WAL MART STORES INC, 10-K filed on 3/26/2013
Annual Report
Document And Entity Information (USD $)
12 Months Ended
Jan. 31, 2013
Mar. 22, 2013
Jul. 31, 2012
Document And Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Jan. 31, 2013 
 
 
Document Fiscal Year Focus
2013 
 
 
Document Fiscal Period Focus
FY 
 
 
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
 
3,292,443,366 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 123,286,859,792 
Entity Voluntary Filers
No 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Consolidated Statements Of Income (Audited) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Jan. 31, 2013
Jan. 31, 2012
Jan. 31, 2011
Revenues:
 
 
 
Net sales
$ 466,114 
$ 443,854 
$ 418,952 
Membership and other Income
3,048 
3,096 
2,897 
Total revenues
469,162 
446,950 
421,849 
Costs and expenses:
 
 
 
Cost of sales
352,488 
335,127 
314,946 
Operating, selling, general and administrative expenses
88,873 
85,265 
81,361 
Operating income
27,801 
26,558 
25,542 
Interest:
 
 
 
Debt
1,977 
2,034 
1,928 
Capital leases
274 
288 
277 
Interest income
(187)
(162)
(201)
Interest, net
2,064 
2,160 
2,004 
Income from continuing operations before income taxes
25,737 
24,398 
23,538 
Provision for income taxes
 
 
 
Current Income Tax Expense
7,999 
6,742 
6,703 
Deferred Income Tax Expense
(18)
1,202 
876 
Total provision for income taxes
7,981 
7,944 
7,579 
Income from continuing operations
17,756 
16,454 
15,959 
Loss from discontinued operations, net of income taxes
(67)
1,034 
Consolidated net income
17,756 
16,387 
16,993 
Less consolidated net income attributable to noncontrolling interest
(757)
(688)
(604)
Consolidated net income attributable to Walmart
$ 16,999 
$ 15,699 
$ 16,389 
Basic net income per common share:
 
 
 
Basic income per common share from continuing operations attributable to Walmart
$ 5.04 
$ 4.56 
$ 4.20 
Basic loss per common share from discontinued operations attributable to Walmart
$ 0.00 
$ (0.02)
$ 0.28 
Basic net income per common share attributable to Walmart
$ 5.04 
$ 4.54 
$ 4.48 
Diluted net income per common share:
 
 
 
Diluted income per common share from continuing operations attributable to Walmart
$ 5.02 
$ 4.54 
$ 4.18 
Diluted loss per common share from discontinued operations attributable to Walmart
$ 0.00 
$ (0.02)
$ 0.29 
Diluted net income per common share attributable to Walmart
$ 5.02 
$ 4.52 
$ 4.47 
Weighted-average common shares outstanding:
 
 
 
Basic
3,374 
3,460 
3,656 
Diluted
3,389 
3,474 
3,670 
Dividends declared per common share
$ 1.59 
$ 1.46 
$ 1.21 
Consolidated Statements Of Comprehensive Income (Audited) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Jan. 31, 2013
Jan. 31, 2012
Jan. 31, 2011
Statement of Other Comprehensive Income [Abstract]
 
 
 
Consolidated net income
$ 17,756 
$ 16,387 
$ 16,993 
Less consolidated net income attributable to nonredeemable noncontrolling interest
(684)
(627)
(584)
Less consolidated net income attributable to redeemable noncontrolling interest
(73)
(61)
(20)
Consolidated net income attributable to Walmart
16,999 
15,699 
16,389 
Other comprehensive income, net of income taxes
 
 
 
Currency translation and other
1,042 
(2,758)
1,137 
Derivatives instruments
136 
(67)
(17)
Minimum pension liabilities
(166)
43 
(145)
Other comprehensive income, net of income taxes
1,012 
(2,782)
975 
Less other comprehensive income attributable to nonredeemable noncontrolling interest
(138)
660 
(162)
Less other comprehensive income attributable to redeemable noncontrolling interest
(51)
66 
(97)
Other comprehensive income attributable to Walmart
823 
(2,056)
716 
Comprehensive income, net of income taxes
18,768 
13,605 
17,968 
Less comprehensive income attributable to nonredeemable noncontrolling interest
(822)
33 
(746)
Less comprehensive income attributable to redeemable noncontrolling interest
(124)
(117)
Comprehensive income attributable to Walmart
$ 17,822 
$ 13,643 
$ 17,105 
Consolidated Balance Sheets (Audited) (USD $)
In Millions, unless otherwise specified
Jan. 31, 2013
Jan. 31, 2012
Current assets:
 
 
Cash and cash equivalents
$ 7,781 
$ 6,550 
Receivables, net
6,768 
5,937 
Inventories
43,803 
40,714 
Prepaid Expense and Other Assets, Current
1,588 
1,774 
Total current assets
59,940 
54,975 
Property and equipment:
 
 
Property, Plant and Equipment, Gross
165,825 
155,002 
Less accumulated depreciation
(51,896)
(45,399)
Property and equipment, net
113,929 
109,603 
Property under capital leases:
 
 
Property under capital leases
5,899 
5,936 
Less accumulated amortization
(3,147)
(3,215)
Property under capital leases, net
2,752 
2,721 
Goodwill
20,497 
20,651 
Other assets and deferred charges
5,987 
5,456 
Total assets
203,105 
193,406 
Current liabilities:
 
 
Short-term borrowings
6,805 
4,047 
Accounts payable
38,080 
36,608 
Accrued liabilities
18,808 
18,180 
Accrued income taxes
2,211 
1,164 
Long-term debt due within one year
5,587 
1,975 
Obligations under capital leases due within one year
327 
326 
Total current liabilities
71,818 
62,300 
Long-term debt
38,394 
44,070 
Long-term obligations under capital leases
3,023 
3,009 
Deferred income taxes and other
7,613 
7,862 
Redeemable noncontrolling interest
519 
404 
Commitments and contingencies
   
   
Equity:
 
 
Common stock
332 
342 
Capital in excess of par value
3,620 
3,692 
Retained earnings
72,978 
68,691 
Accumulated other comprehensive income (loss)
(587)
(1,410)
Total Walmart shareholders' equity
76,343 
71,315 
Noncontrolling interest
5,395 
4,446 
Total equity
81,738 
75,761 
Total liabilities and equity
$ 203,105 
$ 193,406 
Consolidated Statement Of Shareholders' Equity (Audited) (USD $)
In Millions
Total
Common Stock [Member]
Capital In Excess Of Par Value [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Total Walmart Shareholders' Equity [Member]
Noncontrolling Interest [Member]
Balances at Jan. 31, 2010
$ 72,648 
$ 378 
$ 3,803 
$ 66,357 
$ (70)
$ 70,468 
$ 2,180 
Balances, in shares at Jan. 31, 2010
 
3,786 
 
 
 
 
 
Consolidated net income (excludes noncontrolling interest)
16,973 
 
 
16,389 
 
16,389 
 
Net Income (Loss) Attributable to Noncontrolling Interest, excluding redeemable
584 
 
 
 
 
 
584 
Other Comprehensive Income Net Of Tax, excluding redeemable noncontrolling interest
878 
 
 
 
716 
716 
 
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest
162 
 
 
 
