WAL MART STORES INC, 10-K filed on 3/30/2016
Annual Report
Document And Entity Information (USD $)
12 Months Ended
Jan. 31, 2016
Mar. 28, 2016
Jul. 31, 2015
Document And Entity Information [Abstract]
 
 
 
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 
 
 
Document Type
10-K 
 
 
Document Period End Date
Jan. 31, 2016 
 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
3,144,335,104 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 116,140,698,613 
Consolidated Statements of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Jan. 31, 2014
Revenues:
 
 
 
Net sales
$ 478,614 
$ 482,229 
$ 473,076 
Membership and other income
3,516 
3,422 
3,218 
Total revenues
482,130 
485,651 
476,294 
Costs and expenses:
 
 
 
Cost of sales
360,984 
365,086 
358,069 
Operating, selling, general and administrative expenses
97,041 
93,418 
91,353 
Operating income
24,105 
27,147 
26,872 
Interest:
 
 
 
Debt
2,027 
2,161 
2,072 
Capital lease and financing obligations
521 
300 
263 
Interest income
(81)
(113)
(119)
Interest, net
2,467 
2,348 
2,216 
Income from continuing operations before income taxes
21,638 
24,799 
24,656 
Provision for income taxes:
 
 
 
Current
7,584 
8,504 
8,619 
Deferred
(1,026)
(519)
(514)
Total provision for income taxes
6,558 
7,985 
8,105 
Income from continuing operations
15,080 
16,814 
16,551 
Income from discontinued operations, net of income taxes
285 
144 
Consolidated net income
15,080 
17,099 
16,695 
Consolidated net income attributable to noncontrolling interest
(386)
(736)
(673)
Consolidated net income attributable to Walmart
$ 14,694 
$ 16,363 
$ 16,022 
Basic net income per common share:
 
 
 
Basic income per common share from continuing operations attributable to Walmart
$ 4.58 
$ 5.01 
$ 4.87 
Basic income per common share from discontinued operations attributable to Walmart
$ 0.00 
$ 0.06 
$ 0.03 
Basic net income per common share attributable to Walmart
$ 4.58 
$ 5.07 
$ 4.90 
Diluted net income per common share:
 
 
 
Diluted income per common share from continuing operations attributable to Walmart
$ 4.57 
$ 4.99 
$ 4.85 
Diluted income per common share from discontinued operations attributable to Walmart
$ 0.00 
$ 0.06 
$ 0.03 
Diluted net income per common share attributable to Walmart
$ 4.57 
$ 5.05 
$ 4.88 
Weighted-average common shares outstanding:
 
 
 
Basic
3,207 
3,230 
3,269 
Diluted
3,217 
3,243 
3,283 
Dividends declared per common share
$ 1.96 
$ 1.92 
$ 1.88 
Consolidated Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified
12 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Jan. 31, 2014
Consolidated net income
$ 15,080 
$ 17,099 
$ 16,695 
Less consolidated net income attributable to nonredeemable noncontrolling interest
(386)
(736)
(606)
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest
 
 
(67)
Consolidated net income attributable to Walmart
14,694 
16,363 
16,022 
Other comprehensive income (loss), net of income taxes
 
 
 
Currency translation and other
(5,220)
(4,558)
(3,221)
Minimum pension liability
86 
(69)
153 
Other comprehensive income (loss), net of income taxes
(4,970)
(4,718)
(2,786)
Less other comprehensive income (loss) attributable to nonredeemable noncontrolling interest
541 
546 
311 
Less other comprehensive income (loss) attributable to redeemable noncontrolling interest
 
 
66 
Other comprehensive income (loss) attributable to Walmart
(4,429)
(4,172)
(2,409)
Comprehensive income, net of income taxes
10,110 
12,381 
13,909 
Less comprehensive income (loss) attributable to nonredeemable noncontrolling interest
155 
(190)
(295)
Comprehensive Income (Loss), Net of Tax, Attributable to redeemable noncontrolling interest
 
 
(1)
Comprehensive income attributable to Walmart
10,265 
12,191 
13,613 
Net investment hedging
 
 
 
Other comprehensive income (loss), net of income taxes
 
 
 
Derivative instruments
366 
379 
75 
Cash flow hedging
 
 
 
Other comprehensive income (loss), net of income taxes
 
 
 
Derivative instruments
$ (202)
$ (470)
$ 207 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Jan. 31, 2016
Jan. 31, 2015
Current assets:
 
 
Cash and cash equivalents
$ 8,705 
$ 9,135 
Receivables, net
5,624 
6,778 
Inventories
44,469 
45,141 
Prepaid expenses and other
1,441 
2,224 
Total current assets
60,239 
63,278 
Property and equipment:
 
 
Property and equipment
176,958 
177,395 
Less accumulated depreciation
(66,787)
(63,115)
Property and equipment, net
110,171 
114,280 
Property under capital lease and financing obligations:
 
 
Property under capital lease and financing obligations
11,096 
5,239 
Less accumulated amortization
(4,751)
(2,864)
Property under capital lease and financing obligations, net
6,345 
2,375 
Goodwill
16,695 
18,102 
Other assets and deferred charges
6,131 
5,455 
Total assets
199,581 
203,490 
Current liabilities:
 
 
Short-term borrowings
2,708 
1,592 
Accounts payable
38,487 
38,410 
Accrued liabilities
19,607 
19,152 
Accrued income taxes
521 
1,021 
Long-term debt due within one year
2,745 
4,791 
Capital lease and financing obligations due within one year
551 
287 
Total current liabilities
64,619 
65,253 
Long-term debt
38,214 
40,889 
Long-term capital lease and financing obligations
5,816 
2,606 
Deferred income taxes and other
7,321 
8,805 
Commitments and contingencies
   
   
Equity:
 
 
Common stock
317 
323 
Capital in excess of par value
1,805 
2,462 
Retained earnings
90,021 
85,777 
Accumulated other comprehensive income (loss)
(11,597)
(7,168)
Total Walmart shareholders' equity
80,546 
81,394 
Nonredeemable noncontrolling interest
3,065 
4,543 
Total equity
83,611 
85,937 
Total liabilities and equity
$ 199,581 
$ 203,490 
Consolidated Statement Of Shareholders' Equity and Redeemable Noncontrolling Interest (USD $)
In Millions, unless otherwise specified
Total
Common stock
Capital in excess of par value
Retained earnings
Accumulated other comprehensive income (loss)
Total Walmart shareholders' equity
Nonredeemable noncontrolling interest
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 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Consolidated net income
16,617 
 
