WALMART INC., 10-K filed on 3/30/2018
Annual Report
v3.8.0.1
Document And Entity Information - USD ($)
12 Months Ended
Jan. 31, 2018
Mar. 28, 2018
Jul. 31, 2017
Document And Entity Information [Abstract]      
Entity Registrant Name WALMART INC.    
Entity Central Index Key 0000104169    
Current Fiscal Year End Date --01-31    
Entity Filer Category Large Accelerated Filer    
Document Type 10-K    
Document Period End Date Jan. 31, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Amendment Flag false    
Entity Common Stock, Shares Outstanding   2,950,696,818  
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Public Float     $ 114,770,199,895
v3.8.0.1
Consolidated Statements of Income - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Jan. 31, 2018
Jan. 31, 2017
Jan. 31, 2016
Revenues:      
Net sales $ 495,761 $ 481,317 $ 478,614
Membership and other income 4,582 4,556 3,516
Total revenues 500,343 485,873 482,130
Costs and expenses:      
Cost of sales 373,396 361,256 360,984
Operating, selling, general and administrative expenses 106,510 101,853 97,041
Operating income 20,437 22,764 24,105
Interest:      
Debt 1,978 2,044 2,027
Capital lease and financing obligations 352 323 521
Interest income (152) (100) (81)
Interest, net 2,178 2,267 2,467
Gain (loss) on extinguishment of debt 3,136 0 0
Income before income taxes 15,123 20,497 21,638
Provision for income taxes 4,600 6,204 6,558
Consolidated net income 10,523 14,293 15,080
Consolidated net income attributable to noncontrolling interest (661) (650) (386)
Consolidated net income attributable to Walmart $ 9,862 $ 13,643 $ 14,694
Net income per common share:      
Basic net income per common share attributable to Walmart $ 3.29 $ 4.40 $ 4.58
Diluted net income per common share attributable to Walmart $ 3.28 $ 4.38 $ 4.57
Weighted-average common shares outstanding:      
Basic 2,995 3,101 3,207
Diluted 3,010 3,112 3,217
Dividends declared per common share $ 2.04 $ 2.00 $ 1.96
v3.8.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
12 Months Ended
Jan. 31, 2018
Jan. 31, 2017
Jan. 31, 2016
Consolidated net income $ 10,523 $ 14,293 $ 15,080
Consolidated net income attributable to noncontrolling interest (661) (650) (386)
Consolidated net income attributable to Walmart 9,862 13,643 14,694
Other comprehensive income (loss), net of income taxes      
Currency translation and other 2,540 (3,027) (5,220)
Unrealized gain on available-for-sale securities 1,501 145 0
Minimum pension liability 147 (397) 86
Other comprehensive income (loss), net of income taxes 4,220 (2,845) (4,970)
Less other comprehensive income (loss) attributable to noncontrolling interest (169) 210 541
Other comprehensive income (loss) attributable to Walmart 4,051 (2,635) (4,429)
Comprehensive income, net of income taxes 14,743 11,448 10,110
Comprehensive (income) loss attributable to noncontrolling interest (830) (440) 155
Comprehensive income attributable to Walmart 13,913 11,008 10,265
Net investment hedging      
Other comprehensive income (loss), net of income taxes      
Derivative instruments (405) 413 366
Cash flow hedging      
Other comprehensive income (loss), net of income taxes      
Derivative instruments $ 437 $ 21 $ (202)
v3.8.0.1
Consolidated Balance Sheets - USD ($)
$ in Millions
Jan. 31, 2018
Jan. 31, 2017
Current assets:    
Cash and cash equivalents $ 6,756 $ 6,867
Receivables, net 5,614 5,835
Inventories 43,783 43,046
Prepaid expenses and other 3,511 1,941
Total current assets 59,664 57,689
Property and equipment:    
Property and equipment 185,154 179,492
Less accumulated depreciation (77,479) (71,782)
Property and equipment, net 107,675 107,710
Property under capital lease and financing obligations:    
Property under capital lease and financing obligations 12,703 11,637
Less accumulated amortization (5,560) (5,169)
Property under capital lease and financing obligations, net 7,143 6,468
Goodwill 18,242 17,037
Other assets and deferred charges 11,798 9,921
Total assets 204,522 198,825
Current liabilities:    
Short-term borrowings 5,257 1,099
Accounts payable 46,092 41,433
Accrued liabilities 22,122 20,654
Accrued income taxes 645 921
Long-term debt due within one year 3,738 2,256
Capital lease and financing obligations due within one year 667 565
Total current liabilities 78,521 66,928
Long-term debt 30,045 36,015
Long-term capital lease and financing obligations 6,780 6,003
Deferred income taxes and other 8,354 9,344
Commitments and contingencies
Equity:    
Common stock 295 305
Capital in excess of par value 2,648 2,371
Retained earnings 85,107 89,354
Accumulated other comprehensive loss (10,181) (14,232)
Total Walmart shareholders' equity 77,869 77,798
Noncontrolling interest 2,953 2,737
Total equity 80,822 80,535
Total liabilities and equity $ 204,522 $ 198,825
v3.8.0.1
Consolidated Statement Of Shareholders' Equity and Redeemable Noncontrolling Interest - USD ($)
shares in Millions, $ in Millions
Total
Common stock
Capital in excess of par value
Retained earnings
Accumulated other comprehensive income (loss)
Total Walmart shareholders' equity
Noncontrolling interest
Consolidated net income $ 15,080     $ 14,694   $ 14,694 $ 386
Other comprehensive income (loss), net of income taxes (4,970)       $ (4,429) (4,429) (541)
Balances, in shares at Jan. 31, 2015   3,228          
Balances at Jan. 31, 2015 85,937 $ 323 $ 2,462 85,777 (7,168) 81,394 4,543
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Cash dividends declared (6,294)     (6,294)   (6,294)  
Purchase of Company stock (in shares)   (65)          
Purchase of Company stock (4,256) $ (6) (102) (4,148)   (4,256)  
Cash dividend declared to noncontrolling interest (691)           (691)
Other, in shares   (1)          
Other (1,195) $ 0 (555) (8)   (563) (632)
Balances, in shares at Jan. 31, 2016   3,162          
Balances at Jan. 31, 2016 83,611 $ 317 1,805 90,021 (11,597) 80,546 3,065
Consolidated net income 14,293     13,643   13,643 650
Other comprehensive income (loss), net of income taxes (2,845)       (2,635) (2,635) (210)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Cash dividends declared (6,216)     (6,216)   (6,216)  
Purchase of Company stock (in shares)   (120)          
Purchase of Company stock (8,276) $ (12) (174) (8,090)   (8,276)  
Cash dividend declared to noncontrolling interest (519)           (519)
Other, in shares   6          
Other 487   740 (4)   736 (249)
Balances, in shares at Jan. 31, 2017   3,048          
Balances at Jan. 31, 2017 80,535 $ 305 2,371 89,354 (14,232) 77,798 2,737
Consolidated net income 10,523     9,862   9,862 661
Other comprehensive income (loss), net of income taxes 4,220       4,051 4,051 169
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Cash dividends declared (6,124)     (6,124)   (6,124)  
Purchase of Company stock (in shares)   (103)          
Purchase of Company stock (8,204) $ (10) (219) (7,975)   (8,204)  
Cash dividend declared to noncontrolling interest (687)           (687)
Other, in shares   7          
Other 559   496 (10)   486 73
Balances, in shares at Jan. 31, 2018   2,952          
Balances at Jan. 31, 2018 $ 80,822 $ 295 $ 2,648 $ 85,107 $ (10,181) $ 77,869 $ 2,953
v3.8.0.1
Consolidated Statement Of Shareholders' Equity and Redeemable Noncontrolling Interest (Parenthetical) - $ / shares
12 Months Ended
Jan. 31, 2018
Jan. 31, 2017
Jan. 31, 2016
Statement of Stockholders' Equity [Abstract]      
Dividends declared per common share $ 2.04 $ 2.00 $ 1.96
v3.8.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
12 Months Ended
Jan. 31, 2018
Jan. 31, 2017
Jan. 31, 2016
Cash flows from operating activities:      
Consolidated net income $ 10,523 $ 14,293 $ 15,080
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:      
Depreciation and amortization 10,529 10,080 9,454
Deferred income taxes (304) 761 (672)
Gain (loss) on extinguishment of debt 3,136 0 0
Other operating activities 1,210 206 1,410
Changes in certain assets and liabilities, net of effects of acquisitions:      
Receivables, net (1,074) (402) (19)
Inventories (140) 1,021 (703)
Accounts payable 4,086 3,942 2,008
Accrued liabilities 928 1,280 1,466
Accrued income taxes (557) 492 (472)
Net cash provided by operating activities 28,337 31,673 27,552
