of our fiscal year. The seasonality of the
business varies by country due to different national and religious holidays, festivals and customs, as well as different weather
patterns.
Competition. Walmart International competes with both physical retailers who operate department, drug, discount, variety and
specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty
electronics stores, cash & carry operations and convenience stores, and digital retailers, as well as catalog businesses. We also
operate, on a limited basis, consumer credit operations. We compete with others for desirable sites for new or relocated units.
Our ability to develop, open and operate units at the right locations and to deliver a customer-centric experience that seamlessly
integrates digital and physical shopping determines, to a large extent, our competitive position in the markets in which Walmart
International operates. We believe price leadership is a critical part of our business model and we continue to focus on moving
our markets towards an EDLP approach. Additionally, our ability to operate food departments effectively has a significant
impact on our competitive position in the markets where we operate. In the markets in which we have eCommerce websites or
mobile commerce applications, those websites and applications help differentiate us from our competitors and help us compete
with other retailers for customers and their purchases, both in our digital and physical retail operations.
Distribution. We utilize a total of 188 distribution facilities located in Argentina, Brazil, Canada, Central America, Chile,
China, Japan, Mexico, South Africa and the United Kingdom. Through these facilities, we process and distribute both imported
and domestic products to the operating units of the Walmart International segment. During fiscal 2018, approximately 83% of
Walmart International's purchases passed through these distribution facilities. Suppliers ship the balance of Walmart
International's purchases directly to our stores in the various markets in which we operate. The following table provides further
details of our international distribution facilities, including 17 dedicated eCommerce fulfillment centers, as of December 31,
2017, with the exception of distribution facilities in Canada, which are stated as of January 31, 2018:
International distribution facilities
Owned and
Operated
Owned and
Third Party
Operated
Leased and
Operated
Third Party
Owned and
Operated
43
12
87
46
Total
188
We ship merchandise purchased by customers on our eCommerce websites and through our mobile commerce applications by a
number of methods from multiple locations including from our dedicated eCommerce fulfillment centers.
Sam's Club Segment
The Sam's Club segment operates membership-only warehouse clubs, as well as samsclub.com, in the U.S. and had net sales of
$59.2 billion, $57.4 billion and $56.8 billion for fiscal 2018, 2017 and 2016, respectively. During the most recent fiscal year,
no single club location accounted for as much as 1% of total Company net sales.
Membership. Beginning in the year ending January 31, 2019 ("fiscal 2019"), Sam's Club simplified the membership program.
The following two options are available to members:
Annual Membership Fee
Number of Add-on Memberships ($40 each)
Eligible for Cash Rewards
Eligible for Free Shipping
Membership Type
Plus
$100
Up to 16
Yes
Yes
Club
$45
Up to 8
No
No
All memberships include a spouse/household card at no additional cost. Plus Members are eligible for Cash Rewards, which is
a benefit that provides $10 for every $500 in qualifying Sam's Club purchases up to a $500 cash reward annually. The amount
earned can be used for purchases, membership fees or redeemed for cash. Plus Members are also eligible for Free Shipping on
the vast majority of merchandise available online, with no minimum order size. Free Shipping is yet another example of
creating a new Sam's Club for our members.
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Physical. As a membership-only warehouse club, Sam's Club facility sizes generally range between 94,000 and 168,000 square
feet, with an average size of approximately 134,000 square feet.
The following table provides the retail unit count and retail square feet for the fiscal years shown:
Fiscal Year
Balance forward
2014
2015
2016
2017
2018
Opened
Closed
Total(1)
Square
Feet(1)
12
16
8
9
4
—
(1)
—
(4)
(67)
620
632
647
655
660
597
82,653
84,382
86,510
87,552
88,376
80,068
(1)
"Total" and "Square Feet" columns are as of January 31 for the fiscal years shown. Retail square feet are reported in thousands.
Digital. Sam's Club provides its members access to a broad assortment of merchandise, including products not found in our
clubs, and services online at samsclub.com and through our mobile commerce applications. Samsclub.com experiences on
average 20.4 million unique visitors a month and offers access to approximately 59,000 SKUs providing the member the option
of delivery direct-to-home or to the club through services such as "Club Pickup." Digital retail supports our physical clubs with
capabilities like "Scan and Go," a mobile checkout and payment solution, which allows members to bypass the checkout line.
Merchandise. Sam's Club offers merchandise in the following five merchandise categories:
•
•
•
•
•
Grocery and consumables includes dairy, meat, bakery, deli, produce, dry, chilled or frozen packaged foods, alcoholic
and nonalcoholic beverages, floral, snack foods, candy, other grocery items, health and beauty aids, paper goods,
laundry and home care, baby care, pet supplies and other consumable items;
Fuel and other categories consists of gasoline stations, tobacco, tools and power equipment, and tire and battery
centers;
Home and apparel includes home improvement, outdoor living, grills, gardening, furniture, apparel, jewelry,
housewares, toys, seasonal items, mattresses and small appliances;
Technology, office and entertainment includes electronics, wireless, software, video games, movies, books, music,
office supplies, office furniture, photo processing and third-party gift cards; and
Health and wellness includes pharmacy, optical and hearing services and over-the-counter drugs.
The Member's Mark brand continues to expand assortment and deliver member value. In fiscal 2018, Member's Mark sales
exceeded $10 billion, driven by growth in grocery, seasonal items and apparel. The percentage of net sales for Sam's Club,
including eCommerce sales, by merchandise category, was as follows for fiscal 2018, 2017 and 2016:
MERCHANDISE CATEGORY
Grocery and consumables
Fuel and other categories
Home and apparel
Technology, office and entertainment
Health and wellness
Total
Fiscal Years Ended January 31,
2018
58%
21%
9%
6%
6%
2017
59%
20%
9%
6%
6%
2016
59%
20%
9%
7%
5%
100%
100%
100%
Operations. Operating hours for Sam's Clubs are generally Monday through Friday from 10:00 a.m. to 8:30 p.m., Saturday
from 9:00 a.m. to 8:30 p.m. and Sunday from 10:00 a.m. to 6:00 p.m. Additionally, all club locations offer Plus Members the
ability to shop before the regular operating hours Monday through Saturday, starting at 7:00 a.m. A variety of payment methods
are accepted at our clubs and online, including the co-branded Sam's Club "Cash Back" MasterCard.
Seasonal Aspects of Operations. Sam's Club's business is seasonal to a certain extent due to calendar events and national and
religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating income
have occurred in the fiscal quarter ending January 31.
Competition. Sam's Club competes with other membership-only warehouse clubs, the largest of which is Costco, as well as
with discount retailers, retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations as well
as digital retailers and catalog businesses. At Sam's Club, we provide value at members-only prices, a quality merchandise
assortment, and bulk sizing to serve both our Plus and Club members. Our eCommerce website and mobile commerce
13
applications have increasingly become important factors in our ability to compete with other membership-only warehouse
clubs.
Distribution. During fiscal 2018, approximately 68% of Sam's Club's non-fuel purchases were shipped from Sam's Club's 22
dedicated distribution facilities located strategically throughout the U.S., or from some of the Walmart U.S. segment's
distribution facilities, which service the Sam's Club segment for certain items. Suppliers shipped the balance of the Sam's Club
segment's purchases directly to Sam's Club locations. The following table provides further details of our dedicated distribution
facilities, including two dedicated eCommerce fulfillment centers and two dedicated import facilities, as of January 31, 2018:
Sam's Club distribution facilities
Owned and
Operated
Owned and
Third Party
Operated
Leased and
Operated
Third Party
Owned and
Operated
3
3
3
13
Total
22
The principal focus of Sam's Club's distribution operations is on cross-docking merchandise, while stored inventory is
minimized. Cross-docking is a distribution process under which shipments are directly transferred from inbound to outbound
trailers. Shipments typically spend less than 24 hours in a cross-dock facility, and sometimes less than an hour.
Sam's Club uses a combination of our private truck fleet, as well as common carriers, to transport non-perishable merchandise
from distribution facilities to clubs. The segment contracts with common carriers to transport perishable grocery merchandise
from distribution facilities to clubs.
Sam's Club ships merchandise purchased by members on samsclub.com and through its mobile commerce applications by a
number of methods from its dedicated eCommerce fulfillment centers and other distribution centers.
Other Segment Information
Certain financial information relating to our segments is included in Part II, Item 7 under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and in Note 15 to our Consolidated Financial
Statements. Note 15 also includes information regarding total revenues and long-lived assets aggregated by our U.S. and non-
U.S. operations.
Intellectual Property
We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary
technologies, and similar intellectual property as important to our success, and with respect to our associates, customers and
others, we rely on trademark, copyright, and patent law, trade-secret protection, and confidentiality and/or license agreements to
protect our proprietary rights. We have registered, or applied for the registration of, a number of U.S. and international domain
names, trademarks, service marks and copyrights. Additionally, we have filed U.S. and international patent applications
covering certain of our proprietary technology. We have licensed in the past, and expect that we may license in the future,
certain of our proprietary rights to third parties.
Suppliers and Supply Chain
As a retailer and warehouse club operator, we utilize a global supply chain that includes over 100,000 suppliers located around
the world, including in the United States, from whom we purchase the merchandise that we sell in our stores, clubs and online.
In many instances, we purchase merchandise from producers located near the stores and clubs in which such merchandise will
be sold, particularly products in the "fresh" category. Our purchases may represent a significant percentage of a number of our
suppliers' annual sales, and the volume of product we acquire from many suppliers allows us to obtain favorable pricing from
such suppliers. Our suppliers are subject to standards of conduct, including requirements that they comply with local labor
laws, local worker safety laws and other applicable laws. Our ability to acquire from our suppliers the assortment and volume
of products we wish to offer to our customer, to receive those products within the required time through our supply chain and to
distribute those products to our stores and clubs determines, in part, our in-stock levels in our stores and clubs and the
attractiveness of our merchandise assortment we offer to our customers and members.
Employees
As of the end of fiscal 2018, Walmart Inc. and our subsidiaries employed approximately 2.3 million employees ("associates")
worldwide, with 1.5 million associates in the U.S. and 0.8 million associates internationally. Similar to other retailers, the
Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates
are good and are continuing to improve. A large number of associates turn over each year, although Walmart U.S. turnover has
been improving in fiscal 2018 as a result of our focus on increasing wages and providing improved tools, technology and
training to associates.
14
Certain information relating to retirement-related benefits we provide to our associates is included in Note 12 to our
Consolidated Financial Statements.
In addition to retirement-related benefits, in the U.S., we offer a broad range of Company-paid benefits to our associates. These
include a store discount card or Sam's Club membership, bonuses based on Company performance, matching a portion of
purchases of our stock by associates through our Associate Stock Purchase Plan and life insurance. In addition to the health-
care benefits for eligible full-time and part-time associates in the U.S., as announced in January 2018, we expanded maternity
leave and implemented a new paid parental leave program to all full-time associates. We also introduced a $5,000 benefit to
assist eligible associates with adoption.
Similarly, in the operations outside the U.S., we provide a variety of associate benefits that vary based on customary local
practices and statutory requirements.
15
Executive Officers of the Registrant
The following chart names the executive officers of the Company as of the date of the filing of this Annual Report on Form 10-
K with the SEC, each of whom is elected by and serves at the pleasure of the Board of Directors. The business experience
shown for each officer has been his or her principal occupation for at least the past five years, unless otherwise noted.
Name
Daniel J. Bartlett
M. Brett Biggs
Jacqueline P. Canney
David M. Chojnowski
Gregory Foran
John Furner
Marc Lore
Judith McKenna
Business Experience
Executive Vice President, Corporate Affairs, effective June 2013. From
November 2007 to June 2013, he served as the Chief Executive Officer and
President of U.S. Operations at Hill & Knowlton, Inc., a public relations
company.
Executive Vice President and Chief Financial Officer, effective January 1,
2016. From January 2014 to December 2015, he served as Executive Vice
President and Chief Financial Officer of Walmart International. From January
2013 to January 2014, he was Executive Vice President and Chief Financial
Officer of Walmart U.S.
Executive Vice President, Global People, effective August 3, 2015. From
September 2003 to July 2015, she served as the Managing Director of Global
Human Resources at Accenture plc., a global management consulting,
technology services and outsourcing company.
Senior Vice President and Controller effective January 1, 2017. From October
2014 to January 2017, he served as Vice President and Controller, Walmart
U.S. From January 2013 to October 2014, he served as Vice President, Finance
Transformation, of Walmart International.
Executive Vice President, President and Chief Executive Officer, Walmart U.S.
effective August 2014. From May 2014 to August 2014, he served as President
and Chief Executive Officer for the Walmart Asia region. From March 2012 to
May 2014, he served as President and Chief Executive Officer of Walmart
China.
Executive Vice President, President and Chief Executive Officer, Sam's Club,
effective February 1, 2017. From October 2015 to January 2017, he served as
Executive Vice President and Chief Merchandising Officer of Sam's Club.
From January 2013 to October 2015, he served as Senior Vice President and
Chief Merchandising Officer of Walmart China.
Executive Vice President, President and Chief Executive Officer, U.S.
eCommerce, effective September 2016. From April 2014 to September 2016,
he served as President and Chief Executive Officer of Jet.com, Inc. From
January 2005 to July 2013, he served as Chief Executive Officer of Quidsi,
Inc., an eCommerce retailer that became a wholly-owned subsidiary of
Amazon.com, Inc. in April 2011.
Executive Vice President, President and Chief Executive Officer, Walmart
International, effective February 1, 2018. From February 2015 to January
2018, she served as Executive Vice President and Chief Operating Officer of
Walmart U.S. Prior to that position, she served as Executive Vice President
and Chief Development Officer for Walmart U.S. from April 2014 to February
2015; as Executive Vice President, Strategy and Development, for Walmart
International, from April 2013 to April 2014; and as Chief Operating Officer of
Asda Group Limited, the Company's subsidiary in the United Kingdom, from
July 2011 to April 2013.
Current
Position
Held Since
2013
Age
46
2016
49
2015
50
2017
48
2014
56
2017
43
2016
46
2018
51
C. Douglas McMillon
President and Chief Executive Officer, effective February 1, 2014. From
February 2009 to January 2014, he served as Executive Vice President,
President and Chief Executive Officer, Walmart International.
2014
51
New Executive Officer
Effective April 2, 2018, Rachel Brand, age 44, will join the Company as Executive Vice President, Global Governance and
Corporate Secretary. From May 2017 to February 2018, she served as Associate Attorney General in the United States
Department of Justice. From January 2017 to May 2017, she was an Associate Professor of Law at George Mason University
Antonin Scalia Law School. Prior to that position, she served as a Board Member on the Privacy and Civil Liberties Oversight
Board of the U.S. government from August 2012 to February 2017.
16
Our Website and Availability of SEC Reports and Other Information
Our corporate website is located at www.stock.walmart.com. We file with or furnish to the SEC Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy statements and annual
reports to shareholders, and, from time to time, other documents. The reports and other documents filed with or furnished to
the SEC are available to investors on or through our corporate website free of charge as soon as reasonably practicable after we
electronically file them with or furnish them to the SEC. The SEC maintains a website that contains reports, proxy and
information statements and other information regarding issuers, such as the Company, that file electronically with the SEC.
The address of that website is www.sec.gov. In addition, the public may read and copy any of the materials we file with the
SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings, our Code of Ethics for
our CEO and Senior Financial Officers and our Statement of Ethics can be found on our website at www.stock.walmart.com.
These documents are available in print to any shareholder who requests a copy by writing or calling our Investor Relations
Department, which is located at our principal offices.
A description of any substantive amendment or waiver of Walmart's Code of Ethics for the CEO and Senior Financial Officers
or our Statement of Ethics for our chief executive officer, our chief financial officer and our controller, who is our principal
accounting officer, will be disclosed on our website at www.stock.walmart.com under the Corporate Governance section. Any
such description will be located on our website for a period of 12 months following the amendment or waiver.
ITEM 1A. RISK FACTORS
The risks described below could materially and adversely affect our business, results of operations, financial condition and
liquidity. Our business operations could also be affected by additional factors that apply to all companies operating in the U.S.
and globally.
Strategic Risks
General or macro-economic factors, both domestically and internationally, may materially adversely affect our financial
performance.
General economic conditions and other economic factors, globally or in one or more of the markets we serve, may adversely
affect our financial performance. Higher interest rates, lower or higher prices of petroleum products, including crude oil,
natural gas, gasoline, and diesel fuel, higher costs for electricity and other energy, weakness in the housing market, inflation,
deflation, increased costs of essential services, such as medical care and utilities, higher levels of unemployment, decreases in
consumer disposable income, unavailability of consumer credit, higher consumer debt levels, changes in consumer spending
and shopping patterns, fluctuations in currency exchange rates, higher tax rates, imposition of new taxes or other changes in tax
laws, changes in healthcare laws, other regulatory changes, the imposition of measures that create barriers to or increase the
costs associated with international trade, overall economic slowdown and other economic factors in the U.S. or in any of the
other markets in which we operate could adversely affect consumer demand for the products we sell in the U.S. or such other
markets, change the mix of products we sell to one with a lower average gross margin, cause a slowdown in discretionary
purchases of goods, adversely affect our net sales and result in slower inventory turnover and greater markdowns of inventory,
or otherwise materially adversely affect our operations and operating results.
In addition, the economic factors listed above, any other economic factors or circumstances resulting in higher transportation,
labor, insurance or healthcare costs or commodity prices, and other economic factors in the U.S. and other countries in which
we operate can increase our cost of sales and operating, selling, general and administrative expenses and otherwise materially
adversely affect our operations and operating results.
The economic factors that affect our operations may also adversely affect the operations of our suppliers, which can result in an
increase in the cost to us of the goods we sell to our customers or, in more extreme cases, in certain suppliers not producing
goods in the volume typically available to us for sale.
We face strong competition from other retailers and wholesale club operators (whether through physical retail, digital
retail or the integration of both), which could materially adversely affect our financial performance.
Each of our segments competes for customers, employees, store and club sites, digital prominence, products and services and in
other important aspects of its business with many other local, regional, national and global physical and digital retailers,
wholesale club operators and retail intermediaries.
Our Walmart U.S. segment competes with both physical retailers operating discount, department, retail and wholesale grocers,
drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, and digital retailers, as well
as catalog businesses. Our Sam's Club segment competes with other wholesale club operators, as well as discount retailers,
retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations, as well as digital retailers and
catalog businesses.
17
Our Walmart International segment competes with both physical retailers who operate department, drug, discount, variety and
specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty
electronics stores, cash & carry operations and convenience stores, and digital retailers, as well as catalog businesses.
We compete in a variety of ways, including the prices at which we sell our merchandise, merchandise selection and availability,
services offered to customers, location, store hours, in-store amenities, the shopping convenience and overall shopping
experience we offer, the attractiveness and ease of use of our digital platforms, cost and speed of and options for delivery to
customers of merchandise purchased through our digital platforms or through the omni-channel integration of our physical and
digital retail operations.
A failure to respond effectively to competitive pressures and changes in the retail markets or delays or failure in execution of
our strategy could materially adversely affect our financial performance. See "Item 1. Business" above for additional
discussion of the competitive situation of each of our reportable segments.
Certain segments of the retail industry are undergoing consolidation, which could result in increased competition and
significantly alter the dynamics of the retail marketplace. Such consolidation, or other business combinations or alliances, may
result in competitors with greatly improved financial resources, improved access to merchandise, greater market penetration
than they previously enjoyed and other improvements in their competitive positions. Such business combinations or alliances
could result in the provision of a wider variety of products and services at competitive prices by such consolidated or aligned
companies, which could adversely affect our financial performance.
We may not timely identify or effectively respond to consumer trends or preferences, which could negatively affect our
relationship with our customers, demand for the products and services we sell, our market share and the growth of our
business.
It is difficult to predict consistently and successfully the products and services our customers will demand and changes in their
shopping patterns. The success of our business depends in part on how accurately we predict consumer demand, availability of
merchandise, the related impact on the demand for existing products and the competitive environment, whether for customers
purchasing products at our stores and clubs, through our digital platforms or through the combination of both. Price
transparency, assortment of products, customer experience, convenience and the speed and cost of shipping are of primary
importance to customers and continue to increase in importance, particularly as a result of digital tools and social media
available to consumers and the choices available to consumers for purchasing products. Our failure to adequately or effectively
respond to changing consumer tastes, preferences and shopping patterns, or any other failure on our part to timely identify or
effectively respond to changing consumer tastes, preferences and shopping patterns could negatively affect our relationship
with our customers, the demand for the products we sell, our market share and the growth of our business.
Failure to grow our eCommerce business through the omni-channel integration of physical and digital retail or
otherwise, and the cost of our increasing eCommerce investments, may materially adversely affect our market position,
net sales and financial performance.
The retail business is rapidly evolving and consumers are increasingly embracing shopping online and through mobile
commerce applications. As a result, the portion of total consumer expenditures with retailers and wholesale clubs occurring
through digital platforms is increasing and the pace of this increase could accelerate.
Our strategy, which includes investments in eCommerce, technology, store remodels and other customer initiatives may not
adequately or effectively allow us to grow our eCommerce business, increase comparable store sales, maintain or grow our
overall market position or otherwise offset the impact on the growth of our business of a moderated pace of new store and club
openings. The success of this strategy will depend in large measure on our ability to build and deliver a seamless omni-channel
shopping experience and is further subject to the risks we face as outlined in this Item 1A. As a result, our market position, net
sales and financial performance could be adversely affected. In addition, a greater concentration of eCommerce sales could
result in a reduction in the amount of traffic in our stores and clubs, which would, in turn, reduce the opportunities for cross-
store or cross-club sales of merchandise that such traffic creates and could reduce our sales within our stores and clubs and
materially adversely affect the financial performance of the physical retail side of our operations.
Furthermore, the cost of certain eCommerce and technology investments, including any operating losses incurred by acquired
eCommerce businesses will adversely impact our financial performance in the short-term and may adversely impact our
financial performance over the longer term.
The performance of strategic alliances to support the expansion of our Walmart International segment could materially
adversely affect our financial performance.
Our Walmart International segment may enter into strategic alliances in the countries in which we have existing operations or in
other markets to expand our digital retail operations, physical retail operations or both. Any strategic alliance may not generate
the level of eCommerce or other sales we anticipate when entering into that alliance or may otherwise adversely impact our
18
business and competitive position relative to the results we could have achieved in the absence of such alliance. In addition,
any investment we make in connection with a strategic alliance could materially adversely affect our financial performance.
Operational Risks
Natural disasters, changes in climate, and geo-political events could materially adversely affect our financial
performance.
The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis,
cyclones, typhoons, weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of
climate change or otherwise, severe changes in climate and geo-political events, such as war, civil unrest or terrorist attacks in a
country in which we operate or in which our suppliers are located could adversely affect our operations and financial
performance.
Such events could result in physical damage to, or the complete loss of, one or more of our properties, the closure of one or
more stores, clubs and distribution facilities, the lack of an adequate work force in a market, the inability of customers and
associates to reach or have transportation to our stores and clubs affected by such events, the evacuation of the populace from
areas in which our stores, clubs and distribution facilities are located, the unavailability of our digital platforms to our
customers, changes in the purchasing patterns of consumers and in consumers' disposable income, the temporary or long-term
disruption in the supply of products from some local and overseas suppliers, the disruption in the transport of goods from
overseas, the disruption or delay in the delivery of goods to our distribution facilities or stores within a country in which we are
operating, the reduction in the availability of products in our stores, the disruption of utility services to our stores and our
facilities, and disruption in our communications with our stores.
We bear the risk of losses incurred as a result of physical damage to, or destruction of, any stores, clubs and distribution
facilities, loss or spoilage of inventory and business interruption caused by such events. These events and their impacts could
otherwise disrupt and adversely affect our operations in the areas in which they occur and could materially adversely affect our
financial performance.
Risks associated with the suppliers from whom our products are sourced could materially adversely affect our financial
performance.
The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the
products we sell is an important factor in our financial performance. We expect all of our suppliers to comply with applicable
laws, including labor, safety and environmental laws, and to otherwise meet our required supplier standards of conduct. Our
ability to find qualified suppliers who uphold our standards, and to access products in a timely and efficient manner, is a
significant challenge, especially with respect to suppliers located and goods sourced outside the U.S.
Political and economic instability in the countries in which our foreign suppliers and their manufacturers are located, the
financial instability of suppliers, suppliers' failure to meet certain of our supplier standards (including our responsible sourcing
standards), labor problems experienced by our suppliers and their manufacturers, the availability of raw materials to suppliers,
merchandise safety and quality issues, disruption in the transportation of merchandise from the suppliers and manufacturers to
our stores, clubs, and other facilities, including as a result of labor slowdowns at any port at which a material amount of
merchandise we purchase enters into the U.S., currency exchange rates, transport availability and cost, transport security,
inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control.
In addition, the U.S.'s foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain
countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other
countries and other factors relating to foreign trade are beyond our control. These and other factors affecting our suppliers and
our access to products could adversely affect our financial performance.
If the products we sell are not safe or otherwise fail to meet our customers' expectations, we could lose customers, incur
liability for any injuries suffered by customers using or consuming a product we sell or otherwise experience material
adverse effects to our brand, reputation and financial performance.
Our customers count on us to provide them with safe products. Concerns regarding the safety of food and non-food products
that we source from our suppliers or that we prepare and then sell could cause customers to avoid purchasing certain products
from us, or to seek alternative sources of supply for all of their food and non-food needs, even if the basis for the concern is
outside of our control. Any lost confidence on the part of our customers would be difficult and costly to reestablish. As such,
any issue regarding the safety of any food or non-food items we sell, regardless of the cause, could adversely affect our brand,
reputation and financial performance.
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We rely extensively on information systems to process transactions, summarize results and manage our business.
Disruptions in our systems could harm our ability to conduct our operations.
Given the number of individual transactions we have each year, it is crucial that we maintain uninterrupted operation of our
business-critical information systems. Our information systems are subject to damage or interruption from power outages,
computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service
attacks, security breaches (through cyber-attacks from cyber-attackers and sophisticated organizations), catastrophic events
such as fires, tornadoes, earthquakes and hurricanes, and usage errors by our associates or contractors. Our information
systems are essential to our business operations, including the processing of transactions, management of our associates,
facilities, logistics, inventories, physical stores and clubs and our online operations. Our information systems are not fully
redundant and if our systems are damaged, breached or cease to function properly, we may have to make a significant
investment to repair or replace them, and we may suffer interruptions in our business operations in the interim. Any
interruption to our information systems may have a material adverse effect on our business or results of operations. In addition,
we are constantly updating our information technology processes and systems. The risk of system disruption is increased when
significant system changes are undertaken. If we fail to timely integrate and update our information systems and processes, we
may fail to realize the cost savings anticipated to be derived from these initiatives.
If the technology-based systems that give our customers the ability to shop with us online do not function effectively, our
operating results, as well as our ability to grow our eCommerce business globally, could be materially adversely affected.
Many of our customers shop with us using our digital platforms, which are a part of our omni-channel sales strategy.
Increasingly, customers are using computers, tablets, and smart phones to shop online and through digital platforms with us and
with our competitors and to do comparison shopping. We use social media and electronic mail to interact with our customers
and as a means to enhance their shopping experience. As a part of our omni-channel sales strategy, in addition to home
delivery, we offer "Walmart Pickup," "Pickup Today" and "Club Pickup" and, in a growing number of locations, "Online
Grocery" programs under which many products available for purchase online can be picked up by the customer at a local
Walmart store or Sam's Club, which provides additional customer traffic at such stores and clubs. Omni-channel retailing is a
rapidly evolving part of the retail industry and of our operations in the U.S. (whether through organic growth or eCommerce
acquisitions) and in a number of markets in which our Walmart International segment operates.
We must anticipate and meet our customers' changing expectations while adjusting for technology investments and
developments in our competitors' operations through focusing on the building and delivery of a seamless shopping experience
across all channels by each operating segment. Any failure on our part to provide attractive, user-friendly secure digital
platforms that offer a wide assortment of merchandise at competitive prices and with low cost and rapid delivery options and
that continually meet the changing expectations of online shoppers and developments in online and digital platform
merchandising and related technology could place us at a competitive disadvantage, result in the loss of eCommerce and other
sales, harm our reputation with customers, have a material adverse impact on the growth of our eCommerce business globally
and have a material adverse impact on our business and results of operations.
Our digital platforms, which are increasingly important to our business and continue to grow in complexity and scope, and the
computer and operating systems on which they run, including those applications and systems in our acquired eCommerce
businesses, may be subject to cyber-attacks. Those attacks could involve attempts to gain access to one of our eCommerce
websites or mobile commerce applications to obtain and make unauthorized use of customers' or members' payment
information and related risks discussed below. Such attacks, if successful, can also create denials of service or otherwise
disable, degrade or sabotage one or more of our digital platforms and otherwise significantly disrupt our customers' and
members' shopping experience. If we are unable to maintain the security of our digital platforms and keep them operating
within acceptable parameters, we could suffer loss of sales, reductions in traffic, reputational damage and deterioration of our
competitive position and incur liability for any damage to customers whose personal information is unlawfully obtained and
used, any of which events could have a material adverse impact on our business and results of operations and impede the
execution of our strategy for the growth of our business.
Any failure to maintain the security of the information relating to our company, customers, members, associates and
vendors, whether as a result of cybersecurity attacks on our information systems or otherwise, could damage our
reputation, result in litigation or other legal actions against us, cause us to incur substantial additional costs, and
materially adversely affect our business and operating results.
As do most retailers, we receive and store in our digital information systems certain personal information about our customers
and members, and we receive and store personal information concerning our associates and vendors. Some of that information
is stored digitally in connection with our digital platforms. We also utilize third-party service providers for a variety of reasons,
including, without limitation, for encryption and authentication technology, content delivery to customers and members, back-
office support, and other functions. Such providers may have access to information we hold about our customers, members,
associates or vendors. In addition, our eCommerce operations depend upon the secure transmission of confidential information
over public networks, including information permitting cashless payments.