 
 
162 
Cash dividends declared
(4,437)
 
 
(4,437)
 
(4,437)
 
Purchase of Company stock (in shares)
 
(280)
 
 
 
 
 
Purchase of Company stock
(14,834)
(28)
(487)
(14,319)
 
(14,834)
 
Other Shares
 
10 
 
 
 
 
 
Other
19 
261 
(23)
 
240 
(221)
Balances at Jan. 31, 2011
71,247 
352 
3,577 
63,967 
646 
68,542 
2,705 
Balances, in shares at Jan. 31, 2011
 
3,516 
 
 
 
 
 
Consolidated net income (excludes noncontrolling interest)
16,326 
 
 
15,699 
 
15,699 
 
Net Income (Loss) Attributable to Noncontrolling Interest, excluding redeemable
627 
 
 
 
 
 
627 
Other Comprehensive Income Net Of Tax, excluding redeemable noncontrolling interest
(2,716)
 
 
 
(2,056)
(2,056)
 
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest
(660)
 
 
 
 
 
(660)
Cash dividends declared
(5,048)
 
 
(5,048)
 
(5,048)
 
Purchase of Company stock (in shares)
 
(113)
 
 
 
 
 
Purchase of Company stock
(6,170)
(11)
(229)
(5,930)
 
(6,170)
 
Nonredeemable noncontrolling interest of acquired entity
1,988 
 
 
 
 
 
1,988 
Other Shares
 
15 
 
 
 
 
 
Other
134 
344 
 
348 
(214)
Balances at Jan. 31, 2012
75,761 
342 
3,692 
68,691 
(1,410)
71,315 
4,446 
Balances, in shares at Jan. 31, 2012
 
3,418 
 
 
 
 
 
Consolidated net income (excludes noncontrolling interest)
17,683 
 
 
16,999 
 
16,999 
 
Net Income (Loss) Attributable to Noncontrolling Interest, excluding redeemable
684 
 
 
 
 
 
684 
Other Comprehensive Income Net Of Tax, excluding redeemable noncontrolling interest
961 
 
 
 
823 
823 
 
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest
138 
 
 
 
 
 
138 
Cash dividends declared
(5,361)
 
 
(5,361)
 
(5,361)
 
Purchase of Company stock (in shares)
 
(115)
 
 
 
 
 
Purchase of Company stock
(7,709)
(11)
(357)
(7,341)
 
(7,709)
 
Nonredeemable noncontrolling interest of acquired entity
469 
 
 
 
 
 
469 
Other Shares
 
11 
 
 
 
 
 
Other
(66)
285 
(10)
 
276 
(342)
Balances at Jan. 31, 2013
$ 81,738 
$ 332 
$ 3,620 
$ 72,978 
$ (587)
$ 76,343 
$ 5,395 
Balances, in shares at Jan. 31, 2013
 
3,314 
 
 
 
 
 
Consolidated Statement Of Shareholders' Equity (Audited) (Parenthetical)
12 Months Ended
Jan. 31, 2013
Jan. 31, 2012
Jan. 31, 2011
Statement of Stockholders' Equity [Abstract]
 
 
 
Dividends declared per common share
$ 1.59 
$ 1.46 
$ 1.21 
Consolidated Statements Of Cash Flows (Audited) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Jan. 31, 2013
Jan. 31, 2012
Jan. 31, 2011
Cash flows from operating activities:
 
 
 
Consolidated net income
$ 17,756 
$ 16,387 
$ 16,993 
Loss from discontinued operations, net of income taxes
67 
(1,034)
Income from continuing operations
17,756 
16,454 
15,959 
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
 
 
 
Depreciation and amortization
8,501 
8,130 
7,641 
Deferred income taxes
(133)
1,050 
651 
Other operating activities
527 
398 
1,087 
Changes in certain assets and liabilities, net of effects of acquisitions:
 
 
 
Receivables, net
(614)
(796)
(733)
Inventories
(2,759)
(3,727)
(3,205)
Accounts payable
1,061 
2,687 
2,676 
Accrued liabilities
271 
(935)
(280)
Accrued income taxes
981 
994 
(153)
Net cash provided by operating activities
25,591 
24,255 
23,643 
Cash flows from investing activities:
 
 
 
Payments for property and equipment
(12,898)
(13,510)
(12,699)
Proceeds from the disposal of property and equipment
532 
580 
489 
Investments and business acquisitions, net of cash acquired
(316)
(3,548)
(202)
Other investing activities
71 
(131)
219 
Net cash used in investing activities
(12,611)
(16,609)
(12,193)
Cash flows from financing activities:
 
 
 
Net change in short-term borrowings
2,754 
3,019 
503 
Proceeds from issuance of long-term debt
211 
5,050 
11,396 
Payments of long-term debt
(1,478)
(4,584)
(4,080)
Dividends paid
(5,361)
(5,048)
(4,437)
Purchase of Company stock
(7,600)
(6,298)
(14,776)
Other financing activities
(498)
(597)
(634)
Net cash used in financing activities
(11,972)
(8,458)
(12,028)
Effect of exchange rates on cash and cash equivalents
223 
(33)
66 
Net increase (decrease) in cash and cash equivalents
1,231 
(845)
(512)
Cash and cash equivalents at beginning of year
6,550 
7,395 
7,907 
Cash and cash equivalents at end of period
7,781 
6,550 
7,395 
Income Taxes Paid, Net
7,304 
5,899 
6,984 
Interest Paid
$ 2,262 
$ 2,346 
$ 2,163 
Summary Of Significant Accounting Policies
Summary of Significant Accounting Policies
Note 1. Summary of Significant Accounting Policies
General
Wal-Mart Stores, Inc. ("Walmart" or the "Company") operates retail stores in various formats under 69 banners around the world, aggregated into three reportable segments: Walmart U.S., Walmart International and Sam's Club. Walmart is committed to saving people money so they can live better. Walmart earns the trust of its customers every day by providing a broad assortment of quality merchandise and services at everyday low prices ("EDLP") while fostering a culture that rewards and embraces mutual respect, integrity and diversity. EDLP is the Company's pricing philosophy under which it prices items at a low price every day so its customers trust that its prices will not change under frequent promotional activity.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended January 31, 2013 ("fiscal 2013"), January 31, 2012 ("fiscal 2012") and January 31, 2011 ("fiscal 2011"). All material intercompany accounts and transactions have been eliminated in consolidation. Investments in unconsolidated affiliates, which are 50% or less owned, are accounted for primarily using the equity method. These investments are immaterial to the Company's Consolidated Financial Statements.
The Company's Consolidated Financial Statements are based on a 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 January 2013 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 benefits 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 $1.3 billion and $1.2 billion at January 31, 2013 and 2012, respectively. In addition, cash and cash equivalents includes restricted cash of $715 million and $547 million at January 31, 2013 and 2012, respectively, which is primarily related to cash collateral holdings from various counterparties, as required by certain derivative and trust agreements.
The Company's cash balances are held in various locations around the world. Of the Company's $7.8 billion and $6.6 billion of cash and cash equivalents at January 31, 2013 and 2012, respectively, $5.2 billion and $5.6 billion, respectively, were held outside of the U.S. and are generally utilized to support liquidity needs in the Company's foreign operations.
The Company employs financing strategies in an effort to ensure that cash can be made available in the country in which it is needed with the minimum cost possible. Management does not believe it will be necessary to repatriate cash and cash equivalents held outside of the U.S. and anticipates its domestic liquidity needs will be met through other funding sources (ongoing cash flows generated from operations, external borrowings, or both). Accordingly, management intends, with only certain limited exceptions, to continue to permanently reinvest the Company's cash and cash equivalents in its foreign operations. If the Company's current intentions were to change, most of the amounts held within the Company's foreign operations could be repatriated to the U.S., although any repatriations under current U.S. tax laws would be subject to U.S. federal income taxes, less applicable foreign tax credits. As of January 31, 2013 and 2012, cash and cash equivalents of approximately $876 million and $768 million, respectively, may not be freely transferable to the U.S. due to local laws or other restrictions. Management does not expect local laws, other limitations or potential taxes on anticipated future repatriations of amounts held outside of the U.S. to have a material effect on the Company's overall liquidity, financial condition or results of operations.
Receivables
Receivables are stated at their carrying values, net of a reserve for doubtful accounts. Receivables consist primarily of amounts due from the following:
Insurance companies resulting from pharmacy sales;
Banks for customer credit cards, debit cards and electronic bank transfers that take in excess of seven days to process;
Consumer financing programs in certain international operations;
Suppliers for marketing or incentive programs; and
Real estate transactions.
The Walmart International segment offers a limited number of consumer credit products, primarily through its financial institutions in select countries. The receivable balance from consumer credit products was $1.2 billion, net of a reserve for doubtful accounts of $115 million, at January 31, 2013, compared to a receivable balance of $1.0 billion, net of a reserve for doubtful accounts of $63 million, at January 31, 2012. These balances are included in receivables, net, in the Company's Consolidated Balance Sheets.
Inventories
The Company values inventories at the lower of cost or market as determined primarily by the retail method of accounting, using the last-in, first-out ("LIFO") method for substantially all of the Walmart U.S. segment's inventories. The retail method of accounting results in inventory being valued at the lower of cost or market since permanent markdowns are currently taken as a reduction of the retail value of inventory. The Walmart International segment's inventories are primarily valued by the retail method of accounting, using the first-in, first-out ("FIFO") method. The Sam's Club segment's inventories are valued based on weighted-average cost using the LIFO method. At January 31, 2013 and 2012, the Company's inventories valued at LIFO approximate those inventories as if they were valued at FIFO.
Property and Equipment
Property and equipment are stated 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:
 