 
16,022 
 
16,022 
595 
Other comprehensive income, net of income taxes
(2,720)
 
 
 
(2,409)
(2,409)
(311)
Cash dividends declared
(6,139)
 
 
(6,139)
 
(6,139)
 
Purchase of Company stock (in shares)
 
(87)
 
 
 
 
 
Purchase of Company stock
(6,557)
(9)
(294)
(6,254)
 
(6,557)
 
Redemption value adjustment of redeemable noncontrolling interest
(1,019)
 
(1,019)
 
 
(1,019)
 
Other, in shares
 
 
 
 
 
 
Other
(581)
 
55 
(41)
 
14 
(595)
Redeemable noncontrolling interest
1,491 
 
 
 
 
 
 
Consolidated net income, net of tax, attributable to redeemable noncontrolling interest
78 
 
 
 
 
 
 
Less other comprehensive income (loss) attributable to redeemable noncontrolling interest
(66)
 
 
 
 
 
 
Redemption value adjustment of redeemable noncontrolling interest
1,019 
 
 
 
 
 
 
Other change in redeemable noncontrolling interest
(59)
 
 
 
 
 
 
Balances at Jan. 31, 2014
81,339 
323 
2,362 
76,566 
(2,996)
76,255 
5,084 
Balances, in shares at Jan. 31, 2014
 
3,233 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Consolidated net income
17,099 
 
 
16,363 
 
16,363 
736 
Other comprehensive income, net of income taxes
(4,718)
 
 
 
(4,172)
(4,172)
(546)
Cash dividends declared
(6,185)
 
 
(6,185)
 
(6,185)
 
Purchase of Company stock (in shares)
 
(13)
 
 
 
 
 
Purchase of Company stock
(980)
(1)
(29)
(950)
 
(980)
 
Other, in shares
 
 
 
 
 
 
Other
(618)
129 
(17)
 
113 
(731)
Purchase of redeemable noncontrolling interest
(1,491)
 
 
 
 
 
 
Balances at Jan. 31, 2015
85,937 
323 
2,462 
85,777 
(7,168)
81,394 
4,543 
Balances, in shares at Jan. 31, 2015
 
3,228 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Consolidated net income
15,080 
 
 
14,694 
 
14,694 
386 
Other comprehensive income, net of income taxes
(4,970)
 
 
 
(4,429)
(4,429)
(541)
Cash dividends declared
(6,294)
 
 
(6,294)
 
(6,294)
 
Purchase of Company stock (in shares)
 
(65)
 
 
 
 
 
Purchase of Company stock
(4,256)
(6)
(102)
(4,148)
 
(4,256)
 
Dividends declared to noncontrolling interest
(691)
 
 
 
 
 
(691)
Other, in shares
 
(1)
 
 
 
 
 
Other
(1,195)
 
(555)
(8)
 
(563)
(632)
Balances at Jan. 31, 2016
$ 83,611 
$ 317 
$ 1,805 
$ 90,021 
$ (11,597)
$ 80,546 
$ 3,065 
Balances, in shares at Jan. 31, 2016
 
3,162 
 
 
 
 
 
Consolidated Statement Of Shareholders' Equity and Redeemable Noncontrolling Interest (Parenthetical)
12 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Jan. 31, 2014
Statement of Stockholders' Equity [Abstract]
 
 
 
Dividends declared per common share
$ 1.96 
$ 1.92 
$ 1.88 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Jan. 31, 2014
Cash flows from operating activities:
 
 
 
Consolidated net income
$ 15,080 
$ 17,099 
$ 16,695 
Income from discontinued operations, net of income taxes
(285)
(144)
Income from continuing operations
15,080 
16,814 
16,551 
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
 
 
 
Depreciation and amortization
9,454 
9,173 
8,870 
Deferred income taxes
(672)
(503)
(279)
Other operating activities
1,410 
785 
938 
Changes in certain assets and liabilities, net of effects of acquisitions:
 
 
 
Receivables, net
(19)
(569)
(566)
Inventories
(703)
(1,229)
(1,667)
Accounts payable
2,008 
2,678 
531 
Accrued liabilities
1,303 
1,249 
103 
Accrued income taxes
(472)
166 
(1,224)
Net cash provided by operating activities
27,389 
28,564 
23,257 
Cash flows from investing activities:
 
 
 
Payments for property and equipment
(11,477)
(12,174)
(13,115)
Proceeds from the disposal of property and equipment
635 
570 
727 
Proceeds from the disposal of certain operations
246 
671 
Other investing activities
(79)
(192)
(138)
Net cash used in investing activities
(10,675)
(11,125)
(12,526)
Cash flows from financing activities:
 
 
 
Net change in short-term borrowings
1,235 
(6,288)
911 
Proceeds from issuance of long-term debt
39 
5,174 
7,072 
Payments of long-term debt
(4,432)
(3,904)
(4,968)
Dividends paid
(6,294)
(6,185)
(6,139)
Purchase of Company stock
(4,112)
(1,015)
(6,683)
Dividends paid to noncontrolling interest
(719)
(600)
(426)
Purchase of noncontrolling interest
(1,326)
(1,844)
(296)
Other financing activities
(513)
(409)
(260)
Net cash used in financing activities
(16,122)
(15,071)
(10,789)
Effect of exchange rates on cash and cash equivalents
(1,022)
(514)
(442)
Net increase (decrease) in cash and cash equivalents
(430)
1,854 
(500)
Cash and cash equivalents at beginning of year
9,135 
7,281 
7,781 
Cash and cash equivalents at end of period
8,705 
9,135 
7,281 
Supplemental disclosure of cash flow information:
 
 
 