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Cyber threats are rapidly evolving and those threats and the means for obtaining access to information in digital and other
storage media are becoming increasingly sophisticated. Cyber threats and cyber-attackers can be sponsored by countries or
sophisticated criminal organizations or be the work of single "hackers" or small groups of "hackers." Each year, cyber-attackers
make numerous attempts to access the information stored in our information systems. As cyber threats evolve, change and
become more difficult to detect and successfully defend against, one or more cyber-attacks might defeat our or a third-party
service provider's security measures in the future and obtain the personal information of customers, members, associates and
vendors.
Associate error or malfeasance, faulty password management or other irregularities may also result in a defeat of our or our
third-party service providers' security measures and a breach of our or their information systems. Moreover, hardware, software
or applications we use may have inherent defects of design, manufacture or operations or could be inadvertently or intentionally
implemented or used in a manner that could compromise information security. We or our third-party service providers may not
discover any security breach and loss of information for a significant period of time after the security breach occurs.
Any breach of our security measures or any breach, error or malfeasance of those of our third-party service providers and loss
of our confidential information, or any failure by us to comply with applicable privacy and information security laws and
regulations, could cause us to incur significant costs to protect any customers, members, associates and vendors whose personal
data was compromised and to restore their confidence in us and to make changes to our information systems and administrative
processes to address security issues and compliance with applicable laws and regulations.
In addition, such events could be widely publicized and could materially adversely affect our reputation with our customers,
members, associates, vendors and shareholders, could harm our competitive position particularly with respect to our
eCommerce operations, and could result in a material reduction in our net sales in our eCommerce operations, as well as in our
stores thereby materially adversely affecting our operations, net sales, results of operations, financial condition, cash flows and
liquidity. Such events could also result in the release to the public of confidential information about our operations and
financial condition and performance and could result in litigation or other legal actions against us or the imposition of penalties,
fines, fees or liabilities, which may not be covered by our insurance policies. Moreover, a security breach could require us to
devote significant management resources to address the problems created by the security breach and to expend significant
additional resources to upgrade further the security measures we employ to guard personal information against cyber-attacks
and other attempts to access such information and could result in a disruption of our operations, particularly our digital retail
operations.
We accept payments using a variety of methods, including cash, checks, credit and debit cards, our private label credit cards and
gift cards, and we may offer new payment options over time, which may have information security risk implications. As a
retailer accepting debit and credit cards for payment, we are subject to various industry data protection standards and protocols,
such as payment network security operating guidelines and the Payment Card Industry Data Security Standard. We cannot be
certain that the security measures we maintain to protect all of our information technology systems are able to prevent, contain
or detect any cyber-attacks, cyber terrorism, or security breaches from known cyber-attacks or malware that may be developed
in the future. To the extent that any cyber-attack or incursion in our or one of our third-party service provider's information
systems results in the loss, damage or misappropriation of information, we may be materially adversely affected by claims from
customers, financial institutions, regulatory authorities, payment card networks and others. In certain circumstances, payment
card association rules and obligations to which we are subject under our contracts with payment card processors make us liable
to payment card issuers if information in connection with payment cards and payment card transactions that we hold is
compromised, which liabilities could be substantial. In addition, the cost of complying with stricter and more complex data
privacy, data collection and information security laws and standards could be significant to us.
Changes in the results of our retail pharmacy business could adversely affect our overall results of operations, cash
flows and liquidity.
Walmart has retail pharmacy operations in our Walmart U.S. and Sam's Club segments and a large majority of the retail
pharmacy net sales are generated by filling prescriptions for which we receive payment through established contractual
relationships with third-party payers and payment administrators, such as private insurers, governmental agencies and
pharmacy benefit managers ("PBMs").
Our retail pharmacy operations are subject to numerous risks, including: reductions in the third-party reimbursement rates for
drugs; changes in our payer mix (i.e., shifts in the relative distribution of our pharmacy customers across drug insurance plans
and programs toward plans and programs with less favorable reimbursement terms); changes in third party payer drug
formularies (i.e., the schedule of prescription drugs approved for reimbursement or which otherwise receive preferential
coverage treatment); growth in, and our participation in or exclusion from, exclusive and preferred pharmacy network
arrangements operated by PBMs and/or any insurance plan or program; increases in the prices we pay for brand name and
generic prescription drugs we sell; increases in the administrative burdens associated with seeking third-party reimbursement;
changes in the frequency with which new brand name pharmaceuticals become available to consumers; introduction of lower
cost generic drugs as substitutes for existing brand name drugs for which there was no prior generic drug competition; changes
in drug mix (i.e., the relative distribution of drugs customers purchase at our pharmacies between brands and generics); changes
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in the health insurance market generally; changes in the scope of or the elimination of Medicare Part D or Medicaid drug
programs; increased competition from other retail pharmacy operations; further consolidation among third party payers, PBMs
or purchasers of drugs; overall economic conditions and the ability of our pharmacy customers to pay for drugs prescribed for
them to the extent the costs are not reimbursed by a third party; failure to meet any performance or incentive thresholds to
which our level of third party reimbursement may be subject; and changes in the regulatory environment for the retail pharmacy
industry and the pharmaceutical industry, including as a result of restrictions on the further implementation of or the repeal of
the Patient Protection and Affordable Care Act or the enactment and implementation of a law replacing such act, and other
changes in laws, rules and regulations that affect our retail pharmacy business.
If the supply of certain pharmaceuticals provided by one or more of our vendors were to be disrupted for any reason, our
pharmacy operations could be severely affected until at least such time as we could obtain a new supplier for such
pharmaceuticals. Any such disruption could cause reputational damage and result in a significant number of our pharmacy
customers transferring their prescriptions to other pharmacies.
One or a combination of such factors may adversely affect the volumes of brand name and generic pharmaceuticals we sell, our
cost of sales associated with our retail pharmacy operations, and the net sales and gross margin of those operations, result in the
loss of cross-store or cross-club selling opportunities and, in turn, adversely affect our overall net sales, other results of
operations, cash flows and liquidity.
Our failure to attract and retain qualified associates, increases in wage and benefit costs, changes in laws and other
labor issues could materially adversely affect our financial performance.
Our ability to continue to conduct and expand our operations depends on our ability to attract and retain a large and growing
number of qualified associates globally. Our ability to meet our labor needs, including our ability to find qualified personnel to
fill positions that become vacant at our existing stores, clubs and distribution centers, while controlling our associate wage and
related labor costs, is generally subject to numerous external factors, including the availability of a sufficient number of
qualified persons in the work force of the markets in which we operate, unemployment levels within those markets, prevailing
wage rates, changing demographics, health and other insurance costs and adoption of new or revised employment and labor
laws and regulations. If we are unable to locate, to attract or to retain qualified personnel, the quality of service we provide to
our customers may decrease and our financial performance may be adversely affected.
In addition, if our costs of labor or related costs increase for other reasons or if new or revised labor laws, rules or regulations or
healthcare laws are adopted or implemented that further increase our labor costs, our financial performance could be materially
adversely affected.
Financial Risks
Fluctuations in foreign exchange rates may materially adversely affect our financial performance and our reported
results of operations.
Our operations in countries other than the U.S. are conducted primarily in the local currencies of those countries. Our
consolidated financial statements are denominated in U.S. dollars, and to prepare those financial statements we must translate
the amounts of the assets, liabilities, net sales, other revenues and expenses of our operations outside of the U.S. from local
currencies into U.S. dollars using exchange rates for the current period. In recent years, fluctuations in currency exchange rates
that were unfavorable to us coupled with such translations have had a material adverse effect on our reported results of
operations.
As a result of such translations, fluctuations in currency exchange rates from period-to-period that are unfavorable to us may
also result in our consolidated financial statements reflecting significant adverse period-over-period changes in our financial
performance or reflecting a period-over-period improvement in our financial performance that is not as robust as it would be
without such fluctuations in the currency exchange rates. Such unfavorable currency exchange rate fluctuations will adversely
affect the reported performance of our Walmart International operating segment and have a corresponding adverse effect on our
reported consolidated results of operations.
We may pay for products we purchase for sale in our stores and clubs around the world with a currency other than the local
currency of the country in which the goods will be sold. When we must acquire the currency to pay for such products and the
exchange rates for the payment currency fluctuate in a manner unfavorable to us, our cost of sales may increase and we may be
unable or unwilling to change the prices at which we sell those goods to address that increase in our costs, with a corresponding
adverse effect on our gross profit. Consequently, fluctuations in currency exchange rates may adversely affect our results of
operations.
Failure to meet market expectations for our financial performance could adversely affect the market price and volatility
of our stock.
We believe that the price of our stock generally reflects high market expectations for our future operating results. Any failure to
meet or delay in meeting these expectations, including our comparable store and club sales growth rates, eCommerce growth
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rates, gross margin, or earnings and earnings per share could cause the market price of our stock to decline, as could changes in
our dividend or stock repurchase programs or policies. Additionally, failure of Walmart's performance to match that of other
retailers may have a negative effect on the price of our stock.
Legal, Tax, Regulatory, Compliance, Reputational and Other Risks
Our operations subject us to legislative, judicial, accounting, legal, regulatory, tax, political and economic risks and
conditions specific to the countries or regions in which we operate, which could materially adversely affect our business
or financial performance.
In addition to our U.S. operations, we operate our retail business principally through wholly-owned subsidiaries in Argentina,
Brazil, Canada, Chile, China, India, Japan and the United Kingdom and our majority-owned subsidiaries in Africa, Central
America and Mexico.
In fiscal 2018, our Walmart U.S. and Sam's Club operating segments generated approximately 76% of our consolidated net
sales. The Federal Government has created the potential for significant changes in trade policies, including tariffs and
government regulations affecting trade between the U.S. and other countries where we source many of the products we sell in
our stores and clubs. Potential changes which have been discussed include the renegotiation or termination of trade agreements
and the imposition of higher tariffs on imports into the U.S. A significant portion of the general merchandise we sell in our U.S.
stores and clubs is manufactured in other countries. Any such actions could increase the cost to us of such merchandise
(whether imported directly or indirectly) and cause increases in the prices at which we sell such merchandise to our customers,
which could materially adversely affect the financial performance of our U.S. operations and our business.
During fiscal 2018, our Walmart International operations generated approximately 24% of our consolidated net sales. Walmart
International's operations in various countries also sources goods and services from other countries. Our future operating
results in these countries could be negatively affected by a variety of factors, most of which are beyond our control. These
factors include political conditions, including political instability, local and global economic conditions, legal and regulatory
constraints, local product safety and environmental laws, tax regulations, local labor laws, anti-money laundering laws and
regulations, trade policies, currency regulations, and other matters in any of the countries or regions in which we operate, now
or in the future.
Our business and results of operations in the UK may be negatively affected by fluctuations in currency exchange rates,
increases in food costs, changes in trade policies, or changes in labor, immigration, tax or other laws resulting from the UK's
anticipated exit from the European Union.
Brazilian federal, state and local laws are complex and subject to varying interpretations. Although the Company believes it
complies with those laws, the Company's subsidiaries in Brazil are party to a large number of labor claims and non-income tax
assessments, which have arisen during the normal course of business in Brazil. These matters are subject to inherent
uncertainties and if decided adversely to the Company, could materially adversely affect our financial performance.
The economies of some of the countries in which we have operations have in the past suffered from high rates of inflation and
currency devaluations, which, if they occurred again, could adversely affect our financial performance. Other factors which
may impact our international operations include foreign trade, monetary and fiscal policies of the U.S. and of other countries,
laws, regulations and other activities of foreign governments, agencies and similar organizations, and risks associated with
having numerous facilities located in countries which have historically been less stable than the U.S. Additional risks inherent
in our international operations generally include, among others, the costs and difficulties of managing international operations,
adverse tax consequences and greater difficulty in enforcing intellectual property rights in countries other than the U.S. The
various risks inherent in doing business in the U.S. generally also exist when doing business outside of the U.S., and may be
exaggerated by the difficulty of doing business in numerous sovereign jurisdictions due to differences in culture, laws and
regulations.
In foreign countries in which we have operations, a risk exists that our associates, contractors or agents could, in contravention
of our policies, engage in business practices prohibited by U.S. laws and regulations applicable to us, such as the Foreign
Corrupt Practices Act ("FCPA"), or the laws and regulations of other countries, such as the UK Bribery Act. We maintain a
global policy prohibiting such business practices and have in place a global anti-corruption compliance program designed to
ensure compliance with these laws and regulations. Nevertheless, we remain subject to the risk that one or more of our
associates, contractors or agents, including those based in or from countries where practices that violate such U.S. laws and
regulations or the laws and regulations of other countries may be customary, will engage in business practices that are
prohibited by our policies, circumvent our compliance programs and, by doing so, violate such laws and regulations. Any such
violations, even if prohibited by our internal policies, could adversely affect our business or financial performance and our
reputation.
We are subject to income taxes and other taxes in both the U.S. and the foreign jurisdictions in which we currently operate or
have historically operated. The determination of our worldwide provision for income taxes and current and deferred tax assets
and liabilities requires judgment and estimation. Our income taxes could be materially adversely affected by earnings being
23
lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have
higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in worldwide tax
laws, regulations, or accounting principles.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted and contains significant changes to U.S.
income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35 percent to 21 percent and creates
new taxes focused on foreign-sourced earnings and related-party payments. In addition, the Company was subject to a one-
time transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax. The
Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin No. 118 ("SAB 118") on December 22,
2017, which allows companies to record provisional amounts during a measurement period not to extend beyond one year of
the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act,
the Company made reasonable estimates of the effects and recorded provisional amounts in our financial statements as of
January 31, 2018, in accordance with SAB 118. As the Company collects and prepares necessary data, and interprets the Tax
Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the
Company may make adjustments to the provisional amounts during fiscal 2019. Those adjustments may materially impact our
provision for income taxes and effective tax rate in the period in which the adjustments are made and could impact our net
income and our earnings per share, as well as our consolidated cash flows and liquidity.
We are subject to regular review and audit by both domestic and foreign tax authorities as well as subject to the prospective and
retrospective effects of changing tax regulations and legislation. Although we believe our tax estimates are reasonable, the
ultimate tax outcome may materially differ from the tax amounts recorded in our consolidated financial statements and may
materially affect our income tax provision, net income, or cash flows in the period or periods for which such determination and
settlement is made.
We operate in complex regulated environments in the United States and in the other countries in which we operate and could be
adversely affected by changes to existing legal requirements including the related interpretations and enforcement practices,
new legal requirements and/or any failure to comply with applicable regulations. Our pharmacy operations in the United States
are subject to numerous federal, state and local regulations including licensing and other requirements for pharmacies and
reimbursement arrangements. The regulations to which we are subject include, but are not limited to: federal and state
registration and regulation of pharmacies; dispensing and sale of controlled substances and products containing
pseudoephedrine; applicable governmental payer regulations including Medicare and Medicaid; data privacy and security laws
and regulations including the Health Insurance Portability and Accountability Act, the Affordable Care Act or any successor
thereto; laws and regulations relating to the protection of the environment and health and safety matters, including those
governing exposure to, and the management and disposal of, hazardous substances; regulations regarding food and drug safety
including those of the U.S. Food and Drug Administration (the "FDA") and the Drug Enforcement Administration (the "DEA"),
trade regulations including those of the U.S. Federal Trade Commission, and consumer protection and safety regulations
including those of the Consumer Product Safety Commission, as well as state regulatory authorities, governing the availability,
sale, advertisement and promotion of products we sell and the financial services we offer; anti-kickback laws; false claims laws;
and federal and state laws governing health care fraud and abuse and the practice of the professions of pharmacy, optical care
and nurse practitioner services.
For example, in the United States the DEA and various other regulatory authorities regulate the distribution and dispensing of
pharmaceuticals and controlled substances. We are required to hold valid DEA and state-level licenses, meet various security
and operating standards and comply with the federal and various state controlled substance acts and related regulations
governing the sale, dispensing, disposal, holding and distribution of controlled substances. The DEA, FDA and state regulatory
authorities have broad enforcement powers, including the ability to seize or recall products and impose significant criminal,
civil and administrative sanctions for violations of these laws and regulations. We are also governed by foreign, national and
state laws of general applicability, including laws regulating matters of working conditions, health and safety and equal
employment opportunity and other labor and employment matters, as well as employee benefit, competition, anti-money
laundering, antitrust matters and health and wellness related regulations for our pharmacy operations outside of the United
States. Changes in laws, regulations and policies and the related interpretations and enforcement practices may alter the
landscape in which we do business and may significantly affect our cost of doing business.
The impact of new laws, regulations and policies and the related interpretations and enforcement practices generally cannot be
predicted, and changes in applicable laws, regulations and policies and the related interpretations and enforcement practices
may require extensive system and operational changes, be difficult to implement, increase our operating costs and require
significant capital expenditures. Untimely compliance or noncompliance with applicable laws and regulations could result in
the imposition of civil and criminal penalties that could adversely affect the continued operation of our businesses, including:
suspension of payments from government programs; loss of required government certifications; loss of authorizations to
participate in or exclusion from government programs, including the Medicare and Medicaid programs in the United States;
loss of licenses; and significant fines or monetary damages and/or penalties. Any failure to comply with applicable regulatory
requirements in the United States or in any of the countries in which we operate could result in significant legal and financial
24
exposure, damage our reputation, and have a material adverse effect on our business operations, financial condition and results
of operations.
We are subject to certain legal proceedings that may materially adversely affect our results of operations, financial
condition and liquidity.
We are involved in a number of legal proceedings, which include consumer, employment, tort and other litigation. In particular,
we are currently a defendant in a number of cases containing class-action allegations in which the plaintiffs have brought claims
under federal and state wage and hour laws, as well as a number of cases containing class-action allegations in which the
plaintiffs have brought claims under federal and state consumer laws.
In addition, ASDA Stores, Ltd. ("ASDA"), a wholly-owned subsidiary of the Company, has been named as a defendant in over
10,000 "equal value" claims pending in the Manchester Employment Tribunal (the "Employment Tribunal") in the United
Kingdom. The claimants, who are current and former ASDA store employees, allege that the work performed by female
employees in ASDA's retail stores is of equal value in terms of, among other things, the demands of their jobs to that of male
employees working in ASDA's warehouses and distribution facilities, and that the disparity in pay between these different job
positions is not objectively justified. The claimants are seeking differential back pay based on higher wage rates in the
warehouses and distribution facilities and higher wage rates on a prospective basis. At present, we cannot predict the number of
such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from these proceedings.
In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a
wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes,
individuals, and third-party payors, asserting claims generally concerning the impacts of widespread opioid abuse. The
consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804), and is pending in
the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included
in this multidistrict litigation, including cases filed by several counties in West Virginia; by healthcare providers in Mississippi,
Alabama, Texas, and Florida; and by the St. Croix Chippewa Indians of Wisconsin. Similar cases that name the Company have
been filed in state courts by various counties and municipalities; by health care providers; and by various Native American
Tribes. At present, we cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or
range of loss that may arise from such claims.
We discuss these cases and other litigation to which we are party below under the caption "Item 3. Legal Proceedings" and in
Note 10 in the "Notes to our Consolidated Financial Statements," which are part of this Annual Report on Form 10-K.
We could be subject to liability, penalties and other sanctions and other adverse consequences arising out of our on-
going FCPA matter.
The Audit Committee of our Board of Directors has been conducting an internal investigation into, among other things, alleged
violations of the FCPA and other alleged crimes or misconduct in connection with certain of our foreign subsidiaries, including
Wal-Mart de México, S.A.B. de C.V. ("Walmex"), and whether prior allegations of such violations and/or misconduct were
appropriately handled by the Company. We have also been conducting a voluntary global review of our policies, practices and
internal controls for anti-corruption compliance and are engaged in strengthening our global anti-corruption compliance
programs. Since the implementation of the global review and enhanced anti-corruption compliance programs, the Audit
Committee and we have identified or been made aware of additional allegations regarding potential violations of the FCPA.
Inquiries or investigations regarding allegations of potential FCPA violations have been commenced in a number of foreign
markets in which we operate, including, but not limited to, Brazil, China and India. In November 2011, we voluntarily
disclosed our investigative activity to the U.S. Department of Justice (the "DOJ") and the SEC. We have been cooperating with
those agencies and discussions have been ongoing with them regarding the resolution of these matters. These discussions have
progressed to a point that we can now reasonably estimate a probable loss and have recorded an aggregate accrual of $283
million with respect to these matters (the "Accrual").
A number of federal and local government agencies in Mexico have also initiated investigations of these matters. Furthermore,
lawsuits relating to the matters under investigation have been filed by several of our shareholders against us, certain of our
current and former directors and officers and certain of Walmex's current and former officers.
We could be exposed to a variety of negative consequences as a result of these matters. One or more enforcement actions could
be instituted in respect of the matters that are the subject of some or all of the on-going government investigations, and such
actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist orders, debarment or
other relief, criminal convictions and/or penalties. The shareholder lawsuits may result in judgments against us and our current
and former directors and officers named in those proceedings. We also expect that there will be ongoing media and
governmental interest regarding these matters, including additional news articles on these matters that could impact the
perception of our role as a corporate citizen among certain audiences. Moreover, we have incurred and expect to continue to
incur costs in responding to requests for information or subpoenas seeking documents, testimony and other information in
25
connection with the government investigations, in defending the shareholder lawsuits and in conducting our review and
investigations.
While we have made an Accrual for these matters, because the discussions are continuing, there can be no assurance as to the
timing or the terms of the final resolution of these matters. Although we do not presently believe that these matters will have a
material adverse effect on our business, given the inherent uncertainties in such situations, we can provide no assurance that
these matters will not be material to our business in the future.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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ITEM 2.
PROPERTIES
United States
The Walmart U.S. and Sam's Club segments comprise the Company's operations in the U.S. As of January 31, 2018, unit
counts for Walmart U.S. and Sam's Club are summarized by format for each state and territory as follows:
State or Territory
Supercenters
Discount Stores
Neighborhood Markets
and other small formats
Clubs
Grand Total
Walmart U.S.
Sam's Club
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
Washington D.C.
West Virginia
Wisconsin
Wyoming
U.S. total
30
—
31
37
76
18
1
—
94
35
—
3
11
11
—
16
11
34
—
2
3
9
1
10
18
—
7
11
—
—
9
7
45
—
—
34
10
3
17
—
27
—
21
111
12
—
24
6
2
1
2
—
800
13
—
12
9
29
17
1
1
46
24
2
1
25
13
9
9
9
14
3
11
—
23
12
7
19
2
5
7
2
7
7
12
22
3
27
13
—
24
7
—
13
2
14
81
8
—
15
—
—
5
10
2
597
145
9
128
128
320
109
35
10
380
215
12
27
192
128
69
85
107
139
25
61
52
126
82
85
158
16
47
50
29
70
53
117
217
17
172
136
45
164
42
9
124
17
154
601
61
6
154
68
5
44
99
14
5,358
1
2
2
6
74
4
21
3
9
2
10
—
17
7
2
2
8
2
3
18
22
3
4
3
9
—
—
2
8
34
2
18
6
—
6
8
7
21
5
4
—
—
2
20
—
3
6
10
—
—
4
—
400
101
7
83
76
141
70
12
6
231
154
—
23
139
97
58
58
79
89
19
30
27
91
65
65
112
14
35
30
19
29
35
80
144
14
139
81
28
116
13
5
84
15
117
389
41
3
109
52
3
38
83
12
3,561
27
International
The Walmart International segment comprises the Company's operations outside of the U.S. Unit counts as of January 31, 2018
(1) for Walmart International are summarized by major category for each geographic market as follows:
Geographic Market
Africa(3)
Argentina
Brazil
Canada
Central America(4)
Chile
China
India
Japan
Mexico
United Kingdom
International total
Retail
335
106
380
410
778
373
424
—
336
2,186
617
5,945
Wholesale
89
—
70
—
—
5
19
20
—
162
—
365
Other(2)
—
—
15
—
—
—
—
—
—
10
25
50
Total
424
106
465
410
778
378
443
20
336
2,358
642
6,360
(1) Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2017, to correspond with the balance sheet date of the
related geographic market. Canada unit counts are stated as of January 31, 2018.
(2) Other includes drug stores and convenience stores.
(3) Africa unit counts by country are Botswana (11), Ghana (2), Kenya (1), Lesotho (3), Malawi (2), Mozambique (5), Namibia (4), Nigeria (5), South Africa
(382), Swaziland (1), Tanzania (1), Uganda (1) and Zambia (6).
(4) Central America unit counts by country are Costa Rica (247), El Salvador (95), Guatemala (238), Honduras (103) and Nicaragua (95).
Owned and Leased Properties
The following table provides further details of our retail units and distribution facilities, including return facilities, as of
January 31, 2018:
U.S. properties
Walmart U.S. retail units
Sam's Club retail units
Total U.S. retail units
Walmart U.S. distribution facilities
Sam's Club distribution facilities
Total U.S. distribution facilities
Total U.S. properties
International properties
Africa
Argentina
Brazil
Canada
Central America
Chile
China
India
Japan
Mexico
United Kingdom
Total International retail units
International distribution facilities
Total International properties
Total retail units
Total distribution facilities
Total properties
Owned and
Operated
Owned and
Third Party
Operated
Leased and
Operated
Third Party
Owned and
Operated
Total
4,066
512
4,578
103
3
106
4,684
39
66
209
124
304
228
3
2
56
669
442
2,142
43
2,185
6,720
149
6,869
—
—
—
2
3
5
5
—
—
—
—
—
—
—
—
—
—
—
—
12
12
—
17
17
695
85
780
23
3
26
806
385
40
256
286
474
150
440
18
280
1,689
200
4,218
87
4,305
4,998
113
5,111
—
—
—
29
13
42
42
—
—
—
—
—
—
—
—
—
—
—
—
46
46
—
88
88
4,761
597
5,358
157
22
179
5,537
424
106
465
410
778
378
443
20
336
2,358
642
6,360
188
6,548
11,718
367
12,085
We own office facilities in Bentonville, Arkansas, that serve as our principal office and own and lease office facilities
throughout the U.S. and internationally for operations as well as for field and market management. The land on which our
28
stores are located is either owned or leased by the Company. We use independent contractors to construct our buildings. All
store leases provide for annual rentals, some of which escalate during the original lease or provide for additional rent based on
sales volume. Substantially all of the Company's store and club leases have renewal options, some of which include rent
escalation clauses.
For further information on our distribution centers, see the caption "Distribution" provided for each of our segments under
"Item 1. Business."
ITEM 3.
LEGAL PROCEEDINGS
I. SUPPLEMENTAL INFORMATION: We discuss certain legal proceedings in Note 10 to our Consolidated Financial
Statements, entitled "Contingencies," which is included in Part II, Item 8. Financial Statements and Supplementary Data of this
Annual Report on Form 10-K. We refer you to that discussion for important information concerning those legal proceedings,
including the basis for such actions and, where known, the relief sought. We provide the following additional information
concerning those legal proceedings, including the name of the lawsuit, the court in which the lawsuit is pending, and the date on
which the petition commencing the lawsuit was filed.
ASDA Equal Value Claims: Ms S Brierley & Others v ASDA Stores Ltd (2406372/2008 & Others - Manchester Employment
Tribunal); ASDA Stores Ltd v Brierley & Ors (A2/2016/0973 - United Kingdom Court of Appeal); ASDA Stores Ltd v Ms S
Brierley & Others (UKEAT/0059/16/DM - United Kingdom Employment Appeal Tribunal); ASDA Stores Ltd v Ms S Brierley
& Others (UKEAT/0009/16/JOJ - United Kingdom Employment Appeal Tribunal).
National Prescription Opiate Litigation: In re National Prescription Opiate Litigation (MDL No. 2804); Lac Courte Oreilles
Band of Lake Superior Chippewa Indians v. McKesson Corp., et al., WI Circuit Court, Sawyer County, 3/16/18; ApolloMD
Bus. Servs., LLC v. Attain Med, Inc., et al., GA State Ct., Fulton Cty., 3/8/2018; Center Point, Inc. v. McKesson Corp., et al, CA
Superior Ct., San Francisco County, 3/6/2018; Cty. of Greenville v. Rite Aid of S.C., Inc., et al., SC Ct. of Common Pleas, 13th
Judicial Dist., 3/5/2018; Big Sandy Rancheria of W. Mono Indians v. McKesson Corp., et al., CA Superior Ct., San Francisco
County, 3/2/2018; Consolidated Tribal Health Project, Inc. v. McKesson Corp., et al., CA Superior Ct., San Francisco County,
3/2/2018; Robinson Rancheria v.McKesson Corp., et al., CA Superior Ct., San Francisco County, 3/2/2018; Round Valley
Indian Tribes; Round Valley Indian Health Center, Inc. v. McKesson Corp., et al., CA Superior Ct., San Francisco County,
3/2/2018; Hopland Band of Pomo Indians v. McKesson Corp., et al., CA Superior Ct., San Francisco County, 2/21/2018;
Redwood Valley or Little River Band of Pomo Indians of Redwood Valley Rancheria v. McKesson Corp., et al., CA Superior Ct.,
San Francisco County, 2/21/2018; Scotts Valley Band of Pomo Indians v. McKesson Corp., et al., CA Superior Ct., San
Francisco County, 2/21/2018; Big Valley Band of Pomo Indians of the Big Valley Rancheria v. McKesson Corp., et al., CA
Superior Ct., San Francisco County, 2/13/2018; Guidiville Rancheria of Cal. v. McKesson Corp., et al., CA Superior Ct., San
Francisco County, 2/13/2018; Odyssey House La., Inc. v. Morris & Dickson Co., et al., LA Civil Dist. Ct., New Orleans Parish,
2/6/2018; Coyote Valley Band of Pomo Indians v. McKesson Corp., et al., CA Superior Ct., San Francisco County, 1/29/2018;
Cty. Comm'n of Mingo Cty. v. Purdue Pharma, L.P., et al., WV Circuit Ct., Mingo County, 1/18/2018; Brooke Cty. Comm'n v.
Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Hancock Cty. Comm'n v. Purdue Pharma L.P., et al.,
WV Circuit Ct., Marshall County, 12/13/2017; Harrison Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall
County, 12/13/2017; Lewis Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Marshall
Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Ohio Cty. Comm'n v. Purdue Pharma
L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017; Tyler Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct.,
Marshall County, 12/13/2017; Wetzel Cty. Comm'n v. Purdue Pharma L.P., et al., WV Circuit Ct., Marshall County, 12/13/2017.
II. CERTAIN OTHER PROCEEDINGS: The Company is a defendant in several lawsuits in which the complaints closely
track the allegations set forth in a news story that appeared in The New York Times (the "Times") on April 21, 2012. One of
these is a securities lawsuit that was filed on May 7, 2012, in the United States District Court for the Middle District of
Tennessee, and subsequently transferred to the Western District of Arkansas, in which the plaintiff alleges various violations of
the U.S. Foreign Corrupt Practices Act (the "FCPA") beginning in 2005, and asserts violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, as amended, relating to certain prior disclosures of the Company. The plaintiff seeks to
represent a class of shareholders who purchased or acquired stock of the Company between December 8, 2011, and April 20,
2012, and seeks damages and other relief based on allegations that the defendants' conduct affected the value of such stock. On
September 20, 2016, the court granted plaintiff's motion for class certification. On October 6, 2016, the defendants filed a
petition to appeal the class certification ruling to the U.S. Court of Appeals for the Eighth Circuit. On November 7, 2016, the
U.S. Court of Appeals for the Eighth Circuit denied the Company's petition.
In addition, a number of derivative complaints have been filed in Delaware and Arkansas, also tracking the allegations of the
Times story, and naming various current and former directors and certain former officers as additional defendants. The
plaintiffs in the derivative suits (in which the Company is a nominal defendant) allege, among other things, that the defendants
who are or were directors or officers of the Company breached their fiduciary duties in connection with their oversight of FCPA
compliance. All of the derivative suits have been combined into two consolidated proceedings, one of which was consolidated
29
in the United States District Court for the Western District of Arkansas and the other in the Delaware Court of Chancery. On
March 31, 2015, the Western District of Arkansas granted the defendants' motion to dismiss the consolidated derivative
proceedings in that court. On April 15, 2015, plaintiffs filed their notice of appeal with the United States Court of Appeals for
the Eighth Circuit. On July 22, 2016, the United States Court of Appeals for the Eighth Circuit affirmed the dismissal of the
consolidated derivative proceedings in Arkansas. There was no appeal from that ruling. On May 13, 2016, the Delaware Court
of Chancery granted the defendants' motion to dismiss the consolidated derivative proceedings in that court. On June 10, 2016,
plaintiffs in the Delaware consolidated derivative proceedings filed their notice of appeal to the Delaware Supreme Court. On
January 25, 2018, the Delaware Supreme Court affirmed the dismissal of the consolidated derivative proceedings in Delaware.
Management does not believe any possible loss or the range of any possible loss that may be incurred in connection with these
proceedings will be material to the Company's financial condition or results of operations.
Securities Class Action: City of Pontiac General Employees Retirement System v. Wal-Mart Stores, Inc., USDC, Western Dist.
of AR; 5/7/12.
Derivative Lawsuits: In re Wal-Mart Stores, Inc. Delaware Derivative Litigation, Delaware Ct. of Chancery, 4/25/12;
Delaware Supreme Court, Dover, DE; 6/10/16.
III. ENVIRONMENTAL MATTERS: Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters.
The following matters are disclosed in accordance with that requirement. For the matters listed below, management does not
believe any possible loss or the range of any possible loss that may be incurred in connection with each matter, individually or
in the aggregate, will be material to the Company's financial condition or results of operations.
On January 25, 2018, the Environmental Prosecutor of the State of Chiapas (Procuraduría Ambiental del Estado de Chiapas) in
Mexico imposed a fine of $163,000 for the absence of an Environmental Impact Authorization License related to the store Mi
Bodega Las Rosas. The Company plans to challenge the fine before an administrative court.
In May 2017, WMS Supermercados do Brasil Ltda ("Walmart Brazil") self-reported to the relevant municipal environmental
agency, and proposed a remediation plan for, an oil contamination in the soil and underground water at the Walmart and Sam's
Club store location in Barueri, São Paulo (Tamboré), which contamination had been confirmed by an internal investigation in
April 2017. Walmart Brazil is cooperating with the agency, including seeking authorization to start a remediation plan.
In April 2017, the California Air Resources Board ("ARB") notified the Company that it had taken the position that retailers are
required to use unclaimed deposits collected on sales of small containers of automotive refrigerant to fund certain consumer
education programs. The ARB alleged that the Company had improperly retained approximately $4.2 million in unclaimed
deposits and has sought reimbursement. The Company has denied any wrongdoing.
In November and December 2016, the Environmental and Natural History Ministry of Chiapas, Mexico ("Ministry") notified a
subsidiary of the Company, Arrendadora de Centros Comerciales, S. de R.L. de C.V. ("Arrendadora"), that it was proposing
aggregated penalties approximating $430,000 in respect to four stores which the Ministry believed may have been constructed
without first obtaining a required environmental impact license. Arrendadora has challenged the penalties before an
administrative court and the trials are in process. The Ministry had previously proposed penalties of approximately $640,000
related to this matter in 2014, but Arrendadora was released by an administrative court from payment of such penalties on the
basis that the Ministry had failed to comply with legal formalities in connection with their imposition.
On April 6, 2015, representatives for the Brazilian Institute of the Environment alleged that Walmart Brazil had failed to file
required reports documenting the number of tires imported, sold and recycled. The agency proposed a penalty of approximately
$857,000, which may be doubled and excludes additional amounts in respect of inflation and interest, and prohibited Walmart
Brazil from selling or importing tires until the matter is resolved. In October 2015, Walmart Brazil filed its defense with the
agency against the imposition of this penalty.
In April 2013, a subsidiary of the Company, Corporacion de Compañias Agroindustriales, operating in Costa Rica, became
aware that the Municipality of Curridabat is seeking a penalty of approximately $380,000 in connection with the construction of
a retaining wall seventeen years ago for a perishables distribution center that is situated along a protected river bank. The
subsidiary obtained permits from the Municipality and the Secretaria Técnica Nacional Ambiental at the time of construction,
but the Municipality now alleges that the wall is non-conforming.
In January 2011, the Environmental Department of Porto Alegre Municipality formally notified Walmart Brazil of soil
inspection reports indicating soil contamination due to leakage of oil from power generating equipment at nine store locations
in Brazil. Walmart Brazil is cooperating with the agency as well as the District Attorney's Office for the State of Rio Grande do
Sul and has filed a mitigation plan to address the situation.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
30
PART II
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market for Common Stock
Walmart's common stock is listed for trading on the New York Stock Exchange, which is the primary market for Walmart's
common stock. The common stock trades under the symbol "WMT."
Market Price of Common Stock
The high market price and low market price per share for the Company's common stock for each fiscal quarter in fiscal 2018
and 2017 were as follows:
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
2018
2017
High
Low
High
Low
$
$
75.77
80.47
89.11
109.98
$
66.04
73.13
77.50
87.00
$
70.08
74.35
75.19
72.48
62.35
62.72
67.07
65.28
The high market price and low market price per share for the Company's common stock for the first fiscal quarter of fiscal
2019, were as follows:
1st Quarter(1)
(1) Through March 28, 2018.
Holders of Record of Common Stock
As of March 28, 2018, there were 229,858 holders of record of Walmart's common stock.
Dividends Payable Per Share
For fiscal 2019, dividends will be paid based on the following schedule:
April 2, 2018
June 4, 2018
September 4, 2018
January 2, 2019
Dividends Paid Per Share
For fiscal 2018, dividends were paid based on the following schedule:
April 3, 2017
June 5, 2017
September 5, 2017
January 2, 2018
For fiscal 2017, dividends were paid based on the following schedule:
April 4, 2016
June 6, 2016
September 6, 2016
January 3, 2017
Stock Performance Chart
2019
High
Low
$
106.56
$
85.28
$
$
$
0.52
0.52
0.52
0.52
0.51
0.51
0.51
0.51
0.50
0.50
0.50
0.50
This graph compares the cumulative total shareholder return on Walmart's common stock during the five fiscal years ending
with fiscal 2018 to the cumulative total returns on the S&P 500 Retailing Index and the S&P 500 Index. The comparison
assumes $100 was invested on February 1, 2013, in shares of our common stock and in each of the indices shown and assumes
that all of the dividends were reinvested.
31
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Walmart Inc., the S&P 500 Index
and S&P 500 Retailing Index
(Fiscal Years Ending January 31)
$350
$300
$250
$200
$150
$100
$50
$0
2013
2014
2015
2016
2017
2018
Walmart Inc.
S&P 500 Index
S&P 500 Retailing Index
*Assumes $100 Invested on February 1, 2013
Assumes Dividends Reinvested
Fiscal Year Ending January 31, 2018
Walmart Inc.
S&P 500 Index
S&P 500 Retailing Index
$
$
100.00
100.00
100.00
$
109.39
121.52
127.72
$
127.58
138.80
153.64
$
102.39
137.88
184.32
$
105.97
165.51
218.76
173.61
209.22
321.37
2013
2014
2015
2016
2017
2018
Fiscal Years Ended January 31,
Issuer Purchases of Equity Securities
From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Company's
Board of Directors. All repurchases made during the fiscal year prior to November 20, 2017 were made under the plan in effect
at the beginning of fiscal 2018. On October 9, 2017, the Board of Directors approved a new $20.0 billion share repurchase
program which, beginning on November 20, 2017, replaced the previous share repurchase program. As of January 31, 2018,
authorization for $18.8 billion of share repurchases remained under the current share repurchase program. Any repurchased
shares are constructively retired and returned to an unissued status.
Share repurchase activity under our share repurchase programs, on a trade date basis, for each month in the quarter ended
January 31, 2018, was as follows:
Fiscal Period
November 1-30, 2017
December 1-31, 2017
January 1-31, 2018
Total
Total Number of
Shares Repurchased
Average Price Paid
per Share
(in dollars)
6,816,775
$
5,594,137
4,170,041
16,580,953
93.00
97.92
102.37
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs
Approximate Dollar Value of
Shares that May Yet Be
Purchased Under the
Plans or Programs(1)
(in billions)
6,816,775
$
5,594,137
4,170,041
16,580,953
19.8
19.2
18.8
(1) Represents the approximate dollar value of shares that could have been purchased under the current plan at the end of the month. The approximate dollar
value of shares that could still have been purchased under the plan in effect at the beginning of fiscal 2018, as of November 17, 2017, when such plan was
replaced, was $2.2 billion.
32
ITEM 6.
SELECTED FINANCIAL DATA
Five-Year Financial Summary
Walmart Inc.
(Amounts in millions, except per share and unit count data)
Operating results
Total revenues
Percentage change in total revenues from previous fiscal year
Net sales
Percentage change in net sales from previous fiscal year
Increase (decrease) in calendar comparable sales(1) in the U.S.
Walmart U.S.
Sam's Club
Gross profit margin
Operating, selling, general and administrative expenses, as a percentage
of net sales
Operating income
Income from continuing operations attributable to Walmart
Diluted income per common share from continuing operations
attributable to Walmart
Dividends declared per common share
Financial position
Inventories
Property, equipment, capital lease and financing obligation assets, net
Total assets
Long-term debt and long-term capital lease and financing obligations
(excluding amounts due within one year)
Total Walmart shareholders' equity
Unit counts(2)
Walmart U.S. segment
Walmart International segment
Sam's Club segment
Total units
As of and for the Fiscal Years Ended January 31,
2018
2017
2016
2015
2014
$
$
500,343
3.0%
495,761
$
$
485,873
$ 482,130
0.8%
(0.7)%
481,317
$ 478,614
3.0%
2.2%
2.1%
2.8%
24.7%
21.5%
0.6%
1.4%
1.6%
0.5%
24.9%
21.2%
(0.7)%
0.3 %
1.0 %
(3.2)%
24.6 %
20.3 %
$
$
$
$
20,437
9,862
3.28
2.04
22,764
13,643
4.38
2.00
$
$
24,105
14,694
4.57
1.96
$
$
$
$
485,651
$ 476,294
2.0%
1.6 %
482,229
$ 473,076
1.9%
0.5%
0.6%
0.0%
24.3%
19.4%
1.6 %
(0.5)%
(0.6)%
0.3 %
24.3 %
19.3 %
27,147
16,182
4.99
1.92
$
$
26,872
15,918
4.85
1.88
$
43,783
$
43,046
$
44,469
$
45,141
$
44,858
114,818
204,522
36,825
77,869
4,761
6,360
597
11,718
114,178
198,825
42,018
77,798
4,672
6,363
660
11,695
116,516
199,581
44,030
80,546
4,574
6,299
655
11,528
116,655
203,490
43,495
81,394
4,516
6,290
647
11,453
117,907
204,541
44,368
76,255
4,203
6,107
632
10,942
(1) Comparable sales include sales from stores and clubs open for the previous 12 months, including remodels, relocations and expansions, as well as
eCommerce sales and sales from eCommerce acquisitions when such acquisitions have been owned for 12 months. Comparable sales include fuel.
(2) Unit counts related to discontinued operations have been removed from all relevant periods.
33
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
Walmart Inc. ("Walmart," the "Company" or "we") is engaged in retail and wholesale operations in various formats around the
world. Through our operations, we help people around the world save money and live better – anytime and anywhere – in retail
stores and through eCommerce. Through innovation, we are striving to create a customer-centric experience that seamlessly
integrates digital and physical shopping into an omni-channel offering that saves time for our customers. Physical retail
encompasses our brick and mortar presence in each of the markets in which we operate. Digital retail, or eCommerce, is
comprised of our eCommerce websites, mobile commerce applications and transactions involving both an eCommerce platform
and a physical format, which we refer to as omni-channel. Each week, we serve nearly 270 million customers who visit our
more than 11,700 stores and numerous eCommerce websites under 65 banners in 28 countries. Our strategy is to lead on price,
invest to differentiate on access, be competitive on assortment and deliver a great experience. By leading on price we earn the
trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices
("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our
prices will not change under frequent promotional activity. Price leadership is core to who we are. Everyday low cost
("EDLC") is our commitment to control expenses so our cost savings can be passed along to our customers. Our physical and
digital presence, in which we are investing to integrate into a seamless omni-channel, provides customers convenient access to
our broad assortment anytime and anywhere. We strive to give our customers and members a great shopping experience
through whichever shopping method they prefer.
Our operations consist of three reportable segments: Walmart U.S., Walmart International and Sam's Club.
• Walmart U.S. is our largest segment with three primary store formats and eCommerce, as well as an omni-channel
offering. Of our three reportable segments, Walmart U.S. has historically had the highest gross profit as a percentage
of net sales ("gross profit rate"). In addition, it has historically contributed the greatest amount to the Company's net
sales and operating income.
• Walmart International consists of our operations outside of the U.S. and includes retail, wholesale and other
businesses. These categories, including eCommerce, consist of many formats, including: supercenters, supermarkets,
hypermarkets, warehouse clubs (including Sam's Clubs) and cash & carry. Overall gross profit rate for Walmart
International is lower than that of Walmart U.S. primarily because of its merchandise mix. Walmart International is
our second largest segment and has grown in recent years by adding retail, wholesale and other units, and expanding
eCommerce.
•
Sam's Club consists of membership-only warehouse clubs as well as eCommerce through samsclub.com. As a
membership-only warehouse club, membership income is a significant component of the segment's operating income.
Sam's Club operates with a lower gross profit rate and lower operating expenses as a percentage of net sales than our
other segments.
Each of our segments contributes to the Company's operating results differently. Each, however, has generally maintained a
consistent contribution rate to the Company's net sales and operating income in recent years other than minor changes to the
contribution rate for the Walmart International segment due to fluctuations in currency exchange rates.
Our fiscal year ends on January 31 for our U.S. and Canadian operations. We consolidate all other operations generally using a
one-month lag and on a calendar year basis. Our business is seasonal to a certain extent due to calendar events and national and
religious holidays, as well as weather patterns. Generally, our highest sales volume and operating income have occurred in the
fiscal quarter ending January 31.
This discussion, which presents our results for the fiscal years ended January 31, 2018 ("fiscal 2018"), January 31, 2017 ("fiscal
2017") and January 31, 2016 ("fiscal 2016") should be read in conjunction with our Consolidated Financial Statements and the
accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our
financial statements, the changes in certain key items in those financial statements from period to period and the primary factors
that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's
performance. Additionally, the discussion provides information about the financial results of the three segments of our business
to provide a better understanding of how each of those segments and its results of operations affect the financial condition and
results of operations of the Company as a whole.
Throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations, we discuss segment
operating income, comparable store and club sales and other measures. Management measures the results of the Company's
segments using each segment's operating income, including certain corporate overhead allocations, as well as other measures.
From time to time, we revise the measurement of each segment's operating income, including certain corporate overhead
allocations, and other measures as determined by the information regularly reviewed by our chief operating decision maker.
When we do so, the previous period amounts and balances are reclassified to conform to the current period's presentation.
34
Comparable store and club sales, or comparable sales, is a metric that indicates the performance of our existing stores and clubs
by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period from the
corresponding period in the previous year. Walmart's definition of comparable sales includes sales from stores and clubs open
for the previous 12 months, including remodels, relocations, expansions and conversions, as well as eCommerce sales. We
measure the eCommerce sales impact by including all sales initiated online or though mobile applications, including omni-
channel transactions which are fulfilled through our stores and clubs. Sales of a store that has changed in format are excluded
from comparable sales when the conversion of that store is accompanied by a relocation or expansion that results in a change in
the store's retail square feet of more than five percent. Additionally, sales related to eCommerce acquisitions are excluded until
such acquisitions have been owned for 12 months. Comparable sales are also referred to as "same-store" sales by others within
the retail industry. The method of calculating comparable sales varies across the retail industry. As a result, our calculation of
comparable sales is not necessarily comparable to similarly titled measures reported by other companies.
In discussing our operating results, we use the term "currency exchange rates" to refer to the currency exchange rates we use to
convert the operating results for all countries where the functional currency is not the U.S. dollar into U.S. dollars for financial
reporting purposes. We calculate the effect of changes in currency exchange rates from the prior period to the current period as
the difference between current period activity translated using the current period's currency exchange rates, and current period
activity translated using the comparable prior year period's currency exchange rates. Throughout our discussion, we refer to the
results of this calculation as the impact of currency exchange rate fluctuations. 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.
The Retail Industry
We operate in the highly competitive retail industry in all of the markets we serve. We face strong sales competition from other
discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as well as eCommerce
businesses. Many of these competitors are national, regional or international chains or have a national or international online
presence. We compete with a number of companies for prime retail site locations, as well as in attracting and retaining quality
employees ("associates"). We, along with other retail companies, are influenced by a number of factors including, but not
limited to: catastrophic events, weather, competitive pressures, consumer disposable income, consumer debt levels and buying
patterns, consumer credit availability, cost of goods, currency exchange rate fluctuations, customer preferences, deflation,
inflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor costs, tax rates,
cybersecurity attacks and unemployment. Further information on the factors that can affect our operating results and on certain
risks to our Company and an investment in its securities can be found herein under "Item 1A. Risk Factors," and under
"Cautionary Statement Regarding Forward-Looking Statements."
Company Performance Metrics
We are committed to helping customers save money and live better through everyday low prices, supported by everyday low
costs. At times, we adjust our business strategies to maintain and strengthen our competitive positions in the countries in which
we operate. Our financial framework is defined as:
•
•
•
strong, efficient growth;
operating discipline; and
strategic capital allocation.
As we execute on this financial framework, we believe our returns on capital will improve over time.
Strong, Efficient Growth
Our objective of prioritizing strong, efficient growth means we will focus on increasing comparable sales and eCommerce sales
growth while slowing the rate of growth of new stores and clubs. At times, we make strategic investments which are focused
on the long-term growth of the Company, which may not benefit comparable sales in the near term.
Comparable sales is a metric which indicates the performance of our existing stores and clubs by measuring the change in sales
for such stores and clubs, including eCommerce sales, for a particular period over the corresponding period in the previous
year. The retail industry generally reports comparable sales using the retail calendar (also known as the 4-5-4 calendar). To be
consistent with the retail industry, we provide comparable sales using the retail calendar in our quarterly earnings releases.
However, when we discuss our comparable sales below, we are referring to our calendar comparable sales calculated using our
fiscal calendar. As our fiscal calendar differs from the retail calendar, our fiscal calendar comparable sales also differ from the
retail calendar comparable sales provided in our quarterly earnings releases.
35
Calendar comparable sales, as well as the impact of fuel, for fiscal 2018 and 2017, were as follows:
Walmart U.S.
Sam's Club
Total U.S.
Fiscal Years Ended January 31,
2018
2.1%
2.8%
2.2%
With Fuel
2017
1.6%
0.5%
1.4%
2018
0.1%
1.0%
0.2%
Fuel Impact
2017
0.0%
(0.9)%
(0.1)%
Comparable sales in the U.S., including fuel, increased 2.2% and 1.4% in fiscal 2018 and 2017, respectively, when compared to
the previous fiscal year. The fiscal 2018 total U.S. comparable sales were positively impacted by continued traffic
improvement, higher eCommerce sales and the impact of higher fuel sales. eCommerce sales positively impacted comparable
sales approximately 0.7% for both Walmart U.S. and Sam's Club for fiscal 2018. The fiscal 2017 total U.S. comparable sales
were positively impacted by continued traffic improvement and higher eCommerce sales at the Walmart U.S. segment, partially
offset by the negative impact of lower fuel sales primarily due to lower fuel prices at the Sam's Club segment. eCommerce
sales positively impacted comparable sales approximately 0.4% and 0.7% for Walmart U.S. and Sam's Club, respectively, for
fiscal 2017.
In the past, when we were focused on adding new stores and clubs in the U.S., we did so with an understanding that additional
stores and clubs may take sales away from existing units. We reduced the number of new store and club openings in fiscal 2018
and the negative impact on comparable sales as a result of these openings was not significant. We expect this trend to continue
in the future as well. In fiscal 2017, we estimate the negative impact on comparable sales as a result of opening new stores and
clubs was approximately 0.7%. Our estimate was calculated primarily by comparing the sales trends of the impacted stores and
clubs, which are identified based on their proximity to the new stores and clubs, to those of nearby non-impacted stores and
clubs, in each case, as measured after the new stores and clubs are opened.
Operating Discipline
We operate with discipline by managing expenses and optimizing the efficiency of how we work. We measure operating
discipline through expense leverage, which we define as net sales growing at a faster rate than operating expenses.
(Amounts in millions, except unit counts)
Net sales
Percentage change from comparable period
Operating, selling, general and administrative expenses
Percentage change from comparable period
Operating, selling, general and administrative expenses as a percentage of net sales
Fiscal Years Ended January 31,
2018
2017
$
$
495,761
3.0%
106,510
$
$
4.6%
21.5%
481,317
0.6%
101,853
5.0%
21.2%
For fiscal 2018, operating, selling, general and administrative ("operating") expenses as a percentage of net sales increased 32
basis points, when compared to the same period in the previous fiscal year. While our increase in net sales and improving
expense management had a positive impact on our operating expenses as a percentage of net sales, we did not leverage
expenses as a result of approximately $0.6 billion of charges related to Sam's Club closures and discontinued real estate
projects, approximately $400 million related to a lump sum bonus paid to associates, $300 million related to Home Office
severance, a legal accrual of $283 million related to the FCPA matter, a charge of $244 million related to Walmart U.S.
discontinued real estate projects, and the decisions to exit certain international properties and wind down the first party Brazil
eCommerce operations.
Strategic Capital Allocation
We are allocating more capital to remodels, eCommerce, technology and supply chain and less to new store and club openings,
when compared to prior years. This allocation aligns with our initiatives of improving our customer proposition in stores and
clubs and integrating digital and physical shopping. The following table provides additional detail:
(Amounts in millions)
Allocation of Capital Expenditures
New stores and clubs, including expansions and relocations
Remodels
eCommerce, technology, supply chain and other
Total U.S.
Walmart International
Total capital expenditures
Fiscal Years Ended January 31,
2018
2017
$
$
914
$
2,009
4,521
7,444
2,607
2,171
1,589
4,162
7,922
2,697
10,051
$
10,619
36
Total U.S. capital expenditures decreased $478 million for fiscal 2018, when compared to the previous fiscal year. Capital
expenditures related to new stores and clubs, including expansions and relocations, decreased $1.3 billion, partially offset by
increases to capital expenditures for remodels and for eCommerce, technology, supply chain and other. These changes were a
result of our shift in capital allocation strategy to support growth in comparable store and club sales and eCommerce, while
slowing the rate at which we open new stores and clubs.
Returns
As we execute our financial framework, we believe our returns on capital will improve over time. We measure returns on
capital with our return on investment and free cash flow metrics. In addition, we provide returns in the form of share
repurchases and dividends, which are discussed in the Liquidity and Capital Resources section.
Return on Assets and Return on Investment
We include Return on Assets ("ROA"), the most directly comparable measure based on our financial statements presented in
accordance with generally accepted accounting principles in the U.S. ("GAAP"), and Return on Investment ("ROI") as metrics
to assess returns on assets. While ROI is considered a non-GAAP financial measure, management believes ROI is a meaningful
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. ROA
was 5.2% and 7.2% for the fiscal years ended January 31, 2018 and 2017, respectively. The decline in ROA was primarily due
to the loss on extinguishment of debt and the decrease in operating income for the fiscal year ended January 31, 2018. ROI was
14.2% and 15.2% for the fiscal years ended January 31, 2018 and 2017, respectively. The decline in ROI was primarily due to
the decrease in operating income for the fiscal year ended January 31, 2018.
We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent
expense) for the fiscal year or trailing 12 months divided by average invested capital during that period. We consider average
invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average
accumulated amortization, less average accounts payable and average accrued liabilities for that period, plus a rent factor equal
to the rent for the fiscal year or trailing 12 months multiplied by a factor of eight. When we have discontinued operations, we
exclude the impact of the discontinued operations.
Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that
exclude and include amounts that are included and excluded in the most directly comparable financial measure calculated and
presented in accordance with GAAP. For example, we exclude the impact of depreciation and amortization from our reported
operating income in calculating the numerator of our calculation of ROI. In addition, we include a factor of eight for rent
expense that estimates the hypothetical capitalization of our operating leases. As mentioned above, we consider ROA to be the
financial measure computed in accordance with GAAP that is the most directly comparable financial measure to our calculation
of ROI. ROI differs from ROA (which is consolidated net income for the period divided by average total assets for the period)
because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts total assets for the
impact of accumulated depreciation and amortization, accounts payable and accrued liabilities; and incorporates a factor of rent
to arrive at total invested capital. Because of the adjustments mentioned above, we believe ROI more accurately measures how
we are deploying our key assets and is more meaningful to investors than ROA.
Although ROI is a standard financial metric, numerous methods exist for calculating a company's ROI. As a result, the method
used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI.
37
The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP
financial measure, is as follows:
(Amounts in millions)
CALCULATION OF RETURN ON ASSETS
Numerator
Consolidated net income
Denominator
Average total assets(1)
Return on assets (ROA)
CALCULATION OF RETURN ON INVESTMENT
Numerator
Operating income
+ Interest income
+ Depreciation and amortization
+ Rent
= Adjusted operating income
Denominator
Average total assets(1)
+ Average accumulated depreciation and amortization(1)
- Average accounts payable(1)
- Average accrued liabilities(1)
+ Rent x 8
= Average invested capital
Return on investment (ROI)
Certain Balance Sheet Data
Total assets
Accumulated depreciation and amortization
Accounts payable
Accrued liabilities
Fiscal Years Ended January 31,
2018
2017
$
$
$
$
$
$
10,523
201,674
5.2%
20,437
152
10,529
2,932
34,050
201,674
79,995
43,763
21,388
23,456
239,974
14.2%
2018
As of January 31,
2017
$
$
204,522
83,039
46,092
22,122
198,825
76,951
41,433
20,654
$
$
$
$
$
$
$
14,293
199,203
7.2%
22,764
100
10,080
2,612
35,556
199,203
74,245
39,960
20,131
20,896
234,253
15.2%
2016
199,581
71,538
38,487
19,607
(1) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and
dividing by 2.
Free Cash Flow
Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which
measures our ability to generate additional cash from our business operations, is an important financial measure for use in
evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute
for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our
liquidity. See Liquidity and Capital Resources for discussions of GAAP metrics including net cash provided by operating
activities, net cash used in investing activities and net cash used in financing activities.
We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment
made in that period. We had net cash provided by operating activities of $28.3 billion, $31.7 billion and $27.6 billion for fiscal
2018, 2017 and 2016, respectively. We generated free cash flow of $18.3 billion, $21.1 billion and $16.1 billion for fiscal 2018,
2017 and 2016, respectively. The decreases in net cash provided by operating activities and free cash flow in fiscal 2018 from
fiscal 2017 were primarily due to the timing of tax and other payments, as well as lapping the previous year's improvements in
working capital management and the benefit from the application of tax regulations adopted in fiscal 2017. The increase in net
cash provided by operating activities and free cash flow in fiscal 2017 from fiscal 2016 was primarily due to improved working
capital management. Additionally, we benefited from the application of new tax regulations related to the accelerated deduction
of remodels and related expenses.
Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary
expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual
obligations or payments made 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.
38
Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow.
As a result, the method used by Walmart's management to calculate our free cash flow may differ from the methods used by
other companies to calculate their free cash flow.
The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by
operating activities, which we 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:
(Amounts in millions)
Net cash provided by operating activities
Payments for property and equipment
Free cash flow
Net cash used in investing activities(1)
Net cash used in financing activities
Fiscal Years Ended January 31,
2018
2017
2016
$
$
$
28,337
(10,051)
18,286
(9,060)
(19,875)
$
$
$
31,673
(10,619)
21,054
(13,987)
(19,072)
$
$
$
27,552
(11,477)
16,075
(10,675)
(16,285)
(1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.