 
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
Estimated Useful Lives
 
2013
 
2012
Land
 
N/A
 
$
25,612

 
$
23,499

Buildings and improvements
 
3-40 years
 
90,686

 
84,275

Fixtures and equipment
 
3-25 years
 
40,903

 
39,234

Transportation equipment
 
3-15 years
 
2,796

  
2,682

Construction in progress
 
N/A
 
5,828

  
5,312

Property and equipment
 
 
 
$
165,825

 
$
155,002

Accumulated depreciation
 
 
 
(51,896
)
 
(45,399
)
Property and equipment, net
 
 
 
$
113,929

 
$
109,603


Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the remaining expected lease term. Depreciation expense for property and equipment, including amortization of property under capital leases, for fiscal 2013, 2012 and 2011 was $8.4 billion, $8.1 billion and $7.6 billion, respectively. Interest costs capitalized on construction projects were $74 million, $60 million and $63 million in fiscal 2013, 2012 and 2011, respectively.
Long-Lived Assets
Long-lived assets are stated 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 or, in certain circumstances, a market group of stores. 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. Impairment charges of long-lived assets for fiscal 2013, 2012 and 2011 were not significant.
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.
For the reporting units that were tested using only the qualitative assessment, management determined that the fair value of each reporting unit is more likely than not greater than the carrying amount and, as a result, quantitative analyses were not required. For the reporting units tested using a quantitative impairment test, management determined the fair value of each reporting unit is greater than the carrying amount. Accordingly, the Company has not recorded any impairment charges related to goodwill.
The following table reflects goodwill activity, by reportable segment, for fiscal 2013 and 2012:
(Amounts in millions)
 
Walmart U.S.
 
Walmart
International
 
Sam's Club
 
Total
Balances as of February 1, 2011
 
$
239

 
$
16,211

 
$
313

 
$
16,763

Changes in currency translation and other
 

 
(535
)
 

 
(535
)
Acquisitions(1)
 
200

 
4,223

 

 
4,423

Balances as of January 31, 2012
 
439

 
19,899

 
313

 
20,651

Changes in currency translation and other
 

 
(65
)
 

 
(65
)
Purchase accounting adjustments for prior fiscal year acquisitions(2)
 
4

 
(532
)
 

 
(528
)
Acquisitions(3)
 

 
439

 

 
439

Balances as of January 31, 2013
 
$
443

 
$
19,741

 
$
313

 
$
20,497


(1)  
Goodwill recorded for acquisitions in fiscal 2012 primarily relates to the acquisition of 147 Netto stores from Dansk Supermarked in the United Kingdom and to the acquisition of a 51% ownership in Massmart, a retailer based in South Africa. Refer to Note 13 for more information about these acquisitions.
(2)
Fiscal 2013 purchase accounting adjustments primarily relate to the finalization of the Massmart purchase price allocation, which was preliminary at January 31, 2012.
(3)
Goodwill recorded for fiscal 2013 acquisitions relates to several acquisitions completed in fiscal 2013 that are not significant, individually or in the aggregate, to the Company's Consolidated Financial Statements.
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 impairment charges related to indefinite-lived intangible assets recorded during fiscal 2013, 2012 and 2011.
Self-Insurance Reserves
The Company uses a combination of insurance, self-insured retention and self-insurance for a number of risks, including, but not limited to, workers' compensation, general liability, vehicle liability, property and the Company's obligation for employee-related health care benefits. Liabilities relating to these claims associated with these risks are estimated by considering historical claims experience, including frequency, severity, demographic factors and other actuarial assumptions, including incurred but not reported claims. In estimating its liability for such claims, the Company periodically analyzes its historical trends, including loss development, and applies appropriate loss development factors to the incurred costs associated with the claims. The Company also maintains stop-loss insurance coverage for workers' compensation and general liability of $5 million and $15 million, respectively, per occurrence, to limit exposure to certain risks. Refer to Note 5 for more information about the Company's self-insurance reserves.
Income Taxes
Income taxes are accounted for under the liability 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. 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. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized.
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.
Membership Fee
The Company recognizes membership fee revenue both in the United States and internationally over the term of the membership, which is typically 12 months. The following table summarizes membership fee activity for fiscal 2013, 2012 and 2011:
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2013
 
2012
 
2011
Deferred membership fee revenue, beginning of year
 
$
559

 
$
542

 
$
532

Cash received from members
 
1,133

 
1,111

 
1,074

Membership fee revenue recognized
 
(1,117
)
 
(1,094
)
 
