Walmart Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Financial Statements of Walmart Inc. For the Fiscal Year Ended January 31, 2024 Table of Contents Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 51 Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting 53 Consolidated Statements of Income 54 Consolidated Statements of Comprehensive Income 55 Consolidated Balance Sheets 56 Consolidated Statements of Shareholders' Equity 57 Consolidated Statements of Cash Flows 58 Notes to Consolidated Financial Statements 59 50 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Walmart Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Walmart Inc. (the Company) as of January 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2024, and the related notes (collectively referred to as the "Consolidated Financial Statements"). In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the financial position of the Company at January 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 15, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates. Contingencies Description of the Matter As described in Note 10 to the Consolidated Financial Statements, at January 31, 2024, the Company is involved in a number of legal proceedings and certain regulatory matters. The Company records a liability for those legal proceedings and regulatory matters when management determines it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company also discloses when it is reasonably possible that a material loss may be incurred. In assessing the probability of occurrence and whether an estimate of loss can be reasonably estimated for a particular legal proceeding, management exercises judgment on matters relevant to each proceeding. Auditing management's accounting for, and disclosure of, loss contingencies was complex and highly judgmental as it involved our assessment of the significant judgments made by management when assessing the probability of loss for contingencies or when determining whether an estimate of the loss or range of loss could be made. 51 How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the identification and evaluation of contingencies. For example, we tested controls over the Company's assessment of the likelihood of loss and the Company's determinations regarding the measurement of loss. To test the Company's assessment of the probability of loss or determination of an estimate of loss, or range of loss, among other procedures, we read the minutes of the meetings of the board of directors and committees of the board of directors, reviewed documents provided to the Company by certain outside legal counsel, read letters received directly by us from internal and outside legal counsel, evaluated the current status of contingencies based on discussions with internal and outside legal counsel, and obtained representations from management. We also assessed the adequacy of the related disclosures. /s/ Ernst & Young LLP We have served as the Company's auditor since 1969. Rogers, Arkansas March 15, 2024 52 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Walmart Inc. Opinion on Internal Control Over Financial Reporting We have audited Walmart Inc.'s internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Walmart Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2024, and the related notes and our report dated March 15, 2024 expressed an unqualified opinion thereon. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Rogers, Arkansas March 15, 2024 53 Walmart Inc. Consolidated Statements of Income Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2024 2023 2022 Revenues: Net sales $ 642,637 $ 605,881 $ 567,762 Membership and other income 5,488 5,408 4,992 Total revenues 648,125 611,289 572,754 Costs and expenses: Cost of sales 490,142 463,721 429,000 Operating, selling, general and administrative expenses 130,971 127,140 117,812 Operating income 27,012 20,428 25,942 Interest: Debt 2,259 1,787 1,674 Finance lease 424 341 320 Interest income ( 546 ) ( 254 ) ( 158 ) Interest, net 2,137 1,874 1,836 Loss on extinguishment of debt — — 2,410 Other (gains) and losses 3,027 1,538 3,000 Income before income taxes 21,848 17,016 18,696 Provision for income taxes 5,578 5,724 4,756 Consolidated net income 16,270 11,292 13,940 Consolidated net (income) loss attributable to noncontrolling interest ( 759 ) 388 ( 267 ) Consolidated net income attributable to Walmart $ 15,511 $ 11,680 $ 13,673 Net income per common share: Basic net income per common share attributable to Walmart $ 1.92 $ 1.43 $ 1.63 Diluted net income per common share attributable to Walmart 1.91 1.42 1.62 Weighted-average common shares outstanding: Basic 8,077 8,171 8,376 Diluted 8,108 8,202 8,415 Dividends declared per common share $ 0.7600 $ 0.7467 $ 0.7333 See accompanying notes. 54 Walmart Inc. Consolidated Statements of Comprehensive Income Fiscal Years Ended January 31, (Amounts in millions) 2024 2023 2022 Consolidated net income $ 16,270 $ 11,292 $ 13,940 Consolidated net (income) loss attributable to noncontrolling interest ( 759 ) 388 ( 267 ) Consolidated net income attributable to Walmart 15,511 11,680 13,673 Other comprehensive income (loss), net of income taxes Currency translation and other 899 ( 1,858 ) 2,442 Net investment hedges — — ( 1,202 ) Cash flow hedges 56 ( 203 ) ( 444 ) Minimum pension liability ( 11 ) 5 1,974 Other comprehensive income (loss), net of income taxes 944 ( 2,056 ) 2,770 Other comprehensive (income) loss attributable to noncontrolling interest ( 566 ) 404 230 Other comprehensive income (loss) attributable to Walmart 378 ( 1,652 ) 3,000 Comprehensive income, net of income taxes 17,214 9,236 16,710 Comprehensive (income) loss attributable to noncontrolling interest ( 1,325 ) 792 ( 37 ) Comprehensive income attributable to Walmart $ 15,889 $ 10,028 $ 16,673 See accompanying notes. 55 Walmart Inc. Consolidated Balance Sheets As of January 31, (Amounts in millions) 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 9,867 $ 8,625 Receivables, net 8,796 7,933 Inventories 54,892 56,576 Prepaid expenses and other 3,322 2,521 Total current assets 76,877 75,655 Property and equipment, net 110,810 100,760 Operating lease right-of-use assets 13,673 13,555 Finance lease right-of-use assets, net 5,855 4,919 Goodwill 28,113 28,174 Other long-term assets 17,071 20,134 Total assets $ 252,399 $ 243,197 LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY Current liabilities: Short-term borrowings $ 878 $ 372 Accounts payable 56,812 53,742 Accrued liabilities 28,759 31,126 Accrued income taxes 307 727 Long-term debt due within one year 3,447 4,191 Operating lease obligations due within one year 1,487 1,473 Finance lease obligations due within one year 725 567 Total current liabilities 92,415 92,198 Long-term debt 36,132 34,649 Long-term operating lease obligations 12,943 12,828 Long-term finance lease obligations 5,709 4,843 Deferred income taxes and other 14,629 14,688 Commitments and contingencies Redeemable noncontrolling interest 222 237 Equity: Common stock 805 808 Capital in excess of par value 4,544 4,430 Retained earnings 89,814 83,135 Accumulated other comprehensive loss ( 11,302 ) ( 11,680 ) Total Walmart shareholders' equity 83,861 76,693 Noncontrolling interest 6,488 7,061 Total equity 90,349 83,754 Total liabilities, redeemable noncontrolling interest, and equity $ 252,399 $ 243,197 See accompanying notes. 56 Walmart Inc. Consolidated Statements of Shareholders' Equity Accumulated Total Capital in Other Walmart (Amounts in millions) Common Stock Excess of Retained Comprehensive Shareholders' Noncontrolling Total Shares Amount Par Value Earnings Income (Loss) Equity Interest Equity Balances as of February 1, 2021 8,464 $ 846 $ 3,082 $ 88,763 $ ( 11,766 ) $ 80,925 $ 6,606 $ 87,531 Consolidated net income — — — 13,673 — 13,673 267 13,940 Other comprehensive income (loss), net of income taxes — — — — 3,000 3,000 ( 230 ) 2,770 Cash dividends declared ($ 0.7333 per share) — — — ( 6,152 ) — ( 6,152 ) — ( 6,152 ) Purchase of Company stock ( 210 ) ( 21 ) ( 412 ) ( 9,375 ) — ( 9,808 ) — ( 9,808 ) Cash dividend declared to noncontrolling interest — — — — — — ( 416 ) ( 416 ) Sale of subsidiary stock — — 952 — — 952 2,287 3,239 Other 30 3 665 ( 5 ) — 663 124 787 Balances as of January 31, 2022 8,284 828 4,287 86,904 ( 8,766 ) 83,253 8,638 91,891 Consolidated net income — — — 11,680 — 11,680 ( 388 ) 11,292 Other comprehensive (loss), net of income taxes — — — — ( 1,652 ) ( 1,652 ) ( 404 ) ( 2,056 ) Cash dividends declared ($ 0.7467 per share) — — — ( 6,114 ) — ( 6,114 ) — ( 6,114 ) Purchase of Company stock ( 221 ) ( 22 ) ( 518 ) ( 9,326 ) — ( 9,866 ) — ( 9,866 ) Cash dividend declared to noncontrolling interest — — — — — — ( 449 ) ( 449 ) Purchase of noncontrolling interest — — ( 18 ) — ( 1,262 ) ( 1,280 ) ( 493 ) ( 1,773 ) Sale of subsidiary stock — — 48 — — 48 18 66 Other 17 2 631 ( 9 ) — 624 139 763 Balances as of January 31, 2023 8,080 808 4,430 83,135 ( 11,680 ) 76,693 7,061 83,754 Consolidated net income — — — 15,511 — 15,511 774 16,285 Other comprehensive income, net of income taxes — — — — 378 378 566 944 Cash dividends declared ($ 0.7600 per share) — — — ( 6,140 ) — ( 6,140 ) — ( 6,140 ) Purchase of Company stock ( 55 ) ( 6 ) ( 150 ) ( 2,635 ) — ( 2,791 ) — ( 2,791 ) Cash dividend declared to noncontrolling interest — — — — — — ( 776 ) ( 776 ) Purchase of noncontrolling interest — — ( 1,076 ) — — ( 1,076 ) ( 1,367 ) ( 2,443 ) Sale of subsidiary stock — — 562 — — 562 154 716 Other 29 3 778 ( 57 ) — 724 76 800 Balances as of January 31, 2024 8,054 805 4,544 89,814 ( 11,302 ) 83,861 6,488 90,349 See accompanying notes. 