EX-13 5 wmtars-1312015.htm PORTIONS OF OUR ANNUAL REPORT TO SHAREHOLDERS WMT ARS - 1.31.2015
Five-Year Financial Summary
Exhibit 13
Wal-Mart Stores, Inc.
 

 
 
As of and for the Fiscal Years Ended January 31,
(Amounts in millions, except per share and unit count data)
 
2015
 
2014
 
2013
 
2012
 
2011
Operating results
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
485,651

 
$
476,294

 
$
468,651

 
$
446,509

 
$
421,395

Percentage change in total revenues from previous fiscal year
 
2.0
%
 
1.6
 %
 
5.0
%
 
6.0
%
 
3.4
 %
Net sales
 
482,229

 
473,076

 
465,604

 
443,416

 
418,500

Percentage change in net sales from previous fiscal year
 
1.9
%
 
1.6
 %
 
5.0
%
 
6.0
%
 
3.4
 %
Increase (decrease) in calendar comparable sales(1) in the United States
 
0.5
%
 
(0.5
)%
 
2.4
%
 
1.6
%
 
(0.6
)%
Walmart U.S.
 
0.6
%
 
(0.6
)%
 
2.0
%
 
0.3
%
 
(1.5
)%
Sam's Club
 
0.0
%
 
0.3
 %
 
4.1
%
 
8.4
%
 
3.9
 %
Gross profit margin
 
24.3
%
 
24.3
 %
 
24.3
%
 
24.5
%
 
24.8
 %
Operating, selling, general and administrative expenses, as a percentage of net sales
 
19.4
%
 
19.3
 %
 
19.0
%
 
19.2
%
 
19.4
 %
Operating income
 
$
27,147

 
$
26,872

 
$
27,725

 
$
26,491

 
$
25,508

Income from continuing operations attributable to Walmart
 
16,182

 
15,918

 
16,963

 
15,734

 
15,340

Net income per common share:
 

 

 

 

 

Diluted income per common share from continuing operations attributable to Walmart
 
$
4.99

 
$
4.85

 
$
5.01

 
$
4.53

 
$
4.18

Dividends declared per common share
 
1.92

 
1.88

 
1.59

 
1.46

 
1.21

 
 
 
 
 
 
 
 
 
 
 
Financial position
 
 
 
 
 
 
 
 
 
 
Inventories
 
$
45,141

 
$
44,858

 
$
43,803

 
$
40,714

 
$
36,437

Property, equipment and capital lease assets, net
 
116,655

 
117,907

 
116,681

 
112,324

 
107,878

Total assets
 
203,706

 
204,751

 
203,105

 
193,406

 
180,782

Long-term debt and long-term capital lease obligations (excluding amounts due within one year)
 
43,692

 
44,559

 
41,417

 
47,079

 
43,842

Total Walmart shareholders' equity
 
81,394

 
76,255

 
76,343

 
71,315

 
68,542

 
 
 
 
 
 
 
 
 
 
 
Unit counts
 
 
 
 
 
 
 
 
 
 
Walmart U.S. segment
 
4,516

 
4,203

 
4,005

 
3,868

 
3,804

Walmart International segment
 
6,290

 
6,107

 
5,783

 
5,287

 
4,191

Sam's Club segment
 
647

 
632

 
620

 
611

 
609

Total units
 
11,453

 
10,942

 
10,408

 
9,766

 
8,604


(1)
Comparable sales include sales from stores and clubs open for the previous 12 months, including remodels, relocations and expansions, as well as e-commerce sales. Comparable store and club sales include fuel.



Wal-Mart Stores, Inc.
Form 10-K
For the Fiscal Year Ended January 31, 2015



Table of Contents

2


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
Wal-Mart Stores, Inc. ("Walmart," the "Company" or "we") is engaged in the operation of retail, wholesale and other units in various formats around the world. Our operations consist of three reportable segments: Walmart U.S., Walmart International and Sam's Club.
Walmart U.S. is our largest segment and operates retail stores in all 50 states in the United States ("U.S."), Washington D.C. and Puerto Rico, with three primary store formats, as well as digital retail. Walmart U.S. generated approximately 60% of our net sales in fiscal 2015 and, of our three segments, Walmart U.S. is the largest and has historically had the highest gross profit as a percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the Company's net sales and operating income.
Walmart International consists of operations in 26 countries outside of the U.S. and includes retail, wholesale and other businesses. These businesses consist of numerous formats, including supercenters, supermarkets, hypermarkets, warehouse clubs, including Sam's Clubs, cash & carry, home improvement, specialty electronics, restaurants, apparel stores, drug stores and convenience stores, as well as digital retail. Walmart International generated approximately 28% of our fiscal 2015 net sales. The overall gross profit rate for Walmart International is lower than that of Walmart U.S. because of its merchandise mix. Walmart International is our second largest segment and has grown through acquisitions, as well as by adding retail, wholesale and other units.
Sam's Club consists of membership-only warehouse clubs and operates in 48 states in the U.S. and in Puerto Rico, as well as digital retail. Sam's Club accounted for approximately 12% of our fiscal 2015 net sales. As a membership-only warehouse club, membership income is a significant component of the segment's operating income. As a result, Sam's Club operates with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments.
Each of our segments contributes to the Company's operating results differently, but each has generally maintained a consistent contribution rate to the Company's net sales and operating income in recent years.
Through the operations in each of our segments, we help people around the world save money and live better – anytime and anywhere – in retail stores or through our e-commerce and mobile capabilities. Through innovation, we are striving to create a customer-centric experience that seamlessly integrates digital and physical shopping. Physical retail encompasses our brick and mortar presence in each of the markets we operate. Digital retail is comprised of our e-commerce websites and mobile commerce applications. Each week, we serve nearly 260 million customers who visit our over 11,000 stores under 72 banners in 27 countries and e-commerce websites in 11 countries. Our strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience. By leading on price we earn the trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices ("EDLP"), while fostering a culture that rewards and embraces mutual respect, integrity and diversity. EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity. Price leadership is core to who we are. Everyday low cost ("EDLC") is our commitment to control expenses so those cost savings can be passed along to our customers. Our digital and physical presence provides customers access to our broad assortment anytime and anywhere. We strive to give our customers and members a great digital and physical shopping experience.
Our fiscal year ends on January 31 for our U.S. and Canadian operations. We consolidate all other operations generally using a one-month lag and on a calendar year basis. Our business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather patterns. Historically, our highest sales volume and operating income have occurred in the fiscal quarter ending January 31.
This discussion, which presents our results for the fiscal years ended January 31, 2015 ("fiscal 2015"), January 31, 2014 ("fiscal 2014") and January 31, 2013 ("fiscal 2013"), should be read in conjunction with our Consolidated Financial Statements and the accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period and the primary factors that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's performance. Additionally, the discussion provides information about the financial results of the three segments of our business to provide a better understanding of how each of those segments and its results of operations affect the financial condition and results of operations of the Company as a whole.
Throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations, we discuss segment operating income, comparable store and club sales and other measures. Management measures the results of the Company's segments using each segment's operating income, including certain corporate overhead allocations, as well as other measures. From time to time, we revise the measurement of each segment's operating income, including certain corporate overhead allocations, and other measures as determined by the information regularly reviewed by our chief operating decision maker. When we do so, the previous period amounts and balances are reclassified to conform to the current period's presentation. The

3


amounts disclosed for "Corporate and support" in the leverage discussion of the Company's performance metrics consist of corporate overhead and other items not allocated to any of the Company's segments.
Comparable store and club sales is a metric that indicates the performance of our existing U.S. stores and clubs by measuring the change in sales for such stores and clubs, including e-commerce sales, for a particular period from the corresponding period in the previous year. Walmart's definition of comparable store and club sales includes sales from stores and clubs open for the previous 12 months, including remodels, relocations, expansions and conversions, as well as e-commerce sales. We measure the e-commerce sales impact by including those sales initiated through our websites and fulfilled through our e-commerce distribution facilities, as well as an estimate for sales initiated online, but fulfilled through our stores and clubs. Changes in format are excluded from comparable store and club sales when the conversion is accompanied by a relocation or expansion that results in a change in retail square feet of more than five percent. Comparable store and club sales are also referred to as "same-store" sales by others within the retail industry. The method of calculating comparable store and club sales varies across the retail industry. As a result, our calculation of comparable store and club sales is not necessarily comparable to similarly titled measures reported by other companies.
In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the operating results for all countries where the functional currency is not the U.S. dollar. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the current period's currency exchange rates, and the comparable prior year period's currency exchange rates. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. When we refer to constant currency operating results, we are referring to our operating results without the impact of the currency exchange rate fluctuations and without the impact of acquisitions until the acquisitions are included in both comparable periods. The disclosure of constant currency amounts or results permits investors to understand better Walmart's underlying performance without the effects of currency exchange rate fluctuations or acquisitions. Volatility in currency exchange rates may impact the results, including net sales and operating income, of the Company and the Walmart International segment in the future.
We made certain reclassifications to prior period amounts or balances to conform to the presentation in the current fiscal year. These reclassifications did not impact the Company's operating income or consolidated net income. Additionally, certain prior period segment asset and expense allocations have been reclassified among segments to be comparable with the current period presentation.
The Retail Industry
We operate in the highly competitive retail industry in all of the markets we serve. We face strong sales competition from other discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as well as e-commerce and catalog businesses. Many of these competitors are national, regional or international chains or have a national or international online presence. We compete with a number of companies for prime retail site locations, as well as in attracting and retaining quality employees (whom we call "associates"). We, along with other retail companies, are influenced by a number of factors including, but not limited to: catastrophic events, weather, competitive pressures, consumer disposable income, consumer debt levels and buying patterns, consumer credit availability, cost of goods, currency exchange rate fluctuations, customer preferences, deflation, inflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor costs, tax rates, cybersecurity attacks and unemployment. Further information on the factors that can affect our operating results and on certain risks to our Company and an investment in its securities can be located in "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended January 31, 2015, and in the discussion under "Cautionary Statement Regarding Forward-Looking Statements and Information" in our Annual Report on Form 10-K for the fiscal year ended January 31, 2015.
Company Performance Metrics
Our performance metrics emphasize three priorities for improving shareholder value: growth, leverage and returns. Our priority of growth focuses on sales through growth in net sales, comparable store and club sales, including e-commerce sales, and unit square feet growth; the priority of leverage encompasses our objective to increase our operating income at the same rate as or a faster rate than the growth in net sales by growing our operating, selling, general and administrative expenses ("operating expenses") at a slower rate than the growth of our net sales; and the priority of returns focuses on how efficiently we employ assets through return on investment and how effectively we manage working capital through free cash flow. While all three priorities are important, our top priority is growth, with increased investment in digital retail and our associates. Sales growth will contribute to improving leverage and returns over time.