Cash flows from investing activities:      
Payments for property and equipment (10,051) (10,619) (11,477)
Proceeds from the disposal of property and equipment 378 456 635
Proceeds from the disposal of certain operations 1,046 662 246
Purchase of available for sale securities 0 (1,901) 0
Investment and business acquisitions, net of cash acquired (375) (2,463) 0
Other investing activities (58) (122) (79)
Net cash used in investing activities (9,060) (13,987) (10,675)
Cash flows from financing activities:      
Net change in short-term borrowings 4,148 (1,673) 1,235
Proceeds from issuance of long-term debt 7,476 137 39
Payments of long-term debt (13,061) (2,055) (4,432)
Payment for debt extinguishment or debt prepayment cost (3,059) 0 0
Dividends paid (6,124) (6,216) (6,294)
Purchase of Company stock (8,296) (8,298) (4,112)
Dividends paid to noncontrolling interest (690) (479) (719)
Purchase of noncontrolling interest (8) (90) (1,326)
Other financing activities (261) (398) (676)
Net cash used in financing activities (19,875) (19,072) (16,285)
Effect of exchange rates on cash and cash equivalents 487 (452) (1,022)
Net increase (decrease) in cash and cash equivalents (111) (1,838) (430)
Cash and cash equivalents at beginning of year 6,867 8,705 9,135
Cash and cash equivalents at end of year 6,756 6,867 8,705
Supplemental disclosure of cash flow information:      
Income taxes paid 6,179 4,507 8,111
Interest paid $ 2,450 $ 2,351 $ 2,540
v3.8.0.1
Summary of Significant Accounting Policies
12 Months Ended
Jan. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of presentation
Summary of Significant Accounting Policies
General
Walmart Inc. (formerly "Wal-Mart Stores, Inc.") ("Walmart" or the "Company") helps people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce. Through innovation, the Company is striving to create a customer-centric experience that seamlessly integrates digital and physical shopping into an omni-channel offering that saves time for its customers. Each week, the Company serves nearly 270 million customers who visit its more than 11,700 stores and numerous eCommerce websites under 65 banners in 28 countries. The Company's strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience.
The Company's operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended January 31, 2018 ("fiscal 2018"), January 31, 2017 ("fiscal 2017") and January 31, 2016 ("fiscal 2016"). All material intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates variable interest entities where it has been determined that the Company is the primary beneficiary of those entities' operations. Investments in unconsolidated affiliates, which are 50% or less owned and do not otherwise meet consolidation requirements, are accounted for primarily using the equity method. These equity method investments are immaterial to the Company's Consolidated Financial Statements.
The Company's Consolidated Financial Statements are based on a fiscal year ending on January 31 for the United States ("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag and based on a calendar year. There were no significant intervening events during the month of January 2018 related to the operations consolidated using a lag that materially affected the Consolidated Financial Statements.
Use of Estimates
The Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles. Those principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Management's estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.
Cash and Cash Equivalents
The Company considers investments with a maturity when purchased of three months or less to be cash equivalents. All credit card, debit card and electronic transfer transactions that process in less than seven days are classified as cash and cash equivalents. The amounts due from banks for these transactions classified as cash and cash equivalents totaled $1.6 billion and $1.5 billion at January 31, 2018 and 2017, respectively. In addition, cash and cash equivalents included restricted cash of $300 million and $265 million at January 31, 2018 and 2017, respectively, which was primarily related to cash collateral holdings from various counterparties, as required by certain derivative and trust agreements.
The Company's cash balances are held in various locations around the world. Substantially all of the Company's $6.8 billion of cash and cash equivalents at January 31, 2018, was held outside of the U.S. Of the Company's $6.9 billion of cash and cash equivalents at January 31, 2017, $5.9 billion was held outside of the U.S. Cash and cash equivalents held outside of the U.S. are generally utilized to support liquidity needs in the Company's non-U.S. operations.
The Company uses intercompany financing arrangements in an effort to ensure cash can be made available in the country in which it is needed with the minimum cost possible. Management does not believe it will be necessary to repatriate earnings held outside of the U.S. and anticipates the Company's domestic liquidity needs will be met through cash flows provided by domestic operating activities, supplemented with long-term debt and short-term borrowings. Accordingly, the Company intends, with only certain exceptions, to continue to indefinitely reinvest the Company's earnings held outside of the U.S. in its foreign operations. As part of the U.S. tax reform enacted on December 22, 2017, the Company is currently assessing the impact of the new legislation, which can in turn, impact its assertion regarding any potential future repatriation. If the Company's intentions with respect to reinvestment were to change, most of the amounts held within the Company's foreign operations could be repatriated to the U.S., although any repatriation under new U.S. tax laws could be subject to incremental withholding taxes. The Company does not expect current local laws, other existing limitations or potential taxes on anticipated future repatriations of earnings held outside of the U.S. to have a material effect on the Company's overall liquidity, financial condition or results of operations.
As of January 31, 2018 and 2017, cash and cash equivalents of approximately $1.4 billion and $1.0 billion, respectively, may not be freely transferable to the U.S. due to local laws or other restrictions.
Receivables
Receivables are stated at their carrying values, net of a reserve for doubtful accounts. Receivables consist primarily of amounts due from:
insurance companies resulting from pharmacy sales;
banks for customer credit and debit cards and electronic bank transfers that take in excess of seven days to process;
suppliers for marketing or incentive programs; and
real estate transactions.
Inventories
The Company values inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, first-out ("LIFO") method for Walmart U.S. segment's inventories. The inventory at the Walmart International segment is valued primarily by the retail inventory method of accounting, using the first-in, first-out ("FIFO") method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market, since permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. At January 31, 2018 and January 31, 2017, the Company's inventories valued at LIFO approximated those inventories as if they were valued at FIFO.
Assets Held for Sale
Assets held for sale represent components and businesses that meet accounting requirements to be classified as held for sale and are presented as single asset and liability amounts in the Company's financial statements with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less cost to sell.  The Company reviews all businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair values.  As of January 31, 2018 and 2017, immaterial amounts for assets and liabilities held for sale were classified within prepaid expenses and other and accrued liabilities, respectively, in the Consolidated Balance Sheets.
Property and Equipment
Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as earned or incurred. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. The following table summarizes the Company's property and equipment balances and includes the estimated useful lives that are generally used to depreciate the assets on a straight-line basis:
 