57 Walmart Inc. Consolidated Statements of Cash Flows Fiscal Years Ended January 31, (Amounts in millions) 2024 2023 2022 Cash flows from operating activities: Consolidated net income $ 16,270 $ 11,292 $ 13,940 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Depreciation and amortization 11,853 10,945 10,658 Net unrealized and realized (gains) and losses 3,193 1,683 2,440 Losses on disposal of business operations — — 433 Deferred income taxes ( 175 ) 449 ( 755 ) Loss on extinguishment of debt — — 2,410 Other operating activities 2,642 1,919 1,652 Changes in certain assets and liabilities, net of effects of acquisitions and dispositions: Receivables, net ( 797 ) 240 ( 1,796 ) Inventories 2,017 ( 528 ) ( 11,764 ) Accounts payable 2,515 ( 1,425 ) 5,520 Accrued liabilities ( 1,324 ) 4,393 1,404 Accrued income taxes ( 468 ) ( 127 ) 39 Net cash provided by operating activities 35,726 28,841 24,181 Cash flows from investing activities: Payments for property and equipment ( 20,606 ) ( 16,857 ) ( 13,106 ) Proceeds from the disposal of property and equipment 250 170 394 Proceeds from disposal of certain operations, net of divested cash 135 — 7,935 Payments for business acquisitions, net of cash acquired ( 9 ) ( 740 ) ( 359 ) Other investing activities ( 1,057 ) ( 295 ) ( 879 ) Net cash used in investing activities ( 21,287 ) ( 17,722 ) ( 6,015 ) Cash flows from financing activities: Net change in short-term borrowings 512 ( 34 ) 193 Proceeds from issuance of long-term debt 4,967 5,041 6,945 Repayments of long-term debt ( 4,217 ) ( 2,689 ) ( 13,010 ) Premiums paid to extinguish debt — — ( 2,317 ) Dividends paid ( 6,140 ) ( 6,114 ) ( 6,152 ) Purchase of Company stock ( 2,779 ) ( 9,920 ) ( 9,787 ) Dividends paid to noncontrolling interest ( 763 ) ( 444 ) ( 424 ) Purchase of noncontrolling interest ( 3,462 ) ( 827 ) — Sale of subsidiary stock 716 66 3,239 Other financing activities ( 2,248 ) ( 2,118 ) ( 1,515 ) Net cash used in financing activities ( 13,414 ) ( 17,039 ) ( 22,828 ) Effect of exchange rates on cash, cash equivalents and restricted cash 69 ( 73 ) ( 140 ) Net increase (decrease) in cash, cash equivalents and restricted cash 1,094 ( 5,993 ) ( 4,802 ) Change in cash and cash equivalents reclassified from assets held for sale — — 1,848 Cash, cash equivalents and restricted cash at beginning of year 8,841 14,834 17,788 Cash, cash equivalents and restricted cash at end of year $ 9,935 $ 8,841 $ 14,834 Supplemental disclosure of cash flow information: Income taxes paid $ 5,879 $ 3,310 $ 5,918 Interest paid 2,519 2,051 2,237 See accompanying notes. 58 Walmart Inc. Notes to Consolidated Financial Statements Note 1. Summary of Significant Accounting Policies General Walmart Inc. ("Walmart" or the "Company") is a people-led, technology-powered omni-channel retailer dedicated to helping people around the world save money and live better – anytime and anywhere – by providing the opportunity to shop in both retail stores and through eCommerce. Through innovation, the Company is striving to continuously improve a customer-centric experience that seamlessly integrates eCommerce and retail stores in an omni-channel offering that saves time for its customers. 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, 2024 ("fiscal 2024"), January 31, 2023 ("fiscal 2023") and January 31, 2022 ("fiscal 2022"). 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 common stock or in-substance common stock for which the Company exercises significant influence but does not have control are accounted for under the equity method. These variable interest entities and 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 2024 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 ("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 from those estimates. Common Stock Split On February 23, 2024, the Company effected a 3 -for-1 forward split of its common stock and a proportionate increase in the number of authorized shares. All share and per share information, including share based compensation, throughout this Annual Report on Form 10-K has been retroactively adjusted to reflect the stock split. The shares of common stock retain a par value of $ 0.10 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from capital in excess of par value to common stock. 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 $ 2.1 billion and $ 2.0 billion as of January 31, 2024 and 2023, respectively. The Company's cash balances are held in various locations around the world. Of the Company's $ 9.9 billion and $ 8.6 billion in cash and cash equivalents as of January 31, 2024 and January 31, 2023, approximately 60 % and 62 % were held outside of the U.S., respectively. 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. As of January 31, 2024 and 2023, cash and cash equivalents of approximately $ 3.5 billion and $ 2.9 billion, respectively, may not be freely transferable to the U.S. due to local laws, other restrictions or are subject to the approval of the noncontrolling interest shareholders. 59 Receivables Receivables are stated at their carrying values, net of a reserve for doubtful accounts, and are primarily due from the following: customers, which includes pharmacy insurance companies as well as advertisers, and banks for customer credit, debit cards and electronic transfer transactions that take in excess of seven days to process; suppliers for marketing or incentive programs; governments for income taxes; and real estate transactions. Net receivables from transactions with customers were $ 3.7 billion as of January 31, 2024 and January 31, 2023. Inventories The Company utilizes various inventory methods to account for and value its inventories depending upon the nature of the store formats and businesses in each of its segments, resulting in inventories that are recorded at the lower of cost or market or net realizable value, as appropriate. • Walmart U.S. Segment - Inventories are primarily accounted for under the retail inventory method of accounting ("RIM") to determine inventory cost, using the last-in, first-out ("LIFO") valuation method. RIM generally results in inventory being valued at the lower of cost or market as permanent markdowns are immediately recorded as a reduction of the retail value of inventory. • Walmart International Segment – Depending on the store format in each market, inventories are generally accounted for using either the RIM or weighted-average cost method, using the first-in, first-out valuation method. • Sam's Club Segment - The majority of this segment's inventory is accounted for and valued using the weighted-average cost LIFO method. For those segments that utilize the LIFO method, the Company records an adjustment each quarter, if necessary, for the projected annual effect of inflation or deflation. These estimates are adjusted to actual results determined at year end for inflation or deflation and inventory levels. 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 expensed 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: Estimated Useful Lives As of January 31, (Dollars in millions) (in Years) 2024 2023 Land N/A $ 19,562 $ 19,317 Buildings and improvements 3 - 40 111,767 104,554 Fixtures and equipment 2 - 30 72,161 65,235 Transportation equipment 3 - 15 2,979 2,462 Construction in progress N/A 13,390 10,802 Property and equipment 219,859 202,370 Accumulated depreciation ( 109,049 ) ( 101,610 ) Property and equipment, net $ 110,810 $ 100,760 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 finance leases and intangible assets for fiscal 2024, 2023 and 2022 was $ 11.9 billion, $ 10.9 billion and $ 10.7 billion, respectively. Leases For any new or modified lease, the Company, at the inception of the contract, determines whether a contract is or contains a lease. The Company records right-of-use ("ROU") assets and lease obligations for its finance and operating leases, which are initially recognized based on the discounted future lease payments over the term of the lease. If the rate implicit in the Company's leases is not readily determinable, the Company's applicable incremental borrowing rate is used in calculating the present value of the sum of the lease payments. Lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company has elected not to recognize ROU asset and lease obligations for its short-term leases, which are defined as leases with an initial term of 12 months or less. For a majority of all classes of underlying assets, the Company has elected to not separate lease from non-lease components. For leases in which the lease and non-lease components have been combined, the variable lease expense includes expenses such as common area maintenance, utilities and repairs and maintenance. 60 Impairment of Long-Lived Assets 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 typically assigned to the reporting unit which consolidates the acquisition. Components within the same reportable segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of January 31, 2024, the Company's reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill and other indefinite-lived acquired intangible assets are 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. Management has performed its evaluation and determined the fair value of each reporting unit is significantly greater than the carrying amount and, accordingly, the Company has not recorded any impairment charges related to goodwill during fiscal 2024, fiscal 2023 or fiscal 2022. The following table reflects goodwill activity, by reportable segment, for fiscal 2024 and 2023: (Amounts in millions) Walmart U.S. Walmart International Sam's Club Total Balances as of February 1, 2022 $ 2,941 $ 25,752 $ 321 $ 29,014 Changes in currency translation and other — ( 1,475 ) — ( 1,475 ) Acquisitions 433 202 — 635 Balances as of January 31, 2023 3,374 24,479 321 28,174 Changes in currency translation and other ( 10 ) ( 58 ) — ( 68 ) Acquisitions — 7 — 7 Balances as of January 31, 2024 $ 3,364 $ 24,428 $ 321 $ 28,113 Intangible assets are recorded in other long-term assets in the Company's Consolidated Balance Sheets. As of January 31, 2024 and 2023, the Company had $ 4.1 billion and $ 4.3 billion, respectively, in indefinite-lived intangible assets which primarily consists of acquired trade names. There were no significant impairment charges related to intangible assets for fiscal 2024, 2023 or 2022. Fair Value Measurement 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. Refer to Note 8 for more information. Investments Investments in equity securities are recorded in other long-term assets in the Consolidated Balance Sheets. Changes in the fair value of certain equity securities, as well as certain immaterial equity method investments where the Company has elected the fair value option, are measured on a recurring basis and recognized within other gains and losses in the Consolidated Statements of Income. These fair value changes, along with certain other immaterial investment activity, resulted in net losses of $ 3.8 billion, $ 1.7 billion and $ 2.4 billion for fiscal 2024, 2023 and 2022, respectively, primarily due to net changes in the underlying stock prices of those investments. Refer to Note 8 for details. Equity investments without readily determinable fair values are 61 carried at cost and adjusted for any observable price changes or impairments within other gains and losses in the Consolidated Statements of Income. Investments in debt securities classified as trading are reported at fair value and adjustments in fair value are recorded within other gains and losses in the Consolidated Statements of Income. As of January 31, 2024 and January 31, 2023, the Company had $ 1.2 billion and $ 0.5 billion, respectively, 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 January 31, 2024 and January 31, 2023, the Company had $ 0.7 billion and $ 0.6 billion, respectively, of certain legal indemnification