Results of Operations
Consolidated Results of Operations
(Amounts in millions, except unit counts)
Total revenues
Percentage change from comparable period
Net sales
Percentage change from comparable period
Total U.S. calendar comparable sales increase
Gross profit rate
Operating income
Operating income as a percentage of net sales
Consolidated net income
Unit counts at period end
Retail square feet at period end
Fiscal Years Ended January 31,
2017
2018
$
$
$
$
$
$
$
$
500,343
3.0%
495,761
3.0%
2.2%
24.7%
20,437
4.1%
10,523
11,718
1,158
$
$
$
$
485,873
0.8%
481,317
0.6%
1.4%
24.9%
22,764
4.7%
14,293
11,695
1,164
2016
482,130
(0.7)%
478,614
(0.7)%
0.3 %
24.6 %
24,105
5.0 %
15,080
11,528
1,149
Our total revenues, which are mostly comprised of net sales, but also include membership and other income, increased $14.5
billion or 3.0% and $3.7 billion or 0.8% for fiscal 2018 and 2017, respectively, when compared to the previous fiscal year. Net
sales increased $14.4 billion or 3.0% and $2.7 billion or 0.6% for fiscal 2018 and 2017, respectively, when compared to the
previous fiscal year. For fiscal 2018, net sales were positively impacted by overall positive comparable sales, the impact from
new store openings and sales generated from eCommerce acquisitions. Additionally, for fiscal 2018, the increase in net sales
was partially offset by a reduction in net sales of $1.9 billion due to divesting our Yihaodian and Suburbia businesses and the
$0.5 billion of negative impact from fluctuations in currency exchange rates. For fiscal 2017, net sales were positively
impacted by overall positive comparable sales and the 1.3% year-over-year growth in consolidated retail square feet. The
positive effect of such factors on our consolidated net sales for fiscal 2017 was partially offset by a negative impact of $11.0
billion or 2.3% as a result of fluctuations in currency exchange rates and a $0.4 billion decrease in fuel sales from lower fuel
prices at the Sam's Club segment.
Our gross profit rate decreased 26 basis points for fiscal 2018 and increased 36 basis points for fiscal 2017, when compared to
the previous fiscal year. For fiscal 2018, the decrease was primarily due to strategic price investments and the mix impact from
eCommerce. For fiscal 2017, the increase in gross profit rate was primarily due to improved margin in food and consumables,
including the impact of savings in procuring merchandise and lower transportation expense from lower fuel costs in the
Walmart U.S. segment. Additionally, improvement in certain markets' inventory management and cost analytics programs in
the Walmart International segment also positively impacted our gross profit rate for fiscal 2017.
Operating expenses as a percentage of net sales increased 32 and 88 basis points for fiscal 2018 and 2017, respectively, when
compared to the previous fiscal year. For fiscal 2018, the increase in operating expenses as a percentage of net sales was
primarily due to approximately $0.6 billion in charges related to Sam's Club closures and discontinued real estate projects,
approximately $400 million related to a lump sum bonus paid to associates, $300 million related to Home Office severance, a
legal accrual of $283 million related to the FCPA matter in the third quarter, a charge of $244 million related to discontinued
real estate projects in Walmart U.S., and the decisions to exit certain international properties and wind down the first party
Brazil eCommerce operations. For fiscal 2017, the increase in operating expenses as a percentage of net sales was primarily
due to an increase in wage expense at the Walmart U.S. and Sam's Club segments resulting from the continued investment in
associate wage structure, a $370 million charge related to discontinued domestic real estate projects and severance, and our
39
continued investments in eCommerce and technology. The increase in operating expenses as a percentage of net sales for fiscal
2017 was partially offset by the impact of store closures in the fourth quarter of fiscal 2016.
Membership and other income was relatively flat for fiscal 2018 and increased $1.0 billion for fiscal 2017, when compared to
the same period in the previous fiscal year. While fiscal 2018 included a $387 million gain from the sale of Suburbia, a $47
million gain from a land sale, higher recycling income from our sustainability efforts and higher membership income from
increased Plus Member penetration at Sam's Club, these gains were less than gains recognized in fiscal 2017. Fiscal 2017
included a $535 million gain from the sale of our Yihaodian business and a $194 million gain from the sale of shopping malls in
Chile.
For fiscal 2018, loss on extinguishment of debt was $3.1 billion, due to the early extinguishment of long-term debt which
allowed us to retire higher rate debt to reduce interest expense in future periods.
Our effective income tax rate was 30.4% for fiscal 2018 and 30.3% for both fiscal 2017 and 2016. Although relatively
consistent year-over-year, our effective income tax rate may fluctuate from period to period as a result of factors including
changes in our assessment of certain tax contingencies, valuation allowances, changes in tax laws, outcomes of administrative
audits, the impact of discrete items and the mix of earnings among our U.S. operations and international operations. The
reconciliation from the U.S. statutory rate to the effective income tax rates for fiscal 2018, 2017 and 2016 is presented in Note 9
in the "Notes to Consolidated Financial Statements" and describes the impact of the enactment of the Tax Cuts and Jobs Act of
2017 (the "Tax Act") to the fiscal 2018 effective income tax rate.
As a result of the factors discussed above, we reported $10.5 billion and $14.3 billion of consolidated net income for fiscal
2018 and 2017, respectively, which represents a decrease of $3.8 billion and $0.8 billion for fiscal 2018 and 2017, respectively,
when compared to the previous fiscal year. Diluted net income per common share attributable to Walmart ("EPS") was $3.28
and $4.38 for fiscal 2018 and 2017, respectively.
Walmart U.S. Segment
(Amounts in millions, except unit counts)
Net sales
Percentage change from comparable period
Calendar comparable sales increase
Operating income
Operating income as a percentage of net sales
Unit counts at period end
Retail square feet at period end
$
$
Fiscal Years Ended January 31,
2017
2016
2018
$
$
318,477
3.5%
2.1%
17,869
5.6%
4,761
705
$
$
307,833
3.2%
1.6%
17,745
5.8%
4,672
699
298,378
3.6%
1.0%
19,087
6.4%
4,574
690
Net sales for the Walmart U.S. segment increased $10.6 billion or 3.5% and $9.5 billion or 3.2% for fiscal 2018 and 2017,
respectively, when compared to the previous fiscal year. The increases in net sales were primarily due to increases in
comparable store sales of 2.1% and 1.6% for fiscal 2018 and 2017, respectively, and year-over-year growth in retail square feet
of 0.7% and 1.4% for fiscal 2018 and 2017, respectively. Additionally, for fiscal 2018, sales generated from eCommerce
acquisitions further contributed to the year-over-year increase.
Gross profit rate decreased 24 basis points for fiscal 2018 and increased 24 basis points for fiscal 2017, when compared to the
previous fiscal year. For fiscal 2018, the decrease was primarily due to strategic price investments and the mix impact from
eCommerce. Partially offsetting the negative factors for fiscal 2018 was the positive impact of savings from procuring
merchandise. For fiscal 2017, the increase in gross profit rate was primarily due to improved margin in food and consumables,
including the impact of savings in procuring merchandise and lower transportation expense from lower fuel costs.
Operating expenses as a percentage of segment net sales was relatively flat for fiscal 2018 and increased 101 basis points for
fiscal 2017, when compared to the previous fiscal year. Fiscal 2018 and fiscal 2017 included charges related to discontinued
real estate projects of $244 million and $249 million, respectively. For fiscal 2017, the increase was primarily driven by an
increase in wage expense due to the investment in the associate wage structure; the charge related to discontinued real estate
projects; and investments in digital retail and technology. The increase in operating expenses as a percentage of segment net
sales for fiscal 2017 was partially offset by the impact of store closures in fiscal 2016.
As a result of the factors discussed above, segment operating income increased $124 million for fiscal 2018 and decreased $1.3
billion for fiscal 2017, respectively.
40
Walmart International Segment
(Amounts in millions, except unit counts)
Net sales
Percentage change from comparable period
Operating income
Operating income as a percentage of net sales
Unit counts at period end
Retail square feet at period end
$
$
2018
Fiscal Years Ended January 31,
2017
116,119
$
$
118,068
2016
123,408
1.7%
(5.9)%
(9.4)%
5,352
$
5,758
$
5,346
4.5%
6,360
373
5.0 %
6,363
377
4.3 %
6,299
372
Net sales for the Walmart International segment increased $1.9 billion or 1.7% for fiscal 2018 and decreased $7.3 billion or
5.9% for fiscal 2017, when compared to the previous fiscal year. For fiscal 2018, the increase in net sales was due to positive
comparable sales in the majority of our markets and the impact of new stores, partially offset by a reduction in net sales of $1.9
billion due to divesting our Yihaodian and Suburbia businesses and a $0.5 billion negative impact from fluctuations in currency
exchange rates. For fiscal 2017, the decrease in net sales was due to a $11.0 billion negative impact from fluctuations in
currency exchange rates. Additionally, net sales for fiscal 2017 were impacted by positive comparable sales in all of our
markets, except in the United Kingdom, and year-over-year growth in retail square feet of 1.2%.
Gross profit rate decreased 28 basis points for fiscal 2018 and increased 46 basis points for fiscal 2017, when compared to the
previous fiscal year. For fiscal 2018, the decrease in the gross profit rate was primarily due to strategic price investments in
certain markets. For fiscal 2017, the increase in gross profit rate was primarily due to improvement in certain markets'
inventory management and cost analytics programs.
Membership and other income decreased 14.0% for fiscal 2018 and increased 69.4% for fiscal 2017, when compared to the
previous fiscal year. While fiscal 2018 included a $387 million gain from the sale of Suburbia and a $47 million gain from a
land sale, these gains were less than gains recognized in fiscal 2017. Fiscal 2017 included a $535 million gain from the sale of
our Yihaodian business and a $194 million gain from the sale of shopping malls in Chile.
Operating expenses as a percentage of segment net sales decreased 11 basis points for fiscal 2018 and increased 58 basis points
for fiscal 2017, when compared to the previous fiscal year. The decrease in operating expenses as a percentage of segment net
sales for fiscal 2018 was primarily due to an increase in net sales partially offset by restructuring and impairment charges in
certain markets of approximately $0.5 billion, including charges from decisions to exit certain properties and to wind down the
first party Brazil eCommerce operations. The increase in operating expenses as a percentage of segment net sales for fiscal
2017 was primarily due to declining sales on relatively flat fixed costs in the United Kingdom, as well as adjustments to useful
lives of certain assets and impairment charges in certain markets.
Segment operating income was negatively impacted by fluctuations in currency exchange rates of $68 million and $642 million
for fiscal 2018 and 2017, respectively. As a result of the factors discussed above, segment operating income decreased $406
million for fiscal 2018 and increased $412 million for fiscal 2017, respectively.
Sam's Club Segment
We believe the information in the below table under the caption "Excluding Fuel" is useful to investors because it permits
investors to understand the effect of the Sam's Club segment's fuel sales on its results of operations, which are impacted by the
volatility of fuel prices. Volatility in fuel prices may continue to impact the operating results of the Sam's Club segment in the
future.
(Amounts in millions, except unit counts)
Including Fuel
Net sales
Percentage change from comparable period
Calendar comparable sales increase (decrease)
Operating income
Operating income as a percentage of net sales
Unit counts at period end
Retail square feet at period end
Excluding Fuel
Net sales
Percentage change from comparable period
Operating income
Operating income as a percentage of net sales
Fiscal Years Ended January 31,
2018
2017
2016
$
$
$
$
59,216
3.2%
2.8%
982
1.7%
597
80
54,456
2.2%
864
1.6%
$
$
$
$
57,365
0.9%
0.5%
1,671
2.9%
660
88
53,289
1.8%
1,619
3.0%
$
$
$
$
56,828
(2.1)%
(3.2)%
1,820
3.2 %
655
88
52,330
1.4 %
1,746
3.3 %
41
Net sales for the Sam's Club segment increased $1.9 billion or 3.2% and $0.5 billion or 0.9% for fiscal 2018 and 2017,
respectively, when compared to the previous fiscal year. For fiscal 2018, the increase in net sales was primarily due to an
increase in comparable sales which were benefited by an increase of $0.7 billion in fuel sales from higher fuel prices in fiscal
2018. For fiscal 2017, the increase in net sales was primarily due to an increase in comparable sales without fuel driven by
higher eCommerce sales, and a year-over-year increase in retail square feet of 0.9%, partially offset by a decrease of $0.4
billion in fuel sales primarily from lower fuel prices in fiscal 2017. In the future, net sales will be negatively impacted by our
decision to remove tobacco in certain clubs.
Gross profit rate decreased 44 basis points for fiscal 2018 and increased 39 basis points for fiscal 2017, when compared to the
previous fiscal year. For fiscal 2018, the decrease in gross profit rate was primarily due to the impact of markdowns to
liquidate inventory related to the club closures, a reclassification of certain supply expenses from operating expenses to cost of
goods sold, higher inventory shrink, increased shipping costs at samsclub.com and the investment in cash rewards. For fiscal
2017, the increase in gross profit rate was primarily due to margin rate improvement in home and apparel, health and wellness,
and grocery, partially offset by changes in merchandise mix and the growth of the Cash Rewards program.
Membership and other income increased 2.3% for fiscal 2018 and decreased 6.5% for fiscal 2017, when compared to the
previous fiscal year. For fiscal 2018, the increase in membership and other income was primarily due to higher recycling
income from our sustainability efforts and an increase of 1.3% in membership income resulting from increased Plus Member
penetration. For fiscal 2017, the decrease was primarily due to a reduction in other income partially offset by an increase of
2.3% in membership income as a result of increased Plus Member renewals.
Operating expenses as a percentage of segment net sales increased 80 and 49 basis points for fiscal 2018 and 2017, respectively,
when compared to the previous fiscal year. For fiscal 2018, the increase in operating expenses as a percentage of segment net
sales was primarily due to a charge of approximately $0.6 billion related to club closures and discontinued real estate projects.
For fiscal 2017, the increase in operating expenses as a percentage of segment net sales was primarily due to an increase in
wage, benefit and incentive expenses from the investment in the associate wage structure, as well as our investments in
eCommerce and technology and an increase in advertising expense.
As a result of the factors discussed above, segment operating income decreased $689 million and $149 million for fiscal 2018
and 2017, respectively.
Liquidity and Capital Resources
Liquidity
The strength and stability of our operations have historically supplied us with a significant source of liquidity. Our cash flows
provided by operating activities, supplemented with our long-term debt and short-term borrowings, have been sufficient to fund
our operations while allowing us to invest in activities that support the long-term growth of our operations. Generally, some or
all of the remaining available cash flow has been used to fund the dividends on our common stock and share repurchases. We
believe our sources of liquidity will continue to be adequate to fund operations, finance our global investment and expansion
activities, pay dividends and fund our share repurchases for the foreseeable future.
Net Cash Provided by Operating Activities
(Amounts in millions)
Net cash provided by operating activities
Fiscal Years Ended January 31,
2018
2017
2016
$
28,337
$
31,673
$
27,552
Net cash provided by operating activities was $28.3 billion, $31.7 billion and $27.6 billion for fiscal 2018, 2017 and 2016,
respectively. The decrease in net cash provided by operating activities for fiscal 2018, when compared to the previous fiscal
year, was due to the timing of tax and other payments, as well as lapping the previous year's improvements in working capital
management and the benefit from the application of tax regulations adopted in fiscal 2017. The increase in net cash provided
by operating activities for fiscal 2017, when compared to the previous fiscal year, was primarily due to improved working
capital management. Additionally, we benefited from the application of new tax regulations related to the accelerated deduction
of remodels and related expenses.
Cash Equivalents and Working Capital
Cash and cash equivalents were $6.8 billion and $6.9 billion at January 31, 2018 and 2017, respectively. Our working capital
deficit was $18.9 billion and $9.2 billion at January 31, 2018 and 2017, respectively. The increase in our working capital deficit
reflects an increase in short-term borrowings as part of our long-term debt extinguishment activity as well as improved
procurement and inventory management. We generally operate with a working capital deficit due to our efficient use of cash in
funding operations, consistent access to the capital markets and returns provided to our shareholders in the form of payments of
cash dividends and share repurchases.
42
We use intercompany financing arrangements in an effort to ensure cash can be made available in the country in which it is
needed with the minimum cost possible. We do not believe it will be necessary to repatriate earnings held outside of the U.S.
and anticipate our domestic liquidity needs will be met through cash flows provided by domestic operating activities,
supplemented with long-term debt and short-term borrowings. Accordingly, we intend, with only certain exceptions, to
continue to indefinitely reinvest our earnings held outside of the U.S. in our foreign operations. As part of U.S. tax reform
enacted on December 22, 2017, we are currently assessing the impact of the new legislation, which can in turn, impact our
assertion regarding any potential future repatriation. If our intentions with respect to reinvestment were to change, most of the
amounts held within our foreign operations could be repatriated to the U.S., although any repatriation under new U.S. tax laws
could be subject to incremental withholding taxes. We do not expect current local laws, other existing limitations or potential
taxes on anticipated future repatriations of cash amounts held outside of the U.S. to have a material effect on our overall
liquidity, financial condition or results of operations.
As of January 31, 2018 and 2017, cash and cash equivalents of $1.4 billion and $1.0 billion, respectively, may not be freely
transferable to the U.S. due to local laws or other restrictions.
Net Cash Used in Investing Activities
(Amounts in millions)
Net cash used in investing activities
Fiscal Years Ended January 31,
2018
2017
2016
$
(9,060)
$
(13,987)
$
(10,675)
Net cash used in investing activities was $9.1 billion, $14.0 billion and $10.7 billion for fiscal 2018, 2017 and 2016,
respectively, and generally consisted of payments to remodel existing stores and clubs, expand our eCommerce capabilities,
invest in other technologies and add stores and clubs. Net cash used in investing activities decreased $4.9 billion for fiscal
2018, when compared to the previous fiscal year. Fiscal 2018 included cash received of $1.0 billion from the sale of Suburbia
in Mexico, while fiscal 2017 included our acquisition of Jet.com, Inc. ("jet.com") for approximately $2.4 billion and our
purchase of $1.9 billion of available for sale securities in JD.com ("JD"). Net cash used in investing activities increased $3.3
billion for fiscal 2017, when compared to the previous fiscal year, primarily due to our acquisition of jet.com and investment in
JD, partially offset by $0.7 billion in cash received from the sales of shopping malls in Chile. Refer to Note 13 to our
Consolidated Financial Statements for further details on our acquisition of jet.com and investment in JD. Additionally, refer to
the "Strategic Capital Allocation" section in our Company Performance Metrics for capital expenditure detail for fiscal 2018
and 2017.
We continued to focus on eCommerce, including a seamless omni-channel shopping experience, in each of our segments during
fiscal 2018. Our fiscal 2018 accomplishments in this area include growing "Online Grocery" to over 1,100 pickup locations in
the U.S., new dedicated eCommerce fulfillment centers, two-day free shipping with no membership fee at Walmart U.S. and
one-hour delivery from stores in China.
Growth Activities
For the fiscal year ending January 31, 2019 ("fiscal 2019"), we project capital expenditures will be approximately $11.0 billion
and involve:
•
•
•
in Walmart U.S., continuing to prioritize store remodels and digital experiences, with approximately 1,000 additional
online grocery locations;
in Walmart International, investing more in fulfillment capabilities in addition to new stores; and,
eCommerce investments that include enhanced supply chain capabilities.
Globally, in fiscal 2019, we expect to add approximately 280 new, expanded or relocated stores and clubs, with approximately
255 of those in Walmart International, focusing on key markets such as Mexico and China.
Net Cash Used in Financing Activities
(Amounts in millions)
Net cash used in financing activities
Fiscal Years Ended January 31,
2018
2017
2016
$
(19,875)
$
(19,072)
$
(16,285)
Net cash flows used in financing activities generally consist of transactions related to our short-term and long-term debt,
financing obligations, dividends paid and the repurchase of Company stock. Transactions with noncontrolling interests are also
classified as cash flows from financing activities. Net cash used in financing activities increased $0.8 billion and $2.8 billion
for fiscal 2018 and 2017, respectively, when compared to the same period in the previous fiscal year. Net cash used in
financing activities for fiscal 2018 increased due to premiums paid for early extinguishment of debt. Net cash used in financing
43
activities for fiscal 2017 increased primarily due to repurchases of Company stock partially offset by lower repayments of long-
term debt. Further discussion of financing activities is provided by major category below.
Short-term Borrowings
Net cash flows provided by short-term borrowings increased $4.1 billion in fiscal 2018 and decreased $1.7 billion in fiscal
2017, when compared to the balance at the end of the previous fiscal year. We generally utilize the liquidity provided by short-
term borrowings to provide funding for our operations, dividend payments, share repurchases, capital expenditures and other
cash requirements. For fiscal 2018, the additional cash provided by short-term borrowings was primarily due to the timing of
our January 2018 debt extinguishment. For fiscal 2017, the decrease in net cash flows provided by short-term borrowings was
due to improved cash flows from operations driven by working capital improvements and changes to tax regulations.
The following table includes additional information related to the Company's short-term borrowings for fiscal 2018, 2017 and
2016:
(Amounts in millions)
Maximum amount outstanding at any month-end
Average daily short-term borrowings
Annual weighted-average interest rate
Fiscal Years Ended January 31,
2018
2017
2016
$
11,386
$
8,131
1.3%
$
9,493
5,691
1.8%
10,551
4,536
1.5%
In addition to our short-term borrowings, we also have various undrawn committed lines of credit in the U.S. that provide $12.5
billion and various undrawn committed lines of credit outside of the U.S. that provide approximately $4.0 billion of additional
liquidity, if needed.
Long-term Debt
The following table provides the changes in our long-term debt for fiscal 2018:
(Amounts in millions)
Balances as of February 1, 2017
Proceeds from issuance of long-term debt
Payments of long-term debt
Reclassifications of long-term debt
Other
Balances as of January 31, 2018
Long-term debt due
within one year
Long-term debt
Total
$
$
2,256
—
(1,789)
3,224
47
3,738
$
$
36,015
7,476
(11,272)
(3,224)
1,050
30,045
$
$
38,271
7,476
(13,061)
—
1,097
33,783
Our total long-term debt decreased $4.5 billion for fiscal 2018, primarily due to the extinguishment and maturities of certain
long-term debt, partially offset by the issuance of long-term debt. The extinguishment of certain long-term debt allowed us to
retire higher rate debt to reduce interest expense in future periods.
Dividends
Our total dividend payments were $6.1 billion, $6.2 billion and $6.3 billion for fiscal 2018, 2017 and 2016, respectively. On
February 20, 2018, the Board of Directors approved the fiscal 2019 annual dividend of $2.08 per share, an increase over the
fiscal 2018 annual dividend of $2.04 per share. For fiscal 2019, the annual dividend will be paid in four quarterly installments
of $0.52 per share, according to the following record and payable dates:
Record Date
March 9, 2018
May 11, 2018
August 10, 2018
December 7, 2018
Company Share Repurchase Program
Payable Date
April 2, 2018
June 4, 2018
September 4, 2018
January 2, 2019
From time to time, we repurchase shares of our common stock under share repurchase programs authorized by the Company's
Board of Directors. All repurchases made during the fiscal year prior to November 20, 2017 were made under the plan in effect
at the beginning of fiscal 2018. On October 9, 2017, the Board of Directors approved a new $20.0 billion share repurchase
program which, beginning on November 20, 2017, replaced the previous share repurchase program. As of January 31, 2018,
authorization for $18.8 billion of share repurchases remained under the current share repurchase program. Any repurchased
shares are constructively retired and returned to an unissued status.
We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases,
including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the
market price of our common stock. We anticipate that a significant majority of the ongoing share repurchase program will be
44
funded through the Company's free cash flows. The following table provides, on a settlement date basis, the number of shares
repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2018, 2017 and 2016:
(Amounts in millions, except per share data)
Total number of shares repurchased
Average price paid per share
Total amount paid for share repurchases
Fiscal Years Ended January 31,
2018
2017
2016
$
$
104.9
79.11
8,296
$
$
119.9
69.18
8,298
$
$
62.4
65.90
4,112
Share repurchases were flat for fiscal 2018 and increased $4.2 billion for fiscal 2017, respectively, when compared to the
previous fiscal year.
Significant Transactions with Noncontrolling Interests
In fiscal 2016, as described in Note 13 to our Consolidated Financial Statements, we completed the purchase of all of the
remaining noncontrolling interest in Yihaodian, our eCommerce operations in China, for approximately $760 million, using
existing cash to complete the transaction. The Company subsequently sold Yihaodian to JD in fiscal 2017.
Capital Resources
We believe cash flows from operations, our current cash position and access to capital markets will continue to be sufficient to
meet our anticipated operating cash needs, which include funding seasonal buildups in merchandise inventories and funding our
capital expenditures, dividend payments and share repurchases.
We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance
our debt as it becomes due at favorable rates in capital markets. At January 31, 2018, the ratings assigned to our commercial
paper and rated series of our outstanding long-term debt were as follows:
Rating agency
Standard & Poor's
Moody's Investors Service
Fitch Ratings
Commercial paper
A-1+
P-1
F1+
Long-term debt
AA
Aa2
AA
Credit rating agencies review their ratings periodically and, therefore, the credit ratings assigned to us by each agency may be
subject to revision at any time. Accordingly, we are not able to predict whether our current credit ratings will remain consistent
over time. Factors that could affect our credit ratings include changes in our operating performance, the general economic
environment, conditions in the retail industry, our financial position, including our total debt and capitalization, and changes in
our business strategy. Any downgrade of our credit ratings by a credit rating agency could increase our future borrowing costs
or impair our ability to access capital and credit markets on terms commercially acceptable to us. In addition, any downgrade
of our current short-term credit ratings could impair our ability to access the commercial paper markets with the same flexibility
that we have experienced historically, potentially requiring us to rely more heavily on more expensive types of debt financing.
The credit rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities. Each
rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated
independently of any other rating. Moreover, each credit rating is specific to the security to which it applies.
45
Contractual Obligations
The following table sets forth certain information concerning our obligations to make contractual future payments, such as debt
and lease agreements, and certain contingent commitments as of January 31, 2018:
(Amounts in millions)
Recorded contractual obligations:
Long-term debt(1)
Short-term borrowings
Capital lease and financing obligations(2)
Unrecorded contractual obligations:
Non-cancelable operating leases(3)
Estimated interest on long-term debt
Trade and stand-by letters of credit
Purchase obligations
Total contractual obligations
Payments Due During Fiscal Years Ending January 31,
Total
2019
2020-2021
2022-2023
Thereafter
$
33,783
$
5,257
9,930
15,366
17,601
2,626
13,278
3,733
5,257
1,039
1,933
1,291
2,626
6,121
$
5,250
$
3,541
$
21,259
—
1,929
3,250
2,319
—
5,094
—
1,539
2,539
2,121
—
1,138
—
5,423
7,644
11,870
—
925
$
97,841
$
22,000
$
17,842
$
10,878
$
47,121
(1)
(2)
"Long-term debt" includes the fair value of our derivatives designated as fair value hedges.
"Capital lease and financing obligations" includes executory costs and imputed interest related to capital lease and financing obligations that are not yet
recorded. Refer to Note 11 to our Consolidated Financial Statements for more information.
(3) Represents minimum contractual obligation for non-cancelable leases with initial or remaining terms greater than 12 months as of January 31, 2018.
Additionally, the Company has $12.5 billion in undrawn committed lines of credit in the U.S. and approximately $4.0 billion of
undrawn committed lines of credit outside of the U.S. which, if drawn upon, would be included in the current liabilities section
of the Company's Consolidated Balance Sheets.
Estimated interest payments are based on our principal amounts and expected maturities of all debt outstanding at January 31,
2018, and assumes interest rates remain at current levels for our variable rate debt.
Purchase obligations include legally binding contracts, such as firm commitments for inventory and utility purchases, as well as
commitments to make capital expenditures, software acquisition and license commitments and legally binding service
contracts. For the purposes of this table, contractual obligations for the purchase of goods or services are defined as agreements
that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be
purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Contracts that specify
the Company will purchase all or a portion of its requirements of a specific product or service from a supplier, but do not
include a fixed or minimum quantity, are excluded from the table above. Additionally, purchase orders for inventory are not
included in the table above as purchase orders represent authorizations to purchase rather than binding agreements. Our
purchase orders are based on our current inventory needs and are fulfilled by our suppliers within short time periods. We also
enter into contracts for outsourced services; however, the obligations under these contracts are not significant and the contracts
generally contain clauses allowing for cancellation without significant penalty.
The expected timing for payment discussed above is estimated based on current information. Timing of payments and actual
amounts paid may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for
some obligations.
In addition to the amounts shown in the table above, $1.0 billion of unrecognized tax benefits are considered uncertain 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 to our Consolidated Financial Statements for additional discussion of unrecognized tax benefits.
Off Balance Sheet Arrangements
As of January 31, 2018, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or
future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital
resources.
Summary of Critical Accounting Estimates
Management strives to report our financial results in a clear and understandable manner, although in some cases accounting and
disclosure rules are complex and require us to use technical terminology. In preparing the Company's Consolidated Financial
Statements, we follow accounting principles generally accepted in the U.S. These principles require us to make certain
estimates and apply judgments that affect our financial position and results of operations as reflected in our financial
statements. These judgments and estimates are based on past events and expectations of future outcomes. Actual results may
differ from our estimates.
46
Management continually reviews our accounting policies, how they are applied and how they are reported and disclosed in our
financial statements. Following is a summary of our critical accounting estimates and how they are applied in preparation of
the financial statements.
Inventories
We value inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using
the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Walmart International
segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO") method. The
retail inventory method of accounting results in inventory being valued at the lower of cost or market, since permanent
markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's Club segment
is valued using the weighted-average cost LIFO method.