 
 
 
As of January 31,
(Amounts in millions)
 
Estimated Useful Lives
 
2018
 
2017
Land
 
N/A
 
$
25,298

 
$
24,801

Buildings and improvements
 
3-40 years
 
101,155

 
98,547

Fixtures and equipment
 
1-30 years
 
52,695

 
48,998

Transportation equipment
 
3-15 years
 
2,387

 
2,845

Construction in progress
 
N/A
 
3,619

 
4,301

Property and equipment
 
 
 
$
185,154

 
$
179,492

Accumulated depreciation
 
 
 
(77,479
)
 
(71,782
)
Property and equipment, net
 
 
 
$
107,675

 
$
107,710


Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining expected lease term. Total depreciation and amortization expense for property and equipment, property under financing obligations and property under capital leases for fiscal 2018, 2017 and 2016 was $10.5 billion, $10.1 billion and $9.5 billion, respectively.
Leases
The Company estimates the expected term of a lease by assuming the exercise of renewal options where an economic penalty exists that would preclude the abandonment of the lease at the end of the initial non-cancelable term and the exercise of such renewal is at the sole discretion of the Company. The expected term is used in the determination of whether a store or club lease is a capital or operating lease and in the calculation of straight-line rent expense. Additionally, the useful life of leasehold improvements is limited by the expected lease term or the economic life of the asset, whichever is shorter. If significant expenditures are made for leasehold improvements late in the expected term of a lease and renewal is reasonably assured, the useful life of the leasehold improvement is limited to the end of the renewal period or economic life of the asset, whichever is shorter. Rent abatements and escalations are considered in the calculation of minimum lease payments in the Company's capital lease tests and in determining straight-line rent expense for operating leases.
The Company is often involved in the construction of its leased stores. In certain cases, payments made for certain structural components included in the lessor's construction of the leased assets result in the Company being deemed the owner of the leased assets for accounting purposes. As a result, the payments, regardless of the significance, are automatic indicators of ownership and require the Company to capitalize the lessor's total project cost with a corresponding financing obligation. Upon completion of the lessor's project, the Company performs a sale-leaseback analysis to determine if these assets and the related financing obligation can be derecognized from the Company's Consolidated Balance Sheets. If the Company is deemed to have "continuing involvement," the leased assets and the related financing obligation remain on the Company's Consolidated Balance Sheets and are generally amortized over the lease term. At the end of the lease term, including exercise of any renewal options, the net remaining financing obligation over the net carrying value of the fixed asset will be recognized as a non-cash gain on sale of the property.
Long-Lived Assets
Long-lived assets are initially recorded at cost. Management reviews long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows, which is at the individual store or club level. Undiscounted cash flows expected to be generated by the related assets are estimated over the assets' useful lives based on updated projections. If the evaluation indicates that the carrying amount of the assets may not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique.
Goodwill and Other Acquired Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indefinite-lived intangible assets are not amortized; rather, they are evaluated for impairment annually and whenever events or changes in circumstances indicate that the value of the asset may be impaired. Definite-lived intangible assets are considered long-lived assets and are amortized on a straight-line basis over the periods that expected economic benefits will be provided.
Goodwill is evaluated for impairment using either a qualitative or quantitative approach for each of the Company's reporting units. Generally, a qualitative assessment is first performed to determine whether a quantitative goodwill impairment test is necessary. If management determines, after performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative goodwill impairment test would be required. The quantitative test for goodwill impairment is performed by determining the fair value of the related reporting units. Fair value is measured based on the discounted cash flow method and relative market-based approaches. After evaluation, management determined the fair value of each reporting unit is greater than the carrying amount and, accordingly, the Company has not recorded any impairment charges related to goodwill.
The following table reflects goodwill activity, by reportable segment, for fiscal 2018 and 2017:
(Amounts in millions)
 
Walmart U.S.
 
Walmart
International
 
Sam's Club
 
Total
Balances as of February 1, 2016
 
$
461

 
$
15,921

 
$
313

 
$
16,695

Changes in currency translation and other
 

 
(1,433
)
 

 
(1,433
)
Acquisitions(1)
 
1,775

 

 

 
1,775

Balances as of January 31, 2017
 
2,236

 
14,488

 
313

 
17,037

Changes in currency translation and other
 

 
996

 

 
996

Acquisitions
 
209

 

 

 
209

Balances as of January 31, 2018
 
$
2,445

 
$
15,484

 
$
313

 
$
18,242

(1)
Goodwill recorded for fiscal 2017 Walmart U.S. acquisitions primarily relates to Jet.com, Inc. ("jet.com").
Indefinite-lived intangible assets are included in other assets and deferred charges in the Company's Consolidated Balance Sheets. These assets are evaluated for impairment based on their fair values using valuation techniques which are updated annually based on the most recent variables and assumptions. There were no significant impairment charges related to indefinite-lived intangible assets recorded for fiscal 2018, 2017 and 2016.
Self Insurance Reserves
The Company self-insures a number of risks, including, but not limited to, workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits. Standard actuarial procedures and data analysis are used to estimate the liabilities associated with these risks as of the balance sheet date on an undiscounted basis. The recorded liabilities reflect the ultimate cost for claims incurred but not paid and any estimable administrative run-out expenses related to the processing of these outstanding claim payments. On a regular basis, the liabilities are evaluated for appropriateness with claims reserve valuations provided by independent third-party actuaries. To limit exposure to some risks, the Company maintains insurance coverage with varying limits and retentions, including stop-loss insurance coverage for workers' compensation, general liability and auto liability.
Income Taxes
Income taxes are accounted for under the balance sheet method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases ("temporary differences"). Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date.
Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that a portion is not more likely than not to be realized. Many factors are considered when assessing whether it is more likely than not that the deferred tax assets will be realized, including recent cumulative earnings, expectations of future taxable income, carryforward periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income rely heavily on estimates.
In determining the provision for income taxes, an annual effective income tax rate is used based on annual income, permanent differences between book and tax income, and statutory income tax rates. Discrete events such as audit settlements or changes in tax laws are recognized in the period in which they occur.
The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company records interest and penalties related to unrecognized tax benefits in interest expense and operating, selling, general and administrative expenses, respectively, in the Company's Consolidated Statements of Income. Refer to Note 9 for additional income tax disclosures.
Revenue Recognition    
Sales
The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise to the customer. eCommerce sales include shipping revenue and are recorded upon delivery to the customer. Additionally, estimated sales returns are calculated using historical experience of actual returns as a percent of sales.
Membership Fee Revenue
The Company recognizes membership fee revenue both in the U.S. and internationally over the term of the membership, which is typically 12 months. The following table summarizes membership fee activity for fiscal 2018, 2017 and 2016:
 