4


Growth
Net Sales
 
 
Fiscal Years Ended January 31,
 
 
2015
 
2014
 
2013
(Amounts in millions)
 
Net Sales
 
Percent 
of Total
 
Percent
Change
 
Net Sales
 
Percent 
of Total
 
Percent
Change
 
Net Sales
 
Percent 
of Total
Walmart U.S.
 
$
288,049

 
59.8
%
 
3.1
 %
 
$
279,406

 
59.0
%
 
1.8
%
 
$
274,433

 
59.0
%
Walmart International
 
136,160

 
28.2
%
 
(0.3
)%
 
136,513

 
28.9
%
 
1.3
%
 
134,748

 
28.9
%
Sam's Club
 
58,020

 
12.0
%
 
1.5
 %
 
57,157

 
12.1
%
 
1.3
%
 
56,423

 
12.1
%
Net sales
 
$
482,229

 
100.0
%
 
1.9
 %
 
$
473,076

 
100.0
%
 
1.6
%
 
$
465,604

 
100.0
%
Our consolidated net sales increased 1.9% and 1.6% for fiscal 2015 and 2014, respectively, when compared to the previous fiscal year. The increase in net sales for fiscal 2015 was primarily due to 3.0% year-over-year growth in retail square feet, positive comparable sales in the U.S. and higher e-commerce sales across the Company. The increase was partially offset by $5.3 billion of negative impact from fluctuations in currency exchange rates for fiscal 2015. The increase in net sales for fiscal 2014 was due to 3.1% growth in retail square feet, higher e-commerce sales, the impact of fiscal 2013 acquisitions and positive comparable club sales at Sam's Club. The increase in net sales for fiscal 2014 was partially offset by $5.1 billion of negative impact from fluctuations in currency exchange rates.
Calendar Comparable Store and Club Sales
Comparable store and club sales is a metric which indicates the performance of our existing U.S. stores and clubs by measuring the change in sales for such stores and clubs, including e-commerce sales, for a particular period over the corresponding period in the previous year. The retail industry generally reports comparable store and club sales using the retail calendar (also known as the 4-5-4 calendar). To be consistent with the retail industry, we provide comparable store and club sales using the retail calendar in our quarterly earnings releases. However, when we discuss our comparable store and club sales below, we are referring to our calendar comparable store and club sales calculated using our fiscal calendar. As our fiscal calendar differs from the retail calendar, our calendar comparable store and club sales also differ from the retail calendar comparable store and club sales provided in our quarterly earnings releases. Calendar comparable store and club sales, as well as the impact of fuel, for fiscal 2015 and 2014, were as follows:
 
 
Fiscal Years Ended January 31,
 
 
2015
 
2014
 
2015
 
2014
 
 
With Fuel
 
Fuel Impact
Walmart U.S.
 
0.6
%
 
(0.6
)%
 
0.0
 %
 
0.0
 %
Sam's Club
 
0.0
%
 
0.3
 %
 
(0.6
)%
 
(0.3
)%
Total U.S.
 
0.5
%
 
(0.5
)%
 
(0.1
)%
 
(0.1
)%

Comparable store and club sales in the U.S., including fuel, increased 0.5% in fiscal 2015 and decreased 0.5% in fiscal 2014, when compared to the previous fiscal year. The fiscal 2015 total U.S. comparable store and club sales were positively impacted by higher traffic and lower gas prices during the end of the fiscal year. E-commerce sales positively impacted comparable sales approximately 0.3% and 0.2% for Walmart U.S. and Sam's Club, respectively, for the fiscal year ended January 31, 2015. For fiscal 2014, the total U.S. comparable store and club sales were negatively impacted by lower consumer spending primarily due to the slow recovery in general economic conditions, the 2% increase in the 2013 payroll tax rate, and the reduction in government food benefits and severe winter storms that occurred during the fourth quarter. These factors were partially offset by increased member traffic at Sam's Club primarily coming from Savings Members. Additionally, e-commerce sales positively impacted the Walmart U.S. comparable store and Sam's Club comparable club sales percentages by approximately 0.3% for fiscal 2014.

As we continue to add new stores and clubs in the U.S., we do so with an understanding that additional stores and clubs may take sales away from existing units. We estimate the negative impact on comparable store and club sales as a result of opening new stores and clubs was approximately 0.9% and 0.8% in fiscal 2015 and 2014, respectively. Our estimate is calculated primarily by comparing the sales trends of the impacted stores and clubs, which are identified based on their proximity to the new stores and clubs, to those of nearby non-impacted stores and clubs, in each case, as measured after the new stores and clubs are opened.

5


Leverage
Operating Income
 
Fiscal Years Ended January 31,
 
2015
 
2014
 
2013
(Amounts in millions)
Operating Income
 
Percent 
of Total
 
Percent
Change
 
Operating Income
 
Percent 
of Total
 
Percent
Change
 
Operating Income
 
Percent 
of Total
Walmart U.S.
$
21,336

 
78.6
 %
 
(2.1
)%
 
$
21,787

 
81.0
 %
 
3.2
 %
 
$
21,103

 
76.1
 %
Walmart International
6,171

 
22.7
 %
 
19.8
 %
 
5,153

 
19.2
 %
 
(19.0
)%
 
6,365

 
23.0
 %
Sam's Club
1,976

 
7.3
 %
 
7.2
 %
 
1,843

 
6.9
 %
 
(0.9
)%
 
1,859

 
6.7
 %
Corporate and support
(2,336
)
 
(8.6
)%
 
(22.2
)%
 
(1,911
)
 
(7.1
)%
 
(19.3
)%
 
(1,602
)
 
(5.8
)%
Operating income
$
27,147

 
100.0
 %
 
1.0
 %
 
$
26,872

 
100.0
 %
 
(3.1
)%
 
$
27,725

 
100.0
 %
We believe comparing both the growth of our operating expenses and our operating income to the growth of our net sales are meaningful measures, as they indicate how effectively we manage costs and leverage operating expenses. Our objective for a fiscal year is to grow operating expenses at a slower rate than net sales and to grow operating income at the same rate as or a faster rate than net sales. On occasion, we may make strategic growth investments that may, at times, cause our operating expenses to grow at a faster rate than net sales and that may result in our operating income growing at a slower rate than net sales.
Operating Expenses
For fiscal 2015, operating expenses increased 2.3%, when compared to the previous fiscal year, while net sales increased 1.9%, respectively, when compared to the previous fiscal year. Accordingly, we did not meet our objective of growing operating expenses at a slower rate than net sales. Our continued investments in digital retail, higher health-care expenses in the U.S. from increased enrollment and medical cost inflation, the $249 million impact of wage and hour litigation in the U.S., as well as expenses of $148 million related to the closure of approximately 30 underperforming stores in Japan were the primary factors that caused us not to leverage for fiscal 2015. For fiscal 2014, we did not meet our objective of growing operating expenses at a slower rate than net sales as operating expenses as a percentage of net sales increased 27 basis points. Overall, lower than anticipated sales, higher investment in key areas, such as global leverage and digital retail initiatives, and the nearly $1.0 billion of increased expenses for various matters described in the Walmart International segment discussion, were the primary cause for the increase in operating expenses as a percentage of net sales.
During the first quarter of fiscal 2016, the Company announced a new associate wage structure combined with comprehensive associate training and educational programs. We anticipate the additional expenses in fiscal 2016 resulting from these programs will be approximately $1.0 billion, which may impact our ability to leverage operating expenses in fiscal 2016.
Operating Income
For fiscal 2015, we did not meet our objective of growing operating income at the same rate or a faster rate than net sales as operating income increased 1.0%, while net sales increased 1.9% when compared to the previous fiscal year. This was primarily due to the factors we discussed for not leveraging operating expenses. For fiscal 2014, we also did not meet our objective of growing operating income at a faster rate than net sales as operating income decreased 3.1% while net sales increased 1.6%, when compared to the previous fiscal year. This was primarily due to the factors we discussed for not leveraging operating expenses, partially offset by increases in membership and other income of 5.6%.

6


Returns
Return on Investment
Management believes return on investment ("ROI") is a meaningful metric to share with investors because it helps investors assess how effectively Walmart is deploying its assets. Trends in ROI can fluctuate over time as management balances long-term potential strategic initiatives with possible short-term impacts.
ROI was 16.9% and 17.0% for the fiscal years ended January 31, 2015 and 2014, respectively. The slight change in ROI was primarily due to continued investments in store growth and digital retail initiatives, offset by currency exchange rate fluctuations.
We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the trailing 12 months divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average amortization, less average accounts payable and average accrued liabilities for that period, plus a rent factor equal to the rent for the fiscal year or trailing 12 months multiplied by a factor of eight. When we have discontinued operations, we exclude the impact of the discontinued operations.
Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that exclude and include amounts that are included and excluded in the most directly comparable GAAP financial measure. For example, we exclude the impact of depreciation and amortization from our reported operating income in calculating the numerator of our calculation of ROI. In addition, we include a factor of eight for rent expense that estimates the hypothetical capitalization of our operating leases. We consider return on assets ("ROA") to be the financial measure computed in accordance with generally accepted accounting principles ("GAAP") that is the most directly comparable financial measure to our calculation of ROI. ROI differs from ROA (which is consolidated income from continuing operations for the period divided by average total assets of continuing operations for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts total assets of continuing operations for the impact of accumulated depreciation and amortization, accounts payable and accrued liabilities; and incorporates a factor of rent to arrive at total invested capital.
Although ROI is a standard financial metric, numerous methods exist for calculating a company's ROI. As a result, the method used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI. We urge you to understand the methods used by other companies to calculate their ROI before comparing our ROI to that of such other companies.

