C928 - Walmart 10Q PDF

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Task 1 10Q...

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q (Mark One)

☒

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended July 31, 2021. or

☐

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from to Commission File Number 001-06991

.

WALMART INC. (Exact name of registrant as specified in its charter) Delaware

71-0415188

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

702 S.W. 8th Street Bentonville AR

72716

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (479) 273-4000 Former name, former address and former fiscal year, if changed since last report: N/A

Securities registered pursuant to Section 12(b) of the Act: Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.10 per share 1.900% Notes Due 2022 2.550% Notes Due 2026

WMT WMT22 WMT26

New York Stock Exchange New York Stock Exchange New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large Accelerated Filer Non-Accelerated Filer

☒ ☐

Accelerated Filer Smaller Reporting Company Emerging Growth Company

☐ ☐ ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The registrant had 2,788,497,816 shares of common stock outstanding as of August 31, 2021.

Walmart Inc. Form 10-Q For the Quarterly Period Ended July 31, 2021

Table of Contents Page Part I. Financial Information Item 1. Financial Statements Condensed Consolidated Statements of Income Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Shareholders' Equity Condensed Consolidated Statements of Cash Flows Notes to Condensed Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures

3 4 5 6 7 8 15 25 26

Part II. Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Item 5. Other Information Item 6. Exhibits

27 29 29 29 33

Signatures

34

2

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Walmart Inc. Condensed Consolidated Statements of Income (Unaudited) Three Months Ended July 31, (Amounts in millions, except per share data) Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income Interest: Debt Finance lease Interest income Interest, net

2021 $

Other (gains) and losses Income before income taxes Provision for income taxes Consolidated net income Consolidated net (income) loss attributable to noncontrolling interest Consolidated net income attributable to Walmart

139,871 1,177

$

$

270,496 1,868

279,358

272,364

105,183 28,511 7,354

102,689 28,994 6,059

208,455 56,640 14,263

204,715 56,366 11,283

437 78 (37)

577 81 (23)

918 163 (67)

1,087 163 (66

478 953

635 (3,222)

1,014 3,482

1,184 ( 3,943

8,646 2,207 6,439 37

9,767 2,592 7,175 ( 169)

14,042 3,529 10,513 (47

4,276

$

6,476

$

7,006

$

10,466

$

1.53 1.52

$

2.29 2.27

$

2.50 2.48

$

3.70 3.67

$

3

277,030 2,328

137,742

2,799 2,812

See accompanying notes.

$

2020

$

Weighted-average common shares outstanding: Basic Diluted Dividends declared per common share

136,824 918

2021

141,048

5,923 1,559 4,364 (88)

Net income per common share: Basic net income per common share attributable to Walmart Diluted net income per common share attributable to Walmart

Six Months Ended July 31

2020

2,832 2,848 $

2,807 2,820 $

2.20

2,832 2,848 $

2.16

Walmart Inc. Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended July 31, 2021

(Amounts in millions) Consolidated net income Consolidated net (income) loss attributable to noncontrolling interest Consolidated net income attributable to Walmart

$

Other comprehensive income (loss), net of income taxes Currency translation and other Net investment hedges Cash flow hedges Minimum pension liability Other comprehensive income (loss), net of income taxes Other comprehensive (income) loss attributable to noncontrolling interest Other comprehensive income (loss) attributable to Walmart

4,364 (88) 4,276

$

201

Comprehensive income, net of income taxes Comprehensive (income) loss attributable to noncontrolling interest $

Comprehensive income attributable to Walmart See accompanying notes.

4

Six Months Ended July 31

2020 6,439 37 6,476

2021 $

7,175 ( 169) 7,006

2020 $

10,513 (47 10,466

(155) 2 48 (78) (30)

298 (191) 313 16 436 (52) 384

3,160 ( 1,202) ( 135) 1,971 3,794 (4) 3,790

( 3,670 (34 34 31 ( 3,639 660 ( 2,979

4,412 (166)

6,875 (15)

10,969 ( 173)

6,874 613

4,246

$

6,860

$

10,796

$

7,487

Walmart Inc. Condensed Consolidated Balance Sheets (Unaudited) July 31, 2021

(Amounts in millions) ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other

$

Total current assets Property and equipment, net Operating lease right-of-use assets Finance lease right-of-use assets, net Goodwill Other long-term assets Total assets LIABILITIES AND EQUITY Current liabilities: Short-term borrowings Accounts payable Dividends payable Accrued liabilities Accrued income taxes Long-term debt due within one year Operating lease obligations due within one year Finance lease obligations due within one year Total current liabilities