Income Taxes Paid
8,111 
8,169 
8,641 
Interest Paid
$ 2,540 
$ 2,433 
$ 2,362 
Summary of Significant Accounting Policies
Basis of presentation
Summary of Significant Accounting Policies
General
Wal-Mart Stores, Inc. ("Walmart" or the "Company") helps people around the world save money and live better – anytime and anywhere – in retail stores or through the Company's e-commerce and mobile capabilities. Through innovation, the Company is striving to create a customer-centric experience that seamlessly integrates digital and physical shopping. Each week, the Company serves nearly 260 million customers who visit its over 11,500 stores under 63 banners in 28 countries and e-commerce websites in 11 countries. The Company's strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience.
The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended January 31, 2016 ("fiscal 2016"), January 31, 2015 ("fiscal 2015") and January 31, 2014 ("fiscal 2014"). All material intercompany accounts and transactions have been eliminated in consolidation. Investments in unconsolidated affiliates, which are 50% or less owned and do not otherwise meet consolidation requirements, are accounted for primarily using the equity method. These 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 2016 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 $3.4 billion and $2.9 billion at January 31, 2016 and 2015, respectively. In addition, cash and cash equivalents included restricted cash of $362 million and $345 million at January 31, 2016 and 2015, respectively, which was primarily related to cash collateral holdings from various counterparties, as required by certain derivative and trust agreements.
The Company's cash balances are held in various locations around the world. Of the Company's $8.7 billion and $9.1 billion of cash and cash equivalents at January 31, 2016 and 2015, respectively, $4.5 billion and $6.3 billion, respectively, were held outside of the U.S. and were generally utilized to support liquidity needs in the Company's non-U.S. operations.
The Company uses intercompany financing arrangements in an effort to ensure cash can be made available in the country in which it is needed with the minimum cost possible. Management does not believe it will be necessary to repatriate earnings held outside of the U.S. and anticipates the Company's domestic liquidity needs will be met through cash flows provided by operating activities, supplemented with long-term debt and short-term borrowings. Accordingly, the Company intends, with only certain exceptions, to continue to indefinitely reinvest the Company's earnings held outside of the U.S. in our foreign operations. When the income earned, either from operations or through intercompany financing arrangements, and indefinitely reinvested outside of the U.S. is taxed at local country tax rates, which are generally lower than the U.S. statutory rate, the Company realizes an effective tax rate benefit. If the Company's intentions with respect to reinvestment were to change, most of the amounts held within the Company's foreign operations could be repatriated to the U.S., although any repatriation under current U.S. tax laws would be subject to U.S. federal income taxes, less applicable foreign tax credits. The Company does not expect local laws, other limitations or potential taxes on anticipated future repatriations of earnings held outside of the U.S. to have a material effect on the Company's overall liquidity, financial condition or results of operations.
As of January 31, 2016 and 2015, cash and cash equivalents of approximately $1.1 billion and $1.7 billion, respectively, may not be freely transferable to the U.S. due to local laws or other restrictions.
Receivables
Receivables are stated at their carrying values, net of a reserve for doubtful accounts. Receivables consist primarily of amounts due from:
insurance companies resulting from pharmacy sales;
banks for customer credit and debit cards and electronic bank transfers that take in excess of seven days to process;
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 $1.0 billion, net of a reserve for doubtful accounts of $70 million at January 31, 2016, compared to a receivable balance of $1.2 billion, net of a reserve for doubtful accounts of $114 million at January 31, 2015. 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 inventory method of accounting, using the last-in, first-out ("LIFO") method for substantially all of the Walmart U.S. segment's inventories. The inventory at the Walmart International segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO") method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market since permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's Club segment is valued based on the weighted-average cost using the LIFO method. At January 31, 2016 and January 31, 2015, the Company's inventories valued at LIFO approximated 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
 
2016
 
2015
Land
 
N/A
 
$
25,624

 
$
26,261

Buildings and improvements
 
3-40 years
 
96,845

 
97,496

Fixtures and equipment
 
1-30 years
 
47,033

 
45,044

Transportation equipment
 
3-15 years
 
2,917

 
2,807

Construction in progress
 
N/A
 
4,539

 
5,787

Property and equipment
 
 
 
$
176,958

 
$
177,395

Accumulated depreciation
 
 
 
(66,787
)
 
(63,115
)
Property and equipment, net
 
 
 
$
110,171

 
$
114,280


Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining expected lease term. Total depreciation and amortization expense for property and equipment, property under financing obligations and property under capital leases for fiscal 2016, 2015 and 2014 was $9.4 billion, $9.1 billion and $8.8 billion, respectively. Interest costs capitalized on construction projects were $39 million, $59 million and $78 million in fiscal 2016, 2015 and 2014, respectively.
Leases
The Company estimates the expected term of a lease by assuming the exercise of renewal options where an economic penalty exists that would preclude the abandonment of the lease at the end of the initial non-cancelable term and the exercise of such renewal is at the sole discretion of the Company. The expected term is used in the determination of whether a store or club lease is a capital or operating lease and in the calculation of straight-line rent expense. Additionally, the useful life of leasehold improvements is limited by the expected lease term or the economic life of the asset, whichever is shorter. If significant expenditures are made for leasehold improvements late in the expected term of a lease and renewal is reasonably assured, the useful life of the leasehold improvement is limited to the end of the renewal period or economic life of the asset, whichever is shorter. Rent abatements and escalations are considered in the calculation of minimum lease payments in the Company's capital lease tests and in determining straight-line rent expense for operating leases.
The Company is often involved in the construction of its leased stores. In certain cases, payments made for certain structural components included in the lessor's construction of the leased assets result in the Company being deemed the owner of the leased assets for accounting purposes. As a result, regardless of the significance of the payments, Accounting Standards Codification 840, Leases, ("ASC 840") defines those payments as automatic indicators of ownership and requires the Company to capitalize the lessor's total project cost with a corresponding financing obligation. Upon completion of the lessor's project, the Company performs a sale-leaseback analysis pursuant to ASC 840 to determine if these assets and the related financing obligation can be derecognized from the Company's Consolidated Balance Sheets. If the Company is deemed to have "continuing involvement," the leased assets and the related financing obligation remain on the Company's Consolidated Balance Sheets and are generally amortized over the lease term.
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 2016, 2015 and 2014 were not material.
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.
The Company's reporting units were evaluated using a quantitative impairment test. Management determined the fair value of each reporting unit is greater than the carrying amount and, accordingly, the Company has not recorded any impairment charges related to goodwill.
The following table reflects goodwill activity, by reportable segment, for fiscal 2016 and 2015:
(Amounts in millions)
 
Walmart U.S.
 
