WAL MART STORES INC, 10-Q filed on 12/6/2010
Quarterly Report
Document and Entity Information
9 Months Ended
Oct. 31, 2010
Nov. 30, 2010
Document and Entity Information
 
 
Document Type
10-Q 
 
Amendment Flag
FALSE 
 
Document Period End Date
2010-10-31 
 
Document Fiscal Year Focus
2011 
 
Document Fiscal Period Focus
Q3 
 
Entity Registrant Name
WAL MART STORES INC 
 
Entity Central Index Key
0000104169 
 
Current Fiscal Year End Date
01/31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
3,561,994,294 
Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Millions, except Per Share data
3 Months Ended
Oct. 31,
9 Months Ended
Oct. 31,
2010
2009
2010
2009
Revenues:
 
 
 
 
Net sales
$ 101,239 
$ 98,667 
$ 303,352 
$ 292,306 
Membership and other income
713 
706 
2,137 
2,157 
Revenues, total
101,952 
99,373 
305,489 
294,463 
Costs and expenses:
 
 
 
 
Cost of sales
75,906 
73,915 
228,129 
219,366 
Operating, selling, general and administrative expenses
20,435 
20,016 
59,822 
58,553 
Operating income
5,611 
5,442 
17,538 
16,544 
Interest:
 
 
 
 
Debt
500 
442 
1,432 
1,337 
Capital leases
69 
68 
201 
206 
Interest income
(53)
(35)
(161)
(128)
Interest, net
516 
475 
1,472 
1,415 
Income from continuing operations before income taxes
5,095 
4,967 
16,066 
15,129 
Provision for income taxes
1,505 
1,702 
5,285 
5,157 
Income from continuing operations
3,590 
3,265 
10,781 
9,972 
Loss from discontinued operations, net of tax
 
(7)
 
(22)
Consolidated net income
3,590 1
3,258 1
10,781 2
9,950 2
Less consolidated net income attributable to the noncontrolling interest
(154)
(114)
(448)
(338)
Consolidated net income attributable to Walmart
3,436 
3,144 
10,333 
9,612 
Basic net income per common share:
 
 
 
 
Basic income per common share from continuing operations attributable to Walmart
0.95 
0.82 
2.8 
2.48 
Basic loss per common share from discontinued operations attributable to Walmart
 
 
 
(0.01)
Basic net income per common share attributable to Walmart
0.95 
0.82 
2.8 
2.47 
Diluted net income per common share:
 
 
 
 
Diluted income per common share from continuing operations attributable to Walmart
0.95 
0.82 
2.79 
2.47 
Diluted loss per common share from discontinued operations attributable to Walmart
 
(0.01)
 
 
Diluted net income per common share attributable to Walmart
$ 0.95 
$ 0.81 
$ 2.79 
$ 2.47 
Weighted-average number of common shares:
 
 
 
 
Basic
3,617 
3,851 
3,692 
3,887 
Diluted
3,631 
3,861 
3,706 
3,897 
Dividends declared per common share
 
 
1.21 
1.09 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions
9 Months Ended
Oct. 31,
2010
2009
Year Ended
Jan. 31, 2010
Current assets:
 
 
 
Cash and cash equivalents
$ 10,616 
$ 6,003 
$ 7,907 
Receivables, net
4,374 
3,776 
4,144 
Inventories
41,059 
38,129 
32,713 
Prepaid expenses and other
3,382 
3,463 
3,128 
Current assets of discontinued operations
137 
145 
140 
Total current assets
59,568 
51,516 
48,032 
Property and equipment:
 
 
 
Property and equipment
145,669 
135,152 
137,848 
Less accumulated depreciation
(41,857)
(36,716)
(38,304)
Property and equipment, net
103,812 
98,436 
99,544 
Property under capital leases:
 
 
 
Property under capital leases
5,847 
5,618 
5,669 
Less accumulated amortization
(3,117)
(2,833)
(2,906)
Property under capital leases, net
2,730 
2,785 
2,763 
Goodwill
16,586 
16,162 
16,126 
Other assets and deferred charges
4,194 
3,603 
3,942 
Total assets
186,890 
172,502 
170,407 
Current liabilities:
 
 
 
Short-term borrowings
7,352 
5,239 
523 
Accounts payable
36,208 
30,920 
30,451 
Dividends payable
1,191 
1,021 
 
Accrued liabilities
17,518 
16,638 
18,734 
Accrued income taxes
518 
786 
1,347 
Long-term debt due within one year
5,196 
4,169 
4,050 
Obligations under capital leases due within one year
347 
344 
346 
Current liabilities of discontinued operations
77 
38 
92 
Total current liabilities
68,407 
59,155 
55,543 
Long-term debt
40,803 
34,394 
33,231 
Long-term obligations under capital leases
3,096 
3,207 
3,170 
Deferred income taxes and other
6,197 
6,202 
5,508 
Redeemable noncontrolling interest
367 
310 
307 
Commitments and contingencies
 
 
 
Equity:
 
 
 
Common stock and capital in excess of par value
3,969 
4,134 
4,181 
Retained earnings
61,451 
63,697 
66,357 
Accumulated other comprehensive income (loss)
105 
(551)
(70)
Total Walmart shareholders' equity
65,525 
67,280 
70,468 
Noncontrolling interest
2,495 
1,954 
2,180 
Total equity
68,020 
69,234 
72,648 
Total liabilities and equity
$ 186,890 
$ 172,502 
$ 170,407 
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (USD $)
In Millions
Common Stock
Capital in Excess of Par Value
Retained Earnings
Accumulated Other Comprehensive Income (Loss) [Member]
Total Walmart Shareholders' Equity
Noncontrolling Interest
Total
Balances, in shares (as adjusted) at Jan. 31, 2010
3,786 
 
 
 
 
 
 
Balances at Jan. 31, 2010
$ 378 
$ 3,803 
$ 66,357 
$ (70)
$ 70,468 
$ 2,180 
$ 72,648 
Consolidated net income (excludes redeemable noncontrolling interest)
 
 
10,333 
 
10,333 
442 
10,775 
Other comprehensive income
 
 
 
175 
175 
121 
296 
Cash dividends ($1.21 per share)
 
 
(4,552)
 
(4,552)
 
(4,552)
Purchase of Company stock (in shares)
(210)
 
 
 
 
 
 
Purchase of Company stock
(21)
(357)
(10,649)
 
(11,027)
 
(11,027)
Other (in shares)
 
 
 
 
 
 
Other
165 
(38)
 
128 
(248)
(120)
Balances (in shares) at Oct. 31, 2010
3,583 
 
 
 
 
 
 
Balances at Oct. 31, 2010
$ 358 
$ 3,611 
$ 61,451 
$ 105 
$ 65,525 
$ 2,495 
$ 68,020 
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parenthetical) (USD $)
9 Months Ended
Oct. 31,
2010
2009
Cash dividends, per share
$ 1.21 
$ 1.09 
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Millions
3 Months Ended
Oct. 31,
9 Months Ended
Oct. 31,
2010
2009
2010
2009
Condensed Consolidated Statements of Comprehensive Income
 
 
 
 
Consolidated net income
$ 3,590 1
$ 3,258 1
$ 10,781 2
$ 9,950 2
Other comprehensive income, net of tax
 
 
 
 
Currency translation
1,417 3
(336)3
473 4
2,260 4
Net change in fair value of derivatives
(81)
51 
(106)
(61)
Total comprehensive income
4,926 
2,973 
11,148 
12,149 
Less comprehensive income attributable to the noncontrolling interest
 
 
 
 
Net income
(154)1
(114)1
(448)2
(338)2
Currency translation
(132)3
47 3
(192)4
(62)4
Amounts attributable to the noncontrolling interest
(286)
(67)
(640)
(400)
Comprehensive income attributable to Walmart
$ 4,640 
$ 2,906 
$ 10,508 
$ 11,749 
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) (USD $)
In Millions
3 Months Ended
Oct. 31,
9 Months Ended
Oct. 31,
2010
2009
2010
2009
Condensed Consolidated Statements of Comprehensive Income
 