7


The calculation of ROI, along with a reconciliation to the calculation of ROA, the most comparable GAAP financial measure, is as follows:
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2015
 
2014
CALCULATION OF RETURN ON INVESTMENT
Numerator
 
 
 
 
Operating income
 
$
27,147

 
$
26,872

+ Interest income
 
113

 
119

+ Depreciation and amortization
 
9,173

 
8,870

+ Rent
 
2,777

 
2,828

= Adjusted operating income
 
$
39,210

 
$
38,689

 
 
 
 
 
Denominator
 
 
 
 
Average total assets of continuing operations(1)
 
$
203,999

 
$
203,680

+ Average accumulated depreciation and amortization(1)
 
63,375

 
57,907

- Average accounts payable(1)
 
37,913

 
37,748

- Average accrued liabilities(1)
 
18,973

 
18,802

+ Rent x 8
 
22,216

 
22,624

= Average invested capital
 
$
232,704

 
$
227,661

Return on investment (ROI)
 
16.9
%
 
17.0
%
 
 
 
 
 
CALCULATION OF RETURN ON ASSETS
Numerator
 
 
 
 
Income from continuing operations
 
$
16,814

 
$
16,551

Denominator
 
 
 
 
Average total assets of continuing operations(1)
 
$
203,999

 
$
203,680

Return on assets (ROA)
 
8.2
%
 
8.1
%
 
 
 
As of January 31,
 
 
2015
 
2014
 
2013
Certain Balance Sheet Data
 
 
 
 
 
 
Total assets of continuing operations
 
$
203,706

 
$
204,291

 
$
203,068

Accumulated depreciation and amortization
 
65,979

 
60,771

 
55,043

Accounts payable
 
38,410

 
37,415

 
38,080

Accrued liabilities
 
19,152

 
18,793

 
18,808

 
(1) The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and dividing by 2.

8


Free Cash Flow
Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated income from continuing operations as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.
We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. We generated free cash flow of $16.4 billion, $10.1 billion and $12.7 billion for fiscal 2015, 2014 and 2013, respectively. The increase in free cash flow for fiscal 2015, when compared to the previous fiscal year, was primarily due to the timing of payments for accounts payable and accrued liabilities, as well as the timing of income tax payments, combined with lower capital expenditures. The fiscal 2014 decline in free cash flow, when compared to the previous fiscal year, was primarily due to the timing of income tax payments, as well as lower income from continuing operations and slightly higher capital expenditures.
Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows.
Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result, the method used by Walmart's management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow. We urge you to understand the methods used by other companies to calculate their free cash flow before comparing our free cash flow to that of such other companies.
The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities.
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2015
 
2014
 
2013
Net cash provided by operating activities
 
$
28,564

 
$
23,257

 
$
25,591

Payments for property and equipment
 
(12,174
)
 
(13,115
)
 
(12,898
)
Free cash flow
 
$
16,390

 
$
10,142

 
$
12,693

 
 
 
 
 
 
 
Net cash used in investing activities(1)
 
$
(11,125
)
 
$
(12,526
)
 
$
(12,637
)
Net cash used in financing activities
 
(15,071
)
 
(10,789
)
 
(11,946
)
(1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.

9


Results of Operations
Consolidated Results of Operations
 
 
Fiscal Years Ended January 31,
(Amounts in millions, except unit counts)
 
2015
 
2014
 
2013
Total revenues
 
$
485,651

 
$
476,294

 
$
468,651

Percentage change from comparable period
 
2.0
%

1.6
 %
 
5.0
%
Net sales
 
$
482,229

 
$
473,076

 
$
465,604

Percentage change from comparable period
 
1.9
%

1.6
 %
 
5.0
%
Total U.S. calendar comparable store and club sales increase (decrease)
 
0.5
%
 
(0.5
)%
 
2.4
%
Gross profit margin as a percentage of net sales
 
24.3
%
 
24.3
 %
 
24.3
%
Operating income
 
$
27,147

 
$
26,872

 
$
27,725

Operating income as a percentage of net sales
 
5.6
%
 
5.7
 %
 
6.0
%
Income from continuing operations
 
$
16,814

 
$
16,551

 
$
17,704

Unit counts at period end
 
11,453

 
10,942

 
10,408

Retail square feet at period end
 
1,135

 
1,101

 
1,070

Our total revenues, which are mostly comprised of net sales, but also include membership and other income, increased 2.0% and 1.6% for fiscal 2015 and 2014, respectively, when compared to the previous fiscal year. The increase in total revenues was consistent with the 1.9% and 1.6% increases in net sales. The increase in net sales was primarily due to 3.0% year-over-year growth in retail square feet, positive comparable sales in the U.S. and higher e-commerce sales across the Company. The increase was partially offset by $5.3 billion of negative impact from fluctuations in currency exchange rates for fiscal 2015. The increase in net sales for fiscal 2014 was due to 3.1% growth in retail square feet, higher e-commerce sales, the impact of fiscal 2013 acquisitions and positive comparable club sales at Sam's Club. The increase in net sales for fiscal 2014 was partially offset by $5.1 billion of negative impact from fluctuations in currency exchange rates. An increase in membership and other income in both fiscal years, primarily due to growth in membership income at Sam's Club, also contributed to the increase in total revenues.
Our gross profit rate was relatively flat for fiscal 2015, when compared to the previous fiscal year. While the gross profit rate at Walmart International increased, the gross profit rate at Walmart U.S. and Sam's Club decreased. Our gross profit rate decreased 3 basis points for fiscal 2014, when compared to the previous fiscal year, primarily due to our ongoing investment in price, as well as merchandise mix.
For fiscal 2015, we did not meet our objective of growing operating expenses at a slower rate than net sales as operating expenses as a percentage of net sales increased 6 basis points when compared to the same period in the previous fiscal year. Our continued investments in digital retail, higher health-care expenses in the U.S. from increased enrollment and medical cost inflation, the $249 million impact of wage and hour litigation in the U.S., as well as expenses of $148 million related to the closure of approximately 30 underperforming stores in Japan were the primary factors that caused us not to leverage for fiscal 2015. For fiscal 2014, we did not meet our objective of growing operating expenses at a slower rate than net sales as operating expenses as a percentage of net sales increased 27 basis points. Overall, lower than anticipated net sales, higher investment in key areas, such as global leverage and e-commerce initiatives, and nearly $1.0 billion of increased expenses for various matters described in the Walmart International segment discussion, were the primary cause for the increase in operating expenses as a percentage of net sales.
For fiscal 2015, we did not meet our objective of growing operating income at the same rate or a faster rate than net sales as operating income increased 1.0% while net sales increased 1.9% when compared to the previous fiscal year. This was primarily due to the factors we discussed for not leveraging operating expenses. For fiscal 2014, we also did not meet our objective of growing operating income at a faster rate than net sales as operating income decreased 3.1% while net sales increased 1.6%, when compared to the previous fiscal year. This was primarily due to the factors we discussed for not leveraging operating expenses, partially offset by increases in membership and other income.
Our effective income tax rates were 32.2%, 32.9% and 31.0%, for fiscal 2015, 2014 and 2013, respectively. The reconciliation from the U.S. statutory rate to the effective income tax rates for fiscal 2015, 2014 and 2013 is presented in Note 9 in the "Notes to Consolidated Financial Statements."
As a result of the factors discussed above, we reported $16.8 billion, $16.6 billion and $17.7 billion of consolidated income from continuing operations for fiscal 2015, 2014 and 2013, respectively, an increase of $263.0 million for fiscal 2015 and a decrease of $1.1 billion for fiscal 2014 when compared to the previous fiscal year. Diluted income from continuing operations per common share attributable to Walmart ("EPS") was $4.99, $4.85 and $5.01 for fiscal 2015, 2014 and 2013, respectively.

10


Walmart U.S. Segment
 
 
 
Fiscal Years Ended January 31,
(Amounts in millions, except unit counts)
 
 
2015
 
2014
 
2013
Net sales
 
 
$
288,049

 
$
279,406

 
$
274,433

Percentage change from comparable period
 
 
3.1
%

1.8
 %
 
3.9
%
Calendar comparable store sales increase (decrease)
 
 
0.6
%
 
(0.6
)%
 
2.0
%
Operating income
 
 
$
21,336

 
$
21,787

 
$
21,103

Operating income as a percentage of net sales
 
 
7.4
%
 
7.8
 %
 
7.7
%
Unit counts at period end
 
 
4,516

 
4,203

 
4,005

Retail square feet at period end
 
 
680

 
659

 
641

Net sales for the Walmart U.S. segment increased 3.1% and 1.8% for fiscal 2015 and 2014, respectively, when compared to the previous fiscal year. For fiscal 2015, the increase in net sales was due to year-over-year growth in retail square feet of 3.2%, as well as an increase in comparable store sales of 0.6%. Positive traffic and lower gas prices late in the fiscal year contributed to the increase in comparable store sales. For fiscal 2014, the increase in net sales was due to year-over-year growth in retail square feet of 2.9%, partially offset by a decline in comparable store sales of 0.6%. Fiscal 2014 comparable store sales were negatively impacted by lower consumer spending primarily due to the slow recovery in general economic conditions, the 2% increase in the 2013 payroll tax rate and the reduction in government food benefits.
The fiscal 2015 gross profit rate decreased 12 basis points compared to the previous fiscal year. The decrease in the gross profit rate was primarily the result of the segment's strategic focus on price investment, pharmacy cost inflation, reductions in third-party reimbursement rates and changes in merchandise mix. The fiscal year 2014 gross profit rate was relatively flat when compared to the previous fiscal year primarily due to price investment and low price leadership, partially offset by cost of goods savings initiatives and supply chain productivity.
Walmart U.S. did not leverage operating expenses for fiscal 2015, as operating expenses as a percentage of segment net sales increased 24 basis points. The increase in operating expenses as a percentage of segment net sales was primarily driven by higher health-care expenses from increased enrollment and medical cost inflation. In addition, expenses from severe winter storms early in the year contributed to the increase in operating expenses as a percentage of segment net sales. Walmart U.S. leveraged operating expenses for fiscal 2014, driven by productivity initiatives as well as lower incentive expenses in fiscal 2014.
As a result of the factors discussed above, segment operating income was $21.3 billion, $21.8 billion and $21.1 billion during fiscal 2015, 2014 and 2013, respectively. Walmart U.S. did not grow operating income faster than sales during fiscal 2015, but grew operating income faster than sales during fiscal 2014.