 
Fiscal Years Ended January 31,
(Amounts in millions)
 
2018
 
2017
 
2016
Deferred membership fee revenue, beginning of year
 
$
743

 
$
744

 
$
759

Cash received from members
 
1,398

 
1,371

 
1,333

Membership fee revenue recognized
 
(1,411
)
 
(1,372
)
 
(1,348
)
Deferred membership fee revenue, end of year
 
$
730

 
$
743

 
$
744


Membership fee revenue is included in membership and other income in the Company's Consolidated Statements of Income. The deferred membership fee is included in accrued liabilities in the Company's Consolidated Balance Sheets.
Gift Cards
Customer purchases of gift cards, to be utilized in our stores or on our eCommerce websites, are not recognized as revenue until the card is redeemed and the customer purchases merchandise using the gift card. Gift cards in the U.S. and some countries do not carry an expiration date; therefore, customers and members can redeem their gift cards for merchandise indefinitely. Gift cards in some foreign countries where the Company does business have expiration dates. A certain number of gift cards, both with and without expiration dates, will not be fully redeemed. Management estimates unredeemed gift cards and recognizes revenue for these amounts when it is determined the likelihood of redemption is remote. Management periodically reviews and updates its estimates.
Financial and Other Services
The Company recognizes revenue from service transactions at the time the service is performed. Generally, revenue from services is classified as a component of net sales in the Company's Consolidated Statements of Income.
Cost of Sales
Cost of sales includes actual product cost, the cost of transportation to the Company's distribution facilities, stores and clubs from suppliers, the cost of transportation from the Company's distribution facilities to the stores, clubs and customers and the cost of warehousing for the Sam's Club segment and import distribution centers. Cost of sales is reduced by supplier payments that are not a reimbursement of specific, incremental and identifiable costs.
Payments from Suppliers
The Company receives consideration from suppliers for various programs, primarily volume incentives, warehouse allowances and reimbursements for specific programs such as markdowns, margin protection, advertising and supplier-specific fixtures. Payments from suppliers are accounted for as a reduction of cost of sales, except in certain limited situations when the payment is a reimbursement of specific, incremental and identifiable costs, and are recognized in the Company's Consolidated Statements of Income when the related inventory is sold.
Operating, Selling, General and Administrative Expenses
Operating, selling, general and administrative expenses include all operating costs of the Company, except cost of sales, as described above. As a result, the majority of the cost of warehousing and occupancy for the Walmart U.S. and Walmart International segments' distribution facilities is included in operating, selling, general and administrative expenses. Because the Company only includes a portion of the cost of its Walmart U.S. and Walmart International segments' distribution facilities in cost of sales, its gross profit and gross profit as a percentage of net sales may not be comparable to those of other retailers that may include all costs related to their distribution facilities in cost of sales and in the calculation of gross profit.
Advertising Costs
Advertising costs are expensed as incurred, consist primarily of print, television and digital advertisements and are recorded in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. In certain limited situations, reimbursements from suppliers that are for specific, incremental and identifiable advertising costs are recognized as a reduction of advertising costs in operating, selling, general and administrative expenses. Advertising costs were $3.1 billion, $2.9 billion and $2.5 billion for fiscal 2018, 2017 and 2016, respectively.
Pre-Opening Costs
The cost of start-up activities, including organization costs, related to new store openings, store remodels, relocations, expansions and conversions are expensed as incurred and included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. Pre-opening costs totaled $106 million, $131 million and $271 million for fiscal 2018, 2017 and 2016, respectively.
Currency Translation
The assets and liabilities of all international subsidiaries are translated from the respective local currency to the U.S. dollar using exchange rates at the balance sheet date. Related translation adjustments are recorded as a component of accumulated other comprehensive loss. The Company's Consolidated Statements of Income of all international subsidiaries are translated from the respective local currencies to the U.S. dollar using average exchange rates for the period covered by the income statements.
Recent Accounting Pronouncements
Pronouncements Adopted in Fiscal 2018
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Compensation–Stock Compensation (Topic 718), which is intended to simplify accounting for share-based payment transactions. The ASU changed several aspects of the accounting for share-based payment award transactions, including accounting for income taxes, forfeitures and minimum statutory tax withholding requirements. Management adopted this ASU beginning February 1, 2017, and as a result, reclassified an immaterial amount from operating activities to financing activities in the Company's prior year consolidated cash flows.
On December 22, 2017, the Securities and Exchange Commission (SEC) staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), in response to the Tax Cuts and Jobs Act of 2017 ("Tax Act"). The Company has elected to record provisional amounts, as allowed by SAB 118, during a measurement period not to extend beyond one year of the enactment date. Management expects to complete the analysis within the measurement period in accordance with SAB 118.
Pronouncements to Be Adopted in the Year Ending January 31, 2019 ("fiscal 2019")
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU represents a single comprehensive model to recognize revenue to depict the transfer of promised goods or services to a customer at an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company adopted this ASU on February 1, 2018, under the modified retrospective approach, which resulted in an immaterial cumulative adjustment to retained earnings. Also, this ASU will require additional disclosures.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall (Topic 825), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This ASU primarily impacts the Company's accounting for its investment in JD.com ("JD"). The Company adopted this ASU on February 1, 2018, which resulted in a cumulative positive adjustment to retained earnings of approximately $2.9 billion based on the market value of our investment in JD at January 31, 2018. The retained earnings adjustment relates to both the available for sale portion and the cost portion of the investment. Beginning February 1, 2018, the adoption requires the remeasurement of our investment in JD due to observable price changes and impairments, if any, to be recorded through the Consolidated Statement of Income, introducing volatility to reported net income.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows–Restricted Cash (Topic 230), which requires restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the statement of cash flows. The Company adopted this ASU on February 1, 2018, which, while immaterial, will modify the Company's presentation of Consolidated Statements of Cash Flows. At January 31, 2018, the Company had restricted cash recorded in line items other than cash and cash equivalents of $258 million.
In February 2018, the FASB issued Accounting Standards Update ASU 2018-02, Income Statement–Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The ASU provides that the stranded tax effects from the Tax Act in accumulated other comprehensive loss may be reclassified to retained earnings. The ASU is effective February 1, 2019, with early adoption permitted. Management anticipates early adopting this optional standard and is evaluating the effect on the Company's consolidated financial statements.
Other Pronouncements Being Evaluated
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lease assets and liabilities to be recorded on the balance sheet. Certain qualitative and quantitative disclosures are also required, as well as retrospective recognition and measurement of impacted leases. The Company will adopt this ASU on February 1, 2019 and is implementing new lease systems in connection with the adoption. Management is progressing with implementation and continuing to evaluate the effect to the Company's consolidated financial statements and disclosures. Management expects a material impact to the Company's Consolidated Balance Sheet.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326), which modifies the measurement of expected credit losses of certain financial instruments. The Company will adopt this ASU on February 1, 2020. Management is currently evaluating this ASU to determine its impact to the Company's consolidated financial statements.
v3.8.0.1
Net Income Per Common Share
12 Months Ended
Jan. 31, 2018
Earnings Per Share [Abstract]  
Net income per common share
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-based awards. The Company did not have significant share-based awards outstanding that were antidilutive and not included in the calculation of diluted net income per common share attributable to Walmart for fiscal 2018, 2017 and 2016.
The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income per common share attributable to Walmart:
 