 
 
 
Consolidated net income, redeemable noncontrolling interest
$ 4 
$ 10 
$ 6 
$ 18 
Foreign currency translation, redeemable noncontrolling interest
$ 42 
$ (20)
$ 71 
$ 54 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions
9 Months Ended
Oct. 31,
2010
2009
Cash flows from operating activities:
 
 
Consolidated net income
$ 10,781 1
$ 9,950 1
Loss from discontinued operations, net of tax
 
22 
Income from continuing operations
10,781 
9,972 
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
 
 
Depreciation and amortization
5,635 
5,255 
Other
851 
176 
Changes in certain assets and liabilities, net of effects of acquisitions:
 
 
Accounts receivable
(90)
540 
Inventories
(7,996)
(3,268)
Accounts payable
5,363 
1,028 
Accrued liabilities
(2,279)
(1,263)
Net cash provided by operating activities
12,265 
12,440 
Cash flows from investing activities:
 
 
Payments for property and equipment
(9,319)
(8,885)
Other investing activities
30 
224 
Net cash used in investing activities
(9,289)
(8,661)
Cash flows from financing activities:
 
 
Change in short-term borrowings, net
6,820 
3,475 
Proceeds from issuance of long-term debt
11,383 
5,465 
Payment of long-term debt
(3,577)
(4,799)
Dividends paid
(3,361)
(3,179)
Purchase of Company stock
(10,972)
(5,105)
Purchase of redeemable noncontrolling interest
 
(456)
Other financing activities
(623)
(327)
Net cash used in financing activities
(330)
(4,926)
Effect of exchange rates on cash and cash equivalents
63 
(125)
Net increase (decrease) in cash and cash equivalents
2,709 
(1,272)
Cash and cash equivalents at beginning of year
7,907 
7,275 
Cash and cash equivalents at end of period
$ 10,616 
$ 6,003 
Basis of Presentation
Basis of Presentation

Note 1. Basis of Presentation

The condensed consolidated financial statements of Wal-Mart Stores, Inc. and its subsidiaries ("Walmart," the "Company" or "we") included in this document are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for a full year. The condensed consolidated financial statements and notes thereto are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") and do not contain certain information included in the Company's Annual Report to Shareholders for the fiscal year ended January 31, 2010. Therefore, the interim condensed consolidated financial statements should be read in conjunction with that Annual Report to Shareholders.

In connection with the Company's enterprise resource planning ("ERP") system implementation, we changed the level at which we apply the retail method of accounting for inventory. The retrospective application of this accounting change impacted both segment and consolidated operating income, as well as consolidated net income for all comparable periods presented. See Note 4, Accounting Change.

In addition, we reclassified certain revenue and expense items within our Condensed Consolidated Statements of Income for financial reporting purposes. The reclassifications did not impact consolidated operating income or consolidated net income attributable to Walmart. All prior period amounts have been reclassified to conform to the current period's presentation.

Recent Accounting Pronouncements

A new accounting standard, effective for and adopted by the Company on February 1, 2010, changes the approach to determining the primary beneficiary of a variable interest entity ("VIE") and requires companies to assess more frequently whether they must consolidate VIEs. The adoption of this new standard did not have a material impact on our consolidated financial statements.

Net Income Per Common Share
Net Income Per Common Share

Note 2. Net Income Per Common Share

Basic net income per common share attributable to Walmart is based on the weighted-average number of outstanding common shares. Diluted net income per common share attributable to Walmart is based on the weighted-average number of outstanding common shares adjusted for the dilutive effect of stock options and other share-based awards. The dilutive effect of outstanding stock options and other share-based awards was 14 million shares for the three and nine months ended October 31, 2010, and 10 million shares for the three and nine months ended October 31, 2009. The Company had approximately 11 million and 22 million stock options outstanding at October 31, 2010 and 2009, respectively, which were not included in the diluted net income per common share attributable to Walmart calculation because their effect would be antidilutive.

The following table provides a reconciliation of the numerators used to determine basic and diluted net income per common share:

 

     Three Months Ended     Nine Months Ended  
     October 31,     October 31,  
(Amounts in millions)    2010     2009
As Adjusted
    2010     2009
As Adjusted
 

Income from continuing operations

   $ 3,590      $ 3,265      $ 10,781      $ 9,972   

Less consolidated net income attributable to noncontrolling interest

     (154     (114     (448     (338
                                

Income from continuing operations attributable to Walmart

     3,436        3,151        10,333        9,634   

Loss from discontinued operations, net of tax

     —          (7     —          (22
                                

Consolidated net income attributable to Walmart

   $ 3,436      $ 3,144      $ 10,333      $ 9,612   
                                

 

Inventories
Inventories

Note 3. Inventories

The Company values inventories at the lower of cost or market as determined primarily by the retail method of accounting, using the last-in, first-out ("LIFO") method for substantially all of the Walmart U.S. segment's merchandise inventories. The retail method of accounting results in inventory being valued at the lower of cost or market since permanent markdowns are currently taken as a reduction of the retail value of inventory. The Sam's Club segment's merchandise is valued based on the weighted-average cost using the LIFO method. Inventories for the Walmart International operations are primarily valued by the retail method of accounting and are stated using the first-in, first-out ("FIFO") method. At October 31, 2010 and 2009, our inventories valued at LIFO approximate those inventories as if they were valued at FIFO.

As discussed in Note 4, effective May 1, 2010 the Company changed the level at which it applies the retail method for valuing its inventory for its operations in the United States, Canada and Puerto Rico. The retrospective application of this accounting change impacted both segment and consolidated operating income, as well as consolidated net income for all comparable periods presented.

Accounting Change
Accounting Change

Note 4. Accounting Change

Effective May 1, 2010, the Company implemented a new ERP system for its operations in the United States, Canada and Puerto Rico. Concurrent with this implementation and the increased system capabilities, the Company changed the level at which it applies the retail method of accounting for inventory in these operations from 13 divisions to 49 departments. The Company believes the change is preferable because applying the retail method of accounting for inventory at the departmental level better segregates merchandise with similar cost-to-retail ratios and turnover, as well as providing a more accurate cost of goods sold and ending inventory value at the lower of cost or market for each reporting period. The retrospective application of this accounting change impacted both segment and consolidated operating income, as well as consolidated net income for all comparable periods presented.

The retrospective application of the accounting change impacted the following financial statement line items:

 

(Amounts in millions except per share data)    Three Months Ended
October 31, 2009
     Nine Months Ended
October 31, 2009
 

Condensed Consolidated Statements of Income:

   As Reported      Adjustments     As Adjusted      As Reported      Adjustments     As Adjusted  

Cost of sales (1)

   $ 73,805       $ 110      $ 73,915       $ 219,346       $ 20      $ 219,366   

Operating income

     5,593         (151     5,442         16,692         (148     16,544   

Provision for income taxes

     1,758         (56     1,702         5,214         (57     5,157   

Income from continuing operations

     3,360         (95     3,265         10,063         (91     9,972   

Consolidated net income attributable to Walmart

     3,239         (95     3,144         9,703         (91     9,612   

Basic net income per share attributable to Walmart

     0.84         (0.02     0.82         2.50         (0.02     2.47   

Diluted net income per share attributable to Walmart

     0.84         (0.02     0.81         2.49         (0.02     2.47   

(1)

The cost of sales adjustments includes $151 million and $148 million pertaining to the accounting change for the three and nine months ended October 31, 2009, respectively. Certain reclassifications that had no effect on operating income or on the consolidated net income attributable to Walmart represent the remainder of the amounts included in the cost of sales adjustment columns above.