11


Walmart International Segment
 
 
Fiscal Years Ended January 31,
(Amounts in millions, except unit counts)
 
2015
 
2014
 
2013
Net sales
 
$
136,160

 
$
136,513

 
$
134,748

Percentage change from comparable period
 
(0.3
)%
 
1.3
%
 
7.4
%
Operating income
 
$
6,171

 
$
5,153

 
$
6,365

Operating income as a percentage of net sales
 
4.5
 %
 
3.8
%

4.7
%
Unit counts at period end
 
6,290

 
6,107

 
5,783

Retail square feet at period end
 
368

 
358

 
346

Net sales for the Walmart International segment decreased 0.3% and increased 1.3% for fiscal 2015 and 2014, respectively, when compared to the previous fiscal year. For fiscal 2015, the decrease in net sales was due to $5.3 billion of negative impact from fluctuations in currency exchange rates, partially offset by year-over-year net growth in retail square feet of 2.6% and higher e-commerce sales in each country with e-commerce operations, particularly in the United Kingdom, China and Brazil. For fiscal 2014, the increase in net sales was due to year-over-year net growth in retail square feet of 3.6% and the impact of fiscal 2013 acquisitions, which accounted for $730 million of the net sales increase. In addition, higher e-commerce sales in each country with e-commerce operations contributed to the increase. The increase in net sales was partially offset by $5.1 billion of negative impact from fluctuations in currency exchange rates.
Gross profit rate increased 12 basis points for fiscal 2015 and decreased 10 basis points for fiscal 2014, when compared to the previous fiscal year. The fiscal 2015 increase in gross profit rate was primarily due to changes in the merchandise mix in a number of the segment's larger operations. The fiscal 2014 decrease in gross profit rate was primarily due to price investments in certain countries, including Brazil, Canada and Mexico.
Operating expenses as a percentage of net sales decreased 51 basis points for fiscal 2015, when compared to the previous fiscal year. The decrease was due to the nearly $1.0 billion of aggregated expenses incurred in fiscal 2014 detailed below, which were partially offset by fiscal 2015 expenses of $148 million related to the closure of approximately 30 underperforming stores in Japan.
For fiscal 2014, operating expenses as a percentage of net sales increased 80 basis points, when compared to the previous fiscal year. Operating expenses as a percentage of net sales were primarily impacted by the nearly $1.0 billion of aggregated expenses for the following matters:
Charges for contingencies for non-income taxes and employment claims in Brazil;
Charges for the closure of 29 units in China and 25 units in Brazil due to poor performance;
Store lease expenses in China and Mexico to correct a historical accounting practice that did not conform to our global accounting policies; and
Expenses for the termination of the joint venture, franchise and supply agreements related to our former partner's retail store operations in India.
As a result of the factors discussed above, segment operating income was $6.2 billion, $5.2 billion and $6.4 billion for fiscal 2015, 2014 and 2013, respectively. Fluctuations in currency exchange rates negatively impacted operating income $225 million, $26 million and $111 million in fiscal 2015, 2014 and 2013 respectively. Although currency fluctuations caused net sales for Walmart International to decline, operating income grew for fiscal 2015. Operating income did not grow faster than net sales in fiscal 2014.

12


Sam's Club Segment
We believe the information in the following table under the caption "Excluding Fuel" is useful to investors because it permits investors to understand the effect of the Sam's Club segment's fuel sales on its results of operations, which are impacted by the volatility of fuel prices. Volatility in fuel prices may continue to impact the operating results of the Sam's Club segment in the future. 
 
 
Fiscal Years Ended January 31,
(Amounts in millions, except unit counts)
 
2015
 
2014
 
2013
Including Fuel
 
 
 
 
 
 
Net sales
 
$
58,020

 
$
57,157

 
$
56,423

Percentage change from comparable period
 
1.5
%
 
1.3
%
 
4.9
%
Calendar comparable club sales increase
 
0.0
%
 
0.3
%
 
4.1
%
Operating income
 
$
1,976

 
$
1,843

 
$
1,859

Operating income as a percentage of net sales
 
3.4
%
 
3.2
%

3.3
%
Unit counts at period end
 
647

 
632

 
620

Retail square feet at period end
 
87

 
84

 
83

 
 
 
 
 
 
 
Excluding Fuel
 
 
 
 
 
 
Net sales
 
$
51,630

 
$
50,574

 
$
49,789

Percentage change from comparable period
 
2.1
%
 
1.6
%
 
4.6
%
Operating income
 
$
1,854

 
$
1,817

 
$
1,812

Operating income as a percentage of net sales
 
3.6
%
 
3.6
%

3.6
%
Net sales for the Sam's Club segment increased 1.5% and 1.3% for fiscal 2015 and 2014, respectively, when compared to the previous fiscal year. The fiscal 2015 increase in net sales was primarily due to year-over-year growth in retail square feet of 2.5%, driven by the addition of 15 new clubs, partially offset by a decrease in fuel sales due to the lower average selling price. Comparable club sales were flat for fiscal 2015. The fiscal 2014 increase in net sales was due to year-over-year growth in retail square feet of 2.1%, driven by the addition of 12 new clubs, as well as positive comparable club sales of 0.3%. The fiscal 2014 positive comparable club sales were the result of increased member traffic primarily coming from our Savings Members, partially offset by severe winter storms that occurred in the fourth quarter of fiscal 2014.
Gross profit rate decreased 12 basis points for fiscal 2015 and was flat for fiscal 2014, when compared to the previous fiscal year. For fiscal 2015, the gross profit rate decreased primarily due to the segment's investment in the Cash Rewards program, changes in merchandise mix, and commodity cost inflation, partially offset by an increased gross profit rate on fuel sales. For fiscal 2014, our gross profit was negatively impacted by an increase to our product warranty liabilities, which was offset by a favorable impact from merchandise mix.
Membership and other income increased 7.7% and 14.1% for fiscal 2015 and 2014, respectively, when compared to the previous fiscal year. For fiscal 2015, the increase was primarily the result of increased membership upgrades, Plus Member renewals and an increase in members from the opening of 15 new clubs. For fiscal 2014, the increase was primarily due to improved contract terms relating to the profit sharing arrangement with our credit card provider, increased membership fees that were introduced on May 15, 2013, $24 million of income from the sale of two real estate properties and an increase in members from the opening of 12 new clubs.
Sam's Club leveraged operating expenses for fiscal 2015, as operating expenses as a percentage of segment net sales decreased 16 basis points compared to the previous fiscal year. The decrease in operating expenses as a percentage of segment net sales for fiscal 2015 was primarily due to better expense management in a number of areas, including the optimization of the new in-club staffing structure announced in fiscal 2014, which resulted in decreases in wage expense and payroll taxes. This was partially offset by higher health-care expenses, mostly from increased enrollment and medical cost inflation. For fiscal 2014, Sam's Club did not leverage expenses, as operating expenses as a percentage of segment net sales increased 26 basis points, when compared to the previous fiscal year. The increase in operating expenses as a percentage of segment net sales was primarily due to a $59 million charge for the implementation of the new in-club staffing structure and the pending closure of one club, as well as a state excise tax refund credit we received in the previous fiscal year.
As a result of the factors discussed above, operating income was $2.0 billion, $1.8 billion and $1.9 billion for fiscal 2015, 2014 and 2013, respectively. Sam's Club did grow operating income faster than net sales in fiscal 2015, but did not grow operating income faster than sales in fiscal 2014.

13


Liquidity and Capital Resources
Liquidity
The strength and stability of our operations have historically supplied us with a significant source of liquidity. Our cash flows provided by operating activities, supplemented with our long-term debt and short-term borrowings, have been sufficient to fund our operations while allowing us to invest in activities that support the long-term growth of our operations. Generally, some or all of the remaining available cash flow has been used to fund the dividends on our common stock and share repurchases. We believe our sources of liquidity will continue to be adequate to fund operations, finance our global expansion activities, pay dividends and fund our share repurchases for the foreseeable future.
Net Cash Provided by Operating Activities
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2015
 
2014
 
2013
Net cash provided by operating activities
 
$
28,564

 
$
23,257

 
$
25,591

Net cash provided by operating activities was $28.6 billion, $23.3 billion and $25.6 billion for fiscal 2015, 2014 and 2013, respectively. The increase in net cash provided by operating activities for fiscal 2015, when compared to the previous fiscal year, was primarily due to the timing of payments for accounts payable and accrued liabilities, as well as the timing of income tax payments. The decrease in cash flows provided by operating activities in fiscal 2014, when compared to the previous fiscal year, was primarily due to the timing of income tax payments, as well as lower income from continuing operations.
During the first quarter of fiscal 2016, the Company announced a new associate wage structure combined with comprehensive associate training and educational programs. We anticipate cash flows provided by operating activities will be sufficient to fund these programs.
Cash Equivalents and Working Capital
Cash and cash equivalents were $9.1 billion and $7.3 billion for fiscal 2015 and 2014, respectively. Our working capital deficit was $2.0 billion and $8.2 billion at January 31, 2015 and 2014, respectively. The decrease in our working capital deficit is primarily the result of using less of our net cash provided by operating activities for share repurchases and capital expenditures during fiscal 2015, which allowed us to reduce our short-term borrowings. We generally operate with a working capital deficit due to our efficient use of cash in funding operations, consistent access to the capital markets and in providing returns to our shareholders in the form of payments of cash dividends and share repurchases.
We use intercompany financing arrangements in an effort to ensure cash can be made available in the country in which it is needed with the minimum cost possible. We do not believe it will be necessary to repatriate cash and cash equivalents held outside of the U.S. and anticipate our domestic liquidity needs will be met through cash flows provided by operating activities, supplemented with long-term debt and short-term borrowings. Accordingly, we intend, with only certain exceptions, to continue to indefinitely reinvest our cash and cash equivalents 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, we realize an effective tax rate benefit. If our intentions with respect to reinvestment were to change, most of the amounts held within our foreign operations could be repatriated to the U.S., although any repatriation under current U.S. tax laws would be subject to U.S. federal income taxes, less applicable foreign tax credits. As of January 31, 2015 and 2014, cash and cash equivalents of approximately $1.7 billion and $1.9 billion, respectively, may not be freely transferable to the U.S. due to local laws or other restrictions. We do not expect local laws, other limitations or potential taxes on anticipated future repatriations of cash amounts held outside of the U.S. to have a material effect on our overall liquidity, financial condition or results of operations.