(1,064
)
Deferred membership fee revenue, end of year
 
$
575

 
$
559

 
$
542


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.
Shopping Cards
Customer purchases of shopping cards are not recognized as revenue until the card is redeemed and the customer purchases merchandise using the shopping card. Shopping cards in the U.S. do not carry an expiration date and, therefore, customers and members can redeem their shopping cards for merchandise indefinitely. Shopping cards in certain foreign countries where the Company does business may have expiration dates. A certain amount of shopping cards, both with and without expiration dates, will not be redeemed. Management estimates unredeemed shopping cards and recognizes revenue for these amounts over shopping card historical usage periods based on historical redemption rates. Management periodically reviews and updates its estimates of usage periods and redemption rates.
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 warehouses, stores and clubs from suppliers, the cost of transportation from the Company's warehouses 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 advertising reimbursements received from vendors that are not directly related to specific advertising activities.
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, except for certain advertising reimbursements directly related to specific advertising activities and certain other reimbursements, are accounted for as a reduction of cost of sales 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 does not include most 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 ("gross profit margin") 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 and were $2.3 billion for both fiscal 2013 and 2012, and $2.5 billion for fiscal 2011. Advertising costs 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. Advertising reimbursements received from suppliers are generally accounted for as a reduction of cost of sales and recognized in the Company's Consolidated Statements of Income when the related inventory is sold. When advertising reimbursements are directly related to specific advertising activities, they are recognized as a reduction of advertising expenses in operating, selling, general and administrative expenses.
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 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.
Pre-Opening Costs
The cost of start-up activities, including organization costs, related to new store openings, store remodels, expansions and relocations 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 $316 million, $308 million and $320 million for fiscal 2013, 2012 and 2011, 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 income (loss). The income statements of 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.
Reclassifications
Certain reclassifications have been made to prior fiscal year amounts and balances to conform to the presentation in the current fiscal year. These reclassifications did not impact consolidated operating income or net income. Additionally, certain segment asset and expense allocations have been reclassified among segments in the current period. See Note 14 for further discussion of the Company's segments.
Recent Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02, which requires entities to present information about significant items reclassified out of accumulated other comprehensive income (loss) by component either on the face of the statement where net income is presented or as a separate disclosure in the notes to the financial statements. This ASU is effective for the Company in the first quarter of fiscal 2014. The adoption of this ASU is not expected to impact the Company's consolidated net income, financial position or cash flows.
In July 2012, the FASB issued ASU 2012-02, which amends how companies test for impairment of indefinite-lived intangible assets. The new guidance permits a company to assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to perform the annual impairment test. The ASU is effective for the Company in the first quarter of fiscal 2014. The adoption of this ASU is not expected to impact the Company's consolidated net income, financial position or cash flows.
In 2011, the FASB issued two ASUs which amend guidance for the presentation of comprehensive income. The amended guidance requires an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The previous option to report other comprehensive income and its components in the statement of shareholders' equity was eliminated. Although the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under existing guidance. Beginning with the quarter ended April 30, 2012, the Company elected to report other comprehensive income and its components in a separate statement of comprehensive income. The adoption of these ASUs did not impact the Company's consolidated net income, financial position or cash flows.
In 2011, the FASB issued ASU 2011-04 to clarify the intent of the application of existing fair value measurement and disclosure requirements, as well as change certain measurement requirements and disclosures. The Company adopted ASU 2011-04 effective February 1, 2012. In connection with the adoption, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio, consistent with how the Company previously had been measuring credit risk for these instruments. The adoption of ASU 2011-04 did not impact the Company's consolidated net income, financial position or cash flows.
Net Income Per Common Share
Net Income Per Common Share
Note 2. Net Income Per Common Share
Basic income per common share from continuing operations attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period. Diluted income per common share from continuing operations attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of outstanding stock options and other share-based awards. The Company had approximately 37 thousand, 1 million and 4 million stock options and other share-based awards outstanding that were antidilutive and not included in the calculation of diluted income per common share from continuing operations attributable to Walmart for fiscal 2013, 2012 and 2011, respectively.
The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted income per common share from continuing operations attributable to Walmart:
 
 
Fiscal Years Ended January 31,
(Amounts in millions, except per share data)
 
2013
 
2012
 
2011
Numerator
 
 
 
 
 
 
Income from continuing operations
 
$
17,756

 
$
16,454

 
$
15,959

Less consolidated net income attributable to noncontrolling interest
 
(757
)
 
(688
)
 
(604
)
Income from continuing operations attributable to Walmart
 
$
16,999

 
$
15,766

 
$
15,355

 
 
 
 
 
 
 
Denominator
 
 
 
 
 
 
Weighted-average common shares outstanding, basic
 
3,374

 
3,460

 
3,656

Dilutive impact of stock options and other share-based awards
 
15

 
14

 
14

Weighted-average common shares outstanding, diluted
 
3,389

 
3,474

 
3,670

 
 
 
 
 
 
 
Income per common share from continuing operations attributable to Walmart
 
 
 
 
 
 
Basic
 
$
5.04

 
$
4.56

 
$
4.20

Diluted
 
5.02

 
4.54

 
4.18

Shareholder's Equity
Shareholder's Equity
Note 3. Shareholders' Equity
Share-Based Compensation
The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The compensation expense recognized for all plans was $378 million, $355 million and $371 million for fiscal 2013, 2012 and 2011, respectively. Share-based compensation expense is included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for share-based compensation was $142 million, $134 million and $141 million for fiscal 2013, 2012 and 2011, respectively. The following table summarizes the Company's share-based compensation expense by award type:
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2013
 
2012
 
2011
Restricted stock and performance share awards
 
$
152

 
$
142

 
$
162

Restricted stock rights
 
195

 
184

 
157

Stock options
 
31

 
29

 
52

Share-based compensation expense
 
$
378

 
$
355

 
$
371


The Company's shareholder-approved Stock Incentive Plan of 2010 (the "Plan") became effective June 4, 2010 and amended and restated the Company's Stock Incentive Plan of 2005. The Plan was established to grant stock options, restricted (non-vested) stock, performance shares and other equity compensation awards for which 210 million shares of 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 Awards. Restricted stock awards are for shares that vest based on the passage of time and include restrictions related to employment. Performance share awards 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 three and five years. Restricted stock and performance share awards 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 awards 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.
Restricted Stock Rights. Restricted stock rights provide rights to Company stock after a specified service period; 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 right 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 rights granted in fiscal 2013, 2012 and 2011 was 12.2%, 11.7% and 9.1%, respectively.
Stock Options. Stock options allow the associate to buy a specified number of shares at a set price. Options granted generally vest over five years and have a contractual term of ten years. Options may include restrictions related to employment, satisfaction of performance conditions or other conditions. Under the Plan and prior plans, substantially all stock options have been granted with an exercise price equal to the market price of the Company's stock at the date of grant.
In addition to the Plan, the Company's subsidiary in the United Kingdom, ASDA, has two other stock option plans for certain ASDA colleagues. A combined 49 million shares of the Company's common stock were registered under the Securities Act of 1933, as amended, for issuance upon the exercise of stock options granted under the Colleague Share Ownership Plan 1999 (the "CSOP") and the ASDA Sharesave Plan 2000 ("Sharesave Plan").
CSOP. The CSOP grants have either a three- or six-year vesting period. The CSOP options may be exercised during the two months immediately following the vesting date.
Sharesave Plan. The Sharesave Plan grants options at 80% of the Company's average stock price for the three days preceding the grant date. The Sharesave Plan options vest after three years and may generally be exercised up to six months after the vesting date.
The following table shows the activity for each award type during fiscal 2013:
 