liabilities recorded within deferred income taxes and other in the Consolidated Balance Sheets. The maximum of potential future payments under these indemnities was $ 3.2 billion, based on exchange rates as of January 31, 2024. Supplier Financing Program Obligations In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations , which enhances the transparency about the use of supplier finance programs for investors and other allocators of capital. The Company adopted this ASU as of February 1, 2023, other than the roll-forward disclosure requirement, which the Company will adopt in fiscal 2025. The Company has supplier financing programs with financial institutions, in which the Company agrees to pay the financial institution the stated amount of confirmed invoices on the invoice due date for participating suppliers. Participation in these programs is optional and solely up to the supplier, who negotiates the terms of the arrangement directly with the financial institution and may allow early payment. Supplier participation in these programs has no bearing on the Company's amounts due. The payment terms that the Company has with participating suppliers under these programs generally range between 30 and 90 days. The Company does not have an economic interest in a supplier's participation in the program or a direct financial relationship with the financial institution funding the program. The Company is responsible for ensuring that participating financial institutions are paid according to the terms negotiated with the supplier, regardless of whether the supplier elects to receive early payment from the financial institution. The outstanding payment obligations to financial institutions under these programs were $ 5.3 billion and $ 5.2 billion, as of January 31, 2024 and January 31, 2023, respectively. These obligations are generally classified as accounts payable within the Consolidated Balance Sheets. The activity related to these programs is classified as an operating activity within the Consolidated Statements of Cash Flows. 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 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. 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. Derivatives The Company uses derivatives for hedging 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 derivatives in hedging programs subjects the Company to certain risks, such as market and credit risks. The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Credit risk is monitored through established approval procedures, including setting concentration limits by counterparty, reviewing credit ratings and requiring collateral from the counterparty. The Company enters into derivatives with counterparties rated generally "A-" or better by nationally recognized credit rating agencies. The Company is subject to master netting arrangements which provides set-off and close-out netting of exposures with counterparties, but the Company does not offset derivative assets and liabilities in its Consolidated Balance Sheets. The Company's collateral arrangements require the counterparty in a net liability position in excess of pre-determined thresholds, after considering the effects of netting arrangements, to pledge cash collateral. Cash collateral received from counterparties and cash collateral provided to counterparties under these arrangement s was not significant as of January 31, 2024 and 2023. 62 In order to qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. If a derivative is recorded using hedge accounting, depending on the nature of the hedge, derivative gains and losses are recorded through the same financial statement line item in earnings or are recognized in accumulated other comprehensive loss until the hedged item is recognized in earnings. Derivatives 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. Derivatives 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 derivatives with an unrealized loss are recorded as either current or non-current liabilities, based on maturity date. Refer to Note 8 for the presentation of the Company's derivative assets and liabilities. Fair Value Hedges 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. All interest rate swaps designated as fair value hedges of the related long-term debt meet the shortcut method requirements under U.S. GAAP. Accordingly, changes in the fair values of these interest rate swaps are considered to exactly offset changes in the fair value of the underlying long-term debt. These derivatives will mature on dates ranging from April 2024 to September 2031. Cash Flow Hedges The Company is a party to receive fixed-rate, pay fixed-rate cross currency interest rate swaps used to hedge the currency exposure associated with the forecasted payments of principal and interest of certain non-U.S. denominated debt. The Company records changes in the fair value of these swaps in accumulated other comprehensive loss which is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. These derivatives will mature on dates ranging from July 2024 to January 2039. Net Investment Hedges Prior to the divestiture of the Company's operations in the United Kingdom and Japan as discussed in Note 12 , the Company was a party to receive fixed-rate, pay fixed-rate cross currency interest rate swaps used to hedge the currency exposure associated with net investments of these foreign operations. Changes in fair value attributable to the hedged risk were recorded in accumulated other comprehensive loss. The Company also previously designated certain foreign currency denominated long-term debt as a hedge of currency exposure associated with the net investment of these divested operations and recorded foreign currency gain or loss associated with designated long-term debt in accumulated other comprehensive loss. Upon closing of the sale of the Company's operations in the U.K. and Japan during the first quarter of fiscal 2022, these amounts were released from accumulated other comprehensive loss as discussed in Note 4 . 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 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. 63 Redeemable Noncontrolling Interest Noncontrolling interests that are redeemable outside the Company's control at fixed or determinable prices and dates are presented as temporary equity in the Consolidated Balance Sheets. Redeemable noncontrolling interests are recorded at the greater of the redemption fair value or the carrying value of the noncontrolling interest and adjusted each reporting period for income, loss and any distributions made. Remeasurements to the redemption value of the redeemable noncontrolling interest are recognized in capital in excess of par. As of January 31, 2024, the Company has a redeemable noncontrolling interest related to an acquisition in the Walmart U.S. segment as the minority interest owner holds a put option which may require the Company to purchase its interest beginning in December 2027, with annual options thereafter. Revenue Recognition Net Sales The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise or services to the customer. eCommerce sales include shipping revenue and are recorded upon delivery to the customer. Estimated sales returns are calculated based on expected returns. Membership Fee Revenue The Company recognizes membership fee revenue over the term of the membership, which is typically 12 months. Membership fee revenue was $ 3.1 billion for fiscal 2024, $ 2.6 billion for fiscal 2023 and $ 2.2 billion for fiscal 2022. Membership fee revenue is included in membership and other income in the Company's Consolidated Statements of Income. Deferred membership fee revenue is included in accrued liabilities in the Company's Consolidated Balance Sheets. Gift Cards Customer purchases of gift cards are not recognized as sales 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 and services indefinitely. Gift cards in some countries where the Company does business have expiration dates. While gift cards are generally redeemed within 12 months, a certain number of gift cards, both with and without expiration dates, will not be fully redeemed. Management estimates unredeemed balances and recognizes revenue for these amounts in membership and other income in the Company's Consolidated Statements of Income over the expected redemption period. Financial, Advertising 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, certain advertising arrangements and supplier-specific fixtures. Payments from suppliers are accounted for as a reduction of cost of sales and recognized in the Company's Consolidated Statements of Income when the related inventory is sold, except in certain limited situations when the payment is a reimbursement of specific, incremental and identifiable costs. Operating, Selling, General and Administrative Expenses Operating, selling, general and administrative expenses include all operating costs of the Company, except cost of sales, as described above. As a result, the majority of the cost of warehousing and occupancy for the Walmart U.S. and Walmart International segments' distribution facilities is included in operating, selling, general and administrative expenses. Because the Company 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. 64 Advertising Costs Advertising costs are expensed as incurred, and consist primarily of digital, television and print advertisements that are recorded in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. Advertising costs were $ 4.4 billion, $ 4.1 billion and $ 3.9 billion for fiscal 2024, 2023 and 2022, 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 In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. Management is currently evaluating this ASU to determine its impact on the Company's disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which expands the requirements for income tax disclosures in order to provide greater transparency. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied prospectively. Management is currently evaluating this ASU to determine its impact on the Company's disclosures. 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-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 2024, 2023 and 2022. 