Walmart
International
 
Sam's Club
 
Total
Balances as of February 1, 2014
 
$
451

 
$
18,746

 
$
313

 
$
19,510

Changes in currency translation and other
 

 
(1,418
)
 

 
(1,418
)
Acquisitions(1)
 
10

 

 

 
10

Balances as of January 31, 2015
 
461

 
17,328

 
313

 
18,102

Changes in currency translation and other
 

 
(1,412
)
 

 
(1,412
)
Acquisitions(1)
 

 
5

 

 
5

Balances as of January 31, 2016
 
$
461

 
$
15,921

 
$
313

 
$
16,695

(1)
Goodwill recorded for fiscal 2016 and 2015 acquisitions relates to acquisitions 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 for fiscal 2016, 2015 and 2014.
Self Insurance Reserves
The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits. Standard actuarial procedures and data analysis are used to estimate the liabilities associated with these risks as of the balance sheet date on an undiscounted basis. The recorded liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run-out expenses related to the processing of these outstanding claim payments. On a regular basis, claims reserve valuations are provided by independent third-party actuaries to ensure liability estimates are appropriate. To limit exposure to some risks, the Company maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers' compensation, general liability and auto liability.
Income Taxes
Income taxes are accounted for under the balance sheet method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases ("temporary differences"). Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date.
Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income rely heavily on estimates.
In determining the provision for income taxes, an annual effective income tax rate is used based on annual income, permanent differences between book and tax income, and statutory income tax rates. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur.
The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company records interest and penalties related to unrecognized tax benefits in interest expense and operating, selling, general and administrative expenses, respectively, in the Company's Consolidated Statements of Income. Refer to Note 9 for additional income tax disclosures.
Revenue Recognition    
Sales
The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise to the customer. Digital retail sales include shipping revenue and are recorded upon delivery to the customer.
Membership Fee Revenue
The Company recognizes membership fee revenue both in the U.S. and internationally over the term of the membership, which is typically 12 months. The following table summarizes membership fee activity for fiscal 2016, 2015 and 2014:
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2016
 
2015
 
2014
Deferred membership fee revenue, beginning of year
 
$
759

 
$
641

 
$
575

Cash received from members
 
1,333

 
1,410

 
1,249

Membership fee revenue recognized
 
(1,348
)
 
(1,292
)
 
(1,183
)
Deferred membership fee revenue, end of year
 
$
744

 
$
759

 
$
641


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; 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 number of shopping cards, both with and without expiration dates, will not be fully 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 distribution facilities, stores and clubs from suppliers, the cost of transportation from the Company's distribution facilities to the stores, clubs and customers and the cost of warehousing for the Sam's Club segment and import distribution centers. Cost of sales is reduced by supplier payments that are not a reimbursement of specific, incremental and identifiable costs.
Payments from Suppliers
The Company receives consideration from suppliers for various programs, primarily volume incentives, warehouse allowances and reimbursements for specific programs such as markdowns, margin protection, advertising and supplier-specific fixtures. Payments from suppliers are accounted for as a reduction of cost of sales and are recognized in the Company's Consolidated Statements of Income when the related inventory is sold, except when the payment is a reimbursement of specific, incremental and identifiable costs.
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 may not be comparable to those of other retailers that may include all costs related to their distribution facilities in cost of sales and in the calculation of gross profit.
Advertising Costs
Advertising costs are expensed as incurred, consist primarily of print, television and digital advertisements and are recorded in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. Reimbursements from suppliers that are for specific, incremental and identifiable advertising costs are recognized as a reduction of advertising costs in operating, selling, general and administrative expenses. Advertising costs were $2.5 billion for fiscal 2016 and $2.4 billion for both fiscal 2015 and fiscal 2014.
Pre-Opening Costs
The cost of start-up activities, including organization costs, related to new store openings, store remodels, relocations, expansions and conversions are expensed as incurred and included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. Pre-opening costs totaled $271 million, $317 million and $338 million for fiscal 2016, 2015 and 2014, 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 all international subsidiaries are translated from the respective local currencies to the U.S. dollar using average exchange rates for the period covered by the income statements.
Reclassifications
Certain reclassifications have been made to previous 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.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In August 2015, FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to reporting periods beginning after December 15, 2017. Early adoption is permitted for reporting periods beginning after December 15, 2016.  The Company will adopt this ASU on February 1, 2018. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. Management is currently evaluating this standard, including which transition approach to use, and does not expect this ASU to materially impact the Company's consolidated net income, financial position or cash flows.
In April 2015, FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost. FASB issued ASU 2015-03 to simplify the presentation of debt issuance costs related to a recognized debt liability to present the debt issuance costs as a direct deduction from the carrying value of the debt liability rather than showing the debt issuance costs as a deferred charge on the balance sheet. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015, with early adoption permitted. Management elected to early adopt this new guidance effective for the first quarter of fiscal year 2016, and has applied the changes retrospectively to all periods presented. Adoption of this ASU did not materially impact the Company's consolidated net income, financial position or cash flows.
In November 2015, FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This ASU requires the presentation of all deferred tax assets and liabilities as non-current in the consolidated balance sheet. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016, with early adoption permitted. Management elected to early adopt this new guidance effective for the fourth quarter of fiscal year 2016 in order to simplify the global close processes. The Company will apply the changes prospectively. Prior periods were not retrospectively adjusted to reflect the adoption of this ASU. Adoption of this ASU did not materially impact the Company's consolidated financial position, and had no impact on the Company's net income or cash flows.
In February 2016, FASB issued ASU 2016-02, Leases (Topic 842). FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Certain qualitative and quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. Management is currently evaluating this standard.
In March 2016, FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. The effective date for this ASU is the same as the effective date for ASU 2014-09. Management is currently evaluating this standard.
Net Income Per Common Share
Net income per common share
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 share-based awards. The Company did not have significant 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 2016, 2015 and 2014.
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)
 
2016
 
2015
 
2014
Numerator
 
 
 
 
 
 
Income from continuing operations
 
$
15,080

 
$
16,814

 
$
16,551

Income from continuing operations attributable to noncontrolling interest
 
(386
)
 
(632
)
 
(633
)
Income from continuing operations attributable to Walmart
 
$
14,694

 
$
16,182

 
$
15,918

 
 
 
 
 
 
 
Denominator
 
 
 
 
 
 
Weighted-average common shares outstanding, basic
 
3,207

 
3,230

 
3,269

Dilutive impact of stock options and other share-based awards
 
10

 
13

 
14

Weighted-average common shares outstanding, diluted
 
3,217

 
3,243

 
3,283


 
 
 
 
 
 
Income per common share from continuing operations attributable to Walmart
 
 
 
 
 
 
Basic
 
$
4.58

 
$
5.01

 
$
4.87

Diluted
 
4.57

 
4.99

 
4.85

Shareholders' Equity
Stockholders' Equity Note Disclosure [Text Block]
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 $448 million, $462 million and $388 million for fiscal 2016, 2015 and 2014, 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 $151 million, $173 million and $145 million for fiscal 2016, 2015 and 2014, respectively. The following table summarizes the Company's share-based compensation expense by award type:
 