 

     October 31, 2009      January 31, 2010  

(Amounts in millions)

   As Reported      Adjustments     As Adjusted      As Reported      Adjustments     As Adjusted  

Condensed Consolidated Balance Sheets:

               

Inventories

   $ 38,775       $ (646   $ 38,129       $ 33,160       $ (447   $ 32,713   

Prepaid expenses and other

     3,249         214        3,463         2,980         148        3,128   

Accrued income taxes

     810         (24     786         1,365         (18     1,347   

Retained earnings

     64,105         (408     63,697         66,638         (281     66,357   
Debt
Debt

Note 5. Debt

On April 1, 2010, the Company issued $750 million principal amount of its 2.875% Notes due 2015 and $1.250 billion principal amount of its 5.625% Notes due 2040. The aggregate net proceeds from these note issuances were approximately $2.0 billion. The notes of each series require semi-annual interest payments on April 1 and October 1 of each year, with the first interest payment having commenced on October 1, 2010. The 2.875% Notes due 2015 will mature on April 1, 2015, and the 5.625% Notes due 2040 will mature on April 1, 2040. The entire principal amount of the notes of each series is payable at maturity. The notes of each series are senior, unsecured obligations of the Company.

On July 8, 2010, the Company issued $750 million principal amount of its 2.250% Notes due 2015, $1.500 billion principal amount of its 3.625% Notes due 2020, and $750 million principal amount of its 4.875% Notes due 2040. The aggregate net proceeds from these note issuances were approximately $3.0 billion. The notes of each series require semi-annual interest payments on January 8 and July 8 of each year, commencing on January 8, 2011. The 2.250% Notes due 2015 will mature on July 8, 2015; the 3.625% Notes due 2020 will mature on July 8, 2020; and the 4.875% Notes due 2040 will mature on July 8, 2040. The entire principal amount of the notes of each series is payable at maturity. The notes of each series are senior, unsecured obligations of the Company.

 

On July 28, 2010, the Company issued and sold ¥60 billion of its Japanese Yen Bonds - Fourth Series (2010) (the "Fixed Rate Fourth Series Bonds"), ¥10 billion of its Japanese Yen Bonds – Fifth Series (2010) (the "Fixed Rate Fifth Series Bonds") and ¥30 billion of its Japanese Yen Floating Rate Bonds - Third Series (2010) (the "Floating Rate Bonds") at an issue price, in the case of each issue of bonds, equal to the face amount of the bonds and used the proceeds to repay a portion of its outstanding borrowing under its Yen-denominated credit facility. The aggregate net proceeds of the bonds were approximately $1.0 billion. The Fixed Rate Fourth Series Bonds bear interest at a rate of 0.94% per annum, and the Fixed Rate Fifth Series Bonds bear interest at a rate of 1.60% per annum. The Floating Rate Bonds bear interest at a floating rate of interest equal to an applicable three-month Yen LIBOR for each interest period plus 0.45%. Interest started accruing on the Fixed Rate Fourth Series Bonds and the Fixed Rate Fifth Series Bonds on July 29, 2010 and on the Floating Rate Bonds on July 28, 2010. The Company will pay interest on the Fixed Rate Fourth Series Bonds and the Fixed Rate Fifth Series Bonds on January 28 and July 28 of each year, commencing on January 28, 2011. The Company will pay interest on the Floating Rate Bonds on January 28, April 28, July 28, and October 28 of each year, with the first interest payment having commenced on October 28, 2010. The Fixed Rate Fourth Series Bonds and the Floating Rate Bonds will mature on July 28, 2015, and the Fixed Rate Fifth Series Bonds will mature on July 28, 2020. The entire principal amount of the bonds of each series is payable at maturity. The bonds of each series are senior, unsecured obligations of the Company.

On October 25, 2010, the Company issued $750 million principal amount of its 0.750% Notes due 2013, $1.250 billion principal amount of its 1.500% Notes due 2015, $1.750 billion principal amount of its 3.250% Notes due 2020 and $1.250 billion principal amount of its 5.000% Notes due 2040. The aggregate net proceeds of these note issuances were approximately $4.9 billion. The notes of each series will require semi-annual interest payments on April 25 and October 25 of each year, beginning on April 25, 2011. The 0.750% Notes due 2013 will mature on October 25, 2013; the 1.500% Notes due 2015 will mature on October 25, 2015; the 3.250% Notes due 2020 will mature on October 25, 2020; and the 5.000% Notes due 2040 will mature on October 25, 2040. The entire principal amount of the notes of each series is payable at maturity. The notes of each series are senior, unsecured obligations of the Company.

In June 2010, the Company renewed an existing 364-day revolving credit facility which is used to complement its commercial paper program (the "364-day Facility"). The size of the 364-day Facility was increased from $7.0 billion to $9.0 billion. In conjunction with the 364-day Facility, the Company also renewed an existing letter of credit facility used to support various potential and actual obligations. The size of the new letter of credit facility was reduced from $2.35 billion to $2.23 billion to reflect program improvements. In both facilities, undrawn and drawn fees were reduced from the prior year. The 364-day Facility remained undrawn as of October 31, 2010.

Fair Value Measurements
Fair Value Measurements

Note 6. Fair Value Measurements

The Company records and discloses certain financial and non-financial assets and liabilities at their 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. A liability's fair value is defined as 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 a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

 

   

Level 1, defined as observable inputs such as quoted prices in active markets;

 

   

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

 

   

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions.

The disclosure of fair value of certain financial assets and liabilities that are recorded at cost are as follows:

Cash and cash equivalents: The carrying value approximates fair value due to the short maturity of these instruments.

Long-term debt: The fair value is based on the Company's current incremental borrowing rate for similar types of borrowing arrangements or, where applicable, quoted market prices. The carrying value and fair value of our debt as of October 31, 2010 and January 31, 2010 are as follows:

 

     October 31, 2010      January 31, 2010  

(Amounts in millions)

   Carrying Value      Fair Value      Carrying Value      Fair Value  

Long-term debt, including amounts due within one year

   $ 45,999       $ 49,349       $ 37,281       $ 39,055   

 

Additionally, as of October 31, 2010 and January 31, 2010, the Company held certain derivative asset and liability positions that are required to be measured at fair value on a recurring basis. The majority of the Company's derivative instruments relate to interest rate swaps. The fair values of these interest rate swaps have been measured in accordance with Level 2 inputs of the fair value hierarchy. As of October 31, 2010 and January 31, 2010, the notional amounts and fair values of these interest rate swaps are as follows (asset/(liability)):

 

     October 31, 2010     January 31, 2010  

(Amounts in millions)

   Notional
Amount
     Fair
Value
    Notional
Amount
     Fair
Value
 

Receive fixed-rate, pay floating-rate interest rate swaps designated as fair value hedges

   $ 4,445       $ 329      $ 4,445       $ 260   

Receive fixed-rate, pay fixed-rate cross-currency interest rate swaps designated as net investment hedges

     1,250         295        1,250         189   

Receive floating-rate, pay fixed-rate interest rate swaps designated as cash flow hedges

     981         (23     638         (20

Receive fixed-rate, pay fixed-rate cross-currency interest rate swaps designated as cash flow hedges

     2,902         128        2,902         286   
                                  

Total

   $ 9,578       $ 729      $ 9,235       $ 715   
                                  

The fair values above are determined based on the income approach and the related inputs of the relevant interest rate and foreign currency forward curves. The estimated amounts the Company would receive or pay upon a termination of the agreements relating to such instruments, approximate the fair values as of the reporting dates.

Derivative Financial Instruments
Derivative Financial Instruments

Note 7. 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 floating-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 instrument will change. In a hedging relationship, the change in the value of the derivative is offset to a great extent by the change in the value of the underlying hedged item. Credit risk related to derivatives 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 (generally cash) from the counterparty if the derivative liability position exceeds certain thresholds.