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) 2024 2023 2022 Numerator Consolidated net income $ 16,270 $ 11,292 $ 13,940 Consolidated net (income) loss attributable to noncontrolling interest ( 759 ) 388 ( 267 ) Consolidated net income attributable to Walmart $ 15,511 $ 11,680 $ 13,673 Denominator Weighted-average common shares outstanding, basic 8,077 8,171 8,376 Dilutive impact of stock options and other share-based awards 31 31 39 Weighted-average common shares outstanding, diluted 8,108 8,202 8,415 Net income per common share attributable to Walmart Basic $ 1.92 $ 1.43 $ 1.63 Diluted 1.91 1.42 1.62 65 Note 3. Shareholders' Equity The total authorized shares of $ 0.10 par value common stock is 33.0 billion, of which 8.1 billion were issued and outstanding as of January 31, 2024 and 2023. The total authorized shares of $ 0.10 par value preferred stock is 0.1 billion; none of which were issued or outstanding for any period presented. Purchases and Sales of Subsidiary Stock During fiscal 2024, the Company paid $ 3.5 billion to acquire shares from certain Flipkart noncontrolling interest holders and settle the liability to former noncontrolling interest holders of PhonePe. The Company's ownership of Flipkart increased from approximately 75 % as of January 31, 2023 to approximately 85 % as of January 31, 2024. Also during fiscal 2024, the Company received $ 0.7 billion related to new rounds of equity funding for the Company's majority owned PhonePe subsidiary, which decreased the Company's ownership from approximately 89 % as of January 31, 2023 to approximately 84 % as of January 31, 2024. During fiscal 2023, the Company completed a $ 0.4 billion buyout of the noncontrolling interest shareholders of the Company's Massmart subsidiary. This transaction increased the Company's ownership in Massmart from approximately 53 % to 100 %. Additionally, the Company completed a $ 0.4 billion acquisition of Alert Innovation, which was previously consolidated as a variable interest entity, and resulted in the Company becoming a 100 % owner. Also during fiscal 2023, the Company increased its ownership in PhonePe from approximately 76 % to approximately 89 % as part of the separation from the Company's majority-owned Flipkart subsidiary. In consideration for the transaction, the Company initially recorded a liability to noncontrolling interest holders of $ 0.9 billion within accrued liabilities in the Company's Consolidated Balance Sheet as of January 31, 2023, which was paid during fiscal 2024. During fiscal 2022, the Company received $ 3.2 billion primarily related to a new equity funding for the Company's majority-owned Flipkart subsidiary, which reduced the Company's ownership from approximately 83 % as of January 31, 2021 to approximately 75 % as of January 31, 2022. Share-Based Compensation The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The compensation expense recognized for all stock incentive plans, including expense associated with plans of the Company's consolidated subsidiaries granted in the subsidiaries' respective stock, was $ 2.1 billion, $ 1.6 billion and $ 1.2 billion for fiscal 2024, 2023 and 2022, 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 $ 0.5 billion, $ 0.4 billion and $ 0.3 billion for fiscal 2024, 2023 and 2022, respectively. The following table summarizes the Company's share-based compensation expense by award type for all plans: Fiscal Years Ended January 31, (Amounts in millions) 2024 2023 2022 Restricted stock units $ 1,258 $ 927 $ 659 Restricted stock and performance-based restricted stock units 609 444 321 Other 226 207 183 Share-based compensation expense $ 2,093 $ 1,578 $ 1,163 The Walmart Inc. Stock Incentive Plan of 2015 (the "Plan"), as subsequently amended and restated, was established to grant stock options, restricted (non-vested) stock, restricted stock units, performance share units and other equity compensation awards for which 780 million shares of Walmart common stock issued or to be issued under the Plan have been registered under the Securities Act of 1933. 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 Units. Restricted stock units provide rights to Company stock after a specified service period. Beginning in fiscal 2023, restricted stock units generally vest at a rate of approximately 8 % each quarter over a three year period from the date of grant. For grants made from fiscal 2020 through fiscal 2022, restricted stock units generally vest at a rate of 25 % each year over a four year period from the date of the grant. Prior to fiscal 2020, 50 % of restricted stock units generally vested three years from the grant date and the remaining 50 % were vested 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 2024, 2023 and 2022 was 2.2 %, 2.3 % and 3.8 %, respectively. 66 • Restricted Stock and Performance-based Restricted Stock Units. Restricted stock awards are for shares that vest based on the passage of time and include restrictions related to employment. Performance-based restricted stock units vest based on the passage of time and achievement of performance criteria and generally range from 0 % to 150 % of the original award amount. Vesting periods for restricted stock are generally between one month and three years . Vesting periods for performance-based restricted stock units are generally between one and three years . Restricted stock and performance-based restricted stock 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-based restricted stock 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-based restricted stock units in fiscal 2024, 2023 and 2022 was 3.3 %, 3.3 % and 4.2 %, respectively. In addition to the Plan, Flipkart and PhonePe have share-based compensation plans for associates under which options to acquire their own common shares may be issued. These plans may be subject to performance or other conditions, including vesting upon an initial public offering. Share-based compensation expense associated with certain of these plans is included in the Other line in the table above. The following table shows the activity for restricted stock units and restricted stock and performance-based restricted stock units during fiscal 2024: Restricted Stock Units Restricted Stock and Performance-based 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 as of February 1, 2023 48,660 $ 42.67 21,480 $ 46.29 Granted 35,751 48.37 12,999 49.07 Adjustment for performance achievement (1) — — 1,713 47.27 Vested/exercised ( 31,794 ) 42.29 ( 10,383 ) 45.85 Forfeited ( 3,426 ) 46.47 ( 2,706 ) 46.51 Outstanding as of January 31, 2024 49,191 $ 46.79 23,103 $ 48.09 (1) Represents the adjustment to previously granted performance share units for performance achievement. The following table includes additional information related to restricted stock units and restricted stock and performance-based restricted stock units: Fiscal Years Ended January 31, (Amounts in millions, except years) 2024 2023 2022 Fair value of restricted stock units vested $ 1,345 $ 931 $ 703 Fair value of restricted stock and performance-based restricted stock units vested 477 390 264 Unrecognized compensation cost for restricted stock units 1,686 1,323 1,102 Unrecognized compensation cost for restricted stock and performance-based restricted stock units 656 548 417 Weighted average remaining period to expense for restricted stock units (years) 0.9 1.0 1.2 Weighted average remaining period to expense for restricted stock and performance-based restricted stock units (years) 1.3 1.4 1.5 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 fiscal 2024 were made under the current $ 20.0 billion share repurchase program approved in November 2022, which has no expiration date or other restrictions limiting the period over which the Company can make repurchases. As of January 31, 2024 authorization for $ 16.5 billion of share repurchases remained under the share repurchase program. Any repurchased shares are constructively retired and returned to an unissued status. The Company regularly reviews share repurchase activity and considers several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, results of operations 67 and the market price of the Company's 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 2024, 2023 and 2022: Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2024 2023 2022 Total number of shares repurchased 54.6 221.8 209.1 Average price paid per share $ 50.87 $ 44.72 $ 46.82 Total cash paid for share repurchases $ 2,779 $ 9,920 $ 9,787 Note 4. Accumulated Other Comprehensive Loss The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2024, 2023 and 2022: (Amounts in millions and net of immaterial income taxes) Currency Translation and Other Net Investment Hedges Cash Flow Hedges Minimum Pension Liability Total Balances as of February 1, 2021 $ ( 10,772 ) $ 1,296 $ ( 304 ) $ ( 1,986 ) $ ( 11,766 ) Other comprehensive loss before reclassifications, net ( 586 ) ( 7 ) ( 540 ) — ( 1,133 ) Reclassifications related to business dispositions, net (1) 3,258 ( 1,195 ) 30 1,966 4,059 Reclassifications to income, net — — 66 8 74 Balances as of January 31, 2022 ( 8,100 ) 94 ( 748 ) ( 12 ) ( 8,766 ) Other comprehensive income (loss) before reclassifications, net ( 1,145 ) — ( 571 ) 5 ( 1,711 ) Return of currency translation to parent (2) ( 1,262 ) — — — ( 1,262 ) Reclassifications to income, net ( 309 ) — 368 — 59 Balances as of January 31, 2023 ( 10,816 ) 94 ( 951 ) ( 7 ) ( 11,680 ) Other comprehensive income (loss) before reclassifications, net 333 — ( 8 ) ( 11 ) 314 Reclassifications to income, net — — 64 — 64 Balances as of January 31, 2024 $ ( 10,483 ) $ 94 $ ( 895 ) $ ( 18 ) $ ( 11,302 ) (1) Upon closing of the sale of the Company's operations in the U.K. and Japan during the first quarter of fiscal 2022, these amounts were released from accumulated other comprehensive loss, the majority of which was considered in the impairment evaluation when the individual disposal groups met the held for sale classification in fiscal 2021. (2) Upon closing of the noncontrolling interest shareholder buyout of the Company's Massmart subsidiary during the fourth quarter of fiscal 2023, the cumulative amount of currency translation was reallocated from the Company's noncontrolling interest back to the Company. Refer to Note 3 . Amounts reclassified from accumulated other comprehensive loss for derivative instruments are generally recorded in interest, net, in the Company's Consolidated Statements of Income. The amounts for the minimum pension liability, as well as the cumulative translation resulting from the disposition of a business, are recorded in other gains and losses 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. Note 5. Accrued Liabilities The Company's accrued liabilities consist of the following as of January 31, 2024 and 2023: January 31, (Amounts in millions) 2024 2023 Accrued wages and benefits (1) 8,590 8,287 Self-insurance (2) 4,916 4,724 Accrued non-income taxes (3) 3,459 3,425 Opioid litigation settlement (4) — 2,949 Deferred gift card revenue 2,664 2,488 Other (5) 9,130 9,253 Total accrued liabilities $ 28,759 $ 31,126 (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, property, value-added, sales and miscellaneous other taxes. (4) Represents the remaining balance for the opioids litigation settlement (substantially all of the balance outstanding at the end of fiscal 2023 was paid in fiscal 2024, see Note 10 .) (5) Other accrued liabilities includes items such as deferred membership revenue, interest, the purchase of PhonePe stock (see Note 3 ), supply chain, advertising, and maintenance & utilities. 