 
Restricted Stock and Performance Share Awards
 
Restricted Stock Rights
 
Stock Options(1)
(Shares in thousands)
 
Shares
 
Weighted-
Average
Grant-Date
Fair Value
Per Share
 
Shares
 
Weighted-
Average
Grant-Date
Fair Value
Per Share
 
Shares
 
Weighted-
Average
Exercise Price
Per Share
Outstanding at February 1, 2012
 
13,320

 
$
53.56

 
17,621

 
$
47.76

 
20,152

 
$
48.21

Granted
 
4,488

 
62.13

 
5,262

 
53.27

 
2,082

 
47.39

Vested/exercised
 
(2,982
)
 
50.95

 
(3,714
)
 
45.35

 
(10,701
)
 
48.12

Forfeited or expired
 
(2,228
)
 
52.73

 
(1,330
)
 
48.37

 
(1,293
)
 
52.56

Outstanding at January 31, 2013
 
12,598

 
$
57.37

 
17,839

 
$
49.79

 
10,240

 
$
47.58

Exercisable at January 31, 2013
 


 


 
 
 


 
5,326

 
$
50.00

(1)  
Includes stock option awards granted under the Plan, the CSOP and the Sharesave Plan.
As of January 31, 2013, the unrecognized compensation cost for restricted stock and performance share awards, restricted stock rights and stock option awards was $233 million, $437 million and $21 million, respectively, and is expected to be recognized over a weighted-average period of 2.0 years, 1.7 years and 2.8 years, respectively. Additionally, as of January 31, 2013, the weighted-average remaining life for stock options outstanding and stock options exercisable was 5.3 years and 2.7 years, respectively, and had an aggregate intrinsic value of $229 million and $106 million, respectively.
The following table includes additional information related to restricted stock and performance share awards and restricted stock rights: 
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2013
 
2012
 
2011
Fair value of restricted stock and performance share awards vested
 
$
155

 
$
134

 
$
142

Fair value of restricted stock rights vested
 
168

 
178

 
50


The following table includes additional information related to stock option awards: 
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2013
 
2012
 
2011
Fair value of stock options vested
 
$
33

 
$
50

 
$
54

Proceeds from stock options exercised
 
320

 
420

 
205

Intrinsic value of stock options exercised
 
207

 
91

 
51


The fair value of each stock option award is estimated on the date of grant using the Black-Scholes-Merton option valuation model that uses various assumptions for inputs. The Company uses expected volatilities and risk-free interest rates that correlate with the expected term of the option when estimating an option's fair value. The following table provides the weighted-average assumptions used to estimate the fair values of the Company's stock options granted in fiscal 2013, 2012 and 2011:
 
 
Fiscal Years Ended January 31,
 
 
2013
 
2012
 
2011
Dividend yield(1)
 
2.8
%
 
2.9
%
 
2.3
%
Volatility(2)
 
16.2
%
 
17.6
%
 
17.1
%
Risk-free interest rate(3)
 
0.6
%
 
1.3
%
 
1.8
%
Expected life in years(4)
 
3.0

 
3.0

 
3.1

Weighted-average fair value of options granted
 
$
10.57

 
$
9.61

 
$
12.53

(1)
Expected dividend yield is based on the anticipated dividends over the vesting period.
(2)
Expected volatility is based on historical volatility of the Company's stock.
(3)
Risk-free interest rate is based on the U.S. Treasury yield curve at the time of the grant.
(4)
Expected life in years is based on historical exercise and expiration activity of grants with similar vesting periods.
Share Repurchase Program
From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the Board of Directors. The current $15.0 billion share repurchase program has no expiration date or other restrictions limiting the period over which the Company can make share repurchases under the program. At January 31, 2013, authorization for $3.7 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 and the market price of its common stock. Cash paid for share repurchases during fiscal 2013, 2012 and 2011, was as follows:
Share Repurchases
 
Total Number of Shares Repurchased
(in millions)
 
Average Price Paid per Share
(in dollars)
 
Total Investment
(in billions)
Fiscal year ended January 31, 2013
 
113.2

 
$
67.15

 
$
7.6

Fiscal year ended January 31, 2012
 
115.3

 
54.64

 
6.3

Fiscal year ended January 31, 2011
 
279.1

 
53.03

 
14.8

Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
Note 4. Accumulated Other Comprehensive Income (Loss)
The following table provides the changes in the composition of total Walmart accumulated other comprehensive income (loss) for fiscal 2013, 2012 and 2011:
 
 
Currency Translation
and Other
 
Derivative
Instruments
 
Minimum Pension
Liability
 
Total
(Amounts in millions)
 
 
 
 
 
 
 
 
Balances as of February 1, 2010
 
$
348

 
$
77

 
$
(495
)
 
$
(70
)
Other comprehensive income (loss)
 
878

 
(17
)
 
(145
)
 
716

Balances as of January 31, 2011
 
1,226

 
60

 
(640
)
 
646

Other comprehensive income (loss)
 
(2,032
)
 
(67
)
 
43

 
(2,056
)
Balances as of January 31, 2012
 
(806
)
 
(7
)
 
(597
)
 
(1,410
)
Other comprehensive income (loss)
 
853

 
136

 
(166
)
 
823

Balances as of January 31, 2013
 
$
47

 
$
129

 
$
(763
)
 
$
(587
)
Amounts included in accumulated other comprehensive income (loss) are recorded net of their related income tax effects. The Company's unrealized net gains and losses on net investment hedges, included in the currency translation and other category of accumulated other comprehensive income (loss), were not significant as of January 31, 2013 and January 31, 2012.
Accrued Liabilities
Accrued Liabilities
Note 5. Accrued Liabilities
The Company's accrued liabilities consist of the following:
 
 
As of January 31,
(Amounts in millions)
 
2013
 
2012
Accrued wages and benefits(1)
 
$
5,059

 
$
5,089

Self-insurance(2)
 
3,373

 
3,638

Accrued taxes(3)
 
2,851

 
2,323

Other(4)
 
7,525

 
7,130

Total accrued liabilities
 
$
18,808

 
$
18,180

(1)
Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans.
(2)
Self-insurance consists of all insurance-related liabilities, such as workers' compensation, general liability, vehicle liability, property liability and employee-related health care benefits.
(3)
Accrued taxes include accrued payroll, value added, sales and miscellaneous other taxes.
(4)
Other accrued liabilities consist of various items such as maintenance, utilities, advertising and interest.
Short-Term Borrowings And Long-Term Debt
Short-Term Borrowings And Long-Term Debt
Note 6. Short-term Borrowings and Long-term Debt
Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings outstanding at January 31, 2013 and 2012, were $6.8 billion and $4.0 billion, respectively. The following table includes additional information related to the Company's short-term borrowings for fiscal 2013, 2012 and 2011:
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2013
 