Under the retail method of accounting, inventory is valued at the lower of cost or market, which is determined by applying a
cost-to-retail ratio to each merchandise grouping's retail value. The FIFO cost-to-retail ratio is generally based on the fiscal
year purchase activity. The cost-to-retail ratio for measuring any LIFO provision is based on the initial 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. Judgments made include recording markdowns used to sell inventory and shrinkage. When
management determines the ability to sell inventory has diminished, markdowns for clearance activity and the related cost
impact are recorded. Factors considered in the determination of markdowns include current and anticipated demand, customer
preferences and age of merchandise, as well as seasonal and fashion trends. Changes in weather and customer preferences
could also cause changes in the amount and timing of markdowns from year to year.
When necessary, we record a LIFO provision for the estimated annual effect of inflation, and these estimates are adjusted to
actual results determined at year-end. Our LIFO provision is calculated based on inventory levels, markup rates and internally
generated retail price indices. As a measure of sensitivity, a 1% increase to our retail price indices would not have resulted in a
decrease to the carrying value of inventory. At January 31, 2018 and 2017, our inventories valued at LIFO approximated those
inventories as if they were valued at FIFO.
We provide for estimated inventory losses, or shrinkage, between physical inventory counts on the basis of a historical
percentage of sales. Following annual inventory counts, the provision is adjusted to reflect updated historical results.
Historically, our estimated inventory losses have been materially accurate when compared to annual inventory counts and we
expect that trend to continue.
Impairment of Assets
We evaluate long-lived assets, other than goodwill and assets with indefinite lives, for indicators of impairment whenever
events or changes in circumstances indicate their carrying amounts may not be recoverable. Management's judgments
regarding the existence of impairment indicators are based on market conditions and financial performance. The evaluation of
long-lived assets is performed at the lowest level of identifiable cash flows, which is generally at the individual store level. The
variability of these factors depends on a number of conditions, including uncertainty about future events and changes in
demographics. Thus, our accounting estimates may change from period to period. These factors could cause management to
conclude that indicators of impairment exist and require impairment tests be performed, which could result in management
determining the value of long-lived assets is impaired, resulting in a write-down of the related long-lived assets. Although
impairment charges for fiscal 2018 were $1.4 billion, these charges primarily related to restructuring activities described in
Note 14, as well as discontinued real estate projects in the U.S. and decisions to exit certain international properties.
Impairment charges not related to restructuring activities or decisions to exit properties for fiscal 2018 were not material and
would not change materially with a 10% decrease in the undiscounted cash flows for the stores with indicators of impairment.
Additionally, total impairment charges for fiscal 2017 were not material.
Goodwill and other indefinite-lived acquired intangible assets are not amortized, but are evaluated for impairment annually or
whenever events or changes in circumstances indicate that the value of a certain asset may be impaired. Generally, this
evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If we
determine, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely
than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount
cannot be assured, then a quantitative impairment test would be performed. The quantitative test for impairment requires
management to make judgments relating to future cash flows, growth rates and economic and market conditions. These
evaluations are based on determining the fair value of a reporting unit or asset using a valuation method such as discounted cash
flow or a relative, market-based approach. Historically, our reporting units and other indefinite-lived acquired intangible assets
have generated sufficient returns to recover the cost of goodwill and other indefinite-lived acquired intangible assets. Because
of the nature of the factors used in these tests, if different conditions occur in future periods, future operating results could be
materially impacted. For approximately $300 million of certain acquired indefinite-lived intangible assets, the fair value
approximated the carrying value; any deterioration in the fair value may result in an impairment charge.
47
Income Taxes
Income taxes have a significant effect on our net earnings. We are subject to income taxes in the U.S. and numerous foreign
jurisdictions. Accordingly, the determination of our provision for income taxes requires significant judgment, the use of
estimates and the interpretation and application of complex tax laws. Our effective income tax rate is affected by many factors,
including changes in our assessment of certain tax contingencies, increases and decreases in valuation allowances, changes in
tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings among our U.S. and
international operations where the statutory rates are generally lower than the U.S. statutory rate, and may fluctuate as a result.
Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions. The
benefits of uncertain tax positions are recorded in our financial statements only after determining a more likely than not
probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and
circumstances change, we reassess these probabilities and record any changes in the financial statements as appropriate. We
account for uncertain tax positions by determining the minimum recognition threshold that a tax position is required to meet
before being recognized in the financial statements. This determination requires the use of significant judgment in evaluating
our tax positions and assessing the timing and amounts of deductible and taxable items.
Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets
arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net
operating loss and tax credit carryforwards. Deferred tax assets are evaluated for future realization and reduced by a valuation
allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing
whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings,
expectations of future taxable income, carryforward periods and other relevant quantitative and qualitative factors. The
recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all
sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies.
This evaluation relies heavily on estimates.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted and contains significant changes to U.S.
income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35 percent to 21 percent and creates
new taxes on foreign-sourced earnings and related-party payments. In addition, the Company was subject to a one-time
transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax.
During the fourth quarter of fiscal 2018, the Company recorded a net tax benefit of $0.2 billion related to the enactment of the
Tax Act. The benefit primarily related to the remeasurement of the Company's deferred tax assets and liabilities considering the
Tax Act's newly enacted tax rates and is net of the Tax Act's one-time transition tax on previously unremitted earnings of non-
U.S. subsidiaries. As discussed in Note 9 to our Consolidated Financial Statements, as the Company collects and prepares
necessary data, and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and
other standard-setting bodies, the Company may make adjustments to the provisional amounts. Those adjustments may
materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. The
accounting for the tax effects of the Tax Act is provisional and will be completed by the measurement period provided in Staff
Accounting Bulletin No. 118.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
In addition to the risks inherent in our operations, we are exposed to certain market risks, including changes in interest rates and
fluctuations in currency exchange rates.
The analysis presented below for each of our market risk sensitive instruments is based on a hypothetical scenario used to
calibrate potential risk and does not represent our view of future market changes. The effect of a change in a particular
assumption is calculated without adjusting any other assumption. In reality, however, a change in one factor could cause a
change in another, which may magnify or negate other sensitivities.
Interest Rate Risk
We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt issuances. We hedge a
portion of our interest rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For
fiscal 2018, the net fair value of our interest rate swaps decreased approximately $87 million primarily due to fluctuations in
market interest rates.
The table below provides information about our financial instruments that are sensitive to changes in interest rates. For debt
obligations, the table represents the principal cash flows and related weighted-average interest rates by expected maturity dates.
For interest rate swaps, the table represents the contractual cash flows and weighted-average interest rates by the contractual
48
maturity date, unless otherwise noted. The notional amounts are used to calculate contractual cash flows to be exchanged under
the contracts. The weighted-average variable rates are based upon prevailing market rates at January 31, 2018.
(Amounts in millions)
Liabilities
Short-term borrowings:
Variable rate
Weighted-average interest rate
Long-term debt(1):
Fixed rate
Weighted-average interest rate
Variable rate
Weighted-average interest rate
Interest rate derivatives
Interest rate swaps:
Fixed to variable
Weighted-average pay rate
Weighted-average receive rate
Fiscal 2019
Fiscal 2020
Fiscal 2021
Fiscal 2022
Fiscal 2023
Thereafter
Total
Expected Maturity Date
$
$
$
$
5,257
$
1.5%
— $
—%
— $
—%
— $
—%
— $
—%
— $
5,257
—%
1.5%
$
$
3,233
3.2%
500
5.5%
$
$
1,614
2.6%
300
1.7%
3,336
$
607
$
2,934
$
21,259
$
32,983
2.8%
— $
—%
5.5%
— $
—%
1.7%
— $
—%
4.6%
— $
—%
3.9%
800
4.1%
— $
— $
750
$
— $
— $
3,250
$
4,000
—%
—%
—%
—%
3.2%
3.3%
—%
—%
—%
—%
2.5%
2.9%
2.6%
3.0%
(1) The long-term debt amounts in the table exclude the Company's derivatives classified as fair value hedges.
As of January 31, 2018, our variable rate borrowings, including the effect of our commercial paper and interest rate swaps,
represented 26% of our total short-term and long-term debt. Based on January 31, 2018 debt levels, a 100 basis point change in
prevailing market rates would cause our annual interest costs to change by approximately $96 million.
Foreign Currency Risk
We are exposed to fluctuations in foreign currency exchange rates as a result of our net investments and operations in countries
other than the U.S. For fiscal 2018, movements in currency exchange rates and the related impact on the translation of the
balance sheets of the Company's subsidiaries in the United Kingdom and Canada were the primary cause of the $2.3 billion
gain in the currency translation and other category of accumulated other comprehensive loss. We hedge a portion of our foreign
currency risk by entering into currency swaps and designating certain foreign-currency-denominated long-term debt as net
investment hedges.
We hold currency swaps to hedge the currency exchange component of our net investments and also to hedge the currency
exchange rate fluctuation exposure associated with the forecasted payments of principal and interest of non-U.S. denominated
debt. The aggregate fair value of these swaps was in an asset position of $413 million at January 31, 2018 and a liability
position of $147 million at January 31, 2017. The change in the fair value of these swaps was due to fluctuations in currency
exchange rates, primarily the strengthening of other currencies relative to the U.S. dollar in fiscal 2018. A hypothetical 10%
increase or decrease in the currency exchange rates underlying these swaps from the market rate at January 31, 2018 would
have resulted in a loss or gain in the value of the swaps of $560 million. A hypothetical 10% change in interest rates underlying
these swaps from the market rates in effect at January 31, 2018 would have resulted in a loss or gain in the value of the swaps
of $22 million.
In addition to currency swaps, we have designated foreign-currency-denominated long-term debt as nonderivative hedges of net
investments of certain of our foreign operations. We had outstanding long-term debt of £1.7 billion at January 31, 2018 and
£2.5 billion at January 31, 2017 that was designated as a hedge of our net investment in the United Kingdom. At January 31,
2018, a hypothetical 10% increase or decrease in the value of the U.S. dollar relative to the British pound would have resulted
in a change in the value of the debt of $217 million. In addition, we had outstanding long-term debt of ¥180 billion at
January 31, 2018 and ¥10 billion at January 31, 2017 that was designated as a hedge of our net investment in Japan. At
January 31, 2018, a hypothetical 10% increase or decrease in value of the U.S. dollar relative to the Japanese yen would have
resulted in a change in the value of the debt of $150 million.
In certain countries, we also enter into immaterial foreign currency forward contracts to hedge the purchase and payment of
purchase commitments denominated in non-functional currencies.
Investment Risk
During fiscal 2018, the fair value of our available-for-sale investment in JD increased approximately $1.5 billion, due to an
increase in the market value of JD.
49
Other Matters
We discuss our existing FCPA investigation and related matters for fiscal 2018, including certain risks arising therefrom, in Part
I, Item 1A of this Form 10-K under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our
Consolidated Financial Statements, which is captioned "Contingencies," and appears elsewhere herein. We also discuss various
legal proceedings related to the FCPA investigation in Item 3 herein under the caption "Part I, Item 3. Legal Proceedings,"
under the sub-caption "II. Certain Other Proceedings." We discuss the "equal value" claims against our United Kingdom
subsidiary, ASDA Stores, Ltd., for fiscal 2018, including certain risks arising therefrom, in Part I, Item 1A of this Form 10-K
under the caption "Risk Factors" and under the sub-caption "Legal Proceedings" in Note 10 to our Consolidated Financial
Statements, which is captioned "Contingencies," and appears elsewhere herein.
50
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements of Walmart Inc.
(formerly "Wal-Mart Stores, Inc.")
For the Fiscal Year Ended January 31, 2018
Table of Contents
Management's Report to Our Shareholders
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
52
53
54
55
56
57
58
59
60
51
Walmart Inc.
Management's Report to Our Shareholders
Management of Walmart 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 Report on Form 10-K.
Those Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the
United States. In preparing those Consolidated Financial Statements, management is required to make certain estimates and
judgments, which are based upon currently available information and management's view of current conditions and
circumstances.
The Audit Committee of the Board of Directors oversees our process of reporting financial information and the audit of our
Consolidated Financial Statements. The Audit Committee stays informed of the financial condition of Walmart and regularly
reviews management's financial policies and procedures, the independence of our independent auditors, our internal control
over financial reporting and the objectivity of our financial reporting. Both the independent auditors and the internal auditors
have free access to the Audit Committee and meet with the Audit Committee regularly, both with and without management
present.
Acting through our Audit Committee, we have retained Ernst & Young LLP, an independent registered public accounting firm,
to audit our Consolidated Financial Statements appearing below. We have made available to Ernst & Young LLP all of our
financial records and related data in connection with their audit of our Consolidated Financial Statements. We have filed with
the Securities and Exchange Commission ("SEC") the required certifications related to our Consolidated Financial Statements
as of and for the year ended January 31, 2018. These certifications are attached as exhibits to this Annual Report on Form 10-
K. Additionally, we have also provided to the New York Stock Exchange the required annual certification of our Chief
Executive Officer regarding our compliance with the New York Stock Exchange's corporate governance listing standards.
52
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Walmart Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Walmart Inc. (the Company) as of January 31, 2018 and 2017,
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, 2018, and the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at January 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended
January 31, 2018, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of January 31, 2018, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) and our report dated March 30, 2018 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 1969.
Rogers, Arkansas
March 30, 2018
53
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Walmart Inc.
Opinion on Internal Control over Financial Reporting
We have audited Walmart Inc.'s internal control over financial reporting as of January 31, 2018, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) (the COSO criteria). In our opinion, Walmart Inc. (the Company) maintained, in all material respects, effective internal
control over financial reporting as of January 31, 2018, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the accompanying consolidated balance sheets of Walmart Inc. as of January 31, 2018 and 2017, 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, 2018, and the related notes and our report dated March 30, 2018 expressed an unqualified opinion thereon.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting included in the accompanying Report on Internal Control over
Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Rogers, Arkansas
March 30, 2018
54
Walmart Inc.
Consolidated Statements of Income
(Amounts in millions, except per share data)
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 lease and financing obligations
Interest income
Interest, net
Loss on extinguishment of debt
Income before income taxes
Provision for income taxes
Consolidated net income
Consolidated net income attributable to noncontrolling interest
Consolidated net income attributable to Walmart
Net income per common share:
Basic net income per common share attributable to Walmart
Diluted net income per common share attributable to Walmart
Weighted-average common shares outstanding:
Basic
Diluted
Dividends declared per common share
See accompanying notes.
Fiscal Years Ended January 31,
2018
2017
2016
$
$
$
495,761
4,582
500,343
373,396
106,510
20,437
1,978
352
(152)
2,178
3,136
15,123
4,600
10,523
(661)
9,862
3.29
3.28
2,995
3,010
$
$
$
481,317
4,556
485,873
361,256
101,853
22,764
2,044
323
(100)
2,267
—
20,497
6,204
14,293
(650)
13,643
4.40
4.38
3,101
3,112
2.04
$
2.00
$
478,614
3,516
482,130
360,984
97,041
24,105
2,027
521
(81)
2,467
—
21,638
6,558
15,080
(386)
14,694
4.58
4.57
3,207
3,217
1.96
$
$
$
$
55
Walmart Inc.
Consolidated Statements of Comprehensive Income
(Amounts in millions)
Consolidated net income
Consolidated net income attributable to noncontrolling interest
Consolidated net income attributable to Walmart
Other comprehensive income (loss), net of income taxes
Currency translation and other
Net investment hedges
Unrealized gain on available-for-sale securities
Cash flow hedges
Minimum pension liability
Other comprehensive income (loss), net of income taxes
Other comprehensive (income) loss attributable to noncontrolling interest
Other comprehensive income (loss) attributable to Walmart
Comprehensive income, net of income taxes
Comprehensive (income) loss attributable to noncontrolling interest
Comprehensive income attributable to Walmart
See accompanying notes.
Fiscal Years Ended January 31,
2018
2017
2016
$
$
$
10,523
(661)
9,862
$
14,293
(650)
13,643
2,540
(405)
1,501
437
147
4,220
(169)
4,051
(3,027)
413
145
21
(397)
(2,845)
210
(2,635)
14,743
(830)
13,913
$
11,448
(440)
11,008
$
15,080
(386)
14,694
(5,220)
366
—
(202)
86
(4,970)
541
(4,429)
10,110
155
10,265
56
Walmart Inc.
Consolidated Balance Sheets
(Amounts in millions)
ASSETS
Current assets:
Cash and cash equivalents
Receivables, net
Inventories
Prepaid expenses and other
Total current assets
Property and equipment:
Property and equipment
Less accumulated depreciation
Property and equipment, net
Property under capital lease and financing obligations:
Property under capital lease and financing obligations
Less accumulated amortization
Property under capital lease and financing obligations, net
Goodwill
Other assets and deferred charges
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings
Accounts payable
Accrued liabilities
Accrued income taxes
Long-term debt due within one year
Capital lease and financing obligations due within one year
Total current liabilities
Long-term debt
Long-term capital lease and financing obligations
Deferred income taxes and other
Commitments and contingencies
Equity:
Common stock
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Total Walmart shareholders' equity
Noncontrolling interest
Total equity
Total liabilities and equity
See accompanying notes.
57
$
$
$
As of January 31,
2018
2017
$
6,756
5,614
43,783
3,511
59,664
185,154
(77,479)
107,675
12,703
(5,560)
7,143
18,242
11,798
204,522
$
5,257
$
46,092
22,122
645
3,738
667
78,521
30,045
6,780
8,354
295
2,648
85,107
(10,181)
77,869
2,953
80,822
6,867
5,835
43,046
1,941
57,689
179,492
(71,782)
107,710
11,637
(5,169)
6,468
17,037
9,921
198,825
1,099
41,433
20,654
921
2,256
565
66,928
36,015
6,003
9,344
305
2,371
89,354
(14,232)
77,798
2,737
80,535
$
204,522
$
198,825
Walmart Inc.
Consolidated Statements of Shareholders' Equity
Common Stock
Amount
323
$
—
Share
3,228
—
Capital in
Excess of
Par Value
2,462
$
—
Retained
Earnings
85,777
$
14,694
Accumulated
Other
Comprehensive
Income (Loss)
$
Total
Walmart
Shareholders'
Equity
Noncontrolling
Interest
(7,168) $
—
$
81,394
14,694
4,543
386
Total
Equity
$85,937
15,080
—
(4,429)
(4,429)
(541)
(4,970)
(Amounts in millions)
Balances as of February 1, 2015
Consolidated net income
Other comprehensive income (loss),
net of income taxes
Cash dividends declared ($1.96 per
share)
Purchase of Company stock
Cash dividend declared to
noncontrolling interest
Other
—
—
(65)
—
(1)
Balances as of January 31, 2016
3,162
Consolidated net income
Other comprehensive income (loss),
net of income taxes
Cash dividends declared ($2.00 per
share)
—
—
—
—
—
(6)
—
—
317
—
—
—
—
—
(6,294)
(102)
(4,148)
—
(555)
1,805
—
—
—
—
(8)
90,021
13,643
—
(6,216)
Purchase of Company stock
(120)
(12)
(174)
(8,090)
Cash dividend declared to
noncontrolling interest
Other
—
6
Balances as of January 31, 2017
3,048
Consolidated net income
Other comprehensive income (loss),
net of income taxes
Cash dividends declared ($2.04 per
share)
—
—
—
—
—
305
—
—
—
—
740
2,371
—
—
—
—
(4)
89,354
9,862
—
(6,124)
Purchase of Company stock
(103)
(10)
(219)
(7,975)
Cash dividend declared to
noncontrolling interest
Other
—
7
—
—
—
496
—
(10)
—
—
—
—
(11,597)
—
(2,635)
—
—
—
—
(14,232)
—
4,051
—
—
—
—
(6,294)
(4,256)
—
(563)
80,546
13,643
(2,635)
(6,216)
(8,276)
—
736
77,798
9,862
4,051
(6,124)
(8,204)
—
486
— (6,294)
— (4,256)
(691)
(691)
(632)
(1,195)
3,065
650
83,611
14,293
(210)
(2,845)
— (6,216)
— (8,276)
(519)
(519)
(249)
2,737
661
169
487
80,535
10,523
4,220
— (6,124)
— (8,204)
(687)
73
(687)
559
Balances as of January 31, 2018
2,952
$
295
$
2,648
$
85,107
$
(10,181) $
77,869
$
2,953
$80,822
See accompanying notes.
58
Walmart Inc.
Consolidated Statements of Cash Flows
(Amounts in millions)
Cash flows from operating activities:
Consolidated net income
Adjustments to reconcile consolidated net income to net cash provided by operating
activities:
Depreciation and amortization
Deferred income taxes
Loss on extinguishment of debt
Other operating activities
Changes in certain assets and liabilities, net of effects of acquisitions:
Receivables, net
Inventories
Accounts payable
Accrued liabilities
Accrued income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Payments for property and equipment
Proceeds from the disposal of property and equipment
Proceeds from the disposal of certain operations
Purchase of available for sale securities
Business acquisitions, net of cash acquired
Other investing activities
Net cash used in investing activities
Cash flows from financing activities:
Net change in short-term borrowings
Proceeds from issuance of long-term debt
Repayments of long-term debt
Premiums paid to extinguish debt
Dividends paid
Purchase of Company stock
Dividends paid to noncontrolling interest
Purchase of noncontrolling interest
Other financing activities
Net cash used in financing activities
Fiscal Years Ended January 31,
2017
2016
2018
$
10,523
$
14,293
$
15,080
10,529
(304)
3,136
1,210
(1,074)
(140)
4,086
928
(557)
28,337
(10,051)
378
1,046
—
(375)
(58)
(9,060)
4,148
7,476
(13,061)
(3,059)
(6,124)
(8,296)
(690)
(8)
(261)
(19,875)
10,080
761
—
206
(402)
1,021
3,942
1,280
492
31,673
(10,619)
456
662
(1,901)
(2,463)
(122)
(13,987)
(1,673)
137
(2,055)
—
(6,216)
(8,298)
(479)
(90)
(398)
(19,072)
9,454
(672)
—
1,410
(19)
(703)
2,008
1,466
(472)
27,552
(11,477)
635
246
—
—
(79)
(10,675)
1,235
39
(4,432)
—
(6,294)
(4,112)
(719)
(1,326)
(676)
(16,285)
Effect of exchange rates on cash and cash equivalents
487
(452)
(1,022)
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information:
Income taxes paid
Interest paid
See accompanying notes.
(111)
6,867
6,756
$
(1,838)
8,705
6,867
$
$
6,179
2,450
4,507
2,351
(430)
9,135
8,705
8,111
2,540
59
Walmart Inc.
Notes to Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
General
Walmart Inc. (formerly "Wal-Mart Stores, Inc.") ("Walmart" or the "Company") helps people around the world save money and
live better – anytime and anywhere – in retail stores and through eCommerce. Through innovation, the Company is striving to
create a customer-centric experience that seamlessly integrates digital and physical shopping into an omni-channel offering that
saves time for its customers. Each week, the Company serves nearly 270 million customers who visit its more than 11,700
stores and numerous eCommerce websites under 65 banners in 28 countries. The Company's strategy is to lead on price, invest
to differentiate on access, be competitive on assortment and deliver a great experience.
The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended
January 31, 2018 ("fiscal 2018"), January 31, 2017 ("fiscal 2017") and January 31, 2016 ("fiscal 2016"). All material
intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates variable interest
entities where it has been determined that the Company is the primary beneficiary of those entities' operations. Investments in
unconsolidated affiliates, which are 50% or less owned and do not otherwise meet consolidation requirements, are accounted
for primarily using the equity method. These equity method investments are immaterial to the Company's Consolidated
Financial Statements.
The Company's Consolidated Financial Statements are based on a fiscal 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 significant intervening events during the month of January 2018 related to the operations
consolidated using a lag that materially affected 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 affect the reported amounts of assets and
liabilities. Management's estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may
differ 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 transfer transactions that process in less than seven days are classified as cash and cash
equivalents. The amounts due from banks for these transactions classified as cash and cash equivalents totaled $1.6 billion and
$1.5 billion at January 31, 2018 and 2017, respectively. In addition, cash and cash equivalents included restricted cash of $300
million and $265 million at January 31, 2018 and 2017, respectively, which was 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. Substantially all of the Company's $6.8 billion of
cash and cash equivalents at January 31, 2018, was held outside of the U.S. Of the Company's $6.9 billion of cash and cash
equivalents at January 31, 2017, $5.9 billion was held outside of the U.S. Cash and cash equivalents held outside of the U.S.
are generally utilized to support liquidity needs in the Company's non-U.S. operations.
The Company uses intercompany financing arrangements in an effort to ensure 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 earnings
held outside of the U.S. and anticipates the Company's domestic liquidity needs will be met through cash flows provided by
domestic operating activities, supplemented with long-term debt and short-term borrowings. Accordingly, the Company
intends, with only certain exceptions, to continue to indefinitely reinvest the Company's earnings held outside of the U.S. in its
foreign operations. As part of the U.S. tax reform enacted on December 22, 2017, the Company is currently assessing the
impact of the new legislation, which can in turn, impact its assertion regarding any potential future repatriation. If the
Company's intentions with respect to reinvestment were to change, most of the amounts held within the Company's foreign
operations could be repatriated to the U.S., although any repatriation under new U.S. tax laws could be subject to incremental
withholding taxes. The Company does not expect current local laws, other existing limitations or potential taxes on anticipated
future repatriations of earnings held outside of the U.S. to have a material effect on the Company's overall liquidity, financial
condition or results of operations.
60
As of January 31, 2018 and 2017, cash and cash equivalents of approximately $1.4 billion and $1.0 billion, respectively, may
not be freely transferable to the U.S. due to local laws or other restrictions.
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 and debit cards and electronic bank transfers that take in excess of seven days to process;
suppliers for marketing or incentive programs; and
real estate transactions.
Inventories
The Company values inventories at the lower of cost or market as determined primarily by the retail inventory method of
accounting, using the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Walmart
International segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO")
method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market, since
permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's
Club segment is valued using the weighted-average cost LIFO method. At January 31, 2018 and January 31, 2017, the
Company's inventories valued at LIFO approximated those inventories as if they were valued at FIFO.
Assets Held for Sale
Assets held for sale represent components and businesses that meet accounting requirements to be classified as held for sale and
are presented as single asset and liability amounts in the Company's financial statements with a valuation allowance, if
necessary, to recognize the net carrying amount at the lower of cost or fair value, less cost to sell. The Company reviews all
businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully
recoverable in comparison to estimated fair values. As of January 31, 2018 and 2017, immaterial amounts for assets and
liabilities held for sale were classified within prepaid expenses and other and accrued liabilities, respectively, in the
Consolidated Balance Sheets.
Property and Equipment
Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as earned or incurred.
Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred.
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:
(Amounts in millions)
Land
Buildings and improvements
Fixtures and equipment
Transportation equipment
Construction in progress
Property and equipment
Accumulated depreciation
Property and equipment, net
Estimated Useful Lives
2018
2017
As of January 31,
N/A
3-40 years
1-30 years
3-15 years
N/A
$
$
$
25,298
$
101,155
52,695
2,387
3,619
185,154
(77,479)
107,675
$
$
24,801
98,547
48,998
2,845
4,301
179,492
(71,782)
107,710
Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining
expected lease term. Total depreciation and amortization expense for property and equipment, property under financing
obligations and property under capital leases for fiscal 2018, 2017 and 2016 was $10.5 billion, $10.1 billion and $9.5 billion,
respectively.
Leases
The Company estimates the expected term of a lease by assuming the exercise of renewal options where an economic penalty
exists that would preclude the abandonment of the lease at the end of the initial non-cancelable term and the exercise of such
renewal is at the sole discretion of the Company. The expected term is used in the determination of whether a store or club
lease is a capital or operating lease and in the calculation of straight-line rent expense. Additionally, the useful life of leasehold
improvements is limited by the expected lease term or the economic life of the asset, whichever is shorter. If significant
expenditures are made for leasehold improvements late in the expected term of a lease and renewal is reasonably assured, the
61
useful life of the leasehold improvement is limited to the end of the renewal period or economic life of the asset, whichever is
shorter. Rent abatements and escalations are considered in the calculation of minimum lease payments in the Company's
capital lease tests and in determining straight-line rent expense for operating leases.
The Company is often involved in the construction of its leased stores. In certain cases, payments made for certain structural
components included in the lessor's construction of the leased assets result in the Company being deemed the owner of the
leased assets for accounting purposes. As a result, the payments, regardless of the significance, are automatic indicators of
ownership and require the Company to capitalize the lessor's total project cost with a corresponding financing obligation. Upon
completion of the lessor's project, the Company performs a sale-leaseback analysis to determine if these assets and the related
financing obligation can be derecognized from the Company's Consolidated Balance Sheets. If the Company is deemed to have
"continuing involvement," the leased assets and the related financing obligation remain on the Company's Consolidated
Balance Sheets and are generally amortized over the lease term. At the end of the lease term, including exercise of any renewal
options, the net remaining financing obligation over the net carrying value of the fixed asset will be recognized as a non-cash
gain on sale of the property.
Long-Lived Assets
Long-lived assets are initially recorded at cost. Management reviews long-lived assets for indicators of impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is performed at
the lowest level of identifiable cash flows, which is at the individual store or club level. Undiscounted cash flows expected to
be generated by the related assets are estimated over the assets' useful lives based on updated projections. If the evaluation
indicates that the carrying amount of the assets may not be recoverable, any potential impairment is measured based upon the
fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique.
Goodwill and Other Acquired Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is
allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired
as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indefinite-lived
intangible assets are not amortized; rather, they are evaluated for impairment annually and whenever events or changes in
circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived
assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided.
Goodwill is evaluated for impairment using either a qualitative or quantitative approach for each of the Company's reporting
units. Generally, a qualitative assessment is first performed to determine whether a quantitative goodwill impairment test is
necessary. If management determines, after performing an assessment based on the qualitative factors, that the fair value of the
reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in
excess of the carrying amount cannot be assured, then a quantitative goodwill impairment test would be required. The
quantitative test for goodwill impairment is performed by determining the fair value of the related reporting units. Fair value is
measured based on the discounted cash flow method and relative market-based approaches. After evaluation, management
determined the fair value of each reporting unit is greater than the carrying amount and, accordingly, the Company has not
recorded any impairment charges related to goodwill.