 
Fiscal Years Ended January 31,
(Amounts in millions, except per share data)
 
2018
 
2017
 
2016
Numerator
 
 
 
 
 
 
Consolidated net income
 
$
10,523

 
$
14,293

 
$
15,080

Consolidated net income attributable to noncontrolling interest
 
(661
)
 
(650
)
 
(386
)
Consolidated net income attributable to Walmart
 
$
9,862

 
$
13,643

 
$
14,694

 
 
 
 
 
 
 
Denominator
 
 
 
 
 
 
Weighted-average common shares outstanding, basic
 
2,995

 
3,101

 
3,207

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

 
11

 
10

Weighted-average common shares outstanding, diluted
 
3,010

 
3,112

 
3,217


 
 
 
 
 
 
Net income per common share attributable to Walmart
 
 
 
 
 
 
Basic
 
$
3.29

 
$
4.40

 
$
4.58

Diluted
 
3.28

 
4.38

 
4.57

v3.8.0.1
Shareholders' Equity
12 Months Ended
Jan. 31, 2018
Share-based Compensation [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
Shareholders' Equity
Share-Based Compensation
The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The compensation expense recognized for all plans was $626 million, $596 million and $448 million for fiscal 2018, 2017 and 2016, respectively. Share-based compensation expense is generally included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The total income tax benefit recognized for share-based compensation was $150 million, $212 million and $151 million for fiscal 2018, 2017 and 2016, respectively. The following table summarizes the Company's share-based compensation expense by award type:
 
Fiscal Years Ended January 31,
(Amounts in millions)
2018
 
2017
 
2016
Restricted stock and performance share units
$
234

 
$
237

 
$
134

Restricted stock units
368

 
332

 
292

Other
24

 
27

 
22

Share-based compensation expense
$
626

 
$
596

 
$
448


The Walmart Inc. Stock Incentive Plan of 2015 (the "Plan"), as amended and restated effective February 23, 2016, and as amended further as of February 1, 2017, and as renamed on February 1, 2018, was established to grant stock options, restricted (non-vested) stock, performance share units and other equity compensation awards for which 210 million shares of Walmart common stock issued or to be issued under the Plan have been registered under the Securities Act of 1933, as amended. The Company believes that such awards serve to align the interests of its associates with those of its shareholders.
The Plan's award types are summarized as follows:
Restricted Stock and Performance Share Units. Restricted stock awards are for shares that vest based on the passage of time and include restrictions related to employment. Performance share units vest based on the passage of time and achievement of performance criteria and may range from 0% to 150% of the original award amount. Vesting periods for these awards are generally between one and three years. Restricted stock and performance share units may be settled or deferred in stock and are accounted for as equity in the Company's Consolidated Balance Sheets. The fair value of restricted stock awards is determined on the date of grant and is expensed ratably over the vesting period. The fair value of performance share units is determined on the date of grant using the Company's stock price discounted for the expected dividend yield through the vesting period and is recognized over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of performance share units in fiscal 2018, 2017 and 2016 was 7.2%, 8.3% and 7.4%, respectively.
Restricted Stock Units. Restricted stock units provide rights to Company stock after a specified service period; generally 50% vest three years from the grant date and the remaining 50% vest five years from the grant date. The fair value of each restricted stock unit is determined on the date of grant using the stock price discounted for the expected dividend yield through the vesting period and is recognized ratably over the vesting period. The expected dividend yield is based on the anticipated dividends over the vesting period. The weighted-average discount for the dividend yield used to determine the fair value of restricted stock units granted in fiscal 2018, 2017 and 2016 was 9.0%, 9.0% and 8.7%, respectively.
In addition to the Plan, the Company's subsidiary in the United Kingdom has stock option plans for certain colleagues which generally vest over three years. The stock option share-based compensation expense is included in the Other line in the table above.
The following table shows the activity for restricted stock and performance share units and restricted stock units during fiscal 2018:
 
 
Restricted Stock and Performance Share Units(1)
 
Restricted Stock Units
(Shares in thousands)
 
Shares
 
Weighted-Average Grant-Date Fair Value Per Share
 
Shares
 
Weighted-Average Grant-Date Fair Value Per Share
Outstanding at February 1, 2017
 
9,077

 
$
68.61

 
24,276

 
$
65.52

Granted
 
3,598

 
74.73

 
8,570

 
67.54

Vested/exercised
 
(2,525
)
 
71.55

 
(5,440
)
 
63.02

Forfeited or expired
 
(1,592
)
 
68.59

 
(3,253
)
 
66.28

Outstanding at January 31, 2018
 
8,558

 
$
70.47

 
24,153

 
$
66.69

(1)
Assumes payout rate at 100% for Performance Share Units.
The following table includes additional information related to restricted stock and performance share units and restricted stock units: 
 
Fiscal Years Ended January 31,
(Amounts in millions, except years)
2018
 
2017
 
2016
Fair value of restricted stock and performance share units vested
$
181

 
$
149

 
$
142

Fair value of restricted stock units vested
344

 
261

 
237

Unrecognized compensation cost for restricted stock and performance share units
291

 
211

 
133

Unrecognized compensation cost for restricted stock units
972

 
986

 
628

Weighted average remaining period to expense for restricted stock and performance share units (years)
1.2

 
1.3

 
1.3

Weighted average remaining period to expense for restricted stock units (years)
1.8

 
1.9

 
1.7


Share Repurchase Program
From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the Company's Board of Directors. All repurchases made during the fiscal year prior to November 20, 2017 were made under the plan in effect at the beginning of fiscal 2018. On October 9, 2017, the Board of Directors approved a new $20.0 billion share repurchase program which, beginning on November 20, 2017, replaced the previous share repurchase program. As of January 31, 2018, authorization for $18.8 billion of share repurchases remained under the current share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status.
The Company considers several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, its results of operations and the market price of its common stock. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2018, 2017 and 2016:
 
 
Fiscal Years Ended January 31,
(Amounts in millions, except per share data)
 
2018
 
2017
 
2016
Total number of shares repurchased
 
104.9

 
119.9

 
62.4

Average price paid per share
 
$
79.11

 
$
69.18

 
$
65.90

Total cash paid for share repurchases
 
$
8,296

 
$
8,298

 
$
4,112

v3.8.0.1
Accumulated Other Comprehensive Loss
12 Months Ended
Jan. 31, 2018
Other Comprehensive Income (Loss), Tax [Abstract]  
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Loss
The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2018, 2017 and 2016:
(Amounts in millions and net of income taxes)
Currency
Translation
and Other
 
Net Investment Hedges
 
Unrealized Gain on Available-for-Sale Securities
 
Cash Flow Hedges
 
Minimum
Pension Liability
 
Total
Balances as of February 1, 2015
$
(7,011
)
 
$
656

 
$

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

 

 
(217
)
 
96

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

 

 

 
15

 
(10
)
 
5

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

 

 
(336
)
 
(593
)
 