2012
 
2011
Maximum amount outstanding at any month-end
 
$
8,740

 
$
9,594

 
$
9,282

Average daily short-term borrowings
 
6,007

 
6,040

 
4,020

Weighted-average interest rate
 
0.1
%
 
0.1
%
 
0.2
%
The Company has various lines of credit, committed with 27 financial institutions, totaling $18.1 billion as of January 31, 2013. The lines of credit, including drawn and undrawn amounts, are summarized in the following table:
 
 
Fiscal Years Ended January 31,
 
 
2013
 
2012
(Amounts in millions)
 
Available
 
Drawn
 
Undrawn
 
Available
 
Drawn
 
Undrawn
Five-year credit facility(1)
 
$
6,258

 
$

 
$
6,258

 
$
6,258

 
$

 
$
6,258

364-day revolving credit facility(2)
 
10,000

 

 
10,000

 
10,000

 

 
10,000

Stand-by letters of credit(3)
 
1,871

 
1,868

 
3

 
2,225

 
2,178

 
47

Total
 
$
18,129

 
$
1,868

 
$
16,261

 
$
18,483

 
$
2,178

 
$
16,305

(1)
In June 2011, the Company renewed and extended its existing five-year credit facility, which is used to support its commercial paper program.
(2)
In June 2012, the Company renewed and extended its existing 364-day revolving credit facility, which is used to support its commercial paper program.
(3)
In June 2012, the Company renewed the stand-by letters of credit, which is used to support various potential and actual obligations.
The committed lines of credit mature at various times between June 2013 and June 2016, 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 10.0 basis points. In conjunction with the lines of credit listed in the table above, the Company has agreed to observe certain covenants, the most restrictive of which relates to maximum amounts of secured debt and long-term leases.
Additionally, the Company had trade letters of credit outstanding totaling $2.7 billion and $2.9 billion at January 31, 2013 and 2012, respectively.
The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following:
 
 
 
 
January 31, 2013
 
January 31, 2012
(Amounts in millions)
 
Maturity Dates
By Fiscal Year

Amount
 
Average Rate(1)

Amount
 
Average Rate(1)
Unsecured debt
 
 
 
 
 
 
 
 
 
 
Fixed
 
2014-2042
 
$
32,476

 
4.6
%
 
$
33,128

 
4.6
%
Variable
 
2014
 
500

 
5.5
%
 
500

 
5.2
%
Total U.S. dollar denominated
 

 
32,976

 

 
33,628

 

Fixed
 
2030
 
1,358

 
4.9
%
 
1,308

 
4.9
%
Variable
 

 

 

 

 


Total Euro denominated
 

 
1,358

 

 
1,308

 

Fixed
 
2031-2039
 
5,550

 
5.3
%
 
6,301

 
5.3
%
Variable
 

 

 

 

 


Total Sterling denominated
 

 
5,550

 

 
6,301

 

Fixed
 
2014-2021
 
1,942

 
1.4
%
 
2,335

 
1.4
%
Variable
 
2014-2016
 
1,056

 
0.7
%
 
1,271

 
0.8
%
Total Yen denominated
 
 
 
2,998

 

 
3,606

 

Total unsecured debt
 
 
 
42,882

 

 
44,843

 

Total other debt (in USD)(2)
 
2014-2042
 
1,099

 

 
1,202

 

Total debt
 

 
43,981

 

 
46,045

 

Less amounts due within one year
 

 
(5,587
)
 

 
(1,975
)
 

Long-term debt
 

 
$
38,394

 

 
$
44,070

 

(1)
The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end local currency interest rates. Interest costs are also impacted by certain derivative financial instruments described in Note 8.
(2)
A portion of other debt at January 31, 2013 and 2012, includes secured debt in the amount of $627 million and $319 million, respectively, which was collateralized by property that had an aggregate carrying amount of approximately $599 million and $866 million, respectively.
At January 31, 2013 and 2012, 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. Annual maturities of long-term debt during the next five years and thereafter are as follows:
(Amounts in millions)
Annual
Fiscal Year
Maturity
2014
$
5,587

2015
3,753

2016
4,562

2017
1,127

2018
1,128

Thereafter
27,824

Total
$
43,981


Debt Issuances
The Company did not issue any significant amounts of long-term debt during fiscal 2013. Information on significant long-term debt issued during fiscal 2012, is as follows (amounts in millions): 
Issue Date
 
Maturity Date
 
Interest Rate
 
Principal Amount
April 18, 2011
 
April 15, 2014
 
1.625%
 
$
1,000

April 18, 2011
 
April 15, 2016
 
2.800%
 
1,000

April 18, 2011
 
April 15, 2021
 
4.250%
 
1,000

April 18, 2011
 
April 15, 2041
 
5.625%
 
2,000

Total
 

 

 
$
5,000


The aggregate net proceeds from these note issuances were approximately $4.9 billion. The notes of each series require semi-annual interest payments on April 15 and October 15 of each year, with the first interest payment having commenced on October 15, 2011. Unless previously purchased and canceled, the Company will repay the notes of each series at 100% of the principal amount, together with accrued and unpaid interest thereon, at maturity. The notes of each series are senior, unsecured obligations of the Company.
Fair Value Measurements
Fair Value Measurements
Note 7. 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 ordinary 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 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, 2013 and 2012, the notional amounts and fair values of these derivatives are as follows:
 
January 31, 2013
 
January 31, 2012
(Amounts in millions)
Notional Amount
 
Fair
Value
 
Notional Amount
 
Fair
Value
Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges
$
3,445

 
$
60

 
$
3,945

 
$
183

Receive fixed-rate, pay fixed-rate cross-currency interest rate swaps designated as net investment hedges
1,250

 
223

 
1,250

 
316

Receive fixed-rate, pay fixed-rate cross-currency interest rate swaps designated as cash flow hedges
2,944

 
230

 
2,884

 
(3
)
Receive variable-rate, pay fixed-rate interest rate swaps designated as cash flow hedges
1,056

 
(8
)
 
1,270

 
(16
)
Receive variable-rate, pay fixed-rate forward starting interest rate swaps designated as cash flow hedges
5,000

 
10

 

 

Total
$
13,695

 
$
515

 
$
9,349

 
$
480


Nonrecurring Fair Value Measurements
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. The Company did not record any significant impairment charges to assets measured at fair value on a nonrecurring basis during the fiscal years ended January 31, 2013 or 2012.
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, 2013 and January 31, 2012, are as follows: 
 
 
January 31, 2013
 
January 31, 2012
(Amounts in millions)
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Long-term debt, including amounts due within one year
 