The Company's transactions are with counterparties rated "A+" or better by nationally recognized credit rating agencies. In connection with various derivative agreements with counterparties, the Company held $353 million in cash collateral from these counterparties at October 31, 2010. It is our policy to record cash collateral exclusive of any derivative asset, and any collateral holdings are reflected in our accrued liabilities as amounts due to the counterparties. Furthermore, as part of the master netting arrangements with these counterparties, the Company is also required to post collateral if the derivative liability position exceeds $150 million. As of October 31, 2010, the Company had no outstanding collateral postings. In the event the Company posts cash collateral, the Company would record the posting as a receivable exclusive of any derivative liability.

When the Company uses derivative financial instruments for the purpose of hedging its exposure to interest and currency exchange rate risks, the contract 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 instrument is a hedge, 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 income (loss) until the hedged item is recognized in earnings. The ineffective portion of an instrument's change in fair value will be immediately recognized in the Company's earnings during the period. Instruments that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are valued at fair value with unrealized gains or losses reported in earnings during the period of the change.

Fair Value Instruments

The Company is party to receive fixed-rate, pay floating-rate interest rate swaps to hedge the fair value of fixed-rate debt. Under certain swap agreements, the Company pays floating-rate interest and receives fixed-rate interest payments periodically over the life of the instruments. The notional amounts are used to measure interest to be paid or received and do not represent the exposure due to credit loss. The Company's interest rate swaps that receive fixed-interest rate payments and pay floating-interest rate payments are designated as fair value hedges. As the specific terms and notional amounts of the derivative instruments match those of the instruments being hedged, the derivative instruments were assumed to be perfectly effective hedges, and all changes in the fair value of the hedges were recorded on the balance sheet with no net impact on the income statement. These fair value instruments will mature on dates ranging from February 2011 to May 2014.

 

Net Investment Instruments

The Company is party to cross-currency interest rate swaps that hedge its net investment in the United Kingdom. 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 income (loss), offsetting the currency translation adjustment that is also recorded in accumulated other comprehensive income (loss). These instruments will mature on dates ranging from October 2023 to February 2030.

The Company has £3.0 billion of outstanding debt that is designated as a hedge of the Company's net investment in the United Kingdom as of October 31, 2010 and January 31, 2010. The Company also has outstanding ¥437 billion of debt that is designated as a hedge of the Company's net investment in Japan at October 31, 2010 and January 31, 2010. Any translation of non-U.S. denominated debt is recorded in accumulated other comprehensive income (loss), offsetting the currency translation adjustment that is also recorded in accumulated other comprehensive income (loss). These debt instruments will mature on dates ranging from January 2011 to January 2039.

Cash Flow Instruments

The Company is party to receive floating-rate, pay fixed-rate interest rate swaps to hedge the interest rate risk of certain non-U.S. denominated debt. The swaps are designated as cash flow hedges of interest expense risk. Changes in the non-U.S. benchmark interest rate result in reclassification of amounts from accumulated other comprehensive income (loss) to earnings to offset the floating-rate interest expense. These cash flow instruments will mature on dates ranging from August 2013 to July 2015.

The Company is also 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 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. Changes in the currency exchange rate result in reclassification of amounts from accumulated other comprehensive income (loss) to earnings to offset the re-measurement gain or loss on the non-U.S. denominated debt. These cash flow instruments will mature on dates ranging from September 2029 to March 2034. Any ineffectiveness related to these instruments has been and is expected to be immaterial.

Financial Statement Presentation

Hedging instruments with an unrealized gain are recorded on the consolidated balance sheets as either a current or a non-current asset, based on maturity date, and those hedging instruments with an unrealized loss are recorded as either a current or a non-current liability, based on maturity date.

As of October 31, 2010 and January 31, 2010, our financial instruments were classified as follows in the Condensed Consolidated Balance Sheets:

 

     October 31, 2010      January 31, 2010  

(Amounts in millions)

   Fair Value
Instruments
     Net Investment
Hedge
     Cash Flow
Instruments
     Fair Value
Instruments
     Net Investment
Hedge
     Cash Flow
Instruments
 

Balance Sheet Classification:

                 

Other assets and deferred charges

   $ 329       $ 295       $ 128       $ 260       $ 189       $ 286   
                                                     

Asset Subtotals

   $ 329       $ 295       $ 128       $ 260       $ 189       $ 286   
                                                     

Long-term debt

   $ 329       $ —         $ —         $ 260       $ —         $ —     

Deferred income taxes and other

     —           —           23         —           —           20   
                                                     

Liability Subtotals

   $ 329       $ —         $ 23       $ 260       $ —         $ 20   
                                                     
Segments
Segments

Note 8. Segments

The Company is engaged in the operations of retail stores located in all 50 states of the United States and Puerto Rico, our wholly-owned subsidiaries in Argentina, Brazil, Canada, Japan and the United Kingdom, our majority-owned subsidiaries in Chile and Mexico and our joint ventures in China and India and our other controlled subsidiaries in China. Our operations are conducted in three operating segments, the Walmart U.S. segment, the Walmart International segment and the Sam's Club segment. The Company defines its segments as those business units whose operating results our chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. We sell similar individual products and services in each of our segments. It is impractical to segregate and identify revenue for each of these individual products and services.

 

As part of an operational realignment in February 2010, our Puerto Rico operations shifted from the Walmart International segment to the respective Walmart U.S. and Sam's Club segments. The Walmart U.S. segment includes the Company's mass merchant concept in the United States and Puerto Rico operating primarily under the "Walmart" or "Wal-Mart" brands, as well as walmart.com. The Walmart International segment consists of the Company's operations outside of the United States and Puerto Rico. The Sam's Club segment includes the warehouse membership clubs in the United States and Puerto Rico, as well as samsclub.com. All prior period amounts have been reclassified to conform to the current period's presentation. The amounts under the caption "Other" in the Operating Income table below represent unallocated corporate overhead items.

The Company measures the results of its segments using, among other measures, each segment's operating income that 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 dictated by the information regularly reviewed by our CODM. In the first quarter of fiscal 2011, certain information systems' expenses previously included in unallocated corporate overhead have been allocated to the segment that is directly benefitting from those costs. The segment operating income is reclassified for all prior periods presented to conform to the current period's presentation.

Net sales by operating segment were as follows:

 

     Three Months Ended
October 31,
     Nine Months Ended
October 31,
 

(Amounts in millions)

   2010      2009      2010      2009  

Net Sales:

           

Walmart U.S.

   $ 62,178       $ 62,210       $ 189,156       $ 188,482   

Walmart International

     26,919         24,631         77,850         68,584   

Sam's Club

     12,142         11,826         36,346         35,240   
                                   

Net sales

   $ 101,239       $ 98,667       $ 303,352       $ 292,306   
                                   

Operating income by segment was as follows:

 

     Three Months Ended
October 31,
    Nine Months Ended
October 31,
 

(Amounts in millions)

   2010     2009
As Adjusted
    2010     2009
As Adjusted
 

Operating Income:

        

Walmart U.S.