The following table reflects goodwill activity, by reportable segment, for fiscal 2018 and 2017:
(Amounts in millions)
Balances as of February 1, 2016
Changes in currency translation and other
Acquisitions(1)
Balances as of January 31, 2017
Changes in currency translation and other
Acquisitions
Balances as of January 31, 2018
Walmart U.S.
Walmart
International
Sam's Club
Total
$
461
$
15,921
$
313
$
—
1,775
2,236
—
209
(1,433)
—
14,488
996
—
—
—
313
—
—
16,695
(1,433)
1,775
17,037
996
209
$
2,445
$
15,484
$
313
$
18,242
(1) Goodwill recorded for fiscal 2017 Walmart U.S. acquisitions primarily relates to Jet.com, Inc. ("jet.com").
Indefinite-lived intangible assets are included in other assets and deferred charges in the Company's Consolidated Balance
Sheets. These assets are evaluated for impairment based on their fair values using valuation techniques which are updated
annually based on the most recent variables and assumptions. There were no significant impairment charges related to
indefinite-lived intangible assets recorded for fiscal 2018, 2017 and 2016.
62
Self Insurance Reserves
The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto
liability, product liability and certain employee-related healthcare benefits. Standard actuarial procedures and data analysis are
used to estimate the liabilities associated with these risks as of the balance sheet date on an undiscounted basis. The recorded
liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run-out expenses related to
the processing of these outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with
claims reserve valuations provided by independent third-party actuaries. To limit exposure to some risks, the Company
maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers'
compensation, general liability and auto liability.
Income Taxes
Income taxes are accounted for under the balance sheet method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases ("temporary differences"). Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the
enactment date.
Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not
more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the
deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward
periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by
assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences,
forecasted operating earnings and available tax planning strategies. These sources of income rely heavily on estimates.
In determining the provision for income taxes, an annual effective income tax rate is used based on annual income, permanent
differences between book and tax income, and statutory income tax rates. Discrete events such as audit settlements or changes
in tax laws are recognized in the period in which they occur.
The Company records a liability for unrecognized tax benefits resulting from 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.
Refer to Note 9 for additional income tax disclosures.
Revenue Recognition
Sales
The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise to the
customer. eCommerce sales include shipping revenue and are recorded upon delivery to the customer. Additionally, estimated
sales returns are calculated using historical experience of actual returns as a percent of sales.
Membership Fee Revenue
The Company recognizes membership fee revenue both in the U.S. and internationally over the term of the membership, which
is typically 12 months. The following table summarizes membership fee activity for fiscal 2018, 2017 and 2016:
(Amounts in millions)
Deferred membership fee revenue, beginning of year
Cash received from members
Membership fee revenue recognized
Deferred membership fee revenue, end of year
Fiscal Years Ended January 31,
2018
2017
2016
$
$
743
$
744
$
1,398
(1,411)
1,371
(1,372)
730
$
743
$
759
1,333
(1,348)
744
Membership fee revenue is included in membership and other income in the Company's Consolidated Statements of Income.
The deferred membership fee is included in accrued liabilities in the Company's Consolidated Balance Sheets.
Gift Cards
Customer purchases of gift cards, to be utilized in our stores or on our eCommerce websites, are not recognized as revenue until
the card is redeemed and the customer purchases merchandise using the gift card. Gift cards in the U.S. and some countries do
not carry an expiration date; therefore, customers and members can redeem their gift cards for merchandise indefinitely. Gift
cards in some foreign countries where the Company does business have expiration dates. A certain number of gift cards, both
with and without expiration dates, will not be fully redeemed. Management estimates unredeemed gift cards and recognizes
63
revenue for these amounts when it is determined the likelihood of redemption is remote. Management periodically reviews and
updates its estimates.
Financial and Other Services
The Company recognizes revenue from service transactions at the time the service is performed. Generally, revenue from
services is classified as a component of net sales in the Company's Consolidated Statements of Income.
Cost of Sales
Cost of sales includes actual product cost, the cost of transportation to the Company's distribution facilities, stores and clubs
from suppliers, the cost of transportation from the Company's distribution facilities to the stores, clubs and customers and the
cost of warehousing for the Sam's Club segment and import distribution centers. Cost of sales is reduced by supplier payments
that are not a reimbursement of specific, incremental and identifiable costs.
Payments from Suppliers
The Company receives consideration from suppliers for various programs, primarily volume incentives, warehouse allowances
and reimbursements for specific programs such as markdowns, margin protection, advertising and supplier-specific fixtures.
Payments from suppliers are accounted for as a reduction of cost of sales, except in certain limited situations when the payment
is a reimbursement of specific, incremental and identifiable costs, and are recognized in the Company's Consolidated
Statements of Income when the related inventory is sold.
Operating, Selling, General and Administrative Expenses
Operating, selling, general and administrative expenses include all operating costs of the Company, except cost of sales, as
described above. As a result, the majority of the cost of warehousing and occupancy for the Walmart U.S. and Walmart
International segments' distribution facilities is included in operating, selling, general and administrative expenses. Because the
Company only includes a portion of the cost of its Walmart U.S. and Walmart International segments' distribution facilities in
cost of sales, its gross profit and gross profit as a percentage of net sales may not be comparable to those of other retailers that
may include all costs related to their distribution facilities in cost of sales and in the calculation of gross profit.
Advertising Costs
Advertising costs are expensed as incurred, consist primarily of print, television and digital advertisements and are recorded in
operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. In certain limited
situations, reimbursements from suppliers that are for specific, incremental and identifiable advertising costs are recognized as
a reduction of advertising costs in operating, selling, general and administrative expenses. Advertising costs were $3.1 billion,
$2.9 billion and $2.5 billion for fiscal 2018, 2017 and 2016, respectively.
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 and included in operating, selling, general and administrative expenses in
the Company's Consolidated Statements of Income. Pre-opening costs totaled $106 million, $131 million and $271 million for
fiscal 2018, 2017 and 2016, respectively.
Currency Translation
The assets and liabilities of all international subsidiaries are translated from the respective local currency to the U.S. dollar
using exchange rates at the balance sheet date. Related translation adjustments are recorded as a component of accumulated
other comprehensive loss. The Company's Consolidated Statements of Income of all international subsidiaries are translated
from the respective local currencies to the U.S. dollar using average exchange rates for the period covered by the income
statements.
Recent Accounting Pronouncements
Pronouncements Adopted in Fiscal 2018
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09,
Compensation–Stock Compensation (Topic 718), which is intended to simplify accounting for share-based payment
transactions. The ASU changed several aspects of the accounting for share-based payment award transactions, including
accounting for income taxes, forfeitures and minimum statutory tax withholding requirements. Management adopted this ASU
beginning February 1, 2017, and as a result, reclassified an immaterial amount from operating activities to financing activities
in the Company's prior year consolidated cash flows.
On December 22, 2017, the Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin No. 118,
Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), in response to the Tax Cuts and Jobs Act of
64
2017 ("Tax Act"). The Company has elected to record provisional amounts, as allowed by SAB 118, during a measurement
period not to extend beyond one year of the enactment date. Management expects to complete the analysis within the
measurement period in accordance with SAB 118.
Pronouncements to Be Adopted in the Year Ending January 31, 2019 ("fiscal 2019")
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU represents a
single comprehensive model to recognize revenue to depict the transfer of promised goods or services to a customer at an
amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company
adopted this ASU on February 1, 2018, under the modified retrospective approach, which resulted in an immaterial cumulative
adjustment to retained earnings. Also, this ASU will require additional disclosures.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall (Topic 825), which updates certain aspects of
recognition, measurement, presentation and disclosure of financial instruments. This ASU primarily impacts the Company's
accounting for its investment in JD.com ("JD"). The Company adopted this ASU on February 1, 2018, which resulted in a
cumulative positive adjustment to retained earnings of approximately $2.9 billion based on the market value of our investment
in JD at January 31, 2018. The retained earnings adjustment relates to both the available for sale portion and the cost portion of
the investment. Beginning February 1, 2018, the adoption requires the remeasurement of our investment in JD due to
observable price changes and impairments, if any, to be recorded through the Consolidated Statement of Income, introducing
volatility to reported net income.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows–Restricted Cash (Topic 230), which requires
restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the
statement of cash flows. The Company adopted this ASU on February 1, 2018, which, while immaterial, will modify the
Company's presentation of Consolidated Statements of Cash Flows. At January 31, 2018, the Company had restricted cash
recorded in line items other than cash and cash equivalents of $258 million.
In February 2018, the FASB issued Accounting Standards Update ASU 2018-02, Income Statement–Reporting Comprehensive
Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The ASU
provides that the stranded tax effects from the Tax Act in accumulated other comprehensive loss may be reclassified to retained
earnings. The ASU is effective February 1, 2019, with early adoption permitted. Management anticipates early adopting this
optional standard and is evaluating the effect on the Company's consolidated financial statements.
Other Pronouncements Being Evaluated
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lease assets and liabilities to be recorded
on the balance sheet. Certain qualitative and quantitative disclosures are also required, as well as retrospective recognition and
measurement of impacted leases. The Company will adopt this ASU on February 1, 2019 and is implementing new lease
systems in connection with the adoption. Management is progressing with implementation and continuing to evaluate the effect
to the Company's consolidated financial statements and disclosures. Management expects a material impact to the Company's
Consolidated Balance Sheet.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326), which modifies the
measurement of expected credit losses of certain financial instruments. The Company will adopt this ASU on February 1,
2020. Management is currently evaluating this ASU to determine its impact to the Company's consolidated financial
statements.
65
Note 2. Net Income Per Common Share
Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding
during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average
common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did
not have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted net
income per common share attributable to Walmart for fiscal 2018, 2017 and 2016.
The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net
income per common share attributable to Walmart:
(Amounts in millions, except per share data)
Numerator
Consolidated net income
Consolidated net income attributable to noncontrolling interest
Consolidated net income attributable to Walmart
Denominator
Weighted-average common shares outstanding, basic
Dilutive impact of stock options and other share-based awards
Weighted-average common shares outstanding, diluted
Net income per common share attributable to Walmart
Basic
Diluted
Note 3. Shareholders' Equity
Share-Based Compensation
Fiscal Years Ended January 31,
2018
2017
2016
10,523
(661)
9,862
$
$
14,293
(650)
13,643
$
$
15,080
(386)
14,694
2,995
15
3,010
3,101
11
3,112
$
3.29
3.28
$
4.40
4.38
3,207
10
3,217
4.58
4.57
$
$
$
The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The
compensation expense recognized for all plans was $626 million, $596 million and $448 million for fiscal 2018, 2017 and
2016, respectively. Share-based compensation expense is generally included in operating, selling, general and administrative
expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for share-based
compensation was $150 million, $212 million and $151 million for fiscal 2018, 2017 and 2016, respectively. The following
table summarizes the Company's share-based compensation expense by award type:
(Amounts in millions)
Restricted stock and performance share units
Restricted stock units
Other
Share-based compensation expense
Fiscal Years Ended January 31,
2018
2017
2016
$
$
$
234
368
24
$
237
332
27
626
$
596
$
134
292
22
448
The Walmart Inc. Stock Incentive Plan of 2015 (the "Plan"), as amended and restated effective February 23, 2016, and as
amended further as of February 1, 2017, and as renamed on February 1, 2018, was established to grant stock options, restricted
(non-vested) stock, performance share units and other equity compensation awards for which 210 million shares of Walmart
common stock issued or to be issued under the Plan have been registered under the Securities Act of 1933, as amended. The
Company believes that such awards serve to align the interests of its associates with those of its shareholders.
The Plan's award types are summarized as follows:
•
Restricted Stock and Performance Share Units. Restricted stock awards are for shares that vest based on the
passage of time and include restrictions related to employment. Performance share units vest based on the
passage of time and achievement of performance criteria and may range from 0% to 150% of the original award
amount. Vesting periods for these awards are generally between one and three years. Restricted stock and
performance share units may be settled or deferred in stock and are accounted for as equity in the Company's
Consolidated Balance Sheets. The fair value of restricted stock awards is determined on the date of grant and is
expensed ratably over the vesting period. The fair value of performance share units is determined on the date of
grant using the Company's stock price discounted for the expected dividend yield through the vesting period and
is recognized over the vesting period. The weighted-average discount for the dividend yield used to determine the
fair value of performance share units in fiscal 2018, 2017 and 2016 was 7.2%, 8.3% and 7.4%, respectively.
66
•
Restricted Stock Units. Restricted stock units provide rights to Company stock after a specified service period;
generally 50% vest three years from the grant date and the remaining 50% vest five years from the grant date.
The fair value of each restricted stock unit is determined on the date of grant using the stock price discounted for
the expected dividend yield through the vesting period and is recognized ratably over the vesting period. The
expected dividend yield is based on the anticipated dividends over the vesting period. The weighted-average
discount for the dividend yield used to determine the fair value of restricted stock units granted in fiscal 2018,
2017 and 2016 was 9.0%, 9.0% and 8.7%, respectively.
In addition to the Plan, the Company's subsidiary in the United Kingdom has stock option plans for certain colleagues which
generally vest over three years. The stock option share-based compensation expense is included in the Other line in the table
above.
The following table shows the activity for restricted stock and performance share units and restricted stock units during fiscal
2018:
Restricted Stock and Performance Share Units(1)
Restricted Stock Units
(Shares in thousands)
Outstanding at February 1, 2017
Shares
Granted
Vested/exercised
Forfeited or expired
Outstanding at January 31, 2018
Weighted-Average
Grant-Date Fair Value
Per Share
Shares
Weighted-Average
Grant-Date Fair Value
Per Share
9,077
3,598
(2,525)
(1,592)
8,558
$
$
68.61
74.73
71.55
68.59
70.47
24,276
8,570
(5,440)
(3,253)
24,153
$
$
65.52
67.54
63.02
66.28
66.69
(1) Assumes payout rate at 100% for Performance Share Units.
The following table includes additional information related to restricted stock and performance share units and restricted stock
units:
(Amounts in millions, except years)
Fair value of restricted stock and performance share units vested
Fair value of restricted stock units vested
Unrecognized compensation cost for restricted stock and performance share units
Unrecognized compensation cost for restricted stock units
Weighted average remaining period to expense for restricted stock and performance share
units (years)
Weighted average remaining period to expense for restricted stock units (years)
$
Fiscal Years Ended January 31,
2018
2017
2016
$
181
344
291
972
1.2
1.8
$
149
261
211
986
1.3
1.9
142
237
133
628
1.3
1.7
Share Repurchase Program
From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the
Company's Board of Directors. All repurchases made during the fiscal year prior to November 20, 2017 were made under the
plan in effect at the beginning of fiscal 2018. On October 9, 2017, the Board of Directors approved a new $20.0 billion share
repurchase program which, beginning on November 20, 2017, replaced the previous share repurchase program. As of
January 31, 2018, authorization for $18.8 billion of share repurchases remained under the current share repurchase program.
Any repurchased shares are constructively retired and returned to an unissued status.
The Company considers several factors in determining when to execute share repurchases, including, among other things,
current cash needs, capacity for leverage, cost of borrowings, its results of operations 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 amount paid for share repurchases for fiscal 2018, 2017 and 2016:
(Amounts in millions, except per share data)
Total number of shares repurchased
Average price paid per share
Total cash paid for share repurchases
Fiscal Years Ended January 31,
2018
2017
2016
$
$
104.9
79.11
8,296
$
$
119.9
69.18
8,298
$
$
62.4
65.90
4,112
67
Note 4. Accumulated Other Comprehensive Loss
The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2018,
2017 and 2016:
(Amounts in millions and net of
income taxes)
Balances as of February 1, 2015
Other comprehensive income (loss)
before reclassifications, net
Amounts reclassified from
accumulated other comprehensive
loss, net
Balances as of January 31, 2016
Other comprehensive income (loss)
before reclassifications, net
Amounts reclassified from
accumulated other comprehensive
loss, net
Balances as of January 31, 2017
Other comprehensive income (loss)
before reclassifications, net
Amounts reclassified from
accumulated other comprehensive
loss, net
Currency
Translation
and Other
Net Investment
Hedges
Unrealized
Gain on
Available-for-
Sale Securities
Cash Flow
Hedges
Minimum
Pension
Liability
Total
$
(7,011) $
656
$
— $
(134) $
(679) $
(4,679)
—
(11,690)
(2,817)
—
(14,507)
2,345
26
366
—
1,022
413
—
1,435
(405)
—
—
—
—
145
—
145
1,501
—
(217)
15
(336)
(22)
43
(315)
436
1
96
(10)
(593)
(389)
(8)
(990)
83
64
(7,168)
(4,434)
5
(11,597)
(2,670)
35
(14,232)
3,960
91
Balances as of January 31, 2018
$
(12,136) $
1,030
$
1,646
$
122
$
(843) $
(10,181)
Amounts reclassified from accumulated other comprehensive loss for derivative instruments are recorded in interest, net, in the
Company's Consolidated Statements of Income, and the amounts for the minimum pension liability are recorded in operating,
selling, general and administrative expenses in the Company's Consolidated Statements of Income. The income tax impact for
each of the amounts shown in the table above is immaterial.
Note 5. Accrued Liabilities
The Company's accrued liabilities consist of the following:
(Amounts in millions)
Accrued wages and benefits(1)
Self-insurance(2)
Accrued non-income taxes(3)
Deferred gift card revenue
Other(4)
Total accrued liabilities
As of January 31,
2018
2017
6,998
$
3,737
3,073
2,017
6,297
6,105
3,922
2,816
1,856
5,955
22,122
$
20,654
$
$
(1) Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans.
(2) Self-insurance consists of insurance-related liabilities, such as workers' compensation, general liability, auto liability, product liability and certain
employee-related healthcare benefits.
(3) Accrued non-income taxes include accrued payroll, value added, sales and miscellaneous other taxes.
(4) Other accrued liabilities consist of various items such as maintenance, utilities, advertising, interest and legal contingencies.
68
Note 6. Short-term Borrowings and Long-term Debt
Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings at January 31, 2018 and 2017
were $5.3 billion and $1.1 billion, respectively, with weighted-average interest rates of 1.5% and 6.2%, respectively.
The Company has various committed lines of credit in the U.S., committed with 23 financial institutions, totaling $12.5 billion
as of January 31, 2018 and 2017, respectively. These committed lines of credit are summarized in the following table:
(Amounts in millions)
Five-year credit facility(1)
364-day revolving credit facility(1)
Total
As of January 31,
Available
$
$
5,000
7,500
12,500
$
$
2018
Drawn
Undrawn
Available
2017
Drawn
Undrawn
— $
—
5,000
7,500
— $
12,500
$
$
5,000
7,500
12,500
$
$
— $
—
5,000
7,500
— $
12,500
(1) In May 2017, the Company renewed and extended its existing five-year credit facility and its existing 364-day revolving credit facility, both of which are
used to support its commercial paper program.
The committed lines of credit in the table above mature at various times between May 2018 and May 2022, carry interest rates
generally ranging between LIBOR plus 10 basis points and LIBOR plus 75 basis points, and incur commitment fees ranging
between 1.5 and 4.0 basis points. In conjunction with the committed lines of credit listed in the table above, the Company has
agreed to observe certain covenants, the most restrictive of which relates to the maximum amount of secured debt.
Additionally, the Company also maintains other committed lines of credit outside of the U.S. with an available and undrawn
amount of approximately $4.0 billion as of January 31, 2018.
Apart from the committed lines of credit, the Company has trade and stand-by letters of credit totaling $2.6 billion and $3.6
billion at January 31, 2018 and 2017, respectively. These letters of credit are utilized in normal business activities.
The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following:
(Amounts in millions)
Unsecured debt
Fixed
Variable
Total U.S. dollar denominated
Fixed
Variable
Total Euro denominated
Fixed
Variable
Total Sterling denominated
Fixed
Variable
Total Yen denominated
Total unsecured debt
Total other(2)
Total debt
Less amounts due within one year
Long-term debt
Maturity Dates
By Fiscal Year
Amount
Average Rate(1)
Amount
Average Rate(1)
January 31, 2018
January 31, 2017
2019 - 2048
2019 - 2020
2023 - 2030
2031 - 2039
2021 - 2028
4.7%
5.5%
3.3%
5.3%
1.6%
3.9%
4.1%
3.3%
5.4%
0.4%
$
24,540
800
25,340
3,101
—
3,101
3,801
—
3,801
1,655
—
1,655
33,897
(114)
33,783
(3,738)
30,045
$
$
30,500
500
31,000
2,674
—
2,674
4,370
—
4,370
88
—
88
38,132
139
38,271
(2,256)
$
36,015
(1) The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end interest rates.
(2)
Interest costs are also impacted by certain derivative financial instruments described in Note 8.
Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt. At January 31, 2018 and 2017 the Company had secured
debt in the amount of $10 million and $14 million, respectively, which was collateralized by property that had an aggregate carrying amount of
approximately $101 million and $82 million, respectively.
At January 31, 2018 and 2017, the Company had $500 million in debt with embedded put options. The issuance of money
market puttable reset securities in the amount of $500 million is structured to be remarketed in connection with the annual reset
of the interest rate. If, for any reason, the remarketing of the notes does not occur at the time of any interest rate reset, the
holders of the notes must sell and the Company must repurchase the notes at par. Accordingly, this issuance has been classified
as long-term debt due within one year in the Company's Consolidated Balance Sheets.
69
Annual maturities of long-term debt during the next five years and thereafter are as follows:
(Amounts in millions)
Fiscal Year
2019
2020
2021
2022
2023
Thereafter
Total
Debt Issuances
Annual
Maturities
$
$
Information on significant long-term debt issued during fiscal 2018 is as follows:
(Amounts in millions)
Issue Date
July 18, 2017
July 18, 2017
July 18, 2017
October 20, 2017
October 20, 2017
October 20, 2017
October 20, 2017
October 20, 2017
October 20, 2017
Total
Principal Amount
Maturity Date
Fixed vs. Floating
Interest Rate
Proceeds
70,000 JPY
40,000 JPY
60,000 JPY
300 USD
1,200 USD
1,250 USD
1,250 USD
1,000 USD
1,000 USD
July 15, 2022
July 18, 2024
July 16, 2027
October 9, 2019
October 9, 2019
December 15, 2020
December 15, 2022
December 15, 2024
December 15, 2047
Fixed
Fixed
Fixed
Floating
Fixed
Fixed
Fixed
Fixed
Fixed
0.183%
0.298%
0.520%
Floating
1.750%
1.900%
2.350%
2.650%
3.625%
$
$
3,733
1,914
3,336
607
2,934
21,259
33,783
619
354
530
299
1,198
1,245
1,245
996
990
7,476
As described in Note 8, the current year issuances of foreign-currency-denominated long-term debt are designated as a hedge of
the Company's net investment in Japan.
The Company did not have any significant long-term debt issuances during fiscal 2017, but received some proceeds from a
number of small long-term debt issuances by several of its non-U.S. operations.
70
Maturities and Extinguishments
The following table provides details of debt repayments during fiscal 2018:
Principal Amount
Fixed vs. Floating
Interest Rate
Repayment(1)
(Amounts in millions)
Maturity Date
April 5, 2017
April 21, 2017
Total repayment of matured debt
December 15, 2018
February 1, 2019
July 8, 2020
October 25, 2020
April 15, 2021
October 16, 2023
April 5, 2027
February 15, 2030
September 4, 2035
September 28, 2035
August 17, 2037
April 15, 2038
January 19, 2039
April 2, 2040
July 9, 2040
October 25, 2040
April 15, 2041
April 11, 2043
October 2, 2043
April 22, 2044
1,000 USD
500 USD
1,000 USD
500 USD
1,500 USD
1,750 USD
1,000 USD
250 USD
750 USD
500 USD
2,500 USD
1,000 GBP
3,000 USD
2,000 USD
1,000 GBP
1,250 USD
750 USD
1,250 USD
2,000 USD
1,000 USD
750 USD
1,000 USD
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
5.375%
1.000%
$
1.950%
4.125%
3.625%
3.250%
4.250%
6.750%
5.875%
7.550%
5.250%
5.250%
6.500%
6.200%
4.875%
5.625%
4.875%
5.000%
5.625%
4.000%
4.750%
4.300%
1,000
500
1,500
276
136
661
553
491
98
267
412
532
260
1,700
1,081
851
499
372
731
1,082
291
481
498
11,272
12,772
Total repayment of extinguished debt
Total
(1) Represents portion of the principal amount repaid during fiscal 2018.
$
In connection with extinguishing debt, the Company paid premiums of approximately $3.1 billion during fiscal 2018, resulting
in a loss on extinguishment of debt of approximately $3.1 billion.
During fiscal 2017, the following long-term debt matured and was repaid:
(Amounts in millions)
Maturity Date
April 11, 2016
April 15, 2016
Principal Amount
Fixed vs. Floating
Interest Rate
Repayment
1,000 USD
1,000 USD
Fixed
Fixed
0.600%
2.800%
$
$
1,000
1,000
2,000
During fiscal 2018 and 2017, the Company also repaid other, smaller long-term debt as it matured in several of its non-U.S.
operations.
71
Note 7. Fair Value Measurements
The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an
asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties
able to engage in the transaction. The fair value of a liability is the amount that would be paid to transfer the liability to a new
obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. Assets
and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring
fair value. The levels of the fair value hierarchy are:
•
•
•
Level 1: observable inputs such as quoted prices in active markets;
Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop
its own assumptions.
Recurring Fair Value Measurements
The Company holds derivative instruments that are required to be measured at fair value on a recurring basis. The fair values
are the estimated amounts the 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, 2018 and 2017, the notional amounts and fair values of
these derivatives were as follows:
(Amounts in millions)
Receive fixed-rate, pay variable-rate interest rate swaps designated as fair
value hedges
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as net
investment hedges
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash
flow hedges
Total
January 31, 2018
January 31, 2017
Notional
Amount
Fair Value
Notional
Amount
Fair Value
$
$
4,000
$
(91) $
5,000
$
2,250
4,523
208
205
2,250
3,957
10,773
$
322
$
11,207
$
(4)
471
(618)
(151)
Additionally, the Company's available-for-sale securities are measured at fair value on a recurring basis using Level 1 inputs.
Changes in fair value are recorded in accumulated other comprehensive loss. The cost basis and fair value of the Company's
available-for-sale securities as of January 31, 2018 and 2017, are as follows:
(Amounts in millions)
Available-for-sale securities
Nonrecurring Fair Value Measurements
January 31, 2018
January 31, 2017
Cost Basis
Fair Value
Cost Basis
Fair Value
$
1,901
$
3,547
$
1,901
$
2,046
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company's assets and liabilities are
also subject to nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a
result of impairment charges. Fiscal 2018 impairment charges to assets measured at fair value on a nonrecurring basis were
$1.4 billion and primarily related to restructuring activities described in Note 14, as well as discontinued real estate projects in
the U.S. and decisions to exit certain international properties. These impairment charges were classified in operating, selling,
general and administrative expenses in the Company's Consolidated Statement of Income. The fair value was determined based
on comparable market values of similar properties or on a rental income approach, using Level 2 inputs. Impairment charges
not related to restructuring or decisions to exit properties for fiscal 2018 were not material. Additionally, total impairment
charges for fiscal 2017 were not material.
Other Fair Value Disclosures
The Company records cash and cash equivalents and short-term borrowings at cost. The carrying values of these instruments
approximate their fair value due to their short-term maturities.
The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the
Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying value and fair value
of the Company's long-term debt as of January 31, 2018 and 2017, are as follows:
(Amounts in millions)
Long-term debt, including amounts due within one year
January 31, 2018
January 31, 2017
Carrying Value
33,783
$
Fair Value
$
38,766
Carrying Value
38,271
$
Fair Value
$
44,602
72
Note 8. Derivative Financial Instruments
The Company uses derivative financial instruments for hedging and non-trading purposes to manage its exposure to changes in
interest and currency exchange rates, as well as to maintain an appropriate mix of fixed- and variable-rate debt. Use of
derivative financial instruments in hedging programs subjects the Company to certain risks, such as market and credit risks.
Market risk represents the possibility that the value of the derivative financial instrument will change. In a hedging
relationship, the change in the value of the derivative financial instrument is offset to a great extent by the change in the value
of the underlying hedged item. Credit risk related to a derivative financial instrument represents the possibility that the
counterparty will not fulfill the terms of the contract. The notional, or contractual, amount of the Company's derivative
financial instruments is used to measure interest to be paid or received and does not represent the Company's exposure due to
credit risk. Credit risk is monitored through established approval procedures, including setting concentration limits by
counterparty, reviewing credit ratings and requiring collateral from the counterparty when appropriate.
The Company only enters into derivative transactions with counterparties rated "A-" or better by nationally recognized credit
rating agencies. Subsequent to entering into derivative transactions, the Company regularly monitors the credit ratings of its
counterparties. In connection with various derivative agreements, including master netting arrangements, the Company held
cash collateral from counterparties of $279 million and $242 million at January 31, 2018 and January 31, 2017, respectively.
The Company records cash collateral received as amounts due to the counterparties exclusive of any derivative asset.
Furthermore, as part of the master netting arrangements with each of these counterparties, the Company is also required to post
collateral with a counterparty if the Company's net derivative liability position exceeds $150 million with such counterparties.
The Company did not have any cash collateral posted with counterparties at January 31, 2018 and January 31, 2017,
respectively. The Company records cash collateral it posts with counterparties as amounts receivable from those counterparties
exclusive of any derivative liability.