68 Note 6. Short-term Borrowings and Long-term Debt Short-term borrowings consist of commercial paper and lines of credit. Short-term borrowings as of January 31, 2024 and 2023 were $ 0.9 billion and $ 0.4 billion, respectively, with weighted-average interest rates of 7.7 % and 6.6 %, respectively. The Company has various committed lines of credit in the U.S. to support its commercial paper program and are summarized in the following table: January 31, 2024 January 31, 2023 (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) 10,000 — 10,000 10,000 — 10,000 Total $ 15,000 $ — $ 15,000 $ 15,000 $ — $ 15,000 (1) In April 2023, the Company renewed and extended its existing 364 -day revolving credit facility as well as its five year credit facility. The committed lines of credit in the table above mature in April 2024 and April 2028, carry interest rates of the Secured Overnight Financing Rate plus 55 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 has syndicated and fronted letters of credit available which totaled $ 2.1 billion as of January 31, 2024 and 2023, of which $ 1.7 billion and $ 1.8 billion was drawn as of January 31, 2024 and 2023, respectively. The Company's long-term debt, which includes the fair value instruments further discussed in Note 8 , consists of the following as of January 31, 2024 and 2023: January 31, 2024 January 31, 2023 (Amounts in millions) Maturity Dates By Fiscal Year Amount Average Rate (1) Amount Average Rate (1) Unsecured debt Fixed 2025 - 2054 $ 34,527 3.7 % $ 33,707 3.6 % Total U.S. dollar denominated 34,527 33,707 Fixed 2027 - 2030 1,789 4.0 % 1,790 4.0 % Total Euro denominated 1,789 1,790 Fixed 2031 - 2039 3,412 5.4 % 3,318 5.4 % Total Sterling denominated 3,412 3,318 Fixed 2025 - 2028 677 0.4 % 767 0.4 % Total Yen denominated 677 767 Total unsecured debt 40,405 39,582 Total other (2) ( 826 ) ( 742 ) Total debt 39,579 38,840 Less amounts due within one year ( 3,447 ) ( 4,191 ) Long-term debt $ 36,132 $ 34,649 (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. (2) Includes deferred loan costs, discounts, fair value hedges, foreign-held debt and secured debt. Annual maturities of long-term debt during the next five years and thereafter are as follows: (Amounts in millions) Annual Fiscal Year Maturities 2025 $ 3,447 2026 2,600 2027 3,483 2028 1,760 2029 3,458 Thereafter 24,831 Total $ 39,579 69 Debt Issuances Information on significant long-term debt issued during fiscal 2024 and 2023, for general corporate purposes, is as follows: (Amounts in millions) Issue Date Principal Amount Maturity Date Fixed vs. Floating Interest Rate Net Proceeds April 18, 2023 $ 750 April 15, 2026 Fixed 4.000 % $ 748 April 18, 2023 $ 750 April 15, 2028 Fixed 3.900 % 746 April 18, 2023 $ 500 April 15, 2030 Fixed 4.000 % 497 April 18, 2023 $ 1,500 April 15, 2033 Fixed 4.100 % 1,491 April 18, 2023 $ 1,500 April 15, 2053 Fixed 4.500 % 1,485 Total $ 4,967 (Amounts in millions) Issue Date Principal Amount Maturity Date Fixed vs. Floating Interest Rate Net Proceeds September 9, 2022 $ 1,750 September 9, 2025 Fixed 3.900 % $ 1,744 September 9, 2022 $ 1,000 September 9, 2027 Fixed 3.950 % 994 September 9, 2022 $ 1,250 September 9, 2032 Fixed 4.150 % 1,239 September 9, 2022 $ 1,000 September 9, 2052 Fixed 4.500 % 992 Total $ 4,969 These issuances are senior, unsecured notes which rank equally with all other senior, unsecured debt obligations of the Company, and are not convertible or exchangeable. These issuances do not contain any financial covenants which restrict the Company's ability to pay dividends or repurchase Company stock. Additionally, the Company received immaterial proceeds from debt issuances by certain international markets during fiscal 2023. Maturities and Extinguishments The following tables provide details of significant long-term debt repayments during fiscal 2024 and 2023: (Amounts in millions) Maturity Date Principal Amount Fixed vs. Floating Interest Rate Repayment April 11, 2023 $ 1,750 Fixed 2.550 % $ 1,750 June 26, 2023 $ 2,280 Fixed 3.400 % 2,280 Total repayment of matured debt $ 4,030 (Amounts in millions) Maturity Date Principal Amount Fixed vs. Floating Interest Rate Repayment April 8, 2022 € 850 Fixed 1.900 % $ 927 July 15, 2022 ¥ 70,000 Fixed 0.183 % 512 December 15, 2022 $ 1,250 Fixed 2.350 % 1,250 Total repayment of matured debt $ 2,689 Note 7. Leases The Company leases certain retail locations, distribution and fulfillment centers, warehouses, office spaces, land and equipment throughout the U.S. and internationally. The Company's lease costs recognized in the Consolidated Statements of Income consist of the following: Fiscal years ended January 31, (Amounts in millions) 2024 2023 2022 Operating lease cost $ 2,277 $ 2,306 $ 2,274 Finance lease cost: Amortization of right-of-use assets 755 596 565 Interest on lease obligations 326 256 232 Variable lease cost 1,082 899 823 70 Other lease information is as follows: Fiscal years ended January 31, (Amounts in millions) 2024 2023 2022 Cash paid for amounts included in measurement of lease obligations: Operating cash flows from operating leases $ 2,273 2,280 2,234 Operating cash flows from finance leases 315 248 225 Financing cash flows from finance leases 1,055 563 538 Assets obtained in exchange for operating lease obligations 1,514 1,714 1,816 Assets obtained in exchange for finance lease obligations 1,572 1,226 1,044 As of January 31, 2024 2023 Weighted-average remaining lease term - operating leases 11.7 years 12.0 years Weighted-average remaining lease term - finance leases 12.4 years 13.3 years Weighted-average discount rate - operating leases 6.4 % 6.0 % Weighted-average discount rate - finance leases 6.8 % 6.5 % The aggregate annual lease obligations at January 31, 2024, are as follows: (Amounts in millions) Fiscal Year Operating Leases Finance Leases 2025 $ 2,181 $ 1,071 2026 2,107 1,000 2027 1,970 926 2028 1,815 823 2029 1,645 636 Thereafter 11,295 5,850 Total undiscounted lease obligations 21,013 10,306 Less imputed interest ( 6,583 ) ( 3,872 ) Net lease obligations $ 14,430 $ 6,434 Note 8. Fair Value Measurements 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. As described in Note 1 , the Company measures the fair value of certain equity investments, including certain immaterial equity method investments where the Company has elected the fair value option, on a recurring basis within other long-term assets in the accompanying Consolidated Balance Sheets. The amounts of gains and losses included in earnings from fair value changes for these investments are recognized within other gains and losses in the Consolidated Statements of Income. The fair value of these investments is as follows: (Amounts in millions) Fair Value as of January 31, 2024 Fair Value as of January 31, 2023 Equity investments measured using Level 1 inputs $ 2,835 $ 5,099 Equity investments measured using Level 2 inputs 4,414 5,570 Total $ 7,249 $ 10,669 Changes in the fair value of these investments were primarily due to gains and losses resulting from net changes in the underlying stock prices, along with certain other immaterial investment activity. The fair value of these investments decreased $ 3.4 billion and $ 1.2 billion during fiscal 2024 and 2023, respectively. Equity investments without readily determinable fair 71 values are carried at cost and adjusted for any observable price changes or impairments within other gains and losses in the Consolidated Statements of Income. Derivatives The Company also has derivatives recorded at fair value. Derivative 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, 2024 and January 31, 2023, the notional amounts and fair values of these derivatives were as follows: January 31, 2024 January 31, 2023 (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 $ 6,271 $ ( 654 ) (1) $ 8,021 $ ( 689 ) (1) Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges 5,879 ( 1,302 ) (1) 5,900 ( 1,423 ) (1) Total $ 12,150 $ ( 1,956 ) $ 13,921 $ ( 2,112 ) (1) Primarily classified in deferred income taxes and other in the Company's Consolidated Balance Sheets. 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. Upon completing the sales of the Company's operations in the U.K. in February 2021 and Japan in March 2021, the Company recorded incremental non-recurring impairment charges of $ 0.4 billion in the first quarter of fiscal 2022 within other gains and losses in the Consolidated Statements of Income. Refer to Note 12 . The Company did not have any material assets or liabilities resulting in nonrecurring fair value measurements as of January 31, 2024 and January 31, 2023. Other Fair Value Disclosures The Company records cash and cash equivalents, restricted cash 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, 2024 and 2023, are as follows: January 31, 2024 January 31, 2023 (Amounts in millions) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, including amounts due within one year $ 39,579 $ 38,431 $ 38,840 $ 38,169 Note 9. Taxes The components of income before income taxes are as follows: Fiscal Years Ended January 31, (Amounts in millions) 2024 2023 2022 U.S. $ 20,092 $ 15,089 $ 15,536 Non-U.S. 1,756 1,927 3,160 Total income before income taxes $ 21,848 $ 17,016 $ 18,696 72 A summary of the provision for income taxes is as follows: Fiscal Years Ended January 31, (Amounts in millions) 2024 2023 2022 Current: U.S. federal $ 3,215 $ 2,030 $ 3,313 U.S. state and local 762 610 649 International 1,772 2,654 1,553 Total current tax provision 5,749 5,294 5,515 Deferred: U.S. federal ( 438 ) 608 ( 671 ) U.S. state and local 141 119 41 International 126 ( 297 ) ( 129 ) Total deferred tax expense (benefit) ( 171 ) 430 ( 759 ) Total provision for income taxes $ 5,578 $ 5,724 $ 4,756 Effective Income Tax Rate Reconciliation A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pre-tax income from continuing operations is as follows: Fiscal Years Ended January 31, 2024 2023 2022 U.S. statutory tax rate 21.0 % 21.0 % 21.0 % U.S. state income taxes, net of federal income tax benefit 3.0 % 3.1 % 2.8 % Income taxed outside the U.S. 0.1 % 1.1 % ( 1.5 ) % Separation, disposal and wind-down of certain business operations — % 6.3 % 0.5 % Valuation allowance 1.2 % 1.7 % 4.4 % Net impact of repatriated international earnings ( 0.4 ) % ( 0.4 ) % ( 0.3 ) % Federal tax credits ( 1.5 ) % ( 1.3 ) % ( 1.1 ) % Change in unrecognized tax benefits 0.6 % 0.3 % 0.2 % Other, net 1.5 % 1.8 % ( 0.6 ) % Effective income tax rate 25.5 % 33.6 % 25.4 % The