   $ 4,399      $ 4,318      $ 13,893      $ 13,570   

Walmart International

     1,223        1,078        3,605        3,033   

Sam's Club

     367        395        1,224        1,205   

Other

     (378     (349     (1,184     (1,264
                                

Operating income

     5,611        5,442        17,538        16,544   

Interest expense, net

     (516     (475     (1,472     (1,415
                                

Income from continuing operations before income taxes

   $ 5,095      $ 4,967      $ 16,066      $ 15,129   
                                

The following table sets forth the changes in goodwill, by operating segment, for the nine months ended October 31, 2010:

 

(Amounts in millions)

   Walmart
International
     Walmart
U.S.
     Sam's Club      Total  

Balances - February 1, 2010

   $ 15,606       $ 207       $ 313       $ 16,126   

Currency translation

     345         —           —           345   

Acquisitions and other

     83         32         —           115   
                                   

Balances - October 31, 2010

   $ 16,034       $ 239       $ 313       $ 16,586   
                                   

 

Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Loss

Note 9. Accumulated Other Comprehensive Income (Loss)

The following table sets forth the changes in the composition of accumulated other comprehensive income (loss) for the nine months ended October 31, 2010:

 

(Amounts in millions)

   Currency
Translation
     Derivative
Instruments
    Minimum
Pension Liability
    Total  

Balances - February 1, 2010

   $ 348       $ 77      $ (495   $ (70

Currency translation adjustment

     281         —          —          281   

Net change in fair value of derivatives

     —           (106     —          (106
                                 

Balances - October 31, 2010

   $ 629       $ (29   $ (495   $ 105   
                                 

The currency translation adjustment includes a net translation loss of $1.1 billion at October 31, 2010 related to the net investment hedges of our operations in the U.K. and Japan. In addition, during the nine months ended October 31, 2010, we reclassified $14 million from accumulated other comprehensive income (loss) to earnings on the re-measurement of non-U.S. denominated debt.

Common Stock Dividends
Common Stock Dividends

Note 10. Common Stock Dividends

On March 4, 2010, the Company's Board of Directors approved an increase in the annual dividend for fiscal 2011 to $1.21 per share, an increase of 11% over the dividends paid in fiscal 2010. The annual dividend will be paid in four quarterly installments on April 5, 2010, June 1, 2010, September 7, 2010 and January 3, 2011 to holders of record on March 12, May 14, August 13 and December 10, 2010, respectively. The dividend installments payable on April 5, 2010, June 1, 2010 and September 7, 2010, were paid as scheduled.

Legal Proceedings
Legal Proceedings

Note 11. 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, the amount of liability is not probable or the amount cannot be reasonably estimated and therefore, accruals have not been made. However, where a liability is reasonably possible and 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's shareholders. The matters, or groups of related matters, discussed below, if decided adversely to, or settled by the Company, individually or in the aggregate, may result in liability material to the Company's financial condition or results of operations.

Wage-and-Hour Class Actions: The Company is a defendant in various cases containing class-action allegations in which the plaintiffs are current and former hourly associates who allege that the Company committed wage-and-hour violations by failing to provide rest breaks, meal periods, or other benefits, or otherwise by failing to pay them correctly. The complaints generally seek unspecified monetary damages, injunctive relief, or both. The Company cannot reasonably estimate the possible loss or range of loss that may arise from these lawsuits, except where the lawsuit has been settled or otherwise as noted below.

In one of the wage-and-hour lawsuits, Braun/Hummel v. Wal-Mart Stores, Inc., a trial was commenced in September 2006, in Philadelphia, Pennsylvania. The plaintiffs allege that the Company failed to pay class members for all hours worked and prevented class members from taking their full meal and rest breaks. On October 13, 2006, the jury awarded back-pay damages to the plaintiffs of approximately $78 million on their claims for off-the-clock work and missed rest breaks. The jury found in favor of the Company on the plaintiffs' meal-period claims. On November 14, 2007, the trial judge entered a final judgment in the approximate amount of $188 million, which included the jury's back-pay award plus statutory penalties, prejudgment interest and attorneys' fees. The Company believes it has substantial factual and legal defenses to the claims at issue, and on December 7, 2007, the Company filed its Notice of Appeal.

Exempt Status Cases: The Company is a defendant in several cases in which the plaintiffs seek class or collective certification of various groups of salaried managers, and challenge their exempt status under state and federal laws. In one of those cases (Sepulveda v. Wal-Mart Stores, Inc.), class certification was denied by the trial court on May 5, 2006. On April 25, 2008, a three-judge panel of the United States Court of Appeals for the Ninth Circuit affirmed the trial court's ruling in part and reversed it in part, and remanded the case for further proceedings. On May 16, 2008, the Company filed a petition seeking review of that ruling by a larger panel of the court. On October 10, 2008, the court entered an Order staying all proceedings in the Sepulveda appeal pending the final disposition of the appeal in Dukes v. Wal-Mart Stores, Inc., discussed below. Class certification has not been addressed in the other cases. The Company cannot reasonably estimate the possible loss or range of loss that may arise from these lawsuits.

 

Gender Discrimination Cases: The Company is a defendant in Dukes v. Wal-Mart Stores, Inc., a class-action lawsuit commenced in June 2001 in the United States District Court for the Northern District of California. The complaint alleges that the Company has engaged in a pattern and practice of discriminating against women in promotions, pay, training and job assignments. The complaint seeks, among other things, injunctive relief, front pay, back pay, punitive damages and attorneys' fees. On June 21, 2004, the district court issued an order granting in part and denying in part the plaintiffs' motion for class certification. The class, which was certified by the district court for purposes of liability, injunctive and declaratory relief, punitive damages and lost pay, subject to certain exceptions, includes all women employed at any Walmart domestic retail store at any time since December 26, 1998, who have been or may be subjected to the pay and management track promotions policies and practices challenged by the plaintiffs.

On August 31, 2004, the United States Court of Appeals for the Ninth Circuit granted the Company's petition for discretionary review of the ruling. On February 6, 2007, a divided three-judge panel of the court of appeals issued a decision affirming the district court's certification order. On February 20, 2007, the Company filed a petition asking that the decision be reconsidered by a larger panel of the court. On December 11, 2007, the three-judge panel withdrew its opinion of February 6, 2007, and issued a revised opinion. As a result, the Company's Petition for Rehearing En Banc was denied as moot. The Company filed a new Petition for Rehearing En Banc on January 8, 2008. On February 13, 2009, the court of appeals issued an Order granting the Petition. On April 26, 2010, the Ninth Circuit issued a divided (6-5) opinion affirming certain portions of the district court's ruling and reversing other portions. On August 25, 2010, the Company filed a petition for a writ of certiorari to the United States Supreme Court, seeking review of the Ninth Circuit's decision. On September 17, 2010, the district court judge extended the stay of proceedings in the district court until the earlier of (1) thirty days after the Supreme Court's ruling on the Company's petition, or (2) December 30, 2010.

If the Company is not successful in its appeal of class certification, or an appellate court issues a ruling that allows for the certification of a class or classes with a different size or scope, and if there is a subsequent adverse verdict on the merits from which there is no successful appeal, or in the event of a negotiated settlement of the litigation, the resulting liability could be material to the Company's financial condition or results of operations. The plaintiffs also seek punitive damages which, if awarded, could result in the payment of additional amounts material to the Company's financial condition or results of operations. However, because of the uncertainty of the outcome of the appeal, because of the uncertainty of the balance of the proceedings contemplated by the district court, and because the Company's liability, if any, arising from the litigation, including the size of any damages awarded if plaintiffs are successful in the litigation or any negotiated settlement, could vary widely, the Company cannot reasonably estimate the possible loss or range of loss that may arise from the litigation.

Hazardous Materials Investigations: On November 8, 2005, the Company received a grand jury subpoena from the United States Attorney's Office for the Central District of California, seeking documents and information relating to the Company's receipt, transportation, handling, identification, recycling, treatment, storage and disposal of certain merchandise that constitutes hazardous materials or hazardous waste. The Company has been informed by the U.S. Attorney's Office for the Central District of California that it is a target of a criminal investigation into potential violations of the Resource Conservation and Recovery Act ("RCRA"), the Clean Water Act and the Hazardous Materials Transportation Statute. This U.S. Attorney's Office contends, among other things, that the use of Company trucks to transport certain returned merchandise from the Company's stores to its return centers is prohibited by RCRA because those materials may be considered hazardous waste. The government alleges that, to comply with RCRA, the Company must ship from the store certain materials as "hazardous waste" directly to a certified disposal facility using a certified hazardous waste carrier. The U.S. Attorney's Office in the Northern District of California subsequently joined in this investigation. The Company contends that the practice of transporting returned merchandise to its return centers for subsequent disposition, including disposal by certified facilities, is compliant with applicable laws and regulations. While management cannot predict the ultimate outcome of this matter, management does not believe the outcome will have a material effect on the Company's financial condition or results of operations.