The Company uses derivative financial instruments for the purpose of hedging its exposure to interest and currency exchange
rate risks and, accordingly, the contractual terms of a hedged instrument closely mirror those of the hedged item, providing a
high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria
are recorded using hedge accounting. If a derivative financial instrument is recorded using hedge accounting, depending on the
nature of the hedge, changes in the fair value of the instrument will either be offset against the change in fair value of the
hedged assets, liabilities or firm commitments through earnings or be recognized in accumulated other comprehensive loss until
the hedged item is recognized in earnings. Any hedge ineffectiveness is immediately recognized in earnings. The Company's
net investment and cash flow instruments are highly effective hedges and the ineffective portion has not been, and is not
expected to be, significant. Instruments that do not meet the criteria for hedge accounting, or contracts for which the Company
has not elected hedge accounting, are recorded at fair value with unrealized gains or losses reported in earnings during the
period of the change.
Fair Value Instruments
The Company is a party to receive fixed-rate, pay variable-rate interest rate swaps that the Company uses to hedge the fair
value of fixed-rate debt. The notional amounts are used to measure interest to be paid or received and do not represent the
Company's exposure due to credit loss. The Company's interest rate swaps that receive fixed-interest rate payments and pay
variable-interest rate payments are designated as fair value hedges. As the specific terms and notional amounts of the derivative
instruments match those of the fixed-rate debt being hedged, the derivative instruments are assumed to be perfectly effective
hedges. Changes in the fair values of these derivative instruments are recorded in earnings, but are 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 October 2020 to April
2024.
Net Investment Instruments
The Company is a party to cross-currency interest rate swaps that the Company uses to hedge its net investments. The
agreements are contracts to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. All
changes in the fair value of these instruments are recorded in accumulated other comprehensive loss, offsetting the currency
translation adjustment of the related investment that is also recorded in accumulated other comprehensive loss. These
instruments will mature on dates ranging from July 2020 to February 2030.
The Company has issued foreign-currency-denominated long-term debt as hedges of net investments of certain of its foreign
operations. These foreign-currency-denominated long-term debt issuances are designated and qualify as nonderivative hedging
instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other
comprehensive loss, offsetting the foreign currency translation adjustment of the related net investment that is also recorded in
accumulated other comprehensive loss. At January 31, 2018 and January 31, 2017, the Company had ¥180 billion and ¥10
billion, respectively, of outstanding long-term debt designated as a hedge of its net investment in Japan, as well as outstanding
long-term debt of £1.7 billion and £2.5 billion at January 31, 2018 and January 31, 2017, respectively, that was designated as a
73
hedge of its net investment in the United Kingdom. These nonderivative net investment hedges will mature on dates ranging
from July 2020 to January 2039.
Cash Flow Instruments
The Company is a party to receive fixed-rate, pay fixed-rate cross-currency interest rate swaps to hedge the currency exposure
associated with the forecasted payments of principal and interest of certain non-U.S. denominated debt. The swaps are
designated as cash flow hedges of the currency risk related to payments on the non-U.S. denominated debt. The effective
portion of changes in the fair value of derivatives designated as cash flow hedges of foreign exchange risk is recorded in
accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted
transaction affects earnings. The hedged items are recognized foreign currency-denominated liabilities that are re-measured at
spot exchange rates each period, and the assessment of effectiveness (and measurement of any ineffectiveness) is based on total
changes in the related derivative's cash flows. As a result, the amount reclassified into earnings each period includes an amount
that offsets the related transaction gain or loss arising from that re-measurement and the adjustment to earnings for the period's
allocable portion of the initial spot-forward difference associated with the hedging instrument. These cash flow instruments
will mature on dates ranging from April 2022 to March 2034.
Financial Statement Presentation
Although subject to master netting arrangements, the Company does not offset derivative assets and derivative liabilities in its
Consolidated Balance Sheets. Derivative instruments with an unrealized gain are recorded in the Company's Consolidated
Balance Sheets as either current or non-current assets, based on maturity date, and those hedging instruments with an unrealized
loss are recorded as either current or non-current liabilities, based on maturity date. Refer to Note 7 for the net presentation of
the Company's derivative instruments.
The Company's derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net
investment hedges, were classified as follows as of January 31, 2018 and 2017 in the Company's Consolidated Balance Sheets:
(Amounts in millions)
Derivative instruments
Derivative assets:
Other assets and deferred charges
Derivative liabilities:
Deferred income taxes and other
Nonderivative hedging instruments
Long-term debt
Fair Value
Instruments
January 31, 2018
Net Investment
Instruments
Cash Flow
Instruments
Fair Value
Instruments
January 31, 2017
Net Investment
Instruments
Cash Flow
Instruments
$
— $
208
$
300
$
8
$
471
$
—
91
—
—
4,041
95
—
12
—
—
618
3,209
—
Realized gains and losses related to the Company's derivatives are recorded in interest, net, in the Company's Consolidated
Statements of Income. Amounts related to the Company's derivatives expected to be reclassified from accumulated other
comprehensive loss to net income during the next 12 months are not significant.
74
Note 9. Taxes
Income Before Income Taxes
The components of income before income taxes are as follows:
(Amounts in millions)
U.S.
Non-U.S.
Total income before income taxes
A summary of the provision for income taxes is as follows:
(Amounts in millions)
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 provision for income taxes
$
$
$
Fiscal Years Ended January 31,
2018
2017
2016
10,722
4,401
15,123
$
$
15,680
4,817
20,497
$
$
16,685
4,953
21,638
Fiscal Years Ended January 31,
2018
2017
2016
2,998
$
3,454
$
405
1,377
4,780
(22)
(12)
(146)
(180)
495
1,510
5,459
1,054
51
(360)
745
$
4,600
$
6,204
$
5,562
622
1,400
7,584
(704)
(106)
(216)
(1,026)
6,558
On December 22, 2017, the Tax Act was enacted and contains significant changes to U.S. income tax law. Effective in 2018,
the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes focused on foreign-sourced earnings and
related-party payments, including the creation of the base erosion anti-abuse tax and a new tax on global intangible low-taxed
income ("GILTI"). By operation of law, the Company will apply a blended U.S. statutory federal income tax rate of 33.8% for
fiscal 2018. In addition, the Company was subject to a one-time transition tax in fiscal 2018 on accumulated foreign subsidiary
earnings not previously subject to U.S. income tax.
The Securities and Exchange Commission (SEC) staff issued SAB 118 on December 22, 2017, which allows companies to
record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the
timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable
estimates of the effects and recorded provisional amounts in its financial statements as of January 31, 2018, in accordance with
SAB 118. As the Company collects and prepares necessary data, and interprets the Tax Act and any additional guidance issued
by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the Company may make adjustments to the
provisional amounts during fiscal 2019. Those adjustments may materially impact the Company's provision for income taxes
and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be
completed by the measurement period provided in SAB 118.
Provisional amounts for the following income tax effects of the Tax Act have been recorded as of January 31, 2018, and are
subject to change during fiscal 2019. The net tax benefit recognized in fiscal 2018 related to the Tax Act was $0.2 billion. As
the Company completes its analysis of the Tax Act and incorporates additional guidance that may be issued by the U.S.
Treasury Department, the IRS or other standard-setting bodies, the Company may identify additional effects not reflected as of
January 31, 2018.
One-time Transition Tax
The Tax Act requires the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject
to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets, as defined by the Tax Act,
and 8.0% on the remaining earnings. The Company recorded a provisional amount of $1.9 billion of additional income tax
expense for its one-time transitional tax liability. The Company recorded a provisional amount based on estimates as it
completes its analysis of the application of the effects of the Tax Act as well as finalize its calculations surrounding the
components of its foreign subsidiaries subject to the transition tax including the potential of any correlative adjustments.
Deferred Tax Effects
The Tax Act reduces the U.S. statutory tax rate from 35% to 21% for years after 2017. Accordingly, the Company re-measured
its deferred taxes as of January 31, 2018, to reflect the reduced rate that will apply in future periods when these deferred taxes
75
are settled or realized. The Company recognized a deferred tax benefit of $2.1 billion to reflect the reduced U.S. tax rate and
other effects of the Tax Act. The benefit associated with the remeasurement of the deferred taxes is provisional as of January
31, 2018, as the Company continues gathering the necessary information to complete the calculations. The Company has no
provisional adjustment with respect to the GILTI provision of the Tax Act as the Company is not able to make reasonable
estimates of its related effects at this time. The Company has not yet elected an accounting policy to determine whether it will
recognize GILTI as a period cost when incurred or to recognize deferred taxes for basis differences expected to reverse.
Effective 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 the use of global funding structures and certain U.S. tax credits as further discussed in
the "Cash and Cash Equivalents" section of the Company's significant accounting policies in Note 1. The Company's non-U.S.
income is generally subject to local country tax rates that are below the U.S. statutory tax rate. Certain non-U.S. earnings have
been indefinitely reinvested outside the U.S. A reconciliation of the significant differences between the U.S. statutory tax rate
and the effective income tax rate on pretax income from continuing operations is as follows:
Fiscal Years Ended January 31,
2018
2017
2016
U.S. statutory tax rate
U.S. state income taxes, net of federal income tax benefit
Impact of the Tax Act:
One-time transition tax
Deferred tax effects
Income taxed outside the U.S.
Net impact of repatriated international earnings
Other, net
Effective income tax rate
Deferred Taxes
33.8 %
1.8 %
12.3 %
(14.1)%
(4.1)%
(0.1)%
0.8 %
30.4 %
35.0 %
1.7 %
— %
— %
(4.5)%
(1.0)%
(0.9)%
30.3 %
The Company recorded a provisional adjustment to its U.S. deferred income taxes as of January 31, 2018 to reflect the
reduction in the U.S. statutory tax rate from 35% to 21% resulting from the Tax Act. The significant components of the
Company's deferred tax account balances are as follows:
(Amounts in millions)
Deferred tax assets:
Loss and tax credit carryforwards
Accrued liabilities
Share-based compensation
Other
Total deferred tax assets
Valuation allowances
Deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Property and equipment
Inventories
Other
Total deferred tax liabilities
Net deferred tax liabilities
January 31,
2018
2017
$
$
1,989
2,482
217
1,251
5,939
(1,843)
4,096
3,954
1,153
941
6,048
1,952
$
$
35.0 %
1.8 %
— %
— %
(4.0)%
0.1 %
(2.6)%
30.3 %
3,633
3,437
309
1,474
8,853
(1,494)
7,359
6,435
1,808
1,884
10,127
2,768
76
The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:
(Amounts in millions)
Balance Sheet classification
Assets:
Other assets and deferred charges
Liabilities:
Deferred income taxes and other
Net deferred tax liabilities
Unremitted Earnings
January 31,
2018
2017
$
$
1,879
$
1,565
3,831
1,952
$
4,333
2,768
The Company has previously asserted all of its unremitted earnings offshore were permanently reinvested. Accordingly, the
Company did not record any deferred taxes related to any outside basis differences associated with its foreign subsidiaries. As
part of the tax reform enacted on December 22, 2017, the Company is currently assessing the impact of the new legislation,
which can in turn, impact its assertion regarding any potential future repatriation. After consideration of the provisional
transition tax calculation and deemed repatriation of the previously unremitted earnings, the Company is estimating, on a
provisional basis, its outside tax basis exceeds the outside book basis of its foreign subsidiaries by approximately $10.0 billion.
Once the calculations are completed regarding the transition tax, taking into account the timeline provided in SAB 118, the
Company will provide updated disclosures regarding any potential changes for its previous assertions.
Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances
At January 31, 2018, the Company had net operating loss and capital loss carryforwards totaling approximately $6.7 billion. Of
these carryforwards, approximately $3.6 billion will expire, if not utilized, in various years through 2038. The remaining
carryforwards have no expiration. At January 31, 2018, the Company's provisional transition tax calculation fully utilized all
foreign tax credit carryforwards.
The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable
income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences,
forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely
than not that a deferred tax asset will be recovered, a valuation allowance is established. To the extent that a valuation
allowance has been established and it is subsequently determined that it is more likely than not that the deferred tax assets will
be recovered, the valuation allowance will be released.
The Company had valuation allowances of approximately $1.8 billion and $1.5 billion as of January 31, 2018 and 2017,
respectively, on deferred tax assets associated primarily with net operating loss carryforwards for which management has
determined it is more likely than not that the deferred tax asset will not be realized. Net activity in the valuation allowance
during fiscal 2018 related to releases arising from the use of deferred tax assets, changes in judgment regarding the future
realization of deferred tax assets, increases from certain net operating losses and deductible temporary differences arising in
fiscal 2018, decreases due to operating loss expirations and fluctuations in currency exchange rates. Management believes that
it is more likely than not that the remaining deferred tax assets will be fully realized.
Uncertain Tax Positions
The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining
a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities.
As of January 31, 2018 and 2017, the amount of unrecognized tax benefits related to continuing operations was $1.0 billion and
$1.1 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate
was $690 million and $703 million as of January 31, 2018 and 2017, respectively.
77
A reconciliation of unrecognized tax benefits from continuing operations is as follows:
(Amounts in millions)
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
Lapse in statutes of limitations
Unrecognized tax benefits, end of year
Fiscal Years Ended January 31,
2018
2017
2016
$
$
1,050
$
130
(254)
122
(23)
(15)
$
607
388
(32)
145
(46)
(12)
1,010
$
1,050
$
838
164
(446)
119
(25)
(43)
607
The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling,
general and administrative expenses, respectively. During fiscal 2018, 2017 and 2016, the Company recognized interest
expense related to uncertain tax positions of $32 million, $35 million and $5 million, respectively. As of January 31, 2018 and
2017, accrued interest related to uncertain tax positions of $96 million and $72 million, respectively, was recorded in the
Company's Consolidated Balance Sheets. As of January 31, 2018, accrued penalties related to uncertain tax positions of $12
million were recorded in the Company's Consolidated Balance Sheets. As of January 31, 2017, there were no accrued penalties
related to uncertain tax positions recorded in the Company's Consolidated Balance Sheets.
During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by
between $50 million and $400 million, either because the tax positions are sustained on audit or because the Company agrees to
their disallowance. The Company is focused on resolving tax audits as expeditiously as possible. As a result of these efforts,
unrecognized tax benefits could potentially be reduced beyond the provided range during the next twelve months. The
Company does not expect any change to have a material impact to its Consolidated Financial Statements.
The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2013 through
2018. The Company also remains subject to income tax examinations for international income taxes for fiscal 2011 through
2018, and for U.S. state and local income taxes generally for the fiscal years ended 2013 through 2018.
Other Taxes
The Company is subject to tax examinations for value added, sales-based, payroll and other non-income taxes. A number of
these examinations are ongoing in various jurisdictions. In certain cases, the Company has received assessments from the
respective taxing authorities in connection with these examinations. Unless otherwise indicated, the possible losses or range of
possible losses associated with these matters are individually immaterial, but a group of related matters, if decided adversely to
the Company, could result in a liability material to the Company's Consolidated Financial Statements.
In particular, Brazil federal, state and local laws are complex and subject to varying interpretations, and the Company's
subsidiaries in Brazil are party to a large number of non-income tax assessments. One of these interpretations common to the
retail industry in Brazil relates to whether credits received from suppliers should be treated as a reduction of cost for purposes
of calculating certain indirect taxes. The Company believes credits received from suppliers are reductions in cost and that it has
substantial legal defenses in this matter and intends to defend this matter vigorously. As such, the Company has not accrued for
this matter, although the Company may be required to deposit funds in escrow or secure financial guarantees to continue the
judicial process in defending this matter in Brazil.
78
Note 10. Contingencies
Legal Proceedings
The Company is involved in a number of legal proceedings. The Company has made accruals with respect to these matters,
where appropriate, which are reflected in the Company's Consolidated Financial Statements. For some matters, a liability is not
probable or the amount cannot be reasonably estimated and therefore an accrual has not been made. However, where a liability
is reasonably possible and may be material, such matters have been disclosed. The Company may enter into discussions
regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of
the Company and its shareholders.
Unless stated otherwise, the matters discussed below, if decided adversely to or settled by the Company, individually or in the
aggregate, may result in a liability material to the Company's financial condition or results of operations.
ASDA Equal Value Claims
ASDA Stores, Ltd. ("ASDA"), a wholly-owned subsidiary of the Company, is a defendant in over 10,000 "equal value" claims
that are proceeding before an Employment Tribunal in Manchester (the "Employment Tribunal") in the United Kingdom
("UK") on behalf of current and former ASDA store employees, and further claims may be asserted in the future. The claimants
allege that the work performed by female employees in ASDA's retail stores is of equal value in terms of, among other things,
the demands of their jobs compared to that of male employees working in ASDA's warehouse and distribution facilities, and
that the disparity in pay between these different job positions is not objectively justified. As a result, claimants are requesting
differential back pay based on higher wage rates in the warehouse and distribution facilities and higher wage rates on a
prospective basis.
On March 23, 2015, ASDA asked the Employment Tribunal to stay all proceedings and to "strike out" substantially all of the
claims because the claimants had not adhered to the Tribunal's procedural rule for including multiple claimants on the same
claim form. On July 23, 2015, the Employment Tribunal denied ASDA's requests. Following additional proceedings, on June
20, 2017, the Employment Appeal Tribunal ruled in favor of ASDA on the "strike out" issue and remitted the matter to the
Employment Tribunal to determine whether the improperly filed claims should be struck out. On July 12, 2017, claimants
sought permission from the Court of Appeals to appeal this ruling, which was granted on October 3, 2017. A hearing before the
Court of Appeals is scheduled for October 23, 2018.
As to the initial phase of the Equal Value claims, on October 14, 2016, following a preliminary hearing, the Employment
Tribunal ruled that claimants could compare their positions in ASDA's retail stores with those of employees in ASDA's
warehouse and distribution facilities. On August 31, 2017, the Employment Appeal Tribunal affirmed the Employment
Tribunal's ruling. The Employment Appeal Tribunal also granted permission for ASDA to appeal substantially all of its
findings on August 31, 2017. ASDA sought permission to appeal the remainder of the Employment Appeal Tribunal's findings
to the Court of Appeals on September 21, 2017. A hearing before the Court of Appeals is scheduled for October 10, 2018.
Claimants are now proceeding in the next phase of their claims. That phase will determine whether the work performed by the
claimants is of equal value to the work performed by employees in ASDA's warehouse and distribution facilities.
At present, the Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss
or range of loss that may arise from these proceedings. The Company believes it has substantial factual and legal defenses to
these claims, and intends to defend the claims vigorously.
National Prescription Opiate Litigation
In December 2017, the United States Judicial Panel on Multidistrict Litigation ordered consolidated numerous lawsuits filed
against a wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes,
individuals, and third-party payors, asserting claims generally concerning the impacts of widespread opioid abuse. The
consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804), and is pending in
the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included
in this multidistrict litigation, including cases filed by several counties in West Virginia; by healthcare providers in Mississippi,
Alabama, Texas, and Florida; and by the St. Croix Chippewa Indians of Wisconsin. Similar cases that name the Company have
been filed in state courts by various counties and municipalities; by health care providers; and by various Native American
Tribes. The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or
range of loss that may arise from such claims. The Company believes it has substantial factual and legal defenses to these
claims, and intends to defend the claims vigorously.
FCPA Investigation and Related Matters
The Audit Committee (the "Audit Committee") of the Board of Directors of the Company has been conducting an internal
investigation into, among other things, alleged violations of the U.S. Foreign Corrupt Practices Act ("FCPA") and other alleged
crimes or misconduct in connection with foreign subsidiaries, including Wal-Mart de México, S.A.B. de C.V. ("Walmex"), and
79
whether prior allegations of such violations and/or misconduct were appropriately handled by the Company. The Audit
Committee and the Company have engaged outside counsel from a number of law firms and other advisors who are assisting in
the on-going investigation of these matters.
The Company has also been conducting a voluntary global review of its policies, practices and internal controls for anti-
corruption compliance. The Company is engaged in strengthening its global anti-corruption compliance program through
appropriate remedial anti-corruption measures. In November 2011, the Company voluntarily disclosed that investigative
activity to the U.S. Department of Justice (the "DOJ") and the Securities and Exchange Commission (the "SEC"). Since the
implementation of the global review and the enhanced anti-corruption compliance program, the Audit Committee and the
Company have identified or been made aware of additional allegations regarding potential violations of the FCPA. When such
allegations have been reported or identified, the Audit Committee and the Company, together with their third party advisors,
have conducted inquiries and when warranted based on those inquiries, opened investigations. Inquiries or investigations
regarding allegations of potential FCPA violations were commenced in a number of foreign markets where the Company
operates, including, but not limited to, Brazil, China and India.
As previously disclosed, the Company is under investigation by the DOJ and the SEC regarding possible violations of the
FCPA. The Company has been cooperating with the agencies and discussions have been ongoing regarding the resolution of
these matters. These discussions have progressed to a point that the Company can now reasonably estimate a probable loss and
has recorded an aggregate accrual of $283 million with respect to these matters (the "Accrual"). As the discussions are
continuing, there can be no assurance as to the timing or the terms of the final resolution of these matters.
A number of federal and local government agencies in Mexico have also initiated investigations of these matters. Walmex is
cooperating with the Mexican governmental agencies conducting these investigations. Furthermore, lawsuits relating to the
matters under investigation have been filed by several of the Company's shareholders against it, certain of its current directors,
and certain of its former directors, certain of its former officers and certain of Walmex's former officers.
The Company could be exposed to a variety of negative consequences as a result of the matters noted above. There could be
one or more enforcement actions in respect of the matters that are the subject of some or all of the on-going government
investigations, and such actions, if brought, may result in judgments, settlements, fines, penalties, injunctions, cease and desist
orders, debarment or other relief, criminal convictions and/or penalties and the shareholder lawsuits referenced above may
result in judgments against the Company and its current and former directors and officers named in those proceedings. The
Company expects that there will be on-going media and governmental interest, including additional news articles from media
publications on these matters, which could impact the perception among certain audiences of the Company's role as a corporate
citizen.
In addition, the Company has incurred and expects to continue to incur costs in responding to requests for information or
subpoenas seeking documents, testimony and other information in connection with the government investigations, in defending
the shareholder lawsuits, and in conducting the review and investigations. These costs will be expensed as incurred. For the
fiscal years ended January 31, 2018, 2017 and 2016, the Company incurred the following third-party expenses in connection
with the FCPA investigation and related matters:
(Amounts in millions)
Ongoing inquiries and investigations
Global compliance program and organizational enhancements
Total
Fiscal Years Ended January 31,
2018
2017
2016
$
$
26
14
40
$
$
80
19
99
$
$
95
31
126
The Company does not presently believe that these matters, including the Accrual (and the payment of the Accrual at some
point-in-time in the future), will have a material adverse effect on its business, although given the inherent uncertainties in such
situations, the Company can provide no assurance that these matters will not be material to its business in the future.
80
Note 11. Commitments
The Company has long-term leases for stores and equipment. Rentals (including amounts applicable to taxes, insurance,
maintenance, other operating expenses and contingent rentals) under operating leases and other short-term rental arrangements
were $2.9 billion, $2.6 billion and $2.5 billion in fiscal 2018, 2017 and 2016, respectively.
Aggregate minimum annual rentals at January 31, 2018, under non-cancelable leases are as follows:
(Amounts in millions)
Fiscal Year
2019
2020
2021
2022
2023
Thereafter
Total minimum rentals
Less estimated executory costs
Net minimum lease payments
Noncash gain on future termination of financing obligation
Less imputed interest
Present value of minimum lease payments
Operating Leases(1)
Capital Lease and
Financing Obligations
$
$
$
1,933
1,718
1,532
1,381
1,158
7,644
15,366
$
$
1,039
987
942
843
696
5,423
9,930
27
9,903
1,111
(3,567)
7,447
(1) Represents minimum contractual obligation for non-cancelable leases with initial or remaining terms greater than 12 months as of January 31, 2018.
Certain of the Company's leases provide for the payment of contingent rentals based on a percentage of sales. Such contingent
rentals were not material for fiscal 2018, 2017 and 2016. Substantially all of the Company's store leases have renewal options,
some of which may trigger an escalation in rentals.
Note 12. Retirement-Related Benefits
The Company offers a 401(k) plan for associates in the U.S. under which eligible associates can begin contributing to the plan
immediately upon hire. The Company also offers a 401(k) type plan for associates in Puerto Rico under which associates can
begin to contribute generally after one year of employment. Under these plans, after one year of employment, the Company
matches 100% of participant contributions up to 6% of annual eligible earnings. The matching contributions immediately vest
at 100% for each associate. Participants can contribute up to 50% of their pretax earnings, but not more than the statutory
limits.
Associates in international countries who are not U.S. citizens are covered by various defined contribution post-employment
benefit arrangements. These plans are administered based upon the legislative and tax requirements in the countries in which
they are established.
The following table summarizes the contribution expense related to the Company's defined contribution plans for fiscal 2018,
2017 and 2016:
(Amounts in millions)
Defined contribution plans:
U.S.
International
Total contribution expense for defined contribution plans
Fiscal Years Ended January 31,
2017
2016
2018
$
$
1,124
126
1,250
$
$
1,064
173
1,237
$
$
967
179
1,146
Additionally, the Company's subsidiaries in the United Kingdom and Japan have sponsored defined benefit pension plans. The
plan in the United Kingdom was overfunded by $97 million at January 31, 2018 and underfunded by $129 million at
January 31, 2017. The plan in Japan was underfunded by $184 million and $203 million at January 31, 2018 and 2017,
respectively. Overfunded amounts are recorded as assets in the Company's Consolidated Balance Sheets in other assets and
deferred charges. 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.
81
Note 13. Acquisitions, Disposals and Related Items
Other than the jet.com transaction discussed below, the Company completed certain eCommerce acquisitions during fiscal 2018
and 2017, which were immaterial, individually and in the aggregate, to the Company's Consolidated Financial Statements.
The following significant transaction primarily impacts the operations of the Company's Walmart U.S. segment:
Jet.com, Inc.
In September 2016, the Company completed the acquisition of jet.com, a U.S.-based eCommerce company. The integration of
jet.com into the Walmart U.S. segment is building upon the current eCommerce foundation, allowing for synergies from talent,
logistical operations and access to a broader customer base. The total purchase price for the acquisition was $2.4 billion, net of
cash acquired. The allocation of the purchase price includes $1.7 billion in goodwill and $0.6 billion in intangible assets. As
part of the transaction, the Company agreed to pay additional compensation of approximately $0.8 billion over a five year
period.
The following significant transactions impact the operations of the Company's Walmart International segment:
Suburbia
In April 2017, one of the Company's subsidiaries sold Suburbia, the apparel retail division in Mexico, for $1.0 billion. As part
of the sales agreement, the Company is also leasing certain real estate to the purchaser. The sale resulted in a pre-tax gain of
$0.7 billion, of which $0.4 billion was recognized in the second quarter of fiscal 2018 in membership and other income, and the
remainder was deferred and is being recognized over the lease terms of approximately 20 years.
Yihaodian and JD.com, Inc. ("JD")
In June 2016, the Company sold certain assets relating to Yihaodian, its eCommerce operations in China, including the
Yihaodian brand, website and application, to JD in exchange for Class A ordinary shares of JD representing approximately five
percent of JD's outstanding ordinary shares on a fully diluted basis. The $1.5 billion investment in JD is carried at cost and is
included in other assets and deferred charges in the accompanying Consolidated Balance Sheets. The sale resulted in the
recognition of a $535 million noncash gain, which was included in membership and other income in the accompanying
Consolidated Statements of Income. Subsequently, during fiscal 2017, the Company purchased $1.9 billion of additional JD
shares classified as available for sale securities, representing an incremental ownership percentage of approximately five
percent, for a total ownership of approximately ten percent of JD's outstanding ordinary shares.
In fiscal 2016, the Company completed the purchase of all of the remaining noncontrolling interest in Yihaodian for
approximately $760 million, using existing cash to complete this transaction.
Note 14. Restructuring Charges
In the fourth quarter of fiscal 2018, the Company announced several organizational changes to position the business for more
efficient growth going forward. As a result, the Company recorded $1.2 billion in pre-tax restructuring charges in fiscal 2018
as follows:
(Amounts in millions)
Walmart International
Sam's Club
Corporate and support
Total
Fiscal Year Ended January 31, 2018
Asset
Impairment
Severance Costs
Total
$
$
$
193
596
—
789
$
43
69
300
412
$
$
236
665
300
1,201
The asset impairment charges primarily relate to the real estate of the Sam's Club closures and the wind-down of the Brazil
first-party eCommerce business, which were written down to their estimated fair value. Refer to Note 7 for information on fair
value measurement.
The pre-tax restructuring charges of $1.2 billion are classified in operating, selling, general and administrative expenses in the
Company's Consolidated Statement of Income for fiscal 2018. At January 31, 2018, substantially all of the severances costs
were recorded in accrued liabilities in the Company's Consolidated Balance Sheet. Almost all of these severance costs are
expected to be paid during the first quarter of fiscal 2019.
82
Note 15. Segments
The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located
throughout the U.S., Africa, Argentina, Brazil, Canada, Central America, Chile, China, India, Japan, Mexico and the United
Kingdom. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and
Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker
("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products
and services in each of its segments. It is impractical to segregate and identify revenues for each of these individual products
and services.
The Walmart U.S. segment includes the Company's mass merchant concept in the U.S. operating under the "Walmart" or "Wal-
Mart" brands, as well as eCommerce. The Walmart International segment consists of the Company's operations outside of the
U.S., including eCommerce. The Sam's Club segment includes the warehouse membership clubs in the U.S., as well as
samsclub.com. Corporate and support consists of corporate overhead and other items not allocated to any of the Company's
segments.
The Company measures the results of its segments using, among other measures, each segment's net sales and operating
income, which includes certain corporate overhead allocations. From time to time, the Company revises the measurement of
each segment's operating income, including any corporate overhead allocations, as determined by the information regularly
reviewed by its CODM. When the measurement of a segment changes, previous period amounts and balances are reclassified
to be comparable to the current period's presentation.
Information for the Company's segments, as well as for Corporate and support, including the reconciliation to income before
income taxes, is provided in the following table:
(Amounts in millions)
Fiscal Year Ended January 31, 2018
Net sales
Operating income (loss)
Interest, net
Loss on extinguishment of debt
Income before income taxes
Total assets
Depreciation and amortization
Capital expenditures
Fiscal Year Ended January 31, 2017
Net sales
Operating income (loss)
Interest, net
Income before income taxes
Total assets
Depreciation and amortization
Capital expenditures
Fiscal Year Ended January 31, 2016
Net sales
Operating income (loss)
Interest, net
Income before income taxes
Total assets
Depreciation and amortization
Capital expenditures
Walmart
U.S.