following sections regarding deferred taxes, unremitted earnings, net operating losses, tax credit carryforwards, valuation allowances and uncertain tax positions exclude amounts related to operations classified as held for sale. Deferred Taxes The significant components of the Company's deferred tax account balances are as follows: January 31, (Amounts in millions) 2024 2023 Deferred tax assets: Loss and tax credit carryforwards $ 7,136 $ 7,690 Accrued liabilities 3,066 3,312 Share-based compensation 238 237 Lease obligations 4,831 4,653 Other 1,124 839 Total deferred tax assets 16,395 16,731 Valuation allowances ( 7,485 ) ( 7,815 ) Deferred tax assets, net of valuation allowances 8,910 8,916 Deferred tax liabilities: Property and equipment 4,813 4,352 Acquired intangibles 898 932 Inventory 3,035 3,032 Lease right of use assets 4,941 4,727 Mark-to-market investments 322 1,390 Other 486 249 Total deferred tax liabilities 14,495 14,682 Net deferred tax liabilities $ 5,585 $ 5,766 73 The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets: January 31, (Amounts in millions) 2024 2023 Balance Sheet classification Assets: Other long-term assets $ 1,663 $ 1,503 Liabilities: Deferred income taxes and other 7,248 7,269 Net deferred tax liabilities $ 5,585 $ 5,766 Unremitted Earnings Prior to the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), the Company asserted that all unremitted earnings of its foreign subsidiaries were considered indefinitely reinvested. As a result of the Tax Act, the Company reported and paid U.S. tax on the majority of its previously unremitted foreign earnings, and repatriations of foreign earnings will generally be free of U.S. federal tax, but may incur other taxes such as withholding or state taxes. As of January 31, 2024, the Company has not recorded approximately $ 1 billion of deferred tax liabilities associated with remaining unremitted foreign earnings considered indefinitely reinvested, for which U.S. and foreign income and withholding taxes would be due upon repatriation. Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances As of January 31, 2024, the Company's net operating loss and capital loss carryforwards totaled approximately $ 30.3 billion. Of these carryforwards, approximately $ 16.5 billion will expire, if not utilized, in various years through 2044. The remaining carryforwards have no expiration. The realizability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is generally established. To the extent that a valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the change in the valuation allowance is recognized in the Consolidated Statements of Income. The Company had valuation allowances of approximately $ 7.5 billion and $ 7.8 billion as of January 31, 2024 and 2023, respectively, on deferred tax assets associated primarily with the net operating loss carryforwards. Activity in the valuation allowance during fiscal 2024 related to valuation allowance builds in multiple markets, as well as releases due to the expiration of unrealized deferred tax assets. Uncertain Tax Positions The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. As of January 31, 2024 and 2023, the amount of gross unrecognized tax benefits related to continuing operations was $ 3.5 billion and $ 3.3 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate was $ 1.7 billion and $ 1.5 billion as of January 31, 2024 and 2023, respectively. A reconciliation of gross unrecognized tax benefits from continuing operations is as follows: Fiscal Years Ended January 31, (Amounts in millions) 2024 2023 2022 Gross unrecognized tax benefits, beginning of year $ 3,307 $ 3,245 $ 3,135 Increases related to prior year tax positions 336 79 170 Decreases related to prior year tax positions ( 74 ) ( 248 ) ( 97 ) Increases related to current year tax positions 102 357 75 Settlements during the period ( 102 ) ( 89 ) ( 5 ) Lapse in statutes of limitations ( 29 ) ( 37 ) ( 33 ) Gross unrecognized tax benefits, end of year $ 3,540 $ 3,307 $ 3,245 The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling, general and administrative expenses, respectively. Interest expense and penalties related to these positions were immaterial for fiscal 2024, 2023 and 2022. During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by an immaterial amount, either because the tax positions are sustained on audit or because the Company agrees to their disallowance. The Company does not expect any change to have a material impact to its Consolidated Financial Statements. 74 The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2018 through 2023. The Company also remains subject to income tax examinations for international income taxes for fiscal 2013 through 2023, and for U.S. state and local income taxes generally for the fiscal years ended 2017 through 2023. With few exceptions, the Company is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before fiscal 2013. Other Taxes The Company is subject to tax examinations for value added, sales-based, payroll and other non-income taxes. A number of these examinations are ongoing in various jurisdictions. In certain cases, the Company has received assessments and judgments from the respective taxing authorities in connection with these examinations. Unless otherwise indicated, the possible losses or range of possible losses associated with these matters are individually immaterial, but a group of related matters, if decided adversely to the Company, could result in a liability material to the Company's Consolidated Financial Statements. Note 10. Contingencies Legal Proceedings The Company is involved in a number of legal proceedings and certain regulatory matters. The Company records a liability for those legal proceedings and regulatory matters when it determines it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company also discloses when it is reasonably possible that a material loss may be incurred. From time to time, the Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company and its shareholders. Unless stated otherwise, the matters discussed below, if decided adversely to or settled by the Company, individually or in the aggregate, may result in a liability material to the Company's financial position, results of operations or cash flows. Settlement Framework Regarding Multidistrict and State or Local Opioid-Related Litigation During fiscal 2023, the Company accrued a liability for approximately $ 3.3 billion for the Settlement Framework (described below) and other previously agreed upon state and tribal settlements. The Settlement Framework includes no admission of wrongdoing or liability by the Company, and the Company continues to believe it has substantial factual and legal defenses to opioids-related litigation. As of January 31, 2024, substantially all of the original approximately $ 3.3 billion accrued liability for the Settlement Framework and other settlements have been paid. In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes, individuals and third-party payers, asserting claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation is entitled In re National Prescription Opiate Litigation (MDL No. 2804) (the "MDL") and is pending in the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included in the MDL. On November 15, 2022, the Company announced it had agreed to financial amounts and payment terms to resolve substantially all opioids-related lawsuits filed against the Company by states, political subdivisions, and Native American tribes whether as part of the MDL (excluding, however, a single, two-county trial described further below) or in state court, as well as all potential claims that could be made against the Company by states, political subdivisions, and Native American tribes for up to approximately $ 3.1 billion (the "Settlement Amount"). The Settlement Amount includes amounts for remediation of alleged harms as well as attorneys' fees and costs and also includes some, but not all, amounts from previously agreed recent settlements by the Company. One settlement framework with corresponding conditions and participation thresholds applies for the states and political subdivisions, and another settlement framework with corresponding conditions and participation thresholds applies for the Native American tribes. Both settlement frameworks are referred to collectively as the "Settlement Framework." The Settlement Framework, among other applicable conditions, provides that payments to states and political subdivisions are contingent upon the number of states and political subdivisions, including those states and political subdivisions who have not yet sued the Company, that agree to participate in the Settlement Framework or otherwise have their claims foreclosed within a prescribed deadline. On December 20, 2022, the Company announced that it had settlement agreements with all 50 states, including four states that previously settled with the Company, as well as the District of Columbia, Puerto Rico and three other U.S. territories (the "Settling States"), thus satisfying the initial threshold of required participation by Settling States. On August 22, 2023, the settlement administrator determined that a sufficient number of political subdivisions had agreed to participate in the Settlement Framework, which was a necessary condition for the Settlement Framework to become effective. The Settlement Framework became effective 15 days later, on September 6, 2023. The Company deposited the full portion of the Settlement Amount attributable to the Settling States on October 11, 2023. Although the settlement administrator has determined that sufficient number of political subdivisions have agreed to participate in the Settlement Framework, and thus the 75 Settlement Framework was effective, eligible political subdivisions still have until July 15, 2025, to join the Settlement Framework. Other Opioid-Related Litigation The Company will continue to vigorously defend against any opioid-related litigation not covered or otherwise resolved by the Settlement Framework, including, but not limited to, each of the matters described below; any other actions filed by healthcare providers, individuals, and third-party payers; and any action filed by a political subdivision or Native American tribe that is not resolved by the Settlement Framework. Accordingly, the Company has not accrued a liability for these opioid-related litigation matters nor can the Company reasonably estimate any loss or range of loss that may arise from these matters. The Company can provide no assurance as to the scope and outcome of any of these matters and no assurance that its business, financial position, results of operations or cash flows will not be materially adversely affected. Two-County Trial