22,831 6,103 47,754 1,555

January 31, 2021

$

17,741 6,516 44,949 20,861

July 31, 2020

$

16,906 5,111 41,084 1,895

78,243

90,067

64,996

91,621 13,868 4,109 29,159 21,552

92,201 13,642 4,005 28,983 23,598

101,18 16,869 4,843 29,542 19,950

$

238,552

$

252,496

$

237,382

$

671 49,601 3,109 23,915 267 1,617 1,441 501 81,122

$

224 49,141

$

37,966 242 3,115 1,466 491 92,645

357 46,326 3,060 23,768 610 5,553 1,734 549 81,957

39,581 13,116 3,952 13,654

41,194 12,909 3,847 14,370

40,959 15,669 4,673 12,927

278 3,655 84,572 (7,976)

282 3,646 88,763 ( 11,766)

283 3,197 87,614 (15,784

80,529 6,598

80,925 6,606

75,310 5,887

Long-term debt Long-term operating lease obligations Long-term finance lease obligations Deferred income taxes and other Commitments and contingencies Equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive loss Total Walmart shareholders' equity Noncontrolling interest Total equity

87,127 $

Total liabilities and equity See accompanying notes.

5

238,552

87,531 $

252,496

81,197 $

237,382

Walmart Inc. Condensed Consolidated Statements of Shareholders' Equity (Unaudited) Capital in Excess of Par Value

Common Stock (Amounts in millions) Balances as of February 1, 2021 Consolidated net income Other comprehensive income (loss), net of income taxes Dividends declared ($2.20 per share) Purchase of Company stock Dividends declared to noncontrolling interest Other Balances as of April 30, 2021 Consolidated net income Other comprehensive income (loss), net of income taxes Purchase of Company stock Dividends to noncontrolling interest Other Balances as of July 31, 2021

Shares

Amount

Retained Earnings

Accumulated Total Other Walmart Comprehensive Shareholders' Loss Equity

Noncontrolling Interest

Total Equity

2,821 $ — — — (21) — 5

282 $ — — — (2 ) — —

3,646 $ — — — (112) — (110)

88,763 2,730 — ( 6,200) (2,718) — 2

$

(11,766 ) $ — 3,820 — — — —

80,925 2,730 3,820 (6,200) (2,832) — (108)

$

6,606 $ 81 (74) — — (408 ) 52

87,531 2,811 3,746 (6,200 ) (2,832 ) (408) (56)

2,805

280

3,424

82,577

$

(7,946 ) $

78,335

$

6,257

84,592

— (30 ) — — —

4,276 (30) (2,369) — 317

(7,976 ) $

80,529

$

— — (17) — 3 2,791

$

— — (2 ) — — $

278

$

— — (94) — 325 $

3,655

4,276 — (2,273) — (8) $

84,572

$

$

88 78 — (10) 185 $

6,598

4,364 48 (2,369 ) (10) 502 $

87,127

See accompanying notes. Capital in Excess of

Common Stock (Amounts in millions) Balances as of February 1, 2020 Consolidated net income Other comprehensive loss, net of income taxes Dividends declared ($2.16 per share) Purchase of Company stock Dividends declared to noncontrolling interest Other Balances as of April 30, 2020 Consolidated net income Other comprehensive income, net of income taxes Dividends to noncontrolling interest Other Balances as of July 31, 2020

Shares 2,832

Amount $ 284

Par Value $ 3,247

Retained

Accumulated Other Comprehensive

Earnings $ 83,943 $ 3,990

Total Walmart Shareholders' Noncontrolling

Loss ( 12,805) $ ( 3,363)

(6 )

(1)

(26)

(6,117) (666)

6

1

(238)

(9)

2,832

$

284

$

2,983

$

81,141 $

( 16,168) $ 384

2

(1) $

283

214 $

3,197

See accompanying notes.