(11,597
)
Other comprehensive income (loss) before reclassifications, net
(2,817
)
 
413

 
145

 
(22
)
 
(389
)
 
(2,670
)
Amounts reclassified from accumulated other comprehensive loss, net

 

 

 
43

 
(8
)
 
35

Balances as of January 31, 2017
(14,507
)
 
1,435

 
145

 
(315
)
 
(990
)
 
(14,232
)
Other comprehensive income (loss) before reclassifications, net
2,345

 
(405
)
 
1,501

 
436

 
83

 
3,960

Amounts reclassified from accumulated other comprehensive loss, net
26

 

 

 
1

 
64

 
91

Balances as of January 31, 2018
$
(12,136
)
 
$
1,030

 
$
1,646

 
$
122

 
$
(843
)
 
$
(10,181
)
Amounts reclassified from accumulated other comprehensive loss for derivative instruments are recorded in interest, net, in the Company's Consolidated Statements of Income, and the amounts for the minimum pension liability are recorded in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The income tax impact for each of the amounts shown in the table above is immaterial.
v3.8.0.1
Accrued Liabilities
12 Months Ended
Jan. 31, 2018
Accrued Liabilities [Abstract]  
Accounts payable and accrued liabilities disclosure
Accrued Liabilities
The Company's accrued liabilities consist of the following:
 
 
As of January 31,
(Amounts in millions)
 
2018
 
2017
Accrued wages and benefits(1)
 
$
6,998

 
$
6,105

Self-insurance(2)
 
3,737

 
3,922

Accrued non-income taxes(3)
 
3,073

 
2,816

Deferred gift card revenue
 
2,017

 
1,856

Other(4)
 
6,297

 
5,955

Total accrued liabilities
 
$
22,122

 
$
20,654

(1)
Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans.
(2)
Self-insurance consists of insurance-related liabilities, such as workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits.
(3)
Accrued non-income taxes include accrued payroll, value added, sales and miscellaneous other taxes.
(4)
Other accrued liabilities consist of various items such as maintenance, utilities, advertising, interest and legal contingencies.
v3.8.0.1
Short-term Borrowings and Long-term Debt
12 Months Ended
Jan. 31, 2018
Long-term Debt, Unclassified [Abstract]  
Short-term Borrowings and Long-term debt
Short-term Borrowings and Long-term Debt
Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings at January 31, 2018 and 2017 were $5.3 billion and $1.1 billion, respectively, with weighted-average interest rates of 1.5% and 6.2%, respectively.
The Company has various committed lines of credit in the U.S., committed with 23 financial institutions, totaling $12.5 billion as of January 31, 2018 and 2017, respectively. These committed lines of credit are summarized in the following table:
 
 
As of January 31,
 
 
2018
 
2017
(Amounts in millions)
 
Available
 
Drawn
 
Undrawn
 
Available
 
Drawn
 
Undrawn
Five-year credit facility(1)
 
$
5,000

 
$

 
$
5,000

 
$
5,000

 
$

 
$
5,000

364-day revolving credit facility(1)
 
7,500

 

 
7,500

 
7,500

 

 
7,500

Total
 
$
12,500

 
$

 
$
12,500

 
$
12,500

 
$

 
$
12,500


(1)
In May 2017, the Company renewed and extended its existing five-year credit facility and its existing 364-day revolving credit facility, both of which are used to support its commercial paper program.
The committed lines of credit in the table above mature at various times between May 2018 and May 2022, carry interest rates generally ranging between LIBOR plus 10 basis points and LIBOR plus 75 basis points, and incur commitment fees ranging between 1.5 and 4.0 basis points. In conjunction with the committed lines of credit listed in the table above, the Company has agreed to observe certain covenants, the most restrictive of which relates to the maximum amount of secured debt. Additionally, the Company also maintains other committed lines of credit outside of the U.S. with an available and undrawn amount of approximately $4.0 billion as of January 31, 2018.
Apart from the committed lines of credit, the Company has trade and stand-by letters of credit totaling $2.6 billion and $3.6 billion at January 31, 2018 and 2017, respectively. These letters of credit are utilized in normal business activities.
The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following:
 
 
 
 
January 31, 2018
 
January 31, 2017
(Amounts in millions)
 
Maturity Dates
By Fiscal Year
 
Amount
 
Average Rate(1)
 
Amount
 
Average Rate(1)
Unsecured debt
 
 
 
 
 
 
 
 
 
 
Fixed
 
2019 - 2048
 
$
24,540

 
3.9%
 
$
30,500

 
4.7%
Variable
 
2019 - 2020
 
800

 
4.1%
 
500

 
5.5%
Total U.S. dollar denominated
 
 
 
25,340

 
 
 
31,000

 
 
Fixed
 
2023 - 2030
 
3,101

 
3.3%
 
2,674

 
3.3%
Variable
 
 
 

 
 
 

 
 
Total Euro denominated
 
 
 
3,101

 
 
 
2,674

 
 
Fixed
 
2031 - 2039
 
3,801

 
5.4%
 
4,370

 
5.3%
Variable
 
 
 

 
 
 

 
 
Total Sterling denominated
 
 
 
3,801

 
 
 
4,370

 
 
Fixed
 
2021 - 2028
 
1,655

 
0.4%
 
88

 
1.6%
Variable
 
 
 

 
 
 

 
 
Total Yen denominated
 
 
 
1,655

 
 
 
88

 
 
Total unsecured debt
 
 
 
33,897

 
 
 
38,132

 
 
Total other(2)
 
 
 
(114
)
 
 
 
139

 
 
Total debt
 
 
 
33,783

 
 
 
38,271

 
 
Less amounts due within one year
 
 
 
(3,738
)
 
 
 
(2,256
)
 
 
Long-term debt
 
 
 
$
30,045

 
 
 
$
36,015

 
 
(1)
The average rate represents the weighted-average stated rate for each corresponding debt category, based on year-end balances and year-end interest rates. Interest costs are also impacted by certain derivative financial instruments described in Note 8.
(2)
Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt. At January 31, 2018 and 2017 the Company had secured debt in the amount of $10 million and $14 million, respectively, which was collateralized by property that had an aggregate carrying amount of approximately $101 million and $82 million, respectively.
At January 31, 2018 and 2017, the Company had $500 million in debt with embedded put options. The issuance of money market puttable reset securities in the amount of $500 million is structured to be remarketed in connection with the annual reset of the interest rate. If, for any reason, the remarketing of the notes does not occur at the time of any interest rate reset, the holders of the notes must sell and the Company must repurchase the notes at par. Accordingly, this issuance has been classified as long-term debt due within one year in the Company's Consolidated Balance Sheets.
Annual maturities of long-term debt during the next five years and thereafter are as follows:
(Amounts in millions)
Annual
Fiscal Year
Maturities
2019
$
3,733

2020
1,914

2021
3,336

2022
607

2023
2,934

Thereafter
21,259

Total
$
33,783


Debt Issuances
Information on significant long-term debt issued during fiscal 2018 is as follows:
(Amounts in millions)
 
 
 
 
 
 
 
 
 