Fiscal Years Ended January 31,
(Amounts in millions)
2016
 
2015
 
2014
Restricted stock and performance share units
$
134

 
$
157

 
$
141

Restricted stock units
292

 
277

 
224

Other
22

 
28

 
23

Share-based compensation expense
$
448

 
$
462

 
$
388


The Company's shareholder-approved Stock Incentive Plan of 2015 (the "Plan") became effective June 5, 2015 and amended and restated the Company's Stock Incentive Plan of 2010. The Plan was established to grant stock options, restricted (non-vested) stock, performance shares units 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 Units. Restricted stock awards are for shares that vest based on the passage of time and include restrictions related to employment. Performance share units vest based on the passage of time and achievement of performance criteria and may range from 0% to 150% of the original award amount. Vesting periods for these awards are generally between one and three years. Restricted stock and performance share units may be settled or deferred in stock and are accounted for as equity in the Company's Consolidated Balance Sheets. The fair value of restricted stock awards is determined on the date of grant and is expensed ratably over the vesting period. The fair value of performance share units is determined on the date of grant using the Company's stock price discounted for the expected dividend yield through the vesting period and is recognized over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of performance share units in fiscal 2016, 2015 and 2014 was 7.4%, 7.1% and 6.7%, respectively.
Restricted Stock Units. Restricted stock units provide rights to Company stock after a specified service period; generally 50% vest three years from the grant date and the remaining 50% vest five years from the grant date. The fair value of each restricted stock unit is determined on the date of grant using the stock price discounted for the expected dividend yield through the vesting period and is recognized ratably over the vesting period. The expected dividend yield is based on the anticipated dividends over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of restricted stock units granted in fiscal 2016, 2015 and 2014 was 8.7%, 9.5% and 10.3%, respectively.
In addition to the Plan, the Company's subsidiary in the United Kingdom has stock option plans for certain colleagues which generally vest over three years. The stock option share-based compensation expense is included in the other line in the table above.
The following table shows the activity for restricted stock and performance share units and restricted stock units during fiscal 2016:
 
 
Restricted Stock and Performance Share Units(1)
 
Restricted Stock Units
(Shares in thousands)
 
Shares
 
Weighted-
Average
Grant-Date
Fair Value
Per Share
 
Shares
 
Weighted-
Average
Grant-Date
Fair Value
Per Share
Outstanding at February 1, 2015
 
8,723

 
$
68.89

 
17,568

 
$
61.00

Granted
 
3,295

 
71.64

 
6,392

 
71.38

Vested/exercised
 
(2,313
)
 
61.37

 
(4,444
)
 
53.71

Forfeited or expired
 
(1,446
)
 
67.90

 
(1,925
)
 
66.37

Outstanding at January 31, 2016
 
8,259

 
$
72.23

 
17,591

 
$
65.67

(1)
Assumes payout rate at 100% for Performance Share Units.

The following table includes additional information related to restricted stock and performance share units and restricted stock units: 
 
Fiscal Years Ended January 31,
(Amounts in millions)
2016
 
2015
 
2014
Fair value of restricted stock and performance share units vested
$
142

 
$
156

 
$
116

Fair value of restricted stock units vested
237

 
218

 
189

Unrecognized compensation cost for restricted stock and performance share units
133

 
154

 
200

Unrecognized compensation cost for restricted stock units
628

 
570

 
497

Weighted average remaining period to expense for restricted stock and performance share units (years)
1.3

 
1.3

 
2.0

Weighted average remaining period to expense for restricted stock units (years)
1.7

 
1.7

 
2.1



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. On October 13, 2015, the Board of Directors replaced the previous $15.0 billion share repurchase program, which had approximately $8.6 billion of remaining authorization for share repurchases as of that date, with a new $20.0 billion share repurchase program. As was the case with the replaced share repurchase program, the new share repurchase program has no expiration date or other restrictions limiting the period over which the Company can make share repurchases. The share repurchases the Company made during fiscal 2016 were made under both the old and new authorizations. At January 31, 2016, authorization for $17.5 billion of share repurchases remained under the current share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status.
The Company considers several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, its results of operations and the market price of its common stock. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total cash paid for share repurchases for fiscal 2016, 2015 and 2014:
 
 
Fiscal Years Ended January 31,
(Amounts in millions, except per share data)
 
2016
 
2015
 
2014
Total number of shares repurchased
 
62.4

 
13.4

 
89.1

Average price paid per share
 
$
65.90

 
$
75.82

 
$
74.99

Total cash paid for share repurchases
 
$
4,112

 
$
1,015

 
$
6,683

Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
The following table provides changes in the composition of total accumulated other comprehensive income (loss) for fiscal 2016, 2015 and 2014:
(Amounts in millions and net of income taxes)
Currency Translation
and Other
 
Net Investment Hedges
 
Cash Flow Hedges
 
Minimum
Pension Liability
 
Total
Balances as of January 31, 2013
$
(155
)
 
$
202

 
$
129

 
$
(763
)
 
$
(587
)
Other comprehensive income (loss) before reclassifications
(2,844
)
 
75

 
194

 
149

 
(2,426
)
Amounts reclassified from accumulated other comprehensive income (loss)

 

 
13

 
4

 
17

Balances as of January 31, 2014
(2,999
)
 
277

 
336

 
(610
)
 
(2,996
)
Other comprehensive income (loss) before reclassifications
(4,012
)
 
379

 
(496
)
 
(58
)
 
(4,187
)
Amounts reclassified from accumulated other comprehensive income (loss)

 

 
26

 
(11
)
 
15

Balances as of January 31, 2015
(7,011
)
 
656

 
(134
)
 
(679
)
 
(7,168
)
Other comprehensive income (loss) before reclassifications
(4,679
)
 
366

 
(217
)
 
96

 
(4,434
)
Amounts reclassified from accumulated other comprehensive income (loss)

 

 
15

 
(10
)
 
5

Balances as of January 31, 2016
$
(11,690
)
 
$
1,022

 
$
(336
)
 
$
(593
)
 
$
(11,597
)
Amounts reclassified from accumulated other comprehensive income (loss) for derivative instruments are recorded in interest, net, in the Company's Consolidated Statements of Income, and the amounts for the minimum pension liability are recorded in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income.
Accrued Liabilities
Accounts payable and accrued liabilities disclosure
Accrued Liabilities
The Company's accrued liabilities consist of the following:
 
 
As of January 31,
(Amounts in millions)
 
2016
 
2015
Accrued wages and benefits(1)
 
$
5,814

 
$
4,954

Self-insurance(2)
 