$
43,981

 
$
50,664

 
$
46,045

 
$
53,043

Derivative Financial Instruments
Derivative Financial Instruments
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 (generally cash) 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 $413 million and $387 million at January 31, 2013 and January 31, 2012, 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 these counterparties, the Company is also required to post collateral if the Company's net derivative liability position exceeds $150 million with any counterparty. The Company did not have any cash collateral posted with counterparties at January 31, 2013 or January 31, 2012. The Company records cash collateral paid as amounts receivable from the 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 income (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 and, accordingly, do not impact the Company's Consolidated Statements of Income. These fair value instruments will mature on dates ranging from April 2013 to May 2014.
Net Investment Instruments
The Company is a party to cross-currency interest rate swaps that the Company uses to hedge its net investments, as well as its currency exchange rate fluctuation exposure associated with the forecasted payments of principal and interest of non-U.S. denominated debt. 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 of the related investment 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 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 income (loss), offsetting the foreign currency translation adjustment of the related net investments that is also recorded in accumulated other comprehensive income (loss). At January 31, 2013 and January 31, 2012, the Company had £2.5 billion and £3.0 billion, respectively, of outstanding long-term debt designated as a hedge of its net investment in the United Kingdom, as well as outstanding long-term debt of ¥275 billion at January 31, 2013 and January 31, 2012, that was designated as a hedge of its net investment in Japan. These nonderivative hedging instruments will mature on dates ranging from August 2013 to January 2039.
Cash Flow Instruments
The Company is a party to receive variable-rate, pay fixed-rate interest rate swaps that the Company uses 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. Amounts reported in accumulated other comprehensive income (loss) related to these derivatives are reclassified from accumulated other comprehensive income (loss) to earnings as interest payments are made on the Company's variable-rate debt, converting the variable-rate interest expense into fixed-rate interest expense. These cash flow instruments will mature on dates ranging from August 2013 to July 2015.
The Company is also 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 income (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 remeasured 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 remeasurement 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 September 2029 to March 2034.
The Company also uses forward starting receive variable-rate, pay fixed-rate interest rate swaps to hedge its exposure to the variability in future cash flows due to changes in the LIBOR swap rate for U.S.-denominated 10- and 30-year debt issuances forecasted to occur in the future. Amounts reported in accumulated other comprehensive income (loss) related to these derivatives will be reclassified from accumulated other comprehensive income (loss) to earnings as interest payments are made on the forecasted hedged fixed-rate debt, adjusting interest expense to reflect the fixed-rate locked in by the forward starting swaps. These cash flow instruments hedge forecasted interest payments over a maximum period of 32 years. These forward starting swaps will be terminated on the day the hedged forecasted debt issuances occur, but no later than October 31, 2014, if the hedged forecasted debt issuances do not occur.
Financial Statement Presentation
Derivative instruments with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either a current or a non-current asset, based on maturity date, and those hedging instruments with an unrealized loss are recorded as either a current or a non-current liability, based on maturity date.
The Company's derivative instruments, as well as its nonderivative debt instruments designated and qualifying as hedging instruments, were classified as follows in the Company's Consolidated Balance Sheets:
 
January 31, 2013
 
January 31, 2012
(Amounts in millions)
Fair Value
Instruments
 
Net Investment
Instruments
 
Cash Flow
Instruments
 
Fair Value
Instruments
 
Net Investment
Instruments
 
Cash Flow
Instruments
Derivative instruments
 
 
 
 
 
 
 
 
 
 
 
Prepaid expenses and other
$
29

 
$

 
$

 
$
2

 
$

 
$

Other assets and deferred charges
31

 
223

 
327

 
181

 
316

 
91

Derivative asset subtotals
$
60

 
$
223

 
$
327

 
$
183

 
$
316

 
$
91

 
 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities
$

 
$

 
$
4

 
$

 
$

 
$

Deferred income taxes and other

 

 
91

 

 

 
110

Derivative liability subtotals
$

 
$

 
$
95

 
$

 
$

 
$
110

 
 
 
 
 
 
 
 
 
 
 
 
Nonderivative hedging instruments
 
 
 
 
 
 
 
 
 
 
 
Long-term debt due within one year
$

 
$
818

 
$

 
$

 
$
785

 
$

Long-term debt

 
6,145

 

 

 
7,546

 

Nonderivative hedge liability subtotals
$

 
$
6,963

 
$

 
$

 
$
8,331

 
$

Gains and losses related to the Company's derivatives primarily relate to interest rate hedges, which are included in interest, net, in the Company's Consolidated Statements of Income. Amounts reclassified from accumulated other comprehensive income (loss) to net income for the fiscal years ending January 31, 2013 and 2012, as well as the amounts expected to be reclassified from accumulated other comprehensive income (loss) to net income during the next 12 months, are not significant.
Taxes
Taxes
Note 9. Taxes
Income from Continuing Operations
The components of income from continuing operations before income taxes are as follows:
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2013
 
2012
 
2011
U.S.
 
$
19,352

 
$
18,685

 
$
18,398

Non-U.S.
 
6,385

 
5,713

 
5,140

Total income from continuing operations before income taxes
 
$
25,737

 
$
24,398

 
$
23,538


A summary of the provision for income taxes is as follows:
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2013
 
2012
 
2011
Current:
 
 
 
 
 
 
U.S. federal
 
$
5,611

 
$
4,596

 
$
4,600

U.S. state and local
 
622

 
743

 
637

International
 
1,766

 
1,403

 
1,466

Total current tax provision
 
7,999

 
6,742

 
6,703

Deferred:
 

 

 

U.S. federal
 
38

 
1,444

 
818

U.S. state and local
 
(8
)
 
57

 
39

International
 
(48
)
 
(299
)
 
19

Total deferred tax expense (benefit)
 
(18
)
 
1,202

 
876

Total provision for income taxes
 
$
7,981

 
$
7,944

 
$
7,579


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. The Company's non-U.S. income is generally subject to local country tax rates that are below the 35% U.S. statutory tax rate. Certain non-U.S. earnings have been indefinitely reinvested outside the U.S. and are not subject to current U.S. income tax. 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,
 
 
2013
 
2012
 
2011
U.S. statutory tax rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
U.S. state income taxes, net of federal income tax benefit
 
1.7
 %
 
2.0
 %
 
1.9
 %
Income taxed outside the U.S.
 
(2.6
)%
 
(2.8
)%
 
(2.2
)%
Net impact of repatriated international earnings
 
(2.5
)%
 
(0.3
)%
 
(1.5
)%
Other, net
 
(0.6
)%
 
(1.3
)%
 
(1.0
)%
Effective income tax rate
 
31.0
 %
 
32.6
 %
 
32.2
 %

Deferred Taxes
The significant components of the Company's deferred tax account balances are as follows:
 
 
January 31,
(Amounts in millions)
 
2013
 
2012
Deferred tax assets:
 
 
 
 
Loss and tax credit carryforwards
 
$
3,525

 
$
2,996

Accrued liabilities
 
2,683

 
2,949

Share-based compensation
 
204

 
376

Other
 
1,500

 
1,029

Total deferred tax assets
 
7,912

 
7,350

Valuation allowance
 
(2,225
)
 
(2,528
)
Deferred tax assets, net of valuation allowance
 
5,687

 
4,822

Deferred tax liabilities:
 

 

Property and equipment
 
5,830

 
5,891

Inventories
 
1,912

 
1,627

Other
 
1,157

 
409

Total deferred tax liabilities
 
8,899

 
7,927

Net deferred tax liabilities
 
$
3,212

 
$
3,105


The deferred taxes are classified as follows in the Company's Consolidated Balance Sheets:
  
 
January 31,
(Amounts in millions)
 
2013
 
2012
Balance Sheet classification:
 
 
 
 
Assets:
 
 
 
 
Prepaid expenses and other
 
$
520

 
$
815

Other assets and deferred charges
 
757

 
738

Asset subtotals
 
1,277

 
1,553

Liabilities:
 