Acquisitions
Acquisitions

Note 12. Acquisitions

Bounteous Company Limited ("BCL"): In February 2007, the Company purchased an initial 35% interest in BCL, which operates in China under the Trust-Mart banner. The Company paid $264 million for its initial 35% interest and, as additional consideration, paid $374 million to extinguish a third party loan issued to the selling BCL shareholders that was secured by the pledge to the remaining equity of BCL. Concurrent with its initial investment in BCL, the Company entered into a Shareholders' Agreement, which provides the Company with voting rights associated with a portion of the common stock of BCL securing the loan, amounting to an additional 30% of the aggregate outstanding shares. Pursuant to the Share Purchase Agreement, the Company was committed to purchase the remaining interest in BCL on or before November 26, 2010, subject to certain conditions. In October 2010, the Company and the selling shareholder mutually agreed to extend the closing to May 26, 2011, while certain conditions of the contract are being completed.

NettoFood Stores Limited("Netto"): On May 27, 2010, the Company announced an agreement with Dansk Supermarked A/S, whereby ASDA, our subsidiary in the United Kingdom, will purchase Netto. Netto operates 193 stores, each averaging 8,000 square feet. On September 23, 2010, the UK Office of Fair Trading announced its clearance of ASDA's proposed purchase of Netto, subject to the requirement that the Company divests 47 Netto stores. The original estimated purchase price was approximately £778 million ($1.2 billion), before any divestitures. The transaction is expected to close in the first quarter of fiscal 2012.

Subsequent Event
Subsequent Event

Note 13. Subsequent Event

On November 29, 2010, the Company announced an offer to purchase 51% of Massmart Holdings Ltd ("Massmart"), for approximately ZAR 17 billion ($2.3 billion). Massmart operates 288 stores under several wholesale and retail banners in South Africa and 13 other sub-Saharan African countries. The transaction is subject to final shareholder approval, as well as certain customary conditions and relevant regulatory approvals.

Net Income Per Common Share (Tables)
Summary of Net Income, Table
     Three Months Ended     Nine Months Ended  
     October 31,     October 31,  
(Amounts in millions)    2010     2009
As Adjusted
    2010     2009
As Adjusted
 

Income from continuing operations

   $ 3,590      $ 3,265      $ 10,781      $ 9,972   

Less consolidated net income attributable to noncontrolling interest

     (154     (114     (448     (338
                                

Income from continuing operations attributable to Walmart

     3,436        3,151        10,333        9,634   

Loss from discontinued operations, net of tax

     —          (7     —          (22
                                

Consolidated net income attributable to Walmart

   $ 3,436      $ 3,144      $ 10,333      $ 9,612   
                                
Accounting Change (Tables)

(Amounts in millions except per share data)    Three Months Ended
October 31, 2009
     Nine Months Ended
October 31, 2009
 

Condensed Consolidated Statements of Income:

   As Reported      Adjustments     As Adjusted      As Reported      Adjustments     As Adjusted  

Cost of sales (1)

   $ 73,805       $ 110      $ 73,915       $ 219,346       $ 20      $ 219,366   

Operating income

     5,593         (151     5,442         16,692         (148     16,544   

Provision for income taxes

     1,758         (56     1,702         5,214         (57     5,157   

Income from continuing operations

     3,360         (95     3,265         10,063         (91     9,972   

Consolidated net income attributable to Walmart

     3,239         (95     3,144         9,703         (91     9,612   

Basic net income per share attributable to Walmart

     0.84         (0.02     0.82         2.50         (0.02     2.47   

Diluted net income per share attributable to Walmart

     0.84         (0.02     0.81         2.49         (0.02     2.47   

(1)

The cost of sales adjustments includes $151 million and $148 million pertaining to the accounting change for the three and nine months ended October 31, 2009, respectively. Certain reclassifications that had no effect on operating income or on the consolidated net income attributable to Walmart represent the remainder of the amounts included in the cost of sales adjustment columns above.

     October 31, 2009      January 31, 2010  

(Amounts in millions)

   As Reported      Adjustments     As Adjusted      As Reported      Adjustments     As Adjusted  

Condensed Consolidated Balance Sheets:

               

Inventories

   $ 38,775       $ (646   $ 38,129       $ 33,160       $ (447   $ 32,713   

Prepaid expenses and other

     3,249         214        3,463         2,980         148        3,128   

Accrued income taxes

     810         (24     786         1,365         (18     1,347   

Retained earnings

     64,105         (408     63,697         66,638         (281     66,357   
Fair Value Measurements (Tables)
     October 31, 2010      January 31, 2010  

(Amounts in millions)

   Carrying Value      Fair Value      Carrying Value      Fair Value  

Long-term debt, including amounts due within one year

   $ 45,999       $ 49,349       $ 37,281       $ 39,055   
     October 31, 2010     January 31, 2010  

(Amounts in millions)

   Notional
Amount
     Fair
Value
    Notional
Amount
     Fair
Value
 

Receive fixed-rate, pay floating-rate interest rate swaps designated as fair value hedges

   $ 4,445       $ 329      $ 4,445       $ 260   

Receive fixed-rate, pay fixed-rate cross-currency interest rate swaps designated as net investment hedges

     1,250         295        1,250         189   

Receive floating-rate, pay fixed-rate interest rate swaps designated as cash flow hedges

     981         (23     638         (20

Receive fixed-rate, pay fixed-rate cross-currency interest rate swaps designated as cash flow hedges

     2,902         128        2,902         286   
                                  

Total

   $ 9,578       $ 729      $ 9,235       $ 715   
                                  
Derivative Financial Instruments (Tables)
Balance Sheet classification of financial instruments
     October 31, 2010      January 31, 2010  

(Amounts in millions)

   Fair Value
Instruments
     Net Investment
Hedge
     Cash Flow
Instruments
     Fair Value
Instruments
     Net Investment
Hedge
     Cash Flow
Instruments
 

Balance Sheet Classification:

                 

Other assets and deferred charges

   $ 329       $ 295       $ 128       $ 260       $ 189       $ 286   
                                                     

Asset Subtotals

   $ 329       $ 295       $ 128       $ 260       $ 189       $ 286   
                                                     

Long-term debt

   $ 329       $ —         $ —         $ 260       $ —         $ —     

Deferred income taxes and other

     —           —           23         —           —           20   
                                                     

Liability Subtotals

   $ 329       $ —         $ 23       $ 260       $ —         $ 20   
                                                     
Segments (Tables)
     Three Months Ended
October 31,
     Nine Months Ended
October 31,
 

(Amounts in millions)

   2010      2009      2010      2009  

Net Sales:

           

Walmart U.S.

   $ 62,178       $ 62,210       $ 189,156       $ 188,482   

Walmart International

     26,919         24,631         77,850         68,584   

Sam's Club

     12,142         11,826         36,346         35,240   
                                   

Net sales

   $ 101,239       $ 98,667       $ 303,352       $ 292,306   
                                   
     Three Months Ended
October 31,
    Nine Months Ended
October 31,
 

(Amounts in millions)

   2010     2009
As Adjusted
    2010     2009
As Adjusted
 

Operating Income:

        

Walmart U.S.