3,414

 
3,306

Accrued non-income taxes(3)
 
2,544

 
2,592

Other(4)
 
7,835

 
8,300

Total accrued liabilities
 
$
19,607

 
$
19,152

(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, auto liability, product liability and certain employee-related healthcare benefits.
(3)
Accrued non-income taxes include accrued payroll, value added, sales and miscellaneous other taxes.
(4)
Other accrued liabilities consist of various items such as maintenance, utilities, advertising 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, 2016 and 2015 were $2.7 billion and $1.6 billion, respectively. The following table includes additional information related to the Company's short-term borrowings for fiscal 2016, 2015 and 2014:
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2016
 
2015
 
2014
Maximum amount outstanding at any month-end
 
$
10,551

 
$
11,581

 
$
13,318

Average daily short-term borrowings
 
4,536

 
7,009

 
8,971

Weighted-average interest rate
 
1.5
%
 
0.5
%
 
0.1
%

The Company has various committed lines of credit, committed with 23 financial institutions, totaling $15.0 billion as of January 31, 2016 and 2015. The committed lines of credit are summarized in the following table:
 
 
Fiscal Years Ended January 31,
 
 
2016
 
2015
(Amounts in millions)
 
Available
 
Drawn
 
Undrawn
 
Available
 
Drawn
 
Undrawn
Five-year credit facility(1)
 
$
6,000

 
$

 
$
6,000

 
$
6,000

 
$

 
$
6,000

364-day revolving credit facility(1)
 
9,000

 

 
9,000

 
9,000

 

 
9,000

Total
 
$
15,000

 
$

 
$
15,000

 
$
15,000

 
$

 
$
15,000


(1)
In June 2015, the Company renewed and extended its existing five-year credit facility and its existing 364-day revolving credit facility, both of which are used to support its commercial paper program.
The committed lines of credit mature at various times between June 2016 and June 2020, carry interest rates generally ranging between LIBOR plus 10 basis points and LIBOR plus 75 basis points, and incur commitment fees ranging between 1.5 and 4.0 basis points. In conjunction with the lines of credit listed in the table above, the Company has agreed to observe certain covenants, the most restrictive of which relates to the maximum amount of secured debt.
Apart from the committed lines of credit, the Company has trade and stand-by letters of credit totaling $4.5 billion and $4.6 billion at January 31, 2016 and 2015, respectively. These letters of credit are utilized in normal business activities.
The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following:
 
 
 
 
January 31, 2016
 
January 31, 2015
(Amounts in millions)
 
Maturity Dates
By Fiscal Year
 
Amount
 
Average Rate(1)
 
Amount
 
Average Rate(1)
Unsecured debt
 
 
 
 
 
 
 
 
 
 
Fixed
 
2017 - 2045
 
$
32,500

 
4.5%
 
$
36,000

 
4.3%
Variable
 
2019
 
500

 
5.3%
 
500

 
5.4%
Total U.S. dollar denominated
 

 
33,000

 

 
36,500

 

Fixed
 
2023 - 2030
 
2,708

 
3.3%
 
2,821

 
3.3%
Variable
 

 

 

 

 

Total Euro denominated
 

 
2,708

 

 
2,821

 

Fixed
 
2031 - 2039
 
4,985

 
5.3%
 
5,271

 
5.3%
Variable
 

 

 

 

 

Total Sterling denominated
 

 
4,985

 

 
5,271

 

Fixed
 
2021
 
83

 
1.6%
 
596

 
1.0%
Variable
 

 

 

 
255

 
0.6%
Total Yen denominated
 

 
83

 

 
851

 

Total unsecured debt
 

 
40,776

 

 
45,443

 

Total other debt (in USD)(2)
 

 
183

 

 
237

 

Total debt
 

 
40,959

 

 
45,680

 

Less amounts due within one year
 

 
(2,745
)
 

 
(4,791
)
 

Long-term debt
 

 
$
38,214

 

 
$
40,889

 

(1)
The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end interest rates. Interest costs are also impacted by certain derivative financial instruments described in Note 8.
(2)
A portion of other debt at January 31, 2016 and 2015 includes secured debt in the amount of $131 million and $139 million, respectively, which was collateralized by property that had an aggregate carrying amount of approximately $13 million and $19 million, respectively.
At January 31, 2016 and 2015, 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
Maturities
2017
$
2,745

2018
1,519

2019
3,497

2020
498

2021
3,352

Thereafter
29,348

Total
$
40,959


Debt Issuances
The Company did not have any material long-term debt issuances during fiscal 2016, but received proceeds from a number of small, immaterial long-term debt issuances by several of its non-U.S. operations.
Information on significant long-term debt issued during fiscal 2015 is as follows: 
(Amounts in millions)
 
 
 
 
 
 
 
 
 
 
Issue Date
 
Principal Amount
 
Maturity Date
 
Fixed vs. Floating
 
Interest Rate
 
Proceeds
April 8, 2014
 
850 Euro
 
April 8, 2022
 
Fixed
 
1.900%
 
$
1,161

April 8, 2014
 
650 Euro
 
April 8, 2026
 
Fixed
 
2.550%
 
885

April 22, 2014
 
500 USD
 
April 21, 2017
 
Fixed
 
1.000%
 
499

April 22, 2014
 
1,000 USD
 
April 22, 2024
 
Fixed
 
3.300%
 
992

April 22, 2014
 
1,000 USD
 
April 22, 2044
 
Fixed
 
4.300%
 
985

October 22, 2014
 
500 USD
 
April 22, 2024
 
Fixed
 
3.300%
 
508

Total
 
 
 
 
 
 
 
 
 
$
5,030


During fiscal 2015, the Company also received additional proceeds from other, smaller long-term debt issuances by several of its non-U.S. operations. The proceeds in fiscal 2015 were used to pay down and refinance existing debt and for other general corporate purposes.
Maturities
During fiscal 2016, the following long-term debt matured and was repaid:
(Amounts in millions)
 
 
 
 
 
 
 
 
Maturity Date
 
Principal Amount
 
Fixed vs. Floating
 
Interest Rate
 
Repayment
April 1, 2015
 
750 USD
 
Fixed
 
2.875%
 
$
750

July 1, 2015
 
750 USD
 
Fixed
 
4.500%
 
750

July 8, 2015
 
750 USD
 
Fixed
 
2.250%
 
750

July 28, 2015
 
30,000 JPY
 
Floating
 
Floating
 
243

July 28, 2015
 
60,000 JPY
 
Fixed
 
0.940%
 
487

October 25, 2015
 
1,250 USD
 
Fixed
 
1.500%
 
1,250

 
 