 

Accrued liabilities
 
116

 
41

Deferred income taxes and other
 
4,373

 
4,617

Liability subtotals
 
4,489

 
4,658

Net deferred tax liabilities
 
$
3,212

 
$
3,105


Unremitted Earnings
United States income taxes have not been provided on accumulated but undistributed earnings of the Company's international subsidiaries of approximately $19.2 billion and $19.7 billion as of January 31, 2013 and 2012, respectively, as the Company intends to permanently reinvest these amounts outside of the United States. However, if any portion were to be distributed, the related U.S. tax liability may be reduced by foreign income taxes paid on those earnings. Determination of the unrecognized deferred tax liability related to these undistributed earnings is not practicable because of the complexities with its hypothetical calculation. The Company provides deferred or current income taxes on earnings of international subsidiaries in the period that the Company determines it will remit those earnings.
Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances
At January 31, 2013, the Company had net operating loss and capital loss carryforwards totaling approximately $5.5 billion. Of these carryforwards, approximately $3.2 billion will expire, if not utilized, in various years through 2023. The remaining carryforwards have no expiration. At January 31, 2013, the Company had foreign tax credit carryforwards of $1.7 billion, which will expire in various years through 2023, if not utilized.
As of January 31, 2013 and 2012, the Company had a valuation allowance recorded of approximately $2.2 billion and $2.5 billion, 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. The $0.3 billion net decrease in the valuation allowance during fiscal 2013 related to releases arising from the use of net operating loss and capital loss carryforwards, increases from certain net operating losses arising in fiscal 2013, decreases due to operating and capital loss expirations and fluctuations in currency exchange rates. Management believes that it is more likely than not that the remaining net deferred tax assets will be fully realized.
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 management does not consider it more likely than not that a deferred tax asset will be realized, a valuation allowance is established. To the extent that a valuation allowance has been established and management subsequently determines that it is more likely than not that the deferred tax assets will be realized, the valuation allowance is released.
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, 2013 and 2012, the amount of unrecognized tax benefits related to continuing operations was $818 million and $611 million, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate is $741 million and $520 million for January 31, 2013 and 2012, respectively.
A reconciliation of unrecognized tax benefits from continuing operations is as follows:
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2013
 
2012
 
2011
Unrecognized tax benefits, beginning of year
 
$
611

 
$
795

 
$
1,019

Increases related to prior year tax positions
 
88

 
87

 
101

Decreases related to prior year tax positions
 
(232
)
 
(162
)
 
(61
)
Increases related to current year tax positions
 
431

 
56

 
199

Settlements during the period
 
(80
)
 
(161
)
 
(453
)
Lapse in statutes of limitations
 

 
(4
)
 
(10
)
Unrecognized tax benefits, end of year
 
$
818

 
$
611

 
$
795


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 2013, 2012 and 2011, the Company recognized interest and penalty expense (benefit) related to uncertain tax positions of $2 million, $(19) million and $45 million, respectively. As of January 31, 2013 and 2012, accrued interest related to uncertain tax positions of $139 million and $166 million, respectively, were recorded in the Company's Consolidated Balance Sheets. The Company did not have any accrued penalties recorded as of January 31, 2013 or 2012.
During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by between $165 million and $210 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 significant impact to its Consolidated Financial Statements.
The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2011 through 2013. The Company also remains subject to income tax examinations for international income taxes for fiscal 2005 through 2013, and for U.S. state and local income taxes generally for fiscal 2006 through 2013.
Other Taxes
The Company is subject to tax examinations for payroll, value added, sales-based and other non-income taxes. A number of these examinations are ongoing and, in certain cases, have resulted in assessments from the taxing authorities. Where appropriate, the Company has made accruals for these matters, which are reflected in the Company's Consolidated Financial Statements. While these matters are individually immaterial, a group of related matters, if decided adversely to the Company, may result in a liability material to the Company's Consolidated Financial Statements.
Contingencies
Contingencies
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 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. Unless stated otherwise, 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 a liability material to the Company's financial condition or results of operations.
Wage-and-Hour Class Action: The Company is a defendant in Braun/Hummel v. Wal-Mart Stores, Inc., a class action lawsuit commenced in March 2002 in the Court of Common Pleas 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, a 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. By operation of law, post-judgment interest accrues on the judgment amount at the rate of six percent per annum from the date of entry of the judgment, which was November 14, 2007, until the judgment is paid, unless the judgment is set aside on appeal. On December 7, 2007, the Company filed its Notice of Appeal. The Company filed its opening appellate brief on February 17, 2009, plaintiffs filed their response brief on April 20, 2009, and the Company filed its reply brief on June 5, 2009. Oral argument was held before the Pennsylvania Superior Court of Appeals on August 19, 2009. On June 10, 2011, the court issued an opinion upholding the trial court's certification of the class, the jury's back pay award, and the awards of statutory penalties and prejudgment interest, but reversing the award of attorneys' fees. On September 9, 2011, the Company filed a Petition for Allowance of Appeal with the Pennsylvania Supreme Court. On July 2, 2012, the Pennsylvania Supreme Court granted the Company's Petition. The Company served its opening brief in the Pennsylvania Supreme Court on October 22, 2012, plaintiffs served their response brief on January 22, 2013, and the Company served its reply on February 28, 2013. A date for oral argument has not been scheduled by the Pennsylvania Supreme Court. The Company believes it has substantial factual and legal defenses to the claims at issue, and plans to continue pursuing appellate review.
Gender Discrimination Class Actions: The Company is a defendant in Dukes v. Wal-Mart Stores, Inc., which was commenced as a class-action lawsuit in June 2001 in the United States District Court for the Northern District of California, asserting that the Company had engaged in a pattern and practice of discriminating against women in promotions, pay, training, and job assignments, and seeking, 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. As defined by the district court, the class included "[a]ll women employed at any Wal-Mart domestic retail store at any time since December 26, 1998, who have been or may be subjected to Wal-Mart's challenged pay and management track promotions policies and practices." The Company appealed the order to the Ninth Circuit Court of Appeals and subsequently to the United States Supreme Court. On June 20, 2011, the Supreme Court issued an opinion decertifying the class and remanding the case to the district court. On October 27, 2011, the plaintiffs' attorneys filed an amended complaint proposing a class of current and former female associates at the Company's California retail facilities, and the Company filed a motion to dismiss on January 13, 2012. On September 21, 2012, the court denied the motion. Under the current scheduling order, the plaintiffs are required to file their motion for class certification on or before April 11, 2013.
On October 28, 2011, the attorneys for the plaintiffs in the Dukes case filed a similar complaint in the United States District Court for the Northern District of Texas entitled Odle v. Wal-Mart Stores, Inc., proposing a class of current and former female associates employed in any Walmart region that includes stores located in the state of Texas. On October 15, 2012, the court in the Odle case granted the Company's motion to dismiss, dismissing with prejudice the plaintiffs' class-action allegations and the individual claims of the lead plaintiff, Stephanie Odle. On October 2, 2012, the plaintiffs' attorneys filed another similar complaint in the United States District Court for the Middle District of Tennessee entitled Phipps v. Wal-Mart Stores, Inc