Net Cash Used in Investing Activities
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2015
 
2014
 
2013
Net cash used in investing activities
 
$
(11,125
)
 
$
(12,526
)
 
$
(12,637
)
Net cash used in investing activities was $11.1 billion, $12.5 billion and $12.6 billion for fiscal 2015, 2014 and 2013, respectively, and generally consisted of payments to add stores, remodel numerous existing stores, expand our digital retail capabilities and invest in other technologies. Net cash used in investing activities decreased $1.4 billion for fiscal 2015, when compared to the previous fiscal year, primarily due to lower capital expenditures. The following table provides additional capital expenditure detail:

14


(Amounts in millions)
 
Allocation of Capital Expenditures
Fiscal Years Ending January 31,
Capital Expenditures
 
2015
 
2014
New stores and clubs, including expansions and relocations
 
$
4,128

 
$
5,083

Information systems, distribution, digital retail and other
 
3,288

 
2,539

Remodels
 
822

 
1,030

Total U.S.
 
8,238

 
8,652

Walmart International
 
3,936

 
4,463

Total capital expenditures
 
$
12,174

 
$
13,115

Also reducing net cash used in investing activities were cash proceeds of $671 million received from the sale of the Vips Restaurant Business in Mexico ("Vips") on May 12, 2014, which is further described in Note 13 to our Consolidated Financial Statements.
We continue to focus on striving to seamlessly integrate the digital and physical shopping experience for our customers and expanded in digital retail in each of our segments during fiscal 2015, with Walmart U.S. and Sam's Club focused on digital retail in the U.S. and Walmart International focused on digital retail in countries outside of the U.S. Some of our fiscal 2015 accomplishments in this area were to successfully launch our new web platform in the U.S., grow mobile and increase our third-party marketplace offering.
Growth Activities
In fiscal 2016, we plan to add between 26 and 30 million square feet, which will include a continued investment in Neighborhood Markets and a moderation of Supercenter growth in the U.S. compared to recent fiscal years. In addition, we plan to accelerate the growth of our digital retail capabilities by investing $1.2 billion to $1.5 billion in e-commerce websites and mobile commerce applications that will include technology, infrastructure and other areas to better serve our customers and support our stores and clubs. We anticipate financing these growth activities through cash flows provided by operating activities and future debt financings.
The following table provides our estimated range for fiscal 2016 capital expenditures, as well as our estimated range for growth in retail square feet. Our anticipated digital retail expenditures are included in our estimated range for fiscal 2016 capital expenditures. The amounts in the table do not include capital expenditures or growth in retail square feet from any pending or future acquisitions.
 
 
Fiscal 2016 Projected Capital Expenditures (in billions)
 
Fiscal 2016 Projected Growth in
Retail Square Feet
(in thousands)
Walmart U.S.
 
$
6.1

 
to
 
$
6.6

 
15,000

 
to
 
16,000

Walmart International
 
3.7

 
to
 
4.2

 
10,000

 
to
 
13,000

Sam's Club
 
0.8

 
to
 
0.8

 
1,000

 
to
 
1,000

Corporate and support
 
1.0

 
to
 
1.3

 

 
to
 

Total
 
$
11.6

 
to
 
$
12.9

 
26,000

 
to
 
30,000


15


Net Cash Used in Financing Activities
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2015
 
2014
 
2013
Net cash used in financing activities
 
$
(15,071
)
 
$
(10,789
)
 
$
(11,946
)
Cash flows used in financing activities generally consist of transactions related to our short-term and long-term debt, as well as dividends paid and the repurchase of Company stock. Transactions with noncontrolling interest shareholders are also classified as cash flows from financing activities.
Short-term Borrowings
Short-term borrowings decreased $6.3 billion for fiscal 2015 and increased $0.9 billion for fiscal 2014, when compared to the previous fiscal year. We generally utilize the liquidity provided by short-term borrowings to provide funding used for our operations, dividend payments, share repurchases, capital expenditures and other cash requirements. However, more cash provided from operating activities combined with less cash used for share repurchases and capital expenditures during fiscal 2015, allowed us to minimize our short-term borrowings at January 31, 2015. In addition to our short-term borrowings, we also have various undrawn committed lines of credit that provide $15.0 billion of additional liquidity, if needed.
Long-term Debt
The following table provides the changes in our long-term debt for fiscal 2015:
(Amounts in millions)
 
Long-term debt due within one year
 
Long-term debt
 
Total
Balances as of February 1, 2014
 
$
4,103

 
$
41,771

 
$
45,874

          Proceeds from issuance of long-term debt
 

 
5,174

 
5,174

          Payments of long-term debt
 
(3,904
)
 

 
(3,904
)
          Reclassifications of long-term debt
 
4,267

 
(4,267
)
 

          Other
 
344

 
(1,592
)
 
(1,248
)
Balances as of January 31, 2015
 
$
4,810

 
$
41,086

 
$
45,896

Our total outstanding long-term debt balance was relatively flat as of January 31, 2015 compared to the balance as of January 31, 2014. During fiscal 2015, we used the proceeds from the issuance of long-term debt to pay down and refinance existing debt and for other corporate purposes.
Dividends
Our total dividend payments were $6.2 billion, $6.1 billion and $5.4 billion for fiscal 2015, 2014 and 2013, respectively, and on February 19, 2015, the Board of Directors approved the fiscal 2016 annual dividend of $1.96 per share, an increase compared to the fiscal 2015 annual dividend of $1.92 per share. For fiscal 2016, the annual dividend will be paid in four quarterly installments of $0.49 per share, according to the following record and payable dates:
Record Date
  
Payable Date
March 13, 2015
  
April 6, 2015
May 8, 2015
  
June 1, 2015
August 7, 2015
  
September 8, 2015
December 4, 2015
  
January 4, 2016
Company Share Repurchase Program
From time to time, we repurchase shares of our 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 we can make share repurchases. At January 31, 2015, authorization for $10.3 billion of share repurchases remained under the current share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status.

16


We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the market price of our common stock. 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 2015, 2014 and 2013:
 
 
Fiscal Years Ended January 31,
(Amounts in millions, except per share data)
 
2015
 
2014
 
2013
Total number of shares repurchased
 
13.4

 
89.1

 
113.2

Average price paid per share
 
$
75.82

 
$
74.99

 
$
67.15

Total cash paid for share repurchases
 
$
1,015

 
$
6,683

 
$
7,600


We decreased the total cash paid for share repurchases by $5.7 billion for fiscal 2015, compared to the previous fiscal year, as a result of current cash needs, capacity for leverage and increased cash used in transactions with noncontrolling interests described further below. In addition, our results of operations influenced our share repurchase activity.

Transactions with Noncontrolling Interests
As described in Note 13 to our Consolidated Financial Statements, during fiscal 2015, we completed the purchase of substantially all of the remaining noncontrolling interest in Walmart Chile for approximately $1.5 billion, using existing cash to complete this transaction.

Capital Resources
We believe cash flows from continuing operations, our current cash position and access to capital markets will continue to be sufficient to meet our anticipated operating cash needs, including to fund seasonal buildups in merchandise inventories, and to fund our capital expenditures, dividend payments and share repurchases.
We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance our debt as it becomes due at favorable rates in capital markets. At January 31, 2015, the ratings assigned to our commercial paper and rated series of our outstanding long-term debt were as follows:
Rating agency
  
Commercial paper
  
Long-term debt
Standard & Poor's
  
A-1+
  
AA
Moody's Investors Service
  
P-1
  
Aa2
Fitch Ratings
  
F1+
  
AA
Credit rating agencies review their ratings periodically and, therefore, the credit ratings assigned to us by each agency may be subject to revision at any time. Accordingly, we are not able to predict whether our current credit ratings will remain consistent over time. Factors that could affect our credit ratings include changes in our operating performance, the general economic environment, conditions in the retail industry, our financial position, including our total debt and capitalization, and changes in our business strategy. Any downgrade of our credit ratings by a credit rating agency could increase our future borrowing costs or impair our ability to access capital and credit markets on terms commercially acceptable to us. In addition, any downgrade of our current short-term credit ratings could impair our ability to access the commercial paper markets with the same flexibility that we have experienced historically, potentially requiring us to rely more heavily on more expensive types of debt financing. The credit rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities. Each rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated independently of any other rating. Moreover, each credit rating is specific to the security to which it applies.
We monitor our credit rating and our capacity for long-term financing using various qualitative and quantitative factors, including our debt-to-total capitalization, as support for our long-term financing decisions.  For the purpose of the debt-to-total capitalization calculation, debt is defined as the sum of short-term borrowings, long-term debt due within one year, obligations under capital leases due within one year, long-term debt and long-term obligations under capital leases. Total capitalization is defined as debt plus total Walmart shareholders' equity. At January 31, 2015 and 2014, the ratio of our debt-to-total capitalization was 38.2% and 42.6%, respectively. The decrease in our debt-to-total capitalization ratio was the result of using less cash for share repurchases and capital expenditures during fiscal 2015, which allowed us to minimize our short-term borrowings at January 31, 2015. The reduced share repurchases also resulted in increased growth in retained earnings. These impacts were partially offset by additional currency translation losses recorded in accumulated other comprehensive income (loss).