 
 
 
 
 
 
$
4,230


During fiscal 2015, the following long-term debt matured and was repaid:
(Amounts in millions)
 
 
 
 
 
 
 
 
Maturity Date
 
Principal Amount
 
Fixed vs. Floating
 
Interest Rate
 
Repayment
February 3, 2014
 
500 USD
 
Fixed
 
3.000%
 
$
500

April 15, 2014
 
1,000 USD
 
Fixed
 
1.625%
 
1,000

May 15, 2014
 
1,000 USD
 
Fixed
 
3.200%
 
1,000

August 6, 2014
 
83,100 JPY
 
Fixed
 
1.490%
 
810

August 6, 2014
 
16,900 JPY
 
Floating
 
Floating
 
165

 
 
 
 
 
 
 
 
$
3,475


During fiscal 2016 and 2015, the Company also repaid other, smaller long-term debt as it matured in several of its non-U.S. operations.
Fair Value Measurements
Fair value measurements
Fair Value Measurements
The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an asset is the price at which the asset could be sold in an ordinary transaction between unrelated, knowledgeable and willing parties able to engage in the transaction. The fair value of a liability is the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:
Level 1: observable inputs such as quoted prices in active markets;
Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.
Recurring Fair Value Measurements
The Company holds derivative instruments that are required to be measured at fair value on a recurring basis. The fair values are the estimated amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of January 31, 2016 and 2015, the notional amounts and fair values of these derivatives were as follows:
 
January 31, 2016
 
January 31, 2015
(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
$
5,000

 
$
173

 
$
500

 
$
12

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

 
319

 
1,250

 
207

Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges
4,132

 
(609
)
 
4,329

 
(317
)
Receive variable-rate, pay fixed-rate interest rate swaps designated as cash flow hedges

 

 
255

 
(1
)
Total
$
10,382

 
$
(117
)
 
$
6,334

 
$
(99
)

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, 2016 or 2015.
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, 2016 and 2015, are as follows: 
 
 
January 31, 2016
 
January 31, 2015
(Amounts in millions)
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Long-term debt, including amounts due within one year
 
$
40,959

 
$
46,965

 
$
45,896

 
$
56,237

Derivative Financial Instruments
Derivative financial instruments
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 $345 million and $323 million at January 31, 2016 and January 31, 2015, respectively. The Company records cash collateral received as amounts due to the counterparties exclusive of any derivative asset. Furthermore, as part of the master netting arrangements with each of these counterparties, the Company is also required to post collateral with a counterparty if the Company's net derivative liability position exceeds $150 million with such counterparties. The Company had an insignificant amount of cash collateral posted with counterparties at January 31, 2016 and did not have any cash collateral posted with counterparties at January 31, 2015. The Company records cash collateral it posts with counterparties as amounts receivable from those counterparties exclusive of any derivative liability.
The Company uses derivative financial instruments for the purpose of hedging its exposure to interest and currency exchange rate risks and, accordingly, the contractual terms of a hedged instrument closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria are recorded using hedge accounting. If a derivative financial instrument is recorded using hedge accounting, depending on the nature of the hedge, changes in the fair value of the instrument will either be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or be recognized in accumulated other comprehensive 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, also recorded in earnings, and, accordingly, do not impact the Company's Consolidated Statements of Income. These fair value instruments will mature on dates ranging from October 2020 to April 2024.
Net Investment Instruments
The Company is a party to cross-currency interest rate swaps that the Company uses to hedge its net investments. The agreements are contracts to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. All changes in the fair value of these instruments are recorded in accumulated other comprehensive 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, 2016 and January 31, 2015, the Company had ¥10 billion and ¥100 billion, respectively, of outstanding long-term debt designated as a hedge of its net investment in Japan, as well as outstanding long-term debt of £2.5 billion at January 31, 2016 and January 31, 2015 that was designated as a hedge of its net investment in the United Kingdom. These nonderivative net investment hedges will mature on dates ranging from July 2020 to January 2039.
Cash Flow Instruments
The Company was a party to receive variable-rate, pay fixed-rate interest rate swaps that matured in July 2015. The Company used these interest rate swaps to hedge the interest rate risk of certain non-U.S. denominated debt. The swaps were designated as cash flow hedges of interest expense risk. Amounts reported in accumulated other comprehensive income (loss) related to these derivatives were reclassified from accumulated other comprehensive income (loss) to earnings as interest was expensed for the Company's variable-rate debt, converting the variable-rate interest expense into fixed-rate interest expense.
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 re-measured at spot exchange rates each period, and the assessment of effectiveness (and measurement of any ineffectiveness) is based on total changes in the related derivative's cash flows. As a result, the amount reclassified into earnings each period includes an amount that offsets the related transaction gain or loss arising from that re-measurement and the adjustment to earnings for the period's allocable portion of the initial spot-forward difference associated with the hedging instrument. These cash flow instruments will mature on dates ranging from April 2022 to March 2034.
Financial Statement Presentation
Although subject to master netting arrangements, the Company does not offset derivative assets and derivative liabilities in its Consolidated Balance Sheets. Derivative instruments with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either current or non-current assets, based on maturity date, and those hedging instruments with an unrealized loss are recorded as either current or non-current liabilities, based on maturity date. Refer to Note 7 for the net presentation of the Company's derivative instruments.
The Company's derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified as follows in the Company's Consolidated Balance Sheets:
 
January 31, 2016
 
January 31, 2015
(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
$

 
$

 
$

 
$

 
$

 
$

Other assets and deferred charges
173

 
319

 
129

 
12

 
207

 
293

Derivative asset subtotals
$
173

 
$
319

 
$
129

 
$
12

 
$
207

 
$
293

 
 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities
$

 
$

 
$

 
$

 
$

 
$
1

Deferred income taxes and other

 

 
738

 

 

 
610

Derivative liability subtotals
$

 
$

 
$
738

 
$

 
$

 
$
611

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

 
$

 
$

 
$

 
$
766

 
$

Long-term debt

 
3,644

 

 

 
3,850

 

Nonderivative hedge liability subtotals
$

 
$
3,644

 
$

 
$

 
$
4,616

 
$


Gains and losses related to the Company's derivatives primarily relate to interest rate hedges, which are recorded in interest, net, in the Company's Consolidated Statements of Income. Amounts related to the Company's derivatives expected to be reclassified from accumulated other comprehensive income (loss) to net income during the next 12 months are not significant.
Taxes
Income tax disclosure
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)
2016
 