   $ 4,399      $ 4,318      $ 13,893      $ 13,570   

Walmart International

     1,223        1,078        3,605        3,033   

Sam's Club

     367        395        1,224        1,205   

Other

     (378     (349     (1,184     (1,264
                                

Operating income

     5,611        5,442        17,538        16,544   

Interest expense, net

     (516     (475     (1,472     (1,415
                                

Income from continuing operations before income taxes

   $ 5,095      $ 4,967      $ 16,066      $ 15,129   
                                

(Amounts in millions)

   Walmart
International
     Walmart
U.S.
     Sam's Club      Total  

Balances - February 1, 2010

   $ 15,606       $ 207       $ 313       $ 16,126   

Currency translation

     345         —           —           345   

Acquisitions and other

     83         32         —           115   
                                   

Balances - October 31, 2010

   $ 16,034       $ 239       $ 313       $ 16,586   
                                   
Accumulated Other Comprehensive Income (Loss) (Tables)
Changes in the composition of accumulated other comprehensive loss

(Amounts in millions)

   Currency
Translation
     Derivative
Instruments
    Minimum
Pension Liability
    Total  

Balances - February 1, 2010

   $ 348       $ 77      $ (495   $ (70

Currency translation adjustment

     281         —          —          281   

Net change in fair value of derivatives

     —           (106     —          (106
                                 

Balances - October 31, 2010

   $ 629       $ (29   $ (495   $ 105   
                                 
Net Income Per Common Share (Details) (USD $)
In Millions
3 Months Ended
Oct. 31,
9 Months Ended
Oct. 31,
2010
2009
2010
2009
Net Income Per Common Share
 
 
 
 
Dilutive effect of outstanding stock options and other share-based awards
14 
10 
14 
10 
Anti-dilutive number of shares from stock options and share-based awards
11 
22 
11 
22 
Income from continuing operations
$ 3,590 
$ 3,265 
$ 10,781 
$ 9,972 
Less consolidated net income attributable to the noncontrolling interest
(154)
(114)
(448)
(338)
Income from continuing operations attributable to Walmart
3,436 
3,151 
10,333 
9,634 
Loss from discontinued operations, net of tax
 
(7)
 
(22)
Consolidated net income attributable to Walmart
$ 3,436 
$ 3,144 
$ 10,333 
$ 9,612 
Accounting Change (Details) (USD $)
In Millions, except Per Share data
3 Months Ended
Oct. 31, 2009
9 Months Ended
Oct. 31, 2009
3 Months Ended
Oct. 31, 2009
9 Months Ended
Oct. 31, 2009
Jan. 31, 2010
3 Months Ended
Oct. 31, 2009
9 Months Ended
Oct. 31, 2009
Jan. 31, 2010
3 Months Ended
Oct. 31, 2009
9 Months Ended
Oct. 31, 2009
Jan. 31, 2010
Cost of sales
73,915 
219,366 
73,805 1
219,346 1
 
110 1
20 1
 
73,915 1
219,366 1
 
Operating income
5,442 
16,544 
5,593 
16,692 
 
(151)
(148)
 
5,442 
16,544 
 
Provision for income taxes
1,702 
5,157 
1,758 
5,214 
 
(56)
(57)
 
1,702 
5,157 
 
Income from continuing operations
3,265 
9,972 
3,360 
10,063 
 
(95)
(91)
 
3,265 
9,972 
 
Consolidated net income attributable to Walmart
3,144 
9,612 
3,239 
9,703 
 
(95)
(91)
 
3,144 
9,612 
 
Basic net income per common share attributable to Walmart
0.82 
2.47 
0.84 
2.50 
 
(0.02)
(0.02)
 
0.82 
2.47 
 
Diluted net income per share attributable to Walmart
0.81 
2.47 
0.84 
2.49 
 
(0.02)
(0.02)
 
0.81 
2.47 
 
Cost of sales adjustment
151 
148 
 
 
 
 
 
 
 
 
 
Inventories
38,129 
38,129 
38,775 
38,775 
33,160 
(646)
(646)
(447)
38,129 
38,129 
32,713 
Prepaid expenses and other
3,463 
3,463 
3,249 
3,249 
2,980 
214 
214 
148 
3,463 
3,463 
3,128 
Accrued income taxes
786 
786 
810 
810 
1,365 
(24)
(24)
(18)
786 
786 
1,347 
Retained earnings
$ 63,697 
$ 63,697 
$ 64,105 
$ 64,105 
$ 66,638 
$ (408)
$ (408)
$ (281)
$ 63,697 
$ 63,697 
$ 66,357 
Debt (Narratives) (Details)
Jul. 08, 2010
Jun. 28, 2010
Apr. 01, 2010
Oct. 20, 2010
9 Months Ended
Oct. 31, 2010
Apr. 01, 2010
Apr. 01, 2010
9 Months Ended
Oct. 31, 2010
Jul. 08, 2010
9 Months Ended
Oct. 31, 2010
Jul. 08, 2010
9 Months Ended
Oct. 31, 2010
Jul. 08, 2010
Oct. 25, 2010
Oct. 25, 2010
Oct. 25, 2010
Oct. 25, 2010
9 Months Ended
Oct. 31, 2010
Jul. 28, 2010
9 Months Ended
Oct. 31, 2010
Jul. 28, 2010
9 Months Ended
Oct. 31, 2010
Jul. 28, 2010
Jul. 31, 2009
Jul. 31, 2009
Jun. 30, 2009
Jun. 30, 2009
Principal amount of notes
 
 
 
 
 
750,000,000 
1,250,000,000 
 
750,000,000 
 
1,500,000,000 
 
750,000,000 
750,000,000 
1,250,000,000 
1,750,000,000 
1,250,000,000 
 
60,000,000,000 
 
10,000,000,000 
 
30,000,000,000 
 
 
 
 
Interest rate
 
 
 
 
 
0.02875 
0.05625 
 
0.0225 
 
0.03625 
 
0.04875 
0.0075 
0.015 
0.0325 
0.05 
 
0.0094 
 
0.016 
 
 
 
 
 
 
Interest rate to be added to three month LIBOR
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.0045 
 
 
 
 
Aggregate net proceeds from note issuance
3,000,000,000 
1,000,000,000 
2,000,000,000 
4,900,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Date of first required payment
 
 
 
 
01-08-2011 
 
 
 
 
 
 
 
 
 
 
 
 
01-28-2011 
 
01-28-2011 
 
10-28-2010 
 
 
 
 
 
Maturity date
 
 
 
 
 
 
 
2015-07-08 
 
2020-07-08 
 
2040-07-08 
 
 
 
 
 
2015-07-28 
 
2020-07-28 
 
2015-07-28 
 
 
 
 
 
Interest accrual start date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
01-28-2010 
 
 
 
 
 
Line of Credit Facility, Maximum Borrowing Capacity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,000,000,000 
7,000,000,000 
2,230,000,000 
2,350,000,000 
Fair Value Measurements (The carrying value and fair value of our debt) (Details) (USD $)
In Millions
Oct. 31, 2010
Jan. 31, 2010
Fair Value Measurements
 
 
Long-term debt including amounts due within one year, Carrying Value
$ 45,999 
$ 37,281 
Long-term debt including amounts due within one year, Fair Value
$ 49,349 
$ 39,055 
Fair Value Measurements (The notional amounts and fair values of interest rate swaps) (Details) (USD $)
In Millions
Oct. 31, 2010
Jan. 31, 2010
Total Notional Amount
$ 9,578 
$ 9,235 
Fair Value Hedging [Member] | Fixed-rate interest rate swaps [Member] | Floating-rate interest rate swaps [Member]
 
 
Total Notional Amount
4,445 
4,445 
Fair Value Hedging [Member] | Fixed-rate interest rate swaps [Member] | Floating-rate interest rate swaps [Member] | Fair Value, Inputs, Level 2 [Member]
 
 
Total Fair Value
329 
260 
Net Investment Hedging [Member] | Cross-Currency Interest Rate Contract [Member] | Fixed-rate interest rate swaps [Member]
 
 
Total Notional Amount
1,250 
1,250 
Net Investment Hedging [Member] | Cross-Currency Interest Rate Contract [Member] | Fixed-rate interest rate swaps [Member] | Fair Value, Inputs, Level 2 [Member]
 