17


Contractual Obligations and Other Commercial Commitments

The following table sets forth certain information concerning our obligations and commitments to make contractual future payments, such as debt and lease agreements, and certain contingent commitments:

 

 

Payments Due During Fiscal Years Ending January 31,
(Amounts in millions)

Total

2016

2017-2018

2019-2020

Thereafter
Recorded contractual obligations:










Long-term debt(1)

$
45,896


$
4,810

 
$
3,835

 
$
4,032

 
$
33,219

Short-term borrowings

1,592


1,592







Capital lease obligations(2)

5,454

 
504

 
920

 
778

 
3,252

Unrecorded contractual obligations:

 
 
 
 
 
 
 
 
 
Non-cancelable operating leases

17,910

 
1,759

 
3,097

 
2,590

 
10,464

Estimated interest on long-term debt

32,910


1,950


3,690


3,399


23,871

Trade letters of credit

2,723


2,723







Stand-by letters of credit
 
1,898

 
1,898

 

 

 

Purchase obligations

10,712


6,548


3,428


652


84

Total commercial commitments

$
119,095


$
21,784


$
14,970


$
11,451


$
70,890

(1)
"Long-term debt" includes the fair value of our derivatives classified as fair value hedges.
(2)
"Capital lease obligations" includes executory costs and imputed interest related to capital lease obligations that are not yet recorded. Refer to Note 11 in the "Notes to the Consolidated Financial Statements" for more information.
Additionally, the Company has $15.0 billion in undrawn committed lines of credit which, if drawn upon, would be included in the current liabilities section of the Company's Consolidated Balance Sheets.
Estimated interest payments are based on our principal amounts and expected maturities of all debt outstanding at January 31, 2015, and management's forecasted market rates for our variable rate debt.
Purchase obligations include legally binding contracts, such as firm commitments for inventory and utility purchases, as well as commitments to make capital expenditures, software acquisition and license commitments and legally binding service contracts. Purchase orders for inventory and other services are not included in the table above. Purchase orders represent authorizations to purchase rather than binding agreements. For the purposes of this table, contractual obligations for the purchase of goods or services are defined as agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our purchase orders are based on our current inventory needs and are fulfilled by our suppliers within short time periods. We also enter into contracts for outsourced services; however, the obligations under these contracts are not significant and the contracts generally contain clauses allowing for cancellation without significant penalty.
The expected timing for payment of the obligations discussed above is estimated based on current information. Timing of payments and actual amounts paid with respect to some unrecorded contractual commitments may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for some obligations.
In addition to the amounts shown in the table above, $838 million of unrecognized tax benefits are considered uncertain tax positions and have been recorded as liabilities. The timing of the payment, if any, associated with these liabilities is uncertain. Refer to Note 9 in the "Notes to Consolidated Financial Statements" for additional discussion of unrecognized tax benefits.
Off Balance Sheet Arrangements
In addition to the unrecorded contractual obligations presented above, we have entered into certain arrangements, as discussed below, for which the timing of payment, if any, is unknown.
The Company has future lease commitments for land and buildings for approximately 282 future locations. These lease commitments have lease terms ranging from 1 to 30 years and provide for certain minimum rentals. If executed, payments under operating leases would increase by $58 million for fiscal 2016, based on current estimates.
In connection with certain long-term debt issuances, we could be liable for early termination payments if certain unlikely events were to occur. At January 31, 2015, the aggregate termination payment would have been $64 million. The arrangement pursuant to which this payment could be made will expire in fiscal 2019.

18


Market Risk
In addition to the risks inherent in our operations, we are exposed to certain market risks, including changes in interest rates and fluctuations in currency exchange rates.
The analysis presented below for each of our market risk sensitive instruments is based on a hypothetical scenario used to calibrate potential risk and does not represent our view of future market changes. The effect of a change in a particular assumption is calculated without adjusting any other assumption. In reality, however, a change in one factor could cause a change in another, which may magnify or negate other sensitivities.
Interest Rate Risk
We are exposed to changes in interest rates as a result of our short-term borrowings and long-term debt issuances. We hedge a portion of our interest rate risk by managing the mix of fixed and variable rate debt and by entering into interest rate swaps. For fiscal 2015, the net fair value of our interest rate swaps decreased approximately $158 million primarily due to fluctuations in market interest rates and the termination of forward starting receive variable-rate, pay fixed-rate swaps in October and April 2014 concurrently with the issuance of debt.
The table below provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations, the table represents the principal cash flows and related weighted-average interest rates by expected maturity dates. For interest rate swaps, the table represents the contractual cash flows and weighted-average interest rates by the contractual maturity date, unless otherwise noted. The notional amounts are used to calculate contractual cash flows to be exchanged under the contracts. The weighted-average variable rates are based upon prevailing market rates at January 31, 2015.
 
 
Expected Maturity Date
(Amounts in millions)
 
Fiscal 2016
 
Fiscal 2017
 
Fiscal 2018
 
Fiscal 2019
 
Fiscal 2020
 
Thereafter
 
Total
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable rate
 
$
1,592

 
$

 
$

 
$

 
$

 
$

 
$
1,592

Weighted-average interest rate
 
0.5
%
 
%
 
%
 
%
 
%
 
%
 
0.5
%
Long-term debt(1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed rate
 
$
4,055

 
$
2,055

 
$
1,523

 
$
3,518

 
$
514

 
$
33,219

 
$
44,884

Weighted-average interest rate
 
2.5
%
 
1.9
%
 
4.0
%
 
3.1
%
 
4.3
%
 
4.9
%
 
4.4
%
Variable rate
 
$
755

 
$
257

 
$

 
$

 
$

 
$

 
$
1,012

Weighted-average interest rate
 
3.8
%
 
4.2
%
 
%
 
%
 
%
 
%
 
3.9
%
Interest rate derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable to fixed
 
$
255

 
$

 
$

 
$

 
$

 
$

 
$
255

Weighted-average pay rate
 
0.9
%
 
%
 
%
 
%
 
%
 
%
 
0.9
%
Weighted-average receive rate
 
0.6
%
 
%
 
%
 
%
 
%
 
%
 
0.6
%
Fixed to variable
 
$

 
$

 
$

 
$

 
$

 
$
500

 
$
500

Weighted-average pay rate
 
%
 
%
 
%
 
%
 
%
 
1.5
%
 
1.5
%
Weighted-average receive rate
 
%
 
%
 
%
 
%
 
%
 
3.3
%
 
3.3
%
(1)
The long-term debt amounts in the table exclude the Company's derivatives classified as fair value hedges.
As of January 31, 2015, our variable rate borrowings, including the effect of our commercial paper and interest rate swaps, represented 7% of our total short-term and long-term debt. Based on January 31, 2015 debt levels, a 100 basis point change in prevailing market rates would cause our annual interest costs to change by approximately $23 million.

19


Foreign Currency Risk
We are exposed to fluctuations in foreign currency exchange rates as a result of our net investments and operations in countries other than the U.S. For fiscal 2015, movements in currency exchange rates and the related impact on the translation of the balance sheets of the Company's subsidiaries in Canada, the United Kingdom, Japan, Mexico and Chile were the primary cause of the $3.6 billion net loss in the currency translation and other category of accumulated other comprehensive income (loss). We hedge a portion of our foreign currency risk by entering into currency swaps and designating certain foreign-currency-denominated long-term debt as net investment hedges.
We hold currency swaps to hedge the currency exchange component of our net investments and also to hedge the currency exchange rate fluctuation exposure associated with the forecasted payments of principal and interest of non-U.S. denominated debt. The aggregate fair value of these swaps was in a liability position of $110 million at January 31, 2015 and in an asset position of $550 million at January 31, 2014. The change in the fair value of these swaps was due to fluctuations in currency exchange rates, primarily the strengthening of the U.S. dollar relative to other currencies in the latter half of fiscal 2015. A hypothetical 10% increase or decrease in the currency exchange rates underlying these swaps from the market rate at January 31, 2015 would have resulted in a loss or gain in the value of the swaps of $435 million. A hypothetical 10% change in interest rates underlying these swaps from the market rates in effect at January 31, 2015 would have resulted in a loss or gain in value of the swaps of $20 million.
In addition to currency swaps, we have designated foreign-currency-denominated long-term debt as nonderivative hedges of net investments of certain of our foreign operations. At January 31, 2015 and 2014, we had £2.5 billion of outstanding long-term debt designated as a hedge of our net investment in the United Kingdom. At January 31, 2015, a hypothetical 10% increase or decrease in the value of the U.S. dollar relative to the British pound would have resulted in a gain or loss in the value of the debt of $342 million. In addition, we had outstanding long-term debt of ¥100 billion at January 31, 2015 and ¥200 billion at January 31, 2014, that was designated as a hedge of our net investment in Japan. At January 31, 2015, a hypothetical 10% increase or decrease in value of the U.S. dollar relative to the Japanese yen would have resulted in a gain or loss in the value of the debt of $77 million.
Other Matters
We discuss our existing FCPA investigation and related matters in the Annual Report on Form 10-K for fiscal 2015, including certain risks arising therefrom, in Part I, Item 1A of the Form 10-K under the caption "Risk Factors" and in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," under the sub-caption "FCPA Investigation and Related Matters." We also discuss various legal proceedings related to the FCPA investigation in Item 3 of the Form 10-K under the caption "Item 3. Legal Proceedings," under the sub-caption "II. Certain Other Proceedings." We discuss our "equal value" claims against our United Kingdom subsidiary, ASDA Stores, Ltd., in the Annual Report on Form 10-K for fiscal 2015, including certain risks arising therefrom, in Part I, Item 1A of the Form 10-K under the caption "Risk Factors" and in Note 10 to our Consolidated Financial Statements, which is captioned "Contingencies," under the sub-caption "Legal Proceedings."

20


Summary of Critical Accounting Estimates
Management strives to report our financial results in a clear and understandable manner, although in some cases accounting and disclosure rules are complex and require us to use technical terminology. In preparing the Company's Consolidated Financial Statements, we follow accounting principles generally accepted in the U.S. These principles require us to make certain estimates and apply judgments that affect our financial position and results of operations as reflected in our financial statements. These judgments and estimates are based on past events and expectations of future outcomes. Actual results may differ from our estimates.
Management continually reviews our accounting policies, how they are applied and how they are reported and disclosed in our financial statements. Following is a summary of our critical accounting estimates and how they are applied in preparation of the financial statements.
Inventories
We value inventories at the lower of cost or market as determined primarily by the retail 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 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.
Under the retail method of accounting, inventory is valued at the lower of cost or market, which is determined by applying a cost-to-retail ratio to each merchandise grouping's retail value. The FIFO cost-to-retail ratio is generally based on the fiscal year purchase activity. The cost-to-retail ratio for measuring any LIFO provision is based on the initial margin of the fiscal year purchase activity less the impact of any permanent markdowns. The retail method of accounting requires management to make certain judgments and estimates that may significantly impact the ending inventory valuation at cost, as well as the amount of gross profit recognized. Judgments made include recording markdowns used to sell inventory and shrinkage. When management determines the ability to sell inventory has diminished, markdowns for clearance activity and the related cost impact are recorded. Factors considered in the determination of markdowns include current and anticipated demand, customer preferences and age of merchandise, as well as seasonal and fashion trends. Changes in weather and customer preferences could cause material changes in the amount and timing of markdowns from year to year.
When necessary, we record a LIFO provision for the estimated annual effect of inflation, and these estimates are adjusted to actual results determined at year-end. Our LIFO provision is calculated based on inventory levels, markup rates and internally generated retail price indices. At January 31, 2015 and 2014, our inventories valued at LIFO approximated those inventories as if they were valued at FIFO.
We provide for estimated inventory losses, or shrinkage, between physical inventory counts on the basis of a percentage of sales. Following annual inventory counts, the provision is adjusted to reflect updated historical results.
Impairment of Assets
We evaluate long-lived assets other than goodwill and assets with indefinite lives for indicators of impairment whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. Management's judgments regarding the existence of impairment indicators are based on market conditions and operational performance, such as operating income and cash flows. The evaluation for long-lived assets is performed at the lowest level of identifiable cash flows, which is generally at the individual store level or, in certain markets, at the market group level. The variability of these factors depends on a number of conditions, including uncertainty about future events and changes in demographics. Thus, our accounting estimates may change from period to period. These factors could cause management to conclude that indicators of impairment exist and require impairment tests be performed, which could result in management determining the value of long-lived assets is impaired, resulting in a write-down of the related long-lived assets.
Goodwill and other indefinite-lived acquired intangible assets are not amortized, but are evaluated for impairment annually or whenever events or changes in circumstances indicate that the value of a certain asset may be impaired. Generally, this evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If we determine, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative impairment test would be performed. The quantitative test for impairment requires management to make judgments relating to future cash flows, growth rates and economic and market conditions. These evaluations are based on determining the fair value of a reporting unit or asset using a valuation method such as discounted cash flow or a relative, market-based approach. Historically, our reporting units have generated sufficient returns to recover the cost of goodwill and other indefinite-lived acquired intangible assets. Because of the nature of the factors used in these tests, if different conditions occur in future periods, future operating results could be materially impacted.