Walmart
International
Sam's Club
Corporate
and support
Consolidated
$
$
$
$
$
$
$
$
$
$
$
$
318,477
17,869
104,347
3,655
5,680
307,833
17,745
104,262
3,298
6,090
298,378
19,087
103,109
2,800
6,728
$
$
$
$
$
$
118,068
5,352
81,549
2,601
2,607
116,119
5,758
74,508
2,629
2,697
123,408
5,346
73,720
2,549
2,930
$
$
$
$
$
$
59,216
982
13,418
466
626
57,365
1,671
14,125
487
639
56,828
1,820
13,998
472
695
— $
(3,766)
$
$
5,208
3,807
1,138
— $
(2,410)
$
$
5,930
3,666
1,193
— $
(2,148)
$
$
8,754
3,633
1,124
495,761
20,437
(2,178)
(3,136)
15,123
204,522
10,529
10,051
481,317
22,764
(2,267)
20,497
198,825
10,080
10,619
478,614
24,105
(2,467)
21,638
199,581
9,454
11,477
83
Total revenues, consisting of net sales and membership and other income, and long-lived assets, consisting primarily of
property and equipment, net, aggregated by the Company's U.S. and non-U.S. operations for fiscal 2018, 2017 and 2016, are as
follows:
(Amounts in millions)
Revenues
U.S. operations
Non-U.S. operations
Total revenues
Long-lived assets
U.S. operations
Non-U.S. operations
Total long-lived assets
Fiscal Years Ended January 31,
2018
2017
2016
$
$
$
$
380,580
119,763
500,343
81,478
33,340
114,818
$
$
$
$
367,784
118,089
485,873
82,746
31,432
114,178
$
$
$
$
357,559
124,571
482,130
82,475
34,041
116,516
No individual country outside of the U.S. had total revenues or long-lived assets that were material to the consolidated totals.
Additionally, the Company did not generate material total revenues from any single customer.
Note 16. Subsequent Event
Dividends Declared
On February 20, 2018, the Board of Directors approved the fiscal 2019 annual dividend at $2.08 per share, an increase over the
fiscal 2018 dividend of $2.04 per share. For fiscal 2019, the annual dividend will be paid in four quarterly installments of $0.52
per share, according to the following record and payable dates:
Record Date
March 9, 2018
May 11, 2018
August 10, 2018
December 7, 2018
Note 17. Quarterly Financial Data (Unaudited)
(Amounts in millions, except per share data)
Total revenues
Net sales
Cost of sales
Consolidated net income
Consolidated net income attributable to Walmart
Basic net income per common share attributable to Walmart
Diluted net income per common share attributable to Walmart(1)
Total revenues
Net sales
Cost of sales
Consolidated net income
Consolidated net income attributable to Walmart
Basic net income per common share attributable to Walmart
Diluted net income per common share attributable to Walmart(1)
Payable Date
April 2, 2018
June 4, 2018
September 4, 2018
January 2, 2019
Fiscal Year Ended January 31, 2018
Q1
Q2
Q3
Q4
Total
$
117,542
$
123,355
$
123,179
$
136,267
$
500,343
116,526
87,688
3,152
3,039
1.00
1.00
121,949
91,521
3,104
2,899
0.96
0.96
122,136
91,547
1,904
1,749
0.59
0.58
135,150
102,640
2,363
2,175
0.74
0.73
495,761
373,396
10,523
9,862
3.29
3.28
Fiscal Year Ended January 31, 2017
Q1
Q2
Q3
Q4
Total
$
115,904
$
120,854
$
118,179
$
130,936
$
485,873
114,986
86,544
3,216
3,079
0.98
0.98
119,405
89,485
3,889
3,773
1.21
1.21
117,176
87,484
3,202
3,034
0.98
0.98
129,750
97,743
3,986
3,757
1.23
1.22
481,317
361,256
14,293
13,643
4.40
4.38
(1) The sum of quarterly amounts may not agree to annual amount due to rounding and the impact of a decreasing amount of shares outstanding during the
year.
84
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information, which is
required to be timely disclosed, is accumulated and communicated to management in a timely fashion. In designing and
evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives. Our management is necessarily
required to use judgment in evaluating controls and procedures. Also, we have investments in unconsolidated entities. Since
we do not control or manage those entities, our controls and procedures with respect to those entities are substantially more
limited than those we maintain with respect to our consolidated subsidiaries.
In the ordinary course of business, we review our internal control over financial reporting and make changes to our systems and
processes to improve such controls and increase efficiency, while ensuring that we maintain an effective internal control
environment. Changes may include such activities as implementing new, more efficient systems, updating existing systems,
automating manual processes, migrating certain processes to our shared services organizations and increasing monitoring
controls. These changes have not materially affected, and are not reasonably likely to materially affect, the Company's internal
control over financial reporting. However, they allow us to continue to enhance our internal control over financial reporting
and ensure that our internal control environment remains effective.
An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the
period covered by this report was performed under the supervision and with the participation of management, including our
Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that
information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of
1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable
assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's
rules and forms.
Report on Internal Control Over Financial Reporting
Management has responsibility for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles
generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial
reporting as of January 31, 2018. In making its assessment, management has utilized the criteria set forth by the Committee of
Sponsoring Organizations ("COSO") of the Treadway Commission in Internal Control-Integrated Framework (2013).
Management concluded that based on its assessment, Walmart's internal control over financial reporting was effective as of
January 31, 2018. The Company's internal control over financial reporting as of January 31, 2018, has been audited by Ernst &
Young LLP as stated in their report which appears herein.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company's internal control over financial reporting as of January 31, 2018, that has materially
affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
85
Report on Ethical Standards
Our Company was founded on the belief that open communication and the highest ethical standards are necessary to be
successful. Our long-standing "Open Door" communication policy helps management be aware 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 continued observance of high ethical standards such as
honesty, integrity and compliance with the law in the conduct of Walmart's business. Familiarity and compliance with the
Statement of Ethics is required of all associates. The Company also maintains a separate Code of Ethics for our senior financial
officers. Walmart also has in place a Related-Party Transaction Policy. This policy applies to Walmart's senior officers and
directors and requires material related-party transactions to be reviewed by the Audit Committee. The senior officers and
directors are required to report material related-party transactions to Walmart. We maintain a global ethics and compliance
office which oversees and administers several reporting mechanisms, including an ethics helpline. The ethics helpline provides
a channel for associates to ask questions and make confidential complaints regarding potential violations of our statements of
ethics, including violations related to financial or accounting matters. These contacts may be made anonymously.
/s/ C. Douglas McMillon
C. Douglas McMillon
President and Chief Executive Officer
/s/ M. Brett Biggs
M. Brett Biggs
Executive Vice President and Chief Financial Officer
ITEM 9B. OTHER INFORMATION
None.
86
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this item with respect to the Company's directors, certain family relationships, and compliance by the
Company's directors, executive officers and certain beneficial owners of the Company's common stock with Section 16(a) of
the Securities Exchange Act of 1934, as amended, is incorporated by reference to such information under the captions entitled
"Proposal No. 1 – Election of Directors" and "Stock Ownership – Section 16(a) Beneficial Ownership Reporting Compliance"
in our Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 30, 2018 (our "Proxy Statement").
Please see the information concerning our executive officers contained in Part I, Item 1 herein under the caption "Executive
Officers of the Registrant," which is included there in accordance with Instruction 3 to Item 401(b) of the SEC's Regulation S-
K.
No material changes have been made to the procedures by which shareholders of the Company may recommend nominees to
our board of directors since those procedures were disclosed in our proxy statement relating to our 2017 Annual Shareholders'
Meeting as previously filed with the SEC.
The information regarding our Audit Committee, including our audit committee financial experts and our Codes of Ethics for
the CEO and Senior Financial Officers and our Statement of Ethics applicable to all of our associates, including our Chief
Executive Officer, Chief Financial Officer and our Controller, who is our principal accounting officer, required by this item is
incorporated herein by reference to the information under the captions "Corporate Governance – Board Committees" and
"Proposal No. 4: Ratification of Independent Accountants – Audit Committee Independence and Financial Expert
Determination" included in our Proxy Statement. "Item 1. Business" above contains information relating to the availability of a
copy of our Code of Ethics for our CEO and Senior Financial Officers and our Statement of Ethics and the posting of
amendments to and any waivers of the Code of Ethics for our CEO and Senior Financial Officers and our Statement of Ethics
on our website.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to all information under the captions "Corporate
Governance – Director Compensation," "Executive Compensation" and under the sub-captions "Compensation Committee
Interlocks and Insider Participation" and "Compensation Committee Report" that appear under the caption "Executive
Compensation" included in our Proxy Statement.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated herein by reference to all information under the sub-captions "Holdings of
Major Shareholders" and "Holdings of Officers and Directors" that appear under the caption "Stock Ownership" and all
information that appears under the caption "Executive Compensation Tables – Equity Compensation Plan Information"
included in our Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated herein by reference to all information under the caption "Corporate
Governance – Fiscal 2018 Review of Related Person Transactions" and under the caption "Corporate Governance – How We
Determine Director Independence" included in our Proxy Statement.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item is incorporated herein by reference to all information under the caption "Proposal No. 3 –
Ratification of Independent Accountants" and the sub-caption thereunder "Audit Committee Pre-Approval Policy" included in
our Proxy Statement.
87
PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
Documents filed as part of this report are as follows:
1.
Financial Statements:
See the Financial Statements in Part II, Item 8.
2.
Financial Statement Schedules:
Certain schedules have been omitted because the required information is not present or is not present in
amounts sufficient to require submission of the schedule, or because the information required is included in
the Consolidated Financial Statements, including the notes thereto.
3.
Exhibits:
The required exhibits are included at the end of the Form 10-K or are incorporated herein by reference and
are described in the Exhibit Index immediately preceding the first exhibit to this Annual Report on Form 10-
K.
(b)
The exhibits furnished with this Annual Report on Form 10-K in accordance with the requirement of Form 10-K of the
SEC are listed in the Exhibit Index, which appears immediately following the signature pages to this Annual Report on
Form 10-K and which is incorporated in this Item 15(b) by reference to such Exhibit Index.
(c)
Financial Statement Schedules
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Walmart Inc.
Date: March 30, 2018
By
/s/ C. Douglas McMillon
C. Douglas McMillon
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated:
Date: March 30, 2018
Date: March 30, 2018
Date: March 30, 2018
Date: March 30, 2018
By
By
By
By
/s/ C. Douglas McMillon
C. Douglas McMillon
President and Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Gregory B. Penner
Gregory B. Penner
Chairman of the Board and Director
/s/ M. Brett Biggs
M. Brett Biggs
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ David M. Chojnowski
David M. Chojnowski
Senior Vice President and Controller
(Principal Accounting Officer)
88
Signature Page to Walmart Inc.
Form 10-K for the Fiscal Year Ended January 31, 2018
Date: March 30, 2018
By
/s/ James I. Cash, Jr.
James I. Cash, Jr., Ph.D.
Director
Date: March 30, 2018
By
/s/ Timothy P. Flynn
Timothy P. Flynn
Director
Date: March 30, 2018
By
/s/ Sarah Friar
Sarah Friar
Director
Date: March 30, 2018
By
/s/ Carla A. Harris
Date: March 30, 2018
Carla A. Harris
Director
By
/s/ Thomas W. Horton
Thomas W. Horton
Director
Date: March 30, 2018
By
/s/ Marissa A. Mayer
Marissa A. Mayer
Director
Date: March 30, 2018
By
/s/ Steven S Reinemund
Steven S Reinemund
Director
Date: March 30, 2018
By
/s/ Kevin Y. Systrom
Kevin Y. Systrom
Director
Date: March 30, 2018
By
/s/ S. Robson Walton
S. Robson Walton
Director
Date: March 30, 2018
By
/s/ Steuart L. Walton
Steuart L. Walton
Director
Signature Page to Walmart Inc.
Form 10-K for the Fiscal Year Ended January 31, 2018
89
The following exhibits are filed or furnished as part of this Form 10-K or are incorporated herein by reference.
Exhibit Index(1),(2)
3(a)
3(b)
4(a)
4(b)
4(c)
4(d)
4(e)
4(f)
4(g)
4(h)
10(a)*
10(b)*
10(c)*
10(d)*
10(e)*
10(f)*
10(g)
Restated Certificate of Incorporation of the Company dated February 1, 2018 is incorporated herein by
reference to Exhibit 3.1 to the Report on Form 8-K that the Company filed on February 1, 2018 (File No.
001-06991)
Amended and Restated Bylaws of the Company are incorporated herein by reference to Exhibit 3.2 to the
Report on Form 8-K that the Company filed on February 1, 2018 (File No. 001-06991)
Form of Indenture dated as of July 15, 1990, between the Company and Harris Trust and Savings Bank,
Trustee, is incorporated herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File
Number 33-35710)(P)
Indenture dated as of April 1, 1991, between the Company and J.P. Morgan Trust Company, National
Association, as successor trustee to Bank One Trust Company, NA, as successor trustee to The First National
Bank of Chicago, Trustee, is incorporated herein by reference to Exhibit 4(a) to Registration Statement on
Form S-3 (File Number 33-51344)(P)
First Supplemental Indenture dated as of September 9, 1992, to the Indenture dated as of April 1, 1991,
between the Company and J.P. Morgan Trust Company, National Association, as successor trustee to Bank
One Trust Company, NA, as successor trustee to The First National Bank of Chicago, Trustee, is incorporated
herein by reference to Exhibit 4(b) to Registration Statement on Form S-3 (File Number 33-51344)(P)
Indenture dated as of July 5, 2001, between the Company and J.P. Morgan Trust Company, National
Association, as successor trustee to Bank One Trust Company, NA, is incorporated by reference to Exhibit 4.1
to Registration Statement on Form S-3 (File Number 333-64740)
Indenture dated as of December 11, 2002, between the Company and J.P. Morgan Trust Company, National
Association, as successor trustee to Bank One Trust Company, NA, is incorporated by reference to Exhibit 4.5
to Registration Statement on Form S-3 (File Number 333-101847)
Indenture dated as of July 19, 2005, between the Company and J.P. Morgan Trust Company, National
Association is incorporated by reference to Exhibit 4.5 to Registration Statement on Form S-3 (File Number
333-126512)
First Supplemental Indenture, dated December 1, 2006, between the Company and The Bank of New York
Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as
Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust
Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.6 to Post-
Effective Amendment No. 1 to Registration Statement on Form S-3 (File Number 333-130569)
Second Supplemental Indenture, dated December 19, 2014, between the Company and The Bank of New
York Trust Company, N.A., as successor-in-interest to J.P. Morgan Trust Company, National Association, as
Trustee, under the Indenture, dated as of July 19, 2005, between the Company and J.P. Morgan Trust
Company, National Association, as Trustee, is incorporated herein by reference to Exhibit 4.3 to Registration
Statement on Form S-3 (File Number 333-201074)
Walmart Inc. Officer Deferred Compensation Plan, as amended effective February 1, 2018
Walmart Inc. Management Incentive Plan, as amended effective February 1, 2018
Walmart Inc. 2016 Associate Stock Purchase Plan, as amended effective February 1, 2018
Walmart Inc. Stock Incentive Plan of 2015, as amended effective February 1, 2018
Walmart Inc. Supplemental Executive Retirement Plan, as amended effective February 1, 2018
Walmart Inc. Director Compensation Deferral Plan, as amended effective February 1, 2018
Form of Post-Termination Agreement and Covenant Not to Compete with attached Schedule of Executive
Officers who have executed a Post-Termination Agreement and Covenant Not to Compete is incorporated by
reference to Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the fiscal year ended
January 31, 2011, filed on March 30, 2011(1)
10(g).1*
Amended Schedule of Executive Officers who have executed a Post-Termination Agreement and Covenant
Not to Compete in the form filed as Exhibit 10(p) to the Annual Report on Form 10-K of the Company for the
fiscal year ended January 31, 2011
10(h)*
Walmart Deferred Compensation Matching Plan, as amended effective February 1, 2018
90
10(i)
10(j)
10(k)
10(l)*
10(m)*
10(n)
10(o)
10(p)
10(q)
10(r)
10(s)
10(t)
10(u)
10(v)
10(w)
10(x)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2010 Performance Unit Award, Notification of Award
and Terms and Conditions of Award is incorporated by reference to Exhibit 10(s) to the Annual Report on
Form 10-K of the Company for the fiscal year ended January 31, 2014, filed on March 21, 2014(1)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2010 Restricted Stock Award, Notification of Award
and Terms and Conditions of Award is incorporated by reference to Exhibit 10(t) to the Annual Report on
Form 10-K of the Company for the fiscal year ended January 31, 2014, filed on March 21, 2014(1)
Post-Termination Agreement and Covenant Not to Compete between Wal-Mart Canada Corp. and David
Cheesewright dated as of January 31, 2014, is incorporated by reference to Exhibit 10(u) to the Annual Report
on Form 10-K of the Company for the fiscal year ended January 31, 2014, filed on March 21, 2014(1)
Form of Walmart Inc. Restricted Stock Award Notification of Award and Terms and Conditions of Award
(January 2018 annual award - all executive officers)
Form of Walmart Inc. Global Share-Settled Performance-Based Restricted Stock Unit Award Notification of
Award and Terms and Conditions of Award (January 2018 annual award - all executive officers)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Share-Settled Performance Unit Notification and
Terms and Conditions (Wal-Mart Canada Corp.-related - January 2016 annual award to David B
Cheesewright) is incorporated by reference to Exhibit 10(p) to the Annual Report on Form 10-K of the
Company for the fiscal year ended January 31, 2016, filed on March 30, 2016(1)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Restricted Stock Award, Notification of Award
and Terms and Conditions of Award (January 2016 annual award - executive officers other than David
Cheesewright) is incorporated by reference to Exhibit 10(q) to the Annual Report on Form 10-K of the
Company for the fiscal year ended January 31, 2016, filed on March 30, 2016(1)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Performance-Based Restricted Stock Award,
Notification of Award and Terms and Conditions of Award (January 2016 award to Neal Ashe and Greg
Foran) is incorporated by reference to Exhibit 10(r) to the Annual Report on Form 10-K of the Company for
the fiscal year ended January 31, 2016, filed on March 30, 2016(1)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Share-Settled Restricted Unit Notification and
Terms and Conditions (Wal-Mart Canada Corp.-related - January 2016 annual award to David Cheesewright)
is incorporated by reference to Exhibit 10(s) to the Annual Report on Form 10-K of the Company for the
fiscal year ended January 31, 2016, filed on March 30, 2016(1)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Restricted Stock Award and Notification and
Terms and Conditions of Award (January 2017 annual award - all executive officers other than David
Cheesewright) is incorporated by reference to Exhibit 10(r) to the Annual Report on Form 10-K of the
Company for the fiscal year ended January 31, 2017, filed on March 31, 2017(1)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Share Settled Restricted Stock Unit Notification
and Terms and Conditions (January 2017 annual award - David Cheesewright) is incorporated by reference to
Exhibit 10(s) to the Annual Report on Form 10-K of the Company for the fiscal year ended January 31, 2017,
filed on March 31, 2017(1)
Form of Wal-Mart Stores, Inc. Stock Incentive Plan of 2015 Global Share-Settled Performance-Based
Restricted Stock Unit Notification and Terms and Conditions (January 2017 annual award - all executive
officers) is incorporated by reference to Exhibit 10(t) to the Annual Report on Form 10-K of the Company for
the fiscal year ended January 31, 2017 filed on March 31, 2017(1)
Share Settled Restricted Stock Unit Notification and Terms and Conditions Awarded to Marc Lore on
September 19, 2016, is incorporated by reference to Exhibit 10(a) to the Quarterly Report on Form 10-Q of
the Company for the fiscal quarter ended October 31, 2016, filed on December 1, 2016(1)
Deferred Contingent Merger Consideration Agreement dated August 7, 2016, between the Company and Marc
Lore is incorporated herein by reference to Exhibit 10(v) to the Annual Report on Form 10-K of the Company
for the fiscal year ended January 31, 2017 filed on March 30, 2017(1)
Amendment to Deferred Contingent Merger Consideration Agreement dated September 12, 2016, between the
Company and Marc Lore is incorporated herein by reference to Exhibit 10(w) to the Annual Report on Form
10-K of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017(1)
Non-Competition, Non-Solicitation and No-Hire Agreement between the Company and Marc Lore dated
September 19, 2016 is incorporated herein by reference to Exhibit 10(x) to the Annual Report on Form 10-K
of the Company for the fiscal year ended January 31, 2017 filed on March 30, 2017(1)
12.1*
Statement regarding computation of the Earnings to Fixed Charges Ratios
91
21*
23*
31.1*
31.2*
32.1**
32.2**
List of the Company's Significant Subsidiaries
Consent of Independent Registered Public Accounting Firm
Chief Executive Officer Section 302 Certification
Chief Financial Officer Section 302 Certification
Chief Executive Officer Section 906 Certification
Chief Financial Officer Section 906 Certification
101.INS*
XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema Document
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
*
**
(P)
Filed herewith as an Exhibit.
Furnished herewith as an Exhibit.
This Exhibit was originally filed in paper format. Accordingly, a hyperlink has not been provided.
Notes to Exhibit Index:
1.
2.
The exhibits listed in this Exhibit Index and incorporated as exhibits to the Annual Report on Form 10-K of Walmart
Inc. (the "Company") for the fiscal year ended January 31, 2018 by reference to an Annual Report on Form 10-K,
Quarterly Report on Form 10-Q or Current Report on Form 8-K of the Company previously filed with the SEC by the
Company are available for review online on the EDGAR system of the SEC at www.sec.gov as exhibits to the Annual
Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K referred to above in the
description of the exhibit incorporated by reference. The historical filings of the Company may be reviewed and
copied at the Public Reference Room of the SEC at 100 F Street, NE Washington, DC 20549-2521 under Commission
File No. 001-6991.
The Company and its subsidiaries have in the past issued, and may in the future issue from time to time, long-term
debt instruments, but the aggregate principal amount of the debt instruments of any one series of such debt instruments
has not exceeded or will not exceed 10% of the assets of the Company at any pertinent time. The Company has
previously filed with the SEC its agreement to, and hereby agrees to, file copies of the agreements relating to long-
term debt instruments and the instruments representing or evidencing such long-term debt instruments with the SEC
upon request. As a result, in accordance with the provisions of paragraph (b)(4)(iii)(A) of Item 601 of Regulation S-K
of the SEC, copies of such long-term debt instruments have not been filed as exhibits to the Annual Report on Form
10-K of the Company for the fiscal year ended January 31, 2018. The Company has previously filed the documents
and instruments establishing the specific terms of long-term debt instruments offered and sold by the Company
pursuant to its effective registration statements filed with the SEC pursuant to the Securities Act of 1933, as amended,
as exhibits to the applicable registration statement or as exhibits to a Current Report on Form 8-K filed in connection
with the applicable registration statement and the sale and issuance of those long-term debt instruments.
92
BOARD OF DIRECTORS
James I. Cash, Jr., Ph.D.
Dr. Cash is the James E. Robison Professor of Business Administration, Emeritus at Harvard Business School,
where he served from July 1976 to October 2003.
Timothy P. Flynn
Mr. Flynn is the retired Chairman of KPMG International, a professional services firm.
Sarah Friar
Ms. Friar is the Chief Financial Officer of Square, Inc., a provider of commerce solutions, including managed payments
and point-of-sale systems for businesses and mobile financial offerings for consumers.
Carla A. Harris
Ms. Harris is the Vice Chair, Wealth Management as well as Managing Director and Senior Client Advisor for
Morgan Stanley.
Thomas W. Horton
Mr. Horton is a Senior Advisor at Warburg Pincus, LLC, a private equity firm. He is the former Chairman of
American Airlines Group Inc. and the former Chairman of American Airlines, Inc.
Marissa A. Mayer
Ms. Mayer is the former Chief Executive Officer and President and Director of Yahoo!, Inc., a digital media company.
C. Douglas McMillon
Mr. McMillon is the President and Chief Executive Officer of Walmart Inc.
Gregory B. Penner
Mr. Penner is the Chairman of the Board of Directors of Walmart Inc. and a General Partner at Madrone Capital Partners,
an investment firm.
Steven S Reinemund
Mr. Reinemund is the retired Dean of Business and Professor of Leadership and Strategy at Wake Forest University.
He previously served as the Chairman of the Board and Chairman and Chief Executive Officer of PepsiCo, Inc.
Kevin Y. Systrom
Mr. Systrom is the Chief Executive Officer and co-founder of Instagram, a social media application.
S. Robson Walton
Mr. Walton is the retired Chairman of the Board of Directors of Walmart Inc.
Steuart L. Walton
Mr. Walton is the founder and Chairman of RZC Investments, an investment business located in Bentonville, Arkansas,
and the founder and former Chief Executive Officer of Game Composites, Ltd., a company that manufactures carbon
fiber aircraft and aircraft parts.
[THIS PAGE INTENTIONALLY LEFT BLANK]
Walmart by the numbers
$500.3 billion
Total Revenue
$28.3 billion
Operating Cash Flow
$14.4 billion
cash returned to
shareholders through
dividends and share
repurchases
$10.1 billion
Capital Expenditures
$11.5 billion
Walmart U.S.
eCommerce
sales
Serve nearly
270 million
customers
a week
over
11,700 stores
operating in
28 countries
Corporate and Stock Information
Listing
New York Stock Exchange
Stock Symbol: WMT
Corporate Information
Stock Registrar and Transfer Agent:
Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, Kentucky 40233-5000
1-800-438-6278
TDD for hearing-impaired inside the U.S. 1-800-952-9245
Internet: http://www.computershare.com
Annual Meeting
Our Annual Meeting of Shareholders will be held on Wednesday,
May 30, 2018 at 10:00 a.m. (Central Time) in the John Q. Hammons
Center, Rogers, Arkansas.
Communication With Shareholders
Walmart 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 following reports are available without charge upon request
by writing the 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 Responsibility Report
• Culture, Diversity & Inclusion Report
Independent Registered Public Accounting Firm
Ernst & Young LLP
5417 Pinnacle Point Dr., Suite 501
Rogers, AR 72758
Market Price of Common Stock
The high market price and low market price per share for the
Company’s common stock for each fiscal quarter in fiscal 2018
and 2017 were as follows:
Fiscal Years Ended January 31,
2018
2017
High
Low
High
Low
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
$ 75.77 $ 66.04
73.13
77.50
87.00
80.47
89.11
109.98
$ 70.08 $ 62.35
62.72
67.07
65.28
74.35
75.19
72.48
The high market price and low market price per share for the Company’s
common stock for the first fiscal quarter of fiscal 2019, were as follows:
Dividends Payable Per Share
For fiscal 2019, dividends will be paid based on the following schedule:
April 2, 2018
June 4, 2018
September 4, 2018
January 2, 2019
$0.52
0.52
0.52
0.52
Dividends Paid Per Share
For fiscal 2018, dividends were paid based on the following schedule:
April 3, 2017
June 5, 2017
September 5, 2017
January 2, 2018
$0.51
0.51
0.51
0.51
For fiscal 2017, dividends were paid based on the following schedule:
April 4, 2016
June 6, 2016
September 6, 2016
January 3, 2017
$0.50
0.50
0.50
0.50
Stock Performance Chart
This graph compares the cumulative total shareholder return on
Walmart’s common stock during the five fiscal years ending in
fiscal 2018 to the cumulative total returns on the S&P 500 Retailing
Index and the S&P 500 Index. The comparison assumes $100 was
invested on February 1, 2013, in shares of our common stock and
in each of the indices shown and assumes that all of the dividends
were reinvested.
Comparison of 5-Year Cumulative Total Return*
Among Walmart Inc., the S&P 500 Index and S&P 500 Retailing Index
Walmart Inc.
S&P 500 Index
S&P 500 Retailing Index
$350
$300
$250
$200
$150
$100
$ 50
$ 0
2013
2014
2015
2016
2017
2018
Fiscal Years
* Assumes $100 Invested on February 1, 2013
Assumes Dividends Reinvested
Fiscal Year Ending January 31, 2018
Fiscal Years Ended January 31,
2013
2014
2015
2016
2017
2018
$100.00 $109.39 $127.58 $102.39 $105.97 $173.61
Walmart Inc.
137.88
S&P 500 Index
165.51 209.22
100.00
184.32 218.76 321.37
S&P 500 Retailing Index 100.00
138.80
153.64
121.52
127.72
2 | WALMART
1st Quarter(1)
(1) Through March 28, 2018.
2019
High
Low
$106.56
$85.28
Holders of Record of Common Stock
As of March 28, 2018, there were 229,858 holders of record of
Walmart’s common stock.
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Providing opportunity &
serving our communities
2018 ANNUAL REPORT
250,000+
U.S. associates
graduated from
Walmart Academy
$250B
Commitment to
purchase products that
support American jobs
1 Gigaton
Commitment to
work with suppliers to
reduce emissions in the
value chain
$35M+
Donated to 2017
hurricane relief
For more information, please see our Global Responsibility Report at:
corporate.walmart.com/global-responsibility
Walmart Inc. (NYSE: WMT)
702 S.W. 8th Street
Bentonville, Arkansas 72716 USA
479-273-4000
walmart.com
The minimized environmental footprint of this report is the result of an extensive, collaborative effort of Walmart and our supply
chain partners. The environmental and social impact continues to be an important consideration. It is printed on paper from
well-managed forests containing recycled PCW fiber that is Elementally Chlorine Free (ECF). It is printed using environmental
manufacturing principles that were utilized in the printing process. These practices include environmentally responsible
procurement, lean manufacturing, green chemistry principles, the recycling of residual materials and reduced volatile organic
compound inks and coatings.
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ACCELERATING
INNOVATION