 
Total Fair Value
295 
189 
Cash Flow Hedging [Member] | Cross-Currency Interest Rate Contract [Member] | Fixed-rate interest rate swaps [Member]
 
 
Total Notional Amount
2,902 
2,902 
Cash Flow Hedging [Member] | Cross-Currency Interest Rate Contract [Member] | Fixed-rate interest rate swaps [Member] | Fair Value, Inputs, Level 2 [Member]
 
 
Total Fair Value
128 
286 
Cash Flow Hedging [Member] | Fixed-rate interest rate swaps [Member] | Floating-rate interest rate swaps [Member]
 
 
Total Notional Amount
981 
638 
Cash Flow Hedging [Member] | Fixed-rate interest rate swaps [Member] | Floating-rate interest rate swaps [Member] | Fair Value, Inputs, Level 2 [Member]
 
 
Total Fair Value
(23)
(20)
Fair Value, Inputs, Level 2 [Member]
 
 
Total Fair Value
$ 729 
$ 715 
Derivative Financial Instruments (Narratives) (Details)
9 Months Ended
Oct. 31,
Oct. 31, 2010
Oct. 31, 2010
2010
2010
2010
2010
2010
Oct. 31, 2010
Jan. 31, 2010
Cash collateral held from counterparties
 
353,000,000 
 
 
 
 
 
 
 
Threshold of derivative liability position requiring cash collateral
 
150,000,000 
 
 
 
 
 
 
 
Debt designated as United Kingdom net investment hedge
 
 
 
 
 
 
 
3,000,000,000 
3,000,000,000 
Debt designated as Japanese net investment hedge
437,000,000,000 
 
 
 
 
 
 
 
 
Instrument maturity date range start
 
 
Feb 2011 
Oct 2023 
Jan 2011 
Aug 2013 
Sep 2029 
 
 
Instrument maturity date range end
 
 
May 2014 
Feb 2030 
Jan 2039 
Jul 2015 
Mar 2034 
 
 
Derivative Financial Instruments (Balance Sheet classification of financial instruments) (Details) (USD $)
In Millions
Oct. 31, 2010
Jan. 31, 2010
Other assets and deferred charges
$ 4,194 
$ 3,942 
Long-term debt
40,803 
33,231 
Deferred income taxes and other
6,197 
5,508 
Fair Value Instruments [Member]
 
 
Other assets and deferred charges
329 
260 
Asset Subtotals
329 
260 
Long-term debt
329 
260 
Deferred income taxes and other
 
 
Liability Subtotals
329 
260 
Net Investment Hedge [Member]
 
 
Other assets and deferred charges
295 
189 
Asset Subtotals
295 
189 
Long-term debt
 
 
Deferred income taxes and other
 
 
Liability Subtotals
 
 
Cash Flow Instruments [Member]
 
 
Other assets and deferred charges
128 
286 
Asset Subtotals
128 
286 
Long-term debt
 
 
Deferred income taxes and other
23 
20 
Liability Subtotals
$ 23 
$ 20 
Segments (Net sales by operating segment) (Details) (USD $)
In Millions
3 Months Ended
Oct. 31,
9 Months Ended
Oct. 31,
2010
2009
2010
2009
Net sales
$ 101,239 
$ 98,667 
$ 303,352 
$ 292,306 
Walmart US [Member]
 
 
 
 
Net sales
62,178 
62,210 
189,156 
188,482 
Walmart International [Member]
 
 
 
 
Net sales
26,919 
24,631 
77,850 
68,584 
Sam's Club [Member]
 
 
 
 
Net sales
$ 12,142 
$ 11,826 
$ 36,346 
$ 35,240 
Segments (Operating income by segment) (Details) (USD $)
In Millions
3 Months Ended
Oct. 31,
9 Months Ended
Oct. 31,
2010
2009
2010
2009
Operating income
$ 5,611 
$ 5,442 
$ 17,538 
$ 16,544 
Interest expense, net
(516)
(475)
(1,472)
(1,415)
Income from continuing operations before income taxes
5,095 
4,967 
16,066 
15,129 
Walmart US [Member]
 
 
 
 
Operating income
4,399 
4,318 
13,893 
13,570 
Walmart International [Member]
 
 
 
 
Operating income
1,223 
1,078 
3,605 
3,033 
Sam's Club [Member]
 
 
 
 
Operating income
367 
395 
1,224 
1,205 
Other Segments [Member]
 
 
 
 
Operating income
$ (378)
$ (349)
$ (1,184)
$ (1,264)
Segments (Change in goodwill, by operating segment) (Details) (USD $)
In Millions
9 Months Ended
Oct. 31, 2010
Balances - February 1, 2010
$ 16,126 
Currency translation
345 
Acquisitions and other
115 
Balances - October 31, 2010
16,586 
Walmart US [Member]
 
Balances - February 1, 2010
207 
Currency translation
 
Acquisitions and other
32 
Balances - October 31, 2010
239 
Walmart International [Member]
 
Balances - February 1, 2010
15,606 
Currency translation
345 
Acquisitions and other
83 
Balances - October 31, 2010
16,034 
Sam's Club [Member]
 
Balances - February 1, 2010
313 
Currency translation
 
Acquisitions and other
 
Balances - October 31, 2010
$ 313 
Accumulated Other Comprehensive Income (Loss) (Details) (USD $)
9 Months Ended
Oct. 31, 2010
Balances - February 1, 2010
$ (70,000,000)
Currency translation adjustment
281,000,000 
Net change in fair value of derivatives
(106,000,000)
Balances - October 31, 2010
105,000,000 
Currency translation gains on the re-measurement, non-US debt
14,000,000 
Currency Translation [Member]
 
Balances - February 1, 2010
348,000,000 
Currency translation adjustment
281,000,000 
Net change in fair value of derivatives
 
Balances - October 31, 2010
629,000,000 
UK and Japan Operations [Member]
 
Net translation loss related to net investment hedges
1,100,000,000 
Derivative Instruments [Member]
 
Balances - February 1, 2010
77,000,000 
Currency translation adjustment
 
Net change in fair value of derivatives
(106,000,000)
Balances - October 31, 2010
(29,000,000)
Minimum Pension Liability [Member]
 
Balances - February 1, 2010
(495,000,000)
Currency translation adjustment
 
Net change in fair value of derivatives
 
Balances - October 31, 2010
$ (495,000,000)
Common Stock Dividends (Narratives) (Details) (USD $)
9 Months Ended
Oct. 31, 2010
Common Stock Dividends
 
Annual dividend approved by Board of Directors for 2011
$ 1.21 
Percentage increase over 2010 dividend
0.11 
Number of dividend payments for 2010
Legal Proceedings (Narratives) (Details)
In Millions
Oct. 13, 2006
15 Months Ended
Nov. 14, 2007
Legal Proceedings
 
 
Jury award
78 
 
Litigation settlement, gross
 
188 
Acquisitions (Narratives) (Details)
In Millions
9 Months Ended
Oct. 31,
Feb. 28, 2007
2010
2010
Ownership percentage
0.35 
 
 
Additional percentage of voting interests acquired through share-repurchase program
0.3 
 
 
Company subsidiary, ASDA signs agreement with Dansk Supermarket on May 27, 2010 to purchase Netto foodstores
 
Number of stores operated by entity
 
 
193 
Average square footage Netto store
 
8,000 
8,000 
Estimated purchase price
 
778 
1,200 
Number of stores required to divest by parent
 
47 
47 
NettoFood Stores Limited
NettoFood Stores Limited
Subsequent Event (Narratives) (Details) (Massmart Holdings Ltd [Member])
In Millions
Nov. 29, 2010
Nov. 29, 2010
Ownership percentage
 
0.51 
Cost of acquisition
 17,000 
$ 2 
Number of stores operated by entity
 
288