21


As of January 31, 2015, the fair value of certain recently acquired indefinite-lived intangible assets approximated their carrying value of $419 million. Any deterioration in the fair value of these assets would result in a related impairment charge.  Management will continue to monitor the fair value of these assets in future periods.
Income Taxes
Income taxes have a significant effect on our net earnings. We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Accordingly, the determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. Our effective income tax rate is affected by many factors, including changes in our assessment of certain tax contingencies, increases and decreases in valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix of earnings among our U.S. and international operations where the statutory rates are generally lower than the U.S. statutory rate, and may fluctuate as a result.
Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions. The benefits of uncertain tax positions are recorded in our financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the financial statements as appropriate. We account for uncertain tax positions by determining the minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. This determination requires the use of significant judgment in evaluating our tax positions and assessing the timing and amounts of deductible and taxable items.
Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. This evaluation relies heavily on estimates.

22


Cautionary Statement Regarding Forward-Looking Statements
This Annual Report to Shareholders contains statements that we believe are "forward-looking statements" entitled to the protection of the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995, as amended.
Forward-looking Statements
Those forward-looking statements include statements:
in our Management's Discussion and Analysis of Financial Condition and Results of Operations regarding:
volatility of currency exchange rates possibly affecting future results of Walmart and Walmart International;
our objectives of growing net sales at a faster rate than operating expenses and operating income at a faster rate than net sales and our strategic growth investments affecting those metrics in certain ways;
the possible fluctuation of our effective tax rate for future periods;
volatility of fuel prices possibly affecting the operating results of our Sam's Club segment in the future;
meeting our liquidity needs through sources other than cash held outside of the U.S., intending to permanently reinvest such cash outside of the U.S., and our ability to repatriate cash held outside of the U.S. (which statements also appear in Note 1 to our Consolidated Financial Statements);
the recently announced new associate wage structure and comprehensive associate training and educational programs adversely affecting Walmart's ability to leverage in the future and cash provided by operating activities being sufficient to fund those programs;
our fiscal 2016 global expansion plans, continued investment in Neighborhood Markets, moderation in U.S. supercenter growth, growing our retail square feet and expanding our digital retail capabilities and our plans to finance our growth activities;
our estimated range of capital expenditures (including digital retail capital expenditures) in fiscal 2016 for each of our reportable segments, in the "Corporate and support" category and in total;
the estimated/projected growth in retail square feet in total and by reportable segment in fiscal 2016;
our cash flows from continuing operations, current cash position and access to debt and capital markets continuing to be sufficient to meet our cash needs for operations and other specified purposes; and
the amount of increases in payments under operating leases if certain leases are executed (which statement also appears in Note 11 to our Consolidated Financial Statements);
in the Notes to our Consolidated Financial Statements regarding:
any portion of our net investment and cash flow instruments that is an ineffective hedge being insignificant and the amounts related to our derivatives expected to be reclassified from accumulated other comprehensive income (loss) to net income during the next 12 months being insignificant (Note 8);
the realization of certain net deferred tax assets, tax audit resolutions over fiscal 2016 reducing unrecognized tax benefits within a certain range or beyond and the reasons for that reduction, any change not having a significant impact on our Consolidated Financial Statements and the possibility that the resolution of a group of related non-income tax matters might result in a material liability to Walmart (Note 9);
an adverse decision in, or settlement of, certain litigation possibly resulting in material liability to us and matters relating to an FCPA investigation not having a material adverse effect on our business (Note 10);
in this Annual Report regarding:
under "Our framework for growth," our strategic plan, Walmart always being aggressive on price and equipping customers with information and technology to facilitate great customer service;
in our Chief Executive Officer's letter, driving sales growth by executing well in stores and e-commerce, our objective of running great stores, clubs and e-commerce to grow our business, investment in increased wages and other initiatives for our U.S. associates, our fresh food offering and e-commerce innovations being future growth drivers and generating increased shareholder value when we operate and grow efficiently and our commitment to compliance, ethics and doing business the right way;
under "Delivering an improved shopping experience.," in connection with our Walmart U.S. segment, certain wage increases for U.S. associates, continuing to strengthen fresh departments, certain factors ensuring a superior fresh offering to Walmart U.S.'s customers, addition of items sold on walmart.com, continuing to work with supplier partners to ensure everyday low cost and ensuring everyday low cost allowing investment in and strengthening of the segment's everyday low cost pricing strategy and offering value to customers, the ranges of the number of units and amount of retail square feet to be added by Walmart U.S. in fiscal 2016, and transparent pricing for customers occurring through new tools and capabilities;

23


under "Driving increased profitability through balanced growth.," in connection with our Walmart International segment, the segment strategically optimizing its global positioning across key geographies and formats to maximize growth potential and its objective of strengthening customer trust with a focus on everyday low price, high quality fresh food and excellent customer service;
under "Creating a more rewarding member experience.," in connection with our Sam's Club segment, Sam's Club's goal of having a suite of business member services making membership in Sam’s Club such members’ most valuable business card and the range for the number of new and relocated clubs to be opened, and the number of clubs to be remodeled, in fiscal 2016; and
under "A solid FY 15 performance; investing for a stronger future," currency exchange rates possibly continuing to be a headwind to operating results in fiscal 2016, the range of net retail square footage we will add in fiscal 2016, Walmart enabling customers to shop anytime and anywhere, incremental e-commerce investment in fiscal 2016 and Walmart continuing to seek the right balance between sales growth and profitability as we grow our e-commerce business and the investment in wages and other initiatives for U.S. associates leading to higher sales and returns.
The forward-looking statements described above are identified by the use in such statements of one or more of the words or phrases "aim," "anticipate," "could be," "could reduce," "estimated," "expansion," "expect," "goal," "grow," "intend," "investment," "is expected," "may cause," "may continue," "may fluctuate," "may impact," "may not be," "may result," "objective," "plan," "priority is to," "projected," "should continue," "more to come," "we'll," "we'll accomplish," "we'll also equip," "we'll always be," "we'll continue," "we'll drive," "we'll generate," "we'll reinvent," "will add," "will allow," "will be," "will be met," "will be paid," "will continue," "will depend," "will ensure," "will have," "will impact," "will include," "will increase," "will open," "would be," and "would increase," variations of such words and phrases and other similar words or phrases.
The forward-looking statements included in this Annual Report and that we make elsewhere are subject to certain risks, factors and uncertainties that could materially affect our actual results and the realization of our objectives and plans. These risks, factors and uncertainties include, but are not limited to:
Risks, Factors and Uncertainties Relating to the Markets in which We Operate
economic, geo-political, financial markets, capital markets and business conditions, changes, trends and events globally and in one or more of the markets in which we operate;
unemployment and underemployment levels globally and in one or more of the markets in which we operate;
monetary policies of the U.S. government, the Board of Governors of the Federal Reserve System, other governments or central banks, economic or sovereign debt crises and disruptions in the financial markets;
supply of and demand for particular commodities and commodity prices, including the prices of crude oil, natural gas, refined petroleum products and electricity;
inflation and deflation;
currency exchange rate fluctuations and volatility;
fluctuations in market rates of interest;
market labor costs in the U.S.;
market selling prices of gasoline and diesel fuel;
competitive initiatives of other retailers, other competitive pressures and new competitors entering a market;
adoption of or changes in tax, labor and other laws and regulations and interpretations thereof that affect our business, including changes in corporate and personal tax rates and the imposition of new taxes and surcharges;
Risks, Factors and Uncertainties Relating to Consumers Generally and Our Customers
consumer confidence, disposable income, debt levels, credit availability, spending levels, shopping patterns and demand for certain merchandise in one or more of the markets in which we operate;
consumer acceptance of our stores and clubs, e-commerce websites and mobile commerce applications, our digital and physical retail initiatives, programs and merchandise offerings, including our fresh food offerings, globally in one or more of the markets in which we operate;
Risks, Factors and Uncertainties Specifically Relating to Our Operations in Any or All of the Markets in which We Operate
our historical financial performance, including our U.S. and Walmart International cash flows, for one or more periods or historical financial position as of one or more dates completed or occurring after the date the pertinent forward-looking statement is made;
the cost of the goods we sell;
the availability, at an acceptable cost, of adequate supplies of consistent, high-quality produce from suppliers in the local markets in which we operate;