6

(3) $

87,614 $

68,240

$

6,476 384

75,310

5,870

Total Equity $ 81,552 4,074 (4,075 (6,117 (693 (359 (272 $

(37) 52 (3) 5

210 ( 15,784) $

Interest 6,883 84 ( 712)

( 359) (26)

(246)

6,476

2,834

Equity 74,669 $ 3,990 ( 3,363) (6,117) (693)

$

5,887

74,110 6,439 436 (3 215

$

81,197

Walmart Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)

(Amounts in millions) Cash flows from operating activities: Consolidated net income Adjustments to reconcile consolidated net income to net cash provided by operating activities: Depreciation and amortization Net unrealized and realized (gains) and losses Losses on disposal of business operations Deferred income taxes Other operating activities Changes in certain assets and liabilities, net of effects of acquisitions and dispositions: Receivables, net Inventories Accounts payable Accrued liabilities Accrued income taxes

Six Months Ended July 31, 2021 2020 $

7,175

$

10,513

5,302 3,019 433 ( 385) 606

5,562 (4,006 37 472 305

452 (2,725 ) 119 (1,412 ) ( 161)

823 2,466 1,052 1,428 304

Net cash provided by operating activities

12,423

18,956

Cash flows from investing activities: Payments for property and equipment Proceeds from the disposal of property and equipment Proceeds from disposal of certain operations, net of divested cash Payments for business acquisitions, net of cash acquired Other investing activities

(5,019 ) 176 7,935 ( 248) ( 442)

( 3,569 83

2,402

( 3,634

441 (3,010 ) (3,091 ) (5,200 ) (14 ) ( 685)

(178 ( 2,937 ( 3,058 (723 (66 (852

( 11,559)

( 7,814

(21 )

(69

3,245 1,848 17,788

7,439

Net cash provided by (used in) investing activities Cash flows from financing activities: Net change in short-term borrowings Repayments of long-term debt Dividends paid Purchase of Company stock Dividends paid to noncontrolling interest Other financing activities Net cash used in financing activities Effect of exchange rates on cash, cash equivalents and restricted cash Net increase in cash, cash equivalents and restricted cash Change in cash and cash equivalents classified as held for sale Cash, cash equivalents and restricted cash at beginning of year $

Cash, cash equivalents and restricted cash at end of period See accompanying notes.

7

22,881

(175 27

9,515 $

16,954

Walmart Inc. Notes to Condensed Consolidated Financial Statements Note 1. Summary of Significant Accounting Policies Basis of Presentation The Condensed Consolidated Financial Statements of Walmart Inc. and its subsidiaries ("Walmart" or the "Company") and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and do not contain certain information included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2021 ("fiscal 2021"). Therefore, the interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. The Company's Consolidated Financial Statements are based on a fiscal year ending January 31 for the United States ("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag based on a calendar year. In July 2021, the Company's majority-owned Flipkart subsidiary completed a $3.6 billion new equity funding, a portion of which was contributed by the Company. This transaction reduced the Company's ownership of Flipkart to approximately 75% in the third quarter of fiscal 2022. The Company's business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather patterns Historically, the Company's highest sales volume and operating income have occurred in the fiscal quarter ending January 31. Use of Estimates The Condensed Consolidated Financial Statements have been prepared in conformity with GAAP. Those principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Management's estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from those estimates. Investments Investments in equity and debt securities are recorded in other long-term assets in the Condensed Consolidated Balance Sheets. Changes in fair value of equity securities measured on a recurring basis are recognized in other gains and losses in the Condensed Consolidated Statements of Income Refer to Note 5 for details. Equity investments without readily determinable fair values are carried at cost and are adjusted for any observable price changes or impairments within other gains and losses in the Condensed Consolidated Statements of Income. Investments in debt securities classified as trading are reported at fair value with interest income recorded in interest income in the Condensed Consolidated Statements of Income. As of July 31, 2021, the Company had $ 1.0 billion in debt securities classified as trading. Indemnification Liabilities The Company has provided certain indemnifications in connection with its divestitures and has recorded indemnification liabilities equal to the estimated fair value of the obligations upon inception. As of July 31, 2021 and January 31, 2021, the Company had $0.8 billion and $ 0.6 billion, respectively, of certain legal and tax indemnification liabilities recorded within deferred income taxes and other in the Condensed Consolidated Balance Sheets. The maximum amount of potential future payments under these indemnities was $3.6billion, based on exchange rates as of July 31, 2021.

8

Note 2. Net Income Per Common Share Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period Diluted net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-bas...