2015
 
2014
U.S.
$
16,685

 
$
18,610

 
$
19,412

Non-U.S.
4,953

 
6,189

 
5,244

Total income from continuing operations before income taxes
$
21,638

 
$
24,799

 
$
24,656


A summary of the provision for income taxes is as follows:
 
Fiscal Years Ended January 31,
(Amounts in millions)
2016
 
2015
 
2014
Current:
 
 
 
 
 
U.S. federal
$
5,562

 
$
6,165

 
$
6,377

U.S. state and local
622

 
810

 
719

International
1,400

 
1,529

 
1,523

Total current tax provision
7,584

 
8,504

 
8,619

Deferred:
 
 
 
 
 
U.S. federal
(704
)
 
(387
)
 
(72
)
U.S. state and local
(106
)
 
(55
)
 
37

International
(216
)
 
(77
)
 
(479
)
Total deferred tax expense (benefit)
(1,026
)
 
(519
)
 
(514
)
Total provision for income taxes
$
6,558

 
$
7,985

 
$
8,105


Effective Income Tax Rate Reconciliation
The Company's effective income tax rate is typically lower than the U.S. statutory tax rate primarily because of benefits from lower-taxed global operations, including the use of global funding structures and certain U.S. tax credits as further discussed in the "Cash and Cash Equivalents" section of the Company's significant accounting policies in Note 1. The Company's non-U.S. income is generally subject to local country tax rates that are below the 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,
 
2016
 
2015
 
2014
U.S. statutory tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
U.S. state income taxes, net of federal income tax benefit
1.8
 %
 
1.8
 %
 
2.0
 %
Income taxed outside the U.S.
(4.0
)%
 
(2.7
)%
 
(2.8
)%
Net impact of repatriated international earnings
0.1
 %
 
(1.5
)%
 
(1.4
)%
Other, net
(2.6
)%
 
(0.4
)%
 
0.1
 %
Effective income tax rate
30.3
 %
 
32.2
 %
 
32.9
 %

Deferred Taxes
The significant components of the Company's deferred tax account balances are as follows:
 
 
January 31,
(Amounts in millions)
 
2016
 
2015
Deferred tax assets:
 
 
 
 
Loss and tax credit carryforwards
 
$
3,313

 
$
3,255

Accrued liabilities
 
3,763

 
3,395

Share-based compensation
 
192

 
184

Other
 
1,390

 
1,119

Total deferred tax assets
 
8,658

 
7,953

Valuation allowances
 
(1,456
)
 
(1,504
)
Deferred tax assets, net of valuation allowance
 
7,202

 
6,449

Deferred tax liabilities:
 
 
 
 
Property and equipment
 
5,813

 
5,972

Inventories
 
1,790

 
1,825

Other
 
1,452

 
1,618

Total deferred tax liabilities
 
9,055

 
9,415

Net deferred tax liabilities
 
$
1,853

 
$
2,966


The deferred taxes are classified as follows in the Company's Consolidated Balance Sheets:
  
 
January 31,
(Amounts in millions)
 
2016
 
2015
Balance Sheet classification:
 
 
 
 
Assets:
 
 
 
 
Prepaid expenses and other
 
$

 
$
728

Other assets and deferred charges
 
1,504

 
1,033

Asset subtotals
 
1,504

 
1,761

Liabilities:
 
 
 
 
Accrued liabilities
 

 
56

Deferred income taxes and other
 
3,357

 
4,671

Liability subtotals
 
3,357

 
4,727

Net deferred tax liabilities
 
$
1,853

 
$
2,966


Unremitted Earnings
U.S. income taxes have not been provided on accumulated but undistributed earnings of the Company's international subsidiaries of approximately $26.1 billion and $23.3 billion as of January 31, 2016 and 2015, respectively, as the Company intends to permanently reinvest these amounts outside of the U.S. 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, 2016, the Company had net operating loss and capital loss carryforwards totaling approximately $5.3 billion. Of these carryforwards, approximately $3.0 billion will expire, if not utilized, in various years through 2036. The remaining carryforwards have no expiration. At January 31, 2016, the Company had foreign tax credit carryforwards of $1.8 billion, which will expire in various years through 2026, if not utilized.
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. If 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.
The Company had valuation allowances recorded of approximately $1.5 billion as of January 31, 2016 and 2015, 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 net activity in the valuation allowance during fiscal 2016 related to releases arising from the use of deferred tax assets, changes in judgment regarding the future realization of deferred tax assets, increases from certain net operating losses and deductible temporary differences arising in fiscal 2016, decreases due to operating 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.
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, 2016 and 2015, the amount of unrecognized tax benefits related to continuing operations was $607 million and $838 million, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate was $522 million and $763 million for January 31, 2016 and 2015, respectively.
A reconciliation of unrecognized tax benefits from continuing operations was as follows:
 
Fiscal Years Ended January 31,
(Amounts in millions)
2016
 
2015
 
2014
Unrecognized tax benefits, beginning of year
$
838

 
$
763

 
$
818

Increases related to prior year tax positions
164

 
7

 
41

Decreases related to prior year tax positions
(446
)
 
(17
)
 
(112
)
Increases related to current year tax positions
119

 
174

 
133

Settlements during the period
(25
)
 
(89
)
 
(117
)
Lapse in statutes of limitations
(43
)
 

 

Unrecognized tax benefits, end of year
$
607

 
$
838

 
$
763


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 2016, 2015 and 2014, the Company recognized interest and penalty expense (benefit) related to uncertain tax positions of $5 million, $18 million and $(7) million, respectively. As of January 31, 2016 and 2015, accrued interest related to uncertain tax positions of $60 million and $57 million, respectively, was recorded in the Company's Consolidated Balance Sheets. The Company did not have any accrued penalties recorded for income taxes as of January 31, 2016 or 2015.
During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by between $50 million and $150 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 2013 through 2016. The Company also remains subject to income tax examinations for international income taxes for fiscal 2000 through 2016, and for U.S. state and local income taxes generally for the fiscal years ended 2008 through 2016.
Contingencies
Contingencies
Contingencies
Legal Proceedings
The Company is involved in a number of legal proceedings. The Company has made accruals with respect to these matters, where appropriate, which are reflected in the Company's Consolidated Financial Statements. For some matters, a liability is not probable or the amount cannot be reasonably estimated and therefore an accrual has not been made. However, where a liability is reasonably possible and may be material, such matters have been disclosed. The Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company'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. On