24


the availability of persons with the skills and abilities necessary to meet our needs for managing and staffing our operations, including to manage and staff new and relocated units;
the mix of merchandise we sell globally or in one or more of the markets in which we operate;
the size of and turnover in our hourly workforce;
our selling prices of gasoline and diesel fuel;
cyberattacks on our information systems, including any of those used to operate our e-commerce websites and our information security costs and any costs and liabilities we would incur as a result of a successful cyberattack;
disruption in the availability of our e-commerce websites and mobile commerce applications;
the availability of attractive opportunities for investment in retail operations in the markets in which we currently operate and in new markets and for investment in digital retail acquisitions and initiatives;
disruption in our supply chain, including of the availability and transport of goods from domestic and foreign suppliers to our stores and other facilities;
the mix of our earnings from our U.S. and operations in one or more of the markets in which we operate;
the amounts of our net sales and expenses for a period denominated in particular currencies other than the U.S. dollar;
changes in our assessment of certain tax contingencies, increases or decreases in valuation allowances, outcome of administrative audits, the impact of discrete items on our effective tax rate and the resolution of other tax matters;
developments in and the outcome of legal and regulatory proceedings to which we are a party or are subject and the expenses associated therewith;
the requirements for expenditures in connection with the FCPA-related matters;
unanticipated changes in operating philosophy, plans and objectives;
availability and the cost of acceptable building sites for new and relocated stores, clubs and other facilities;
real estate, zoning, land use and other laws, ordinances, legal restrictions and initiatives that may prevent Walmart from building, or that impose limitations on Walmart's ability to build new units in certain locations or relocate or expand existing units;
availability of necessary utilities for new or expanded units; and
availability of skilled labor and labor, material and other construction costs in areas in which new or relocated units are proposed to be constructed or existing units are proposed to be expanded or remodeled.
Other Risk Factors; No Duty to Update
We discuss certain of these factors more fully, as well as certain other risk factors that may affect the results and other matters discussed in the forward-looking statements identified above, in our filings with the Securities and Exchange Commission (the "SEC"), including our Annual Report on Form 10-K under the heading "Item 1A. Risk Factors." We filed our Annual Report on Form 10-K for the fiscal year ended January 31, 2015, with the SEC on April 1, 2015. The forward-looking statements described above are made based on knowledge of our business and the environment in which we operate and assumptions that we believe to be reasonable at the time such forward-looking statements are made. However, as a consequence of the risks, factors and uncertainties we discuss above, and in the other reports mentioned above, other risks not known to us at this time, changes in facts, assumptions not being realized or other circumstances, our actual results may differ materially from those results discussed in or implied or contemplated by such forward-looking statements. We cannot assure the reader that the results or developments expected or anticipated by us will be realized or, even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business or our operations in the way we expect. You are urged to consider all of these risks, factors and uncertainties carefully in evaluating the forward-looking statements and not to place undue reliance on such forward-looking statements. The forward-looking statements included in this Annual Report speak only as of the date of this report, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances, except as may be required by applicable law.

25


Wal-Mart Stores, Inc.
Consolidated Statements of Income
 
 
Fiscal Years Ended January 31,
(Amounts in millions, except per share data)
 
2015
 
2014
 
2013
Revenues:
 
 
 
 
 
 
Net sales
 
$
482,229

 
$
473,076

 
$
465,604

Membership and other income
 
3,422

 
3,218

 
3,047

Total revenues
 
485,651

 
476,294

 
468,651

Costs and expenses:
 
 
 
 
 
 
Cost of sales
 
365,086

 
358,069

 
352,297

Operating, selling, general and administrative expenses
 
93,418

 
91,353

 
88,629

Operating income
 
27,147

 
26,872

 
27,725

Interest:
 
 
 
 
 
 
Debt
 
2,161

 
2,072

 
1,977

Capital leases
 
300

 
263

 
272

Interest income
 
(113
)
 
(119
)
 
(186
)
Interest, net
 
2,348

 
2,216

 
2,063

Income from continuing operations before income taxes
 
24,799

 
24,656

 
25,662

Provision for income taxes:
 


 


 


Current
 
8,504

 
8,619

 
7,976

Deferred
 
(519
)
 
(514
)
 
(18
)
         Total provision for income taxes
 
7,985

 
8,105

 
7,958

Income from continuing operations
 
16,814

 
16,551

 
17,704

Income from discontinued operations, net of income taxes
 
285

 
144

 
52

Consolidated net income
 
17,099

 
16,695

 
17,756

Less consolidated net income attributable to noncontrolling interest
 
(736
)
 
(673
)
 
(757
)
Consolidated net income attributable to Walmart
 
$
16,363

 
$
16,022

 
$
16,999

 
 
 
 
 
 
 
Basic net income per common share:
 
 
 
 
 
 
Basic income per common share from continuing operations attributable to Walmart
 
$
5.01

 
$
4.87

 
$
5.03

Basic income per common share from discontinued operations attributable to Walmart
 
0.06

 
0.03

 
0.01

Basic net income per common share attributable to Walmart
 
$
5.07

 
$
4.90

 
$
5.04

 
 
 
 
 
 
 
Diluted net income per common share:
 
 
 
 
 
 
Diluted income per common share from continuing operations attributable to Walmart
 
$
4.99

 
$
4.85

 
$
5.01

Diluted income per common share from discontinued operations attributable to Walmart
 
0.06

 
0.03

 
0.01

Diluted net income per common share attributable to Walmart
 
$
5.05

 
$
4.88

 
$
5.02

 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
Basic
 
3,230

 
3,269

 
3,374

Diluted
 
3,243

 
3,283

 
3,389

 
 
 
 
 
 
 
Dividends declared per common share
 
$
1.92

 
$
1.88

 
$
1.59

See accompanying notes.

26


Wal-Mart Stores, Inc.
Consolidated Statements of Comprehensive Income
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2015
 
2014
 
2013
Consolidated net income
 
$
17,099

 
$
16,695

 
$
17,756

Less consolidated net income attributable to nonredeemable noncontrolling interest
 
(736
)
 
(606
)
 
(684
)
Less consolidated net income attributable to redeemable noncontrolling interest
 

 
(67
)
 
(73
)
Consolidated net income attributable to Walmart
 
16,363

 
16,022

 
16,999

 
 
 
 
 
 
 
Other comprehensive income (loss), net of income taxes
 
 
 
 
 
 
Currency translation and other
 
(4,179
)
 
(3,146
)
 
1,042

Derivative instruments
 
(470
)
 
207

 
136

Minimum pension liability
 
(69
)
 
153

 
(166
)
Other comprehensive income (loss), net of income taxes
 
(4,718
)
 
(2,786
)
 
1,012

Less other comprehensive income (loss) attributable to nonredeemable noncontrolling interest
 
546

 
311

 
(138
)
Less other comprehensive income (loss) attributable to redeemable noncontrolling interest
 

 
66

 
(51
)
Other comprehensive income (loss) attributable to Walmart
 
(4,172
)
 
(2,409
)
 
823

 
 
 
 
 
 
 
Comprehensive income, net of income taxes
 
12,381

 
13,909

 
18,768

Less comprehensive income (loss) attributable to nonredeemable noncontrolling interest
 
(190
)
 
(295
)
 
(822
)
Less comprehensive income (loss) attributable to redeemable noncontrolling interest
 

 
(1
)
 
(124
)
Comprehensive income attributable to Walmart
 
$
12,191

 
$
13,613

 
$
17,822

See accompanying notes.

27


Wal-Mart Stores, Inc.
Consolidated Balance Sheets
 
 
As of January 31,
(Amounts in millions)
 
2015
 
2014
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
9,135

 
$
7,281

Receivables, net
 
6,778

 
6,677

Inventories
 
45,141

 
44,858

Prepaid expenses and other
 
2,224

 
1,909

Current assets of discontinued operations
 

 
460

Total current assets
 
63,278

 
61,185

Property and equipment:
 
 
 
 
Property and equipment
 
177,395

 
173,089

Less accumulated depreciation
 
(63,115
)
 
(57,725
)
Property and equipment, net
 
114,280

 
115,364

Property under capital leases:
 
 
 
 
Property under capital leases
 
5,239

 
5,589

Less accumulated amortization
 
(2,864
)
 
(3,046
)
Property under capital leases, net
 
2,375

 
2,543

 
 
 
 
 
Goodwill
 
18,102

 
19,510

Other assets and deferred charges
 
5,671

 
6,149

Total assets
 
$
203,706

 
$
204,751

 
 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Short-term borrowings
 
$
1,592

 
$
7,670

Accounts payable
 
38,410

 
37,415

Accrued liabilities
 
19,152

 
18,793

Accrued income taxes
 
1,021

 
966

Long-term debt due within one year
 
4,810

 
4,103

Obligations under capital leases due within one year
 
287

 
309

Current liabilities of discontinued operations
 

 
89

Total current liabilities
 
65,272

 
69,345

 
 
 
 
 
Long-term debt
 
41,086

 
41,771

Long-term obligations under capital leases
 
2,606

 
2,788

Deferred income taxes and other
 
8,805

 
8,017

 
 
 
 
 
Redeemable noncontrolling interest
 

 
1,491

 
 
 
 
 
Commitments and contingencies
 

 

 
 
 
 
 
Equity:
 
 
 
 
Common stock
 
323

 
323

Capital in excess of par value
 
2,462

 
2,362

Retained earnings
 
85,777

 
76,566

Accumulated other comprehensive income (loss)
 
(7,168
)
 
(2,996
)
Total Walmart shareholders' equity
 
81,394

 
76,255

Nonredeemable noncontrolling interest
 
4,543

 
5,084

Total equity
 
85,937

 
81,339

Total liabilities, redeemable noncontrolling interest, and equity
 
$
203,706

 
$
204,751

See accompanying notes.

28


Wal-Mart Stores, Inc.
Consolidated Statement of Shareholders' Equity and Redeemable Noncontrolling Interest
 
 
 
 
 
 
 
 
 
Accumulated
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
Capital in
 
 
 
Other
 
Walmart
 
Nonredeemable
 
 
 
 
Redeemable
(Amounts in millions)
Common Stock
 
Excess of
 
Retained
 
Comprehensive
 
Shareholders'
 
Noncontrolling
 
Total
 
 
Noncontrolling
Shares
 
Amount
 
Par Value
 
Earnings
 
Income (Loss)
 
Equity
 
Interest
 
Equity
 
 
Interest
Balances as of February 1, 2012
3,418

 
$
342

 
$
3,692

 
$
68,691

 
$
(1,410
)
 
$
71,315

 
$
4,446

 
$
75,761

 
 
$
404

Consolidated net income

 

 

 
16,999

 

 
16,999

 
684

 
17,683

 
 
73

Other comprehensive income, net of income taxes

 

 

 

 
823

 
823

 
138

 
961

 
 
51

Cash dividends declared ($1.59 per share)