and MDL Bellwethers; Canada; and Other Litigation. The liability phase of a single, two-county trial in one of the MDL cases resulted in a jury verdict on November 23, 2021, finding in favor of the plaintiffs as to the liability of all defendants, including the Company. The abatement phase of the single, two-county trial resulted in a judgment on August 17, 2022, that ordered all three defendants, including the Company, to pay an aggregate amount of approximately $ 0.7 billion over fifteen years , on a joint and several liability basis, and granted the plaintiffs injunctive relief. On September 7, 2022, the Company filed an appeal with the Sixth Circuit Court of Appeals. The monetary aspect of the judgment is stayed pending appeal, and the injunctive aspect of the judgment went into effect on February 20, 2023. On September 11, 2023, the Sixth Circuit Court of Appeals issued an order of certifying certain questions in the appeal for review by the Supreme Court of Ohio. On November 29, 2023, the Supreme Court of Ohio accepted the request for certification, and the matter remains pending with the court. The MDL designated five additional single-county cases as bellwethers to proceed through discovery; however, these five counties have elected to participate in the Settlement Framework and receive a portion of the Settlement Amount rather than go to trial. On October 25, 2023, the MDL designated four cases brought by third-party payers as bellwether cases to proceed through discovery. Additional bellwethers of cases brought by hospitals and other healthcare providers may be designated in the future. Wal-Mart Canada Corp. and certain other subsidiaries of the Company have been named as defendants in two putative class action complaints filed in Canada related to dispensing and distribution practices involving opioids. These matters remain pending. Similar cases that name the Company also have been filed in state and federal courts by state, local, and tribal governments, healthcare providers, and other plaintiffs. Plaintiffs in these cases and in the MDL are seeking compensatory and punitive damages, as well as injunctive relief including abatement. The Company has also been responding to subpoenas, information requests, and investigations from governmental entities related to nationwide controlled substance dispensing and distribution practices involving opioids. DOJ Opioid Civil Litigation. On December 22, 2020, the U.S. Department of Justice (the "DOJ") filed a civil complaint in the U.S. District Court for the District of Delaware alleging that the Company unlawfully dispensed controlled substances from its pharmacies and unlawfully distributed controlled substances to those pharmacies. The complaint alleges that this conduct resulted in violations of the Controlled Substances Act. The DOJ is seeking civil penalties and injunctive relief. The Company initially moved to dismiss the DOJ complaint on February 22, 2021. After that motion was fully briefed, the DOJ filed an amended complaint on October 7, 2022. On November 7, 2022, the Company filed a partial motion to dismiss the amended complaint. The Court held a hearing on the partial motion to dismiss on January 18, 2024, and ordered the DOJ to file an amended complaint. The DOJ filed that amended complaint on February 1, 2024, and Walmart filed a partial motion to dismiss that complaint on February 6, 2024. On March 11, 2024, the Court granted in-part Walmart's motion by dismissing the entirety of the DOJ's claims related to distribution and dismissing the DOJ's claims arising under one of the DOJ's two dispensing liability theories. The DOJ's claims arising under its other dispensing liability theory remain pending. Opioid-Related Securities Class Actions and Derivative Litigation. In addition, the Company is the subject of two securities class actions alleging violations of the federal securities laws regarding the Company's disclosures with respect to opioids, filed in the U.S. District Court for the District of Delaware on January 20, 2021 and March 5, 2021, purportedly on behalf of a class of investors who acquired Walmart stock from March 30, 2016 through December 22, 2020. Those cases have been consolidated. On October 8, 2021, the defendants filed a motion to dismiss the consolidated securities action. After the parties had fully briefed the motion to dismiss, on September 9, 2022, the Court entered an order permitting the plaintiffs to file an amended complaint, which was filed on October 14, 2022, and which revised the applicable putative class of investors to those who acquired Walmart stock from March 31, 2017, through December 22, 2020. On November 16, 2022, the defendants filed a motion to dismiss the amended complaint. That motion remains pending. Derivative actions were also filed by two of the Company's shareholders in the U.S. District Court for the District of Delaware on February 9, 2021 and April 16, 2021, alleging breach of fiduciary duties against certain of its current and former directors with respect to oversight of the Company's distribution and dispensing of opioids and also alleging violations of the federal 76 securities laws and other breaches of duty by certain current and former directors and officers in connection with the Company's opioids disclosures. Those cases have been stayed pending developments in other opioids litigation matters. On September 27, 2021, three shareholders filed a derivative action in the Delaware Court of Chancery alleging that certain members of the Board of Directors and certain former officers breached their fiduciary duties in failing to adequately oversee the Company's prescription opioids business. The defendants moved to dismiss and/or to stay proceedings on December 21, 2021, and the plaintiffs responded by filing an amended complaint on February 22, 2022. On April 20, 2022, the defendants moved to dismiss and/or to stay proceedings with respect to the amended complaint. In two orders issued on April 12 and 26, 2023, the Court of Chancery granted the defendants' motion to dismiss with respect to claims involving the Company's distribution practices and denied the remainder of the motion, including the Company's request to stay the litigation. On May 5, 2023, the Company's Board of Directors (the "Board") appointed an independent Special Litigation Committee (the "SLC") to investigate the allegations regarding certain current and former officers and directors named in the various derivative proceedings regarding oversight with respect to opioids. The Board has authorized the SLC to retain independent legal counsel and such other advisors as the SLC deems appropriate in carrying out its duties. The derivative matter pending in the Delaware Court of Chancery is stayed until the SLC completes its investigation. Other Legal Proceedings Asda Equal Value Claims. Asda, formerly a subsidiary of the Company, was and still is a defendant in certain equal value claims that began in 2008 and are proceeding before an Employment Tribunal in Manchester in the United Kingdom on behalf of current and former Asda store employees, as well as additional claims in the High Court of the United Kingdom (the "Asda Equal Value Claims"). Further claims may be asserted in the future. Subsequent to the divestiture of Asda in February 2021, the Company continues to oversee the conduct of the defense of these claims. While potential liability for these claims remains with Asda, the Company has agreed to provide indemnification with respect to certain of these claims up to a contractually determined amount. The Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise related to these proceedings. Accordingly, the Company can provide no assurance as to the scope and outcome of these matters. Money Transfer Agent Services Matters. The Company has responded to grand jury subpoenas issued by the United States Attorney's Office for the Middle District of Pennsylvania on behalf of the DOJ seeking documents regarding the Company's consumer fraud prevention program and anti-money laundering compliance related to the Company's money transfer services, where Walmart is an agent. The most recent subpoena was issued in August 2020. Walmart's responses to DOJ's subpoenas have been complete since 2021. The Company continues to cooperate with and provide information and documents voluntarily in response to supplemental requests from the DOJ. The Company has also responded to civil investigative demands from the United States Federal Trade Commission (the "FTC") in connection with the FTC's investigation related to money transfers and the Company's anti-fraud program in its capacity as an agent. On June 28, 2022, the FTC filed a complaint against the Company in the U.S. District Court for the Northern District of Illinois alleging that Walmart violated the Federal Trade Commission Act and the Telemarketing Sales Rule regarding its money transfer agent services and is requesting non-monetary relief and civil penalties. On August 29, 2022, the Company filed a motion to dismiss the complaint. On March 27, 2023, the Court issued an opinion dismissing the FTC's claim under the Telemarketing Sales Rule and denying Walmart's motion to dismiss the claim under Section 5 of the Federal Trade Commission Act. On April 12, 2023, Walmart filed a motion to certify the Court's March 27, 2023, order for interlocutory appeal. On June 30, 2023, the FTC filed an amended complaint against Walmart again asserting claims under the Federal Trade Commission Act and Telemarketing Sales Rule. On July 20, 2023, the Court denied Walmart's motion to certify the Court's March 27, 2023, order for interlocutory appeal, finding that it would be more orderly to consider a request for interlocutory appeal after a ruling on Walmart's motion to dismiss the amended complaint. Walmart's motion to dismiss the amended complaint was filed on August 11, 2023. The motion remains pending. No other deadlines have yet been set, and discovery is stayed. The Company intends to vigorously defend these matters. However, the Company can provide no assurance as to the scope and outcome of these matters and cannot reasonably estimate any loss or range of loss that may arise. Accordingly, the Company can provide no assurance that its business, financial position, results of operations or cash flows will not be materially adversely affected. Mexico Antitrust Matter . On October 6, 2023, the Comisión Federal de Competencia Económica of México ("COFECE") notified the main Mexican operating subsidiary of Wal-Mart de México, S.A.B. de C.V. ("Walmex"), a majority owned subsidiary of the Company, that COFECE's Investigatory Authority ("IA") had requested COFECE to initiate a quasi-judicial administrative process against Walmex's