 
Issue Date
 
Principal Amount
 
Maturity Date
 
Fixed vs. Floating
 
Interest Rate
 
Proceeds
July 18, 2017
 
70,000 JPY
 
July 15, 2022
 
Fixed
 
0.183%
 
$
619

July 18, 2017
 
40,000 JPY
 
July 18, 2024
 
Fixed
 
0.298%
 
354

July 18, 2017
 
60,000 JPY
 
July 16, 2027
 
Fixed
 
0.520%
 
530

October 20, 2017
 
300 USD
 
October 9, 2019
 
Floating
 
Floating
 
299

October 20, 2017
 
1,200 USD
 
October 9, 2019
 
Fixed
 
1.750%
 
1,198

October 20, 2017
 
1,250 USD
 
December 15, 2020
 
Fixed
 
1.900%
 
1,245

October 20, 2017
 
1,250 USD
 
December 15, 2022
 
Fixed
 
2.350%
 
1,245

October 20, 2017
 
1,000 USD
 
December 15, 2024
 
Fixed
 
2.650%
 
996

October 20, 2017
 
1,000 USD
 
December 15, 2047
 
Fixed
 
3.625%
 
990

Total
 
 
 
 
 
 
 
 
 
$
7,476


As described in Note 8, the current year issuances of foreign-currency-denominated long-term debt are designated as a hedge of the Company's net investment in Japan.
The Company did not have any significant long-term debt issuances during fiscal 2017, but received some proceeds from a number of small long-term debt issuances by several of its non-U.S. operations.
Maturities and Extinguishments
The following table provides details of debt repayments during fiscal 2018:
(Amounts in millions)
 
 
 
 
 
 
 
 
Maturity Date
 
Principal Amount
 
Fixed vs. Floating
 
Interest Rate
 
Repayment(1)
April 5, 2017
 
1,000 USD
 
Fixed
 
5.375%
 
$
1,000

April 21, 2017
 
500 USD
 
Fixed
 
1.000%
 
500

Total repayment of matured debt
 
 
 
 
 
 
 
1,500

 
 
 
 
 
 
 
 
 
December 15, 2018
 
1,000 USD
 
Fixed
 
1.950%
 
276

February 1, 2019
 
500 USD
 
Fixed
 
4.125%
 
136

July 8, 2020
 
1,500 USD
 
Fixed
 
3.625%
 
661

October 25, 2020
 
1,750 USD
 
Fixed
 
3.250%
 
553

April 15, 2021
 
1,000 USD
 
Fixed
 
4.250%
 
491

October 16, 2023
 
250 USD
 
Fixed
 
6.750%
 
98

April 5, 2027
 
750 USD
 
Fixed
 
5.875%
 
267

February 15, 2030
 
500 USD
 
Fixed
 
7.550%
 
412

September 4, 2035
 
2,500 USD
 
Fixed
 
5.250%
 
532

September 28, 2035
 
1,000 GBP
 
Fixed
 
5.250%
 
260

August 17, 2037
 
3,000 USD
 
Fixed
 
6.500%
 
1,700

April 15, 2038
 
2,000 USD
 
Fixed
 
6.200%
 
1,081

January 19, 2039
 
1,000 GBP
 
Fixed
 
4.875%
 
851

April 2, 2040
 
1,250 USD
 
Fixed
 
5.625%
 
499

July 9, 2040
 
750 USD
 
Fixed
 
4.875%
 
372

October 25, 2040
 
1,250 USD
 
Fixed
 
5.000%
 
731

April 15, 2041
 
2,000 USD
 
Fixed
 
5.625%
 
1,082

April 11, 2043
 
1,000 USD
 
Fixed
 
4.000%
 
291

October 2, 2043
 
750 USD
 
Fixed
 
4.750%
 
481

April 22, 2044
 
1,000 USD
 
Fixed
 
4.300%
 
498

Total repayment of extinguished debt
 
 
 
 
 
 
 
11,272

Total
 
 
 
 
 
 
 
$
12,772

(1) Represents portion of the principal amount repaid during fiscal 2018.
In connection with extinguishing debt, the Company paid premiums of approximately $3.1 billion during fiscal 2018, resulting in a loss on extinguishment of debt of approximately $3.1 billion.
During fiscal 2017, the following long-term debt matured and was repaid:
(Amounts in millions)
 
 
 
 
 
 
 
 
Maturity Date
 
Principal Amount
 
Fixed vs. Floating
 
Interest Rate
 
Repayment
April 11, 2016
 
1,000 USD
 
Fixed
 
0.600%
 
$
1,000

April 15, 2016
 
1,000 USD
 
Fixed
 
2.800%
 
1,000

 
 
 
 
 
 
 
 
$
2,000


During fiscal 2018 and 2017, the Company also repaid other, smaller long-term debt as it matured in several of its non-U.S. operations.
v3.8.0.1
Fair Value Measurements
12 Months Ended
Jan. 31, 2018
Fair Value Disclosures [Abstract]  
Fair value measurements
Fair Value Measurements
The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable and willing parties able to engage in the transaction. The fair value of a liability is the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:
Level 1: observable inputs such as quoted prices in active markets;
Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.
Recurring Fair Value Measurements
The Company holds derivative instruments that are required to be measured at fair value on a recurring basis. The fair values are the estimated amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of January 31, 2018 and 2017, the notional amounts and fair values of these derivatives were as follows:
 
January 31, 2018
 
January 31, 2017
(Amounts in millions)
Notional Amount
 
Fair Value
 
Notional Amount
 
Fair Value
Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges
$
4,000

 
$
(91
)
 
$
5,000

 
$
(4
)
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as net investment hedges
2,250

 
208

 
2,250

 
471

Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges
4,523

 
205

 
3,957

 
(618
)
Total
$
10,773

 
$
322

 
$
11,207

 
$
(151
)

Additionally, the Company's available-for-sale securities are measured at fair value on a recurring basis using Level 1 inputs. Changes in fair value are recorded in accumulated other comprehensive loss. The cost basis and fair value of the Company's available-for-sale securities as of January 31, 2018 and 2017, are as follows:
 
 
January 31, 2018
 
January 31, 2017
(Amounts in millions)
 
Cost Basis
 
Fair Value
 
Cost Basis
 
Fair Value
Available-for-sale securities
 
$
1,901

 
$
3,547

 
$
1,901

 
$
2,046


Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company's assets and liabilities are also subject to nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. Fiscal 2018 impairment charges to assets measured at fair value on a nonrecurring basis were $1.4 billion and primarily related to restructuring activities described in Note 14, as well as discontinued real estate projects in the U.S. and decisions to exit certain international properties. These impairment charges were classified in operating, selling, general and administrative expenses in the Company's Consolidated Statement of Income. The fair value was determined based on comparable market values of similar properties or on a rental income approach, using Level 2 inputs. Impairment charges not related to restructuring or decisions to exit properties for fiscal 2018 were not material. Additionally, total impairment charges for fiscal 2017 were not material.
Other Fair Value Disclosures
The Company records cash and cash equivalents and short-term borrowings at cost. The carrying values of these instruments approximate their fair value due to their short-term maturities.
The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying value and fair value of the Company's long-term debt as of January 31, 2018 and 2017, are as follows:
 
 
January 31, 2018
 
January 31, 2017
(Amounts in millions)
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Long-term debt, including amounts due within one year
 