subsidiary for alleged relative monopolistic practices in connection with the supply and wholesale distribution of certain consumer goods, retail marketing practices of such consumer goods and related services. The quasi-judicial administrative process is the first opportunity for Walmex's subsidiary to respond to and defend against the IA's allegations before COFECE. While COFECE has the authority to impose monetary relief and/or non-structural conduct measures, such relief and conduct measures would be subject to appeal by Walmex's subsidiary. On December 14, 2023, Walmex's subsidiary submitted its defense arguments and will continue to defend against the allegations vigorously, both at the quasi-judicial administrative process and, if required, before any courts. Because this process is at an early stage, the Company can provide no assurance as to the scope and outcome of these matters, cannot reasonably estimate any loss or range of loss that 77 may arise and can provide no assurance that its business, financial position, results of operations or cash flows will not be materially adversely affected. Note 11. Retirement-Related Benefits The Company offers a 401(k) plan for associates in the U.S. under which eligible associates can begin contributing to the plan immediately upon hire. The Company also offers a 401(k) type plan for associates in Puerto Rico under which associates can begin to contribute generally after one year of employment. Under these plans, after one year of employment, the Company matches 100 % of participant contributions up to 6 % of annual eligible earnings. The matching contributions immediately vest at 100 % for each associate. Participants can contribute up to 50 % of their pre-tax earnings, but not more than the statutory limits. Associates in international countries who are not U.S. citizens are covered by various defined contribution post-employment benefit arrangements. These plans are administered based upon the legislative and tax requirements in the countries in which they are established. The following table summarizes the contribution expense related to the Company's defined contribution plans for fiscal 2024, 2023 and 2022: Fiscal Years Ended January 31, (Amounts in millions) 2024 2023 2022 Defined contribution plans: U.S. $ 1,528 $ 1,491 $ 1,441 International 85 74 39 Total contribution expense for defined contribution plans $ 1,613 $ 1,565 $ 1,480 Note 12. Disposals, Acquisitions and Related Items The following dispositions impact the Company's Walmart International segment. Other immaterial transactions have also occurred. Asda In February 2021, the Company completed the divestiture of Asda, the Company's retail operations in the U.K., for net consideration of $ 9.6 billion. Upon closing of the transaction, the Company recorded an incremental pre-tax loss of $ 0.2 billion in other gains and losses in its Consolidated Statements of Income in the first quarter of fiscal 2022, primarily related to changes in the net assets of the disposal group, currency exchange rate fluctuations and customary purchase price adjustments upon closing. During the first quarter of fiscal 2022, the Company deconsolidated the financial statements of Asda and recognized its retained investment in Asda as a debt security within other long-term assets and also recognized certain legal and tax indemnity liabilities within deferred income taxes and other in the Consolidated Balance Sheet. Seiyu In March 2021, the Company completed the divestiture of Seiyu, the Company's retail operations in Japan, for net consideration of $ 1.2 billion. Upon closing of the transaction, the Company recorded an incremental pre-tax loss of $ 0.2 billion in other gains and losses in its Consolidated Statements of Income in the first quarter of fiscal 2022, primarily related to changes in the net assets of the disposal group, currency exchange rate fluctuations and customary purchase price adjustments upon closing. During the first quarter of fiscal 2022, the Company deconsolidated the financial statements of Seiyu and recognized its retained 15 percent ownership interest in Seiyu as an equity investment within other long-term assets in the Consolidated Balance Sheet. Note 13. Segments and Disaggregated Revenue Segments The Company is engaged in the operation of retail and wholesale stores and clubs, as well as eCommerce websites and mobile applications, located throughout the U.S., Africa, Canada, Central America, Chile, China, India and Mexico. The Company previously operated in the United Kingdom and Japan prior to the sale of those operations in the first quarter of fiscal 2022. Refer to Note 12 for discussion of recent divestitures. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products and services in each of its segments. It is impracticable to segregate and identify revenues for each of these individual products and services. The Walmart U.S. segment includes the Company's mass merchant concept in the U.S., as well as eCommerce, which includes omni-channel initiatives and certain other business offerings such as advertising services through Walmart Connect. The 78 Walmart International segment consists of the Company's operations outside of the U.S., as well as eCommerce and omni-channel initiatives. The Sam's Club segment includes the warehouse membership clubs in the U.S., as well as eCommerce and omni-channel initiatives. Corporate and support consists of corporate overhead and other items not allocated to any of the Company's segments. The Company measures the results of its segments using, among other measures, each segment's net sales and operating income, which includes certain corporate overhead allocations. From time to time, the Company revises the measurement of each segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed by its CODM. Information for the Company's segments, as well as for Corporate and support, including the reconciliation to income before income taxes, is provided in the following table: (Amounts in millions) Walmart U.S. Walmart International Sam's Club Corporate and support Consolidated Fiscal Year Ended January 31, 2024 Net sales $ 441,817 $ 114,641 $ 86,179 $ — $ 642,637 Operating income (loss) 22,154 4,909 2,192 ( 2,243 ) 27,012 Interest, net ( 2,137 ) Other gains and (losses) ( 3,027 ) Income before income taxes $ 21,848 Total assets $ 137,782 $ 86,136 $ 15,682 $ 12,799 $ 252,399 Depreciation and amortization 7,671 2,159 642 1,381 11,853 Capital expenditures $ 13,877 $ 2,911 $ 1,041 $ 2,777 $ 20,606 Fiscal Year Ended January 31, 2023 Net sales $ 420,553 $ 100,983 $ 84,345 $ — $ 605,881 Operating income (loss) 20,620 2,965 1,964 ( 5,121 ) 20,428 Interest, net ( 1,874 ) Other gains and (losses) ( 1,538 ) Income before income taxes $ 17,016 Total assets $ 130,659 $ 86,766 $ 15,490 $ 10,282 $ 243,197 Depreciation and amortization $ 7,054 $ 1,964 $ 609 $ 1,318 10,945 Capital expenditures $ 11,425 $ 2,625 $ 727 $ 2,080 16,857 Fiscal Year Ended January 31, 2022 Net sales $ 393,247 $ 100,959 $ 73,556 $ — $ 567,762 Operating income (loss) 21,587 3,758 2,259 ( 1,662 ) 25,942 Interest, net ( 1,836 ) Loss on extinguishment of debt ( 2,410 ) Other gains and (losses) ( 3,000 ) Income before income taxes $ 18,696 Total assets $ 125,044 $ 91,403 $ 14,678 $ 13,735 $ 244,860 Depreciation and amortization $ 6,773 $ 1,963 $ 601 $ 1,321 10,658 Capital expenditures $ 8,475 $ 2,497 $ 622 $ 1,512 13,106 Total revenues, consisting of net sales and membership and other income, and long-lived assets, consisting primarily of net property and equipment and lease right-of-use assets, aggregated by the Company's U.S. and non-U.S. operations for fiscal 2024, 2023 and 2022, are as follows: Fiscal Years Ended January 31, (Amounts in millions) 2024 2023 2022 Revenues U.S. operations $ 532,076 $ 508,685 $ 470,295 Non-U.S. operations 116,049 102,604 102,459 Total revenues $ 648,125 $ 611,289 $ 572,754 Long-lived assets U.S. operations $ 104,480 $ 95,567 $ 89,795 Non-U.S. operations 25,858 23,667 22,829 Total long-lived assets $ 130,338 $ 119,234 $ 112,624 No individual country outside of the U.S. had total revenues or long-lived assets that were material to the consolidated totals. Long-lived assets related to operations classified as held for sale are excluded from the table above. Additionally, the Company did not generate material revenues from any single customer. 79 Disaggregated Revenues In the following tables, segment net sales are disaggregated by either merchandise category or market. In addition, net sales related to eCommerce, which include omni-channel sales where a customer initiates an order digitally and the order is fulfilled through a store or club, are provided for each segment. (Amounts in millions) Fiscal Years Ended January 31, Walmart U.S. net sales by merchandise category 2024 2023 2022 Grocery $ 264,210 $ 247,299 $ 218,944 General merchandise 113,985 118,597 125,876 Health and wellness 54,898 46,591 42,839 Other categories 8,724 8,066 5,588 Total $ 441,817 $ 420,553 $ 393,247 Of Walmart U.S.'s total net sales, approximately $ 65.4 billion, $ 53.4 billion and $ 47.8 billion related to eCommerce for fiscal 2024, 2023 and 2022, respectively. (Amounts in millions) Fiscal Years Ended January 31, Walmart International net sales by market 2024 2023 2022 Mexico and Central America $ 49,726 $ 40,496 $ 35,964 Canada 22,639 22,300 21,773 China 17,011 14,711 13,852 United Kingdom — — 3,811 Other 25,265 23,476 25,559 Total $ 114,641 $ 100,983 $ 100,959 Of Walmart International's total net sales, approximately $ 24.8 billion, $ 20.3 billion and $ 18.5 billion related to eCommerce for fiscal 2024, 2023 and 2022, respectively. (Amounts in millions) Fiscal Years Ended January 31, Sam's Club net sales by merchandise category 2024 2023 2022 Grocery and consumables $ 56,449 $ 53,027 $ 46,822 Fuel, tobacco and other categories 12,854 14,636 10,751 Home and apparel 9,263 9,579 9,037 Health and wellness 5,005 4,248 3,956 Technology, office and entertainment 2,608 2,855 2,990 Total $ 86,179 $ 84,345 $ 73,556 Of Sam's Club's total net sales, approximately $ 9.9 billion, $ 8.4 billion and $ 6.9 billion related to eCommerce for fiscal 2024, 2023 and 2022, respectively. Note 14. Subsequent Event Dividends Declared The Company approved, effective February 20, 2024, the fiscal 2025 annual dividend of $ 0.83 per share, an increase over the fiscal 2024 dividend of $ 0.76 per share. For fiscal 2025, the annual dividend will be paid in four quarterly installments of $ 0.2075 per share, according to the following record and payable dates: Record Date Payable Date March 15, 2024 April 1, 2024 May 10, 2024 May 28, 2024 August 16, 2024 September 3, 2024 December 13, 2024 January 6, 2025 80 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.