$
33,783

 
$
38,766

 
$
38,271

 
$
44,602

v3.8.0.1
Derivative Financial Instruments
12 Months Ended
Jan. 31, 2018
Summary of Derivative Instruments [Abstract]  
Derivative financial instruments
Derivative Financial Instruments
The Company uses derivative financial instruments for hedging and non-trading purposes to manage its exposure to changes in interest and currency exchange rates, as well as to maintain an appropriate mix of fixed- and variable-rate debt. Use of derivative financial instruments in hedging programs subjects the Company to certain risks, such as market and credit risks. Market risk represents the possibility that the value of the derivative financial instrument will change. In a hedging relationship, the change in the value of the derivative financial instrument is offset to a great extent by the change in the value of the underlying hedged item. Credit risk related to a derivative financial instrument represents the possibility that the counterparty will not fulfill the terms of the contract. The notional, or contractual, amount of the Company's derivative financial instruments is used to measure interest to be paid or received and does not represent the Company's exposure due to credit risk. Credit risk is monitored through established approval procedures, including setting concentration limits by counterparty, reviewing credit ratings and requiring collateral from the counterparty when appropriate.
The Company only enters into derivative transactions with counterparties rated "A-" or better by nationally recognized credit rating agencies. Subsequent to entering into derivative transactions, the Company regularly monitors the credit ratings of its counterparties. In connection with various derivative agreements, including master netting arrangements, the Company held cash collateral from counterparties of $279 million and $242 million at January 31, 2018 and January 31, 2017, respectively. The Company records cash collateral received as amounts due to the counterparties exclusive of any derivative asset. Furthermore, as part of the master netting arrangements with each of these counterparties, the Company is also required to post collateral with a counterparty if the Company's net derivative liability position exceeds $150 million with such counterparties. The Company did not have any cash collateral posted with counterparties at January 31, 2018 and January 31, 2017, respectively. The Company records cash collateral it posts with counterparties as amounts receivable from those counterparties exclusive of any derivative liability.
The Company uses derivative financial instruments for the purpose of hedging its exposure to interest and currency exchange rate risks and, accordingly, the contractual terms of a hedged instrument closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria are recorded using hedge accounting. If a derivative financial instrument is recorded using hedge accounting, depending on the nature of the hedge, changes in the fair value of the instrument will either be offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or be recognized in accumulated other comprehensive loss until the hedged item is recognized in earnings. Any hedge ineffectiveness is immediately recognized in earnings. The Company's net investment and cash flow instruments are highly effective hedges and the ineffective portion has not been, and is not expected to be, significant. Instruments that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are recorded at fair value with unrealized gains or losses reported in earnings during the period of the change.
Fair Value Instruments
The Company is a party to receive fixed-rate, pay variable-rate interest rate swaps that the Company uses to hedge the fair value of fixed-rate debt. The notional amounts are used to measure interest to be paid or received and do not represent the Company's exposure due to credit loss. The Company's interest rate swaps that receive fixed-interest rate payments and pay variable-interest rate payments are designated as fair value hedges. As the specific terms and notional amounts of the derivative instruments match those of the fixed-rate debt being hedged, the derivative instruments are assumed to be perfectly effective hedges. Changes in the fair values of these derivative instruments are recorded in earnings, but are offset by corresponding changes in the fair values of the hedged items, also recorded in earnings, and, accordingly, do not impact the Company's Consolidated Statements of Income. These fair value instruments will mature on dates ranging from October 2020 to April 2024.
Net Investment Instruments
The Company is a party to cross-currency interest rate swaps that the Company uses to hedge its net investments. The agreements are contracts to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. All changes in the fair value of these instruments are recorded in accumulated other comprehensive loss, offsetting the currency translation adjustment of the related investment that is also recorded in accumulated other comprehensive loss. These instruments will mature on dates ranging from July 2020 to February 2030.
The Company has issued foreign-currency-denominated long-term debt as hedges of net investments of certain of its foreign operations. These foreign-currency-denominated long-term debt issuances are designated and qualify as nonderivative hedging instruments. Accordingly, the foreign currency translation of these debt instruments is recorded in accumulated other comprehensive loss, offsetting the foreign currency translation adjustment of the related net investment that is also recorded in accumulated other comprehensive loss. At January 31, 2018 and January 31, 2017, the Company had ¥180 billion and ¥10 billion, respectively, of outstanding long-term debt designated as a hedge of its net investment in Japan, as well as outstanding long-term debt of £1.7 billion and £2.5 billion at January 31, 2018 and January 31, 2017, respectively, that was designated as a hedge of its net investment in the United Kingdom. These nonderivative net investment hedges will mature on dates ranging from July 2020 to January 2039.
Cash Flow Instruments
The Company is a party to receive fixed-rate, pay fixed-rate cross-currency interest rate swaps to hedge the currency exposure associated with the forecasted payments of principal and interest of certain non-U.S. denominated debt. The swaps are designated as cash flow hedges of the currency risk related to payments on the non-U.S. denominated debt. The effective portion of changes in the fair value of derivatives designated as cash flow hedges of foreign exchange risk is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The hedged items are recognized foreign currency-denominated liabilities that are re-measured at spot exchange rates each period, and the assessment of effectiveness (and measurement of any ineffectiveness) is based on total changes in the related derivative's cash flows. As a result, the amount reclassified into earnings each period includes an amount that offsets the related transaction gain or loss arising from that re-measurement and the adjustment to earnings for the period's allocable portion of the initial spot-forward difference associated with the hedging instrument. These cash flow instruments will mature on dates ranging from April 2022 to March 2034.
Financial Statement Presentation
Although subject to master netting arrangements, the Company does not offset derivative assets and derivative liabilities in its Consolidated Balance Sheets. Derivative instruments with an unrealized gain are recorded in the Company's Consolidated Balance Sheets as either current or non-current assets, based on maturity date, and those hedging instruments with an unrealized loss are recorded as either current or non-current liabilities, based on maturity date. Refer to Note 7 for the net presentation of the Company's derivative instruments.
The Company's derivative instruments, as well as its nonderivative debt instruments designated and qualifying as net investment hedges, were classified as follows as of January 31, 2018 and 2017 in the Company's Consolidated Balance Sheets:
 
January 31, 2018
 
January 31, 2017
(Amounts in millions)
Fair Value
Instruments
 
Net Investment
Instruments
 
Cash Flow
Instruments
 
Fair Value
Instruments
 
Net Investment
Instruments
 
Cash Flow
Instruments
Derivative instruments
 
 
 
 
 
 
 
 
 
 
 
Derivative assets:
 
 
 
 
 
 
 
 
 
 
 
Other assets and deferred charges
$

 
$
208

 
$
300

 
$
8

 
$
471

 
$

 
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities:
 
 
 
 
 
 
 
 
 
 
 
Deferred income taxes and other
91

 

 
95

 
12

 

 
618

 
 
 
 
 
 
 
 
 
 
 
 
Nonderivative hedging instruments
 
 
 
 
 
 
 
 
 
 
 
Long-term debt

 
4,041

 

 

 
3,209

 


Realized gains and losses related to the Company's derivatives are recorded in interest, net, in the Company's Consolidated Statements of Income. Amounts related to the Company's derivatives expected to be reclassified from accumulated other comprehensive loss to net income during the next 12 months are not significant.